“A few years ago, globalisation was the new paradigm in international business, however from a branding perspective it has lost its initial efficiency…” (Dumitrescu & Vinerean, 2010).
“Going global” has become an outdated way of doing business since international companies face the decreasing number of customers in recent years. Customer’s wants have evolved and they no longer desire a standardised product but wish to feel part of a localised community. In order for an International company to satisfy their customers they need to evolve and adapt their Global image to the customer’s localised taste. According to Van Heerden and Barter, it is important for an international company to consider culture in their international marketing strategy. In order to reach the market and achieve better results a local strategy is required with the addition of a global strategy (Van Heerden & Barter, 2008). This brings us to a fairly new strategy, “Glocalisation”. Glocalisation provides a way for international companies to provide this “local taste” to their brand image while still retaining their global brand identity.
A company that has been operating for over 125 years, consisting of over 400 brands in 200 countries, Coca-Cola’s success in their international operations has become one of the most recognised brands in the world. The company considers all contact it has with the consumer and makes use of all relevant communication systems. This well-established approach has created a longing for the product that all consumers or potential consumers experience (Dudovskiy, 2015).Therefore, this paper uses Coca-Cola as a case study and further discusses whether Coca-Cola’s Glocalisation strategy is ranked one of the best in the global market.
Local marketing strategy VS Global marketing strategy
When discussing Glocalisation it is important to fully understand the differences between a Global Marketing Strategy and Local marketing Strategy. A global Strategy is when a product or service is standardised and the marketing and branding is generic and appeals to most, if not all audiences (“Glocalization,” 2012)(citation of tough nickel). According to Chung, this standardisation is the similarities of a set of practices used in both the home and foreign country (Chung, 2003).
Global corporations face difficult decisions regarding what marketing strategy to adopt. The main aim of a Global marketing strategy is to maximise standardisation, homogenisation and integration of marketing activities to suite customers across the world (Kotler, Keller, Brady, Goodman, & Hansen, 2009). However, each Country consists of different economic, political, social and cultural environments each with their own issues. It is vital that global marketers take these issues into consideration in order to be successful globally.
While the standardisation theory works on a strategic level, it is often not suitable for the attention to detail required on operative and tactical levels (glocal strategy article). A more successful marketing approach is making adaptations according to local conditions and circumstances in the marketing place to suite the customers. Thus, a pure global marketing strategy is not ideal as it neglects locally related factors. Marketers need to be aware of how their brand is meeting the needs of customers and how successful their marketing efforts are in individual countries (Kotler et al., 2009)
Conversely, Local Marketing generally refers to any marketing techniques a localised business uses to market itself to the location it operates in (citation from business2community).Local Marketing gives a company a brand identity (Duke,2005). This form of marketing allows companies to develop a loyal customer base in the immediate vicinity of the business’s location (marketing school-org). This location restriction has a limiting demand and does not allow the company or brand to expand globally. It meets only the needs of local customers are met which may not be the needs of customers in different locations.
Although Global strategies recognise localisation of products, local strategies emphasise their importance. While global strategy emphasizes standardization of global products, local strategy explains the balance that must exist between the standardization and local adaptation of business activities and products (Svensson, 2001). Therefore, corporations that desire to be successful must develop a glocal strategy, by utilising their global experiences and customising them in such a way that would appeal to local markets (Dumitrescu & Vinerean, 2010).
Glocalisation, the fusion of globalisation and localisation, is the adaptation of international products around the uniqueness of a local culture in which they are sold. The process allows integration of local markets into global markets (Hong & Song, 2010). In other words a glocal strategy consists of standardising specific core elements and localising others by ensuring a balance between products containing both global and local components. The term, glocal is also referred to as “be global, act local” and has been widely accepted as an alternative approach that combines the traditional two strategies mentioned above (Rugman, 2001).
In the past, sales plummeted, global – brand corporations started to pay more attention and listened to what their local business partners said regarding how to adapt product attributes to the local taste (Dumitrescu & Vinerean, 2010). For example, Coca cola adopted the glocal strategy when they faced a loss of their international market share to competition that was both local and global.
According to Coca-Cola’s former chair Douglas Daft,” the world had changed ,and we had not. The world was demanding greater flexibility, responsiveness and local sensitivity, while we were further consolidating decision making and standardising our practices. The next big evolutionary step of ‘going global’ now has to be ‘going local'”(Ball, McCulloch, & Frantz, 2003).
Glocal marketing or brand managers have the responsibility of ensuring there is a balance between the demands from the headquarters and local knowledge and expertise. As a result many global companies started delegating more authority to local marketers and gave many executive power. This balance between global and local perspectives is a task for the Headquarters in Atlanta, states current Coca-Cola CEO, James Quincy in an interview published in Welt am Sonntag on July 2, 2017 (website of interview). However, there have been occasions where the headquarters have been mistaken such as one of the most innovative campaigns in recent years “Share a Coke”, where first names replaced the brand name on Coca-Cola labels. The idea came from Australia however, headquarters tried to stop the campaign several times but local management succeeded in its effort to launch it. The results were remarkable and the campaign has since been launched in numerous countries (citation of coca cola website interview).
The primary result of a glocal strategy is to develop a world where local areas benefit from global resources while retaining their own cultural abilities (Website howstuffworks).
The influence of Glocalisation strategy effects on Adaptation
As previously mentioned in order to implement a glocal strategy a company must adapt and customise their product or services to meet the “localised taste” of the customers. Adaptation takes into account the inherent diversity in the Global marketplace and tailors the marketing mix to suite the local culture, preferences, laws and rules, infrastructure and competition (scribd). Without adaptation a company is not fully able to implement a glocal strategy as everything remains homogenised. Thus, adaptation involves the use of specific strategies in each market, where the organisation adapts its marketing mix to each individual local environment (Ang, 2007).
In the following section, the paper discusses certain glocal tactics Coca-Cola implemented in order to adapt their brand to the localised markets in connection with the marketing mix.
The adaptation of a product is the degree to which its elements (brand, design, label, product line and quality) are adapted to localised markets (Brei, D’Avila, Camargo, & Juliana, 2011). The product is the first and key marketing element (dang 2105). The Coca-cola company with more than 400 brands provides consumers with a broad variety of drinks that can be divided into three categories: sparkling beverages, still beverages and waters.
Many of these brands are country specific. For example, Fruktime is one of Russia’s first few Coca-Cola brands launched. After market research showed the top flavours prefreed in Russia the company released 4 flavours: lemonade, cream soda, “Dushes” and “Buratino” (Banutu-Gomez, 2012).
In China, the Minute Maid Pulpy Super Milky drink and the Sprite Tea drink have been regional hits. Both drinks were developed by the research and development unit in China to suite the Chinese local taste (Fawkes, 2010). Through numerous local market research Coca-Cola is able to meet the needs of all its consumers through the innovation of new drinks and ultimately, “refersh the world” as stated in their mission statement.
Pricing adaptation focuses on markets for many reasons, such as the following factors: Economic, Political,Legal issues, Price controls, Transportation costs, Markets structures, Demands, Rates and taxes and Trade barriers (Brei et al., 2011). It can be defined further as the money a buyer must give out to obtain a product. Price is the quickest and most flexible element to adjust in the marketing mix. The pricing system of Coca-Cola products vary according the type of brand and size it is purchased in (Coca-Cola Company 2006). According to Yeboah et al, customers demand competitive prices (Yeboah, Owusu, Boakye, & Owusu-Mensah, 2013). Coca-Cola adheres to this statement by setting prices according to the brands competition in the specific local area. The Coca-Cola company distributors and retail stores often implement their own pricing strategy. Many distributors sell at a fixed price however some retailers use psychological pricing strategies that are used to make consumers perceive that the products are cheaper than they really are. Therefore, local retailers and distributors are setting the prices of Coca-cola products according to the local market they are situated in.
This is the association with the company’s channels to foreign markets including criteria involved in distribution such as transportation, network, budget and distribution system. Distribution is an important element in the Marketing mix as it can assist in revenue growth and how a company can expend (marketingmo). Without a good distribution process, even the best products cannot be delivered and the marketing mix will fail (Fergusen, 200)
In the study “effective distribution, a pre-requisite for retail operations: A case of Poku Trading” it exemplifies the important correlation between distribution and customer satisfaction, the better the flow of products the more satisfied the customer is (Yeboah et al., 2013).
Although Coca-Cola is a global company its product never has to travel far distances which makes the product more local than one may think (mpk74). Coca-Cola creates global reach by having over 250 bottling partners worldwide (cocacolacompany). Coca-Cola is not a single entity and does not have power over all bottling partners but instead operates through numerous local channels. The Coca-Cola company sells concentrates, syrups and bottling operations and owns the brand. However, the Bottling partners manufacture the products and are responsible for the final branded products distribution. This ensures a factor of localisation as the bottling partners have a close relationship with consumers and are able to execute the localised strategies implemented by Coca-Cola Company (the Coca cola system). In Africa, Coca cola had to use adaptability to distribute their products in undeveloped infrastructures due to limited resources. The product is distributed in small quantities by using local transportation methods such as paddling canoes up rivers to remote villages.
Furthermore, Coca-Cola considers different climates in regions and provides solar panels on their coolers in much warm humid countries. For example, in Aipir, a small rural village located in Columbia, Coca cola donated a “Coca-Cola Bio Cooler” which uses no electricity to ensure their product is kept cold and to increase customer satisfaction (Columbia bio cooler).
A way in which Coca cola remains true to their brand image is their use of unique vending machines. This channel of distribution is very innovative and has been very successful. Coca- cola went as far as introducing the world’s first dialect vending machine, “Dialekt-0-Maten” in Stockholm, Sweden. It functions when a person selects one of six regional Swedish dialects and tries to impersonate it. If done so successfully they will receive a free Coke (rassberrypi). Thus, one can conclude that Coca-Cola tries to establish a very close and intimate relationship with their customers of different culture backgrounds. They personalise each service, distribution included, while still creating a fun and “happy” atmosphere in which Coca-Cola created their brand image from.
Promotion and Sales
“Promotion of the marketing mix is a tool that helps disseminate information, encourage the purchase and affects the purchase decision process” (Išorait?, 2016). It can be defined further as creating an awareness with regards to the product and the purchasing information (Yeboah et al., 2013). Since Coca-Cola operates on a global scale, their promotional strategies must adapt to the external factors in which their products are sold. For example, Coca-Cola released a commercial “Happiness factory” that was aired in several different countries. Although there was a global image each commercial was different varying with a “local touch” due to the use of local models and a variety of different screen captions and slogans in different languages (tv paper).
According to Išorait?, in order to understand promotion fully it is important to consider the aspects of the promotional mix that are advertising, sales promotion, public relations and direct marketing (Išorait?, 2016).
Advertising is very important for Coca-Cola as this is where it spends most of its annual income. “Coca-Cola believes in expanding consumer base through experiential marketing, which aims at creating an emotional connect(ion) with customers” (forbes). The company spends over three billion US dollars a year on Advertising alone.
Sponsorship is a very important type of sales promotion (Išorait?, 2016). In Morocco, Coca-cola is the number one soft drink and soccer is the number one sport. Coca-Cola has sponsored Moroccan soccer in the 1994 and 1998 World Cup. Coca-Cola realises the benefits and uses locally produced television commercials with Moroccan actors and on occasion dubs International ads in Arabic. Coca Cola released its international trademark campaign of one of its many popular slogans “The Coke Side of Life.” A collaboration with Imane Mrikh, a Famous Moroccan singer lead to the making of the song “El Donya Helwa” (The World is Beautiful) with a famous international director (AliRaqi, 2001) (AliRaqi, 2001).
Good public relations assist the company in a good reputation of the company and provides confidence in the markets (Išorait?, 2016). The type of public relation tools Coca-Cola uses widely are product placements, sponsorships and their numerous donations and work with non-profit organisations. Coca-cola has given back to communities since 1984. In 2011, the Coca-Cola foundation has invested more than $76 million in 257 community organisations worldwide (corporate giving). Coca-Cola understands that being a responsible member of the community and maintaining a good reputation in each local community means “giving-of our money, our time and unique expertise.” Many of Coca-Cola’s innovative local campaigns generate good local publicity. For example, in 2013 Coca-Cola partnered with Mccann Copenhagen to create “The Happy Flag” campaign. As a result of Denmark being voted the happiest country by many surveys and the UN, McCann took this discovery to Denmark’s biggest airport where it is a Danish tradition to greet people with the Danish Flag. McCann created a fun experience by designing a large poster where people were able to take the flag straight from the Coca-Cola logo, allowing Coca-Cola to create a “happy” welcome to the worlds happiest place (mccann Copenhagen).
Direct Marketing is direct communication between the manufacturer and the customer (Išorait?, 2016). In Coca-Cola’s case, it is the direct communication between Coca-Cola and the consumers. One of the main forms of Direct Marketing is personal selling. Coca-Cola does this in a business to business form by forming alliances with local partners. Coca-Cola’s aim in partnership is to effectively resonate the brand’s global image with the local target market. Consider Coca-Cola’s campaign during the FIFA world cup. Each Country’s website was localised with local celebrities and culture although, they all portrayed the same brand message regarding the sporting event (globalmarketing culture).
Having an efficient glocal strategy and effectively implementing it is one of the necessities for international companies in a modern business world. Companies without it compromise their chances for long-term growth.
Global strategies are no longer adequate regarding the satisfaction of customers globally. In order to be successful, all global companies have to resonate their global image with the local target market. This paper has studied The Coca-Cola company and discussed Coca-Cola’s adaptation methods that ensured effective glocalisation, in connection with each of the four elements in marketing mix (Product, Price, Distribution channel and Promotion). It has discovered that Coca-Cola has successfully adapted itself to each of its 200 location’s external factors and has adapted to provide local familiarity to their consumers. Therefore, Coca-Cola has created a global brand image that is able to adapt and resonate with each local target market without losing their original brand identity. Thus, Coca-Cola’s glocal strategy can be ranked one of the most effective in the global market.