How Coca Cola Uses Tactical Planning

Tactical planning is a process by which companies determine and prioritize strategic initiatives. These initiatives include what markets to enter, what products to introduce and how to compete with other companies more effectively. As is the case with most large and mature companies, Coca-Cola's tactical decisions revolve around growth. Coca-Cola's tactical planners are constantly trying to determine what new markets the company should enter, how to steal market share from competitors and how to encourage more consumers to use Coca-Cola's products.

The first step in effective tactical planning is to determine the sizes of various markets around the world. Conducting a market sizing analysis allows companies to prioritize which new markets should be targeted first. In conducting this analysis, Coca-Cola will first consider the total size of a market's population, the percentage of that population that is currently using Coca-Cola's product and the quantity of product that Coca-Cola could sell to non-users. For example, suppose Coca-Cola was considering whether or not to attempt expansion into Argentina. Using international census data, Coca-Cola's tactical planners determine that the country's population is 41 million. Coca-Cola would then hire a local marketing agency to conduct detailed customer surveys to determine what percentage of the population consumes Coca-Cola's soda on a regular basis. Suppose these surveys revealed that 40 percent of the population uses Coca-Cola's product, implying that 60 percent x 41 million = 24.6 million people in Argentina do not drink Coca-Cola on a regular basis. Suppose these surveys also revealed that the average person in Argentina drinks 20 bottles of soda per year and that the average selling price of a bottle of soda is $2. Based on these figures, the total addressable market size for Coca-Cola in Argentina is 24.6 million x 20 x $2 = $984 million per year. Completing this type of analysis for a number of countries allows Coca-Cola to rank each country according to market size, which helps prioritize which new market the company should target.

Once Coca-Cola's tactical planners have chosen which market to enter, they must decide upon the appropriate strategy for achieving this goal. The appropriate strategy depends upon the unique characteristics of the market in question. Suppose that the 24.6 million people in Argentina who do not drink Coca-Cola are heavy purchasers of Pepsi. In this case, Coca-Cola must attempt to steal market share from Pepsi by highlighting the product features that make Coca-Cola superior. Again, the company would rely upon local customer surveys to determine what characteristics are most important in determining a soft drink purchase. If most customers say taste is the most important factor, Coca-Cola could run a series of advertisements highlighting the company's unique product formula that delivers superior taste to Pepsi. If convenience of purchase is most important, Coca-Cola will likely expand its distribution so that Coca-Cola products are available in a larger number of locations. On the other hand, suppose that the 24.6 million non-users do not drink soda of any kind. In this case, Coca-Cola would focus on expanding customer acceptance of the soda category by running advertisements highlighting the refreshing nature of soda versus other beverages. Once customer acceptance of soda in general has increased, Coca-Cola would switch to an advertising campaign focused on Coca-Cola products specifically.

There are numerous other tactical initiatives that Coca-Cola pursues on a regular basis. One is to increase the volume of product that Coca-Cola customers purchase. Generally, Coca-Cola attempts to achieve this goal by introducing new products, such as salty snack foods that go well with soda. Coca-Cola also runs extensive advertising that targets current customers in order to keep the Coca-Cola brand in the forefront of customers' minds. Doing so ensures that customers will immediately think of Coca-Cola soda whenever they are thirsty and decide to purchase a beverage.