Region-wise growth patterns of Coke and its rival brands in India
Discuss about the Reinventing Strategies for Emerging Markets.
The Coca-Cola Company, being a global soft beverage industry leader in the market have been in control of the industry for a good time now. Things have taken shifts, and various factors have set in with each having a series of turns of events. Some of the known competitors of the company have since been outcompeted and as such, made the rivals to back and withdraw from the business environment. This paper sets out to discuss a new product that the Coca Cola Company intends to provide in India, the product in question being New Coke. Being that the produt had registered an all-time failure, the company has put in place measures like new tacts and strategies in order to make it a success.
The Coca-Cola Company was established in 1886. The company was a brainchild of one Pharmacist by the name of Dr. John Pemberton who initially produced coke syrup for sale in the drinks.
The world is dynamic, witnessing changes all around us. To see its success over the next years, it is important for the company to focus and shape up its game in in a bid to adjust to the ever changing scenarios in the business world. This is about the trends set by the business community. The mission of the company is to refresh the global market, inspire the moments of happiness and optimism, and to bring forth value and make the difference among customers.
The core vision of the company serves to describe every aspect of consumers about people, partners, planet, profits, and productivity (London,and Hart, 2004, 350-370). The competition among soft drink manufacturers in India is one of the fiercest known. Some of the known traditional rival companies in the country included Pepsi and Parle. To survive this, Coca-Cola Company has to come up with top strategies that would make it easier for the enterprise to have a firmly rooted strategy that would outsmart these companies (Svensson, 2001, 6-18).
One of the strategies that Coca-Cola Company can adopt while entering a new environment(India) with a new brand,( New Coke), includes the acquisition of Parle in a bid to taking advantage of the company’s network and extensive customer base. This is the decision that can be deemed the best for the company since through this, the company commands access to over 2 million retailers plus the 60 bottles in the enterprise’s network. It remains a powerful call for the Coca-Cola Company to employ strategies that would then win the war of business establishments and make it successful (Cavusgil, et al., 2002, 3).
It is quite useful for the Coca-Cola Company to employ the use of 4Ps of marketing. These include price, promotion, and place. This is done in such a manner that the quality of the product (soft drinks), as provided to the consumers is in a consistent state and price. This is geared towards making the brand attractive to the customers. Therefore, it will be for the best interest of the company to ensure that they spend a good amount of money in sales and advertisements plus other promotional errands (Svensson, 2001, 6-18).
Coca-Cola is known to be one of the largest manufacturers, and distributors as well as marketers of non-alcoholic drinks and Cyprus in the whole world. Coca-Cola Company has its headquarters in Atlanta, Georgia. Known for its flagship brand, the company is by far the largest corporation in the US. In the present day, Coca-Cola has an international presence and is the all-time recognized beverage company with a range of plans that are aimed at promoting and growing the brand. The majority of the soft drinks bars, restaurants, and big hotels are coca cola products, thanks to the Coca-Cola Company. Some of the known company’s product include Fanta, Oasis, Sprite and PowerAde among others (London,and Hart, 2004, 350-370).
The coca cola company refreshes consumers with close to 500 sparkling brands with about 3,800 choices of beverages. This move makes the business, one of the world’s recognizable and valuable brands in the globe. As a matter of fact, the portfolio of the company boasts of close to 20 billion dollar brands in the beverage industry. It is important to note that just 18 out of the whole brands available are either reduced or no-calorie varieties. With the enduring commitment of coming up with the strategies of building business communities that are such sustainable, the company lays emphasis on some initiatives that are geared towards a reduction of environmental footprints. The other important considerations include the creation of a safe, all-inclusive environment for work as well as the enhancement of economic development for the business communities that Coke as a company operates (London,and Hart, 2004, 350-370).
According to the Company’s annual report, it boasts of a record sale in over 312 countries worldwide. When a company like Coca-Cola has made a decision to enter into new markets, otherwise known as overseas markets, there must be some considerations that fall into the bracket of open options. There are three main issues of concern that Coca-Cola has to deal with; marketing, sourcing and investment as well as control. Marketing regards what countries, what segments, the means and ways of managing as well as implementing the efforts of marketing and how to get to the new markets. However, some factors tend to deter such an entry process by various considerations. Some of these entry barriers or deterrents include intermediaries or direct entry with the necessary information. With regards to sourcing, the company needs to establish whether or not the company obtains the products, either by manufacturing or through purchase. Lastly, investment and control have everything to do with the direction the company takes, whether a joint venture, acquisition or global partnership (London,and Hart, 2004, 350-370).
With the view of winning a new market, it becomes necessary for any company of Coke’s status to pay attention to such factors that tend to deter entry of companies of such magnanimity. The barriers to entry for the said companies often tends to prevent the smooth establishment of the said companies into these new markets. Some of the common barriers include network effects, control of the limited resources and the regulations as well as policies that govern the establishment of the business (Svensson, 2001, 6-18). According to economic models, lack of any barriers to entry makes it hard for any business to earn a credible and sustainable profit that goes beyond the cost of capital since the new companies entering the market gets attracted to the profits and tends to compete for the profits weighing them down to the capital cost (Foster, 2012, 7).
As aforesaid, an example of a barrier to entry, in this case, is a brand. In this case, the best application would be a carbonated beverage. With this in mind, it becomes apparent that it takes billions of dollars plus the many years taken to manufacture and have the brand built. Regarding patents, it is important to note that the company has to spend millions as well as years to have its own R&D or even a license for the same.
With the slow trend of development and growth in developed markets, Coca-Cola is set to look for new and emerging markets in India for growth and expansion. The company looks forward to tripling its business and establishment in India over the course of five years while at the same time looking forward to setting up new leadership structures in the country (India) (Foster, 2012, 7). Coke has in place a new entrant strategy and as such, renewed the focus on such plots as semi-urban as well as rural markets in the country.
· Growth of carbonated soft drinks slated at between 10-15%
· The estimated PCC slated to increase to between 6-8 glass bottles
· Weaker infrastructure esp. refrigeration
· Small retailer base, and less self-space
· Massive custom and or excise duty that is close to 40% that have since been registered to come down considerably.
· High import rates of cans
· Problems of emptying bottles
· An increase in the rural market about intermediate competition
· Cheap PCC in the new market compared to the ones in neighboring countries.
· Rise in disposable income
· The dynamic consumer trends as a result of satellite TV
· Political uncertainties
· Pepsi and Coke rivalry.
The drinking of soft drinks in India is predominantly concentrated in the urban areas. The data from the study conducted in the industry suggest that consumers in the cities spend the better part of their time at a comfort that is ten times that of their counterparts in the rural areas. Nonetheless, Coca-Cola Company has had a new focus that is primarily targeted at the rural markets in India and as such shares in the belief that there is a great opportunity that encompasses loads of growth potential in the target markets. In India, Coke is laying focus on a small town like Agra, Lucknow, and Bilaspur plus other small markets in the rural setting in India (Shama, 1995, 90-109).
Some of the best strategies that Coke as a company has adopted involves training of small retailers that are close to 6000 in number in the country. This is done through a program that was launched by the same University established by the company. The program is known as the “parivartan,” meaning “change.” Under this program, the retailers are taught on ways and means of stocking and displaying their products (Shama, 1995, 90-109). This program is aimed at providing the traditional retailers with the fundamental skills, techniques, and tools that are necessary to the success of the business in such a constantly changing business scenario. Under the program, the companies are meant to have presentations that include both visual and audio technologies that are done in the Hindi language so as to enable the retailers to have a better understanding of the concepts involved in the business. Having this in place, the company then provides each of the retailers with a Coke “certified retailer” certification that legitimizes them to deal in such products from the enterprise.
The Coca-Cola Company set up an R&D faculty in the country in a bid to develop beverages suited for localization of the company portfolio about beverage consumption. In earlier times, the Coca-Cola Company was known to outsource its R&D roles from its establishment in Shanghai, China. Some of the known brand flavors include Maaza aam panna among other flavors. Some of the cultural challenges that the new product is likely to face in the new market includes overreliance of the local consumers on traditional beverages such as Pepsi and Parle, making it hard for the Coca Cola Company to firmly establish its roots in the new market.
Initially, the Coca-Cola Company had set its target in the rural customers through bringing down the price at the time of entry. The company has now stepped up its distribution of the 200 ml beverage that is priced at between Rs 7 and 8. With this price in mind, the consumer returns the glass bottle after consuming the drink.
As far as marketing decisions are concerned, the core focus that must be emphasized on is mainly value chain. The entry alternatives or the strategy that must make sure the activities in the chain are integrated or performed. Of the many factors that Coca-Cola Company has to pay attention to while entering a market is to come up with ways of creating global development strategies and the right selection of entry modes in the intended market in the targeted foreign market as well as its channel of distribution (Shama, 1995, 90-109). While the above mechanism can be deemed the best, other several strategies of entry can be paid attention to, that is, multinational enterprises that expand their international reach, with products and brands that are both new and diverse in the new economies and markets. As coca cola company attempts to expand its market in India having commanded a significant presence in Hong Kong. In this country, the company needs to come up with entirely new portfolio matching its competence in so far as the local needs are concerned.
In any new markets, it is important that the foreign entrants come up with operational capacity for the appropriate context that calls for complementary assets that are controlled by the local firms. Coke is known to have a dying appetite for such foreign markets as India and Africa.
The FDI means an investment in the manufacture and the service of facilities in the country that is considered foreign, with the sole intention of engaging the management of the facets that increasingly integrate national economies. Significant investments in the overseas markets are deemed to be the direct investments of the companies in the new country to (or “intending to”) developing the local products plus the means and ways of controlling the prices from the current set price. This fact brings us to the history of the establishment of the Coca-Cola Company that was established in the year 1981 in Beijing to the benefits of the investors.
The company should operate in a joint venture, an arrangement that calls for partners to come together and collaborate without necessarily involving any returns of equity investments.
Conclusively, Coca-Cola has been viewed quite positively just as much as it has been projected. The consumers are quite aware of Coke as a brand plus its awareness that is quite high in the industry. with the right steps taken by the company to see New Coke gaining ground and stamping its authority in this new environment, it remains apparent that the new environment will find the product fulfilling.Whenever a product such as Coca-Cola is launched, the avid drinkers settle for the soda over the other competitors. When people settle for coke, they not only buy the product but also its image that goes with it.
CAVUSGIL, S.T., GHAURI, P.N. and AGARWAL, M.R., (2002). Doing business in emerging markets: Entry and negotiation strategies. Sage.
FOSTER, R.J., (2012). Coca?Globalization. John Wiley & Sons, Ltd.
LONDON, T. and HART, S.L., (2004). Reinventing strategies for emerging markets: beyond the transnational model. Journal of international business studies, 35(5), pp.350-370.
SVENSSON, G., (2001). “Glocalization” of business activities: a “glocal strategy” approach. Management decision, 39(1), pp.6-18.
SHAMA, A., (1995). Entry strategies of US firms to the newly independent states, Baltic states, and Eastern European countries. California Management Review, 37(3), pp.90-109.
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