Coca-Cola vs. Pepsi Marketing Strategies in Thailand and UK

Introduction

Coca-Cola and Pepsi, rated among the top companies in the world, share a common distinction: for several years, both have successfully sold a simple product made of water and sugar to consumers in almost every country. This would have been impossible unless the companies were able to create sustained excitement around their products and brands among both consumers and employees (Davis and Dunn, 2002).

This study is of interest because both are extraordinary companies in terms of brand penetration, even in challenging markets such as China and the Middle Eastern countries. Coca-Cola is the world's number one 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 consumers and markets alike, and an evaluation of the strategies of these two companies therefore always evokes strong interest. This paper evaluates the marketing strategies of Coca-Cola and Pepsi in Thailand and the United Kingdom, and recommends effective marketing strategies for each market.

Methodology constitutes an important aspect of any study. Several scholars have followed many techniques to collect data, analyze it, and draw conclusions. No field study has been carried out for this paper. The present study, which was completed within a short span of time, concentrates on books, newspaper articles, reports, and internet websites that are readily available and relevant to the subject.

Coca-Cola and Pepsi in Thailand

Coca-Cola has maintained a successful presence in Thailand for more than 55 years. In 1949, Coca-Cola (Thailand) was established, and since then the company has built major operations encompassing 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 about its Thai business, and the reason is not hard to find: in 2000, an average Thai citizen consumed just 12 servings of Coke in an entire year, while a counterpart in Rome consumed 941 eight-ounce servings in the same period (Irwin, 2001).

Thailand appears to have shed the recessionary effects of 1997, as per-capita consumption of soft drinks was rising again after a sharp drop during the recession years. In 2001, per-capita consumption was recorded at 68.9 liters, with signs of further growth (World of Information Report, 2004). In 1998, when Thailand was reeling under economic recession, Coca-Cola increased its equity stake in Thai Pure Drinks from 44 percent to 49 percent at a cost of 1.9 billion baht. During that year, sales of soft drinks had dropped from 22 billion baht to 18 billion baht, yet Coca-Cola remained the market leader with a share of 60.6 percent. Despite the difficult conditions — when many companies were laying off or eliminating staff — Coca-Cola went on a hiring spree, increasing its workforce by 9 percent in 1999. The company's commitment to the region is evident from the fact that Bangkok serves as the regional headquarters for 13 countries, including Singapore, Malaysia, Vietnam, Pakistan, and Sri Lanka.

The rationale is straightforward: Thailand accounts for 50 percent of the business generated across those 13 countries. Coca-Cola's marketing strategy in this region is more focused on customer satisfaction than on fighting competitors. In the words of Mike Bascle, 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 closely mirrors its practices elsewhere. For its flagship drink, local bottling companies import the concentrate from the Atlanta plant, blend it with locally sourced water, and bottle the liquid before distributing it to markets. In a notable departure from the long-standing strategy of maintaining product uniformity across all markets, the company has permitted changes in the content and taste of Fanta Orange, Fanta Strawberry, and Fruit Punch in order to ensure greater customer satisfaction. The only exception is Coca-Cola itself, which retains the same formula worldwide (Siam Future Development Report, 1999).

Targeting the youth segment is one of Coca-Cola's primary marketing strategies in this region, and it appears to be paying dividends. Coke's major initiative in 2003, the "Year of Coca-Cola," reinforced the brand among Thai teenagers. This campaign included the first launch of Vanilla Coke in Southeast Asia, and early reports were very encouraging: Vanilla Coke proved an instant hit with consumers, with sales exceeding targets. Notably, the new product did not cannibalize existing product lines. Other initiatives included the Coke Pi Big campaign for the new 15-ounce Coke bottle.

Coke also signed an exclusive contract with Thai music superstar Thongchai "Byrd" McIntyre for a nationwide tour and promotional effort. Byrd's first nationwide tour in a decade generated tremendous interest, as the campaign promised non-stop entertainment featuring all of the artist's musical hits, made possible with the support of GMM Grammy. To maximize the impact of 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 designed to appeal to young consumers.

The "For Fan Fun Fair" initiative clearly demonstrated Coke's aggressive approach to increasing market share and brand penetration. In an innovative move that attracted wide attention in the advertising world, Coke offered devoted Coca-Cola drinkers the chance to appear in a 15-second TV commercial. Results began flowing in quickly. Coke pointed to the AC Nielsen Survey, which revealed that Coke's brand preference among Bangkok teenagers had doubled following the launch of the "Year of Coca-Cola" campaign. Coca-Cola's market share increased every month, and the program was expected to motivate 20 percent more consumers in Thailand to purchase Coca-Cola products (PR Domain News Release, 2003).

Fanta has been Thailand's leading flavored carbonated drink for over four decades. According to market research firm AC Nielsen, Fanta commands over 70 percent of the flavored soft drink sector (NACS Online News, 2003). In a concerted bid to attract teenagers, Coke introduced a new variant — Fanta Blueberry Splash — in February 2003. The central theme of the campaign was "Fanta…Taste the Flavor of Fun," aimed at deepening the popularity and loyalty that the Fanta brand already enjoyed among youth. Notably, Coke chose Thailand as the first country in Asia to launch the new blue soft drink, ahead of far larger markets such as China and India.

To capture the imagination of modern teenagers, Coca-Cola promoted the new flavor aggressively, offering free samples nationwide in 390 ml PET bottles and supporting the campaign with radio and TV commercials, outdoor advertisements, and Fanta caravans in upcountry markets (The Coca-Cola Company, News Release, 2003). A further variant, Fanta Mango Magenta, was subsequently launched, claiming to deliver the exotic taste and flavor of "Muang," or mango in Thai. Interestingly, Coke used magenta rather than the yellow or green colors typically associated with mangoes worldwide. This differentiation was designed to generate special appeal among the younger generation and position the drink as a trendy juice (Coca-Cola News Release, 2004).

Coca-Cola has been a pioneer in promoting its business through association with popular sports. Recognizing the global power of football, Coke has long supported the game in various ways — providing drinks and refreshments at World Cup matches as far back as the 1930 tournament in Uruguay, and serving as the official sponsor of every FIFA World Cup since 1978. Since football is the most popular sport in Thailand, Coke launched a series of football-centered promotional efforts. In 2000, the company brought the 2002 FIFA World Cup Trophy to Thailand, allowing Thai football fans to be photographed with it. The campaign also included weekend football fun games and a contest offering twin-package trips to 2002 World Cup matches (PR Domain News Release, 2002). By fulfilling the dreams of millions of fans, Coke hoped to achieve significant brand penetration and business growth.

Despite its cherished long-term relationship with Thailand, Coke encountered difficulties when, following the US-led invasion of Iraq, protests broke out in Thailand against the United States and calls were made to boycott American products. One of the major Coke bottlers in the south of the country, Haad Thip, temporarily closed its plant following anti-war demonstrations. This led to disruption of supplies of Coke, Fanta, and Sprite in southern Thailand. Coca-Cola's Thai unit announced that the company is neutral and does not support political or religious causes (The Financial Express, 2003).