Introduction
Coca-Cola generally referred as Coke, is an American multinational company, producing a non-alcoholic carbonated drink, which was invented back in the 19th century by a pharmacist John Pemberton as a patented medicine. When the drink started to be distributed in the country’s retail market, the sales were below expectations. The businessman Asa Griggs Candler, however. saw a great potential in the company and acquired it in 1891, laying the foundation to the strongest brand in soft drinks market throughout the 20th century under the leadership of the visionary businessman and, later, his oldest son. Importantly, Asa Griggs Candler is well known for the unique and innovative at a time marketing techniques, such traveling salesmen to distribute the free coupons and billboard advisement. Diversity, innovative marketing and international presence of the brand under the same name make this company especially interesting for analysis (The Coca-Cola Company, 2015). The purpose of this report is to compare The Coca-Cola Company’s 4Ps in the three major countries: (1) India, (2) the USA and (3) the UK in view of the Global Marketing strategy of the company in different external environments.
4Ps Analysis
II.I. India
II.I.I Marketing Mix
The Coca-Cola Company entered in India with a variety of products, including the traditional Coke, Sprite, Thumps Up and other drinks. Since its entry into the country in 1923, the company established the relationships and partnerships with several major bottling companies and opened or partnered with over 2.6 million retail outlets (Coca-Cola India, 2015). Moreover, the company is focused on the Corporate Social Responsibility (CSR), which underpins the marketing strategy and brand identity of the company in India (Coca-Cola India, 2015). It is evident that India is one of the fastest-growing markets with an average annual growth of 4% over the past two years (The Coca-Cola Company, 2015; The Coca-Cola Company, 2016).
Price is the critical element of the organizational competitive strategies. The Coca-Cola Company works with several brands, including Coke, Fanta, and Spire, targeting the middle-class segment, juices, focusing on niche market segments and population concerned with health, and coffee and tea drinks, aiming at building on the public, which can build on incremental to carbonated drinks. Importantly, pricing strategy can be classified as a mix between neutral pricing and promotional pricing, where the company targets at average market prices for each of the drink segments. Some of the major elements of the pricing strategy are the bundle promotions, which offer a better price for higher volume purchase.
The Coca-Cola Company aims at product diversification to ensure that the revenue streams are varied and can help the organization to tap into the three major segments (1) traditional drink lovers, (2) health-aware population of India and (3) individuals, who prefer coffee and tea. Considering the above observations, it is possible to conclude that the product strategy is centered around diversification and multiple channel competition, where the company recognizes the strengths of competitive power, coming from substitute products. While the organization aims at reducing its dependence on the sales of traditional Coke and Fanta brand, these products still constitute the major potential in the Indian market (The Coca-Cola Company, 2015). Multi-segmentation strategy, adopted by the company worldwide, is evident in India through the introduction of such products as VIO Flavored Milk and Cold tea and other differentiated products.
Promotional strategy of the company in India is aligned with its international marketing strategy overall. In other words, the organization aims at utilizing varies advertisement and promotional strategies to create market demand. The core focus of the company’s promotional action is to build on consumer loyalty by building on attitude, lifestyle and behavior association through value-based advertisement. Additionally, the company widely uses CSR as its marketing strategy, but due to the immature interest and attractiveness of this strategy mechanism, the effectiveness of the actions limited.
The place is critical to the company's marketing mix as the product portfolio, which The Coca-Cola Company offers to the market is targeting mass client. To ensure that the organization growth ambition is aligned with the internal and external environment, the company utilizes its rare franchised distribution system, there licensed bottling companies purchase concentrate to produce and sell its final product (The Coca-Cola Company, 2015). The company uses its both distribution channels, direct and indirect, using their own fleet as well as outsourced transportation through wholesalers and agencies across the states of the country. With that in mind, the organization is actively involved product placement in the major supermarket chains as well as food retailers in the hospitality sector, such as restaurants, bars, and hotels.
II.I.II. Environmental Factors
External environment to a great extent dictates how the company "translates" it's global thinking into a local acting. India is a market with one of the strongest growth potentials due to the population growth and very specific market. Based on IBEF (2015) statistics, Indian consumer segment is highly segmented in rural and urban environments, placing pressure on the distribution channels of Coca-Cola. The market comprises a huge and consistently growing middle class, and the country occupies the second place in the global consumer confidence index with 128 points (IBEF, 2015). Overall consumer spending is expected to increase to the total of USD$ 3.6 trillion by 2020, following the promising growth of 5.7% between 2005 and 2015.
One of the important trends, which determines the influence of external factor is the development of technology and growing access to digital shopping. This, coupled with the governmental policies, aimed at boosting entrepreneurship and allowing for 100% foreign-owned companies in e-commerce sector determines the potential for further enhancement of The Coca-Cola Companies sales through virtual environment internet advertisement.
II.II. The UK
II.II.I Marketing Mix
The Coca-Cola Company is present in the UK since 1900 when Charles Candler brought the first 5 gallons of Coca-Cola syrup with him to London (Coca-Cola, 2016). Since then, the company was growing at a rapid pace and established itself as one of the largest producers of carbonated drinks, juices, coffee and tea drinks as well as dairy products.
Pricing strategy highly relies on promotions and highly competitive environment places pressure on the company in terms of maintaining market price levels across its product lines. The company adopts multi-segmental approach with the strong focus on middle class, which values strong relationships with quality and price of the product. Importantly, the competitive environment dictates the organizational strategies and the UK market is open for new competitors. This reducing consumer switching costs and, thus, The Coca-Cola Company should ensure market-level prices across its portfolio.
Product strategy is an essential growth and sustainability mechanism for the company’s marketing mix in the UK. The company works with a large number of brands within its portfolio. It is possible to observe that "healthy and green" trend is central for portfolio management as European market evolves in the way that healthy drinks, such as juices and vitamin waters take market share from traditional carbonated beverages (Sayd, 2014). The company is represented by such brands as Coca-Cola, Sprite, Fanta, Schweppes, Glaceau Smartwater and Vitamin Water and other strong names. Similarly, to India and the most of the critical markets for the company, product diversification is the central strategy for growth and profitability.
The promotional strategy involves a variety of advertisement and promotional campaigns. The Company uses TV, Radio, and traditional print media to promote its brands, as well as heavily relies on social media and internet advertisement to build on brand identity with health and sustainability. Facebook, Twitter, and Instagram are some of the most popular social media met works, used by the company to promote the sustainable brand and its Corporate Social Responsibility (CSR). Differently, for India, the UK market is overmature in terms of self-driven interest in environmental issues among consumers and strong governmental control over CSR policies in the industry. With that, The Coca-Cola Company places CSR in the center of its marketing in the country with such campaigns as a bottle with a twist, Coca-Cola Life, and other campaigns. In-store activations, loyalty program, and point-of-sale marketing, however, remain central to marketing mix of the company (Bailey, 2014).
The place is characterized by a multi-channel strategy of the company. Similarly, to other European countries and India, the company works with direct and indirect distribution channel and adopts franchise approach to the bottling of its products. With that, Coca-Cola uses its distribution strategy to promote its CSR-driven approach to business and community service. According to the company's corporate website, over 4000 are employed by the organization in manufacturing, depots, and offices. The products are sold in the large supermarket chains, local grocery stores and through hospitality sector distribution channels in restaurants and bars (Coca-Cola EP, 2015).
II.II.II. Environmental Factors
The UK is one of the most developed markets in Europe, where Coca-Cola's portfolio of products is presented to the widest extent. One of the critical characteristics of the market is the consumers' preference for healthy and "green" products, evident from statistical analysis and research. As such, over 10% of the UK population outline healthy as the highest influence on their decision to purchase a beverage, this indicator is the third most important factor after quality and taste, chosen by 18% and 11% of the respondents accordingly (DEFRA, 2015). At the same time, it is possible to argue that the overall economic climate demonstrates relative stagnation of the market, where the competition is getting stronger due to cross competition between similar products and substitutes, leading to market maturity and limited potential for growth (DEFRA, 2015).
II.III. The US
II.III.I Marketing Mix
The Coca-Cola Company is the American brand and the marketing strategy and growth ambition are based on the benefits and contribution that the business has in its domestic market. Similarly, to Europe, the American market is mature and the major growth potential comes from the expansion of the product portfolio and its diversification to "green" and healthy products. Given the fast-cycle of the market in the beverage industry, the focus of the company is on innovation in product and attributes, such as packaging, distribution, and innovation (Deloitte, 2016).
The product line of the company in the US is very lean, which is surprising for the fact that the US market still represents over 25% of the operating income of the company (The Coca-Cola Company, 2016). The company offers all the major lines of sparkling products as well as soft drinks, but the diversification strategy is focused on platform strategy, where marketing is done through personalization of customer experience, such as Share a Coke, allowing customers create a personalized coke bottle, Peapod Company proposition, and the Coke Life, giving healthier and more transparent customer experience. All the above demonstrates the focus on the platform strategy for the major product lines, such as Coke.
Pricing strategy in the country is grounded on demographic and geographic product segmentation due to a wide portfolio of brands on the market. Differently from the clear majority of other markets, in the US, The Coca-Cola Company attempts to enter premium pricing strategy by offering Share a Coke and Coke Life and Fairlife experience (The Guardian, 2014). Following the healthy trends in the domestic market, this approach was giving expected results over the past years (The Coca-Cola Company, 2015; The Coca-Cola Company, 2016).
The promotional strategy involves numerous street and TV advertisement campaign. In the US alone, the company spent over USD$ 1.2 million on advertisement alone. Promotional campaigns are similar to the ones in the European market, including loyalty cards, in-store actions, and point-of-sale marketing. The company places a lot of emphasis on its CSR-driven approach to the business and heritage, building on special and unique bond with its customers. Mobile marketing gains more and more popularity, explained by the overall consumer trend in digital marketing and social media popularity.
Place strategy is global for the company and franchise approach along with direct and indirect distribution channel outline the distribution strategy for most of the regions, where the company operates. The US is not an exception. Distribution practices are aligned with the FMCG market trends, focused on the elimination of small and medium size competitors by building on low-cost and Just-in-Time (JIT) delivery network and on-shelf availability in most of the food retails in the country. Exclusive partnerships with companies like McDonald's contribute towards already strong distribution network of the company.
II.III.II. Environmental Factors
As it was previously mentioned, the US market is mature primarily in sparkling beverages. The capacity for breakthrough and radical innovation is limited, which leads to the focus of the companies on incremental innovation, driven by the consumer trends in “green” products and corporate policies and healthy food and beverage preferences (Deloitte, 2016). The external environment is characterized by the strong recovery of the global economic crisis 2008-2009 and increasing consumer confidence, leading to higher domestic spending. Search for innovation and personal bond with the brand identify the unique nature of the US market, where consumers seek for the different and fulfilling experience. In the US, the food and beverage consumer market have been growing on average 2,5% over the past three years, reflecting the inflation and population growth (Deloitte, 2016). Moreover, some country-specific statistics outline the potential of the healthy and organic market in the country. This statistic includes, but is not limited, to the fact that 8.4% of the US population have diabetes. To respond to this trend, the company have introduced Trivia product to the market (Deloitte, 2016). Scandals surrounding the food and beverage market, related to the quality of products and toxic components in beverages and food provide Coca Cola with additional opportunity to build on its newly-acquired Honest Tea brand and other beverage brand acquisitions in health market (Honest Tea, 2014).
The impact of social media and e-commerce preferences of the consumers determine the future direction of organizational strategy, already observed in this marketing strategy and a strong focus on e-commerce platform (The Coca-Cola US, 2015). The external environment will continue offering new opportunities in the alternative markets and e-commerce sales channels.
References
The Coca-Cola Company (2015). Annual Report 2015. Form 10-K. The Coca-Cola Company Corporate Website. Retrieved 25 January 2017, from http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/2015-annual-report-on-form-10-k.pdf
The Coca-Cola Company (2016). Annual Report 2015. Form 10-K. The Coca-Cola Company Corporate Website. Retrieved 25 January 2017, from http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/2015-annual-report-on-form-10-k.pdf
Coca-Cola (2015). Coca-Cola Journey. Coca-Cola Company Corporate Website UK. Retrieved 25 January 2017, from http://www.coca-cola.co.uk/
Coca-Cola India (2015). Coca-Cola Worldwide and in India. Coca-Cola India. Retrieved 25 January 2017, from https://www.coca-colaindia.com/our-company/coca-cola-worldwide-and-in-india/
Bailey, S. (2014). Investing in Coca-Cola: The world’s largest soft drink company. Market Realist. Retrieved 26 January 2017, from http://marketrealist.com/2014/12/advertising-key-strategy-coca-colas-growth/
The Guardian (2016). Indian Officials Order Coca-Cola Plant to Close For Using Too Much Water. The Guardian [Online]. Retrieved 26 January 2017, from https://www.theguardian.com/environment/2014/jun/18/indian-officals-coca-cola-plant-water-mehdiganj
The Guardian (2014). Coca-Cola Enters Dairy Market with “Milka Cola”. The Guardian [Online]. Retrieved 26 January 2017, from https://www.theguardian.com/business/2014/nov/25/coca-cola-fairlife-milk.
IBEF (2015). Indian Consumer Market. Indian Brand Equity Foundation. Retrieved 26 January 2017, from http://www.ibef.org/industry/indian-consumer-market.aspx
DEFRA (2015). Food Statistics Pocketbook 2015. Department for Environment, Food & Rural Affairs. Retrieved 26 January 2017, from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/526395/foodpocketbook-2015update-26may16.pdf
Sayd, R. (2014). Coca-Cola Life to launch in the UK as new low-calorie alternative to the classic brand. The Mirror. Retrieved 26 January 2017, from http://www.mirror.co.uk/news/uk-news/coca-cola-life-launch-uk-3672697
Coca-Cola EP (2015). Sites and Offices. Coca-Cola UK. Retrieved 26 January 2017, from https://www.cokecce.co.uk/about-us/sites-and-offices
Coca-Cola (2016). When Did Coca-Cola First Arrive in the UK. Coca-Cola UKCorporate Website Retrieved 26 January 2017, from http://www.coca-cola.co.uk/faq/when-did-coca-cola-first-arrive-in-the-uk
Deloitte (2016). Consumer trends in the food industry. Deloitte [Online]. Retrieved 26 January 2017, from https://www2.deloitte.com/us/en/pages/consumer-business/articles/us-food-industry-consumer-trends-report.html
The Coca-Cola US (2016). About Coca-Cola. The Coca-Cola US Corporate Website. Retrieved 26 January 2017, from https://us.coca-cola.com/home/
Honest Tea (2014). Our Mission. Retrieved 26 January 2017 from http://www.honesttea.com/mission/about/story/
