Coca Cola Marketing
On the 14th of June Coca-Cola’s soft drinks
were banned from the markets in
Belgium and later also in Luxemburg and
France. Two failures in the bottling
system were the cause for the nausea
that the people suffered. According to the
article it would have been better
if they would have acted fast and told the
whole truth. Coca- Cola is in an
ologopolistic market and therefore branding
plays a great role. It is
possible that the company ha lost market shares, due
to this accident. In the
ologopolistic market the firms don’t compete with
price, but rather with
advertising and other non-price strategies. Therefore one
can predict that
this scandal has shifted the demand curve to the left. This
accident can be
seen as a negative externality. The government should make Coca
Cola
increase their health controls (internalise their externalities), if
scandals
of this sort happen again. They can enforce this by either subsidies
(reward)
of in this case taxation (punishment). People who would usually only
buy Coca
Cola due to the heavy advertising might try a substitute during the
time of
the ban. This can be seen as a sort of free promotion for the others in
the
market. According to the zero sum game, the lose that Coca Cola is
making
right now is directly proportional to the profits the other firms are
making in
the respected market. Coca Cola will need to take further actions
to restore
their brand name that they have established throughout all these
years. This
will significantly influences their total added costs. A strong
brand has very
few goods substitutes and it is very difficult for competitors
to challenge the
supremacy of the brand. This health scandal might have
opened the doors fro new
competitors. In the long run this can lead to Coca
Cola’s costs for
advertising to increase or furthermore they could lose
control of the market and
fall into a disequilibrium. The accelerator theory
suggests that the level of
planned investments varies with the rate of change
of income or output rather
than with the rate of interest. It will be hard
for the big American company to
fulfil their expectations of expansion in
Europe with no investors being pleased
with their progress.