Global Business Environment, Multinationals Such

¶ … global business environment, multinationals such as Coca Cola and Pepsi Cola often need to make the strategic decision on whether to globalize or localize certain activities. In terms of the marketing, globalization allows, on one hand, the creation of a sustainable international brand, while localization permits decisions to be made in full customization with local habits and characteristics.

As global companies, Pepsi Cola and Coca Cola face the same challenges. This study aims at analyzing the degree to which the marketing strategies at these two global companies are influenced by both global and local pressures. In other words, the study will investigate how the final strategic marketing decision at Pepsi Cola and Coca Cola is taking into consideration, at the same time, global integration pressures and local responsiveness pressures.

Research Gap

The concept of global responsiveness and local responsiveness has become more recognized in the business community only after globalization became an economic reality, during the 1980s and, especially, with the informational revolution of the 1990s. Due to this aspect, there is still plenty of investigating and research to be done for both concepts, in several directions.

With Coca Cola and Pepsi Cola, this is perhaps less true, because the two brands had become global throughout the 20th century because of the expanded and diversified markets the soft drinks were enjoying. Nevertheless, their marketing strategies have only become fully adapted to globalization in the last two decades, so that the assertion still pertains to these two cases.

First, the existing literature has only partially investigated the optimum response between these two extremes (global vs. local), based both on theoretical analysis and practical inquiry. Intuitively, there should be an optimal approach by which an organization can determine to what degree its marketing strategy should be either global or local. Second, Coca Cola and Pepsi Cola are usually used only in examples of more ample discussions on marketing strategy and on the influence of globalization and localization factors on marketing. The lack of precise application to the two companies is also a research gap.

3. Research Questions

This study will aim to analyze and find answers to two primary research areas:

To analyze the degree to which global integration pressures and local responsiveness pressures determine the global marketing strategies in the way of Coca-Cola and Pepsi-Cola?

The degree to which there is a significant difference in profit and market share performance among companies facing global responsiveness pressures and local responsiveness pressures.

4. Research objectives

The objectives of this research include:

Analyzing through secondary sources and existing theory the degree to which the marketing strategy of an international organization is influenced by global integration and local responsiveness

Determining the impact of each of these two on an international organization

Transfer the existing theory to the practical case of Coca Cola and Pepsi Cola and investigate how global integration and local responsiveness play a role in determining marketing strategy in these companies

Comparing the involvement of global integration and local responsiveness in the two organizations.

5. Literature Review

Many of the studies starting with the 1980s have revealed that global integration pressures and local responsiveness pressures affect and have an impact on the different parts of a company's marketing mix, at the same time making marketing managers interpret these as industry pressures (Bartlett, 1985). On one hand, pressures coming from the differentiation of customer needs and local specifics (ranging from distribution to local supply channels) require companies to adapt its product or service in order to suit the local demand (Egan, 2007). However, as J. Egan pointed out, these differences between consumers tend to be eroded by increased communication and travel, so that a company needs to consider at times the need for global integration (Egan, 1998).

The most likely response to pressure coming from both the need to adapt to local specifics and to produce a global brand and marketing strategy that can be more viable for an international organization is to alternate between different international marketing strategy, such as multidomestic, multifocal, global or transnational strategies (Wasilewski, 2001). This mix of marketing strategies will allow a company to remain relatively flexible in front of the existing pressures and direct each marketing strategy according to the local

On a company like Coca Cola, research is significant and focuses on the way that the organization is alternating its approach and global marketing strategy. The most important factors that influence the development of a global strategy at Coca Cola are considered to be "pricing, advertising, sales promotion programs, product innovation, increased efficiency in production techniques, the introduction of new packaging, new vending and dispensing equipment, and brand and trademark development and protection" (The Coca Cola Company, 2008).

At the same time, Kotler has shown in his "Marketing Management" that "the company often tailored the flavor, packaging, price, and advertising" (all parts of the marketing mix) to "match the tastes in specific markets" (Kotler 2006). Kotler's discussion on the subject of Coca Cola is vast and includes descriptions of local marketing approaches used by Coca Cola.

With Pepsi, the need to reduce costs through economies of scale led the company towards a global integration, however, most of its marketing strategies are still customized in order to reflect the particularities of the region in which the company is selling its products (Aswathappa, 2006). This includes, for example, some Pepsi products are only sold locally or regionally and bear some of the traditional characteristics of the location.

6. Research Method

Research Design

The research used both primary and secondary sources. In terms of primary sources, this research relied on individual interviews with marketing directors in several host countries as the primary data collection method. The interviews were conducted, in each case, with a marketing director from an Asian country (Japan in the case of both companies), a Latin American country (Brazil, in the case of Pepsi Cola, and Mexico, in the case of Coca Cola) and an European country (Poland, in the case of Pepsi Cola, and Spain, in the case of Coca Cola).

At the same time, secondary sources were also successfully used in this study. Such secondary sources were also used in the present research study. They contain existing information obtained through previous research. Their utility is granted by the high degree of availability, their low costs, their diversity, and their increased coverage possibility. Also, in international research projects, such sources are often the only sources used in obtaining the information needed in taking decisions on external markets.

Secondary sources were preferred in this case because even in research projects where primary information is required, the first step consists in consulting the most adequate secondary sources. In most cases, they can lead to clarifications and increased efficiency of the research. As mentioned above, there are situations where secondary sources ensure the information necessary for solving certain decisional issues. This was also the case here.

Using secondary resources in this case led to two challenges. The first challenge consisted in identifying the secondary resources that were useful to the respective scope. The second challenge consisted in the fact that in international marketing research using secondary sources is essential because they're accessible, they ensure an overall view on international phenomenon, and they allow for further research.

The secondary information gathered for this research study was useful for increasing the degree of understanding the issue of global strategy marketing, elaborating the hypotheses of the research, and ensuring an adequate interpretation of the findings.

The reason behind selecting this type of data collection relies on the advantages of this method. The advantages taken into consideration in this case are:

The cost of data collection

The time required for data collection

Availability of information

Relevance of information

Accuracy of information

Data Collection

The interviews were all around 15-20 minutes long and contained the following questions:

1. How often to you have face-to-face or conference meetings with the marketing coordinators in the United States?

2. To what degree do you feel you have a contribution to the company's marketing strategy?

3. How many advertisements borrow local content?

4. How often do you have marketing executives from headquarters visiting? Do you strategize about the marketing approach in your location?

5. Do you observe the marketing practices of your competitors in this country?

6. To what degree do you feel that their financial and competitive performance is affected by their marketing strategy and by the impact of local responsiveness pressures?

There are several other elements worth explaining in this sub-chapter. First, marketing directors from the host country were used for this interview because they were deemed to have the best connection with both types of pressures. Indeed, by activating in the local environment, they were facing the obvious local responsiveness pressures. At the same time, they were also in permanent contact with the company's headquarters, which usually tries to promote a global integration approach, most notably in view of reducing costs. This means that the marketing directors were also aware of global integration pressures and able to make judgments based on both factors.

Some of the problems that this type of approach offered were:

Reliability issues -- many of these marketing directors had their own host perspective (local responsiveness) and the headquarter perspective (global integration), but none of the overarching overview that someone coordinating all the activities in other countries might have.

7. Research findings, Analysis and Evaluation

The results of the primary research are fully supported by the findings of the secondary research and backed by the general theory in the area of global marketing strategy. The marketing directors of both companies in all different regions (Asia, Latin America, Europe) have admitted to adapting their marketing strategies as much as possible to local specificities, but also recognized the important role that the headquarters and central marketing department played in the way they made their decisions, especially since the central departments were also coordinating the marketing budgets and were working towards creating economies of scale and a more profitable global company.

Some of the most interesting examples were related to the way that the marketing mix was subject to local responsiveness pressure and parts of it or the whole had to be tailored to fit the local conditions. Perhaps one of the most interesting examples in this sense was in Spain, where Coca Cola was sometimes presented as a soft drink that could be combined with wine, mainly because this was a custom among the young generation in Spain. This type of local responsiveness pressure affected the product and the promotion, two of the elements of the marketing mix.

In both Pepsi Cola and Coca Cola's case, the advertisements were very often the most subjected to local responsiveness pressure. Some of the Pepsi advertisements, for example, had been tailored in the United States to be based on football as the intermediary by which the drink could be brought to the consumers. This meant a significant campaign to have different important football players join in promoting the product.

This was obviously not possible in Brazil, where the marketing director informed that the football played in the U.S. was more or less unknown and that the entire theme needed to be changed so that it would focus on soccer and some of the Brazilian stars. Nevertheless, this was not a phenomenon singular in Brazil: the same commercial made plenty of sense both in Poland and in Japan, places where soccer has been or is becoming a cult sport. In all these countries, the commercial where different soccer player (Ronaldinho, Beckham, Henry etc.) meet and play together is a great success, as is the fact that many of these soccer players have been, at some time or other, the official figures for Pepsi (as was the case for Ronaldinho).