We all know - at least if we are old enough to have heard the jingle - that Coke would like to teach the world to sing in perfect harmony. Except that this isn't quite true. What the Coca-Cola Company would most like to do is to teach the world to drink Coke - or one of its other wholly owned brands. The company has in fact proved to be remarkably hardy in the ever-more-globalizing economy. It's hard to travel anywhere in the world today and not see someone sipping a Diet Coke.
But this does not mean that the company's entrance into different national markets has been smooth - or that its continued competitiveness in various national markets will be assured. Each country presents a unique set of cultural and economic challenges. This paper examines the possible entrance of the Coca-Cola Company into Iran, looking at what problems it may have in entering this market, how it might be able to overcome these challenges, and what continuing challenges that it would face in this market.
History of Domestic U.S Corporation and Product
Before looking specifically at how the Coca-Cola Company might enter into a new market (or rather, re-enter into a market, because Coca Cola was sold in Iran before the current embargo was imposed there), it may be helpful to give a brief of overviews of the entire company. The company is a picture of corporate health and this economic health is based in many ways on its continuing to expand into new markets. It is clear from every aspect of the company - from its mission statement to its sales strategies to where it builds new bottling plants - that while Coca-Cola may be as American as apple pie, the company itself is resolutely international. Indeed, ironically, a large part of its domestic marketing strategy has to do with the fact that it is so popular overseas.
Although Coca-Cola® was first created in the United States, it quickly became popular wherever it went. Our first international bottling plants opened in 1906 in Canada, Cuba and Panama, soon followed by many more. Today, we produce more than 230 brands in nearly 200 countries. More than 70% of our income comes from outside the U.S., but the real reason we are a truly global company is that our products meet the varied taste preferences of consumers everywhere. We bring refreshment to people in nearly 200 countries.
A slightly more objective viewpoint follows. It cannot be emphasized enough that the Coca-Cola Company is far, far more than just Coke as the following graph shows.
Figure 2. Coca-Cola's share in beverage categories http://www.thecoca-colacompany.com
The company's ability to combine a flagship product like Coke that is known throughout the world with a wide diversity of other products has up until recently been one of its greatest strengths.
The Coca-Cola Company is the world's biggest drinks company, controlling more than half the global soft drinks market. It's principal brand is of course Coca-Cola itself, the single most valuable brand in the world. But the company also owns almost 240 other soft drinks ranging from spin-offs like Cherry Coke and Sprite to bottled water and iced coffee.
However, and this point shall be explored in greater depth below, that size is now beginning to work against it at least some of the time. Certainly, the foreign divisions of Coca-Cola have found that anti-monopoly government agencies are more and more likely to intervene against proposed mergers - perhaps even more eagerly than they would if the company were not such an obvious symbol of American hegemony.
Recently the company has found its sheer size working against it. Competition authorities watch the company's every move, while market saturation and economic downturn in emerging territories has caused sales to plateau. (Advertising Age estimate a 2000 global media spend of $1.6bn, of which $1.2bn was outside the U.S., making it the world's #6 advertiser).
The company has come a very long way indeed since its 19th century roots as an offering at an Atlanta soda fountain. There are probably few more products that signal the American entrepreneurial spirit (as well as American greed) more clearly to those outside of the U.S. than Coke, as Pendergast (2000) makes clear throughout his clear exegesis of the company's history and success.
With sales in 195 countries, the company's worth is over $50 billion, value that is likely - Allen argues - to climb rapidly as it breaks down the last remaining markets closed to it, especially the one-billion people in China. Much of the company's success is due to the skill and intelligence that Robert Woodruff, who ran the company from the 1920s to the 1980s, brought to his directorship of the firm - leadership that guided the company through the Great Depression, World War II, a century of changing tastes and fashions, legal challenges, ethical lapses by other executives and that pesky rival, Pepsi.
Domestic Marketing Strategy
Coca Cola is a product aimed primarily at younger consumers, although as those Baby Boomers who grew up with Cokes are aging many of them are continuing to drink their favorite beverage.
However, given that most Coke drinkers are young, the Coca Cola Company is mindful that as its consumers age they may begin to slip out of its grasp. As a result, the company makes continual efforts to recruit new, younger drinkers.
One of the most recent examples of this marketing strategy was pairing Coke with Harry Potter - a favorite among preteens and young teenagers. Piggybacking onto pop cultural products that resonate with its key consumer base is a long-time strategy for the company. It is willing to make compromises - as it did in this case with author J.K. Rowling - if by doing so it can connect its product in the minds of young people with something that they view very favorably:
Around 100 families in the U.S. could win free trips to England as part of the Hogwarts Castle Adventure promotion.
More than 850 million Coca-Cola, Minute Maid and Hi-C promotional packages are being produced with Harry Potter imagery.
But a specific detail of its marketing deal was that no images of Harry Potter or any characters from the books or film can be used.
Author JK Rowling was keen that her young wizard would not be over-exploited as part of the campaign.
She also insisted that the soft drinks giant donate money to community projects as part of the deal.
Analysis of Iraq
The major barrier to the marketing of Coca Cola in Iraq is a ban on almost all U.S. companies for political reasons. Certainly the political situation will have change if the company is to move into Iraq.
But if it can do so, the company's chance for growth in the market look promising, as indicated by the fact that ersatz Coke is already being sold in the country. Despite the fact that by all accounts it tastes pretty bad, people are willing to buy it because of the fame of the trademark.
And there is some real chance that sanctions may soon be eased because of an improving political climate in Iran.
In the presidential election this month, Iranians voted overwhelmingly in favor of reform and democracy. The landslide victory of Mohammad Khatami, the candidate identified with reform, provides an opportunity for the United States to respond to the Iranian people's desire for change. The current stalemate in American-Iranian relations does not serve overall American interests.
The United States should relax its economic sanctions against Iran and take other steps to foster an improved relationship, without weakening efforts to advance Middle East peace and prevent terrorism and the proliferation of nuclear weapons.
However, despite the relatively rosy picture painted here, the country remains politically restive, which is always problematic for economic expansion. Iran, which is a constitutional Islamic republic (in which both the executive and legislative branches derive their authority and power primarily through the Muslim clergy). Given that America remains for at least some Iranians "the great Satan," any American company trying to make inroads into Iran, where "Shia Islamic ideals and beliefs provide the conservative foundation of the country's customs, laws and practices" must be cautious.
The country is not entirely safe for Western visitors, which does not necessarily mean that Western products like Coca Cola will not be welcomed but does pose logistic problems for the company, which will have to be careful in sending its representatives into Iran.
U.S. citizens should exercise caution throughout the country and especially in the southeastern area of the country. Several European travelers were kidnapped in 1999 near the cities of Kerman and Bam, apparently by drug-traffickers. They were later freed through the intervention of the Iranian authorities. In 1999, in the period before and after anti-government demonstrations in major cities around the country, there were several incidents of organized harassment and violent intimidation of American tourists. A high-level Iranian…