Porter’s Generic and Intensive growth Strategies used by Coca Cola
Coca Cola, the soda beverages giant is the leader in its industry. 21st century is marked by intense competition and any brand that wants to remain ahead of the others must have one or another critical advantage. A sustainable competitive advantage helps brands get ahead of the competition and operate profitably. Coca Cola is a global brand that is found in almost all the corners of the world. Its closest rival is Pepsi. Coca Cola has managed its place through some critical factors which are a source of sustainable competitive advantage for it. Michael E Porter has highlighted three key strategies that come in handy if you are trying to build a competitive advantage.
These strategies are – cost leadership, differentiation and focus. The third strategy he has subdivided into two categories – cost focus and differentiation focus. These strategies can help a brand build a competitive advantage and overcome competitive pressure. However, there are also four intensive strategies that are useful when it comes to expanding the brand’s customer base and growing sales. This is a discussion of the generic and intensive strategy that Coca Cola has used to build sustainable competitive advantage and grow its market presence globally.
The main generic strategy used by Coca Cola is that of cost leadership. This is a strategy employed by several big brands of the world that are leading in the market. Cost leadership is a very effective strategy that helps brands quickly increase market share and gain popularity. Everyone wants to spend less on any product. Especially, the middle class which forms a very large part of Coca Cola’s customer base loves low prices of products. Coca Cola has kept the prices of its products low. These are affordable products and available easily in every corner of the world. Coca Cola has ensured both affordability and accessibility which has led to both higher sales and popularity. This has proved to be a source of sustainable competitive advantage for Coca Cola.
From time to time, Coca Cola also uses discounts and promotional campaigns to increase sales and popularity. It is mainly for the affordability of its products however, that the sales of the brand and its products have remained high. Thus, the benefits of cost leadership are clear. It helps achieve higher sales, build a large customer base and also gain recognition. Coca Cola spends a lot on marketing and promotion but still if its products’ prices were not as affordable, its sales would have been lower. While cost leadership is the main generic strategy used by Coca Cola, it has also used differentiation to gain an advantage over the competitors. It has introduced a number of healthy products including health drinks and juices that are aimed at the health conscious customers. So, Coca Cola has used a mix of cost leadership and differentiation to gain competitive advantage and to build customer loyalty.
There are four intensive strategies for a brand’s growth and market expansion. They are – market penetration, market development, product development and diversification. Below is a discussion of the intensive strategies used by Coca Cola to grow its market and sales.
This is the strategy of selling more to the existing customer base. It is one of the key strategies Coca Cola has used to grow its sales. Apart from keeping prices affordably low, the brand also uses promotional tactics like seasonal discounts to push sales among its existing customers. It releases new packages and runs promotional campaigns that are aimed at increasing the sales of its products worldwide.
This is the strategy of entering new markets or regions and selling to new customers. It is another key strategy that has helped Coca Cola become a global brand. Coca Cola products are sold in more than 200 countries. The brand has spread globally to nearly every corner of the world. Apart from the flavor of the coca cola products and there affordable prices, the credit also goes to the use of marketing and promotions for international growth. the strategy has been highly effective and helped Coca Cola grab the leadership position in the beverages industry.
Product development is the strategy of bringing more products to the market to increase sales and revenue. Overtime, the product array of Coca Cola has grown quite broad. Its large product portfolio is made up of 500 sparkling and still brands and it serves nearly 3900 beverage choices. Now, there are 21 billion dollar brands in its portfolio. In this way, Coca Cola has achieved a lot of growth through product development.
This was a discussion of the generic and intensive strategies that Coca Cola has used to grow its brand and earn a competitive advantage. It is the leading brand in the beverages industry and this position has been achieved with the help of a sustainable competitive advantage. Its global growth story is a testimony of its use of generic and intensive strategies.