-A case analysis of Coca-cola.
-Written by Esther Obong
2.0 Brief History of Coca-Cola Company
3.0 Customer Relationship
3.1 The six markets model
3.2 Gummesson 30 R’s
3.3 Ladder of Loyalty
4.0 External Stakeholder Relationships
4.1 Partnerships and Alliances
4.2 Corporate Social responsibility
-Written by Esther Obong
The aim of this paper is to identify and evaluate existing and potential customer relationships of coca-cola company and therefore make recommendations. This report will start by explaining who’s and what’s of the company i.e. who they are? What they do? What they sell? In order to establish a detailed basis of this report, it will be supported by academic theories and models such as the Gummesson’s 30 Rs, the ladder of loyalty, six markets model, and external relationships, so as to make suitable recommendation for the company.
2.0 Brief History of Coca-Cola Company
The Coca-Cola Company is a refreshment company. It is a giant corporation that involves almost 275 small companies; it operates a franchise system. In 1892, Asa Candler obtained and consolidated the Coca-Cola Company as a Georgia Organization (The Coca-Cola Company, 2014). After fourteen years, under Candler's administration, packaging operations started in several countries. From its initial years, it made huge developments in the refreshment business and kept on growing globally. It licenses a number of non-alcoholic refreshment brands. Its main competitors are Pepsi, Dr. Pepper and Monster beverages (Coca-Cola Company, 2014).
The main new product circulated by the Company was Fanta Orange in Naples, Italy. After the accomplishment of this product, it set up various portfolios through securing Minute Maid Corporation and including a line of juice items. In 2008, Sprite turned into the third Company item to offer more than 2 billion cases every year, joining Coca-Cola and Diet Coke (The Coca-Cola Company, 2014). Coca-Cola Company basically serves sparkling drinks and refreshments such as water, juices, prepared to-drink teas, coffee and sports drinks.
3.0 Customer Relationship
An understanding of how to oversee customer relationship has successfully turned into a vital topic for academicians and practitioners of late. Companies now understand that customers have distinctive financial value to the company, and they are in this manner adjusting their customer offerings and the strategies of communicating with their customers accordingly. Thus, firms are moving far from transaction marketing to relationship marketing (Reinartz et al., 2004). Vence (2002) views relationship marketing as an inclination to make a customer relationship from the very start off point to please and keep existing customers, while transaction marketing tries to make the deals and find new customers. Customer relationships have been progressively studied in the scholarly marketing literature (Morgan and Hunt, 1994). An extraordinary enthusiasm for customer relationships is apparent in showcasing practices and also mostly evident in the significance of the company’s customer relationship management frameworks (Winer, 2001). Therefore, companies use relationship marketing techniques such as loyalty programs to develop a close relationship with their customer which in turn enhances customer retention (Bramlett, 2000). In the following sections of this report, the customer relationships will be discussed.
3.1 The six markets model
The six markets stakeholder model is seemingly the most extensive of the three approaches concerned with the relationships with traditional stakeholders. Each of the six market areas may be sub-divided in a way which can cover all real stakeholder groups (Payne and Holt, 2001). It is broken down into six domains which are customer markets, referral markets, supplier and alliance markets, influence markets, recruitment, and internal markets. As seen in figure 1.
Source: Adopted from (Christopher et al. 2005)
Nonetheless, the focus from the model will be on referral market, supplier & alliance markets, influence market and customer market. This is because these are the market models that are of relevance to Coca-Cola.
Ø Customer market: this comprises of purchasers e.g. distributors, intermediaries and final consumers (Christopher et al. 2005). Coca-cola connects a wide customer base ranging from children to adults daily. Being that coca-cola is the world’s leading manufacturer and distributor of non-alcoholic beverages, their aim is to keep refreshing the world and inspire positivity through their brands, and actions towards their consumers (Coca-Cola, 2016). Although, while doing that, they have to put their competitors in mind as well because for instance, brands like PepsiCo are thriving continuously to dominate the soft drink industry and steady developing ways by creating a unique taste to their products and packaging.
Ø Referral market: This is made up of two primary classifications which include; existing customers and non- customer referrals. The non-customer referrals could be referral based on incentives or staff referrals or other organisations, while the customer referrals recommend their providers to others (Christopher et al. 2005).
In the case of Coca-Cola, there’s a high customer referral on the basis of word of mouth advertising. It is said that the coca-cola empire grew based on the word-of-mouth referrals. For instance, the CEO at the growth stage gave barrels of coca-cola syrup to shop owners who were reluctant to stock the drinks and also gave free coupons to customers to take free coca-cola in any shop they enter. This strategy worked because it encouraged both retailers and buyers to discuss coca-cola which in turn created a buzz and it built the brand (Tan, 2016). Another example that can be cited is the coca-cola friendship campaign whereby the company photographer wanted to address the social isolation in a city in China, and decided to bring complete strangers together for a video and before the shooting of the video; the strangers had bonded over the soft drink. Thus, people kept talking about the campaign because it addressed an issue (social isolation), something that was relatable. Hence, it was an intellectual yet refreshing message that consumers were happy to spread and in turn the coca-cola brand kept on being referred (Tan, 2016).
Ø Supplier and alliance markets: According to Christopher et al. (2005), suppliers give physical resources to the business and can be classified into various suppliers such as strategic suppliers. On the other hand, alliance partners supply skills and capacities that are ordinarily knowledge based rather than product based. The Coca-Cola Company places their suppliers at a high rate because they contribute in making sure the aim of the company is achieved by providing them with materials which include ingredients, packaging and the necessary machinery. The company has a standard for their suppliers in the way their business should be conducted (Coca-Cola, 2014). Regarding the alliance partners which is much more relevant in this case, coca-cola has succeeded in entering strategic alliances with certain companies such as McDonalds and Nestle so as to boost their brand and operations. However, these strategic alliances will be discussed further under the external stakeholder relationships.
Ø Influence markets: this has the most different scope of constituent groups. It includes the stakeholders and third parties as well, such as financial and investor groups, regulatory bodies, business press and media, environmental groups, political and government organisations (Christopher et al. 2005). For example, third parties such as the press and media, most especially the media have a great influence on potential consumers of Coca-Cola. Regarding the 2014 world cup that the company sponsored, whereby the company used that as a platform to tell their story; a 2-minute video was made on the basis of 4 football teams in different countries that were stricken with a tragedy. The emphasis of the story was the unity of football and bringing happiness to communities in the face of those tragedies. The story was shared on YouTube and attracted many views because of the emotional content behind the story (Tan, 2016). Thus, this implies that, the exposure gotten from the social media by sponsoring such a large event and taking advantage of the opportunity to advertise its brand had a positive influence on Coca-Cola customers. In other words, the company used the media to influence the consumer’s decision.
3.2 Gummesson 30 R’s
The 30 R’s was introduced by Evert Gummesson to make relationship marketing easier to overview (Gummesson, 1997). This 30 R’s can be split into four categories which are; classic relationships, special relationships, mega relationships, and nano relationships (Gummesson, 2008). Although, the focus of this report is on the special relationships. In as much as all the 30 R’s are important for companies to improve their brand, there are only a specific few that are very vital for companies. Therefore, the relevant relationships that appeal to Coca-Cola will be discussed.
Ø R9- the relationship with dissatisfied customers: This relationship is linked to customer retention and loyalty. Dissatisfied customers are those customers who either quit purchasing the products or services offered by the company or they don’t leave the brand due to lack of choices (Gummesson, 2008). Coca-cola has managed customer crisis well in the past, for example, in order to increase the promotion of their products, the company introduced a ‘’my coke rewards’’ campaign whereby consumers enter codes found on their purchased products and then accumulate points so as to redeem it at their local coca-cola branches. A customer got annoyed due to the fact that he could not redeem the all expense paid trip he won and ranted on twitter (which is a social media site) about it and got many retweets, which could hinder the promotional campaign because of the negative publicity. The company had a social media representative who tendered an apology immediately after monitoring the crisis online and called him to resolve it (Duan, 2011). This goes to show that a good company cares about the public image and will work towards maintaining a good one. However, there have been crisis that Coca-Cola hasn’t responded to, personally, there was a purchase of a pack of can drinks and a quarter of their contents were half gone and properly sealed and a complaint was made to their customer complaint line but no action was taken. This means that the company still has work to do in dealing with dissatisfied customers.
Ø R12- Electronic relationships: this particular relationship has turned out to be increasingly noteworthy for organisations. It builds relationship systems based on information technology networks (Gummesson, 2008). It can also mean using online media (internet) to either promote or market the company’s products or services. Being that Coca-Cola is a big brand, more than thousands of communication takes place on the internet about the brand and its product almost every day. Although, coca-cola monitors their online customers via the twitter and Facebook platform, emphasis still needs to be placed on the ‘’internet’’ platform. Furthermore, the company launched a campaign called ‘’The Ahh effect’’ to target young adults on smart phones. This is an app that includes games, films and GIFs, their main motive for this mobile app was to create an atmosphere of happiness, satisfaction, and sweet refreshment that one feels after drinking a bottle of cold coke (Lacy, 2013). It is a platform for young adults to have fun and in turn keep discovering the new promotions of the brand. Thus, they have made an effort in building an I.T based relationship but there’s still room for more improvement.
Ø R13- Relationships to symbols and objects: this reflects circumstances where individual contacts are not generally conceivable. In other words, the relationship between the manufacturers and the end-consumers may not be necessarily possible (Gummesson, 2008). For example, in the case of Coca-Cola, their products are being sold through different mediums and it’s quite difficult to establish a close relationship with their final consumers (Coca-Cola, 2016). Although, they created platforms such as the ‘’share a coke’’ campaign, and the ‘’Hilltop’’ campaign whereas the share a coke was to give their final consumers the feeling of unity and happiness and hilltop campaign was to also give their customers a medium of connectivity. This implies that they always have their final consumers in mind and thinking of ways to keep them happy with just holding their nice bottled product or purchasing them. Hence, it has been a thoughtful strategy in identifying with the symbol or brand of the company.
Ø R15- Green Relationships: This relationship refers to the realities of working in a world progressively fixed on environmentalism (Gummesson, 2008). It implies how organisations keep up ecological and health problems and how they utilise it to reinforce the relationship with people, most especially with communities. Coca-Cola has made efforts in going green by making provision of their bottles that are made from 30% plant based plastic and which are fully recyclable. And also, the company substituted sugar with a sweetener called stevia which is less in calories. In Argentina, the design on the bottle has been changed from the symbolic red background to a green background which signifies and it’s trying to pass the environmental message (Morris, 2012). Therefore, it can be said that Coca-Cola is taking an initiative to build green relationships.
3.3 Ladder of Loyalty
Loyalty is a positive feeling a buyer have towards suppliers on the basis of its preferred decision. It is the conviction of the customer in a company or towards a product or service (Godson, 2009). The utilisation of loyalty programs as a capable tool of relationship is getting to be distinctly well known to encourage customer loyalty and retention (Roking, 2005). Coca-Cola has introduced a variety of loyalty programs so as to attract customers and in future, retain them. The process of attracting and maintaining their customers will be discussed using the ladder of loyalty. The ladder of loyalty is explained below;
Ø Prospect: this is the beginning stage of the ladder. It can be seen as potential customers who are keen in doing business with the organisation/company (Godson, 2009). Regarding Coca-Cola, they use promotional gifts such as key holders, water bottles, etc. to attract their customers when they purchase any coca-cola product from their local stores. When customers receive such branded gift, they are aware of the brand and it keeps giving them a reminder of it on the long run, and this in turn kept attracting customers who were willing to know more about the brand and their rewards (Tham, 2013). This is a very smart way for Coca-Cola because they worked on keeping their brand in front of their potential customers.
Ø Purchaser: these are individuals who particularly do business once with the company (Godson, 2009). One of the aims of Coca-cola is to create value and make a difference in the heart of their customers. Coca-Cola is very good with thinking creatively and strategically, the company introduced a ‘’my coke rewards’’ promo whereby you buy a Coca-cola product and scratch the code on the product to keep gathering tokens, and then stand a chance to win a price such as an all expense paid trip to a certain place (Coca-Cola, 2015). This will motivate the purchaser to make repetitive purchases so as to win something of good value. Also, the ‘’share a coke’’ promo (Tan, 2016) whereby names were personalised on the bottles, this is another encouragement for first time buyers, in the sense that customers will keep buying a bottle that has their names on it and get a feeling of excitement which in turn could lead them to being clients.
Ø Client: These are people who do business with the company on a regular basis but do not have an interest towards the company (Godson, 2009). Coca-Cola always strives to ensure that they maintain a high level of product quality to their final consumers. Although, not having an interest in the company may be due to lack of attention. For instance, the initial example that was given personally about the half content of the liquid and no response was gotten. This can cultivate a lack of interest towards the company’s product. Personally speaking, with the huge customer base that Coca-Cola has and since it’s the first choice for customers, the people under this stage of loyalty may be limited.
Ø Supporter: supporters are individuals who likes the company however supports only passively. The target for every company is to convert the supporters to advocates (Godson, 2009). Thus, Coca-Cola has somehow managed to do that due to their various marketing campaigns and loyalty programs in attracting customers.
Ø Advocate: The people who climbed to this stage fall under the active customers of the company. They strongly recommend the company and its product to others (Godson, 2009). Coca- Cola has a strong customer base and has succeeded in having loyal customers who will always advertise their products via word-of-mouth. Despite the fact that they do not deal with their customers directly, they have created different platforms such as the mobile app for young adults, the ahh-effect campaign and share a coke campaign to stay connected. Furthermore, in terms of recommending in a B2B business, the company has partnered with the FIFA world cup and some other events to further gain exposure. Therefore, it can be inferred that Coca-Cola has strong advocates.
Ø Partners: These are the ones at the top of the ladder, and they are the ones who have gained a standard relationship with the company. When the customer reaches the stage (Godson, 2009), the aim of Coca- Cola is to maintain the level of expectation of its customer and keep improving in order for the customers not to step down the ladder.
4.0 External Stakeholder Relationships
4.1 Partnerships and Alliances
Elmuti and Kathawala (2001) view an alliance as at least two or more companies or business units that collaborate to achieve strategically significant goals that are usually useful. Coca-Cola Company has been involved in alliances and partnerships with different companies. Take for instance, the partnership between McDonalds and Coca-cola. Coca-Cola partnered with them due to the fact that McDonalds was just opening an outlet and needed a beverage supplier at that time. This alliance turned out to be very successful making McDonalds a leading global food service and Coca-Cola the leading beverage company in the world today. In every McDonald’s outlet a customer goes to enjoy a meal, they enjoy a coca-cola product alongside with it (Postmaster, 2014). Both companies created an excellent value and services that were beneficial to each other on the long run. This shows that they jointly planned to achieve a good partnership value and that made the alliance extremely worthy.
Another external relationship that Coca-cola formed is the joint venture partnership with Nestle in order to tap the growth of beverage segments. This corporation was renamed to Beverage partners worldwide so that it can operate as a single and entrepreneurial entity. This collaboration with Nestle was to add its own beverage into the business so as to foster the growth of a new beverage business and in future make a geographical expansion (Vevey, 2001). Developing such partnership with Nestle was an important growth strategy.
4.2 Corporate Social responsibility
Coca-cola has developed a sense of responsibility towards the environment. One of the aims is to provide nutrition information such as the amount of calories on the front of all their packs. In other words, the company became nutritionally transparent so that its consumers can make decisions that can fit their lifestyle (Coca-Cola Annual report, 2015). They also avoid waste by introducing returnable bottles and recyclable cups at their partnership outlets. The company is also giving back to the community by a woman empowerment initiatives which are to unleash the potentials of women and in turn make their business sustainable as these investments in this initiative will help boost the success of these women in communities around the world.
Furthermore, Coca-Cola practiced green relationship by becoming a signatory to a water aid foundation which helps to provide fresh water to communities and supports a dedicated sustainable development to achieve good hygiene and sanitation in various communities. Also, in terms of their sustainable packaging, Coca-cola believes that a resource efficient packaging is of utmost importance and is working with partners worldwide to recycle more than 40% of their bottles and cans so as to avoid waste. In terms of protecting the climate, Coca-cola has reduced energy emissions in their various manufacturing plants by using a preferred energy sources so as to improve energy efficiency (Coca-Cola Annual report, 2015).
Despite Coca-Cola is doing its best to refresh the world as well as build and keep maintaining its relationship with customers, there are certain areas that need to be addressed so as to foster improvement. Firstly, there should be an introduction of effective customer feedback platform whereby their final consumers can relay any sought of complaints regarding their product purchased. Looking back to the half content of liquid purchased in a sealed pack of can, and sending emails to the given contacts without any response, this sent a negative signal to the customer, which can be inferred that they do not care about their customers. Although, they have a customer complaint line, it’s not effective in answering queries. In addition, they can further create a segmentation, in the sense that since it’s a global company, they can make customer complaint platform in different branches of countries so as that way, the customers won’t feel neglected when they make requests.
Also, Coca-Cola should develop its social media strategy. The company recognises the fact that social media is important most especially if used in the right way. Although, Coca-Cola has a Facebook, Twitter, and even Google+ account and has a massive fan followership online, it does not use that medium to engage its fan or undertake e-commerce. It can usually go weeks before posting anything on its social media pages or replying fans comments (Moth, 2013). Therefore, they should endeavour to adopt a good social media strategy as the world is rapidly developing into a technology based environment and cultivating the social media structure now will make the product appealing to most especially the younger generation.
Bramlett, D. (2000). Implications of loyalty program membership and service experiences for customer retention and value. Journal of the academy of marketing science, 95-108.
Christopher, M. B. (2005). A stakeholder approach to relationship marketing strategy: the development and use of the six markets model. European journal of marketing, 855-871.
Coca-Cola. (2014, December 1). Our business. Retrieved from Coca-Cola journey: http://www.coca-cola.co.uk/about-us/our-business
Duan, Y. (2011, July 23). Crisis management and strategies: Case study for Coca-cola. Retrieved from Crisis communication: https://crisiscomms.wordpress.com/2011/07/23/case-study-summary-for-coca-cola/
Godson, M. (2009). Relationship Marketing. Oxford, U.K: Oxford press.
Gummesson, E. (1997). Relationship marketing as a paradigm shift: Some conclusions from the 30R approach. Management decision, 35(4), 267-72.
Gummesson, E. (2008). Total relationship marketing (3rd ed.). Jordan Hill, Oxford: Butterowrth-Heineman.
Lacy, L. (2013, May 02). Coca-Cola's Ahh effect offers teens seemingly endless mobile content. Retrieved from ClickZ: https://www.clickz.com/coca-colas-ahh-effect-offers-teens-seemingly-endless-mobile-content/40757/
Morgan, R. a. (1994). The commitment-trust theory of relationship marketing . Journal of marketing, 20-38.
Morris, A. (2012). Coca-Cola goes green with environmental friendly bottles. Retrieved from Allbusiness: https://www.allbusiness.com/coca-cola-takes-a-green-lead-6178-1.html/2
Moth, D. (2013, April 17). How coca-cola uses social media . Retrieved from Econsultancy: https://econsultancy.com/blog/62548-how-coca-cola-uses-facebook-twitter-pinterest-and-google/
Postmaster. (2014, August 4). Coca-Cola and McDonalds. Retrieved from Strategic partnering: http://strategic-partnering.net/case-3-coca-cola-mcdonalds/
Reinartz, W. K. (2004). The customer relationship management process: its measurement and impact on performance. Journal of marketing research, 41(3), 293-305.
Roking. (2005). Customer retention programs. Retrieved from sales lobby : www.saleslobby.com/Mag/0601/FERK.asp.
Tan, J. (2016, November). nine examples of how coca-cola generates word of mouth. Retrieved from Referral candy: http://www.referralcandy.com/blog/9-examples-of-how-coca-cola-generates-word-of-mouth-and-happiness/
Tham, N. (2013, April 24). How Coca-Cola attracts customers with promotional gifts. Retrieved from Odm group: http://www.theodmgroup.com/2013/04/24/how-coca-cola-attracts-customers-with-promotional-gifts/
Vence, D. (2002). It's still the master key: marketers always rely on transactional angle. Business source premier, 36(13), 1-9.
Vevey. (2001, January 30). Nestle and Coca-Cola: Joint venture to tap rapidly growing segments. Retrieved from Nestle: http://www.nestle.com/media/pressreleases/allpressreleases/cocacolajointventure-30jan01
Winer, S. (2001). A framework for customer relationship management. California management review, 89-108.
Coca-Cola sustainability report, 2014-2015.