The Coca-Cola Company always incorporates innovation in their advertising by showcasing various bottle styles, can designs, and non-beverage items such as stuffed animals, T-shirts, and caps. The production process of different products necessitates the use of technology. When introducing a new product, it is crucial to conduct research on demand and potential sales prices through an opportunity analysis. Furthermore, the required production line and machinery should be evaluated to ensure cost efficiency and at least breaking-even point. A comprehensive business plan is essential for identifying strengths and weaknesses, aiding managers and executives in decision-making through SWOT analysis. Technology is also employed for communicating the plan via e-mail and inter-/intranet to the individuals responsible for its execution.
Management must plan for the skills required to complete the task. The company’s culture is deeply rooted in its history and influences its self-perception as a reflection of American entrepreneurial greatness. Additionally, the company draws inspiration from its past successes even after facing setbacks. Despite currently experiencing a period of inactivity, experts note that Coke has previously recovered from adversity.
Although the extent to which Coke reminds workers of the organization’s previous comebacks is unclear, the corporate culture is undoubtedly focused on showcasing a history of success and resilience. The history of Coca Cola reveals that its original version contained cocaine and was widely successful in the United States. However, its journey to fame was hindered by competition from Pepsi and government intervention. Despite these challenges, Coke persevered and established bottling companies in major cities, no longer being affected by setbacks.
The success of Coca-Cola as a monopolist resulted in the formation of its subsidiaries and an alarming growth in the coke business or industry. Many beverage companies have emerged from Coca-Cola, such as Grapette, who also made a significant impact on the beverage industry with their incredibly delicious Grapette beverage. Other companies imitated this strategy and attempted to establish their own reputation. The formula employed by Coca-Cola serves as its foundation, and it is these well-guarded secrets that keep them at the forefront of the industry.
From the outset, the formula was inherited exclusively by family members, carrying a secret that revolutionized the American lifestyle. This formula generated curiosity among many individuals, as it serves as a crucial aspect for companies, defining their success. Additionally, Coca-Cola employed strategic bottling techniques and marketing strategies to enhance the sales of their exceptional products. Leveraging modern advertising methods and widespread communication, Coca-Cola once again dominated the market with slogans such as “Coke is the right thing” and “Always Coca-Cola”.
Bottles were unique in their own way, as they represented the complete package that people held in their hands and enjoyed until the very last drop. Bottlers utilized their packaging as a captivating and straightforward final detail that defined their product. Coke’s renowned artist, who designed the cans and bottles featuring Santa Claus, was the first to portray Santa in a red robe, breaking away from the traditional depiction of a young man clad in blue. Like any major corporation, Coke also had humble beginnings. Its founding members consisted of three salesmen who explored the idea of joining forces to establish the beverage company we now know as Coke.
Next, Coca-Cola faced external interference pressure, such as trademark slogans and tastes challenges from the government. It also strived to be the first to gain recognition.
Coca-Cola encountered a crisis when it decided to change its formula due to a perceived shift in public taste. At first, this caused Coke to lose respect. However, it was later reintroduced and became the nation’s top cola.
This occurred during Pepsi’s “Pepsi Challenge,” which revealed that most Americans actually preferred the taste of Pepsi over Coke.
Coca-Cola dominates the global soft-drink industry, employing 30,000 individuals. It trades under the stock symbol KO.
Coca-Cola is a sponsor of various global events such as the World Cup, the National Football League, Tour de France, Rugby World Cup, COPA America, and more. They have been a sponsor of the Olympic Games since 1928. The company was founded by three working-class individuals who collaborated and generated multiple ideas. One of their most innovative products was Coca-Cola, which originally contained cocaine and caffeine. Building on this groundbreaking invention, Coca-Cola expanded its manufacturing operations to reach its full potential and remain the leading brand in the United States.
The drink, with its undisclosed formula and concealed qualities, rapidly gained popularity among even the most resistant consumers. Today, trade and competition have become increasingly globalized in scope. There are multiple factors contributing to this trend, with improved transportation and communication opportunities being a significant one. This has made trade more viable and allowed consumers and businesses to access top-notch products from various countries. Additionally, the escalating speed of technological advancements has intensified competition among nations gunning to produce the latest technology innovations.
Countries have been making efforts to improve global trade. They do this through agreements like the General Treaty on Trade and Tariffs, as well as organizations such as the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and the European Union (EU). Earlier, we looked at different stages a company may go through while expanding into international business.
A purely domestic firm concentrates only on its domestic market, lacks current ambitions to expand internationally, and does not recognize any substantial competition from abroad. This kind of firm may eventually receive some orders from overseas, which can be viewed as either bothersome (for small orders, significant effort and cost may be required to obtain relatively moderate revenue) or as an added bonus. As the firm starts exporting more, it enters the export stage where minimal efforts are made to promote the product internationally, yet an increasing number of foreign orders are fulfilled.
When venturing into the international market, a firm may decide to enter specific countries individually and sequentially based on the attractiveness of their markets and foreign orders. However, in this ad hoc approach, there is limited sharing of learning and marketing efforts between countries. As the firm progresses into the multi-national stage, there is a shift towards pursuing efficiencies by standardizing practices across a specific region, such as Central America, West Africa, or Northern Europe.
The focus on the entire World market characterizes the global stage, where decisions are made to optimize the product’s position across markets. The central role of the home country is no longer predominant in this stage. Coca Cola serves as a prime example of a company that truly operates globally. It is important to acknowledge that these stages exist along a continuum, ranging from a purely domestic orientation to a genuinely global one. Companies can fall at various points along this continuum, and different parts of a firm may exhibit traits from different stages. For instance, an auto-manufacturer’s pickup truck division may have a strong domestic focus, while its passenger car division has a global focus.
Although it is generally suitable for most large firms to have a global focus, it may not be advisable for all companies to pursue the global stage. For instance, ice cube manufacturers may thrive as domestic or locally centered firms. Some factors in international trade, such as comparative advantage, argue that trade between nations is advantageous due to their varying economic strengths, with some having advanced technology and others having lower costs. The International Product Life Cycle theory suggests that countries will vary in the timing of their demand for different products.
Products are typically adopted faster in the United States and Japan. Therefore, when the demand for a product decreases in these markets, there may be an opportunity for growth in other countries such as Europe and Asia. Internalization and transaction costs refer to the high expenses associated with developing large-scale projects like a globally targeted automobile, which may require spreading the costs across multiple countries. Political and legal factors can also impact international business.
The political situation can cause issues for a firm if there are strained political relations between its home country or other important operations and another country. This situation is often out of the firm’s control. For instance, oil companies that invested in Iraq or Libya suffered due to the misconduct of those countries, resulting in trade bans. Similarly, American companies may face hostility in certain parts of Latin America or Iran due to the United States’ colonial history or support for unpopular leaders, such as the former shah.
Certain issues in the political environment hold great importance. Certain countries, like Russia, have governments that are relatively unstable. If new leaders come to power through democratic or alternative methods, their policies can undergo significant changes. Some countries lack a strong democratic tradition, making implementation challenging. For instance, despite Russia’s aim to become a democratic nation, its history of communist and czarist dictatorships has resulted in a corrupt system with a strong presence of criminal elements.
In contracts, it is possible to specify which laws will apply when there are differences in laws between two countries. However, enforcing this agreement may not always be possible. Another way to determine jurisdiction is through treaties. Some governments, like the U.S., often apply their laws even outside their borders (known as “extra-territorial” application). If a company violates U.S. law in another country, they can argue that they were compelled to do so by the local government as a defense. However, these violations must be compelled by the local government and not just legal or accepted in the host country.
In some legal systems, such as the U.S., transparency is relatively high where the law generally means what it says on its face. However, certain countries have existing but unenforced laws. For example, Japan has antitrust laws similar to those of the U.S., yet collusion is openly tolerated.
Furthermore, the level of discretion granted to government officials can vary significantly across different countries. In Japan, government officials possess extensive authority through administrative guidance and effectively establish laws. However, in certain nations, limited access to the legal system presents a significant challenge when seeking resolution for grievances against other entities.
In contrast, the United States heavily relies on lawsuits as a means of addressing disputes. Nonetheless, the absence of effective mechanisms to hold contractual partners accountable creates obstacles in enforcing business agreements. Many jurisdictions have implemented restrictions on pre-trial discovery procedures, making it arduous to build a case against a company using internal documents that would otherwise implicate them.
Consequently, personal relationships carry greater significance in some cultures compared to the U.S., as ensuring trustworthiness becomes crucial due to difficulties in enforcing contracts. The global legal systems can be categorized into four primary approaches with their own variations: Common law, which is followed in the U.S., originates from a legal tradition based on precedent.
Each case is assessed individually and establishes a precedent for future decisions on the same matter. However, the legislature can override judicial rulings by modifying the law or implementing regulations through legislation. Nonetheless, reasonable court decisions typically remain unaffected unless changed by the legislature. In Europe, code law restricts judges and confines their capacity to find innovative solutions for emerging issues such as biotechnology patentability. Moreover, there are discrepancies in standards.
In the U. S., a supplier must honor a contract even during a strike, unless it is deemed an “act of God.” Conversely, Islamic law, based on the teachings of the Koran, prohibits usury and excessive interest rates. Consequently, some Islamic nations strictly forbid interest while others allow it within reasonable limits. Overall, Islamic law prioritizes pleasing God and does not tolerate legal loopholes.
Attorneys can provide guidance on what would be pleasing to God rather than focusing solely on what is explicitly required by the government. Socialist law operates on the assumption that the government is always correct and does not usually have well-established systems for contracts (where you follow government instructions) or intellectual property protection (as the government ultimately claims ownership of everything, royalties are deemed unnecessary). Former communist nations like Eastern European countries and Russia are working towards adapting their legal systems to address matters in a capitalist economy.
Culture is a multifaceted system consisting of interconnected components, such as knowledge and beliefs. In the United States, there is a prevailing belief that individuals who possess skills and exert effort will succeed. In contrast, some cultures view outcomes as being more influenced by luck. In Chinese culture, for instance, the term “Chunking” translates to “The Middle Kingdom,” reflecting the ancient Chinese belief that they occupied the center of the universe, which significantly shaped their mindset. Numerous other factors also play a role.
Various cultural practices around the world reflect art and morality in different ways. In some countries, wearing ties is seen as an arbitrary artistic expression, whereas in others, turbans hold cultural significance. The United States deems public nudity indecent, while Japan accepts communal steam baths involving both genders without judgment. Conversely, certain Arab nations impose strict dress codes on women, even prohibiting the exposure of their faces. It is crucial to acknowledge that what one country considers moral may be perceived as highly immoral by another.
Culture encompasses several key attributes: it is all-encompassing, requiring all elements to harmonize coherently. For instance, the act of bowing and the intense aversion to losing one’s dignity both express the value of respect. Moreover, culture is acquired rather than innate, a concept we will delve into later in this course. Culture materializes within limits of socially appropriate conduct. For instance, in American society, attending a class in a state of undress is unacceptable, while attire ranging from formal wear to casual outfits like shorts and a T-shirt is typically permissible.
Failure to comply with prescribed norms can result in various sanctions. These can range from being apprehended by law enforcement for engaging in indecent exposure to being ridiculed by others for wearing a suit at the beach. (4) The awareness individuals have of cultural standards is limited. During World War II, a German interception of an American spy occurred solely because of the way he held his utensils while eating. (5) Cultures exist on a continuum between static and dynamic, which determines their willingness to embrace change. For instance, the American culture has undergone significant transformations since the 1950s, in contrast to Saudi Arabia’s culture, which has experienced far less change.
Dealing with culture can be challenging for marketers as it is complex and hard to comprehend. Without being aware, one may unintentionally break cultural norms in another country, leading to discomfort between individuals from different cultures. For instance, two speakers may unconsciously struggle to find a compatible interpersonal distance. It is important to avoid making sweeping assumptions or stereotypes when observing a culture.
Research in social psychology suggests that people have a strong tendency to perceive an “outgroup” as more homogenous than an “ingroup,” even when they are aware that the group assignments were determined by chance. This tendency to over-generalize is often driven by the presence of some valid differences among the groups. It is important to note that there are significant individual differences within cultures. In class, we discussed various cultural lessons, but it is crucial to consider the broader perspective.
Within the Muslim tradition, the dog is viewed as impure, so it would be counter-productive to depict it as “man’s best friend” in an advertisement. In Asia, packaging is highly regarded as a reflection of the quality of the actual product, unlike in the U.S., where the emphasis is often on the substance that truly matters. Various cultures exhibit greater formality compared to typical U.S. customs. Japanese negotiators, for instance, tend to pause silently for extended periods while contemplating a speaker’s point.
The text emphasizes that cultures should not be stereotyped as one-dimensional, but rather seen as existing on a continuum of cultural traits. Hofstede’s research supports the idea that there is a wide range between the most individualistic and collectivistic countries, with some countries falling in the middle. Another cultural characteristic discussed is the distinction between high and low context cultures. In high context cultures, such as Japan, facial expressions and what is not said play a crucial role in understanding a speaker’s meaning. On the other hand, low context cultures like the U.S. prioritize direct communication and clarity. This cultural difference can make it challenging for Japanese speakers to fully comprehend written communication from others. Furthermore, language itself can contribute to this challenge, as German is known for its precision while Chinese lacks certain grammatical features, making word meanings less precise.
English falls somewhere in the middle of this range. The self-reference criterion, which is the act of individuals, often without awareness, using their own culture’s standards to judge others, is a factor. For instance, Americans may view more traditional societies as “backward” and lacking motivation because these societies opt to maintain their traditional values instead of embracing new technologies or social customs.
In the 1960s, a psychology professor from America who was believed to be well-read referred to India’s culture as “sick” because, despite facing severe food shortages, the Hindu religion prohibited the consumption of cows. The professor expressed disgust at the practice of allowing cows to roam freely in villages. However, it later became evident that these cows served important functions by providing milk and fertilizing fields. Ethnocentrism refers to the inclination to perceive one’s own culture as superior to others. It is crucial to recognize how these biases can hinder interactions with individuals from different cultures.
It is important to acknowledge that outsiders tend to exaggerate the similarity of individuals within a culture. In the United States, we recognize the significant variety within our own culture but frequently underestimate the diversity within other cultures. For instance, in Latin America, there are notable distinctions between those residing in coastal and mountainous regions, as well as between social classes. Language plays a crucial role in culture.
It should be noted that regional distinctions can be subtle. In one Latin American country, a word may have one meaning, but in another, it could be deemed inappropriate. It is also important to consider that non-verbal communication carries significant information. While nodding signifies agreement in some cultures, it represents disagreement in others. In the realm of language, regional dialects often differ considerably within a given language. The disparities between U.S., Australian, and British English are minor compared to those between dialects of Spanish and German. Idioms consist of figurative language that may not be directly translated into other languages. As an example, baseball is primarily popular in North and South America, so the phrase “in the ball park” is meaningful here but not in cultures with less familiarity with the sport. Neologisms are terms that have recently emerged due to advancements in technology or changes in society.
The widespread use of computer technology has popularized the concept of an “add-on”. However, it might take more time for such terms to become widely known in other parts of the world. In regions where English is heavily studied in schools, the focus is often on grammar and traditional language rather than current terminology. As a result, newly coined words have a high chance of not being understood. Slang is present in most languages, but its usage varies regionally, and not everyone in a region where slang is used will necessarily comprehend it.
The use of slang often creates significant generation gaps. Writing patterns, the accepted ways of writing, differ greatly between cultures. English and Northern European languages prioritize organization and conciseness. They build up to a point through background information and often foreshadow what will be said in the introduction. Romance languages like Spanish, French, and Portuguese consider this style “boring” and “inelegant.” It is expected to take detours and seen as a sign of sophistication rather than poor organization. Asian languages frequently involve circularity due to concerns about losing face. Expressing opinions directly is avoided, and instead speakers hint at ideas or indicate others’ viewpoints, waiting for feedback before fully committing. These cultural value differences result in varied preferred speech methods. American English, where individuals are assumed to have more control over their destiny compared to other cultures, favors the “active” tense (e.g., “I wrote the marketing plan”) over the passive (e.g., “The marketing plan was written by me.”). Relying on a single person’s translation from one language to another can be risky due to potential misunderstandings. The “decentering” method involves using multiple translators.The initial translation of the text is performed by a single translator, for example, converting it from German to Mandarin Chinese.
The text is translated from German to Mandarin Chinese, and then another translator translates it back to German. The translations are compared, and if the meanings don’t match, a third translator will translate from German to Mandarin again. This process continues until the translated meaning is satisfactory. Segmentation, targeting, and positioning are important aspects of marketing at the customer level.
However, in international marketing, it can sometimes be beneficial to view countries as segments. This allows decision makers to focus on common attributes of countries and avoid information overload. It is important to note that there can be significant variations within certain countries (e.g., Brazil), making averages less meaningful. Country-level segmentation can be based on factors such as geography (neighboring countries or those with similar climates or terrains), demographics (population growth, education levels, age distribution), or income. Segmenting based on income is challenging due to differences in relative prices between countries (affected, in part, by purchasing power parity measures that impact the cost of imported and domestically produced products). The importance of segmentation, targeting, and positioning (STP) is essential in marketing, as nearly all marketing efforts involve decisions about whom to serve and how to position products through different elements of the marketing mix.
One should consider their distribution strategy in relation to their target market’s preferred purchasing locations, and their promotional strategy in relation to their target’s media habits and the types of messages that will be most effective. Trying to appeal to everyone in a large market can be risky, as it may cause the firm to lose its appeal to its chosen segments. In order for segments to be effective, members of the segment should be similar in relevant dimensions (e.g., preference for quality vs. low price) but different from members of other segments. This allows for targeted campaigns towards segment members, while also justifying different treatment for other segments based on their unique response behavior. There are two main approaches to global segmentation.
At the macro level, countries are viewed as segments due to their distinct characteristics and statistics. For instance, the demand for expensive pharmaceuticals is limited to countries with specific income levels. Similarly, the market for infant clothing is more promising in countries with higher birthrates, while competitors face strong competition in countries with lower or stable birthrates. Nevertheless, there are notable variations even within individual countries.
When considering different markets, it was initially assumed that the Italian market would prefer low-cost washing machines while the German market would prioritize high-quality, dependable ones. However, it was discovered that Germany actually sold more affordable units than Italy did. This shows that although some German consumers matched the predicted preferences, there were significant variations within the country. At a smaller level, examining segments within countries, there are two approaches that correspond with the firm’s stage of international engagement.
Intramarket segmentation refers to the process of segmenting markets in individual countries independently. For instance, if an American company enters the Brazilian market, they would conduct research to identify and segment Brazilian consumers, without considering knowledge about American buyers. On the other hand, intermarket segmentation involves identifying segments that transcend national borders. It is important to note that not all segments present in one country will exist in another, and the sizes of the segments may also differ significantly. Europe, for example, has a substantial small car segment, whereas it is comparatively smaller in the United States.
When it comes to positioning across markets, firms often face a dilemma of whether to adapt their products to meet the specific demands of a country or embrace standardization to benefit from cost savings and maintain a consistent global brand image. Finding the right balance is challenging. For instance, McDonald’s has invested significant resources in promoting its global image, yet it also makes substantial accommodations for local tastes and preferences. While serving alcohol in U.S. restaurants would contradict the family-oriented image the brand has carefully cultivated over decades, McDonald’s has met this demand from European patrons.
In terms of methods of entry into foreign markets, it is rare for products to spontaneously gain popularity overnight. Instead, firms need to gradually build up their presence over time. Various strategies are available, differing in their level of aggressiveness, risk, and control. One such strategy is exporting, which is relatively low-risk and requires minimal investments in the new country.
A disadvantage of not making marketing investments in a new country is that the firm’s market share may not reach its full potential. Additionally, by not operating in the country, the firm misses out on valuable market insights, such as understanding consumer preferences, successful advertising campaigns, and effective distribution methods. If an importer takes charge of marketing efforts effectively, this arrangement could be mutually beneficial. However, if the firm later decides that greater profits can be obtained within the country, it may face challenges entering the market independently.
Licensing and franchising are methods of entry that involve low exposure. These methods allow someone else to utilize your trademarks and expertise while they take on the financial risk. However, there are some concerns with these methods. Firstly, by training a potential competitor, you potentially create a future rival. Additionally, you have limited control over the operations of the business. An example of this is seen in American fast food restaurants where foreign franchisers often struggle to uphold the same cleanliness standards as those in America.
Similarly, a foreign manufacturer might utilize inferior ingredients when producing a brand that is based on high-quality components in its home country. Contract manufacturing entails outsourcing product production to another party while assuming some marketing responsibilities. This approach reduces investment costs, but it also runs the risk of training a future rival. Direct entry strategies, such as acquiring a company or establishing operations from the ground up, carry the highest risk, but also offer the most potential for lucrative returns.
The firm acquires more insight into the local market and maintains higher control, however, it also bears a significant investment. In certain countries, the government may confiscate assets without offering compensation, thereby adding an extra risk to direct investment. Another option is to form a joint venture, in which a local firm contributes funds and expertise in the local market. Product Issues in International Marketing encompass both products and services.
There is a clear distinction made by marketing scholars and professionals between conventional products and services. These differences are highlighted by characteristics specific to services, such as heterogeneity (varying standards among providers, even within the same firm’s different locations), inseparability from consumption, intangibility, and sometimes perishability. Cultural considerations are even more significant in the realm of services compared to tangible goods, with significant variations in willingness to pay for quality and often substantial differences in expectations.
In certain countries, it can be challenging to encourage employees to adopt a company’s customer service ideology. Some countries have labor regulations that make it tough to dismiss employees whose treatment of customers is below standard. In the U.S. and Western countries, the speed of service is usually crucial, whereas personal interaction may carry greater significance in other countries. We often overlook the “obvious” needs that products appear to satisfy in our own culture, but these functions may vary greatly in other cultures.