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Tag Archives: Coke

Santa hat isolated on white

By Mira Korber, guest blogger.

Imagine Coca-Cola for a moment. Polar Bears, Santa Claus, a time when soda still came in refillable glass bottles…perhaps, for the health-conscious, high fructose corn syrup? And if you live in Singapore, you might even think of a “Hug Me” Coke vending machine.

As part of Coke’s new marketing campaign, it overnight-installed a unique vending machine at the University of Singapore. It gladly dispenses Coca-Cola — but only after the “customer” hugs the machine in a specific way does the drink pop out.  Therefore, Coke has sympathized with (and definitely capitalized on) Singaporean youth and its growing propensity towards public displays of affection, which have been traditionally repressed in Asia. Fuzzy feelings + soda = positive and pleasurable psychological association between the two…well, that’s Coke’s hope for future sales, anyway.

Engaging customers through the “Hug Me” machine is a perfect example of  Coke’s static advertising strategy morphing into interactive cultural experience. And this speaks volumes about a new marketing strategy; two fascinating videos the company produced explain a new “liquid linked” advertising plan and how consumers will largely shape how the Coca-Cola brand evolves. Traditional 30-second TV adverts are phasing out. Social collaboration with customers is moving in.

In the 1930s, the company invented the now iconic image of Santa Claus as rotund, bearded, jolly, and sporting a red and white suit. (Incidentally, he was chugging red-and-white clad soda bottles in every ad.) Now, Coke isn’t presenting its consumers with cheery content, but seeking their help, or hugs, to revamp its image.

The Bottom Line? Through unconventional marketing, such as the “Hug Me” machine or Coke “Happiness” truck and vending machines, Coca-Cola subliminally sparks positive feelings towards its product. By shifting its focus to popular culture infiltration and stimulation of “happy” feelings, Coke has linked a positive consumer reaction with its beverage.

Notes: The “Hug Me” Machine in action. How hugs are “gesture-based” marketing. A failed marketing trope. Coke’s sales are indeed up. Coke’s advertising strategy through the years – interesting.

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The Sugary Beverage Debate

Pepsi has discovered that “fun for you” (chips and soda) increases revenue more than “good for you” (oatmeal, fruit juice, Gatorade). According to the WSJ, with Pepsi losing market share to Coke, they will focus more advertising dollars on “fun for you.” During 2010, Coke’s soda advertising cost close to $253 million while Pepsi spent almost $154 million.

The WSJ tells us that Pepsi’s CEO, Indra Nooyi cares about “good for you” and believes the consumer wants healthier products. Add to this soda taxes in most states that are supposed to encourage us to eat healthier foods. Or, new federal calorie labeling requisites. Or soaring obesity and diabetes numbers. Bloomberg Radio recently reported that big-and-tall men’s sizes are now being emphasized more by clothing retailers.  What to do?

Coke has 42% of the beverage market, Pepsi, 29.3%, and Dr. Pepper Snapple, 16.7%.

The Economic Lesson

Duopoly. When 2 large firms dominate a market with close to 80% of all sales, we can call them a duopoly. One economist has suggested that when deciding whether a duopoly is harmful to consumers and rivals, we should consider innovation, prices and profits.

Some current and past duopolies:

  • Fedex and UPS
  • Coke and Pepsi
  • Home Depot and Lowes
  • Kodak and Fuji Film
  • Gillette and Wilkinson Sword

An Economic Question: As a duopoly, do Coke and Pepsi have too much power? Explain.

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Diet Coke just pushed Pepsi out of the #2 spot in soda sales.

Other soda facts…

As reported by Beverage-Digest, Coke (17%) remains the most popular carbonated soft drink with Diet Coke (9.9%) next and then Pepsi (9.5%) and Mt. Dew (6.8%). The number next to each brand is its market share. Fanta, a Coca-Cola brand, is last among the top ten names.

As for each firm’s market share, Coca-Cola is at 42%, PepsiCo, 29.3%, Dr. Pepper Snapple 16.7% and Cott Corp., 4.8%. Among the “premium priced energy drinks,” Red Bull is first with a .8% share of the market.

Total sales of carbonated drinks indicate that we are drinking less soda. Our consumption of the top three brands, Coke, Diet Coke and Pepsi declined. However, sales of Diet Mountain Dew and Diet Dr. Pepper were up. Similarly, we are buying more Dr. Pepper, Mt. Dew and Sprite.

Should Pepsi have had a super bowl ad?

The Economic Lesson

Competing in an oligopolistic market, it is crucial for Coca-Cola, PepsiCo and Dr. Pepper Snapple to achieve product differentiation through non-price competition. An oligopoly is a market that typically has several large, mass producing dominant firms and many customers. Market entry and exit are difficult.

 

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