EXECUTIVE SUMMARY

Coca Cola recently introduced a one brand approach strategy to try and unite four distinct brands, Iconic
and effective packaging to increase brand awareness. They employ cost and competition based pricing
methods to ensure a net profit each year and to remain competitive. For pricing strategies their
implementation of price penetration in new markets and use of premium product image in established
markets to set higher prices and comparatively higher price points. This is coupled with effective
promotion through advertising on TV and the saving of money by promoting all the coke products in the
same advertisement. Coca Cola greatly benefits from intensive distribution as the producers products are
stocked in the majority of outlets and Coca Cola is a global brand name. As a result of these factors Coca
Cola effectively uses marketing strategies together and is hugely successful.

By

Coke Business Report

Timothy Yang
Business Studies
Mr Paul OConnor

PRODUCT
BRANDING
In a significant marketing development in May 2015, Coca-Cola no longer treat its four Coke variants as
separate brands, and will instead bring them all under one overarching strategy. "We've failed to
communicate clearly enough the product differentiation," Bobby Brittain, Marketing Director for CocaCola, told Marketing Week.
While treating Coca-Cola, Diet Coke, Coca-Cola Zero and, Coca-Cola Life, as separate products might be
thought to ensure product differentiation, consumer research showed that 50% of consumers were not
aware that Coke Zero has no sugar and no calories and many were unsure about the difference between
Coke Zero and Diet Coke.
With our new one brand approach, we are uniting four distinct brands under the umbrella of Coca-Cola.
We believe our no and lower sugar variants will benefit from this closer association with Coca-Cola. Jon
Woods, General Manager of Coca-Cola
5 changes Coca Cola made in May 2015:
Coke advertising show their full range of colas
Coke TV ads feature all four variants in the final frame
Packaging clearly highlights the benefits of each variant
The branding on every Coke being the same style, with different colours to distinguish each variant
In 2015, Coke doubled marketing spend for no sugar and calorie colas
The Coca-Cola Company spends a lot of time, energy and money marketing its many different brands. By
advertising all four coke at the same time they save money and the three alternative coke drinks benefit
from original cokes brand recognition, by changing the labels and cans to be in the same design and
advertising them on TV and in print together. However the new Coca Cola Life was labelled a flop by the
26th May Sydney Morning Herald article Coca Cola Life falling short of sales expectations and tasters
reported an unpleasant aftertaste caused by the stevia natural sweetener.

PACKAGING
Coke have made some changes in May 2015, with all coke cans looking almost exactly the same in shape
and only differeing in colour scheme. The colours used, Coca Cola Red and Green are trademarked
colours and the Coca Cola iconic trademarked font is used for Coca Cola. The colour schemes respectively
for Normal, Life, Zero and Diet are White and Coca Cola Red, White and Coca Cola Green, Coca Cola Red

and Black, and Silver/Black/Coca Cola Red. The 375ml Coca Cola can uses the tradition cylindrical can
shape with a pop top and straw holder on top to drink from. The shape of the cans is not a perfect
cylinder, with a lip to drink from at the top that is not sharp, and a concave bottom for easy stacking and
optimal material usage. The can is pressurised at 55psi and fizzes when opened. All cans clearly show
nutritional content and clearly state the benefits of each drink. The colour of the liquid is dark and amber
which is consistent across all versions. Cans come in packs of 6,10,24 and 30.

BENEFITS AND EFFECTIVENESS OF PACKAGING

The benefits of cokes packaging are that it preserves the product, protects it from damage or tampering,
attracts customers attention, divides the product into convention units making transportation and story
easy, and assists with the display of the product. By having the concave bottoms Coca cola can are easy to
stack and have decreased the weight of the cans from 18.6g to 13.7g from the 1960s. By having
pressurised cans Coke made their cans fizz, which people associate with freshness. The packaging of Coca
Cola does a very good job highlighting the differences and benefits of each coke. Having the Coca Cola
red and green can also makes it easy for consumers to distinguish Coca Cola from other products. By
trademarking the Coca Cola can colours and font they have established an identity that triggers brand
recognition.

PRICE
PRICING METHOD AND STRATEGY
To determine its price, I believe Coca-Cola use cost-based pricing for its Coke. They first determined the
costs for the product, and set a price taking into account their markup percentage. I believe this to be true
as the ingredients for Coca Cola do not cost a lot, the main ingredients being a sugary syrup and
carbonated water. As the major player in the soft drink business and the markets preference for either
Coke or Pepsi where they are more likely to establish loyal lifelong customers, Coca Cola stays at roughly
the same price when not on promotion for example $20 for a 24 pack as a cut in price would usually not
cause a switch. I also believe this is the case as Cost based competition is mainly used by wholesalers and
retailers, in this case Coca Cola.
An observed strategy Coke implements is to lower price points when entering new markets that are
especially price sensitive for example developing nations such as Pakistan. By doing so, it allows Coke to
face their competition and raise brand awareness. However they also employ competition based pricing
when entering new markets, by undercutting the competition, such as in Pakistan. When they are
established, in markets like Australia which are not as price sensitive it repositions itself as premium
superior product with a higher price compared to numerous competitors like Pepsi, with an image of
bringing intangible benefit in lifestyle, group affiliation, and moments of joy and happiness. Coke then
sets a price slightly above its competitors and then have higher price points. Competition based pricing
would also occur in trade deals, where major retailers and fast food would be offered lower prices in
exchange for exclusive distribution at fast food outlets in cans such as KFC and also more shelf space for
their lines and refrigerator presence and promotion.
However, its fierce rivalry with Pepsi has forced Coke to maintain affordable price points to appeal to its
middle class customers. Coca Cola will also have different price points for different segments of the
market for example high price points for the convenience customer who buys single small cans while
lower price points for the grocery shopper who buys in bulk packs of cans for the family.
This pricing method and strategy is largely successful, allowing Coke to operate at a net profit margin of
19% in 2014. However during periods of economic hardship namely the great recession it was criticized
by shareholders and analysts for maintaining relatively low price points to appeal to its vast middle class
market. Cokes pricing method of cost based pricing allows it to operate at a net profit and its strategy of
price penetration and then repositioning as a premium product is clever.

PROMOTION
ADVERTISING
The promotion method most used is advertising, used by Coke as a method of increasing company
awareness. It mainly uses television using young unknown actors instead of celebrities as opposed to
Pepsi promoting an image of bringing intangible benefit in lifestyle, group affiliation, and moments of joy
and happiness. Coke has television advertisements targeting 2 main demographics. The is first young
people who are targeted by unique and fun advertisements, for example skysurfing or jumping into a
huge bottle of coke with an air blower at the bottom with the tagline open happiness or friendly twist
meeting new friends by asking them to open a bottle of coke and sharing it. The second is the grocery
buyer who is targeted by images of family togetherness with the tagline around the table showing
different types of families of all cultures and races enjoying coke around the table. In the past up until
May 2015 when they adopted the one brand approach they also had billboards and print advertisements
providing information about specific new products such as Coke Zero or Coke Life. Now all Coke TV ads
feature all four variants in the final frame
By segmenting the market and identifying the two main types of people who buy their products,
convenience shoppers (young people) and grocery buyers (the parents of the family) and knowing what
types of advertisement would catch their awareness and make them interested in Coke, Coca Cola has
smartly taken advantage of what captures our interest and helps Coke promote its intangible benefits and
premium image while raising brand awareness. Before May 2015 they spent a lot of money promoting
the coke brands separately which is now all promoted together on the same billboard or at the end of each
TV advertisement which saves money and gives the alternative coke products brand recognition.

DISTRIBUTION CHANNELS
Coca Cola uses an intensive distribution channel as the producers products are stocked in the majority of
outlets. I believe this is because Coke products are used every day and replaced often and may be found
in dozens of different retail outlets in any given area. Not only does intensive distribution provide
convenience and availability to consumers, it also increases their brand preference and loyalty. The
purpose of this type of strategy is to put so much of a soft drink in so many locations that a customer will
come across the product frequently, making it easy for them to remember and also buy the product.
78o Coca Cola greatly benefits from intensive distribution. As a result their products and their brand
name are seen and are available everywhere. As a result, Coke can easily become the recipient of product
loyalty as it is readily available. It is officially available for sale in all but two countries in the world, and

Coke proudly advertised that they sent 3 travelers on an expedition to 186 countries where coke was sold.
This has made Coke one of the most recognised symbols in the world today and its 48.6% market share of
the world soft drink market means it has more than double of its closest competitor, PepsiCo Inc. with
20.5%.