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Coca Cola India Case Study Gupta Period

"We want to be the Hindustan Lever1 of the Indian beverage business."


- Sanjeev Gupta, Deputy President - Coca-Cola India in May 2002.2

"The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product."


- Sanjeev Gupta, Marketing Director - Cola-Cola India, in August 1995.3

Coca Cola India's Thirst for the Rural Market: 'Thanda' Goes Rural

In early 2002, Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan. The advertisement with the tag line - 'Thanda Matlab Coca-Cola4' was targeted at rural and semi-urban consumers. According to company sources, the idea was to position Coca-Cola as a generic brand for cold drinks. The campaign was launched to support CCI's rural marketing initiatives.

CCI began focusing on the rural market in the early 2000s in order to increase volumes. This decision was not surprising, given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India).

With flat sales in the urban areas, it was clear that CCI would have to shift its focus to the rural market. Nantoo Banerjee, spokeswoman - CCI, said, "The real market in India is in the rural areas. If you can crack it, there is tremendous potential."5

However, the poor rural infrastructure and consumption habits that are very different from those of urban people were two major obstacles to cracking the rural market for CCI. Because of the erratic power supply most grocers in rural areas did not stock cold drinks. Also, people in rural areas had a preference for traditional cold beverages such as 'lassi'6 and lemon juice. Further, the price of the beverage was also a major factor for the rural consumer.

CCI's Rural Marketing Strategy

CCI's rural marketing strategy was based on three A's - Availability, Affordability and Acceptability. The first 'A' - Availability emphasized on the availability of the product to the customer; the second 'A' - Affordability focused on product pricing, and the third 'A'- Acceptability focused on convincing the customer to buy the product.

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Coca-Cola India no. 1-0000

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History of Coke

The Early Days

Coca-Cola was created in 1886 by John Pemberton, a pharmacist in Atlanta, Georgia, whosold the syrup mixed with fountain water as a potion for mental and physical disorders. Theformula changed hands three more times before Asa D. Candler added carbonation and by2003, Coca-Cola was the world’s largest manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with more than 400 widely recognizedbeverage brands in its portfolio.With the bubbles making the difference, Coca-Cola was registered as a trademark in 1887and by 1895, was being sold in every state and territory in the United States. In 1899, itfranchised its bottling operations in the U.S., growing quickly to reach 370 franchisees by1910.

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Headquartered in Atlanta with divisions and local operations in over 200 countriesworldwide, Coca-Cola generated more than 70% of its income outside the United States by2003 (See Exhibit 3).

International expansion

Coke’s first international bottling plants opened in 1906 in Canada, Cuba, and Panama.

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Bythe end of the 1920’s Coca-Cola was bottled in twenty-seven countries throughout the worldand available in fifty-one more. In spite of this reach, volume was low, quality inconsistent,and effective advertising a challenge with language, culture, and government regulation allserving as barriers. Former CEO Robert Woodruff’s insistence that Coca-Cola wouldn’t“suffer the stigma of being an intrusive American product,” and instead would use localbottles, caps, machinery, trucks, and personnel contributed to Coke’s challenges as well witha lack of standard processes and training degrading quality.

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Coca-Cola continued working for over 80 years on Woodruff’s goal: to make Coke availablewherever and whenever consumers wanted it, “in arm’s reach of desire.”

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The SecondWorld War proved to be the stimulus Coca-Cola needed to build effective capabilitiesaround the world and achieve dominant global market share. Woodruff’s patrioticcommitment “that every man in uniform gets a bottle of Coca-Cola for five cents, whereverhe is and at whatever cost to our company”

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was more than just great public relations. As aresult of Coke’s status as a military supplier, Coca-Cola was exempt from sugar rationingand also received government subsidies to build bottling plants around the world to serveWWII troops.

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Turn of the Century Growth Imperative

The 1990’s brought a slowdown in sales growth for the Carbonated Soft Drink (CSD)industry in the United States, achieving only 0.2% growth by 2000 (just under 10 billioncases) in contrast to the 5-7% annual growth experienced during the 1980’s. While per capitaconsumption throughout the world was a fraction of the United States’, major beveragecompanies clearly had to look elsewhere for the growth their shareholders demanded. The

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