An analysis of market segmentation of the coca-cola company

Market Segmentation of Coca-Cola


Introduction

As everyone knows, the Coca-Cola Company (see Appendix A) is a well-known big drinks manufacturer with over one hundred year. Because of its strong brand, it not only makes and delivers their products around the world, but also markets the non-alcoholic beverage concentrates and syrups. The company has a vast portfolio of drinks, beverages, waters, juice, teas, coffees, energy and sports drinks which they products, distribute, market and license all over the world. Meanwhile, Coca-Cola also manages its business in more than 200 countries. (Datamonitor, 2009) The company plays an important part in the international markets, and it also gives its one of the closest competitors Pepsi a big challenge when the prices of the drinks are nearly the same. According to the Coca-Cola official website (www.thecoca-colacompany.com), the company is growing very fast with its expanding, 92,400 worldwide employees are being employed to work for it (The Coca-Cola Company, 2009).

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On the other hand, Coca-Cola becomes a successful company and earns great revenue, using its internal and external marketing strategies to overcome most of the other competitors. The company also claims that innovation is at the heart of everything they do and it is one of the reasons why they success. The report aims to analyze the market segmentation for one of the world's strongest brands Coca-Cola and talks about the different market segmentation variables by theories and practices in the company. Furthermore, the report discusses the targeting and positioning of Coca-Cola Company, it also provides the market for the organization is segmented for the company.

Discussions

With its high reputation and strong brand image, Coca-Cola Company changed its original name Coke with New Coke in 1985, and, the company also aims to give their customers better taste (Datta, 1996). Generally speaking, although the company focus on whole population in the world, young generation is the target marketed of the company and they also want to show their products with full of youth and energy to their customers. Pendergrast(1993) states that Coca-Cola are cool and real, and , differentiate Coke from its competitors while Plummer (1995) argues "pepsi being young, exciting and hip and Dr pepper being nonconforming, unique and fun". (cited in Jennifer, 1997). Coca-Cola Company had to carefully consider releasing a diet product line due to fears of weakening the brand. Part of the decision process relied on the invention of aspartame, which is regarded as a superior sweetener to saccharine with less side effects (Patrick and Thomas, 1992). Coca-Cola has been using its marketing mix to prove their success business.

Market segments help the company to improve their products and services, knowing what their customers need and innovate new sectors. They markets the products selling into different or more than one market (e.g. Diet coke) (Patrick and Thomas, 1992). To know what their customers need, Coca-Cola uses the consumer segmentation criteria and market into different groups: behavioural, psychographic and profile.

Coca-Cola creates value to its customers and with good performance to convince people to buy their products. The company heavily invested lots of money to advertise the products from one country to another. According to its official website (2009), Coca-Cola Company says that it is proud to be the longest continuous corporate partner of the Olympic Games. It is obviously that the company has a long partnership with the Olympic Games since 1928 (The Coca-Cola Company, 2009). The reputation is getting stronger and stronger now. There are more than 3,000 beverages and being sold at every store and luncheonette and sports ground across the land (Hays, 2004). It is very convenience to buy them everywhere for parties or any functions. The Coca-Cola Company treats each store differently. For example, in Japan, Coca-Cola Company segmented its products for customers, not only through their products or favourite choices but also according to the saving needs of logistics and vending machines to bring more convenience and time saving, such as help the billing or regularly delivery (Joseph et al., 1993). Though the company is earning good profit, innovation is still one of the important strategies to gain more wealth. Different new products and packages could attract people to buy. For instance, if companies want to run success business, they must know how to dissolve in different culture. Coca-Cola knows people from different culture, using its innovation to mix different cultures and flavours together to make new product (e.g. with the European launch of Jianchi, a new drink inspired by the ancient principles of traditional Chinese wisdom (The Coca-Cola Company, 2009)).

The Coca-Cola Company aims to focus on market and work smart. Generally, comparing with old generation, Coca-Cola seems more popular in the younger groups. Especially they put vending machines in schools to gain more profit. "A Coca-Cola official said that his company would "continue to be very aggressive and proactive" in going after school business" (Marion, 2000). In 2008, the company launched more than 700 new products globally, which was including more than 160 low or no-calorie beverage options (The Coca-Cola Company, 2009). This gives people more options to choose what they want, especially for those people who do not like to drink with too much sugar but water, so diet coke is not the only option for those people anymore.

Furthermore, the company follows the mass marketing strategy. As all the products are non-alcohol and everyone can drink, Coca-Cola targets the whole market rather than and particular segment of the population. But this does not mean that Coca-Cola does not have its differentiation strategy to overcome the whole market. For example, diet coke is not just market segmentation, it concerns with the value chain on purchasing Coca-Cola (see Appendix B) and Diet Coke in economic differences with purchasing, production cost, as well as marketing functional support cost (Peter, 1987). Coca-Cola has successfully segmented its market in different products. The company stays the No.1 of selling the sparking beverages, juice and juice drinks, as well as No. 2 in sales of sports drinks and No. 3 in sales of bottle water (The Coca-Cola Company, 2009)

Coca-Cola uses the same strategy to market and formula it's business: "One sight, one sound, one sell" (David, 1996). The Coca-Cola Company operates its business in multiple geographic areas such as Eurasia & Africa, Europe, Latin America, North America and Pacific. At the beginning of 2007, the company decided to change the operating structure, combining Eurasia and Middle East Division, and the Russia, Ukraine and Belarus Division, and, with the India Division to form the Eurasia operating segment; and combined the China Division and the Japan Division with the remaining former East, South Asia and Pacific Rim operating segment to form the Pacific operation segment. This was completed by the year end of 2007. (The Coca-Cola Company, 2008)

On the other hand, Warren et al.(2001) claims that the positioning and strategy are being used in same condition in all countries and it shows a global image of fun, good times and enjoyments. Coke is "The real thing" and unique. Coca-Cola has being positioned with a low/no tech product, and "it's flavored, carbonated, sweetened water in a plastic, glass and metal container"(Warren et al., 2001). However, despite aims to reach consumers' desire, there was an interesting problem came out from its positioning. For instance, according to Madden (2007), Diet Coke and Coke Zero (see Appendix B), although Diet Coke is not only aimed to sell to women on purpose, 80% of Diet Coke sales are to female customers. The company has done a research for male customers and it shows men are also interesting in low-calorie drink but they just not accept to drink Diet Coke because they might think it's designed for women. Later on, the company invited a new product Coca-Cola Zero, which was targeted at the male market, so the two products are very different in the market position. (Madden, 2007, cited in David and John, 2009)


Conclusion

The Coca-Cola Company/ Industry have covered a strong business market scale around the world. Using different market strategies and dividing the market segments to help the company to gain more profits. Moreover, the corporation (partnership) strategy and implementation provides a brief overview of Coca-Cola Company's operation, targeting and positioning in the drink industry. In this case, although the company is running a good business, there are still some other internal (e.g. positioning) and external challenges waiting for it to achieve, for example, Pepsi is one of the closet competitors and purchases similar products.

Being the biggest manufacturer, distributor and marketer of non-alcoholic beverage industry, the Coca-Cola Company has been running successful business with its franchising model in the world. The company is in a good position to capture the market of any new drink categories. Coca-Cola continues to expand their customers through investing new products, keeps innovating and pursuit to get better results for its business in order to catch their loyal customers throughout the world.

Appendix A:

Established in 1886, The Coca-Cola Company operates in more than 200 countries and markets nearly 500 brands and more than 3,000 beverage products. These products include sparkling and still beverages, such as waters, 100 percent juices and juice drinks, teas, coffees, sports drinks and energy drinks. The company has four of the world's top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Sprite and Fanta.

The Coca-Cola Company is a global business that operates on a local scale in every community where they do business. It creates global reach with local focus because of the strength of the Coca-Cola system, which comprises the company and its bottling partners - more than 300 worldwide. The Company manufactures and sells concentrates, beverage bases and syrups to bottling operations; owns the brands; and is responsible for consumer brand marketing initiatives. Its bottling partners manufacture, package, merchandise and distribute the finished branded beverages to their customers and vending partners, who then sell their products to consumers.

All bottling partners work closely with customers - grocery stores, restaurants, street vendors, convenience stores, movie theaters and amusement parks, among many others - to execute localized strategies developed in partnership with the Company. Customers then sell their products to consumers at a rate of nearly1.6 billion servings a day.

The business operations are divided into the following geographies: Eurasia and Africa, Europe, Latin America, North America and Pacific, as well as their Bottling Investments operating group.

Source: The Coca-Cola Company. (2009). 2008/2009 Sustainability Review.

Appendix B:

1. Product/Brand Name: Coca-Cola

Drink Type: Soft Drink
Coca-Cola: Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world.
Created in Atlanta, Georgia, by Dr. John S. Pemberton, Coca-Cola was first offered as a fountain beverage by mixing Coca-Cola syrup with carbonated water. Coca-Cola was introduced in 1886, patented in 1887, registered as a trademark in 1893 and by 1895 it was being sold in every state and territory in the United States. In 1899, The Coca-Cola Company began franchised bottling operations in the United States.
Coca-Cola might owe its origins to the United States, but its popularity has made it truly universal. Today, you can find Coca-Cola in virtually every part of the world.

Available in the following flavours: Cola, Cola Green Tea, Cola Lemon, Cola Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry.

2. Product/Brand Name: Diet Coke

Drink Type: Soft Drink
Diet Coke: Diet Coke was born in 1982 and quickly became the No. 1 sugar-free drink in diet-conscious America. Known as Coca-Cola light in some countries, it's now the No. 3 soft drink in the world. Diet Coke is the drink for people who want no calories, but plenty of taste.
Available in the following flavours: Black Cherry Cola Vanilla, Cola, Cola Green Tea, Cola Lemon, Cola Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry.

3. Product/Brand Name: Coca-Cola Zero

Drink Type: Soft Drink
Coca-Cola Zero: Coca-Cola Zero offers Coca-Cola taste with zero calories. Created with young adults in mind, this soft drink is sweetened with a blend of aspartame and acesulfame potassium (Ace K).

Coca-Cola Zero has been one of the most successful product launches in the company's history. In 2007, the company sold nearly 450 million cases globally. Put into perspective, that's roughly the same size as their total business in the Philippines, one of their top 15 markets. As of September 2008, Coca-Cola Zero is available in more than 100 countries.

Available in the following flavour: Cola

Source: The Coca-Cola Company (2009). Available at: <http://www.virtualvender.coca-cola.com/ft/index.jsp >


References:

Datamonitor. (2009). The Coca-Cola Company: company profile. p4

The Coca-Cola Company. (2009). Avaliable at

Datta, Y. (1996). Market Segmentation: An Integrated Framework. Long Range Planning, 29(6), 797-811

Patrick, B and Thomas,R. (1992). Brand Portforlios. European Management Journal, 10(3), 277-285

Jennifer, L. A. (1997). Dimensions of Brand Personality. Journal of Marketing Research, 34(3), 347-356

Joseph B.F. James O'C and Richard, R. (1993). Tailored Logistics: The Next Advantage. Harvard Business Review , 87-98

Hays, C. (2004). Truth and Power at the Coca-Cola Company. Random House, Incorporated.

Marion, N. (2000). Soft Drink "Pouring Rights": Marketing Empty Calories. Public Health Reports ,15, 308-319

The Coca-Cola Company. (2009). 2008/2009 Sustainability Review. The Coca-Cola Company.

Peter, W. (1987). A Refinement of Porter's Strategies. Strategic Management Journal, 8(1), 93-101

David, H. (1996). Cross-cultural consumption: global markets, local realities. London: Routledge.

The Coca-Cola Company. (2008). 2008 Annual Report on Form 10-K. p2

Warren, J.K and Bodo, B.S. (2001). Global marketing management: a European perspective. Prentice-Hall, Inc.

David, J and John, F. (2009). Foundations of Marketing. McGraw-Hill Education. Lin Lin200653621Page 9

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