Environmental Factors Essay
The Coca-Cola Company was established in 1886 in the United States. Today, the Coca-Cola Company’s products are available in over 200 different countries. Each country contains its own demographics and other factors that influence the marketing planning and promotions for the Coca-Cola product lines. These factors vary by location and can include culture, customs, and even legal matters. The Coca-Cola Company has been able to successfully examine these factors and create marketing campaigns that have allowed the company to grow in leaps and bounds over the past 100 years.
Global economic interdependence
Global economic interdependence is when different economies rely upon one another and can include goods and service exchanges. Coca-Cola is one of the most famous soft drink brands in the world because they have successfully marketed their products across the globe. These foreign economies rely upon Coca-Cola products to stock their shelves to meet the consumers demand. With such a strong demand, countries would want the company’s product in local stores to increase sales and thus taxes collected.
In order to get products to foreign markets, Coca-Cola is faced with trade restrictions and agreements. Restrictions can include tariffs which impose taxes on imported goods or quotas that limit the amount of certain product that is brought into the country (Kotler, Keller, 2012). These restrictions can lead to questions as to whether entering that foreign market is profitable. A high tariff could cut into profits while other trade restrictions may not allow a product to enter the market at all. A stiff market to enter may require a very detailed and successful marketing plan in order to reach the most potential consumers. A failed plan could result in the company paying more for the product to enter that market rather than the amount of money being made.
Demographics and infrastructure
Demographics must be examined prior to entering a foreign market. Household income, population, and age can all play a factor in a marketing plan. Poor countries such as those in Africa may not be able to afford to purchase a product and therefore, would not be included in a marketing plan for a high priced item. Also, if there is a limited amount of infrastructure the product may not be able to be transported. Countries that lack infrastructure such as paved roads or electricity would become difficult markets for Coca-Cola to enter. Without roads or railroads, Coca-Cola would not be able to deliver their product to the consumers. Electricity is typically needed in order to keep the beverage chilled and to record sales transactions. A country lacking infrastructure will have a difficult time getting popular goods to their consumers.
Cultural differences play a role in the marketing process. Different cultures will have different ideals and may even use products for different reasons. What may be acceptable in the American market may be a sign of disrespect in another. Knowledge of cultural differences can make or break a marketing campaign and also the entire company. For example, the Japanese commercials tend to have more animation and songs in the commercial. Also, the culture is also more advanced in technology so vending machines are more advanced in Japan than the ones we see here in America. Finally, different cultures may see certain products or ingredients as unhealthy. What may be delicious to consumers in China may be horrid to the taste buds of those in America. Social responsibility and ethics versus legal obligations
Social responsibility and ethics are values that should be followed but not necessarily obligated to do so. On the other hand, legal obligations force a company to perform certain actions. For example, Coca-Cola is not legally obligated to set a certain price on their product. However, they are legally obligated to place nutritional and ingredient information on the product. As previously mentioned, different cultures play a role in marketing. What one culture may see as a social responsibility may be a legal obligation in another. As many know, Coca-Cola once contained the drug cocaine. Legally, cocaine is outlawed in the United States but may not be in other countries. What some may not know is that Coca-Cola still contains an extract from the coca leaves that is not classified as illegal (New York Times, 2013). In some cultures, it may be unethical to sell a product that has any derivatives from any mind altering plants.
Political systems and the influence of international relations
Political systems can decide whether to allow a product to enter their market or impose extreme conditions that must be met. In addition, international relations can play a part as to where a product goes. Currently, the United States has a trade restriction with Iran that limits what can be exchanged between the two countries. Iran, once considered an ally, is now an evil and thus trade restrictions are in place. Coca-Cola may find it difficult to get their product into this market through a legit trade agreement. If Coca-Cola was faced with the fact that nobody would be allowed to import their product, they would be able to develop a marketing plan for domestic use that would portray that they are the only country who gets to receive the product.
Foreign Corrupt Practices Act of 1977
The Foreign Corrupt Practices Act of 1977 prohibits bribes being paid to foreign officials to assist in obtaining or keeping business (U.S. Securities and Exchange Commission, n.d.). This Act would prohibit Coca-Cola from bribing an Iranian official to allow them to export their product to the country. Because of this Act, large corporations can no longer pay foreign officials to keep their products in stores of countries that have banned them either by local or international law. These different laws and stipulations create barriers for a product to be introduced into foreign and domestic markets.
Advancements in technology have made marketing both easier and more difficult at the same time. Social media sites such as YouTube now promote products before the user can watch the video they intended to view. As technology advances, previous innovations become cheaper and open the doors for new consumers to obtain these products. As the amount of people who are able to access the internet increases, so does the amount of people that can view advertisements. One of the newest fads for technology is making more products “green”. Environmental friendly products are now the big rage and consumers will pay more for a product if it is deemed “green”. Advances in technology will eventually lead to more products being green and thus creating a decline in the demand.
The Coca-Cola Company was established in 1886 in the United States. Today, the Coca-Cola Company’s products are available in over 200 different countries. Each country contains its own demographics and other factors that influence the marketing planning and promotions for the Coca-Cola product lines. Factors such as political influences, technology, and cultural differences all play a part on marketing. Differences in these factors can determine whether a product should be entered into the market. It is the responsibility of the manufacture, such as Coca-Cola, to perform their due diligence and evaluate its findings.
New York Times. (2013). How Coca-Cola Obtains Its Coca. Retrieved from http://www.nytimes.com/1988/07/01/business/how-coca-cola-obtains-its-coca.html
U.S. Securities and Exchange Commission. (n.d.). Spotlight on Foreign Corrupt Practices Act. Retrieved from http://www.sec.gov/spotlight/fcpa.shtml