Coca-Cola’s Brand Extension Strategy

The subject is a marketing tactic that companies use in promoting new goods. An already established brand name fall in the categories of the new product. It doesn’t matter whether the newly introduced product relates to the current product. The products may have some connections or fail to have any relationship. Coca-Cola Company is a world known best beverage manufacturing company that offers a diverse range of products to its target market (McWilliams, 2016). As a result of numerous product categories, the company offers and use the brand extension strategy to promote its new products on the market. When the company launched coke-zero, Coca-Cola Light, among other brands, it used the Coca-Cola brand to launch them with ease. Given the prominence in the Coca-Cola brand name, the new product Coke-Zero did not appear strange in the market. This paper shall discuss the brand extension strategy as Coca-Cola Company used it to launch Coke-Zero in the market. We shall look at the current Coca-Cola brand values and the target market into which Coke-Zero extended.

According to McWilliams (2016), Coca-Cola is among the top valuable brands recognized internationally. By 2016, the company value estimation stood at $73.1 billion (McWilliams, 2016). The company’s products and innovations in packaging are significant in promoting the brand value. In addition to these innovations and differentiated products, the Coca-Cola brand leaves its fans with a refreshing experience that also contribute much to the brand value. Coca-Cola product consumers always want the product in diverse ways and this indicates how valuable Coca-Cola is in comparison to other beverage companies (McWilliams, 2016). Due to the consumer demand, the company comes with new products and does a brand extension to familiarize their target market with the product (McWilliams, 2016). Despite launching different products in markets, the Coca-Cola Company believes in one brand strategy. This forms the company’s trademark in all parts of the world.

Brand extension strategy is not new because it dates back to the 1960’s (McWilliams, 2016). For instance, Pepsi, a rival to Coca-Cola Company, used a brand extension to launch Diet Pepsi brand in 1964 (McWilliams, 2016). Coca-Cola Company responded to this by launching Coca-Cola Light in 1982 (McWilliams, 2016). As much as the products may have a relationship, the new product must come with new distinct features that do not exist in the current brand. The Coke Zero also referred to as Coca-Cola Zero, has low-calorie content and has a unique taste. Coke Zero was launched in 2005 and their target markets are male consumers.  Beverages such as Diet Pepsi, Juice brands are the main competitors of Coke Zero.  The Coke Zero has unique values of taste and all carbonated variants, though flavoring formula is the same.

Coke Zero is present globally and consumers from different countries can access it. For instance, it can be found in the United States, Australia and most of the African and Asian countries including Pakistan and India. In addition to the Coca-Cola brand which is, popular, the company has also adopted some policies that allow intensive distribution of Coke Zero in different markets around the world. The Coca-Cola Company also promotes its brand through their transportation. Other companies outsource transport services to other firms but Coca-Cola company transport their products, both existing or new ones by their own trucks to the warehouses or marketplaces. In order to increase the rate of stock turn over and sales figures, the Coca-Cola company directly links with their intermediaries for fast and efficient product distribution.

A reputable agency was responsible for marketing Coke Zero in the global target markets. Because Coke Zero targeted male consumers, it fitted a nickname Bloke Coke. The diet drinks in most instances target female consumers (McWilliams, 2016). However, Coke Zero’s branding as calorie-free instead of diet drink managed to target male consumers. The new products are also marketed through advertising, sales promotion and personal selling. The Coca-Cola positive brand image improved through pervasive advertisements in media channels such as televisions, magazines, radio, newspapers, and billboards. The company representatives were significant during the launch of the product. They would use personal selling strategy by moving to the retail outlets and fast food places. At first Coke zero brand used below-the-line marketing promotional policy. Free samples of about 4 million were given free in a period of four weeks (McWilliams, 2016). This helped the brand to penetrate the market and capture the new customers.

The brand extension may be seen important and prevalent among top companies which use it as a marketing strategy for bringing new product in the market but it’s not easy to pre-judge how the consumers would react for such product (Tauber 1988). The consumers examine the newly introduced product if it is suitably a member of the brand group. The initial opinion of consumers about the existing brand product is a determinant of whether a brand extension can really work well in bringing a new product in the markets (Aaker & Keller, 1990). For instance, Coca-Cola has a good reputation in the market and their products have been always thought to be the best. Therefore, consumers have formed an opinion on its products and any new product that comes on the market with the Coca-Cola brand may not face many difficulties in penetrating the market. The brand extension, therefore, helps in introducing a new product while using an already established strong brand.

Some companies’ brand extension ideas involve venturing into products that are totally different from the normal company products. Coca Company is different because it expands its line of products in the same category. Brand extension in the same product category is more reliable than the brand extension in a different product line.  The Coke Zero brand was easy to understand by customers because it is in a similar category with the original Coca-Cola Company (Wells, 2017). In contrary, if the brand extension involves a product that falls into a different category from the normal company products. For instance, if a beverage company ventures in the clothing line, it will not be easy for consumers to understand whether the product belongs to that particular company.

If Coke Zero brand were launched with a different brand apart from Coca-Cola, it would be difficult for it to penetrate the market. Brand extension strategy requires a careful application because if not so, the original company’s product may fail by the arrival of the new product (Czellar, 2003). Coca-Cola Company was efficient in its brand extension strategy because the identity of the original Coca-Cola product maintained as the new product also penetrated the market. 

Coca-Cola products score high when we consider the most loved beverage brands in sub-Saharan Africa (Czellar, 2003). Despite the many company brands, there is no inter-brand competition in the market. The close rivals for the company cannot outdo it due to good marketing strategies that the company uses. The company focuses its brand value on all the product brands. Brand extension strategy by Coca-Cola Company is enhanced visual identity. This is done through packaging. Coke zero, just like the original Coca-Cola product, uses the classic Coca-Cola logo. However, the product descriptions are slightly different so that the communication of content differentiation is effective. Getting the brand extension message to consumers has hot however been easy. Due to the similarity in brand color and taste as the original product, many consumers around the globe have not understood that the content of Coke Zero is sugar-free (Czellar, 2003). Therefore, each bottle of Coke Zero has some slight descriptions such as zero sugar and no calories.

There are various advantages that Coca-Cola Company has as an outcome of brand extension marketing strategy. First, it is cheaper and less risky when compared to when the company chooses to create a new product brand (Taylor and Valerie 2002). Marketing a new product involves research and development among other costs. An already established brand is known hence the company saves some cost on marketing. Second, the consumer knowledge is guaranteed through brand extension. It is not hard to create imagery and awareness. The new products’ is already associated with the normal product through brand extension. Therefore, communicating the specifics of the new product becomes the main task.

Third, brand extension enhances consumer trust for products (Pitta and Katsanis 1995). The Coca-Cola Company is a well-known and trusted brand. The Coke Zero brand, therefore, relies on the already existing consumer trust. The extension thus benefits from the consumer trust. The information of the product is what consumer transfer to the extension. The favorable general opinion of the Coca-Cola brand creates a value proposition on the new product.  The brand extension also enhances the visibility. When Coca-Cola Company launched Coke Zero, it performed a rigorous promotion that ensured that the company brand became more visible to consumers.

In conclusion, Coca-Cola uses the brand extension strategy as marketing strategy not only for Coke Zero but to the other brands as well. The strategy has helped the company in minimizing market risks and cost reduction. Maintaining the brand name has helped Coca-Cola Company to be more relevant and maintain its identity among the potential consumers.

References

Czellar, S. (2003). Consumer attitude toward brand extensions: an integrative model and research propositions. International Journal of Research in Marketing, 20(1), pp.97-115.

McWilliams, J. (2014). Coca-Cola No. 3 on Most Valuable Brands Ranking. [online] The Coca-Cola Company. Available at: https://www.coca-colacompany.com/stories/coca-cola-no-3-on-most-valuable-brands-ranking [Accessed 9 Aug. 2018].

Pitta Dennis A.; and Katsanis Lea Prevel (1995), “Understanding Brand Equity for Successful Brand Extension”,Journal of Consumer Marketing, Vol. 12(4), pp.51-64

Taylor Valerie A. (2002), ”Price Effects on Brand Extension Quality Evaluations”,Journal of Empirical Generalizations in Marketing Science, Vol. 7, pp.1-19

Wells, W. (2017). Coca-Cola ’One Brand’ Strategy Hits Stride in South Africa. [online] The Coca-Cola Company. Available at: https://www.coca-colacompany.com/stories/coca-cola-one-brand-platform-hitting-stride-in-south-africa [Accessed 9 Aug. 2018].