Key Success Factors of Coca Cola

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The likelihood of new competition and substitute products entering the company’s market

The beverage industry spends large amounts of money on marketing and advertising and this has resulted in high brand loyalty from customers all over the globe. Coca-Cola spent $3.499 billion on advertising and marketing in 2014. Advertising accounted for 6.9% of total revenue and marketing was 15.2% of total revenue. PepsiCo Inc. spent $2.3 billion on advertising and 3.9 billion on marketing in 2014. This strategy by Coca-Cola makes it difficult for new beverage companies to compete. The competition for shelf space in grocery stores makes it difficult for new companies to find a place to sell their product. Coca-Cola consumers are very loyal and the threat of consumers switching to a substitute product is very low. The beverage industry is not very price sensitive.

Any actions the company’s Operations and Logistics management can take to improve the company’s value chain through, changes, competitive pressure and bargaining power.

In order for Coca-Cola to maintain its share in the market it will need to continue to innovate and expand its products to meet the consumers changing preferences and behaviors. The changing health-conscious attitude of the market could have a serious effect on the bottom line of Coca-Cola. Coca-Cola will need to increase awareness of their other drinks, like ready-to-drink teas, juices, and bottled waters.

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References

The Coca-Cola Company (2014). Annual Report: 2014. Retrieved from http://www.coca-colacompany.com/.

Euromonitor (2013). Coca-Cola Co, The in Soft Drinks (World). Retrieved from http://www.euromonitor.com/.

World Demographics Profile (2013). World Demographics Profile 2013. Retrieved from http://www.indexmundi.com/world/demographics_profile.html.