Product Innovation of Coca Cola
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Background of the Organization
The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Coca Cola products bearing the company’s trademark are now being sold in 200 countries around the world.
The business of Coca Cola is nonalcoholic beverages – principally sparking beverages, but also a variety of still beverages. The company owns or license more than 450 brands, including diet and light beverages, waters, enhanced waters, juices and juice drinks, teas, coffees, and energy and sports drinks.
Reasons behind the Innovation
Broader Context surrounding the Innovation
Perhaps a big reason why Coca Cola continues to implement product innovation is because of the intense competition in the non-alcoholic beverage industry. In order to remain competitive and to maintain its leadership position, Coca Cola introduces innovative products that create value for the customers and shareholders.
The nonalcoholic beverages segment of the commercial beverage industry is highly competitive. Coca Cola competes with major international beverage companies that, like Coca Cola operate in multiple geographic locations, as well as numerous firms that are primarily local in operation. In order to withstand competition form numerous rivals, Coca Cola uses its resources in creating new products.
Role of National and International Institutions
As a company that operates in more than 200 locations around the world, national and international institutions such as government bodies have significant impact on Coca-Cola’s product innovation. Changes in laws and regulations relating to beverage and packaging could increase costs and reduce demand for the company’s products. Another area where national and international institutions influence the company is through health issues. Over the years, there have been a growing concern over health and the possible health risks that Coca Cola’s products carry. One main concern is the impact of Coke and similar products on Obesity particularly in Children. In order to address health issues, the company has developed products which complements healthy lifestyle. Innovative products such as Coca-Cola Zero and Enviga have been introduced.
Product innovation is an important business process. It aids in sustaining growth and is a possible source of competitive advantage. According to (1999) new products and services are the lifeblood of an enterprise that fuels business growth. Product innovation is a critical business process that drives growth in both revenues and profits .
Product innovation is an essential strategic approach for creating competitive advantages in the dynamic, global business environment. Globalization and the changes in social, political, economic, and technological arenas topped with turbulent market conditions have resulted in shorter product life cycles. These changes also created demands for better, cheaper, cleaner, safer and more effective products. The process of product innovation is about the development of new solutions that provide positive benefits to customers and stakeholders. Product innovation according to (2005) is the fundamental management practice used for creating new products, reinvigorating existing products and solving product-related difficulties with customers and stakeholders.
Product innovation is a core process within an organization associated with renewal – with refreshing what it offers and how it creates and delivers that offering. Innovation is essential in sustaining the prosperity of most organizations. Innovation is the prescription for reinvigorating the organization to compete more successfully in a demanding world. Product Innovation concentrates on improving the strategic position and product delivery capabilities of the organization through creativity and leadership. Product innovation includes several essential aspects:
1. Examining the needs for new products, processes, and services
2. Determining the appropriate direction and for new products
3. Establishing the appropriate game plan of the entire management system for developing and commercializing new products
4. Selecting new-product opportunities for investment
5. Enhancing the organizational capabilities to create successful new products
6. Creating the new product and executing the new-product development program
The primary objectives of product innovation are to create value, to obtain a competitive advantage, and to achieve long-term success through the development and commercialization of new products and services.
The Coca Cola Company
Product Innovation in Coca Cola
Coca Cola is a company with rich history and tradition that has build an iconic brand. The company prides itself with being a leading innovator in the soft drinks industry and being able to turn customer demands to products. Being in step with customer trends and being able to anticipate what lies ahead as well as marketing innovation has always been a hallmark of The Coca Cola Company, helping the brand evolve with time and keep in step with consumers’ changing lifestyles.
In 2006, Coca Cola introduced another innovative product – the Coca Cola Zero (Coke Zero). Cokes zero is now a part of the Coca Cola core family with Classic Coke and Diet Coke. Complementing these, and meeting consumers’ desire for new ways to enjoy the great taste of Coke, the company also introduced brand extensions such as Coke with Citrus Zest and Diet Coke with Cherry.
Selected Product Innovations
In this section, I will discuss some product innovations that Coca Cola introduced.
1. No-Calorie Drink (Coke Zero) – the introduction of Coke Zero was motivated by the increasing consumer demands for healthier products. Consumers are increasingly seeking more choices and order to keep up with the demands of the consumers and their lifestyles, Coca Cola launched Coke Zero. Coke Zero offers the same taste as Coca-Cola with no calories.
2. Calorie Burning Tea (Enviga) – as part of the company’s commitment to keep up with the changing lifestyles of the consumers, Coca Cola introduced a calorie-burning tea named Enviga in 2006. This product is intended to complement healthy lifestyles. By drinking three cans of Enviga each day, consumers can burn an extra 60-100 calories daily. This innovative product is added with a powerful antioxidant EGCG that speeds up metabolism and increase energy use, especially when combined with caffeine.
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