Soft drinks development in China is linked to the concurrent development of the

sugar industry. The sugar industry has experienced rapid progress since the econ
omic reforms. China has become a major sugar-producing country. In its 40 years
of existence, the sugar industry has developed into a comprehensive sugar produc
ing industrial complex covering the growing of crops for sugar source, sugar pro
duction as well as to industry utilities such as manufacturing of sugar processi
ng equipment, scientific research and development, sales and marketing. Within t
he years since the reform, China was able to establish 497 sugar factories. ( 19
97)

On the aggregate, these sugar factories are able to process an average of 650,00
0 tons of sugar per day or 8,500,000 tons per year. Breaking down sugar producti
on activities depending on sugar source, shows that care sugar production accoun
ts for majority of sugar produced. The 411 cane sugar manufacturing companies re
present a processing capacity of 560 tons per day or 7,000,000 tons per year whi
le the 86 beet sugar production plants are able to process 90,000 tons per day o
r 1,500,000 per year. The entire comprehensive sugar producing industrial comple
x employs and total of 450,000 employees including farmers and engineers. Curren
tly, China has established 25 scientific institutions focusing on sugar-making t
echniques and sugar-bearing crops research. There are also a number of universit
ies offering courses and vocational studies specializing on sugar production. Th
ere are also a number of beet seed companies and sugar processing machinery prod
ucers in China. ( 1997)

With the growth in sugar production, sugar-consuming industries al

so started to develop such as confectionary, bakery products, soft drinks and sn
acks manufacturing industries. However, prior to 1991 sugar supply and sales wer
e subject to a strict and planned management. The main industries with the bigge
st sugar consumption were confectionary, bakery and soft drink producing firms.
During the decades of restricted sales, industrial sugar use was limited to arou
nd 50 percent of total sugar production. The growth of firms within these three
industries continued due to the large sugar sales quota allotment. By 1991, suga
r sales quota was relaxed resulting to an increase in the industrial consumption
of sugar. Sugar consumption of industries increased to 66 percent by 1995 relat
ive to a consumption of 55 percent in 1991. The concentration of these sugar-con
suming industries is in the developing provinces near the coast such as Guangdon
g and Shanghai, where Coca Cola established its first bottling plant. ( 2001)

Concurrent with the development of the sugar industry is the develop

ment of the soft drinks industry, a largely sugar-consuming sector. During the 1
970s, soft drinks production was only at the level of 200,000 tons per year with
20,000 ton sugar consumption. In the next decade, output shows a gradual increa
se due to the growing popularity of soft drinks as a beverage. The gradual incre
ase in production was in part affected by the continued control of sugar sales f
or industrial use. By the mid-1990s with the relaxation of the strict sugar allo
tment for industrial use, total production of soft drinks reached an impressive
increase to 6.5 million tons using 1,050,000 tons of sugar. Major soft drink pro
ducing geographic area is Guangdong, solely attributed with 30 percent or 2 mill
ion tons of soft drink production. The remaining percentage is attributed to pro
duction activities in 17 other provinces. In the succeeding years, soft drink pr
oduction is expected to further increase with greater sugar consumption. ( 2003)
 The rapid increase in soft drink producing firms resulted to the gro
wth of China¡‾s soft drink industry and soft drink consumption in China. To date
there are more than eight hundred soft drinks manufacturers in China. This mean
s that the industry is highly competitive. The competitiveness of the industry i
s largely attributed to the relaxed level of regulation by the government. Howev
er, the level or intensity of competition differs relative to the various sector
s. Except carbonated drinks, other soft drink sectors such as RTD tea to juices
and bottled water are sectors open to new entrants seeking to gain a share in th
e growing market. ( 2003)

In China, the soft drinks industry is comprised of four sectors, whi

ch are 1) carbonated drinks, 2) bottled water, 3) RTD tea drinks, and 4) juice a
nd juice drinks. Products under these sectors are produced by both domestic and
international soft drink firms. In China, there are seventeen major players in t
he soft drinks industry. For the carbonated drinks sector, the major players in
the Chinese market are The Coca-Cola Co., Pepsi Co., Wahaha and Jianlibao. In th
e bottled water sector, major players include The Coca-Cola Co., Nestle, Tingyi,
Wahaha, Robust and Nongfu Spring. In the RTD tea drinks sector, there are more
major players such as The Coca-Cola Co., Nestle, Kirin, Asahi, Suntory, Tingyi,
Uni-President and Wahaha. The biggest number of major players is concentrated in
the juice and juice drinks sectors including The Coca-Cola Co., Pepsi Co., Grea
t Lakes, Kirin, Asahi, Suntory, Tingyi, Uni-President, Wahaha, Nongfu Spring, Ji
anlibao, Yeshu, Lolo, Huiyuan and Huabang. ( 2001)
Table 1: Foreign Domestic Major Players in China

The seventeen major players in the soft drink industry either carry
the company name as its brand name or market products through different brand na
mes. There are a number of well-known soft drink brands in the market. The Coca-
Cola Co. carries the brands Coca-Cola, Sprite, Fanta, Qoo, Sensation, Tianyudi a
nd SMART; Pepsi Co. controls the brands Pepsi, 7-UP, Mirinda and Mountain Dew; N
estle sells its products under the brands Nestle, Drins and Nestea; Tingyi sells
under the brands Master Kong, Daily C and Fresh Daily C; Uni-President markets
its products under the brands President and Xianchengduo; Nongfu Spring sells th
rough the brands Nongfu Spring, Nongfu, Nongfu Orchard; Jianlibao holds the bran
ds Jianlibao, The Fifth Season, Pal; Huiyuan markets the brands Huiyuan and Zhen
; other brands like Great Lakes, Kirin, Asahi, Suntory, Wahaha, Robust, Yeshu, L
olo and Huabang carry the company name as their product marketing brand. These b
rands are known to different segments of the market depending upon targeted cons
umers. ( 2001)

Due to the proliferation of different types and brands of soft drink

products in the Chinese market, soft drinks have actually become a major part o
f the daily purchases of Chinese consumers. Consumption has increased to an exte
nt that in 2005 per capita consumption has reached 20 litres. This represents a
Compound Annual Growth Rate of more than 15 percent. The growth in consumption h
as affected production by an addition of almost 27 billion litres. Consumption i
s greater in urban than in rural areas. Among soft drink consumers, people under
the age of 45 represent the highest levels of consumption, particularly the you
ng people. Younger age groups in the urban areas are bent towards trends making
them the convenient target market for soft drink products.

However, recently the soft drink consumption has faced two issues af
fecting its consumers. First is the issue of the safety of soft drink products i
n China following medical reports that certain amounts of benzene ingested into
the human body could cause cancer. The issue was arrested after The General Admi
nistration of Quality Supervision, Inspection and Quarantine conducted a nationa
l quality check of both domestically-produced and imported soft drinks. Test res
ults showed that the benzene content of the soft drinks tested was below 10 part
s per billion complying with the standard set by the Ministry of Health correspo
nding with the standard determined by the World Health Organization. ( 2006)

Second is the growing concern over healthy living of Chinese individuals and hou
seholds particularly in urban areas. Soft drinks, especially carbonated drinks a
re associated with fast food so that with the advent of fast food in China carry
ing soft drink brands, concerns over the increasing number of overweight or obes
e children has also affected China. The growing concern for public health increa
sed the pressure for the companies to develop products with the same taste but w
ithout the same amount of sugar as the original products. The global trend of th
e increasing risk of children to become obese influenced the introduction of die
t or light sodas and fruit flavoured pop. The sales of diet or light soft drinks
continue to increase. Both Coca-Cola and Pepsi came out with diet or light vers
ion of their products. These companies previously focused on carbonated drinks h
ave also diversified their products to bottled water and juice and juice drinks.
( 2006)

At present, soft drink has gone from a product with minimal consumer value prior
to the 1990s to an everyday consumer product after the reforms in 1991 to becom
e an enduring beverage commodity in the Chinese market after surviving the benze
ne issues and addressing the growing health-oriented perspective of consumers in
urban areas. This means that soft drinks are expected to remain a significant c
onsumer product in the future.

Chapter 6 SWOT Analysis of Coca-Cola

Coca-Cola has established the company as a major player in the soft

drink industry in China and its brands and products in the Chinese market by dev
eloping and maintaining a competitive advantage over its competitors. As an indi
vidual business firm, the company has also maintained and even enhanced its viab
ility as a multinational corporation conquering different markets in different r
egions and countries.

6.1 Strengths

As a thriving individual business firm, Coca-Cola holds the position

as a major player in the soft drink industry by enhancing its strengths. First
strength of Coca-Cola is its establishment of a strong brand name ( 2004). The b
rand name and logo used by Coca-Cola in marketing in products has been associate
d with historical and social relevance. In the United States, Coca-Cola has been
in existence for more than a century so that the product has become part of the
food and beverage culture of Americans. In different parts of the world, Coca-C
ola may have just been introduced for several decades but in markets where the p
roduct enjoys a large customer base, the brand and product has been integrated i
nto the local culture. This means that the market recognizes the brand, logo and
tasted the product. Coca-Cola has also been sentimentalized through shirts, cap
s, and memorabilia and widely viewed through billboards, advertisements and post
ers. Even in China, the Coca-Cola brand and logo has enjoyed recognition and cul
tural relevance over the past decades.

Second strength of Coca-Cola is the development of a good reputation

with its customers ( 1999; 2004). The company has faced several complaints on
its operations in different markets around the world ranging from human rights a
nd labour issues in Colombia and China to environmental issues in its bottling p
lants in the Philippines and in China and even to product quality issues regardi
ng its bottled water under the Dasani brand after the company admitted that it u
ses tap water for its bottled water products. However, despite these issues the
brand proved to be of greater value to offset the negative feedback which may de
velop from the public response to these issues. The company has also built links
with the community by proving itself as a business firm concerned with communit
y issues by dealing decisively with these problems. Apart from this, Coca-Cola h
as also maintained its international brand-related message of advocacy for tradi
tion and consistency making Coca-Cola a company, brand and product valued throug
h its quality and dependability.

Third strength of Coca-Cola is its enjoyment of cost advantage (1995

) brought about by it¡‾s more than a century of experience in the industry. Its
wide experience in operating as a multinational company has also helped the firm
determine best practices in market entry and marketing in the international mar
ket. In China, the company has reaped the cost advantage of engaging in joint ve
ntures with local companies for its bottling operations and beverage concentrate
production instead of establishing a subsidiary company in the country. By ente
ring into joint ventures, the company saves on the establishment of the building
infrastructure, expenses for legal obligations required for establishing a subs
idiary in China, expenses on human resources, and other necessary expenses in se
tting up a branch in the local market. In entering the Chinese market, most of t
he investments made by Coca-Cola were directed towards the technological advance
ment of the facilities and equipment covered by the joint venture as well as the
integration of quality standards in its operations. With regard to marketing, t
he company has also saved on the advertising and promotional expenses involved i
n achieving market acceptability of the company, its products and the company br
and and logo since it takes advantage of the market links of its partners in the
joint venture.
6.2 Weaknesses

Coca-Cola is part of a highly competitive industry causing the firm

to experience several weaknesses in its operations. First weakness is the compan
y¡‾s lack of exclusive or advantageous access to resources ( 2001). As mentioned
earlier, soft drink production involves large amounts of sugar. For some decade
s prior to the 1991 reforms, Coca-Cola had limited access to sugar from the dome
stic market due to the controlled industrial use of the raw ingredient. Control
means that the company had to compete with other sugar-utilising firms to gain t
heir share of the ingredient. With the removal of control over the industrial pu
rchase and use of sugar, production increased. However, this environment still i
nvolves strong competition since all the firms belonging to the various sugar-ut
ilising industries have heightened their production levels necessitating the acq
uisition of larger volumes of sugar and other raw ingredients. This means that C
oca-Cola has to gear up for a fiercer competition with the relaxation of the reg
ulation on the industrial use of raw materials than during the period of regulat
ed acquisition and utilisation.

The lack of exclusive access to high quality raw materials ( 2001) c

onstituting Coca-Cola¡‾s weakness is further supported by the uniformity or simi
larity of the ingredients used in the production of competing soft drink product
s. In the case of carbonated beverages, although the taste of Coca-Cola and Peps
i products are different, the ingredients used are the same but differing only i
n the manner of mixing the ingredients. Even juices and bottled water involve th
e same raw materials. This implies that all the competing business firms in the
soft drink industry are competing with each other for access to the same ingredi
ent suppliers. Although Coca-Cola has engaged in joint ventures with bottling an
d beverage concentrate producing firms, these firms have to compete for raw mate
rials. Coca-Cola experiences the disadvantage of not having exclusive access to
high quality raw materials.

Second weakness is the lack of advantageous access to channels of di

stribution ( 2001). Although Coca-Cola is widely distributed, so does competing
products. Channels of distribution for soft drink products include supermarkets
and grocery stores, fast food and other restaurants, vending machines, and even
t sponsorships. In the case of supermarkets and grocery, Coca-Cola products are
displayed in shelves beside its competitors. This means that Coca-Cola does not
have an advantage in supermarkets and groceries as channels of distribution and
these retail outlets would not want to jeopardize their business relationship wi
th competing companies by providing Coca-Cola with an advantageous position thro
ugh product display, placement and signage. Fast food and other restaurants are
channels of distribution where there may be exclusive distribution arrangements.
Coca-Cola has entered into an exclusive beverage distributions agreement with M
cDonalds and other restaurants but Pepsi also exclusive beverage distribution ag
reements with KFC, Pizza Hut and Taco Bell. This does not really provide Coca-Co
la with an advantageous distributions scheme.

6.3 Opportunities

Despite Coca-Cola¡‾s enjoyment of increasing sales in the Chinese ma

rket, there are still areas of opportunity open to the company. First is expansi
on of distribution to rural areas. So far, Coca-Cola has successfully captured t
he urban market but there are still potential markets in rural areas. This oppor
tunity is created by the increasing transfer of manufacturing firms to the rural
areas due to the trend of shifting from agricultural production to manufacturin
g. This in turn has brought about by the entry of China into the world market in
fluencing the re-establishment of the economic activities that the country would
prioritize in order to achieve competitive position in the world market. The es
tablishment of manufacturing firms in the rural areas would mean income opportun
ities for rural residents drawing the entry of various businesses such as fast f
ood and beverage firms.
Coca-Cola could take advantage of this opportunity by expanding its distribution
channels to rural areas by aligning with fast food companies or wholesale and r
etail distribution channels. Coca-Cola can successfully capture the rural market
by linking the company, product and brand with the community practices. The com
pany could start by sponsoring community affairs or engaging in community welfar
e services. The company could also form retail partnerships with local restauran
ts and stores to provide better visibility and greater access to Coca-Cola produ
cts of targeted rural market.

Apart from expansion to the rural market, Coca-Cola also is faced wi

th the opportunity of furthering its product diversification schemes in order to
gain a wider customer base. At present, Coca-Cola has already entered the four
major sectors of the soft drink industry, which are: 1) carbonated drinks; 2) RT
D tea drinks; 3) bottled water; and 4) juice and juice products. All these produ
cts and product brands are presently available in China. However, apart from car
bonated drinks the company has only a number of products in the different soft d
rink sectors. Due to the growing health consciousness of Chinese customers, Coca
-Cola may want to expand its product line in the other three soft drink sectors.
An innovative opportunity for the company may even be to engage in food product
s to complement its beverages. This opportunity is supported by the strong brand
equity of the company which can adequately support this venture.

Another area of opportunity is in the bottling system and packaging

of its products. One venture open to Coca-Cola is the expansion of its bottling
and beverage concentrate production in the rural areas in order to support its e
xpansion to the rural market as well as to gain possible cost savings from the l
esser expenses incurred in operating in rural areas. Another venture for Coca-Co
la is the evaluation of the packaging of its products in the other soft drink se
ctors. In relation to carbonated drinks, the colour red for coke has helped in p
roduct recognition. The company should consider evaluating the packaging of its
other products, especially those with sales lower than company expectations, cov
ering the colour scheme, brand name, and bottle shape and size.
6.4 Threats

Although Coca-Cola has gained strength as a soft drink manufacturing

company in China, the increasing number of food and beverage products being int
roduced in the market result to a certain degree of threat to the company. One t
hreat is the shift in the tastes of consumers. Individuals and families in urban
areas are increasingly joining the health consciousness bandwagon based on thei
r experience and as influenced by the international campaign against obesity. If
this further strengthens, this means that the consumption of Coca-Cola products
could be affected. Since Coca-Cola carbonated drink has sugar and caffeine cont
ents, customers seeking to cut back on the consumption of these products could d
rop out of the company¡‾s customer base. Apart from this, the association of Coc
a-Cola carbonated products with fast food restaurants could mean that customers
withdrawing from fast food consumption could also decide to lessen intake of car
bonated products. If the company does not strengthen the saleability of its prod
ucts in the other soft drink sectors, it could face an even bigger threat from c
ompanies offering substitute products.

While it is true that Coca-Cola has introduced diet cola, marketed a

s having the same taste as the original cola but with lesser sugar content, this
single product innovation may not be sufficient to retain the customer pool tha
t changed its customer preference in the direction going away from Coca-Cola pro
ducts.

Concurrent with the recognized change in consumer preferences, subst

itute products are being introduced in the market such as tea, juices, coffee, h
ot chocolate and coffee that all fit the consumer taste for healthy living. Thes
e products serve as threats to Coca-Cola products. The company has to enhance br
and equity by strengthening its non-carbonated products in order to retain its c
ustomer base and gain additional customers seeking alternative products to carbo
nated drinks.

Chapter 7 Marketing Strategy of Coca-Cola

Coca Cola¡‾s marketing strategy in China is linked to its place in the history o
f China distinguishing the company and its product in the Chinese market. The in
troduction of coca cola into the Chinese market was initiated after the conclusi
on of the First World War with the establishment of the company¡‾s first bottlin
g plant through joint venture with Hong Kong based business firms. However, in t
erms of product marketing Coca Cola became the first US based company to distrib
ute its products in the Chinese market immediately after Deng Xiaoping catalyzed
the opening of China to foreign investors towards the end of 1970s. Since then,
Coca Cola has maintained a significant and growing market share in China. At pr
esent, Coca Cola holds ownership interest in twenty four bottling plants through
join ventures with Hong Kong based companies that the company also owns in part
such as Kerry Group and Swire Beverages. Apart from joint ventures, Coca Cola a
lso holds ownership interests in a completely foreign-owned firm, based in Shang
hai, which produces beverage concentrates. It is also through this company that
Coca Cola entered into a joint venture with another beverage concentrate produci
ng firm located in Tianjin. Coca Cola has utilized joint venture in establishing
twenty four bottling operations and several beverages concentrate producing ope
rations in mainland China and Hong Kong. (2001)

It was Coca Cola¡‾s long-term goals of localizing production and building of inf
rastructure through strategic partnerships with domestic companies as well as th
e Chinese government have pushed the company to achieve nationwide operations re
sulting to strong market presence. Due to these strategies, the company has cont
rol of 35 percent of the country¡‾s carbonated beverage market. Coca Cola is als
o able to generate yearly sales amounting to $1.2 billion. The company earned an
increasing profit from sales in China since 1990. Thus, Coca Cola has establish
ed a hold over the Chinese economy by contributing 15,000 employment opportuniti
es and supporting the viability of various supply, distribution, wholesale and r
etail companies employing around 400,000 people. Apart from this, Coca Cola has
also contributed to the technological enhancement of the beverage industry in te
rms of the updating of old facilities, introducing of quality testing, and provi
ding training programs for managers involving $1.1 billion worth of investments
into the Chinese market. ( 2001)
7.1 Market Segmentation and Product Positioning

Coca-Cola¡‾s market is distinguished according to geographic locatio

n and age. Geographic location pertains to determination of whether the consumer
comes from the rural or urban areas. Although, there are more potential consume
rs in the rural areas, most of Coca-Cola¡‾s customer base is located in the urba
n areas. This manner of segmentation is supported by the economic diversity of C
hina so that it is imperative that it should not be considered as a single marke
t. China¡‾s market diversity stems from the disparity in income between rural an
d urban areas since the per capita disposable income in urban areas is at a leve
l of three times more than in rural areas. Apart from this, there is also a disp
arity in income among urban areas based on the level of economic development and
the concurrent standard of living. The imbalance in economic development in dif
ferent geographical regions of China affects the purchasing power of consumers i
n the different regions. In considering the top four largest cities in China, th
ese accounted for only 4 percent of the population but responsible for 15 perce
nt of retail sales while the remaining small cities and provinces represent 80 p
ercent of the population accounting for a little more than 50 percent of retail
sales. ( 2003)

Age as the other criteria for market segmentation of Coca-Cola consu

mers refers to the segmentation of the company¡‾s consumers according to consume
rs below 45 years old and 45 years old and over. The age distinction is based on
the young generation during the time of the reintroduction of Coca-Cola in Chin
a in the 1970s. It was this generation, aged 45 and below, that comprised the in
itial customer base of Coca Cola and integrated consumption of company products
into their food and beverage purchases. The generation before them do not have a
similar attachment to Coca-Cola products.

Coca-cola has a strong brand equity ( 2005) attached to its products. The value
of its brand comes from the reputation of the company of developing a good tasti
ng soda beverage that families and friends can share. Coke is all about traditio
n and stability. This was observed by the consistency of the company¡‾s approach
, message and product development. The strengths of coke come from its ability t
o be consistent, a product that is always there. When coke introduced New Coke i
n 1985, a product with a sweeter taste, the public reaction to the change was de
vastating to the company. The change represented a deviation from the values of
stability and consistency attached to the brand equity of the company. Coke reli
es mainly on its brand equity to sell its products. Although, coke also got invo
lved in celebrity endorsements, it withdrew from this race and continued with it
s equity-based campaigns. Thus, Coca-Cola has positioned itself in the internat
ional market and in China as a traditional and consistent company that will alwa
ys be there to provide its products to the market.
7.2 Marketing Mix

The marketing mix of Coca-Cola comprises the factors that the compan
y controls in order to provide customer satisfaction in the targeted market segm
ents. Through the strategic blending of these factors, Coca-Cola ensures that it
is able to generate a positive response from its targeted market segments.

7.2.1 Product

Coca-Cola has been able to diversify its products to include carbonated drinks s
uch as Coke Classics and other soda products such as Sprite, Fanta, Barq¡‾s Root
Beer and Dr. Pepper as well as bottled water, RTD tea drinks and juice drinks u
nder the brand names Qoo, Sensation, Tianyudi and SMART. The diversification to
other soft drink sectors was influenced by the growing demand for healthy bevera
ges in its targeted market.

The diversity of the quantity of demand and the cost of packaging ha

s also affected the products of the company. The companies packaged their produc
ts in glass bottles of different sizes and shapes. However, after the developmen
t of plastic containers the packaging shifted to plastic containers especially f
or larger volumes of soda making it lighter when carried. At present, the demand
for better convenience resulted to the packaging of sodas in cans. Coca-Cola pr
oducts are sold in glass bottles, plastic containers and cans.
7.2.2 Price

The pricing strategy of Coca-Cola is based on the pricing dynamics relative to i

ts competitors as well as the value of its products. In China, as is true in the
international market, the fiercest competitor of Coca-Cola is Pepsi so that pri
cing is in a way influenced by the interplay of these competitors in a given mar
ket. However, Coca-Cola holds the advantage in pricing because it had a head sta
rt of several years giving the company a stable market share relative to Pepsi,
which suffered several bankruptcies. The product price of Coca-Cola became the i
ndustry benchmark. The strategy of Pepsi then was to sell its products at half t
he price of Coca-Cola. The company was able to gain a share in the market. ( 200
3). This pricing dynamics between Coca-Cola and Pepsi continue today. In superm
arkets, the price of coke is still higher by 15 to 20 cents when compared to Pep
si.

The higher price given by Coca-Cola to its products is supported by the value of
the brand equity of its different soft drink products. Coca-cola was able to se
ll at a higher price than its competitors because of its stable share market sha
re due to its marketing communications message linked to brand equity of product
stability. This makes Coca-Cola a true leader in the industry due to its abilit
y to determine the industry pricing benchmark. Despite its slightly higher prici
ng, it is still able to maintain a market share by establishing a high value for
its products through associations with consistency and dependability.
 7.2.3 Promotion

Coca-Cola applies consistency and dependability even in its promotional activiti

es. The company actually makes use of pattern advertising ( 2003). The company d
evelops advertisements containing its determined marketing communications messag
e. The manner of advertising adheres to various specific audiences. However, des
pite the consistency of its advertising framework for its different markets arou
nd the world, Coca-Cola also implements local adjustments. The adjustments cover
the 1) translation of words and lyrics in the local dialect of particular marke
ts and delivered in a manner appropriate and acceptable to the local culture, 2)
basic adjustments to the advertising format such as the use of locally signific
ant words, phrases, messages and the arrangement of these elements to deliver a
cohesive promotional campaign aligned with the basic marketing communications me
ssage of the company; 3) audio-visual adjustments made to the advertising format
such as colour scheme, character selection, video stream and other audio-visual
aspects of the campaign.

Apart from pattern advertising, Coca-Cola also adheres to product differentiatio

n ( 2003) by withdrawing from the explicit cola war with Pepsi. The cola war per
sisted until the late 1900s with taste-tests and celebrity endorsements of compe
ting personalities. In succeeding years Coca-Cola reverted to its marketing stra
tegy of appealing to the stability and consistency found in the value accorded t
o family and friendship differentiating the company, product and brand from its
competitors.

7.2.4 Place

All the soda brands are marketed in the common channels of distribution except i
n the exclusive retail venues that companies bid to have. In supermarkets, these
brands are sold side by side in the display shelf not giving a single brand any
edge relative to the buyer. The rivalry over the channels of distribution was e
levated to obtaining exclusive selling contracts in restaurants, places for vend
ing machines, recreation areas, and popular events.

In China, the focus of Coca-Cola is in direct-to-retail distribution

through the establishment of a minimum of one sales centre in cities with a tot
al population of 1 million. The sales centres that also serve as warehouses are
completely owned and operated by Kerry, Swire and other bottling firms with whic
h the company has entered into joint venture agreements. For logistics support,
delivery trucks numbering around twenty in large cities are on standby in the sa
les centres to cater to retail orders. Apart from its own distribution centres,
Coca-Cola also partners with large wholesalers with valuable experience in the a
rea of retailing and independent wholesalers able to reach out to local communit
ies. Apart from this, Coca-Cola also builds strong partnerships with government
units by sponsoring welfare programs.