Coca Cola Company in South Korea
Coca Cola Company is a multinational company with its headquarters based in America. The company is well known for the production of beverages worldwide. The company produces a range of brands such as Fanta, Krest, Sprite, and Coca Cola, which has different flavors that suit different groups of consumers. The Company is the largest corporation in America, and the largest company worldwide in the production of non-alcoholic beverages, marketer, and distributor. It widely known Coca Cola brand has over 400 different flavors that are distributed in different regions. Since its origin in 1892, the company has continued to grow significantly. The company has developed many outlets across the globe, and this has created a large market for its product. According to the company’s report, the company operates in more than 200 countries and serves a market of 2 billion consumers globally. A few of the countries that the company has entered its market and successfully grew immensely are Japan, Africa, South Asia, Europe, and Latin America. In this research, we will be researching and discussing Coca Cola Company in the South Korea market.
Coca Cola Company entered the market of South Korea in 1974. The Company was initially named Hankook Coca-Cola. The company is located in Seoul, Korea, and it started as a Doosan Beverage producers. The multinational company entered the South Korean market through a partnership with Doosan in the 1970s. In 1997 the company had acquired up to 59 percent of South Korea’s $1 billion soft drink market. This included the acquisition of the Honam and Woosung Food Company. The company also acquired Doosan Beverages Company soft drink bottling assets for $450 billion, giving the company full control of its bottling, distribution, and sales of Coca-Cola products in the South Korea market (New York Times, 1997). In 2008 the organization was still struggling to penetrate the South Korea Market, and they have to use the South Korean Culture so as to expand its market in South Korea since, by that time, the company was still not understanding the South Korea demographic.
All businesses have targets and objectives they set annually. The objectives are either short term, which is achieved in less than one year or long term objectives, which are achieved in more than one year. These objectives organizations develop strategies that will enable the organization to achieve its objectives, no matter the risks and situation that arises on the way. Some of the objectives set by organizations are improving customer service, increasing sales, increasing profits, focus on exports, and many other objectives. However, for the Coca-Cola Company in South Korea, its main objective is increasing customer experience and increasing sales. Customer focus is an objective that many organizations globally are paying much attention to. Understanding your customers’ needs and preferences determines the success of any organization. Coca-Cola Company in South Korea ensures they are able to satisfy the customers by having the right and safe products in the market. The Company has also ensured it has the best customer care desk. Moreover, the company ensures that customers are distributed with beverages in time and try hard to minimize stock-outs at their shelves. Secondly, the organization pays to focus on ensuring it increases its sales annually by understanding customers’ demands. For instance, a fall in demand for traditional carbonated drinks led to low production of the product and a high production rate of healthier beverages such as green tea (Beveragedaily.com, 2007). An increase in the company’s sales increased the organizations operating profits significantly.
Coca-Cola South Korea has also made significant investments since its entrance in the South Korea market besides full acquisition of the bottling, distribution, and selling of its product from Doosan Beverages in 1997. The company has also made significant investments in the acquisition of a 10% stake of the South Korean bottling arm of Australia’s Coca-Cola Amatil Ltd (Reuters, 2007). Besides the company’s huge investment in the market of South Korea, the company has effectively set up effective strategies to help the company in excelling in the market. One of its effective strategies implemented by the company is the company’s marketing strategy. The company has effectively used the culture of the people of South Korea to enter into the market of South Korea. The company in the year 2019 unveiled a special packaging that featured the BTS the K-pop superstars. This branding strategy was set to appeal to consumers in Korea by featuring the hottest celebrity of the time. The company also had used the band’s song titles such as “you’re my IDOL,” “RUN like yourself,” and other song titles from K-pop to attract consumers from using the best entertainers in Korea (The Korea Herald, 2019). The Company also has a strong marketing strategy that studies the market adequately. The strategy effectively studies the products that are on low demand and studies the brands that are of customers’ preference. For instance, customer shift from carbonated drinks to healthier beverages drinks enabled the company to focus on the production of healthier beverages drinks, which in turn led the company sales to double.
Social responsibility is an essential component for companies in today’s business world. Businesses today must do more than just focusing on generating more profits for the success of the company. Taking part in social responsibility initiatives in the society is part of business survival in the economy, and companies should take a stance strategy so as to build a brand that will build the consumers’ trust in the company. Examples of social responsibility that could be undertaken by companies are in environmental conversation and other areas that improve the welfare of consumers. Coca Cola Company is among the companies that have complied and contributed to corporate social responsibility. The company, in its more than 200 countries that it has based its bottling and distribution companies it has managed to do all the variables of social responsibility. This includes education and empowering activities, labor and human rights, health and safety, environment, water consumption, and other programs. In South Korea, the company has supported irrigation schemes in the country. The company helped farmers to access clean water for irrigations by purifying the water and channeling it to the rice paddies. The program helped the country in increasing its food production rate to date through its irrigation program. The Company has played a key role in boosting the Korean Football Association, and the company signed a deal with the football associatihttps://sharksavewriters.com/the-alignment-of-human-resource-practices-and-the-business-strategy/on that will offer support to the team until 2023 (Dixon, 2020).
The Coca-Cola South Korea Company has managed to help the country in curbing water shortage through the recycling and purification of water that can be used in irrigating rice farms. Coca Cola also engages people in various events by awarding them beverages when they dance. Through the coke dance vending machine, has increased the interaction of people in Korea (Signageinfo.com, 2012). The vending machine senses human interaction and rewards any person who dances a bottle of coke. The company, through the dancing vending machine, has contributed to bringing fun to most people in an aging way and also increased the engagement of people with the brand.
Confectionary Industry is a branch of the food processing industry that produces chocolate confectionery, sugar confectionery, and gum products. The products provided are baked products that are primarily with sugar (“Confectionery industry,” n.d.). For instance, in the baking industry, products such as cakes, pastries, and cookies are considered to be baker’s confectionery products. However, the products may include candy, gum, chocolates, and candied nuts. In today’s economy, the confectionery market is one of the growing sectors worldwide. Confectionary products, however, are in high demand and has since caused a stiff competition to other food and beverage processing companies such as Coca-Cola. Examples of confectionery producers are Hershey Co., Nestle, Mars, and many others located in different countries globally.
Snacks and potato chips lead the confectionery market in South Korea. The country’s confectionery market is growing steadily as the demands for sweets and candy increased significantly over the past five years. Besides the snacks and potato chips that are growing at a significant portion, South Korea market consumers an average of 607 grams of chocolate per year, and the amount is set to increase (“South Korea chocolate market | Growth | Trends | Forecast,” n.d.). The increased consumption of confectionery products has threatened the survival of the Coca-Cola Company in South Korea. Companies such as the Lotte Confectionery has introduced new products such as the green tea flavored dream cacao which targets mostly the adult consumers. The company has also strategized on the production of chocolate flavors that offers health benefits. The sale of chocolate flavors such as probiotic chocolate has increased by more than 100% (“South Korea chocolate market | Growth | Trends | Forecast,” n.d.). This posed a great threat to the Cokes carbonated drink after its demand decreased after customers prefer products that offer health benefits such as the probiotic chocolate. Another strategy of the company of producing chocolates that have toys has also caused the products to demand to increase significantly. In addition, the company’s introduction of small pack size chocolates has driven the market to consumers who are price sensitive. Multinational Corporation such as Hershey Co., Mars, and Crown Confectionery has also contributed significantly to the fall in sales in South Korea’s Coca-Cola Company.
The greatest weakness Coca-Cola South Korea faces is stiff competition from Pepsi. Pepsi poses a great rival for Coca Cola in South Korea. Despite Pepsi, the organization also faces stiff competition from confectionery companies such as Lotte Confectionery, which products which are safe for consumers’ health. Another great weakness the company faces is of health concerns. Most of the products produced by Coca Cola are carbonated, while customers prefer drinks and products that are safe and healthy for their bodies. Health experts have also prohibited the intake of soft drinks from Coca Cola since they increase obesity and diabetes to consumers. Hence most consumers will prefer and consume more green tea flavored dream cacao and probiotic. The company also has a low product diversification when compared to Pepsi. Pepsi has so far not only focused on beverages nut also produced snacks such as the Lays and Kurure. Despite the company’s weakness, the company also has strengths that make it successful. One of the strengths of the company is its brand. Coca-Cola has a strong, unique brand identity that makes it drinks the most selling beverage in South Korea. In addition, the company also has a good customer relationship management with its customers.
Coca Cola has extended its outreach in more than 200 countries with only two countries to date that is not selling the beverage. The countries in which the Coca-Cola beverage is not sold are Cuba and North Korea. The company has also set to exit the Lebanon market due to financial reasons. However, in my country, the company should expand further by not only focus on the production of soft drinks. The company should also consider the production of safe and healthy products such as snacks that will make it competitive in the market with Pepsi, Lotte Confectionary, Hershey Co., Mars, and Crown Confectionery.
References
Beveragedaily.com. (2007, August 22). Coca-Cola confirms South Korean sales. beveragedaily.com. https://www.beveragedaily.com/Article/2007/08/22/Coca-Cola-confirms-South-Korean-sale
Confectionery industry. (n.d.). TheFreeDictionary.com. https://encyclopedia2.thefreedictionary.com/Confectionery+Industry
Dixon, E. (2020, 24). Report: Korea Fa’s sponsorship income up to US$34m. Sports sponsorship, broadcasting, OTT, technology, governance, and business news for the sports industry – SportsPro Media. https://www.sportspromedia.com/news/south-korea-fa-nike-coca-cola-sponsorship-revenue
The Korea Herald. (2019, January 21). Coca-Cola features BTS for New Year’s special packaging. https://www.koreaherald.com/view.php?ud=20190121000683
New York Times. (1997, November 11). Company news; Coke to buy bottling assets of Korean concern. The New York Times – Breaking News, World News & Multimedia. https://www.nytimes.com/1997/11/11/business/company-news-coke-to-buy-bottling-assets-of-korean-concern.html
Reuters. (2007, July 25). Coke to buy a stake in S.Korea bottling unit: Source. U.S. https://www.reuters.com/article/us-cocacola-lg/coke-to-buy-stake-in-s-korea-bottling-unit-source-idUKSEO25255620070725
Signageinfo.com. (2012, October 19). Coca-Cola the dancing vending machine in South Korea. SignageInfo.com – DIGITAL SIGNAGE – DIGITAL OUT OF HOME News and Information. https://www.signageinfo.com/news/21094/coca-cola-the-dancing-vending-machine-in-south-korea/
South Korea chocolate market | Growth | Trends | Forecast. (n.d.). Mordor Intelligence. https://www.mordorintelligence.com/industry-reports/south-korea-chocolate-market