International Marketing
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International Marketing
Table of Contents
Coca Cola: An Overview of the Company...............................................................................3
Answer 1........................................................................................................................................3
1.1. Global Marketing Mix of Coca Cola...........................................................................3
1.1.1. Product.....................................................................................................................3
1.1.2. Price..........................................................................................................................4
1.1.3. Place.........................................................................................................................4
1.1.4. Promotions..............................................................................................................5
1.2. Standardization of the Global Marketing Mix of Coca-Cola .................................5
1.3. Effectiveness of Coca-Colas Global Marketing Strategy.....................................6
Answer 2........................................................................................................................................8
2.1. Internationalization Process Theory.........................................................................8
Conclusion.....................................................................................................................................9
References...................................................................................................................................11
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Coca Cola: An Overview of the Company
The company was founded in the year 1886 and has eventually turned into the leading
manufacturer, distributors and marketer of non-alcoholic beverages, syrups and concentrates.
The company is currently operating in more than 200 countries and is known for its innovative
formula named Coca-Cola, after which the company is named. The headquarters of Coca-Cola
are based in Atlanta, Georgia and its subsidiaries are based on 30,000 employees, all around the
world. 80 percent of the profit generated by the company and 70 percent of its volume comes
from outside the United States, making it one of the largest companies of the world (Anon.,
2015).
The global success of Coca-Cola can be attributed to a number of factors. The message
was conveyed by the former chief marketing officer of Coca-Cola that if the firm wanted to think
globally, it must first try to act locally. This message has been communicated a number of times
by Coca-Cola Company. Coca-Cola has sustained its successful global image for many years.
Coca-Cola is the brand that leads towards global recognition, however, the company operates
equally well in its local operations; trying to meet the demands of the local culture and taste
(Anon., 2015).
Answer 1
1.1. Global Marketing Mix of Coca Cola
1.1.1. Product.
The product of Coca Cola is standardized worldwide, which includes not just the liquid
but also the products packaging. Soft drinks, which are the main product of Coca Cola, are used
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for satisfying the need of the consumers. However, the demand of the consumers may differ as
some want less and some want more. In order to address this need, Coca Cola offers its product
in different sizes, across the globe.
1.1.2. Price.
Unlike many other companies, Coca-Cola has completed a century of its successful
existence. One of the reasons of this success is the fluent pricing strategy of Coca-Cola. The
company also enjoys the privilege of operating as a strong competitor, who is growing faster,
smarter and better with every passing day. Coca-Cola faces some strong competition in the
beverage industry from competitors such as Pepsi Co.; and the more successful the competitors
of the Coca-Cola will be, the sharper the company has to be, to strive. This can be considered as
another reason behind the success of the company.
1.1.3. Place.
There were various strategies adopted by Coca-Cola, in order to cater the share of the
foreign market. The most common modes adopted by Coca-Cola to enter into the foreign market
were; licensing, franchising and exporting. Besides syrups and beverages, Coca-Cola is also
known for exporting its merchandise to the overseas companies and distributors. Besides
exporting, the company also markets internationally by licensing the bottlers across the globe
and supplying them with syrup needed for the manufacturing of the product.
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1.1.4. Promotions
The target market of Coca-Cola is the youth. The company wants to associate its products
with energy and youth, but considering the old people in the society, Coca-Cola has labelled
them as its co-target market. The global marketing strategy of Coca-Cola is focused on the fact
that they want to take the right product to the right people at the right time (Kokemuller, 2015).
1.2. Standardization of the Global Marketing Mix of Coca-Cola
There has been an extensive research on topics that are related to standardization of
global strategy, but the number of conclusions reached is very limited. In a research conducted
by Demetris & Sharp (2000) global marketing can also be termed as another aspect of
international marketing that does not exist in its true form. It is based on the idea that it covers a
wider perspective of countries and endeavours to develop a standard marketing strategy between
different countries.
A study by Svensson (2001) proposed that global strategy of Coca-Cola is strongly
associated with its corporate strategy, which is the reason behind the companys success. An
organization strategy is defined as leading the performance of an organization based on its
overall activities of business and distribution of resources in order to meet the aims and
objectives of the organization. On the contrast, many studies also stated that when an
organization like Coca-Cola decides to go global, it looks on the global market as a whole
instead of considering every country as a separate or new market (Svensson, 2001). Ghoshal
(1987) explained that the optimum globalized strategy is to manufacture a product that is
standardized and therefore, can be sold by means of standard marketing strategies and programs.
The main issue that is faced by many organizations is to identify if they can achieve low cost and
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high production without any compromise on the quality. Standardizing the product is the key to
success while operating in global markets.
Organizations that are leading small markets, usually domestic, will easily be dominated
by large scale organizations producing standardised products in the global market. Kogut (1985)
explaining global strategy considered strategic flexibility (as cited in Meyer & Estrin, 2014)
whereas, according to Collis, (1991) global strategy can be explained in following key points (as
cited in Carr & Collis, 2011):
There is a need of global strategy when there is a strong dependence on the competitive
position of businesses in different regions and countries.
The dependence or interdependence of Coca-Cola can be evaluated by constructing scale
economies, retrieved from global or international capability and practices, the value of a
business depends on its global name of the brand, learning curve effect as explained by
Porter & Millar (1985), cross-subsidization or value of options, conferred by its presence
in multinational markets.
The perilous issues that should be addressed by global strategy of Coca-Cola incorporate
alignment and synchronization with global activities of any business.
The structure of an organization or a business must be a derivative of the global strategy
implemented by the organization (Anon., 2015).
1.3. Effectiveness of Coca-Colas Global Marketing Strategy
The global marketing strategies of Coca-Cola that the company has introduced have been
quite successful over the time as it is based on some timeless principles. Acceptability is one of
the core values of the global marketing strategy of Coca-Cola. The company through its effective
marketing has planted this idea in the minds of the people that their product is an integral part of
their daily life, due to the brands availability everywhere in the world. The company, over the
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time has created a well-organized and extensive global distribution network that guarantees
ubiquity of its brand. The global marketing strategy of Coca-Cola is based on the approach that
the company has to quench the thirst of every person in the world. The success of the company
can be identified by the fact that the glass bottle of Coca-Cola is considered to be an iconic
symbol globally (Puravankara, 2007).
The standardized global practices of Coca-Cola have been a success, as within all the
these years, the company has achieved its core goals such as accelerating the growth of
carbonated soft drinks, which is led by Coca-Cola, broadening its product range globally, with
the major focus on bottled water, coffee, tea, energy drinks and juices. The company has also
established a fast pace growing system of capability and profitability with the bottlers, by
intelligently investing in the global market growth. Cost effectiveness and efficiency are the key
drivers on which the success of the Coca-Cola is dependent, which has also enabled the company
to achieve extra-ordinary global success in the past years.
The effectiveness of standardization can be evaluated when the global management
practices of Coca-Cola are implemented on a local market. It has been argued over the years that
globalization leads towards standardization and homogenization of the product. This is a
significant factor the companies forwards to achieve the economies of scale. Standardization at
times overlooks the needs of localization and may not take into consideration factors such as the
local taste, culture and the preference of the consumers. However, standardization has worked in
the case of Coca-Cola Company, as it has effectively established its globalization initiative.
Standardization has proved to be an effective strategy in the case of Coca-Cola, helping the
company to achieve economies of scale. Localization limits the benefits associated with location
economies and economies of scale. It also requires additional effort of the company in the
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research and development areas and increase the companys cost associated with producing
tailored products (Feloni, 2015).
Answer 2
2.1. Internationalization Process Theory
The theoretical framework of the Internationalization Process theory was developed by
Wiedersheim and Johansson. This theory lays its emphasis on the four aspects which are market
commitment and knowledge, current marketing activities and commitment decisions. The major
internalization theories that are implemented by a company while entering into any new market
are contract manufacturing and exporting and licensing. Licensing is considered to be the
permission granted by the proprietor owner to any foreign company to sell their product, which
would otherwise have been forbidden. Franchise on the other hand is when any company
undertakes the right to take the business activity, by using the companys name. However, Joint
venture can be totally different from these two internationalization theories, as in this case a
completely new identity is created in which both the companies take an active role. Export can
be direct or indirect. When the firm exports indirectly it operates through the confirming house,
buying a house or export house (Anon., 2015).
However, in this case franchising can be a better option for the company. The company
started giving away its bottling rights for a dollar each, while maintaining the rights of the syrup
produced. This was the initiated of what is now addressed as the Coca-Cola system of franchise
partnership. This partnership with the bottlers is what led towards the internalization of the
brand. These bottlers are the public companies operating with the rights from Coca-Cola such as
Coca-Cola Enterprises, Coca-Cola Bottling Company, Coca-Cola Consolidated Bottling, etc. It
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was in the year 2013, when the company updated its franchising model in Canada and US,
making its agreement with the American and Canadian bottlers and expanding its territory
(Feloni, 2015).
Coca-Cola has implemented all the theories of internalization at some point of time. The
internationalization strategies of Coca-Cola have been a success in the first place. The company
exports the syrups to the bottle owner, who have the right of manufacturing the firms product.
There are a number of challenges that Coca-Cola faces while operating in the global market. In
the developed countries, children may become obese due to the excessive consumption of CocaCola. These allegations are often addressed by Coca-Cola. As, once the CEO of the company
gave the statement that children in the developed countries are not obese because of the
consumption of Coca-Cola but, they are obese because they do not take part in enough sports
activities. He also added that companys products, like diet Coke is healthy for children, as well
as the adults. The internationalization theories adopted by Coca-Cola helps it in facing the
competition from the local companies. Competing in the global market exposes the company to
local competitors (Mok, et al., 2002).
Conclusion
The global companies continuously need to generate and sustain high profit levels, to
create competitive advantage for the company. For example, Coca-Cola continuously needs to
build its brand image by adopting effective and successful strategies related to promotion,
provision and advertising. The distribution system of the company needs consistent development
and expansion. Coca-Cola has been doing this successfully over the years with the help of its
strategy of growth, enabling the company in the development of its international market
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leadership. The company over the years had successfully developed a global mindset which
involves understating of different global cultures, utilizing work relationships and identifying
and grabbing every global opportunity.
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References
Anon., 2015. Coca-Cola Co (KO). [Online]
Available at: http://www.reuters.com/finance/stocks/companyProfile?symbol=KO
[Accessed 7 August 2015].
Anon., 2015. Coca-Colas international strategy in Africa. [Online]
Available at: https://tortora.wordpress.com/2010/04/07/coca-colas-international-strategyin-africa/
[Accessed 7 August 2015].
Anon., 2015. Coca-Cola's Journey. [Online]
Available at: http://www.coca-colacompany.com/our-company/
[Accessed 7 August 2015].
Anon., 2015. Strategy Implementation. [Online]
Available at: http://www.referenceforbusiness.com/management/Sc-Str/StrategyImplementation.html
[Accessed 7 August 2015].
Collis, D. J. (1991). A resourcebased analysis of global competition: the case of the bearings
industry. Strategic management journal, 12(S1), 49-68.
Feloni, R., 2015. Coca-Cola isn't one giant corporation it's a system of almost 275
companies. [Online]
Available at: http://www.businessinsider.com/inside-coca-cola-franchise-system-2015-6
[Accessed 7 August 2015].
Kogut, B. (1985). Designing global strategies: Comparative and competitive value added
chains. Sloan management review, 26(4).
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Kokemuller, N., 2015. What Is the Marketing Mix of Coca Cola?. [Online]
Available at: http://yourbusiness.azcentral.com/marketing-mix-coca-cola-12969.html
[Accessed 7 August 2015].
Mok, V., Vincent, D. & Yeung, G., 2002. An internalization approach to joint ventures: the case
of Coca-Cola in China. Asia Pacific Business Review, 9(1), pp. 39-58.
Puravankara, D., 2007. Strategic Anaysis of Coca-Coal Company, s.l.: Simon Fraser University.
Porter, M. E., & Millar, V. E. (1985). How information gives you competitive advantage.
Svensson, G. (2001). Glocalization of business activities: a glocal strategy
approach. Management decision, 39(1), 6-18.
Vrontis, Demetris, and Iain Sharp. "The strategic positioning of Coca-Cola in their global
marketing operation." The Marketing Review 3.3 (2003): 289-309.
