Coke adapts in India

04 January 2011

NEW DELHI: Coca-Cola is developing a unique approach in India, based on understanding the wide array of consumer needs across the fast-growing market.

"The global model that we use, and has worked in USA and Mexico, won't work here," Stan Stanunathan, the US firm's global head of marketing strategies and insights, told Livemint.

"There has to be a locally relevant template and so we have to depend on our forces on [the] ground."

Among the issues facing multinationals in India is offering products at a cost acceptable to the requisite number of customers.

While this encourages emphasising volume rather than value sales, Stanunathan suggested there were advantages to such a schema.

"If you don't put a Coke in the hands of people regularly, you cannot build a relationship with them," he said. "The price war was a tactical move to get people into the habit of consumption."

When trialists have sampled a brand, factors beyond simple financials – like advertising and distribution – play a heightened role.

"Subsequently, we realised it wasn't price alone that drives the transaction," said Stanunathan.

"If we … got the basics right, like putting more coolers, servicing retailers effectively, talking to consumers and making the product available within an arm's reach of desire, we could see huge growth."

But even inside India varied methods are necessary to accurately meet the requirements of shoppers with extremely divergent preferences.

"Rural consumers do tend to be price-sensitive. Therefore, we have very compartmentalised strategies for rural and urban consumers," Stanunathan continued.

"Giving the rural consumer that special Coke experience, even once, is the most important thing. In an urban environment, the strategy is to move them up the frequency ladder."

As part of this process, smaller pack sizes have been introduced in the countryside, where households spend less.

Uptake has proved particularly impressive in certain regions, including Punjab and Uttar Pradesh, meaning they serve as excellent testing grounds.

"We also segment rural markets. Some pockets are very lucrative," Stanunathan argued. "This is where we are going first to learn, and then to expand."

Elsewhere, cities demand a selection of options for people to enjoy at home, during social events or on the go.

Challenges apply not only to enhancing specific lines, but in many cases to fostering entire sectors.

Such has been observable with Burn, an energy drink, which has employed a nuanced roll out to ensure it achieves traction among the target audience of young, affluent males.

"The energy drink category is not the kind which will generate huge volumes like Thums Up or Coke," said Stanunathan.

"We have to build the brand, one outlet at a time, through night channels, and the cool, hip places."

By contrast, Thums Up and other ranges with an established domestic heritage fuel Coca-Cola's local success.

"We would love to take Thums Up global, but we wouldn't do it in a way that it takes focus away from Coke in markets where it is a really strong brand," said Stanunathan.

Data sourced from Livemint; additional content by Warc staff