Coca Cola Company in the Indian Market - Case Study Example

University: A Report on Coca Cola Company in the Indian Market. Name: Date: A REPORT ON COCA COLA COMPANY IN THE INDIAN MARKET. EXECUTIVE SUMMARY This report presents a detailed assessment of the activities, progress, and the future prospects of the Coca cola Company in the Indian market. The Indian market has provided the Coca Cola Company with one of the most profitable and dynamic emerging markets for its various brands of soft drinks product lines. This report takes us through this market, with emphasis on the evolution of the company from a once obscure brand in the Indian market to the strong market player that it has become today. Particularly, the report embarks on using present analysis and data to develop an innovative strategy of enhancing sustainability of the Coca Cola Company in the highly competitive Indian Market. INTRODUCTION History has it on record that Coca Cola was the dominant soft drinks brand in the Indian market until it fell out with the government in power at the time. That was in the year 1977 (Khanna et al., 2010, p.107). While it may be argued that the history of the Coca Cola Company in the Indian market has been with challenges, none so far surpasses the legislation enacted at the time that demanded the multinational company disclose to the government its formula and thus risk a drastic reduction in its equity stake. Sixteen year later, the company returned to the Indian market and made an acquisition of the then renowned Thums Up brand, catapulting the Company to become a major player in the Indian soft drinks market (Majumdar, 2011, p.48). Currently, the company has several soft drinks under its product line. These include among others: Fanta, Sprite, Limca, Maaza, Minute Maid, and a water brand going by the name Kimbley Water. MARKET DESCRIPTION Going by the population statistics in India which indicate that the Indian population has hit over the one billion mark, it is beyond doubt that the country offers an extremely wide market for any industry (Foster, 2008, p.76). Particularly, in the soft drinks market, the country has been a much sought after spot by the major soft drinks market players. Therefore, there has been stiff competition from other major companies such as Pepsi Company. The Soft drinks industry has over the years been registering remarkably positive growth, primarily driven by a growing economy and the gradual rise of the middle class. The fact that the country still records lower than expected consumption of soft drinks further makes the industry a great bargain and competitors have engaged in quite a number of creative innovations in a bid to promote their brands (Balakrishna, 2011, p.139). Specifically, Coca Cola has been rolling out new flavors of the Minute Maid brand and sought to capture new markets as it maintains its current network. An analysis of the Indian market reveals a very interesting phenomena when it comes to population distribution. Unlike in developed countries where most of the population is invariably concentrate in the urban centers, a staggering 90% of the country’s population reside in the rural areas while a meagre 10% occupying the urban centers. This population structure led to an initial market consolidation for both the Pepsi and the Coca Cola Companies who aggressively tried to outdo each other on this small market segment (Bachmeier, 2009, p.56). With time, however, penetration into the rural areas began. Consequently, the two market players substantially increased market consumption levels and gained in the number of new consumers. Since the year 2006, sales figures have indicated a consistently upward trend, particularly attributable to erosion of the preconceived notion that was there regarding soft drinks being a reserve of the well to do individuals in the economy. As the competition grew stiffer, the two companies had to engage in improving value for their individual brands and making them affordable so as to appeal to the large number of consumers, particularly those who did not come from the affluent backgrounds (Fernando, 2009, p.86). In particular, Coca Cola’s concentration in the underdeveloped rural market gave the company a cutting edge over the Pepsi brand which had largely been well established in the Indian market for a relatively longer period of time. Undeniably, penetration of the soft drinks industry to the rural areas received a major boost from the government through its concerted efforts to invest in infrastructure and thus making it easier for the industry players to gain ground in the somewhat isolated areas in the Indian geographical map (Nobrega & Sinha, 2008, p.186). SWOT ANALYSIS. STRENGTH The Coca Cola brand is a well-recognized and respectable brand in the Indian market The company has branches and its operations are spread across 35 manufacturing plants and 18 franchises (Majumdar, 2011, p.39). Intensive campaigns in the Indian media through use of renowned celebrities has boosted popularity. The company has set up a powerful network that spreads extensively throughout the Indian market. The company already has a strong market share in the Indian market, it can therefore survive amid sharp competition from competitors easily. WEAKNESS The company has not been attracting the much needed support from the executives of the parent company. The company has often had inconsistent supply of its product. Moreover, some of the products are totally unavailable in some parts of the Indian market. There has been a marked shortage of skilled manpower in some parts thus inhibiting major expansion. OPPORTUNITY Coca Cola can still seek further expansion in the still underdeveloped market in the rural areas. The company should embark on creating new outlets in areas with relatively lower market share. With improved marketing, the Company should focus on appealing to the young generation who would provide a tremendous market for their products (Hannaford, 2007, p.44). THREATS The major threat has been from popularized campaigns by select groups against the consumption of soft drinks on grounds of health hazards. Pepsi, the major competitor, has been giving stiff competition especially through offering lower prices for their drinks. The company has had to fight off the negative publicity elicited due to claims of unreasonably high consumption of water in regions with low water supply such as Kerala State (Griffin, 2007, p.62). The inclination by a majority of the Indian consumers towards getting offers to encourage consumption makes the Indian market quite impulsive in consumption tendencies This SWOT analysis provides a brief and factual evaluation of the performance of the Coca Cola Company with regards to the industry as a whole in reference to the Indian market. While some of the data bears resonance with the global performance of the company, the analysis has been conducted solely from the performance and prevailing market conditions in the Indian market. A brief assessment of the SWOT analysis strongly indicates that the market presence of the Coca Cola Company in the Indian market is well established. Further, the Company’s strengths far outweigh the weaknesses and thus signals the company’s prospects and capability for future growth and expansion. RECOMMENDATIONS. The size of the Indian market makes it particularly easy to subject to various market segmentation variables. These may include segmentation based on the geographical distribution of consumers, demographics, or on the arrangement of the business (Foster, 2008, p.148). However, for the scope of this study, I shall limit my market segmentation to demographics, with keen emphasis on the target market being the younger generation. Statistics show that one in every three Indians is a youth. This definitely shows the great potential that the youths have in expanding the market for the Coca Cola Company. Capturing the youth most certainly requires prudence and creativity to ensure the product relates well with what should be seemingly fashionable and at the same time produce a substantial success in terms of sales. The marketing mix of the product will, therefore be as follows: 1. Product – The product in question here shall be a new flavor, a Minute Maid Coconut flavor. The brand shall be made through addition of coconut water extracts in the soda. This is informed by the fact that the Indian culture, especially the younger generation, has a strong liking for coconut water. This product should, therefore, prove captivating to this market segment. 2. Place – In as much as the population of most of the Indians are in the rural areas, the target market of this product is primarily in the urban market. This is informed by the fact that most of the well to do younger generation relocate to the urban areas in search for greener pastures such as jobs or for studies hence it will be economical to narrow down to them. 3. Promotion – Promotion of this product shall be done through newspaper advertisements, billboards in major cities, as well as online marketing through social media forums since a majority of the target youths have access to the internet and social media. 4. Price – With an understanding of the Indian market, the pricing of this product shall be listed at the standard selling price of the other Minute Maid brands, with discounts being given to any purchase of a set of three Minute Maids of the Coconut brand. This will serve to boosts sales and encourage the youths to buy in groups to enjoy the reduced pricing hence increasing sales volume. The new Minute Maid coconut flavor will, among other advantages, have reduced sugar levels. There has been a lot of complaints from consumers regarding the high level of sugar in the Coca Cola brand and this has sparked protests especially in the India market. This new product will have a remarkably lower level of sugar (Krishnamacharyulu et al., 2010, p.84). Moreover, since the brand shall be made from extracts of coconut water which aid in weight loss, this brand shall be beneficial to youth with weight problems. Moreover, coconut water facilitates digestion due to the high concentration of fiber and this same relieving effect shall be one of the great benefits of the Minute Maid Coconut brand. In conclusion, it can be observed that introduction of this brand would be a milestone for the Coca Cola Company in the Indian market as it would effectively bridge the gap between the Company’s major strengths of possession of a strong network and market share with the evidently unutilized opportunity of investing in the highly informed and the large number of youths in the country. Undoubtedly, this does fit in with the earlier observed SWOT analysis where we see the possessing a brand that has a strong network in the Indian market as well as a strong market share which can be taken full advantage of by capturing the opportunity provided by the younger generation in the country. REFERENCES. BACHMEIER, K. (2009). Analysis of marketing strategies used by PepsiCo based on Ansoff's theory. München, GRIN Verlag GmbH. BALAKRISHNA, S. (2011). Case studies in marketing. New Delhi, India, Dorling Kindersley (India). FERNANDO, A. C. (2009). Business Ethics An Indian Perspective. Prentice Hall. FOSTER, R. J. (2008). Coca-globalization following soft drinks from New York to New Guinea. New York, Palgrave Macmillan.  GRIFFIN, R. W. (2007). Fundamentals of management: core concepts and applications. Boston, Mass, Houghton Mifflin. HANNAFORD, S. (2007). Market domination!: the impact of industry consolidation on competition, innovation, and consumer choice. Westport, Conn, Praeger. KHANNA, T., PALEPU, K. G., & BULLOCK, R. J. (2010). Winning in emerging markets: a road map for strategy and execution. KRISHNAMACHARYULU, C. S. G., & RAMAKRISHNAN, L. (2010). Cases in rural marketing: an integrated approach. Noida, Pearson Education, Dorling Kindersley. MAJUMDAR, R. (2011). Product management in India. New Delhi, PHI Learning. NOBREGA, W., & SINHA, A. (2008). Riding the Indian tiger understanding India--the world's fastest growing market. Hoboken, N.J., J. Wiley & Sons.  Read More