Innovation Processes: Coca Cola in Russia - Case Study Example

Coca Cola in Russia Name Date Course Executive Summary Coca Cola is a manufacturer of a variety of soft drinks all over the world. The company is also a leading manufacturer of soft drinks in Russia. The market in Russia is quite large due to the availability of a high number of consumers who consume soft drinks. The market in Russia has experienced some growth due to the benefits of the soft drinks and the improvement in the purchasing powers of the customers. The main strength of the company in the Russian market is its financial stability and good public image. However, its weakness lies on the environmental issues. The opportunities for diversification and exploiting new markets are also available to the company. The threat to the company is the political and economic tension between Russia and the west may affect the operations of the company due to sanctions. The competition from the local and international companies also poses a threat to the company. The new product of the company will be served the demographic segment and specifically the elderly. The main benefit of the new product will be in terms of health, quality and low pricing. The new product has mainly capitalized on the relationship between the Strength and opportunities of the company in accordance with the SWOT analysis. Market Description Coca Cola is the leading soft drink company in the Russian market (Coca Cola Hellenic, 2014). The soft drinks market has experienced a lot of dynamic and rapid development since 2010. This includes the products of Coca Cola which have continued to dominate the market in Russia. A broad range of soft drinks is offered by Coca Cola for the purposes of satisfying the different demands of the customers in the market. The market in Russia is quite large and it has a lot of customers as well as competing firms. Millions of customers are in the market which makes it large. Coca Cola is the market leader in Russia in terms of the carbonated and non carbonated drinks (Leigh, 2011). The main competitor in the market is Pepsi Company which produces similar products to Coca Cola. The growth of the industry has been on the rise as more people are increasingly becoming cautious about their health and the products that they consume. Supermarkets, hypermarkets and small groceries are the main retail channel for the Coca Cola products and other soft drinks in the market. The rise in disposable income of the customers has played an important role in increasing the purchase power of the customers in the market. The overall performance of the market is also good and Coca Cola has been able to register some positive growth since 2010 (Filippov, 2013). This is set to continue as the demands for the soft drinks is set to rise in future and hence benefiting the company. SWOT analysis Strength Weaknesses The company is the market leader in the soft drinks industry. The company is financially stable due to its high profitability. The brand image of the company is good among the customers (Shankar, 2012). The company enjoys a high number of customers in the market. The company produces diverse soft drinks in the market. The company usually practices a high level of ethics. Several manufacturing plants of the company are in the market. The company faces difficulties in terms of environmental issues as most of its products are packaged in plastic bottles. Difficulties in dealing with multi-disciplinary assignments in the country. High cost of labor and raw materials (Ponomarenko, 2013). Opportunities Threats Increased demands for the products of the company in the market. Diversification of the products to meet the demands of different customers. Exploring new markets within remote regions of Russia. The availability of Eurasian customs that is friendly to businesses. Developing new manufacturing plants in different parts of the country. Utilizing technology which is supported in the country to boost production (Parameswaran, 2011). Competition from the local companies as well as international companies. Economic sanctions on Russia from the western countries. Political crisis in the neighboring country Ukraine. Ban on agricultural products from Europe and USA which formed important raw materials for the company. Poor performance of the Russian economy in the last one year (Zhao, 2013). Development of strict regulations on the USA and European companies. The results of the SWOT analysis indicate that the company has a lot of strengths due to its financial stability and good brand image. The strengths have the potential of impacting positively on the growth of the company. However, the main weakness of the company is the control of its packaging products as it has negative impacts on the environment. The company has an opportunity of opening new branches throughout the country due to its good brand image. The major threat for the company is the political and economic tension between Russia and the western countries which may affects the operations of the company considering that it is USA based company. On the other hand, the competition in the market is also on the increase from the local as well as the international companies and this may affect the market share of the company. Recommendations The company usually targets different customers in the Russian market. The elderly people are on the rise in Russia (Khvostova, 2013). The company should therefore develop a soft drink that will target the elderly people in the market. This is considering that the existing products do not fully satisfy this target group. It is important to note that the ability of the products of a company to satisfy all the customers in the market is important in increasing profitability (Weinstein, 2012). Since the company is financially stable and it has good public image, it has the potential of carrying out intensive marketing for the purpose of targeting the segment. On the other hand, it is also important to note that the targeted segment can be reached through various means of advertisements. The elderly in Russia are found in both the rural and urban areas. This means that the company will have to ensure that its products are able to reach all the consumers both in the urban and rural areas. This targeted segment also has millions of customers and it will be beneficial to the company in terms of revenue generation. The new product of the company will be a soft drink that is specifically aimed for the elderly. The soft drink will have health advantages to the elderly as most of them cannot consume the current soft drinks of the company. It will have minerals and nutrients that are beneficial to the elderly and hence impacting positively on their health. This is considering that the elderly are likely to be faced with health problems because they consume unhealthy products. The demographic segmentation of the market will play an important role in ensuring that the company is able to benefits the different segments in the market. The new product will also be useful in ensuring that the company is able to carter for the needs of all the customers considering that it has different products for all the other customers in the demographic segment. The new products will also be affordable to the customers. It price will be slightly lower than that of the other products as it is meant for the elderly. The low cost and high value of the product will be beneficial to the customers and hence enabling them to purchase the products easily. The customer value proposition is important in ensuring that the customers are able to purchase the products that fully meet their demands in terms of quality and value (Ozbas, 2010). The new product will have heath value to the customers and hence ensuring that they are able to enjoy it. On the other hand, the new product fits the SWOT analysis through the Strength-Opportunity relationship. The company is financially stable and it has a good brand image in Russia. This gives the company the ability to develop the new products and distribute it widely to the customers in different parts of Russia. The company also has strength in terms of its good public image. This means that the customers will purchase the new product since they trust the company and its products. In terms of opportunity, the demands for the products of the company are high and it also has the opportunity of diversifying its products and exploring new markets. Developing the new products for the elderly is therefore important in terms of diversifying its products and meeting the demands of the customers. The combination of the strengths and opportunities of the company will be useful in ensuring that the customers benefit fully from the new products. Exploring the new market is an opportunity for the company but it will require a lot of resources considering the vast nature of Russia as a country. The company is able to meet the demands of the customers allover Russia due to its financial stability. The financial stability of a company is important in terms of exploring new markets as it may be faced with financial challenges (MacEvoy, 2011). List of References Coca Cola Hellenic, 2014, Coca Cola Hellenic in Russia, Retrieved on 5 September 2014 from, . Leigh, L, 2011, The rate of penetration by multinationals into emerging markets: evidence from BRIC, Multinational Business Review, 19(3), 272-289. Filippov, S, 2013, Innovation processes in the Russian manufacturing subsidiaries of multinational corporations: An integrated view from case studies, Journal of East-West Business, 19(4), 260-290. Shankar, S, 2012, How to win in emerging markets, Image. Parameswaran, M, 2011, Strategic brand management: Building, measuring, and managing brand equity, Pearson Education India. Zhao, M, 2013, Beyond cops and robbers: The contextual challenge driving the multinational corporation public crisis in China and Russia, Business Horizons, 56(4), 491-501. Khvostova, I, 2013, Households Consumption Behavior in Russia: Estimates on Micro Data, Available at SSRN 2348801. Ponomarenko, A, 2013, Money-based inflation risk indicator for Russia: a structural dynamic factor model approach (No. 3), Centre for Central Banking Studies, Bank of England. Weinstein, A, 2013, Handbook of market segmentation: Strategic targeting for business and technology firms, Routledge. Ozbas, O, 2010, Market Segmentation and Cross‐predictability of Returns, The Journal of Finance, 65(4), 1555-1580. MacEvoy, B, 2011, Richness curves for evaluating market segmentation, Department of Statistics, UCLA. Read More