Is Coca-Cola Big, Bad and Stupid?
Coca-Cola is the giant of the soft drinks industry, yet the original mass marketer with the distribution reach of God has received quite a bit of negative press lately: carbonated soft drinks are losing their fizz with volumes down and profits harder to maintain. On top of this, it seems that the Coca-Cola Company has become the company we all love to hate.
It’s Coca-Cola’s fault we are obese. It’s Coca-Cola’s fault that our kids are out of control and high on preservatives. It’s Coca-Cola’s fault our rivers are polluted with empty bottles. It’s Coca-Cola’s fault our teeth are rotten. It’s Coca-Cola’s fault we don’t understand what “in moderation” means. Big, bad Coca-Cola.
But it’s not just Coke that is suffering from being big or being viewed as bad, multinationals everywhere are under constant threat of diminishing returns, lacklustre results and bad press, but it’s the effect these have on organisations’ behaviour that is the real threat. When big companies feel threatened, introspection and fear are familiar by-products. Whether the source of that threat comes from the City and shareholder demands, market changes or competition, this introspection and fear translates into organisations not doing what they need to do but rather what they can do; in other words, creating “stuff”.
Stuff that on the surface appears innovative but is no more than a cosmetic enhancement. Stuff with strategies that struggle to be executed. Stuff born from pressure groups that ultimately lack a market. Stuff that keeps everyone busy, but in truth is little more than an expensive distraction.
Enter Coke LifeTM . Less calories, less sugar, more natural and tastes just like the real thing. But, is Coke Life TM just “stuff”, and if it is then why?
When Coca-Cola decided to separate its manufacturing and distribution from its brand and marketing function way back in 1899 it made sense. It was at a time when retailers were still relatively small, and their commercial power was influenced by what consumers wanted and what suppliers wanted to deliver. “The System”, as it is known, allowed one entity to influence the masses of consumers and the other party to influence masses of small retailers.
Over time, The Coca-Cola Company wowed consumers with genius mass marketing, and created a brand culture that people aspired to be part of. The bottlers expertly creating mass economies of scale and unparalleled distribution. The System allowed Coke to be “It” and physically and financially “within arms reach”. It was the perfect mass marketing model; so long as nothing changed.
But there’s the big problem. An explosion of new categories and competitive brands changed the colour of supermarket aisles, corner shops and bar fridges forever. Huge retailers with ferocious buying power and shrinking shelf space are now threatening profits, and turning other historically profitable channels unprofitable. The System’s new customer wants choice, innovation, category news, volume and value. They also want to be brand owners, marketers and partners, and of course they demand The System to be big enough to work for them.
And what happened to the happy Coca-Cola loyalist? New and mind-blowing forms of media made the world smaller and bigger at the same time. Over-supplied, over-stimulated and no longer willing to just listen, consumers now expect to engage and converse with brands. Mass markets have become masses of niches; clusters of consumer groups and ‘friends’ who accept or reject a brand’s carefully constructed message in a click. And, of course, they demand The System to think and be small enough to work for them.
Building a successful brand is determined by engaging and delighting a small group of brand advocates who, over time will support the brand until eventually a serious (mass) market evolves. This is exactly the model that Coca-Cola arguably invented to build brand Coke, but paradoxically that model is no longer available to Coke Life.
The challenge for Coca-Cola is that it is caught in a power struggle with itself and the market. It needs to stay big enough to maintain the economies of scale that keep prices down, deliver short-term profits and service a customer more powerful than itself. But, it needs to be able to think small enough to truly innovate, develop and compete in new categories, while at the same time conversing, engaging and satisfying the needs of individuals and consumer groups that are more powerful than itself.
The reality is Coca-Cola is neither bad nor stupid, it’s just big. And until or unless Coke Life gets big quick, it will be too small to survive, and too soon become “stuff”.
Karen Connell is founder of The SMALLmighty Ltd, a boutique consultancy helping traditional mass-marketing lead businesses understand and develop new processes that will connect their brands with today’s more influential and connected consumer. She currently works with a number of the world’s top global brands, including Shell, Coca-Cola, Cadbury and Diageo, and was formerly marketing director for Virgin.