Introduction

Management

Introduction

Coca-Cola is one of the largest manufacturers of carbonated soft drinks in the world (Coca-Cola, 2021). The company is based out of the USA and is considered one of the leading carbonated drink manufacturers in the world with a total International market share of 10%. Furthermore, in their native country of USA, the company holds over 48% of the domestic market share. The biggest competitors of the company are Pepsi and Sprite, which are fighting for the same market segment. The following report aims to assess the competitive positioning of Coca-Cola in comparison to the other brands, furthermore, evaluating the factors to be considered by the company while conducting international trade.

Comparative analysis of the competitive position

Brand equity

Coca-Cola as a brand has been present in the marketplace for over 100 years and thus, has created a robust market presence over the years (Gellweiler, 2018). They are the inventors of the “Cola” flavoured drinks and are the main reason for their popularity. Compared to the other competitive brands such as Pepsi (25%) and Sprite (<20%) they hold the maximum market share internationally as well as domestically.

Global presence

The company sells their products in over 200 countries worldwide as well as manufacturing plants all over the world. Coca-Cola, over the years, has become a household name and has the highest global presence and brand awareness compared to their competitors. They also own the largest distribution supply chain which helps them efficiently cater to customers worldwide which amount to close to 2 billion servings each year.

Pricing strategy

The pricing strategy of the company is a “Competitive pricing strategy” (Danso et al, 2019). This entails Coca-Cola prices their products equal to or just below the pricing of its rivals such as Pepsi and sprite. This is one of the main reasons for their competitive advantage in the industry as it is leveraged by the company’s brand equity and robust international presence.

Product portfolio

The product line of Coca-Cola is diverse and encompasses products that complement the company’s main product (carbonated beverage) such as sparkling water, energy drinks, fruit drinks, and dairy as well as beverages which are made with plants. This diverse portfolio of products cater to all age segments and, this diversification is one of the main reasons the company is still relevant in the market as similar products are bolstered by their competing rivals as well (Khan, Yang & Waheed, 2019).

Marketing strategy

Their marketing strategy is well crafted and is aided by billions of dollars in funding from the company. Their main promotion is done through sponsorships of sporting events as well as with the use of conventional advertising strategy such as TV advert and billboards. The same marketing strategy is also used by their immediate competitor Pepsi and is the main contender in the fight for Coca-Cola’s market share.

Customer base

They are one of the leading soda brands with the highest customer base compared to Sprite and Pepsi. This means they have a higher potential to generate sales and income (Danso et al, 2019). Their customer base is spread across 200 nations worldwide with the younger generation being their targeted audience. To keep its clients interested, the company publishes appealing adverts and promotions on a regular basis as well as sponsors major sporting events and leverages brand awareness with the help of brand ambassadors, who are international celebrities in sports and the big screen.

Factors to be considered for International trading

Demographics: Coca-Cola must be aware of its inherent targeted audience. The new trend of healthy food options is changing the buying behaviour of consumers who are looking for healthier options. Furthermore, sugary drinks are more attractive for young people thus the company should be well versed by the requirements and demands of such factors while indulging in international trade (Shatilo, 2019).

Political

The company is highly dependent and in mercy of the FDA regulations in the USA. Moreover, the manufacturing of their products takes a toll on the natural water reserves of its manufacturing plants. Hence, they need to comply with all environmentally related legislative rules and regulations while conducting international trade (Shatilo, 2019). Furthermore the regulations of labour laws as well as tax brackets stipulated by the different governments need to be adhered to for compliance.

Economic

Hundreds of nations are served by their products with diverse traditions, customs, cultures, and preferences. The company has modified and improved its product handling by developing unique varieties to cater to the specific needs of those individuals (Shtal et al, 2018). They possess a net equity of over 80 bil and the majority of Coca-Cola’s revenue (>70%) comes from overseas.

Social

The megatrend of healthy eating presently seen in society is the biggest focus and the threat to the company’s client base. For the same reason, they have to diversify their product range to include healthy options to appeal to the customers.

Technological

An automated manufacturing process in their plant is the key reason for their high-profit generation as well as, it has helped them in creating a highly efficient supply chain. Moreover, they have a strong online presence which they use to attract new customers and increase their target client reach (Shtal et al, 2018).

Legal

Coca-Cola should take note of the existing copyrights, patents and rights in the countries they are planning to conduct business. Furthermore, be diligent and focus on compliance of legislative regulations related to sustainability and labour laws.

Environmental

Water accessibility has an impact on production. However, if something unexpected occurs, such as global warming, the corporation may come under scrutiny. This has an impact on their main rivals as well. However, because Coca- Cola’s products are predominantly sodas, the corporation would incur damage as a result of the water crisis. If they want to enter new markets, the corporation must follow environmental regulations (Fares et al, 2019).

Conclusion

To conclude, it is found that the main competitors of Coca-Cola are Sprite and Pepsi who are fighting over the same market share of Coca-Cola, internationally. The company’s biggest strength that provides them with a competitive advantage is its robust brand equity, marketing strategy and sought after brand awareness, which helps them to conduct business in over 200 countries. Furthermore, considering the external factors of influence the Political and environmental implications are found to be the main concern for Coca-Cola while planning to conduct international trade.

References

Journals

Danso, A., Adomako, S., Amankwah‐Amoah, J., Owusu‐Agyei, S., & Konadu, R. (2019). Environmental sustainability orientation, competitive strategy and financial performance. Business Strategy and the Environment, 28(5), 885-895. Available at: https://bradscholars.brad.ac.uk/bitstream/handle/10454/16791/Adomako_BSEJ.pdf?sequence=1&isAllowed=y

Fares, A. E. R., Amr, A., Mohamed Ahmed, A., & Fares, R. (2019). A Study on the Key Factors Influencing International Franchisors in Egypt (Applied On Hype)(Coca-Cola Company as a role model). Available at: http://repository.msa.edu.eg/xmlui/bitstream/handle/123456789/1957/Franchising-FALL2018.pdf?sequence=1&isAllowed=y

Gellweiler, C. (2018). Cohesion of RBV and industry view for competitive positioning. Strategic Management-International Journal of Strategic Management and Decision Support Systems in Strategic Management, 23(2). Available at: https://www.smjournal.rs/index.php/home/article/download/25/8

Khan, S. Z., Yang, Q., & Waheed, A. (2019). Investment in intangible resources and capabilities spurs sustainable competitive advantage and firm performance. Corporate Social Responsibility and Environmental Management, 26(2), 285-295. Available at: https://www.researchgate.net/profile/Sher-Khan-21/publication/327820404_Investment_in_intangible_resources_and_capabilities_spurs_sustainable_competitive_advantage_and_firm_performance/links/5fb772f7299bf104cf5f88c0/Investment-in-intangible-resources-and-capabilities-spurs-sustainable-competitive-advantage-and-firm-performance.pdf

Shatilo, O. (2019). The Impact of External and Internal Factors on Strategic Management of Innovation Processes at Company Level. Ekonomika, 98(2), 85-96. Available at: https://www.zurnalai.vu.lt/ekonomika/article/download/14734/14513

Shtal, T. V., Buriak, M., Ukubassova, G., Amirbekuly, Y., Toiboldinova, Z., & Tlegen, T. (2018). Methods of analysis of the external environment of business activities. Available at: http://repository.hneu.edu.ua/jspui/bitstream/123456789/19872/1/Methods%20of%20analysis%20of%20the%20external%20environment%20of%20business%20activities.pdf

Websites

Coca-Cola, 2021. [online] Available at: https://www.coca-colacompany.com/ [Accessed 10 january 2022]