Table contents
Introduction
- 1.1. The Role of Strategic Marketing
- 1.2. Objectives of Strategic Marketing
- 1.3. Scope of Analysis: Coca-Cola Company
Problem Identification
- 2.1. Coca-Cola’s Global Reach and Market Presence
- 2.2. SWOT Analysis
Critical Discussion
- 3.1. Emotional Branding and Market Impact
- 3.2. Challenges in Health-Conscious Markets
- 3.3. Strategic Market Orientation and Consumer Trends
Application of Theory
- 4.1. Segmentation, Targeting, and Positioning (STP)
- 4.2. Consumer Behaviour Theory
Recommendations and Conclusion
- 5.1. Key Points
References
Introduction
In today’s business climate, maintaining a competitive edge is crucial for long-term success. Strategic marketing plays a pivotal role in strengthening and maintaining an organisation’s competitive advantage to help increase business growth.
While the objective of traditional marketing is often seen as the advertising and selling of goods, services, or information in exchange for monetary value (Kotler and Armstrong, 2021), the objective of strategic marketing is twofold and much broader. First, focusing on segmentation, positioning and targeting, and second, emphasising resource allocation at both the product and market level (Kirova, 2017). The aim is to determine how and where an organisation can compete effectively (Personal, Archive and Monray, 2012; Abratt and Bendixen, 2018).
Although there is no universally accepted definition of strategic marketing, Jain (2000) offers a conceptual definition that captures its essence:
“Strategic marketing means looking at the whole of a company’s portfolio of products and markets, and managing the portfolio to achieve the company’s overall goals”. (Jain, 2000, cited in Personal, Archive and Monray, 2012, p. 7).
To better understand the dynamic nature of competitive business environments and why consumer preferences evolve, this essay will assess key elements of strategic marketing, including situational analysis, consumer behaviour, and segmentation and positioning, by providing a comprehensive analysis of strategic marketing using the Coca-Cola Company as a case study.
Problem Identification
The Coca-Cola Company is an iconic brand and a leader in the global beverage industry. It has 200 master brands which are sold across over 200 countries and territories (The Coca-Cola Company, 2024). A situational analysis exploring Coca-Cola’s strengths, weaknesses, opportunities, and threats (SWOT), including stakeholder and customer perspectives, helps to understand Coca-Cola’s market position (Jobber and Ellis-Chadwick, 2024), competitive environment, and the factors influencing its strategic decisions.
STRENGTH
Coca-Cola has an extensive global reach, operating in over 200 nations, with an average of 1.9 billion people drinking Coca-Cola daily. This expansive customer base reflects the strength of the brand and the extent of its supply chain network. The company ranked 15th on the 2023 list of most valuable global brands ranking (Faria, 2024). The large customer base and high brand ranking position Coca-Cola favourably to bargain with its suppliers. The brand is valued at $106 billion USD, indicative of its dominance within the carbonated drinks industry.
The company continues to evolve its product line with additions, such as Coca-Cola Zero Sugar, Coca-Cola Energy, and Topo Chico Hard, whilst diversifying its drinks offerings to include Coffee, Tea, Plant, Nutrition Juice, Dairy, Hydration and Sports (Bhasin, 2024). This diversification provides Coca-Cola with flexibility to cater for varying customer preferences and lifestyles.
WEAKNESS
Although Coca-Cola has numerous strengths, competitor rivalry is a weakness. Coca-Cola’s limited product diversification of healthier product offerings in comparison to Pepsi, Coca-Cola’s number one rival (François, 2019), is a major weakness of the brand. Although the company engages in initiatives to promote physical activities to fight obesity, public sentiments towards carbonates drinks as the leading cause of obesity, heart disease, diabetes and other illness, continues to garner critique (Gertner and Rifkin, 2017; Duan, 2022), making the brand less favourable to a health-conscious consumer base.
OPPORTUNITIES
Considering Genzer and Millennials are technologically orientated (Wandhe, 2024), and more health and wellness orientated than older generations (Callaghan et al., 2024), Coca-Cola has competitive opportunities available. By creating health focused products and creatively utilising technological advancements, Coca-Cola can enter new market streams.
THREATS
Across the macro-environment landscape various threats affect the company’s market share, such as legal, environmental, social, political and technological. For example, the introduction of sugar taxes by some governments to combat obesity health concerns, resulted in the brand producing smaller cans and hiking its prices to balance the profit loss margins (Wood, 2018). Similarly, health campaigns targeting carbonated drinks across Medina, Saudi Arabia, resulted in the consumption of carbonated drinks decreasing by 19% (Jalloun and Qurban, 2022). The brand has also faced criticism for its lack of corporate social responsibility (Gertner and Rifkin, 2017), and its negative environmental impact, e.g., the post-1990s Anti-Coca-Cola movement which began in Kerela as a result of widespread local pollution and water scarcity caused by Coca-Cola bottling plants (Rajesh, 2019).
Critical Discussion
Coca-Cola’s success is attributed to its marketing strategy, which is grounded in emotional branding and its global reach. According to Kotler and Armstrong (2021), creating an emotional connection is key to building lasting relationships as it fosters superior customer value and satisfaction.
Coca-Cola’s emotional advertising campaigns have been instrumental to maintaining its valuable brand position and expanding its consumer base. For instance, Coca-Cola’s iconic ‘Share a Coke’ campaign led to a 2% increase in U.S. sales, and a 7% consumption increase among Australian youth (Esterl, 2014). Another example is the launch of Coca-Cola’s limited-edition red, white, and blue flag can with the patriotic song lyric “I’m proud to be an American” on the label (Kotler and Armstrong, 2021, p. 363), demonstrating the impact emotional connections have on business growth.
While Coca-Cola’s emotional advertising has proven to be effective, there is evidence to suggest this approach may be less impactful in regions where health concerns dominate consumer preferences. François (2019) points out that Coca-Cola’s failure to innovate in response to health-conscious trends has caused it to lose market share to rivals like PepsiCo, which diversified into healthier options. To avoid market share loss, Jobber and Ellis-Chadwick (2024) suggests adopting a market-orientation approach could yield significant performance benefits.
On the other hand, it could be argued that Coca-Cola’s slower shift towards healthier product lines is a deliberate decision. According to Porter (2023), bargaining powers of buyers, including health-conscious consumers, is one of the fives forces that shape industry competition. Previously, Coca-Cola reformulated its original drink and launched “New Coke” which was hugely unsuccessful. After considerable backlash from large swaths of Coke drinking loyalists, the company reintroduced its original formula after a few months (Kotler and Armstrong, 2021), demonstrating the risks associated with deviated from its original produced.
This discussion highlights the impact of emotional connections on business growth and global market penetration, as well as the risks associated with not maintaining brand consistency. Equally, it highlights the importance of aligning marketing strategy with evolving consumer values to remain competitive against market rivals.
Application of Theory
There is a myriad of theoretical concepts which can be applied, whole or in part, to evaluate the marketing strategy of the Coca-Cola Company. These concepts range from targeting marketing segments and positioning, determining market metrics for marketing performance, or delving into consumer behaviour. Ultimately, the choice of which concepts to utilise is determinant of marketing objectives.
SEGMENTATION, TARGETING, AND POSITIONING (STP)
The Segmentation, Targeting, and Positioning (STP) model is essential for finding growth opportunities. It’s a three-stage process that involves segmenting a market into distinct groups, targeting specific groups with tailored marketing mix strategies, and positioning a brand or product to appeal to the desires target group (Weinstein, 2004, p. 134).
Coca-Cola targets a wide range of consumers, segmenting them based on geographic, demographic, socioeconomic, and lifestyles factors. For example, Coca-Cola markets its original Cola-Cola drink to mainstream consumers who value tradition, while targeting its Coca-Cola Zero Sugar product to health-conscious and lifestyle orientated consumers (Jain, 2000). Subsequently, Coca-Cola uses a differentiated targeting strategy by creating specific products for distinct consumer groups, allowing their drinks to appeal to both traditional soda drinkers and health-conscious individuals without alienating any particular segment.
In terms of positioning, which refers to placing a brand in that part of the market it will receive a favourable reception compared to competing products (Jain, 2000, p. 360), Coca-Cola has established itself well within the drinks market. They have a number of drink brands within their portfolio that serve varying segments, including traditional Coke, Diet Coke, Sprite, Fresca, and others.
This evaluation demonstrates how Coca-Cola uses the STP model to remain relevant in different markets and with diverse consumer groups, whilst illustrating how Coca-Cola effectively segments and targets its diverse consumer base.
CONSUMER BEHAVIOUR THEORY
Consumer behaviour theory focuses on understanding how individuals make decisions about what they buy, why they buy it, and how they use it. For Coca-Cola’s, this provides insights into consumers decision-making, brand loyalty, and how external factors shape preferences. For instance, Social Identity Theory suggests that individuals derive part of their self-concept from their membership in social groups, making decisions based on their perceived social identity and their desire to fit in (Bartholomew, 2009).
Coca-Cola leverages this theory by crafting campaigns that tap into collective social experiences, national pride, and identity. For example, Coca-Cola has been a sponsor of the Amsterdam Olympics since 1928, creating advertisements that align with national pride and community spirit (Luo, 2022). Additionally, Coca-Cola’s “Share a Coke” campaign, where names are printed on bottles, created a strong personal and social identity connection. The constant association with the Olympics, family, and friendships reinforce the idea that drinking Coca-Cola is part of these event’s collective experience, making consumers more likely to continue engaging with the brand.
Conclusion
This essay explores the role of strategic marketing plays in maintaining Coca-Cola’s competitive edge in a dynamic business environment. Strategic marketing extends traditional marketing’s focus on advertising and sales by emphasising segmentation, positioning, targeting, and resource allocation. Coca-Cola, a global leader with a vast customer base, continues to adapt its product offerings to meet changing consumer preferences.
A situational analysis of Coca-Cola reveals strengths in its brand ranking and global reach but identifies weaknesses in its slow orientation towards health-conscious trends. Emotional branding campaigns, like “Share a Coke,” have proven effective, albeit rising health concerns challenge Coca-Cola’s traditional product line. By applying theories such as Segmentation, Targeting, and Positioning, Coca-Cola diversifies its product portfolio to target specific consumer groups.
Lastly, the company’s strategic focus on diversification, sustainability, and global expansion enables Coca-Cola to operate in a competitive market whilst addressing challenges from competitors, regulators, and shifting consumer behaviours.
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