In recent times, simply producing products is not enough, the marketers have to ensure the fact that the products are delivered to the right market at the right time to the right people at the right cost. The Coca-Cola Company is a worldwide company that works locally in every neighbourhood. The phrase is second only to alright in terms of global recognition (Coca-Cola United, 2022). The Company’s structure, which includes the Coca-Cola Company and its bottling partners globally, allows it to establish a global reach with a local emphasis. So this emphasizes the importance of distribution channels in modern-day business operations. Regarding this, the report emphasizes analyzing the distribution system of Coca-Cola.

SWOT Analysis of Coca Cola

(Source: Sale-made, Coca-Cola United, 2022)

On the basis of the above-presented SWOT analysis, it can be stated that the company has a few issues related to its distribution system that has increased its overall cost. Due to this reason, the company is not able to offer low-cost beverages to its customers which is also affecting its customers’ loyalty. 

Distribution Channel of Coca-Cola

Although it is often believed that Coca-Cola conducts all of its activities on a worldwide scale, this is really accomplished via a variety of local channels. Among the products the company produces and distributes to bottling operators are concentrates, beverage bases, and syrups. Although it no longer owns the brand, it continues to be in charge of all consumer brand marketing initiatives (The Coca-Cola Company, 2022). Bottlers and distributors make, bottle, and transport the finished branded drinks to clients and vending partners, who subsequently resell the items to the general public. 

Apart from providing satisfaction to customers with brands, delivery and merchandising workers of the company are accountable for ensuring that product placement and promotions are correct across our retail locations. With the support of its valued partners, the company is dedicated to focusing on mutual, and sustainable development. Customers are referred to as partners in this context. Retailers such as supermarkets and convenience shops benefit from the dedication and market research of the company, which helps them achieve their objectives and develop their companies (Coca-Cola United, 2022). This expansion is made possible by the efforts of delivery and merchandising colleagues of the company, who promote and put products in strategic locations.

Horizontal and Vertical Integration of Coca-Cola’ Distribution System

Firms use vertical integration to gain complete control on different stages of distribution of their products. Vertical integration is defined as a modest strategy used to gain complete control over one or earlier defined stages related to the manufacturing or distribution process. The main reason behind the adoption of this strategy is to manage all activities related to the supply chain to ensure the ultimate satisfaction of customers (Gropp, 2018). In a comparison of this strategy, horizontal integration strategy is another effective strategy that drives the firm towards acquisition in the market related to the business. In regard to this strategy, only 20% of the products of the beverage are produced by Coca-Cola Company Enterprises that is a larger portion of its overall manufacturing process. Through the help of this strategy only, the company is able to dominate the global beverage market as this strategy facilitates the company to buy and own various beverage brands, which helps the company to provide an opportunity for the company to expand its business in different markets (Buehler, 2021). With the help of the above discussions, it concluded that the manufacturing strategy of the Coca-Cola Company is more based on horizontally integrated into a comparison of vertically integrated.

Issues related to a Distribution system

Customers in Coca-Cola may purchase the finished goods from the bottling factory of Coca-Cola since the firm does not disclose its contents. Such an arrangement may therefore be termed “franchising.” As a result, although this mode of distribution saves the organisation money in the form of no transportation costs, it also has its drawbacks. Insufficient internal communication, customer dissatisfaction and high costs of internal distribution are some of the challenges that are faced by the company in its target market (Alexander, Misra and Shenoy, 2020).

Use of Technology to manage Distribution System

Beverage companies want to offer new products to distributors while maintaining operational expenses the same or lower, as Coca-Cola does. The firm makes efficient use of storage technologies to extend the usable life of warehouses while doing so at a low cost. These fast-growing stocks may be effectively handled by the storage methods employed, which include double deep racking, and mobile racking (Egede and Egboro, 2014). Using an automated case handling system would allow distributors to better manage and increase warehouse throughput, which would improve order accuracy. The firm may also make use of technology such as SmartTrak, which would increase its exposure within the industry. The organisation can simply see the exact location of demand and make shifts in inventory at the appropriate time and in the appropriate location, which will aid in increasing the efficiency of the supply chain.

Role of Innovation in Development of Distribution System

Currently, innovation may be seen as a magic key to unlocking the big competitive advantage and competitive advantages in the whole marketplace. Coca-Cola is the market leader in this regard. When it comes to innovation in all aspects of the company’s operations despite its 129-year history and 500 brands, Coca-Cola is continually looking for ways to find new ways to do things. Eco-friendly beverage cups made of ice that melt away after use and smart vending machines that allow consumers to mix and match tastes are examples of this kind of innovation.

Rather than hindering expansion, innovation has enabled the corporation to create new brands and goods that are well-liked by its customers.

Channel Power and Conflict

Some channel members need others more than others do in this situation, and therefore diverse power sources emerge. Coca-Cola, for example, often aims to embrace reward power since it may reinforce the success of the channel members. Price reductions or extra fees may be offered by Coca-Cola, for example, to get more shelf space. Disagreement exists between the participants of the channel (Partridge, 20221). Coca-Cola, for example, may be interested in expanding its sales by giving a particular degree of discount on its cans to achieve this. The merchants, on the other hand, maybe cognizant of the fact that, if Coca-Cola is placed on sale, total soda sales would not increase much since customers who normally prefer other brands may move to Coca-Cola as a result of the discounts being provided (Partridge, 20221). As a result, in such situations, shops are more likely to pocket the discounts granted by the corporation.

Conclusion

From the foregoing discussions, it can be concluded that, despite fierce competition in the market from competitors such as PepsiCo and others, Coca-Cola has been maintained its market positioning that is expanding its business along with success. This success is attributed to the company’s efficient distribution system that is helping it to address its business needs.

References

Alexander, J., Misra, S. and Shenoy, V. (2020). Coca Cola India and its distribution channel: A selection by Analytic Hierarchy Process (AHP). High Technology Letters, 26(5), pp. 455-469.

Buehler, N. (2021).The Coca-Cola Company. 2022. The Coca-Cola Company. Retrieved from https://investors.coca-colacompany.com/about/coca-cola-system

Coca-Cola United. (2022). Sales & distribution. Retrieved from https://cocacolaunited.com/our-company/our-business/sales-distribution/ 

Egede, E. and Egboro, F. (2014). Challenges of Channel Conflicts Management in Soft Drink. International Journal of Management & Information Technology, 9(1), pp. 1520-1529.

Gropp, J. (2018). Vertical Integration in Soft Drinks. Retrieved from https://econ243.academic.wlu.edu/schedule/term-papers/vertical-integration-in-soft-drinks/

Partridge, P. (2021). Coca-Cola’s supply chain under pressure due to shortage of cans. Retrieved from theguardian.com/business/2021/sep/02/coca-colas-supply-chain-under-pressure-due-to-shortage-of-cans