Potential Market for the Coca-Cola Product in Bulgaria and Spain - Report Example

International Marketing Management: Potential market for the Coca-Cola product in Bulgaria and Spain Table of Contents Introduction Page 3 2. Marketing of Coca Cola in Bulgaria and Spain : Page 4 3. PESTEL Analysis of Coca Cola : Page 8 4. Market entry and Supply chain management of Coca Cola in Bulgaria and Spain : Page 8 5. Conclusions : Page 9 6. Recommendations : Page 9 7. References : Page 10 Introduction Coca Cola needs no introduction in the global soft drink industry. It is the world’s largest non-alcoholic beverage company. Coca Cola was invented by Doctor John Pemberton in May, 1886. Bellis (2009) has mentioned that “today, products of the Coca Cola Company are consumed at the rate of more than one billion drinks per day” (Bellis, 2009). Coke has more than 300 worldwide bottling partners at present. Moreover, Coke is currently operating in more than 200 countries with over 50,000 employees and more than 800 production and distribution centres (The Coca-Cola Company: Growth, Leadership, Sustainability, 2009). Globalization and Liberalization has opened many doors to the international companies like Coke and they are currently exploiting these opportunities. (Coca Cola Pictures, n.d) The destruction of communism has made the business climate in Bulgaria more suitable for the American business tycoon Coke. Earlier the communist regime looked suspiciously at the intrusion of the products and organizations from the capitalist countries. On the other hand, Spain had no such political obstacles for the entry of Coke in their market. Spain traditionally a close ally of America and American products never faced many barriers in Spain. This report analyses the macro-environmental analysis of Coca Cola product in Bulgaria and Spain. Marketing of Coca Cola in Bulgaria and Spain Coca Cola is currently marketing across different countries and different cultures. One of the major characteristics of Coke’s international marketing strategy is the custom made marketing strategies for each country and region where Coke operates. Coke knows that different countries may have different social, political, economical environmental, legal, cultural and communal factors and each country needs marketing strategies suitable to their characteristics. Even though Coca Cola is marketing same products all over the world, they have realized that even for same product, different marketing techniques needed in different countries. Since 1990, Bulgaria has embraced parliamentary democracy as communism failed to fulfil the needs of the people. Spain on the other hand is a parliamentary representative democratic constitutional monarchy since 1975. In short both these countries are under democratic administration at present which is a good sign for Coke’s business hopes in these countries. Historically, communist countries were reluctant in allowing American companies to function in their soil because of suspected spy work. But the current political systems in Spain and Bulgaria offers less resistance to American companies like Coke. “IMF forecasted Spanish GDP growth of 1.7% in 2012, of 1.9% in both 2013 and 2014 and 1.8% in 2015” (Spain Economy Watch, 2010). Spanish economy is the eighth-largest in the world and fifth largest in Europe with respect to GDP comparisons. Spain is one among the top 20 developed countries in the world for the last few decades. Even though, Bulgaria is classified as an upper-middle-income country by the World Bank, its economy collapsed a bit after the destruction of communism. The recent financial crisis hit Bulgaria badly and the country is currently repairing the damages caused by the recession. “Bulgaria’s economy is an open free market, with a large and advanced private sector. Critical and strategic industries are owned by the state” (Bulgaria economy, n. d). In short, economic environment of Spain is promising for Coke whereas same thing cannot be said about Bulgaria. Roman Catholics are the largest community in Spain whereas Orthodox Christians are the dominant community in Bulgaria. The cultural traits and life styles of both Roman Catholics and Orthodox Christians in these countries are similar and hence Coke can formulate similar marketing strategies for these two countries. The major customers for Coke in global market are youths and in Bulgaria and Spain also the above fact is true, even though coca cola is used by all the people irrespective of their age. Youths often drink Coke and they consider it as a status symbol. Youths often engage in activities which need lot of physical workouts. The energy loss during the physical workout session might be compensated by taking soft drinks by most of the youths. In most of the cases, Coke happens to be their selection because of the impeccable taste and energy it provides to the consumers. Coca Cola Bulgaria is targeting the middle –level price segment of soft drinks. Over 400 brands of soft drinks from various producers now sell in Bulgaria. In order to conquer the Bulgarian soft drink market, Coca Cola Co secretly worked on plans to launch a new Vanilla-flavoured Coke drink (COCA COLA BULGARIA TARGETS INCREASED MARKET SHARE, 2002). Bulgaria is not a developed country and the economic growth in Bulgaria is not much promising. Medium income people are more in Bulgaria and Coke is targeting this medium income consumer segment in Bulgaria. Product diversification is essential for keeping pace with the changing trends in consumer behaviors. The above realization forced Coke to think in terms of developing new products for the Bulgarian market. There are over 700 low- and no-calorie beverages in Coke’s portfolio at present and they planned to include Guideline Daily Amount (GDA) nutrition labeling on all of their packages in Europe by the end of 2008. “In 2007, the Company and Foundation spent $6 million to support active, healthy lifestyle programs” (The Coca Cola Company: Products, 2009). Coca Cola has spent millions of dollars for educating the public to lead a healthy a life. In Bulgaria and Spain like European countries, they have raised the standards of their products based on the changing needs of the consumers. They have given more importance to the health of the people and hence they have started to include the percentage of different ingredients in their soft drink at the bottle labels itself. This type of labeling helps the consumers to purchase suitable Coke products. For example, diabetics’ patients can make use of the sugar free coke after reading the descriptions about the ingredients in the label. The Coca Cola Company website for Spain mentioned that in Spain, they are focusing more on “sparkling drinks, still drinks, and juices and water”. Moreover it focuses more on helping the environment to sustain its natural look. Fires in Spain are a big problem (over 21,000 fires every year) and “coke recently helped restore some of the forests around Madrid that have suffered badly from forest fires, planting indigenous species and building dams” (The Coca Cola Company: Spain, 2009). In Bulgaria also Coke is engaged in similar kind of environment protection activities as part of their corporate social responsibility. They helped Bulgaria to develop new environmental legislation and in the waste recovery or recycling operations. Target market is usually identified by big companies with the help of geographical traits, Demographic traits, Psychographic traits and Behavioural traits. Spain and Bulgaria has almost similar geographic, demographic, psychographic and behavioural traits. Spain and Bulgaria has similar culture, living standards, life styles and food habits. Both the countries are in Europe and elements of European culture can be witnessed in these countries. Schuh (2000) has pointed out the needs of differentiation strategy for successful marketing. In his opinion, “using a common product, price, distribution and promotion program on a worldwide basis--does not seem adequate considering the differences in market conditions” (Schuh, 2000). “Coke’s new Bevariety beverage dispenser allows consumers to choose from 12 brands and multiple flavor shot options, totaling more than 50 different drink combinations, in the same footprint as the existing legacy dispenser” (Innovation in the Marketplace, 2009). Without innovation, no business can sustain their market share and Coke is always keen in devising innovative marketing strategies. Coke never tried to cheat the customers with false offers. They always conducted thorough market research before implementing any marketing strategy which helped them to retain their number one spot in soft drink industry for a longer period. It should be remembered that the history of Coke began with an innovation in which they converted a mixture of syrup and water into a soft drink which became one of the worlds’ leading soft drink at present. PESTEL Analysis of Coca Cola Currently both Bulgaria and Spain have democratic administrations which helped Coke to establish in these markets without much political interferences or barriers. These democratic governments warmly welcome Foreign Direct Investments in their countries as they have realized that FDI is necessary for a country’s economic growth. Bulgaria has smaller economic development compared to Spain. Spain is one among the top 15 economies in the world. Lower interest rates and stronger currencies in Spain made Cokes business hopes brighter in Spain than in Bulgaria. Social factors are almost similar in these two countries as Christians dominate the population in both these countries. The availability of educated workforce is another positive social factor in these two countries for Coke’s business prospects. Coke has implemented modern technologies in the preparation, bottling and recycling of the waste materials in the Coca Cola plants in these two countries which is another positive sign. As mentioned earlier, Coke actively participates in environment protection activities in these countries as part of their corporate social responsibility. Since both Spain and Bulgaria are European countries and they are the members of the European Union. The EU legal frameworks are applicable in both these countries which is another positive sign for Coke. Market entry and Supply chain management of Coca Cola in Bulgaria and Spain Coca-Cola arrived in the Spanish market in the 1920s whereas it arrived in Bulgarian market in the 1970’s. “Coca-Cola Hellenic Bottling Company Bulgaria AD (CCHBCB) produces, sells and distributes the Coca-Cola non-alcoholic beverages in Bulgaria” (Coca-Cola Hellenic Bottling Company Bulgaria AD, 2009) whereas Casbega, is the largest Coca-Cola bottling companies in Spain (LeBlanc, 2010). Conclusions Coke has tremendous business potentials in Bulgaria and Spain. Spain is a developed economy and Bulgaria is a developing economy and hence Coke needs to formulate different marketing strategies to cater the needs of these contrasting economies. Coke has realized that it is not possible for them to market their soft drink everywhere using same marketing strategies and hence they have custom made marketing strategies for both Bulgaria and Spain even though these countries have lot of similarities. Social, economical, political and cultural backgrounds are different in these countries and hence Coke implemented unique marketing strategies for both the countries. Bulgaria is dominated by Orthodox Christians whereas Spain has majority Roman Catholics. Coke has successfully implemented global and local standardization of their products which helped them to keep their number one position in tact so far. Recommendations Bulgaria and Spain are two countries which are facing severe drinking water shortages. Coke has already faced some allegations of injudicious exploitation of underwater resources in many countries and being a socially responsible organization, they should ensure that their activities may not intensify these problems further. The health concerns about the soft drink usages are growing in the world. Some of the soft drinks available in the market are accused of containing more quantities of harmful ingredients. Coke should ensure that their products are safe to use. Coke should stay away from heavy exploitation of the resources of the countries in which they operate. Coke should visualize the opportunities provided by globalization for mutual growth rather than individual growth. References 1. Bellis, M. (2009), The History of Coca Cola, [Online], Available at: http://inventors.about.com/od/cstartinventions/a/coca_cola.htm, [Accessed 11 August 2010] 2. Bulgaria economy, (n. d), [Online], Available at: The Economy Watch http://www.economywatch.com/world_economy/bulgaria/,[Accessed 11 August 2010] 3. Coca-Cola Hellenic Bottling Company Bulgaria AD, (2009), [Online], Available at: http://www.seenews.com/profiles/companies/bg_coca_cola_hellenic_bottling_company/[Accessed 11 August 2010] 4. COCA COLA BULGARIA TARGETS INCREASED MARKET SHARE, (2002), [Online], Available at: http://www.novinite.com/view_news.php?id=8495, [Accessed 11 August 2010] 5. Coca Cola Pictures (n.d), [Online], Available at: http://2.bp.blogspot.com/_STNJ3qjC9Nk/SX30qf_Ve3I/AAAAAAAAAcU/P3nV5aXUBdY/s320/Coca-Cola_logo5.jpg[Accessed 11 August 2010] 6. Innovation in our Marketing, (2009), The Coca Cola Company, [Online], Available at: http://www.thecoca-colacompany.com/ourcompany/innovation_marketing.html, [Accessed 11 August 2010] 7. LeBlanc,R. (2010), Coca-Cola Bottler Casbega, Working with CHEP to Realize Supply Chain Savings[Online], Available at:http://packagingrevolution.net/coca-cola-2/, [Accessed 11 August 2010] 8. Schuh, A. (2000), Global Standardization as a Success Formula for Marketing in Central Eastern Europe, [Online], Available at: http://www.accessmylibrary.com/coms2/summary_0286-28092441_ITM, [Accessed 11 August 2010] 9. Spain Economy Watch, (2010), [Online], Available at: http://spaineconomy.blogspot.com/, [Accessed 11 August 2010] 10. The Coca-Cola Company: Growth, Leadership, Sustainability, (2009), [Online], Available at: http://www.thecoca-colacompany.com/ourcompany/, [Accessed 11 August 2010] 11. The Coca Cola Company: Products, (2009), [Online], Available at: http://www.thecoca-colacompany.com/brands/, [Accessed 11 August 2010] 12. The Coca Cola Company: Spain, (2009), [Online], Available at: http://www.europeancareers.coca-cola.com/en/home/locations/spain.aspx, [Accessed 11 August 2010] Read More