Critically evaluate the company’s strategies for sustainable competitive advantage, segmentation (including targeting and positioning) and branding

Building and Marketing High Performing Organisations

Introduction

Competitive advantage can be defined as a feature that permits a firm to beat its rivals. It enables an organization to have an edge in comparison with its rivals and creates value for the firm and its stockholders (Corporate Finance Institution, 2020). The macro-environment is the circumstances that lie in the economy in general, instead of in a specific part or zone. It contains tendencies in inflation, hiring, gross domestic product, payouts, and finances (Oxford College of Marketing, 2020). This research paper will critically evaluate Coca-Cola’s strategies for sustainable competitive advantage, segmentation (including targeting and positioning) and branding; and at the same time identify and critically assess two opportunities for growth within the organisation’s macro environments.   

Macro environment forces also include governmental and legal forces (legal or political incidents on the firm and its market) and economic forces (affects manufacturing and the customer’s choices). Demographic forces (movement, culture, level of education, age) and cultural and social forces (the effect the services and products offered by the firm bring must be factored in). Technological forces (expertise and know-how used in the creating of goods; equipment and technology required to produce goods and services) and physical or natural forces (renewable resources such as marine, agricultural products, and forests; and non-renewable products for instance minerals, coal, oil) can affect the business flow and consequently, must be considered (Oxford College of Marketing, 2020).

Critically evaluate the company’s strategies for sustainable competitive advantage, segmentation (including targeting and positioning) and branding

Coca-Cola is the dominant soft drink manufacturer in the world, conducting its business in more than 200 countries globally. Sixty percent of its income and around eighty percent of its earnings are earned away from America. It boasts of powerful brand recognition across the planet (Vrontis & Sharp, 2003). Business Insider (2016) states that ninety-four percent of the world’s inhabitants know the red and white Coca-Cola logo. Additionally, Coca-Cola claims that its name is the second most known word globally, after the word “okay”.

Competitive Advantage

Coca-Cola has maintained a competitive edge over its rivals with concerning operations, cooperative client relationships, channel marketing, variety of brands, and price control.

High entry barriersThese are the determinants that make it hard for rivals to join an existing market. They reduce competition in the market. Monopolies are created by high barrier entries.

Operations – The organization has contracted out its bottling services to Fomento Económico Mexicano SA (FEMSA), which is Coca-Cola’s largest bottling corporation on the planet. FEMSA enables Coca-Cola to seize vital opportunities for growth in disadvantaged non-carbonated drinks segment and crucial acquisitions by making deals to purchase firms with Coca-Cola as one (ColaFEMSA, 2020).

Price control – Its varied brand portfolio, cost advantage due to large scale production, enabling it to reduce operational costs and grow its profit margins. Coca-Cola sells its brands at a cheap price, to prevent competition. Even though this step may reduce their profits, they will still meet their bottom line due to economies of scale.      

Powerful brand portfolio – Coca-Cola offers its clients a wide range of products to choose from, such as coffee, milk, energy drinks, tea, iso-tonics, orangeades, juices, bottled water, and carbonated soft drinks. It also produces beer for a few markets for instance Brazil.

Cooperative client relationship – The company relies on competitive marketing, developing joint values for all stockholders. Suiting its large variety of brands and merchandise for their stock depending on the immediate market’s social and financial statistics, appropriate use, and the store’s peculiar features.

Oligopoly– This is a market arrangement where only a few organisations monopolise the industry. The number of companies is insufficient, making them realise that their survival is dependent on both their policies and those of their rivals. Both Coca-Cola and Pepsi sell a similar product and collude to reduce operational costs and lower the prices, making it difficult for new rivals to succeed in their industry (Economic Online, 2020).         

Brand – Their powerful brand has created faithfulness, making them have a grip on current clients, hindering new entries to their soft drinks industry. Oligopolies regularly keep their top spot in market supremacy since it becomes too expensive and hard for likely competitors to join the market. Brand new companies have to spend astronomical amounts of money on advertising leading to sunk costs since these financial resources would have been reinvested into the business to bring profits. No level of advertising can dislodge Coca-Cola (Porter, 2011).

Knowledge – Since Coca-Cola has been in the non-alcoholic drinks business since 1886, they have gained invaluable hands-on expertise, making it hard for any new potential rival to match them. They have done decades of research and know where to improve efficiency or productivity. 

MarketingCoca-Cola brands areavailable, low cost, and globally, their customers agree that they are satisfied with their products. These also form the basis of their slogan and strategies. According to TPT News Agencies, (2020) Coca-Cola has spent over twenty billion dollars in the past five years in marketing alone, and this boosts its revenue by almost eight percent.

The economy of scale – The more products a company produces, the lower the costs they will incur. Consequently, it is hard for brand new companies to join the market due to dominance and cut-throat competition by Coca-Cola. Because of their large size, the average cost of production significantly lower. Since new companies have little production, they have much higher average costs of production (Porter, 2011).

Patent – This is a legal hurdle that makes it illegal to copy a product. One patent cannot be used by two firms. A patent is a governmental authority of sole rights given in swap for a public revelation of a brand new yet top-secret innovation. To get it, an inventor must fully reveal their classified trade secret.

Vertical integration – A business has to access supplies for it to be sustainable. Coca-Cola has control over the reserve and circulation of non-alcoholic soft drinks. If a new company wants to join the retail business, they might have to buy from Coca-Cola, who will set extremely high prices to deter them.

Leading – Being the first to start a business gives one an edge over new entrants in some industries. Since Coca-Cola has spent billions of dollars over the years in research, innovation and, advertising, it has an advantage over new rivals since it is already leading the industry. Coca-Cola has earned privileges that can only take decades to earn (Al-Othman, 2001).

DifferentiationCokeuses differentiation to grow its products and services. More than twenty percent of Coca Cola’s marketing budget goes to the differentiation of their products. This has helped them to become a symbol of fun and joy. The company has gained recognition for quality and innovation. Their customers also believe that their products are superior (Pendergrast, 2000).

TechnologyCoca-Cola has invented a unique method known as PlantBottle packaging technology that helps it to cut down its overdependence on raw materials based on fossil fuels. 30% of the PlantBottles are made of plant materials, making it environmentally friendly. These bottles are made from byproducts of sugarcane. This has enabled them to eliminate thousands of tons of carbon dioxide emissions. Additionally, Coca-Cola uses print and electronic media to advertise its products (Aim2flourish, 2020).   

Geographical barriers – Lack of access to a convenient site hampers any new entrant. A suitable location is mandatory (Porter, 2011).

Segmentation (Including Targeting and Positioning)

Market segmentation can be described as the practice of selecting sections of the market and the method of subdividing an expansive client base into sections of customers made up of current and potential clients. Analysts look for typical features, for example, similar desires, similar concerns, a common way of life or behaviour, and common demographic characterization (Camilleri, 2018).

Targeting    

After finishing the process of market segmentation, the firm should be informed of the needs and desires of the segments that it has picked out. It is to their advantage for them to find any untapped demands in their chosen market since they can find clients who are yet to be served by their business rivals. Afterwards, they can find out the segments with the most profit-making margins and determine which market segments to serve. (Camilleri, 2018). Coca-Cola does not aim for a particular market but adjusts its marketing strategy by creating and expanding new brands. Likewise, it works with a combination of undifferentiated marketing strategies and niche marketing for specific goods to increase sales in the competitive market (Vrontis & Sharp, 2003). Three market coverage alternatives exist:  undifferentiated marketing; differentiated marketing and concentrated marketing.

An undifferentiated marketing strategy.Camilleri (2018) states that this plan of action disregards any changes in the market. As a result, the undifferentiated marketing strategy includes reaching the client with a single market proposal. Modern-day clients have the foresight and have become more demanding. It is hard for a business to create a product or brand that will please all clients and make them satisfied despite their different anticipations, desires, and needs. Its brands are popular globally and are a favourite of people of all age groups and all walks of life. Diet coke specifically targets people who are more aware of their health or those with underlying health issues. 

A differentiated marketing strategy.For the most part, this method will include aiming for a certain number of segments. It involves creating a specific product or service and developing a marketing plan for individual segments. The firm should conduct all exhaustive market research to enable it to know how it can meet the desires of its chosen segments. This means higher costs in comparison with an undifferentiated marketing plan of action (Camilleri, 2018). The firm must make a determination of the most important services to its selected segments.  Marketing managers should decide if there will be meaningful margins when settling for a differentiated marketing strategy.

Concentrated marketing.Organisations with inadequate financial possessions mostly aim for a limited number of submarkets. When the right segment is selected, there is a chance that the company may make a lot of money from its investment. Nevertheless, this type of marketing also has high risks. If the chosen segment proves unsuccessful, the firm can encounter big financial losses (Camilleri, 2018).

Positioning

Competitive positioning strategy has enabled Coca-Cola to maintain its lead against its rivals in the soft drinks industry. Diet coke and Coke zero for people with health issues. Coca-Cola has critically situated itself in the global nonalcoholic drinks market. It has to keep adapting to the dynamics in the more than 200 nations where it carries out its businesses. Coca-Cola has well embraced the principle of thin global, act locally by selling the same product (coke), while at the same time suiting it to adapt to the unique local needs of its clientele. Strategic positioning has helped the firm to maintain a constant image on a global scale making it huge since it is believed to be a part of daily life worldwide. Since the consumers believe that Coca-Cola is part of their everyday life, they have maintained their loyalty, making their preference with regards to purchasing soft drinks automatically. Clichés such as “Live the coke side of life” make consumers associate the brand with happiness and good moments. Whenever the word “coke” is mentioned anywhere, people associate it with entertainment, fun, and other good emotions (Vrontis & Sharp, 2003).     

Identify and critically assess two opportunities for growth within the organisation’s macro environments

Diversification

Coca-Cola needs to branch out into other segments such as health and food to enhance the variety Coca-Cola offers its customers. It will also help the firm to increase its sources of revenue. They can use their existing supply chains to supply snacks, thereby sharing their supply chain costs (Bhasin, 2018). Coca-Cola needs to strengthen its Chu-Hi or Alcopops, which is a drink with an alcohol level of less than 8%. It has been marketed to women as an option to beer. Chu-Hi is mostly found in Japan. Worldwide, both alcoholic and non-alcoholic drinks are sold in a similar system. Since the Japanese market for this product has quickly grown, extensive marketing is required to grow similar Coca-Cola products (McCarthy, 2018).

More people have become aware of the weak relationship between drinks sweetened with sugar and obesity. This has made them lose many clients in developed countries who are struggling with obesity. Further diversification to cater to the needs of these consumers will help Coca-Cola maintain its firm grip in these countries concerning soft drinks consumption.

Developing Nations  

Currently, developed countries prefer healthy soft drinks. On the other hand, these companies are still suggesting carbonated nonalcoholic drinks to developing countries. Some developing countries such as India which experience extremely hot summers get double usage of cold beverages during these extreme weather conditions. From this perspective, the high use of these drinks is a great chance for Coca-Cola to seize (Bhasin, 2018). A majority of developing countries don’t grapple with lifestyle diseases, such as type 2 diabetes and obesity unlike developed nations like America. Since sales in America and some parts of Western Europe have been flat recently, while the converse is true in Africa, Latin America, the Middle East, and Asia, the focus should shift to these developing countries. Mexico has the most per-capita usage of Coca-Cola in the world. These developing countries have many teenagers who enjoy the fun and entertainment associated with Coca-Cola and are thus a new market (Blackmore, 2016).

Conclusion

This research paper critically evaluated Coca-Cola’s strategies for sustainable competitive advantage, segmentation (including targeting and positioning) and branding; and at the same time identified and critically assessed two opportunities for growth within Coca-Cola’s macro environments. High barrier entries for example price control, operations, knowledge, brand, oligopoly, cooperative client relationship, leading, vertical integration, patent, the economy of scale, marketing, geographical barriers, technology, and differentiation make a market become a monopoly due to insignificant competition. Marketing strategies can take place in three forms, namely undifferentiated marketing strategy, differentiated marketing, and concentrated marketing. Coca-Cola should aggressively market its new products, for example, Chu-Hi, to expand its diversification program. It should also focus on growing markets in developing nations in continents such as Africa, Latin America, the Middle East, and Asia since a majority of the population in these nations are youths who enjoy having fun and entertainment.  

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