Coca Cola Distribution Analysis

Autor: Jannisthomas • October 5, 2018 • 1,373 Words (6 Pages) • 755 Views

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Meanwhile, outside the United States which accounts 81% of the 29.3 billion yearly units sold (23.8 billion), their primary method of distribution outside of US is through these independent bottling partners which account for almost their entire sale outside of US. There are more than 275 of this partners exist worldwide, although, Coca Cola heavily relied on five main partners that account 11.4 billions of sale or almost half of the total unit sold worldwide. (Coca Cola Annual Report, 2016)

Now, why Coca-Cola chose to use independent bottling partners for sales outside of US and Use Company owned distribution inside of the US? To analyse this strategy, we need to take a look at three main criteria on what motivates a company to use a certain distribution strategy more so than others.

First is Economic Reason, it is the cost of selling different volume through each channel, comparing sales and cost. Secondly is Control, using intermediaries’ means giving them some control over the marketing of the product. Third is Adaptive reason, it is to keep a long term commitment yet maintain the channel flexible so it could adapt to environmental change

Now in the United States, as the market is more saturated and has lower growth prospects, Coca-Cola use price-realization-led strategy. And to execute this strategy well, that means Coca-Cola need to be more Adaptive and flexible to its environmental change. (Bailey, 2016)

That's why they prefer to use company-owned operations as that means they have more control to all producing and distribution aspect. For example, to respond to a more health conscious market in the United States Coke focused its strategy in selling a smaller package that carries higher price per ounce and delivers better margins. So they will concentrate on creating smaller packages rather than the big one

This kind of changes, of course, would be easier if they have control over their facility and could implement the strategy directly, rather than if they have to communicate first with independent bottling partners.

Meanwhile, for outside of the US market, Coca-Cola is more focused on a balanced between volume and price. The priority of the company is to establish its distribution network, and enhance the scale of the operation. (Bailey, 2016)

That's why they choose to partner up with as many as independent bottling partners as possible so they could penetrate the market more quickly as local partners have a better understanding of their region ecosystem.

As of their non-retailing strategy, they use PeaPod and Amazon, although, online sales doesn't account much of their total sales. This is again due to Beverage/Soda product are the type of goods that is "convenience," products that customers would purchase on the spot.

References

Tanner, John F., and Mary Anne Raymond. Principles of Marketing. Nyack, NY: Flat World Knowledge, 2010. Web.

http://marketrealist.com/2014/12/pepsicos-three-channel-distribution-network/

http://marketrealist.com/2014/12/understanding-dr-pepper-snapples-route-market/

http://www.pepsico.com/live/pressrelease/PepsiCo-Reaches-Agreement-to-Distribute-Certain-Dr-Pepper-Snapple-Group-Brands12082009

https://www.wsj.com/articles/SB10001424052748703303904575292341015388912

https://www.forbes.com/sites/greatspeculations/2015/01/14/dr-pepper-snapple-follows-coca-cola-into-the-at-home-carbonation-market/#5fc5ba092ae1