Wahaha Case Study
QUESTION 1: What “international strategy” and “modes of entry” did COKE/PEPSI use to penetrate the Chinese Market? How effective were these choices?
When Chinese markets opened up in 1980’s, Coke/Pepsi focussed on defining several strategies to Differentiate, Market and distribute their Cola products to Chinese consumers.
International Differentiation Strategy: Both used two main aspects of this strategy “Branding” and “Cost Leadership“to force local producers to withdraw from the market or establish joint ventures with them. They invested heavily in Brand recognition and used lots of advertising and sponsoring to support their cola brands. They replicated their global rivalry in China and initially were determined to seize market share from domestic cola producers, even at the cost of profitability.
Later, Coke instituted the “Glocal” strategy which means “Think Local, act local but leverage global” but Pepsi instituted its positioning on young consumers.
International Marketing Strategy: Coke spent heavily on Marketing to create a sound brand image and included Chinese cultural icons like windmills and dragons in its advertising. Local films and sports stars were engaged, sponsored National Soccer teams and International Olympic Committee as well with funding up to $1.1 Billion for Beijing Games.
Pepsi also used a great deal of Marketing like using popular entertainers such as Faye Wang, Guo Fuchen as endorsers. Pepsi became the most popular soft drink brand for young consumers due to its focussed Marketing for this demographics.
International Distribution Strategy: Both preferred to establish their own distribution networks while setting up Joint Ventures with bottlers and bottlers managing sales in their assigned territory. They set stringent sales targets for bottlers, and in turn bottlers would set targets for distributors.
While in most of the joint ventures, Coke did not have majority shareholding but Pepsi sought a majority share in the joint
When Chinese markets opened up in 1980’s, Coke/Pepsi focussed on defining several strategies to Differentiate, Market and distribute their Cola products to Chinese consumers.
International Differentiation Strategy: Both used two main aspects of this strategy “Branding” and “Cost Leadership“to force local producers to withdraw from the market or establish joint ventures with them. They invested heavily in Brand recognition and used lots of advertising and sponsoring to support their cola brands. They replicated their global rivalry in China and initially were determined to seize market share from domestic cola producers, even at the cost of profitability.
Later, Coke instituted the “Glocal” strategy which means “Think Local, act local but leverage global” but Pepsi instituted its positioning on young consumers.
International Marketing Strategy: Coke spent heavily on Marketing to create a sound brand image and included Chinese cultural icons like windmills and dragons in its advertising. Local films and sports stars were engaged, sponsored National Soccer teams and International Olympic Committee as well with funding up to $1.1 Billion for Beijing Games.
Pepsi also used a great deal of Marketing like using popular entertainers such as Faye Wang, Guo Fuchen as endorsers. Pepsi became the most popular soft drink brand for young consumers due to its focussed Marketing for this demographics.
International Distribution Strategy: Both preferred to establish their own distribution networks while setting up Joint Ventures with bottlers and bottlers managing sales in their assigned territory. They set stringent sales targets for bottlers, and in turn bottlers would set targets for distributors.
While in most of the joint ventures, Coke did not have majority shareholding but Pepsi sought a majority share in the joint
References: 1: International Trade & Academic Research Conference (ITARC ), 7 – 8th November, 2012, London.UK. on “COCA-COLA: International Business Strategy for Globalization” 2: Porter’s Five Force model of Competition: http://www.managementstudyguide.com/porters-model-of-competetion.htm 3: Cola Wars in China: Case Study Analysis Source: Strategy Analysis and Practice 2005 McGraw Hill Education Europe 4: Cola Wars in China : The Future is Here ; Case Study by Nancy Dai at Richard Ivy School of Business. 5: Cola Wars – UTS 21715 – Strategic Management Lecture 3 University of Technology Sydney 6: Alon, I., Littrell, R. F., & Chan, A. K. (n.d.).Branding in China: Global product strategy Alternatives.http://www.aabri.com/OC09manuscripts/OC09002.pdf 7: Espitia E., Manuel and Ramires A., Marisa The impact of product diversification strategy on the corporate performance of large Spanish firms.Spanish Economic Review Volume 4 Number 2. P.119-137 2002.