Factors Influencing the Sales of Coca-Cola

Coco-Cola Company

Coco-Cola Company is the current leading organization in the soft drink. Coca-Cola is ranked as the most significant distributor, marketer, and manufacturer of non- alcoholics beverages. During its first year of establishment, the company made the loss by making the sales of $50 by encountering the expenses which amounted to $ 70 (Aviv 2013, p.778). Consequently, by the early 1990s of its operations, it became one of the prominent distributors of the soft drinks in America. The sales regularly increase by 4000 percent in the late 1990s as they developed a unique coke formula for selling the bottle (Aviv 2013, p.779). Therefore, this study seeks to examine the factors which determine factors influencing sales of Coca-Cola in Australia.

Objectives of the study

Overall objective of the study is:

To determine factors that influencing sales of Coca-Cola in Australia

Specific Objectives

I. To identify the crucial factors influencing the sales of Coca-Cola. The potential factors under investigation include the level of promotion campaigns, type of day, consumer behavior and competitor action.

II. To review various texts and find out how potential factors affect the sales of beverages.

III. To eliminate factors with negligible or no influence at all on the sales of Coca-Cola through correlation analysis.

IV. To study the background of the research and identify the gap in the research field, applying theories.

V. To develop a multi-regression analysis of data that will get a more accurate forecast of demand, sales, and product strategy.

Project Scope

The study is divided into three chapters’ introduction, literature review, and conclusion. The review will examine and identify previous studies conducted on factors influencing sales of Coca-Cola. Ideas will be established in the knowledge gap by acknowledging and explaining why the study is worth for further study. Lastly, the inquiry will provide a conclusion for the study.

Literature Review

This part is divided into four headings. Firstly, the study examines the industry background, academic literature, immediate literature, and lastly the study examines the knowledge gap concerning the factors that influencing sales of Coca-Cola in Australia.

The Background of the Industry of Soft Drinks

During the seventeenth century, there developed the first drinks that were non-carbonated thirst-quenchers. It was made through mixing lemon juice with water and successively sweetening with nectar. The Paris based Compagnie de Limonadiers sold lemonade soda in 1676, imposing a business model (Historyofsoftdrinks.com 2018). In 1835, the first of the packaged pop soda was brought into the U.S. showcase. Coca-Cola was set up in Atlanta in 1886 the other known soft drinks, Pepsi-Cola came to being in 1898 (Bellis 2007). Bottles made of glass were presented in 1899 and aluminum jars in 1957, were acquainted with the market.

In the current times, soft drinks comprise of filtered water, carbon compounds, functional beverages, and distillates, as well as ready to drink coffee and tea. In the year 2005, the income earned from the worldwide market dealing with soft drinks produced about 319.2 billion US dollars (Datamonitor 2006). Somewhere in the range between 2001, all through to 2005, the field had a composite development of 3.2 percent per year. Datamonitor anticipated that the worldwide soda pop market would keep on growing.

Inside the market involving soft drinks, Americas, which incorporates the US, Canada to its south, Mexico, and Brazil in South America, contributed 42 percent, while Europe; Great Britain and Northern Ireland combined; France among other European countries, Belgium, and others added 36 percent. The Asia-Pacific including Australia, China, India, among other countries takes up about 20 percent of the soft drink market (Datamonitor 2006). The three pioneers in the field include Nestle S.A, the famous Coca-Cola Company, and the Pepsi Co Inc. taking up close to 43 percent in the soda pop and soft drinks market.

The Background of the Company

These days Coca-Cola could be a core organization in the market for soft drinks. It is arguably the biggest producer, and advertiser of refreshment concentrates and syrups being a merchant of non-alcoholic beverages (Coca-Cola Company 1990). It was first built up in May 1886 (Datamonitor 2006). The foundation is attributed to Dr. John Pemberton who established it in Georgia, Atlanta. In the central part of the founding year, the deals summed to about 50 US dollars while the expenses incurred ranged at over 70 US dollars (Bellis 2007). In other words, a misfortune of losses occurred in the primary year of the organization built up.

The last periods of the 1890s, the soft drinks company, amongst the best well-known, had become a standout beverage producer in America (Bellis 2007). The company stretched out syrup transactions by an excess of about 40 times its initial sales somewhere in the range of 1890 and early 1900s. The innovativeness that came as a mystery of the secret coke recipe came in handy in 1985 (Bellis 2007). The products of the then new creation are used more than one billion beverages for every day these days.

Coca-Cola Company has made more than 400 brands of soft drinks keeping aim in the spotlights of the non-alcoholic refreshment market (Coca-Cola Company 1993). The non-alcoholic Coca-Cola brands are sold in roughly 200 nations from place to place worldwide. The organization offers more than six million refreshments consistently these days (Datamonitor 2006) moreover; it lacks claims of only one of the five leading global brands of soft drinks across the world. The company products as of this day are Coca-Cola, Sprite, Diet Coke, and Fanta with a reliable brand picture created over the past one hundred years. However, there are worries the market position might be influenced by the declining prominence of carbonated refreshments in both the United States and the United Kingdom. The growth and expansion of the flavored water market, for that reason, is necessary to improve the market position (Datamonitor 2006).

Coca-Cola in Australia

In around 1937, the Coca-Cola Company team set up a facility in Australia, production resting on a staff of ten and four trucks. The early development was not as easy as any developing business would witness small markets. In two years, the company was operational across the country (Coca-Cola Australia 2018). They supplied service men with drinks during the world war running on a 24-hour basis to satisfy the demand. After the war, during the 1950s, the economy was established with the company granting licenses across Australia. The bottling companies have since then consolidated under Coca-Cola Amatil.

The company today, working with the bottling partners sell more 200 products including waters, flavored milk, sports and energy drinks as well as the standard soft drinks. According to Coca-Cola Australia (2018), the major brands in Australia include Coca-Cola, Sprite, Coca-Cola Zero, among other beverages. The Coca-Cola Company uses its website for some advertisement and marketing works to boost their sales. An ‘Ask Coca-Cola’ feature on the website will give a quick response to customer questions and those of prospective customers (Coca-Cola Company 2001). One can also use their e-mail and advertisement form to get more information if not at contentment.

The company was founded on the principle of advertising as Pemberton had appreciated it. They advertised the products in the Atlanta Journal offering the drinks and giving details on how to get one. The spirit of advertisement has come along with slogans from time to time. Over the years, Coca-Cola produced slogans of a lasting impression for the promotion of their products. Slogans such as ‘The pause that refreshes,’ ‘Be refreshed,’ ‘Things go better with coke,’ and ‘Taste the Feeling’ have mainly contributed on the sales of the Coca-Cola brands along with advertisements on different media. The company uses a one brand strategy that extends the iconic originality, currently in a global promotion “Taste the Feeling.”

Factors that Influence Coca-Cola Sales

The company has undergone a lot of change due to different factors that affected their sales. Coca-Cola has been on the verge of finding new structures to consolidate their operations (Forbes 2018). The aim is to reduce the cost of supply, increase efficiency and add to their profit. The translation of currency, however, let down the growth as it was anticipated. The volatile nature of the macroeconomic environment in the global market has been a dragging factor for the sales of the company. With the weakening of other currencies and strengthening of the US dollar among other currencies, the company has experienced lots of losses in the translation of the coins in different countries. The company has tried to mitigate the damages by focusing more on smaller packs of their soft drinks (Forbes 2018). Small bottles have a higher price to volume ratio which sustains fewer gas costs boosting customer expenditure. With an expansion in the GDP, there is a reflection of stronger conditions on the economic scale (Simonson and Schmitt 2014). The increase in marketing by the company has mainly helped in the accelerated growth in the key markets.

Irrational and quick decisions could affect the sales of a company severely. In the 1980s, the company had introduced a new beverage with the belief that the original taste was a cause of the decline in the sales. The new product was sweeter according to the test from a fraction of consumers as conducted by the company (Smith 2018). The introduction of the new product to replace the original taste, however, seemed to be a mistake as the company had to retreat later to the reintroduction of the unique flavor. This could lead to the conclusion of a flaw in the research conducted by the company to test for the better tastes. The test was based on analysis alone, and they did not research further if the consumer would let go the previous original formula. It must be realized that consumers develop an emotional relationship with products that make it hard to give up (Smith 2018). The dependent variables were limited in the research which ought to have been addressed before shifting to replace a developed initially taste. The investigation of the market always matters in the decision making of the company. Correct and inclusivity of the majority variable in market research is required to ensure the company understands the needs of the consumers.

Unemployment is a significant factor when it comes to the consumption of any product (Healey 2016). It has adverse effects that affect the whole population either directly or indirectly (Howard 2012). The bottling company partnering Coca-Cola announced the closure of its department in the Adelaide suburb (Mariuz 2017). This will lead to another 180 people losing jobs in the coming year. The area has the highest rate of unemployment in the country. Close to 1000 posts are estimated to be lost as 2019 approaches. Alison, the Coca-Cola boss, asserted having reviewed the supply chain that they decided it was not viable. Citing issues like high tax among other factors, the operation in the area was not conducive for the company. However, the sales would also depend significantly on the employability of the population (Mariuz 2017). More cases of loss of jobs will prove disastrous to the deals of the company in the area and the country at large come 2019.

Contribution to the Australian Economy

Operating in over 200 hundred countries, Coca-Cola has both direct and indirect impacts on the economic systems of the countries they work in. The company has a local nature of a business that keeps them in an excellent position to contribute crucially to the local communities all over the world. The Coca-Cola Company has employed over 90000 employees across the globe on a direct basis (Coca-Cola Company 2018). They stimulate the creation of jobs hence contributing much to the economic success of the country. The company has employed many Australians as their workers, adds revenue through the taxpayer system of the country and pay for other goods as well as services to ensure smooth running.

The company has many customers across the country. Its vendors, retail shops, and other convenience stores sell their beverages to consumers all over (Coca-Cola Company 2018). They help retailers build up their business, and the retailers contribute further to the GDP of the country. Generally, the company has always fared on well compared to the economy of the country. The sales in the recent years have increased by over 3 percent from a few years back. The growth is linked to new brands which are launched to better the sales and improve the economy at large. Having its businesses on an international market basis has enabled the company to be profitable even when Australia drops weaker in the marketplace. Having discussed the development of the soft drinks industry from the first ever manufactured to the current market, it is easy to see the factors that have affected the development and sales of the Coca-Cola Company.

The Knowledge Gap

The research on the factors influencing sales of Coca-Cola in Australian has not been greatly conducted. However, there exist some few reviews that highlight the gap between what exists and what has been previously examined.

Rent (2018) studied the relationship between the customer and the product is significant to the company’s success. The study revealed that the digital world is full of customer frustrations and praises for the products they are subscribed to. There is a significant gap from the similar study conducted by Datamonitor (2006) which established that organizations should collect data on the companies to monitor the progress and see the development of the companies concerning profits and losses. Corporations such as Datamonitor have done a great deal in focusing information from different companies about the global economy.

A study by Green (2016) examined the effect of Coca-Cola on changing the original flavor of the Coca-Cola brand, which turned out to be a massive failure for the company. A notable gap was established, and the review indicates that it is important to understand the relationship between customers and products and manufacture the goods that satisfy the needs of their clients. Additionally, the study reveals that customers are the ambassadors of the company products and developing an excellent customer-product relationship is the best way to market the brands. Coca-Cola has been one of the companies that have globally established and is in the public eye as the most successful soft drink company currently (Green 2016). Having its operations across over 200 countries in the world, Coca-Cola Company still undergoes challenges in the maintenance of its position, having a drop in consumption of Coca-Cola around the globe.

When evaluating the customer brand relationship, Raab and Resko (2016) established a significant gap in the emotional connection between customers and products. The review that it is important for the companies to understand the connection between the clients and commodities before they make critical decisions that could influence their sales adversely in a dramatic way. A similar study was conducted by Hennig-Thurau and Hansen (2000), and they established another gap. Their study reveals that it is significant for the Coca-Cola for the companies to understand the link between consumers and brands as it’s the foundation for the sales.

Conclusion

In summary, the drink industry is changing with the progressive threats from local brands and small firms operating at the national and regional levels. These firms should be critically monitored as they may pose danger to the booming sales of the Coca- Cola Company. Several studies concerning the factors which affect the sales of drinks and its apparent those elements such as affordable price and availability are mainly affecting the consumption of the soft drink. Coca-Cola Company should emphasize on advertisement to attract more clients to their products. Lastly, soft drinks have owned the heart of the customers in the market.

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