Analysis of Coca-Cola’s Marketing Strategy
Jian Le
1,a,*
1
Ningbo Xiaoshi High School, Ningbo, Zhejiang Province, China, 315040
a. ib@nbxiaoshi.net
*corresponding author
Abstract:
In recent years, with the continuous improvement of people's living standards,
people have paid more and more attention to their health. This has led to more and more
people seeking fresh juice, diet drinks and other healthy drinks. As a representative of
high-sugar and fat-prone drinks, what marketing means will Coca-Cola choose to ensure the
survival of the company under this social background? In addition, how will different
stakeholders be affected? In this article, we will use PESTLE, stakeholder, and SWOT
analysis, as well as Enterprise Life Cycle (ELC) and Ansoff Matrix analysis, to demonstrate
how Coca-Cola Company uses technology and innovative marketing strategies to gain a large
number of loyal and long-term customers. It can be concluded that Coca-Cola made various
decisions under the threat of other competitors in an environment where people pay more
attention to their health.
Keywords:
Coca-Cola Company, PESTLE analysis, SWOT analysis, business management
1.
Introduction
First, a brief overview of the Coca-Cola corporation will be given. The Coca-Cola Company,
established in 1886 and with its global headquarters in Atlanta, Georgia, is a leading pioneer in the
soft drink industry. It sells successfully in more than 200 countries and regions and has close to 400
beverage brands. Moreover, Coca-Cola sells more than 1.5 billion cups of soft drinks per day, or 48%
of the global market. Four of the top five soft drink brands in the world are also owned by one
company. They include Sprite, Fanta, Coca-Cola, Diet Coca-Cola, etc [1].
In the market environment, with the passing of the era of hunger and the improvement of material
living standards, in order to improve the quality of life, people are under increasing pressure and
should pay more attention to improving their health. Doing more exercise is one of the main reasons
that some people have a healthy body, but nowadays most people are busy with work and socializing.
Where is the exercise time? Only by keeping a healthy diet can we give people a healthy body. It can
be carried that these people to some extent, want to take shortcuts to achieve their goals. But when
consumers have a demand for health, a healthy food without high sugar and caffeine will appear on
the market. Therefore, consumers will have less and less demand for high-sugar drinks such as
Coca-Cola and Pepsi. This paper uses PESTLE, stakeholder and SWOT analysis models combined
with enterprise life cycle (ELC) and Ansoff matrix to analyze Coca-Cola's marketing strategy. It
focuses on how Coca-Cola maintains profits and puts pressure on competitors as consumers become
more health-conscious.
Proceedings of the 2023 International Conference on Management Research and Economic Development
DOI: 10.54254/2754-1169/21/20230261
© 2023 The Authors. This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0
(https://creativecommons.org/licenses/by/4.0/).
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2.
Research Method
2.1.
PESTLE Analysis Model
The PESTEL analysis model is a beneficial tool for studying the macroenvironment in addition to
investigating the external environment and identifying all the forces that have an impact on the firm.
Political factor (P), economic factor (E), sociocultural component (S), technical factor (T),
environmental factor (E), and legal factor are the six key elements that each letter of the acronym
stands for. It is a methodology for examining an organization's external influencing elements (L).
2.2.
SWOT Analysis Model
The foundation of a SWOT analysis is the evaluation of the market environment, internal and external
competitive environments, and market trends. By conducting research, it identifies the key internal
strengths, weaknesses, and external opportunities and threats that are directly related to the research
object. It then draws a number of corresponding conclusions with the idea of systematic analysis, and
the conclusions typically have specific strategic implications. S stands for strength, W for weakness,
O for opportunity, and T for threat. Whereas the opportunities and threats are based on an analysis of
the external competitive market, the benefits and disadvantages are based on an internal analysis of
the firm.
2.3.
Stakeholder Analysis
Stakeholder analysis helps the customer find the key stakeholders who have the most influence over
the strategy by analyzing all the people (and organizations) who are relevant to their interests.
Stakeholders are people or groups of organizations that are either inside to the customer (such as
employees) or external to the customer but have an interest in the customer (e.g., suppliers or
competitors).
2.4.
Enterprise Life Cycle (ELC)
The dynamic trajectory of an organization's development and growth is known as the enterprise life
cycle, which includes development, growth, maturity, and decline at various stages.Finding a specific
organizational structure for enterprises in different life cycle stages that can adapt to their specific
qualities and constantly promote their development is the aim of studying enterprise life cycle
theory.This will enable businesses to find a relatively optimal mode from the perspective of internal
management in order to maintain their capacity for growth and fully exploit their distinctive
advantages in each life cycle stage. Then, extend the lifespan of businesses and aid them in achieving
sustainable development on their own.
2.5.
Ansoff Matrix
The Ansoff Matrix separates four product/market pairings and associated marketing techniques based
on the two fundamental features of product and market. It is one of the most often employed tools for
marketing analysis. Market penetration, market development, product development, and
diversification are the segments of the Ansoff Matrix.
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3.
SWOT Analysis of Coca-Cola Company
3.1.
Strength
3.1.1.
Historic Brand
Since its founding in 1886, Coca-Cola has been popular all over the world for more than one hundred
years. The brand image is deeply rooted in people's hearts and has become a part of consumers' lives.
With a high level of innovation and R&D capabilities (such as the launch of new formulations), a
large global market share, and more market leader brand products.
3.1.2.
Multiple Brands
Coca-Cola launched the Coca-Cola Sugar-Free series and acquired a large number of juice brands to
consolidate the existing market and expand resources in new markets that are primarily focused on
healthy drinking in order to satisfy the most loyal Coca-Cola users.
According to Alfredo Rivera, president of the Coca-Cola Latin America business, the market for
plant-based beverages is "developing quickly and is of great interest to consumers across the markets
that we serve." Coca-Cola's 2016 acquisition of AdeS, the largest soymilk beverage in Latin America,
also helped Coca-Cola move into the health drinks market in a healthier diet market environment for
the first time [2].
3.2.
Weakness
Customers believe Coca-Cola to be a fizzy beverage with caffeine and a lot of added sugar (even for
sugar-free variants), which might cause obesity and other health issues.
The delivery cost of raw materials is high.
Coca-Cola concentrates its beverages and ships them to various locations throughout the world,
increasing the cost of transportation in order to keep its components a secret.
3.3.
Opportunity
3.3.1.
Participation in Global Public Welfare Activities
The Olympic Games are one of the most popular events in the world, and it’s also one of the
opportunities for Coca-Cola to expand their international market and get more market share during
the duration in Olympic Games.
3.3.2.
Unique Appeal
Entry barriers to the soft drink sector in general are low, but those to accomplish global marketing are
significant. Young people's demands are catered to by carbonated beverages, particularly in Latin
America and the Asia-Pacific region where the proportion of young people is rising quickly and
creating significant business opportunities for the sector. So, this may be the chance that allows the
Coca-Cola Corporation to enter the soft drink market and surpass Pepsi in market share.
3.4.
Threat Combined with Stakeholder Analysis and Ansoff Matrix:
3.4.1.
The Rise of Health Education
Coca-Cola is practically junk food in today's health-conscious culture. Carbonated drink usage will
inevitably decline as consumer health awareness grows. Therefore, Coca-Cola Company strongly
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bound Coca-Cola to the scene of the Chinese New Year party in 2022 (for example, it released many
short videos and photos of Coca-Cola with the theme of red under the scene of the New Year), which
enhanced the connection between people, captured the minds of consumers, and enhanced the social
appeal of the brand, perfectly explaining the brand proposition of "Reunion in the Year of the Tiger,
releasing the beauty"(exist-product &exist-market, but create the way of traditional marketing). They
use the New Year advertisement to establish the connection between the traditional ace products and
the Spring Festival, so as to promote their own products, so that the beverage image of Coca-Cola can
go deep into the heart of Chinese consumers through these New Year advertisements, so as to
increase the total sales volume of Coca-Cola in China.
3.4.2.
The Threat of Stakeholders and Substitutes
Pepsi's vision is to "beat Coca-Cola". Although Coca-Cola has a large market share, Pepsi is its
biggest competitor in carbonated beverages. Coca-Cola must push forward to avoid being replaced by
other competitors.
For Coca-Cola, their existing market share (sugary and caffeinated Coke and other products) will
reduce a lot of demand. At the same time, there will be more strong competitors in the new market
(such as the sugar-free products of Genki Forest and Pepsi), so they need to create as many kinds of
new products as possible in a short time to seize market share (they have launched up to 30 sugar-free
products in Japan this year, such as sugar-free coffee and soda, etc.). Further more, according to
Marketingedge, Coca-Cola Co. boosted worldwide ad spending by 12.2% in the first nine months of
2022 as against 2021, according to figures in a quarterly regulatory filing [3]. The advertising spend
is in line with a 12.6% increase in the beverage giant’s revenue. Although Coca-Cola Company’s
sales were threatened by Pepsi, other substitutes, and COVID-19, they still spent $4.7 billion on
advertising in order to continuously strengthen their brand in society and people's hearts of choice
status, which can expand market influence and market sharing.
4.
Social, Legal and Technological Factors in PESTLE Analysis
4.1.
Social Factors Combined with Diversification in Ansoff Matrix
According to a 2021 report by the World Health Organization (WHO), the top reason consumers
choose diet drinks is that they believe they are healthier, accounting for more than 78%. There are
also consumers who need to control their sugar intake for health reason, such as losing weight or
suffering from diabetes, actually for their health [4].
Many consumers believe that diet drinks have "zero sugar" and "zero calories", which allow them
enjoy the pleasure of sweet food without worrying about gaining weight, and are much healthier than
ordinary sugary drinks. So, as one of the world's largest beverage companies, Coca-Cola Company
chooses the strategy of diversification in the Ansoff Matrix. In addition to Coke, the products of the
Coca-Cola Company also include mineral water, juice, coffee, tea and other diversified products.
Minute Maid, Fanta, Water sports and so on are all subordinate products that are healthier than Coke.
Coca-Cola created new products (Minute Maid, Fanta and other new products, in 2000 alone,
Coca-Cola launched 15 new beverage varieties in 45 Asian countries) and new markets (coffee, juice,
etc.). The advantage of this marketing method of the the Coca Cola Company is that the competition
coefficients in these new markets are smaller, but the risk will be higher, and as a result, the profit will
be the biggest.
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4.2.
Legal Factor
According to a WHO research on the issues surrounding childhood obesity, governments are
tightening their restrictions for the marketing of food and non-alcoholic beverages to children. 49 of
the 177 countries surveyed in 2015 had laws in place that forbade the marketing of food and drink to
children [5]. The remaining regulations were optional or determined by the business. This number
increased to 67 nations in the year 2017 [among which 45 have state policies]. Plenty of areas restrict
the selling of carbonated beverages, and as a result, the demand for Coca-Cola will decrease. So, in
order to improve its image internationally and gain more loyal customers, Coca-Cola strives to make
significant progress in eliminating plastic waste, reducing carbon emissions(Coca-Cola Company,
n.d.), ensuring access to clean water and achieving racial equality [6].
4.3.
Technological Factors
With the continuous improvement of machinery and technology in the glass manufacturing and glass
printing industriesies, the supply efficiency of Coca-Cola has greatly improved. Coca Cola has
factories in Britain with top of the name machinery to ensure fast delivery times and quality product
development.
In 2016, they could only produce 1.7 billion glass bottles of Coca-Cola. But with the development
of technology, they could supply more than 3.9 billion bottles of Coke a year in 2021.
5.
Enterprise Life Cycle (ELC) for Coca-Cola Company
Coca-Cola has reached a developed stage. Not because the cola product has fallen out of favor but
rather because more and more people are realizing that it is not a healthy alternative, the cola market
is saturated with slow or stagnant growth.
“As one of the world's largest beverage companies, Coca-Cola released financial results in 2022
showing that the company's net revenue in 2014 was 45.998 billion dollars, down 2% from 46.854
billion dollars in 2013”. According to PhoenixNet, it shows a decline in the industry life cycle, which
means that the macroenvironment of the carbonated beverage market is in a decline stage [7].
Coca-Cola has implemented a number of marketing methods to lengthen its market life cycle.
Online media platforms are improved greatly as the Internet business matures, and more and more
substantial leisure food and beverage consumer groups are increasingly supporting this platform.
Many food manufacturers are concentrating on how to select and use the network media platform to
market their own brands and products.
In 2005, Coca-Cola launched the online platform ICOKE, which combines the traditional
marketing model with the Internet platform. Coca-Cola creates an online community for consumers
through a variety of ICOKE-themed activities and employs innovative capabilities to engage with
young customers via different platforms to improve their awareness of the Coca-Cola company.
6.
Conclusion
As their material standard of living improves, consumers prefer sugar-free and caffeine-free healthy
beverage products to improve their quality of life. Through SWOT analysis and the corporate life
cycle, Coca-Cola has gained a large number of loyal consumers in this market environment through
such measures as establishing its brand image, solving natural pollution and joining the FIFA World
Cup as a sponsor. Even in different age groups, many consumers are still willing to pay for
Coca-Cola. In several examples of PESTLE's analysis, Coca-Cola tries to acquire other brands in
different global health beverage industries, so as to gain profit efficiency more effectively and quickly
than Coca-Cola's own development of new products and occupy a certain market share. Meanwhile,
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Coca-Cola, the giant soft-drink brand, is also developing new products that appeal to the public. What
is more important is that the Coca-Cola Company was able to seize every opportunity and develop its
own response strategy, allowing it to always have a larger market share than competitors or
substitutes in a new market. Although the case analysis in this paper is one-sided, it is expected that
future studies will make a more complete analysis in the future and it is believed that Coca-Cola
Company will become better and better through its correct management strategy and long-term view.
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