The Situation
The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, the world’s most valuable brand. The
company’s portfolio features 16 billion-dollar brands including Diet Coke, Fanta, Sprite, Coke Zero,
vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, Coca-Cola is the No. 1
provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy these beverages every day.
It all started back in 1886, when an Atlanta pharmacist created a caramel-colored liquid and brought it
down the street to Jacobs’ Pharmacy, where it was mixed with carbonated water and sold for five cents a glass. The beverage caught on, and sales took off from the initial average of nine drinks a day, to today’s total of 1.7 billion Coke-owned beverages consumed daily. The success spawned bottling plants, six-pack cartons, international distribution . . . and imitators. For example, Pepsi followed in 1902 and today is a $29 billion conglomerate with vast holdings.
Both companies (Coke and Pepsi) spent decades marketing a single brand, Coke or Pepsi. But over the
course of the twentieth century, they both expanded their product lines by introducing drink alternatives such as Fanta, Sprite, TAB, Fresca, and Diet Coke (Coca-Cola) along with Diet Pepsi and Mountain Dew. The relatively simple segmentation that these offerings suggested has since grown increasingly complex and sophisticated, especially as the competitors have expanded their international sales into hundreds of diverse country markets. Although they face a number of smaller competitors, the primary focus in this mature market is to take customers away from its main rival or find a way to encourage existing customers to drink more cola—both challenging tasks. For Coca-Cola, the best solution is to pursue extensive product development for new and different market segments.
In a tightening, competitive consumer market, Coke has developed unique products for various specific market segments. Because these unique products appeal to specific groups, Coke has been able to increase its sales without cannibalizing the sales of its other products. In addition to the products already mentioned, for example, the company launched caffeine-free versions of both Coke and Diet Coke to appeal to cola drinkers who wanted to cut back on their caffeine intake but preferred colas to lemonlime– flavored drinks. By introducing these decaffeinated versions of traditional sodas, Coca-Cola increased the number of sodas it sold each day, without hurting sales, because the consumers targeted by these products already had been avoiding or minimizing cola consumption to reduce their caffeine intake.
This case was developed in conjunction with the Coke Zero case study in Marketing, 4e by Grewal & Levy (McGraw Hill)
and was created for class discussion purposes only. Some information also provided by the Coca-Cola website.
