Coca-Cola - Providing More Infrastructures in the Diverse Market to Satisfy Customers Needs - Case Study Example

Executive Summary Coca-Cola is an international company that has its bases in Atlanta, Georgia in the United States of America. The company produces a variety of soft drinks across the world based on different tastes and preferences of the consumers in the different countries it sells its products. The company has undergone a number of changes and evolutions since the time it was established. Some of the notable changes that it has undergone include the adoption of different strategies by different stakeholders and managers in order for it to remain relevant and to optimize its profits. Since the satisfaction of the consumers’ needs and preferences was paramount then, the Coca-Cola Company had to come up with different strategies in order to maximize the utility of the different consumers and at the same time increase its customer base. The top leadership and hierarchy, therefore, faced the challenge of choosing the best strategy to incorporate so that success could prevail and since choices have consequences then over the period some leaders failed while others succeeded. The issue about the best strategies that Coca-Cola could choose was investigated through comprehensive research and facts since the success of the company was investigated during the era of different C.E.Os. The findings were significant since strategies that have to be put in place for the success of the company are complex undertakings and caution have to be applied when they are being implemented. The findings were, therefore, significant since they broadly shown the journey that the Coca-Cola Company has had to undergo and the various reasons why it attributes its success worldwide to the present age. I found out that from the findings that the C.E.O. who was most-successful in the implementation of the best strategy was Neville Isdell. He led to the maximization of the company’s profits, and this was between the year 2004 and 2008. Introduction The choice in terms of strategies that Coca-Cola had to adopt date back to 1902 when it became an international enterprise since it had to sell its products outside the United States, and this happened in Cuba. By 1929, the company had expanded its market in 76 countries hence for it to meet the market demand then it had to be strategic. Over the years, some of the strategies that it put in place was to build 63 bottling plants all over the world since its perception was that great growth opportunities were found overseas. The top leadership has also speculated that the U.S. market would in the long run reach maturity thus there was a need for expansion. An evidence of how that strategy was successful is the fact that more than 59,000 of Coca-Cola’s staff out of a total number of 71000 are found in 200 countries all over the world. To also show how tremendous the strategy is that over seventy percent of Coca-Cola’s market is found internationally thus if it only relied on the U.S. market then it could not be able to leap a huge fortune as it is doing in the present age. Coca-Cola has, therefore, become one of the successful international enterprises that have been helpful to different societies in the world because of its philanthropic support. Localization was one of the strategies that were implemented until the 1980s where local operations were fully supported thus they were independent in terms of how they operated their operations. The result was the growth of different plants that were located all over the world since they had a mandate and monopoly to make their decisions that were instrumental in the growth of the company and its influence felt. The benefit of localization was that employment opportunities were created for the locals, and thus their living standards improved. The sale of Coca-Cola, therefore, went up tremendously since the company was able to integrate itself and gain acceptance in various regions worldwide. Accountability was, therefore, the mandate of the managers who were located in different regions and this created competition since the managers wanted their regions to be the ones that gained more profits from sales. Localization also led to economic growth in the nations where the plants were located since it led to the improvement of infrastructure. Body After Roberto Goizueta became the C.E.O of the company in 1981, the localization strategy was changed, and the emphases were based on the company’s flagship brands. New brands such as Diet Coke and Cherry Coke among others were invented and introduced into the market. Roberto’s main belief was that as compared to the U.S. market the penetration level was lower in the international market since it amounted to about 10 to 15 percent of the U.S market. The C.E.O’s quest was to make the company a global one and thus the strategy that he implemented was the centralization of the marketing activities and management at the company’s headquarters in Atlanta. The main focus was on the core brands as well as the foreign bottlers where equity stakes were taken so that Coca-Cola could have more strategic control on them. The strategy that was adopted was known as the one-size-fits-all strategy and the ideologies behind it were based on standardization, and the reality of economies of scale and a good example of this was the use of the same message in advertising all over the world. The notion behind this strategy was that the needs and preferences were the same and hence standardization was necessary since costs could be minimized. Roberto’s idea was also that by marketing the main and core brands of Coca-Cola that were famous worldwide then profits would increase since there was already a ready market that was in existence. The company’s headquarters would thus provide an oversight role on the various plants that are located worldwide hence its role was significant. Investigations through research show that the adoption of the strategy was not a significant success since the leadership of the company by then did not realize that the consumers’ tastes and preferences worldwide varied since they were not the same. Standardization was not the solution rather the company could have implemented the differentiation of products in order to suit the diverse market that the world provides. The advertising messages ought to have been different in the diverse regions it had operations in to suit the needs of the consumers since by buying the various Coca-Cola products then huge revenues could have been realized. After Roberto Goizueta’s term ended then, Douglas Ivester took over the reigns and immediately he adopted the strategy that had been put in place by his predecessor. It was a matter of time before Douglas realized that the one-size-fits-all strategy was becoming obsolete thus new measures had to be put in place. Coca-Cola was now facing stiff competition from competitors who could market local beverages, and this was attributed to the fact that the company in the year 2000 failed to hit its financial targets. The occurrence was a big misfortune since it had not experienced such a drop in performance in a generation. The company experienced sluggish growth, and this was a major downfall given its tremendous growth that it had experienced. Douglas Ivester, therefore, failed to drive the company forward, and he thus resigned in 2000. It is, therefore, evident that during Douglas Invester’s era failure was experienced, and this slowed down the growth of the company and the main reason attributed to this was the poor and wrong strategy that was adopted. After Douglas Invester had resigned then Douglas Daft took over, and he was among the most-successful C.E.Os during that period since he incorporated a 180-degree shift in strategy, and this would greatly influence the company’s growth in later years. Daft believed that the local country managers needed more power in order to strive the company back to prosperity. The ideology was that the local country managers were best suited to hold the power since they understood the local consumers’ tastes and preferences. The Coca-Cola products thus would be centered on their needs hence penetrating in the market. Daft was behind the notion that product development, marketing and the strategies incorporated ought to have been tailored to the local needs. The measures that were put in place by Daft involved terminating the contracts of 6000 employees who were majorly based in Atlanta hence giving the country managers autonomy. The country managers, therefore, had a pivotal role to play since they were the main stakeholders in ensuring that the company’s mission and vision were implemented. The managers had a huge task since they were mandated to head the decision-making processes in different regions. The strategy created competition in different regions where Coca-Cola was operational since the country managers wanted their regions to be successful in terms of the sales attained. The marketing strategies were also enhanced in that the global advertisements that had been adopted were scrapped, and the advertisement budgets were placed under the hands and control of the managers thus creativity and innovation were required. Great emphases were laid on the customization of products based on the local needs, tastes and preferences. An example of how the tastes and preferences varied in different nations was in Japan where Coca-Cola’s best-selling product was a canned cold coffee drink as compared to other markets where the best-selling product is a carbonated beverage. The above experience thus attested to the need for customization and differentiation of products to suit the diverse consumer needs. The strategy was aimed at the maximization of the consumers’ utility by providing them with their desired product. The strategy however was not able to meet the desired expectations and growth and by the year 2002 centralization towards the company’s headquarter Atlanta was setting in since it was exercising the oversight role. The oversight role that it was assuming entailed product development and marketing in different nations, but it was different from the one-size-fits all strategy that had been adopted during the era of Goizueta. Neville Isdell took over the leadership from Goizueta, and he became the C.E.O between 2004 and 2008. A more vigorous and significant strategy was adopted since Coca-Cola had to guide the local marketing and product development if the expected growth was to be achieved since the strategic markets lay internationally. Neville believed that the right strategy which comprised of product offering, pricing and marketing message ought to have varied from one market to another in order to match the local conditions that were in existence. The notion was that Coca-Cola would be viewed as an international enterprise and company that had a variety of products that could meet the demands of any consumer all over the world. The decision-making in terms of the products chosen was solemnly left to the choice made by the consumer since a variety of products were in existence. In some instances because of the huge variety some consumers found themselves in a dilemma torn between which among the products to choose. Neville’s strategy, therefore, represented a midpoint between the strategies adopted by both Goizueta and Daft hence its success was significant. Neville also stressed the importance of the leverage of good ideas across the nations. An example of this ideology was the Georgia coffee since the beverage had gained great success in Japan. Coca-Cola resulted to the formation of strategic alliances in order to propel its mission thus leading to the maximization of profits. In October 2007, Coca-Cola entered a strategic alliance with Illycaffe that is one of the premier coffee makers in Italy. The alliance and partnership led to the creation of a global franchise for bottled or canned cold coffee beverages. The alliance, therefore, led to the emergence of new markets since Coca-Cola used a brand name that was already famous hence penetration into the market was easy. Neville also understood the fact that stiff competition existed hence for Coca-Cola to remain relevant then it had to incorporate strategies that were innovative and creative. Another strategy that was adopted was to seek new markets in areas where its competitors were thriving in order to counter their influence in those regions. During the period, Coca-Cola gained interest in the Asian market, and this was triggered by the success of its subsidiary in China where it developed a low-cost noncarbonated orange based drink. The drink gained popularity and its sales were enormous, and this led to it becoming one of the best-selling drinks in that country. The Coca-Cola Company thus had to lay strategies in order to see whether the drink could gain similar popularity in other Asian countries since there were huge opportunities hence its quest to harness them. The drink became a huge hit in Thailand where it was launched in 2005 since there was a similarity in the tastes and preferences of the consumers in the Asian countries. The company had to be agile in the rolling out plan concerning the drink, and a similar strategy was put in place in India where the drink was launched in the year 2007, and it gained similar popularity. Neville’s era presented a period where continued and tremendous growth was experienced since he learnt from the mistakes made by his predecessors thus implementing strategies that were for the goodwill of the company. The world in the present age has become very dynamic, and this can be attributed to the technological innovations such as the internet that it has experienced. The internet has aided the creation of the social media such as facebook and twitter among others, and this has been beneficial since communication has been made easier and faster. Coca-Cola Company has adopted strategies to brand reinvention, and its target has been the “Millennials”, and these are people who were born early 1980s till early 2000s. The characteristic of this category of people is that they are technological survey and are digital natives since they were born during the era of the internet. The expectations of the millennials are that they expect personalized and unlimited choice of goods and services that are delivered through multiple channels and at the maximum speed possible. For Coca-Cola just like any other brand, it has had to be constantly innovative by being progressive and nimble for it to be relevant. The strategies that Coca-Cola has adopted is innovative in partnerships, packaging, cultural leadership, equipment & products and the consumer provocations. An example is in Australia where the company had to replace the Coke branding with the teen first names that were popular such as “Mike” and “Suzy” and the sales grew tremendously. In Japan, the innovation that was put in place was the partnership that Coca-Cola made with Sony in order for its customers to download free songs that matched their birth year. Another notable innovation that has been put in place over the years is the freestyle machine which comprises of a fountain that dispenses over a 100 products. The machine is unique since it enables any kind of flavor mix that creates unique and new flavor combinations. The shift is tremendous since it enables consumer customization and co-creation. A mobile app that uses smart phones enables the consumers save the blends hence the freestyle machine can identify their favorite flavor combo. The company has also adopted the virtual of consumer provocation since the idea is that Coca-Cola should move away from a brand that just promotes happiness to one that provokes happiness. It is, therefore, evident that Coca-Cola has undergone significant growth for the period it has been in existence, and the strategies that it has adopted over the years have played a pivotal role in ensuring its successfully obtains its objectives and missions. The world today has become very competitive, and Coca-Cola has gained the upper hand in gaining a comparative advantage over its competitors since it has been innovative and creative hence creating a form of monopoly. Analysis People that were surveyed had heard about Coca-Cola and this attested to the fact that the company is famous, and most of them had tried a product made by the company at least once. The fact, therefore, explains the brand awareness concerning Coca-Cola. The analysis concerning the strategies adopted show that the products by Coca-Cola are enjoyed by many people. There is brand loyalty on the part of the customers towards Coca-Cola, and the company’s logo is easily recognized by most people. Conclusion Coca-Cola over the years has been perceived positively since people are aware of the brand and awareness of the company because of the trust they have with the company. The brand loyalty that people possess is worth to note, and this has made Coca-Cola products popular. Once a person buys a Coca-Cola product he or she is not just buying the beverage, but also the image that is associated with it hence portraying a better quality. In most supermarkets, Coca-Cola has a fridge of their own, and it holds products made by the company. Coca-Cola is instrumental in the nurturing of talents through the sponsorships of different events that include recreational activities and sports. The company is helpful in the eradication of social ills such as poverty through philanthropic support for different projects and education for children from poor backgrounds. Coca-Cola’s influence and presence are thus felt global. Recommendations The Coca-Cola Company should lay more emphasis on how they can provide more infrastructures in the diverse market in order to facilitate the customers hence satisfying their needs. The virtue that should be understood is that for brand loyalty to be achieved then the customers’ satisfaction is paramount. Constant inventions and creativity should be put in place to ensure that the company can remain relevant over the years to come since new generations are still coming up, and the products and services should suit the needs. The company should also find new markets especially in rural areas since this would lead to its expansion. The focus based on products should also target old people since this is an untapped market. References Case Studies from the Textbook (Hill, CWL 2013, International business: competing in the global marketplace, 9th edn, McGraw-Hill/Irwin, New York, NY). Coca-Cola, textbook 518-519 Coca cola. (2013). S.l.: Spruce Books. Payne, A., & Frow, P. (2013). Strategic customer management integrating relationship marketing and CRM. Cambridge, UK: Cambridge University Press. Senker, C., & Foy, D. (2012). Coca Cola: the story behind the iconic business. London: Wayland. Read More