MASTER OF MANAGEMENT

GADJAH MADA UNIVERSITY

MARKETING MANAGEMENT

CASE STUDY : COCA-COLA IN INDIA

Lecture : Prof. Dr. Basu Swastha Dharmmesta, M.B.A

Group 4

Anne Stam

Febrini Wulandari

Irwan Arfandi Bachtiar

Case Summary

In the late 1990s Coca-Cola began using

Indianized themes to appeal to the Indian

customers. It realized that its communication

needed to appeal to the youth. Also, Coca-Cola

was aware that the Indian youth respected

traditional Indian values even if they wore

western clothes and listened to western pop

music. Taking these aspects into consideration, it

created an advertisement showing an Indian

college-goer coming home for the Diwali

holidays. The young man was clad in trendy

clothes (blue jeans and T-shirts) and even

sported an ear-stud to signify his contemporary

style. He was shown touching the feet of his

grandparents while the Diwali fireworks lit up in

the background. This communication helped in creating a personality of Coca-Cola that the

Indian youth could relate with and it resulted in a suitable positioning for the brand.

Also in 2000, Coca-Cola chose the leading Hindi movie stars and also some of the best

cricketers to enable proper brand associations. The intent was to ensure that the celebrities

who would endorse the brand would help to have a rub-off effect of their personas on the

Coca-cola brand. Since a large number of Indian youth aspired to emulate these celebrities,

the association would result in creating the right identity for the brand.

Bollywood Movies Stars with Coca-cola Advertisement.

COMPANY PROFILE

The Coca-Cola Company is the world's largest beverage

company, largest manufacturer, distributor and marketer of

non-alcoholic beverage concentrates and syrups in the world

and is one of the largest corporations in the United States. The

company is best known for its flagship product Coca-Cola,

invented by pharmacist John Stith Pemberton in 1886. The

Coca-Cola formula and brand was bought in 1889 by Asa Candler

who incorporated The Coca-Cola Company in 1892. Besides its

namesake Coca-Cola beverage, Coca-Cola currently offers nearly

400 brands in over 200 countries or territories and serves 1.5

billion servings each day.

Coca-Cola is the best-selling soft drink in most countries. While the Middle East is one of the

only regions in the world where Coca-Cola is not the number one soda drink, Coca-Cola

nonetheless holds almost 25% marketshare (to Pepsi's 75%) and had double-digit growth in

2003.1

In India2

A Healthy Growth to The Indian Economy

Ever since, Coca-Cola India has made significant investments to build and continually

consolidate its business in the country, including new production facilities, waste water

treatment plants, distribution systems, and marketing channels.

Coca-Cola India is among the country’s top international investors, having invested

more than US$ 1 billion in India in the first decade, and further pledged another US$100

million in 2003 for its operations.

A Pure Commitment to The Indian Economy

The Company has shaken up the Indian carbonated drinks market greatly, giving

consumers the pleasure of world-class drinks to fill up their hydration, refreshment, and

1 Data accessed on http://en.wikipedia.org/wiki/The_Coca-Cola_Company, March 17, 2009.2 Data accessed on http://www.coca-colaindia.com/aboutus/aboutus_ccindia.aspx, March 17, 2009.

nutrition needs. It has also been instrumental in giving an exponential growth to the

country’s job listings.

Creating Enormous Job Opportunities

With virtually all the goods and services

required to produce and market Coca-Cola

being made in India, the business system of the

Company directly employs approximately 6,000

people, and indirectly creates employment for

more than 125,000 people in related industries

through its vast procurement, supply, and

distribution system. Nation Flags of India

The Indian operations comprises of 50 bottling operations, 25 owned by the Company, with

another 25 being owned by franchisees. That apart, a network of 21 contract packers

manufacture a range of products for the Company.

On the distribution front, 10-tonne trucks – open bay three-wheelers that can

navigate the narrow alleyways of Indian cities – constantly keep our brands available in

every nook and corner of the country’s remotest areas.

MAIN ISSUES

Branding Positioning Strategies of

Coca Cola in India.

Rural Market Scenario.

Distribution Strategy.

Advertising Strategy.

Problem Statement

“Would these branding strategies enable Coca-Cola to penetrate the Indian market?”

Analysis

Branding Strategies : India A

The designation Coca-Cola gave to the market segment including metropolitan areas

and large towns, represented 4 % of the country population.

This segment sought social bonding as a need and responded to aspirational

messages, celebrating the benefits of their increasing socail and economic.

“Life ho to aisi,” (life as it should be) was the successful and relevant tagline found in

Coca-Cola’s advertising to this audience.

Branding Strategies : India B

Coca-Cola India believed that the first brand to offer communication targeted to the

smaller towns would own the rural market and went after that objective with a

comprehensive.

“India B” included small towns and rural areas, comprising the other 96% of the

nation’s population.

This segment’s primary need was out-of-home thrist-quenching and the soft drink

category was undifferentiated in the minds of rural consumers.

Additionally, with an average Coke costing Rs. 10 and an average day’s wages around

Rs. 100, Coke was perceived as a luxury that few could afford.

Rural Market Scenario

After 1999, Most MNC’s that came in to India targeted India’s upper middle class to

earn more revenues. According to Industry estimates rural India accounts for 74% of

population and 58% of indian rural disposable income. Rural India is also characterized

by growing affluence: agricultural output increasingly to early 215 millions tonnes in

2004 compared to 176 millions in 1991. According to data compiled by the National

Council of Applied Economic Research rural India now accounts for the 70% of toilet soap

users, and 38% of two-wheelers purchases com from India.

Coca-Cola Company is one one of the first global majors to have spotted the potential

spin offs from the country’s rural market. It has perfected a unique supply chain to cater

to India’s vast rural markets hinterland. The results are working and coca-cola India rural

penetration increased from 13% in 2001 to 25% in mid 2003.

Over that period, the numbers of company’s increased from less than 4000 to 5500.

Coke’s, being fast moving consumer good, hold enormous potential from a manufacturer

like the coca-cola company. The biggest reason for this is the low per capita

consumption, which coke estimates at 3.7 bottles person per year compared to 10

bottles per person per year for all India.

Breaking to this market required innovative

thinking and a new strategy. Rural India

meant reaching 6.27.00 square Km; it meant

getting distributors to travel 200 kms to

reach five shops with drop sizes of than a

case.

A typical village retail environment

consists of 4-5 kirana shops (stripped down

version of mom and pop shops), the size of

such stores varies depending on the size on

population density of village where it serves.

Coca Cola India’s Rural Initiatives in Indian Market

It also tapped local forms of entertainment like annual haats and fairs and made

huge investments in infrastructure for distribution and marketing.

Sanjev Gupta, Deputy President – Coca Cola India in May 2002 : “we want to be

the hindustani lever limited of the indian business. The rural market is the

significant which enables us to help the consumer link with our product.”

Distribution Strategy

To reach out to rural India, Coke started out by drawing up a hit list of high potential

villages from various districts. To ensure full loads, large distributors were apointed,

and they were supplied from the company’s depot in large town and cities.

Full load supplies were offerd twice weekly against payment by demand draft. On

their part, the distributors (large) appointed smaller distributors (Spokes) in adjoining

areas.

The smaller distributors undertook fixed journey plans on a weekly basis and

supplied against cash. The distributors also hired rickshaws (cyle operated vans) that

travelled to villages daily.

Coca Cola India’s distribution in urban areas

Coca-Cola India’s distribution system in rural areas

Retail StoresBottling Plant

Bottling Plant

Large Distributors

Spokes

Retailers Retailers Retailers

Advertisement Strategy

Coke realised that the communication media used in cities and urban areas would

not work in villages because of low penetration of conventional media.

Coca Cola India also lauched television commercials (TVCs) targeted at rural

consumers. In orders to reach more rural consumers, Coca Cola India increased its

ad-spend on Doordarshan.

The company ensured that all its rural marketing initiatives were well-supported by

TVCs.

When Coca Cola launched Chota Coke in 2002 price at Rs. 5, it bought out a

commercial featuring Bollywood actor Aamir Khan to communicate the messages of

the price cut and the launch of 200 ml bottles to the rural consumers.

The commercial was shot in a rural setting.

In the summer of 2003, Coca Cola India came up with a new commercial featuring

Aamir Khan, to further strengthen the Coca Cola brand image among rural

consumers.

The commercial aimed at making coke a generic name for ‘Thanda.’ Of the reason for

picking up the word ‘Thanda’, Prasoon Joshi, national creative director – McCann

Erickson, the creator of the commercial, said, “Thanda is a very North India-centric

phenomenon. Go to any restaurant in the north, and attendants would promptly ask,

‘thanda ya garam?’

Between March and September 2003, Coca Cola India launched three commercials

with the “Thanda Matlab Coca-Cola” tag line.

All the three commercials aimed to make rural and semi-urban consumers connect

with Coca-Cola.

The first ad featured Aamir Khan as a ‘tapori’ (street smart); in the ad he makes the

association between Coca-Cola and the word ‘Thanda’.

The second commercial in the series featured Aamir Khan as a “Hyderabadi shop-

keeper’; here again he equates the word ‘Thanda’ with Coca-Cola.

The third commercial featured Aamir Khan as a ‘Punjabi Farmer’ who offers Coca

Cola to ladies asking for Thanda.

‘Thanda’ usually means lassi or nimbu pani, ‘garam’ is essentially tea. Because the

character, in itself, represented a culture, they wanted to equate Coke with ‘Thanda’,

since ‘Thanda’ too is part of the popular dialect of the north.

Thus making ‘Thanda’ generis for Coca-Cola, with the long-playing possibilities of the

“Thanda’ idea becoming evident, ‘thanda’ became the central idea. Once we decided

to work on that idea, in the creative mind just opened up.”

Aamir Khan as a Punjabi Farmer.

Recommendation

Branding Strategies

Communicate openly with key constituents, including the public, the media,

employees, franchisees, the trade/channel, state and national government, and

suppliers. Open, honest communication is key to communicating a spirit of

partnership and a willingness to resolve the issue in a way that benefits the Indian

consumer.

Rural Market

Listen to the customers

Manage for tommorow

Prove it with action that Coke is suitable with the Indian rural areas

Distribution Strategies

Make more extensive distributive channels

Put lot of large distributors all over India

Advertising Strategies

Tryin’ to improving more rural condition mixed with Coca-Cola branding

Start agressive advertising campaign

Announce a new campaign for new flavour of Cokes and others

-het einde-