Coca Cola’s Marketing Challenges

Issues

• Should Coca Cola focus on profitability or increase in market share?

• Was Coca Cola’s reactive approach appropriate for a market like Brazil?

Soft Drink Market

• The country is large with a majority of Brazilians living in urban locations. The south and Southeast regions accounted for over 57% of the population, and the Northeast contained another 28%.

• Soft drink consumption continued to grow slowly with per capita consumption being 95.3 liters in 2003 and projected to be 104.9 liters in 2008

Soft Drink Market• Soft drinks were sold in cans, disposable and returnable

glass bottles• Key customer segments were social classes A, B, and C.

Focus on social class C, which represented 28% of the total Brazilian population’s consumption expenditures.

• A major trend is the growth of B brands and private brands

• About half of the soft drinks were consumed near the POS. Supermarkets accounted for 25% sales and vending machines were not readily available in Brazil.

SWOT

• Strengths:1. World’s cola leader with massive financial

resources, operational efficiencies, and advanced product development capabilities.

2. Widely known brand recognized in the world.3. Brand name respected for quality4. Had excellent distribution in urban areas of

Brazil.

SWOT

• Weaknesses:1. Coke had higher total costs than many of the tubainas

because it paid taxes.2. Unclear as to the primary objective: profitability or

market share.3. Not perceived as a value brand4. Reactive approach5. Had no beer brands6. Did not distribute to some retail outlets that sold

tubaina brands.

SWOT

• Opportunities:1. Low consumption rate of cold drinks in Brazil 2. Stabilization of Brazilian economy.3. Could introduce a fighting brand4. Increase distribution network5. Quality brand6. Financial resources could help company go

for sponsorships and promotions.

SWOT

• Threats:1. Tax evasion2. Received bad press over tax issue3. Private labels were increasing in importance4. RC entered the market5. Low entry barriers6. Massive C class segment was not brand loyal.

Pros & Cons of Coke’s Strategies

• Price freezing• Lowering price/reducing product size• Returnable glass bottles• Brand extensions• Purchasing Tubainas• New distribution partners• Challenging government officials.• Sponsorship of cultural and sporting events.