IT Strategy

Coca Cola’s Business Intelligence Strategy

June 8, 2009 by Raj Sheelvant

When a company like Coca Cola, which has several flavored drinks wants to know what its customers prefer, what does it do?  Well, it intends to use IT to monitor the pulse of its customers.   According to Information Week article titled “Coke’s RFID-Based Dispensers Redefine Business Intelligence”, Coke plans to roll out the Freestyle drink dispenser nationwide which is taking the concept of customer choice to new heights, the most interesting aspect is the technology it’s built on. Freestyle will become Coke’s front-line robotic army for business intelligence, sending massive amounts of consumption data back to the beverage company’s Atlanta headquarters. The dispensers collect data on what customers are drinking and how much, and transmit that information each night over a private Verizon wireless network to Coke’s SAP data warehouse system in Atlanta.

Unique byproduct of this BI enabled dispenser is that Coke can try out new flavors and get back almost real time feedback on the viability of its success.  It will no longer have to ensemble Customer focus group and try it out in a ‘lab’.  The real world becomes the lab and the marketing department at Coke can watch consumers vote yea or nay on the viability of new product instantaneously.  This not only improves the speed of feedback but also makes the entire test marketing process cheaper.  The Information Week article notes that besides collecting data on what customers are drinking, Freestyle also lets Coke know what flavor cartridges each dispenser holds, so the company can advise outlets on when to order more. Coke also will use the wireless network to send out new drink formulas to the beverage machines with instructions on how to mix them up. And should the soda company ever need to recall a flavor cartridge, the network also lets it instantly disable dispensers across the nation.  Coke research, product development, and marketing personnel worldwide can use that system to share information on successful regional product rollouts and marketing programs, so they can apply them in other regions. Globally, Coke offers about 3,000 beverages, and what works in one place is often tried in another with similar demographics.

Kudos to IT team at Coke setting this complex infrastructure so that marketing decisions can be based on analytical and statistical data.  Not only that, this application streamlines distribution by automatically recognizing when to expect orders from the outlets.  On top of that, global marketing departments can collaborate on their findings. This is a great example of how IT can recognize the company’s competitive advantage and automate the process to broaden the economic moat.  Article also notes that Coke came up with the design themselves and are closely guarding the engineering details of the RFID based dispenser.   With a competitive advantage like this, I think its a good idea Coke store its IT architecture details along with its recipe formula!

Also check out my other blog on Coke titled Emerging Role of IT in the Marketing Strategy of Coka Cola

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