Coca cola low cost strategy

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Coca cola low cost strategy

Marketing Content After a series of missteps during recent years, Coca-Cola India has had to learn lessons the hard way. As in previous years, the tasks ahead for Singh and his team are clear.

One of the biggest challenges is introducing a greater number of people to consuming beverages in a ready-to-drink packaged form, he says. That means getting its bottles of fizzy drinks to the right place at the right time at the right price — a tall order in a country with such a vast hinterland like India.

John Zhang, a Wharton marketing professor. But as Coca-Cola and its rivals know, India is a market that makes neither distribution nor inventory management easy, and is hugely diverse in terms of tastes and buying power. Part of that meant a greater focus on refrigeration.

Coca cola low cost strategy

In electricity-deficient areas, such as some of the hinterland in Uttar Pradesh, it now provides shops with coolers that operate with brine solution so its products can stay chilled up to 12 hours without electricity.

In other places, it has trade agreements with local ice makers. Taking a New Route As for distribution, Coca-Cola India has done what other companies in the hinterland have done, and moved from a centralized distribution model to a hub-and-spoke approach, says CEO Singh.

Among the benefits, that approach reduces costs because fewer long-haul journeys in large, uneconomical vehicles are needed, while efficiency increases through more timely, tailored fulfillment.


The company also erred in adopting the low price-point strategy that many other foreign consumer-goods companies were using at the time to sell their products in rural India.

They want good-quality products at a reasonable price. The High Cost of a Low Price Yet about seven years ago, Coca-Cola set out to woo rural consumers by halving the price of a milliliter seven-ounce bottle to Rs. A price greater than Rs. Indian retailers found themselves arguing with customers, who wanted the drink for Rs.

Meanwhile, a price war erupted as rival PepsiCo matched the Rs. Both firms have since dropped the strategy, however, and let prices for their ml sodas rise up to around Rs. Yet Zhang, who has analyzed priced wars in China extensively, says the Rs. Despite what many Western companies believe, he says, a price war can be an effective business strategy but must be managed well and works best in fragmented markets in which consumers are price sensitive.

In any case, there seems to be no easy way for Coca-Cola to woo rural consumers with pricing strategies. We are now looking at alternative packaging and how to organize distribution.

He argues in favor of going to a ml bottle to woo rural Indian consumers, arguing that it is consistent with their drinking habits. Of Drinks and Dreams The psychological impact of pricing is just one part of the bigger basket of intangible considerations that MNCs often struggle to manage in rural India.

Armed with that knowledge, he says marketers at companies like Coca-Cola need to increase their investments around educating rural consumers. So far, the program has covered more than 30, retailers in cities including Agra, Ludhiana, Chandigarh and Lucknow, with courses on such topics as how to display products and improve inventory management.

The aim is to trainretailers in the next two years, according to a Coca-Cola spokesperson. But Santosh Desai, managing director and CEO at Future Brands, a brand consulting company in New Delhi, says that while education is important — particularly that of retailers — expectations need to be managed.

One involves its failed attempt to let the popular home-grown Thums Up brand fade away in the mids so that its own Coke brand could gain more market share. Then it started paying attention and Thums Up is still number one in India, with Coke and Pepsi following. There are huge pockets of enthusiasm for it across the country, and it tends to appeal to rural audiences more than other brands.2.

Law: A commercially distributed good that is (1) tangible personal property, (2) output or result of a fabrication, manufacturing, or production process, and (3) passes through a distribution channel before being consumed or used.

The objective of every business is to grow, be it a start-up that’s just closed its first deal or an established market leader seeking to further increase profitability. But how does a business decide upon the best strategy for growth? The Ansoff Matrix management tool offers a . PepsiCo’s generic competitive strategy is based on the need to address market pressure coming from its biggest rivals, including the Coca-Cola Company.

A firm’s generic strategy (based on Porter’s model) defines the basic strategy used to maintain competitive advantage. With this campaign and our broader “one brand” strategy, we’re letting consumers know they can enjoy Coca‑Cola with calories, fewer calories or no calories and with or without caffeine.

The choice belongs to each individual, every time he or she reaches for a delicious and refreshing Coca‑Cola. Nov 19,  · Soda manufacturers are accused of knowingly deceiving customers about the health risks of sugar-sweetened beverages — at great cost to the African American community.

At the beginning when Coca Cola company started to work used the low cost strategy, and offer its product in a low price to attract customers, combined with the differentiation strategy, because Coca Cola refreshment was an innovative product of the era.

Porter’s Five Forces- Threat of Substitute Products or Services — Valuation Academy