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COCA COLA CASE STUDY

GROUP 8
Shant Kumar Bathwal
(X027 /14)
Snehashis Sarkar
(X029 /14)
Rajesh Ranjan (X025 1
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Company Background

Coca Cola India Private Limited (In short


CCIPL)

a
leading
beverages
manufacturer in India was promoted by
M/s Coca Cola Inc., USA in the year
1993. CCIPL manufacturers Soft Drinks
under brand Coca Cola, Thumps up,
Fanta, Limca etc., and also other FMCG
like Mazza, Kinley (Mineral Water). CCIPL
has manufacturing facilities in major cities
in India and in other places it has
franchisees who do bottling work based on
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Background ....................
continues

CCIPL directly employs about 6,000 people and provides


indirect employment to about 125,000 persons who are mostly
working in ancillary units like packaging products, crowns,
bottles and other inputs. CCIPL markets its product through
retailers who are about 2,00,000 in number in India. CCIPL
functions under overall control and guidance of its parent
company viz., Coca Cola Inc., USA which is a conglomerate
having worldwide operation.

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BUSINESS STRATEGY
.

CCIPL initially started its operation with Soft Drink Product viz;
Coca Cola in India in the year 1993 after a gap of 16 years and
within next few years it acquired leading soft drink business of
Parle Group including its well known brand Thumps up, Limca
etc. Gradually CCIPL added Mazza as a mango pulp juice and
Kinley as mineral drinking water to its fold.
Within few years of entry of Coca Cola into India its arch rival
Pepsi also invaded into Indian soil and is today giving CCIPL
very tough competition at all fronts. Today CCIPL and Pepsi
enjoy about 95% market share of soft drinks in India.
CCIPL aims to be the market leader in Soft drinks in India and for
this it has adopted different marketing strategy viz.; attractive
packaging, sales incentives, massive advertisement and all
efforts to penetrate into Indian rural market.
CCIPL despite various marketing plans/strategy is facing tough
completion with local soft drink manufacturers, other substitute
products viz; Coconut Water, Lime Juice, Sugarcane Juice, Fruit
Juice etc., CCIPL is not satisfied with its present volume of sales4

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ISSUES

CCIPL is confronting with various issues at present which are pertinent and
acting as a hindrance to achieving its goal.
How to penetrate into Indian rural market which constitutes 2/3 rd of total
countrys population?
In respect of few old stock Pesticides were detected in Coca Cola
product which has sent wrong signal to the Indian Community. How to
counter such wrong signal and regain the lost confidence in few pockets?
How to overcome cut throat competition/threat provided by its arch rural
Pepsi and other local producers/substitute products?
Selling and Distribution overheads are mounting day by day and this
makes CCIPLs product expensive. How to minimize such costs and provide
cheap hygienic product to the Indian rural population?
CCIPL is still carrying alien tag and how it could project itself as a true
Indian company and assimilate with local business firms.
CCIPL is facing threat of pursuing monopolistic trade practices which are
not permitted under Indian Legislation. How to overcome such legal
hurdles?
More than 50% of CCIPLs products in India are produced through
Franchisee bottlers. How to make them company loyal and fully
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Some Facts about Indian Rural Market Coca
Cola Fail to deliver
74% of the countrys population
41% of its falls under middle class
58% of their income are disposable income but they
are a large consuming class.
Around 700 million people, or 70% of India's
population, live in 6, 27,000 villages in rural areas
90% of the rural population is concentrated in
villages with a population of less than 2000.
The Indian rural market today accounts for only
about Rs 8 billion (53 per cent - FMCG sector, 59
per cent durables sale, 100 per cent agricultural
products) of the total ad pie of Rs 120 billion, thus
claiming 6.6 per cent of the total share
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Swot Analysis : On examination of various factors including


information gathered from CCIPL web site and other web sites, it
is observed that the reasons for panic on the part of CCIPL were
due
to
under-noted
factors.
Majority of Indian rural population are either illiterate or semi
literate. They are more guided by local factors and old habits of
consumption of food and beverages.
Purchasing power of rural mass is quite low.
Many spurious products under CCIPL brands are available in the
market and CCIPL itself cannot prevent such occurrence without
support of local administration.
CCIPLs functioning is mostly dictated by its promoter US
Company. This has created a feeling of ALIEN invading into
Indian soil for making quick buck.
Due to cut throat competition, price war and quest for larger
market share with its arch rival Pepsi - equally big, CCIPL is not
able to increase its price- though cost of all inputs, marketing
and distribution costs have been rising day by day. High
incidence of excise duty and local taxes also limits its ability to
increase product price, turnover, and profitability.
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Strength & Weakness

STRENGTH:
Coca Cola brand, Thumps up, Limca and other brands are well
known, to the community, Concentrates for manufacturing these
products are Unique and cannot be copied easily by others.
Suppliers Bargaining Power
The key raw material input for Coca Cola is coke concentrate
which is being manufactured by CCIPL itself. However in respect of
other inputs viz; Sugar, Carbon Dioxide, Corn, Bottles and Mango
Pulp (For Mazza) and packaging materials- these are available from
market at competitive prices. CCIPL has also promoted ancillary
units which cater its requirements from time to time. Thus there
appears to be no problem in procuring the basic inputs.
No Entry Barrier in Trade
There is no entry barrier in Soft Drink or Beverages industry in
India today. Economic of scale, brand loyalty are distribution
network act as an entry barrier for a new comer. Only PEPSI - the
arch rival and equally big in size is a threat to CCIPL in India today.8

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Strength & Weakness..............


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WEAKNESSES:

Heavy burden of excise duty and local taxes.


Multinational tag attached with CCIPL
Huge marketing and distribution costs.
Very high compensation package to working personnel at
CCIPL due to multinational tag and working culture.
Non-availability of local presence at the point of
consumption- as CCIPL owns plants located in few
specified regions/centers
On examination of CCIPLs strategy with respect to 7Ps
(a) Product (b) Price (c) Promotion (d) Place (e) Process (f)
People and (g) Physical appearance, it is observed that
CCIPL needs to continuously innovate and try to improve
itself in all fronts so that it could keep its edge over

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Opportunities & Threats


OPPORTUNITIES:
Growing market demand due to increase in peoples income,
changing work culture and improvement in communication
system provide an ample opportunity to CCIPL to increase its
sales and to approach larger number of people in the country.

THREATS:
CCIPL despite its best efforts is still having threat from local
brands, substitute products and with its arch rival PEPSI. Non
availability of desired cooperation from local administration
acts adds its woo in checking increased availability of spurious
products in the Indian rural markets.

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QUES : 1 Although the sales volume of soft drinks in the
rural market has indeed grown, the consumption still
remains much lower than in other countries. What can
soft-drinks companies do today to further increase their
FACTS
sales?
Company worked out on 3A model
AFFORDIBILIT
Broke the traditional way of distribution Y
Developed infrastructure
Indian villages have
Bad roads
Acute Power shortage
Not accessible to traditional advertisingAVAILABILITY
such
Cable TV except Doordarshan which reaches 41%
Print media

Resul
ts

ACCEPTIBILI
TY

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QUES : 1 Although the sales volume of soft drinks in the
rural market has indeed grown, the consumption still
remains much lower than in other countries. What can softdrinks companies do today to further increase their sales?
FACTS
Ensuring Availability:
Worked on HUB & SPOKE distribution model
In order to increase the reach

NOW
Earlier

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QUES : 1 Although the sales volume of soft drinks in the
rural market has indeed grown, the consumption still
remains much lower than in other countries. What can softdrinks companies do today to further increase their sales?
FACTS
Affordability : Getting the pricing right
Rural people have lesser disposable income
Products should valued considering target customer
Coke introduced chotta coke 200 ml since 300 ml was shared by
people

Spreading Awareness
Went for hoardings paintings on wall near village mandis & haats
Created kiosks during gatherings where 100 villagers used to
congregated at one place
Thand Matlab Coca Cola campaign
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CASE RESOLUTION
Jo Deekta hai wo beekta hai (AVAILABILITY ISSUE)
Extrapolate the distribution network to increase the
reach
Challenge is to make available chilled drinks or else it
will lose ground against unorganized segment
Spoke distributors should be incentivize to set up Ice
factory
Ice box such as Thermocol box and steel box would be
complimented with pick up volume
May go wit innovative packing as paper boat has
launched which is biodegradable as well small size easy
to transportable
Scaling up operation of open truck with a fountain
machine offering 100-150 mlbeverages in small cups at
Rs 5 and 200-300 ml at Rs 8-10, depending on the
location
Introduction of collaborative distribution channels where
cost can be shared up in providing compact

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CASE RESOLUTION
Power Price point (Affordability)
Work on Low unit Packs (LUPs)
Rs 1, 2, 3, 5, 7, 10
Varied quantities at different price points
coke with 100 or 125 ml beverage
need to be worked out
Promote trials & switching from traditional
alternatives introducing splash bar
kind of dispenser which can use 2 lt bottle
to fill smaller cups 100 -125 ml without
compromising
the quality & chilling of
Spreading
Awareness
beverages
Every
village contains
Primary Schools
Health Post / Dispensary
Police post
Primary Market
Parking or Bus stand

Need to work out the campaign customized to the areas as say eastern
UP speaks Bhojpuri whereas western UP is conversant with hindi
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((Product connect should happen)

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QUES : 2 The Indian consumer still presents certain
challenges. For example,
consumption remains concentrated in a few
months of the year. How can
FACTS
this issue be tackled?
Peak of sales happen from Mar July as temp touches 45
50 deg centigrade
Rural market ramp up once harvesting is complete &
gradually disposable income increase
State wise crop season

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FACTS
India is a country of festivals which changes with distance
India consumes liquors branded as well as local or Desi
made
Diverse preference in different time ( winter time records
sales of hot beverages whereas summer records cold
beverages sales)

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CASE RESOLUTION
Customized plan to tap once disposable income are in hands of
people especially after harvesting
During season of festivals of fast such as Shivratri, Navratri etc.
Nutritional drinks can be promoted through BTL campaign
concentrated in specific zone
Working on togetherness, celebrations & happiness model as Coke
did to boost Diwali sales

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QUES : 3 The Indian consumer has evolved since the time
Coca Cola came up
with its famous advertisements. How should the
company reach out to
the consumers today? Should it still maintain a
ISSUES
similar theme as the
Indian consumers
is traditionally
more
inclined
Thanda
matlab Coca
Cola
campaign

with hot beverages such as Tea, Coffee, etc.


Beverages connected with Nutritional effects such as Lassi, Ganne ka Rash,
Bel Ki Sarbath, Juices, Aam Panna

Most villages as well as semi urban town are


Still not connected properly with good roads, electricity
Not knowing difference between Hygienic drinks & Non Hygienic drinks

Misconception that a rural-looking ad will appeal only to rural


audiences, and that an urban backdrop ad will go down well
only with city people
As Village & semi urban population too aspire to lead a plush urban life
(aspirational Quotient)

Relationship marketing
Village and semi urban population has great respect for relations & elders
within community, tribe, village etc.
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QUES : 3 The Indian consumer has evolved since the time
Coca Cola came up
with its famous advertisements. How should the
company reach out to
the consumers today? Should it still maintain a
CASE RESOLUTION
similar
theme
as the
Company
should
work on going local
Thanda matlab Coca Cola campaign
Working on BTL (Below The Line) advertising campaign to target
rural customers for eg . Sponsoring local games such as inter
school (cricket, kabaddi & Kusti),wall signage, print media
Place specific campaign workout (considering population
demography)
Work on relationship marketing(Romping or getting local celebrity
with custom made ad campaign)
Ad campaign should be designed in coordination with local
distributions(as different areas have different festivals
with
varying timings and significance) For eg. Rath Yatra in Orissa,
Sarhul (Jharkhand),Akshaya Tritia etc.
Tying up with Govt. for primary school to provide nutritional drink
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with mid day meal

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QUES : 4 Coca Cola has now diversified into new products,
selling juices, nimbu
paani, etc. Do you think that this was a good
CASE RESOLUTION
idea?
Increased awareness of health & hygienic
products
Trend developed basically in urban zones
and gradually shifted to semi urban & rural
Mushrooming of unorganized players
promoting sales of Neembu paani, ganne
ka ras, juices, bel ka sharbat etc.
Propagation of pesticide in cola drinks
Local gurus stressed on need of health
drinks

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QUES : 5 Do you have any ideas on how the company could
market its suite of products in a different manner ? Will
alliances
help
? as Rural market is very
Alliances will
help
vast & diverse
It can be win win situation for both
brands
As say ITC has set up e chaupals to
market direct to rural consumers, coke if
ties up with ITC can get that customer
reach
One brand can compliment others on
Channel alliance
Co branding alliance
Cross product alliance

As HUL launched Project Shakti in order


to help rural women to earn their
livelihood, similarly Coke can get
associated with Anganbari to promote
nutritional products

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KEEP TRYING NEW THINGS AND BE POSITIVE!!!

THANK YOU

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