Coca-Cola and Its Global Marketing Strategies
Coca-Cola is a company that is known worldwide for its product. It is a drink that ps all ages, colors, races, and countries. The Coca-Cola Company is the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. The world’s headquarters are located in Atlanta, Georgia, with many other locations around the country. The Company and its subsidiaries employ nearly 31,000 people around the world.
Syrups, concentrates and beverages bases for Coca-Cola, the company’s flagship brand, and over 230 other Company soft-drink brands are manufactured and sold by the Coca-Cola Company and its subsidiaries in nearly 200 countries around the world (Virginia, 1). The company has been around for over 100 years, and has used this time to perfect its marketing strategy. The success of the company was built on many people with the great business knowledge and know-how to take a simple drink, and make it into a symbol that represents humanity.
This paper will focus on not only the globalization of Coke, and Coke as a company, but also what advertising and media strategies have been used to help in the discourse of its globalization. Coca-Cola is an internationally recognized drink, popular in many countries throughout the world. The company that produces the soft drink has an interesting way of distributing it around the world, which many people may not realize. You don’t get exactly the same Coke in India that you do in the US, because bottling of the drink is franchised.
What occurs is the following: the company produces a concentrate with the patented formula for Coca-Cola. This remains the same wherever you purchase the product. This concentrate is then sold to companies who have purchased franchises to bottle Coca-Cola in their area. Each bottling company adds water and whatever sweeteners are used for that specific type of coke. Slight variations may occur if the bottlers don’t conform to standards of production. For instance using less of the concentrate than is recommended, or changing the type of sweetener used.
Though the formula for Coca-Cola concentrate doesn’t change, there can be slight differences in sweetness since bottling agencies may change the amount of sweeteners used to fit the local population’s palate, and some versions of the cola are said to be sweeter or sharper in other countries. The United States has seen, especially in countries close to Mexico, a rise in the amount of Mexican Coca-Cola imported into the US and sold at a number of Mexican and Latin or South American grocery stores. Cola aficionados say there are differences between south of the border and American produced versions of the drink.
They cite the fact that most Mexican bottlers add cane sugar instead of corn syrup to the formula for Coca-Cola and many people prefer the Mexican version, though at first the taste can be a little unusual. Since the cost of importing sugar cane to the United States is expensive, bottlers import the drink from countries where it’s abundant or use substitutes like corn syrup which is subsidized by the government as well (Hays, 47). Thus the main difference is the way in which the formula for Coca-Cola has ingredients added to it from one country to another.
The type of water used also may create a major difference in both taste and safety. Some countries, particularly emerging countries with high levels of pollution have been under investigation for producing Coca-Cola with alarmingly high levels of pesticides. In 2003, for instance, a government independent investigatory agency in India found that water filtration was not ridding the water of substances like DDT and Marathon (Allen, 182). Several soft drinks in India, including Pepsi, were found to have toxic and unsafe levels of these chemicals.
This led to a decline in sales in Coca-Cola that lasted for several years, and an outright ban on selling Coke in certain parts of India for a short while. Technically water filtration should eliminate most of these chemicals, but the presence of higher amounts of the chemicals in certain areas may mean filtration methods aren’t adequate to the task. Coca-Cola has defended their product and claims they test all their soft drinks, wherever produced, to make sure they meet safety standards (Coca-Cola, 1).
They also stand by the formula for Coca-Cola though they do recognized small differences in taste when it is bottled outside of the US. Although the taste differences are often involuntary, in many cases the taste differences between countries and regions have helped locals adopt the Coca-Cola flavors. As a result, Coca-Cola can capitalize on its growth and spread its product base even further. In order to appeal to countries that did not adopt the standardized Coca-Cola Flavors, the company decided to expand its product lines in order to appeal to foreign countries that did not have the same taste characteristics as the United States.
In order to do this it developed new flavors of water, teas, juices, sports drinks and energy drinks to appeal to a larger number of people. In some cases they acquired existing companies that already had a loyal customer base and even developed some of its own products by tweaking existing recipes or creating new drinks all together. For example, in Asia soy drinks are much popular than carbonated beverages. To combat this Coca-Cola also offers its own soy beverage in the regions where as in the United States it’s very rare to see soy drinks produced by Coca-Cola (McKay, 22).
This adaptation strategy has allowed greater flexibility to consumer’s tastes and growth in the company’s market share of the non-alcoholic beverage industry. Coca-Cola places its product globally depending on several conditions. The first level that needs to be examined is the macro level including Coca-Cola’s choice of continents, countries and geographic regions. Population and the proximity of natural resources to that population are the first things that Coca-Cola considers when entering new territories.
If the region does not have a large enough population to purchase enough of their beverages they will focus more on regions that do. Also, if it is not efficient or cost effective to produce drinks within the country or region the company either looks elsewhere to bottle its beverages, imports its products or moves refrains from focusing on this region all together. In countries that do not have abundant resources such as sugar cane and corn syrup, it increases the cost to produce the beverage because supplies must be imported (.The Coca-Cola Company will also consider the proximity of bottling plants to the region its promoting its products to. Either the company will purchase or build a plant to cut down on costs or contract with local bottlers to sell its product to. In some cases Coca-Cola may have even establish itself in neighboring countries because it may already inhabit locations with similar cultures and preferences. Within these regions that Coca-Cola decides to inhabit, it also must choose an area that their products have the best chance of reaching the consumer.
The Coca-Cola Company sells its products to bottling and canning operations, distributors, fountain wholesalers and some fountain retailers. These then distributes them to retail outlets, milk bar and corner stores, restaurants, petrol stations and newsagents. The Coca-Cola Company uses the intensive distribution strategy. The business’s products are sold in almost every outlet including small shops, restaurants gas stations, schools, sports venues and vending machines. Depending on the level of popularity and extensiveness, Coca-Cola will choose areas that will have the best opportunity to sell.
With these sales comes increased customer awareness and brand loyalty. The final thing that Coca-Cola must do is recognize local laws and regulations. Coca-Cola adopts a standardized practice for areas that are similar which makes it easier for Coca-Cola to distribute and sell its products (Allen, 82). In some foreign countries however, many of the taste preferences are determined by local laws, ancient religions or the countries culture. When these characteristics differ from the standard Coca-Cola model, the company adapts its products are marketing strategies to adhere to regulations and cultural norms.
Coca-Cola decides if it’s then cost effective and possible to enter the market without significant barriers or alterations to its brands flavors. If the barriers are too large, the company is likely to pursue other locations. The company’s beverages are generally for all consumers. However, there are some brands, which target specific consumers. For example, Coca-Cola’s diet soft drinks are targeted at consumers who are older in age, between the years of 25 and 39. PowerAde sports water targets those who are fit, healthy and participate in athletics.
The Winnie the Pooh sipper cap Juice Drink targets children between the ages 5-12. This type of market approach refers to market segmentation. The Coca-Cola Company when advertising has a primary target market of those who are 13-24, and a secondary market of 10-39 (Coca-Cola, 3). In order for these beverages to reach the target markets, Coca-Cola needs to use a medium that will best reach these consumers. If advertisements are not reaching the right age group or in the tight places, sales will drop and the brand image will be damaged.
For example, when advertising Diet Coke, Coca-Cola primarily advertises with in-print ads, billboards, fast food restaurants and the radio. They understand that this age group is likely to have children and spend a lot of their time driving, feeding their children and spending time at home (GSCE, 1). By using these methods they increase the chance of being exposed and having their products used. In order to reach the young adults and teens they use the internet, television and popular events such as concerts and sporting events to advertise their products.
Coca Cola has researched and found that the majority of time teens spend is online or spent watching their favorite television programs. Unlike the older generations, younger generations are more likely to be electronic savvy and read less of in print advertisements. Internationally, Coca-Cola has adopted a global strategy that includes sponsoring professional sports leagues, music artists or groups and the Olympics. For example the company advertises with the NBA, World Cup Tournaments, the NCAA and popular music groups such as Maroon 5 (McKay, 13).
Coca-Cola pays several million dollars in order to have the exclusive rights to advertise or partner with these events. Although it an expensive way to advertise, its benefits extend far past the cost of advertising. Millions of viewers worldwide tune into or watch these events and the brand exposure is enormous. Viewers are exposed to the brand and the Coca-Cola brand becomes synonymous with that popular athlete, league or artist. By paying these popular athletes and stars to endorse their products, they influence millions to buy or try the Coca-Cola brand.
From there it’s up to Coca-Cola to keep the consumers to continue to use its products. In conjunction with their advertising strategy, Coca-Cola also uses specific promotions and strategies in order to gain sales. Internationally, many of these methods are similar to those found in the United States. Whether it’s to gain a first time customer, getting them to switch from other brands or keep them loyal to Coca-Cola, the company uses strategic self-selection. They purchase shelves in big departmental stores and display their products on shelves in an attractive style.
Most times Coca-Cola pays more to have their products on shelves that are easier to reach and are more likely to be seen than the shelves that other companies use. Coca-Cola is one of the leading companies to take advantage of end caps and special racks that they give to outlets to promote specific products. Often time’s salesman of the coca cola company positions their freezers and their products in eye-catching positions. Normally they keep their freezers near the entrance of the stores or in high traveled areas.
The company recently introduced a revolutionary electronic vending machine that has hundreds of Coke flavors on hand that even can be mixed from one single machine. The machine is called the “Freestyle” and offers a totally new and innovative approach to the standard vending machines (Coca-Cola, 1). The company also does sponsorships with different college and school’s cafes and sponsors their sports events and other extra curriculum activities for increasing market share among younger demographics. The majority of the Coca-Cola Company’s products are sold in retail stores, convenient stores, petrol stations etc.
Although the pricing methods/strategies are set by those the company sells to, it does suggest specific guidelines and have some restrictions on pricing and trade. For example gas stations and convenient stores usually sell Coca-Cola products at a fixed price, where restaurants have more freedom on what they can charge. In a majority of places competition-based pricing is used. Coca-Cola products are usually priced below, above or equal to its competitors’ prices. For example, during Easter (2010) sale periods the average price for a 2 liter Coca-Cola was 1. 7 and a 2 liter Pepsi bottle sold for 1. 83 on average (Virginia, 3). In order to generate more sales and clear additional product, Coca-Cola also adopts a discount price strategy. Coca-Cola products are often marked down during sale periods and special occasions. For example Coca-Cola often will send out coupons for an amount to be taken off the cost of a specific product or allow the markdown below MAP pricing to make room for new sales or products. One of the most obvious pricing strategies Coca-Cola uses is psychological pricing.
Often times there advertised prices end in seven or five, which is below other competitors such as Pepsi. The Coca-Cola Company also gives trade incentives to its retailers to generate more revenue. For example, the company will send free samples and product to have events which allow consumers to try a product for nothing. As a result of this by this these retailers and middle man push their product in the market following “Seen as sold”. Lastly, the Coca Cola Company changes their product prices according to the season. For example, summer is supposed to be a good season for beverage industry in Pakistan (Hays, 96).
So in winter they reduce their prices to maintain their sales and profit In essence, the examples above reveal that global marketing is not necessarily an all or nothing proposition. The Coca-Cola Company has the freedom to choose from many possibilities on the spectrum from total standardization through to complete customization. Clearly there are circumstances where they can gain competitive advantage through increased standardization of products and marketing, especially with respect to keeping costs down and building brand power.
On the other hand, in conditions where national market differences are more marked, this strategy would harm the company and its reputation. By making standardization decisions using target market conditions as its starting point, the company insures that in the long-term customers are being offered what they want. Although Coca-Cola can seemingly gain a great deal from a standardized agenda, its decision to combine global and local resources is ultimately more long-standing in a market where national customer differences are influential.
Coupled with strategic pricing and being a low cost leader, the Coca-Cola Company has enjoyed over a hundred years of success which continues to grow every day. The company uses its branding power and size to promote its products even further, which influences even more consumers to try the brand or switch from previous used brands. Regardless, Coca-Cola has been extremely successful in their international marketing mix and continues to dominate global beverage sales.