Coca-Cola’s Marketing Strategies in China

Coca-Cola’s advertising and branding Strategies in China that are more relatable for the Chinese consumers and also incorporate the Chinese culture and values

This research aims at determining the glocalization strategies Coca-Cola is using in advertising and branding in China and how these strategies have contributed to its success in China. This chapter contributes to the achievement of the main aim of the research by reviewing past literature that discusses Coca-Cola’s marketing strategies in China. This research will review academic sources relating to the research topic. First, the research will discuss the relevant theories relating to the research topic. Secondly, it will discuss the findings from past literature relating to the research topic and to the theoretical review. Lastly, this section of the research will determine the gaps in knowledge the past literature leaves that should be filled in the future. The sources reviewed will be recently published; articles published within the last ten years. The sources reviewed are expected to find that Coca-Cola’s advertising and branding strategies have been successful and have contributed to its long-term growth in China. The theory used in understanding glocolization in the advertisement and branding strategies by Coca cola in China is the symbolic consumption theory. The definition of symbolic consumption occurs when individuals use consumption and its meaning to communicate about themselves. Through adverts and branding that incorporates their culture, consumers attach meaning to products and change the consumer behavior to suit the products they feel communicate about them effectively.

Among the most relevant literature discussed in this project that will be very helpful in the achievement of this project’s goals is Gao’s (2012) article “Advertising and China: How does a love/hate relationship work?” that discusses how coca cola brought change to China’s advertising in general as a result of its advertising strategies in china in the 1980s.  In his opinion although Coca Cola’s advertising strategies were highly criticized they changed China’s advertising from hard-sell to soft-sell advertising. Banutu-Gomez,’ (2012) article “Coca-Cola: International business strategy for globalization” discusses how Coca Cola’s glocalization branding strategies have led to the better performance of the company in China. He suggests that the brand image Coca-Cola has created in China creates mental satisfaction and behavioral change that leads to massive purchase among Chinese consumers. This article also reviews Lin et al., (2012) article “The influence of cultural values in advertising: Examples from China and the United States” discusses how Coca Cola’s advertisement strategies in China represents the Chinese culture. They discuss how Coca Cola advertises its brand and at the same time promotes the Buddhist and Taoism cultures that are most prevalent in Asian countries. Wei and Yu’s (2012) article “How do reference groups influence self-brand connections among Chinese consumers?” talks about how Coca Cola’s glocolization advertising strategies aimed to reach the young Chinese population have impacted the growth of Coca Cola’s market share in China. These are just a few of the articles reviewed in this project. The data collected from these articles relates to the symbolic consumption theory in that, the authors all suggest that Coca Cola has been successful in incorporating the Chinese culture and values in their branding and advertising and this has led to its positive growth in China.

Theoretical Review

Symbolic consumption

The definition of symbolic consumption according to Lee, (2013) occurs when individuals use consumption and its meaning to communicate about themselves. Through this perspectives, advertisers must fulfill their consumers’ needs and preferences to help them transform from who they are to who they want to become and also bridge the gap between them and society. Through adverts and branding that incorporates their culture, consumers attach meaning to products and change the consumer behavior to suit the products they feel communicate about them effectively. Companies try to wrap up their products in mythic meanings in an attempt to fulfill their consumers’ needs and preferences. Through advertisements, companies help their consumers transform from who they are to who they desire to become and also to bridge the gap between them and others around them. Hence, consumption is one way to create an aspirational self. Advertisements attach meaning to the products that are not intrinsic to the particular product rather, the marketers create and motivate the meanings of the products. Marketers are responsible for creating symbolic value for their products that address the desires, needs and identities of their potential consumers.

The importance of consumer goods lies in the ability of the goods to communicate cultural meaning. Batey (2015) asserts that the cultural meaning of the products does not reside in the goods. Rather, the consumers’ behavior and practices transfer the cultural meaning to and from the products. Advertisement is an effective way to create and transfer cultural meaning to products because it brings the consumer good and representation of the cultural world together within a given advertisement.

Coca Cola in China

Coca-Cola has an exceptional marketing strategy and a super portfolio of more than 500 different drinks. In china Coca-Cola has been around since 1900’s quenching the thirst of millions of Chinese people. Coca-Cola came up with an aggressive way of mass marketing strategy, it is pioneered the adaptive marketing which is the allocation of marketing resources and personnel in relation to consumer behavioral trends. Banutu-Gomez (2012) suggests that the company’s aggressive global marketing strategies are the reason why Coca-Cola has been successful in building a strong brand image in the Asian countries. He reasoned that the brand image Coca-Cola has created in China creates mental satisfaction and behavioral change that leads to massive purchase among Chinese consumers. China has been successful in creating a well-known brand that the Chinese consumers can relate with and attracted loyal buyers. The localization branding strategy China used that was successful in creating this brand image is changing its label to an appropriate Chinese name that sounds like “Coca-Cola” in Chinese. Glocalization refers to the growing interdependency of the global economies, populations and cultures. Globalization is the cultural homogenization that involves the domination of one regional culture over others. In this research, the term glocalization is used to refer to how Coca-Cola, being a global company, uses Chinese cultural symbolism to promote the culture of consumption within the Chinese society.

The Chinese market has realized a rapid growth in advertising recently becoming the second in advertising after the US. According to (Puppin, 2014) the sudden growth in advertising is as a result of the joint-venture arrangements that western-based and Japanese global advertising agencies have had with China since 1979. China has now become not only these markets’ global clients but also their advertisers. Coca-Cola penetrated the Chinese market in 1979 as the first foreign brand being sold in the country at the time. The first foreign advertisement on CCTV was done by Coca-Cola and was followed by much criticism with the Chinese consumers arguing that it did not aim at ordinary Chinese consumers. By the 1980s, Chinese advertising had adopted hard-sell advertising strategies that focused on product information (Gao, 2012). The growth in foreign advertisements led the Chinese market to adopt soft-sell advertising strategies that rather than focusing on product information, it focused on culture, and a range of values held specifically by the Chinese consumers. This transformation has led to the growth of advertising in the Chinese market and has had positive impacts on the consumption of foreign products by the Chinese consumers.

Branding Strategies

Coke is one of the most popular carbonated beverages in china. A study conducted around 2015 shows that Coca-Cola sold around 93 million metric tons, and the figure keeps on improving at a rate of about 4% annually. At first, it was difficult to access the Chinese market because most people preferred their drinks hot instead of cold, and most Chinese consumers considered the coke test odd. This is why most of the success attributed to coke in china should give credits to its marketing strategies, when Coca-Cola was first sold in the year 1927 it had to translate its name to “ke kou ke le” which can be translated to its time for the mouth to rejoice or “delicious happiness” their main competitor at the time was a drink called “arctic ocean” Coca-Cola had the marketing advantage of this beverage not only because its pricing was lower but also because the consumers felt more connected to the drink because it felt more homely (Shi, 2019).

A consumer is defined as a person who makes the decision to buy a product by actually paying for it, Coca-Cola which focuses on manufacturing of non-alcoholic drinks focuses on the consumer compared to the customer, this is why it has come to realize that the millenniums value openness to changes in values, sense and culture. Coca-Cola companies are believed to have been nationalized by their chairman Mao Zedong in the ear 1949 this is the point where Pepsi had won the bid to soviet amount huge pressure on Coca-Cola into becoming a communist giant (Byun, 2010). The chairman J. Paul Austin asked Peter Lee to launch a Coca-Cola brand in its Chinese territory. During the Beijing negotiations Lee managed to convince the authorities to commit to a contract on agreement on the premise that china was finally open for tourists and Coca-Cola was a product that they could really love, the agreement was announced on December 15th 1978 (Berger & Huntington 2012). Coca-Cola had a rough time expanding its market because it was only permitted to sale to tourists only, it was even punished for holding an illegal street promotion in Beijing in the year 1980. But as the restrictions eased the company built a production facility on chines soil, followed by a breakthrough when it launched its first Shanghai cooperative joint. One of the most successful brands that took the markets by storm is “Minute Maid.” It entered china with flavors such as grapefruit and orange at around 2004. Coca-Cola built a revolution in china they made sure that their brand name benefited from the product. This study claims the successful impact of unconventional and creative marketing strategies that Coca-Cola adopted are segmented to attract youths and people in their mid-50’s especially in social and family gatherings.

Coca-Cola does its branding in local languages, and coming up with social media trends which are relatable with millennial, it is also maximizing the use of the brand it has built over the years towards its competitive advantage (Yao, 2016). While concluding at the end of this study it should be clear how social media, digital marketing and incorporation of cultural symbols has contributed to coca cola’s success in Asian countries such as China. Both qualitative and quantitative research methods will be applied, the qualitative method will be used to obtain data from around 30 respondents while the quantitative research method is used in focusing on the effects that glocalization has had to Coca-Cola being successful. Coca-Cola acts as a salient case for study on how it has successfully managed to use cultural ideologies and Symbols in advertisements in China, and it is also successful in marketing around different cultures around the globe (Wong, 2017).

The company uses packaging and promotion as a mode of further differentiation. The Coca-Cola bottle has also been recognized as a symbol internationally. They managed to diversify from their competitors such as Pepsi into building a product that offers unique value to its customers. There is also the significant growth of Coca-Cola to regions that can be considered to be remote. The company is always focused on expansion and opening of new outlets around china diverse regions. This can be done by creation of brand awareness within these remote villages, equity and branding has to be seriously taken into account. Experts talk about horizontal growth which means more sales can be attained through opening of new outlets and ensure that they are sustainable.

Advertisement Strategies

Coca-Cola’s advertising strategy includes giving out chopsticks and balloons at shopping malls for every bottle bought. It is difficult for most international brands to penetrate the Chinese market because their cultural values seem to be antagonistic towards consumerist ideas (Lin, Koroglu & Olson, 2012). For ages, Buddhism and Taoism have shaped Chinese society; this is more of ethics and philosophical concept rather than a religious one. Master Kong fu zi was successful in establishing a moral and ethical system whereby the relationship between friends and family promoted virtues such as honesty, trustworthiness, and benevolence. According to Chao et al, (2012) one of the most critical point to note is the confusan theory teaches about the need to always acts in favor of a group’s interests. This is why most Chinese consumers only buy a product if it brings out inner happiness, and it should represent some social status and wealth. This will lead them to buy products produced locally in order for them to collectively achieve in-group-goals and realization of cultural aspirations.

Consumer satisfaction has been attained by diversification of packaging products into more fashionable possessions. In the year 1920 china changed from using cans into plastic bottles their objective was to impact the packaging demographic, and consumer preference to price and packaging. In china most consumers are believed to like buying their Coca-Cola in plastic bottles compared to cans. Most consumers are loyal to Coca-Cola compared to other brands such as Pepsi It is in china where the largest share of carbonated drinks is at. Coca-Cola by itself it commands more than 70 percent of this share, then closely followed by other brands such as Pepsi and future cola. Coca-Cola has really been aggressive in the way it conducts its advertisements, market segmentation and branding. It has managed to portray itself to youths as freedom, playfulness and fun. This is the reason why the company has been sponsoring worldwide events such as Olympics, FIFA world cup and other major film festivals (Wei & Yu, 2012). Coca-Cola has spread to new markets such as china through direct, export, franchising and licensing modes. The fact that Coca-Cola has been able to maintain quality that cannot be compared to other competing brands.

Wu (2018) states one challenge that the coca cola company should consider is people inclining towards healthier drinks which are sugar free. The introduction of products such as diet cola and sugar free cola shows that Coca-Cola is always listening to is consumers and following current trends in the market. By the time is competitors introduce such products coke zero could have already grabbed a larger market share. There are a number of effective strategies that companies can apply globally to ensure that they firmly hold to some major markets. They include, labor, management, distribution, marketing, diversification and collaborative strategies (Fifield, 2012). Instead of Coca-Cola opening bottling plants around the world which may be expensive to operate and maintain, they can hire already setup bottling plants for a long period of time. This has enabled them to stay afloat for more than 50 years. This is because Coca-Cola possesses an international differentiation strategy in, cost leadership, advertisements and maintenance of a patriotic company to its loyal customer (Robert Sarich, 2011).

Approximately 64% percent of university students in Beijing drink Coca-Cola products for at least once a week. But it is amusing that almost 20percent of them have never used Coca-Cola products may be due to financial constraints or health backgrounds. There is around 8% who consume Coca-Cola products on alternate daily or daily basis (Greenhalgh, 2019). Another important factor to note is the fact that Coca-Cola’s sales are dependent on the number of units they sale compared to the quantity of the product that they sale. Most of the youth prefer to buy their sodas while going for fun events or have cravings. Tentatively, the youths want maximum marginal utility to enable them derive more from the product (Thacker, 2017). This is where we focused on the qualitative aspect so that we could understand how Coca-Cola uses the quality of its product to draw more consumers to it. It has also built its brand in a way that it can be used for prestige. Most youths could find their counterparts saying that they have a better taste by preferring Coca-Cola compared to Pepsi and Limca (Tian, 2016). Although most youths are influenced by new trends most youths, we obtained their answers from our online platforms preferred the normal coke over its variants such as coke zero sugar and coke with a taste of coffee. The price remained to be a determinant factor since the demand remains equally proportional to price. Around 50 samples were collected from online questionnaires that were circulated around university students in Beijing. They came from different religious, social and even cultural backgrounds. The samples are collected from people who had bought another Coca-Cola drink in the past 48 hours so that we could be able to interview continuous users of Coca-Cola products (Singaram, 2019).

Coca-Cola has applied the glocalization strategy of “first-in-market advantage” strategy this is because it is the first company to open a manufacturing and distribution channel in China, According to Chen, (2011) this has helped the brand to become engraved in the collective Chinese memory as a brand of their own. Coca cola is now able to form strategic partnerships with logistic and bottling companies across the china this advantaged them because they were able to concur other regions across the whole continent of Asia.  Coca-Cola also came up with a campaign of having bottle labels featuring song lyrics, common names, movie themes and popular icons’ quotes. These are some of the things that china’s young people like it fascinates them by using codes and symbols they use in their local slangs and means of communication (Mok, 2012). The use of these symbols creates a meaningful conversation between the brand and the youths establishing the sense of belonging to a specific beverage in the market. The incorporation of religious and traditional forms of communication in branding and advertisements also attracts the older members of the society who confine themselves to values and cultures of the ancient chines people it enables the older member of the society to read as they come across billboards such a local feel has really increased brand loyalty. Millennial are really influenced by social media trends (Lam et al., 2013). This happens during festive seasons or when new brands are introduced to the market like the case study of coke zero. Youths want to appear like they are fashionable and they are updated with the current trends. The price changes also directly affect the sales customers are really sensitive to price changes especially when it comes to their favorite drink. There is a direct relationship between consumer satisfaction and the price of the product. Most millennial are the point where their personal satisfaction matters even when compared to the price (Prange, 2016). They are ready to pay for their favorite drink even if it is double the normal price just to be ahead of their age mates. Although Coca-Cola has tried to maintain its price tag over a long period of time even during tough economic conditions it is the renowned brand and quality of taste that attracts its consumer. Advertisers in China have found it necessary to come up with advertisement strategies that bring a connection between the Chinese culture and the national pride.

The sources reviewed in this section of the research discuss the glocalization advertisement and branding strategies. The symbolic consumption theory suggests that consumers’ behavior and practices transfer the cultural meaning to and from the products therefore, the way the customers perceive the Coca Cola brand determines the cultural meaning attached to the brand. This research found that Coca Cola’s branding strategies include changing the drink’s label to a name that is more relatable to the Chinese consumers, and branding all its stores and advertising in the Chinese language has created a long-term connection between the consumers and the company therefore contributing to its long-term success. Coca-Cola’s advertising strategies have also been localized with advertising and marketing activities that support the Chinese culture such as the use of plastic bottles in place of cans as the Chinese people prefer them to bottles and marketing strategies involving giving consumers chopsticks which are symbolic to the Chinese culture. The glocalization of the advertisement and branding strategies by Coca-Cola in China are positively correlated to its continuous success.

Gaps in Knowledge

The literature reviewed by this project in this section has revealed that Coca Cola has been able to localize its marketing strategies in China and this has contributed to its growth significantly. A wide range of sources has been reviewed and much information collected. However there is still a gap in knowledge on the challenges that Coca Cola has faced in localizing its advertising and branding in China and how these challenges affect the company’s performance in general.

References

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Batey, M. (2015). Brand meaning: Meaning, myth and mystique in today’s brands. Routledge.

Berger, P. L., & Huntington, S. P. (Eds.). (2002). Many globalizations: Cultural diversity in the contemporary world. Oxford University Press, USA.

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Chen, M. J. (2011). Inside Chinese business: A guide for managers worldwide. Harvard Business Press.

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Gao, Z. (2012). Chinese grassroots nationalism and its impact on foreign brands. Journal of Macromarketing32(2), 181-192.

Greenhalgh, S. (2019). Making China safe for Coke: how Coca-Cola shaped obesity science and policy in China. Bmj364.

Lam, P. Y., Chan, A., Gopaoco, H., Oh, K., & So, T. H. (2013). Dual branding strategy for a successful new product launch in China. Business horizons56(5), 583-589.

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Mok, V., Dai, X. and Yeung, G., 2012. An internalization approach to joint ventures: Coca-Cola in China. Asia Pacific Business Review9(1), pp.39-58.

Prange, C. (2016). Market Entry in China. Case Studies on Strategy, Marketing, and Branding. Cham, sl: Springer International Publishing (Management for Professionals). Online verfügbar unter http://dx. doi. org/10.1007/978-3-319-29139-0.

Puppin, G. (2014). Advertising and China: How does a love/hate relationship work?. In The changing landscape of China’s consumerism (pp. 177-195). Chandos Publishing.

Robert Sarich, Riasat Zaman, and Chinmoy Misra. “Discussion and analysis of the marketing strategy of Coke Zero in the US market.” (2011): 20.

Singaram, Rukmani. “Coca Cola: A study on the marketing strategies for millenniums focusing on India.” International Journal of Advanced Research and Development (2019): 10.

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