SCHOOL OF MANAGEMENT

STRATEGIC MANAGEMENT

‘’COCA-COLA CASE STUDY ANALYSIS‘’

Submitted
By
RAVI SHEKAR S
(R16MB049)
4th Semester

Submitted
To
Prof. MEENAKSHI VERMA
School of management studies.
REVA University

Rukmini Knowledge Park, Kattigenahalli,

Yelahanka, Bangalore-560064

2017-18
www.reva.edu.in

Page | 1
SUMMARY OF THE CASE

This case is about the penetration of the Coca- Cola into Indian rural market and also the major
initiatives taken by the Coca- Cola in India. This case discusses the detail of the Distribution,
Pricing & Advertising strategies taken up by the CCI (Coca-Cola India) to be successful in
Rural India. The case also focuses on the Cola War from the urban market to the Rural Market.

In 1999 Coca-Cola re-entered in India through a strategic alliance with Pearle Exports. CCI
had three CEO’s 1. Jaydev Raja – In 1993 2. Richard Nicholas – In 1995 3. Donald Short- In
1997Alex Von Behr Became the CEO. In 2001 CCI focused on rural marketing & decided to
diversify into the bottled water & powered soft drink in association with the Kinley & Sunfil
Brands. CCI announced its Maiden profits from its Indian operations. CCI made an additional
Investment of Rs. 7 million (5 million from the company & 2 million from the company’s
bottlers) CCI added 25 production lines & doubled it glass & PET bottle capacity. Increment
in rural distribution by covering 1, 58,342 villages in Aug 2003 & in 2001 it was 81,383
villages. In early 2002, Coca- Cola India launched a new advertisement campaign featuring
leading Bollywood actor -Amir Khan.

The advertisement “Thanda matlab Coca-Cola” was launched to support CCI’s rural market
initiatives. CCI launched three commercials with tagline Thanda matlab Coca- Cola in which
Aamir Khan featured as “Tapori”, “Hyderabadi shopkeeper” & as a “Punjabi farmer”. The poor
rural infrastructure & consumption habits are the two major obstacles to crack the rural market.
Shortage of power supply became a problem for CCI in rural marketing because of which
people prefer more of “Lassi” & “Lemon juice”. The Strategy was based on three “A” 1.
Availability 2. Affordability 3. Acceptability.

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 I have provided
the SWOT Analysis of CCI. After this the case task were completed.

Page | 2
OBJECTIVES OF THE CASE

 To increase size of worldwide Coca Cola enterprise

 To gain 60% of the markets for soft drink industry

 To achieve a 20% return on capital employed

 To survive current market war with competitors

 To increase awareness of the product on market

FACTS FILE

 Geographical Area: 3, 287,263 sq.kms

 Indian rural market which constitutes 2/3rd of total country’s population?

 Population: over 1.21 billion people (2011 census)

 About 68% of India’s population lives in rural areas

 Rural population has grown by 12% in last decade.

 Rural market, accounts for 40% of Indian economy.

 Rural India has huge heterogeneous and growing consumer market which contributes

more than 50 percent to India’s total consumer market size.

Page | 3
PROBLEM IDENTIFICATION

A. Short term

 Physical Distribution Adversely affect the service & the cost of the company

 Channel Management.

 Promotion & Marketing Communication.

B. Long term problems

 Difficulty in understanding the social dynamics & attitude variation with in each

village.

 Poor rural Infrastructure.

 Price of the branded beverages.

 Different consumption habits.

 Erratic power supply.

Page | 4
ASSUMPTIONS

Assumption 1:

Coca cola was forced to move from North America in which coca cola has 35.4 % of its
world market share, the reason may be the market was more matured than ever and moving
towards decline in stage.

Reason:

The annual per capita consumption of coke in North America was 120 bottles in 1992,

compared with 340 bottles in 1995, reduced to 140 bottles in 1998

Assumption 2:

CCI is facing threat of pursuing monopolistic trade practices which are not permitted under
Indian Legislation and minimum of 10% of ownership stake in foreign based company is
mandate (FERA), but Indian government, in 1993 have Illegally granted permission for coca
cola to operate its business in India for approximately 40m USD, May be the Indian
government officials are bound to be corrupt.

Reason:

In 1977 when coca cola left India rather than revealing 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

Page | 5
SWOT ANALYSIS OF CCI

STRENGTHS WEAKNESSES

1. Solid financial resources 1. Poor rural infrastructure

2. Strong brand pull 2. Different rural consumption habit and

3. Quick and Strategic distribution
channels and system(Supply Chain)
4. Value proposition through humour
appealing advertisements by famous actor
Amir Khan
buying capacity from urban area people
3. Erratic power supply to most grocers in
rural areas and lack of storage system of
cool drinks.
4. Preferences for traditional cold
beverages such as ‘Lassi’ and lemon juice

OPPORTUNITIES THREATS

1. Expansion of distribution 1.High price sensitiveness

2. Adding more villages in its distribution

network through proper promotions.
2. High market competition among the
3. Launching juice and milk-based MNOs. (Frontal attack by Pepsi Co.)
beverages for the result of growing sales
3. High influence of media
volume of cola drinks
4. Governmental restriction and regulations
4. Acquisition on local cola producers
in India (Political and legal constraints)
(Choice and Tikli) through product
divisibility.

Page | 6
CONCLUSION

 The Success of coca cola depends on their world premier marketing strategies. They

do their marketing in innovative methods. Coca cola maintains quality and core

features of their product over a 125 years. They have their own pricing systems and

appropriately they behave according to competitor’s price levels. Promotion of coca

cola made it as a world most valuable and recognizable brand

 CCI’s success on India’s vast, rural markets is a lesson on how to grow an untapped

market. It is an indication that if an MNC does its home work right and gets the right

distribution mix, then it need not restrict itself to India’s urban middle class.

SUGGESTIONS

 The company should focus to bring some more flavours like health drinks and other

low-calorie offerings. Coca-Cola Srilanka can also introduce some fruit based drinks,

as it has already entered the energy drink arena with “Burn”.

 College students should be their prior target to increase their market

 More MoA With entertainment industry and Tourist and travel companies

 The company should make hindrance free arrangement for its customers/retailers to

make any feedback or suggestions as and when they feel.

 CCI should focus on CSR activities

 The CCI should also conduct some Street theatre as this is deeply rooted in Indian

culture.

Page | 7
QUESTIONS FOR DISCUSSION:

1. In the late 1990s, CCI increased its focus on the rural market in India. Explain the
reasons for CCI's move in detail.

A. Coca cola was forced to move from North America in which coca cola has 35.4 % of
its world market share, the reason may be the market is more matured than ever and
moving towards decline in stage. Due to the vast size & large demand of the Indian
rural market, the FMCG companies have a great opportunities. The rural population in
India accounts for around 627 million, which is exactly 74.3 percent of the total
population. 1 /3rd of country’s GNP, 450 districts, 6, 30,000 villages and this results in
substantial improvements in incomes & spending power. Hence CCI increased its focus
on the rural market in India.

2. According to analysts, CCI's ‘Thanda Matlab Coca-Cola’ advertisement was a major

hit and made rural consumers connect with the product. Discuss the importance of
advertising in rural marketing. What are the issues in advertising that a company should
focus on while targeting rural consumers? Do you think there should be differences in
advertising for rural consumers and urban consumers? Justify your stand.

A. Advertising itself serves not to create increasing demand but it helps in expansion of
the demand, hence advertisement in rural marketing plays a vital role in Indian rural
market.

Importance of Advertising in Rural Marketing

• The low level of education that creates problem in brand identification. Since they can

not read the brand names and price tags it makes it easier for the clones to launch

brands similar in label and design and spoil the brand image.

Page | 8
• Unscrupulous retailers are taking the benefit and damaging the perception of the brands

before they actually enter in to the rural market.

• To strengthen the brand image of the product.

Issues to focus

• Pesticides Issue and building confidence.

• Infrastructure in distribution network.

• Competing with local brands

• More spending on advertisement

Rural market is more comfortable.

• Huge market

• High growth in terms of sales

• Change in the life style (More scope for transition)

3. Some analysts feel that with the urban market reaching saturation, the Cola war will
now be fought in the rural market. What are the issues that CCI and Pepsi Co have to
focus on to capture the rural market? Who do you think is more comfortably placed in
the rural market?

A. CCI and PepsiCo has been facing problems with respect to healthy beverages as the
customers are switching to healthy beverages as a result the market share of coca cola
has declined from 38% to 32.4% and PepsiCo has declined from 23.4% to 22.2% which
resulted both the companies to enter into dairy products in the late 2015 CCI has come
up with a new product VIO followed by 2 other products Aquarius and Zico. I think
CCI is more comfortably placed in the rural market based on the study

Page | 9
The issues that CCI and Pepsi Co have to focus on to capture the rural market is

• Pesticides Issue and building confidence.

• Infrastructure in distribution network.
• Competing with local brands
• More spending on advertisement

Page | 10