Critical Analysis Article( no more than 3 pages)

Background

Coca cola is one of the largest company selling soft drink in the world founded by Dr. John Stith Pemberton on May 8, 1886 in Georgia. Later in 1889, the brand was owned by Asa Candler who made most of his money selling coca cola. Atlanta serves as the home for parent headquarter producing over 500 brands across nations. Presently, the company is facing decline in sales due to health concerns that sugary drinks contribute to diabetes and obesity.

The new CEO Mr. James Quincey is task with steering the company out of financial problems. According to a previous study asserts that, the company has seen global sales slide with revenues falling from $49 billion in 2011 to $43.4 billion last year. The greatest obstacle that the CEO is battling is the ongoing sugar demonstration. In fact, the Atlanta Company, which is largely profitable, has seen its core coke brand slipped and soda sales stalled in the U.S. market. This is because many people opt for soft drinks that are lower in sugar. As a result, the beverage market is more divided as new choices continue to materialize. In light of this, the CEO is pushing to widen its line up with non-fizzy brands.

Problem statement

With the anti-sugar brigade growing stronger daily, the Company need to come up with brand innovation in cola carbonates which are lower in sugar through partnership with bottling partners. In addition, the company should ensure such experiments meet the needs of their customers.

Alterative Solutions

The company can improve sales and profit margins by making structural rearrangements to deal with new marketplace realities. In this case, Coca-Cola Company should consider downsizing its workforce in order to save money. In an interview the Coca-Cola spokesman Kent Landers says “we expect to see changes throughout our corporate organization, including Atlanta and elsewhere, as we fundamentally change the way we work to be faster, more agile and more efficient” (Grant, 2013, p. 26).

In addition, the company needs to invest heavily in digital marketing if it wants to double the number of users who currently access its apps worldwide. According to Quincey in order to have a “good sense of marketing” the company will prioritize digital even if it affects the return on investment (ROI) (Cunningham & Harney, 2012, p. 34). This is crucial at time the company looks to align its brand approach across international market.

The company could create a new brand of soft drink that is all-natural or with no calories following the sales decline due to health concerns that sugary drinks contributes to tooth decay, type 2 diabetes and obesity. Currently, the company has captured the Australian market with a new brand Coca-Cola plus coffee zero sugar. Australia is the second largest consumer of coffee and so far, the company has doubled its market share (Grant, 2013, p. 27).

Recommendations

Downsizing may present itself as a viable solution to coca cola increasing cost of operations. However, downsizing workforce introduces many challenges and changes into a company. The remaining employees may have feeling of unease, discomfort or anger leading to high level of stress and even conflict between team members. In my view, the best alternative is to create a new type of product that is low in sugar but most importantly meet the needs of their consumers (Gertner & Rifkin, 2017, p. 3).

For instance, when it developed and launched its gold peak tea brands about a decade ago, the brands passed $1 billion in annual retail sales in 2015. Currently, the company has added 10 more brands to its billion-dollar portfolio across different beverage categories. According to the group director Geoff Henry, tea portfolio, Coca-Cola North America says, “Gold Peak has one of the best conversion rates in the category, which means once a consumer tries it, they come back and buy it again.” (Bevnet, 2017)

Tracking Metrics

The intermediate metric should determine the effectiveness of diversifying to new marketplace.

The conclusive metric should determine the success of the strategy based on return on investment. If it is positive, the strategy is successful.

Summary

What I have learned from this critical analysis exercise is that brand innovation is significant to any company that wishes to remain in a competitive market. Companies that are successful innovators know what consumer want. In fact, they have a broad understanding of the lives of their consumers, and the context in which their products are used. In addition, such companies with successful innovators have a knack for finding the best spot between what makes them unique and what their customer really values. I believe Coca-Cola did not quickly respond to product innovation when its sales started plugging down. If the company had responded immediately to health concerns about effect of sugary drinks, it could not have suffered losses in terms of market share.

References

Cunningham, J., & Harney, B. (2012). Strategy & strategists. Retrieved from https://global.oup.com/academic/product/strategy-and-strategists-9780199219711?cc=us&lang=en&

Gertner, D., & Rifkin, L. (2017). Coca-Cola and the Fight against the Global Obesity Epidemic. Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/tie.21888/full

Grant, J. (2013). Brand innovation manifesto: How to build brands, redefine markets and defy conventions. Retrieved from http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470027517.html

Bevnet. (2017). Coca-Cola’s Gold Peak Tea Becomes a Billion-Dollar Brand.

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