International Business Management - Coca-Cola Entry Strategy in North Korea - Case Study Example

International Business Management Contents Contents 2 Introduction 3 Discussion 4 Conclusion 12 References 13 Introduction Marketing mix is a significantly important business tool which is generally being used by the various organizations across the world. 4Ps marketing mix is highly crucial for any organization to expand businesses in the overseas markets. Here in this essay American organization Coca Cola has been chosen for the topic of international business management. The Atlanta based organization is eyeing for more extensive overseas business operations. It is very important for the organization to know that up to which extent the organization can use the 4P’s marketing model in their overseas business expansion. 4P’s stands for the Product, Price, Place and Promotion. The organization is eyeing to expand its business in the North Korean markets. The essay will focus upon the applicability of 4P’s model in this context. During the course of this essay the model will be analyzed in detailed fashion. International business expansion is a highly complex matter. Taking consideration of this subject complexity it is utterly important to scrutinize the justification of the 4P’s model of marketing. This Atlanta based organization does not have its business operations in North Korea. This marketing mix will certainly help the organization to open its account in the highly volatile country i.e. North Korea. Over the years the organization has managed its 4P’s suitably and that factor has made the organization a global leader in the beverage industry. In 2013 the organization registered revenue of US$ 46.854 billion. It shows the organization is significantly cash rich to expand its business in the overseas market. The study will also focus towards the weakness in the model and how those weaknesses can be augmented. The 4p’s model is a highly regarded marketing model and over the years global business fraternity has used this model comprehensively. The essay will also showcase importance of the 4P’s model. Discussion Over the years 4P’s marketing model has been significantly use full for the organizations across the world. Due to the vastness of this model, it can be appropriate for Coca Cola to apply this model for opening its new overseas business in North Korea. Last few years culture of North Korean people has evolved a lot. In the last one decade there has been a great shift in the North Korean culture. People of the country over the years have shifted their focus towards the carbonated drinks. This cultural shift can be significantly fruitful for the Coca Cola to market their beverages. The Atlanta based organization is significantly known for its carbonated drinks across the world (Lamb, Hair and McDaniel, 2011). This product segment of the organization is significantly suitable and compatible with the country’s culture (Richter, 2012). This kind of suitable product alignment can be definitely advantageous for the organization to open its account. In this context identification of proper product for the particular country is highly important and that identification can be achieved by the help of 4P’s model only. The 4P’s model of marketing mix will help the organization to select the most appropriate Coca Cola product for the North Korean markets. Any kind of overseas business expansions requires high investments. For the successful overseas business expansion the organization has to invest its money in a calculative way. Product component of this 4 P’s model will help the organization to invest their money into the right products. The particular marketing model will assist the organization to keep focus on the particular products only and it will prevent any kind of distractions. All the above arguments and discussions are clearly indicating that, product mix of the 4P’s model can be applied without any shadow of doubts. It will provide significant competitive advantages to the organization and with the help of it organization can focus towards the long term business perspective also. It will support the organization to meet the requirements of the North Korean customers in proper way. It is very important for Coca Cola to fix its pricing strategy in the overseas business. Price is one of the most important criterion on the basis of which buying behaviours of the customers are being influenced. If the organization cannot fix its product’s prices properly in the overseas market then the company will not be able to test success. It is the most important thing on the basis of which profitability of the new overseas business will be decided for the company (Bowman and Avignon, 2010). Before fixing the prices the organization has to know one thing that, up to what extent North Korean customers would prefer to pay their money for the Coca Cola products. It will assist the organization to get an idea about the pricing of the products. If pricing of the Coca Cola products are faulty then it will be significantly counterproductive for the organization. Price component of the 4P’s market mix will help the organization to design its pricing strategy according to the market dynamics. The organization has operating expenses and business costs (Kemmer and Boden, 2012). All the expenditures will be covered from the revenue generation of the product. To earn profitability out of the new business, the Atlanta based organization must use this parameter of 4P’s model precisely and meticulously. Extravagant pricing and too much low cost can be detrimental for the organization’s overseas business. Without any shadow of doubt, price analysis has significant scopes and it can be extensively used by the Coca Cola to open its new overseas business in North Korea (Belohlavek, 2008). The above discussions and arguments are reinforcing one fact that the model can be used extensively for the purpose of new overseas market and price will play an important role to apply this marketing model effectively. It is highly important for the organization to manage its distribution or select the right places for business in the overseas market. Application of 4P’s marketing model will assist the organization to identify the suitable places in the North Korean market from where the customers can get Coca Cola products. It will support the organization to layout its business stores into the country (Maclaran, Saren, Goulding, Elliott and Caterall, 2012). It is being observed that proper store selections and place selection is highly important for the overseas business success. That is why this component of the 4P’s marketing model has higher degree of significances. This component will help the organization to select proper distribution channel according to nature of the place. In North Korea there are several places where business potentialities are higher than other places of the country. This particular component of 4P’s model will be significantly advantageous for the organization to select those highly potential places in the country. It will directly help the organization to gain good revenue out of its new overseas markets. This component of the 4P’s, model will assist the organization to invest their money into the right places (Gitman and McDaniel, 2008). Resources allocation is an important matter for Coca Cola. Selecting proper place will result into the suitable resource allocation from the side of the company. It will safeguard the organization from unnecessary wastage of vital resources. The above discussions are clearly articulating that selecting proper place is one of the most primary objectives for Coca Cola to open its new overseas business (Pride, 2011). To achieve that objective it is highly important to focus towards the particular component of 4P’s model. Suitable selection of places will provide long term business orientation to the company and it will support the organization in the purpose of profit making as well as meeting the demands of the North Korean customers. In any new overseas market product communication is utterly important. Coca Cola has to communicate its products in North Korean markets properly. For communicating their products in a suitable way the organization has to promote their products extensively. Extensive promotion will encourage North Korean customers to buy more Coca Cola products. Promotion with the help of various mediums will create a permanent brand image in the minds of the customers (Lamb, Hair and McDaniel, 2008). It will help the organization to position their products uniquely. Human brains are similar to black box. It requires continuous inputs from the side of the organization (Lilien, Rangaswamy and Bruyn, 2013). Promotion will provide that continuous input into the human brains. Promotion will play an important supporting role for the products of the organization that they are going to sale in the new overseas market. This component of the 4P’s model will showcase various offerings of Coca Cola. Promotion can be significantly advantageous for the company to gain competitive advantages in the new overseas market. Customer loyalty is an important criterion for the business success; this criterion can be fulfilled with the help of promotions. Various promotional techniques will be advantageous for the company to communicate their unique selling propositions in the market. During the course of this essay one thing has been observed all the parameters of 4P’s marketing model are significantly important for Coca Cola to open its business in the overseas market. It indicates that up to great extent this model can be applicable for the new overseas market. The marketing mix is a strategically designed marketing tool which a company applies for getting a desired remark from its market. The 4Ps of marketing has been designed for assisting the company in meeting the company’s marketing goals and objective by providing value to its customers. The 4ps of marketing are strongly related to each other and they together help in positioning a product in the market. This is a tool which creates the demand for the product in the market. Marketing mix is the combination of product, price, place and promotion (Christina, 2006). The product is the very important element of marketing mix, the popularity and demand of the product can be seen or understood by the buying behaviour of the customers. The popularity of the product in a particular region is also affected by the purchasing power of the people. Coca Cola has a wide portfolio of its product in the beverage industry. The beverages can be classified as tea, coffee, energy drinks, and fruit drinks and fruit juices. Coca Cola has its operation in more than 200 countries across the world. The famous brands of Coca Cola are Thumps up, Limca, Sprite, Mirinda, Fanta and Nested ice tea. With the increase in its flavour, it has ensured to increase its revenue in the same parameter. Coca Cola produces more than 3300 products and its marketing strategy is changing or is being modified with the addition of more products in its portfolio. Soft drink satisfies the thirst of the individual (Balram, 2010). But the necessity of soft drinks or the consumption ability depends and varies for customer to customer. So to meet the need of its different types or categories of customers it has launched Coca Cola in different sizes so that the consumer has an option to consume according to their necessity and capability. Coca Cola is more attractive as compared to other soft drinks it is because of its red colour appearance. The main weakness of Coca Cola is that it mainly focuses its attention on carbonated drinks which leads to the consumption of fats. Now a day’s people are very health conscious they are concerned about their health, they prefer to buy a bottle of plain mineral water rather than buying a can of Coca Cola. Coca Cola has an undiversified product portfolio it only focuses its attention, innovation, development in the beverage industry whereas its competitors are diversifying its product portfolio to other food products also. Its line of business is only in the beverage industry. Coca Cola was fined for Rs 1,000000 for selling Coca Cola on substandard bottle by Pakistan. A case was launched in the consumer court for finding a dead insect inside the bottle of sprite, sprite which is considered as one of the important brand of the Coca Cola company (Tobias, 2012). Therefore Coca Cola in order to remain as the market leader in the beverage market should extend its product to diversified product portfolio consisting of other products together with its beverages. And the packaging which is the most important element should be mainly focussed, as the satisfaction of the consumers matters a lot for the company to earn goodwill as well as in degenerating revenue of the company. Before launching the product it should first analyse the purchasing power of the people in that region and the demand for the product in that particular area (Ronald and Edward 1998). Next is the price which is another most important element of marketing mix, Fixation of price for the product is very crucial as lot of factors have to be considered while pricing the product. Market analysis and research has to be conducted before pricing a product. Pricing has to be done by considering, comparing and evaluating the price fixed or assigned by its competitors in the same industry for the similar type of product. Consumer research is also to be conducted to evaluate how much importance they give to the product and how much they are willing to pay for the product. The price of the product mainly depends how the customers perceives the product. The market for Beverage industry is oligopoly, Coca Cola mainly deals with beverages so it falls in the oligopoly market. In Oligopoly market there are few numbers of seller and large numbers of buyer so they generally enter into a cartel type of contract for maintaining equilibrium in price of the products offered between the different sellers. Coca Cola with its wide range of products have different sub brands the pricing strategy for each of this sub brands have to assumed and analyzed differently. Geographical condition also influences the price of the product. Coke once became the victim for changing the preferences of the consumers, as it paid more attention in generating revenue rather than paying attention on satisfaction of the consumer (Richard, 2000). Coca Cola should adopt some of the important strategy before determining the price of its products. Public demand should be given more priority, the price must the estimated on the basis of its target market, the price should not be too high nor too less from its competitors. While determining the pricing strategy for its product the company should also focus on revenue generation. The main competitor of Coca Cola in the market is Pepsi. So, Coca Cola cannot increase its price too much from that of Pepsi. It has to strategically design its price because if its competitor reduces the price people will switch to the product of its competitor as it was charging a low price from the beginning and on the other hand if Coca Cola reduces its price the customer will perceive that the quality of Coca Cola has deteriorated (Hill and Jones, 2011) After pricing is selection of place for launching the product in the market. This is another important element of marketing mix. Place consist of many factors such as inventory, logistics, assortment, transportation, location. Coca Cola is the most popular and favourite brand of the consumers and it is available all over the world. Coca Cola follows the Fast moving consumer goods distribution channel for determining its distribution pattern and it have already removed the small and middle level player of the same industry from the market. Coca Cola had to face many factors for introducing the product such as political, economical, technological, legal, environmental, and social. Coca Cola sells its product in bottles, cans. The company after manufacturing sell the product to the wholesalers, distributors. They then distribute their product to the retailers and small and medium retail outlets. Coca Cola faced a problem while launching a product as the consumption ability of the consumer varies from customer to customer. And the place has to be selected where they can introduce their brands .as the purchasing ability of the consumer depends from place to place. The place for introduction is to be selected in such a way that the product gets delivered at the right time at the right place (Hitt, Ireland and Hoskisson, 2008) Coca Cola while selecting the place should consider the following factors that is the convenience of the customers; the product should be accessible for the customers and at a reasonable cost in rural areas (Gerard 1998). After selection of the place, the promotional strategy is to be selected. The promotional strategy is one of another important element of the marketing mix. The popularity of the brand depends highly upon its promotional activity. It encourages and attracts the customers to purchase the product. Promotional activities create awareness about the product to its customers. Advertisement is an important tool of promotion. Coca Cola has positioned itself in the soft drink market strategically. As Coca Cola operates in more than 200 countries they faced a problem either to standardize their product globally and enjoy the benefit of economies of scale or adopt an integrated method of marketing. Coca Cola faced the problem as it produced carbonated drinks (Hussey, 2007). Coca Cola adopted a promotional strategy of Coca Cola zero which aimed at providing diet coke to the consumer mainly targeting the teens and the consumer in the age band 20 -30 who are more conscious about diet. The introduction of Coca Cola zero has differentiated Coca Cola from lot of other soft drink producers in the market. The company will require advertising and internet marketing to receive a favourable gain from the product Coca Cola zero (Jeffs, 2008). Conclusion The main focus of Coca Cola is high growth and profitability. Coca Cola does not produce any specified drinks for the children below 12 years as they believe that it is the parents of the children who will choose the right drinks for their own children. Coca Cola is operating in more than 200 countries and now it wants to expand its operation in North Korea as it does not have its operation in North Korea. Here in this report we have discussed how the elements of marketing mix can help Coca Cola in becoming the market leader and also the weaknesses and how the weaknesses can be augmented. Coca Cola believes and follows the strategy of acceptability and affordability of its consumers. References Balram. D., 2010. Rural Marketing New Delhi: Tata McGraw-Hill Education. Belohlavek, P. 2008. Unicist Marketing Mix. New York: Blue Eagle Group. Bowman, D. and Gatignon, H., 2010. Market Response and Marketing Mix Models: Trends and Research Opportunities. Hanover: Now Publishers Inc. Christina, D., 2006. 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