Research Paper # 1
ANTHONY BYRUM
Abstract
Coca Cola Company is a producer of multiple beverages including their main staple of
carbonated soft drinks like Coke, Diet Coke, and Sprite. The product was invented by Dr John S
Pemberton on 8th May 1886 in Atlanta, Georgia. When the Coca Cola was first invented Dr.
Pemberton tried it out on customers at Jacobs' Pharmacy, the product was so popular it
immediately went on sale at five cents a glass[CITATION Coc20 \l 1033 ]. Through the year’s
multiple other beverage companies such as PepsiCo, and Seven Up have forced Coca Cola to
diversify their products and add multiple new layers to their business portfolio. Throughout this
paper we will look over what Coca Cola has done to change the company’s products and
marketing to remain the top beverage company in the world. In order for any business to
successfully introduce change they have to develop a strategy that helps the company diversify
and enter different markets and Coca Cola provides the perfect example of this strategy with the
acquisitions of different companies that offered products that they could brand with the Coca
Cola Company label and capture a changing consumer market. The main reasons a company
diversifies is to create value, to generate new avenues for profitable growth and to strengthen
current business, by enhancing the products capabilities or its value [ CITATION Inn20 \l 1033 ].
Analysis
Coca Cola Corporation adopted the acquisition strategy during the time of Asian financial
crisis. During the Asian financial crisis at the country and company level, 1998 was about
restructuring. "Companies will be forced into strategic re-evaluations of their businesses, their
balance-sheet size and their structure, as it becomes clear that fundamental growth rates are
unsustainable," says Roberts at Salomon[ CITATION Eur97 \l 1033 ]. Companies began to shed their
assets to raise capital and adapt themselves to tougher operating and financing markets. With the
liquidations of assets, the Coca Cola Company took advantage of this by acquiring bottling
plants throughout Korea.
During the Asian Financial Crisis years Coca Cola went back to the reduced size of
returnable glass bottles in Indonesia and South Korea in order to make their product more
affordable to the consumers. The smaller glass bottles had never disappeared from store shelves
in Indonesia but had been pushed to the side by 10-ounce cans and bottles during the country's
economic boom. The company put the price of the smaller glass bottle at 250 Won plus a 40
Won deposit. By using the smaller returnable glass bottles the company was able to hold their
prices while others were raising prices as they did not have to remanufacture new cans and
packaging for the products. In order to market this product, the company reintroduced the
smaller bottles in stores. "All of this is about being there at the right price, they increased the
availability of it [the 6-ounce bottle]. They put more emphasis on it from a marketing
standpoint.”, said spokesperson Kerry Traubert[ CITATION Zac98 \l 1033 ].
In the beverage industry there are multiple competitors vying for consumers to choose
their products, in order to maintain top sales within the market companies need to make
necessary changes to their product lines. Not only did Coca Cola have to worry about their
competitors they had to worry about consumers constantly changing their wants and needs. Coke
was accustomed being the leader in their market, but the company’s strategy of filling markets
with cola held back the company. As the company tried to adjust to new circumstances, it was
slow to offer bottled water, then it passed over a chance to buy Gatorade and dragged its feet in
trying to acquire the South Beach Beverage Company, the maker of SoBe. Both company
opportunities Coca Cola passed over are now owned by competitor PepsiCo [ CITATION And07 \l
1033 ].
In order to diversify their company’s offerings Coca Cola has purchased multiple
companies such as Glacéau, Monster and Minute Maid expanding its venture model. When Coca
Cola purchased these companies, it was the start of their venture outside of the strictly cola
market. As people are becoming more health conscious and willing to invest on health-based
products, Coca Cola started developing juices and various energy drinks as well. This shows the
company’s strategy to responding to the varying consumer tastes and expectations and changing
itself according to those consumer’s needs. The company has been using its investment arm to
acquire or take stakes in promising upstarts. These include Honest Tea, Fairlife dairy and Suja
Life LLC, which makes high-pressure processed juices, kombucha and drinking vinegars
(Kaplan, 2018).
While these two situations can be looked at as a business doing what is necessary to
survive there are multiple levels of changes that needed to be made within the company. Coca
Cola had to respond to the intrusion of two competitors who took away from their business in the
cola market and offered a wide array of products. In order for Coca Cola to stay on top and
relevant they needed to make drastic changes to their product lines. When the company acquired
the non-cola beverage companies, they took a step in the correct direction in enacting a necessary
change. Coca Cola would stamp these products with their distribution label and in came the
profits.
The company was slow to introduce change as they did not believe that the cola market
was going to become saturated or die down as it did in the United States. Coca Cola was forced
to enact a second-order change. The company needed to decide where the direction of the
company was going, and they were being forced by their competitor to do something
significantly or fundamentally different from what they have done before. As the competition to
remain on top of the market increased so did the consumers demand for alternate products. The
company had to adapt to the growing health conscious consumers that meant changing the
products they offered.
In order for Coca Cola to implement these changes they needed to go through all the
legalities of acquiring each company. After all of the legalities are handled Coca Cola must then
set up a marketing campaign to introduce and market their new products. Although the company
is acquiring established businesses it is going to be in Coca Cola’s best interest to rebrand these
products and have them become associated with their company’s product line. Branding
techniques can be used to help employees and customers better connect to the new brand. This
will maintain clarity for customers and staff as well as maximize the opportunities the
acquisitions bring to the company [ CITATION Dan15 \l 1033 ]. When a company reestablishes clear
internal organizational structure and expectations for the ongoing success of rebranding, it
ensures that the rebranding is done effectively, the organization should ensure that its brand to
align with its mission statements.
While the company was forced to diversify their product lines, they still remained true to
their mission statement “ To refresh the world in mind, body and spirit, To inspire moments of
optimism and happiness through our brands and actions, To create value and make a difference.”
In order for them to correctly implement their mission statement they provide specific examples
such as: Offering the world a portfolio of drink brands that anticipate and satisfy people's desires
and needs, Being a highly effective, lean and fast-moving organization[ CITATION Coc201 \l 1033 ].
Coca Cola’s mission statement needed to be enacted throughout each company they acquired so
that they all held the same values. The company made sure that the changes they made were
communicated throughout their marketing plan, ensuring that consumers who saw their
advertisements knew what the company stood for and that all changes made were to better serve
the consumers wants and needs.
Personal Reflection
While Coca Cola is doing the right thing by diversifying their product lines they need to
also focus on their cost of production. I believe that they need to go back to making smaller sizes
and glass bottles. If the company was to go back to smaller sizes and glass bottles, they would be
able to cut their costs allowing for their products to be sold at a lower price as they did during the
Asian Financial Crisis. In a 2017 study conducted by Cone Communications it was revealed the
63% of Americans were hopeful that businesses would take the lead to drive social and
environmental change moving forward, in the absence of government regulation
(Communications, 2020). If the company was to produce a more ecofriendly bottle consumers
would be more inclined to purchase Coca Cola products.
In the age of millennial control, I believe that it would be in Coca Cola’s best interest to
market to this younger generation in order to capture their business. The company needs to do
special promotions and advertise on social media with engaging ad content. When millennials
feel as though a company cares about their concerns and connects with them, they will post
about their experience on their social media, give the company free word of mouth marketing.
Another thing that Coca Cola can do on social media is open up a comments section allowing the
new generation of consumers to post suggestions, comments, or concerns about what they think
of the product lines and what they would like to see from the company.
I feel as though Coca Cola is on the mend and by implementing the proper Social
Responsibilities and Mission Statement, they will be able to recapture their top spot in the
Packaged Beverage Market. In order for these changes to further the success of the company
they need to ensure that all employees and consumers know exactly what the Coca Cola
Company stands for and what their mission revolved around, if consumers and employees buy
into these then the success of Coca Cola Company will soon produce a greater sales profit.
Conclusion
Coca Cola’s organizational change is one that many company’s must make throughout
their business’s life cycle. While I believe that Coca Cola did a poor job with their original
execution of implementing new products the recent strides they are making by introducing their
own energy drink flavored after their original Coke recipe, Cherry Coke, Coke Zero, and Coke
Zero Cherry is a step in the right direction with moving at a faster pace to keep up with
consumers changing lifestyles. They communication that the Coca Cola company provided to
consumers was subtle, but effective they used product placement and their mission statement to
justify their acquisitions and show consumers that they were the company to provide the
everyday needs of the consumers. Acquisitions and mergers can sometimes make or break a
company’s overall sales performance, in Coca Cola’s case that diversification helped Coca-Cola
keep growing, its organic sales rose 5% last year, its free cash flow grew 14%, and its adjusted
earnings improved 9% [ CITATION Leo19 \l 1033 ].
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