Coca Cola Market Analysis Report

This report provides an in-depth analysis of the Coca Cola Company, focusing on its market position in the United States. It includes external and internal analyses using frameworks such as PEST and SWOT, as well as Porter's Five Forces model. The report highlights the competitive landscape, consumer behavior, and strategic recommendations for Coca Cola to maintain its market leadership amidst changing consumer preferences and increasing competition.

Running head: THE MARKET OF COCA COLA AND THE UNITED STATES
The Market of Coca Cola in the US
Name of the Student:
Name of the University:
Author Note:

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THE MARKET OF COCA COLA AND THE UNITED STATES
Executive Summary:
Coca Cola Company is the leading multinational beverage manufacturing and marketing
company in the whole world. The company own brands like Sprite, Coca Cola and Minute Maid
Orange drink worth billions of dollars. The assignment delves into the external and internal
analysis of the company. Several graphs and figures have been provided to make the study more
lucid.

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Table of Contents
Introduction:....................................................................................................................................4
Step 1: Porter’s Five Forces model of Coca Cola:..........................................................................4
Threats of new entrants:...............................................................................................................4
Threats of substitutes:..................................................................................................................5
Bargaining power of consumers:.................................................................................................6
Bargaining power of suppliers:....................................................................................................6
Industry rivalry:...........................................................................................................................7
Step 2: PEST analysis of Coca Cola Company:..............................................................................8
Political:.......................................................................................................................................8
Economic:....................................................................................................................................9
Social:........................................................................................................................................10
Technological:...........................................................................................................................11
Step 3: Summary of PEST and Porter’s model:............................................................................11
PEST Summary:........................................................................................................................11
Porter’s model:...........................................................................................................................12
Step 5: SWOT analysis of Coca Cola Company:..........................................................................12
Strengths:...................................................................................................................................12
Weaknesses:...............................................................................................................................13
Step 5: Strengths and Weaknesses of Coca Cola Company-Summary:........................................13

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Step 6: Recommendations from SWOT analysis(Appendix):.......................................................13
Conclusion:....................................................................................................................................14
References:....................................................................................................................................15
Appendix:......................................................................................................................................17

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Introduction:
The aim of the assignment is to conduct external and internal market research of a
company. The paper takes into account Coca Cola as an example and conducts it external market
research to find out the political, economic, social and technological factors under which the
company operates. The internal factor analysis conducted after this shows the strengths and
weaknesses of Coca Cola. The paper ends with recommendations for the company to improve its
business in the market.
Step 1: Porter’s Five Forces model of Coca Cola:
Threats of new entrants:
Coca Cola is the leading manufacturer and marketer of soft drinks and faces threats of
new entrants because the profitability of international soft drinks market attracts new entrants.
The company markets carbonated soft drinks brands like Coca Cola, Sprite, hot beverages like
Honest Tea, fruit drinks like Minute Maid and packaged water like Kinley(coca-
colacompany.com, 2017). The company’s products face threats from new products like Diet
Pepsi by its biggest competitor, PepsiCo. The mineral water product of Coca Cola, Kinley, the
hot beverage product, Honest Tea and the Fruit drinks range Minute Made face threats from local
bottled water manufacturers, tea manufacturers and fruit drink marketers who introduce new low
priced products of same category in the United States of America(Herbet et al., 2014). This
analysis shows that Coca Cola in order to counteract the threats of new products by the
international and local companies adopts aggressive strategies like massive marketing activities

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and vast supply chains to maintain its supremacy over the America beverage market(Lu &
Swaminathan, 2015)..
Threats of substitutes:
The products of Coca Cola Company can be categorised into carbonated beverages like
Coca Cola, hot beverages like Honest Tea, mineral water products like Kinley and ready to serve
fruit drinks products like Minute Maid. The products of the company faces threats from
substitute drinks like soft drinks and beverages of other companies and companies manufacturing
alcoholic drinks(E. Dobbs, 2014).
Figure 1. Graph showing falling consumption of soft drinks in America
(Source: Holodony, 2017)

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The figure above shows the decreasing consumption of soft drinks among the Americans.
This reduction in consumption of carbonated drinks would mean fall of revenue for Coca Coal in
the United States. The company in order to counteract this threat of decreasing sale of soft drinks
and threats from substitutes like alcohol marketers promotes its products aggressively using the
print and digital media like newspapers and social networking websites(Porter & Heppelmann,
2014).
Bargaining power of consumers:
The consumers gain power when a multiple products of same categories are available in
the market from multiple sellers at almost same prices. The power of buyers also increases when
they have a lot of information about related products and there are substitute products available
in the market at same prices. Coca Cola and its biggest competitor Pepsi sell same types of
products in the American market like carbonated drinks and packaged mineral water. This allows
the consumers to choose between these two products(Fabbri and Klapper, 2016). Moreover the
American market also experience presence of premium alcoholic products like premium beer
which competes with Coca Cola. This analysis shows that the consumers in the United States
have great bargaining powers owing to presence of substitute of Coca Cola products in the
American market.
Bargaining power of suppliers:
The bargaining powers of suppliers are more when there are few alternatives available to
the consumers to choose from. As a result the sellers are able to compel the consumers to pay
high prices for their products. The figure below shows the market of Coca Cola compared to its
competitors in the year 2015. It shows that Coca Cola enjoys more than 40 percent of the market,
followed by its deadliest rival Pepsi and while the other smaller soft drinks marketers have total

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combined market share of 30 percent. This analysis shows that though there are several soft
beverages products in the market, there are virtually two manufacturers who sell these drinks
namely, Coca Cola and PepsiCo. This allows these two companies charge high prices from the
consumers for their products which account for their huge profits(Sheu & Gao, 2014).
Figure 2. Graph showing market share of major soft drink brands in 2015
(Source: Author)
Industry rivalry:
The soft drink market experiences a high degree of industry rivalry owing to presence of
strong contenders like Coca Cola and PepsiCo. The two companies dominate the international
soft drink industry and manufacture almost similar products. Thus, there exists a high degree of
rivalry in the market which requires Coca Cola to form aggressive marketing strategies to
maintain its hold over the soft drink market particularly in the United States of America. The
financial chart below shows the rising share prices of Coca Cola on NASDAQ in the past 5

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years. The graph shows that the share price of the company on average remains high which
proves its power to counteract challenges from rival companies like Pepsi Co and maintain its
dominance over the American market. Finally, it can be inferred that the investors invest in the
shares of Coca Cola Company due to its power to maintain dominance over the American soft
drink industry and give high returns on investments(Gupta, 2013).
Figure 3. Graph showing risisng stock index of Coca Cola in 5 years
(Source: Coca-Cola Company Stock Chart, 2017)
Step 2: PEST analysis of Coca Cola Company:
The PEST analysis of the Coca Cola Company is as follows:

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Political:
Coca Cola Company is a multinational company and comes under the influence of
various political factors like government laws and policies framed by the governments of the
countries it operates in particularly, the United States of America. It must be noted that Coca
Cola uses the open market policy of the American government to expand its business outside the
boundaries of the United States of America. The company must also abide by the agreements the
government of the United States has with its trading partner nations and the international
organisations like the European Union(Gilpin, 2016).
Economic:
The economic factors influencing Coca Cola Company are the GDP, per capital income,
availability of raw materials, supply of labour and financial resources. The United States of
America is a developed market and enjoys the highest GDP in the whole world around $18.57
trillion. This economic strength of the United States, technological advancement, supply of
skilled labour, huge investor base and the country’s strong network of financial institutions
providing ready capital have led to the growth of Coca Cola into a leading multinational
beverage seller. The company open market policy of the United States has allowed the company
to expand globally and sell its products all across the world, thus generating huge
revenue(Kelsey, 2015). This global expansion allows Coca Cola to employ talents from all round
the world which accounts for its high standard of market performance. The company has put up
bottling plants and established its own supply chains to ensure supply of raw materials at low
prices. The company also has a global distribution chain which allows the Coca Cola products to
reach the customer at low prices. This analysis shows that Coca Cola Company is influenced by

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and exploits the economic factors to dominate the beverage market both internationally and
within the United States.
Social:
The social factors impacting the business of Coca Cola are preferences among
consumers, their life style and their preferences for its substitute products like alcohol and milk
shakes(Sherif, 2017). The growing awareness among the consumers about the negative effects on
soft drinks on the human body has brought about reduction in the per capital consumption (figure
4) of aerated drinks in the market which has affected the revenue generation of Coca Cola
Company. The company has introduced low sugar healthier variant of Coca Cola called ‘Diet
Coke’ to attract health conscious consumers. This change in the preferences for beverage in the
society has led Coca Cola to strengthen the marketing of Minute Maid, its fruit drink product to
earn huge revenue by selling it to the Americans. This analysis shows that the social factors like
changing preferences among consumers has deep impact on Coke.

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Figure 4. Graph showing decreasing consumption of soft drinks
(Source: nasdaq.com, 2017)
Technological:
The technological factors like availability of advanced bottling plants and use logistics
facilities like delivery trucks with freezing facilities have impact on the business of Coke in the
United States and its international market. Coca Cola Company sources its products from several
independent bottling plants which use modern bottling technology to ensure mass production of
Coca Cola bottled drinks. This helps the company to make Coca Cola products available to
consumers at low prices which ensures huge market penetration and revenue generation. Thus it
can be inferred from the discussion that technology plays a very important to ensure the market
leadership and high revenue generation of Coca Cola(Kashyap Xiang & Heiden, 2015).