Analysis Of Coca Cola’S Communication With Customers From Various Cultures

Executive Summary

It is indisputable that one’s success in life is pertinent to his or her personal communication skill in the society. Good communication techniques can help other people to understand the words we say and recognize us in some way. In addition, this golden key to success also applies to organizations or businesses as it is related to the reputation and trustworthiness of a body. The purpose of this study is to examine Coca Cola’s success in communicating with its buyers from various cultures. Coca Cola, as one of the greatest and biggest companies in the soft drink industry and the world, has always been prevalent and essential for many people over the last hundred years. Certainly, such achievement requires the efforts of people from different generations. Hence, this paper explored the secret behind this soft drink giant by looking at its marketing and PEST&SWOT analysis from the past to present. Furthermore, it discussed the advantages of the brand for being a renowned name in the public. So, what does the brand “Coca Cola” mean to us? And what does we, as consumers, mean to the brand?

In order to speak sensibly about Coca Cola’s case, I guess it is important to first establish a basic understanding of the word ‘brand. ’ Indeed, many people would simply define it as the name, logo or images of a company, which represent a certain types of products or services. However, if we think deeply and carefully, it is obvious enough that a brand is not merely a symbol, but also an ideas or concepts that have injected into our brains. Moreover, it is created with a marketing aim with an intention to make something recognizable in our everyday life [Hearn, 2008]. So, is this how the Coca Cola brand become so popular today? If we answer the question above from a marketing and business perspective, this is indeed the reason behind Coca Cola’s success. Honestly speaking, you will visibly realized that you can never get away from the Coca Cola logo in daily activities, no matter which part of the world you are at. A report prepared by Polaris Institute in 2005 issues that Coca Cola has dominated the drink industry. With its catalogue of approximately 400 drink brands, four of the top five selling soft drink brands in the world are owned by Coca Cola. This means 1 in every 10 non-alcoholic beverages we buy from the market are supplied by this soft drink super brand [Girard, 2005].

Meanwhile, Coca Cola invested more than 2. 2 billion dollars in 2004 on its product advertisements; and millions of dollars every year to convince us that its products does not cause harm to our health [Girard, 2005]. This is devastating in terms of number. The amount of worldwide publicity of Coca Cola is certainly one of the main reasons why the brand has become so popular in human history. However, did Coca Cola spend their money merely intending to get publicity? In fact, the company is also creating brand values with the consuming public as it advertises the brand. Brand value is an important and fundamental factor in branding. In other words, it is building “bridges” between a brand and its various customers from different cultures. Holt (2010) reveals the importance of creating brand values in branding strategies. It is considered as a potent means to establish competitive advantage, which can also generate significant impacts on the image of a brand. In addition, Holt thinks brand cultures are “sticky” as people do not easily give up the conventions they get used to. He also addresses that there is an unhealthy phenomenon in marketing, which often perceive branding as an advertising means, which seem to have ignored the importance of creating a relationship with customers. So, has Coca Cola done well in creating value in our society? The answer is: yes. Essentially, throughout the history of Coca Cola it is easy to discover that the company’s marketing and public relation strategies have always been aggressive and significant. The company has been looking for ways at any opportunity to creating brand value in our communities. Obviously, they have succeeded in doing so. And this is what makes the company so unique and successful for more than 10 decades.

Introduction

Company Background

The Coca-Cola Company was established in 125 years ago [Coca-Cola history]. Its manufactured the carbonated, sweetened soft drink it called Coca-Cola or the nickname called Coke. The drink's name refers to two of its original ingredients: coca leaves, and kola nuts. Originally intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton and was bought out by businessman Asa Griggs Candler, whose marketing tactics led Coca-Cola to its dominance of the world soft-drink market throughout the 20th century. The Coca-Cola Company has on occasion introduced other cola drinks under the Coke name. The most common of these is Diet Coke, along with others including Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla, and special versions with lemon, lime, and coffee. Based on Interbrand's 'best global brand' study of 2015, Coca-Cola was the world's third most valuable brand, after Apple and Google [Iterbrand’s “best global brand”, 2015]. According to Coca-Cola web page, Coke products were sold in more than 200 countries worldwide [How many countries sell Coca-Cola?], with consumers drinking more than 1. 9 billion company beverage servings each day [Drinks are Coca-Cola sell worldwide each day]. Besides, Coca-Cola ranked No. 100 in the 2019 Fortune 500 list of the largest United States corporations by total revenue [Coca-Cola’s ranking in Fortune 500, 2019].

Company mission & strategy

A mission serves as the objective for which a business exists. A vision has a long term value, is a very important part of a company’s strategy. Its mission statement in three small lines: to refresh the world; to inspire moments of optimism and happiness; to create value and make a difference [The Coca-Cola Company’s Mission, vision and values]. In addition, they are focuses on five strategic actions [The Coca-Cola Company’s five strategic actions]: Out of Coca-Cola and Pepsi, the only two largest manufacturers of soft drinks in the beverage segment, Coca-Cola has the largest market share. According to Beverage Digest, Coke's market share has risen from 17. 3% to 17. 8%, while Pepsi's has dropped from 10. 3% to 8. 4% [Why Coke is winning the cola wars, by Danielle Wiener-Bronner, 21 February 2018, CNN Business]. Hence, they focused on driving revenue and profit growth on mass markets.

Moreover, healthy businesses require continuous investment and Coca-Cola is a highly popular brand with a unique brand identity so they invested in their brand and business to the largest brand valuation. On the other hand, they increased their efficiency and productivity while reducing costs became more efficient. For simplified the company, they removed a layer of functional management and connected their regional business units directly to headquarters, streamlined a number of important internal processes and removed roadblocks and barriers. Last but not lease, they refocused on their core business model, acquired and managed a number of Coca-Cola bottling partners with the aim of improving performance, optimizing manufacturing and distribution systems, and ultimately refranchising the bottling territories back to independent status [Refranchising of Company-Owned Bottling Operations in the US].

PEST analysis

Company analysis

“ Even in a temporary environment of steady or slightly declining disposable income, Coca-Cola’s research suggests that consumers are unlikely to forgo soft drinks” [Kono,1994, p. 85], consumers thought Coca-Cola as an inexpensive pleasure and hence were affordable to their limited income. There have also been a lot of new competitors emerging in the industry and Coca-Cola Company is seeking to maintain their market domination. Below is the PEST analysis for the Coca-Cola Company which are analysis identifies changes in the market caused by political, economic, social, and technological factors.

• P for Political Factors

This external factor mainly deals issues such as law and restrictions. It also implies on the tax/legal duties a firm needs to pay attention when doing business locally or internationally. Political factors are very important because it varies from not only states but also country to country. The factors such as tax policy, trade limit, environment policy, laws imposed on the recruiting labors and services provided by the government. Coca cola just like any other company has legal and political issues surrounding it, mostly for Coca-Cola it is mainly usually about health and safety of products and consumer rights. Thus, culture, politics, economic situation and even laws are some factors that affect businesses directly. The political factors which can have a direct impact on Coca Cola are laws and government regulation of food products. Coca Cola is a brand that is highly dependent on governmental policies about sugar and caffeine consumption. If changes in the political situation of the countries like government changes or any political turmoil can potentially impact its business. For example, the Food and Drug regulations apply to its business in US; The UK is one of its main markets which rise of taxes on sugar production, is also an imminent threat to Coca Cola [UK pushes ahead with sugar tax, 5 December 2016, BBC]. These issues potentially impact their business and revenue.

• E for Economic Factors

Key economic factors include interest rates, disposable income, unemployment rates, retail price index, gross domestic product (GDP) and exchange rates. This factor also analyses the economic condition of a country such as supply and demand conditions. There are many economic issues as far as food and beverages concerned in the world. Economic factors include economic growth, interest rates, tax rates, exchange rates, the inflation rate, labor costs and others. These factors have major impacts on how business operate and make decisions. The consumption of water in huge quantities is a factor that affects Coca Cola in various ways. In the Mumbai of India, some local farmers blamed Coca Cola for giving rise to water shortage through over consumption [Water shortage shuts Coca-Cola plant in India, by Avantika Chilkoti, 19 June 2014]. The Coca-Cola company is forced to spend a huge amount of its budget on solving water crisis issues and ensuring that their water demands are met. According to its website, in 2017, their water efficiency improved for the 15th consecutive year, with a 2. 55% improvement over 2016, a 15% improvement over 2010 [Improving Our Water Efficiency, 29 August 2018]. On the other hand, the rising cost of raw materials is a reason. Coca Cola uses some very basic ingredients to produce its products, and these ingredients are always rising in prices. The company can be seen shifting its production base to various countries where the raw material costs are lower.

• S for Social Factors

Social factors are just as important from a business point of view, it changes sometimes may impact on change of goods or demand of the product in the organization because of the cultural issues such as religion, race, ethnicity and heritage/tradition which imposes restriction on goods. According to the Dr. R. K. [Singla, 2011, Page 28] “Business in born and develops in society. Therefore, the effect of various social factors on business is but natural. Social factors include customs, fashions, traditions, wishes, hopes, level of education, population, standard of living of the people, religious values, distribution of income, corruption, family set-up, consumers’ consciousness, etc. ” The importance of culture as a major factor in international trade has already been recognized by research. Its impact on the businesses cannot be underestimated. Culture’s importance can also be understood from a marketing perspective. Coca Cola cannot ignore its importance particularly in the developing markets. The trend of healthy lifestyle and increasing level of consumer health concerns towards obesity fuelled by sugar and carbonated drinks has direct and significant effect on Coca Cola performance which can be specified as the most important social change. Media has also played an important role in changing people’s perception of soda drinks which are mainly seen as ‘loaded with calories’. Such trends can lead to a decline in the popularity of Coca Cola products. People are adopting healthier lifestyles and moving away from anything which can add to their weight including soda. Because of people moving towards healthier drinks, Coca Cola had to focus and invest more on its marketing efforts. Therefore, Coca Cola introduced several low calorie products to adopt to these changes, such as Diet Coke and Coke Zero.

• T for Technological Factors

Technology is an important factor for the large businesses like Coca Cola. Technological efficiency ensures timely production and an efficient supply chain. Their production and packaging as well as distribution, depend heavily on technology. In order to remain profitable, Coca Cola has to focus in production technology investment. Also, the manufacturing machine which requires a lot of investment and maintenance. Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furethermore, technological shifts can affect costs, quality and lead to innovation. According to the Dr. R. K. [Singla, 2011, Page 28], “Technology includes new methods of production of goods, services and discovery of new implements. Technology changes make available better methods of production and that makes the optimum use of the raw material possible. The technology changes offer both the possibilities and threats for business. In case a company understands these things well in time it can achieve its objective, otherwise the very existence of the company is threatened. ”

The new technology advances like the internet that use incomparable effects for advertising through the use of social media helps promote Coca-Cola’s products. Coca-Cola is one of the most recognizable brands worldwide and it has one of the highest follower bases hroughout the various social media platforms. At the same time, The Coca-Cola Company uses these platforms quite actively to campaign for its products. Coca Cola currently has 108 million followers on Facebook [Product brands with the most Facebook fans, Statista, 2019], 3. 34 million followers on Twitter [Coca-Cola’s Twitter], and such high numbers in other platforms as well. So, these platforms serveas the primary method for the brand to reach its target market. Social media-based advertising has turned out to be a boon for Coca-Cola’s brand. Combining with Technological advancements such as AI bases analytics and big data operations have also served the brand in deciding markets trends and service chain management processes. Coca-Cola utilize the AI bases analytics and big data operations to the target customers, in order to driving their profit growth. Coca-Cola North America is launching a digital marketplace this fall that connects its foodservice customers to pre-vetted, industry-best restaurant technologies with competitive pricing. This ecosystem, which has been in planning and development over the last two years, will be fueled by proprietary technologies, analytics and tools available only for Coca-Cola customers aimed at optimizing customer business operations and driving their profit growth [Coca-Cola North America to Launch Digital Marketplace with Leading Foodservice Technologies Powered by Omnivore, 25 June 2019].

Conclusion

In conclusion, Coca Cola’s success in branding is obviously achieved through its efficient marketing and public relation strategies. For certain, cultural integration is also an important factor as it successfully helps the company to enter into different human cultures and become part of it. From studying the Coca Cola’s case, we can say that integration process between a business and culture is achieved through Holt’s concept of creating values in branding. It is obvious enough to say that Coca Cola has always been doing well in completing these tests. In other words, if Coca Cola were to be a person, it would definitely be a great communicator who speaks several languages and has extensive knowledge about various cultures. In addition, it appeared as different characters in different time, occasions and cultures. This feature establishes a relationship between Coca Cola and cultures and offers the people with these cultures a sense of belonging of the brand. This is indeed a good and successful example for all businesses. However, we, as customers, should get a clear understanding of these strategies aims and the purposes behind these super brands.