Coca-Cola's Marketing Strategies - Research Paper Example

? Marketing Coca-Cola Global Marketing strategies Introduction The Coca-Cola Company is the world’s leading manufacturer and marketer of non-alcoholic beverage concentrates in the world with sales and operations in over 200 countries. Coca-Cola started its operations in Atlanta, Georgia on May 8, 1886. One among the most widely used soft drink in the world is Coca-Cola. The company has very widespread and competent distribution system in the world. Coca-cola offers a portfolio of brands throughout the world like Sprite, RC cola, Fanta, Diet Coke, Minute made etc. One can easily find Coke’s soft drinks anywhere in the world due to their efficient distribution system. Coca-Cola’s Marketing Strategies Global marketing strategy has been adopted by Coca-Cola. They consider the whole world as a single market place and uniform marketing strategy has been in use by Coca-cola for several years, but now different marketing campaigns are being designed for different regions of the world due to change in trends. Business decisions are initialized on a domestic basis to fit in with the cultural and societal needs of the domestic country. Coca-Cola went global in the 1920s. Coca-Cola decided to take its operations worldwide and started marketing research in China, Central America, and in a lot of other countries. Successful and efficient marketing research paved way for Coca-cola to produce on a global scale in various parts of the world (United States Securities and Exchange Commission 33). The Company has got such an extensive distribution and bottlers system that its products are available the world over. Coca cola beverage is available at each and every retail outlet. There are numerous reasons why Coca-Cola opted to globalize its products. The prospect to sell Coca-Cola worldwide existed because it is a product which can be consumed by everyone irrespective of age and gender, all over the world. Advertising has been strong enough to create demand for Coca-Cola worldwide. However, advertising has to be aligned with the culture of the respective countries. An adapted marketing mix means adjusting the mix with the prevailing culture, geographic, economic and other differences in different countries. Different languages and cultures caused problems. The bottling system is one of their greatest strengths. It permits them to carry out their operations on a global scale while at the same time keep a national approach. Brand image is an important factor moving Coke’s sale. The brand name of Coca-Cola is very well recognized all over the world. Packaging changes have also impacted industry positioning and sales. The bottling system also allows the company to take advantage of countless growth opportunities the world over. This strategy enables Coke to service a large geographic, diverse, area. The threat of new crucial competitors in the carbonated soft drink industry is not very extensive. The threat of substitutes, however, is a very real threat. The soft drink industry is very strong. Possible substitutes that continuously exert pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate. Coca-Cola constantly evaluates their supply chain model so as to fit in the local dynamics of the market and recognizing different service needs from our customers, analyze the way we go to market, at the same time as looking for a more competent supply chain model. They rolled various new distribution models throughout their regions looking for improvements in their supply chain network. In Saudi Arabia, advertising forms the essence of the marketing strategy i.e. print, outdoor, and electronic media. The global strategy for Coca-Cola here means that they provide standardized products throughout the world but promote it in a local way. McDonalds even has the same strategy “Think Local, Act Global”. Their main strategies in the Middle East were to position the products by localizing, bringing new products and innovative packaging. In the Middle East such as Saudi Arabia and UAE we know that consumption varies with season so the company invests huge resources in the summers and target restaurants, school and college canteens, domestic users and even rural chaupals whereas in the winter season, the target changes to high-income group consumers and mainly party users. In the Middle East, Coca-Cola had tied up with Ensan, the Saudi Charity committee for the care of orphans. They support this cause by dedicating 10% from the consumer price of all Coca-Cola family size packages sold during the holy month of Ensan. It aims to generate a feeling of togetherness, sharing and acceptance amongst people and inviting people to support the cause. This initiative is also a method of pushing sales in the Middle East in 2011 which is dedicated towards spreading positivity, optimism and happiness into the lives of orphans. In 2007, it organized a major water-conservation program to compensate for the loss of water in producing soft drinks worldwide. In 2008, Coca-Cola Company created special can for Ramadan decorated with a crescent moon and a star for the Middle East. Coca-Cola had launched an advertising campaign in the year 2011 across the Middle East that featured the Egyptian acting celebrity Omar Sharif. Sharif along with the Canadian musician Karl Wolf and, Saudi footballer Yasser Qahtani rolled out the celeb-led promotion campaign across the Iraq, GCC, Palestine and Jordan. The drive called ‘Brrr’ is an addition to Coca-Cola’s actions in other corners of the world. The ‘Brrr’ concept was launched first in Africa. In the Middle East this concept had been launched for the first time. The feeling when one is drinking Coke had been described as ‘Brrr’. The campaign featured TV spaces on channels such as Rotana and MBC, in-store, outdoor executions, partnerships with ice rinks in Qatar and Ski Dubai, online activity via YouTube and , Facebook and a sampling drive. The intent behind the word ‘Brrr’ was to make it a key word among the youth. Therefore, they had chosen celebrities that the youth would aspire to become. Hence, knowing the passion points of youth i.e. music and football, they chose Karl in support of music and Yasser for football. Omar Sharif had been chosen because of their research which reflected that a number of people would feel shy of doing ‘Brrr’. Therefore, the idea was to bring into focus a cherished personality to ‘Brrr’. Omar Sharif was an idol of culture and arts in Saudi Arabia and thus was the ideal choice for Coca-Cola. He appreciated the initiative as well. As a result we formed our partnership. The initiative was the key purchase stimulator for the brand was part of the company’s refreshment drive. The timing of the launch was made to coincide with the summer heat. In 2012, Coca-Cola organized a campaign ‘Coke Studio Middle East’ to basically focus on the Saudi Arabia and UAE markets with an aim to increase revenues in the Middle East region. Sprite (brand of Coca-Cola) initiated a tournament on the Cricket World Cup for modest construction workers. They launched a campaign named ‘Today I Will’ to basically inspire young adults and teens to construct positive change in their quest of happiness. In 2010, not even its joint venture with the devastating French football World Cup campaign was able to prevent it from taking all three places on the stands of top-selling soft drinks. The rationale for Coca-Cola’s capability to withstand the World Cup storm which saw a lot of other sponsors with egg on their faces is because Coca-Cola’s drive for the support of the team consisted mainly of events which were organized before the competition began, thus ensuring that its name was almost invisible during the team’s dishonor on the pitch. The soft drinks market is in outstanding shape in France and in terms of turnover it is now the largest in the major retail sector by dethroning the previous leader, yogurts. Soft drink sales in France reached €2.4bn last year in super and hypermarkets and hard discount shops, an increase of around 6% in comparison to 2009. They will also increase investments in online shopping to create industry’s leading marketing programs and digital sales (Coca-Cola Enterprises, Inc. 7) In United States of America, Coca-Cola had initiated an ad campaign for defending the use of sweeteners in diet soda. The ad is the next stage of the drive to push hard at critics who blame Coca-Cola’s products for the United States’ ever-rising obesity toll. The Diet Coke ad featuring two smiling women drinking the soda came just after Coca-Cola observed a drop in sales. The decline in sales of carbonated drinks has been a long-running trend in the United States. As Coca-Cola is a United States based company, it enjoys a market share of more than 50% in the US markets. One area of concern for them in the United States market was the obesity factor. To prevent this in hampering the US market sales, they have promoted more on Diet Coke and Coke Zero which will not lead to obesity. Coca-Cola’s Strengths The strengths are enumerated below: Brand Loyalty: One of their core strengths is the brand loyalty their customers have for the brand due to the strong branding exercise of Coke. Bottling Network: It has partnerships with over 275 bottling companies which allows it distribute products all over the world. Due to a strong distribution network it is available at every retail store around the world (Coca-Cola Company 28). Brand Positioning: Coca-Cola is very strong in its brand positioning. It focuses on top of the mind strategy which creates a position in the minds of the consumers as the number one product. Quality: A company should not compromise on the quality as because once it gives a bad impression in the minds of the consumer then the brand image is definitely hurt which ultimately impacts the revenue generation. It has been consistent in delivering quality products and thus sustained its brand image in the markets worldwide. Economies of Scale: The Company is the largest producer and marketer of non-alcoholic beverages in the world. Due to the large scale of operations it can invest in new markets and reap benefits at the times business turns profitable. Coca-Cola’s Weaknesses Inspite of the huge success, few weaknesses that the company needs to resolve are enumerated below: Criticisms: People criticize Coca-Cola products due to health and environmental issues as they consider it to be high in calories and harmful for health. Several groups around the world have preferred health drinks over carbonated drinks. The company also got involved in an issue in India relating to the pesticide content in the drinks and proved dangerous for health in 2006. This led to negative publicity and caused a lot of damage to the company in the growing and emerging markets. Lack of Diversification: Coca-Cola is only into various kinds of beverages. On the contrary, PepsiCo’s product mix consists of majority into food (around 65%). This is an area of concern as the demand for beverages will directly affect Coca-Cola’s sales. Improving Weaknesses In the case of Coca-Cola, I think they should start diversifying into health drinks and the food industry as because the slump in the demand for carbonated drinks will directly impact the sales or revenue generation of the company. Diversification into more of health drinks will see the brand flow in those regions where they criticize carbonated drinks. The mix of product portfolio should change by getting into the food industry with packaged products like chips, wafers, biscuits etc. If they diversify somewhat to the extent of 30% or so it will not let the Coca-Cola Company down in times of downturn in sales of carbonated drinks. It can use the brand image of the Coke brand for the food industry just as PepsiCo has done in case of Lays Chips, Lehar, etc. Case Study: Coke & Pepsi Pepsi and Coke had a hard time in entering the beverage market in India. In 1993 round about 45 percent of the carbonated drinks industry comprised of small producers and the trade were worth 3.2 million dollars. Previously, Coke had been in India, but in 1977, due to a dispute with the Government of India they had to leave India. The carbonated drink industry in India had to suffer in the year 1988 because a warning was issued by the Government of India that BVO, an essential component in the drinks, was proved to be carcinogenic. A lot of companies withdrew from the industry because they could not afford to import the substitutes of this ingredient. The reduction in competition, and the fact that India experienced an economic disaster in 1991, allowed Pepsi and Coke to enter India’s market. By 1994, the new government turned India into an Emerging Market, which once again invited foreign investors to India. In 1986, PepsiCo entered India as “Pepsi Foods Ltd.” in a joint venture with local partners. They had to follow many new rules including changing the name of the Pepsi cola in order to put up their products for sale being a foreign product. But PepsiCo was eager to mollify the government to continue in the market. To compete in a better manner throughout the carbonated drink market, PepsiCo on entering India also made various new brands such as Teem soda and Slice. Until Coca Cola re-entered the market in 1990, Pepsi had to fight with the local players. Godrej turned down Pepsi’s offer to partner. Coke collaborated with snack food company Britannia Industries India Ltd. and the two became “Britco Foods.” Parle, the top soft drink producer decided to sell its leading brands and its main bottling plants in four key cities to Coke in 1993. Both Pepsi and Coke opted to publicize and promote during significant events and times. For example, both of them advertise a lot in summers, when most of the soft drinks are consumed, and heavy ads are put up by them during the Navrati. Both of them also run big television campaigns during football and cricket games, and they also take up bollywood celebrities for the endorsement of their products. Especially, Coca-Cola does well promoting a lifestyle towards India’s youth, and Pepsi does well by sponsoring cricket. Coca-Cola wouldn’t give India its secret recipe for Cola as because the latest government restricted foreign ownership to 40 percent. In 1991, these laws were excluded after the Government of India changed again, and India began welcoming foreign firms and funds to help the economy boom. Pepsi followed every rule the Indians gave them after entering the Indian market. This included forcing Pepsi to process various fruits and vegetables and distribute, and changing the names of different brands of Pepsi. Even the classic “Pepsi Cola” was forced to be changed to “Lehar Pepsi” and “Lehar 7UP” to fit in with India’s requests. Their scheme worked, however, because as Coke was trying to get back into the market in 1990, Pepsi was approved while Coke was not, which gave Pepsi the leverage to profit in India. Pepsi’s willingness to do exactly as India wanted has proven to be very beneficial for the company. Pepsi is now also involved in counter trade in India, which has helped them to develop their business in India even further than Coke. They look at a country’s “competitive advantages… and then build long-term businesses around those strengths.” In India, this means Pepsi is “in the business of creating hard currency to get our partners in soft-currency countries to buy our products, to repatriate our earnings and to get access to foreign markers.” Now Pepsi has a position in India as a foreign investor that is mutually beneficial to both India and to PepsiCo Worldwide. Coke and Pepsi found that the cultural festival of Navrati and the summer season are the two times a year that Indians drink carbonated drinks the most. The summer months last only about 70 to 75 days, from April to June, and the festival of Navrati is celebrated mostly by people living in Gujarat and Mumbai, and is celebrated for about 25 days. The marketing campaign of Coke as described by a representative “think local and act local”. They have also implemented campaigns such as free passes to a dance during the festival of Navrati, buy one, get one free, and drawings to win trips to places such as Goa. Pepsi couldn’t afford to not participate in Navrati as well, and has sponsored big, popular dance competitions called “garba” dances. To broadcast the Navrati festival, Pepsi’s representatives felt confident about teaming up with Zee Alpha, popular TV channel amongst the Gujarati. Also, Pepsi offers some customers the ability to get refills of Pepsi and to get free Basmati rice, which is considered premium quality rice. Both companies take advantage of TV campaigning, and get more involved in regional and local festivals and sporting events around India. Pepsi is especially good with aligning itself with sports, such as cricket. Both companies have also found it important to get Bollywood celebrity endorsers of their product to help align themselves with Indians and lose some of their western feel. Pepsi has run very successful campaigns with cricket, especially the one-day series. In their campaigns, they feature Mohammad Kaif, one of the most popular cricket batters in India, and some of his team-mates. This has helped Pepsi create campaigns and new products using these sports heroes to market their new products. Pepsi has also aligned itself in the same successful way, but with Indian football players (our soccer.) Coca-Cola has taken a different approach. They had targeted specific youth habits and lifestyle and aligned themselves with their customers. In urban areas, they targeted one group in particular between 18 to 24 years. They marketed to them using popular Indian music director A. R. Rahman and Bollywood stars in short films. They also made lounges called “Red Lounges” which are places where youths can enjoy any of Coke’s products and have a hang out spot where they also can play video games, watch TV, and surf the Internet. These campaigns have proven to help Pepsi and Coke make sales, along with sporting different priced and sized products for this diverse market. Works Cited Wagner, Kristin. Coca-Cola in the Arab World: “nothing but a local company”. (2013). Web. October 09, 2013. http://www.yourmiddleeast.com/features/cocacola-in-the-arab-world-nothing-but-a-local-company_14045 United States Securities and Exchange Commission. The Coca-Cola Company Form 10K. (2013). Web. October 09, 2013. http://www.coca-colacompany.com/annual-review/2012/pdf/form_10K_2012.pdf Coca-Cola Company. Annual Review 2012. (2013). Web. October 09, 2013. http://www.coca-colacompany.com/annual-review/2012/pdf/TCCC_2012_Annual_Review.pdf Coca-Cola Enterprises, Inc. 2012 Annual Report. (2013). Web. October 09, 2013. http://www.cokecce.com/system/content_panels/22/pdf/CCE_2012_AR_FINAL.pdf The Coca-Cola Company, USA. The Real Story of New Coke. (2012). Web. October 09, 2013. http://www.coca-colacompany.com/stories/coke-lore-new-coke Read More