Coca Cola India’s

Thirst for the Rural

Market
 (Q-1)
In the late 1990’s CCI Increased its focus on the
rural market in India. Explain the reasons for CCI’s
move in detail.
Availability:-
• CCI's entry into rural markets led to a shift in distribution
strategy.
• Centralized distribution from bottling plants to retailers
wasn't viable due to high costs for long distances.
• Hub and spoke system adopted: Stock moved from
plants to hubs, then to spokes in small towns, serving
rural demand.

• Transportation means varied: Large trucks, medium

vehicles, auto rickshaws, cycles, even unconventional
like camel carts and mules.
• Rs 7 million invested in 2002, 25 production lines
added, glass/PET bottle capacity doubled by March
2003.
• 200,000 refrigerators provided to rural retailers; 5,000
trucks and auto rickshaws purchased for distribution.
• Expanded presence from 81,383 villages (2001) to
158,342 villages (August 2003).
• Pricing strategy also emphasized in rural markets.
 Affordability:-
• CCI's 2001 survey finds rural and semi-urban residents
sharing 300 ml bottles and finding Rs 10 price high.
• CCI plans changes in bottle size and pricing for rural
market appeal.
• In 2002, CCI introduces 200 ml bottles (Chota Coke) at
Rs 5 for rural consumers.
• Focus on pushing 200 ml bottles in price-sensitive rural
areas.
• Expected boost in consumption with affordable 200 ml
bottles. Rs 5 price makes CCI competitive against
cheaper local brands.
• Choice and Tikli local colas cost half as much in Rajasthan
and Gujarat.
• CCI's Chota Coke counters local brands for market share.
• Aggressive marketing campaigns target rural consumers,
enhance brand awareness.
 Acceptability:-
• CCI's initiatives in distribution and pricing were supported by
extensive marketing in mass media and outdoor advertising.
• Hoardings were placed in villages and the name "Coca Cola"
was painted on residential compounds.
• Participation in weekly mandies and annual haats and fairs
boosted business in rural India.
• Television commercials (TVCs) were launched targeting rural
consumers, increasing ad-spend on Doordarshan.
• Chota Coke launch in 2002 featured Aamir Khan in a rural
setting, promoting the Rs. 5 price and 200 ml bottles.
• Summer 2003 commercial featuring Aamir Khan aimed to
make "Thanda" synonymous with Coca-Cola.
• 'Thanda Matlab Coca-Cola' tag line used in three commercials
between March and September 2003.
• Aamir Khan portrayed different characters (fapori,
Hyderabadi shop-keeper, Punjabi farmer) associating
'Thanda' with Coca-Cola.
• Commercials progressively linked 'Coke' with 'Thanda' in
rural/semi-urban context.
• Analysts noted successful rural consumer connection and
increased brand awareness.
• Print advertisements also launched in regional newspapers.
 (Q-2)
According to analysts, CCI's "Thanda Matlab Coca-Cola'
advertisement was a major hit and made rural consumers
connect with the product. Discuss the importance of
advertising in rural marketing. What are the issues in
advertising that a company should focus on while
targeting rural consumers? Do you think there should be
differences in advertising for rural consumers, and urban
consumers? Justify your stand.
• CCI introduced a new commercial in 2003 with Aamir Khan to
strengthen Coca-Cola's rural brand image.
• The aim was to establish "Coke" as a synonym for "Thanda" (cold)
in the North Indian context.
• Prasoon Joshi, the creator, explained that "Thanda" was a regional
term commonly used for beverages like lassi and nimbu pani in the
North.

• The concept aimed to link Coca-Cola with the popular term

"Thanda" in the northern dialect.

• Three commercials were launched between March and September

2003 under the tagline "Thanda Matlab Coca-Cola."
• The first commercial featured Aamir Khan as a street-smart
character, connecting Coca-Cola with "Thanda."
• In the second commercial, Aamir Khan played a Hyderabadi
shopkeeper, subtly emphasizing the term "Thanda" over Coca-
Cola.

• The third ad portrayed Aamir Khan as a Punjabi farmer offering

Coca-Cola when ladies asked for "Thanda."
• The progression of commercials strengthened the association of
"Coke" with "Thanda" in rural and semi-urban settings.
• Analysts noted that the commercials effectively connected rural
consumers with Coca-Cola and raised brand awareness.
• Alongside TV commercials, CCI launched regional print
advertisements in various newspapers.
 (Q3)
Some analysts feel that with the urban market reaching
saturation, the Cola war will now be fought in the rural
market. What are the issues that CCI and Pepsi Co have
to focus on to capture the rural market? Who do you
think is more comfortably placed in the rural market?
• CCI claimed successful marketing, rural penetration 9%
(2001) to 25% (2003), volumes 35% from rural markets.
• Focus on adding villages to distribution network, 0.1
million target in 2003.
• Competition from PepsiCo challenging CCI's market share
growth.
• PepsiCo also targeting rural market, launched Rs. 5, 200
ml bottles.
• PepsiCo reduced 300 ml bottle price to Rs. 6/- for urban
market boost.
• CCI dropped plans for new beverage businesses due to
cola volume increase.
• Media setback: Center for Science and Environment found
pesticides in soft drinks of both cola companies.
• BBC Radio alleged groundwater misuse and
contamination by CCI's Kerala plant.
• CCI denied allegations but faced sales decline after
August 2003.
• Social and political groups opposing cola companies in
rural areas pose challenges for CCI's rural market
expansion.
Thank You