The Coca-Cola Company is a multinational corporation manufacturing, retailing, and marketing nonalcoholic beverage concentrates and syrups. The company was incorporated under Delaware’s General Corporation Law having its headquarters in Atlanta, Georgia. Here, let’s know about Coca-Cola Business Model.
Coca-Cola, which is the leading brand in the soft drink industry, was invented back in the 19th century by John Stith Pemberton and was marketed by the businessman Asa Griggs Candler who is the founder of the Coca-Cola company.
The name of the brand is derived from the two core ingredients of their best-known drink, kola nuts & coca leaves.
What is a Business Model?
A business model is a plan describing a company’s core ideas and strategies for creating value economically and socially in a specific target market. A business model includes business purpose and process, target customers, products and services, infrastructure, cultural policies, organizational and operational structure.
Coca-Cola’s Business Model
Offerings
Coca-Cola generates its revenue from selling diverse beverages like soft and sports drinks, juice, enhanced water, and energy drinks. The company also partners with other beverage companies like Campari, Edrington, Monster Energy, and Brown-Forman to sell their products. A few of its popular selling brands are Coca-Cola, Sprite, Fanta, Dasani, and Powerade.
Main products:
- Coca-Cola
- Dasani
- Georgia – A brand usually sold in Japan
- Diet Coke/Coca-Cola Light
- Powerade
- Fanta
- Sprite
- Ice Dew – A water brand which is sold in China
- Simply – A juice brand famous in North America.
- I LOHAS-
- Coca-Cola Zero Sugar
- Del Valle
- Glacéau Smartwater – Includes distilled water with electrolytes
- Ayaka- Green tea brand
- Schweppes
- Gold Peak – A tea brand
- Aquarius
- Fuze Tea
- Minute Maid Pulpy
Targeted Market
Every customer who is looking to satisfy his/her thirst is on the target list of the Coca-Cola company. Although the most potential group of buyers are from 18-25 age i.e. youngsters or youth.
Competitors
The top competitors of Coca-Cola are Pepsico, Keurig Dr. Pepper, Tropicana Products, Britvic, Red Bull, and Mountain Dew.
Acquisitions
Minute Maid was acquired by the Coca-Cola company in the year 1960 for an amount that wasn’t made public. Columbia Pictures, the movie studio was acquired by the company in the year 1982 for $692 million and was sold to Sony in 1989 for $3 billion.
India Cola brand and Thums Up were taken over in the year 1993. Odwalla brand of fruit juices, bars & smoothies was acquired by the company in the year 2001 for $181 million. Later then in 2007, founder Castanea and Lance Collins sold their brand Fuze Beverage for an amount of around $250 million.
The corporation also took over brands like Honest Tea, ZICO, Monster Beverage, and Moxie.
Marketing Strategy
Coca-Cola’s brand identity has reached heights where around 93% of the world’s population can easily recognize it. The company has always invested a good amount in the marketing sector and adopted various methods of establishing, holding, and increasing its market value and share.
- The company believes in attracting new customers and entertaining the existing ones too.
- The untouched logo and font of Coca-Cola since 1923 has imprinted in the minds of people around the globe for over a decade though the style of packaging keeps adjusting accordingly.
- Featuring well-known celebrity faces in creative advertisements has also been the strongest strategy of the company.
- A great distribution channel is what adds up as the main part since there’s no point in having a good product if it can’t be made available properly to the customers.
- Consistency is the key and the company has truly proved this right.
- Socialization on the platforms like Twitter, Instagram, Pinterest, and Facebook has largely helped the brand to expand its recognition. The company does so by engaging with the audience in the form of replying to their tweets, messages and by arranging campaigns.
- The little slogans written on the bottles are also quite attractive and pleasing.
Distribution System
The Coca-Cola Company has the largest beverage distribution system in the world including wholesalers, retailers, company-owned or controlled bottling operators, independent bottling partners, and distributors. The distribution system plays a vital role in the expansion of the company’s business not only in developed and developing countries but also in emerging ones. The company has experienced rapid growth in the sales of its products as its bottling and distribution network plays a central role in providing the availability of existing, enhanced, and new products to consumers from over the world.
Raw Materials
One principle ingredient needed for virtually all Coca-Cola drinks is water. All things considered, Coca-Cola has not encountered any critical test identified with the water supply. Notwithstanding, the water shortage has filled in a few areas of the planet. Along these lines, water accessibility, quality, and manageability are the key difficulties confronting Coca-Cola.
Aside from water, the other key fixings needed for Coca-Cola drinks are nutritive and nonnutritive sugars.
The raw components for juices and juice drink results of Coca-Cola are the juices and juice condensed from different products of the soil squeezed orange and squeezed orange concentrates. Coca-Cola sources its squeezed orange and concentrates predominantly from Florida and Brazil. The fundamental provider of orange juices for Coca-Cola in the US and Brazil is the Cutrale Citrus Juices U.S.A., Inc.
Coca Cola buys unrefined components from a few different channels also. The organization possessed and united packaging tasks just as the completed item business of Coca Cola likewise buy an assortment of unrefined substances for the organization. The organization by and large purchases these unrefined components from a few providers and has not had any trouble or encountered any deficiency previously.
Generally, there are a couple of natural substances that Coca-Cola sources from a predetermined number of providers. If there should be an occurrence of others it has an enormous number of providers.
Pricing Strategy
There are three diverse evaluating methodologies that an organization can principally follow:
1) Price Skimming
Charging premium costs at first to procure the greatest income.
2) Market Price
Setting cost as going business sector rate (by contenders)
3) Market Penetration
Charging the most reduced cost to accomplish the most noteworthy potential deals.
Alternative Pricing Strategy
1) Promotional Pricing
Coke additionally utilizes the limited-time valuing procedure. Coca-Cola has offered limited-time costs as frequently as could be expected. In stores that offer Coca-Cola, costs are consistently unexpectedly esteemed under the summary expense to fabricate short-run bargains. Especially on some occasions, Coca-Cola lessens its rates like in Ramadan Coca Cola diminishes its rate to 5 Rupees on 1.5-liter holders. It gives the thing a sensation of criticalness and clients purchase the thing taking into account the lower cost. Coca-Cola association offers inspiration to center men or retailers in a way that they offer them free model and free cleanse bottles, by these retailers and focus man push their thing on the lookout. Additionally, that is the explanation Coca-Cola seen more on the lookout.
2) Psychological Pricing
In 2009, Coca-Cola used the mental assessing framework for their Original Coke. For instance, the expense of a 2-liter container of Original Coke was $2.49. They set the expense to end at 9, since this impacts customers to think the expense is under $2.50, to address the customer.
3) Segmented Pricing
Coke utilizes the fragmented estimating technique. Given various bundles, Coca-Cola is accessible at various costs. By selling their items in various sizes and at various expenses, they will expand their income, because there isn’t a lot of contrast in the expenses needed to deliver the items.
PESTLE Analysis (Political Economical Social Technological Legal Environmental Analysis)
- Political Factors
FDA governs the products of Coca-Cola which means the company must meet certain rules and regulations to sell their products in the market. Although some changes being made by the government in the already established laws may affect the selling of Coca-Cola.
- Economical Factors
Coca-Cola serves its products in more than 200 countries accommodating according to the needs of the buyers. The company’s 75% of the income comes from countries outside the US.
But people are now looking for healthy alternative drinks and Coca-Cola hasn’t made a single effort to start something in this category.
- Social Factors
For adjusting in the marketplace of countries like Japan & China, Coca-Cola has created and introduced new flavors.
On the other hand, Americans are shifting towards consuming tea & water rather than sugar drinks as they are very concerned about their health.
- Technological Factors
Having good machinery has helped the company a lot to produce in bulk which can meet the product’s ever-growing demand. The company’s factories are established in Britain ensuring quality product development and timely distribution.
The naming campaign launched by Coca-Cola was a worthwhile use of social media technology as it helped to boost the sales of the company. Everybody was quite interested in clicking selfies with their names on the bottles and this turned out to be a huge profit-making strategy for the company.
- Legal Factors
The company has made each of its products on its own and holds all the legal rights of manufacturing including patents.
- Environmental Factors
Being a soft drink company, it always has an advantage in the summer season as people are looking for something tasty and chilled to satisfy their dry throat.
Though the company may face problems due to change in climate or problems in the accessibility of water since the primary ingredient of the product is water.
SWOT Analysis
Ø Strengths of Coca-Cola
Ø It is the number one brand in terms of sales.
Ø The company’s financial condition has always been consistent.
Ø It has a huge setup with employees from around the globe.
Ø Offers more than 500 brands such as water, sparkling & soft drinks, etc.
Ø The company is constantly working towards saving the environment in the best possible way by finding alternatives for packaging and also encouraging recycling.
Ø The unique advertising and marketing strategies.
Ø The company has a global reach as it operates in more than 200 countries and is highly loveable.
Ø Weaknesses of Coca-Cola
Ø There is strong competition being put forward by Pepsico which means the ongoing struggle for presenting better.
Ø Overdependence on some major brands.
Ø Unlike its competitors, Coca-Cola hasn’t even stepped into the food selling category.
Ø Nowadays soft drinks are being linked to having high sugar levels which can be harmful to our body and hence is affecting the sales.
Ø Opportunities for Coca-Cola
Ø Starting a separate full line for health drinks and supplements.
Ø Diversification of the company by entering into the snacks category.
Ø Increasing its reach in areas and countries which are untapped yet.
Ø Coca-Cola’s market share can further get strengthened by acquiring other beverage companies.
Ø Threats for Coca-Cola
Ø Reduced market share due to strong competition.
Ø Different laws, rules, and regulations of different countries are very difficult to comply with.
Ø The increasing rejection of people towards soft drinks due to health consciousness could be a serious threat to the company.
Ø The slowdown in the economy, lack of availability of water, inflation, etc.
Coca-Cola is a significant worldwide player in the drink business. It is matched basically by only a couple of global brands. The refreshment business has become exceptionally cutthroat. In this situation, each brand needs a few wellsprings of the upper hand to dominate the match.
Coca-Cola has zeroed in on making uncommon worth by putting resources into basic regions. Item quality and wellbeing are some critical regions where Coca-Cola continues to attempt constantly to make further upgrades. Development in the drink business has turned into a critical test due to higher contests and unofficial law. Coca-Cola and its packaging accomplices cooperate to discover new channels of development and bring new and imaginative items to the market. Coca-Cola’s plan of action’s principal strength is its broad worldwide presence.
The organization is attempting to develop its item portfolio, which as of now contains more than 500 brands and more than 4,100 drinks. In the financial year 2020, the company marked a profit of Rs. 619.14 crores. Its attention is on fortifying its plan of action by aiding its packaging accomplices to develop their business productively. It additionally remains current with industry best practices and deals with the whole Coca-Cola framework deliberately through severe standards and guidelines identified with item wellbeing and quality. Its packaging accomplices, who are generally self-employed entities, have assumed a focal part in guaranteeing the accomplishment of its worldwide dispersion organization. They resemble the focal mainstay of Coca-Cola’s plan of action. The organization’s broad item portfolio is a huge strength, yet there are a few dangers and difficulties ahead. For manageable development, Coca-Cola should zero in on digitization and bring higher effectiveness across the two its production network and circulation network just as make creative promoting programs.
FAQs About Coca-Cola Company
1. How many drinks does the Coca-Cola company sell in a single day?
Around 1.9 billion drinks are sold by the company every day in more than 200 countries.
2. Is the taste of every drink produced by The Coca-Cola company the same in every country?
The sole ingredients used in the making of drinks are the same and constant in every country although the variation in taste may be felt due to several external reasons like the food with which the drink is being consumed, the temperature it was stored before consumption, etc.
3. Are there any no-calorie products offered by the company?
The company has launched a few products keeping in mind growing people’s concern about their health like Diet Coke, Sprite Zero, DASANI, Coca-Cola Zero Sugar, AHA Sparkling Water, and Vitamin Water Zero.
4. Who claims Coca-Cola India?
The Coca-Cola framework in India includes a completely claimed auxiliary of The Coca-Cola Company (TCCC) in particular Coca-Cola India Private Limited (CCIPL) which produces and sells concentrates and refreshment bases and powdered drink blends.
5. Are there any added substances in Coca‑Cola?
Indeed, the company uses added substances in a portion of their beverages, including Coca‑Cola Classic, to give them flavor and shading and to increase their allure. Just added substances that are known and shown to be protected make it into the beverages.
6. Is Coca-Cola dark in shading since it contains a coloring specialist?
No. Coca-Cola contains caramel shading which gives the beverage its trademark tone. Driving administrative specialists throughout the world perceive that caramel shading is alright for use in food and beverages.
In December 2012, the European Food Safety Authority (EFSA) reaffirmed that caramel shading was protected after a thorough survey of the security writing.
7. What is the total net worth of the Coca-Cola company?
Ø The total net worth of the company presently is $230 billion.
