This is a group presentation where we studied the economics of the coca-cola company

1. By: Mahayla Marston, Lauren Schmit, and Carela Spence
MICROECONOMICS PRESENTATION:
Coca-Cola

2. Introduction Of Coca-Cola
Coca-cola is one the
most popular sodas
around the world. It
started in the 1880s
and has since
evolved
tremendously since
then.

3. History
Coca Cola also known as coke started in 1886 by DR, John S.
Pemberton a pharmacist in at Atlanta. The main goal was to create a
soft drink that could be sold at soda fountains. Later on, Dr. John S.
Pemberton passed away and the drink was then sold to Asa G.
Candler. With this partnership he then began to sell coke in other
parts of the country. One hundred plus years later Coca-Cola is the
number one selling soft drink across the world. Coca-cola is global
in 6 different countries including North America, Latin America,
Europe, Eurasia, Africa, and Asia Pacific.

4. Competition
Three of the most top competitors that Coca-Cola faces are PepsiCo, Red
Bull, and Tropicana Products.
One substitute for coke would be Pepsi. Both of these products are
competitors, but people love to argue about which one taste better. Or
some people might argue it taste the same. But the other two competitors
are not that close in substitute. Considering Tropicana Products are more
of a fruity juice and Red Bull is an energy drink they are completely
different to coke. Pepsi is the closest substitute for Coca-Cola.

5. Revenue Streams
Coca-Cola is making money by selling their products all around the world. The
company’s revenue by selling different flavored syrups and concentrates to other
bottling companies around the world. This company also does not bottle most of
their products. Coca-Cola has over 900 sources that bottle and manufacture their
products. They continue to grow their company selling their products in movie
theaters, vending machines, and restaurants, as well as many other stores around
the world.
• Liberty Coca-Cola Beverages
• Reyes Coca-Cola Bottling
• Swire Coca-Cola, USA

6. Competition Structure
Coca-Cola is an oligopoly market because between Coca-Cola and
PepsiCo they are two large firms competing with each other. When Coca-
Cola increases their prices most people then switch to Pepsi because of
the tasting similarities, and vice versa with PepsiCo. Also, in the oligopoly
market they tend to have non-price competition. In this result Coca-Cola
might have 0 sugar products which would then get their competitors to
do something similar.

7. Factors Affecting Demand
Coca-Cola Co.

8. Consumer’s Income
How would a sudden change in income affect demand?
As Consumer Income changes the company has to adjust their
business strategy but they have shown high flexibility in the past with it
so should have no problem with tailoring themselves to please the
majority. When health concerns came about they issued smaller sizes
and the widely popular Coke Zero.

9. Price of Related Goods
Compliments & Substitutes
• Jack Daniels No.7 $26.99
• Absolut Vodka $22.99
• Disaronno Amaretto $25.99
• Malibu Coconut Rum $16.99
• Pepsi $1.19
• LaCroix $5.49
• Monster $1.99
• Nestle Water $2.59
Given that Pepsi is the strongest competitor to Coke if they were to lower their price it could have an affect on the demand of
Coke’s product, as of right now they are the same price. Items like LaCroix on the other hand can only be purchased by the
case. If they were to ever be sold individually it would be roughly .75 cents a can which would have a deeper impact on the
demand.

10. Trends or Changes to watch for.
• Coke Plus Coffee
• Coca-Cola Energy
• Coca-Cola Cinnamon
• Coca-Cola Cherry Vanilla
Tastes Within The Market

11. Expectations Within The Market
What changes could happen in the future?
With the popularity of contactless buying, delivery services for any
given products are on the rise. Coca-Cola is eyeing this strategy and
intends to make it a part of their business beginning this year.
Consumers now more than ever are striving for more convenient ways
to shop and are more concerned about their health so having their
favorite soda products delivered right to their door will be a great
service to offer. Coca-Cola sees this as a bright business opportunity
and one that will not just end with Covid-19.

12. Number of Buyers
What could increase or decrease number of potential customers?
With things like Soda, consumers are worried about their health. Coco-
Cola is known itself to be a leading contributor to tooth decay, obesity
and type 2 diabetes. Consumers now more than ever are watching their
health as these medical studies come out which is lowering sales.
Coca-Cola has also tried to combat this though by coming up with
healthier alternatives to their Classic Coke, such as Coke Zero. This
drew a good response from consumers and boosted up their sales
once again.

13. Elasticity
How strong will raising or lowering the price affect business?
Given customer loyalty in this brand if Coca-Cola decided to raise their
prices even by 15% their fan base probably would not budge much. It’s
the American standard of Soda. Even ball parks charge extreme prices
for Coke but the fans still pay it. On the other hand if they eliminated
selling individually and only sold by the case which would be far more
expensive that would vastly affect their business as it would be less
convenient for the consumer.

14. Factors Affecting Supply
Coca-Cola Co.

15. It is likely that any increase in costs in inputs such as materials would likely
decrease the amount of products supplied to retailers and vendors. For
example, if Coca-Cola developed a new material for bottled soda that
costs more money to produce, they may not mass produce as much as a
cheaper canned soda. This would affect the amount they supply to retailers
and vendors. Because it now costs more to make this new bottle, the retail
price would also increase resulting in a lower demand. If they developed a
new material for bottled soda that was cheaper to make and cheaper to
sell, they would likely increase supply with the increasing demand.
Input Prices
What changes could you expect in the prices you pay for your
inputs (wages, materials, rent, etc.) and how would they affect
your decisions to supply?

16. What new technology is coming out
that will decrease your company’s
costs?
Microsoft recently signed Coca-Cola to a cloud
technology and business software deal, known
as Dynamics 365. This software is a product line
of enterprise resource planning and customer
relationship management applications. It is said
that artificial intelligence will be used to
determine important issues affecting retailers
and vendors in Coke’s supply chain, efficiently
decreasing costs within the company.
Technology

17. In recent years, consumers have become more health conscious and began drinking
less sugary drinks which has had a huge impact on the soft drink industry. Last year,
Coca-Cola generated 69% of its worldwide unit volume from sparkling soft drinks.
Despite the declining soda consumption, Coca-Cola has continued to show revenue
and profit growth due to pricing power, margin-enhancing restructuring efforts, and
expanding in to new beverage categories. More than half of Coca-Cola’s revenue has
come from outside of the United States, where soda consumption remains prevalent.
In places like the US, Coca-Cola has substituted the sugary drinks with healthier
options. These business levers keep the company growing.
Expectations
What are your company’s expectations of how the market for your good or
service will change? How do these expectations affect your business
decisions?

18. Considering Coca-Cola is one of the largest
beverage companies the world, it would be
very hard for new companies to compete.
The beverage industry is in consumer
product goods, meaning consumers must be
aware that this new company exists. This
requires lots of marketing which could be
very time consuming. Soft drink consumption
is also declining so it would be very difficult to
compete with major companies. This
competition and lack of soda consumption
would drive newer companies to leave the
market.
Entry/exit
How easy and how long would it take for new competitors to enter your
market once they see you are doing well? Or, what might make some of your
competitors leave the market which would mean more business for you?

19. Coca-Cola is one of the largest and most successful beverage companies,
making it a great reference for business tactics with its long history. As for the
future of Coca-Cola, it is possibly on a slow decline to fading out over the next
couple of decades. However, it is also possible that its decline may not happen
at all. With Coca-Cola’s new strategic partnership with Microsoft’s Dynamic 365
software, this will allow more insight into underlying issues with consumers and
vendors which could spark new business strategies. Coca-Cola is worldwide
name known by everyone with a very established presence in the beverage
industry, so it would take a lot of changes in society to completely wipe it out. I
believe as long as Coca-Cola continues making healthier, low-calorie beverages,
there is a bright future for the company.
Wrap Up
Why did you select this business? What is the future of this business?

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