Coca-Cola India - Case Study Example

The company's re-entry into the Indian market was through a strategic alliance with Parle Exports which was owned by Ramesh Chauhan (ICFAI Center for Management Research (ICMR)). Parle Exports entered the soft drinks market in late 1970s and this was the time when the government pressures forced Coca-Cola to exit the Indian market. Through the strategic alliance, Coca-Cola India gained the ownership of 5 popular brands of Parle Exports namely Thums Up, Limca, Maaza, Citra and Gold Spot with a market share of around 60%, and a well established network of 56 bottlers.

All these five brands were the leading and most popular soft drink brands which were initially owned by Parle and later take over by CCI. Coca-Cola India wanted to tap the vast rural market of India. The company did so by creating a tag line which almost every common man of India is well versed with - "Thanda Matlab Coca-Cola." As part of this initiative to tap rural India, in the year 2002, Coca-Cola India launched a new advertising campaign featuring leading Bollywood star Aamir Khan with the above mentioned tag line.

The advertisement was targeted at rural and semi-urban consumers. According the sources from inside the company, the idea was to position Coca-Cola as a generic brand for cool drinks and at the same time also to support CCI's rural marketing initiatives. The company seriously started focusing on the rural market in the early 2000s with an aim to increase sales volumes. This decision was nothing to get surprised about if the huge untapped rural Indian market was looked at. Nevertheless, it is a fact that the real market in India is in the rural areas and if any company can tap it in the right way, there is a tremendous potential (Carratu).

"The company's strategy to tap the rural market was based on three A's - Availability, Affordability and Acceptability. The first 'A' - Availability emphasized on the availability of the product to the customer; the second 'A' - Affordability focused on the pricing of the product, and third 'A' - Acceptability focused on convincing the customer to buy the product (Research) (ICFAI Center for Management Research)." After entering the rural market in India, CCI focused on strengthening its distribution network there.

The company realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas. In the centralized distribution system, the product was transported directly from the bottling plants to retailers, but the company realized that this kind of distribution system would not be effective in rural markets as the transportation of stocks directly from bottling plants to retail stores would be very costly due to the long distances that need to be covered.

The other alternative that the company looked at was a hub and spoke distribution system. "Under this kind of system, stock used to get transported from the bottling plants to hubs and then from hubs, the stock was transported to spokes which were situated in small towns. These spokes in turn fed the retailers catering to the demand in rural areas. Apart from changing the distribution model, the company also