Market Segmentation
COCA-COLA
Back in 1886, an Atlanta pharmacist created a caramel-colored liquid and brought it down the street to Jacobs’ Pharmacy, where it was mixed with carbonated water and sold for five cents a glass. The beverage caught on, and sales took off from the initial average of nine drinks a day to today’s total of 1.6 billion servings of Coke products consumed daily. The success spawned bottling plants, six-pack cartons, international distribution—and imitators. By the early 1930s, Pepsi, created in 1902, had survived two bankruptcies and was expanding as well.42
Both companies went decades marketing only one brand, but Coca-Cola added Fanta, Sprite, TAB, and Fresca in the 50s and 60s and Diet Coke in the early 80s, while Pepsi launched Diet Pepsi and Mountain Dew. Since then, both companies have grown and developed new brands designed to attract market segments. Today Coke products are sold in more than 200 countries. Pepsi is available in nearly the same number of countries43 and other cola products have entered the marketplace. To grow and increase sales in this mature market, Coca-Cola must either take customers away from other beverage companies or encourage existing customers to drink more cola—both challenging tasks. Part of the company’s solution pertains to its approach to new product development for different market segments.44
Market Segmentation Strategy
As the market tightened and consumer values changed, Coke responded by developing more unique products for various specific market segments. Because those unique products appeal to specific groups, Coke can increase its sales without cannibalizing the sales of its other products. In addition to the products mentioned above, the company launched caffeine-free Coke and Diet Coke to appeal to cola drinkers who wanted to cut back their caffeine intake. By introducing decaffeinated versions of its traditional sodas, Coca-Cola could increase the number of sodas it sells each day without hurting sales,
Back in 1886, an Atlanta pharmacist created a caramel-colored liquid and brought it down the street to Jacobs’ Pharmacy, where it was mixed with carbonated water and sold for five cents a glass. The beverage caught on, and sales took off from the initial average of nine drinks a day to today’s total of 1.6 billion servings of Coke products consumed daily. The success spawned bottling plants, six-pack cartons, international distribution—and imitators. By the early 1930s, Pepsi, created in 1902, had survived two bankruptcies and was expanding as well.42
Both companies went decades marketing only one brand, but Coca-Cola added Fanta, Sprite, TAB, and Fresca in the 50s and 60s and Diet Coke in the early 80s, while Pepsi launched Diet Pepsi and Mountain Dew. Since then, both companies have grown and developed new brands designed to attract market segments. Today Coke products are sold in more than 200 countries. Pepsi is available in nearly the same number of countries43 and other cola products have entered the marketplace. To grow and increase sales in this mature market, Coca-Cola must either take customers away from other beverage companies or encourage existing customers to drink more cola—both challenging tasks. Part of the company’s solution pertains to its approach to new product development for different market segments.44
Market Segmentation Strategy
As the market tightened and consumer values changed, Coke responded by developing more unique products for various specific market segments. Because those unique products appeal to specific groups, Coke can increase its sales without cannibalizing the sales of its other products. In addition to the products mentioned above, the company launched caffeine-free Coke and Diet Coke to appeal to cola drinkers who wanted to cut back their caffeine intake. By introducing decaffeinated versions of its traditional sodas, Coca-Cola could increase the number of sodas it sells each day without hurting sales,