Coca-Cola Zero Marketing Strategy in the Middle East

Executive Summary

This report seeks to provide insights into Coca-Cola’s marketing strategy in relation to the company’s operations in the Middle East and with reference to the Coca-Cola Zero product. The report provides an innovative marketing idea that should significantly increase the performance of the company financially and socially in the region. It provides an analysis of different factors that affect its current marketing performance and uses them as the background for describing proposed changes. The report begins with a company overview and then looks at both the micro and macro marketing environments that affect Coca-Cola in the Middle East. In addition, the report analyses an existing brand and product gap in the company’s marketing strategy. It then proposes a solution that should work in the medium term to make the company more dominant.

The report uses information collected from news sites on the internet and from literature on management and marketing to link theory and observations. It shows that Coca-Cola will have a favorable internal environment and marketing microenvironment-favoring growth.

However, challenges appear in the macro environment and have the potential of destabilizing the current growth rate of the company. Social and environmental issues have the biggest potential of causing negative changes to the company’s operating environment, and they should feature majorly in management analysis of the company’s marketing strategy. Additionally, the report confirms that a growing youthful population is a major opportunity for Coca-Cola’s marketing strategy. The company can embrace new marketing channels presented by the internet to make its integrated marketing communication effective.

Introduction: Company overview

Coca-Cola is a multinational beverage manufacturer with its headquarters in the United States. The company operates extensively in the Middle East market and has a localization strategy that ensures its brand adheres to the expectations of its target consumers in the region. Core operations of Coca-Cola happen through a franchised distribution system, and the parent company provides a guideline on marketing approaches used for its more than 400 brands in more than 200 countries.

Coca-Cola is a famous brand in the Middle East. The company’s operations in the Middle East retain its American heritage. Despite this, the company continues to do well in the region even as citizens and public activist groups continue to display an anti-American attitude in countries such as Iran. The company has not only succeeded in marketing the Coca-Cola brand but also all the constituent brands that are about 30 in number. They include Fanta, Schweppes, and Dasani. In the Middle East, Egypt is the largest and the oldest market for Coca-Cola (Wagner, 2013).

Corporate Mission

The Coca-Cola mission outlines the nature of the organization and its intention of operating in the global marketplace. The mission also describes the ideology that the company follows to achieve its objective. Here is a summary of the company’s mission. It represents the goal of the Middle Eastern operations by Coca-Cola. It translates to refreshing the world in body, mind, and spirit. In addition, the mission is to inspire moments of optimism.

The company explains that it shall use its brands and actions, create value, and make a difference. The mission declaration applies to every activity and area covered by Coca-Cola. These statements embody the overall intention of the company and highlight its important consideration for people, the planet, its portfolio, partner organizations, and the basic business function of maximizing returns for shareholders (The Coca-Cola Company, 2015).

Core competencies

Going with the resource-based view theory of a firm, Coca-Cola’s core competencies are the activities and resources that allow the company to enjoy a competitive advantage in the Middle East (Lync, 2010). Coca-Cola’s core competencies lie in its signature product and its distinct taste that continues to capture the tastes and preferences of its target customers. The ability to maintain a standardized product quality and marketing activity throughout its sub-markets in the Middle East are organizational competencies of the company. In addition to the innovation of the company, which ensures that there is a new and relevant integrated marketing communication campaign to keep its brand relevant qualifies as another core competency.

Coca-Cola is able to segment its market accurately such that it can take on rivals in every area of the beverage market. It combines its innovation capabilities with its market segmentation to create new products that cater to emerging consumer needs. For example, the Coke Zero brand, which is a variation of the original Coca-Cola drink, was an innovation aimed at meeting the concerns of consumers who are keen to limit their calorie intake. Many consumers in the world have become aware of the consequences of consuming too many calories. They recognize soft drinks as one of the major sources of calories. As a result, many medical intervention programs against obesity in the Middle East have cautioned against excessive consumption of soft drinks. As a response, Coca-Cola introduced the Zero brand to meet the new challenge.

Another competency of Coca-Cola is its operations base, which provides the necessary infrastructure for retailers to sell its soft drinks. It also runs a comprehensive program with its franchise that ensures all retail outlets have sufficient stocks and product storage and display facilities like freezers and coolers to deliver drinks to clients at the right temperature. The company has maintained its equipment well in respective markets. It has even been innovative with solar-powered freezers to ensure that drinks remain refrigerated and sufficient for meeting customer refreshment needs.

The salesperson network of the company is among the largest in the Middle East, and it provides the company with sufficient market intelligence about its product distribution and consumer trends. The personnel hired by various franchises of the company ensure that all distribution and retail points are in proper condition and are well stocked with the latest products. The company uses its salesperson network to service all distributor and retailer interests, such as the repairing of broken equipment leased by the company to its retail partners. Salespeople help the company to provide correct information about the consumer benefits of its new healthy products (Segal, 2014).

Marketing micro-environment

The company is well-positioned to meet the needs of its market. It has a sufficient workforce, a robust corporate social responsibility program, and uses the latest technologies in the packaging and distribution of its products. The company also relies on the internet, traditional media, and salespeople to drive its marketing strategy. In the microenvironment, the company considers suppliers, competition, customers, intermediaries, and itself.

The main competitor is PepsiCo, and the two companies use the same business strategy to reach consumers. They rely on franchises for respective countries in the Middle East to handle their distribution and bottling needs. They also use diverse marketing strategies created by the parent company and the respective franchises. Customers are citizens of all ages located in the geographic region of the Middle East. They include retail and corporate customers. Rivalry in the business is high, and both Coca-Cola and PepsiCo are keen to gain marketing advantages by acquiring smaller brands and rivals to defeat each other.

Marketing macro-environment

To provide a macro-environment overview of Coca-Cola in the Middle East, this report uses the PESTLE analysis tool. The political situation in the Middle East varies among countries. Saudi Arabia, the United Arab Emirates, and Iran, among others, have been stable politically while Palestine, Yemen, Iraq, and other countries have been volatile. For Coca-Cola, its main operations in the region concentrate on the stable countries, but there is always a threat of violence spilling over or negative economic sanctions against some countries affecting its market performance. Generally, the region is safe for investors (Fry & Walt, 2015).

The region has a majority population of Middle-Income earners because of its endowment in oil resources. However, many markets are also tied to global financial markets and are affected by the overall performance of the global economy. A fall or rise in demand for oil ends up affecting the economies of many Middle Eastern countries, and this goes on to affect Coca-Cola’s market performance. Other than global oil prices, the population increase in the region is also increasing the market size of the company and present positive future prospects in demand for beverages.

Social factors affecting Coca-Cola’s performance include the tastes and preferences of Middle Eastern people. Many of them have become fans of the cold soft drink as the hot weather in the region favors cold drink consumption. However, the biggest social contributor to beverage drinking has been the casual nature of meetings for business and personal functions. At the same time, the region’s people have a culture and tradition of many holidays, which provide them with opportunities for consuming refreshments. Moreover, the Middle East has been accepting globalization increasingly, which includes the acceptance of the American culture of beverage consumption passively.

The technological effects of the macro-environment include the spread of the internet and growth in mobile device penetration. This has made it possible for companies like Coca-Cola to run integrated marketing communication channels that are impressive in their interaction approach to consumers. Social media is popular in the Middle East due to a growing youthful population, and it provides companies with advertising and word-of-mouth marketing opportunities (Statista, 2015). In manufacturing, the company is able to rely on renewable energy and on recycled materials to make its packaging materials for beverages.

Other considerations in the macro-environment include legal and environmental factors. The Middle East is not a single market, and the company has to seek operating licenses from specific countries. It must also obey regulations for multinational businesses. In many countries, the company relies on local franchises. The company may be affected by environmental regulations on emissions as its bottling plants, and distribution networks are potential sources of carbon emission. The packaging material for its beverage can also be considered as a major source of plastic and metal waste. The company attempts to use recycled materials in packaging, but it does not have absolute control of the sources along its supply chain.

Current brand portfolio: Gap analysis (expected, augmented & ideal)

The current brand portfolio for the company includes soft drinks, juice and juice drinks, coffee, water, energy drinks and teas, carbonated soft drinks, syrups, and milk-based products.

Although the success of Coca-Cola in the Middle East has been sustainable in the past years, the company risk going out of favor with consumers if it fails to capture the changes in consumer interests, the company exports its marketing strategies from North America to the Middle East, and this can be a reason for alienation with some of its target consumers. It needs to come up with a localized strategy that captures sufficient customer intelligence. This will enable it to remain responsive to the changes in consumer preferences and to alter its product promotion in various market segments appropriately.

Growth in sales in the Middle East in the previous year included an increase in sales in all brands of Coca-Cola except Diet Coke. As consumers in the United States continue to express concern about the sugar content and ingredients of Coca-Cola products, they will influence their counterparts in the Middle East to consider the same issues. Therefore, the company should be responding to queries raised by consumers globally as part of its integrated marketing campaign activities in the Middle East. Otherwise, it risks losing out to rival companies that do not have similar cases with negative publicity (The Associated Press, 2014).

New product/brand opportunity: Summary

The Coca-Cola Zero is a new product that the company intruded in its global markets. The product is a variation of the original Coca-Cola. It retains Coca-Colas’s distinctive taste that many consumers are familiar with when they are shopping. However, it also presents a sugar-free solution for consumers. In the Middle East, the Zero brand has a huge potential because consumers are increasingly becoming aware of the need to make healthy beverage choices. In addition, Coca-Cola has been unable to become the dominant still beverage company in the Middle East with its existing product portfolio and needed a new brand like “Zero” to appeal to changes in demographics and to present an innovative brand image to consumers. The increase in the number of young people will allow the company to have a big market share when it succeeds in marketing the “Zero” brand.

Value proposition

Coca-Cola seeks to influence positive change in communities by providing happiness through its beverages and participating in corporate social responsibility programs that affect the needy populations. In Lebanon, the company works with the Regional Food Banking Network to deliver more than 4.5 million meals annually to underprivileged households in the Middle East (Zaywa, 2015).

The company uses corporate citizenship activities to highlight its value to society. The company also has a product line consisting of healthy drink choices that help it defend itself against allegations of being unconcerned about the health of its consumers. A recent demonstration of its value proposition in helping vulnerable people in the community took place in Dubai. The company paid tribute to the hard work of laborers by allowing them to make phone calls using bottle tops instead of coins. The company then used the story as an advertising feature of its Coca-Cola brand in the country (Croucher, 2014).

Segmentation strategy/target consumers

The company will segment its customers according to their geographic location. It will use the country boundaries to different marketing activities. In addition to geography, the company will target people according to their demographic characteristics. For example, it will use its Coca-Cola Zero brand to target consumers who are looking for a cool product image association and, at the same time, are conscious of their healthy eating choices. The target of this brand will mainly be youthful. This demographic will likely try out new brands, as it is not tied down to brand loyalty. Other products such as Diet Coke, Minute Maid will be marketed to older consumers, especially parents making a conscious, healthy choice and looking for a quality beverage.

The company will also make a subtle difference in its marketing to male and female consumers to appeal to their feminine or masculine characteristics. The company will be paying attention to the level of education, the cultural influences, and the existing reputation of this brand in a particular market when it goes on with its segmentation strategy. In addition, it will target activist consumers by highlighting its contribution to a safe environment in various ways.

Intended positioning

The company has been actively buying out its competition or entering into a joint production arrangement so that it is able to dominate the beverage choices for consumers in the market. The company trails behind PepsiCo in market dominance and has been using the strategy to increase the number of brands offered as a way to improve its visibility in the market. Coca-Cola intends to offer itself as the default choice for most consumers when they consider any type of beverage in any situation. Its Coca-Cola Zero brand serves as a complimentary soft drink that is available in all outlets in the region alongside its other products and products from rival companies. The Zero brand has to come to a dominant product in combined marketing campaigns so that it attracts consumers who are eager to try new options. The Zero brand will occupy a premium market position so that it is able to appeal to consumers that are status-conscious (Wagner, 2013).

Marketing mix proposed

Product

Coca-Cola will be buying rival still beverage brands in the region and then add them to its existing portfolio. It will then offer them according to their respective brand names to preserve any existing brand value. The company will not be introducing new brands to the market except in cases where the brands have already been introduced in other markets. This is in response to the connectedness of the Middle Eastern target consumer, who is well connected to the global market and understands the available choices. The company will be purchasing rival products that it does not yet have in its portfolio.

In cases where there is a duplicate brand, the company will continue marketing the two or more brands with their respective names in the same market to avoid alienating any of its customers. Already specific products by Coca-Cola have individual brand personalities, and the company uses separated marketing campaigns to sustain their uniqueness; thus, the posed product strategy is to continue treating each brand independently based on its market features (Kotler, Armstrong, Tolba, & Habib, 2011).

Price

The products by Coca-Cola are available in different price segments. The traditional soft drink is available at the lowest recommended retail price. However, many consumers pay more than the retail price, depending on the location of purchasing the product. Generally, all products are priced competitively against the available competing brands. Coca-Cola will continue to consider its products as targeted to ordinary consumers. Thus, it will keep prices affordable to the low and middle-income consumer levels in the respective countries of operation. The pricing of specific brands will be different depending on the reputation of the brand in a particular market (Kotler, Armstrong, Tolba, & Habib, 2011).

Place (Marketing channels)

The marketing channels for the region will follow the company’s principle of thinking globally and working locally. Thus, it will be using its global approach to the marketing of its product and embracing local opportunities for distributing its products in the respective Middle East country markets. The company will sustain its operations in each country by continually training its partners on new operation technologies and techniques (Kotler, Armstrong, Tolba, & Habib, 2011).

Promotion (integrated communications)

The company uses its website and other news sites online to deliver press releases that inform consumers about its business activities. The channel helps the company to quell rapidly any rumors about its activities. In the past, it has used its company website and social network sites to inform consumers that it does not conduct business in most of the disputed lands in the Israel-Palestine border (Journey Staff, 2014). The company will also rely on customer-focused social media profiles that engage consumers with new branding information and provide the company with immediate feedback on its market performance.

The strategy will be to use the easiest opting in options for consumers and to rely on a brand personality that embodies the company’s mission. This will allow consumers to have a general attachment to the company and its products without having to interact specifically with all its products. The company will also rely on its sponsorship of major sporting events in the region to promote the Zero brand. A good opportunity for promotion will be the upcoming FIFA World Cup in 2018 in Qatar (Arabian Business, 2014).

Conclusion

Coca-Cola has a good marketing strategy for the Middle East. However, the company will continue following its main rival PepsiCo unless it alters some of the features of its strategy so that they make use of its global reputation well. In addition, it needs to continue considering the unique features in culture, economic situation, and promotion possibilities of its various brands in the region. Brand dominance by having a product in almost all categories of beverages sold to consumers is a good move that will work overall. However, it does not give the company a distinctive advantage over its rivals.

The company needs to come up with marketing features that set it apart. Its use of integrated marketing options to cultivate a reputation of innovativeness is the best for the company. With its new Coca-Cola Zero product, the company has an opportunity to increase its influence in the region and capture a bigger market share than it currently does. The important move will be to pay attention to the reputation of the company globally and to address any issues fast before they cause doubt to its Middle East consumers.

References

Arabian Business. (2014). FIFA sponsor Coca-Cola criticises ‘disappointing’ World Cup corruption report. Arabian Business. Web.

Croucher, M. (2014). Coca-Cola’s bottle-top operated phone video divides opinion in the UAE. The National UAE. Web.

Fry, E., & Walt, V. (2015). How secure is the Middle East? Fortune. Web.

Journey Staff. (2014). ‘Did you hear the one about…?’ Coca-Cola myths in the Middle East. Coca-Cola Journey. Web.

Kim, S. (2015). March madness fans at ‘Final Four’ in Indianapolis guzzle from drinkable bottle. ABC News. Web.

Kotler, P., Armstrong, G., Tolba, A., & Habib, A. (2011). Principles of marketing (Arab world edition). New York, NY: Pearson Education. Web.

Lync, R. (2010). Corporate strategy. Harlow: FT Prentice Hall. Web.

Segal, D. (2014). For coconut waters, a street fight for shelf space. The New York Times. Web.

Statista. (2015). Social network penetration in the Middle East and Africa from 2012 to 2018. Web.

The Associated Press. (2014). Coca-Cola sales up 3% globally, but Diet Coke suffers. CBCNews. Web.

The Coca-Cola Company. (2015). Mission, vision and values. Coca-Cola Journey. Web.

Wagner, K. (2013). Coca-Cola in the Arab World: “nothing but a local company”. Your Middle East. Web.

Zaywa. (2015). Coca-Cola Middle East renews partnership with the Regional Food Banking Network for the third year. Web.

Appendix

Coca Cola company performance versus PespsiCo globally from 2007 to 2012.
Coca Cola company performance versus PespsiCo globally from 2007 to 2012.
An innovative Coca-Cola Coke Zero billboard also serving as a soda dispenser.
An innovative Coca-Cola Coke Zero billboard also serving as a soda dispenser.
Coca-Cola example of corporate social responsibility: Installed phone boxes in drink dispensers in Dubai.
Coca-Cola example of corporate social responsibility: Installed phone boxes in drink dispensers in Dubai.
Soda market forecasts by region 2013-2018.
Soda market forecasts by region 2013-2018.