Free Essay About Assume The Role Of A Management Consultant Reporting To The CEO And Board Of Directors At Coca-Cola
At the present stage of development of the national economy in an already relatively existing economic ties and the competitive environment not only the overall improvement of existing technologies and the organization of mediation becomes relevant, but also the introduction of new techniques for the promotion and marketing of the product.
Coca-Cola Company is the most powerful beverage company in the world with its great experience and reputation that’s why its health is a fundamental aspect of responding to today’s increasingly stringent financial reporting requirements and future marketing strategy. It owns or licenses and markets over 500 nonalcoholic beverage brands, mainly sparkling beverages but besides a variety of still drinks, such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks.
PepsiCo Company is the second largest producer of food and beverages in the world. PepsiCo sees its responsibility is to continually improve all aspects of life in a world where it works – social, economic, environmental – so that the next day was better today.
Both companies face the necessity to reorganize their marketing activity in order to apply the most suitable marketing strategies. Marketing strategy is to bring the capabilities of the company in line with the market situation that is the internal environment with the external one (Kotler and Armstrong, 2012). The marketing strategy of the company is required to determine the strategic direction, identify market prospects of the company and its products / services, determine points of growth in the medium and long term, develop an action plan (marketing plan), which ensures the company’s success in the market relative to its main competitors and build a working motivated and result-marketing system (marketing department) and system sales (sales service) (Elliott, Rundle-Thiele and Waller, 2010).
In order both companies were successful in the market, their marketing component should work appropriately.
Marketing problems and opportunities
One of the most significant problems Coca-Cola faced was the increasing challenges of noncarbonated drinks (Bloomberg, 2004). Due to the fact that Coca-Cola was popular because of carbonated beverages’ production, it appeared to have a decrease in its profits. It is worth to mention that carbonated drinks are forbidden for people with gastrointestinal diseases as the carbon dioxide bubbles are irritating to the mucosa, causing an exacerbation of the inflammatory process.
The next problem related to the company was a dysfunctional culture (Bloomberg, 2004). It is known that the strength of the organizational culture is defined by at least two important factors, namely the degree of acceptance of the organization’s members its core values and the degree of their commitment to these values. Due to its value base each employee within the organization in the common system of values takes the individual value position. Valuable items change during interpersonal interaction and exchange of values. Organizations, which seriously think about the harmony of values and employee values, the issues on a combination of these two systems of values should be given serious consideration (Thompson and Strickland, 2003). Coca-Cola was confused how thousands of employees could rapidly change their most essential statements.
Company’s marketing campaign in general was obsolete. It required new approach and vision starting from the struggles with own bottlers to the elimination of the dearth in new goods.
Absence of innovation was also Cola’s problem. In the U.S. market, the company hasn’t formed a best-selling new soda since Diet Coke in 1982. Recently, it has been outbid by competitive PepsiCo for faster growing noncarb beverages like SoBe and Gatorade (Bloomberg, 2004).
Additionally, Cola’s management was aged and, of course, this couldn’t stay away from the impact on company’s overall operation. In general, the management reputation was based on meddling.
Concerning opportunities it is necessary to define Cola’s world’s most recognized global brand. Currently, the beverage is sold in more than 200 countries. Coca-Cola trademark is known by 99% of the total population of the globe due to the strategy of geographical expansion of the market.
Dollar’s decline against other major currencies benefited the national industry, because export increased. The reason is that the devaluation provides with at least a temporary advantage in cost, which increases the competitiveness of domestic firms in each country.
Remaining a cash cow Coca-Cola has a big share in the market. The need for the costs of maintaining and selling its products is low, but due to the high proportion occupied in the market, the product brings revenue.
Finally, company’s opportunity was in the concept of “49% solution”, which allowed the company to erase $2.4 billion of debt from its balance sheet (Bloomberg, 2004).
Coca-Cola’s marketing and innovation strategy transformation
Until the end of the 70s the company pursued a policy of continuous expansion of bottlers’ network. Selling concentrate at a high price, the company secured substantial benefits. But in the early 80’s the enlargement process of network has stalled – with the advent of beverage cans and plastic bottles smaller bottlers were not able to purchase new machines. Then, according to the newly developed concept Coca-Cola has created 8 “anchors” – major subsidiaries of bottlers’ companies, which activities cover the entire planet. The participation of the parent company in the “anchor” firms, according to the strategy of economy, never exceeded 50%, but it was sufficient for complete control over the activities of their management (Bloomberg, 2004).
The strategy of the company is stable growth. Only the development will help achieve long-term plans, allowing the company to prosper and grow. The basic policy of Coca-Cola is to make the buyer constantly aware of its existence. Thanks to skillful policy in sales promotion Coca-Cola achieved enormous success in all markets, which it covered. It is the undisputed leader in this field, announcing itself to its customers, especially on television and billboards. Characteristic for the company is the unity of policy in this area. In any country, wherever the company operates, it uses one and same methods, by which achieves success in any market (The Coca-Cola Company, 2014).
Coca-Cola’s product strategy of developing healthy beverages
Coca-Cola constantly improves manufactured products. The particular importance the company paid to PR policy. Big name not only needs, but also obliges the company to participate in all national programs, mass rallies, and public events. Virtually no one event or festival of wide scale in the country takes place without Coca-Cola sponsorship.
Availability of company’s beverages is not a factor, formed due to the price. On the contrary, winning markets, the company does not seek to adapt its prices to the market situation in the new countries. Skillfully using aggressive advertising system (commercials, billboards, and signs) and providing proximity to customers, Coca-Cola can afford to set the price, which will be higher than of normal domestic producers. With an emphasis on quality, popularity and convenience of the drink, the company has adopted a common pricing policy, bringing it stable profits.
The development of healthy beverages was connected with the Minnick’s management in marketing, strategy and innovation. Minnick was pushing to alter the company from a soda-centric business that was long content to offer “me-too” products in emerging categories to one on the cutting edge of consumer trends (Bloomberg, 2004). Her product strategy was based on the necessity to understand the reasons of consumption. The Atlanta behemoth just launched a new bottled tea called Gold Peak, and in coming months it’ll unveil a premium coffee drink licensed from chocolatier Godiva to compete with bottled Frappuccinos sold by Pepsi in a venture with Starbucks (Bloomberg, 2004).
Mary Minnick’s emphasis on understanding why people consume beverages
Minnick considered that there were 10 primal “need states” that customers have, together with “hunger and digestion,” “mental renewal,” and “health and beauty.” Making beverages that meet every among those requirements states may indicate creating completely new groups. Imagine beverages, for instance, that are prepared with vitamins or nutrients and offer females similar advantages as a facial scrub or cold cream. Someday, Minnick was sure the winners would be the beverage companies that expand infiltrate goods that, more often than not, intersect usual drink groups – just as Red Bull did when it single-handedly created the energy drink segment (Bloomberg, 2004).
Non-carb drinks strategy
In order to compete with up-and-coming non-carb opponents such as Snapple and Gatorade, which were beginning to steal consumers from Cola’s soft drink business, Minnick persuaded company’s management in the necessity to start the production of new drinks. However, when her team made Fruitopia to compete with Snapple, bottlers balked at the costly glass bottles and its more expensive brewing process. Aligned with Minnick’s needs, Cola’s supervision distorted, ordering a switch to plastic bottles and the same “cold fill” process used to make soda. Unfortunately, mentioned changes led to depreciate the good in the eyes of customers and, with sales wavering, the company finally took away Fruitopia from the U.S. market.
Nevertheless, Minnick was appointed for developing non-carb drinks’ campaign in the Asian market, where she discovered the opportunities in Japan. So, in Japan, Coca-Cola generates big profits, amazingly, from canned coffees and 200 or so eclectic products like Real Gold, a hangover cure sold in a small bottle, and Love Body, a tea marketed to calorie-counting women (and which contains an ingredient that some Japanese believe increases bust size) (Bloomberg, 2004).
Comparison of Coca-Cola and Pepsi performances
One of the main differences between Coca-Cola and Pepsi is in their activity, which is to sell carbonated drinks (Coca-Cola) and both types of drinks (PepsiCo).
The next is in their vision statement, namely Coca-Cola Company’s vision is used as the outline for its Roadmap and directs each element of business by characterizing what it requires achieving with the intention of further accomplishment of longstanding, excellence growth, while PepsiCo’s vision is to put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company (PepsiCo, 2014). It is seen that PepsiCo’s vision is clear with definite actions and Cola’s vision is quite abstract.
Coca-Cola has traditionally been the favorite drink of the families, and the Pepsi all efforts directed at attracting the attention of young people.
Coca Cola with its emphasis on human values still remained the market leader, but Pepsi already hard on its heels.
Also, company’s financial indicators were different, but sometimes close.
Finally, it is worth to mention that PepsiCo has also food market share with a well-established system of food brokers, while Cola is the leading soft drink company. However, Cola planned to expand its activity with new categories (Bloomberg, 2004).
Thus, together, the two US corporations, Coca-Cola Co and PepsiCo Inc., control a little less than 90% of the market of carbonated drinks in the world.
Recommendations to management Pepsi
PepsiCo is one of the world’s two leading manufacturers of carbonated soft drinks and one of the leading companies in the fast snacks. The annual turnover of the company exceeds the tens of billions of dollars, and the output reaches twenty thousand bottles per hour (PepsiCo, 2014).
However, even such a giant has weaknesses. Chief among them is the dependence on the U.S. market and a major U.S. retailer. The company is keenly aware of the unacceptability of this situation, so trying to overcome this weakness by increasing both the existing range, with new flavor combinations, as well as through the acquisition of companies operating in other product markets. An example of the last move can serve transactions such as: the purchase of Wimm-Bill-Dann, Lebediansky contract with Unilever, etc.
The main rival for PepsiCo is the Coca-Cola Company, whose product lines practically coincide. Speaking about goods of PepsiCo, it should be noted that almost all of them belong to either “star” or “cash cows”, which demonstrates a stripped down example (PepsiCo, 2014).
The company has a clear positioning and a number of its loyal customers. Despite the fact that the current century is the century of “healthy eating” and is characterized by an increased demand for natural juices, mineral water and purified water, some consumers as goods – substitutes seen such a weak alcoholic beverages, as light or non-alcoholic beer. The company itself should try to take into account the wishes, needs and requirements of its customers, expanding its sphere of influence, taking up a larger and larger share of the market of juice products and mineral water market. Large growth in these markets, and the huge opportunities the global giant will continue to make an impression that PepsiCo will be as successful on the already busy markets and in new, promising open spaces.
Companies producing similar products always compete with each other. This is understandable and natural. But that the war lasted for a century – it does not happen often. However, the situation with the two main producers of soft drinks – Coca Cola Company and PepsiCo – is exactly the century battle. In order to be profitable apart from the competition each company spent a great amount of efforts for building brands and money on advertising and a lot of managers have lost their seats, allowing an unforgivable mistake. But the most amazing thing is that the war of brands does not even think to end. On the contrary, it is still in the midst and no one could name the winner. Thus, PepsiCo continues to participate in various promotions and advertising campaigns designed to raise as much as possible in the eyes of potential buyers. Coca Cola, in turn, with all the forces defends its positions. With each new original marketing ploy Pepsi is getting closer to its competitor, but has never overtook it. According to most experts, the reason for this lies in the ideological message, which is based on brands. While Pepsi focuses on youth, football, movie stars, Coca Cola is based on eternal values and is associated mainly with Christmas, family and home comfort. Every Pepsi ad is a work of art. It is provocative and bright, and therefore always pleases fans of the drink as well as its opponents. But Coca Cola still continues to be ahead.
Bloomberg (2004). Gone Flat. Retrieved from http://www.bloomberg.com/bw/stories/2004-12-19/gone-flat
Elliott, G., Rundle-Thiele, S. and Waller, D. (2010). Marketing, Milton: John Wiley & Sons Austraila.
Kotler, Ph. and Armstrong, G. (2012). Principles of Marketing, 14th edition, Pearson Prentice Hall.
PepsiCo (2014). Annual Report 2013. Retrieved from http://www.pepsico.com/Assets/Download/PEP_Annual_Report_2013.pdf
The Coca-Cola Company (2014). Annual Report. Retrieved from http://assets.coca-colacompany.com/d0/c1/7afc6e6949c8adf1168a3328b2ad/2013-annual-report-on-form-10-k.pdf
Thompson, A. A. and Strickland, A. J. (2003). Strategic management: concepts and cases, McGraw-Hill/Irwin.