Coca-Cola Companys Environmental Factors

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Coca-Cola Companys Environmental Factors

Table of Contents

Introduction
Economic environment
Demographic environment
Cultural environment
Importance of social responsibility and ethics
Political environment
Technological environment
Conclusion
Reference list

Introduction

The general marketing environment is made up of factors and forces that affect or influence the marketing function (Capon, 2009). The marketing companys immediate environment is the marketing function itself consisting of the four Ps which ensure the smooth running of the marketing function (Reynolds & Lancaster, 2005). The wider external environment is called the macro environment and it includes the political, economic, social-cultural, technological factors and legal factors. For organizations to adapt successfully to changing conditions, management needs to understand the many factors and forces influencing the changes (Blythe, 2008).

By identifying environmental trends early, management can better determine how they might affect the future of the business. This article will look at the coca-cola industry which performs both domestic and global marketing. Coca-Cola Company is located in the United States and its the biggest company that manufactures and distributes beverages that do not contain alcohol. It has the most recognized brand and it markets its products in more than 200 countries all over the world (Capon, 2009). Its main rival is PepsiCo and therefore it works hard to increase and maintain its market share. This company is affected by the environment in which it operates in which is beyond its explicit control. Therefore, the company has to subject its plans, growth strategies, and day-to-day functioning to economic systems, fiscal policies and procedures, and laws enacted by the governments that rule different nations.

Economic environment

Marketing decisions are affected by global economic interdependence (Capon, 2009). The global expansion of international marketing by Coca-Cola Company takes place when different countries open their doors for foreign products. Different nations worldwide enact their trade laws and fiscal taxation laws which influence the global marketing operation of Coca-Cola Company (Reynolds & Lancaster, 2005). Global economic interdependence has dramatically affected how countries and businesses relate to one another. The challenge of global competition today has caused numerous and profound changes in the political environment in which business must find their way and consequently, how nation-states act and react to one another (Capon, 2009).

Demographic environment

Customer tastes, needs, and purchasing patterns are changing thus influencing the global marketing of Coca-Cola Company. Changing trend in demographics across many nations has seen the decline of the nuclear family in North America and many countries around the globe. In most countries, more women have entered the workforce and divorce trends have similarly increased in Europe and other developed countries (Capon, 2009). The living standards in many countries have also gone up. Therefore, for coca-cola company to keep up with the changing demographic trends it should come up with different promotion strategies to target the different market segments worldwide. To remain competitive also, the company should be sensitive to societys demographic shifts and changing values.

Cultural environment

The cultural environment component of the marketing environment consists of the relationship between the marketer and society and its culture. Cultural differences like language and lifestyle influence the marketing strategy of Coca-Cola Company. Therefore, marketers in the company need to learn about the cultural and societal differences among countries abroad. Marketing strategies applied locally may fail in other countries and thus the company should re-design packages and modify products and advertising messages to suit the tastes and preferences of different cultures worldwide.

Business ethics embodies standards, norms, and expectations that reflect a concern of major stakeholders, including consumers, employees, shareholders, suppliers, competitors, and the community (Blythe, 2008). On the other hand, social responsibility is the responsibility of the organizations to increase its positive impact and to reduce its negative impact. Coca-cola company sponsor many sports which make it create a good image for its customers. Social responsibility including business ethics is associated with increased profits. Social responsibility also contributes to employee commitments and customer loyalty which are the vital concern for any firm trying to increase profits (Capon, 2009).

Political environment

No business whether at home or abroad can be set up without assessing the ramification of the prevailing political environment (Capon, 2009). The politicians of the home and host company both affect and influence business in all its forms. Coca-cola companies face labor leaders, environmentalists, nongovernmental organizations, and social activists for one reason or another. Thus the company has to wriggle its way through and juggle to stay on good terms with the opponents as well as the favorites. Most of the time, international firms harbor and harness political bosses and opponents to make them initiate new rules, regulations, and amendments in the existing rule books so that the firms can run their business smoothly (Reynolds & Lancaster, 2005).

The politics of a country are inexorably linked with government attitudes to business and with the freedom to which they are allowed to operate, as a result, a seemingly valuable foreign market may not just enter if the political climate is unstable, uncertain or anti-international business. Furthermore, a company should note that the political environment of a country rarely remains static for any length of time and major political changes can occur after substantial financial commitments have been made (Capon, 2009).

Government legislators create laws and regulations to avoid unfair competition among firms, protect customers from unfair business and to make sure products and services are safe (Capon, 2009). However, these government legislations can lead to unnecessary financial burden on firms and barriers to entry for competition firms.

Technological environment

The technological environment consists of factors that change the way consumers live and the production and delivery of products and services. Technological change has made Coca Cola Company to have a competitive edge in the market (Blythe, 2008). Technological changes have resulted to more product variety and convenience for customers. The areas with some of the most technological advances include electronics and telecommunications. In particular, the advent of internet has had a positive effect to Coca Cola Company. The internet offers the company a way to reach new target markets. In addition, the company is able to create databases and email lists in its efforts to increase customer loyalty.

Conclusion

It is important for marketing managers to understand the external environment in order to plan for the future. Thus many organizations assemble a team of specialists to continually collect and evaluate environmental information (Blythe, 2008). The factors that are analyzed on the macro level are the economic factors, changes in the demographic of the population, cultural differences, technological factors and political factors. Whatever occur in these areas is important for firms before they develop a successful marketing plan. Environmental scanning should be considered as an ongoing business process (Reynolds & Lancaster, 2005). Therefore, those who are responsible for developing a marketing plan should invest in necessary time and effort in environmental scanning if they are to discover the threats and opportunities that could affect their efforts to have a competitive edge in the market.

Reference list

Blythe, J. (2008). Essentials of Marketing. Chicago. Prentice Hall.

Capon, C. (2009). Understanding the Business Environment. Chicago. Financial Times Prentice Hall.

Reynolds, P., & Lancaster, G. (2005). Management of marketing. New York. Butterworth-Heinemann.