Top Brand- Coca Cola

The brand I have chosen is Coca-Cola which ranks at first among the top 100 global brands. Coca cola belongs to the beverage industry, particularly in the carbonated soft-drink category. The beverage industry has been in existence since 1878 when the term “soda industry” was first coined and the first bottled soda water was sold in 1835 in USA. It consists of wines, beers, carbonated drinks, juices etc which have been in existence for centuries. However, we will focus only on carbonated drinks. Although entering the beverage industry is not so expensive or difficult but there are only three key players which are Coca cola, Pepsi and Cadbury-Schweppes among which Coca Cola is the market leader. The market leaders have an oligopoly in the carbonated drink industry and it is virtually impossible for a new entrant to enter the market. The reason for this is that Coca Cola has been in the market for such a long time and they have built up such strong brand equity that consumers recognize the drink by the name of Coca Cola rather than a carbonated drink. The most famous and most consumed drink of Coca Cola Company ( Coca Cola) is the cash cow for the company and has been in existence for a century now and yet it has not lost its market and is the market leader. The reason for being such a recognized brand is Coca Cola’s brand hammering strategy in which they keep on advertising their brand from time to time and target every age group although the brand is for the new generation. They spend a considerable amount of money on advertisement every year and most of their ads are a reminder message in order to keep the brand alive. Along with excessive advertisements through commercials they also sponsor other products and carry out events on a regular basis where they promote their brand. Carbonated drink is such a product which can easily be copied by competitors and which has been done in the past but Coca Cola knows that the only distinct factor in this industry is to market their brand and make their drink a symbol for youth. So, through aggressive marketing strategies and a constant flow of advertising campaigns Coca Cola is still the number one brand in carbonated drink industry and easily sweeps away new entrants due to its large and loyal customer base. Advertising has become a part of our lives and we go through a myriad of advertisements daily. From an investor’s point of view such as Coca Cola, advertising has the following benefits:

  • It helps in gaining customer attention and if successful, helps the company to gain market share.
  • It helps in reminding customers of the products that exist in the market and hence enables the company to maintain market share and profits through regular purchases.
  • It keeps the existence of company alive and helps in competing with companies offering the same products in the market.

However, on the other side, there are also potential drawbacks of marketing which are as follows:

  • The cost of advertising and marketing is very high and costs the company a large fortune to regularly do marketing activities.
  • There is no proper check on the success of marketing campaign. The only check is the increase in sales of the company which might also be due to external factors such as change in weather in the case of Coca Cola as demand of drinks goes up during warm seasons.
  • The cost of advertising in passed on to customers in the form of high prices and high prices might reduce the demand of the product and so the company might lose its customers if another company offers the same product with same attributes at a lower price.

As witnessed by the success of Coca Cola even after so many years reflect the importance of proper advertising. In today’s competitive world where competition has become global, it is very important for companies to differentiate its products through marketing and product development. For products such as carbonated drinks where product differentiation is very limited, it is important for firms to gain a larger market share and that can only be achieved through aggressive marketing and advertising and advertisements are the main medium of interaction with the customers and convincing them to buy your product