Coca-Cola Global Marketing Strategy

Introduction

As domestic markets mature, it is becoming more and more fashionable

for organisations 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 standardising
marketing actions across a number of geographic markets. This does not
rule out any customisation of the marketing mix to individual countries but
suggests that organisations should capitalise on similarities between
markets to build competitive advantage.
Compelling cases can be put forward for both a standardisation or
adaptation approach to international marketing practice. These arguments
are keenly explored, drawing from examples of Coca-Cola's international
marketing programme 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 Standardisation

• Converging customer needs and preferences

It is proposed by Levitt that the forces of globalisation driven by

technology and wider travel are leading to more homogenised 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, standardised 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.

• 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 centralised 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 standardisation 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 standardise 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 globalisation due
to inefficiencies in their operation.

Arguments for Adaptation

• Consumer Diversity
Supporters of the adaptation view contend that, regardless of
globalisation, 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 programme in some shape or form.
By carefully singling out the most significant differences,
organisations 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 organisations in particular, can
easily fall prey to obstacles such as regional taste and category
development issues.
On the other hand, organisations that market internationally have to
bear in mind that customising communication and product strategy will
increase overall marketing costs. Traditionally, Coca-Cola used a
standardised 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 standardisation
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.
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 standardised
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 standardised 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 emphasises 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 standardisation
through to complete customisation. Clearly there are circumstances where
multinationals can gain through increased standardisation 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 standardisation decisions using target market conditions as its
starting point, an organisation 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 standardised
agenda, its decision to combine global and local resources is ultimately
more long-standing in a market where national customer differences are
influential.