Coca-Cola in China

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Marketing Strategy Plan of Coca-Cola in China

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  • Rita good day .
    I have come across your article on marketing strategy on China .I am interested to know more on how COCA -COLA overcomes the goverment 's constraints and cultural barriers in China .i am an associate lecturer of international marketing at the Institute of international relations of Cameroun (Iric -Yaounde ).
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  • So on the next “X” minutes , we are going to talk about the subjects that we learn on the MSP lectures:
    I am going to talk about: ... ; Ansuha Bhat: will talk about... ; Mohammad will show our aproach about: ....; Tina Lai will gives you some insights about: ....
    And finally Victor will speak about ....

  • Starting with the mission statement our goal was to answer three characteristics that we considered fundamental. We are talking about: the purpose, the business and the distinctive competence. We believe that the mission of Coca-Cola it to constantly strive to provide a quality range of flavoured drinks for all individuals tastes and lifestyles in China.
    This can include carbonated drinks but also non-carbonated drinks.

    In order to achieve this mission, Coca-Cola will need to maintain:
    » sustainable growth by maximizing in sales and provide profits to the company
    » Attractive returns to shareholders, through the development of a profitable product line and operational excellence.
    For us it is clear that the purpose is to maintain the market leadership; The business is soft drinks; And distinctive is profitable product line and operations (eg. Marketing, r&d, logistics… etc)

  • Next, about the corporative objectives we try to estimate what Coca-Cola want to achieve in the future.
  • To designed the Value-in-use, we first defined which benefits the customers can get when they drink Coca-Cola.
    We assume that different customers can have different benefits, such as Hapiness and fun, Refreshing, Just for taste etc..
    And then, we suggest which external and internal attributes of the Coca-Cola drink can led to this values.
    We believe that the our product as quality and taste, and can led to this values: Hapiness; refreshing, Just for taste; social gathering.
    However, if the package and labelling look attractive to a customer, can make them believe that the product has quality and is tastefull
    Ingredients are linked to refreshing and just for sure. Perhaps, some customers care what they are drinking exactly.
    Promotions, we are talking about on trade promotions


  • About the mission statement our goal was to answer the three characteristics that we considered fundamental. We are talking about: the purpose, the business and the values of Coca-Cola in China. We believe that the mission of Coca-Cola is:….
    In order to achieve the mission, it is essential to create value to:
    * Consumers/Consumers » By offering a broad range of nonalcoholic ready-to–drink “drinks”.
    * Partners » For instance cultivate a healthy relationship with bottlers, governments, suppliers
    * Community » Communicate the brand values (hapiness, enjoyment and refreshing) that in suitable to the Chinese culture and life style.

  • Before we start to talk about the perceptual map, we decided to identify who are our customers, having in mind the differences the 2 motivators factor: health awareness and the percepetion of Coca-Cola brand
  • Futher this we wanted to specify
  • About the mission statement our goal was to answer the three characteristics that we considered fundamental. We are talking about: the purpose, the business and the values of Coca-Cola in China. We believe that the mission of Coca-Cola is:….
    In order to achieve the mission, it is essential to create value to:
    * Consumers/Consumers » By offering a broad range of nonalcoholic ready-to–drink “drinks”.
    * Partners » For instance cultivate a healthy relationship with bottlers, governments, suppliers
    * Community » Communicate the brand values (hapiness, enjoyment and refreshing) that in suitable to the Chinese culture and life style.

  • About the mission statement our goal was to answer the three characteristics that we considered fundamental. We are talking about: the purpose, the business and the values of Coca-Cola in China. We believe that the mission of Coca-Cola is:….
    In order to achieve the mission, it is essential to create value to:
    * Consumers/Consumers » By offering a broad range of nonalcoholic ready-to–drink “drinks”.
    * Partners » For instance cultivate a healthy relationship with bottlers, governments, suppliers
    * Community » Communicate the brand values (hapiness, enjoyment and refreshing) that in suitable to the Chinese culture and life style.

  • - Coca-Cola and Pepsi have dominated the Cola Industry...
    - Low which indicate low profit margin (incentive) to the outsider (new entrants)
  • Hello everybody, we are the learning team 2 and we are going to present our perspective about Coca-Cola in China; The product that we chose is Coca-Cola Regular
  • Coca-Cola in China

    1. 1. Coca-Cola in China “Think Local, Act Local” Product: Coca Cola Regular Cranfield University 21/10/2010 Module : MSP Presented by learning team 2: Ansuha Bhat Mohammad Aladalh Rita Batalha Tina Lai Victor Zhang
    2. 2. Is _ 1. Mission Statement 2. Corporate Objectives 3. Value in Use 4. Buying Criteria 5. Consumer Segment 6. Perceptual Map 7. PESTLE Analysis 8. Porter’s Five forces 9. BCG Matrix 10. Market Attractiveness 11. Critical Success Factors 12. Directional Policy Matrix 13. Marketing Strategies: 4 Ps 14. Marketing Strategies: CSF 15. Assumptions 16. New product 17. Conclusions Agenda
    3. 3. Mission Statement Coca Cola will constantly strive to provide a quality range of flavoured drinks for all individuals tastes and lifestyles in China. We will maintain sustainable growth and attractive returns, through the development of a profitable product line and our operational excellence.
    4. 4. Corporate Objectives We aim to increase our sales in China by 15% using our effective strategy, "think local, act local“ by 2015 Establish 3 new manufacturing firms in the rural areas Increase market share by 5% in 2015 by targeting a new segment of customer through a new product which will cater their needs Exceed USA and become the second largest market in terms of per capita consumption of Coca-Cola products by 2020
    5. 5. Value-in-Use Product Service Experience Surround quality taste Social responsability ingredients Value-in-use: Hapiness and fun Refreshing Just for taste Social gathering Sense of belonging Enjoyment Complementary product I feel close to my idol!
    6. 6. Buying Criteria Motivators factors Brand affinity* Taste Health awareness* Packaging Hygiene factors Refreshing Affordable Convenient location Quality
    7. 7. Consumer Segment Who are we talking to? Generation Y (http://en.wikipedia.org/wiki/Generation_y) Generation Y comprehends a group of people born aged between 15-35 years old. They have divided into subsequent trends, such as the Fashionists and Techno lovers.
    8. 8. Consumer Segment Genuine: Ting is a marketing student with 27 years old . She loves Coca Cola more than her mother. Drinks Coca-Cola on daily basis and she would hardly change it for another brand. Being fit its important, but it is not a requirement. She preferes to be updated about the latest trends in fashion or arts. In good shape: Zhang is a young professional with 34 years old. He is very active and practice several sports. He is not a big fan of carbonated drinks, prefers natural juices or sports drinks. He is very rational. Brands does not mean anything to him, however he prefers to consume local brands than international.
    9. 9. Consumer Segment Brand Consumers: Hong and Li are two best friends both at 18. For them Coca-Cola represents celebration/ party and a feeling of closeness with their idols. They see sports as hobbies and not a requirement for being fit. They drink Coca-Cola in parties ,when they go to cinema or go shopping. Light on the pocket: Chen is a mid-age adult who cares how much is going out of his pocket. He neither cares for brands and health. He would prefer Coca-Cola to other health drinks because it would turn out cheaper.
    10. 10. Perceptual Map high brand affinitylow brand affinity high health awareness low health awareness Genuine Brand Consumer In good shape Light on the pocket
    11. 11. Consumer Insights - survey Female 44,75% Male 55,24% Who are they? 18-35: 53,73% 35-50: 34,33% >50: 11,94% How old they are? < 2 bottles 55% Weekly consumption* 6-7 bottles 11% > 8 bottles 12% 3- 5 bottles 22% *330ml
    12. 12. PESTLE Analysis What changes in government policy have a big impact on the way Coca-Cola operates? Politcal Factors What social and cultural aspects affect the customer needs? Social Factors What changes in the technological environment affects the production levels and the business in general? Technological Factors What significant legal changes may affect Coca-Cola’s behaviour? Legal Factors What environmental factors can affect the consumer’s insights and choices? Environmental Factors What economic factors effect Coca Cola’ ability to generate income? Economical Factors
    13. 13. PESTLE Analysis Political Bureaucracy, corruption and a lack of transparency are key obstacles to conduct a business in China Tax incentives are offered to foreign investors as part of the "open door" development strategy Lack of coordination between central and local authorities • Lack of federal structure • Investment climate to be insecure
    14. 14. PESTLE Analysis Economic Favorable government policies (Free-market economy) • Developing the capital markets • Undertaking significant bank reforms Rising unemployment • In 2008, almost 70% of job seekers were unemployed • 11 million people were laid off and are now without jobs
    15. 15. PESTLE Analysis Social Quality of lifestyle is increasing as the increasing of purchasing power and education level Decline in poverty, per capita income was $6,500 which is one of the highest in Asia in 2009 One child policy to reduce population rate and decrease the pressure on the resources of the country
    16. 16. PESTLE Analysis Technological Larger number of R&D institutions: • Coca-Cola opened its $90 million Innovation and Technology Center in Shanghai, 2009 • China produces the second largest number of science and engineering graduates The increasing awareness of technology. (E.g. new bottle, new label, design etc.)
    17. 17. PESTLE Analysis Legal Increasing importance of anti-monopoly law: • The acquisition of Huiyuan by Coca-Cola failed Facilitation of (Foreign Direct investment) FDI: • Clear and fast procedures and processes for foreign investments Reporting and accounting standards; • Only a very small group of certified accounting professionals • Lack of modern financial reporting
    18. 18. PESTLE Analysis Environmental Increasing the importance of environmental policies: • State Environmental Protection Administration • Inspection of industrial companies on a regular basis • Coca Cola will be inspected and supervised regularly to make sure that it meets the environmental standards in its industrial operations
    19. 19. Porter’s Five Forces Rivarly among existing competitors Threath of new entrants Bargaining power of suppliers Bargaining power of buyers Threath of substitutes Threath of new entrants: WEAK • Brand Image / Loyalty: Coca-Cola has consolidate brand equity and loyal customer • Retailer and super markets shelf space: Retailers require significant margins for the shelf space they offer • Advertising Spends Eg. In 2008, Coca-Cola invested €81.2 million in the Beijing Olympic • Substantial fixed cost Bargaining power of buyers: WEAK • Individual consumer may have little power over the companies • Wholesalers, distributers and retailer may have certain power over Coca-Cola • Coca-Cola also has its own well-developed distribution channel in China Threat of substitutes: STRONG • There is a number of other soft drinks can easier substitute Cola. Eg. tea • The increasing health awareness has lead to the trends of healthy drinks, such as milk or flavored juice • Consumers have more choices than ever before Bargaining power of suppliers: WEAK Availability of the ingredients on the Chinese market Eg. Such as aspartame which many often is substitute for saccharine Fluctuations in market price: Eg. Market turbulence increases Coke’s vulnerability to price fluctuations Rivalry: STRONG Pepsi taste: Pepsi has a similar taste with Coca-Cola Pepsi marketing: has more successful marketing strategy in China than Coca-Cola Future Cola: has its advantage in coverage in rural areas where Coca-Cola has failed to step into
    20. 20. BCG Matrix HIGH LOW HIGH LOW MarketGrowth Market Share relative to competitors Light on the pocket Genuine Brand Consumers In good shape
    21. 21. Market Attractiveness MAFs Weights Score/weighted score Above Diagonal line: Score out of 10 Below the digonal line: Multiply score x weight Genuine In good shape Brand Consumer Light on the pocket: Market Size 25 Volume Growth 25 Profit margin 30 Risk 20 Totals 100 4,1 5,4 6,1 3,95 8 2 2 0,5 4 1,2 2 0,4 6 1,5 6 1,5 2 0,6 9 1,8 7 1,75 5 1,25 7 2,1 5 1,0 5 1,25 4 1,0 3 0,9 4 0,8
    22. 22. Critical Success Factors Product-market: Genuine Relative Business Strengh: 0,5 C.S.F.C’s Weights Score/weighted score Above Diagonal line: Score out of 10 Below the digonal line: Multiply score x weight Coca Cola Regular Future Cola Pepsi Substitutes Just for Taste 10 Price 10 Brand affinity 30 Health Awareness 30 Promotions 20 Totals 100 6,7 4,3 5,5 6,2 9 0.9 3 0,3 9 2,7 4 1,2 8 1,6 2 0,2 4 0,4 3 0,9 4 1,2 7 1,4 8 0,8 3 0,3 8 2,4 4 1,2 4 0,8 7 4 0.4 6 7 2,1 6
    23. 23. Critical Success Factors Product-market: In good shape Relative Business Strengh: -2,25 C.S.F.C’s Weights Score/weighted score Above Diagonal line: Score out of 10 Below the digonal line: Multiply score x weight Coca Cola Regular Future Cola Pepsi Substitutes Just for Taste 15 Price 10 Brand affinity 20 Health Awareness 40 Promotions 15 Totals 100 4,45 3,15 3,9 6,7 3 0,45 5 0,5 7 1,4 3 1,2 6 0,9 2 0,3 6 0,6 3 0,6 3 1,2 3 0,45 3 0,45 5 0,5 5 1 3 1,2 5 0,75 7 3 0,3 5 9 3,6 5 1,05 1,0 0,75
    24. 24. Critical Success Factors Product-market: Brand Cons. Relative Business Strengh: 1,30 C.S.F.C’s Weights Score/weighted score Above Diagonal line: Score out of 10 Below the digonal line: Multiply score x weight Coca Cola Regular Future Cola Pepsi Substitutes Just for Taste 20 Price 10 2 Brand affinity 30 Health Awareness 10 Promotions 30 Totals 100 6,9 4,4 5,6 3,9 7 1,4 0,2 9 2,7 2 0,2 8 2,4 4 0,8 3 0,3 4 1,2 3 0,3 6 1,8 5 1 3 0,4 6 1,8 3 0,3 7 2,1 4 0,8 3 0,3 3 0,3 4 0,4 7 2,1
    25. 25. Critical Success Factors C.S.F.C’s Weights Score/weighted score Above Diagonal line: Score out of 10 Below the digonal line: Multiply score x weight Coca Cola Regular Future Cola Pepsi Substitutes Just for Taste 10 Price 30 Brand affinity 10 Health Awareness 10 Promotions 40 Totals 100 6,6 6,8 6,1 4,2 4 0,4 7 2,1 4 0,4 5 0,5 8 3,2 3 0,3 8 2,4 4 0,4 5 0,5 8 3,2 4 0,4 7 2,1 3 0,3 5 0,5 7 2,8 4 0,4 2 0,6 3 0,3 5 0,5 6 2,4 Product-market: Light on the pocket Relative Business Strengh: -0,2
    26. 26. Directional Policy Matrix HIGH LOW HIGH LOW MarketAttactiveness Relative Business Strenght Light on the pocket In good shape +2 -2 3 4 5 6 7 01 -1 Brand Consumer Genuine
    27. 27. Marketing objectives Genuine: Increase revenue by 5% in 3 years In good shape: Increase sales by 3% in 3 years Brand Consumer: Maintain market attractiveness by 4% in 3 years Light on the pocket: Increase market share by 2% in 3 years
    28. 28. Directional Policy Matrix “future” HIGH LOW HIGH LOW MarketAttactiveness Relative Business Strenght Light on the pocket In good shape +2 -2 3 4 5 6 7 01 -1 Brand Consumer Genuine + 5% - 4% + 3% + 2% New segment 1 New segment 2
    29. 29. Marketing Strategies: 4 Ps Element Current Future Product Coca-Cola Coca-Cola Price Competitive pricing Competitive pricing Promotion Internet, Sponsorship, Press Internet, Sponsorship, Press Place Cities and large towns - Vending machines; outlets, bars, cafés, restaurants, supermarkets Cities and large towns (the same) Rural areas - local stores Segment: Genuine
    30. 30. Marketing Strategies: 4 Ps Element Current Future Product Coca-Cola + Pepsi Coca-Cola Price Competitive Competitive Promotion TV, internet, events sponsorships, outdoors, press TV, internet, outdoors, press, sampling activities Place Vending machines; retailers, supermarkets, pubs, cafés, restaurants Vending mahines; retailers, supermarkets, pubs, cafés, restaurants.. Segment: Brand Consumer
    31. 31. Marketing Strategies: CSF Segment: Genuine CSF: Brand Affinity Score: 7 (current) 8 (objective) Description of Strategy Increase revenue by 5% from this segment. Actions to achieve the strategy 1) Increase brand affinity and make taste more differentiable from other carbonated drinks 2) Get feedback on what this segment wants and is looking for Responsability Market Research, Marketing and R&D Approx. cost Meddium
    32. 32. Marketing Strategies: CSF Segment: Brand Consumer CSF: No change Score: N/A (current) N/A (objective) Description of Strategy 1) No change in CSF’s since we want to maintain the relative business strength 2) Decrease in market attractiveness (maintain revenue) Actions to achieve the strategy 1) Reduce cost on TV advertising and celebrity endorsement 2) Target mutual branding with ohter big brands Responsability Marketing Approx. cost Low/Meddium
    33. 33. Marketing Strategies: CSF Segment: In good shape CSF: Health Awareness Score: 3 (current) 5 (objective) Description of Strategy This segment is a very profitable one as it promises returns. Increase relative business strength and thus, profits by 3% in 5yrs. Actions to achieve the strategy 1) Introduction of a new product to cater to this segments' health and taste needs. Responsability Marketing, Operations and Market Research and the whole company Approx. cost High
    34. 34. Marketing Strategies: CSF Segment: Light on the pocket CSF: Promotions/Price Score: 7/7 (current) 8/8 (objective) Description of Strategy Increase revenue from his segment by 2% in 5yrs. Actions to achieve the strategy 1) Promote Coca-Cola with other brands/items on a regular basis 2) Increase bulk packaging in off-trade sales Responsability Finance, Marketing and R&D Approx. cost Meddium
    35. 35. New Product Coca-Cola Tea The taste of coke with the goodness to tea! 茶
    36. 36. Coca-Cola Tea Features: Coca-Cola Flavour Caffeine Free Hot drink Tea bags Needs: Who is our target? Tea lovers; Health conscious segment ; Coca-Cola Fans; What is the consumer’s need Drink a non-carbonated drink with Coke flavour Benefits: Health Stress Relief Closeness with Chinese culture 茶
    37. 37. Assumptions Corruption and bureaucracy in China may affect Coca Cola in the near future. Increase in purchasing power of the people will lead to increased sales of Coca Cola. Inflation in prices may not affect sales of Coca Cola as we are assuming purchasing power of people will also increase Anti-monopoly law affecting ban on further acquisitions. New entrants, both local and international, will not be able to compete with Coca Cola's growing markets. Shift of industries to the rural areas will increase markets and thus market share for Coca Cola.
    38. 38. Conclusions 1st Coca-Cola aim provide a quality range of flavoured drinks and exceed USA in per capita consumer of Coca-Cola products 2nd The genuine segment is the most profitable. We intend to maintain the market attractiveness and increase the business strenght 3rd The brand consumers required huge investments, so we intend to invest less in promotions (reducing market attractiveness) and maintain the business relative strengh and revenue 4th The good shape segment provide negative cash flows despite the market is growing. We want to increase the market attractiveness and relative business strenght, by introducing the Coca-Cola tea product 5th The light on the pocket segment experienced low market growth and relative market share. Despite that, we believe that we can increase in market attractiveness and business strenght by investing more in off-trade promotions and synergies
    39. 39. Thank You. Let’s discuss!

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