You’re in the middle of a desert.
Wandering in the unforgiving heat, shielding your eyes from swirling sand, you suddenly stumble up to a vending machine. What colour is the vending machine? What brand is on it?
Did you imagine a red Coca-Cola vending machine?
If so, you aren’t alone. Consider these facts:
- Coca-Cola has a brand awareness over 90% in countries around the world.
- 94% of the world’s population recognizes the Coca-Cola brand.
- Nearly 2 billion Coke products are consumed daily in over 200 countries worldwide.
How strong is the Coca-Cola brand? In Mandarin, Coca-Cola translates to “delicious happiness”
The strongest companies are usually the strongest brands. More than the quality or variety of their products, Coca-Cola’s brand has created an economic moat that has survived for 130 years. This economic moat has led to sustainable profitability.
Coca-Cola is not a price-sensitive product. Many imitators have tried to undercut Coca-Cola products by selling at a lower price. Such a strategy - competing on price - is hopeless against Coke. Consumers aren’t buying the product; they’re buying the experience. Coke’s brand and products are so intertwined that enjoying one of their beverages is an experience fostered by marketing and expectations. As a result, consumers are willing to pay extra for a Coca-Cola product. People don’t want a pop; they want a Coke. This has led to a gross profit margin of over 60% for the past decade - in simpler terms, $0.40 of every dollar sold is the actual cost of the item, while the remaining $0.60 is profit.
Walk into a grocery store or convenience store anywhere, and they will sell Coca-Cola products. How could a product have such a global presence? The brand is so strong that any store selling beverages needs to have their products - consumers demand it! Over 130 years of innovative marketing has kept people clamouring for it worldwide. To meet this demand, Coca-Cola established an unprecedented distribution system that smaller, less-desired companies could never replicate. This distribution system, spurred on by consumer demand, has created a competitive advantage for Coca-Cola and an average net profit margin over 20% for the past decade. This means that for every dollar it sells globally, they pocket $0.20 (accounting for all costs).
How did Coca-Cola establish such a strong brand? From 1886 until today, management perfected the mix of tradition and innovation. Coca-Cola has used the same font and logo for over 100 years, as the classy red cursive is timeless. What is truly amazing, however, is that the cursive has been tweaked for different countries and languages. The logo transcends languages and borders.
The price of Coke was fixed for about 70 years. This humble simplicity hooked consumers, allowing Coca-Cola to scale across America and the world quickly. Until 1959, bottles of Coke were always sold at 5 cents.
When it comes to innovation, Coca-Cola has shown a willingness to think outside the box. In 1915, it held a design contest for a one-of-a-kind bottle to ensure consumers could easily identify it. The unique bottle created a packaging advantage and new marketing tool for the brand. Even today, the Coca-Cola bottle still seems unconventional yet singularly appealing.
And while tradition matters, it hasn’t stopped pushing the envelope. In 2016, Coca-Cola flipped its marketing strategy by creating a “One Brand” campaign. It aimed to unite all Coke brands from around the world with the slogan, “Taste the Feeling”. Previously, different products had different marketing campaigns, such as “It’s Mine” for Diet Coke and “Same Great Taste, Zero Sugar” for Coke Zero. Capitalizing on increasing globalization makes perfect sense for a company with such an immense presence.
Today, Coca-Cola owns more than 3500 beverages across 500 brands. If you drank a different Coca-Cola beverage every day, it would take over 9.5 years to try them all!
Coca-Cola has created the all-time global standard for brand strength. No other modern company has been so accepted across barriers. No matter where you go or what language you speak, you can always get a Coca-Cola. No brand can match Coca-Cola’s resilience, growth, and dominance.
Even in the desert, Coca-Cola comes to mind.
For further analysis of Coca-Cola (NYSE:KO), click HERE
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-Daniel Baum, Community Manager, Vuru