BUSI4321:International business
Coca Cola International Strategies
Done By: Malk AlKhamis, 200800701
Zainab AlNasser,200800692
Section: 202
Table of content:
Introduction ------------------------------------------------------------------------------- 3
Foreign Direct Investment Strategy ------------------------------------------------- 3
Culture Analysis -------------------------------------------------------------------------- 3
Distribution Strategy -------------------------------------------------------------------- 4
Communication Strategy --------------------------------------------------------------- 5
Pricing Strategy --------------------------------------------------------------------------- 5
Conclusion --------------------------------------------------------------------------------- 6
References --------------------------------------------------------------------------------- 7
Introduction:
Coca cola is the most popular company that operates in more than 200 countries
around the world and become the biggest-selling company that provides innovative
soft drink in history. The purpose of this project is to analyze the marketing strategy
of coca cola such as discussing their pricing strategies in order to make sense to
customers to understand coca cola structure they are following in setting their prices.
Also, this project is aiming to provide a clear explanation of the strategies they are
applying such as distribution strategy, how they applied foreign direct investment and
communicating strategy. By doing research about coca cola in the internet and
newspapers, we will be able to analyze their strategies and states our
recommendations regarding their strategies to do a better job.
The applied foreign direct investment method
Foreign direct investment is manufacturing and service in foreign countries to manage
effectively and control the price of their products. Coca cola wants to invest in India
5billion$ by creating new innovations and put price customer can handle so, increase
the customer experience, and brand loyalty for long term. Soft drinks have huge
growth in India and coca cola consider the most and fast growth company increased in
India for drinks. Coca cola used the method of acquisition or merging which start
their business in India by enter existing market because there was soft drinks before
coca cola in India. Also, coca cola has the type inflow FDI.
The cultural analysis done for the selected foreign country
The hofstede cultural dimensions are for studying the effect and influence of society
on the value of the people in the culture. Hofstede cultural dimensions are 4: power
distance, collectivism vs. individualism, uncertainty avoidance and masculine vs.
feminine. Fist dimension power distance, it means how the members of the society
accept and deal that people are not equal in wealth and power. According to hofstede
theory India has High power distance which is mean that high level that people
unequal in wealth and power. So, a company hierarchy is very important in India
companies and low level employee can't call their manager by first name just. Second
dimension collectivism vs. individualism, collectivism means that people of society
combined into strong solid groups for each other's. And individualism means every
individual cares and stand just for him/herself. According to hofstede India is
collectivism culture so to take decision without call and make relationships with other
people. Third dimension is uncertainty avoidance, concerned with society's tolerance
of uncertainty and ambiguity when the country has low tolerance for uncertainty and
ambiguity that means it has high uncertainty avoidance means and high tolerance of
uncertainty and ambiguity comes from low uncertainty avoidance. According to
hofstede, India has low uncertainty avoidance. Fourth dimension is masculine vs.
feminine, means spreading of roles between men and women; culture value
performance and achievement vs. Tender and caring culture. According to hofstede
theory India is masculine culture which is means that in companies in India men are
more hard, motivated and confident while women are modest and caring.
Distribution strategy for coca cola:
Coca cola products are distributed to more than 200 countries across the world with
different sub brand of it such as Diet Coke, Coca Cola Zero and free-caffeine coke. As
coca cola aims to be number one in providing soft drinks around the world, they are
focusing in providing an effective distribution strategy that makes it unique from
other manufacturers in order to meet its customer needs and fulfill their requirements.
The distribution strategy is mainly about how their customers reach the products of
the company. The distribution channels for coca cola is very intensive distribution as
we can recognize that we can find coca in many stores and everywhere includes
retails stores such as supermarkets and vending machines that are distributed
everywhere in schools, hospitals and restaurants. . In addition, coca cola make
exclusive agreements with some restaurants such as MacDonald's and with bars. The
distribution channels for coca cola includes two types of selling; direct selling and
indirect selling. Firstly, direct selling, coca products offer in the shops by their own
transports specifically they have 450 vehicles to transfer to the shops and this type is
making more profits. Secondly, indirect selling which is done by their whole sellers
and agencies to ensure that products are available for their customers. The way they
choose their distributor or an agent is based on some criteria's such as motivation of
the agent and whither he exciting about the product and selling it or not. Beside
motivation they are looking at the distributor reputation and wither they are growing
and making profits. Furthermore, looking at the agent Control in order to see wither
they are efficient in handling the problems.
Applied communication strategy:
Every company in world, communication strategies is very important role to help
emerge their brand and positioning the company in the market. Also, it is a way to
develop the company in the global market. Coca Cola through all years they used
different communication strategies to increase number of customers. First strategy is
advertisement, which is a massage for the audience to know about Coca Cola and
encourage them to buy it. Coca cola every time they do an advertisement they target
group of people and they technique to attract those group like when they use
celebrities only drink coca cola they are targeting youth people, so when they see the
ad they will want to be like her because the celebrity their model this strategy called
Pull strategy. Example of this in UK Coca cola sponsor party for signer and drink
only coca cola. Also, if coca cola want to target males they use what make the males
interested like sport. For example, they put banners in stadium of football game.
Beside sponsoring party or concert and put banners, do advertisement in TV to attract
large number of audience, another way is do advertisement on cinema before the
movie start to encourage people to buy Coca cola products. Second strategy is sales
promotion; coca cola push and persuade audience to buy their products by offering
some awards if they buy. For example they write on the can buy coca cola and win
iPad or iPhone.
Pricing strategy:
Price is not just a number tagged on the product but price plays a significant role in
attracting the customers and makes more sales and each company basically set their
prices in same level as their competitors. Coca cola has put low initial prices for its
product in order to target a lot of customers and they are following different pricing
strategies. The strategy coca cola used when it trades its products internationally is
based on the economic conditions and laws of a particular country, for example, the
price of 1 liter bottle coke in China is different from the price of the same product in
Saudi Arabia. In addition, coca cola following segmented pricing strategy which is
simply offering the product in different sizes and different costs, for example, they
offer 3-bundle bottles, 3-bundle cans and 6-bundle cans of the same coke but in
separated prices and this help to increase their sales and target different customers.
Furthermore, coca cola use promotional pricing strategy which means they set prices
in the short term for their products that are lower than the original price to increase
their sales and excite the customers to purchase more products. A good example is
that in India they changes the prices of its products depends on the seasons such as in
the summer they raise the prices because it is a good season for beverage in India and
in the winter they minimize their prices so that they retain their profits.
Conclusion:
Coca cola use for foreign direct investment a method of acquisition or merging and
start by entering exciting market as they are soft drink before. Also, we discussed the
four dimensions of cultural analysis which include power distance, collectivism vs.
individualism, uncertainty avoidance and masculine vs. feminine. Coca cola distribute
their products through two kinds of selling; direct selling and indirect selling, the
direct selling include transfer their products by their own vehicles and indirect selling
which is done by their whole sellers. Also, they make agreements with the restaurants
such as McDonalds and coffee-shops to sell their products for the customers. The
communication strategies of coca cola include how they attract their customer by
using advertisement so that people get excited if they see their favorite celebrities in
the advertisement. Coca cola set low initial prices for its products to attract more
customers and they follow different pricing strategies such as strategy based on
economic of the country wither they are good in economic or not. Also, they follow
segmented pricing strategy which is offering the product with different sizes and costs
and promotional pricing strategy which means setting a low price for the product in
some seasons to attract more customers.
References: