UNIVERSITY OF PETROLIUM

& ENERGY
STUDIES

SUBMITTED

TO

Prof. DR. A.K JAIN

(MARKETING MANAGEMENT)

BY

DEVAJIT BARMAN
M.B.A. (International Business)

COLLEGE OF
MANAGEMENT
PROJECT REPORT

OF
 CASE STUDY

“ COCA-COLA INDIA'S THIRST FOR THE RURAL MARKET”

CASE SUMMARY

The case study has generally laid emphasis on the decision taken by the Coca-Cola
India (CCI) to penetrate their business into the rural market. The main aim was to
increase the market share and make Coca Cola the generic brand for cold drinks.
Moreover, the infrastructure and the culture of the people in rural areas were the
major hindrances for the company. CCI's rural marketing strategy was based on
three A’s - Availability, Affordability and Acceptability. The first 'A' –
Availability emphasized on the availability of the product to the customer; the
second 'A', Affordability focused on product pricing, and the third 'A',
Acceptability focused on convincing the customer to buy the product. For
availability of product the company followed hub and spoke distribution technique
in which the product is sent to the hub from the plant and from hub to spokes
which were situated in small towns. These spokes were responsible for selling the
products to the retailers. For transportation the company used trucks, auto
rickshaws, cycles, rickshaws, handcarts and even camel carts in Rajasthan and
mules in the hilly areas. The company also distributed around 2, 00,000
refrigerators among the rural retailers and also bought 5,000 new trucks and auto
rickshaws. Through these initiatives, CCI was able to raise its presence in rural
areas from coverage of 81,383 villages in 2000 to 1, 58,342 villages in August
2003. For affordability the company keeping in mind the state of the rural people
also introduced 200ml bottles of coca cola for just Rs5. named as Chota Coke
which also gave a competition to the local cold drinks of Rajasthan? For
acceptability the company marketed the brand in all possible ways as outdoor
advertising, ads on doordarshan. It also featured actor Amir Khan as a villager
selling coca cola with the tag line “Thanda matlab Coca Cola”. This tag became
very popular too. CCI claimed all its marketing initiatives were very successful,
and as a result, its rural penetration increased from 9% in 2001 to 25% in 2003,
CCI also said that volumes from rural markets had increased to 35% in 2003. Then
came a tough competition from PepsiCo which also focused on the rural market
providing them with 200ml cold drink at Rs5. and 300ml cold drink at 6 Rs. As a
result, the company has to think something innovative and new in order to coming
up with new products such as juices, coffees. A major media setback occurred in
August 2003 when Delhi based Centre for Science and Environment announced
that high amount of pesticides were found in cold drinks manufactured by the Cola
company. Even though, the company refuses the entire allegation but still the
market share was seen decline.

COMPANY PROFILE
The Coca-Cola Company is the world's largest beverage company, largest
manufacturer, distributor and marketer of non-alcoholic beverage concentrates
and syrups in the world and is one of the largest corporations in the United
States. The company is best known for its flagship product Coca-Cola, invented by
pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was
bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in
1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers nearly
400 brands in over 200 countries or territories and serves 1.5 billion servings each
day. Coca-Cola is the best-selling soft drink in most countries. While the Middle
East is one of the only regions in the world where Coca-Cola is not the number
one soda drink, Coca-Cola nonetheless holds almost 25% market share (to Pepsi's
75%) and had double-digit growth in 2009.

In India
A Healthy Growth to the Indian Economy

Ever since, Coca-Cola India has made significant investments to build and
continually consolidate its business in the country, including new production
facilities, waste water treatment plants, distribution systems, and marketing
channels. Coca-Cola India is among the country’s top international investors,
having invested more than US$ 1 billion in India in the first decade, and further
pledged another US$100 million in 2009 for its operations.

A Pure Commitment to the Indian Economy

The Company has shaken up the Indian carbonated drinks market greatly,
giving consumers the pleasure of world-class drinks to fill up their hydration,
refreshment, and 1 Data accessed on http://en.wikipedia.org/wiki/The_Coca-
Cola_Company. 2 Data accessed on http://www.coca-
colaindia.com/aboutus/aboutus_ccindia.aspx.
PROBLEM

 How to introduce coke in a rural market.

 What pricing strategy to be use in rural market
 Poor infrastructure.
- Lack of electricity in the rural areas.
- Lack of proper road ways.
- Lack of storage facilities.

THE VITAL PROBLEM

 What strategy should be implementing in order to succeed in the
rural market?
 Competitors entering in market. Example – PepsiCo.
 Decrease in market share of Cola Company when pesticides
were found by Delhi based Centre for Science and Environment.

CONSTRAINTS
 Electric problems in rural areas.
 Limited advertisements and channels in rural areas.
 Miss utilization of resources.
 Ice box given to the rural retailers for storing cold drinks are
not been use for storages of cold drinks rather they are been
used to store milk packets, lassi, curds etc.
 Poverty and Literacy ratios are high in rural areas .
 Lose of turnover.
SOLUTION GIVEN IN THE CASE
The main problem was of transportation of the cold drink for which
the company use hub and spokes mode of transportation. They used all the possible
vehicles such as trucks, carts, rickshaws etc. and distributed refrigerators also.
They featured actor Amir Khan in the advertisements for making the rural people
aware about the product and also they featured their ads on doordarshan which
reaches around 70 million homes. Also they introduced 200 ml bottles for just Rs
5. seeing the pocket of the people in rural areas. This increased their market share
and sales to a good extent.

SWOT ANALYSIS
STRENGTHS

Coke has been a complex part of world culture for a very long time. The
products image is loaded with over-romanticizing and fun; this is an image
many people have taken deeply to heart. It is extremely recognizable
brand, which is the greatest strength of them. Additionally there Bottling
system is one of their greatest strengths. This allows them to the conduct
business on a global scale while at the same time maintain a local
approach. The bottling companies are locally owned and operated by
independent business people who are authorized to sell product of these
cola giant. Coca cola are having the largest distribution network in the
world, which is also there one of the greatest strength.

WEAKNESSES

Weaknesses for any business need to be both minimized and monitored in

order to effectively achieve productivity and efficiency in their business
activities. Moreover all over the India especially in the rural areas the
customer preference for cola drink is shifting towards the healthy drink is
taking place. Being addictive of cola drink is also a health problem,
because drinking of carbonated soft drink daily has an effect on your body
also.
OPPORTUNITIES

Brand recognition is the significant factor affecting Coke competitive

position. Coke brand is known well throughout 95% in India today. As in
India per head consumption is only 1 bottle in rural areas as compare to 6
bottles in urban areas. So looking at these data we can say that lot of
potential is there in developing market which is now also untapped.

THREATS

Currently, the threat of new viable competitors in the carbonated soft drink
industry is not very substantial. The threat of Substitute, however, is a very
real threat. The soft drink industry is very strong, but consumers are not
necessarily married to it. Possible substitutes that continuously put
pressure on include tea, coffee, juice, milk and hot chocolate. Even
through, the changing health consciousness of the market could have a
serious affect. Of course, both have already diversified into these markets,
but still this Substitute will remain threat to them. Consumer buying power
is also represents a key threat.
RECOMMENDATION
 Branding Strategies

Communicate openly with key constituents, including the

public, the media, employees, franchisees, the trade/channel, state and
national government, and suppliers. Open, honest communication is key to
communicating a spirit of partnership and a willingness to resolve the issue
in a way that benefits the Indian customer.

 Rural Market

- Listen to the customers.

- Manage for tomorrow

- Prove it with action that Coke is suitable with the Indian rural

areas.

 Distribution Strategies

- Make more extensive distributive channels.

- Put lot of large distributors all over India.

 Advertising Strategies

- Trying’ to improving more rural condition mixed with Coca-

Cola Branding.

- Start aggressive advertising campaign

- Announce a new campaign for new flavor of Cokes

and others.

CONCEPTS
The case is related to market

 PENETRATION STRATEGY

The Coco- Cola Company entering the rural market to increase

its market share would be an example of penetration strategy which
can be seen in the above case study.

 PRODUCT DEVELOPMENT STRATEGY

The introduction of new size and shape of bottles

according to target market also an example product
development strategy which can be seen in the above case
study.