Regardless of industry, companies use various marketing strategies to ensure their services and products reach their market and drive sales. This includes the BCG matrix. The framework has been helpful to companies since 1968 so they can better understand the best products they have and guide them in business model analysis.
With the many products Coca-Cola has, you can expect they also have their BCG Matrix to assess how they stand in the market. You may have heard of Coke, but it's just one of the drinks you'll see in the matrix. Continue reading to know more.
Background of Coca-Cola
Originating as a medicinal tonic in the late 19th century, the Coca-Cola Company's creation can be attributed to John Smith Pemberton. However, it was Asa Griggs Candler's efforts in the 20th century that transformed Coca-Cola into a prominent player in the soft drink market. This historical trajectory underscores the evolution of a product that transitioned from a medicinal concoction to a widely recognized beverage.
While almost everyone knows how Coca-Cola products taste, its recipe remains a trade secret. The company generally creates concentrates, which are then sold to licensed distributors of Coca-Cola worldwide. The bottles with exclusive contracts with the company will use the concentrates combined with sweeteners and filtered water to produce the drinks in bottles and cans.
These bottlers then distribute and market Coca-Cola to restaurants, retail stores, and vending machines. They can also sell concentrates to food service retailers and major soda restaurants. Instead of producing drinks cans and bottles from its main manufacturing plant, Coca-Cola strategically distributes its drinks to licensed manufacturers worldwide.
Coca-Cola BCG Matrix Analysis
The BCG Matrix for Coca-Cola includes four quadrants. Each section is significant in assessing the product's performance in the market. Whether you're a startup and want to know how Coca-Cola organizes its matrix or a student who is looking to learn more about this matrix, the illustration and explanations below are for you.
Stars
The products under this section have high market share and growth. While people would think soft drinks are the most successful product from Coca-Cola, a bottled water brand is actually the company's star. Kinley and Dasani fall under the Stars quadrant of the Coca-Cola BCG matrix. These two are the leading bottled waters from Coca-Cola, which operates in two different geographic locations.
Kinley caters to European markets, whereas Dasani holds preference in the United States. With rising demand for healthier beverages, the Star segment in the BCG matrix anticipates Coca-Cola reaching a wider market, offering opportunities for additional investments. This underpins the company's ongoing commitment to invest in sparkling and flavored water products.
Question Mark
The question mark segment of a BCG matrix refers to products and services still at the development stage. This means they have yet to create significant market reach, sales, and profit impacts. They're promising products that can pave the way for a broader market if companies can handle their development effectively.
As you can see, the Coca-Cola BCG matrix Diet Coke, Minute Maid, Honest Tea, and Sparkling Water as the drinks in the question mark segments. These are drinks newly launched by Coca-Cola to cater to the growing market of non-carbonated drink consumers. With most people's consciousness about having a healthy lifestyle, they will also tend to find healthier drink options.
Cash Cows
Coke stands as the Cash Cow within Coca-Cola's BCG matrix, serving as the market leader and a substantial revenue generator for the company. Coke is everywhere: on bending machines, fast food, restaurants, supermarkets, and in households. This means it has a high market share. Cash cows have lower market growth, but it does not mean the company is not reaping considerable revenues from them. The product under this segment has solidified its position in the market, so the company must invest more to sustain profitability.
However, companies must also be careful with cash cows as they might be insignificant if the demand and market environment change.
Dogs
Indeed, Coca-Cola owes much of its market acclaim to its flagship product, Coke. Curiously, within the Coca-Cola BCG matrix, Coke is categorized as a dog. These represent offerings with limited growth prospects, possessing a modest market and growth share. This classification emphasizes the company's diversified portfolio, where strategic considerations are made to optimize the overall product mix.
With healthier options trending everywhere, there is an expected decline in carbonated soft drinks, to which Coke belongs. If the trend continues, Coke, which is currently under the cash cow segment of this matrix, will now be permanently placed under the dog quadrant. While there might still be Coke consumers in the future, it will not be as many as decades ago.
Key Takeaways
The Coca-Cola BCG Matrix is an excellent business planning reference for companies wanting to introduce drinks and other beverages to its market. The matrix is relatively easy to create as you only need to fill in the four segments. However, one must also understand each segment to supply details on the diagram.
Boardmix offers a ready-made BCG matrix at your disposal. The template allows for personalized adjustments in terms of colors, margins, and shapes. Additionally, you have the flexibility to incorporate unique elements such as stickers and images. Boardmix also allows creators to formulate their own BCG matrix using a blank whiteboard. All templates and diagrams are accessible to others if you provide them with a link to your project. It makes collaboration easy as you can authorize them to access and edit the document from anywhere.
References
The BCG Growth-Share Matrix. (2023, May 24). https://www.investopedia.com/terms/b/bcg.asp
BCG Matrix of Coca-Cola in a Simplified Way. (2021, December 4). https://businessmavericks.org/bcg-matrix-of-coca-cola/
