This is second part Coca Cola Dissertation Literature Review. this dissertation complete in six parts so stay update for next and enhance knowledge with this part of dissertation.
The basic purpose of a business boils down to triviality of buying-selling concept, i.e. seller focuses on market products and services according to the needs of customers. When it comes to market products internationally, one umbrella strategy of marketing products across the world is difficult to achieve success, as the needs of customers are bound to vary with the differences in demography, locally, regionally, nationally and internationally (Krippendorf, 2004). The term “international marketing” is coined to describe the marketing which includes marketing of products and services, in and outside the country where the business originally started (Bender, 2010). International or global marketing planning is often described as multinational use of marketing practices which is carried out by the branches of the organization set up internationally, and integrated and coordinated at a standard level (Badal, Melawar, & Small, 2006).
With the inflow of technological advancements in our daily lives, paradigm shifts in environment, global political scenario, demographic changes, changes in consumption pattern and behavior of the consumers globally, has made globalization pave its way to the drawing rooms (Doctoroff, & Sorrell, 2005). In international business the standardized global marketing practices initially worked as a trick, while catering to the needs of global base of consumers and generating revenue, but the strategy of mass marketing seemed to be failing lately, as one universal umbrella programme with centralized approach in marketing practices was not working any more (Andrews, Durasula & Netmeyer, 1994). The international business and corporations platform has found a new approach towards global marketing, coining the term, “GLOCAL”, i.e. encapsulating global and local (Krishna, 2005). The companies are trying to implement a strategy of “think global act local”, which combines the global identity of the brand while marketing the product by imbibing local practices (Krishna, 2012).
According to Michael & Ilkka (1998), international marketing involves cross transactional functions across the world, to fulfill needs and demands of consumers around the globe. According to Terpstra & Sarathy (1997), defined that managers, involved in international marketing has to deal with many tasks, which encompasses foreign marketing, i.e. planning and conducting marketing activities in foreign countries, and management of global market, i.e. to maintain sustainability and competitive edge in global market (Cateora & Graham, 2006). Doole & Lowe (1999), explained that international marketing strategy of a company varies with the company’s involvement in global marketplace (Chan, Ireland, & Yu, 2006). International marketing includes export marketing, or international operations in marketing, i.e. a company engages itself in operations in several countries and coordinate marketing activities internationally. Due to the global forces penetrating the international business platform companies are trying to launch themselves both domestically and internationally (Bielaszka, 2008).
standardization vs adaptation practice in global marketing
With the advancement in world economy, today’s market and business environment has been more globalized internationally than it used to be 20 years back.The organizations these days have become exposed to more and more threat, as well as enjoy more favorable opportunities, thanks to the fast changing dynamics of world economy (Krippendorf, 2004). The exposure for the companies to the world economy has increased considerably. There are numerous examples lying here and there which vouches for the fact that the companies nowadays are affected by the foreign firms and at the same time, has increased opportunities of competing in the open world market (Maynard & Tian, 2004). This clearly supports the fact that business in today’s date is no longer run confined to boundaries. There are no geographical limits to the expansion of a business, and there are no guarantees of a firm remaining unaffected when other companies around it are struggling to get a foothold (Boggs, Magnusson, & Westjohn, 2009). This has come as a corollary of the globalization of marketing environment (Rugman & Verbeke, 2004). Furthermore, due to coherent factors like the increase or decrease of demand, the subsequent changes undergone in the social strata and the demographic factors, along with the factors of excess production and the competition from the market keep a constant pressure on the running businesses. Without adapting to these changes constantly, no business can survive for long (Liu, 2002). So it testifies the fact that in today’s world, no business strategies and thinking can put a business in a position from where it can enjoy constant success. It also goes on to show that by following the strategies present in contemporary times, no firm cab survive the scare of the ever changing market challenges.
The consumer needs these days have become more focused. The needs and demands are becoming more complex by the day. Since the consumers are exposed to the whole world, they no longer have need for the items that the companies produce to fill their pockets (Lewis, Motley & Perry, 2010). Moreover, due to increased competition in the market, in order to survive the companies have delved the ideas that led to their gain in terms of production (allen, 2004). The products should be designed nowadays aiming at satisfying the customer needs in more ways than one. In order to achieve the above, suitable marketing strategies need to be devised which bears a mentality through which the gulf between the consumer and the producer can be bridged (Noel, 2009).
In the present market condition, companies cannot bank upon their achievements in the past to bring success in the present times. The more and more complex market circumstances puts them in front of questions and makes them think if the strategies that have been long followed are effective in today’s changing world or not (O’Barr, 2008). This also challenges those who still hold firm to their medieval beliefs and practices. The economic position now has put the companies in a compulsory brainstorming situation where they have to decide whether to carry on with the strategies followed in the past which has given them success or to devise new plans to ensure long term success in the diverse economic condition (Shepherd & Striphas, 2006).
This change in the outlook has given birth to a new debatable scenario, where one group nurtures their age long standard practices and opines that through standardization of thinking and marketing strategies, a company should be able to maximize its profits (Pendergast, 1993). Whereas the people on the other side are of the opinion that changing policies may very well incur high temporary expenses as compared to what the standard strategy does, but by providing the consumers with products tailor made for them and marketing the products by newer and more effective strategies will more than make up for the apparent loss (Rosado, 1994).
Easier said than done, the companies now face the challenge of assessing the situation when they should think of going for a changed adaptive strategy, or they should stick to their basics (Jain, 1999). Though extensive research has been done about this standardization and adaptability issues, no specific study was able to pinpoint the criteria which when fulfilled, must a company decide to go into the switch over mode (Straebhaur, 1991). But those researches have made firms aware of the changes in the marketing environment and have also given an insight into the changing market demands (Johri & Petison, 2011). Moreover, one more aspect has yet to be thrown light upon. If a company decides to go into an adaptive switch over mode, there remains a question if the whole of the existing set of reforms need to be replaced (Leiberthal & Prahalad, 2008). Changing a part of the existing strategy may prove enough for reaping benefits. But if a concern decides to go for a full fledged change every time situation demands a change, it might land up itself in deep waters, because of the fact that total remodeling of the existing strategies is a huge task and needs considerable time and effort (Surry, 1997). Hence, the question of strategic migration remains vastly important in such demanding scenario. Every time such situation arises, both the experts as well as the managers entrusted upon with the responsibility of decision making finds it pretty discomforting to devise a plan through which the migration of strategy can be done with minimum collateral damage and maximum benefits. But the absence of a solid theory which can help making this decision easier is still not in place (Noel, 2009). The studies only provide a insight but does not provide a strong guidance as to how the migration needs to be done. So the need of the hour still remains of a theory that provided means of strategic migration with pinpoint accuracy.
After a firm is done scaling the growths and the opportunities of the indigenous markets, it sets its eye on the foreign frontiers (Lane, 1998). The domestic market being conquered, there remains nothing from which those companies can reap greater profits and hence switches to cater the foreign markets. Before launching its services and products in the seemingly unknown territory, the managers dig deep to finalize a strategy that should be effective in terms of growth as well as earn profits for the concern (Levitt, 1994). Here comes the catch where the officials have to decide whether to continue with the tried and tested standard procedures that have helped them conquer the domestic market or transform those into a much more adaptive kind of techniques that, though uncertain, is much more suited for the foreign environments.
This debate, the origin of which is arguably pretty old, as old as 1961, has kept the strategists into splits. The pundits in support of the age old standard approaches put forward their notion that products should be more and more standard and services rendered should remain same across borders (Jain, 1999). The argument put forward by the opposite group that the world is increasingly changing and so does the need of the consumer is defined by experts belonging to this group. In sharp contrast, they believe that the consumer needs do not change as the borders are crossed, they remain pretty much standard no matter where in the world you take your business to. But the opposite group keeps on arguing that changes in need and demands are inevitable (Hines, 2003). They also suggest that the customer demands are varied not just in different countries but also within different regions in the same country. They urge the companies doing business in different countries to consider these changing aspects and develop products and render services keeping these in mind. This group of people believes in the right marketing mix and devising in the strategy which is right for the market where the firm is treading (Bakker, 1997).
Since no one approach has all the advantages and disadvantages, both these approaches are pretty likely to co-exist. Various surveys have removed the curtain from the fact that the multinational companies indeed mix both these approaches while devising the right marketing strategy before launching items into the market or before providing services to wide range of customers across the globe (Sala, 2010). It has also been noticed that within the same company there are different sectors that follow different approaches for selling their products or services.
Under these circumstances, it is left to the marketers to decide in which proportion they ought to mix and match these two approaches to reap maximum profits for largest period of time possible (Sivny, 2007). A product needs to be developed keeping in mind the standard and adaptive component in it. The governing factors like price, place and promotion Intervention along with the other two are still easier to decide. But the development of the product with these mixed elements still remains the hardest nut to crack (Tobis, 2001).
Researchers have argued over the issue of global market and the marketing policy a firm should adapt. Many think that an international firm’s marketing strategy should be standardized across the globe to make it truly a global brand, where some argues that the product quality may remain universal but the marketing strategy should not be a “one size fits all” formula, to tap the opportunities in international market place. Researchers have constantly tried to find out a standardized policy to be implemented across the borders. Standardization of marketing policy gained popularity in studies of advertising, which has been thought of as the most important marketing tool (Vanmesday, 2000). New researches in the area of international and global marketing however embraces concepts like uniform marketing strategies across the globe, domestic marketing policy which can be equally instrumental in cross country market place. Cavusgil et al (1993), has described about thinking of markets as homogeneous and standardized practice can be beneficial in economies of scale. The adaptation concept further differentiates the strategy applied to different countries, and how customization of strategies can be made in cross borders (Walsh, 2003). Cavusgil et al, (1993) further explains about contingency perspective of marketing strategy which extends the standardization concept, incorporating the internalization strategy of a firm, i.e. marketing practices may be universal but slight differences can be made in terms of objectives, resource, internal and external environment etc. Buzzell (1988) argues that a standardized marketing practice can be considered as one universal marketing programme, providing identical product, at identical price, by distributing identically, and establishing identical promotional strategy for product positioning (Walsh, 2003). Further many researchers argued that the world is becoming a global village, and sooner the differentiation in the world market will disappear, making customization of policies and practices needless, and it will increase room for standardization.
Standardization provides a company with benefits of cost reduction, well coordinated distribution and delivery network, controlled operational flow and the strength of globally recognized brand name. Levitt (1994) has further demonstrated that with improved transportation, technological advancements, the world market is homogenized and therefore consumers are global demanding unique standard product at value for money. Though there are major benefits of standardization, a potential list of drawbacks has to be considered before implementing that. According to Douglas & Wind (1997), standardization of marketing practices largely depends on environmental condition and can be implemented in typically certain circumstances. The global market share, distribution network, communication and promotion fall under that (Tobis, 2001). The drawback of standardization concept is primarily is it focuses more on orientation of product rather than focusing on customer’s need, market competition, environmental, socio-cultural phenomena etc. Product orientation may lead to marketing myopia and often is failed in implementation. Cateora and Laughlin (1994) described that Standardization does not take into count the factors like cultural preferences, infrastructural systems, labor and capital flow, economic backdrop which are vastly different in developed and developing countries( Van & Barter, 2005). Jaworski & Kohli has pointed out that firms that focus on maintaining competitive advantages, and focus on customer’s needs and demands, become more customer centric in their approach and enjoys sustainability and success (Wilkins, 2009). Product oriented company can excel in markets where it has already an established base of loyal customers who have already experienced the product or love that Brand. The product orientation approach can lead a company to be blinded about idiosyncrasy of the consumers across cross borders and fail to deliver the expected standard in foreign markets (Kwon, 2008).
Researchers have proved that standardized marketing mix has some benefits even across international borders, but it has its limitations. Standardized marketing practices did not take into account the demographic differences, the change of culture, food and drinking habit, environmental issues, socio-economical scenarios, political and legal obstacles etc (Friedrich,2002). On the other hand adaptation strategy may be successful in tapping the opportunities in domestic market across the country but the company will lose out on opportunities like advantage of brand strength, economies of scale, use of marketing knowledge, skill and expertise, and definitely the seamless collaborative and holistic approach will not be present, which can be detrimental for long term growth (Ahmed, 2000). Coca-Cola has chosen a middle way out i.e. a combination of both standardized and adaptation practice to position themselves globally.
Standardization & localization- a combined approach
The recent researches have proved that international marketing equations are being changed by the forces of globalization, which answers to the problem of choosing one extreme solution, i.e. a company can mix and merge several options and create unique yet standardized policy, that answers to the customer’s requirement (Fombrun & Ran, 2006). This gives a company enhanced market value and business performance in terms of volume expansion, profitability, acceptability and sustainability. The integration of standardization and adaptation can serve as a system for solution of most of the international marketing problems. According to Douglas & Wind (1997), standardization of marketing practices largely depends on environmental condition and can be implemented in typically certain circumstances (Yu, 2005). The global market share, distribution network, communication and promotion fall under that. The drawback of standardization concept is primarily is it focuses more on orientation of product rather than focusing on customer’s need, market competition, environmental, socio-cultural phenomena etc. Product orientation may lead to marketing myopia and often is failed in implementation. Cateora and Laughlin (1994) described that Standardization does not take into count the factors like cultural preferences, infrastructural systems, labor and capital flow, economic backdrop which are vastly different in developed and developing countries (Hanschen & Wyroll, 2007).
Capturing and entering into a foreign market is challenging and daunting task, while offers the business leaders a new territory. Foreign countries are different in terms of demography, socio-cultural background, economic standard, legal and political complications, technological advancements, labor market, needs and demands of changed customer base etc. Entrance in a foreign market can make a company change or modify their products according to the local taste and preferences (Tezeli, 2010). Coca-Cola is known to sell 400 brands in more than 200 countries, and the international success and recognition across the globe has made it the most valued brands in the world. The intelligent use of expansion strategy by Coca-Cola has incorporated strategic positioning across the globe which has made use of standardization strategy, i.e. maintaining some strategic approach in conducting marketing, product quality, product positioning and promoting, and also adaptation strategy, i.e. modifying the strategies according to the requirement of different countries, regions, territories etc (Weber, 1990).
The ideal mix of standardization and adaptation allows a company to look into deeper aspects of consumer behavior pattern and how they vary according to culture, language, socio-economic background, etc (Pae, Saimee & Tai, 2002). Value, beliefs, perception, knowledge, shapes a country’s culture, and differences in culture are present even in one single country (Liu, 2002). Coca- cola, being the world’s most favorite brand, and selling across over 200 countries have standardized global brands but also a number of adaptation practices have been used to position the brands locally (Roth, 1995). The adaptation policy in Coke has further been extended with policies like region centric policy, invention or geocentric policy, i.e. coke uses standardized branded product but the marketing mix varies regionally, where the regional taste preferences are kept in mind while packaging, product Commercials Advertisement and promotion etc, and invention policy describes the intermediate path between standardization and complete adaptation which takes the benefit of both the policies by using tactfully according to the need of the situation (Stemler, 2001).
Coca Cola invests hugely in operations of bottling, to enhance the efficiency of production, packaging and distribution, across the globe. Coca-cola follows an aggressive marketing strategy, and this result in increase in unit case volume, net revenues, and profits at the level of bottlers (Rubin & Haridakis, 2009). This results into increased amount of shipment, which enhances company’s business. Therefore the bottlers and company both enjoy the benefit of long term growth in volume, flow of capital and share-owner value.