Assignment Sample

Coca-Cola Global Marketing Strategy

Global Marketing Strategy: Standardization or Adaptation - Coca-Cola Case Study

Introduction
As domestic markets mature, it is becoming more and more fashionable for organizations to seek
growth through opportunities in foreign countries. Faster communication, new technologies and
improved transport links are making international markets more accessible and businesses pursuing a
global position can experience an upsurge in brand awareness and cost effectiveness. Global marketing
is a relatively new concept linked to these developments.
In the main, it is concerned with decisions for integrating or standardizing marketing actions across a
number of geographic markets. This does not rule out any customization of the marketing mix to
individual countries but suggests that organizations should capitalize on similarities between markets to
build competitive advantage.
Compelling cases can be put forward for both a standardization or adaptation approach to international
marketing practice. These arguments are keenly explored, drawing from examples of Coca-Cola's
international marketing programmed to elucidate key points.
Background of Coca-Cola
As the world's largest manufacturer and distributor of non-alcoholic beverages, Coca-Cola is certainly no
stranger to global marketing. Established in the US, Coca-Cola initiated its global expansion in 1919 and
now markets to more than 200 countries worldwide. It is one of the most recognizable brands on the
planet and also owns a large portfolio of other soft drink brands including Schweppes, Oasis, 5 alive, Kea
Oar, Fanta, Lilt, Dr Pepper, Sprite and PowerAde. Despite this, Coca-Cola often struggles to maintain its
market share over its main rival PepsiCo in some overseas markets, particularly Asian countries.

Arguments for Standardization

Converging customer needs and preferences
It is proposed by Levitt that the forces of globalization driven by technology and wider travel are leading
to more homogenized customer needs and wants worldwide. This paves the way for the building of
global brand identities where companies are able to export their domestic brands to mass markets
abroad and consumers will react to them in similar ways.
In this sense, standardized marketing with a universal product and message can be an integrating force
across national borders. To send out different communication messages across countries could lead to
customer confusion and even dilution of the brand. In keeping with this, Coca-Cola sells virtually the
same Coke beverage worldwide.
The design of Coca-Cola soft drinks has changed little in its history, from the logo to the distinctive glass
bottle. These unique and consistent characteristics evoke a strong brand image which has cross-cultural
appeal.
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Economies of scale/experience
In many industries, companies can reap cost advantages by operating on a global scale and ultimately
improve their all-round competitiveness. Using a centralized structure, a firm can draw economies from
bulk purchase discounts or by sharing functions such as product development, marketing, production
and managerial resources among different markets.
In Coca-Cola's example, economies are gained through the competent running of a large-scale
franchising system for its bottling operations.

Technological viability
In sectors where technological and production processes are homogeneous, extra weight is placed on
standardization of products as a prerequisite for success. As part of its vision that Coke should taste the
same around the world, Coca-Cola has chosen to standardize its product and manufacturing process.
The knock on effects of this are more streamlined procedures and greater cost efficiencies. It is worth
noting Levitt's argument that companies' which opt to produce an assortment of products serving
different customer segments would be unable to survive globalization due to inefficiencies in their
operation.

Arguments for Adaptation

Consumer Diversity
Supporters of the adaptation view contend that, regardless of globalization, consumers in different
countries continue to vary dramatically in their geographic, demographic, economic and cultural
characteristics. It is sensible to imply that, where there are differences in product preferences, product
uses, attitudes, shopping patterns, income levels and education, a business will need to adapt its
product offering or communication programmed in some shape or form.
By carefully singling out the most significant differences, organizations can tailor products to suit local
tastes and conditions. Dennis and Harris pronounced that global branding strategy should actually be a
local plan for each component market, as to apply a standard approach worldwide without considering
local preferences and cultural differences is doomed to failure. Food and beverage organizations in
particular, can easily fall prey to obstacles such as regional taste and category development issues.
On the other hand, organizations that market internationally have to bear in mind that customizing
communication and product strategy will increase overall marketing costs. Traditionally, Coca-Cola used
a standardized marketing campaign strategy where it would pull advertisements for specific markets
from a common pool of adverts designed to have universal appeal.
Lately, Coca-Cola has chosen to back away from a full standardization approach and to instead tweak its
efforts to accommodate local culture and nuances. Its former approach was deemed too rigid with some
of its campaigns not always successfully transcending national borders.
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Although the branding and position of Coca-Cola remains consistent worldwide, its execution is based
on what is judged to be best for each local market. This is evident in its 'Live on the Coke Side of Life'
advertisement campaign launched in 2006 where elements of local culture are included. On the product
side, Coke bottles and cans include the target countries native language and are sized to match up to
other beverage bottles or cans in that country. The company also offers a varied product line-up to
capture different consumer tastes, for example, soy drinks for its Asian markets.

Differences in Infrastructure and Regulations

Several multinational companies, including Coca-Cola, have discovered that operating from a completely
central and standardized perspective can impede the progress of the company, especially when it comes
to understanding and integrating with local conditions. Coca-Cola is well known for its widespread
accessibility through a variety of channels such as large supermarkets, petrol stations, restaurants,
hospitals, cafes and so on.
Having a strong brand gave Coca-Cola the supplier bargaining power it needed to break into the more
complex and entrenched distribution systems of lots of countries. Adding the fact that food laws can
vary tremendously from one country to another, it is not surprising that Coca-Cola describes itself as
multi-local'.
Despite a standardized product, Coca-Cola is obliged to adopt different approaches to the global
marketplace. This goes some way to disproving Levitt's idea that one size fits all and emphasizes a plan
global, act local approach instead.

Conclusion
In essence, the arguments above reveal that global marketing is not necessarily an all or nothing
proposition. Companies have the freedom to choose from many possibilities on the spectrum from total
standardization through to complete customization. Clearly there are circumstances where
multinationals can gain through increased standardization of products and marketing, especially with
respect to keeping costs down and building brand power.
On the other hand, in conditions where national market differences are more marked, this strategy
would harm the company and its reputation. By making standardization decisions using target market
conditions as its starting point, an organization can ensure that, in the long-term, customers are being
offered what they want.
Although Coca-Cola can seemingly gain a great deal from a standardized agenda, its decision to combine
global and local resources is ultimately more long-standing in a market where national customer
differences are influential.