Coca Cola Drinks In A Time Of Economic Difficulty Business Essay

“ Always Coca-Cola! ” This motto was used in 2003 by the Coca-Cola Company, but old ages subsequently it still resounds. Despite, the uninterrupted changing of consumers ‘ demands, wants and life styles, economic down-turns and increasing competition in the market place, Coca-Cola has managed to ‘always ‘ take first topographic point as the universe ‘s most valuable trade name, since 2001. ( Interbrand Best Global Brand Surveys, 2001-2010 )

This study is intended to explicate and analyze why the gross revenues of Trademark Coca-Cola drinks, viz. Coca-Cola, Coca-Cola Zero and Coca-Cola Light/Diet Coke were all ‘immune ‘ to the economic recession. The analysis will be within a consumer behavior range. Inevitably, the relationship of consumer behavior to other subjects will be seen. First, there will be a brief history on Coca-Cola and a reappraisal of its public presentation over the last 4 old ages. Subsequently, the Consumer ‘s Buying Decision Making Process in relation to Coca-Cola drinks will be discussed. Then, there will be an scrutiny of how input factors from the Buying Decision-Making Process Model such as, the company ‘s selling mix and single factors such as attitudes might hold influenced consumers ‘ behavior in the purchasing procedure and enabled Coca-Cola to be successful throughout the old ages, even during the recession. Additionally, the influence of mention groups would be discussed as it is purported to be another property to the trade name ‘s success during the recession.

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It is worthy to observe that, harmonizing to the National Bureau of Economics Research the recession started in December 2007 in the US. However, states could hold experienced a recession at different times ( imf.org ) . Therefore, the survey is based on 2007-2010 clip period.

2.1 Coca-Cola ‘s History and Performance Review

When carbonated H2O is added to a sirup made from Coca foliage infusions, Cola nut, sugar and citric acid, the reviewing Coca-Cola drink is produced. Its name was derived by uniting its two chief ingredients Coca and Cola. The Coca-Cola expression was concocted by a passionate doctor and chemist named Dr. John Stith Pemberton in 1886. Dr. Pemberton ‘s end was to contrive the ultimate medical specialty and tasty imbibe all into one. ( Business Heroes, 1998 ) Therefore, Coca-Cola was ab initio marketed as a “ valuable encephalon quinine water and a remedy for all nervous fondnesss such as concerns, neuralgia, craze every bit good as a delightful, reviewing and inspiring drink ” ( curezone.com ) . Although, some ingredients have been added or removed to heighten the drink but non to alter the gustatory sensation excessively much, up to this twenty-four hours it is non certain if the Coca-Cola Company still includes Coca foliage infusions.

The Coca-Cola drink was sold for 5 cents a glass and merely an norm of 9 spectacless of Coca-Cola were sold daily in the 1880 ‘s. Many old ages subsequently, the Coca-Cola Company produces gallons of syrup day-to-day and “ about 1.6 billion times a twenty-four hours, people around the universe enjoy one of our drinks ” ( Coca-Cola Annual study, 2008 ) . The dressed ores and sirups that are manufactured are so sold to licensed Coca-Cola bottlers in more than 200 states.

Coca-Cola has become a multi-million dollar profit-making company and has been able to go on that tendency even during disputing economic times. Although harmonizing, Brian Morgan, Beverages Industry Analyst, planetary value gross revenues had declined in the soft-drinks market ( Euromonitor web log, 2010 ) . Coca-Cola was affected insignificantly by the planetary diminution and this was reflected in its fiscal studies.

The Coca-Cola Company ‘s amalgamate Net Operating Income before Interest and Taxes ( NIBIT ) had increased from $ 7,252m in 2007 to $ 8, 446m in 2008. However, there was a 2.5 % diminution in ( NIBIT ) from 2008-2009. The impact of the diminution was undistinguished because of the company ‘s well balanced portfolio, well-known trade name and advanced schemes. Another index that the company was making good during the recession was the steady addition in hard currency dividends payments. The hard currency dividend payments to stockholders in 2007, 2008, and 2009 were $ 1.36, $ 1.52, $ 1.64 severally ( Coca-Cola Annual Review, 2009 ) .

“ The gross revenues of Trademark Coca-Cola, which includes Coca-Cola, Coca-Cola Zero and Diet Coke/ Coca-Cola visible radiation, are what fuel our concern ” ( Coca-Cola Annual study 2009, p.16 ) . Trademark Coca-Cola has seen volume unit growing in 2009 for many of its markets around the universe including Vietnam ( 27 % ) , India ( 25 % ) , Pakistan ( 18 % ) and Nigeria ( 11 % ) to call a few ( Coca-Cola Annual study, 2009 ) .

‘Solid public presentation ‘ has been reported for Coca-Cola in its 2010 3rd one-fourth and year-to-date company study. As at the stoping of October, Operating Internet Grosss had increased by 5 % . Furthermore, the worldwide unit instance volume had increased 5 % . This volume growing was led by the trade name Coca-Cola ( Coca-Cola Year-to-Date study, 2010 ) . Please see Appendix 1 & A ; 2 for more indexs of the Coca-Cola Company ‘s resiliency to the 2007-2010 economic down-turn.

3.0 Discussion and Analysis

3.1 Routinised Response Behaviour

Research workers have identified three chief degrees of consumer determination doing. They are extended job resolution, limited job resolution and routinised response behavior degrees ( Schiffman et al 2007, p.526 ) .Consumers would hold engaged in a routinised response behaviour degree with respects to Coca-Cola drinks. This is because the hallmark trade name has been in the drink market for old ages and so consumers would hold had experience with it and other trade names. Besides, consumers would hold established a set of standards good plenty to measure the Coca-Cola trade name against other trade names ( Schiffman et al, 2007 ) .

Additionally, due to the low-involvement of consumers in buying Coca-Cola drinks, consumers are able to do speedy determinations and they would hold so relied to a great extent on heuristics, its monetary values, packaging and their acquaintance with the trade name. This would so hold led to people buying Coca-Cola out of wont and in some instances automatic purchases. Therefore, it can be argued that because of the trouble in interrupting their accustomed purchases and the small idea that goes into purchasing Coca-Cola drinks, consumers continued to purchase Coca-Cola during the recession which made Coca-Cola ‘immune ‘ .

3.2 Effective Marketing Mix

Another ground why Coca-Cola was resilient to the recession could hold been because of the company ‘s effectual selling mix. The Coca-Cola Company has been able to construct its trade name throughout the old ages by utilizing the right blend of marketing mix for the Trademark Cola-Cola drinks. Coca-Cola ‘s selling mix attempts will now be discussed.

Merchandise

Some people argue that the gustatory sensation of Coca-Cola makes it really popular and gives it a competitory advantage. Furthermore, people have demonstrated their love for the gustatory sensation in different ways. One well-known incident was when consumers rejected the new expression of Coca-Cola, the ‘New Coke ‘ . The company was compelled to convey back the original gustatory sensation of Coca-Cola ( Fortune, 1985 ) . Coca-Cola ‘s hallmark is its merchandise name ‘Coca-Cola ‘ in a alone white book against a bright ruddy background. This assists clients to easy place the trade name in food markets, stores and advertizements. The Coca-Cola drink is packaged in aluminum tins, glass and plastic bottles in a scope of sizes ; 2L, 1.25L, 500ml and 330ml. Although fluctuations have been made to the form of the glass and plastic bottles, “ The contour bottle remains the signature form of Coca-Cola today and was chosen for its attractive visual aspect and original design… ” ( Coca-Cola Heritage Timeline, 1905-1918 ) .

Monetary value

Coca-Cola is priced somewhat higher to the monetary values of non-popular Cola trade names such as shop trade names but the same to chief rival, Pepsi. For case, in England the monetary value for a 2L bottle of Coca-Cola and Pepsi is ?1.66 while a 2L ASDA shop trade name Cola is ?0.47 ( asda.com ) . During 2007-2010 the monetary value of Coca-Cola was increased for some parts like North-America due to increase trade good costs for the bottlers and to other recessive force per unit areas. ( Coca-Cola Company Annual Report, 2008 p.47 )

Promotions & A ; Ad

Coca-Cola makes big investings in publicities and advertisement. Ad costs for 2006, 2007 and 2008 has been $ 2.6b, $ 2.8b and $ 3.0b severally ( Coca-Cola one-year study, 2008 ) . In 2007 there were publicities in Europe for Rugby World-cup and for the Christmas vacations ( Coca-Cola Annual Review, 2007 ) . There were many point-of-sale publicities world-wide in 2008. Loyalty plans that enable clients to have free wagess and awards by roll uping points became really popular in 2009. For case, the North-American market has the ‘my coke wagess ‘ and the European market has the ‘coke zone ‘ web sites peculiarly set up for these promotional programmes ( Coca-Cola Annual Review, 2009 ) . Coca-Cola ‘s originative, colorful, animated and high imagination advertizements go many people ‘s front-runner. Indeed, some of Coca-Cola advertizements have won several awards such as the Golden Award of Montreux, 2007 ( Gold Medal ) and CLIO Awards, 2007 ( Gold ) Animation ( adforum.com ) .

Place/ Distribution Channels

Coca-Cola uses an intensive distribution scheme. Customers can easy entree Coca-Cola drinks at their convenience through food markets, stores, promenades, seller machines, universities, work offices, bars and eating houses. Coca-Cola works closely with all components of the supply concatenation to guarantee that the distribution procedure is efficient and effectual ( coca-cola.com ) . Additionally, Coca-Cola has even been endorsed by many eating houses including Mc Donald ‘s and other concerns, where a formal understanding is made between the two parties to merely sell Coca-Cola drinks.

With the Consumer Decision Making Model that was produced by Schiffman et Al ( 2007 ) in head, see this illustration. When consumers who drink Coca-Cola became thirsty or were out of stock of Coca-Cola at place, a demand was recognised which is the first phase of the Process constituent of the theoretical account. The consumers would hold so entered the information hunt phase and would hold first drawn on past experiences they had with Coca-Cola drinks before utilizing external beginnings of information from the Input constituent of the theoretical account, such as the company ‘s selling communications and socio-cultural influences. Because of Coca-Cola ‘s effectual selling mix attempts in the yesteryear, the client would hold most likely had good memories and experiences with the drinks. Besides, Coca-Cola ‘s selling attempts during the clip of the consumer ‘s determination devising would hold played a large function in act uponing consumers ‘ determinations. As a consequence, when consumers entered the Output phase, their determination was to re-purchase Coca-Cola. Coca-Cola selling mix was effectual because of its strong impact on the consumer ‘s determination devising procedure.

Another ground why Coca-Cola ‘s selling mix was effectual because it catered for the single factors of consumers and this made the selling mix more influential on single determination doing procedures of consumers. For case, Coca-Cola ‘s trueness wages publicities would hold appealed to those clients who like to be rewarded for their committedness or the gross revenues publicities for those who were ever seeking deals. The changing of forms of the bottles and the originative and high imagination advertizements, particularly the one 1s with the polar bears imbibing Coca-Cola, would hold appealed to those emotional and unprompted consumers. Besides, by acquiring many concerns to merely sell Coca-Cola drinks would hold trapped those consumers who do non usually buy Coca-Cola. The fact that most people would hold had less disposable income might hold made these marketing tactics more influential on their existent Decision Making Process because people ‘s demand for wagess and stimulation to purchase Coca-Cola and non exchange to a cheaper trade name would hold been greater.

3.3 Committedness to Attitudes

It is believed that people ‘s high degree of committedness to their favorable Attitudes towards Coca-Cola drinks was another ground that caused people to go on to buy Coca-Cola drinks during the recession. “ Attitude is a individual ‘s erudite sensitivity, inclination to react to an object in a systematically favorable or unfavorable manner ” ( Allport 1935, cited in Professor Jiang 2010 Lecture 5 slides ) . In relation to Coca-Cola drinks this means that, people were non born with the attitudes that they have towards Coca-Cola. Alternatively they learned about Coca-Cola from their direct experiences with the drinks, from other people ‘s sentiments and from the company ‘s selling mix. They used these factors to develop an overall rating of Coca-Cola and in so making formed favorable attitudes towards the drinks. Consequently, people were so motivated by their attitudes to buy Coca-Cola drinks ( Schiffman et al 2007, p.238 ) .

The psychologist, Daniel Katz, purported that “ attitudes exist because they serve a map for the individual ” ( Solomon et al 2010, p.275 ) . The map could be a Utilitarian, Value-expressive, Ego-defensive or Knowledge map. For case, people who like the gustatory sensation of the Coca-Cola drinks and who derives pleasance from it would hold an attitude that serves the Utilitarian map. Value-expressive attitudes would be seen in those people who drink Diet Coke because it may convey that they are ‘dieting and watching their figure ‘ to others ( societal individuality ) or because they personally believe it ‘s the healthier pick of drink ( personal values ) . Coca-Cola ‘s attempts to supply more factual and meaningful nutritionary information on their packaging would organize attitudes that serve the cognition map in those people who need such information in selecting merchandises.

“ Attitudes change when it “ … no longer gives satisfaction to its related demand province ” ( Katz, 1960 p.177 ) . Coca-Cola ‘s selling mix attempts has been systematically fulfilling the demands of consumers and so consumers became committed to their attitudes towards Coca-Cola. For illustration, Coca-Cola ‘s entire quality direction systems guarantee that every bottle on the production line tastes the same so that people ‘s Utilitarian map would ever be satisfied.

There have been misperceptions and rumors of Coca-Cola drinks including ‘soft-drinks cause Kidney rocks ‘ or ‘Coca-Cola can be used as family cleaners ‘ . In order to supply lucidity and consistence for persons with cognition map demands, Coca-Cola posted responses on its web site to these rumors. Furthermore, the company had spent $ 9m to advance active healthy life style plans in 2008 ( coca-cola.com ) . This besides illustrates Coca-Cola fulfilling the demands of consumers which would so take to consumers going extremely committed to their attitudes.

Harmonizing to Katz ( 1960 ) attitudes consist of affectional or feelings and cognitive or belief constituents. Attitudes can be related to behaviour which makes it a 3rd constituent. Another effect of Coca-Cola ‘s attempts systematically fulfilling consumers ‘ demands was that it strengthened the affectional constituent of consumers ‘ attitudes and reinforced the beliefs they had towards Coca-Cola. The consequence was people keeping onto to their favorable attitudes towards Coca-Cola which was so the driving force of their purchase behavior.

It is worthy to observe that the consequences of many surveies have shown “ a really low correlativity between a individual ‘s reported attitude towards something and their existent behavior towards it ” ( Solomon et al 2010, p.290 ) . Researchers found that events, fortunes or societal force per unit area can interfere with a individual ‘s planned or expected behavior. For case, people may wish Coca-Cola but do non purchase it because of persuasive runs from wellness administrations that say soft-drinks are unhealthy ( societal force per unit area ) . Therefore, it can so be debated that although people may hold had favorable attitudes towards Coca-Cola this may non hold caused them to buy Coca-Cola drinks during the recession or any clip. It is believed that this happened because people were non strongly committed to their attitudes. It can so be argued that Coca-Cola ‘s selling schemes have been promoting people to stay extremely committed to their attitudes towards Coca-Cola. Once consumers are really committed to their attitudes, it would go really hard for external influences to alter their beliefs or feelings for the merchandise and by extension change their behavior.

3.4 Support of trueness through Reference Groups

Coca-Cola has used the cyberspace to make a practical community where its fans from all over the universe can run into other fans, chat about assorted subjects and reminisce about Coca-Cola memories. Although Coca-Cola has an official web site ( coca-colaconverstaions.com ) to ease this community, the web site provides links to Twitter and Facebook so that fans can utilize those forums if they desired. Additionally, there is a Coca-Cola ‘s Collectors Club for people who are really nostalgic and who enjoy roll uping Coca-Cola ware. The nine has more than 5000 members from all over the universe. Several conventions and meetings are held yearly and monthly newssheets are published. There are besides swap meets and other societal events that enable members to portion their involvements with others ( coca-cola.com ) .

Research workers find that people within trade name communities “ … experience more positive about the merchandise ” ( Solomon et al, 2010 p.392 ) when they interact with other people who portion similar involvements in the same merchandise and when they participate in societal events held for them. Their trade name trueness is enhanced and the opportunity of them exchanging to viing trade names that are as good or even better is really low. Furthermore, these community members do non merely go emotionally involved with the merchandise, but truly concerned with the public assistance of the company every bit good ( Solomon et al, 2010, p.392 ) .

Coca-Cola has been the chief patron of large events for many old ages such as NASCAR racing, Youth Olympics Games, FIFA World cup and Particular Olympics ( coca-cola.com ) . These different events convey together people who portion common involvements and these people make up sub-cultural groups within society. Attitudes, beliefs and certain behaviors would be adopted faster by these groups because of their coherence and group members ‘ desire to portion one individuality. By Coca-Cola patronizing the events for these groups frequently, Coca-Cola would hold become recognized and liked by these groups. Coca-Cola would hold relied on the ‘social power ‘ of these groups to remind and reenforce the trade name. As a consequence, members within these groups would hold been motivated to buy Coca-Cola every bit long as they were active members of these groups in order to suit in.

Therefore, the presence of Coca-Cola ‘s trade name communities both practical and those that meet face-to-face had strengthened people ‘s trade name trueness and this enabled Coca-Cola to keep a high keeping of consumers during the recession. Besides, the influence of sub-cultural groups could hold contributed to Coca-Cola ‘s continued success during the recession.

Conclusion/Recommendations

Coca-Cola ‘s has maintained a strong trade name image and fiscal public presentation for many old ages, even during the recession. The grounds for this success could hold been because of consumer ‘s accustomed purchase behavior, successful executing of marketing schemes by the company, consumers ‘ committedness to their favorable attitudes towards Coca-Cola drinks and the presence of mention groups. These factors at the same time impacted consumers ‘ existent determination devising procedure which so caused them to go on to buy Coca-Cola.

It is going more hard to foretell consumer behavior because sociological factors, fortunes and events interfere with consumers intended behavior ( Schiffman et al, 2007 ) . Coca-Cola has built a secret research installation at its central office and this shows that the company is cognizant of the importance of understanding consumer behavior. “ We ‘re passing a batch of clip seeking to understand shopping and shopping psychological science, ” says Joe Tripodi, Coca-Cola ‘s main Marketing Officer ( CNBC 2009 ) .

It is evident that Coca-Cola has been able to construct an highly strong trade name trueness for its drinks. Therefore, the company should go on with its advanced schemes and go on its research into why and when people purchase their merchandises. The company should besides go on utilizing their web sites and people ‘s web logs to acquire feedback from consumers about beliefs and feelings towards the company ‘s merchandises and schemes. One caution for the company is that it should ne’er go chesty and think that consumers will ever hold that strong trade name trueness for Coca-Cola.

Appendix I

SELECTED FINANCIAL DATA

Year Ended December 31,

( in 1000000s except per portion informations )

2009

2008

2007

2006

Summary OF OPERATIONS

Net operating grosss

$ 30,990

$ 31,944

$ 28,857

$ 24,088

Net income attributable to stockholders of The Coca-Cola Company

$ 6,824

$ 5,807

$ 5,981

$ 5,080

PER SHARE DATA

Basic net income

$ 2.95

$ 2.51

$ 2.59

$ 2.16

Diluted net income

$ 2.93

$ 2.49

$ 2.57

$ 2.16

Cash dividends

$ 1.64

$ 1.52

$ 1.36

$ 1.24

BALANCE SHEET DATA

Entire assets

$ 48,671

$ 40,519

$ 43,269

$ 29,963

Long-run debt

$ 5,059

$ 2,781

$ 3,277

$ 1,314

Appendix II

Performance AT A GLANCE

2007

2008

2009

22.7

23.7

24.4

Unit of measurement CASE

Volume

( in one million millions )

2007

2008

2009

$ 7,252

$ 8,446

$ 8,231

OPERATING

Income BEFORE

Interest & A ; TAXES

( in 1000000s )

2007

2008

2009

$ 7,150

$ 7,571

$ 8,186

OPERATING

CASH FLOW

( in 1000000s )