Coca-Cola is a large scale company that has been operating in the beverage industry for more than a century, supplying different products to 200 countries. The Boston Consulting Group Matrix (BCG Matrix) can be used to analyze the different products being sold by the company in terms of their market share, sales generated on an annual basis and the potential for growth. The BCG Matrix for Coca-Cola is as follows:
Cash Cows
Cash cows are those business products which are a significant source of income for a business entity and generate enough sales to obtain a significant market share in the local or global industry. The market is at a mature stage for these products, nevertheless, these products continue to generate cash for the organization. The Cola market, as a specific part of the beverage industry has matured over the years, becoming concentrated by various companies selling their own brand of cola. Coca-Cola as a beverage has been operating as a cash cow for the Coca-Cola Company, as the brand is sold across 200 countries in a mature beverage industry. A larger segment of the operations is based on finished products (including sparkling and still beverages) manufactured by the company, constituting 63% of the operations in 2015 (The Coca-Cola Company, 2015). The bottling partners in different locations help in making the finished beverages available to the market in their respective regions, enabling the organization to earn significant amount of revenues from its finished products categories. Since the industry is mature, the company needs to invest little effort to keep the sales high as the business unit has captured a large market to generate cash. A slowdown in sales has been a temporary setback for the organization, however adjusting the business strategy has helped the management to regain its firm hold in the industry (Estrel, 2016).
Stars
The products that are viewed as stars are defined by the key feature of having a high market share as compared to the other products which have a lower share in the market. The market is still in the phase of development, therefore, the stars have the likelihood of further adding to the existing market share and create a steady source of revenue for a business entity. The bottled water produced by the Coca-Cola Company can be categorized as a star for the organization. The reason for this classification is that the mineral water industry is still viewed as a gradually evolving segment on an international scale. The rising number of people increases the need to produce more bottled water to fulfil the needs of the expanding population. In Europe and Asian regions, Kinley is being sold while Dasani bottled water is targeting the US and UK market. Both of these business units are stars for the Coca-Cola Company as the rising need of bottled water opens up growth opportunities in the industry (Estrel, 2015). Even though the company faces competition from other bottled water producers, the growing market offers it significant opportunities to attain a large market share and expand it further in future. Nevertheless, an important consideration for the management is to ensure that the bottled water brands remain a source of significant sales as decline in sales can reduce the revenues.
Question Marks
The products that are categorized as questions marks seem to have a dubious outlook for the future development. These products have not thrived into the market to such as extent that they can be recognized as stars. The market has growth opportunities, but these products have not been able to take benefit of these opportunities in an effective manner. Minute maid is one such example where the business units can be seen as a question mark. Even though in some regions minute maid has been able to obtain a generous sales volume of $ 1 billion, the brand has not been able to gain widespread popularity as the coke (Arnett, 2015). Apart from minute maid, the sales volume of Diet coke doesn’t present favourable prospects for the future. As indicated by Kell (2015) the brand has received relatively favourable response in the past, however recent data shows that the brand is losing its popularity. The health conscious consumers formulate a significant part of the industry, suggesting the growth potential, but diet coke has not been able to tap this market potential to gain sustainable revenues.
Dogs
The products that are included in the category of dogs are a part of mature industry, thus the chances of further growth are limited. Another issue that raises question about the feasibility of these business units or products for the company is that they do not offer significant revenues to the organization. Moreover, the future outlook of these products is also bleak, necessitating the evaluation of the viability of continuing business operations in this domain. Coca-Cola life is a brand that has been launched with the aim of targeting the market that is seeking low calorie soda. It has been developed using the blend of coke and diet version of coke to offer the consumers a comparatively healthier beverage option in terms of calories consumption. Despite the efforts to target this segment of the market, the brand has not been able to perform well as depicted through the declining sales of this business unit. The soda industry has matured over the years, limiting the growth prospects for new products. In case of Coca-Cola life, the brand has not been able to gain expected level of market share. Murphy (2015) has mentioned that in an effort to keep the market share of the leading brand of coke (which is cash cow for the organization), coke life was presented to the market. However, it was not readily accepted by the targeted market, leading to low sales of the new brand. It has been further stated that the decision to launch the low calorie version of coke didn’t take the market needs into consideration, which has resulted in the brand becoming an initiative with low market share.
References
Arnett, G., 2015. How Coca-Cola is fighting against a US public losing the taste for it. The Guardian, [online] February 13. Available at: https://www.theguardian.com/news/datablog/2015/feb/13/coca-cola-us-public-losing-taste [Accessed 12 September 2016].
Estrel, M., 2015. Coca-Cola Boosted by Sales of Tea, Bottled Water. The Wall Street Journal, [online] July 22 Available at: <http://www.wsj.com/articles/coke-profits-jump-20-despite-dollar-impact-1437565369> [Accessed 12 September 2016].
Estrel, M., 2016. Coke Begins to Win Back Investors. The Wall Street Journal, [online] April 16 Available at: <http://www.wsj.com/articles/coke-begins-to-win-back-investors-1460799004> [Accessed 12 September 2016].
Kell, J., 2015. 3 reasons why Diet Coke sales will keep plunging. Fortune, [online] October 23 Available at: <http://fortune.com/2015/10/23/diet-coke-sales-plunge/> [Accessed 12 September 2016].
Murphy, J., 2015. Spork Life: Dysfunction at the heart of Coca-Cola. [online] October 12 Available at: http://www.news.com.au/finance/business/other-industries/spork-life-dysfunction-at-the-heart-of-cocacola/news-story/e02d21493c23b58c4ff48bb96cbb3de7 [Accessed 12 September 2016].
The Coca-Cola Company. 2015. Form 10-K. Available at: <http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/2015-annual-report-on-form-10-k.pdf> [Accessed 12 September 2016].
Recent Comments