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The Coca-Cola Company


Vision, Mission & Objectives:

From our heritage to our mission to the people who bring our products to thirsty consumers, The Coca-Cola Company is a part of lives everywhere. We constantly monitor our performance; where we are today and where we're going tomorrow. Our mission is to maximize shareowner value over time. In order to achieve this mission, we must create value for all the constituents we serve, including our consumers, our customers, our bottlers and our communities. The Coca-Cola Company creates value by executing a comprehensive business strategy guided by six key beliefs:

Consumer demand drives everything we do. Brand Coca-Cola is the core of our business. We will serve consumers a broad selection of the nonalcoholic ready-to-drink beverages they want to drink throughout the day. We will be the best marketers in the world. We will think and act locally. We will lead as a model corporate citizen.

The ultimate objectives of our business strategy are to increase volume, expand our share of worldwide nonalcoholic ready-to-drink beverage sales, maximize our long-term cash flows and become economic-value-added by improving economic profit.. The Coca-Cola system has more than 16 million customers around the world that sell or serve our products directly to consumers. We keenly focus on enhancing value for these customers and helping them grow their beverage businesses. We strive to understand each customer's business and needs, whether that customer is a sophisticated retailer in a developed market or a kiosk owner in an emerging market. There are nearly six billion people in the world that are potential consumers of our Company's products. Ultimately, our success in achieving our mission depends on our ability to satisfy more of their beverage consumption demands and our ability to add value for our customers. We achieve this when we place the right products in the right markets at the right time.


Introduction: (International)

The Coca-Cola Company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with world headquarters in Atlanta, Georgia. The Company and its subsidiaries employ nearly 31,000 people around the world. Syrups, concentrates and beverage bases for Coca-Cola, the Company's flagship brand, and over 230 other Company soft-drink brands are manufactured and sold by The Coca-Cola Company and its subsidiaries in nearly 200 countries around the world. By contract with The Coca-Cola Company or its local subsidiaries, local businesses are authorized to bottle and sell Company soft drinks within certain territorial boundaries and under conditions that ensure the highest standards of quality and uniformity. The Coca-Cola Company stock, with ticker symbol KO, is listed and traded in the United States on the New York Stock Exchange. Common stock also is traded on the Boston, Cincinnati, Chicago, Pacific and Philadelphia exchanges. Outside the United States, Company common stock is listed and traded on German and Swiss exchanges. The Company's operating management structure consists of five geographic groups plus The Minute Maid Company. The North America Group comprises the United States and Canada. The Latin America Group includes the Company's operations across Central and South America, from Mexico to the tip of Argentina. The Greater Europe Group stretches from Greenland to Russia's Far East, including some of the most established markets in Western Europe and the rapidly growing nations of Eastern and Central Europe. The Africa and Middle East Group encompasses the Middle East and the entire continent of Africa. The Asia Pacific Group has operations from India through the Pacific region including China, Japan, and Australia. The Minute Maid Company, the Company's juice business in Houston, Texas, is the world's leading marketer of juices and juice drinks. The Minute Maid Company's products include Minute Maid Premium Orange Juice with calcium, Minute Maid Premium Lemonade Iced Tea, Minute Maid Coolers, Hi-C Blast and Five Alive. The Coca-Cola Company has a commitment, more than a century old, to social responsibility through philanthropy and good citizenship. The Company's reputation for good corporate citizenship results from charitable donations, employee volunteerism, technical assistance and other demonstrations of support in thousands of communities worldwide. The Coca-Cola Company continues to sponsor the world's most exciting sports events, including World Cup Soccer, the National Football League, National Basketball Association, NASCAR, the

Tour de France, the Rugby World Cup, COPA America and numerous local sports teams. The Coca-Cola Company has sponsored the Olympic Games since 1928. The products of The Coca-Cola Company touch lives everywhere. Our core brands have made an impact around the world; brands such as Fanta, Sprite and of course, Coca-Cola, are available and recognized in many countries. Each of our other brands is distributed in one or more countries, and is tailored to the cultures and tastes of those consumers. So wherever you are, you're sure to find a Coca-Cola product to enjoy. The Coca-Cola Company is a business that's recognized all over the world. But we're also a local operation, a source of commitment in nearly 200 countries. Simply check out the profiles for a few examples of how we're enriching the lives of people everywhere. Some of our most satisfying work is done in the community around us. The Coca-Cola Foundation is one way we work to support education and advancement at the local level. Within this section, you'll learn how we help people around the world refresh their hopes and dreams through education.


Brand History In the World

YEAR 1886 1960 1961 1963 1966 1972 1974 1979 1982 1983

1984 1985

1986 1987 1990 1992 1994 1995 1997

Over the Years.

Coca-Cola Beverages Pakistan Ltd.

Company Overview: (Pakistan)

In 1960, when Coca-Cola started its business in Pakistan, it operated through franchised bottlers, who had a great deal of autonomy in carrying out business within the regions allotted to them. CocaCola always had problems with licensing of these bottlers. According to Coca-Colas representatives, these bottlers acquired licensing for bottling operations as a side business, as compared to Pepsi, which had complete control over all its operationsin Pakistan. The Coca-Cola Company played an advisory role in Pakistan till 1990, when a new strategy was formulated for operations in the entire South Asian region, monitored by Coca-Cola, Singapore. At present, the company divided the country into seven operational regions, which are:

Karachi Hyderabad Rahim Yar Khan Lahore Gujranwala Multan Faisalabad

In addition to these regions, licensed bottlers are performing operations in Islamabad and Peshawar.



Macro Environment: Demographics:

The first macro-environmental force that marketers monitor is population because people make up markets. Marketers are interested in the characteristics and movements of population. Therefore, people at Coca-Cola monitor this integral macro-environmental factor with great attention. Pakistan being the seventh most populous country in the world with one of the highest population growth rate of 2.8% proves to be real test for marketers. A mix bag of people belonging to different ethnic, racial and religious background with ever changing demographic characteristics, are the target market of Coca-Cola Pakistan. Soft drinks are a product, which are non-peculiar and undifferentiated to any particular race or class. Hence, they are easily acceptable within the masses without any cultural biases. The Pakistani population has a current growth rate of 2.3% (1996). This percentage was even higher around 5 to 7 years ago. This means that while a huge number of people are just about in their teenage, the other lower age segment will reach their teenage in about 10 years time. This shows that Coca-Cola and other soft drink companies have a huge potential market coming up. This trend poses a great opportunity for the manufacturers of impulse products, that is soft drinks. Karachi, Lahore, and Islamabad are the main urban areas in the country with the highest population and best infrastructure. These urban areas are a major market for these soft drink products. One reason is the high growth rate (which is as high as 4.0% in Karachi.) Another reason is the relatively higher income of people living in the urban areas, which makes soft drinks not that expensive a buy. Besides, the good infrastructure and media facilities give an added advantage. In fact at Coca-Cola, the management has divided the urban-rural split to 80 - 20 level - that is 80% of the marketing strategy is targeted towards the urban population centers while only 20% is targeted towards rural areas.

Population growth rate: With the current population of 145 million people and an annual population growth rate of 2.3%, Pakistan becomes eligible to be a major sales generating country in South Asian region after India. An unexplored potential target market. Population age mix: As a matter of fact, 60% of Pakistani population is of below 25 years of age. This constitutes of the target market for Coca-Cola. Coca-Colas beverages are targeted for the teenagers and people in there twenties who can be attracted towards a brand which is known as a thirst quencher that is there for more than a century. Occupation: Occupation refers to the general overview of how the population earns its living. In most of the developed countries there is a general trend of industrial occupation based population, whereas for the developing nations the economies are agrarian. In Pakistan 65% of population is dependent upon agricultural sector. This is a large untapped market or poorly catered by local brands.

Literacy can clearly be termed as the measure of the countrys development indicator. Unfortunately in Pakistan, the literacy rate is around 36%, one of lowest in developing countries. This makes a large proportion of population simply inaccessible. Communicating to them is not only costly but changing their attitudes towards new want satisfying products is very difficult as they are usually hostile to new believes and habits. (Ariel is doing a fine job targeting rural and lower-middle class by promoting through depicting Ariel as a product of their own e.g. may apne bachoon ko). Geographical shifts in population: The increasing rate of rural to urban migration is changing the composition of both rural and urban population centers. People in developing countries like Pakistan resettle in urban centers, as they perceive of these places as opportunity generators for better economic well being. There spending usually vary from those who are already living in cities. The better

analysis of this segment is very critical as they can later be turned into loyal customers due their high potency of habitual consumption patterns. Family Life Cycle: Evolution from traditional joint family system to one-unit family in last two decades in Pakistan has also changed family spending patterns. Now families with working mothers are increasing in urban centers of our country. Now families prefer to opt for convenience goods rather than going through the hassle of preparing thing at home. This gives a hint to marketers as they can target their products according to this changing scenario.

Economic Conditions:
Countrys economic conditions not only directly effect Coca-Cola and others companies but indirectly too. The adverse effects of worsening economic conditions in Pakistan are curbing foreign investment that can play as lifeline for foreign firms like Coca-Cola. The weak economy automatically limits purchasing power of consumers due to high inflation and growing unemployment. Both of these phenomenon reduces consumer $ (or Rupees) on which competitors can fight for there share in any market. On the other side of the picture, the high marginal propensity to consumption is a healthy sign, as consumers tend to spend major portion of their income on consumption expenditure. Income distribution in our country shows a great deal disparity. Accumulation of wealth in a particular quarter of population clearly indicates the high consumption segment, which can easily be targeted but the major disadvantage can be this segments tendency of early adopters or innovative habits. (Can they be loyal to Coca-Cola? May be yes!) Due to the highly uneven distribution of income within the urban and rural population soft drinks become an affordable impulse good for urbanites. The galloping inflation rate of 20% (unofficial) though worsens the situation. Therefore soft drinks have a very elastic demand and a reduction of even one rupee can lead to a substantial demand increase, as was observed in the Cola Price War in 1996.

Ever since Coca-Cola introduced its disposable glass bottles in 1995, Cola and Pepsi have been contributing to the glass waste, which has created a big garbage problem. Apparently none of the

two companies are prepared to call off the product. However they do talk of recycling the waste but very little seems to be done about it. Coca-Cola has started a Clean Up World campaign globally but so far it has not initiated any such campaign in Pakistan. Competition: Only PEPSI! No, there is tough competition faced by both Pepsi and Coca-Cola to win major market share of rural markets where substandard local brands leads the way. If we only analyze the perspective of Cola War in Pakistan, Pepsi is leading this with huge margin but Coca-Cola Beverages Pakistans take over by Coca-Cola Singapore had a positive impact. Currently Coca-Cola is penetrating into Pepsis market share at the rate of around 2 to 3 percent annually. The growth rate of the potential market is also increasing due demographic and other factors. Competitor Analysis

The Pepsi Cola Company traces its origins to August 1898, when Caleb D. Bradham first devised and named the formula that was later used for Pepsi (which was called Brads drink at that time). Pepsi-cola Company, headquartered in Purchase, NY, is the global division of PepsiCo, Inc. Today, Brand Pepsi, and other Pepsi-Cola North America Products including Diet Pepsi, Pepsi-One, Mountain Dew, Slice and Mug Brands account for nearly a third of total soft drink sales in the U.S., a consumer market totaling around $56 billion. Available in 190 countries around the globe, its other products include, ready to drink iced teasand coffees, via joint ventures with Lipton and Starbucks. PepsiCo, Inc. is among the most successful fast moving consumer goods company with 1999 revenues more than $26 billion and 151,000 employees. It is also the largest manufacturer and distributor of snack chips. On the other hand, Coca Cola is the worlds leading soft drink brand. Its principal arch-rival is PepsiCo, which is a conglomerate having a core business portfolio in the soft drink industry, and diverse business portfolios in the snack foods and fast foods industries. Coca Cola is the market leader in the soft drinks industry in the USA and Europe. Pepsi is the runner-up soft drink in these regions. However, in certain Asian regions, like Pakistan, India, and the Middle East, Pepsi is the

leading soft drink brand and Coca Cola occupies the second position slot. Here is an extract from an article written on the history of this aggression between Coke and Pepsi: Pepsi and Coke: The Battle between Colas By Alissa Wilkinson December 15, 1998 Today television commercials for Coke and Pepsi bombard us with images of youth and beauty, family togetherness, fun and pleasure, celebrity, and patriotism. Barbara Lippert, an Ad-week columnist, perhaps says it best: "Soda pop imagery has become such a driving force in American culture, that we forget the commercials are trying to sell something" (Consumer Reports, 518). As we will see, today's promotions are much like yesterday's advertisements. It all began in back of an Atlanta home owned by a druggist named John Pemberton.

In the Beginning In 1886 John Pemberton whipped up a refreshing elixir of coca-leaf and kola nut extracts in back of his Atlanta home. By accident, his syrup was mixed with carbonated, not plain, water. Coca-Cola is born. Six years later, another druggist, Caleb Bradham of New Bern, North Carolina, trademarked the name of a new cola concoction, Pepsi. Bradham called it Pepsi in honor of the drink's supposed soothing effects on dyspepsia, or upset stomach (Consumer Reports, 522). The battle between colas begins, although slowly at first. That same year, 1902, the first magazine advertisement for Coca-Cola appeared in Munsey's, and it became obvious that the company would need professional help in creating advertisements. In 1904, Asa Candler, president of the Coca-Cola Company, appointed the Massengale agency in Atlanta as the beverage's first advertising authority. The Massengale agency tried to create an image for CocaCola by having the art in its ads show people drinking the cola, and by attempting to carve out a sociological niche for its characters: middle to upper class white Americans enjoying themselves on outings. Somehow there were always refreshment stands in the back of these scenes. At this point in time, Massengale advertised in newspapers and magazines, but concentrated most efforts on streetcars and billboards. (Dietz, 49). Massengale slogans were generally too long, and the Coca-Cola Company tried to curb this by hiring the W.C. D'Arcy agency to handle part of the Coca-Cola account. Both ad agencies shared the responsibility and covered their ads with testimonials. Eventually, the Massengale agency was booted and in 1908 D'Arcy and fellow salesman Sam Dobbs dreamed up the idea for the world's largest

outdoor sign at the time. This billboard was erected on the main line of the Pennsylvania railroad, between Philadelphia and New York. It stood thirty-two feet high and showed a young man drawing Coca-Cola syrup into a glass, as real water flowed out of the fountain. In 1909, because of the shining D'Arcy achievements, the Coca-Cola Company was cited by the Associational Advertising Clubs of America as "the best advertised article in America". The Coca-Cola Company was spending $761,981.35 on advertising (Dietz, 56). Meanwhile, Pepsi was tagging along. Its creator, Caleb Bradham, was busy proclaiming Pepsi-Cola to be "exhilarating", "invigorating", and "Aids Digestion". "Don't Forget to Purchase Pepsi at the Soda Fountain". In 1909, Pepsi, too, had its own testimonial. The Coca-Cola company and D'Arcy responded to Pepsi and a slew of other would-be challengers, some amusingly called Coca Nola and Koke Ola, by inserting phrases such as "Demand the Genuine" and "Accept No Substitutes" in their advertisements. Coca-Cola's competitors repeatedly fail in sales (Dietz, 57). Creating the "Image" Between the years 1910-1916, the Coca-Cola Company implored the public to avoid using "Coke" as a nickname for their soft drink. They did not want their beverage to be associated with the drug cocaine, which had the same nickname, and vigorously advertised "Coca-Cola". At the soda fountain, Coca-Cola was served on distinct metal trays with "Coca-Cola" branded on it, along with either a portrait of a young lady or a young man involved in an "all-American" activity. These trays also covered the walls in the drug store. The drink was served in glasses with "Coca-Cola" on them, a preview of what was to come, because the company was already toying with the idea of bottling the beverage as well as ways in which to package it (Dietz, 85). Post World War I, sales for carbonated beverages were down. Pepsi, already floundering in CocaCola's shadow, went bankrupt for the first time. Coca-Cola and D'Arcy decided to reevaluate which segment of the American public to target. They realized that one of the most important elements of the success of Coca-Cola was product identification. The guy sitting there with the glass of CocaCola was supposed to be aware that he was drinking a Coke, however casual he appeared. The company also realized they would soon need a new advertising perspective and some fresh ideas. Enter Archie Lee. Archie Lee, an up-and-coming entrepreneur, began working for the D'Arcy agency on the CocaCola account in 1922, and created some of the most memorable advertisements. He refined and polished the concept, which was to constantly remind the potential customer that whatever was

occurring, that moment in time could be made more pleasurable by consuming a Coca-Cola. His ads often consisted of good-looking women; his theory was that the women in his ads should be in their mid to late twenties, an age that younger people aspired to because of the charm connected with it, and an age which older people liked to remember. He reasoned that these women were attractive to both men and women, because women could see in the pictures either things to emulate or criticize. Either way, they would notice (Dietz, 108-111). Graphic styles in ads for Coke, along with the rest of American commercial art, changed at this time. Advertisements had evolved from the formal and static art produced by anonymous artists for lithographers in the early days of the century to the free-flowing illustrative styles produced by wellknown artists for use in large-circulation slick magazines in the 1920s and later. We began to see less and less text to get the message across and more intertextuality and image interpretation. Archie Lee's purpose was to capture the spirit of America and to claim that central to the American experience was the act of drinking Coca-Cola. Archie Lee, D'Arcy, and the Coca-Cola Company began conducting market research in the 1920s to find out why people drank, and especially why they drank soft drinks. Coca-Cola was the first major company to chart automobile traffic flow so that billboards and signs could be placed on the most heavily traveled areas (Dietz, 121). By 1929, the nation was floating in Coca-Cola, and the Coca-Cola Company was floating in profits. It should be noted that the company didn't hurt from the eighteenth amendment that had been passed either--the nation could no longer wet itself down with beer. The Pepsi-Cola Company had been trickling along since its 1921 bankruptcy. In the mid-twenties, a Wall Street man named Roy Megargel bought the company and made up the deficits out of his own pocket. Despite this, Pepsi went bankrupt again in 1931. Megargel was not giving up. He caught wind of an interested, sharp entrepreneur named Edward Guth, who owned a number of candy stores throughout the country. The two men joined forces and Guth replaced the Coca-Cola fountains in his candy stores with Pepsi ones. The two encountered more failures in sales, until as a last resort Guth experimented with bottling Pepsi in a ten ounce bottle and selling it for a nickel, to Coca-Cola's six ounce bottle for ten cents. Sales for Pepsi doubled and tripled. At last Coca-Cola has a viable competitor (Dietz, 130-134). New Mediums, More Marketing

In the early thirties Coca-Cola was being plugged by celebrities and film stars such as Greta Garbo and ironically Joan Crawford, who later married the president of the Pepsi-Cola company. As Pepsi's sales skyrocketed, D'Arcy began investigating ways in which his agency could use the new medium, radio, to advertise for Coca-Cola. Despite his efforts, Pepsi beat Coca-Cola to the punch and created the first ever fifteen-second-radio jingle, aired in 1939. The jingle was so popular it was featured in jukeboxes and played for free on radio stations (Dietz, 135). By the late thirties, the Coca-Cola Company was spending 5.5 million dollars per year on advertising in all forms. In 1941, as the United States entered World War II, Coca-Cola's president vowed to see that "every man in uniform gets a bottle of Coca-Cola for a nickel, wherever he is and whatever it costs the company." The bottling plants followed the troops and by the war's end the company had a network of bottlers established worldwide (Consumer Reports, 523). Coca-Cola broke through in radio in 1941. There was no way to expand the market, since there was no way to satisfy the demand of a rationed society. There was no new tin for billboards, and there was a ration on sugar. All that could be done for Coca-Cola was keep the name in front of the public electronically, in the softest of all soft sells, in a cushioned spot featuring Big Band shows (Dietz, 160). For the duration of the war, the soft drink battle remained between Coca-Cola and Pepsi. Pepsi's sales faltered during World War II because of the sugar rationing. Advertisements for Coca-Cola celebrated its success in the war effort. Also at this time, Coca-Cola decided to give in to popular demand and call itself "Coke", too. After the war, in 1946, Pepsi found it could no longer afford to offer "Twice as much for a nickel, too" because of inflation. By positioning itself for years as the bargain cola, it had courted the least loyal of customers: the price-shopper. When the price advantage vanished, so did many Pepsi drinkers. Pepsi was left with an inferior image, and so it changed its formula and took on the tougher task of changing its image (Consumer Reports, 523). Around 1950, Middle America had changed, therefore, ads changed. This was the start of the first Pepsi generation, which is arguably the longest-running ad campaign ever, and Pepsi is branded as a drink consumed by "those who think young". Their target is the young American woman, the supermarket shopper and household cola buyer. To appeal to her, Pepsi offers the first twenty-six ounce "hostess" bottle. This was not a good time for Coke. An attempt to make a run on the Pepsi constituency resulted in a series of magazine ads showing upwardly mobile young adults in what were taken to be exotic,

expensive locations. D'Arcy floundered, replacing paintings with color photography, which at this time makes people in photographs look like overripe oranges (Dietz, 166). In 1955 the Coca-Cola Company severed its ties with D'Arcy and hired a new advertising agency, McCann-Erickson. McCann promptly spent $250,000 experimenting with color photography and discovered that photographed food didn't look as bad as photographed people had. This resulted in a series of ads of food with Coca-Cola placed next to it. Pepsi was still outdoing Coke in sales by introducing new sizes, including smaller bottles for vending machines (Dietz, 169). Taste Is the Key In the 1960s, it became obvious that whatever myths were built into the act of drinking one brand of soft drink or another, they were all rationalized by the consumer as a matter of taste. Consumers would not say they drank Pepsi because it put them into a different sociological class than consumers of Coke. They would say: "Pepsi tastes better." The taste test wars begin. Coke's advertising agency, McCann, tried to come to terms with the newest mass-market medium, television. The first television commercials for Coke resembled Archie Lee's old magazine ads: they consisted of brief shots of the different faces of America. Ads placed in youth magazines were criticized for associating soft drinks with the drug culture that often accompanied youth magazines at that time. McCann found an easy and shrewd way into a youth market when it hired a bunch of rock performers and had each of them sing the current Coke jingle in the performers' own style, for radio air play (Dietz, 173). In the 1970s, the soft drink companies became more corporate and began to globally expand more. In 1975, spurred by market research showing consumer preference for Pepsi over Coke in blind taste tests, Pepsi's district manager set up in-store "Challenge Booths". Pepsi's sales immediately improved, and Pepsi launched the Challenge nationwide (Consumer Reports, 524). In the 1980s, television was the primary medium in which consumers saw soft drink ads. We were bombarded with celebrity endorsements, jingles, product association, sweepstakes, clothing, and movie tie-ins. Pepsi kicked it all off with its endorsement by Michael Jackson; other celebrity endorsements for Pepsi included Fred Savage, Ray Charles, whose "You got the right one Baby?Uhhuh" campaign turned into a nationwide frenzy, and Madonna, among others. Coke's endorsers included Michael Jordan and New Kids on the Block, while Paula Abdul and Elton John endorsed Diet Coke. Diet Pepsi finished it off with endorsements from Michael J. Fox, Joe Montana, and Billy Crystal.

"You are what your hero drinks" school of advertising became the mainstream, and it was quite effective. The goal was to keep the soft drinks in the public eye through sheer entertainment. Pepsi was associated with the hip and the young, and Coke remained the all-American, wholesome-imaged soft drink. Pepsi was "the choice of a new generation" and Coke went with "Coke is it!" Ads still concentrated and targeted on the young market (Sellers, 82). New Coke/Old Coke In 1985, on the evening of April 23, all three major network news programs opened with the following flash: "Coke is changing its formula. The company claims it stumbled across a better, sweeter recipe for the flagship brand while developing Diet Coke. Pepsi responds that Coke is declaring defeat in the Cola Wars and gives its employees a day off for victory celebrations" (Consumer Reports, 525). This "New Coke" fiasco has since been called the worst marketing blunder of all time, but led to unexpectedly positive results for the Coca-Cola Company. Roberto Goizueta, a native of Cuba, was appointed president of the Coca-Cola Company May 30, 1980. Goizueta had started as a chemist with the company and was one of few people who knew the secret formula of Coke. Asa Candler had passed the secret on to his son Howard, who taught it to Dr. W.C. Heath, the company's number one chemist. As each chemist retired, he in turn taught his successor (Soda Fountain, Goizueta introduced Diet Coke in 1980 and presided over the "Coke Is It!" campaign in 1982. He also had Coca-Cola buy Columbia Pictures in 1982 (product placement, anyone?). Columbia Pictures soon became a money making machine for Coca-Cola with such hits as Tootsie and E.T. A few years later in 1989, Columbia was sold to Sony for $3.4 billion. Goizueta eventually became one of the most highly regarded of all CEO's, having turned one of the world's most nonessential consumer products into a money spinner with annual sales of $18.5 billion. (Perman). Goizueta is not remembered for any of these accomplishments, but instead for the biggest mistake in corporate history: New Coke (Soda Fountain, In 1984-85, Pepsi-Cola had been conducting the "Pepsi Challenge" taste test nation-wide. The reported findings were that the majority of test-takers preferred Pepsi to Coke, even when Coke conducted their own tests. Pepsi used these tests for all they were worth and started walking away with market share. Coca-Cola was under pressure, especially since Pepsi had been beating Coke in sales since 1977. In response, Coca-Cola decided to change their formula.

Fiddling with the formula put Coke fans on the warpath. In Seattle, retired real estate investor Gay Mullins founded the Old Cola Drinkers of America and set up a hot line for angry consumers. A Beverly Hills wine merchant bought 500 cases of vintage Coke and sold them at a premium. Meanwhile, back at the Coca-Cola Company, some 1500 calls a day and vanloads of mail drove home the public's fury. Wrote one disgruntled consumer: "Changing Coke is like God making the grass purple or putting toes on our ears or teeth on our knees" (Consumer Reports, 525). Coke got the message. After three months of lagging sales, it announced that "Old Coke", CocaCola Classic, would join the "New Coke" on supermarket shelves (Consumer Reports 525). Coke had failed to realize that its soft drink has historical significance to consumers. Coca-Cola is a tradition of sorts. Coke had also failed to realize the conditions of the "Pepsi Challenge". People were given a swallow or two of each soda, the sweeter choice being more pleasing to the taste buds, because that's how they work (Soda Fountain, When Coca-Cola executives first announced the return of Old Coke, competitors were overjoyed. They reasoned that Coke would suffer from consumer confusion, diluted promotional efforts, and a lack of space on retailers' shelves (Business Week, 58-59). Goizueta would no more admit to failure than he would to drinking Pepsi, but he and other top Coke executives were staggered by the public response to scrap original Coke. "We knew some people were going to be unhappy, but we could never have predicted the depth of their unhappiness", Goizueta said (Business Week, 60.) "New Coke" became old news, and Coca-Cola Classic thrived, eventually replacing "New Coke" altogether. Old Coke's comeback drove Coca-Cola's stock to its highest level in twelve years (U.S. News and World Report, 12). The threat of replacing the original formula with a new version ironically turned out to be exactly what Coca-Cola needed to revitalize itself, and renewed long-lost faith in brand-loyalty. Global Expansion, Campus Monopolization, Online Advertising Efforts By 1989, Coke was spending more than $140 million and Pepsi was spending more than $151 million on advertising, mostly for television ads and celebrity endorsements. By 1990, Coke was enjoying global success. Sixty-eight percent of its $8.6 billion in soda sales took place in 170 countries outside the U.S. Today, more than half of the world's soft drinks are produced by Coke (Moreau, 32).

Throughout the 1990s, both cola companies have tried to expand more internationally. Coke's international sales are outdoing Pepsi's, while Pepsi has been outselling Coke at home. Pepsi owns three fast-food restaurant chains: Taco Bell, Pizza Hut, KFC, and it also owns the Frito-Lay snack company, which may explain why Pepsi's soft drink sales have lagged behind Coke's of late. Pepsi has decided to spin off its three fast food chains to enable it to concentrate on selling soft drinks internationally (Sheets, 32-33). Meanwhile, Coke and Pepsi have tried their hand at buying out universities, monopolizing the soft drink sale to one company or the other. Youth continues to be the colas' vital market; it has been proven that the tastes young people acquire at college age often remain with them throughout their lives. By striking corporate-like deals with universities, enabling only one type of cola to be sold on an entire campus, the cola companies see the youth as being held as a captive audience (Chidley, 63). The winners in these cola wars are determined not by taste tests but by who has deeper pockets, and the universities keep the silver. Coke is aware of its lagging domestic sales, and aspires to swallow a huge chunk of the U.S. segment in the near future. Under current CEO M. Douglas Ivester's direction, Coke is pouring on the investment to attain its goal of gulping 50% of the U.S. market by 2001. The plan is to make this conspicuous brand ubiquitous by putting a Coke vending machine or retail point within arm's length of every consumer (Perman). Coke is stepping up its global omnipresence too, with plans announced December 11 to buy Cadbury Schweppes beverage brands (Dr. Pepper, Crush, Canada Dry, Schweppes) in more than 120 countries for about $1.85 billion (Advertising Age, As internet popularity surges, both colas have made efforts to create effective Web sites advertising their respective products. Pepsi's site is geared more toward the young and energetic, whereas Coke's is laden with information that appeals both to youth and to any generation. These two Web sites adhere closely to the advertising patterns Coke and Pepsi have established over the years. Information at these sites is fairly limited, with concentration most focused on maintaining the attention of the web-surfer and luring her/him into the world of soda pop culture. Coke currently leads Pepsi in sales, but no one knows for how long, as these two warring companies compete for the last consumer, the last dollar. Throughout the entire historical tracing, two things have remained constant: both companies have always targeted youth and both portray their products as providing pleasure. Global expansion and campus domination are two new facets for the colas to explore; it should be interesting to watch unfold. Our televisions are so plastered with commercials

for soft drinks today that some viewers, especially the Gen-X'ers, don't even notice anymore. As the World Wide Web's accessibility has increased, both colas have taken their marketing attempts online, each site featuring multimedia interaction and splash page graphics. The battle will continue, whether we notice or not. We have become, pardon the pun, pop culture. Currently, in Pakistan, Pepsi is the market leader in soft drink industry and Coca-Cola is the market challenger, completely as against the scenario globally (internationally Pepsi holds around 23% of the market share as against Cokes 65%). The respective market shares of both the soft drinks are given below: MARKET SHARE (as of 1999)

Coca Cola
Globally In Pakistan In Karachi 65% 30% 34%

24% 60% 56%

11% 10% 10%

Earlier on, however, Coca Cola used to be the market leader in Pakistan as well, until 1987. Coca Colas management decided in the late 1980s that they would shift from operating through franchisee bottlers to a single anchor bottler. The bottlers were informed of this decision and were given a deadline after which they were to cease their operations. This prompted the bottlers to cut costs and maximize their short-term profits. The cost-cutting led to a variation in the quality of Coca Cola sold all over Pakistan. Pepsis quality, on the other hand, remained consistent and it started attracting more of Cokes consumers, who were disgruntled with Coca Colas lack of quality. Hence, Coca-Colas market share started dropping. Another peripheral reason for the fall in market share was Coca Colas Jewish ownership. This was another setback for Coca Cola in Pakistan and amounted in a lot of negative publicity for the company. Furthermore, Coca Colas bottlers realized that their market share was falling and gradually ceased their marketing operations in the country. This resulted in Coca Cola withdrawing all its package sizes, except for the 250 ml returnable glass bottle. On the other hand, Pepsi took full advantage of Coca Colas weaknesses. Pepsi intensified its marketing activities in Pakistan. It also worked on strengthening its distribution system and extending its distribution network all over Pakistan. Soon Pepsi took the lead from Coca Cola. Over

a period of time, they also introduced a number of package sizes. Pepsi further strengthened its position in Pakistan by getting sports celebrity endorsements, and associating itself with the birth of pop music in Pakistan, by sponsoring pop groups and concerts. Now, since 1996, Coca Cola has jumped back into the fray after a slump of nine years. It has reentered the market with their sole bottlers, Coca Cola Beverages Pakistan Limited. Already, Pepsi and Coca Cola have fought a number of pitched battles against on another. Pepsi is aggressively trying to defend its market share against Coca Colas promotional forays. Meanwhile, Coca Colas market share has increased from 14% just two years ago to its current 34%. Social & Cultural Forces: High persistence of core cultural values: Belief in the core cultural values in Pakistani society is manifested by the living patterns of every single individual. These values are passed down from generation to generation and this is what that makes us different from the western developed nations. Conducting business activities keeping these core values in mind can be a detrimental factor for success and failure in countries like Pakistan and 3rd world nations. (Why McDonalds can not sell its beef burger in India?) Existence of subcultures: Pakistan is a mix bag of different subcultures from Pukhtoon to Punjabi, Sindhi to Balochi. These all are further mingled with growing number of population that migrated either at the time of independence or due to Afghan conflict. These cultures require a close attention because of the fact that these individually constitute of huge share of the market. The true importance of this statement can be gauged from an incident that occurred back in 1998 in the interior of Sind. What actually happened was that some extremist Sindi elements raised their concern and protest over the writing of Coke-Cola in Urdu. According to them Coke should either be written just in English, or if Coke had to be written in a local language then it should be nothing, but Sindi. Changing cultural scenario: World has become a global village and now the distances are bridged by communication highways. This west meets east drift is influencing culture and now an amalgamated shape is building up which is defining the future of our society. The example that can be quoted over here is of growing

business of food franchising. The mass customization has already started to cater to these changing cultural needs. Other Factors: As per a survey conducted by Coca-Cola, people in Pakistan love 3 things: 1) Cricket 2) Music 3) Movies These three things are stated in order of preference. The Pak culture is such that females mostly stay at their homes and males usually carry out the outdoor jobs. Keeping this view, Coca-Cola has targeted teenage males who have these pastimes. For this reason females are not their primary target segment. Another cultural change is serving drinks at marriage ceremonies. This has substantially increased the overall sales of the soft drink industry. All firms are coming up with new ideas to top this trend. Political & Legal Forces Pakistan, for the last ten years is going through the process of democratization but successive failures lead it to politically unstable country. This instability is reflected through the economic policies of successive governments in both monetary and fiscal. The taxation policies in our country changes monthly leaving no room for companies to evolve them according to their long-term goals. The very recent deadlock between traders and government over the issue of General Sales Tax is causing great level of trouble for business community. The government has imposed 12.5% general sales tax (GST) and 15% excise duty on both CocaCola and Pepsi since 1993. Before 1993, the tax regulations were better for the industry. The beverage industry is very vulnerable to the tax regulations and the macroeconomic changes imposed by the government. The subsequent Rupee devaluation always results in an increase in the prices of concentrate, packaging materials and other ingredients and this leads to increased cost of production for the company. Moreover, the beverage industry is affected by changing governments, political turmoil and minibudgets. All these occurrences increase the operating costs of the company and since the price of the drinks is more or less constant due to competitive pressure and elasticity of demand, the companys profits are eroded.

The changing role technology has affected Coca-Cola in very little manner. Except the adoption of information technology in the company operations there is no significant change in the production technology as yet. (We still prefer Classic Coke! Dont we). At Coca-Cola a lot of emphasis is given to product quality controls. In fact, the very reason why the Coca-Cola Export Company shifted from franchisee bottlers to one single anchor bottler CCBPL was the inconsistent quality of Coca-Cola all over Pakistan. Apart from the quality control work carried out by CCBPL, the TCCEP also carrier out random quality checks once every quarter. Also CCBPL has to send regular samples to its Atlanta head office for scrutiny and record purposes. Out of all its acquired plants to date, Karachi has a quality maintenance standard of 90% while the Gujranwala plant has achieved 100% quality control. The Coca-Cola Beverages prides itself of being the trendsetters in bringing new and innovative technological breakthroughs in the soft drink industry. At the start of its recent market onslaught in Pakistan Coca Cola introduced the contour shaped bottle and newly styled caps on its returnable glass bottles. Also it introduced the new plastic cap for its disposable bottles.

Market is considered the focus of the marketing strategies by any firm. The real test for any product is its market success or failure and when we talk about success, there can not be any better company then Coca-Cola. Coca-Cola runs in the blood, over a century of success all around the world now

Coca-Cola is repeating its history in Pakistan. The steps involved in evaluation of market as that of identification of customers as well as of their needs and wants is of matter of hanging sword for any company. Coca-Cola strategies designing reflects these key details with great importance. The beverage market has been in a decline for the past few years because of inadequate investment in the beverage industry. Pepsi enjoyed a real monopoly in the beverage industry while Coca-Cola took the back seat. The others impulse goods like ice creams & chocolates were enjoying growth in their sales. So, the relative Share of Voice of the beverage industry shrank in comparison to other impulse goods firms. Coca-Colas reentry into market has revitalized the industry by competing directly against Pepsi. This led to subsequent increase in the relative share of voice of the beverage industry. Coca-Cola is well aware of the fact that soft drinks are an impulse good and hence people do not have any set brand loyalties. Therefore, there is always an opportunity for them to snatch away customers from their competitors by making available a better augmented product.


For Coca-Cola, the supply of the main ingredients is of no problem, because CCBPL only bottles Coca-Cola in Pakistan the liquid comes from Singapore. The streamlined process involved in shipment of these is of great value both in marketing and financial perspectives.


Ever since its recent entry into the market, Coca-Cola has identified youngsters as its main customers. However, it practices differentiated marketing in the country and has therefore identified other segments as well. Its major target segments for different packages are:

Youth House wives Kids & Rural segments. These segments are: Children & Youth (males) Females & rural consumers

250 & 300 ml RGB 1.0 litre & 1.5 litre bottles. Mini bottles

However, due to the differences in the product tastes offered, there are different major Coke fanta

Adults 35 years and above



Marketing Intermediaries:

Distribution network for any consumer goods company and especially the beverages companies. Coca-Cola extensive network of intermediaries that work in a flow of 10 regions of the country tries to give coverage to the complete potential market is very effective but still is in infant stage. Pepsis leading edge over Coca-Cola is due to its well-established network of dealers and retailers in the country. Coca-Cola fight to gain market share from Pepsi also depends upon development of its distribution network. Coke has the following distribution channels. The Coca-Cola Export Company (TCCEC) that supplies the concentrate and shares costs equally with Cola-Cola Beverages Pakistan Ltd. for marketing and selling activities. Coke's advertising is handled by TCCEC along with the advertising agency Orient-Mc Cann. TCCEC, the suppliers of the concentrate, is in Lahore. The next channel is the bottlers. In Pakistan, the bottlers of Coca-Cola are Coca-Cola Beverages Pakistan Ltd. (CCBPL). They take the concentrate from TCCEC and then carbonate, bottle and sell the finished product to retailers and wholesalers in local markets, such as Karachi and Hyderabad. CCBPL are the sole bottlers in Pakistan and they represent their parent company Fraser & Neave Coca-Cola, Singapore. The wholesalers are the next step in the distribution network. This is also called indirect retailing. They provide transportation facility to retailers. In Karachi, Coke distributors its product to 3300 wholesalers. Retailers are a very important part of the distribution process. Coke makes 57% of its sales to direct retailers which accounts for 5200 retail outlets in Karachi. Total number of outlets in Karachi are 12,500 85% of which is covered by Pepsi. It is evident that Pepsi has a better market coverage and distribution. Coke has 80 trucks and Pepsi has 125 trucks. To develop consumer taste for Coke, there are some restaurants that are Coke-exclusive. These are: 1. New York Cafe 2. Coconut Groove 3. BBQ Tonite

4. Red Onion 5. Mr. Burger



Coca-Cola's marketing environment includes the following publics: Financial Public For the purpose of investment, Coca-Cola borrows a large amount of funds from financial publics like local and foreign banks. It is currently investing in 1 litre and 1.5 litre glass bottle for the purpose of increasing the percentage of disposable sales. Media Public Coca-Cola's marketing environment comprises of media public like newspapers, magazines, radio and television- these play an important role in Coca-Cola's marketing and promotion strategy. Media is a major promotion tool employed by the company to create its image and to inform the consumer of discounts, deals or special promotions. Local and General Public Coke's management keeps channels of communication open with regard to the general public. The image that the local public has of Coca-Cola will affect its sales and thus, it seeks feedback and is there to communicate and clarify its position. It strives to protect its image as an environmentally conscious and socially responsible company. Internal Public The workers, managers and board of directors- all are an asset for the company. Coca-Cola has strong internal marketing worldwide and also in Pakistan. Workers are informed by newsletters and are motivated by paying high salaries and providing incentives. Every employee wears a T-shirt, which says "To make it happen", and they wear a company badge. These are a few ways in which they identify with the company.


Business Mission

Coca-Cola's business mission in Pakistan is:

To become the market leader in the beverage industry in Pakistan while providing in maximum customer satisfaction.
Coca-Cola's business mission is clearly defined. It aims to increase its market plan through brand awareness and high brand equity. Coca-Cola's mission is market oriented since it wants to get Profit through customers satisfaction.

Marketing Objectives

Currently, in Pakistan, Coca-Cola is a market challenger. It wants to become the market leader and its marketing objectives to achieve this goal are:

To create an awareness in the market about the product. To enhance sales by effective advertising campaigns. Coca-Colas marketing objectives are in line with its business mission in the case where increase in market share is concerned. However, it is not focusing its marketing efforts on its main target market, teenagers, to enhance sales and improve market share.

Instead, it plans to enhance sales and increase market share by increasing the percentage of take home sales in total sales. It is currently investing its resources in its 1litre (economy pack) and 1.5 liter (convenience pack) bottle. Examples of marketing efforts in this direction include the 1) Ramzan promotion. 2) Twin pack offer Because of this focus, sales have more than doubled in the past year. The 1litre and 1.5litre Karachi market is equal to a measurement of 360,000 physical cases. 1 physical case is equal to 12 bottles.

Marketing Strategy Audit:

Coca-Cola reentered the Pakistani market in 1994 as a market challenger. The biggest issue after its entry into the market was to create brand awareness and promotion. The companys greatest opportunity for popularizing the brand came during the Cricket World Cup in 1996. The company started off by setting up a huge billboard on Sharea Faisal. Later, Coca-Cola also clinched the cosponsor status for the World Cup. It became the official drink of the event and side by side, it also

launched its campaign called The Coca-Cola Cricket Mania. The highlights of this campaign were: 1. The UTC (Under The Crown) competition was organized with big prizes offered to the lucky winners. 2. The Coca-Cola Giant Cricket Bat which visited every major city in Pakistan before reaching the venue of the final at Qaddafi Stadium, Lahore. 3. Coca-Cola sponsored TV cabins set up at popular outdoor venues around Karachi for giving the by-passers an opportunity to watch the match live. The giant Coca-Cola bottle that was brought out on the field during the drinks break was another very good way of getting exposure because it was a unique idea and the Coca-Cola logo was very visible to the spectators. The Coca-Cola companys World Cup campaign was so popular that Pepsi felt directly threatened by Coca-Colas successes. Pepsi then launched its own World Cup campaign with the slogan Pepsi, Nothing Official About It. This campaign was in direct comparison with Coca-Colas status of the official drink of the 1996 World Cup. This campaign did have some effect on Coca-Colas Cricket Mania campaign. Right after the World Cup ended, Coca-Cola initiated the Cola Price War in late 1996. This time Coca-Cola directly attacked Pepsi by providing a soft drink of comparable quality at lower prices. The soft drink prices of both Coca-Cola and Pepsi went as low as Rs. 2.50 for a 300-ml bottle. This enabled Coca-Cola to increase its market share from a dismal 14 % before 1996 to 46 % during the Price War (1996). The Cola Price War helped Coca-Cola accomplish some of its goals but not without its cost. CocaCola gained the following benefits from this price war: 1. Increased brand awareness of the Coca-Cola brand name and an indication of its presence in the Pakistani market. 2. Consumers taste for Coca-Cola was developed. Many people who wouldnt have otherwise tried Coca-Cola now found it easier to do so. 3. Empty glass bottles were circulated extensively throughout the marketplace. This is an essential requirement when a contract is initiated with a new retailer. 4. Coca-Cola was established at par with Pepsi in the Pakistani market.

All these strategic and tactical moves by Coca-Cola helped it to enter the market in real market challenger style. Gradually, Coca-Cola started making inroads into the lives and lifestyles of Pakistanis in general and citizens of Karachi in particular. With Coca-Colas successful entry, CocaCola is now working on increasing its market share while Pepsi has been put on the defensive. Both companies are currently busy designing strategies to capture each others market share. Recently also, Pepsi directly attacked Coca-Colas Eat Cricket, Sleep Cricket, Drink Coca-Cola ( ESD) campaign with its ad campaign More Cricket, More Pepsi featuring two Indian cricketers, Azharuddin and Jadeja.

Distribution Strategy

Coca-Cola and Pepsi both differ in their distribution methods. Coca-Cola has a fleet of 75 to 80 trucks, which are owned by the company itself. In contrast, Pepsi has a distribution fleet of 120 trucks, which are distributor-owned and distribute for Pepsi on contract basis. Another difference between the distribution strategies of Pepsi and Coca-Cola is that since Pepsi distributes through independent distributors, it doesnt usually have its representatives to deal directly with the retailers. In contrast, Coca-Cola has its own exclusive fleet of distribution trucks therefore it practices personal selling with its retailers. Each truck has a sales representative of CocaCola to deal with any requests and customer queries. Coca-Cola hopes that this strategy of personal selling will benefit it in the long run. Apart from this, Coca-Cola also has a help-line, which the retailers can call for any help or assistance they might require


A companys budget is the basis for materials buying, production scheduling, personnel planning and marketing operations. Resource allocation in Cokes budget is based upon the following facts:

70% of total sales and profits come from consumers below 25 years of age. Coke is the main product. Fanta and Sprite are supporting products. Product Coca-Cola. Sprite. Fanta Sales contribution 55% 32% 13%

Coca-Colas target market is the average urban consumer and the main target market geographically is Karachi. Karachi is a lucrative market for Coke and this is why majority of marketing activities and distribution focus is on Karachi, which is the main market.

Resources are allocated according to: 1) 2) 3) Profitability of products in the product-line. Distribution costs incurred and the market coverage required. Main target markets or most profitable markets. Most marketing activities are directed towards Karachi.

Marketing budget is around Rs100 million for Karachi annually and Rs 100 million for the rest of country. This confirms that the major market for Coke is Karachi and maximum marketing activities are focused on Karachi. Marketing expense is shared equally amongst the Coke bottlers and TCCEC.



The product line strategy adopted by Coke in Pakistan is product line filling. In the US Product line modernization is carried out where better styled cans are launched. Coca-Cola is the main product and Sprite and Fanta are supporting products. Coke is associated with Cricket, Music and Movies. Sprite is associated with food and Fanta with fun. CCBPL does not plan to phase out any products since they are directly positioned against Pepsi's brands. At the same time, it will not introduce new products since there is no market absorption. However, it will continue to introduce new packages since the contour and dimple shaped bottles were a huge success.


Coke's Pricing strategy is competition based pricing. Prices are based on competitive criteria. If cost of production rises, sales volume is increased to reduce fixed costs. Coke also employed segmented pricing during the Cola War where coke was selling for Rs.3 in low-income areas and Rs.8 in Clifton and Defense. It carried out an effective pricing strategy in Ramzan when a 1 liter bottle whose normal price was Rs.25 was selling for Rs.10. This discount increased sales during the winter season.


Coca-Cola considers Karachi to be its biggest and most rapidly expanding market. To ensure better distribution coverage, it has a fleet of 80 trucks. Coca-Cola has a routing System, which helps it to cover large areas in the minimum possible time. Coke directly covers high volume outlets which account for 75% of its sales. It covers small outlets through wholesalers which account for 25% of sales. The objective of distribution is 100% availability. To ensure maximum market coverage, Coke has an arrangement with restaurants that are Coke-exclusive. These include:

1) New York Cafe. 2) BBQ Tonite 3) Coconut Grove. 4) Mr. Burger. 5) Red Onion. It gives these places discounts and shares sales promotion costs. It also has a fleet of 50 cycle venders that peddle chilled Coke, Fanta and Sprite at all major public and shopping centers.


Coke's advertising objectives are: Coke wants its commercials and advertisements to be direct, powerful, effective and yet impressive enough to leave a long lasting refreshing impact in the consumers mind. Coke aims to have a strong consumer pull. It employs several promotion strategies such as sharing cost with retailers who promote their brand. It also has a huge display at Metropole Hotel. In 1992, Coke changed its advertising agency from Paragon to Orient-McCann, since Paragon wasn't coming up to the company's expectations. Advertising messages are well developed and received. The recent ad campaign, Eat Cricket, Sleep Cricket, Drink Coca Cola (ESD campaign) is a huge success with the sport of its target consumer segment, Cricket lovers.

Sales force Sales force serves as a critical link between the company and its customers. Coke's sales force objectives are: 1. To carry out sales for the company. 2. To know how to produce customer satisfaction. 3. Must be able to look at sales data, gather market intelligence and give proper feedback. 4. Sales Force must be market oriented. Sales force of Coke is well paid. They have a fixed salary and above that they get commissions for the amount of sales that they make.

Coke has strong internal marketing. Its sales force is motivated and they wear company badges, so as to identify with the company.


Product Mix:
In 1961, a citrus-flavored drink made its U.S. debut, using "Sprite Boy" as inspiration for its name. This elf with silver hair and a big smile was used in 1940s advertising for Coca-Cola. Sprite is now the fastest growing major soft drink in the U.S., and the world's most popular lemon-lime soft drink.

The name "Fanta" was first registered as a trademark in Germany in 1941, when it was used for a few years for a soft drink created from available materials and flavors. The name was then revived in 1955 in Naples, Italy, when it was used for the "Fanta" orange drink we know today. It is now the trademark name for a line of flavored drinks sold around the world.

Coca Cola
Developed in a brass pot in 1886, Coca-Cola is the most recognized and admired trademark around the globe. Not to mention the best selling soft drink in the world.

Market share

10% 30% 60%

Coke Pepsi Others

Market share of Coca-Cola in Pakistan is increasing for past few years and this can be a result of the company strategy of acquisition of its bottlers. For both Pepsi and Coke the unexplored segment of market that usually represents the rural segment will determine the future for both companies.

Coca-Cola has dominated the beverage market all over the globe for decades, controlling 46% of the entire beverage market share at present. What is it about Coke that has kept it alive for so many yearsand still going strong?

Product Levels:

For a marketer, a product is not just the physical, tangible good, but a whole lot more. Almost all products comprise 3 levels:

The core product The actual product The augmented product

Augmented Product

Actual Product

Core Product

Coke as a core product is merely a carbonated drink to quench your thirst. That is the core benefit that the consumers derive for consuming the product. However, it is not the core product that is marketed by the seller or purchased by the customer. It is the actual product that matters. Actual products have at least the following 5 characteristics:

Quality level Features Styling Brand name Packaging

Thus, for a consumer of Coca-Cola, a bottle of Coke is not just a drink, but the quality, package, and image that it accompanies. This means that if a drink that looked and tasted like Coke was being sold by a retailer in a low quality packaging and under an unknown brand name, at the same price,

there is very little probability that a beverage consumer will buy that product. The reason? It lacks the above characteristics. The new product guarantees neither the quality nor the image nor the packaging nor the brand name. A higher level of product is the augmented product. These include after-sales benefits that come with the product. For instance Coke as an augmented product can include benefits such as recyclable NRBs and the returnable liter bottles.

Product Classification:

Coca-Cola can be classified on the basis of two criterialength of the product life, and consumer shopping habits. In relation to life span, Coke is a non-durable good. These are tangible goods, normally consumed in one, or a few uses. According to consumer shopping habits, Coke is classified as a convenience good. These are consumer goods that the customer usually buys frequently, immediately, and with minimum of comparison and buying effort. Coke is an impulse good, and consumers generally do not have to make a decision when buying it. It does not require any planning or search effort. The product is generally placed where it is most easily accessible, for instance just before the entrance of the outlet.

Product Attributes
Market Segmentation & Target Market The concept of market segmentation is based no the idea that the total relevant market is made up of different group of customers who are similar to each other in some ways that are important in the marketing of a particular product or product line. These groups are called market segments. Thus a market segment is a group of customers with similar needs or wants that will be especially responsive to a given marketing MIX; that is, certain product features, at a certain price or price range, will respond to this MIX better than to any other MIX and better than customers in any other segment will respond. In this way a company can concentrate all its marketing efforts on those portions of the market that it is best able to serve and the ones that offer the greatest potential profits. The segment or segments that are selected for intensive marketing efforts are known as target markets. The companys entire marketing program will be focused around these target markets. The Coca-Cola Company has a semi-demographic segmentation strategy, with two target markets:

Urban vs. Rural Young adults vs. 30-45 year olds

For its urban market Coca-Cola is a beverage that carries an official image along with being trendy and sporty. For the rural divide, it is a drink that refreshes. For the market segmentation based on the age structure, Coca-Cola targets two segments teenagers and Moms. Teenagers in the social structure of Pakistan are considered to be between 15-24 years of age. They form the target market since this is the school/college going population, and includes most of the actual consumers. In addition, this is the age when children are most impressionable and for whom image and fun is everything. Moms come under the age bracket of 28-45 years. They are the decision-makers in a household and thus it is important for them to be convinced that Coca-Cola is their beverage. .

Product Positioning:
The basic idea behind positioning is that any product or service can distinguish itself from others by claiming some unique position in the market. Position represents the image of the productwhat the product stands for, what it delivers especially wellas seen through the eyes of the customer. According to one advertising executive: To succeed in our over-communicated society, a company must create a position in the prospects mind. A position that takes into consideration not only its own strengths and weaknesses, but those of its competitors as well. Another executive offered the following definition: Positioning is the basic selling concept used to motivate consumers to select a given product over that of the competition. The greater the number and strength of competitive brands, the greater the need for positioning to foster distinction between a given product and all others in the same product category. Positioning can be done using any of the three strategiesin relation to the competitor, in

relation to the product class, or by price and quality. Coke is positioned in relation to the product class. It projects itself against not just its key rival Pepsi, but against all other beverages on which the consumer may spend his beverage budget. However, some market analysts do not agree with this view and believe that Coke is only positioned at one end of the Cola War, with Pepsi at the other end. In view of this opinion, Coke is positioned in relation to the competitor.

A brand is defined as a name, term, symbol, or design, or a combination of them, which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. Brand Equity: Brand equity comprises three elements: Awareness+Loyalty+Association. A strong brand equity, although intangible, is an asset for any organization. For the Coca-Cola Company, its brand is one of its most important assets, with its brand equity worth $36 billion. Branding Strategies: Branding strategies are a key element for both, the producer as well as the middleman. These strategies decide the brand name that will be marketed to the consumer. a) Producers Strategy: The Coca-Cola Company markets the product under its own brand name. Being a well-established brand in the cola market, the Coca-Cola Company makes its product available to its consumer with a brand name that the consumer can associate with high quality. b) Middlemens Strategy: The wholesalers and retailers all carry only the producers brand. Since the brand Coca-Cola has a very strong presence in the market, the middlemen neither have the need, nor the finances and other resources to brand the product under their own name.

Packaging is the activities of designing and producing the container or wrapper for a product. For Coke packaging does not require a decision, since there is a standard packaging policy that is followed by all beverage manufacturers. Similarly, Coke is packaged in identical bottles all over the world, including Pakistan. However, there is slight variation in the 250ml bottles available in Pakistan. The original 250ml Coca-Cola bottles are made with green tinted glass, where as the green tinge is absent in the bottles manufactured in Pakistan. The reason for this variation is only cost, which is one of the most important packaging considerations. The green tinted glass is expensive to manufacture in Pakistan. It would therefore increase the cost of production, and consequently the price, which could be harmful for Coca-Colas sales.

Labeling performs any or all of the following three basic functions for a marketer: a) Identifies the product or brand, b) Promotes the product, and c) Describes the product. It is essential that a label does not mislead customers, or fail to describe an important ingredient, or fail to include needed safety warnings. Therefore the seller must make sure their label contain all the required information. Coca-Cola follows the brand labeling strategy, the label only giving the brand name. However, it does give some precautionary requirements on the label (e.g. bottle for beverage use only).

A price represents the value of a good or service for both the seller and the buyer. Coke engages in price planning which is systematic decision-making regarding all aspects of pricing by the organization. Coke provides its consumers with tangible and intangible value in the price that it sets for the various categories of this product. It provides tangible value by offering periodic discounts on its 1liter and 1 liter bottles especially during special seasons like Ramazan and Eid. The intangible value provided by Coke is the pride and the feeling of being cool that drinking Coke brings to the consumer. Cokes Prices
Serial number 1. 2. 3. 4. 5. Size of Coke bottle 250ml 300ml Disposable I liter I liter Price Rs. 8/Rs.9/Rs.12/Rs.25/Rs.45/-

Relation Of Pricing To Cokes Other Product Mix Variables:

The basic way in which Cokes pricing relates to the other product mix variables includes: Since Coke is a convenience product, it does not have a high price. This low price does not include any customer services. Thus Cokes low price and its inherent product nature prohibit the offering of any customer service to consumers.

From the distribution perspective, the prices charged are high enough to compensate them for their functions yet low enough to be competitive with other brands at the retail and/or wholesale level. For every Rs.8/- regular 250ml bottle of Coke, Rs.1 is given to the retailer so as to provide him with an incentive to do profitable business on behalf of Coke. However, the price is not prohibitively high as it is in keeping with what Pepsi charges its consumers.

When costs change, Coke decides whether to pass on this price increase to consumers or to absorb it tself. If the magnitude of the price change is substantial, Coke decides to partially absorb the cost itself and pass it on partially to consumers as has been witnessed by the price increase in the 1 liter bottle by Rs.5/-

Price Vs Non-Price Competition:

Coke engages in price and non-price competition. In price competition, Coke influences consumer demand primarily through changes in price levels. In so doing, Coke moves along the products demand curve by raising or lowering its prices. Price competition is a flexible marketing tool because prices can be adjusted quickly and easily to reflect changes in demand, cost or competitive factors. Coke also engages, although to a lesser degree, in non-price competition whereby it emphasizes factors other than price. In so doing, Coke attempts to shift consumers demand by stressing the distinctive attributes of the product the fizzy taste, the in thing, its always-there etc.

Factors Affecting Cokes Re-pricing Decisions:

Cokes price decisions are heavily dependent on external influences, primarily competitive influences posed predominantly by Pepsi. This contrasts with Cokes product and promotion decisions, which are more directly controlled by the company. A discussion of the factors is:

Consumers This means that relatively small changes in price bring about large changes in quantity demanded. With Cokes elastic demand, total revenues increase when prices are decreased and total revenues go down when prices rise. Coke is basically purchased by convenience shoppers people who value the availability of Coke at nearby locations. This type of demand for Coke is based on two factors: Availability of substitutes: Coke has many substitutes directly Pepsi and other cola drinks and indirectly white drinks and fresh and frozen juices. Substitutes for Coke are also to be found within the Coke company itself- thus Coke faces internal competition in addition to external competition. This makes it more difficult for Cokes price to be raised since the subsequent gap in Cokes consumption will be easily and smoothly filled in by substitutes. Urgency of need: Consumers feel no urgency of need when purchasing Coke since it is hardly a life saving commodity. Since there is no urgency of purchase, any price increases by Coke will simply lead to delayed purchases, maybe no purchases or purchases of substitutes. With price decreases by Coke, sales will expand as consumers will be drawn from competitors or will move up the date of their purchases to take advantage of these price reductions.

Costs For Coke the costs of the concentrate, labor, wholesalers, retailers, advertising and other items have to be incorporated in the price of the final drink. The major cost is incurred for the concentrate that has to be imported from abroad. In addition, taxes have to be paid to the government which again leads to cost increases. Out of every Rs8/- bottle, Rs.4 is given to the government as taxes.

Channel members Channel member considerations also play a pivotal role in price setting. Coke sets aside every Rs1/- out of Rs8/- to give to retailers. This may seem like a very small sum but considering the volume of Cokes sales, the chunk which comes in the slot of retailers is substantial. Thus channel cooperation is ensured.

Competition Competition is perhaps the most vital factor influencing Cokes pricing. It must price in accordance with Pepsi. If it raises prices, it seeks to lose substantial market share since Pepsi is hardly likely to match the price increase. If it lowers prices, again Coke stands to lose because there may be a very high probability of the price cut not being matched by Pepsi. Thus, Coke operates on the kinked dot of its kinked demand curve and sets its prices in the typical way of a classical oligopolist. Coke operates in a tightly controlled market-controlled price environment which is characterized by a high level of competition, similar products, and not very substantial control over prices by individual firms.

Cokes pricing objectives are sales oriented whereby Coke is interested in:
o o

Sales growth, and Maximizing market share

The Coca-Cola Company seeks to price Coke so as to achieve high sales volume and expand its share of sales relative to competitors.

Broad Price Policy: Cokes broad price policy sets the tone for the firms pricing efforts and makes sure pricing decisions are coordinated with its choices regarding its target market, image and marketing mix factors. Since, Cokes pricing objective is to achieve high sales volume, it engages in penetration pricing. Here the company utilizes low prices to capture the mass market for Coke. This is the proper strategy to use since the market is sensitive to price, low prices discourage potential competitors, there are economies of scale and a large consumer market exists. Penetration price recognizes that a high price may leave Coke vulnerable to competition.


Coke utilizes a combined price strategy that mixes elements of a cost-based price strategy, a

demand-based price strategy and a competition-based price strategy.

In a cost-based price strategy, Coke starts off with its costs and works towards a selling price that also includes a profit margin. This strategy is combined with a demand-based price strategy where Coke researches consumer demand and measures the exact amount that consumers are willing to pay for it. The price that is acceptable to the target market is ascertained since Coke realizes that if a certain price ceiling is exceeded, consumers will not make purchases. Finally, both these strategies are mixed with competition-based price strategies where Coke sets its price in relation to competitors. Since Coke faces intensive competition from Pepsi in Pakistan it cannot afford to ignore this vital player when pricing Coke.

Promotion involves any technique, under the control of a seller, that can communicate favorable, persuasive information about that sellers product to potential buyers, either directly or through others who can influence purchase decisions.(William P. Dommermuth)

Coca-Colas Promotional mix in Pakistan:

Coca-Cola Export Corporation Ltd., which the manufacturer of Coca-Cola concentrates, and not the bottlers over look the promotional strategies in Pakistan. The positioning of Coca-Cola as thirst quencher and refreshment drink was promoted before 90s. But now its image as Real Thing is highlighted through promotional campaigns. Coca-Cola relies heavily on the following Promotional Mix:

The main thrust of promotion is through advertising and it is due the reach and effectiveness these medias to the target market (positioning oriented promotion). The target market CocaCola that usually lives in urban centers for the country have access to the following channels of advertising

Television Newspapers Bill boards

These modes of advertising are in a sense exhausted by both Coca-Cola and Pepsi. Television campaigns by Coca-Cola helped a great deal in emphasizing the image importance amongst the target segment. The print media is normally used for the Sales Promotion purposes. Billboard is provided with new life by heavy advertising budgets. One of such example is Hotel Metropole Bill- board.

Coca-Cola Advertising Campaigns: Coca-Cola launches a new set of advertising campaigns on the regular basis after 2 years time. It started with Always Coca-Cola in mid 90s and Eat Cricket, Sleep Cricket and Drink Coca-Cola this theme was during hyped up time of world cup. Coca-Cola has standardize its advertising theme in South-Asian region that too is due to development of global communication technologies which has started the satellite war in this region. The new theme goes like this Jo Chahe Ho Jaye Coca-Cola.

Sales Promotion
Pakistani Cola war is filled with examples of sales promotion campaigns based on low prices of both Pepsi and Coke. These campaigns usually start during the month of Ramadan or winter season. The main focus of these campaigns is 1-litre and 1-1/2 litre packaged bottles. Sales promotion in case of Pepsi is offered to its wholesalers and retailers. But Coca-Colas sales promotion activities are focused around its valued customers. According to Cokes representatives: benefits of sales promotion can only be transferred to end customers if distribution network members are aware of their role in Promotional campaigns and this developed by highly trained sales management team.

Endorsing Other Activities

Coke is one of the major contributors towards the growth of music industry in Pakistan. Coke image was promoted through sponsoring music bands like Junoon, which is highly popular among the core target market of Coca-Cola. Coke in Pakistan also made its way in Cricketing world by becoming the official drink for 1996 world cup. Cricket in both India and Pepsi dominated Pakistan but for the past few years Coke is becoming the major sponsor. The cricket sponsorship is controlled by Coca-Cola Middle East. Coke is one of the leading partners in foreign food franchise business development. The partnership is extended to companies like McDonalds etc.

COCA-COLAS IMPLICIT ADVERTISING Coke is now developing its image awareness in Pakistan through implicit Advertising. These implicit advertising techniques are devised in a way that people start associating themselves with Coca-Cola. Implicit advertising techniques devised by Coca-Cola are mentioned below:

Color of coke. The shape of the bottle. (Particularly its jumbo packaging) Font of Coca-Cola.

These implicit advertising supports the explicit advertising campaigns carried out by coca-cola. The image development process in Pakistan is based upon these implicit techniques which are recognized all over the world and represents the brand Coca-Cola.

Like any other company, Coke engages in distribution planning which is systematic decision making regarding the physical movement of Coke from the manufacturer to the consumer as well as the related transfer of ownership.

Types Of Distribution Channel

Coke is distributed through an indirect channel that involves the movement of Coke from the manufacturer to independent middlemen to consumer. The chain of this indirect distribution takes the following form:





However, Coke is also distributed directly to approximately 600 large-scale retailers. This is done because these retailers boast of large-scale operations and the volume of business that they provide to Coke is large enough to justify the expenses of direct distribution. This direct channel takes the following form:




Factors Determining Selection Of Distribution Channel

In selecting its distribution channel, Coke has kept in mind the following factors:

The Consumer: Consumer characteristics are an important criterion for determining which channel should be employed. Since the number of Coke consumers is many, the channel of distribution is indirect. This is necessary since it would be uneconomical and extremely inefficient for Coke to distribute its product to such a large number directly. Also, the market segment that consumes Coke is very large, technically defined by the Coke company as consisting of MUMS married with kids between 20-45 years, though a very heavy portion of the teenage market also consumes Coke. To reach such a vast and not necessarily geographically concentrated segment, Coke needed the services of distribution and hence, a distribution channel.

The Company: The goals of Coke were an important factor in identifying this particular distribution channel as the right one. Coke is The Coca-Colas Companys core product. Thus it is vital that it be readily accessible all the year round and through a distribution channel that is neither so circuitous so as to delay delivery and neither so short so as to become unfeasible for the company. Also, the long-term strategic intent of the company with regards to distribution is to make Coke the drink that is available anywhere, anytime and all the time. To achieve, this long-term goal, Coke selected a distribution channel that would ensure easy accessibility and ready availability all the time for consumers. Also, Coke, even though it can financially afford to have its own distribution channel, does not have the expertise to make it work. Coke has been in the market

for a long time but has not developed its own distribution channel simply because it was concentrating on its core competencies which do not include distribution. It was more feasible, in a business sense, to let someone else more experienced in this field do the job for them.

The Product: The unit value of Coke is not much- one regular bottle of Coke costs Rs. 9/- This low per unit cost does not justify Cokes developing its own distribution channel. If the price per unit was large, Coke may have opted for direct distribution. However, indirect distribution is more appropriate for a low cost, convenience consumer product like Coke. The Competition: Competitor distribution channels also dictated what channel Coke should choose. If Pepsi chose a shorter distribution channel than Coke, they would have gained an advantage over Coke with respect to shorter lead times and availability of the product in the market before Coke. Thus it was essential to match Cokes distribution channel with that of competition.

The Middlemen: For Coke, the choice of middlemen was heavily dependent on the financial standing of the middlemen. Obviously, it would not be a very smart move if Coke were to choose channel members who were financially weak. Also, the professional competence of these channel members was also very important. Coke had to suffer in earlier years because its channel members lacked professional competence and expertise in their field. Also, it is important for Coke to give credit to distributors. Thus, Coke chose those channel members who were creditworthy and had a good past record where payments were concerned. To provide incentives to distributors and retailers, Coke also gives regular quantity discounts to them.

Intensity Of Channel Coverage

Coke undertakes intensive distribution by employing a large number of wholesalers and retailers to meet its distribution aim of ease availability.


Cokes objectives in undertaking intensive distribution are to gain widespread market coverage and channel acceptance. Also through intensive distribution, Coke can accomplish volume sales and profits, which is its core business strategy.

Wholesalers and Retailers:

Coke distributes directly to 600 prime retailers who have large chains and/or are organized on a large scale. Their accounts with Coke are large enough to justify direct distribution. Indirectly, by way of its distribution channel, Coke supplies its products to more than 20,000 retailers. Through such intensive distribution and supply of products to such a large number of retail outlets, Coke meets its long-term strategic intent mentioned earlier. Coke is supplied to all kinds of retail points including supermarkets, general stores, restaurants etc. Customers: The purpose of using an intensive distribution strategy is to gain access to final consumers. Final consumers are many in number and are convenience oriented. Since Coke is a convenience product, consumers will not undertake a very lengthy and detailed search of many stores to look for it. Thus, through intensive distribution, it is made conveniently available given the relatively elastic demand for it.

Marketing emphasis:

Again the marketing emphasis is on final consumers who are reached through mass advertising, electronic and print included.. Retailers make use of POS material or advertising pamphlets in stores to attract the attention of consumers. Also, in intensive distribution, Coke ensures that the product is available in nearby locations. Again, since convenience and ease of consumers is the name of the game, Coke ensures that its product is available in all nearby locations and that it is never out of stock especially at important occasions like Eid, Ramazan etc.

Major disadvantage:

The major disadvantage of employing intensive distribution is the limited channel control that it gives Coke. It is difficult to monitor and keep track of the activities of over 20,000 retailers interspersed over a big geographical area. Thus, the company must needs sacrifice a higher degree of channel control in return for extensive distribution.


Coke makes use of a pushing strategy in distribution where the various members in its distribution channel cooperate in marketing Coke. This is possible only because Coke is a well-known product. Had Coke been a non-entity, the channel members would have been totally unwilling to bear the expenditure required to market the product. The manufacturers of Coke obviously bear the major share of marketing the product. However, the channel members do pitch in with a significant contribution so Coke does have middlemen cooperation on its side.
Wholesaler Retailer

Manufacturer Physical Distribution:


The physical distribution of Coke from manufacturer to wholesaler is done through trucks. 85 trucks go out per day to replenish the depleted stocks of wholesalers.