Coca-Cola is the greatest iconic brand that the world has ever known. Coca-Cola has name recognition in every country and its products are sold worldwide under various kinds of political environments. Although the coca-cola company is considered a success by most in recent years sales have flattened and the corporate culture has been characterized as being “dysfunctional” (Foust & Byrnes, 2004, p. 76). There are several issues that continue to plague the corporate giant and that must be addressed before the company can increase growth that will match its past history including product lines, corporate culture, and marketing.
The Coca-Cola brand is successful which leads to the fact of why it is not able to sustain the explosive growth of profits and expansion that was enjoyed during the last century. One of the issues that has been a factor in the leadership of Coca-Cola is the worry that any major changes that are made would spoil the overall success of the company. The Board of Directors has many members that are not proponents of change and so this has been reflected in the choices and tenure of recent CEO’s. In the years from 1998 to 2005 the board had “installed one CEO, ousted him, and installed another so inexperienced that he needed constant shoring up, and finally, after a very public search that found no outside takers, named a third—a retired Coke executive who had been passed over for the top job [before]” (Hess, 2010, n.p.). Even those that were known for being able to make sweeping changes in parts of the Coca-Cola system seem to wilt when faced with the powerful Board of Directors.
Former Chief Executive Officer, E. Neville Isdell, made his name with Coca-Cola by helping to expand into new markets in Asia, Africa, and Eastern Europe. During his time with Coca-Cola previous to being named C.E.O., Isdell was known as someone that took gambles and was open to new products and mergers (Foust & Byrnes, 2004, p. 80). Once Isdell was named C.E.O. and was faced with the reality of changing the culture and the board he became less of a vocal agent of change, being quoted as saying the way back to the growth of the previous decades is simply a perfection of the process, not a new process.
The turmoil in the corporate offices is a major roadblock to an effective marketing campaign. When a plan is in place to market a new product or go after a new market there must be a commitment by the company to support the effort. When an executive creates a new campaign or is targeting the launch of a new product the support of that campaign or product may erode if there is a change in management. Strategies that have been laid out and executed may fall by the wayside during a change in management which can lead to a workforce that feels unsure of the direction the company is taking.
Coca-Cola faces a declining market for their core product as more people are seeking products that are viewed as healthier. The opportunity that Coca-Cola has before it is in the expanding market for water and fruit drinks. Coca-Cola has seen this change on the horizon for many years as was seen in an article in 2006, where it was noted that, “In response to concerns about healthier lifestyle choices and seeing a drop in consumption of their colas, the major beverage giants-Coke and Pepsi-are quickly switching gears and products” (Harden & Fletcher, 2006, p. 18). Coca-Cola also has opportunity for expansion into geographical areas that it has little or no market penetration.
Coca-Cola’s marketing strategy suffers from having great concepts that are introduced and then abandoned. A product that has been advertised as a healthier cola product, Coca-Cola Zero, has battled through advertising changes that seem to take the product in different directions. A visit to the website devoted to Coca-Cola Zero shows a very well designed, social media friendly site with content that has not been updated in three months. The Coca-Cola Zero website is focused on a theme built around winter sports and sweaters even though it is the middle of summer.
Although the marketing surrounding Coca-Cola Zero has been inconsistent the product itself has been a sales success story for the company. Although sales of carbonated soft drinks “fell 3% in 2013, according to Beverage Digest. That marks the ninth straight drop. Coca-Cola Enterprises, one of the world’s biggest bottlers of Coca-Cola products, has seen strength in Coke Zero and energy drinks. Sales of Coke Zero, which has no carbohydrates and no calories, grew by double digits in three of the past four quarters” (Demand Strong, 2014, n.p.). The idea behind the product is to appeal to young male adults that feel diet products like Diet Coke are less masculine and so a product such as Coca-Cola Zero is a superior choice.
Coca-Cola has felt the necessity during the past two decades to consider creating new innovations and new advertising methods to attract new customers and retain old customers. It has come to the point where new innovations will change the cola industry and become the basis for new advertising. The idea of finding new ways to deliver customers a carbonated soda but with new “formulations could potentially serve as the basis for future advertising efforts for both companies, while providing shelter from health critics and politicians who blame soda for the nation’s obesity epidemic. The negative attention has hurt sales: Soda consumption continues to fall. Last year it declined 1.2%, which brought the category to 1996 levels, according to Beverage Digest” (Schultz, 2013, p.12). The formulations have to have some natural basis in order for them to aid in the company attracting those that are looking for healthier drink alternatives.
Coca-Cola understands that in order to meet the demands of new consumers they must find ways to eliminate the things that are being used as a basis to reduce cola consumption. Coca-Cola’s competitor, PepsiCo “is in the late stages of developing a “taste modifier” that would essentially fool taste buds into thinking they are getting more sugar than delivered. The ingredient, which is called “S617” and still requires regulatory approval, would theoretically allow for PepsiCo to lower the amount of sugar and high-fructose corn syrup in full-calorie beverages such as regular Pepsi, while keeping the same sweet cola taste. Coca-Cola, meanwhile, continues to experiment with steviol glycosides, which are the sweet, calorie-free extracts from South American stevia plants” (Schultz, 2013, p. 12).
During Coca-Cola’s search for an overall marketing identity they have turned to many different agencies and executives to provide direction. One of the line of experienced executives that faced the fire of running the marketing side of Coca-Cola was Mary Minnick. Minnick was appointed in March 2005 as Executive Vice President of Marketing, Strategy, and Innovation. Minnick served at her post until February of 2007 when she left the company after being passed over for the position of Chief Operating Officer (Mary Minnick, 2007, n.p.). When she came to power in 2005, Minnick was known for sending chills down the spines of the genteel company’s marketing ranks, challenging long-held convention at the Atlanta beverage giant and sending back to the drawing board agency work designed to revive the brand’s iconic status. Her no-nonsense, risk-taking approach is already winning over investors. ‘Feathers need to be ruffled at Coca-Cola,’ said Bonnie Herzog, beverage analyst for Citigroup’s Smith Barney. ‘It has desperately needed shakeup for a very long time’ “(Macarthur, 2004, p. 34). Minnick was determined to steer Coca-Cola into a new creative direction and also to move towards the production and marketing of non carbonated beverages.
Minnick attempted to move the company in a direction that was not anywhere it had gone before. She championed considering the reasons that people would buy Coca-Cola’s beverages instead of classifying them simply as cola and other types of drinks. According to Minnick, if a company could anticipate the needs and desires of customers then that company would be the beverage company that would be the leader in the industry. People want to consume beverages that satisfy thirst but also address issues like mental renewal and health and beauty (Cravens & Piercy, 2009, p. 567). A company that understood those reasons could introduce products that addressed those needs without having to search for the right products.
Although there have been issue in the company, according to the reported financial statements of Coca-Cola the company still is profitable and growing. From 2009 to 2013 the company actually increased their overall equity by eight billion dollars (Coca-Cola, 2014, n.p.). There has been an increase in debt, however the overall ratios of the company seem strong. The other major player in the beverage business, PepsiCo, Inc., has also experienced growth over the same period according to their financial reports. PepsiCo has nearly doubled its overall assets over the period from 2009 to 2013 and has experienced profit and growth during that period (PepsiCo, 2014, n.p.).
Coca-Cola is one of the most successful brands and corporations in history. There is no question that the strength of the brand will continue to support sales volume and will provide a basis for any future decisions to be made. There are certain decisions that must be made by the company in order to continue the recent growth of the company. Much like PepsiCo, Coca-Cola needs to understand the importance of diversification, simply relying on carbonated soda is not enough to ensure continued growth. Developing new products that focus on less sugar and emphasize health benefits that can be used to attract new customers is absolutely necessary. Finally, there must be a cohesive marketing plan that is agreed to by management and then completely carried out and only modified when absolutely necessary, not simply when there is a change in management. These issues must be addressed if Coca-Cola is to continue as the leader in the beverage industry and continue to experience growth and profits.
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