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International Marketing of Coca-Cola

The growth drivers for and the competitive environment of the ICFD industry in India

In 2018, the new whipped frozen fruit treat from Coca-Cola India Private Limited was to be released. A unique introduction of the frozen dessert category in India will be the first to use this product across the country (Puri et al., 2018). This ice cream and frozen dessert business in India has several contributing elements. First, India is a massive market for ice cream consumption worldwide. India leads the way, with 381.8 million liters sold in 2017 (Puri et al., 2018).

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Because of rising GDP per capita and increasing demand from an expanding middle-class population, the frozen dessert industry in India is expected to develop at a compound annual growth rate (CAGR) of over 19 percent by 2023 (Puri et al., 2018). Furthermore, the increasing use of refrigerated facilities in small retail stores and rural families, combined with the expansion of the organized retail and e-commerce industries, is expected to significantly drive the ICFD market in India over the next five years.

Additionally, the ice cream and frozen desserts industry expanded by 20 percent in 2016, reaching $1.59 billion, with yearly growth of 11 percent projected by 2021 ($2.65 billion). Another aspect that is favorable to the market is the hot temperature of the nation, which has contributed to the popularity of this cool dessert in recent years. The ice-cream market has undergone an evolution in which the category has expanded in size and shape, from consumers’ perspective to the goods and services supplied. The ice cream and frozen dessert business have developed into a high-indulgence market, owing mainly to the huge young population and the rising middle class, which has increased in wealth. As a result, the category has had steady growth, with a compound annual growth rate of around 10-15 percent.

Each one of the marketing mix factors influences all the others. A business strategy that is well handled may help a firm achieve significant success. The incorrect way to deal with the business might take years to get back on track. Understanding, market research, and collaboration with various individuals are required for a good marketing mix. Therefore, the marketing mix is a very important aspect to consider to ensure product success. A marketing mix is a combination of all of the things a firm does to advertise and sell its products or services. It’s important to know what products you have, when and where you may sell them, and at what price. The traditional marketing mix comprised the 4Ps that include product, price, place, and promotion. A mix of these marketing mix factors is employed by businesses to draw in the reaction they desire from their target audience.

Successful implementation of the marketing mix would result in improved product performance in the market. This is evident in exhibit 2 in the appendix, whereby there has been a constant increase in the number of sales made for the ice cream and yogurt products from 2014 to 2016. This is due to the successful implementation of the marketing mix. The market shareholders of the ice cream and yogurt products have remained almost constant, showing how competitive the market is as no company is ready to lose its market share to its rival competitors. The following is an expansion of the 4Ps of the marketing mix.

The product strategy

When it comes to product strategy, having a diverse product lineup is more important than having a core product emphasis. If this is the case, a product offering various sizes, shapes, and sorts of items will be needed. For instance, Coca-Cola makes many kinds of beverages with varying sugar levels, including those with and without sugar. Coca-beverages Cola’s includes Fanta, sprite, ginger ale, lemonade, and spring water. 2 liter, 1 liter, 1.25 liter, 500ml, and 200ml varieties of Coca-Cola drinks are also available. A variety of consumer needs and preferences will be addressed as a result of this product strategy. To help make it more distinguishable from other brands, Coca-Cola made the Coca-Cola logo visible on each of these bottles and cans. To further emphasize Coca-unique Cola’s brand image, the bottles all feature distinctive forms and designs.

Pricing Strategy

In this context, they price goods at various rates for different product categories. There are just a few vendors in the beverage industry, and this market is known as an oligopoly. The major participants in the soft drink industry are Coca-Cola and Pepsi. In that particular sector, Coke goods and Pepsi products are priced the same. Consumers could switch notably in underdeveloped nations where they are price sensitive. This understanding allows both parties to agree to preserve price parity in each section. On the other hand, although Coca-Cola may provide bulk purchases with bulk savings, it also occasionally bundles goods.

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Place & Distribution Strategy

Coca-large Cola’s distribution network reflects its market strategy whereby it manufactures and distributes the beverage globally. The company predetermines bottle sizes and shapes. After filling the bottles, the bottlers ship them to the transport and delivery agents. Most products delivered by distributors end up at wholesalers, distributing them to retailers based on demand. Coca-Cola products are readily available in most retail outlets, supermarkets, and convenience shops worldwide. Coca-Cola is available in many hotels and restaurants worldwide. A complete reverse supply chain collects abandoned glass bottles from retail locations and recycles them into reusable products to help save costs and resources.

External Environmental Analysis using the Porter 5 forces Analysis

  1. The threat of competitive rivalry (high) – In a competitive industry where firms are ready to go to considerable efforts to maintain their position of dominance within a sector, the intense competition among businesses may help determine the lucrativeness of a particular industry. The Coca-Cola Indias Frozen Dessert Plan has seen an increase in inactivity. Another primary focus of the Competition is the variety of products and services available in the market and changes in the industry, and difficulties that start-ups may face while entering the market. Coca-cola will be encouraged to improve in all areas due to the increased sense of rivalry in this market, whether product quality, price differentiation, or marketing strategy.
  2. The threat of new entry (medium) – Because there are several rivals in this market, the threat of entry is low to medium. On the other hand, Coca-Cola is a well-known brand worldwide, making it simpler for the company to acquire new customers and grow into a new market sector. It is in the best interests of the marketplaces that currently exist for companies to construct barriers to entry to discourage new entrants from entering. New firms or companies who are seeking to broaden their product lines might be included among the groups. Industrial and legal obstacles might both exist at the same time and be interconnected. Beyond that, the size and reputation of the firms that are already active players in the market are vital considerations.
  3. Bargaining power of suppliers (low) – There is a lack of supplier power because Coca-Cola, as a well-known brand, will not compromise on the quality of the goods it provides to its customers. As a result, Coca-Cola will be forced to charge a higher price than its competitors. Powerful suppliers have more ability to capture considerable value for themselves by demanding high prices while limiting the quality and quantity of the goods or services or shifting the cost to the participants in the business. In general, many of the conditions set by the suppliers involve an increase in price while simultaneously reducing the quality and quantity.
  4. Bargaining power of buyers (high) – Buying conditions that are not very favorable to suppliers regarding price, quality, or service can significantly impact the suppliers’ profitability if the buyers have significant negotiating power. The amount of interest and concentration of customers in a product determines whether they have more or less control over it. To counterbalance the dominance of powerful suppliers, powerful consumers must first force prices to fall while simultaneously expecting high levels of quality and services. This will create Competition amongst those involved in the sector based on both price and quantity. Customers are considered powerful if they possess bargaining leverage, especially if the industry is sensitive to pricing. The buyers can exert pressure on suppliers to reduce prices even more. They can move to the ordered product in a matter of seconds, but it should be emphasized that the quality of the rivals’ goods will be inferior to that of Coca-Cola.
  5. The threat of substitutes (medium) – When it comes to Competition, the Coca-Cola India Frozen Dessert Plan is heating up. Substitute items are products that are accessible in the market at a lower cost and are therefore more appealing to consumers. Such items have become popular as a result of technical and inventive progress. Due to technological advancements, there is a high threat of substitute products in this market, which forces competitors to lower their prices compared to what Coca-Cola is providing to the consumers; as a result, the threat of substitute products is high.

Promotion, Branding, and Advertising Strategy

Coca-Cola sets the bar for advertising and branding through its aggressive marketing approaches, including TV and web advertising, print, and sponsorship ads. The Coca-Cola Company also airs national-language television ads in several nations across the globe. Coca-Cola may be able to increase its business while maintaining its existing degree of stability. Distributors and retailers profit from increased Coke sales. Supermarkets and drugstores with huge footprints can feature refrigerators and Coca-Cola hoardings to help promote the brand. Supermarkets dedicate a lot of shelf space to attracting customers’ attention. The firm also conducts various CSR activities globally, such as environmental and social sustainability. Thus, knowing the entire Coca-Cola marketing mix is possible.

The pros and cons of entering the ICFD market

It is the appropriate time for Coca-Cola to enter the industry. There are several compelling reasons to support this new endeavor in this market, which will provide Coca-Cola India with opportunities to flourish and expand. First and foremost, Coca-Cola is not only a well-established brand name, but it is also one of the most valuable and recognizable brands in the world, making it a desirable investment. It is doubtful that they would be required to expend substantial resources to raise awareness of their brand or persuade customers of its value. The brand is already well-known and trusted all around the world, and this is only the beginning.

Secondly, the market is expanding, and the demand for ice cream and other sweet delicacies is steadily increasing. Coca-Cola would be well served by taking the risk of expanding into this market since the rewards would be significant and the risks are minimal. Entrepreneurs would be prudent to seize the opportunity presented by a developing market and establish themselves before the market becomes fully matured and even more competitive.

It is also an advantage that Coca-Cola has over other ice cream competitors regarding the difficulty of training a salesforce. Because they already have a training program that has been proved successful in virtually every nation and setting, establishing a good curriculum for Coca-Cola India will not be an issue. Coca-Cola already has a well-established distribution network, known as Coca-Cola. Coca-Cola already has a long history of successfully expanding and developing into new areas without creating a whole new distribution network to do this.

Coca-cola might also find it challenging to enter the IFCD market due to already established competitors. This gives its competitors an upper hand to gain a competitive market advantage making it difficult for Coca-cola to gain momentum. Coca-cola also does not be a local brand in India. The consumers might not recommend it due to its unknown status in the country; hence, the competitors might gain the market advantage. The customization of the Coca-cola products might make them easily identified as they are not local products. The distribution network is also another factor that Coca-cola should consider. A fully developed distribution network should be designed to ensure the products are well promoted and reach every consumer at ease. The creation of networks may result to rising in product costs which may also discourage the consumers.

Coca-Cola will need to carefully weigh the pros and cons of the plan and undertake extensive market research on customer behavior and trends. To succeed in this new market, they will need to thoroughly investigate and evaluate their consumers and rivals on various levels. This will assist them in determining whether or not there is a genuine need for Coca-Cola in this potential new market and whether or not expanding into this potential new market is beneficial for the firm. Suppose coca-cola wants to distinguish itself from the Competition and make its presence known in the market, they need to engage in a comprehensive marketing strategy that includes extensive advertising and social media activities. Without comprehensive planning and marketing strategies, coca-cola might end up losing its customers to its rival competitors. They might look at customizing their products to help them break into this market.

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Possible Obstacles and Recommendations to the company’s success

Coca-cola should ensure that strong distribution networks are created to provide consumer awareness of various Coca-cola products. This will also help create a good relationship with the local community making it easier to carry out promotions. Another critical strategy Coca-Cola could pursue is to tap into India’s impressive agricultural/farm-based economy, the world’s largest milk and dairy product producer and consumer. It is also vital for Coca-Cola to guarantee that they exercise product differentiation by providing numerous new flavors to consumers that are entirely compatible with the new India, where ice cream is connected with pleasure and exploration.

As of 2018, India has a population of 1.3 billion people, with a growing income level and urbanization. The non-urban market, which has 650,000 villages, is projected to generate the most business (Puri et al., 2018). As a result, Coca-Cola should boost its attention on non-urban markets in India, mainly through the Vistaar initiative. Youth, children, and the elderly are targeted by an aggressive advertising campaign that includes appealing schemes and promotional events.

When it comes to entering the IFCD market, Coca-Cola will have to overcome many barriers and market risks to be successful. In addition to water shortage, which is a significant resource utilized in the production of drinks and ICFD products, some of the objectives may include energy conservation. As a result, water shortages might have a detrimental influence on the business. Due to the well-developed distribution networks of rival brands such as Amul, Coca-Cola may face a competitive disadvantage in the market due to the well-developed distribution networks of rival brands. Some local players supply low-cost items to the community, causing the community to favor the lower-cost products over the more expensive Cola products. Finally, the regular shifts in customer tastes and preferences may become a challenge since locals may cease purchasing Coca-Cola goods due to their shifting preferences.

There are different marketing strategies, such as product innovation, price strategy, and promotion planning, to name a few. These business strategies, which are based on the Coca-Cola marketing mix, aid in the brand’s success. Coca Cola marketing strategy aids the brand/company in establishing a competitive position in the market and achieving its business goals and objectives. The following strategies would be of great impact to an organization.

Reference

Puri, S., Gupta, S., & Kacker, A. (2018). Coca-Cola India’s frozen dessert plan heats up competition. Ivey Publishing, 23-30.

Appendix

International Marketing of Coca-Cola

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