Coca-Cola’s Advertising And Marketing Efforts Are Helping It To Stay On Top
The Coca-Cola Company (NYSE:KO) leads the U.S. carbonated soft drinks (CSD) category, with 44% market share, more than one-and-a-half times the market share of its closest competitor, PepsiCo (NYSE:PEP). The U.S. is the largest market for the beverage giant by a distance, contributing 46% to its net revenues in 2015. CSDs in the domestic market constituted around 13% of the company’s overall volumes last year. Health concerns among consumers regarding consumption of sugary soft drinks have resulted in de-growth in the U.S. CSD market for eleven consecutive years.
In order to spur sales of its CSD portfolio, beverage companies have looked to deliver innovation in product, packaging, equipment, and consumer engagement. Coca-Cola, in particular, has looked to increase advertising and media investments in the last few years, despite already being one of the most recognizable brands in the world. Coca-Cola aims to draw this incremental fund by maximizing productivity. This move has benefited Coca-Cola and could continue to grow sales, as it not only aims to boost sales of the company’s beverage portfolio on the back of increased marketing and promotional activities, but also aims to improve functionality and efficiency of operations.
Despite Coca-Cola’s stronghold in the soft drink industry and vast global reach, the company has sequentially improved its marketing spend each year. Coca-Cola believes in expanding its consumer base through experiential marketing, which aims at creating an emotional connect with customers. Positive consumer perception is crucial for Coca-Cola, as it faces headwinds in the CSD category due to the unhealthy tag associated with these drinks.
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