Coke Market Analysis
Coke is a carbonated soft drink beverage produced by the Coca-Cola Company. The Coca- Cola Company is based in Atlanta and owns the trademark coke. Coke is produced in several product lines’ which include caffeine free cola, diet coke, coke zero and coca-cola vanilla. Coke as a product is available and also targets all the 200 countries in the world thus it is not restricted to any given region. It is also the main dominant product in the world’s beverage market. Coke is a differentiated product with its main close competitor/substitute being Pepsi. The two products usually target the same customer base and also do satisfy the same need but they are made to look different to consumers through product differentiation activities such as branding and massive advertising. Although coke is one of the leading brands in the world matter fact it is the most valuable brand in the world with a worth of one billion in the recent past there has been some health issues raised about the product. The product has been associated to diabetes, dental diseases, cancer and other obesity related conditions arising from the ingredients used in the coke syrup formula. Issues have also been raised on the bisphenol A used in the lining the coke can which have been termed to be environmentally harmful. Basically issues regarding the coke product have been centered on health issues as many researchers have found that coke has some health implications (McGonigal 2012; Harrington 2010). Coca-Cola positions its products depending on the target market, competition, and also depending on the types of the market structure it is in. Coke‘s target market is mainly the teenagers and the youth whose demographics are between the ages of 18 to 25 years. The segment of the target market constitutes 40% of the coke target market. Other target segments include; the people with busy lifestyle, students, the young , adventurous and also both upper and lower classes in terms of income (Anon, 2012). Coca-Cola Company has made sure they designed products to suit the needs of each of these segments. For example the packaging of the products in returnable bottles meant to attract the people in the lower income segments. The 1 liter and two liter bottles for the families and the coke zero and diet coke for health conscious consumers. The company targets the audience using different techniques. The main tool is advertising which the coca-cola company is known for. Coca cola has one of the biggest advertising budgets in the world amounting to $2.9 billion in the year 2010. The carbonated drinks beverage industry has many players but there the major dominant forces in the industry. The supply of carbonated drinks is usually high due to the many players in the market but the major players are Coca-Cola Company and PepsiCo. The other players include Nestle, Cadburys, Dr Snapple group and Buffalo Rock Company (Business insights, 2012). The coke product therefore operates under oligopoly market structure and more specifically a duopoly. This market is characterized by non price completion with the main forms of competition being in form of advertising, packaging and branding. There is also interdependence between firms and product differentiation. Interdependence is shown by especially the two major players in the industry that is Coca Cola Company and PepsiCo. Any action taken by any of them must be retaliated by the other. An increase in advertising expenditure in this industry by any of the following company leads to an increase in the market share of that company. For example with the reduction of PepsiCo advertising expenditure led to a fall in its market share in the beverage industry. Coke as a product is differentiated whereby it does not have a perfect substitute to it. Also the firms in this industry tend to be dependent on each other in decision making meaning a firm has to consider the actions...