marketing strategies of Coca-Cola and Pepsi in Thailand and UK
Coca-Cola and Pepsi, rated among the top companies in the world share a common fact - for several years, both these companies have been successfully selling a simple product made of water and sugar to almost all countries. This would have been impossible unless the companies were able to create sustained excitement over their products and brands among the people and its employees. (Davis and Dunn, 2002)
This study is of interest because both are extra-ordinary companies in terms of brand penetration in even the toughest markets such as China and the middle-eastern countries. Coca-Cola is the world's number brand and Pepsi is also among the top brand names in the world. In 2000, Coca-Cola's sales surpassed one billion units per day and it had 239 products, selling across 200 countries. Coca-Cola and Pepsi are seen as arch rivals by the people and markets and hence an evaluation of the strategies of these two companies always evokes interest. This paper evaluates the marketing strategies of Coca-Cola and Pepsi in Thailand and the United Kingdom and to recommend effective marketing strategies.
Methodology constitutes an important aspect of any study. Several scholars have followed many techniques of method to collect data, analyze it and come to its conclusions. There has not been any field study carried. In the present study which is supposed to be completed within a short span of time, has concentrated on books, newspaper articles, reports, internet websites which are easily available and relevant to the study.
Coca-Cola has a successful presence in Thailand for more than 55 years. In 1949, Coca-Cola (Thailand) was established and since then the company has come a long way and now has major operations with production, distribution and marketing networks. Brands in the market include Coca-cola, Fanta, Sprite, Schweppes, A&W and non-carbonated beverages such as Qoo fruit juice drink and Namthip bottled water. Coca-Cola has generally been bullish over its businesses in Thailand. The reason is not hard to seek- in 2000; an average citizen of Thailand consumed 12 servings of Coke in a whole year, while her counterpart in Rome guzzled 941 eight-ounce products in the same period. (Irwin, 2001)
Thailand seems to have shed off the 1997 recessionary effects as per capital consumption levels of soft drinks seems to be rising again after a sharp drop in the recession years. In 2001, per-capita consumption was pegged at 68.9 liters with signs of further growth. (World of information Report, 2004) In 1998, when Thailand was reeling under economic recession, the company increased its equity in Thai Pure Drinks from 44% to 49% at a cost of 1.9 billion baht. During the year, sales of soft drinks had dropped from 22 billion baht to 18 billion baht, with Coca-Cola the market leader with share of 60.6%. Despite the tough times when many companies laid off or eliminated employees, Coca-Cola went on some sort of hiring spree, increasing its staff strength by 9% in 1999. Its commitment is evident from the fact that Bangkok is the regional headquarters for as much 13 countries including Singapore, Malaysia, Vietnam, Pakistan and Sri Lanka.
The rationale is simple - Thailand accounts for 50% of the business from the 13 countries. Coca-Cola's marketing strategy in this region is more focused on customer satisfaction than fighting with competitors. In the words of Mike Bascle, the Chief Executive for Southeast and West Asia in 1999, "We don't focus on competitors. Beating the competitor is not our objective. Appealing to the consumers and making the retailer profitable is the objective and that's why we've been successful." The company's operating strategy for Thailand is quite similar to its practices elsewhere. For the flagship drink, Coca-Cola, the local bottling companies import the concentrate from the plant in Atlanta, Unites, blends with locally sourced water and bottle the liquid, before sending to the markets. In a major departure from the age-old strategy of sticking to product similarity in all markets, the company has allowed changes in content and taste of Fanta Orange, Fanta Strawberry and Fruit Punch, to ensure greater customer satisfaction. However, the only exception is Coca-Cola, which still has the same formula all over the world. (Siam Future Development Report, 1999)
Targeting the youth group is one of the main marketing strategies of Coca-Cola in this region. And it seems to be paying handsome dividends. Coke's major initiative in 2003, the 'Year of Coca-Cola' has enabled the company to reinforce the brand among the teenagers in Thailand. The Year of Coke saw the first launch of Vanilla Coke in Southeast Asia and the early reports were very encouraging. According to Chuenhathai Vuntanadit, Marketing Manager, Coca-Cola (Thailand), Vanilla Coke had proved to be an instant with consumers with sales exceeding targets. More importantly, the new product had not cannibalized the existing product lines. Other initiatives included the Coke Pi Big campaign for the new 15-ounce Coke bottle.
Coke signed up an exclusive contract with Thailand's music superstar Thonghchai 'Byrd' McIntyre for a nation-wide tour cum promotional effort. Byrd's first nation-wide tour in a decade sparked tremendous interest as the campaign promised non-stop entertainment with all the musical hits of the maestro, which was made possible with the support of GMM Grammy. To generate maximum mileage from this effort, Coke promoted the 'Closeness between Coke and Fans' program, which included one million limited-edition Cola bottles with special graphics, T-shirts, drinking glasses, disposable cups, notebooks and other promotional items to appeal to the youngsters.
In all, the 'For Fan Fun Fair' initiative clearly demonstrated the aggressive approach of Coke to increase market share and brand penetration in this part of the world. In an innovative approach that stunned the advertising world, Coke provided a chance to devoted Coca-Cola drinkers to appear in a 15-second TV commercial. The results of these initiatives have already started flowing in a big way. Coke sources point to the AC Nielsen Survey, which has revealed that Coke's brand preference among Bangkok teens has doubled, after the start of the 'The Year of Coca-Cola' campaign. Coca-Cola's market share increased every month and the program was expected to motivate 20% more consumers in Thailand to buy Coca-Cola products. (PR Domain News Release, 2003)
Fanta is Thailand's numero uno flavored carbonated drink, for over four decades. According to market research firm AC Neilsen, Fanta dominates with over 70% share in flavored soft drink sector (NACS Online News, 2003). In what is seen as a concerted bid to attract the teenage group, Coke introduced a new variant, the Fanta Blueberry Splash in February 2003. The central theme of the campaign was 'Fanta...Taste the Flavor of Fun', primarily aimed at increasing the popularity and loyalty that Fanta brand enjoys with the youth. It is interesting to note that Coke has chosen Thailand as the first country in Asia to unleash the new blue soft drink, even ahead of massive markets like China and India.
To capture the imagination of the modern teenagers, Coca-Cola promoted the new flavors drink aggressively offering free samples throughout the country in 390 ml PET bottles and supported the campaign with a range of activities - radio and TV commercials, outdoor advertisements and Fanta caravans in upcountry markets. (The Coca-Cola Company, News Release, 2003). A new variant, the Fanta Mango Magenta was launched recently with claims of the drink having the exotic taste and flavor of 'Muang' or mango in Thai. It is interesting to note that Coke has used the magenta color instead of yellow or green, the normal colors for mangoes throughout the world. This differentiation is aimed at generating a special appeal for the flavor with the younger generation and promotes the drink as a trendy juice. (Coca-Cola News Release, 2004)
Coca-Cola is of the pioneers in promoting its business by associating itself with popular sports. Realizing the power and reach that football had over most of the world, Coke had always followed a policy of supporting this game in many ways. The company started providing drinks and other refreshments at the world-cup games, way back in the 1930 world cup held in Uruguay. Since 1978, Coca-Cola had been the official sponsor of every FIFA World Cup, thus always maintaining a close relationship. Since football is the most favorite game in Thailand, Coke unleashed a series of promotional efforts with football in the centre-stage. In 2000, the company succeeded in bringing the much-adored 2002 FIFA World Cup Trophy to Thailand and allowing Thai football fans to take photographs with the Trophy.
The campaign also included fun games of football during weekends and contest that provides a chance for fans to win twin-package trips for the 2002 World Cup matches. (PR Domain News Release, 2002) By fulfilling the dreams of millions of fans in Thailand, Coke hoped to achieve a significant brand penetration and business growth in a short span of time. Despite the cherished long-term business relationship with Thailand, Coke did have its share of…