Marketing questions

Chapter Case Study COCA-COLA: A H ISTORY AN D A FUTURE1 Visit virtually any restaurant, fast-food joint, or convenience store around the world, and the odds are that you will hear someone ask for a “Coke.” Even if the product made by the Coca-Cola Corporation is not readily available, the term “Coke” has become shorthand for virtually any dark-colored carbonated bever- age. The consumer may really end up drinking a Pepsi, or a Thums Up, or Parsi Cola, depending on where he or she is ordering, but few servers would correct a patron who asks for Coca-Cola. It takes a special product to get so ingrained in people’s minds.

TH E BEGI N N I NG A potential headache cure invented in 1886 by an Atlanta, Georgia, pharmacist named John Pemberton, Coca-Cola got its name because one of its curative ingre- dients was an extract of coca leaves, known as cocaine. That ingredient gave the beverage its “kick.” By 1929 though, the kick came only from caffeine.2

Asa Griggs Candler, who became the first president of the Coca-Cola Company, purchased the small market but popular beverage in 1891. Although he appar- ently never really appreciated what he had, Candler is credited with getting the

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Coca-Cola logo into widespread use and acceptance, by embossing it onto items such as clocks, scales, and calendars. He then sent the complimentary Coca-Cola emblazoned gifts to pharmacists that were compounding the beverage for custom- ers. He also pioneered the use of coupons that could be redeemed for free drinks. Coca-Cola moved from the pharmacy directly into customers’ hands when the company sold the bottling rights, for $1, in 1899. By mid-century, the influence of World War II moved Coke abroad. The U.S. GIs took bottles of the popular cola with them to Europe, as unofficial brand spon- sors who introduced the brand to an entirely new international market. By the end of the war, Coke had earned a market share of more than 60 percent worldwide.3

TH E MI DDLE Coke’s success was also partially its undoing though. The Coca-Cola Company introduced new drinks, such as Sprite, Tab, and Fresca, which fragmented its mar- ket. Then the increasing popularity of its direct rival Pepsi-Cola—a fellow immi- grant from the nineteenth century—brought Coke into yet another war . . . the Cola War. By 1985, Coke had a mere 24 percent market share in the United States. Coca-Cola’s response remains fodder for continued debate: With great fanfare, the company announced it had changed the formula for its beverage, and New Coke would soon be appearing on shelves. An uproar, the likes of which had never been seen before, ensued. New Coke did not last long, as customers voiced their complaints over and over again. The company had no choice but to respond; it brought back “Original” Coke with just as much publicity as it had employed to herald its demise. Both products shared shelf space, and they continue to do so in some international markets.4

TH E EN D? NOT REALLY The never-ending Cola War continues. Coca-Cola spends more money on global sponsorship deals with athletes, sports teams, sports entities (e.g., National Bas- ketball Association), entertainers, and events than does any other company. Its expenditures are in excess of $1 billion a year. These sponsorship efforts publicize a company that globally distributes approximately 300 brands of drinks, including carbonated drinks (e.g., Sprite, various flavors of Coke and Diet Coke), sports drinks (e.g., PowerAde), Dasani bottled water, and Minute Maid fruit juices. The headache

Coca-Cola then and now: The price and bottle have changed, but the logo and taste have not.

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cure founded by a Southern pharmacist more than 100 years ago has turned into a multinational conglomerate that offers beverages to slake every type of thirst.5

ONGOI NG EVOLUTION No one could accuse Coca-Cola of resting on its laurels. According to the Interbrand agency, it remains the world’s most valued brand and continues to increase in value, despite the global recession.6 And how does Coca-Cola manage this feat? Adapt- ing to an ever-changing environment is key. For example, with mycoke.com, Coca- Cola gives its monthly audience of 58,325 young U.S. users (http://www.quantcast .com/mycoke.com) a forum to discuss and learn about what is happening in the world of the cola. There are links for people to post videos, look up the latest spon- sored events, play games, win prizes, and save money. Coca-Cola even maintains a presence on the wildly popular social network Twitter. Coke lovers can chat, see the latest company updates, and check on new product development and upcoming sponsorship events—all in real time (http://twitter.com/cocaCola). In addition to the technical and online revolution, perhaps the next most sig- nificant global trend is an awareness of climate change and the need for individu- als, companies, and countries to “go green.” Coke therefore is embracing the credo while still maintaining its unique identity and sponsorship strategies. For example, Coca-Cola is partnering with several entities to spread a green message. With the Westminster City Council in London, England, Coca-Cola has installed 260 recycling bins across the city in an effort to recycle 11,000 tons of waste that would normally be thrown into landfills daily. Of course, London is also the host city for the 2012 Summer Olympics, so its cooperative effort closely ties in with Coca-Cola’s long-standing sponsorship (since 1928) of the Olympic Games.7

At the 2010 Vancouver Winter Olympics, Coca-Cola conducted a carefully cal- ibrated test of its Commitment 2020 plan, by which it aims to decrease its overall carbon footprint by 15 percent in 10 years.8 The test determined whether it could achieve a net zero carbon footprint for the two-week period of the Olympics. But the Olympics feature millions of fans from around the world, consuming massive amounts of food and drink, and zero impact is a difficult goal even in normal con- sumption situations.9

However, compared with its relatively simple recycling effort at the 2000 Athens Olympics, Coca-Cola has significantly increased its green efforts to include the pro- duction of bottles made from 30 percent plant-based materials, using only hybrid vehicles or electric carts to make deliveries, switching to environmentally friendly coolers, and even sporting company shirts made from recycled plastic bottles.10

As one of the first major marketers to commit itself to becoming more environ- mentally friendly, Coca-Cola remains one of the world’s most trusted brands. Its increasing role in responding to and influencing how the world itself is changing and evolving makes Coke a real thing for most of the world.

Questions 1. Visit the company’s website (www.coca-cola.com) and identify and describe

the different product lines that it markets. 2. How would you describe its product line breadth? 3. Review the different product categories in each of the company’s product

lines. Which has the greatest depth? Which has the least? 4. How has the company positioned its brand? How does it go about communi-

cating its position?

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