Running head: DISTRIBUTION STARTEGY

Distribution strategy

Name

Institution
DISTRIBUTION STARTEGY

The distribution channel is an important aspect of the marketing strategy. It’s one of the

members of the 4 Ps (promotion, product, price, and place are also known as ‘distribution’).

They help in growing the revenue by expanding your reach. In the current first fast-paced world,

the company’s distribution channel can offer the company an enormous competitive advantage.

Due to the increasing costs, companies are working towards exploring diverse markets to

increase their profit margin and turnover. The right distribution strategy is required if you intend

to reach far. You need to both market the product and thereafter deliver the product to the

customer (Elmore, 2014).

Recent statistics indicate that 1.9 billion products of coca cola are sold on a daily basis all

over the world. The Coca-Cola Company operates on a local scale in its whole global business

highly recognizable in every culture and community throughout the world. The company uses

local focus to achieve a global reach due to the strength of its system that comprises 250 bottling

partners and coca cola Company itself. The partners tasked with bottling work in collaboration

with restaurants, grocery store, suppliers and convenience stores to implement localized

strategies that have been developed in conjunction with Coca-Cola. The coca cola products don’t

need to travel far to reach the final consumers thus making the product more local despite Coca-

Cola company being a global company. The product is manufactured locally near the place that it

will be sold (Segal-Horn & McGee, 2012).

Though it’s widely perceived that Coca-Cola runs global operations, various local

channels are used. The manufactured product from Coca-Cola Company is sold as beverage

bases, concentrates, and syrups to the local bottling company operators. It’s important to note

that the company will still have control over the brand and will thus control the marketing

initiative of the consumer brand. The bottling operators manufacture, distribute and repackage
DISTRIBUTION STARTEGY

the final branded beverages ready to be transported to the vending partners that undertake the

task of selling it to the consumer. The operation of the distribution channel has numerous

managerial and legal departments and sections that are independent of one another and the

departments do not have control over the bottling and distribution of the products worldwide.

The Coca-Cola business is sometimes referred to as local business since its products are

not shipped more than few hundred miles. They explore the local tastes and prompt response to

consumer needs in every type of market. The bottling operators will collaborate with its main

customers such as grocery stores, restaurants, movie theatres, amusement parks and convenience

stores so that localized strategies can be executed more efficiently. These localized strategies

have been developed in partnership with the company. The coca cola company products are sold

to canning and bottling operations, fountain wholesalers, distributors, and some fountain

retailers. The products are then distributed to corner stores, retail outlets, petrol stations,

restaurants and many others. The point of sale for Coca-Cola products is categorized into

retail/supermarkets/corner stores, distributors/wholesalers, Automated teller machines (ATM),

petrol stations, restaurants/nightclubs/café (Rosenbloom, 2012).

The coca cola company is viewed as a global multinational corporation that conducts its

operations on a local scale. The coca cola system is made up of 250 bottling companies and the

company itself across the globe. The concentrates, beverage bases and syrup are sold are

produced by the Coca-Cola company. They are then sold to the bottling companies that

manufacture, distributes and packages the final beverage to the customers and lending partners.

The consumers and the vending partners will again sell it to the consumers. The company uses

both indirect and direct selling. In the case of direct selling, the products are distributed to the

shops using the company’s transportation system. In the case of indirect selling, the company
DISTRIBUTION STARTEGY

utilizes the agencies and wholesalers that oversee the distribution of the products in a different

region (Tanwar, 2013).

The distribution system of the firm is well planned and executed compared to other

products and drinks that fall in the same category. Consumers have seen it have much impact

that wholesalers and distributors require the product for their business to succeed. The position

of coke in the minds of the consumers make it essential to wholesalers and retailers. They have

attained their objective due to high availability and visibility of their product throughout the

world including the remotest places. To stay true to its identity, the vending machine of Coca-

Cola was innovated. Various other innovations have been invented in this sector (Banutu-

Gomez, 2012).

Comparative advantage

Coca-Cola Company has sustained competitive advantage, extensive business model,

innovation and substantial distribution network. The Coca-Cola Company offers an example of a

company with a competitive advantage that is sustainable. With a proven sustainability of over

100 years, Coca-Cola Company has achieved a competitive advantage over other beverages such

as Pepsi. Coca-Cola has the best and comprehensive distribution system that has allowed the

accessibility of Coca-Cola products to billions of people around the world. Coca-Cola Company

has gained access with ample supply in remote areas where other goods of consumers did not

reach or would never have considered supplying their products. For example, the continent of

Africa offers a good example. Small shops have been cited selling coke products in the remote

places in the middle of nowhere (Elmore, 2014).

Coca-cola has one of the largest distribution and supply networks in the world. The

distribution network is advanced and most sophisticated. Syrups, concentrates, and beverages are

manufactured and sold by Coca-Cola to other bottling operators. The ingredient of Coca-Cola is

a trade secret. The bottling partners’ will now take the responsibility in packaging,

manufacturing, merchandising and distributing the final branded beverages to the vending

partners and customers. This particular type of distribution is franchising and it’s beneficial to

the company. The Coca-Cola Company will only need to incur expenses between manufacturers

in the bottling operations of the business (Segal-Horn & McGee, 2012).

The transportation cost between the customers and bottling operators will be incurred by

the bottling company. Therefore, the above model of distribution will help save a lot of costs for

the Coca-Cola Company. The customers and the vending partners will work closely. For

example, there is a creation of the Bottling Investment Group that invests strategically in specific

bottling operations which temporarily is included in the ownership of the Coca-Cola Company.

Suppliers of Coca-Cola have a better relationship with Coca-Cola Company. The focus on

improving the relationship with suppliers has resulted in the creation of strategic initiatives and

plans that are aimed at helping and empowering suppliers such as farmers (Gillespie & Riddle,

2015).

Alternatives

The coca cola company should incorporate other alternatives such as providing superior

distribution by clustering stores directly near each other. It will provide a competitive advantage

over other beverages competitors that are sparsely populated. They should as well be positioned

in high traffic foot areas, retail areas with very high visibility such as shopping streets and malls

and gallery locations where people visit with open-minded buying mood. They should interact
DISTRIBUTION STARTEGY

with customers on regular basis (Elmore, 2014). The Coca-Cola Company should give some

discount, free sample and loyalty points to retail stores for a period. For example, Apple and

Microsoft were successfully after setting up more than 10 stores in a one-mile radius of the

downtown city of New York and hence Coca-Cola should embrace the technique too.

The product portfolio for Coca-Cola Company is quite large and serves as one of its main

strengths. The products and brands have been developed to meet the needs of the local

consumers. Specific products are therefore distributed to specific regions. The portfolio has an

array of products and brands that generate billions in annual revenue. The brands are over 20 and

18 of them are in no calorie or low-calorie options. With the increasing demand of health-

friendly products in the wake of the 21st century, the company has grown its range of beverages

that are health friendly (Rosenbloom, 2012).

The services and goods needed to produce and market Coca-Cola in various countries

such as India are produced locally with the help of skills and technology from the Coca-Cola

Company. The market for soft drinks needed to meet the requirements of consumers requires a

distribution channel that supports 700000 retail outlets that are operated by a fleet of 10-ton

trucks, trademarked tricycles, and pushcarts and open bay three-wheelers to navigate the narrow

city alleyways. Through procurement, supply and distribution networks a high number of jobs

are created for the local population (Elmore, 2014).

Proper distribution channel ensures customer finds the product that wants to purchase.

Accessibility of the product increases the brand value. Therefore, a proper distribution strategy

should be devised for the company to increase its distribution efficiency. The place that consists

of distribution is one of the major 4Ps in the marketing mix. The type of distribution strategy

selected affects the overall operations of the business and hence the top management should be
DISTRIBUTION STARTEGY

kept in the loop at all times. The distribution strategy selected should consist of 3 main points for

example, how to move the product from the point of manufacture to the end user customer, how

to save time and costs while implementing the selected distribution strategy and how to achieve a

competitive advantage in the distribution process (Tanwar, 2013).

In conclusion, it’s evident that the Coca-Cola Company depends on its franchising

method of distribution to develop the company. The method has helped the company cut costs

and reduce operational costs that would have otherwise been involved in distribution and

delivery. Emerging problems such as customer loyalty problems and inadequate communication

are affecting its operations. The company should work towards introducing a pull strategy and

cooperate with the distribution system to address the above challenges.

Reference

Banutu-Gomez, M. B. (2012). Coca-Cola: an International business strategy for globalization.

The Business & Management Review, 3(1), 155.

Elmore, B. J. (2014). Citizen Coke: The Making of Coca-Cola Capitalism. WW Norton &

Company.

Gillespie, K., & Riddle, L. (2015). Global marketing. Routledge.

Quan, W., Wang, X. D., Wang, J., & Zhang, Y. X. (2012). New combination rule of DST based

on local conflict distribution strategy. Dianzi Xuebao(Acta Electronica Sinica), 40(9),

1880-1884.

Rosenbloom, B. (2012). Marketing channels. Cengage Learning.

Segal-Horn, S., & McGee, J. (2012). Strategies to cope with retailer buying power. Retail and

Marketing Channels (RLE Retailing and Distribution), 6, 24.

Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management,

15(1), 11-17.

Zhang, L., Dang, Y., Xue, S., Wang, H., Gu, S., & Wang, C. (2015). The Optimal Distribution

Strategy of BeiDou Monitoring Stations for GEO Precise Orbit Determination. In China

Satellite Navigation Conference (CSNC) 2015 Proceedings: Volume I (pp. 153-161).

Springer, Berlin, Heidelberg.