The Coca-Cola Company retains a business leadership position the world over and is one of the companies with a promising future. Its operations qualify for deeper study. The thesis statement for this study is that strategy behind the success of the Coca-Cola Company revolves around advertisement, a worldwide presence, and revenue maximization.
The fact that the world consumes half a billion servings of company’s products daily justifies its expenditure on advertising, such as on the current advertising campaign dubbed open happiness. One of the definitive proofs of Coca-Cola being the world’s most valuable brands is its ability to withstand the smashing test.
The gist of the test is the ability of consumers to identify the logo despite its smashing. Advertising is the key behind the brand excellence of Coca-Cola. Secondly, the Coca-Cola Company has had international operations for very many years now. The emergence of globalization is only a further advantage for the company’s international business and is not the basis. This knowledge of international business gives Coca-Cola competitive advantage.
The third element of the business strategy the Coca-Cola Company is revenue maximization built on the understanding that financial soundness is the measure of a good and enduring business. The company attains this by using similar production and manufacturing processes in all its plants, using the same advertisements for all its marketing, and by using local production to reduce and eliminate the cost of transport and warehousing.
The Coca-Cola Company
The Coca-Cola Company is one of the greatest enterprises on earth. It is one of the oldest multinationals with operations spanning one and a quarter centuries (Zegler, 2007). The company retains a strong evolutionary character and is one of the companies with very attractive growth prospects. With the kind of achievements that the company boasts of, there is indeed a good reason to look at its operations in order to understand the reasons behind its success.
While it is true that there have been difficult moments in the company’s history, it remains one of the most enduring companies of all times. This paper contends that there are three reasons why the Coca-Cola Company remains a market leader and one of the most valuable global brands. Specifically, the strategies used by the Coca-Cola Company to become successful includes advertisement, a worldwide presence, and revenue maximization.
Advertisement is the most important aspect of the marketing strategy of the Coca-Cola Company. The Coca-Cola Company has an international market that spans almost all the countries of the world. As of 2009, the world, on average, consumed over a billion and a half servings of Coca-Cola products every day (Black, 2009). It is therefore understandable why the company spends billions of dollars in advertising.
The latest advertising campaign by Coca-Cola is the open happiness campaign. The thinking behind a campaign is to identify an enduring theme that resonates with every Coca-Cola consumer. Each of these campaigns forms the basis of the advertisements produced. The genius in the Coca-Cola Company advertising strategy is the ability to reach an international audience using the same basic elements in advertisements in all its international markets.
Coca-cola, according to Super Brands, is the world’s most valuable brand (Jeffrey, 2005). This means that it has achieved such success as a brand that it is impossible, or at least very difficult to tamper with it. It can survive the “smashing test” (Jeffrey, 2005, p. 278).
The gist of it is that if someone took a Coca-Cola branded item such as a bottle and smashed it, people would still be able to recognize it as a Coca-Cola product. Not so many brands can stand up to this test. The power of the Coca-Cola brand is not in the uniqueness of its logo or any superior graphic design elements. Rather it is in the enduring and patient work done by the company over many years to provide a product that consumers across many generations value and appreciate.
The strong company in existence today is the result of the investment the company made over the years in its advertising campaigns coupled with a careful branding effort to develop a loyal customer base (Zegler, 2007). These efforts continue to propel the company’s growth despite the challenges that it faces at various times in its existence. Carefully planned advertising is one of the keys to strong corporate performance in the increasingly competitive world that characterizes the operations of the company.
The second reason behind the success of Coca-Cola is its worldwide presence. Long before many companies begun to think about global business, Coca-Cola developed a global business (Zegler, 2007). The forces of globalization found the company well on its way towards a truly global business. Coca-Cola pursued a consistent strategy by placing its products “in the right place and at the right time”, just when a consumer would need one of them (“Why Colca-Cola”, 2006, p. 19).
Working with a global mindset when the world was still under the limitation of geographical boundaries provided the company with a lot of insight into how global markets operate. The company came to possess a wealth of knowledge that continues to give it competitive advantage when it comes to doing business in a global setup. Each market has its own peculiarities and hence the understanding of the local environments provides the company with a strong basis for making business decisions.
The company’s worldwide presence, based of its long-term vision of providing a product that meets a human need, gives the company a strong place as an international player. As most companies expand to take advantage of emerging opportunities to operate globally, Coca-Cola is simply adapting its methods to take advantage of the new opportunities (Patrick, 2002). This will ensure that the company remains a leader in developing international business.
It already has unmatched infrastructure in about two hundred countries, so the advantages of globalization such as faster communication, real time order processing and faster analysis of market trends only boosts its traditional strengths (Black, 2009). These possibilities build on the already existing presence and are not the only basis for the company’s international business. In this sense, Coca-Cola is decades ahead of its competitors.
The third core element in the success of the Coca-Cola Company is its commitment to revenue maximization. No matter how strong a company’s brand is, and no matter how good its business strategy is, if they do not translate to revenue, the business cannot survive (Black, 2009). The Coca-Cola Company clearly understands this precept. There are a number of things that Coca-Cola does to ensure that it keeps its operating costs down. The strategies include using standardized products, common adverts, and local production.
All Coca-Cola products have the same ingredients regardless of point of manufacture (“Why Coca-Cola”, 2006). The company uses standardized production processes to take advantage of the efficiencies that such methods bring. It is possible to reduce the operating costs and maximize revenues by using standardized processes.
It reduces the unknowns in the production process and reduces the need and cost of maintenance. Comparable manufacturing units produce the Coca-Cola products hence the technical personnel can work in any of the plants. This reduces the wage bill and makes the scheduling of maintenance convenient.
The other method that the company uses to maximize its revenues is that it uses similar advertisements in all the countries to reach its customers (Jeffrey, 2005). What this does is that it eliminates the need to develop custom adverts for every market, which would consume substantial resources.
Coca-cola has the knack for producing adverts that do not require any linguistic components to communicate. Language is a very strong barrier. By using concepts that do not depend on any language, the advertisements can meet the needs of the company in any part of the world. The overall result is a significant reduction in operating expenses that helps to maximize revenues.
The third way through which Coca-Cola maximizes its revenue is by using local production within its markets to reduce the transport and warehousing costs that a central manufacturing system would entail. Coca-Cola has several bottling plants in all the markets that it serves.
The role of the regional offices is to ensure that the bottlers are operating profitably and that they maintain the quality standards set by the company. Local production reduces the interruptions in supply and makes it possible to develop unique products for local markets to hedge the other flagship products (“The Science”, 1998).
The products developed locally normally have business advantages that do not exist if their development targets the international markets. Local production ensures that the company can take advantage of profitable opportunities to improve the overall standing of the company. More importantly, it reduces the high cost of transport and warehousing hence it serves to improve the bottom line of the company.
In conclusion, the Coca-Cola Company stands as an example of a company with a fundamental understanding of its markets. It is also a good example of why every business ought to have strong fundamentals if it plans to operate for a long time to come. What the Coca-Cola Company has achieved over the years is testament to the fact that understanding customers is central to the long-term success of any business.
The company’s use of advertising is legendary, and demonstrates the innovativeness inherent in the company. Apart from that, the company has made good use of its worldwide presence to create value for its shareholders. Globalization is only making operations more efficient for the company, because it already operated as a global corporation before the technological developments that increased the rate of globalization came up.
Thirdly, the company has strived to pursue revenue maximization by adopting business practices that make it possible for it to save on inputs, and to reduce on operating costs. This unique mix of strategies, developed over time, is the source of the company’s enviable standing in the business world. The future of the Coca-Cola Company seems secure as long as it remains committed to the values that have contributed to its current success.
Why Coca-Cola has lost its fuzz. (2006). Strategic Direction , 22 (1): 19.
Black, K. (2009). Business statistics: Contemporary Decision Making. John Wiley and Sons: New York, NY.
The science of alliance. (1998). The Economist . Retrieved from http://www.economist.com/node/361379
Jeffrey, P. (2005). Brand sense: How to build powerful brands through touch, taste, sight and sound. The Journal of Product and Brand Management , 14 (4/5): 278.
Patrick, S. (2002). Cashing in on the world cup. Far Eastern Economic Review , 165 (22): 42.
Zegler, J. (2007, July). Coca-Cola, 125 years young. Brand Packaging: 30-32.