Market Analysis of Coca Cola as a Global Brand - Assignment Example

? International Marketing: Market Analysis of Coca Cola as a Global Brand Outline Coca Cola 4Ps: Product, Price, Place, Promotion On Having the RightStrategy Globalisation Uppsala Model Uppsala Approach of Coca Cola Country of Origin Effect (COO) COO on Coca Cola Conclusion Coca Cola, the largest beverage company in the world which has originated in United States, was outstandingly recognized to be the best brand not only in United States but in the entire 2010 global market (Interbrand, 2012). In fact, the brand Coca Cola had maintained its number one spot as the top global brand of 2011 (Interbrand, 2012). The brand’s portfolio contains the original version of Coca Cola, Diet Coke, Coca Cola Zero, Sprite, Royal Tru Orange, Fanta, Minute Maid, Powerade, Vitaminwater, Simply, Geogia and Del Valle and a lot more others (The Coca Cola Company, 2012). Aside from soft drinks and juices, the brand also includes other ready – to – drink (RTD) beverages like coffees and sports drinks (The Coca Cola Company, 2012). Why in the world, among the different categories and sectors of the global market, Coca Cola has happened to successfully penetrate and retain its market internationally and become the most valuable brand at the global scale level? In order to know the reason behind its victorious market leadership, the brand of Coca Cola’s marketing mix, 4Ps, such as product, price, place and promotion is analysed. First is the product. The Coca Cola as a brand is not limited only to its Coca Cola soft drinks. As mentioned earlier, it encompasses a wide array of categories of beverages like soft drinks, sports drinks, energy drinks, water, ready – to – drink juices, teas, as well as coffees. Moreover, Coca Cola has managed to venture their products into new opportunities through different product variants in these different categories of beverages. The Coca Cola products are not without issues. In point of fact, a worldwide hate campaign, Killer Coke, is formed against The Coca Cola Company and is calling to boycott its products (Killer Coke). Primarily, its products are criticised for their adverse possible negative effects on health among its consumer as a carbonated and sweetened drink. It produces nothing but products detrimental to health which can lead to death (Killer Coke). Since Coca Cola products are high in sugar and calorie content, they fuel the prevalence of obesity and diabetes in the whole world (Killer Coke). Some of chemical components and food dyes used in these products are identified to cause cancer (Killer Coke). Caffeine, a substance causing physical dependence, is also present in these products (Center for Science and Public Interest). Nonetheless, in the soft drink category, Pepsi, RC Cola, and other local competitor brands are just behind Coca Cola. Despite the issues faced by Coca Cola, its consumers across the globe remain loyal to the brand and the brand has managed to be on top among the other sectors of beverages. Each of the Coca Cola products is positioned to target specific market. For example, the original version of Coke is not only serving as refreshment for an individual but is seen as a special part of the modern times. It functions as means of bonding to family as well, especially when having the traditional dining. While on the one hand, Diet Coke and Coke Zero target those who are health conscious and do not want to gain additional weight due to drinking soft drinks. Coke Zero is positioned as a no sugar and no calorie version of Coke. For those who do not want to ingest caffeine, there is also Caffeine – Free Coca Cola. For those who still want a fruity taste of soda, Coca Cola has its cherry, lime, citra, light sango and orange soda variants. For those who are not into soft drinks, Coca Cola also has ventured in RTD juices like Minute Maid which is positioned as a product with real pulps of fruits like orange. Because of the pulps in Minute Maid, it is considered by the consumers as a healthy citrus drink in the beverage sector. The Coca Cola Company has a lot more different products to offer which specifically target a consumer segment. The company has something to offer to the coffee lover consumers and to those sporty individuals who prefer water or sports drink alone. Despite the negative issues attacking Coca Cola products, they are able to remain stronger than these issues. The branding of the product including the image of the products left to the consumers is something good enough for the product to be purchased. Second is the price. The prices of Coca Cola products vary depending on the product category, variant, size and location of country. Different brandings of its products have its own target market. The prices of available Coca Cola products in different countries are not the same in other locations. The company ensures that their products are made affordable but not to the point that it seems cheap to their target consumers. The Coca Cola products still remain as a quality product despite the affordability it offers to the consumers. Its products are much higher in price than the products of RC Cola and somewhat at the same price level of Pepsi products. If in case for some, the product is no longer affordable for some consumers, Coca Cola also offers smaller sizes at a more affordable cost. Third is the place. It is important to note that not all Coca Cola products are distributed in all regions of the world. In some countries, it is only the original version of Coke that is being sold. In other countries, the original version of Coke together with Diet Coke and Coke Zero are being offered. In other countries, original version of Coke comes along with Coca Cola Lime and others. This is how the Coca Cola Company distributes its product across the globe. Different countries have different cultures and preferences. That is why Coca Cola’s products are not equally spread and not all are made available. There are certain products which are only distributed in a certain area. Meanwhile, Coca Cola products are very accessible to its consumers. Their products are widely available in different channels such as supermarkets, convenience store, vendo machine, fast foods, restaurants and other channels. Coca Cola brings closer their products to their consumers through ensuring that it is widely reachable for them. Fourth is the promotion. Indeed, consumers are very much aware of Coca Cola products because the promotional activities of the company. Advertising of different forms are available such as television, radio, print, online and others. Their commercials are also effective enough to encourage consumers to purchase their products. The messages of their ads are remarkable to the consumers. And besides, the company provides advertisement that is up – to – date and relevant to the season. The original Coke version has TV ads that really sell. Its advertisements are able to make their products the top of mind beverage of a certain category to its consumers. Other than that, its commercials are relevant to the season and lives of the consumers. Every Christmas season, the original Coke version airs TV ad relevant to the season. The Coca Cola Company has managed to be very visible to the eyes of consumers, worldwide. Apart from that, the company is able to transcend the negative issues attached to them through the continuous promotion of their products in such a manner of relevance to each consumer. Aside from these advertisements, the company also venture in different promotional activities like raffle, freebies or premium items, buy X get X for free and others across the globe. No doubt that the Coca Cola products have not only made it to people’s awareness but also have caused this awareness to make the consumers try the products. Their advertisements are able to effectively communicate their messages to consumers. In effect, these advertisements, press releases, and other means of marketing communication to the market have caused the trial, usage and loyalty to the Coca Cola products. In the analysis of Coca Cola’s brand mix, it is observed that Coca Cola is able to apply the best strategy to market their products. That is why, Coca Cola has happened to be the number 1 global brand. As part of their marketing strategies, first, the company knows who their target consumers are. Through knowing their target markets, Coca Cola is able to deliver the needs and wants that will satisfy their consumers more effectively than their competitors (Kotler, Amstrong, Wong and Saunders 2008: 17). After knowing who the target markets of Coca Cola are, the company has strategically thought of the what, when, why and how they will introduce their products to the market. In order to achieve the successful market penetration, retention and expansion, Coca Cola has strategically executed these 4P’s of marketing namely product, price, promotion and place. Furthermore, the quality of the Coca Cola products is ensured to have high quality which according to Adcock, Halborg and Ross (2001: 15), ensuring such high quality would entail their consumers to continuously patronise the products. Indeed, it can be observed how Coca Cola operates in such customer – focused marketing. The 4Ps of product, promotion price and place can also be seen in another marketing model of SIVA: solution, information, value and access (Dev and Schultz 2005: 18 – 24). Coca Cola provides solution through their products, information about their product through their promotion, value through price, and access through different places. Moreover, Coca Cola does not only take into consideration the internal factors but the external factors as well. Given that not all products are readily available in a particular location, this indicates that what contributes behind Coca Cola’s success is that the company also analyses other elements like the political climate, economic growth, social and lifestyle changes and technology and innovation. Analysing these elements is also known as PEST analysis. Analysing the political, economic, social and technological factors which are something out of control of companies and businesses, it provokes company’s proactive thinking through going beyond these factors to consider the threats and opportunities in which the business can grow (Narayanan and Fahey 2001: 189 – 241). This explains why Coca Cola products, prices, places and promotions are specific at a certain country. Through knowing who their markets are, Coca Cola has managed to innovate their products and venture to other beverage categories other than sodas. Nevertheless, the original version of Coke still remains as their flagship product despite these innovations. This is the strategic mechanisms applied by Coca Cola behind their success globally. On the one hand, the phenomenon of globalisation has enabled the entire world to have a sense of connectedness. Anthony Giddens (1990: 64) has described this phenomenon as the strengthening of global relationships via making the distant regions of the world still connected. In this manner, understanding the geographical and particular experience of a country is necessary to strengthen such association worldwide. This phenomenon can also explain the business practice of The Coca Cola Company. From United States, the country of origin of Coca Cola, the company is able to expand its market internationally. Globalisation also entails survival of the fittest. Being able to do business worldwide is an indication of the strength of the market. Nevertheless, Coca Cola’s success is not just as simple as following the trend of globalisation. Coca Cola has undergone a process of internalisation which according to Welch and Luostarinen (1988: 36) is the manner of intensifying participation of global operations. Their triumph of Coca Cola among the other companies can be best explained by an Internalisation Process Theory (IPT) through Uppsala theory. According to Johanson and Vahlne (1997: 23), the Uppsala model is an approach of knowledge acquisition, experiential learning as well as additional responsibilities of a firm in order to advance as an international market. This model assumes that the lack of knowledge of a specific country happens to be a vital hindrance to the advancement of global business relations (Johanson and Vahlne, 1977: 23). This view is supported by Carlson (1966) when he stated that the lack of understanding on how to operate a business in a foreign market signifies disability for a company to efficiently participate in international operations. Moreover, the relevance of experiential learning is that it able to generate business opportunities for development and also as a back - up information to shape the internalisation process (Johanson and Vahlne, 1990: 33). Through this learning, businesses know the possible outcomes of their business ventures. The decisions made by business firms are something that is incremental because of the ambiguity of the market and the possible threats and opportunities as well (Johanson and Vahlne 1977: 26). Johanson and Vahlne (1990) states that the Uppsala model has also accounted that the advancement of operations in each individual nation is a step – by – step process. However, the development will be hastened once the larger firms help them out. This approach tells that companies and businesses can possibly reduce the risks and threats while strengthening their market commitment once geared with an improved familiarity, awareness and understanding of the market (Johanson and Vahlne, 1977: 34). This internationalisation theory also contributes in the shaping how to choose what kind of market to target. According to Johanson and Vahlne (1992), before companies venture in international operations, they do it first by internalisation process in countries that are geographically nearer to their country of origin. After the successfully undertaking of international business in the physically close nations, companies venture international operations to the more distant ones. On the one hand, Benito and Gripsrud (1992: 464) state that the companies begin their internalisation in countries whose market is understood easily. In this manner, distance serves as hindrance for gaining the accurate and sufficient amount of information about the market (Johanson and Vahlne, 1990). In an empirical study of O’Grady and Lane’s (1995: 310) among thirty – two (32) retail companies which entered United State market coming from Canada, they have found out that the supposed resemblances in a different region may be far in reality because of the unpreparedness for the set of differences. It is not just safe to just operate in a business decision based on assumptions but just like what Uppsala approach tells, absence of particular market knowledge can cause failure in the development of international operations. With regards to the Coca Cola Company, it is the case that before its business has grown to how big it is as of today, it has first started only in Atlanta, Georgia before it has dominated the whole world, not only the soft drink segment. Coca Cola is able to expand its market worldwide not abruptly but gradually. It has first ventured in areas and locations near Atlanta, Georgia before it was sold in every state in US in 1985 (The Coca Cola Company). After being widely available in United States, the nearby countries had been targeted by the company until it has become a truly global product. Behind this success, of course, The Coca Cola Company has first understood its market and its prospective market. Through the gained familiarity, Coca Cola knows the pros and cons of its business venture. Being a long – standing company that has been present over a hundred years ago, Coca Cola has acquired much understanding about its market that enables for its successful marketing strategy. Knowing who the consumers in a specific area, and understanding what their needs are has been nothing but the best strategic weapon for successful businesses. Learning from a specific experience of a country has geared Coca Cola’s success. On the one hand, the phenomenon of country of origin effect (COO) also affects how consumers perceive a certain product. Country of origin, the country from where manufacture, production and growth of a product originated also causes a country image, reputation, or stereotype about the product. According to Schooler (1965: 394 – 397), products are perceived by consumers identically with the exception of their views on the country of origin. The origin of the product influences the consumers’ perception on quality. Its effect also includes the preference and willingness of consumers to purchase a certain product. Shimp and Sharma (1987: 280 – 289) suggest that consumers have comparative preference to products coming from their own nation. However, according to Usunier (1987: 60 - 73), the so – called countly – of – association or country with which a certain product is connected with has directionally influences the evaluations and preferences of consumers among products. With regard to the Coca Cola Company, its origin, United States, has of course a good image to majority of the people across the globe. According to Josiassen (2009: 53), Coca Cola is one among the global brand that attracts the global youth culture even though they rejoice their national culture. US has maintained good relationships among the most of the other countries worldwide. Image – wise, the notion of American Dream or the idea that Americans benefit from high social freedom of movement also serves as a good factor of affecting the consumers’ perception of the product to a larger extent. A wide array of nationalities can be found in America because of this American dream. Because of the fact that America has been region mainly with good image across the globe, majority of consumers have no issues purchasing and drinking the Coca Cola products. A taste of Coca Cola products may entail a taste of United States for some. Third world nations and those who have subjected to colonialism have this colonial mentality. These individuals think that imported products are relatively better the products produced by their own country. Knowing that the Coca Cola product has originated from United States, it assures consumers of its quality and value. Indeed, Coca Cola as a brand catches to its greatest extent of rightness when it comes to business. Its brand promise of pleasure, liberation, spirit and refreshment echoes across the globe. Coca Cola’s success is not just by coincidence but by purely great strategic mechanism through being able to evaluate who the target consumers are, what the needs and desires that can satisfy them are, and how the company can deliver these needs and desires are. Coca Cola as a brand has risen above the negative issues attacking the company. Through good marketing communication across the globe, good pricing strategy, making the products widely available to consumers, Coca Cola has amazingly expanded its business and retained its markets worldwide. References: Adcock, Dennis; Al Halborg, and Ross, Caroline, 2001. Marketing: Principles and Practice, 4th edition. Prentice Hall. Benito, G. and Gripsrud, G., 1992. The Extension of Foreign Direct Investment: Discrete Rational Location Choices or a Cultural Learning Process? Journal of International Business Studies 23(3): 461-476. Carlson S., 1966. 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