Market Analysis of Coca Cola

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Coca-Cola, corporation nourishing the global community with world’s largest selling soft drink since 1886. Its nations top soft drink brand, with the best bottling network. It is the largest marketer of non-alcoholic beverages in the world.

In India, Coca Cola was the leading soft drink till 1977 when govt. policies necessitated its departure. It returned to India in 1993 after a 16 year hiatus and made significant investments to ensure that the beverage is available to more and more people, even in the remote and inaccessible parts of the nation. In the minds of world’s consumers the brand has assumed an iconic status. Coca Cola was initially advertised as a remedy for headache and exhaustion. It has been advertising on television for 50 years.

COCA COLA INDIA (CCI)

• Leading player in the Indian beverage market
• A fortune 500 company in India (73rd position)
• Coca Cola India with PepsiCo forms “Duopoly”
• Includes 24 company-owned bottling operations
• Came back in 1993 and acquired local brands

(Ibef, 2010)

(Coca Cola India, 2010)

2. COMPANY BACKGROUND

Marketing Coca Cola in India-The post-liberalization period in India saw the comeback of Coca Cola but Pepsi had already beaten Coca-Cola to the punch, by creatively entering the market in the 1980’s period by way of a joint venture. In a way Pepsi benefited the Coca Cola by developing the Indian soft drink market in the early years of liberalization .The only disadvantage was that CCI in 1993 applied the American way of life approach in selling its product on the contrary, Pepsi targeted the youth.

(Coca Cola India, 2010)

3. The Marketing tools: The Marketing Environment

3.1-The Macro Environment- PEST Analysis of Coca Cola

(P)OLITICAL ANALYSIS-

Political variables have very little effect on the CCI’s selling and production behavior. There are few exceptional things like the ‘environmental protection laws’ they somewhat effect the industry of coca cola. The state government of Kerala released a report on March 22, 2010 holding Coca Cola responsible for causing pollution and water depletion in a state of Kerala and made it liable for Indian rupees 216 corer for damaged caused as a result of the company’s bottling operations.

To deal with this problem the company has made proper adjustments in plant and applied the proper way of wastage management. The company’s production also gets effected by the elections and military take over because in the day of election any countries production in any field is declined.

(E)CONOMICAL ANALYSIS-

Inflation in any country is not good from its production point of view. So, coca cola is no exception. Its impact on coca cola is highly negative. In a country like India where there is a high rate of unemployment, CCI directly employs approximately 6,000 people and indirectly creates employment for more than 1,25,000 people in related industries. It’s among the countries top investors having invested more than US$ 1 billion in India in the first decade and further pledged another US$ 100 million in 2003 for its operations.

(S)OCIAL ANALYSIS-

CCI in partnership with the NGO, Bharat Integrated Social Welfare Agency (BISWA) has launched a program to build awareness on micro-nutrient malnutrition (or “Hidden Hunger”) in the “bottom of the socio economic pyramid” population in India.

They are constantly working to keep their product environmentally and socially beneficial to the communities they serve. Their community water programs are designed to support healthy watersheds and sustainable programs to balance the water used throughout their production process. CCI has been awarded the Social and Corporate Governance Award for Best Practices in Corporate Social Responsibility in 2009.

All India Division COBO’s are now ISO 14001 certified.

(T)ECHNICAL ANALYSIS-

The CCI uses the more advanced technology in its production process. Computers have become the basic needs these days and it is giving the way of other industries to come to new technologies and into a new world of business. Computers can increase the efficiency of its business and the latest coke vending machine will now employ the use of (user friendly) touch screen technology.

SWOT ANALYSIS OF COCA COLA

(S)TRENGTHS

• Brand Ambassadors-focused target marketing by launching appropriate brand ambassador for the target market.
• Diverse Product Portfolio.
• Extremely Recognizable Brand.
• Improved Quality Control.
• Heavy Investment.
• Bottling System.

(W)EAKNESSESS

• Reduced Consumer Purchasing Power.
• Issues for Health Care.
• Environmental Destruction.

(O)PPORTUNITIES

• To serve a large geographic diverse area
• Brand recognition
• Sponsorships

(T)HREATS

• Substitutes
• Heath Consciousness
• Consumer preferences
• Stiff Competition

3.2-The Micro Environment –

The micro environment represents those elements over which the marketing firm has full control in order to reach its target market i.e. the ‘4 Ps’, which it can use in order to gain information that will better help it in its marketing operation.

MAJOR COMPETITORS

Coca cola major competitors is Pepsi as its portfolio includes-

• PEPSI
• 7UP
• NIMBOOZ
• MIRINDA
• SLICE
• MOUNTAIN DEW

After CCI it covers the 2nd largest market share % of the soft drink industry in India –

(Pepsi Co India, 2010)

Consumer Behavior-

The two factors that dictate the Consumers decision-making process are involvement and perceived risk. The consumer will follow the habitual decision making steps while purchasing coca cola.

• Habitual Decision Making

Product

Coca Cola

Level of Involvement

Low ( unimportant decision )

Perceived Risk

Low ( simple , low-cost product )

Information Processing

Respond to environmental cues ( shop signage or displays )

Learning Model

Behavioral learning ( ad shows product in beautiful setting , creating positive attitude )

Needed Marketing Action

Provide environmental cues at point of purchase , such as product display

Fig 4.2 extended problem solving versus habitual decision making

(Solomon, Marshall, Stuart, Barnes and Mitchell, 2009, Pg151)

In India the perception of the people regarding coca cola is that, they consider it as a drink which can quench their thirst as well as creates a sense of belongingness. India’s physical environment is suitable for the sale of soft drinks moreover during festive time sales are doubled. Thus the need of buying a soft drink falls in the first and third level of Maslow’s Hierarchy of Needs (Exhibit 1.)

• Situational Influences

Physical environment

Time

Internal Influences

Perception

Motivation

Learning

Attitudes

Personality

Age groups

Decision

ProcessLifestyle

PURCHASE

• Social Influences

Culture

Subculture

Social class

Group memberships

Fig 4.4 Influences on Consumer Decision Making (Solomon, Marshall, Stuart, Barnes and Mitchell, 2009, Pg151)

• SOCIAL MEDIA NETWORKS-

Different aspects of social media, which CCI uses in order to communicate with its consumers.

This in turn will increase –

• Brand awareness
• Positive image for the brand

4 THE ORGANISATION MARKETING MIX-

4.1-PRODUCT-

http://www.coca-colaindia.com/media/images/brand_logos_all.gif

Major Brands of Coca Cola-

• Coca Cola
• Diet coke
• Thumbs Up
• Sprite
• Fanta
• Limca
• Minute Maid Pulpi Orange
• Maaza
• Kinley
• Minute Maid Nimbu Fresh
• Georgia
• Burn

http://cdn.i.haymarket.net.au/Utils/ImageResizer.ashx?n=http%3A%2F%2Fi.haymarket.net.au%2FNews%2FCoca-Cola+India.jpeg&w=460

The product strategy includes decisions such as product design, packaging, branding, etc.

Coca Cola brand consists of different packs and flavor.

They promote all brands available in brand pack under their product strategy.

4.1.1-Packing Strategy – Coca Cola products are available in different packing, in order to capture each and every segment.

GLASS

PET

CAN

FOUNTAIN

200ml, 300ml, 500ml,1000ml

500 ml, 1.5 L,

2 L ,2.25 L,

300 ml + 100 ml

330 ml

Various Sizes

4.1.2 -THE STRATEGY PLANNING –

PRODUCT EMPHASIS

EXISTING PRODUCTS NEW PRODUCT

Existing

MarketMarket penetration strategy

(Coca Cola)

Market

EmphasisSeek to increase sales of existing products to existing markets

Product development strategy (New Launches e.g. Burn)

Create growth by selling new products in existing markets

NEW

MARKETS Market development strategy

Introduce existing products to new markets

Diversification strategy

Emphasize both new products and new markets to achieve growth

Fig 2.4The Growth Strategies (Solomon, Marshall, Stuart, Barnes and Mitchell, 2009, Pg 70)

New Launch- CCI launches Burn, Minute Maid Nimbu Fresh and Maaza Milky Delite

http://popsop.com/wp-content/uploads/maaza_milky_delite_01.jpg http://2.bp.blogspot.com/_4mgcjlbXuF0/SxUEA8oH1sI/AAAAAAAAAH4/Fl4__sJUCZM/s1600/burn.jpg http://www.tribuneindia.com/2010/20100409/ls15.jpg

4.2- PRICE-

Firms Pricing Strategies should be based on costs, demand or the prices of competing products.

CCI, some time back, had initiated the first cola price war by launching small 200ml packs priced at Rs 5. On the other hand its competitor Pepsi India also reduced its prices of 300ml pack from Rs.8 to Rs. 6. CCI was able to reduce its price from Rs 7 to Rs 5 because it acquired a big glass bottle manufacturing facility which enabled it to offer small bottles at reduced process.

PRICE STRATEGY-

DIFFERENT PRICE IN DIFFERENT SEASON

India is a country with diverse season, summer season is supposed to be a good season for beverage industry. During winters they reduce their prices to maintain their sales and profit.

They usually reduce the prices of their pet bottles or 1 litter glass bottle. Even during festivals they offer different price schemes.

4.3-PLACE-

4.3.1DISTRIBUTION STRATEGY-

Events- Cricket Matches, FIFA World Cup, World Cup Hockey, Common Wealth Youth Games, Cultural Festivals, Concerts etc.

Urban Distribution Network

Consumer

Retailer

Spoke

Hubs

Bottling Plant

Rural Distribution Network

4.3.3-CCI KEY LOCATIONS

(Coca Cola India, 2010)

4.4:- PROMOTION

CCI follows the Pull Promotion strategy –

Coca Cola is the official beverage partner of the Common Wealth Games 2010 (CWG), because of which it enjoys exclusive marketing and supply rights for the beverage across its portfolio. CCI has undertaken the largest ever free product sampling program called “Delhi celebrates” a cultural fiesta where 5000 artists will perform. The companies association with the commonwealth games will provide the opportunity to enhance its brand value. These games will help consumers in connecting with the brand. When product is seen more in the market, they have good sales too because according to the experts the product which is seen more in the market sell more too.

Types of Media which CCI uses –

• Print Media
• Posters and Stickers Material
• TV Commercials (TVC’s)
• Billboards
• Holdings
• Banners
• Celebrities
• Getting shelves
• Sales promotion
• Placing the product at an eye catching position in the shops
• UTC scheme (Under the crown scheme)

To keep the products in nice condition, company provides-Freezers, display racks, etc

Facebook, Twitter, MySpace, YouTube, etc- CCI have their own and separate brands account on these social networking sites, where they directly gets the opinion of today’s generation about the existing and new products.

http://htmlimg2.scribdassets.com/7lva67i2vf9rsu8/images/19-f744e60085/000.jpg

(Google, 2010)

5. THE SEGMENTATION, TARGETTING AND POSITIONING STRATEGY-

5.1-SEGMENTING STRATEGY – CCI focuses on Demographic segmentation

1. Generational marketing – CCI targets the youth of the country. Coca Cola started using Indian themes in order to appeal the Indian customers. They wanted to communicate with the youth. Considering that the Indian youth respected traditional Indian values coca cola created advertisements showing college students valuing their culture. This connection helped coca cola in creating its own personality with which Indian youth could relate itself and it resulted in the suitable positioning of the brand.

2.Gender- CCI have different product range for different genders like for males there is Coca Cola, Thumps up, for females they have Fanta, for kids they have Maaza.

3. Rural Market- The majority of Indian population i.e. (74%) lives in numerous villages scattered throughout the country. Estimates show that rural India accounts for 58% of Indian rural disposable income and 41% of middle class.

5.2-TARGETING STRATEGY –

Coca Cola commercials basically target on young generations, because they want to represent Coca Cola with the youth and energy.

Rural Market is also a very attractive target-

In order to reach to the rural India, CCI had also launched television commercials targeting at rural population. This market covers 80% of India’s new coke drinkers.

5.3 -POSITIONING STRATEGY –

CCI’s Initiative in Indian Market-

5.3.1- Urban India-

In order to target the metropolitan areas and large town audience, CCI captured the theme of Celebration and Joy of peoples, they showcases increasing social and economic status of the people in their television commercial (TVC’s). This theme they applied for positioning their brand in urban market. “Life ho toh aise” (life as it should be) was very popular and successful tagline.

5.3.2.-Rural India-

Under it they have tapped the local entertainment like fairs and local festivals

They increased their TVC’s on Doordarshan (the local channel), designed to target rural customers.

It’s all rural marketing initiatives were well supported by TVC’s.

In 2002 CCI launched Chota Coke (Mini Coke) at Rs 5considering the pocket size of rural consumers.

CCI communicated this price cut message with the help of TVC featuring leading Hindi movies star Amir Khan in rural settings to enable proper brand association because large number of people inspire to emulate these celebrities. It will help in creating the right identity for the brand.

Its tagline gained a lot of popularity “Thanda Matlab Coca Cola” (Cold Means Coca Cola)

(You Tube, 2010)

http://www.thaindian.com/images/stories/aamircoke.jpg

Exhibit: Thanda Matlab Coca-Cola Advertising Campaign

6.-RECOMMENDATIONS-

New Strategy- Rural market (MARKET IS CREATED AND NOT BORN)

Rural consumers are inclined more towards the home made drinks like Lassi, lemonade etc. So, we need to target them when they are out of their home and will need something to quench their thirst.

Rural India with the average income of Rs 100/day, consider coca cola whose average price comes around Rs 10, as a luxury product .Moreover soft drinks categories are undifferentiated in the minds of rural consumers. The good news is that the rural consumer market which grew 25% in 2008 is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers.

1. As this market is not fully utilized, there lays a huge scope to reposition the brand in a more effective way to prove that CCI is the suitable brand meant for rural customers and there is a need to shift it from luxury item category to every day product category.

2. An appropriate marketing strategy is required, which is only possible by listening to consumer’s needs and requirements.

Advertising Strategy-

• Looking at the tough competitors there is a need for aggressive marketing campaign.
• Announce a new campaign for CCI.
• In order to connect with the rural population, CCI should increase social welfare activities.
• Prior creating the ad ,following points should be kept in mind-
• Selecting an appropriate brand ambassador with which the rural population could relate itself with.
• Brand promotion by targeting folk and traditional culture.
• To think local we have to act local.

Distribution Strategy-

There is a need to extend CCI’s distribution channel especially in rural sector.

Creating an Extended Distribution channel available all over India, it will provide support to TV commercials.

Branding Strategy-

There is a need to restructure the communication channel, which will bring open and honest views of the people (public, media, employees, suppliers, state and national government, channels). It is the only solution to resolve the issues in a way that it benefits the Indian consumers as well as CCI.