Cola Wars Case Analysis

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Coca-Cola, the world’s largest producer and marketer of nonalcoholic beverages claims a 10% market share worldwide selling about 500 million servings annually. On a worldwide scale, Coca-Cola divides and segments their operations into 5 different segments: •North America

Europe, Eurasia, and Middle East
Latin America
As each segment is different, but equally important to their success, Coca-Cola’s largest driver comes from the Europe, Eurasia, and Middle East segment totaling $7,195,000,000 in net operating revenue in 2004. Trends over the years in net operating revenue can be seen in table 2 of appendix 1. The challenges faced by Coca-Cola in this situation are different than past experiences due to its international locations. The issue is not located in the home state, or even the home country. Imagine how hard it was to overcome an obstacle when it was in the same country, the same kind of an obstacle is going to be much harder to overcome due to the cultural behaviors of each specific area of the world. Coca-Cola has to do much more research to realize why events are happening the way they are. Why are consumers boycotting their product?

The nonalcoholic beverage industry in Europe, Eurasia, and Middle East has become highly competitive. The political environment has increased the competition between beverage manufacturers since the year 2000. The turmoil in the Middle East has fueled competition between all brands, paving way for new manufacturers of “Muslim-friendly” drinks from Mecca Cola, Qibla Cola, and Zam Zam Cola to take out MNC’s like Coca-Cola and Pepsi.

The overall objective for Coca-Cola is to gain market with a differentiation strategy and their target market is Muslim community in the Middle-Eastern market.
Coca-Cola’s product objective is to create a better brand image through product differentiation. Even though competitors products closely resemble the look and packaging, Coca-Cola still has an edge when it comes to overall brand recognition. With an annual per capita consumption of 82 servings in the Europe, Eurasia, and Middle East market, Coca-Cola holds a sizable market share (table 1.).

Coca-Cola’s main price objective is to increase market share in the Europe, Eurasia, and Middle East market by following an at-market price strategy. With the political problems, Coca-Cola has put more emphasis on promotional activities to gain back market share. By reinforcing the brand image with support of local celebrities and a push and pull strategy, Coca-Cola can fight back against the boycott of these American products.

Established companies and entrepreneurs have taken advantage of these political problems that the U.S. is facing. Many of the competitors to Coca-Cola have acquired the same look and feel of their product to closely resemble the “real thing” with a statement of being “Muslim friendly”.

Coca-Cola has three main competitors in the Middle-East; Mecca Cola, Qibla Cola, and Zam Zam Cola. These three brands launched their campaigns to take advantage and ride the anti-American sentiments.

Mecca Cola was launched by Tawfiq Mathlouthi in Paris in November of 2002. Mecca Cola used an at-market price strategy with the objective to take market share away from Coca-Cola and provide a way for consumers in this market to stand up to American hypocrisy. A tactic that Mecca Cola is using to remain competitive is that they promised a 10% donation from profits will go to a Palestinian children’s charity and 10% to support charitable associations in the country where that product was sold. Mecca Cola didn’t have to spend any money on promotional activities because of the big boost the war in Iraq gave them. They relied on word-of-mouth advertising to and build their brand name and were fortunate to receive donations from the Palestinians. Mecca Cola used real-life footage of the...
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