Global strategy: Selecting an appropriate target market is one of the keys to business success. Holistic analysis that takes many factors into account is required to make smart decisions and define effective marketing strategies. We will assess potential target markets based on: market size and growth potential, competition, regulation, cultural differences and macro-economic data. Coca-Cola has dominated the soft drink industry for decades, and is known throughout the world. As the company expands it needs to wisely look at potential target markets. This study will also cover market size, market growth potential, competitors, regulation, culture, and macro-economic factors.
Coca-Cola prioritises market size when pursuing markets. One’s financial condition and market share may improve. Coke assesses a market’s demographics, consumption trends, and population size for suitability. Coca-Cola must consider market size and growth potential while evaluating prospective target markets. Due to its size, the beverage business has huge growth potential. Emerging Asian and African markets with vast populations and significant discretionary money provide growth potential. Coca-Cola likes India because of its large population and rising per capita income. (Yoffie, D. B., & Kim, R, 2010)
Coca-Cola focuses its market entry on market size. An individual’s financial situation and market share can be enhanced. Coke evaluates the demographics, consumption, and population of a market for appropriateness. Coca-Cola should also take into account market size and growth potential when considering potential target markets. The beverage business has tremendous growth potential, owing to its size. Emerging Asian and African markets with large populations and significant discretionary income are promising for growth potential Coca-Cola is interested in India because of the large population and increase in per capita income. (Yoffie, D. B., & Kim, R, 2010)
Coca Cola’s long-term performance is reliant on evaluating target market growth potential. Improving incomes, evolving consumer preferences and expanding markets can drive up demand. The market research and trends analysis can identify development opportunities for the markets. (Porter, M. E, 1980)
Coca-Cola’s competitive environment has to be analyzed to find out what the competition is in the market. By comparing its market shares and strategies with its competitors, Coca-Cola can be able to identify the opportunities and threats. This study also might uncover untapped markets for Coca Cola. You need to study the competition in order to find new target markets. With health consciousness on the increase in rich countries like US and EU, Coca Cola has tough competition. Because there’s less competition at new locations and customers’ tastes are still developing, the company can place its focus there. (Euro monitor International. 2022).
Coca-Cola may also face huge legal challenges in different countries. Taxation, labelling, promotion and trade restrictions should be considered. Coca-Cola has to obey local laws to protect its brand and bottom line. Regulations influence the decision to enter a market. Some advertising, labelling and ingredient requirements are stringent for beverages. These standards are necessary for long-term success. Compliance with local regulations: Staying up-to-date with evolving laws and regulations is essential for adapting plans to local laws. (Kotler et al., 2009)
Cultural differences are very important for Coca-Cola to know about when it comes to product placement. Customers’ behavior is affected by societal norms, beliefs and conventions. Coca-Cola has to adapt its branding, marketing and products to every new market. Consumers have different preferences and behavior, which is influenced by culture. If Coca-Cola needs to reach everybody with its commercials it should know the differences between the cultures. Flavours, packaging and advertising might have to be modified to cater to local tastes. The company’s philosophy of “think global, act local” has enabled it to retain a global brand identity in a culturally diverse environment. (Yoffie, D. B., & Kim, R. 2010).
Coke uses macroeconomic data to determine stability and profitability of the market. Inflation, disposable income, consumer spending, GDP growth and other variables provide insight into buying power and market conditions (World Bank, 2022), and according to this data, Coca-Cola may focus on markets with positive macroeconomic conditions: Consumer spending is affected when the unemployment rate rises, inflation rises, the GDP rate declines, and other macroeconomic factors come into play. Targeting markets with a growing middle-class and stable economies could be helpful. However, in a bad time, you could have to adjust your pricing and promotion to keep the consumers pleased and prices low.
China is a potential market for Coca Cola due to its high population and growing middle class. The growth of China’s beverage industry has been spurred by the increase in urbanization, disposable income, and changing consumer demand. In the competitive market, there are multiple market penetration options:
China’s regulatory environment is unlike most others because it has stringent ingredient, labeling, and advertising regulations. Culture plays a large role; Chinese buyers expect varied flavors, packaging and advertising content. Coca-Cola overcome these challenges by having locally specialised products, local partnering and advertising during Chinese holidays.
Levitt’s hypothesis is about the tension between the standardization of marketing strategies and the local preferences of markets across the world. Coca-Cola has learned the importance of finding balance. The company adapts its products and marketing to appeal to local cultures while still creating a global brand. The adaptation of taste and packaging to specific markets is a clear evidence of this strategy. (Levitt, 1983)
In the modern connected world of economy, business organizations aiming to excel globally have to venture in new markets. Deciding to enter the market in the right way is hard. We will look at exporting, licencing, joint venture, M&A and Greenfield investments as mode of entry. By considering the pros and cons and appropriateness to the target market, businesses can raise their chances of achieving success.
One of the largest multinationals in the world, Coca-Cola has never failed to pursue global growth. The global expansion has helped the company to develop its market share, profitability, and stability. It has taken licensing, franchising, exporting, full ownership as well as joint ventures to break into these markets (Miller & Cross, 2011 p. 410). Exporting entails the sale of goods and services to other countries and doing so without establishing a company. The advantages of this market entry strategy are low investment levels, risk and flexibility. Companies can utilize their production capacity in order to access more people. Exporters are subject to cultural differences, trade obstacles and distribution challenges. (Miller & Cross, 2011:410).
A company grants a foreign business, under the condition that it enters its market, a license of its trademark and/or processing and manufacturing know-how. The licensor provides an international market that allows a local company to use its trademarks and processes. Before licensing a company, a licensor should be able to replicate his or her business over in a foreign firm. The management will have to choose the term of the license and activities of the trademark or the company which should be covered by the license. Companies can grant foreign companies a license to manufacture, distribute or sell their products at a royalty. The licensee can also help businesses venture into new markets and expand rapidly with the knowledge and resources available locally.
A domestic and a foreign firm join hands to create a target market organization. Joint venture. Through pooling resources, knowledge, and networks the businesses can reduce risk and share costs entering the market. The local knowledge, channel systems, and local experience of regulatory systems are offered through joint ventures. Implementation may be constrained by cultural challenges, differences between partners, and the need to achieve considerable cooperation. (Tielmann, 2010 p. 7)
Merger and acquisition of target market firms are undertaken. This is a market entry technique that allows firms to access past clients, distribution system, and local market knowledge within a very short time. Merger and acquisition benefits are known as consolidation and speed to market. It has a lot of moving components, and cultural assimilation, government regulations, and stakeholder or employee opposition could be both expensive and hard to conquer.
Greenfield investment involves establishment of a complete owned subsidiary or plant in the target market. This is the most controlling, flexible and customizable market entrance strategy. Sharing of technology, expertise and managerial practices can take place. Greenfield investments can reinforce a local connection and respond to the market. Maneuvering through legal, political, and cultural complexities takes enormous amounts of financial resources, time, and experience.