Why does coca-cola have a good market in china?

The coca-cola was invented in Atlanta, Georgia in 1886 by Doctor John Pemberton, is a pharmacist. The coke company was established in 1888. Coke is a carbonated beverage that is available in stores, restaurants, and vending machines across the world. Now, it has become as one of the global market leaders in the beverage industry and their products sold over 200 countries around the world. (Lifestyle, 2010) Explain the reasons of why the coca-cola is so popular in china clear through the analysis of this essay. The major aim is analyze two aspects regarding how the coca-cola company makes success in china, the first one is virtual business model and describe some benefits of this model, the second one is establish successfully a good brand.

Virtual business model is a marketing from that breakthrough the enterprise administrative boundaries and accelerate its development rely to external force. The first paragraph expounds overall the virtual business model of the coca-cola company. It had made a number of other aspects such as production, bottling, marketing and so on to be virtualization except the secret recipe of coca-cola and its branding. Coca-cola Company had invested more than 1 billion until the end of 2003 in building 23 bottling companies and 28 production companies with three major bottling companies. They are China Oil & Foodstuffs Corporation, TaiGu Corporation and JiaLi Corporation.

Then, discussing some benefits of the virtual business model, the first one is try the best to save resources. Coca-cola Company retains the most important functions when they implement virtual business model and has the aid of resources of China Oil & Foodstuffs Corporation to make up their deficiencies. All the branches of China Oil & Foodstuffs Corporation in China substitute for coca-cola company to manufacture and transport products in order to save the cost of goods. So coca-cola company could save a great quantity of resources to put the key point focus on the functions what have a high additional value. The second advantage is decreasing the risks for the coca-cola company. The company has not to operate all the works range from production to marketing, so they do not need to undertake all the risks. Additional, the company adapted to characteristics what the new economic era environment changed quickly and the future is uncertain.

The next paragraph illustrate in detail about the branding of coca-cola company. Having a simple description of the brand value of coca-cola, it(including coke and diet coke) gained the number four slot in the 100 ranking-behind non-food brands Google, GE and Microsoft with a brand value of $58.2 billion, and it has 17percent increase on the previous year. (Foodnavigator, 2010) Corporate branding is about establishing an overall image of the organization. This has strategic implication in the four ways. (Blythe, 2003)

Next, researching the reasons about why the coca-cola achieve a big brand after have a brief description of the four ways, talking about the reasons from two parts. The one part is the price strategy. The coca-cola company has a terrible ten years to be in loss from it expand overseas marketing and come into china in 1979. At that time, people have lower life level and incomes because of the planned economy, meanwhile, the coke’s price is 1.5yuan each bottle, nearly all of the people could not spend tenth of their income to buy the coke each month. Whilst, the company was waiting for people’s incomes would be raised in the future. Nowadays, people’s incomes increased by a huge margin, but the price of coke just increased 1yuan than before, the company satisfied the customers’ consumer psychology use the tiny price difference. And the coca-cola company cultivate customers’ loyalty index.

The second part is expressing the brand promotion in detail as the major object. ‘Promotion is the process of inspiring require for a company’s goods and service. MNEs promote their goods and services through advertising and personal selling’. (Rugman,2003) Advertising is a non-personal form of promotion in which a firm attempts to persuade consumers to a particular point of view. (Rugman,2003) The original coca-cola marketing director named Sergio Zyman (Keynotespeaker, 2010) wrote a book and people could realize other one side of the brand that is coca-cola company’s successful brand depend on many various factors, the company is good at use tools whatever they can utilize. Coca-cola Company will invest a large sum of money in their advertisement. The turnover just was 50 dollars, whilst the advertisement fees reached to 46 dollars in 1886. Now, the advertisement fees over 600 million dollars. From these data, people could realize how much importance coca-cola company put on the advertisement.

The company has many classical advertisements and the significant characteristic is red temptation of coca-cola, the creativity of advertising could get from the packing and color of product when product of coke has never changed. In addition, the company always catch best chances for publicity their brand. For example, the coke had prepared special packing for success to apply of Beijing Olympic when all of Chinese people were waiting for the result of application in 2001. Except that, coca-cola also support sports and invest in education. Then talk about the brand competition between coca-cola and Wahaha with the Porter’s Five forces, they are ‘threat of substitute products, bargaining power of suppliers, threats from new entrants, bargaining power of buyers and intensity of rivalry in the industry’.(Stinehouse, 2000) then explain the Porter’s five factors briefly. Although coca-cola company has achieved so brilliant achievements, it also has a different opinion than before, it must face an increasing competition comes from Chinese companies. Compare the coca-cola with very coke and evaluate the product. Analyzing the competition degree from two aspects, the advertisement of coca-cola is more efficient than wahaha. The price of wahaha is only less 0.3 yuan than coca-cola. At last the coca-cola produce some other beverages to enrich marketing after make a better brand, such as spring and seven-up, these production decrease the wahaha’s attack in other area drinks except coke.

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