Coca Cola: International Marketing Mix

Coca Cola: International Marketing Mix

INTRODUCTION:

This scope of this essay is to discuss the international marketing mix of Coca Cola, which is one of the biggest brands in the world. The debate between the global standardization and local adaptation of the marketing mix has been going on for more than four decades without a resolution (Agrawal, 1995) and globalization trends starting in the early 1980’s has further fueled the debate (Jeong, 2000). This has led the global companies to make the critical trade-off decision between economies of scale resulting from standardization and the cultural prerequisite of local adaptation. This essay looks at how one of the most successful brands, Coca Cola manages their marketing mix in a global context to get an insight into this debate.

COMPANY OVERVIEW:

The Coca-Cola Company focuses on the non-alcoholic beverage market, producing a range of drinks around the world. It is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverages, primarily carbonated soft drinks. The company is active in more than 200 countries (Mintel, 2005), with the help of directly controlled subsidiaries, partnerships and franchising, thus making it a truly global company. The company sells over six million beverages every day (Coca-Cola, 2005).

The financial situation of Coca-Cola can be commented by looking at the company’s annual reports. For the year ended December 2004, the company generated revenues of $21,962 million, an increase of 4.4% on the previous year (Coca-Cola, 2005). The distribution of this revenue under the five business units is: North America 30.1%; Africa 3.9%; Asia 24%; Eurasia 31.2% and Middle East 9.7% (Datamonitor, 2005). The company’s leading brands are Coca-Cola, Diet Coke, Sprite and Fanta.

The former chairman of the company, Duglas Ivester has stated that being a global brand is the main strength of the Coca-Cola Company (Lewis, 2003). Furthermore, the former chief marketing officer of the company, Sergio Zyman argues that in order to think globally, the company must act locally (Weisert, 2001). An in-depth analysis of the market mix of the company is needed to analyze this equilibrium between standardization and adaptation in the global context for the company.

STANDARDIZATION VS. ADAPTATION:

The debate on standardization vs. adaptation has resulted in three schools of thoughts regarding the marketing mix of the global company (Melewer & Claes, 2004): standardization, adaptation and contingency perspective.

STANDARDIZATION:

Advocates of standardization perspective claim that global market segments are emerging and that marketing mix not only can, but also should be standardized across markets (Levitt, 1983; Shoham, 1995). They further suggest that differences between countries are more a matter of degree rather than direction (Boddewyn et al, 1986) and thus the marketing mix from a global brand must be focused on the similarities of consumers around the world. Drawing upon Melewar & Claes (2004), the major benefits from standardization can be summarized as economies of scale, consistent brand image and cost reductions in planning and control.

ADAPTATION:

Proponents of the adaptation school of thought, on the other hand argue that the difference between cultures is so vast that standardization is not possible (Solberg, 2002). They point out the differences among the markets as culture (Marcus & Gould, 2000), stage of economic and industrial development (Jeong, 2000), stage of product life cycle, media availability and legal restriction (Harvey, 1993). However, in order to adapt marketing communication in each market the company increases costs and decreases possibilities to create synergy across the market, which can in turn dilute the brand image of the company.

COMPROMISE:

The third school of thought takes a moderate approach towards the marketing mix in the global organization context. This school holds the view that neither complete standardization nor complete adaptation is necessary and that a more effective marketing strategy using the combination of the two approaches can be developed (Yip, 2003). Theorists (Nikolaos & Vlasis, 1997) believe that the difference between standardization and adoption is in degree rather than in kind. Theorists further argue that this difference should be seen as continuum (Melewar & Claes, 2004). According to them on the left side are companies with highly decentralized, multi-local operations and products. On the