International Strategy and Modes of Entry Coke/Pepsi

When Chinese markets opened up in 1980’s, Coke/Pepsi focussed on defining several strategies to Differentiate, Market and distribute their Cola products to Chinese consumers.

International Differentiation Strategy: Both used two main aspects of this strategy “Branding” and “Cost Leadership“to force local producers to withdraw from the market or establish joint ventures with them.

They invested heavily in Brand recognition and used lots of advertising and sponsoring to support their cola brands. They replicated their global rivalry in China and initially were determined to seize market share from domestic cola producers, even at the cost of profitability. Later, Coke instituted the “Glocal” strategy which means “Think Local, act local but leverage global” but Pepsi instituted its positioning on young consumers. International Marketing Strategy: Coke spent heavily on Marketing to create a sound brand image and included Chinese cultural icons like windmills and dragons in its advertising.

Order custom essay International Strategy and Modes of Entry Coke/Pepsi with free plagiarism report

450+ experts on 30 subjects Starting from 3 hours delivery

Get Essay Help

Local films and sports stars were engaged, sponsored National Soccer teams and International Olympic Committee as well with funding up to $1. 1 Billion for Beijing Games. Pepsi also used a great deal of Marketing like using popular entertainers such as Faye Wang, Guo Fuchen as endorsers. Pepsi became the most popular soft drink brand for young consumers due to its focussed Marketing for this demographics. International Distribution Strategy: Both preferred to establish their own distribution networks while setting up Joint Ventures with bottlers and bottlers managing sales in their assigned territory.

They set stringent sales targets for bottlers, and in turn bottlers would set targets for distributors. While in most of the joint ventures, Coke did not have majority shareholding but Pepsi sought a majority share in the joint ventures. Global vs. International Strategy: Coke/Pepsi both maintained a global image and product offerings with a strong level of standardization in terms of Product quality, taste and branding but adapted their marketing strategies as per local market.

For Example, Coke has taken the “think local, act local” approach and localized their marketing activities to be in sync with Chinese consumers. They sponsored National Youth Soccer Team and also extended their sponsorship for Beijing Games to create a sense of belonging among the end consumers. International Collaborative Strategy: Both Coke/Pepsi did collaboration with local Chinese companies and set up joint Ventures which helped them understand cultural, political, competitive and economic differences among various provinces in China.

They were also successfully able to reach end consumers through local companies and create accurate customer profiles which helped them understand complexities in Chinese market. International Diversification Strategy: Product diversification strategy entails any modification of a current product that serves to expand its potential. Product diversification is different from product development such that it involves creating a new customer base, which expands the market potential of the original product. Coke/Pepsi used this strategy quite effectively to widen their customer base and target new segments.

They launched several local products specific to Chinese needs and culture and did marketing in localised manner. For Example: Coke launched Minute Maid Pulpy Super Milky drink and the Sprite Tea drink and both have been regional hits. Both drinks have been developed out by the research and development unit in China. These strategic choices made by Pepsi/Coke were quite effective in China as they had successfully implemented them in other countries and both companies gained combined market share of 71% in Chinese Cola market by 2000.

References

1. International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London. UK. on “COCA-COLA: International Business Strategy for Globalization”
2. Porter’s Five Force model of Competition: http://www. managementstudyguide. com/porters-model-of-competetion. tm
3. Cola Wars in China: Case Study Analysis Source: Strategy Analysis and Practice 2005 McGraw Hill Education Europe
4. Cola Wars in China : The Future is Here ; Case Study by Nancy Dai at Richard Ivy School of Business.
5. Cola Wars – UTS 21715 – Strategic Management Lecture 3 University of Technology Sydney
6. Alon, I. , Littrell, R. F. , & Chan, A. K. (n. d. ). Branding in China: Global product strategy Alternatives. http://www. aabri. com/OC09manuscripts/OC09002. pdf
7. Espitia E. , Manuel and Ramires A. , Marisa The impact of product diversification strategy on the corporate performance of large Spanish firms. Spanish Economic Review Volume 4 Number 2. P. 119-137 2002.

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

Check my essay Hire Writer