Coca Cola Company in China

Executive Summary

Over the past few years Coca Cola has attempted to gain a foothold into the Chinese market through a variety of advertising and marketing campaigns, however, it has experienced a considerable level of competition from local and international competitors resulting in the need to develop a new method of advertising that would entice consumers to patronize Coca Cola’s products.

This is where the new Coca Cola credit card enters into the equation wherein through special agreements with local banks, credit cards with the brand image of Coca Cola will be released that allows consumers to get special discounts at various fast food restaurants while at the same time enables them to earn Coca Cola points that entitles them to entries into the company’s weekly raffle draw. Through such a strategy, it is expected that the Coca Cola company can gain a considerable competitive advantage in China.

Promotion opportunity analysis

Industry analysis

One of the current marketing trends in the soft drink industry has been to connect special amenities, services and exclusive offers to particular soda brands. For example, one of the most popular methods of advertising for soda brands has been to place special offers underneath the bottle caps of the drinks. Depending on what has been written, a consumer can either win a new can of soda, a digital device or even a vacation. This particular strategy has worked in increasing the amount of customers drawn to particular brands and shows the effectiveness of connecting prizes with the consumption of a company’s products. Consumers love a bargain no matter the market demographic and some consumers continue to patronize the same types of products for their needs.

Competitive analysis

With the holiday season closing in, the Coca Cola Company is releasing its new Coca Cola credit card in an attempt to capitalize on the increased number of sales within this particular period. The Coca Cola card works by either having customers apply for it at their local bank or they can apply for it online through a bank’s website. Emblazoned with the company’s logo, eligible bank clients can choose which particular establishments they would like to link to the card and, as a result, this enables them to avail of special discounts whenever they purchase a meal with a Coca Cola product attached to it. Not only that, each time they make a purchase a point is added to their total Coca Cola Card score which enables them to avail of a weekly raffle promo to win an assortment of prizes that are released by the company.

This particular method of connecting the process of purchasing and consumption with a reward factor included when using a credit card would be a unique drawing point for local consumers since they tend to drink Coca Cola anyway and if they are able to win a prize due to their consumption, then that would be even better (Crespo-Almendros & Del Barrio-García 2014). Such a tactic has yet to be utilized by other companies within China and, as such, would enable Coca Cola to pull ahead in terms of the level of brand awareness generated and the increased amount of consumption for its products.

Target market analysis

The target market demographics for the Coca Cola credit card will primarily be mid to high income clients of banks within China. These individuals should have excellent credit scores of 600 and above while at the same time show consistent patronage of some of the country’s fast food establishments. It is assumed, though not entirely confirmed, that 60 to 70 percent of the clientele that match the specified requirements will be male clients of the bank while the remaining 40 or 30 percent will be female. This is based upon consumer market surveys which examined the prevalence of males purchasing fast food as compared to females

Customer analysis and profiles

Specific behavioral factors that should be present are: high and occasional purchases of meals with Coca Cola products, little variation in purchasing location (i.e. continuous patronage of the same restaurants), high amounts of purchases when it comes to soft drinks and finally little or no delinquency in paying for purchases made.

Setting objectives

IMC objectives

The marketing objectives for this particular endeavor are the following:

  • To increase the amount of consumers of Coca Cola within China by 30%
  • To achieve a product penetration rate of 60% within the consumer market of Beijing, Shang Hai and Guangzhou
  • To increase consumer awareness of the Coca Cola brand
  • To achieve an initial subscription rate of 20% of targeted market demographics within the first year of release after which subsequent increases in consumer subscriptions should increase by 10 to 15 percent per year.

IMC budget

The IMC budget for this promotion will start of at $1,000,000 for the initial promotion yet will increase to $10,000,000 when it comes to the weekly prizes that will be given away in conjunction with the Coca Cola credit card promotion.

Agency selection

No agency will be needed, instead the entirety of the promotion campaign will be handled within the company itself and through the banks that will be part of the promotional activities.

Timing: Gantt chart

The Gantt chart is located in the Appendix section of this paper (i.e. at the very end).

Developing corporate strategies

Corporate Image strategy

To start off its product launch of the Coca Cola credit card in China, the company will start by launching its latest soda creation in the. Its first campaign will begin in Tiananmen Square in Beijing where the company will give away as many cans as a person can carry. The objective of this event is to generate substantial levels of awareness regarding the company’s Coca Cola credit card by making the giveaway happen in a public venue where it is likely that hundreds would attend resulting in a considerable level of social media hype as people post on social media sites about their experience.

The expected outcome is greater awareness for the Coca Cola credit card through word of mouth advertising as well as the event being featured on the news which should enable the company to reach millions of Chinese citizens without having to spend massive amounts of money on TV commercials (Lowe & Barnes 2012). The primary stakeholder for this event is the Coca Cola Company since they are paying for the successful launch of the Coca Cola credit card. Secondary stakeholders come in the form of local officials and the police department of Beijing since they would need to assign personnel to the area to prevent the event from getting out of hand.

The primary constraint that will be implemented in this event is that the amount of people that will be given as many drinks as they can carry will be limited to an estimated 500 people. The reason behind is due to the fact that the event needs to have budget constraints implemented and cannot simply keep on giving away free cans of coke to everyone in Beijing. At a $1.50 per can of the reduced calorie soda and an estimated 15 can carrying capacity per person, the amount of money that will be attributed just for the product giveaway alone will reach $11,250.

When taking into consideration the possibility that other people may bring bags with them, the amount of money allocated for the giveaway will reach $15,000 which is still within reasonable limits for the company. Aside from this, there are also costs associated with renting out the street for the venue which is roughly $10,000 for a few hours (this includes costs associated with having cops and other city personnel in the location). Lastly, the venue would need to hire personnel, barricades and setup a platform where announcements and music can be played.

Overall, this last aspect of the plan is expected to cost $25,000 at the very minimum given the amount of personnel, material and miscellaneous costs for the event. In total, the event is expected to cost the company $50,000 just for one day. However, what should be taken into consideration regarding the costs is the fact that given the location and the sheer amount of news coverage that the venue would result in, the level of consumer awareness for the product will skyrocket resulting in high future sales for the company through greater brand awareness and the release of the Coca Cola credit card. Should this event prove to be a success, more events will follow in other cities in China.

Brand development strategy

The brand development strategy focuses on the fact that the Coca Cola credit card and its ability to be connected to only specific stores for better discounts and services is an option not currently being utilized by other soda brands within the country. While it may be true that other companies have developed the same idea such as the Forever 21 credit card and the Gucci credit card, the fact remains that there has yet to be a branded credit card of this nature that focuses primarily on a product that can be bought nearly everywhere in China.

The Coca Cola credit card due to its store specific discounts gives consumers a far better and wider variety of discounts, amenities and services not otherwise available with other soba company promotions and, as such, presents itself as lucrative option for discerning clients (Ailawadi, Harlam, César & Trounce 2006).

Developing corporate strategies

Brand positioning strategy

The primarily brand positioning strategy of the company focuses on creating greater brand awareness via the Coca Cola credit card. The reason behind this is connected to the fact that consumers of Coca Cola will see the unique way that they would be able to get great prizes simply by using the Coca Cola credit card and choosing to purchase coke instead of other drinks. This positions the brand in such a way that it becomes more preferable for people to purchase coke since they think that they are getting more out of their purchase.

Media distribution and planning

The media distribution and planning strategy for this advertising campaign focuses on the Coca Cola giveaway and concerts as a means of drawing media attention towards the Coca Cola credit card. Furthermore, banks will send flyers to their customers in the envelopes containing their monthly credit card bills advertising the Coca Cola card as well.

Evaluation metrics/ KPIs

In order to determine how well Coca Cola was able to meet its market objectives, sufficient market research will need to be conducted. First and foremost it will be necessary to examine after six months time whether the company was able to increase the coke consumption of its target clients. This can be done by examining the credit histories associated with the card and examining the amount of meal purchases that had Coca Cola products (Liu, Cheng & Ni 2011).

After which an examination will be necessary to see how many current subscribers there are in the Coca Cola credit card program versus the number of estimated credit card users of the targeted demographic within the cities where the card was launched. After combing both data sets, it will be possible to see the degree of market penetration, the degree of usage and whether Coca Cola was able to meet its market objectives.

Promotional Tools

Sponsorship Programs

For this particular venture, no sponsorship programs will be necessary. The entire process will be handled by the company itself.

Consumer promotions

The consumer promotion for the product is done primarily through the event and via the bank.

Personal selling

No personal selling will be conducted; the promotion will focus primarily on the giveaway, concert and Coca Cola card.

Promotional Tools

Direct Marketing

Advertising and promoting the Coca Cola credit card will involve three specific strategies: direct consumer invitation, targeted commercials and press releases for the general public. In the first strategy the Coca Cola Company will copy the current method of credit card promotion utilized by various banks by sending specific invitations to select customers via mail.

These invitations will include a summary of the benefits the card would give to the consumer, how much it would cost them per year to maintain, and the selection of stores that they can link to the card. A number or email address will be placed on the invitation that the customer can use in order to directly contact the affiliated bank and facilitate the transaction at a later date.

The second strategy involves the use of targeted advertisements which showcase the release of the new card via viral marketing campaigns and various TV advertisements. It is expected that this should drum up sufficient interest for various consumers to call their bank and see if they are eligible to have a Coca Cola credit card (Parre-Selva, Mas-Ruiz & Ruiz-Conde 2014).

The third strategy involves a press release given to specific newspapers and online bloggers who will then subsequently relay the news via newspapers and online blogs. It is expected that by utilizing this strategy Coca Cola will be able to better penetrate the desired consumer market within China resulting in a considerable amount of profit for the company.

Event marketing

Marketing the event will actually be pretty straightforward, the company will setup various posters and use local television advertisements in order to broadcast that there will be a free concert and giveaway at a particular location. During the event, the various pop stars and idols that are in attendance will promote Coca Cola as a product while at the same time give their recommendation regarding the new Coca Cola credit card that consumers can avail of.

Both methods of marketing should result in a considerable level of public interest, especially when taking into consideration that the prizes that the company will giveaway will range from free products to iPads, iPhones to even cars and fully paid international vacations. This is likely to entice consumers even more resulting in a lot more inquiries regarding the card and more people actually using it

Promotional Materials

Ads series

The advantage of digital marketing trends over their traditional counterparts is due to their capacity to provide instantaneous consumer data regarding their effectiveness which enables companies to change them based on consumer reactions. This can be possible due to current use of advertising analytic data which takes the form of page views, the number of clicks on an advertisement, the user demographic (i.e. IP address) of where it is primarily being viewed from as well as the rate by which it is viewed. By utilizing such data, companies can immediately determine how effective a particular campaign is and make an immediate change via the advertising provider’s console interface (ex: Google Ads).

Such data is simply not available in the case of traditional advertising campaigns which makes digital marketing campaigns that much more appealing when taking this into consideration. Another problem attached with normal advertising is the fact that utilities such as electricity (for billboards), paper (for magazines), and air time (for television and radio) come into play when taking into account the cost of running such campaigns. With digital marketing most of the framework of an online advertising campaign is run on servers which requires much less electricity than a retail sign and there is no air time payment involved.

The only cost involved in such a venture would have to be the cost of the cost per click or in the case of rented online capacity (i.e. a website) the cost of cyberspace which is actually negligible considering the fact that the cost of putting up a website today is equivalent to only a quarter of single employees salary for most companies. Finally, one of the most important factors that should be taken into consideration is that an online advertising campaign, unlike a store, never stops, it is on going 24 hours a day 7 days a week and is capable of catering to a global consumer base unlike an ordinary advertising campaign that can only accommodate customers within the immediate area.

Direct mail

Social Media refers to the method of interaction by which people share ideas, information and concepts through an online virtual community. At the present, it can be defined as the leading creator of user generated content wherein pictures, videos, blogs and other such manifestations of human creativity are found. Aside from calling, texting and emailing someone, social media has become one of the most dominant methods of communication wherein millions of people utilize social media networks such as Weebo in China in order to reach out and communicate with people that they otherwise would not have been able to do so. It has resulted in a more interconnected society where people can almost instantaneously reach out and communicate to hundreds if not thousands of people within a few seconds.

It is due to the capability of social media to communicate with millions of people that various companies have begun to utilize social media as a means of presenting their products to consumers. This has taken the form of “viral” marketing campaigns which refers to creative digital marketing strategies where certain ads, posts, information or videos are liked by the general public and are shared between members of a social network. It goes “viral” since it spreads quickly and is shared rapidly from person to person. Such campaigns are relatively low cost as compared to their traditional media counterparts (i.e. television, radio, magazines, newspapers, etc.) resulting in many companies turning towards digital media and viral marketing campaigns as an alternative towards their more costly counterparts.

Preparing whole plan

Budget and ROI

The total budget for the project is estimated at $11,000,000 with a return of investment of at least 100% due to the increase in the amount of coke consumed within a year.

Cost Approach

The cost of the project was based on an examination of budgets outlined on various online websites regarding event management and expanded to fit the needs of the company. The cost approach in this case takes into consideration the percentage of sales needed to recoup the amount paid per million people and the estimated amount of sales needed on a daily basis.

The following was the formula utilized:

.05% of the cost with an average price of $5 per meal combo with a Coca Cola product X 10 million in a city within China.

This is equivalent to 0.0025 x 10,000,000 = $25,000 per city per day.

With 5 cities being scheduled for the initial trial period this is equivalent to: $125,000 a day.

The amount spent on the promotion will be recouped within 5 months.

Campaign Timeline

The start of the campaign is October 17 and will end by the middle of next year after the various other promotional events that the company will create.

Reference List

Ailawadi, K, Harlam, B, César, J, & Trounce, D 2006, ‘Promotion Profitability for a Retailer: The Role of Promotion, Brand, Category, and Store Characteristics’, Journal Of Marketing Research (JMR), vol. 43, no. 4, pp. 518-535,

Crespo-Almendros, E, & Del Barrio-García, S 2014, ‘The Quality of Internet-User Recall: A Comparative Analysis by Online Sales-Promotion Types’, Journal Of Advertising Research, vol. 54, no. 1, pp. 56-70,

Liu, T, Cheng, T, & Ni, F 2011, ‘How Consumers Respond to the Behavior of Missing a Free Gift Promotion: Inaction Inertia Effect on Products Offered as Free Gifts’, Journal Of Social Psychology, vol. 151, no. 3, pp. 361-381

Lowe, B, & Barnes, B 2012, ‘Consumer perceptions of monetary and non-monetary introductory promotions for new products’, Journal Of Marketing Management, vol. 28, no. 5/6, pp. 629-651

Parre-Selva, J, Mas-Ruiz, F, & Ruiz-Conde, E 2014, ‘Price promotions effects of virtue and vice products’, European Journal Of Marketing, vol. 48, no. 7/8, pp. 1296-1314

Appendix

Gantt Chart for Coca Cola China Promotion

Gantt Chart for Coca Cola China Promotion