Case Study on Coca-Cola Company

Product life-cycle theory, new trade theory, absolute advantage, and Heckcsher-Ohlin theory are some of the basic marketing theories (Robinson, 2011). Product life-cycle theory tries to explain global trade patterns. Raymond Vermon says in this idea that as demand develops in the United States, it extends to other developed nations to which the United States exports. As a result, the developed nations begin the process of producing the items, and the United States is forced to establish manufacturing facilities in those countries, limiting their export volumes. The process is repeated and the U.S. finally ends up importing the product which it initially introduced within its boundaries (Knight, 1999).

The new trade theory argues that economies of scale facilitates trade by availing a wide variety of goods to consumers and therefore reducing the average cost of goods in the market. On the other hand, the theory of absolute advantage proposes that for a country to have absolute advantage in the production of a specific product, it should first ensure that it is the most efficient in terms of producing it. Therefore, when two different nations specialize in the production or manufacture of two different products, that is, they have been able to attain absolute advantage, then they will be able to easily trade with each other. In this way, both countries will be able to access both products easily and in huge amounts so as to sort their consumption needs.

The Heckcsher-Ohlin theory, advanced by Eli Heckcsher, countries attain comparative advantage due to the fact that they endowed by varied national factors. These factors include capital, land and labor which are able to propel a nation higher economically according to the way that they are utilized.

International Marketing Opportunities

International markets offer a lot of growth opportunities for businesses worldwide. This is due to the fact that operating in both international and domestic markets offers a scope for international diversification to lengthen the product life cycle in addition to maximizing the revenues. Opportunities in the international market helps to introduce the culture of the business in the new markets.

Venturing into new and foreign markets is like finding out new prospects for any business. The foreign countries normally have regulations, government policies, economic conditions, cultural differences and even currencies that may offer an opportunity for the organization venturing into the new market. For instance, regulations such as tax waivers or tax holidays for foreign investments offer as great opportunities which encourage the global companies to venture into international markets. Reduction or wavering of taxes ensures that the global companies are able to maximize on their revenues.

Favourable economic conditions also act as great opportunities for organizations that venture into international markets. The business is guaranteed to thrive since the consumers have the purchasing power to welcome the entrant into the market. Factors such as high population in a foreign market is another huge opportunity that international organizations exploit when they venture into foreign markets. It offers a huge and ready demand which enables the foreign entity to exploit and increase their customer base.

Unique cultural identity also offers an opportunity for the international organizations to exploit and develop a strong brand loyalty. Coca-Cola has been on the front foot in exploiting the existing international market opportunities and as a result it has been able to achieve the global brand status. The company invests heavily in the quality of their soft drinks, their brand recognition, charity sponsorship and sustainability. Moreover, they have been able to exploit the international market opportunities through branding differentiation in order to achieve their sustainability strength. They have also been able to develop an efficient distribution channel that has enabled them to be reliable since the product has never experienced any form of shortage.

Coca-Cola has also been able to effectively exploit the strategy of localization as a key way of entering the foreign markets. Localization has proven to be more effective when combined with standardization due to the differences in the demographical composition and the culture of the different markets. As a result the company has been able to enjoy an identifiable brand image in addition to instilling the local practices of the various markets that has allowed them to embrace and even influence the culture of the local people.

Formulation and assessment of International marketing strategies

For every foreign market, the industry global drivers are normally the competition, government regulations, cost and the market. International market strategies refer to the set of activities and action points which determine the performance of the organization in the foreign market. It is a very vital element of strategic planning especially with regards to a global company since the effective strategy offers an opportunity for the organization to exude an advantage over its competitors.

This concept relates more to different target markets as opposed to analyzing a market from a singular perspective. The fundamental of marketing strategies is derived from the fact that different markets cannot exhibit similarity of cultures across all the world. It therefore emphasizes the fact that organizations have to establish adaptation and localization for them to be able to establish their brands across the globe.

Strategy formulation involves organizational changes, international alliances, government relations and competition. The organization needs to be reorganized and coordinated globally in order to avoid obvious operational and reporting challenges that lead to may lead to communication break down or lack of a cohesive team. In other markets, the organization may be forced to form partnerships with either local or international companies in order to facilitate the ease of entry into the market.

Moreover, the government exercise a huge level of control and for ease of doing business, the international organizations have to develop good relations with the government in order to guarantee ease f market entry. Competition is one of the major factors of strategy formulation as it enables the organization to be able to formulate a strategy that will enable them to take over or gain more market share.

For the case of Coca-Cola they have been able to exhibit effective and efficient strategy formulation that has enabled them conquer more countries and build a strong brand. For example, they have been able to give the local managers control over most advertising activities and operations. In addition, their strategy has enabled them not to present themselves as a foreign company but a company of the locals. To counter competition, they have effected a strategy that has enabled them to attach their soft drinks with all types of meals therefore addressing all customers.

In the assessment of their strategies, Coca-Cola has proven to be very successful as establishing themselves as one of the most powerful global brands in the world. They have been able to attract a huge and diverse customer base. This has been effectively translated into high profit margins which have been enjoyed by the company.

Processes and complexities associated with implementing international marketing programs

There are various issues associated with implementing international marketing programs by Coca-Cola. Some may be easy to handle while others may prove to be quite challenging. These issues include cultural differences, communication difficulties, global pricing strategy and international company structure.

Cultural differences is a major factor that Coca-Cola faces in that different countries perceive marketing ads differently. In the United States, marketing should really emphasize how a customer would benefit after buying a Coca-Cola drink since people there appreciate the nature of being direct. However, in countries like Japan, indirectness is appreciated more by customers since it may be considered quite presumptuous of the seller to speculate what the consumer would like. Sophistication is another factor in culture that influences marketing of Coca-Cola products. For instance, the French would prefer marketing ads that are sophisticated in nature as their culture is aligned that way unlike Americans who appreciate who are more appealed emotionally.

Communication difficulties arise due to language barriers, cultural barriers and the media infrastructure available in different countries (Jaideep, 2016). When carrying out marketing, adverts may need to be translated not only into the generic category of the specific language, let’s say, Portuguese, but also into Brazilian Portuguese, since it may be the specific version spoken within a certain region. Exquisite cultural differences may also cause a variation in the way customers respond to the same ad. In Japan, an advert by Coca-Cola showing how two young adults were kissing after consuming a bottle of Coca-Cola was considered quite inappropriate unlike in the United States where it was not a big deal. Furthermore, the general attitude towards marketing by locals determines whether the message will be received or not. While Europeans may view ads as too commercial and churlish, customers in the United States may find them necessary in day to day life.

Coca-Cola faces completion from other global brands like Pepsi hence their pricing strategy is an important factor to be considered. Markets that have uniform preferences have already been subdued by Pepsi hence Coca-Cola has to ensure that it conquers other markets so as to make more earnings, that is, markets that have local preferences and markets that bear a mix of both local and global preferences (Mourdoukoutas, 2013). In an effort to conquer markets, Coca-Cola should also cut prices so as to reflect its brand and to increase sales among the targeted customers but also ensure that they remain competitive in order to ensure profit is made.

International marketing implications of activities of organizations such as the European Union, other regional trading blocks and WTO

The European Union through General Data Protection Regulation (GDPR) has influenced the way companies that use data to engage in sales and marketing activities operate (Kolah, 2015). It involves more effective supervision and enforcement hence any breach of data on users will be met with high fines. Coca-Cola therefore has to ensure that its ads do not violate any of the regulations since it may cause damage to the organization’s reputation. GDPR also makes it easier for citizens that are within the European Union to complain about the violation of their privacy rights and data protection.

The entry of countries into the European Union also influences how Coca-Cola Company will market their products since the specific countries will be more exposed to cheaper or more affordable competitive products. Such countries will also be able to access cheaper imports hence rival companies will incur lower production costs. This may pose a challenge to Coca-Cola since in a bid to market their products and encourage higher volumes of sales, they will be forced to revise their pricing.

The European Union also introduced a deposit return scheme a while back in a bid to encourage consumers to return their bottles after consuming their drinks by adding a small charge, which is refundable, at sale. The deposit return scheme raised its rates in countries like Denmark, Sweden and Germany and other nations like Scotland also considered doing the same. This ultimately raised the marketing costs of Coca-Cola hence the business was influenced negatively.

Introduction of the European Union competition law also affected the operations of Coca-Cola Company in that they were prohibited from abusing their dominant market position. This influences their international marketing strategies in that they are not supposed to charge unfair prices, or limit their production levels or even refuse to innovate their products as per the prejudice of customers.

In conclusion, Coca-Cola Company should ensure that they operate according to the policies set out by international organizations so as to promote favorable trade and market consumption of their products.

References

Jaideep, s. (2016). Top 9 Problems Faced by International Marketing. [Online] YourArticleLibrary.com: The Next Generation Library. Available at: http://www.yourarticlelibrary.com/marketing/top-9-problems-faced-by-international-marketing/48739/ [Accessed 25 May 2017].

Kolah, A. (2015). Marketing Implications of the GDPR? [Online] Smart Insights. Available at: http://www.smartinsights.com/marketplace-analysis/digital-marketing-laws/marketing-implications-of-the-eu-general-data-protection-regulation-gdpr/ [Accessed 25 May 2017].

Mourdoukoutas, P. (2013). Coca-Cola’s Real Overseas Problem--How To Tap Into Neglected Markets. Forbes.

Robinson, B. (2011). 7 International Trade Theories » B Rob on Tech. [online] Robinsontechnology.com. Available at: http://robinsontechnology.com/blog/2011/01/23/7-international-trade-theories/ [Accessed 25 May 2017].

Knight, G., (1999). International services marketing: review of research, 1980-1998. Journal of services marketing, 13(4/5), pp.347-360.