This Is the Best Example of an Organic Growth Business Strategy
Business schools use real-world examples to teach students about critical concepts, and one of the greatest companies when it comes to growth is undoubtedly Coca-Cola. Their organic growth business strategy has made them a household name across the globe. Here are the key elements that boosted the success of their organic growth plan.
Advertising and Marketing
In 2013, Coca-Cola spent $3.37 billion on advertising. That’s 7 percent of its yearly revenue. In contrast, PepsiCo spent 5.9 percent of its 2013 revenues on advertising and marketing, a significant leap from 2010, when PepsiCo spent just 3 percent on its beverage brands as a percentage of sales. Clearly, Coca-Cola knows that you have to spend money to make money, and it’s constantly reaching out to consumers via several different avenues.
If you watched the 2014 Sochi Olympic games, you would have seen Coca-Cola products and advertising everywhere. Anyone who tuned into the 2014 FIFA World Cup was bombarded by the ubiquitous red and white logo. Their latest gambit is the “Share a Coke” campaign, which allows people to personalize their Coke cans.
All of these marketing efforts are calculated to help them reach their goal, dubbed the 2020 Vision. At the top of the list of portfolio priorities is the accelerated growth of Trademark Coca-Cola via ‘innovative and effective marketing.’ As it’s the fourth most valuable brand in the world, their strategy seems to be working.
In a 2011 interview with Coca-Cola CEO Muhtar Kent, Harvard Business Review asks him why, with the kind of brand power Coca-Cola commands, don’t they put the company name on everything? Kent responds that this just isn’t how branding works. He says, “Think about the signature bottle – you can touch it in the dark and immediately know it’s a Coca-Cola. Therefore, the company name won’t work as an umbrella for all our other brands.”
Coca-Cola owns far more than just Coke. It’s the parent company for Minute Maid, Dasani, vitaminwater, Honest Tea, and even Odwalla, which makes snack bars and juices. You may not drink soda, but odds are you’ve consumed a Coca-Cola product in the past few months. Coca-Cola has diversified its product offerings so it’s reaching billions of consumers across the globe. Even if one brand took a plunge, the others would keep the company afloat.
So what can you learn about organic growth business strategy from Coca-Cola? Don’t underestimate the importance of marketing; it enables you to reach more potential customers. And if you have the opportunity and the means to diversify your offerings, do so! You can’t grow your business without some risk.
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