After mentioned about what, where and who is done in Coca Cola’s channel marketing structure. In this part, we will mainly talk about how is it exactly done with their channel members. As we already know about the Coca-Cola company, they are a well known worldwide company, therefore, they supplied different procedures in different cultures. Like we already talked above, Coca-Cola “wholesales” its syrup concentrate (product) to franchises who carbonate and bottle and distribute the brand (processing, packaging and physical distribution) to consumers who have been targeted by Coca Cola’s heavy advertising (Promotion).
For gaining the better management in the channel sides, Coca-Cola did a lot of big moves recently years domestically and internationally. They did an acquisition of bottling operations in Vietnam, Cambodia, and Guatemala recently. They also integrated their German Bottling and Distribution Operations in 2007. There some conflicts among Coca-Cola and their channel members before. The biggest one is that they had too many different independent bottler partners in the past. Those bottling company had their own operating systems. Each of them had the different profit margin, the packaging, distribution cost were all in different scales.
However, Coca-Cola obviously wants them goes to the uniform costing and sell the same price to the markets. Also, Coca-Cola didn’t actually own those bottler companies, their control power is very few, they cannot really manage those bottlers, therefore in 2010, Coca-Cola did a big decision that they paid $12. 3 billion to buy its biggest U. S. bottler, which is the Coca-Cola Enterprise, in order to secure control of most production and distribution in its home market.
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Now, this latest approach will allow it to keep production of popular brands including Sprite, Powerade, Minute Maid and Coke in-house but gradually parcel out distribution once again. In 2013, they announced deal would increase the scale of five of them: Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United Inc. , Swire Coca-Cola USA, Coca-Cola Bottling Co. High Country and Corinth Coca-Cola Bottling Works Inc. Those moves defiantly increased the vast control ability over their business.
In the future, Coca-Cola can have the power to administrate their bottler partners; they can better monitor the quality of the coke, make all production line the same format. By acquisition those international bottler companies, Coca-Cola doesn't have to put too much energy into the local distribution, they can put more time to focusing on advertising, marketing and also leave the freedom for the bottlers doing the local distribution since those local bottlers already familiar with their local business.
When they procedure the whole channel systems, legal constraints become a very important consideration for Coca-Cola, especially in the international market. All of their Company’s facilities and other operations in the United States and elsewhere around the world are subject to various environmental protection statutes and regulations, including those relating to the use of water resources and the discharge of wastewater. Their policy is to comply with all such legal requirements.
Compliance with these provisions has not had, and they do not expect such compliance to have, any material adverse effect on their Company’s capital expenditures, net income or competitive position. They also offer discount among their channel members during sale periods and special occasions. It helps them generate sales and increase profits. We also found that some theme park also associated with Coca-Cola. Like Universal Studio and Six Flag, they all have promotion events with Coca-Cola. At the financial assistance part, we didn’t really find those detail information about financial assistance between the channel members.
However, we found out that Coca-Cola actually teams together with their bottlers to spouse many education facilities. Give universities and high school students scholarships. We figured out that this also could be considerate that Coca-Cola and their bottling partner want to create a good reputation about their brands.
For the channel communication and information systems part, in their 10K report, it mentioned that they depend on information systems for digital marketing activities and electronic communications among their locations around the world and between Company personnel and their bottles and other customers, suppliers and consumers. Because information systems are critical to many of the Company’s operating activities, Coca-Cola business processes may be impacted by system shutdowns or service disruptions.
Coca-Cola has open communication channels provide the means to support a culture based on relationships. Coca-Cola has a number of communication operations within their own company and their channel members, including monthly leadership team meeting (involving function heads). Coca-Cola has weekly department team meetings and monthly employee team briefing sessions. Also, they consultative employee groups for each region (with representatives meeting in a European Council), they also will do some surveys to monitor employee or their channel members’ views and feelings.
To better measure the Coca Cola’s key channel performance, we also looked over their last year’s10 K report. We found out that after they finished their acquisition of Coca-Cola Enterprise’s former North America Business. The Company has identified incremental synergies, primarily in the area of our North American product supply operations, which will better enable them to service their customers and consumers. They believe these efforts will create annualized savings of $200 million to $250 million.
For the gross margin part, it is shown that their gross profit margin decreased to 60. 3 percent in 2012 from 60. 9 percent in 2011. One reason is that of the impact of the current global economic condition. Therefore, we can conduct the conclusion that the economic crisis still impacted Coca-Cola and decreased their gross profit margin. Another reason is that the ongoing fluctuations in foreign currency exchange rates and the impact of their acquisition of Great Plains in North America as well as their acquisition of bottling operations in Vietnam, Cambodia, and Guatemala.
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