Case Study

Report: Coca-Cola
India (CCI)
Submitted to:
Mr. Khan Md. Raziuddin
Taufique
Faculty, M.H. School of
Business
Presidency University

Course Code: MKT 307

Fall 2009
Date: December 12, 2009

Submitted by:
Md. Abul Hasnat
081091025

Nusrat Ali
081031025

Md. Sad Arefin

081
 Case Study Report: Coca-Cola India (CCI)

2
MANAGEMENT SUMMARY

Coca-Cola was the leading soft drink brand in India until

1977 when it left rather than reveal its formula to the government
and reduce its equity stake as required under the Foreign
Exchange Regulation Act (FERA) which governed the operations of
foreign companies in India. After a 16-year absence, Coca-Cola
returned to India in 1993, cementing its presence with a deal that
gave Coca-Cola ownership of the nation's top soft-drink brands
and bottling network. Coke’s acquisition of local popular Indian
brands including Thums Up (the most trusted brand in India),
Limca, Maaza, Citra and Gold Spot provided not only physical
manufacturing, bottling, and distribution assets but also strong
consumer preference. This combination of local and global brands
enabled Coca-Cola to exploit the benefits of global branding and
global trends in tastes while also tapping into traditional domestic
markets. Leading Indian brands joined the Company's
international family of brands, including Coca-Cola, diet Coke,
Sprite and Fanta, plus the Schweppes product range. In 2000, the
company launched the Kinley water brand and in 2001, Shock
energy drink and the powdered concentrate Sunfill hit the market.

In the given case, the marketing strategies are explained in the

period of 2000-2004. In the given year CCI targeted the rural
market for their expansion and CCI was very much successful.
The strategies they followed and the problems they faced are
explained in the case. We have tried our heart and soul to explain
the situations of the case in the marketing concept and tried give
our outmost effort to solve the problems that CCI faced india. In
this report we have provided the SWOT matrix of CCI and
confrontation matrix based on the SWOT analysis. After this the
case task were completed. Along with the task we have provide
other information found from the internet to make this report
more worthy and applicable.
 Case Study Report: Coca-Cola India (CCI)

CASE TASK 1: SWOT –MATRIX

 Case Study Report: Coca-Cola India (CCI)

4
Strengths Weaknesses
S1. Solid financial resources W1. Poor rural infrastructure

S2. Strong brand pull W2. Different rural consumption

habit and buying capacity from
S3. Quick and Strategic urban area people
distribution
channels and system(Supply W3. Erratic power supply to most
Chain) grocers in rural areas and lack of
storage system of cool drinks.
S4. Value proposition through
humor appealing
O1 advertisements
O2 O3 O4 W4. T1Preferences
T2 T3 forT4 Total
traditional cold
by famous actor Amir Khan beverages such as ‘lassi’ and
lemon juice
S1 ++ ++ ++ ++ + + --- --- 7
Opportunities Threats
+ + +
O1.S2 ++of distribution
Expansion ++ ++ ++ T1.High
++ + price-sensitiveness
- - - 10

O2. Adding + more villages+in its + High market competition

T2.
S3
distribution ++ ++
network +
through + +
among + MNOs.
the - - (Frontal
- - 6attack
proper promotions. by Pepsi Co.)
+ +
O3.S4 ++juice
Launching ++ -
and milk- -- - -High+influence
T3. ++ of0media
2
based beverages for the result of
growing sales volume of cola T4. Governmental restriction and
W1
drinks -- 0 0 0 -- - - in0India 0
regulations -6
O4. Acquisition on local cola
W2 (Choice
producers - -and
- Tikli
++) 0 --- --- - - -9
through product divisibility

W3 --- -- - 0 0 0 0 0 -6

W4 ++ + ++ 0 -- + + 0 7
+ +
Total 7 6 9 -4 -4 2 -5 -8
 Case Study Report: Coca-Cola India (CCI)

CONFRONTATION MATRIX 5

CASE TASK 2: MARKETING ANALYSIS

In this world of globalization a company has to meet their
customers every need in terms of high return on investments and
sales. So to know everything about the customer and to do
business, companies like Coca-Cola give their best effort in
marketing their product. Marketing department is the most
closest to the customer. They know and figure out what
customers actually want and which steps can attract customers to
buy their products. For that reason to get maximum customer
satisfaction marketers use the marketing mix. Marketing mix
includes the 4Ps consisting Product, Price, Place, Promotions. The
efficient mix of these four functions can generate more profits
from the market. Coca-Cola is the world’s number one brand and
they use it effectively in the market like India.

India holds one of the largest populations and has a

monsoon climate. So the heat of the weather is scorching. This
country is culturally bound and cold drinks are available in this
market. So indeed it is a very attractive, highly profitable market
for any kind of soft drinks. Coca-Cola is the company which has
introduced 6 types of soft drinks in the Indian market and in the
leading position as well. So product is highly diversified in the
market, and for that reason this company has reached above
their objectives. Quality soft drinks are always produced by Coca-
Cola. So it is obvious that people of India will consume more than
other competitors of Coke.

Coca-Cola India (CCI) is always concerned about the price of

its products. Though there is a lot competition in the market.
Moreover India is a very price sensitive market. So everything
must be kept under pricing. CCI is very successful in pricing.
 Case Study Report: Coca-Cola India (CCI)

Through their pricing method they have captured a large share of

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the rural market. When CCI targeted the rural market of India in
the year of 2000, it was obvious to think about the affordability of
the market. Consumers were targeted whose income level is very
low. Additionally, with an average Coke costing Rs. 10 and an
average day’s wages around Rs. 100, Coke was perceived as
a luxury that few could afford. Thinking of these weaknesses of
the plan CCI introduced its 200 ml bottle instead of 300ml, and
the price was halved from Rs. 10 to Rs. 5. This decision was
actually the main reason to be successful in the rural market.
Coke’s rural penetration increased from 9% to 25% in 2003. It
was an ultimate success for CCI. But the competitors were even
giving lower price than them. Pepsi Co. the main competitor of
CCI reduced their 300 ml bottles price for that reason in the urban
areas Pepsi’s sales increased.
India is a poor country with a large population. So
infrastructure is very bad in the rural and semi-urban areas. It was
the main difficulty for CCI to enter in the rural market. Insufficient
power supply caused problems of having a refrigerator in the
grocery shops. All along the distribution channel was a mess. To
capture the rural market CCI they started hub & spoke
distribution system. Through this system products from bottling
plant come directly to the hub in the towns, and then it is
distributed to the spoke in small towns. From there the product
was distributed to the retailers. This strategy was effective to
reduce the cost of transportation for CCI products. To make this
system more effective CCI purchased 5,000 trucks and auto
rickshaws. Coca-cola was bound to provide a bottle of Coke to
every Indian. So they have even distributed through cycles and
camels in the places like Rajasthan and Gujarat.

Among the all marketing efforts of CCI, the acceptability was

the most sensitive area in the rural market. The rural market was
covered by some traditional drinks like Lassi, Lemon juice; Jeera
water etc and consumers were far more satisfied. So it is very
challenging to enter in a market like this where the chance of
acceptability is very low.CCI was successful. To promote this
brand Coke, they have done a tremendous strategic work that,
now rural india is fond of Coke. Firstly, the distribution and pricing
were supported by the mass media and as well as through
outdoor advertisement. They painted their name in the compound
 Case Study Report: Coca-Cola India (CCI)

of the houses of villages and crowded places. Secondly, they

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participated in mandies (village market), haat, fairs, and other
events of the villages to offer Coke. And people started to know
them, by providing TVCs in doordarshan (national TV channel) it
became more popular. But the expected result was not that long.
Finally they used humor appealing advertisements to replace the
position of other cold drinks from consumers mind. They used the
widely used word for identifying cold drinks in india. They have
promoted Coke as ‘Thanda matlab Coca-Cola’ in India. So it
became very popular in the rural areas as well as in urban areas.
They followed product category positioning in those
advertisements and was very successful. Amir Khan a famous
actor of India was inducted to advertise these promotions. And
the result was like, sales volume increased in 2003 at 35% in rural
areas.

Considerably, it is clear that CCI was very much successful to

promote Coca-cola in India because of their effective marketing
mix.

CASE TASK 3: POSITIONING: COCA-COLA

Coca-Cola is the soft drink that is originated from USA,
and Indian culture is far different from USA. To position a product
one must consider a lot of matters like relevance, distinctiveness,
believability, feasibility, communicability and sustainability. CCI
does not only sale Coke in Urban areas but also in rural areas. So
their positioning must be relevant with the both of the areas. As
we know the income discrimination is high in India, so this fact
also has to be in concern. There are different types of positioning
a product or service. Coca-Cola has followed product category
positioning. Through the slogan, “Thanda matlab Coca-cola” they
have tried give a clear statement about coke that, it is a cold
drink. But the sustainability is at risk in this point of view, because
this market is very price sensitive.
 Case Study Report: Coca-Cola India (CCI)

Considering all the facts and conditions of this market, we

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suggest that price positioning is the most effective positioning
strategy for CCI. The reasons are:
• In this time the market is highly competitive so price
should a concern of the competitors. Coca Cola sales
‘Chota Coke’ at Rs.5 and is enough for a person. So if
price positioning is done then consumers will be more
attracted to coke rather than others because coke has
its brand value more than others.
• India is very price sensitive and consumer always wants
the best thing at cheap price so price positioning can
grab more of them.
• The cost of production is not very high because they
use less foreign resources and resources are available
in India. So the company can give more in Rs5 / Rs.10.
if they follow ‘more for same’ or ‘more for less’ strategy
the sales volume will boost up in a short time.
• Price positioning is more communicable and distinctive
than other offers in the market. As we know for an
established brand it is safer to position its price rather
than others.

Sales
• Coca-cola is the market leader. Pepsi Co. is the
challenger. In
9%this soft drinks industry there is little
chance of development and other improvements. And
the Indian govt. has regulations for drinks in India. So to
Coca-Cola
15%
defend them Coca-Cola must focus on its price
44%
activities. Pepsi Co.

Cadbury
Schweppes
All other

32%
 Case Study Report: Coca-Cola India (CCI)

Figure: Company Market Share 2001

Being a market leader it is very difficult for Coke to survive

in the long run with competitors like Pepsi Co., Cadbury
Schweppes. So only by product positioning they can’t move on. In
this competitive market of low income people, Coca-Cola must
adopt mainly price/value positioning for its products. On the other
hand, if market becomes flat by the means of pricing and price
elasticity is lower, then Coca-Cola can follow use positioning and
attribute positioning. Because in the flat market consumers look
for more quality at the same price. If the resource is available
enough a combination of all of this positioning strategy can be
applied to attract the market more effectively than the
competitors.

CASE TASK 4: What is the central problem of Coca-Cola

India (CCI) at this moment (according to the case)? If you
were the CEO of CCI, how would you handle the crisis?

Coca-Cola India (CCI) is the largest soft drinks company in

India and the only company of this industry who are using the
domestic resources in a large scale. For that reason CCI also
having an important contribution to the economy of India. This
 Case Study Report: Coca-Cola India (CCI)

company has more than 6000 direct Indian employees. In total,

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CCI is one of the biggest companies of India. From the year 1977
this company is facing many problems in this region because of
many Govt. regulations, media setbacks, political invasion and so
forth. After having all that problems this company has
successfully recovered every setback.

India is a large country with many kinds of varieties. This

country has variety in people, culture, religion, weather, even in
resources. For CCI pure drinking water is a must resource for their
production. But in some region of India there is a high scarcity of
drinking water. So the question comes, if u can’t drink water
enough what is the meaning of Coke? This question was a media
setback for CCI in August 2003. There were also some other
quality based question against CCI as well as Pepsi Co.

According to the case, the main problem that CCI facing is

the Social Problems. In August 2003 CSE (centre for science and
environment) told that Coke contains high pesticide. In around
same time BBC radio said that CCI use huge amount of ground
water in Kerala that environment is in the way of destruction. For
this complain many political and social parties became active
against CCI and convinced the rural market that CCI is destructing
the weather. For that reason sales in 2003 declined significantly.
This kind of blame was very much affective for MNOs like
Coca-Cola, because this kind of media blame can affect the global
sales volume. CEO of CCI Sanjiv Gupta published own report and
communicated with the country, through TVCs, programs, news
paper and other types of medium in 2006. Though CCI refuted
these allegations the sales was not boosting up like that. So it can
be said that the CEO was successful to refute but not to regain.

Being a CEO of company like CCI, I would always follow the

holistic marketing concept that everything matters. Social
marketing concept says that society matters in business and
every business has the social responsibility. So in the moment of
crisis when CSE and BBC reported the facts CCI would do some
social welfare. Such CCI would establish water treatment plant,
drinking water plant and other environmental friendly plants that
would help the society to have more drinking water and some
employments. This kind of plant CCI would establish places like
 Case Study Report: Coca-Cola India (CCI)

Rajasthan, Kerala, Gujarat and other places where the water is

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scarce. The reason for this kind of decision is, rural market can’t
understand reports like CSEs. They are in need of water always so
if the water plants are established the loyalty of the rural people
would be greater than before and the retention would be higher.
So the sales volume will increase rather than decreasing. Also the
brand value would be higher than before and competition would
be lessened. Now if we think about the profit, this water plants
will leased for the govt. and with providing drinking water CCI also
can have water for their production. So ground water won’t be
used further, and if the water is enough that can be used to
produced bottled mineral water under their respective brands.
Considerably, the decision will not only remove the blame, but
also increase the profit, customers and society’s loyalty for Coca-
Cola India.