Coca Cola India Essays

Coca Cola India Essays Coca Cola India Paper Coca Cola India Paper Table of contents Executive Summaryi The Coca-Cola Company Firm Profileii The Beverage Industry in Indiaiii India’s Societal Systemvii Macroeconomic Indicators and Demographics. vii Market System Aspectsix Infrastructure and Legal Orderix Cultural Dimensionsx India’s Societal Predispositionxi Ideologiesxii Indian Caste Systemxii Valuesxiii Religionxiv Politicalxv Economicxv Strategies and Policiesxvi Constraintsxvi Coca-Cola Strategyxvii Future Strategic Initiativesxvii Market Penetration Strategyxviii Consumer and Market Focus Strategyxviii Marketing Strategyxx Conclusionxx Executive Summary India, as one of the world’s largest emerging markets, is quick to be seen as a source for new corporate growth and expansion by both large and small companies alike and The Coca-Cola Company is no exception. Since its second foray into the Indian market, The Coca-Cola Company has seen significant growth in its operations there, with average annual gains of 21 percent. As the company becomes more entrenched within the Indian market, it must continue to navigate the cultural, economic and political idiosyncrasies found in India to ensure continued growth and to sustain its competitive advantage over its rivals. For The Coca-Cola Company, long-term success hinges upon a myriad of factors that include expansion into the rural markets of India where inadequate infrastructure, widespread poverty and the legacies of the country’s caste system continue; product development and marketing strategies that cater to both the taste preferences of the Indian consumer and societal pressures for healthier alternatives; and acquisitions and partnerships that broaden the company’s internal distribution network while simultaneously giving the company access to long-standing relationships, which is important in a country that places a greater emphasis on relationships over rules and profits. As The Coca-Cola Company implements its strategies for continued operations and market share expansions within India, working knowledge of how the political, economic and cultural forces shape the corporate environment within the country will boost the company’s acceptance by local partners, employees and consumers, ultimately leading to a stronger competitive position for company. The Coca-Cola Company Firm Profile The Coca-Cola Company, publically traded on the New York Stock Exchange under the symbol KO, is the world’s largest nonalcoholic beverage company with over 139,600 employees and reported revenues of USD 35,119 million during the fiscal year that ended in December 2010 (Global Data, 2011). With over 500 brands sold in more than 200 countries, The Coca-Cola Company maintains responsibility for three primary business elements for its product: the manufacture of the concentrates, beverage bases and syrups that are sold to bottling operations for final manufacture and packaging for consumption, the company’s brand and consumer brand marketing initiatives (The Coca-Cola System, 2011). The Coca-Cola Company is a dispersed, transnational organization that operates under a decentralized management structure. The company consists of six operating segments: Eurasia, Africa (includes India), Europe, Latin America, North America and Pacific. Two other business entities round out the corporate structure Bottling Investments, which are the Company-owned bottling operations and Corporate (The Coca-Cola System, 2011). Each operating segment holds significant autonomy as it drives sales within its region and develops market-specific products to meet local demands and preferences. The largest volume growth by operating segment has been Eurasia Africa, with 12 percent gains from 2009 to 2010 and the Indian market is driving the growth with average annual gains of 21 percent (The Coca-Cola System, 2011). In terms of financial performance and stability, the company’s global footprint offers the opportunity to offset sluggish market conditions in developed markets like the United States and Europe with growing sales in emerging markets like Brazil, China and India (Global Data, 2011). As the domestic demand for non-alcoholic beverages in these markets grows, The Coca-Cola Company is able to leverage its brand and breadth of portfolio to secure market share. The backbone of Coca Cola’s operations is its more than 300 bottling partners worldwide. Bottling partners manufacture, package, merchandise and distribute the final beverage products to local customers and vending partners (The Coca Cola System, 2011). The company does not own or control most of its bottling partners. In 2007, 79% of unit case volume was produced and distributed by bottling partners in which the company did not have a controlling interest (The Coca Cola System, 2011) and 2011 figures show the company having a 30 to 35 percent interest in its major bottling partners (Global Data, 2011). This organizational philosophy is evident in its Indian operations. Coca Cola reentered the Indian market in 1993 and by 1999 it had acquired 37 company-owned bottling operations and 16 franchise bottling operations (India: Coca Cola uncorks new growth plans, 2000). Volatile raw material costs and governmental regulations remain the most serious of threats to The Coca-Cola Company across the entire corporation (Global Data, 2011). As most of the raw material costs for The Coca-Cola Company arise from commodity products, their supply can be affected by weather and natural disasters, governmental controls and supply shortages (Global Data, 2011). For The Coca-Cola Company, governmental restrictions affect every operating segment that they are in and can include anything from foreign direct investment and national labor requirements to labeling requirements to environmental regulations. Failure to monitor and abide by individual governmental regulations can have severe consequences on the overall financial health of the organization and can impede successful operations (Global Data, 2011). The Beverage Industry in India Soft drink sales in the Indian market generated total revenues of $3. 8 billion in 2010 as market consumption volumes increased nearly 11 percent during the 2006-2010 timeframe (Datamonitor, 2011). For comparison, the global beverages industry saw total revenues of $1,749 billion in 2010 of which $560 billion is attributed to soft drink sales, which highlights the limited overall current consumption of soft drinks in the Indian market (Datamonitor, 2011). In terms of market share, the Indian market is dominated by The Coca-Cola Company (33 percent market share) and PesiCo, Inc. (22 percent market share), with Parle Bisleri Ltd. , a Mumbai-based drinking water bottler capturing 20 percent of the remaining market. Various other companies make up the remaining 26 percent of total available market for soft drink sales (Datamonitor, 2011). For The Coca-Cola Company, India led its segment in revenue growth, though it has the lowest annual per capita consumption globally at 11 for 2010. India’s annual per capita consumption rate has increased from 6 in 2009 (The Coca-Cola System, 2011) and continued growth is expected for the country. For the soft drinks/beverage industry, the primary factors of production include water, concentrates, and both natural and synthetic sweeteners (Datamonitor, 2011). For bottlers, product packaging comprises another major factor of production. Relative stability and limited controversy are evident for soft drink concentrates and sweeteners within the Indian market (Datamonitor, 2011). Water as a factor of production plays a critical and often controversial role in the soft drinks beverage industry. For the bottling process, water is the primary ingredient in products produced for The Coca-Cola Company (The Coca-Cola System, 2011). In addition, water is used extensively for rinsing, cleaning, heating and cooling within the manufacturing process. The Coca-Cola Company Corporate offices has an active, three-fold water stewardship program that looks to reduce water usage, recycle the water used in manufacturing processes at a level that supports aquatic life and replenish water used in the company’s finished products through supply chain initiatives, governmental cooperation and local community investments (The Coca-Cola System, 2011). In India, the company has faced allegations of excessive water extraction and water and soil pollution at several of its bottling facilities (Harish and Gopal, 2008). Since it re-entered the Indian market in 1993, the company has launched numerous local initiatives, including water harvesting in drought-prone regions with bottling facilities, public awareness campaigns and cooperation with Indian governmental agencies like the Central Pollution Control Board to mitigate these real concerns within the Indian market (Harish and Gopal, 2008). Much like water stewardship, The Coca-Cola Company Corporate division leads a sustainable packaging division that works to improve packaging material efficiency, recycle at least 50 percent of its bottles and cans consumed annually, and utilize recycled materials for future packaging (The Coca-Cola System, 2011). While not specific to the Indian market, concerns for sustainable packaging and the solutions being worked by the company are seen there. A supporting industry for The Coca-Cola Company within the Indian market is the mango fruit industry. According to The Coca-Cola Company, over 60,000 tons of mango pulp is required annually for its Maaza juice drink brand (Coke, Pepsi announce campaigns for mango brands, 2009). In addition to agreements with local farmers to purchase mangos directly, the company is also working hand-in-hand with Jain Irrigation there to boost mango production in order to meet projected demand (Coke, Jain Irrigation join hands to improve mango yield, 2011). Both actions allow the company to be better positioned within the local Indian market by building local relationships that boost public perception and facilitating output conducive to meeting local demand. The main distribution channels for the soft drink and beverage market make up another important supporting industry within the Indian market. Independent retailers make up the largest distribution channel for the soft drink market in India, accounting for more than 46 percent of the total market volume (Datamonitor, 2011). As with its other geographical centers, The Coca-Cola Company and its bottlers work branding and local marketing initiatives to create demand for its products and incentives for its retailers. The firm strategy for success in the Indian market is to capitalize on its strong brand equity while building consumer loyalty with its flagship products as well as with other Coca-Cola beverages that match local tastes and preferences – the Coke brand in Delhi, Thums Up in Mumbai and Andhra Pradesh, and Fanta in Tamil Nadu (India: Coca-Cola uncorks new growth plans, 2000). More recently, the company broadened its portfolio in India with the launch of Minute Maid 100% Pure Fruit Juices (Coca-Cola India uncorks fruit juice range, 2011). In 2011, the company broadened its portfolio in India with the launch of Minute Maid 100% Pure Fruit Juices (Coca-Cola India uncorks fruit juice range, 2011). In September 2011, Coca-Cola India launched milk-based juice beverages in support of Indian market trends for consumers to switch to health conscious beverages (All products aim at making us†¦, 2011). According to Atul Singh, president, Coca-Cola India and South West Asia, the key strategy drivers for Coca-Cola in India are products that match local preferences and trends, distribution efficiencies, and transportation and technology investments that allow the company to reach more deeply within the Indian population outside of metro centers with an appropriately chilled product (All products aim at making us†¦, 2011). India’s Societal System Macroeconomic Indicators and Demographics. The Republic of India provides advantages and disadvantages for future business opportunities concerning Coca Cola and the carbonated beverage industry. Economically, India has had triumphs and challenges over the past several years. Recent fluctuating trade policies and practices, along with an increasing GDP growth rate percentage, as well as a well-documented societal instability can make the country seem unstable. However, once reviewed, there are incentives for doing business in the country. As of July, 2011, the population of India is 1. 2 billion people, compared to 300 million people in the United States. India’s population growth rate is at 1. 344 percent. There are three major ethnic groups in India, the Indo-Aryan (72%), Dravidian (25%), and Mongolian and other small groups comprise the final 3 percent. There are several languages, with Hindi being the primary. The English language is also important for education, business, career and traveling reasons. The predominant religion is Hindu (80%), followed by Muslim, Christian and Sikh (www. cia. gov). 25 percent of the population of India is living below the poverty line, most of which live in the rural areas (www. cia. gov). India has most recently noticed a surge in urbanization among its population, with many of its citizens seeking employment and better education in the cities. Currently 30 percent of the country’s population resides in urban areas and that number is expected to grow 2. 4 percent annually over the next four years (www. cia. gov). Lack of development in many of the rural areas may be a contributing factor to the country’s urbanization. According to the CIA, only 88 percent of the population has access to clean drinking water, and most of the areas that lack are rural. In addition, only 31 percent of the population has access to sanitation facilities. The lack of availability of sanitation facilities and drinking water likely contributes to India’s high risk of infectious diseases among its population. Many of these are food, animal or water borne diseases. Interestingly, the CIA reports only . 3 percent of Indians living with HIV AIDS, while the rate in the United States is . percent. Further health issues in India include a low fertility rate and shorter life expectancy of 66 years (www. cia. gov). The result is a much younger median population. According to the CIA, the median age in India is 26 years-old. This can be a great advantage for a country that is struggling with unemployment. Through a surplus of young people who want to work, a nation can thrive and there will be more opportunities for growth. India’s GDP growth rate is at 10 percent as of 2010, and the GDP/purchasing power is at $4. 06 trillion, compared to the United States’ $14. 6 trillion. India’s GDP is ranked fifth in the world (www. cia. gov). Also, India’s debt of -$51 billion is minor compared to the United States’ $470 billion deficit (www. cia. gov). Additional international factors include an exchange rate of $1. 5 trillion and GDP per capita at $3,500, compared to $47,000 in the U. S. According to the CIA, India spends 2. 4% of GDP on health expenses, 2. 5% on military expenses and 3. 1% on education. Data concludes only 61% of India’s population can read. A creation of jobs by a new business could increase opportunities for education in India. India has the second largest workforce in the world with almost 480 million workers. India’s top occupations are agriculture, industry and services. However, CIA reports industry is â€Å"a major source of economic growth, accounting for more than half of India’s output, with only one-third of its labor force† (www. cia. gov). India exports rice, cotton, tea and chicken, and their industries include textiles, oil, machinery, clothing and pharmaceuticals (www. cia. gov). In more recent years India’s economy has boomed largely due to deregulation of industries and reduced control on foreign trade and investment. However, more recently India has come under fire for some of its trade policies. Indian online newspaper, The Economic Times, reported conflict between India, the U. S. , and the European Union. U. S. and EU complained that India’s trade tariffs were too high after they were reviewed by the WTO. Currently at 12%, the countries further argued that inconsistent rates can result in an unstable global market. In 2009-2011, India was able to recover from the recent global financial crisis rather quickly due to domestic demands (www. cia. gov). According to the CIA’s analysis, â€Å"India’s long term challenges include widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, insufficient access to quality and basic higher education, and accommodating rural-to-urban migration† (www. cia. gov). A company like Coca-Cola will bring jobs, improve infrastructure and promote education. Market System Aspects India has in recent years become more geared toward market capitalism due to cross-border activities and increasing focus on urbanization and non-agricultural industry. Infrastructure and Legal Order As the economy continues to advance, India has been forced to make major upgrades to its infrastructure conditions. â€Å"Energy shortage, inadequate transportation network, and insufficient water supply system have caused a bottleneck in the country’s economic growth† (Maniar, 2010). India created the Build-Operate-Transfer (BTO) scheme in 1991 to specifically focus on these issues. Although it is an effective way to improve the country’s infrastructure and attract foreign investors, it may have a tendency to be misunderstood by foreign companies, which can pose a major problem (Mainar, 2010). If a firm chooses to enter India, it will be their choice to identify whether or not the BTO is worth investing in, considering the risks. When entering India, a firm must also be concerned with the country’s government and banking system. India’s law system is very inexperienced which has resulted in â€Å"widespread government corruption, financial speculation, and misallocation of investment funds† (Mainar, 2010). India also places more emphasis on interpersonal relationships rather than strict business transactions, therefore many firms are successful based on personal connections instead of merit. This can make entry by a foreign entity difficult. Additionally, India’s banking system is controlled and regulated by the government which contributes to corruption, affecting loan distribution. According to Mainar’s analysis, before entering India, the main risks to consider concerning infrastructure are, â€Å"availability of permits and licenses, operating performance risk, price of entering firm’s product, price of raw materials and energy, and enforceability of contracts for the product† (Mainar, 2010). Most of these factors will be controlled by the Indian government. Cultural Dimensions Eighty percent of India practices Hinduism, while remaining citizens prefer Christianity, Islam and Sikh. According to Hofstede’s analysis, India has a high power distance ranking of 77 (world average is only 56. ), indicating a large gap between the wealthy and the poor. Notably, this condition is the norm in India and is not traditionally forced on the people. India’s masculinity ranking is very high as well, indicating a lack of power between men and women. This is usually the case for Middle Eastern countries. Lastly, the country’s uncertainty avoidance ranking is a very low 40 (world average is 65), indicating less focus on rules and laws in the country (Hofstede, 2009). A low uncertainty avoidance ranking leaves the country prone to corruption. Education is more available in urban and wealthier areas, as mentioned earlier and India’s government spends only 3. 1% of its GDP on education. Socially, India is also a collectivist society, meaning interactions are mostly geared toward interpersonal relationships, with political connections being most valued. Contracts and agreements are not as formal as in the U. S. , while personal relationships have more merit than a binding piece of paper. In India, religious beliefs and interpersonal relationships are major factors of the society. India’s Societal Predisposition In order for a firm to successfully enter India, they must consider the country’s current economic, political and social climate. Economically, the firm must be more than willing to contribute to the development of infrastructure, an issue that has been plaguing India’s economy for years. India’s BTO scheme is a viable option for those who wish to help the problem. Joining the BTO could also increase relationships with the government and have a positive influence on consumers, thus increasing a better return on the firm’s products and services. Political instability must be assessed as well. The Indian government has a history of corruption in its banking system as well. Socially, the collectivist way of life must be fully understood and embraced. Any benefits to this type of society will need to be exploited in all ways possible. The economic and political dynamics in India lay the foundations for the manner in which the country operates. In a way they are complementary, considering the country’s recent focus on infrastructure versus a historically corrupt government. It seems that while India lacks in government regulations, it is making major moves to improve crucial aspects of economic development. However, the cultural dynamic is the most significant, in that it truly is the underlying force behind both the economic and political dynamics. India’s low uncertainty avoidance is a contributing factor to political corruption, which can directly affect economic conditions, further proving that each dynamic is intertwined. Ideologies With a population of over a billion people, one of the biggest issues facing India is overpopulation. This issue is weaved into the socio-economic framework of the entire country and is the root cause of several other problems in the country, including poverty, corruption and poor sanitation. These problems, along with a historically vibrant culture shape the lives of ordinary Indians every day. Indian Caste System One of the biggest characteristics of Indian society is the Indian caste system. In the past, the Indian caste system controlled all social relationships in India. People from higher caste systems did not interact much with those from lower caste and it was uncommon for a person from a high caste system to even enter into the house of an â€Å"Untouchable†, the term used to refer to one from the lowest caste or out of the caste system. India’s modern social structure is based on its historic caste system. This is a hereditary structure that keeps the population in social groups, ranging from laborers to kings (Alex, 2003). This caste system is derived from Hinduism, that largest religion practiced in India. Members of the other two religions, Islam and Christianity also recognize the Hindu caste system, but more for historic and cultural reasons. This system gives privileges to people that belong to a high caste while giving lower priority to people of lower caste and places a divide in the society by institutionalizing inequality within the population. In recent times, the caste system is not strictly adhered to and caste-based discrimination is illegal, however government institutions have quotas on their hiring from the different caste and collect data on the different caste during national censuses (Alex, 2003). People from higher caste tend to have better jobs and access to social services, whereas people from lower caste tend to be marginalized by the rest of the population and even the government. As globalization continues to move people across borders, the caste system is having less of an effect on business, since several of the multi-national enterprises in India, which hire large amounts of people, do not recognize the caste system. The discrimination of certain groups in India may impact Coca Cola since this system leaves an entire section of the population marginalized and usually poor. This means less people with the money to purchase Coca Cola products. In addition, because the government spends fewer resources in areas dominated by people of lower caste, the necessary infrastructure for trade, for example paved roads, may inhibit the distribution of Coca Cola’s products to certain rural areas. Values Indians value piety, modesty and conservatism. These values are derived from their strong religious beliefs. Both Islam and Hinduism call for modesty in their followers’ dealings with others in society. Even members of the higher caste systems tend to be modest in their dealings with other members of society. This differs from American values where wealth is displayed openly. Americans often feel the need to advertise that they are well-off and do so by purchasing expensive goods and services. These values also relate to the India work ethic. Whereas in America, workers tend to set themselves apart from their jobs, Indians are their jobs. In India, people have a more relaxed attitude towards to their work; however their work is their life (Steen, 2007). They often take long breaks and negotiate deadlines with their supervisors, however they work long hours and often work on weekends. The Indian work ethic keeps employees determined to complete their tasks and produce good results (Steen, 2007). This is somewhat different from the American work ethic. It is not uncommon to meet an American who does not enjoy their job, but simply puts in the hours necessary to get paid. They often work strict work hours and deadlines are very important. Because of the notion that Americans hold their own destinies and are able to break through all social-economic barriers with hard work, there is often a determination to work as hard as possible. In India, relationships are more important than rules. This attitude comes from a culture and religions that respects personal relationships. Although this culture builds relationships, it can often lead to corrupt practices since rules are often broken (Corruption in India, 2011). Coming from America, where rules usually trump relationships, Coca Cola will have to adapt to this culture to learn how to build strong relationship in the Indian market, while maintaining the company’s integrity. Religion Religion is a major part of Indian society. There are two main religious groups in India, the Hindus, which make up 80. % of the population and the Muslims, which make up 13. 4% of the population (CIA Factbook). During the 80’s and 90’s, there were serious clashes between m embers from the two groups, causing the deaths of thousands of people (Alex, 2003). More recently, there have a number of terrorist attacks, including the bombing of a popular hotel in Mumbai in 2008 carried out by extremist Muslims. These attacks often target foreigners in India. As a foreign company in India, Coca Cola is vulnerable to terrorist attack, more especially because Coca Cola is an icon for globalization and the spread of western culture. Political India is the world’s largest democracy. It operates on a multi-party system and British-style parliament. Although India has over 40 political parties, the dominant parties that hold power in the country are the Indian National Congress (INC), which holds â€Å"leftist† ideologies and the Bharatiya Janata Party (BJP), which is to the â€Å"right†. Parties on the left have held power in India since independence. Parties such as the INC generally oppose unregulated trade and businesses, most especially unregulated foreign investment. In 1974, the Indian parliament passed the Foreign Exchange Regulation Act (FERA) (India Export Import Portal). This act required foreign companies to sell majority of their shares to Indians.  ¬Ã‚ ¬Ã‚ ¬Ã‚ ¬Ã‚ ¬Ã‚ ¬Ã‚ ¬Ã‚ ¬Ã‚ ¬ In addition to regulating company ownership, FERA imposed strict regulations on specific types of payments, the dealings in foreign exchange and securities and the transactions which had an indirect impact on the foreign exchange and the import and export o f currency. Economic Indian economic policy has evolved over the years since independence reflecting the different ideologies that have dominated over the years. In the years soon after independence, India, led by the leftist Indian National Congress (INC) took a more liberal approach to foreign investment, placing emphases on the need for foreign investment for development and industrialization (State Regulation). Although the government made some welcoming statements regarding foreign investment, there was still a lack of clarity of the exact measures the government would take when it came to take-over and how long foreign firms would be allowed to maintain control of their firms. This led to reluctance of foreign firms to invest in the country (Dhar, 2011). However, in 1956, India fell into a foreign exchange crisis, which required the government to open up the country to more foreign investment. There was also a large push for India to industrialize, also requiring a large amount of capital (Dhar, 2011). Strategies and Policies Constraints Constraints to doing business in India can come from various factors. The Coca-Cola Company needs to remain conscientious to the market and the macro view of India. The company and its subsidiaries rely on significant amounts of electricity, natural gas, and other energy sources to operate plants, distribution facilities, and delivery channels. An increase or disruption in fuel or natural disaster that would disrupt power outages would have a negative impact on business operations and profitability. Higher interest rate fluctuations would impact net income. Also Coca-Cola relies on business partners and maintaining a good relationship is priority. It is in the interest of Coca-Cola to ensure their suppliers relationships are aligned with Coca-Cola’s interest to ensure continuous flow of material and product. Government regulations or political instability would encumber business operations to compete fairly within domestic markets. In the early 80’s Coca-Cola and foreign businesses exited the Indian market due to weak political structures that would have severely damaged business performance. Government regulations such as higher taxes, lack of protection for intellectual property and market size restrictions to favor domestic industry are constraints to growth and profits. India’s obesity and other health concerns associated with the product is a growing concern that might hurt market sales unless the company continues its expansion into healthier alternatives. Consumers and health officials are becoming increasingly concerned about the public health consequences due to obesity, particularly among the young. Scarcity and poor quality will have a negative impact on production and capacity output. Water is the main ingredient and overexploitation and poor management of the environment is cause for Indian government and public to be concern. Also, increases in supply cost or the disruption of supply or a shortage of national energy supplies could have profound impacts on business operations and contribute to a loss of profits. Coca-Cola Strategy The Coca-Cola Company’s goal is to use company assets, brand, financial strength, unrivaled distribution system, global reach and human talent to become more competitive and to accelerate growth in a manner that creates value for its shareholders and stakeholders. Future Strategic Initiatives The Coca-Cola Company should consider opportunities to reduce company ownership interest in the Bottling Investments group. It would free up capital and liquidity to meet current and future obligations to ensure no business disruption that would harm profits. Alternatively, the company may merge company owned bottling interests with the established bottling companies to share the cost and form a strategic business alliances that would expand Coca-Cola reach into the market. Moves to strengthen the company’s internal core business structure by consolidating operations and eliminating waste and redundancies that are costly to business operations would contribute to sustained growth in the Indian market. Market Penetration Strategy In 1993 Coca-Cola’s purchased Thums Up, India’s largest beverage operations, which granted immediate access to consumer base, established suppliers and a thriving distribution network. The acquisition gave Coca-Cola physical manufacturing, bottling plants, and distribution assets that allowed the company to quickly introduce its product to a new demographic. The branding and partnership with Thums Up enabled Coca-Cola to shift into the market and gain a competitive advantage over domestic competitors and PepsiCo, the second largest soft drink company globally. Coca-Cola has the capital to update and improve physical assets and the knowledge to increase the efficiency within the distribution channels. When Coca-Cola reentered the Indian market in early 1990’s, its market penetration strategy was to gain larger market share and market advantage over its primary rival PepsiCo by taking over the ownership of valuable distribution and supplier networks. Coca-Cola’s capital investment is a strategic focus to introduce other primary brands in the Indian market to boost sales on a global scale and create global sustainable. Consumer and Market Focus Strategy Consumer demand determines optimal levels of product of a company’s product offerings. Consumer demand can vary from one location to another and change over time within a single location. It is recommended that the company develop a specific consumer demand strategy with a strong focus on ensuring product availability to meet seasonal and cyclical demands. The Coca-Cola Company can build brand recognition and expand its customer base by making the product available in all established locations. Beverage market consumption in India is mainly focused in urban cities. Coca-Cola generates the majority of revenues within urban cities. As the urban locations mature and sales peak, Coca-Cola is looking to target rural location to expand sales network. Over seventy percent of the India’s population is located in rural areas. A strategic focus to move products to target rural areas will create sustainable revenue streams in the out years. Strategic partnerships with Indian non-governmental organizations, or NGOs, could assist The Coca-Cola Company as it seeks to become further entrenched within the Indian market. NGOs generally bring with them intricate knowledge of governmental regulations, laws and, quite importantly, connections with local officials. The NGOs knowledge of the local and national market could positively impact the company’s efforts to develop supplier connections and relationships and to deliver the company’s message at the community level. Coca-Cola’s market strategy is an attempt to gain leadership in the Indian market and capitalize on significant growth potential, particularly in rural markets. The foundation of the new strategy is based on product positioning at retail outlets. Targeted brand positioning positing at the retail levels to highlight product for consumers’ views. The company should deliver communications and advertisements in specific markets to gain consumer acceptance and create a reticular activator mindset of Coca-Cola that will encourage sales over rivals. The strategic goal to make sure product is close in distance and available to maximize profit potential. Marketing Strategy Through strategic partnerships with distributors and local chain outlets The Coca-Cola Company may offer incentives that would include price discounts, cash, funds for promotional programs for local marketing activities to help improve area and regional sales. Moreover, the company could develop an incentive program that is tied to volume sales. Throughout the promotion process, The Coca-Cola Company may extend low interest loan or advance payments to specific retailers or customers for marketing activities intended to generated high volume sales that will increase company top lines sales and grow brand identity in the Indian market Conclusion The foundation of Coca-Cola’s strategy in India is to target urban and rural populations and identify the differences on marketing penetration, communications, and how to address perceptions of product introduction and delivery as to packaging, size, and price points to reach full sales potential in a growing market. References Alex, Perry. Indias Great Divide. Time Magazine. 08 Aug 2003: n. page. Web. 17 Oct. 2011. . All products aim at making us a total beverage company. Financial Express. New Delhi. Sept. 23, 2011 Amiti Sen. (2011, September 24). Amid criticism by West, India strongly defends its tariff walls [Policy]. 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