The Coca-Cola Company Strategic Challenges
Introduction
The Coca-Cola Company is a well-known brand that has served the many with refreshment drinks since it was started in 1886 in Atlanta, Georgia. The company has evolved and increased its products, and it has invested in different countries that have seen its stability and continuous growth. Despite its large market dominance, the company has been facing several challenges that have shaken the giant’s profits in recent years. The company faces external challenges such as stiff competition, a decrease in sales in the US due to customer’s lack of confidence in its products. The company has, however, continued to dominate its market in overseas countries. The company needs to take strategic changes to deal with the change in macroeconomic variables that threaten its leadership in the soft drink industry.
Company history and products
The company started with the production of a tonic drink that used to be distributed to local soda distributors before it registered its Coco-Cola trademark in 1893. It invested in advertising its product, a move that led to an increase in sales (“The Birth of a Refreshing Idea – News & Articles”, n.d.). The company’s new developments after the second world war included the introduction of the Coca-Cola contoured bottle, diet cola, lemon-lime drink, and the purchase of rights to Fanta and Minute Maid Corporation. The moves gave the Coca-Cola Company dominance in the market, and by 1978, it was the only company licensed to sell its products in China. The company has continued to do innovations to its products to counter the external challenges that affect its profit margins.
The market trends
Companies have been facing external challenges in recent decades, and the challenges cut across the globe. The ability of a company to adapt to the changes and innovate its products is crucial for existence. Significant changes include climate change, macroeconomic factors, and sources of energy (Brookings, 2007). Macroeconomic factors have been brought up by, among other factors, the development of technology. Technological advancement has improved production systems while rendering others obsolete. It is easy for new companies to enter the market and carry out extensive marketing strategies given the availability of online platforms. The Coca-Cola Company should consider increasing their advertisements on all of its products on social media platforms apart from TV adverts.
Market competition
The Coca-Cola company is facing stiff competition from Pepsi Co., which has majored in producing healthy drinks as compared to Coca-colas carbonated drinks. The Pepsi company strategy of marketing their soft drinks as healthy as compared to Coca-Cola’s carbonated drinks has helped it gain a market that was dominated by the Coca-Cola Co (Telford, 2015). The domestic markets in different countries have established local companies that produce soft drinks, and this increases competition in the soft drink market. The increased competition has reduced the company’s profits significantly, and it’s likely to continue affecting it unless the soft drink market leader takes strategic measures. The company should consider changing its advertisement and marketing strategies to highlight more on non-carbonated and sugar-free drinks.
Increased health awareness
There has been an increase in health awareness, and people want to consume more of sugar-free drinks. The Coca-cola company has not covered the sugar-free niche completely, and that is the reason its competitors are gaining market. Given the increase in lifestyle diseases like diabetes and obesity, there is a need for the company to manufacture more drinks that contain Low-calorie and with no sweeteners (Telford, 2015). The company has a variety of waters and juices in the market, but the competition is still high, and the customer’s taste of soft drinks is always insatiable. The Coca-Cola company’s beverages are mainly carbonated drinks, and there is a need to change and align with the new customers’ demands for non-carbonated drinks. The company should conduct promotions and create awareness in its healthy drinks and also diversify such products to satisfy the rising needs of healthy drinks.
Environment Pollution
There is an increased awareness in conservation of the environment, and just like other companies who deal with plastic packaging, Coca -Cola company has not been spared. Given the wide market worldwide, plastic containers from soft drink companies continue to cause environmental pollution and there is need of taking actions to clean the litter (Brookings, 2007). The company has taken care of this issue by encouraging the recycling of its plastic and glass packaging, but there is still a gap to be filled. The centers for recycling are few as compared to the massive consumption of the product worldwide, and it requires more investment in setting up packaging collection points.
Conclusion
The changes that happen in the market can affect the production and sales of a company. The Coca-Cola Company is still in position to realign its strategies as a market leader in the soft drink market to continue leading and increase its profits. The company needs to increase its innovativeness in the market and diversify its products that are not carbonated and the zero calories drinks. Coca-Cola Co. has produced different drinks in the market, but the awareness of these products is little, especially in the overseas markets. A change in marketing and advertisement strategies can help the company get a boost from the non-carbonated drinks and zero sugar soft drinks. The company can increase its innovativeness by working closely with consumers to customize its production according to market demands.
References
Brookings. (2007). Top Ten Global Economic Challenges: An Assessment of Global Risks and Priorities. Brookings. Retrieved 14 March 2020, from https://www.brookings.edu/research/top-ten-global-economic-challenges-an-assessment-of-global-risks-and-priorities/.
Telford, H. (2015). Four big challenges for Coca-Cola | Food & Beverage. Foodmag.com.au. Retrieved 14 March 2020, from https://www.foodmag.com.au/four-big-challenges-for-coca-cola/.
The Birth of a Refreshing Idea – News & Articles. Coca-colacompany.com. Retrieved 14 March 2020, from https://www.coca-colacompany.com/company/history/the-birth-of-a-refreshing-idea.