Coca Cola Entry Methods and Strategy Analysis

Introduction

Since the Coca-Cola was formulated by pharmacist Dr. John Stith Pemberton in Jacob’s Pharmacy in Atlanta, Georgia in the U.S., passing by 140 years it became the world’s largest soft drink company in term of manufacturer, distributor and marketer in non-alcoholic area, and operates in more than 200 countries servicing over 16 million people different Coca-Cola products every day. The products in Coca-Cola company including sparking drinks and still beverages such as waters, juices and juice drinks , teas , coffees , sports drinks, and energy drinks. (Coca-Cola website 2010)

Brand as the definition is “A name, a sign, symbol or design or combination of them intended to identify the goods and services of either one seller or group of sellers and to differentiate the from the competitors” (Kotler 1984, p442) .

Brand is a symbol, an attitude and a culture to the people which can show their own personalities and life. A good brand is not only a name and a promise is not only a memory in people’s mind however it can influences people’s life.

The brand Coca-Cola now is one of the most valuable brand ($66,667 million) including 500 soft drink brands in the company. Beside the most valuable brand Coca-Cola, the company still have another 12 brands which are over $10 hundred million consist of ‘Diet coke’, ‘Sprite’, ‘Fanta’, ‘Coca-Cola zero’, Glaceau, ‘ Powerade” Minute Maid’ , ‘Georgia’ etc…(Coca-Cola website 2010), (annual report 2009)

Foreign direct investment (FDI)

FID which means investment in manufacturing and service facilities in a foreign country with an intention to engage actively in managing them-is another facet of the increasing integration of national economies. (Kotabe Helsen)

The biggest investment in foreign market is direct investment, as the company investment the new manufacture in the foreign country to develop their local product and easy to control the price come from the raw material details. Such as HP make the direct investment in some majored market around the world, including India. (Kotler and Armstrong). Generally the foreign direct investment can help the company developing deeper relationship with government, customers and local supplier, at the same time improved their image in the target country because they create jobs. Also the foreign direct investment have the disadvantages like government changing , falling markets, frankly speaking the company have no chose but can build the effective operations to accept this.

This first Coca-Cola bottling manufacture factory was established in Beijing in 1981, to got the benefits from direct investment, until now there are 35 bottling company and 29 manufacture factory for Coca-Cola products in china, more than 30,000 people working in Coca-Cola,99% stuff are Chinese local .

Network models (alliances and joint ventures)

Alliances

An operate joint venture is an agreement for the partners to collaborate but does not involve any equity investment. (Kotabe Helsen)

For the fierce of the business, more choose face to the customers in the market, however how can the company satisfy the customers multi-choice of the produce is an impotent to the company management. However the “marketing partnership” will be the first choice to enhance the value to customers. For instance two different company become to alliance their retailers has to be treat they are customer too, cause they may not in the same industry and market, therefore two different company to be alliances can support their sales channel ,design and implemented co-operative advertising campaigns. (Keller, aperia, georgson2008)

2000 in china , Coca-Cola and Lenovo (top technologies company in china) home computer together becoming to the “marketing partner”, with Lenovo’s high-tech image to match the Internet Express, Coca-Cola with this alliances for the first step to connected with internet and also it is a required of the development of the technology. In Chinese technology marketing, Lenovo has hundreds of stores and thousands of dealers spread all over the country, with the lager channel system, Coca-Cola to be well -know brand in china .(Lenovo website 2010)

Joint ventures

Joint ventures is “the participation of two or more companies in an enterprise in which each party contributes assets, owns the new entity to some degree, and share risk.”(Hollensen 2004)

Joint ventures as the important strategy to the company developing their global business, before the FDI (Kotabe Helsen) most of the company choose corporation with the local company to help them entry the new marketing, therefore the most of the local company have majority market share in their industry, so it is easily and fast to the foreign company to introduce the product and build their services net work in the new marketing.

Two top companies in the world Coca-Cola and nestle joined marketing force called Coca-Cola and nestle refreshments(CCNR) as the beverage partners worldwide (BPW)since 2001, the fifth-fifty joint venture held by the two companies. The joint ventures concentrate on the reedy-to-drink tea excluding the US and Japan, probably create the new values for all shareholders both of two companies.

Before to cooperate with Coca-Cola, Swire Group’s services consisted of property, aviation, beverage, marine services, industry& industrial; COFCO is the largest oil and foodstuffs import and export company in china, also have food manufacture, hotel management and financial services, list by the< FORTUNE> magazine as one of the top 500 companies in the world; the Kerry group also the top oil and foodstuffs company have the high market share in china. In china Coca-Cola with the three partners in a joint venture bottling plants-Swire Group, Kerry Group and COFCO (China Oil & Foodstuffs Corporation), responsible for the implementation of the beverage production, sales and building the marketing channels. The responsibilities for Coca-Cola are brand promotion, marketing development and control the liquid forms of cooperation. (Annual report 2009) (COFCO website). Read phonetically

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Chinese culture

“Culture is the collective programming of the mind which distinguishes the members of one human group from another Culture, in this sense, includes systems of values; and values are among the building blocks of culture” (Hofstede 1980, p21).

To understand the different culture in different countries is a main principle for the global company enters the foreign, unknown market. Some of the culture elements like history, religion, ethnicity, family, language, social class, politics, income, etc, are very important when the company doing the business in foreign counties, so according to the different culture in different country to make the company localization strategy is helpful to the company for the long-term business to entry the new global market.

China is one of the world’s oldest history of more than 5,000 years, has the territory area of 9.6 million square km, with the sea area of about 4.73 million square km, second largest country in the world. (China culture 2010).

Coca-Cola in china

While Coca-Cola was succeeded in penetrating nearly every country of the world, it has never been able to separate itself from the image of overpowering US brand (Hollensen 2004). For help to raise the international profile of the brand further Coca-Cola entry the third biggest country in the world -china. Therefore Coca-Cola is one of the earliest US company entries Chinese marketing since 1927. The first bottling manufacture factory established in Shanghai and Tianjin, this is the first time that Chinese people drink the new types, high-quality drinks. In 1930, in Qingdao the third bottling factory was established, till 1948 Shanghai become the first city outside Unites exceeded sales 100 million boxes. (Coca-Cola website 2010)

After the restored diplomatic relations between china and the Unites States in 1979 , the first 28,000 boxes of bottled and canned Coca-Cola products were shipping from Hong Kong to mainland china to sales, since the Chinese marketing opening to the global ,the first Coca-Cola bottling manufacture factory was established in Beijing in 1981, until now there are 35 bottling company and 29 manufacture factory for Coca-Cola products in china, more than 30,000 people working in Coca-Cola,99% stuff are Chinese local . over the past 5 years of business in china the Coca-Cola company to be the main leadership in Chinese soft drink market, china become the world’s third largest market for Coca-Cola as well.(Coca-Cola website 2010)

Segmentation

(Kotler and Armstrong) statistics the definition of market segmentation as “involves individuating a market in to smaller groups of buyers with distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes.”

“Market segmentation is the subdividing of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix”. (Kotler 2010)

The major segmentation elements for consumer markets are: Geographic, Demographic, psychographic and Behavioural. (Kotler and Armstrong2010)

Developing the global businesses for the geographic and operating segmentation Coca-Cola divided the world into six parts: Eurasia, Africa, Europe, Latin American, North American and Asia Pacific.(Annul report 2009)

Coca-Cola company purchase the vehicles for the factory to responsible for the drinks to retailers and giving free refrigerators, umbrellas to retailers, the company trying to find the different ways to perfect their customer services. once the people will think about Coca-Cola when they want to drink ,no matter where you are ,you can fine a Coca-Cola around you ,like grocery stores, restaurants, street vendors, convenience stores, movie theaters and amusement parks, the products covered among many others public squares. (Coca-Cola website 2010) (Annul report 2009)

Therefore the fierce completion push the company must provide more products to satisfy the customer’s choice, for the entry the variety beverage field Coca-Cola try to transform itself into a localized “comprehensive”. on the other hand Coca-Cola was alliances with one of the Chinese largest internet services website company–Tencent to developing their youth marketing in china, the star product of Tencent company is QQ (similar with MSN , is a instant message software), until march 5, 19:52:58 ,Tencent QQ announced that the number of the current users exceeded 100million .with this cooperation ,Coca-Cola’s iCoke website (www.icoke.cn) introduced the use of 3D QQ Tencent game show , QZONE personal space, QQ theme packages ,to be the first comprehensive online community for young consumers with a new experience of communication.Listen

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Target market and positioning strategy

“A target market is a chosen segment of market that a company has decided to serve.” (David Jobber 2010 p 261)

A clear target is helpful to the company to understand the costumers’ demand and favorite, easier to design the target product to the target customers. For instance CNN target its news program me, that is why CNN has globally, concentrate to the distribution effort in to hotels room, for the business people they can see the CNN news wherever they are.( David Jobber 2010)

There are 3 key points of the Coca-Cola company-quality, customers and consumers. As the leader of beverage market, in the fierce international competition, Coca-Cola company does not pre-localization strategy, as the first global company to annoy the new localization theory “think local, act local “to the whole world, the main principle about this theory is relevant to the basic conditions of the different countries to make different decisions and strategy. Since the Coca-Cola has the 30% market share in US, the company theory is to satisfy every customer’s demand, the aim for the whole company to make the everywhere and easy to buy, so pervasiveness, price, value, preference to be the sales goal for Coca-Cola Company .The Coca-Cola Company is always

Been the one of the first enter to developing marketing and build their strong positioning. Coca-Cola will no longer focus on formal product but it committed to expand its beverage varieties. From the style of oolong tea to a new era of mixed fruit drinks, high-calorie energy drink, or even to the most basic drink-water. Coca-Cola company follow “give the world a coke”, begin according to people’s teats in different countries to “tailored” drinks.

Marketing mix & Chinese marketing mix

“marketing mix is the set of market tools the firm uses to implement its marketing strategy. The major marketing mix tool is classified into four board four groups, called the four Ps of marketing: product, price, place, promotion” (Kotler and Armstrong 2010 p 36)

Product strategy

“Produce decision involves deciding what goods or services should be offered to a group of customers” (David Jobber 2010 p 17)

A good whatever the design, the brand, the price, the main objective should be according to the customer’s demand. The most important element is new product development. Because the change of the technology and taste, product become out of fashion probably or defeated by the competitors, so company should replace them to satisfying customer’s needs.

As the developing of the society, more and more pay attention about their quality of living and health, people in order to keep their weight to reduce to eat some high energy food and even drinks.co ca-ca la at this time to be the extension of the market to made the coke without sugar and no calories but plenty of taste called “diet coke” in 1982, within two years it had become to the top diet soft drink in the world. In 2008 another successful product “Coca-Cola zero” was published. (Coca-Cola website)

China has almost four or five thousand years history to drink tea, to the Chinese people tea is not just drink it is a type of culture. For this especially culture Coca-Cola made the product strategy for Chinese marketing to sale Nestea ice rush lemon tea, and design a new product for Chinese people called “Smart” to enhance the marketing competitions.

Pricing strategy

Pricing strategy is a key element and basic element of the marketing mix, for instance, the

Spending on product design (product), advertising and salespeople (promotion),

Transportation and distribution (place). So the pricing strategy should be very clear about objective, ethos, factor and influencing, and also the discount and allowance in some transactions. (David jobber 2010)

The main principle in Chinese economic marketing are vast land and large numbers of population, varieties raw materials, nevertheless the another issue of the marketing is the low cost of the labor force. However compared the product price between china and other countries, the price advantages is obviously appeared.

Place strategy

“Place involves decisions concerning the distribution channels to be used and their management, the locations of outlets, methods of transportation and inventory levels to be held.” The aim of the place strategy is to choose the right time and place to do available produce and service.

(David Jobber 2010 p 19)

To build an effective distribution channel is a best way to cooperate to the retailers, and wholesalers, because they will fine the good way to sale the product and also analyses the market to help the marketer to change the marketing planning at the first time.

The Coca-Cola’ s partner in china have the effective marketing occupation, the Swire group occupied southern part and central part market ,Kerry Group’s business including North , Southwest, and Beijing, COFCO control sites including the northwest, northeast, Hunan, Hainan, and other areas, so for the share market area Coca-Cola ‘s sales market channel like a big net hold the whole China.

Promotion strategy

“Promotion mix: advertising, personal selling, sales promotions, public relations, direct marketing and online promotion.”(David jobber 2010, p18)

With the globalization of trade, many best international companies gradually enter the Chinese marketing, the best way to publicity is advertising, the effective advertising strategy for the foreign company must be care the basic conditions of the target country and the domestic customers demand.

For the long term Coca-Cola advertising in china is coupled with the US vision of the Chinese commentary, the advertising was full of typical American style and American personality .Since 1999, Coca-Cola have been adjusted their advertising strategies in china , for the first time the Chinese stars , the traditional mascot ,family relations and friendship appeared in the advertising ‘stories’. The localization in china also appears on product packaging the most successful one produced for Chinese traditional festival- New Year’s Day, they put the 12 zodiac in the cans (this is the first souvenir to use Chinese theme around the world, worthy to collected and commemorative) for this new packaging Coca-Cola use Chinese culture to design the cans with 12 animals. Also as the New Year gift Coca-Cola change the normal size to family Value Pack, for another point of view satisfied the costumer’s demands.

Coca -cola is the longest-serving sponsor since 1928. 2008 was the fantastic year for Coca-Cola when china held the Olympic game in Beijing; it is create a unique opportunity to the world to understand a new china and new Coca-Cola china. another agreement was signed at the great wall in Beijing between Coca-Cola company and ‘IOC’ about sponsor responsible ,from 2009 to 2020 during winter Olympics in Vancouver, summer games in London and Olympic games in 2014,2016, 2018 until 2020.(Coca-Cola website) (BBC news)

Conclusion

As the sum up of all factors and model during Coca-Cola’s global business strategy, for a past 140 years Coca-Cola use their product, brand, cultural to infiltrate into the propels’s life and impression of the taste from generation to generation. For the fierce of the competition and development of economic and technology ,Coca-Cola will meet more challenge and good competitors in the future, how can they conquer everything and according to method”think global, act local”,and still following the company work “give to the world a Coca-Cola”is a worthy question need to considering in the next step.

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Appendix

(Finger 1. The list of Coca-Cola products)

PRODUCTS SERVED AT THE WORLD OF Coca-Cola (except US)

Product/Brand

Country of Sale / Group

Stoney Tangawizi

Tanzania / Africa

Fanta Exotic Fruit Punch

Uganda / Africa

Krest Ginger Ale

Mozambique / Africa

Sparletta Sparberry

Zimbabwe / Africa

Bibo Candy Coco-Pine

South Africa / Africa

Sunfill Mint

Djibouti / Africa

Bibo Kiwi Mango

South Africa / Africa

Sunfill Blackcurrant

Mauritius / Africa

Smart Apple

China / Asia

Sprite Ice

India / Asia

Fanta Apple Kiwi

Thailand / Asia

Smart Watermelon

China / Asia

Crushed Lemon

Bahrain / Asia

Nestea Ice Rush Lemon Tea

China / Asia

Aquarius Citrus

Taiwan / Asia

Vegitabeta

Japan / Asia

HI-C Ume

Japan / Asia

Beverly

Italy / Europe

Fanta Magic (Blue Grape)

Estonia / Europe

Mezzo Mix

Germany / Europe

Kinley Bitter Lemon

England / Europe

Fanta Pineapple

Greece / Europe

Nestea Raspberry Iced Tea

Spain / Europe

Nestea Lemon

Bulgaria / Europe

Nestea Peach

France / Europe

Lift Manzana

Chile / Latin America

Fanta Kolita

Costa Rica / Latin America

Inca Kola

Peru / Latin America

Simba Guarana

Paraguay / Latin America

Ciel Aquarius – Jamaica Sun

Mexico / Latin America

Delaware Punch

Honduras / Latin America

Nestea Light Peach

Brazil / Latin America

Nestea Mango

Mexico / Latin America

Finger 3. Some of the Coca-Cola product in china (some of localization)

(Finger 4. Specific product designed for Chinese marketing)

(Figure 5: Coca-Cola alliances with Lenovo to public the Coca-Cola /Lenovo laptop)

(Figure 5: Coca-Cola to be the sponsor of Beijing Olympic Game 2008)

(Figure 5: Coca-Cola alliances with Tencent)

(Figure 6: the spread of the bottling factory in china)