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Coca-Cola Global Marketing StrategyGlobal Marketing Strategy: Standardization or Adaptation - Coca-Cola Case Study

IntroductionAs domestic markets mature, it is becoming more and more fashionable for organizations to seekgrowth through opportunities in foreign countries. Faster communication, new technologies andimproved transport links are making international markets more accessible and businesses pursuing aglobal position can experience an upsurge in brand awareness and cost effectiveness. Global marketingis a relatively new concept linked to these developments.

In the main, it is concerned with decisions for integrating or standardizing marketing actions across anumber of geographic markets. This does not rule out any customization of the marketing mix toindividual countries but suggests that organizations should capitalize on similarities between markets tobuild competitive advantage.

Compelling cases can be put forward for both a standardization or adaptation approach to internationalmarketing practice. These arguments are keenly explored, drawing from examples of Coca-Cola'sinternational marketing programmed to elucidate key points.

Background of Coca-ColaAs the world's largest manufacturer and distributor of non-alcoholic beverages, Coca-Cola is certainly nostranger to global marketing. Established in the US, Coca-Cola initiated its global expansion in 1919 andnow markets to more than 200 countries worldwide. It is one of the most recognizable brands on theplanet and also owns a large portfolio of other soft drink brands including Schweppes, Oasis, 5 alive, KeaOar, Fanta, Lilt, Dr Pepper, Sprite and PowerAde. Despite this, Coca-Cola often struggles to maintain itsmarket share over its main rival PepsiCo in some overseas markets, particularly Asian countries.

Arguments for Standardization Converging customer needs and preferences

It is proposed by Levitt that the forces of globalization driven by technology and wider travel are leadingto more homogenized customer needs and wants worldwide. This paves the way for the building ofglobal brand identities where companies are able to export their domestic brands to mass marketsabroad and consumers will react to them in similar ways.

In this sense, standardized marketing with a universal product and message can be an integrating forceacross national borders. To send out different communication messages across countries could lead tocustomer confusion and even dilution of the brand. In keeping with this, Coca-Cola sells virtually thesame Coke beverage worldwide.The design of Coca-Cola soft drinks has changed little in its history, from the logo to the distinctive glassbottle. These unique and consistent characteristics evoke a strong brand image which has cross-culturalappeal.

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Economies of scale/experienceIn many industries, companies can reap cost advantages by operating on a global scale and ultimatelyimprove their all-round competitiveness. Using a centralized structure, a firm can draw economies frombulk purchase discounts or by sharing functions such as product development, marketing, productionand managerial resources among different markets.In Coca-Cola's example, economies are gained through the competent running of a large-scalefranchising system for its bottling operations.

Technological viabilityIn sectors where technological and production processes are homogeneous, extra weight is placed onstandardization of products as a prerequisite for success. As part of its vision that Coke should taste thesame around the world, Coca-Cola has chosen to standardize its product and manufacturing process.

The knock on effects of this are more streamlined procedures and greater cost efficiencies. It is worthnoting Levitt's argument that companies' which opt to produce an assortment of products servingdifferent customer segments would be unable to survive globalization due to inefficiencies in theiroperation.

Arguments for Adaptation Consumer Diversity

Supporters of the adaptation view contend that, regardless of globalization, consumers in differentcountries continue to vary dramatically in their geographic, demographic, economic and culturalcharacteristics. It is sensible to imply that, where there are differences in product preferences, productuses, attitudes, shopping patterns, income levels and education, a business will need to adapt itsproduct offering or communication programmed in some shape or form.

By carefully singling out the most significant differences, organizations can tailor products to suit localtastes and conditions. Dennis and Harris pronounced that global branding strategy should actually be alocal plan for each component market, as to apply a standard approach worldwide without consideringlocal preferences and cultural differences is doomed to failure. Food and beverage organizations inparticular, can easily fall prey to obstacles such as regional taste and category development issues.

On the other hand, organizations that market internationally have to bear in mind that customizingcommunication and product strategy will increase overall marketing costs. Traditionally, Coca-Cola useda standardized marketing campaign strategy where it would pull advertisements for specific marketsfrom a common pool of adverts designed to have universal appeal.

Lately, Coca-Cola has chosen to back away from a full standardization approach and to instead tweak itsefforts to accommodate local culture and nuances. Its former approach was deemed too rigid with someof its campaigns not always successfully transcending national borders.

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Although the branding and position of Coca-Cola remains consistent worldwide, its execution is basedon what is judged to be best for each local market. This is evident in its 'Live on the Coke Side of Life'advertisement campaign launched in 2006 where elements of local culture are included. On the productside, Coke bottles and cans include the target countries native language and are sized to match up toother beverage bottles or cans in that country. The company also offers a varied product line-up tocapture different consumer tastes, for example, soy drinks for its Asian markets.

Differences in Infrastructure and RegulationsSeveral multinational companies, including Coca-Cola, have discovered that operating from a completelycentral and standardized perspective can impede the progress of the company, especially when it comesto understanding and integrating with local conditions. Coca-Cola is well known for its widespreadaccessibility through a variety of channels such as large supermarkets, petrol stations, restaurants,hospitals, cafes and so on.Having a strong brand gave Coca-Cola the supplier bargaining power it needed to break into the morecomplex and entrenched distribution systems of lots of countries. Adding the fact that food laws canvary tremendously from one country to another, it is not surprising that Coca-Cola describes itself asmulti-local'.Despite a standardized product, Coca-Cola is obliged to adopt different approaches to the globalmarketplace. This goes some way to disproving Levitt's idea that one size fits all and emphasizes a planglobal, act local approach instead.

ConclusionIn essence, the arguments above reveal that global marketing is not necessarily an all or nothingproposition. Companies have the freedom to choose from many possibilities on the spectrum from totalstandardization through to complete customization. Clearly there are circumstances wheremultinationals can gain through increased standardization of products and marketing, especially withrespect to keeping costs down and building brand power.

On the other hand, in conditions where national market differences are more marked, this strategywould harm the company and its reputation. By making standardization decisions using target marketconditions as its starting point, an organization can ensure that, in the long-term, customers are beingoffered what they want.

Although Coca-Cola can seemingly gain a great deal from a standardized agenda, its decision to combineglobal and local resources is ultimately more long-standing in a market where national customerdifferences are influential.