Introduction
This paper discusses Coca-Cola Company, a beverage industry leader, and it will focus on analyzing its business-level and corporate-level strategies. It will also discuss the company’s significant competitor; PepsiCo, Inc. and provide a comparison of strategies at both levels. Having started operating its business in 1886, Coca-Cola Company remains the largest nonalcoholic beverage manufacturer, distributor as well as marketer (Coca-Cola, 2013). Indeed Coca-Cola is the leading maker of soft drinks operating in over 200 nations and owns more than 400 nonalcoholic beverage brands.
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Apparently, the most valuable beverage brand in the world is Coca-Cola thereby promoting the operations of the company on a global scale. Having started its operations more than a hundred years ago, the company has gone through different challenging times of economic prosperity and depression, and war and peace. For a long time especially in the 1990s, the Coca-Cola was one of the world’s most reputable companies. The company specializes in making and selling carbonated soft as well as many other non-carbonated drinks. With its mission statement “to refresh the world, to inspire moments of optimism, and to create value and make a difference everywhere we engage”, Coca-Cola has a set of ideals to which it adheres to both at the business and corporate level (Coca-Cola, 2013).
Business Level Strategies
Differentiation Strategy
The company embraces differentiation strategy in order to remain unique in the market and separated from its competitors. Through differentiation strategy, the company makes unique and valued products for its customers. The company has unique capacities to customize its products in order to ensure that they meet the wants and needs of its target markets. For instance the company satisfies the needs of old health conscious consumers by providing Diet Coke, Odwalla products and Vitamin water. On the other hand, it meets the needs and expectations of young consumers by providing vanilla coke and cherry coke, which are flavored and PowerAde products of Coke (Saul, 2010). It is also worth noting that the management at Coca-Cola Company continues investing a lot of time and money into research in order to acquire a clear comprehension of the various segments in the market in respect to age, income and lifestyle in order to achieve accurate development and marketing for its products.
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In terms of packaging, differentiation strategy has and continues playing a significant role by helping Coca-Cola products continue remaining adaptable to different market segments (Saul, 2010). In this regard, functional packaging has been essential for making products appear in different forms and sizes. This includes product appearance fountain drink dispensers, aluminum cans, and plastic and glass bottles. Besides, the company also uses different sizes and shapes of the cans and bottles in order to ease operations in vending machines. The company also makes sure that it uses recyclable packaging materials in order to promote its commitment to the sustainability of the environment. Packaging materials are well labeled to make consumer identification easier. Apart from product differentiation, the company also embraces image differentiation whereby it emphasizes its logo to achieve this. The logo is essential for establishing the name of the brand in the minds of consumers.
Cost Leadership Strategies
There are various methods that a company can embrace in order to attain the status of low cost producer. These methods can either be implemented separately or in combination. One of the ways is by a firm considering a product design that does not attract extra costs especially where alternative materials can be used (Magretta, 2009). The firm can also employ production as well as operational processes that do not demand high costs. The positioning of Coca-Cola regarding cost leadership strategy is as a result of learning, knowledge as well as experience in matters of production as well operational processes. The strategy is also achieved through economies of scale especially in research, promotion and development. The company also achieves cost leadership strategy through embracing efficient/effective manufacturing systems and distribution networks.
Marketing Strategies
Marketing segmentation
Coca-Cola makes strong choices regarding the kinds of markets it requires targeting in order to promote its sales. A market segment refers to a group of product or service consumers possessing unique characteristics in a collective manner. For instance, the company satisfies the needs of old health conscious consumers by providing Diet Coke, Odwalla products and Vitamin water. On the other hand, it meets the needs and expectations of young consumers by providing vanilla coke and cherry coke, which are flavored and PowerAde products of Coke (Coca-Cola, 2013).
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Promotion Strategy
The company considers certain levels of emphasis regarding public relation, advertising, technological changes, sales promotion, personal selling etc. During advertisement; for instance, Coca-Cola employs a number of phrases such as “enjoy”, “drink Coca-Cola”, “always Coca-Cola”, “Life tastes good” and many more. These advertising strategies have played an essential role in ensuring that the brand successfully reaches global markets (Campbell & Goold, 2014). Besides, these advertisement techniques enable consumers to remain informed of the significance of Coca-Cola products.
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Price Strategy Trade Promotion
Coca-Cola Company does offer incentives to retailers and middlemen mostly in form of free empty bottles and free samples. This encourages such retailers and middlemen to keep pushing the product further into the market (Campbell & Goold, 2014). This is one of the reasons why Coca-Cola is more common in the market than other brands. In other words, it is a “Seen and Sold” scenario. The company is also involved in sponsoring various sporting events and in so doing; it grows its market share.
Considering these business-level strategies, differentiation strategy is the most significant strategy that can drive the company into long-term success. Through differentiation strategy, the company can make unique and valued products for its customers. The company has unique capacities to customize its products in order to ensure that they meets the wants and needs of its target markets. Besides, through differentiation strategy, the company can capitalize on the weaknesses of its competitors in order to gain a competitive advantage.
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Corporate level strategy
A corporate strategy is essential for guiding a company’s performance in its overall business activities as well as resource allocation in order to achieve the established goals of the business. The company has been keen on developing new products every time it enters a new market. At one point Coca-Cola was known to be a company operating in a market dominated by carbonated soft drinks.
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However, over time, the company began producing new products such as Sprite, Fanta and Diet Coke, which are non-carbonated, and that have eventually become the key products of the company. Besides, in order to further penetrate the market, the company has widened its business definition into what is called ‘ready packaged liquid refreshments’ (Campbell & Goold, 2014). Through embracing this consideration, the company has grown beyond the usual carbonated soft drink (CSD) market and joined markets such as fruits juices, ready to drink tea and bottled water.
Globalization strategy
This is another significant corporate business-level strategy. Technological advancements have been significant for contributing to Coca-Cola’s business growth through globalization especially during the 20th century (Campbell & Goold, 2014). For instance, transportation of products became easier and cost effective especially following the development of faster and bigger semi-trucks, trains, jet aircrafts and cargo ships. This enabled and continues enabling Coca-Cola manufacture and avail its products in furthest markets. Due to technological development, the company has taken advantage of the situation and now has its presence in more than 200 countries in the world.
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In regards to these corporate strategies, production of new products for new markets is the most significant business level strategy that can drive the business into long-term success. Through embracing this consideration, the company has grown beyond the usual carbonated soft drink (CSD) market and joined markets such as fruits juices, ready to drink tea and bottled water. This has been significant for enabling the company to penetrate new markets.
Significant competitor
Following an analysis of the competitive environment, the most significant competitor of Coca-Cola is PepsiCo Inc. It is an American based multinational food and beverage corporation.
Business Level Strategies
Low cost differentiation is one of the business level strategies that the company engages. It achieves this strategy through embracing economies of scale mostly through mass production. Through this strategy, PepsiCo offers low prices for its products in order to stimulate demand and increase its market share (Choice Level Books, 2009).
The company also employs smart selling marketing strategies. It considers customer relationships so that it makes products that sit their life styles (Shachman, 2004). Unlike Coca-Cola, PepsiCo deals in snack products as well. It therefore makes its presence in the market by providing both beverages and snacks. Pepsi, a product of PepsiCo is the most common soft drink in the market.
Corporate Level Strategies
PepsiCo embraces mergers and acquisitions as a strategy for international market expansion so that it can gain access to infrastructure and competencies. This, in turn, helps it to limit direct costs so that it can achieve organic growth. Examples of recent mergers and acquisitions include Dilexis cookies in Argentina, and juice and diary businesses lebedyansky and Wimm-Bill-Dann in Russia (Campbell & Goold, 2014).
The company’s second corporate strategy is formation of creation of international strategic alliance (Saul, 2010). For instance, following the growing Chinese beverage market, PepsiCo recently established a strategic alliance with Tingyi in China so that it can tap into the market. Besides, focusing on the emerging markets and on organizational culture are significant corporate strategies for PepsiCo.
Following the analysis of the business-level and corporate-level strategies of the two companies, Coca-Cola Company is most likely to remain successful in the long-term as compared to PepsiCo, Inc. This is because following the 2008-2011 economic crisis, most global corporations, which rely on competitive advantage like PepsiCo are likely to be affected due to the confirmed fragile economic system (Campbell & Goold, 2014). Due to the economic crisis, it has become clear that cost advantage or product differentiation is not a sufficient competitive advantage for the current business order. Coca-Cola would differ in slow cycle and fast cycle markets. Being a top performing company, fast cycle time for Coca-Cola will play two essential roles: designing an organization, which can perform without errors, inventories and bottlenecks. Quick flow of information will enable the company to adjust accordingly in a competitive environment. The second one is management paradigm.
Conclusion
Coca-Cola Company embraces differentiation strategy in order to remain unique in the market and separated from its competitors as one of its business-level strategies. In this case it embraces both product and image differentiation strategies. The positioning of Coca-Cola regarding cost leadership strategy is as a result of learning, knowledge as well as experience in matters of production as well operational processes. Production of new products for new markets and globalization are some of Coca-Cola’s key corporate strategies. Following an analysis of the competitive environment, the most significant competitor of Coca-Cola is PepsiCo Inc. Following the analysis of the business-level and corporate-level strategies of the two companies, Coca-Cola Company is most likely to remain successful in the long-term as compared to PepsiCo, Inc.
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