---
title: "Coca-Cola Announces Reduction in Global Marketing Investment and Strategic Deployment Across 4 Areas"
description: "As the COVID-19 pandemic continues to spread globally, economies worldwide are suffering varying degrees of impact, especially for large multinational corporations. On April 21, Coca-Cola reported a 25% decline in global sales since the second quarter, with nearly all declines attributed to away-from-home consumption. In response, the company announced it would reduce marketing costs globally."
author: "Morketing"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-04-26"
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# Coca-Cola Announces Reduction in Global Marketing Investment and Strategic Deployment Across 4 Areas

> As the COVID-19 pandemic continues to spread globally, economies worldwide are suffering varying degrees of impact, especially for large multinational corporations. On April 21, Coca-Cola reported a 25% decline in global sales since the second quarter, with nearly all declines attributed to away-from-home consumption. In response, the company announced it would reduce marketing costs globally.

The COVID-19 pandemic continues to spread globally, and economies around the world are suffering varying degrees of impact, especially for large multinational corporations, which face even greater difficulties.

On April 21, Coca-Cola announced that **since the second quarter, global sales have declined by 25%, with nearly all of the decline coming from away-from-home consumption. To address this, Coca-Cola also announced it would reduce marketing costs globally.**

**-01-**

**Forced to Cut Marketing Spending Amid the Pandemic**

Coca-Cola stated that after strong performance in 2019, 2020 started with good momentum, with total business volume growing 3% by the end of February (excluding China).

**Unfortunately, starting in March, the novel coronavirus began to spread globally, and countries implemented varying degrees of social distancing measures, significantly changing consumer purchasing behavior, especially with a sharp decline in away-from-home channels.**

People began reducing the frequency of shopping trips, and restaurants and cinemas hung up signs indicating temporary closure, severely impacting Coca-Cola's away-from-home business.

According to Coca-Cola's first-quarter results, approximately half of its revenue came from at-home consumption. This was mainly due to consumers increasing their beverage purchases in the short term to prepare for extended periods at home. Many netizens also indicated that during the pandemic, they bought more beverages like cola to stock up.

Additionally, Coca-Cola noticed a sharp growth in e-commerce channels. Although e-commerce accounts for only a small portion in many regions, its growth rate has doubled.

**Coca-Cola's current operating cash flow is $556 million, down 29%; free cash flow is $229 million, down 43%, primarily due to one fewer working day in the quarter, unfavorable currency effects, and extended payment terms to suppliers from the previous year.**

In response to this situation, Coca-Cola said it is reducing marketing expenditures. To date, the company has laid off some employees and will pay their full salaries through June.

Coca-Cola Chairman and CEO James Quincey stated that while the company has been cutting marketing spending, maintaining close relationships with consumers remains the company's guiding principle, followed by pursuing appropriate return on investment.

**-02-**

**Coca-Cola is Implementing Strategic Deployment Across 4 Areas**

In response to the pandemic, Coca-Cola has launched a new strategic deployment, attempting to leverage more levers to maximize profit and cash flow. In the coming work, Coca-Cola's spending will be divided into four key areas.

**First, as the CEO stated, continue to maintain close relationships with consumers.**

Second, improve the effective management of bottling plants and bottlers in North American operations.

Third, reduce all discretionary operating expenses as much as possible, ensuring that every dollar spent on services, travel, meetings, etc., is worthwhile.

Fourth, suspend all capital expenditures except for absolutely necessary or already committed funds, acting decisively to avoid wasting resources, improve return on investment, and provide maximum flexibility for operations in the second half of the year.

To more effectively increase revenue, Coca-Cola said it will enhance cooperation with bottlers and retail customers, prioritizing core brands and key packaging, while also ensuring adequate inventory levels in key channels.

To provide support and protection for Coca-Cola retailers, the STAR Alliance will work with consumer product peers to connect companies, governments, and small retail associations to jointly help small and medium-sized retailers weather the crisis.

Additionally, Coca-Cola will increase investment in e-commerce and redeploy consumer and trade promotions to digital, to support retailers and food delivery services, shift to packaging sizes suitable for online sales, and develop more innovative packaging to increase the likelihood of consumers choosing Coca-Cola beverages.

James stated that as consumers become more accustomed to staying at home, they are more likely to increase purchase quantities while reducing shopping trips, so the company will reconsider multi-pack promotions and frequency to meet consumer demand.

**-03-**

**Is Cutting Budgets Really the Best Option?**

**This year, we have heard many brands announce layoffs and cuts in marketing spending.**

According to statistics from Human Interest, from March 11 to April 12, 221 U.S. startups laid off 19,570 employees.

Additionally, Airbnb announced at the end of March that it would suspend all marketing activities, expecting to save $800 million; Marriott previously announced a $1 billion cut in its marketing budget.

Today, we also learned that Google's marketing department is undergoing budget cuts and a hiring freeze, and other marketing departments are expected to see budget cuts of half in the second half of this year.

**Affected by the pandemic, cutting expenses seems to have become a "trend" among companies. In special times when costs need to be tightened, many companies first choose to cut marketing budgets for a simple reason: if consumers are unlikely to purchase products or services in the short term, marketing investment during this period seems less meaningful.**

However, while many brands are cutting marketing spending, Procter & Gamble has instead said it will spend more on advertising.

P&G CFO Jon Moeller believes that in the face of the pandemic's impact, most brands' instinctive reaction is to reduce marketing spending, which is precisely a rare opportunity for its brands to "double" their visibility.

To encourage some consumers to try brands and products they have never used before, P&G will continuously convey its brands' concepts and culture to consumers through creative advertising and other means, further strengthening the emotional connection between brands and consumers.

**A recent analysis in Forbes pointed out that competitors cutting advertising spending due to the pandemic, on the other hand, frees up promotional space for capable brands. Therefore, persisting with marketing during this time is more likely to win consumer attention and trust, thereby enhancing the brand's long-term sustainable influence.**

However, it should be noted that some brands are cutting marketing spending out of necessity; the depletion of cash flow has become the most headache-inducing issue for companies, and the simple ways to free up cash are layoffs and marketing cuts.

Earlier, German sportswear giant Adidas was pushed to the forefront of public opinion for refusing to pay advertising agency fees. People could not believe that a company like Adidas, with annual sales of tens of billions of euros, could not pay marketing expenses due to a few months of closure.

At this point, companies should especially focus on creating greater business value with less money. "How to spend money wisely" is the problem most companies face.

Currently, although Coca-Cola has cut some marketing spending, after analyzing consumer shopping habits during the pandemic, it has shifted investment focus from out-of-home business to e-commerce models. Although it has made some layoffs, it has not neglected maintaining good relationships with consumers and retailers.

Moreover, Coca-Cola has put considerable effort into repackaging products to capture consumers, meeting the demand for bulk purchases while compensating for lost revenue during normal times. Airbnb, in addition to increasing revenue and reducing expenses, has also launched virtual tours and online experiences, moving previously suspended destination experiences online for a fee.

**Marketing expert Mark Ritson reminds practitioners that the 4Ps of marketing are not just Promotion, but also Product, Placement, and Price. Brands play an extremely important role at this time, and they should consider the overall situation, not just how to promote.**

In fact, it is not difficult to see that people view cutting marketing spending during economic downturns as "marketing myopia," fearing that companies might miss good opportunities for brand enhancement. So, if while cutting marketing spending, companies also balance finance, operations, logistics, and internal communication, maintaining unified marketing and business goals, moderate marketing cuts might allow companies to survive better.

**-04-**

**Conclusion**

During the spread of the novel coronavirus, companies make decisions based on their judgments, whether cutting marketing budgets or increasing them against the trend, all based on their current assessments.

But we must avoid "marketing myopia," such as blindly reducing marketing budget spending. This not only misses opportunities in the crisis but also pushes companies to the brink of growth stagnation. Such defensive measures are a form of "marketing myopia."

**From the information Coca-Cola has conveyed externally, it is reducing marketing spending in a more localized manner. They are prepared to adjust production, marketing, and sales methods to adapt to the current global situation.**

Reducing marketing spending is also a smart way to survive; increasing marketing spending may be seeing opportunities in the crisis. There is no distinction between the two; they are just different strategies.

Source: Morketing (ID: Morketing)

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