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Coca cola


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Coca cola

  1. 1. LETTER OF TRANSMITTAL Date: To: From: Subject: We are given pleasure to transmit this report, “Strategic Analysis” under the unprejudiced conclusions of International Marketing Course, during summer semester (4th) 2004 of MBIT program, IBIT department, University of the Punjab. We have arranged our superlative efforts in originating this undertaking. We enormously enjoyed it. Working on this task was exceptionally erudite for us. Group Members Signature 1 Institute of Information & Technology, University Of The Punjab, Lahore.
  2. 2. ACKNOWLEDGMENT We are thankful to the ALLAH ALMIGHTY, by the assistance of HIM, we have accomplished our Task. We would like to thank all of the people who directly or indirectly helped us to achieve this Target. Special Thanks to: • Mr. Amjad Rasool Alvi • Mr. Fasial Hashmi • Mr. Matloob • Mr. Rana Imran • Mr. Sahil This Report fabricates its foundation on numerous discussions among the panel (Group Members). Our conspirator’s encouraging ideas and strengthening of our thoughts are reflected in this comprehensive Report. All the stuff regarding this report has been explained marvelously and carefully. This write up is being demonstrated in easy mode which is understandable by the reader. It will provide the intramural and threshold aura to read and it will cover all the requisites and proviso about the topic under discussion. One of the aesthetic and charming characteristics of this speculation is this, that it is easygoing and genial. 2 Institute of Information & Technology, University Of The Punjab, Lahore.
  3. 3. ABSTRACT The vibrant capability of Marketing Department in Coca-Cola career planning has been highly accentuate. This department has been acknowledged as the means through which the swift industrialization and other progressing goals of the association can be conquered. This report delves into the role of International Marketing for the promotion of organization, role of other departments in this process, internal & external support of different institution department in this process. The verdict about Coca-Cola’s marketing department process may facilitate policy makers, employment agencies, organization to ascertain and over and above existing cooperation’s the genteel maneuver to improve the overall performance of the company, not only in Pakistan but also in all parts of the world. 3 Institute of Information & Technology, University Of The Punjab, Lahore.
  4. 4. METHODOLOGY Aspect about international marketing has been pile up by means of primary sources by interviewing marketing executive, in the production unit & Head Office, Visiting to office of Human Resource managers in Lahore. Human Resource administrator in Head Office was the part of that information collecting activity. Secondary information has been congregated through different marketing books, internet sites of Coca-Cola Company, articles and generals related to advertisement and promotion. Our foremost endeavor was to compile and evaluate all relevant information with reference to marketing strategies in the host country (Pakistan) and to judge against this information with standard set by international marketers. 4 Institute of Information & Technology, University Of The Punjab, Lahore.
  5. 5. TABLE OF CONTENTS Executive Summary 06 Introduction 07 Brands 08 The Coca-Cola Story 09 New Coke to Present 10 Coca-Cola IN Pakistan 12 Community Involvement 14 Marketing Involvement 14 Uncontrollable Elements 15 Methods of Doing Business 17 Customer Market 18 SWOT Analysis 19 Post 9/11 Effects 22 IPR 22 PEST Analysis 24 BCG Matrix 27 EPRG Model 28 Product Life Cycle 29 Duties & Taxes Applied 30 Strategies to Reduce Political Vulnerability 31 Cultural Borrowing 32 Problems 34 Recommendation 36 Bibliography 40 Appendix 41 5 Institute of Information & Technology, University Of The Punjab, Lahore.
  6. 6. EXECUTIVE SUMMARY Role of Marketing Department in the improvement process continues to be at the vanguard of strategy contest not only in this part of the world (Pakistan) but also in other countries. Most of the specifics about promoting brands have been renowned in the entire world. The competitive allege for marketing department are infinite, containing promotions and strategies that make possible for them to survive in persistently varying environment (Such as technology) of world. By applying international marketing concepts the company can acquire multinational status with a reputed brands and the company is globally recognized for the quality and standard. Coca-cola’s headquarter is in USA and there are more than 200 countries in which it is acting as a host company. In Pakistan there are 9 plants and over 1800 employees, 8 plants are functional and three plants in Lahore, Gujranwala and Rahimyar Khan have achieved the Quality system award. Coca-cola with its 450 brands is claiming to be the world’s best non- alcoholic beverage maker and is yet proving his claim by having 63% share in the world market and they are fulfilling their promise to maintain a standard and proving to become a quality symbol. And their aim is to serve the nation by making only non-alcoholic drinks and to give the world a cool and fresh treat. 6 Institute of Information & Technology, University Of The Punjab, Lahore.
  7. 7. INTRODUCTION Coca-Cola (also known as Coke) is a popular carbonated soft drink sold in stores, restaurants and vending machines in over two hundred countries. It is produced by The Coca-Cola Company, which is also occasionally referred to as Coca-Cola or Coke. It is one of the world’s most recognizable and widely sold commercial brands. Coke's major rival is Pepsi. Although Coke has been the target of urban legends decrying the drink for its supposedly copious amounts of “acid”, or the "life-threatening" effects of its carbonated water but still it is the most in-style soft drink. About its safety and the ethics of the company that produces it, it is widely accepted as the most dominant soft drink in the world today. Originally intended as a patent medicine when it was invented in the late 19th century, Coca-Cola was bought out by shrewd businessman Asa Griggs Candler, whose aggressive marketing tactics led Coke to its dominance of the world soft drink market throughout the 20th century. Although faced with accusations of perverse side-effects on the health of consumers and monopolistic practices by its producing company, Coca- Cola has remained a popular soft drink well into the first decade of the 21st century. 7 Institute of Information & Technology, University Of The Punjab, Lahore.
  8. 8. BRANDS Globally, the Coca-Cola Company owns or licenses nearly 450 brands in the nonalcoholic beverage business. Many of those brands are considered among the worlds most valuable. Some of these include: - Carbonated soft drinks Such as Coca-Cola, Diet Coke, Fanta, Sprite and Fresca - Juices and juice drinks Such as Minute Maid, Qoo, Fruitopia, Maaza and Bibo - Sports drinks Such as POWERade and Aquarius - Water products Such as Ciel, Dasani and Bonaqua - Teas Such as Sokenbicha and Marocha - Coffee Such as Georgia coffee, the best-selling noncarbonated beverage in Japan. 8 Institute of Information & Technology, University Of The Punjab, Lahore.
  9. 9. THE COCA-COLA STORY Coca-Cola was invented by John S. Pemberton in 1886 in Columbus, Georgia, originally as a coca-wine called Pemberton's French Wine Coca. It was initially sold as a patent medicine for five cents a glass at soda fountains, which were popular in America at the time thanks to a belief that carbonated water was good for the health. It was re-launched as a soft drink to counter Prohibition. The first sales were made at Jacob's Pharmacy in Atlanta, Georgia on May 8, 1886, and for the first eight months only thirteen drinks were sold each day. Pemberton then ran the first advertisement for the beverage on May 29 of the same year in the Atlanta Journal. Asa Griggs Candler bought out Pemberton and his partners in 1887 and began aggressively marketing the product — the efficacy of this concerted advertising campaign would not be realized until much later. By the time of its 50th anniversary, the drink had reached the status of a national symbol. Coca-Cola was sold in bottles for the first time on March 12, 1894 and cans of Coke first appeared in 1955. The first bottling of Coca-Cola occurred in Vicksburg, Mississippi at the Biedenharn Candy Company in 1891. Its proprietor was Joseph A. Biedenharn. The original bottles were Biedenharn bottles, very different from the much later hobble-skirt design that is now so familiar. Asa Candler was tentative about bottling the drink, but the two entrepreneurs who proposed the idea were so persuasive that Candler signed a contract giving them control of the procedure. However, the loosely-termed contract proved to be problematic for the company for decades to come. Legal matters were not helped by the decision of the bottlers to subcontract to other companies — in effect, becoming parent bottlers. When the United States entered World War II, Coke was provided free to American soldiers, as a patriotic drink. The popularity of the drink exploded in the wake of World War II as American soldiers returned home, more grateful than ever to partake of a beverage that had become synonymous with the American way of life. 9 Institute of Information & Technology, University Of The Punjab, Lahore.
  10. 10. NEW COKE TO THE PRESENT In 1985, Coca-Cola, amid much publicity, attempted to change the formula of the drink. Some authorities believe that New Coke, as the reformulated drink was called, was invented specifically to respond to its commercial competitor, Pepsi. Double-blind taste tests indicated that most consumers preferred the taste of Pepsi (which has more lemon oil, less orange oil, and uses vanillin rather than vanilla) to Coke. New Coke was reformulated in a way that emulated Pepsi. Follow-up taste tests revealed that most consumers preferred the taste of New Coke to both Coke and Pepsi. The reformulation was led by the then-CEO of the company, Roberto Goizueta, and the President Don Keough. It is unclear what part long-time company president Robert W. Woodruff played in the reformulation. Goizueta claims that Woodruff endorsed it a few months before his death in 1985; others have pointed out that, as the two men were alone when the matter was discussed, Goizueta might have misinterpreted the wishes of the dying Woodruff, who could speak only in monosyllables. It has also been alleged that Woodruff might not have been able to understand what Goizueta was telling him. The commercial failure of New Coke therefore came as a grievous blow to the management of the Coca-Cola Corporation. Coca-Cola management was unprepared, however, for the nostalgic sentiments the drink aroused in the American public; some compared changing the Coke formula to rewriting the American Constitution. The new Coca-Cola formula subsequently caused a public backlash. Gay Mullins, from Seattle, Washington, USA, founded the Old Coke Drinkers of America organization, which attempted to sue the company, and lobbied for the formula of Old Coke to be released into the public domain. This and other protests caused the company to return to the old formula under the name Coca-Cola Classic on July 10, 1985. The company was later accused of performing this volte-face as an elaborate reuse to introduce a new product while reviving interest in the original. The company president responded to the accusation by declaring: "We are not that stupid, or that smart." 10 Institute of Information & Technology, University Of The Punjab, Lahore.
  11. 11. The Coca-Cola Company is the world's largest consumer of natural vanilla extract. When New Coke was introduced in 1985, the economy of Madagascar crashed — vanilla being a prime export — and recovered only after New Coke flopped, since New Coke used vanillin, a less-expensive synthetic substitute. Purchases of vanilla more than halved during this period. Meanwhile, the market share for New Coke had dwindled to only 3% by 1986. The company renamed the product "Coke II" in 1992 (not to be confused with "Coke C2", a reduced-sugar cola launched by Coca-Cola in 2004). However, sales falloff caused a severe cutback in distribution. By 1998, it was sold in only a few places in the Midwestern U.S. 11 Institute of Information & Technology, University Of The Punjab, Lahore.
  12. 12. COCA-COLA IN PAKISTAN 12 Institute of Information & Technology, University Of The Punjab, Lahore.
  13. 13. Introduction The Coca-Cola Company is a global company with some of the world's most widely recognized brands, the Coca-Cola business in Pakistan has completed its 50 years of operation. The beverages are produced locally, employing Pakistani citizens. And their product range and marketing reflects Pakistani tastes and lifestyles, and they are deeply involved in the life of the local communities in which they operate History The Coca-Cola Company began operating in Pakistan in 1953. Benjamin H. Oehlert Junior, former senior vice president of The Coca-Cola Company, served as United States Ambassador to Pakistan from 1967 to 1969. Brands Coca-Cola®, Fanta®, Sprite® Bottling Information The Coca-Cola System in Pakistan operates through twelve bottlers, 10 of which are owned by Coca-Cola Beverages Pakistan Limited, out of these twelve plants now eight are operating. The CCBPL plants are in Karachi, Hyderabad, Lahore, Gujrawala, Faisalabad, Rahimyar Khan, Multan and Sialkot. The remaining two plants, independently owned, are in Rawalpindi and Peshawar. The Coca-Cola in Pakistan serves 70,000 customers retail outlets. Employment/Economic Impact In Pakistan it employs 1,800 people. In Pakistan it has invested over $130 million (U.S.). 13 Institute of Information & Technology, University Of The Punjab, Lahore.
  14. 14. Community Involvement In 2000, when Eastern Pakistan suffered its worst droughts, The Coca-Cola System initiated a famine-relief program to help victims and was the first private-sector company to assist. It initiated a voluntary Haj program that allows one employee from each plant, selected through a draw, to be sent on the Holy Pilgrimage to Mecca at the Company's expense. Sponsorships The Coca-Cola Company sponsors the Basant Festival in Lahore, a festival that marks the beginning of spring and attracts visitors from all over the world. Part of the festival is the Coca-Cola Kite Flying Championship. The Company sponsors Pakistan's leading pop group and organizes concerts throughout the country for teenagers and underprivileged children. It sponsors Pakistan's No. 1 solo artist, who will participate in concerts and charity events organized by The Coca-Cola Company in Pakistan. The Company has signed a sponsorship agreement with eight of Pakistan's national cricket players for promotional and advertising use. The Coca-Cola System in Pakistan is the exclusive supplier for Pakistan Railways, serving soft drinks in stations, platforms and on trains. The Company will be undertaking a beautification program of stations and platforms. Marketing Involvement Coca-Cola Corporation is a multinational organization. And it is indulged in the international marketing .The brands and basic strategies are made in the home country but the local strategies are defined in the host countries. Also the 4P’s are made according to the demographics and taste of the people of the host country. In Pakistan the Coca-Cola Company maps the strategies and the brands by looking into the environment in which it is working. The brands are produced locally. And the product, price promotion and placement are planned with respect to the controllable variables and uncontrollable variables. Uncontrollable Elements 14 Institute of Information & Technology, University Of The Punjab, Lahore.
  15. 15. Whenever any business start operating in two or more than two countries, it come across some of the problems which are beyond the control of business , like legal restraints, government controls, weather, consumer behavior, economic conditions of the host country, social and cultural factors, geography & infrastructure, channel of distribution available, level of technology and competitive forces. These problems are different in all the countries in which business starts its operations. So business has to design a separate framework for each country to overcome these problems. Coke is one of the oldest companies which are in international business; they have a vast experience of controlling these elements. They heavily rely on research to overcome these problems. Legal And Political Problems They perform thorough study of legal and political problems to decide to enter into any country. They track the previous record of the ruling party and policies. They also keep in mind the attitude of other opposition parties about foreign companies. If any problem arises regarding political or legal issues, they don’t sacrifice their policies and secrecies, as we have a case of COKE AND INDIAN GOVERNMENT. When Indian Government asked to have formula for the concentrate and they deny and left the huge Indian market. Social And Cultural Factors Social and Cultural factors have a very vital impact on the business in the host country. Although this is the most difficult task to understand the culture of the host country but business has to do reasonable care to understand this problem. Coke performs research to understand these issues and design their strategies accordingly. They design their products, prices, place, promotion and customer service according to the culture of the country. As we see that coke has 400 brands allover the world but in Pakistan we have only 4 brands and in India which is a market of 1.1 billion people coke has 15 15 Institute of Information & Technology, University Of The Punjab, Lahore.
  16. 16. brands. This is because of cultural differences that they cannot introduce all the brands in all the countries. Geography & Infrastructure If any business wants to start its business in any other country, it also studies the geography and infrastructure of the host country. That is if feasible for doing business or not. They decide the channel of distribution, modes of transportation and there cost to make decisions regarding prices and designing strategies. In Pakistan Coke found a reasonable infrastructure to do business, which is continuously improving to facilitate distribution system. Economic factors Different counties have different economic conditions at a time so Coke designs different strategies to handle these conditions. As Coke is one of the largest businesses in the world, they have a strong financial background to overcome these economic problems. In host countries they change their prices, investment and penetration strategies to overcome economic factors. Competitive Forces Whenever any business enters into any other country they face competition with some local and international brands. Coke Combat this problem with their quality commitment and continuously providing its customers with quality product, services and entertainment. 16 Institute of Information & Technology, University Of The Punjab, Lahore.
  17. 17. Methods of Doing Business Diverse structure, management attitude, and behavior encounter in international business, they are behaviors encountered in international business, and there is considerable latitude in the ways business is conducted. Coca-Cola Company had taken into the consideration these facts that a certain amount of cultural shock occurs when differences in contract level, communications emphasis, tempo, and formality of foreign business are encountered. Ethical standards are likely to be different as well as negotiation emphasis. Coca Cola Company determines the prominence of status and position (PDI) combine to influence the authority structure of business. It adopts low (PDI) value that they could take the suggestion of his employees to make a right decision at a right time, which could deal with of the customer; also they could take the suggestion of his customers about its taste, branding and other related features which could enhance its efficiency of sales and promotion. As its business grows and professional management develops, their is shift towards decentralized management decision management. They are making their decisions either in committees or meeting. Committee may operate on a centralized or decentralized basis, but the concept of committee management implies some thing quite different from individualized functioning. Coca Cola company is doing its business allover the world they hire locals wherever they do business and take their suggestions in designing their strategies. Because company is very much well aware of the fact that local know their social culture very well and help company to design effective and efficient strategies. • Target Market: o Upper upper class o Upper middle class o Upper lower class 17 Institute of Information & Technology, University Of The Punjab, Lahore.
  18. 18. o Middle upper class o Middle middle class o Middle lower class They mainly emphasize on students and teenagers, they gain their attraction by indulging into the activities like: • Becoming a partner at the Basant • Promoting new age music and hiring pop stars into their promotion Compaign. CUSTOMER MARKET Demographic Factors People of all ages and gender use Coca-Cola. Educated people belonging to upper and middle-income groups also commonly use Coca-Cola. Major emphasis of Coca-Cola is to attract teenagers. Life Style Pattern The Taste and quality conscious people Drink Coca-Cola brands especially Coca-Cola. Diet Coca-Cola offered by Company is Very popular among diabetic patients. Preference for Specific Benefits For over 51 years Coca-Cola Corporation has maintained a tradition of producing only the Quality drinking beverages. That is why it continues to be a familiar and trusted household name in Pakistan. Today, Coca-Cola’s lives up to its well earned reputation as market leader by insuring that consumers get the best carbonating drink. The best of nature, technology and human resource have together contributed to Coca-Cola’s reputation for unparalleled quality- a standard now recognized internationally. Above all, the entire process is overseen by a professional management and trained workforce. 18 Institute of Information & Technology, University Of The Punjab, Lahore.
  19. 19. SWOT ANALYSIS 19 Institute of Information & Technology, University Of The Punjab, Lahore.
  20. 20. STRENGTHS Coca-Cola has been a complex part of Pakistani culture for over a half century. Being a strongly recognized brand the product's image is loaded with coolness and refreshment, and this is an image many people have taken deeply to heart. The Coca-Cola image is displayed on T-shirts, hats, and collectible memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest strengths. "Enjoyed more than 685 million times a day around the world Coca-Cola stands as a simple, yet powerful symbol of quality and enjoyment". Additionally, Coca-Cola's bottling system is one of their greatest strengths. It allows them to conduct business on a global scale while at the same time maintain a local approach. The bottling companies are locally owned and operated by independent business people who are authorized to sell products of the Coca-Cola Company. Because Coke does not have outright ownership of its bottling network, its main source of revenue is the sale of concentrate to its bottlers. The Coca-Cola Company in Pakistan has the mover advantage, as it was the first to introduced soft drink. There are 8 plants working in Peshawar, Karachi, Lahore, Gujrawala, Rawalpindi, Faisalabad, Raheem Yar khan, and Multan. These big plants have employed more than 1800 employees. Duopoly of two main beverage companies in Pakistan including Coca-Cola has been diffused into the local markets. WEAKNESSES Although domestic businesses as well as many international markets are thriving, Coca-Cola has recently reported some "declines in unit case volumes due to reduced consumer purchasing power” Coca-Cola on the other side has effects on the teeth's which is an issue for health care. It also has got sugar by which continuous drinking of Coca- Cola may cause health problems. Being addicted to Coca-Cola also is a health problem, because drinking of Coca-Cola daily has an effect on your body after few years (International report of Coca-cola). Out of twelve plants, eight are the operational plants while two are franchised with other group of companies, which is a drawback for coca- 20 Institute of Information & Technology, University Of The Punjab, Lahore.
  21. 21. cola in Pakistan as in these two plants the involvement of Coca-Cola International is not present which effects the overall image of these plants in the local market about the quality and international standards. OPPORTUNITIES Brand recognition is the significant factor affecting Coke's competitive position. Coca-Cola's brand name is known well throughout 94% of the world today. In Pakistan it is the well-known brand among the people of all ages specially the children are more attracted towards the coke. As Coca-Cola is in business of soft drinks and has more than 450 brands allover the world, but in Pakistan they have only four brands, so there is a potential in Pakistani market for other brands too. Pakistani weather is hot and humid. This causes a tremendous growth in the sales during the summer season. Packaging changes have also affected sales and industry positioning, but in general, the public has tended not to be affected by new products. Coca- Cola's bottling system also allows the company to take advantage of infinite growth opportunities around the world. This strategy gives Coke the opportunity to service a large geographic, diverse, area. The unique formula (concentrate) is being imported from U.S.A and it is then processed in the local plants, this resists the copying of formula and formation of fake formula thus keeping the taste of pure and real Coca- Cola revitalizing and tempting. THREATS Currently, the threat of new viable competitors in the carbonated soft drink industry is not very substantial. The threat of substitutes, however, is a very real threat. The soft drink industry is very strong, but consumers are not necessarily married to it. Possible substitutes that continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate ("Cola Wars", 1991). Even though Coca-Cola and Pepsi control nearly 5% of the entire beverage market, the changing health-consciousness of the market could have a serious affect. Of course, both Coke and Pepsi have already diversified into 21 Institute of Information & Technology, University Of The Punjab, Lahore.
  22. 22. these markets, allowing them to have further significant market shares and offset any losses incurred due to fluctuations in the market ("Cola Wars", 1991). In Pakistan the consumption of cold beverages is 5% which have to be stabilized. Consumer buying power also represents a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow moving industry in which management must continuously respond to the changing attitudes and demands of their consumers or face losing market share to the competition. Furthermore, consumers can easily switch to other beverages with little cost or consequence. Post 9/11 Effects After 9/11 incident Coca-cola suffered a loss due to boycott of religious activists at a larger scale. The market share and market value was dropped down to several points .Price competition was started after this incident. Due to sanctions imposed on Pakistan after May5, 1995 taxes were to be paid in high amount thus increasing the cost of production and price offered to consumers and decreasing the buying powers of customers. So any of the activists behavior can cause decline in the production and sale of coke and other cold beverage company. Intellectual Property Rights Coke is one of the biggest brands in the world, and its brand value is approximately 4 billion $. It is said that the most common word to speak in this world is “OK” and after this the second most common in this whole world is “COKE”. Sometimes different people and organizations used their names to make money, in the form of fake bottling. The main threat to the company is the production of fake bottles. Fake bottling is growing day by day Fake bottles problem for a company comes under the “act of unfair practices”. In a black marketing aspect whole sellers and retailer could take the fake bottles at a low price for selling at the price of original bottles which could be harm full for the health of consumers. Coca Cola Company could create a check and balance to meet the need of time, which in turn could help to increase its market share. It 22 Institute of Information & Technology, University Of The Punjab, Lahore.
  23. 23. already had made several steps to prevent fake bottling and production of fake coke but due to mushrooming industry the laws and management of the corporation is failed to stop this industry from flourishing. The government is also not of great help to the company in solving this main issue. 23 Institute of Information & Technology, University Of The Punjab, Lahore.
  24. 24. PEST ANALYSIS 24 Institute of Information & Technology, University Of The Punjab, Lahore.
  25. 25. POLITICAL FACTORS The political environment of Pakistan affects the coca-cola beverages and Coca-Cola Export Corporation, to some extent. For instance, the political instability in Pakistan causes trade and import policies to change rapidly as the government changes which causes many problems in the import of raw materials. Trade barriers such as tariffs and duties on the import of syrup (concentrate) from USA increases the operational cost. A relaxation has been given by the current government. So the situation for the beverage industry is getting better day by day for the last couple of years. Also the policies have been more or less constant and also the emaciation of free trade zones by the government will help the Coca-cola to flourish more effectively in Pakistan. ECONOMIC FACTORS The economic condition of Pakistan has not been stable for a long time but The recent economic indicators suggest that the economy is growing and macroeconomic issues are getting sold but at the same time there has not any marked increase in the consumer buying power (inflation). When the recession occurs the price of bottles are dropped down to increase the sales and to achieve the targets of the company. So overall economy of Pakistan directly affects the cost and price of the Coca-Cola Company. SOCIAL FACTORS Being a foreign based company Coca-cola faces opposition by Muslim activists. The main social issues are: It faced scandal of humiliating Muslim’s religion that when the inverted image of Coca-Cola brand name is being viewed on the mirror it disgraces the name of Holy city Makkah and Hazrat Muhammad (P.B.U.H). This was a wrong conception as there was no reality in it and this scandal was flopped after a short span. One of the greatest social barriers to coca-cola Lahore is the restriction of coke in the campus premises. Jamiat’s strike to coke affects the sales and overall image of coke as a larger number of students from all over the 25 Institute of Information & Technology, University Of The Punjab, Lahore.
  26. 26. Pakistan are studying in the University of The Punjab. But on the contrary in the all parts of the country coke is viewed as the partner in the major events like Basant and promoter of music thereby making a place in the hearts of young generation of the society. TECHNOLOGICAL FACTORS The making of Coke, Fanta, Diet coke and sprite involves "mixing and blending, filling and capping ". For this process, concentrate or syrup is imported from USA and is then mixed in the local plants .Machinery for the local plants was also imported but now the coca-cola company follows Local content law as most of the spare parts are locally made. The system is automated and equipment is fully operational and up-to-dated. In technology Coca-cola company is far ahead than the several other local beverage brands of Pakistan. It is a Highly Technical 10 Steps Process. Which are all done in the local plants using local content law. 26 Institute of Information & Technology, University Of The Punjab, Lahore.
  27. 27. BCG MATRIX High ? Growth Of Market Cash Low Dog Cow High Low Relative share A Coca-cola beverage limited is now at a stage of question mark if we place it in a BCG Matrix. Because overall market is growing and it has relatively less market shares then its real competitor PEPSI. Only about 5% of the cold beverages are being utilized and this number is increasing. Coke is sold in the 1:2 approximately ratio with respect to Pepsi as market share or Coca-Cola Company is 27% and that of Pepsi is 68%. 27 Institute of Information & Technology, University Of The Punjab, Lahore.
  28. 28. EPRG MODEL Coca –cola has a geocentric policy regarding their human resource and policy making for host countries. They design their 4 P’s and management policies according to the environment and atmosphere of the host country. And they hire employees on merit regarding their qualifications and knowledge without any discrimination between the countries and races. As for as Pakistan is concerned here Coca –cola is being lead by a Pakistani head, Mr. Asadullah Sherazi (GM CCBPL). 4 P’s are designed by management of the host country, as BASANT is being celebrated by Coca – cola in Pakistan, which is a very important event celebrated by the main target market of the company. 28 Institute of Information & Technology, University Of The Punjab, Lahore.
  29. 29. PRODUCT LIFE CYCLE LA CO CA CO IN R U O Y T OD CT R GR T OW H MTR Y A U IT DE INE CL Coca-cola is in a stage of growth according to a product life cycle analysis. It is recovering its market share very quickly which it had lost in previous years although there is good competition in market but it is still recovering and enjoying healthy profits. There are no barriers for new entrants, and many companies are entering in this industry because of healthy growth. 29 Institute of Information & Technology, University Of The Punjab, Lahore.
  30. 30. DUTIES AND TAXES APPLIED Duties and Taxes are the tariff barriers for any company to import or export something to other country. The most important component of coke is their concentrate which is provided allover the world from USA. Pakistani Government treats their concentrate under the head of luxuries and applied second highest duty after tobacco. According to their spokesman if this duty is removed, then price of coke’s 250ml bottle can be lessened up to Rs.5. Laws Abided By & Methods of Conflict Resolution Coca-cola is one of the oldest multinational corporation, they have a vast experience of dealing with different governments and different organizations allover the world. When ever they enter into some country they made a thorough research work. They analyze the political restrictions, rules and regulations of doing business, political parties which can affect policies and policy making authorities. They respect the laws of host country and design their framework according to the rules and regulations of the host country. Methods of Conflict Resolution World wide Coca-cola tries to solve any disputes which may arise through arbitration and they mention this clause in contract that if any dispute arises, they will go for arbitration but if arbitration does not solve the problem then they refer their dispute to litigation. They prefer arbitration because litigation is very expensive and lengthy process; there is fear of poor image and damaging public relations, fear of unfair treatment in host country and fear of loss of confidentiality. As far as Pakistan is concerned up till now no such dispute has arisen in which they need to go for arbitration. But they go for litigation against those firms which are involved in using their brand name for fake bottling. 30 Institute of Information & Technology, University Of The Punjab, Lahore.
  31. 31. STRATEGIES TO REDUCE POLITICAL VULNERABILITY Nowadays political governments are very conscious about foreign businesses and foreign investments, so they usually have standardized policies for all the competing businesses; there is no biasness in dealing with different competing business. But sometimes a situation may arise due to some political reasons that may create some problems, so coke deals with such problems strategically. As we have a example, when Pepsi launch their tin can at Rs.10/-they got special permission to manufacture tin cans and that was the only plant which got permission to manufacture cans, as we know that time Pepsi and Coke are bitter competitors so Coke must go with guns and guns with Pepsi, they tried to get permission but they failed. So they imported Coke cans from Dubai at Rs.13/- and sell it for Rs.10/- to compete in the market. So if some problem arises which can affect their image and that cannot be solved due to some political and legal problems they solve this strategically. As we know that nowadays Pepsi in Pakistan is under the administration and control of Mr. Hamayun Akhtar who is a Federal Trade Minister of Pakistan, but nowadays policies are standardized so it doesn’t create any problems. Current Strategies Regarding International Operations One of the reasons of losing their market share in Pakistan in last few years was their quality. In Pakistan they were operating as franchisee but now Company has acquired most of the plants except from Peshawar and Rawalpindi plant now they are very much conscious about their quality standards and the quality of other two is being controlled by Coca Cola Exports Corporation. Another reason was that their backup was not as strong as Pepsi. They were not getting any kind of help regarding financial problems, management problems from Coca Cola International. But now most of the plants are under the control of Company itself and Coke International is also very keen to raise its market share in Pakistan so they are fully 31 Institute of Information & Technology, University Of The Punjab, Lahore.
  32. 32. supporting Coca Cola Beverages Pakistan and Coca Cola Exports Corporation Pakistan. In Pakistan there main focus is on standardized products as Coca Cola, Sprite, Fanta, and they are going to launch some of new products in next 2 or 3 years. Adaption and cultural borrowing Adaption is a key concept in international marketing, and willing to adapt is a crucial attitude .Adaptation, or at least accommodation, is required on small matters as well as large ones. Coca-Cola Company recognizes the need of affirmative action, that is, open tolerance of concept “different and equal”. Coca-Cola company feels that essential to effective to Adaption is awareness of its own culture and recognize that differences in others can cause anxiety, frustration and misunderstanding of the host intention .The self reference criterion (SRC) is specially operative in business custom but Coca-Cola company could not indulge its own (SRC) in others culture it try to adopt the strategies of the host countries where they are doing business around the world ,it reduce the (SRC) to lower the barriers of cultural differences . Coca-Cola Company develops an understanding and willingness to accommodate the differences that exists. Company is doing a successful business internationally since 1953. And operating in a home country for more than 50 years it have set up its strategies to meet the needs of required customer in every way possible where it is doing business it aware of the possibility of cultural differences and the probable differences, consequences of failure to adapt, or accommodate, the seemingly and less variety of customs must be assessed. Coca-Cola Company business customs includes imperatives and adiaphora. Cultural imperatives are the business customs and exceptions that must be met and conformed to or avoided if relationship is to be successful. Company knows the best how to do the business at their best. Human relation, friend ships and or attaining the level of trust are right tricks to do a business in a home country as well as in a host country. They that 32 Institute of Information & Technology, University Of The Punjab, Lahore.
  33. 33. there is no substitute for establishing friend ship in some cultures before effective business negotiation can begin. Company motivate their local agents to make more sales and the friendship helps establish the right relationship with end users that to more sales over a longer period of time. Culture adiaphora relates to the area of behavior or to customs that cultural aliens may wish to conform or to participate in but that are not required. Company feels that such Culture adiaphora has a minute effect on its sale but it has no longer effects. When an issue arises in a home country about its penny per bottle is given to the Israel to war against Muslims and mean while many brands came into existence such as Mecca Cola, Shandy Cola etc. They have adapted their company culture according to the external environment as they are indulge in many community programs such as scholarship and school funding programs and they have borrow the culture of Pakistanis. They hire local employees and plan according to the local environment 33 Institute of Information & Technology, University Of The Punjab, Lahore.
  34. 34. PROBLEMS BEING FACED BY COCA-COLA COMPANY There are some problems being faced by a company which affects its business strategies. It is difficult to know where to begin and isolate the events which shape the business environment. Distribution Coca-Cola Company is facing a problem of distribution, as distributors are expecting more from coco cola to provide an extra distribution channels which could help them to spread their products at large .Coca-cola products are some where not available in rural area due to inefficient distribution system. Investment Coca-Cola Company is now facing a problem regarding investment, like investment in distribution system, to make it efficient. They need investment to encourage retailers to provide space to their products, in the form of providing coolers. Company is not in a situation to provide it to all its retailing stores while its competitor PEPSI COLA provides it to its distributors to promote his products in the market which is their competitive edge to increase it s share in the market. It creates an attraction to its distributors to take its products more to take incentives of special discounts provided by the company to its distributors, wholesaler, and retailers. This is a relatively a long term process to penetrate in the market and gain market share. Brand Awareness Having low promotional strategies that most of their customers are unaware of their brands mostly they mix their brands with Pepsi, they feel that Sprit and Fanta are the brands of Pepsi but in actual these are the brands of Coca-Cola Company they are facing these problems due to having low promotional strategy so that the unaware of its brands. 34 Institute of Information & Technology, University Of The Punjab, Lahore.
  35. 35. Single Advertising Platform They have only one Advertising platform regarding promotion which is music; on the other hand Pepsi has another very important Advertising platform which is Cricket. Most of our youngsters are attracted towards it. Low value of share Coca-Cola company having a share of about 27% which is lower than its competitors i.e. Pepsi having market share of 68% involve in more promotional strategies as compared to Coca-Cola. Fake Bottling Fake bottling in Pakistan is one of the major problems being faced by the company. This problem not only affects the sale volume and profit margins but also brand value and loyalty of the customers. The profitability which company gain, ultimately that part of gain goes to fake bottle producers, who running their business in the name of company 35 Institute of Information & Technology, University Of The Punjab, Lahore.
  36. 36. RECOMMENDATIONS Distribution Products of the company must be physically transported from its warehouse where the products are needed. Company must add value to its products that eventually bought by individuals in order to create a viable “value chain” model to create a relationship of distribution management and select other facilitating organizations as a member of value chain .so the distributors within a marketing mix is getting the product to its target Market .the most important activity in getting the coco cola company products to the target market is arranging for its sales and transfer of a product to its final customer by assuming its financial risks. for ultimate selling company try to carry out the functions in exchange for the order and payment from the customer by providing more easily available products at a required place. Company try to carry out the functions in exchange for the order and payment form the customer by providing more easily available products at required places. Companies try to hire Agent middle man who works as their own to distribute its products at various locations. As the middle man could not be disinter mediate from the process although some of unnecessary or redundant functions which cause the lost of financial resources. Company create assortment and storing products can be shifted from one party to another in order to increase efficiency. Designing Distribution Channel • Specify role of distribution. • Select the distribution channel • Determine the intensity of distribution • Choose specific channel members Market Segmentation With different wants, buying preferences or product use behavior relatively minor and benefits sought by the customer can be satisfied with single 36 Institute of Information & Technology, University Of The Punjab, Lahore.
  37. 37. marketing mix .as a result segments must be targeted individually and alternative marketing mix is required. The process of market segmentation • Identify the current and potential wants that exist within a market • Identify characteristics that distinguish among the segments • Determine the size of segment and how well they are being satisfied New Product Development To achieve strong sale and healthy profits company should have an explicit strategy with respect to developing and evaluating new products. This could also help it to defend its market share. Stages in product development which could enhance business activities. • Gathering new product ideas • Screening of ideas • Business analysis • Prototype development • Market test. • Commercialization. Dispose of Used Products Consumers desire for convenience in the form of throw away containers conflict with their stated desire for clean environment .some discard packages wind up little ,other add to solid waste in land fills. So the coco cola company recycles its disposable bottles and cans to recycle so the cost of production could be minimized to deal with other financial resources. Promotional Programs Promotion, in some where it takes, is an attempt to influence so the company could hold a defined marketing promotional mix so that the consumer could be aware of its brand at large. They adopt the strategy by the following methods: • Personal selling. • Advertising. • Sale promotion. 37 Institute of Information & Technology, University Of The Punjab, Lahore.
  38. 38. • Public relations. Company sells its products by creating an attraction for the customers by adopting these strategies. Formation of a Pakistani Website Web ushered in another level of networking of marketers. E-information form of networking involves creating a corporate website and posting information on it .Firms are able to make vast amount of information available on their website .The information ranges from product description and invitations to suppliers to submit bits on planned purchases to product operation instruction and information about contracting sale personnel. So the coco Cola Company must be create its website that the ultimate customer could know about the product available in the market .They must create a web sit which could fall in the categories of • Background and general information • Current business operations • Links • Attraction and entertainment features • Contact point The impacts of internet marketing create an opportunity to increase its wellbeing in the market place so opportunity of dealing in a host country as well as in the international marketing could increase. Establishing the Budget Once the promotional budget has been established, it must be allocate among the various activities comprising the overall promotional program .One method that the coco cola company use to extend their budget “cooperative corporative ads which is a joint effort two or more firms intended to benefit each of the participant. So the company could use any of the two strategies of corporative ads i.e. vertical and horizontal. In vertical corporative ads Coco cola Company could share the cost of ads with the retailers or by giving a special discount to the retailers, to encourage the retailer advertise. 38 Institute of Information & Technology, University Of The Punjab, Lahore.
  39. 39. BIBLIOGRAPHY Reference Books • John Bratt, Jeffzay Gold, 2003, Human Resource Management (Theory & Practice), 3rd, Plagrave Mecmiilan. • Will Rowan, 2002, Digital Marketing (Using New Technologies to Get Closer to Your Customers), 1st, Kogan Page Limited. • Miller & Layton, 2001, Fundamental of Marketing, 4th, McGraw-Hill Book Company Australia Pty Limited. • David Jobber & Geoff Lancaster, 2004, Selling and Sales Management, 6th, Pearson Education Singapore Pte. Ltd. • Peter Rix, 2001, Marketing (A Practical Approach), 4th, McGraw-Hill Book Company Australia Pty Limited. • Dillon, Madden, Firtle, 1994, Marketing Research in a Marketing Environment, 3rd, McGraw-Hill Book Company Australia Pty Limited. • Hawkins, Best, Coney, 2004, Consumer Behavior (Building Marketing Strategy), 9th, McGraw-Hill Book Company Australia Pty Limited. Reference Sites 39 Institute of Information & Technology, University Of The Punjab, Lahore.
  40. 40. APPENDIX 40 Institute of Information & Technology, University Of The Punjab, Lahore.
  41. 41. QUESTIONIARE 1. Information about: • Company’s History • Line of business • Number of Employees • Information about Host Country Analysis 2. How do you adjust the controllable variables with the uncontrollable variables? Like: • Economic climate • Structure of Distribution • Competitive Forces • Political and legal Forces • Cultural Forces • Geography and Infrastructure • Domestic Environment 3. What are Barriers faced by the company to operate (Tariff and non Tariff)? 4. What are Duties and Taxes applied? 5. Culture and its impact, any resistance if any like boycott of foreign brands nowadays 6. Cultural borrowing, if any like in promotion strategies? 7. What are Imperatives, Adiaphorous and Exclusives followed by the company? 8. What are Strategies adopted to reduce political, operational and administrative vulnerabilities? 9. What are Laws abided by and methods of conflict resolution? (Both internal and external) Like: • Conciliation • Arbitration • Litigation 10. Any issues related to Intellectual propriety rights, Fake Coke, How you deal with this problem. 11. What are the current strategies regarding International Operations in Pakistan? Like Standardization vs. Adoption. 12. Localization Issues: Localization of Business in Pakistan (any raw material import, extend of local vendors) 41 Institute of Information & Technology, University Of The Punjab, Lahore.
  42. 42. • Localization of Products • Localization of Profits • Localization of Production • Localization of Management 13. How to deal with competitors strategies 14. What are the current problems and opportunities in this business that you are facing? 15. Describe mode of international import/export, joint venture, and subsidiary? 16. Information About: • Ratio of International profits vs. domestic profits • Sales figure • Production Cost 17. Any Future Problem: • W.T.O. tread • New Business Entrance 42 Institute of Information & Technology, University Of The Punjab, Lahore.