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PRAGUE UNIVERSITY OF ECONOMICS AND BUSINESS

BACHELOR THESIS

2021 Nadezhda Kolesnik

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Prague University of Economics and Business International Business

Marketing Strategy of Coca-Cola

Author: Nadezhda Kolesnik

Thesis instructor: Ing. Jaroslav Halík, MBA, Ph.D.

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Declaration:

I hereby declare that I am the sole author of the thesis entitled “Marketing Strategy of Coca-Cola”. I duly marked out all quotations. The used literature and sources are stated in the attached list of references.

In Prague on 29/04/2021 Signature

Nadezhda Kolesnik

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Acknowledgement

I hereby wish to express my appreciation and gratitude to the supervisor of my thesis, Ing. Jaroslav Halík, MBA, Ph.D. for valuable advice, devoted time, and assistance, that helped me to write the Bachelor Thesis.

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Introduction

The Bachelor Thesis is dedicated to the marketing strategy of The Coca-Cola Company. It is known as one of the oldest and most recognized companies worldwide.

Moreover, it is a large organization that has a huge number of brands in it. In addition, the drinks it offers are successful globally. Hence, it is the best example of a company to be analyzed in terms of its global marketing strategy success.

The study focuses on The Coca-Cola Company itself and which marketing strategy it uses on the global market. The aim of the thesis is to understand how the company makes millions of people buy their beverages, meaning an analysis of its key factors of success.

Since the main problem of the subject is the abundance of general information and few sources of detailed information, the thesis tries to provide as many details as possible, dividing the main goal into several sub-goals, represented in respected chapters.

Consequently, the research hypothesis is the following: large product portfolio and “glocal”

strategy are the key success factors of the company.

The research on the marketing strategy of The Coca-Cola Company is carried out by using primary and secondary data analyses, as well as literature review. The internal and external analyses are conducted by using SWOT and Porter’s Five Forces analyses respectively. In addition, a questionnaire as a resource of primary data is used in the thesis.

Besides, synthesis method is applied to assess the points for improvement of the Coca-Cola Company’s marketing strategy, possible key success factors and to give respective recommendations, based on personal opinion and the results of SWOT analysis, Porter’s Five Forces and questionnaire. Consequently, the major approach used in this thesis is analytical method. It includes the collection of data, its analysis and synthesis of crucial findings.

The paper is divided in five parts and each of them is dedicated to fulfilling its own aim. First chapter will mainly deal with the theoretical part of the marketing side. Its main goal is to deliver the basic knowledge in marketing thoughts and ideas which are used in the subsequent chapters. This part explains in detail terms such as marketing strategy, market segmentation, targeting, positioning, marketing mix and situational analysis, including SWOT and Porter’s Five Forces analyses.

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Afterwards, the second chapter is dedicated to the detailed introduction of the Coca- Cola Company itself. It observes the company’s development through years and its current market position.

Aside that, chapter three describes the internal and external analyses of The Coca- Cola Company, particularly using SWOT and Porter’s Five Forces analyses. Further, the chapter elaborates on the targeting and positioning of the company.

Chapter four analyzes marketing strategy of The Coca-Cola Company and its marketing mix. Both aspects are considered from the global perspective.

The first part of the chapter five provides information on the questionnaire results.

Firstly, it elaborates on the description of the typical Coca-Cola customer: age, sex, employment status and household income. Then it evaluates customer’s perception of the quality and price for Coca-Cola, preferred locations for buying the drink, the most frequently bought type of the Coca-Coal, the reason why people buy it, how frequently they do it, what do respondents prefer more: Pepsi or Cola. Besides, the questionnaire studies the most recognized campaigns of Coca-Cola, as well as the possible reason of the campaign’s success. Finally, the second part of the chapter provides a summary of key success factors and recommendations based on the personal opinion, mainly from evaluation of the SWOT and Porter’s Five Forces analyses, as well as questionnaire results.

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1. Marketing Theory

1.1. Marketing

Marketing is a term that is described by hundreds of definitions. The one of the most common ones is given in the book called “Principles of Marketing” - “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others” (Kotler, 2005, p.6).

Another marketing definition is management process that helps products and services move from concept to customer through identification of a product, determining demand, deciding on its price, and selecting distribution channels. It also includes developing and implementing a promotional strategy (Market Business News, 2019).

Finally, American Marketing Association defines marketing as an “activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (American Marketing Association, 2017).

The definitions above have a lot in common and something different. This might be due to the fact, that marketing is something that can be compared to art, which does not have one definition; each person can perceive it from different angle.

1.1.1. Marketing Strategy

The authors of “Handbook of Marketing Strategy” see marketing strategy as “a broad plan of managerial initiatives and actions relating an organization to its customers and markets” (Shankar, Carpenter and Hamilton, 2012, p.2). Further, the authors compare marketing strategy with marketing tactics, and describe the key aspects of the former. First of all, marketing strategy decides on how to allocate resources strategically. Secondly, it implies long-term effect of managerial decisions. Finally, all the decisions related to marketing strategy are made by marketing managers and executed by others through the organization and beyond.

Furthermore, there are two types of marketing issues to which marketing strategies can be applied at different level of aggregation (Schnaars, 1998). The first one is macro level, where marketing strategy focuses on “manipulations of the marketing mix variables – product, price, place, and promotion” (Schnaars, 1998, p.18). Concerning this definition,

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strategy setting includes product price selection, design of an advertising campaign, and then decision on a plan of distribution. Further goes marketing element strategies, which is a narrow concept, applying to elements of marketing mix separately. There are three strategies in this type: promotion, distribution and pricing strategies.

In a more recent study marketing strategy is defined as “the process by which the organization translates its business objective and business strategy into market activity”

(Fifield, 2012, p.27). The definition can be considered as the most simple and broad one. It describes marketing strategy as a process, which helps to understand this term better.

However, the author insists on practical part of marketing strategy, as he believes one cannot understand it fully without practicing.

1.1.2. Market Segmentation

Market segmentation is a term that refers to the identification and description of market segments (set of potential customers) which have a potential to become target segments for a marketing plan of a company (Tynan and Drayton, 1987). In addition, there are criteria for segmentation, which are used to identify market segments. They can be described as follows:

• Segments must be big enough in order to ensure the development of a marketing mix that is profitable.

• Segments must be identifiable, and their size can be measured based on demographic and other measurable criteria (e.g., attitudes).

• Targeted segments must be accessible – easy to reach with marketing mix elements (e.g., promotion and distribution).

• Different segments must respond to different offerings of the marketing mix;

otherwise, they do not need to be treated as distinct.

• The selected segments must be in line with the company’s objectives and strengths to deliver (financial, managerial, employee skills, and facilities) (Andaleeb, 2016).

Besides, there are four major variables used in segmenting consumer market:

geographic, demographic, psychographic, and behavioral variables (Armstrong et.al., 2015).

They are described below, based on the study mentioned.

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To begin with, geographic segmentation divides a market into geographical units.

For example, these geographical units might be one of the world regions (North America, Middle East, etc.), country (China, Brazil, etc.), region of a country (The Maritimes, Southern Ontario, etc.), population size (intervals as “250000-500000” or “over 1 million”, etc.), and type of region (urban, rural, etc.). In addition, a company may choose how to operate: in one or more geographical areas or to operate in all areas. However, in the latter case the company should pay attention to the geographical differences, as well as needs and wants of the residents (Armstrong et.al., 2015).

Furthermore, demographic segmentation calls for dividing the market based on demographic variables such as gender, age, life cycle, generation, family size, household income, occupation, education, and ethnic or cultural group. According to the study mentioned earlier, this method is one of the most popular methods used. The reason is that the needs and wants of a consumer are often in line with demographic variables. Moreover, these variables are easier to measure, compared to other types of variables (Armstrong et.al., 2015).

Besides, psychographic segmentation divides the market into different segments concerning social class (working class, middle class, etc.), personality characteristics (ambitious, quiet and solitary, etc.), or lifestyle (active suburban person, athletic, etc.). As it is described by the authors mentioned, marketers often segment the markets and base their marketing strategies by consumer’s lifestyle, since the products people buy usually reflect their way of living (Armstrong et.al., 2015).

Finally, behavioral segmentation divides the market into groups by consumer’s attitudes, uses, knowledge or responses to a product. Hence, the buyers can be grouped according to:

• Occasions (for example, holiday season decoration or food).

• Benefits sought (for instance, Trek Bicycle Corporation makes three types of bicycles, as there are three major benefit groups; and each of the bikes correspond to one of them).

• User status (non-user, ex-user, potential user, first-time user, regular user).

• Usage rate (light, medium, heavy product users).

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• Loyalty status (completely loyal – buy one brand all time, somewhat loyal – loyal to two or three brands or have in favor one brand but sometimes buying others, no loyalty to any brand) (Armstrong et.al., 2015).

1.1.3. Targeting and Positioning

Targeting a market is a process of concentrating marketing efforts on the key segments (or segment) consisting of the customers whose needs and desires most closely match the selected product or service (Ward, 2019). As soon as segments have been identified, the decision about how many and which customer groups to target can be made.

There are three main options. To begin with, the option chosen might be to concentrate on a single segment with only one product. On the other hand, the company may decide to offer one product to a number of segments. Finally, there might be a decision about targeting a different product brands at each of a number segment. However, the choice of any of the option must be in compliance with the resource implications of following particular strategy (Dibb and Simkin, 1991).

Product positioning stands for “the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products” (Kotler and Armstrong, 2005, p.432). Through the process of segmentation, a marketer can obtain insights into market differences that are essential for developing a positioning plan. The positioning plan itself consists of three main parts. The first component is generation of a list of potential attributes or benefits motivating customers in each market segment. Then, a marketer should create a picture of a firm against the competition relative to the buying criteria. Eventually, a validation process that collects data directly from the market must be carried out. After these steps, one can decide on how to position the company and its offerings (Carpenter, 2005).

1.1.4. Marketing Mix

Marketing mix is one of the fundamental marketing concepts. It presents a set of marketing tools which are used by a company to create a desired response in the target market. Also, it is referred as the Four P’s: product, price, place, and promotion (Kotler, 2002).

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Marketing mix is also a combination of tactics that company uses to achieve its objectives. It can be done by marketing the company’s products to the selected customer groups (Figure 1) (Cengiz et.al, 2007).

Figure 1: The relation between customer and the main elements of marketing mix

Source: Kotler (2002), own construction

The first component of the marketing mix is product. It can be described as “the need-satisfying offering of a firm” (McCarthy, Perreault, 1993, p.255). Product may be a physical good, a service, or a blend of both – it is not limited to physical goods only. For example, the product of a political party is the set of objectives it wants to achieve. However, it is important to remember that this good and/or service should satisfy some customer’s needs (McCarthy, Perreault, 1993).

According to (Khan, 2014), a product can include not only service and/or physical good but also persons, places, organizations and even ideas. The product can be divided on three parts (Figure 2) (Armstrong, Kotler, 2012):

• Core product – this part represents a solution to a problem or core benefits that customer resolves or gets when buying the product (e.g., a camera takes pictures, but it can have other core benefits that customer can look for: wide lens, high-definition videos, etc.)

• Actual product – it refers to the parts of the product: quality, design, features, brand name, packaging and other features that can deliver the core benefits (e.g., Apple’s iPhone is a market leader arguably because of its design, which makes thousands of people to preorder it despite the variety of other smartphones on the market).

• Augmented product – a part that associates additional benefits and services around the core and actual product (e.g., help lines, warranties, free or cheap delivery, etc.).

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Figure 2: Levels of Product

Source: Armstrong, Kotler (2012), own construction

Then, price is something a customer sacrifices to obtain something. In addition, price is the most significant factor affecting customer’ choice (Kotler et.al, 1999). Since people differ, as well as their wants and needs, they are willing to pay differently. Hence, price perception also varies across people (Riaz and Tanvir, n.d.). For example, a survey on the new low-calorie beer may be created. One of its aims should be setting a price through identifying how much people are willing to pay for the beer. The answer of each person will differ, as everyone is willing to pay different amount of money for such a product: someone would pay $15, another one would pay no more than $5.

Moreover, price can be considered as the most important element of marketing mix because it is the only variable that must be set in relation to other three Ps. Furthermore, pricing is the only mix that generates a turnover for the company. The rest three Ps are considered to be cost for the organization as it has to pay for design of a product, its distribution and promotion (Khan, 2014).

Nonetheless, price is a variable which is incredibly difficult to set duly. The reason is that price should reflect both demand and supply. Hence, setting it too low or too high will mean loss of sales for the company (Khan, 2014).

Moreover, price strategy should consider many aspects. For example, competition, target group, fixed and variable costs, as well as company’s objectives (Khan, 2014).

Further, consumer’s price perception is a significant variable for buying behavior and for choice of a product and/or service. Consumers usually make decision based on perceived price, especially when they lack information about the product/service. In addition, when

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deciding whether or not to buy this product/service again, consumers think about whether they received the product/service’s value for the money paid (Chung and Shin, 2008). For instance, consumer buys a bottle of wine for a high price, thinking that the quality will be also high. However, it tastes alcohol like a wine that costs three times cheaper. In result, this consumer will never buy it again and, probably, recommend to his or her surrounding not to waste their money on it as well.

Hence, to set the price rightly, company should use pricing strategies, in order to not lose its sales. Besides, several strategies are introduced below.

To begin with, break-even pricing is a method of calculating the point, where costs are equal to revenue. This strategy is usually used by the companies willing to increase its market share. Also, it helps to set up the lowest acceptable price (The Economic Times, 2021). Break-even pricing is calculated by the following formula (Figure 3):

Figure 3: Break-even point, formula

Source: The Economic Times (2021), own construction

Further, to show how this formula is used, the example is provided. Company Q produces toys. The fixed cost of producing toys is $50,000, while variable cost per unit is

$10. The annual target of selling is 10,000 toys. Hence, Break-even point = ($50,000/10,000 toys) + $10 = $15 – the break-even price for one toy. This price means that if the company wants to earn profit, it should set price above $15.

The second method is called cost-based pricing. Through this method price is determined by adding a mark-up to the cost of making the product. Then, a price range is created – the range between price floor and price ceiling (Figure 4). It consists of the minimum and maximum prices that a seller will demand from the buyer for a specific product or service. Finally, through analyzing the marketing situation, price is determined (MBA Skool Team, 2021).

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Figure 4: Cost-based pricing strategy

Source: MBA Skool Team (2021), own construction

Customer value-based pricing is a method through which price is set up according to buyer’s perception of value. Hence, first of all company should analyze potential customer’s needs and their value perception. Only after this step company can set its target price, that will match potential customer’s value perception. Next, the company should derive target costs that might be incurred. Finally, the design of a product can be developed, it should deliver desired value at target price (Claessens, 2015) (Figure 5).

Figure 5: Customer value-based pricing process

Source: Claessens (2015), own construction

Competition-based pricing is a method of setting price through analyzing competitors’ prices for the same or similar product or service. It is focused on information from the market, not on the production costs. Further, the price of a competing product or service is used as a benchmark, hence, the price can be set above or below it. If the price is set above the benchmark, it will result in higher profit per unit sold but in less quantity of units sold, as a buyer would prefer to buy similar or the same product for a lower price.

While setting the price below the benchmark will result in more units sold but less profit per unit (Accounting Verse, 2021).

Furthermore, promotion is the information communicated between the seller and potential buyer or others in the channel, and the main objectives of it are delivering the

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customers to buy it, and encourage customers to acquire the product during specific time such as sales (Khan, 2014). This communication is determined by target customer’s needs and attitudes. Hence, the marketing manager can influence their attitudes and behavior.

Moreover, the selected promotion method, or a blend of several methods, determines how the messages are delivered. As it has been already stated, a marketing manager can choose from several promotion methods, for example, advertising, personal selling, public relations, direct marketing, sales promotion, and digital marketing (McCarthy, Perreault, 1993). All of these methods are described further.

“Advertising is any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor” (McCarthy, Perreault, 1993, p.419). Moreover, advertising is a part of mass selling, which means communication with large number of potential customers at the same time. Advertising includes use of magazines, newspapers, radio, TV, signs, and direct mail (McCarthy, Perreault, 1993).

Personal selling requires direct communication between seller and potential customer. Personal selling is usually held face-to-face. However, it can be done as a telephone call. This selling method allows the salesperson grab attention of a potential customer easily, get immediate feedback and adapt the marketing mix to him or her.

Nevertheless, this method can be very expensive, therefore it is often mixed with other selling methods, for example, sales promotion (McCarthy, Perreault, 1993).

Public relations is a continuous process of building good relations with the company’s various publics by obtaining favorable publicity, building up as perfect as possible “corporate image”, and handling or preventing adverse rumors, stories and events.

Public relations aims are promoting products or services, people, ideas, places, activities, organizations and even nations (for example, to attract foreign direct investment, international support or tourism). The main tools of this method include press relations, product publicity, corporate communications, lobbying and counselling (Kotler, 2005).

Direct marketing means direct communication with well-targeted individual customers to get immediate response and develop lasting customer relationships. This method refers to communication directly with narrowly selected customers. Through it and with using detailed databases, the company can tailor its marketing offers and communications to the needs of the target group or even individual buyer. While using this method, marketing managers usually seek for a direct, immediate and measurable customer

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response. For example, Dell uses this method through communicating with its customers via phone or website, to design build-to-order systems that meets customer’s individual needs (Kotler, 2005).

Sales promotion refers to the promotion activities that stimulate interest, trial or purchase of the product or service by final customers. This method can involve using of the following tools: samples, catalogs, circulars, coupons, signs, point-of-purchase materials, and novelties (McCarthy, Perreault, 1993).

Digital marketing is based on interactive communication with targeted potential customers using the following tools: digital devices – smartphones, tablets, laptops, desktop computers, TVs, gaming devices, virtual assistants, and other devices connected to the internet; digital platforms- browser apps or online services (LinkedIn, Amazon, Apple, Facebook etc.); digital media – advertising, email, messaging, search engines, social networks; digital data – data collected from targeted groups’ profiles and interactions with businesses; and digital technology – marketing technology that businesses use to create interactive experience for the targeted audience, using websites, mobile apps, email campaigns etc (Chaffey, Ellis-Chadwick, 2012).

The final component of the marketing mix is called place. The place strategy is the offered products’ or services’ distribution made by the company (Goi, 2011). However, the place strategy can be also defined as a group of activities that make the product or service available for the potential consumers (Armstrong and Kotler, 2017).

To sum up, place strategy refers to the process and activities of moving a product from the producer to the potential consumer. Furthermore, there are three main distribution channels that are usually used nowadays (Luenendonk, 2019).

First of all, direct distribution refers to the providing of goods or services from manufacturer to consumer directly, without any intermediaries (Figure 6). In other words, company may have its own shop with its products, use specific retailer location, use internet sales and one on one meetings with consumers. Also, using this method, company has a complete control over the product or service it sells, and control over its image at all stages (Luenendonk, 2019).

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Figure 6: Direct distribution

Source: Luenendonk (2019), own construction

Another distribution channel is called indirect, as it means selling of goods and services using intermediates. Hence, a company may sell its products or services to a wholesaler who then distributes them to retail outlets (Figure 7). However, this method may raise the product costs since each of the intermediaries gets their percentage of the profits.

In addition, indirect distribution is usually used by large producers who sells its products through hundreds of small retailers (Luenendonk, 2019).

Figure 7: Indirect distribution

Source: Luenendonk (2019), own construction

Finally, there is a dual distribution which is the combination of direct and indirect selling. Thus, the product or service may be sold directly to a consumer and, in other cases, through intermediaries at the same time. Nevertheless, this method may lead to a channel conflict, variation of consumer experience and an inconsistent image of the product or service (Luenendonk, 2019).

1.1.5. Situational Analysis

A situational analysis implies a set of methods that are used to analyze a company’s internal and external factors that help to understand the company’s capabilities, customers, and business environment (Schildge, 2018). The situational analysis consists of several methods, two of them are described in this paper. Particularly, SWOT analysis and Porter five forces analysis (Steenburgh and Avery, 2010). These two methods have been chosen

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due to the reason that they are quite common in use. Moreover, these techniques allow to understand the basic logic used through them easily.

The SWOT acronymous stands for strengths, weaknesses, opportunities, and threats.

This analysis is a framework that is used to evaluate external and internal environment for strategic management practices. As shown in Figure 8, this method refers to the external and internal analyses, as strengths and weaknesses are internal factors (they are understood from the company’s perspective), while opportunities and threats are external factors (they form environment and are outside of the company) (Gürel, 2017).

Figure 8: SWOT analysis

Source: Gürel (2017), own construction

SWOT analysis has four tools of analyzing a company’s position. First of all, strength, as an internal factor, is a characteristic that adds additional value to something, making it more special than others. Hence, the company should analyze what is its advantage and what customers see as its advantage. On the contrary, weakness, that is also an internal factor, shows the disadvantages of the company. Thus, weakness shows the field for improvement within the company. Besides, opportunity, as an external factor, acts as a driving force for an activity which has a potential to be improved and, thus, bring benefits to the company. On the other hand, threat, as also an external factor, is a situation or condition that endangers realization of an activity. Consequently, it is the element that makes it difficult or impossible for the company to reach its goals (Gürel, 2017).

Another analysis is called Porter’s Five Forces. It makes up a framework that analyzes the level of competition within an industry and business strategy development. As shown in Figure 9, annex 1, the analysis is done by using five forces: threat of new entrants, threat of substitute products or services, bargaining power of customers, bargaining power

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of suppliers, and rivalry among existing competitors (Porter, 2008). All of the forces are described further.

Threat of new entrants refers to the danger of losing the market share and profitability for all firms in the industry because of newcomers. However, entry barriers can protect the industry from new entrants – the higher the barrier, the lower the threat of entry (Porter, 2008).

Threat of substitute products or services means fear of a company or industry that consumer of its products/services will switch to a substitute – the product that performs similar function as yours and satisfies the same needs of a customer as your product does.

To illustrate, juices are substitutes for soda, or smartphones are substitutes for traditional phones (Porter, 2008).

Bargaining power of buyers can be described as the ability of customers to put a company under pressure, influencing its product’s price and quality. Nevertheless, their power can be high – when the buyer has many alternatives, or low – if the buyer acts independently. The reason is that if a group of customers will cooperate to ask the company to reduce its prices, it will do so as there is no other choice left. Besides, company can implement a loyalty program in order to reduce the power of buyers (Porter, 2008).

Bargaining power of suppliers refers to the influence of suppliers on the company. It can be very high if there is no substitute for the material, component, labor, or services that supplier provides to the firm. Hence, the supplier can charge higher prices or refuse to work with the firm, affecting the company’s profit (Porter, 2008). In other words, if a company makes wooden furniture and it has only one supplier of wood, it has no alternative but to buy wood from this supplier no matter what the supplier would ask for.

Rivalry among existing competitors shows the intensity of competition in the industry. For most industries this determinant is the most significant one. Thus, if there is intense and competitive rivalry on the particular market, it is not considered attractive because it reduces the potential revenue that a company may get in this particular industry (Porter, 2008).

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2. Introduction of the Coca-Cola Company

2.1. History

The drink “Coca-Cola” was invented by pharmacist Dr. John Stith Pemberton at his Pemberton Chemical Company on May 8,1886 in Atlanta, Georgia. At that time, it was sold as a soda fountain drink at Jacob’s Pharmacy. It was invented as a tonic which helped to heal common ailments. Later on, Coca-Cola became a trademark (The Coca-Cola Company,

“The Birth of a Refreshing Idea”, 2021).

Through time and advertising Coca-Cola became popular. Already in 1891, the ownership of the business was secured by Asa Griggs Candler, who incorporated the Coca- Cola Company in 1892 (Encyclopaedia Britannica, 2020).

Since then, the company started to expand and rise its sales. During 1890, the plants were established in Dallas, Los Angeles, and Philadelphia. Moreover, Coca-Cola was sold in every US state and Canada. Also, in 1899 the Coca-Cola Company has signed its first contract with independent bottling company, which allowed the product to be distributed within a system. Moreover, such licensing agreement formed the basis for a unique distribution system which is used by American soft-drink industry nowadays. In 1919 the ownership of the Coca-Cola Company was bought by a group of investors led by Atlanta businessmen Ernest Woodruff (Encyclopaedia Britannica, 2020).

In 1946 Coca-Cola Company purchased rights to Fanta. Later on, in 1960 the legendary bottle was registered (however, it was invented much earlier, in 1916). Besides, in 1961 new drinks were introduced – Sprite and the first diet cola. In addition, the company has purchased Minute Maid in 1960, which allowed it to enter the citrus juice market. Then, it also purchased brand Fresca (Encyclopaedia Britannica, 2020).

Afterwards, in 1978 the Coca Cola Company was the first one to be allowed selling cold packaged beverages in People’s Republic of China. By the year 1982, the company experienced a decline in market share. It attempted to address it by introducing a new flavor of Coca-Cola, which was not well received. However, it was able to recover with reviving of the original taste (the Coca-Cola Classic) (Encyclopaedia Britannica, 2020).

Later, in early 1990s Coca-Cola has entered many new markets - East Germany, India, Asia, and Peru. Also, it has created and acquired many new beverages during that time and some of them, for example Cadbury Schweppes beverages, were sold in more than 120

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countries. Moreover, this period of time is notable for the fact that the Coca-Cola Company introduced a bottle made partially from recycled plastic which was the major innovation at that time (Encyclopaedia Britannica, 2020).

Finally, a few words about Coca-Cola advertising should be written, as it has always been a significant part of the company. Its success can be due to the fact that the company has paid attention to details, fashion, world trend development, culture, history and consumers. The Coca-Cola add of 1971, “The Hilltop” commercial, is a good illustration of the facts listed above.

The time period of 1970-1980 can be characterized by a fight for equality and against the war in Vietnam. Also, at that time it was popular to use small-town-life, farmyards, country music in advertisements. Hence, “The Hilltop” has covered all the trends of that time – it has featured various people from different backgrounds and addressed a message of unity. It was released as a TV add and was also printed (Figure 10, annex 2) (Neagoe 2020).

2.2. Company’s Revenue

According to Figure 11, the Coca-Cola Company’s net operating revenue has fluctuated globally for the last 13 years. The maximum amount is reached in year 2021, in the amount of $48.02 billions. While the minimum profit of $28.86 billions is gained in 2007. As for the last 4 years, the trend is rather downward than upward, because the net operating revenue is decreasing since its maximum point in 2012, with the exception for the results in 2019. For the period from 2012 to 2018, it has decreased by almost a third ($34.3 billion in 2018). Besides, Coca-Cola generated $33.01 billions as net operating revenues in 2020.

By the end of 2020, North America became the most profitable sector, as almost one third of the company’s total revenue (34.7%) was generated there. In addition, bottling investment is the second most profitable stream for the company, as it brings about 19% of its revenues (The Coca-Cola Company, “Investor Overview – Updated for Fourth Quarter 2020”, 2020).

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Figure 9: The Coca-Cola Company's net operating revenues worldwide from 2007 to 2020 (in billion US dollars)

Source: Statista (2021a), own construction

2.3. Current Market Share

Figure 12, annex 3 shows market share of the carbonate drinks for the year 2017.

This time period was chosen because it is the last year Dr. Pepper Snapple Group Inc had statistical information on its market share. Hence, on the diagram the companies with the biggest market shares can be seen. The biggest share is held by the Coca-Cola Company, it takes almost 45% (44,7%). Then, PepsiCo Ink takes 19,8%, while Dr. Pepper Snapple Group Inc takes only 4,1%. However, all other companies together have a share of 31,4% on the market of carbonate drinks.

To sum up, Coca-Cola may be considered as a leader on the market of carbonated soft drinks, as it has the biggest volume of share. Moreover, for the last five years, it has fluctuated only slightly (Table 1).

Table 1: Coca-Cola Co, The - carbonate drinks market share for the period from 2015 to 2020

Year 2015 2016 2017 2018 2019 2020

Coca-Cola Co, The 44,8% 44,8% 44,7% 44,7% 4,8% 44,8%

Source: Passport (2021), own construction 0

10 20 30 40 50 60

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3. Situational Analysis of Coca-Cola

This chapter is dedicated to the detailed situational analysis of The Coca-Cola Company. Particularly, SWOT and Porter’s Five Forces analyses that are described below.

This chapter helps to understand the internal and external factors of the company. Hence, through the analyses it is possible to understand the company’s capabilities, customers, and business environment (Schildge, 2018).

3.1. SWOT Analysis

SWOT analyses depicts strong and weak points of a company and also its opportunities and threats. Figure 13 shows the facts about The Coca-Cola Company that are grouped according to the SWOT analyses parts.

Figure 10: SWOT analysis of The Coca-Cola Company

Source: Koschman (2016); DeFranco (2015); PepsiCo (2021); The Coca-Cola Company,

“Brands” (2021); Sky (2020); Bhasin (2019); Management Glossary Content Team (2020); Farooq (2019); Pratap (2020), own construction

To begin with, one of the strengths of The Coca-Cola Company is leading market share. It is the strongest company on the market of carbonated beverages, since it controls almost 45% of the market. Besides, even not heavy soda drinkers are loyal across the level of the brand – for regular Cola it is 90.5% loyal customers, for low-calorie Cola it is 92.5%,

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and for the modified brand (with additional flavors) it is 95.9% of loyal consumers (Koschman, 2016). Furthermore, The Coca-Cola Company has a large product portfolio – over 500 brands (The Coca-Cola Company, “Brands” 2021). Figure 14 presents comparison of the brand portfolios among the largest companies on the carbonated soft drinks market – The Coca-Cola Company, PepsiCo, and Dr Pepper Snapple Group. It is seen that The Coca- Cola Company has much more brands in its portfolio than its competitors.

Figure 11: Largest carbonated beverage brand portfolios

Source: The Coca-Cola Company, “Brands” (2021); PepsiCo (2021); Dr. Pepper Snapple (2021), own construction

Then, one of the biggest weaknesses for The Coca-Cola Company is water management. It is a well-known fact that water is a limited resource. The company uses water heavily, as it is the main ingredient of their products, even in the water scarce regions.

For the reason that demand for water increases around the world and this source becomes scarcer, the quality of available water sources may deteriorate significantly, leaving the company to bear higher costs in order to meet the consumers’ demand (DeFranco, 2015).

Further, compared to the main competitor PepsiCo, Inc, The Coca-Cola lacks diversification of its products in any other segments but beverages. The former company diversified its products into snacks segment (PepsiCo, 2021), while Coca-Cola remains only in the soft drinks segment (The Coca-Cola Company, “Brands”, 2021). Hence, Coca-Cola is lagging in the snacks segment, giving the PepsiCo leverage over itself. The last but not least weakness of the company is its absence in health beverages. It is known that carbonated drinks contain

500+

57 52

The Coca-Cola Company

Pepsi Co, Inc Dr Pepper Snapple Group

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a lot of sugar. Its intake may result in obesity or even diabetes. As Coca-Cola is one of the largest manufacturers of carbonated beverages, this fact affects its current and future sales to decline, especially in developed countries (Sky, 2020), (Bhasin, 2019). Hence, Coca-Cola should take in to account a promotion of healthier drinks that it has in its portfolio, so its customers would have a choice among health Coca-Cola’s beverages.

One of the main opportunities for The Coca-Cola Company is to increase its presence in developing countries. It is due to a reason that many of the developing countries have a hot climate (Middle East, African countries, etc.) and people want to consume cold and refreshing drinks more. Hence, it is a good possibility for the company to gain more entry into these areas. Furthermore, with the help of acquisition The Coca-Cola Company can buy out competition in the areas where it is possible. Moreover, by such steps it can also increase its beverage portfolio even more by extending more products. To illustrate, it has acquired AdeS in Latin America – the largest brand that is based out of soy (Management Glossary Content Team, 2020). Besides, The Coca-Cola company can promote the products that are not that successful now. The rise of sales for these products will also help to rise the revenue of the company (Farooq, 2019).

Also, there are some threats that The Coca-Cola Company faces. Firstly, sever indirect and direct competition. For the indirect competition, there are companies (Starbucks, Dankin’ Brands Group, etc.) that can offer healthier alternatives, unique choice, and customer loyalty rewards which Coca-Cola lacks (DeFranco, 2015). While for direct competition, the company fights for market share in soft beverages with its main competitor – PepsiCo. Also, it competes with sports and energy drinks. To illustrate, Red Bull and Monster energy drinks. Another threat for the company is government regulations as it has to be compliant with the legislation in the areas where it operates. In other words, The Coca- Cola Company has to remain compliant with tax, labor laws and regulations that are related to the environmental protection. Thus, the company is under significant pressure as noncompliance of those rules leads to the high fines for it (Pratap, 2020). Last threat but not least is health concerns. The taste of consumers is changing due to the fact that more and more people become conscious of what they eat or drink, which decreases sales of the company. As The Coca-Cola Company is a soda producer, this fact is an alarming threat for it, as well as for other soda companies (Farooq, 2019). Hence, the Coca-Cola company

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should expand its portfolio in other segments (healthy) but sodas and, as it has been said in weaknesses, to promote the healthy drinks that it has in its products portfolio.

3.2. Porter’s Five Forces Analysis

At his stage the Five Forces model of The Coca-Cola Company is described. Figure 15 shows the main points and brief outline of the analysis.

Figure 12: Porter’s Five Forces analysis of The Coca-Cola Company

Source: Author (2019); Baah (2015), own construction

First, the rival competitors of the company are PepsiCo and Dr. Pepper Snapple. This force is strong. Pepsi is probably the first rival to Coca-Cola as it has similar products and offerings – Coke versus Pepsi. Also, for the non-soda products they have similar interests:

orange juice and bottled water. However, PepsiCo has food products in its portfolio, which gives it benefits concerning the competition, because Coca-Cola does not have such offerings. Hence, if the trends for soda and bottle drinks decreases, Pepsi has an opportunity to use its other lines. Regarding the Dr. Pepper Snapple, it does not have a cola, but it can also offer soft drinks and juices – Dr. Pepper, Snapple, A&W Root Beer, and Sunkist. Hence, it has an advantage over Coca-Cola as the trend towards beverages with less caffeine increases. To sum up, the mentioned companies have some advantage over Coca-Cola.

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Nevertheless, The Coca-Cola Company has extremely loyal consumers, which reduces the described risk to the moderate level (Author, 2019).

Further, the threat of new entrants is a weak force but still possible to happen. The new entrants have no or limited access to distribution channels. In addition, the amount of buttling companies is limited, thus most probably new entrants would have to build new plants. Moreover, due to the high popularity of such companies as Coca-Cola, PepsiCo and Dr. Pepper, new entrants would have to spend a fortune on marketing and advertising to become visible. Finally, the giants of the soft beverage industry have high customers brand loyalty. This fact makes difficult to obtain a significant market share for the new entrants (Baah, 2015).

In terms of threat of substitute, this force is rather strong. The substitutes for the Coca-Cola products may be coffee (e.g., Starbucks), freshly made smoothies, fresh-pressed juices, and other soda brands. Due to the reason that the trend of people becoming more health-conscious develops markedly, there is a threat of substituting cola products to healthier alternatives (Author, 2019).

In the soft drink industry, the power of buyers is strong. Mainly, the buyers are distribution companies that distribute products to fast food chains, vending machine companies, grocery stores, etc. Hence, The Coca-Cola should always consider the final price.

It has to sell its products to the distribution networks and other customers at quite law prices in order they would be able to sell cola products at a price that will bring its consumers back (Author, 2019).

Finally, the bargaining power of suppliers is rather weak, since The Coca-Cola Company uses very common ingredients, such as high fructose corn syrup, sugar, food coloring etc. The company has number of suppliers who provide it with all the ingredients needed. Due to the reason that all the components are readily available, the suppliers have no power over pricing (Baah, 2015).

3.3. Targeting and Positioning

The Coca-Cola Company takes all its customers as a target group, while the most potential group is people in the age range from 18 to 25 (Ramya and Subaasakthi, 2021).

However, each of its products focuses on different age groups, sexes, lifestyles, etc. To illustrate, Coca-Cola light is popular among women who do not want high calorie intake,

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while Coke Zero is bought mainly by men who are health-conscious but who also like strong taste of coke (Hub Pages, 2021). Also, the Powerade, brand of the Coca-Cola, targets people doing sports in the age range between 13 to 27. Further, the brands of the company such as Dansai and Smart Water (bottled water) are focused on health-conscious people (Writer, 2020). Moreover, Coca-Cola focuses on emerging markets, since these markets give an opportunity to gain larger market share. This fact is due to the reason that only a quarter of offered drinks in developing countries are commercial (Sosland, 2021). Further, Coca-Cola focuses on people with different income levels as it offers its products in different sizes and packages (Anders, 2013). For example, for the Coke in a glass bottle one can return and get a certain amount of money for it, which is convenient for people with low income, whereas people with high- or middle- level income can purchase a coke in glass and not return it.

Moreover, The Coca-Cola Company focuses on the household size (Anders, 2013). For a family it is more convenient to buy a two-liter bottle, whereas for a person who is single, it is suitable to buy a bottle of a standard size. In addition, as Coca-Cola operates in more than 200 countries, it should have considered how to reach its potential customers within different countries. Thus, the company has started to use principle “think global, act local”. To illustrate, for the advertisement of Coke in India they have hired a big Bollywood star Aamir Khan (Sroychow, 2016), while for the US advertisement of Coke the company hired Selena Gomez, a famous American singer, in 2016 (Menyes, 2016).

Finally, The Coca-Cola Company is positioned as a same single picture around the globe. Nowadays, it is seen as a piece of a day-by-day life all around. Its consumers are sure that its products are reliable, hence their choice became more programmed whether to choose coke and its other brands or something else. Moreover, Coca-Cola uses unique selling preposition word as “Carry on with coke side of life”, which associated with satisfaction and euphoria. To sum up, when one hears “Coke”, the thing that comes to their mind is joy and happiness (Sroychow, 2016).

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4. Marketing Strategy

The main strategy of The Coca-Cola Company is “glocal” strategy. It represents a combination of local strategy, which seeks ways for satisfying local customers, and global strategy, which basically focuses on the product of the company rather than on particular consumers using a single strategy worldwide. Using “glocal” strategy gives Coca-Cola an opportunity to stay a world-recognized brand while introducing its products into the local economies in a way to create a strong sense of cultural congruence. Even though, the Coca- Cola brand image is recognizable, specifics of local culture are also clear (ProQuest, 2006).

To illustrate, two Coca-Cola advertisements on different countries’ websites will be analyzed. To begin with, Japan website presents a group of young ladies wearing trendy clothes. They are portrayed as a group of friends, who follows Japan fashion trends (colorful hair, japan clothes style, etc.) (Coca-Cola Japan, 2021). In contrast, Moroccan website shows a group of people where women are wearing traditional clothes. Moreover, the ad presented on this web focuses on family relations and how coke matches local traditional food during a family meal (Coca-Cola Morocco, 2021).

Further, product innovation is also a part of Coca-Cola’s marketing strategy. One of the firs innovations was introduction of the classic contour bottle in 1926 (which is recognized worldwide now) in order to distinguish Coca-Cola from its competitors. Then, in 1923 Coca-Cola was sold in six packs that was an innovation at that time. Moreover, in 1982 Coca-Cola was the first soda company that extended its brand. This extension was a Diet Coke that in less than two years became a number one low-calorie soda drink in the world (Chu, 2020).

In addition, Coca-Cola creates a lifestyle for people. As the trend for health- consciousness develops, the company decided to follow it as well. Hence, in 2017 Coke Zero Sugar was announced, Then, Zero Calorie Plus was introduced that helps to inhibit fat absorption and decreases triglycerides in the blood after having a meal. Also, The Coca-Cola Company makes people to find its products in their lives. For instance, by cobranding with fashion (Figure 16, annex 4) and cosmetics brands (Figure 17). To sum up, the company knows their products well and makes the best use of their value. This is one of the reasons why the company is successful (Chu, 2020).

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Figure 13: collaboration of Coca-Cola and Morphe in US, 2020

Source: Morillo (2020)

Finally, The Coca-Cola Company considers the feelings, thoughts and psychological needs of consumers when selling their products (Chu, 2020). For example, in 2020 a Christmas advertisement “The Letter” was announced in more than ninety countries. It shows a loving father who goes through an epic journey to the North Pole to make his daughter’s Christmas wish come true. The campaign conveys a message of hope in a challenging year. Also, it promotes unity and uplift, which are necessary during the COVID- 19 pandemic (The Coca-Cola Company, “Coca-Cola Invites World to ‘Give Something Only You Can Give’ in 2020 Holiday Campaign”, 2020).

4.1. Marketing Mix

4.1.1. Product

First of all, the product mix is analyzed. The Coca-Cola Company owns more than 500 beverage brands that are represented in more than 200 countries (The Coca-Cola Company, “Company Information: At a Glance”, 2021). Moreover, all the beverages are offered in different sizes that vary product to product and country to country (e.g., in US Coke is sold from standard bottle size to 20-ounce bottle; from one can to a 35-cans pack), different packages (e.g., Coke is represented in glass, plastic, and can), and divided in seven categories: sparkling soft beverages, waters and hydration, juices, dairy, plant-based, coffees, and teas (The Coca-Cola Company, “Brands. Beverage Categories”, 2021).

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The Coca-Cola core product is that it quenches thirst by its beverages that are represented in a wide range of soft drinks. Further, the actual product of Coke is high standards and quality that Coca-Cola products offer as well as its design and variety of tastes, packages and number of calories in beverages. Finally, the augmented product is the help line and customer’s complain service that are offered by The Coca-Cola Company (Bear Brand, 2014).

4.1.2. Price

According to study done by (Anders, 2013), The Coca-Cola Company sets prices based on the market, geographical segment and the brand. Besides, it uses competitor-based pricing strategy. As Pepsi is the main competitor of Coca-Cola, prices for Coca-Cola products are almost the same as prices for Pepsi products. Moreover, as soft drinks market is an oligopoly market (i.e., few sellers and many buyers), Pepsi and Coke have signed a cartel contract to maintain pricing balance between them (Alhawsawi, 2016).

Furthermore, The Coca-Cola Company uses customer value-based strategy. The company sets prices for its products that are nor too high for consumers to switch for another products, especially in developing countries where consumers are price sensitive, neither too low to be associated with a poor-quality beverage product (Heart of Codes, 2018).

4.1.3. Promotion

One of the most significant mix for The Coca-Cola Company is promotion, as it targets customers globally. Hence, the company uses powerful advertising techniques. For example, catchy and relatable slogans that influence viewers (Angelica and Mrithula, 2019).

The main communication channels used by the company are described further.

The Coca-Cola Company uses several advertising techniques. To begin with, in terms of print media it applies newspapers, which are used by the company since its early stage, and magazines, which are chosen based on their readability and the company’s target group. Also, the Coca-Cola advertisement often takes an entire page to have a more positive impact of this marketing initiative. Further, The Coca-Cola Company advertise its products through television. These TV ads are created depending on the target country of advertisement, taking into account its culture. Moreover, the Cola products are also advertised in cinemas. It is done either through product placement in the film or through an

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ad shown before the movie. Besides, Coca-Cola uses an outdoor advertising: posters that can be seen in public transport billboards that are placed in the city centers, highways and in some areas of the rural territories (Prafull, 2018). Also, the point of purchase advertising is used by placing stickers and posters in various shops (Angelica and Mrithula, 2019).

Direct marketing is applied by the company as well. The Coca-Cola Company is in partnership with restaurants, cinemas, etc. Hence, customers of these places are offered only cola products and they do not have a choice to buy another brand. Thereby, Cola eliminates competition by these partnerships (Angelica and Mrithula, 2019). In addition, Coca-Cola often sponsors events, different projects and organizations. To illustrate, the company sponsors Apple iTunes, the Olympic Games (Coca-Cola is the longest uninterrupted corporate partner of them since 1928), FIFA, NBA, NASCAR, NCAA, American Idol and others (Rahman, 2020).

Another tool the company uses is digital marketing. It has created accounts in all social media platforms that are popular right now. The Coca-Cola Company’s Facebook account is used to enlarge brand recognition, increase awareness for future campaigns and authority. Further, the company is one of the most active brands on Twitter platform, where it communicates with its customers. Also, Cola uses Snapchat to integrate its campaigns to the messaging app (Seabrook, 2019). Last but not least, the company uses Instagram to promote its products and campaigns and expand brand awareness by cooperating with Instagram influencers and famous persons (Cole, 2019).

Furthermore, The Coca-Cola Company uses Corporate Social Responsibility as a promotion tool. For example, in 2012 the company launched campaign called “Coming Together”. Through it, Cola told its consumers that all calories count, including cola beverages, and that everyone should balance calories intake and calories burnt. This campaign was created because of the obesity issues around the world and the trend for health-consciousness. (Oxford, 2015). Also, The Coca-Cola Company invests in its supply chain and manufacturing network to make it sustainable. All the activities mentioned help the company to make its image on the market stronger (Pratap, 2017).

Besides, Coke uses sales promotion techniques, such as bulk-buying discounts, promotional sales and incentives for the distributors and retailers to place more products on the market (Rahman, 2020). Also, in 2016 Cola launched “Taste the Feeling” campaign which has united all its brands (Pratap, 2017). Lastly, The Coca-Cola Company spends a lot

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of its budget on promotion since it is a global brand that has to expand brand awareness and increase customer loyalty. To illustrate, in 2019 the company spent $4.25 billion on global advertising, while PepsiCo spent only $3 billion on it (Statista “Coca-Cola Company's advertising expense from 2014 to 2020”, 2021), (Statista “PepsiCo's advertising expenses worldwide from 2013 to 2019”, 2021).

4.1.4. Place

Finally, place strategy of The Coca-Cola Company is analyzed. Cola sells its products in more than 200 countries. It has a huge distribution network covering both urban and rural areas (Heart of Codes, 2018). Moreover, the company sells about 1.9 billion servings per day (Pratap, 2017). It uses both direct and indirect distribution. For the direct distribution, the company manufactures and sells finished products directly to the shops (Alhawsawi, 2016). While for the indirect distribution, the company manufactures the syrups, beverage concentrates and sells it to its botting partners. The latter put together the concentrate, sweeteners, still or/and sparkling water. Then they prepare and package all the products, merchandise them and distribute to its partners, who sell the final products to consumers (The Coca-Cola Company, “Coca-Cola System”, 2021).

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5. Research Results

In this chapter the research results and their description are introduced. An online survey (annex 6) was used to conduct the research. It was done for three months (January- March of 2021) and was generated using Google Forms. In order to get more respondents, it was distributed through survey exchange platforms (Survey Swap and Survey Circle), through the messenger (Slack) used by the company the author of the thesis works in, and Instagram. Hence, all the respondents were from either United States (50% of all respondents, i.e., the company’s employees are living in America; for the survey exchange platforms a respective filter was used – only American residents), Russia, Ukraine or Czech Republic.

5.1. Typical Customer of Coca-Cola

The subchapter reviews the research results that were aimed to study the Coca-Cola’

typical customer. It has studied the sex and age, household income level, and employment status. Also, it has found out how the respondents perceive the price and quality of the Coca- Cola, whether they prefer Coca-Cola or Pepsi, where do they usually buy Coca-Cola, how frequently and why they buy Coca-Cola.

Figure 14: Sex and age of the respondents

Source: Own research and construction 50

8 9

1 1

24

11

4 3

1 0

10 20 30 40 50 60

18-29 30-39 40-59 60 Prefer not

to say

Female Male Nonbinary

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Figure 18 shows sex and age of the respondents. Overall, there are 113 respondents.

It can be seen that the majority of them are female in the age range from 18 to 29, while male take only 37.2% of all the respondents in all age ranges. Also, there’s one nonbinary person in the age range from 18 to 29 respondent and one female and three male who preferred not to indicate their age.

The reason that most of the respondents are in their twenties is due to the fact that the online platforms used for this research are mostly used by people in this age range. On Instagram my page is followed only by my friends who are mostly below thirty years old.

While Survey Circle and Survey Swap are platforms where people exchange their surveys, and I have mostly participated in surveys for study purposes (thesis, diplomas, school projects, etc.) because I have almost never met any other survey purposes on the platforms mentioned. However, there are also nineteen people in the age range from 30 to 39, fifteen in the age range from 40 to 59 and one person who is older than 60. The reason for people in these age ranges to participate in the survey is that the questionnaire was launched in the messenger where people I work with communicate.

According to the results it can be seen that Cola is mainly bought by women in the ages between 18 and 29, the age range that is targeted the most (Ramya and Subaasakthi, 2021). Nonetheless, it can be observed that people after 30 years also enjoy Coke.

Figure 15: Employment status of the respondents

Source: Own research and construction

Figure 19 shows the employment status of the respondents. According to the results, most of the respondents (77.9%) are students or those who combine studies and part-time

70 38

3 2

Part-time and study Full-time Independent Prefer not to say

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work. Also, there are 38 people who are employed full time, 3 independent and 2 persons who preferred no to indicate their employment status.

Thus, Coke is more often bought by students and/or part-time workers. This result is most probably connected with the age of the respondents because according to survey results people in the age range from 18 to 29 buy Coke more frequently than people who are older.

Figure 16: Household income of the respondents per month

Figure 20 represents the household income per month of the respondents. It can be seen that for 26 (23%) people this question seemed too sensitive to answer. However, it is certain that most of the respondents (the rest of them) have household income either less than $1000 (18.6%), in the range from $1000 to $3500 (17.7%), from $3500 to $6500 (19.5), or more than $10000 (15.9%). Nevertheless, 4.4% of them have household income from

$6500 to $8000 and 0.9% of the respondents (one person) are in the range of household income from $8000 to $10000.

In result, it can be seen that people with different household income levels buy Coca- Cola. This fact means that the price for Coke is not too high to be purchased only by people with middle- and high-income level but also with low income. Moreover, the price is not too low for the product to be considered poor quality beverage, not to be bought by people who can afford high-quality drinks. This result is further elaborated under Figure 21.

0 5 10 15 20 25 30

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Figure 17: Respondents' perception of Coca-Cola's prices and quality

Figure 21 represent the respondent’s perception of prices and quality of Coca-Cola.

Making a visual evaluation of the chart, it is certain that most of the people (88) that have went through the survey consider price for Coca-Cola to be average. However, there are also those who think that the price is too low (15) or too high (6).

Furthermore, the majority of the respondents (68) believe that the quality of Coca- Cola is even above the average. While 37 respondents think that its quality is average, and 4 people consider it as a low-quality product.

The results of this question in the survey show that the customer value-based strategy, that The Coca-Cola Company uses, works perfectly. Almost no one consider the product to be low-quality to stop buying it. Moreover, there are just few people thinking that the price is too high to switch to the competitors’ products.

Figure 22 (annex 5) shows preferences of the respondents between Coca-Cola and Pepsi beverages. The results are the following. More than 66% of people participated in the survey prefer to drink Coca-Cola, while Pepsi is preferred only by 15.9% of participants.

This percentage is even less than the percentage of those, who likes both beverages (17.7%).

These results show high loyalty of the Cola customers. It means that when having a choice, they will most probably buy Coca-Cola instead of the Pepsi, the main competitor of The Coca-Cola Company.

15

88

4 6

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68

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low average high

Price Quality

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Figure 18: Preferred locations of respondents for buying Coca-Cola (multiple options to select were available for the respondents)

According to the research held, most of the respondents, 80 people, prefer to buy Coca-Cola in supermarkets (Figure 23). Further, many people buy Coca-Cola in restaurants or cafes and cinemas. It means that the promotion strategy of the company, in terms of direct marketing, works great and people buy cola products when offered them in the areas that have partnership or agreement with The Coca-Cola Company. Besides, 23.9% of the respondents buy Coke in the local shops, which means that cola products are easy to find in the areas that are the most convenient for the customers. Nevertheless, only 8.3% of the respondents buy Coke at the University or company canteens they study or work in. This fact is a sign that The Coca-Cola Company should pay more attention to concluding agreements with universities and companies to offer cola products there. This act may increase the number of products sold as well as the revenue.