Coca-Cola’s Real Overseas Problem–How To Tap Into Neglected Markets
Wednesday, July 17, 2013
By Panos Mourdoukoutas
Coca-Cola has an overseas problem.
Its global sales volume barely grew last quarter, disappointing markets expecting a 3.3 percent growth. Europe sales volume dropped 4 percent. China’s volume was unchanged; and North America volumes fell 1 percent.
Commentators were quick to point to a number of unusual factors that may have contributed to this shortfall — ranging from bad weather in Germany, social unrest in Brazil, and an economic slow-down in China.
But there are other problems — like old competition from Pepsico and new competition from herbal drinks and from Red Bull.
The biggest creeping problem, however, is that global brands like Coke and Pepsi have already conquered the pure global segment of the world economy—markets with uniform preferences, close to those of the U.S. home market. Now they must reach to two other segments: the semiglobal—markets, with a mix of global and local preferences; and the local segment—markets with local preferences.
In a previous piece, I called these segments neglected markets– potential customers for a company’s existing products which managers and marketers routinely overlook or write off altogether, as these markets are either too small in terms of revenue potential or too costly in terms of the operating expenses required to tap into them.