Date of submission
Marketing Channel for Coca-Cola
Coca-Cola utilizes the distribution channel as a marketing strategy to bridge the demand and supply gap and ensure that their products reach their different market segments. The company keeps altering their distribution channels to match their expansion efforts for a larger market share. Over the years, Coca-Cola has managed to develop a solid distribution network across the globe. Mainly, they use two major channel distribution strategies, direct selling and indirect selling (Ferrell 429). On their website, the company states, “our principal channels are small retailers, “on premise” consumption, such as restaurants and bars, supermarkets and third party distributors” (Coca-Cola par. 4). The strategy of using small retailers to reach their consumers is a form of direct selling where the company supplies their various products to the retailers. The company uses its own resources to deliver stock to the retail outlets, meaning the company generates only a small part of revenue through this strategy. Indirect selling however is the most profitable strategy. Indirect selling is a strategy whereby Coca-Cola engages various distributor agencies, through partnership and the company delivers the products to the distributors who then supply to the direct retailers. However, large retailers such as Wal-Mart get their supplies from the company directly (Ferrell 431). However, the most creative mode of direct selling strategy is the use of coke vending machine in strategic locations like gas stations and school premises. The channel delivers the products direct the customers and it is obvious that the company is reaping big from these machines because the company does not have to incur costs of trade and prime promotions (Ferrell 433).
According to Littleson, the choice of a marketing channel is significant because consumers today are used to convenience shopping and If your product cannot reach them when, where and how they want it, then they can always opt for the substitute (par. 7). This implies that the how a company sells its products because as important as what they are selling. This implies that the choice of channel partners is also important to avoid conflicts along the distribution channel (Littleson par. 8). For instance, a strong retailer like Wal-Mart and other retailers around is a good choice because the retailer will help the company to promote and sell its products to the various market segments. However, there is a downside to using distributors and major retailers. Firstly, Kumar posit that the company does not have control over the activities of the channel partners because they are independent firms (272). Retailers like Wal-Mart also stock competing brands for Pepsi and other producers and thus Coca-Cola cannot depend on such partners to sell its products aggressively. Furthermore, distributors may not welcome slow-selling products because they are also in business to make profits. Kumar also elucidates that physical distribution revolves around a cycle time and improper management might lead to a shortage or absence of the product. The idea of using marketing channels is to ensure the availability of the product at the right place and time to the consumer, therefore disruption in the cycle time, probably due to poor order processing, will cause conflict along the supply chain because the unavailability of Coca-Cola products will compel the consumers to switch to competing brands (274). Such pitfalls make it necessary for a company to keep changing the marketing channels to keep abreast with the changing market environment (Coca-Cola par. 7).
The target market for Coca-Cola products is multi-segmented. For this reason, the company has come up with different multi-segmentation strategy in most of its markets. The strategy involves activities aimed at invention of different products, different pricing and different packaging strategy for the different market cluster groups. From its competitive strategy information, the company states that the different market clusters are defined using various criteria such as consumption occasion, socioeconomic levels, and competition intensity (Coca-Cola par. 5).
The company produces different products to meet the tastes and preferences of its broad consumer base. The company’s core product is the carbonated beverage that targets the general soft drink consumers. The classic carbonate drink, Coke, has always appealed to the older consumer, but the company has tried to use the various advertising strategies to create a youthful appeal for the younger generation. Recently, the company rolled out several products to capture a wider market audience. For instance, their juice drinks target the kids, while the teas and coffee target the consumers who are looking for a healthier alternative to the carbonated drinks (Ferrell 432).
The idea of adopting effective marketing channels and the multi-segmentation strategy by Coca-Cola is an attempt to gain a competitive edge through the creation of collaborative customer relationships.
Coca-Cola FEMSA. Company, Strategy and Competitive Advantages, 2014. Web. 19 Nov. 2014.
Ferrell, William Pride. Marketing 2012. Mason, Ohio: Cengage Learning, 2012. Print.
Kumar, V. Managing Customers for Profit: Strategies to Increase Profits and Build Loyalty. Upper Saddle River, N.J.: Prentice Hall Professional, 2008. Print.
Littleson, Randy. “Supply Chain Trends: What’s In, What’s Out.” Manufacturing.net, 6 Feb. 2007. Web. 19 Nov. 2014.