The Strategic Positioning of Coca Cola 299
Cost Leadership
*
DifferentiationFocusCost Focus
Differentiation
*
Competitive Advantage
CompetitiveScope
Lower Cost DifferentiationBroadNarrow
Figure 6. Porter Generic Strategy Grid
The use of a differentiation strategy is where the firm attempts to be diversefrom its competitors by adding something to its product that will provide aunique value to its customers. There are also various ways a firm candifferentiate depending on the industry it is in, however the costs of thisdifferentiation policy must be lower than the additional pricing the firm canobtain.Differentiation for Coca-Cola is achieved through perceived superior quality product, which surpasses their nearest rivals, and high brand imageand recognition. The company has also used their promotion and packagingas a means of further differentiation, for example, the Coca-Cola bottle,which has become an internationally recognised symbol. The decision in1999 to revitalise the contoured bottle design was Coca-Cola’s first globalmarketing priority (Boutzikas, 2000). They capitalised on a resource thatnone of their competitors had or have as an asset. They can, therefore,adopt a premium pricing policy in many markets where economic conditionsallow.It should also be noted that Coca-Cola is positioned in the CostLeadership quadrant. Aaker (1998) points out that there are several approaches a firm can taketo become a low cost producer, which can be used in isolation or as acombination. The most basic way to a low cost is to remove all the ‘extras’from the product and produce a no frills offering. The danger in this strategyis that the way is paved for a feature war. The design or make up of theproduct can create cost advantages, for example, the use of alternativematerials. The production and operational processes a firm employs can alsoreduce costs. Another example would be the efficient use of distributionnetworks, manufacturing systems or the use of low cost labour and productinnovation
The Strategic Positioning of Coca Cola 299
Cost Leadership
*
DifferentiationFocusCost Focus
Differentiation
*
Competitive Advantage
CompetitiveScope
Lower Cost DifferentiationBroadNarrow
Figure 6. Porter Generic Strategy Grid
The use of a differentiation strategy is where the firm attempts to be diversefrom its competitors by adding something to its product that will provide aunique value to its customers. There are also various ways a firm candifferentiate depending on the industry it is in, however the costs of thisdifferentiation policy must be lower than the additional pricing the firm canobtain.Differentiation for Coca-Cola is achieved through perceived superior quality product, which surpasses their nearest rivals, and high brand imageand recognition. The company has also used their promotion and packagingas a means of further differentiation, for example, the Coca-Cola bottle,which has become an internationally recognised symbol. The decision in1999 to revitalise the contoured bottle design was Coca-Cola’s first globalmarketing priority (Boutzikas, 2000). They capitalised on a resource thatnone of their competitors had or have as an asset. They can, therefore,adopt a premium pricing policy in many markets where economic conditionsallow.It should also be noted that Coca-Cola is positioned in the CostLeadership quadrant. Aaker (1998) points out that there are several approaches a firm can taketo become a low cost producer, which can be used in isolation or as acombination. The most basic way to a low cost is to remove all the ‘extras’from the product and produce a no frills offering. The danger in this strategyis that the way is paved for a feature war. The design or make up of theproduct can create cost advantages, for example, the use of alternativematerials. The production and operational processes a firm employs can alsoreduce costs. Another example would be the efficient use of distributionnetworks, manufacturing systems or the use of low cost labour and productinnovation
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