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Organizational policy change is any action that results in a shift in the manner an organization carries out its activities. In this regard, an organization does not change what it does, but rather how it does it. In the corporate sector, policy change is usually intended to increase a company’s market share and, in effect, profitability. Coca-Cola implemented a policy change by focusing on consumer needs when it entered the Indian market to expand its market share. In the face of stiff competition from PepsiCo, Coca Cola realized that it needed to make its products more appealing to the consumers in order to increase its market share. This paper presents an analysis of the article “Coca-Cola’s Branding Strategies in India” by Kaushik Mukerjee in The Lefai Journal of Brand Marketing, vol. The analysis highlights the shift from a western to a local marketing approach as a policy change that helped to expand Coca Cola’s market share in the Indian urban and rural market segments.

When Coca Cola started operations in India in 1993, it was lagging behind PepsiCo in sale and market domination. Over the years, Coca Cola’s strategy had been to take its products to the consumer’s door-step through a network of wholesale and retail distribution channels. However, PepsiCo had similar distribution channels in place, and Coca Cola’s global strategy was to make their bottled drinks readily available and meeting specific consumer needs.

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Nevertheless, when it entered the Indian market in 1993, Coca-Cola approached the market “selling an American way of life, which failed to resonate as expected” (Kaye 5).  In 2001, the company’s CEO Douglas Daft set a new direction with the mantra “Think local, act local’ which was aimed at identifying specific consumer needs for the urban and rural markets.

The urban market consisted of high-income consumers, and the company identified their need as “social bonding”. In response, it adopted a marketing strategy that conveyed inspirational messages and the celebration of their rising economic and social freedoms. The tagline “Life ho to aisi” which means “life as it should be” was used in promotional adverts targeting the urban audience.

Rural India, which comprises of small towns and villages, accounts for 96% of the national population, and Coca Cola’s strategy was to beat PepsiCo in reaching this segment of the Indian market. It designated this population as “India B”, because its income level was lower than that of the urban population. Consequently, Coke, the company’s leading drink, was considered a luxury to most people, whose daily wages were averagely Rs. 100 against Coke’s retailing price of Rs. 10 for a 300ML bottle.  Thus, the local consumers’ primary need for bottled drinks was “out-of-home thirst-quenching”. In response to this situation, Coca-Cola adopted a two-pronged marketing policy that met the two needs identified for the rural market: affordability and thirst quenching. Accordingly, Coca Cola’s first step in making the price of Coke within the reach of consumers in rural areas was the introduction of a 200ml bottle for the rural market, retailing at Rs. 5. Effectively, this pricing strategy narrowed the gap between Coke and other local refreshments like tea and lemonade.

Secondly, Coca-Cola supplied retailers with coolers to offer cold drinks alongside the advertisement tagline “Thanda Matlab Coca-Cola”. The local expression “thanda” means cold/cool, and the advert tagline is translated as “Coke means refreshment” thereby addressing the rural market’s need for refreshment. This marketing strategy of offering cold drinks derives from one of the Company’s mission statements, “To refresh the world” (Mukrjee, 2008).  In the Indian context, “thanda” could refer to any chilled drink. Coca-Cola’s intention was to associate its brand name with chilled drinks in the consumers’ minds. As Kaushik Mukerjeenotes in the Lefai Journal of Brand Management, this caption “was capable of enabling penetration into the small towns and the rural markets wherein the generic term ‘thanda’ was very prevalent” (Mukerjee 2008, p. 37). As a result of this marketing policy, Coca-Cola experienced tremendous growth in the rural market segment within the first three years, which accounted for 80% of India’s new Coke drinkers  (Kaye 2004, p. 7).  Sales increased by 37% compared to 24% in the urban areas, with consumption per capita doubling between 2001 and 2003.

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In conclusion, policy change involves a shift in corporate practices with the aim of increasing market share. In relation to Coca-Cola India’s policy change, it is evidently clear that the shift from a western to a local approach in brand marketing helped the company expand its market reach. The company identified consumer needs in the urban and rural market segments and adopted a marketing policy that appealed to their respective needs. In so doing, Coca-Cola was able to penetrate into India’s soft drink market. 

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