1.

OVERVIEW ABOUT Coca-Cola

1.1. Company and brand introduction

Located in Atlanta, Georgia, the Coca-Cola company is the American world-renowned corporation
manufacturing and distributing sweetened carbonated beverages to over 200 nations. Interbrand - Best
Global Brand ranking in 2018, claimed that Coca-Cola was the fifth most valuable brand, standing
behind Apple, Google, Amazon and Microsoft.

As stated by the company itself as well as the brand, in order to continue thriving as one of the world’s
biggest manufacturers and distributors, their missions include:

(1) To refresh the world in mind, body and spirit;

(2) To inspire moments of optimism and happiness through our brands and actions;

(3) To create value and make a difference.

In Vietnam, summarized from Coca Cola's journey to acquire Vietnamese partners (Bao Linh, 2013),
Coca Cola has been known in Vietnam since 1960, but it took 30 years before 1994 to start a business.
Over nearly 20 years of development, Coca Cola has become a major brand in Vietnam. Today, Coca
Cola is known as a company with 100% foreign capital.

1.2. Environment Analysis

1.2.1. Microenvironment

Company

The Coca-Cola Company has been making an attempt to seek for local suppliers. Having been
operating in Vietnam since 1994, currently, the company has 3 factories in Vietnam (namely in Ha Noi,
Da Nang, Ho Chi Minh City) and mostly concentrates on employing the local inhabitants, for instance,
in 2016, Coca-Cola Vietnam claimed that 99.9% of their workforce are Vietnamese.

Suppliers

Coca-Cola has partnered with some suppliers from Vietnam, such as:

KCP Vietnam Industry Ltd Company – KPC sugar factory (sugar supplier)

Dynaplast Packaging Vietnam Ltd Company (bottles supplier)

Bien Hoa JSC (cartons, boxes supplier)

However, to ensure the quality of the drink, they have to import the two most important ingredients of
Coke which are Cola nuts and Coca leaves from its partner based in the US (Illinois State), Stepan
Company.

By exploiting the domestic resources, the company now can save money on delivery cost, importation
tariff, embrace the local industry development and construct a local partnership network which might be
beneficial for Coca-Cola’s future extension strategy.

Marketing immediaries

Currently, there are about 14 million Coca-Cola distributors all over the world. Specifically, in Vietnam,
there are approximately over 3,500 distributors (Thu Ky, 2019), wholesalers as well as countless
retailers throughout the country.

Coca-Cola often works with wholesalers rather than retailers. Wholesalers, then, can make business
deals with distributors. Since PepsiCo was the earlier to do business in Vietnam’s market (1991), it has
a wider partnership network with fast food restaurants; therefore, Coca-Cola has to extend its reseller
network by offering them promotions such as: financial support, store decorations and so on. Retailers
normally work with wholesalers; however, they have to follow all commitments from Coca-Cola
Company and conform to the company’s regulations.

Competitors

Coca-Cola Brand Vietnam’s direct competitors, who offer exactly the same commodities, are other
carbonated beverages such as Pepsi, Mirinda and Sprite.

Coca-Cola Brand Vietnam’s indirect competitors, who offers different commodities but same product
category, satisfying the same consumer’s need, are juice, bottled water, tea, coffee and so on, such as
Dr.Thanh, Trung Nguyen Coffee.

Figure 1. Consumption rate of beverage brands in Vietnam. Adapted from MarketIntello, 2016,
Retrieved from http://bit.ly/2Y3CE00.
It can be referred from the above graph that Pepsi has been the major competitor of Coca-Cola
Vietnam beverage market. Moreover, while Coca-Cola’s media campaigns mostly focused on family
gatherings, Pepsi chose ‘cool, trendy and fashionable’ for its main image. According to Vinaresearch
(2013), although Coca-Cola is the most recognized soft drink brand (with 61,3%), Pepsi leads in the
loyalty rate (with 0,4% of abandon rate).

Nevertheless, several local brands should also be taken into consideration as they have a better
understanding of the Vietnam market and “These competitors affect the price, advertisements, sales
promotion programs and many others” (Zhivko Dimitrov, n.d.)

Customers

In the buying process, Coke’s customers purchase the products with three prior purposes: satisfying
thirst, refreshing feelings and enhancing appetite. In addition, females tend to consume Coke when it is
‘available’ more than males. Meanwhile, men consume Coke more because of ‘habits’ rather than
‘availability’. Regarding the consumption frequency, the consumption from 3-4 times and 1-2 times per
week account for the largest proportion with 57.2% combined. Next, in the information search stage,
according to the group of authors’ focus group interview, there are several ways of seeking information
from the brand arranging from: asking suggestions from waiters or friends’ choices to learning the
products via meaningful advertisements, reputation or the ingredients and calories. Furthermore, in the
following step, people often consider other products from the company’s competitors in different
aspects: flavors, healthy feelings, the level of carbonate, packaging,.etc. Most importantly, they may
consider the wholesale price when buying large quantity of Coke. Eventually, when it comes to
purchase decision, 5 out of 7 interviewees claimed to choose Coca-Cola; however, the rest wanted
another kind of carbonated soft-drink besides Cola types such as: Sprite or 7up. After buying, most
consumers feel satisfied and insist to continue choosing Coke the next time. Moreover, there are some
recommendations that Coca-Cola should embrace their health-conscious lines.

From investigation results of Vinaresearch (2013), numerous individuals tend to use soft drinks in
reunion parties, crowded meetings. To be more specific, the rate of people utilizing sweetened
carbonated beverages for meetings/ hanging out with friends, parties and family reunions are 76.1%,
75.8% and 58.8%, respectively.

Moving to brand loyalty, it is best shown in the table below:

 Figure 2. Loyalty rate. Adapted from Vinaresearch, 2013, Retrieved from http://bit.ly/2sn0QPb

As can be inferred from the table, it is clear that Pepsi is the brand having the most loyal customers,
with the abandon rate is only 0.4%, which is roughly threefold lower than Coca-Cola (with 1.3%).

1.2.2. Macroenvironment

Political factors

Vietnam has a steady political condition, ever since the Vietnam’s Unification Day in 1975, Viet Nam
has witnessed only 5 moderate protests in 1997, 2001, 2007, 2014 and 2018 respectively. Moreover,
they were all at small-scale and conciliated by the government without severe violent force within 5
days. However, government regulations should be taken into consideration for their influence to the
company’s sales.

In December 2017, the Prime Minister of Vietnam demanded the Ministry of Education and Training to
implement the directive of stopping advertising and selling carbonated soft drinks in middle schools.
Lately, a Special Consumption Tax of 10% to 20% on sweetened beverages was proposed by
Vietnam’s Ministry of Finance with a purpose to reduce and prevent obesity. Providing approval is
given, the sales of Coke as well as its reputation might be impacted since this refers to one of the
common downsides of carbonated sweetened beverages which is the possibility of leading to health
problems when consuming these products for a consistently long time.

Economic factors

Inflation rate is one of the factors that gradually affect the business, especially the price of products.
Along with the rise of inflation rate, the company has to adjust its merchandise cost.

Figure 3. Vietnam Inflation Rate 1996-2018. Adapted from Macrotrends, 2018, Retrieved from
http://bit.ly/2rS6dWf

As can be seen clearly from the chart that, the inflation rate in Vietnam fluctuates significantly.
However, in general, the inflation situation in Vietnam decreases from 5.68% to 3,54% in 1996 and
2018, respectively. This might be a positive sign for Coca-Cola to tackle its uncontrollably price
increasing problem.
According to the Institute Of Chartered Accountants In England and Wales, despite the downward trend
caused by the affects of the Trade War between China and the United States which also decreased the
general average economic development speed of the whole South-East Asia by 0.5% in the first half of
2019, Vietnam actually had the accelerating economic growth in the area which was estimated to reach
6.7% at the end of this year. Moreover, Vietnam appears to be benefited when earlier this year, exports
to America surged 33% helping reduce the impact of commercial loss with Chinese market as well as
strengthen the bond between Vietnam and the United States. Eventually, this circumstance brings
advantage to enterprises that have foreign capital like Coca-Cola.

Social factors

Vietnam has experienced a rapid increase in the number of middle class citizens. According to HSBC
Bank Prediction (Hong Nga, 2018), by 2020, Vietnam would have 33 million people being in the middle
and upper classes. “The country's recent move to middle income level along with rising consumer
affluence has accelerated the premiumisation momentum in the beverage industry” (EU-Vietnam
Business Network, 2016). Accordingly, in 2020, the beverage consumption is estimated to reach 109
billion litres with a projected annual growth rate of 6%. “While Western culture promotes individuality,
the family unit is very important in Vietnamese culture.” (Pamela LaBorde, 1996). That is why in
Vietnam, people usually have family reunions on any special occasions which is the most significant
reason that people drink Coke (Consumers, 1.2.1). All reasons above prove that Vietnam is an indeed
promising soft-drink market, especially for Coke.

Technological factors

Back in August 21, 2017, Coca-Cola Vietnam celebrated the company’s additional investment of 300
million dollars in Vietnam from 2013 to 2016. Coca-Cola officially launched a warehouse and a state-of-
the-art water treatment system with modern technology at Da Nang production plant. The company’s
vision by doing this is to operate in Vietnam as a long-term investor, along with to satisfy both the
company itself and the community.

In 2009, Coca-Cola started using less petroleum in 2.5 billion of the company’s products, producing
greener bottles and packaging.(Kay Ireland, n.d.)

Additionally, Coca-Cola uses online advertising to manipulate consumers into wanting its products.
Using targeted advertising, the company can observe who sees its ads and when people see them.
(Kay Ireland, n.d.)

Environmental factors

Coca-Cola has made numerous efforts to step up with these problems. In 2018, to develop the
sustainability in Vietnam, Coca-Cola cooperated with VCCE, Dow and Unilever to seize the initiative
which was called “Zero Waste to Nature” with goals including: (1) Developing value chains in the
direction of circular economy as well as policy recommendations to facilitate the implementation of the
circular economy in Vietnam. (2) Raise the public awareness about plastic waste. (3) Look for effective
plastic recycling solutions and solve problems arising from plastic waste. (4) Develop and form a habit
of managing waste in a responsible way for society and the community. (Journey Staff, 2018).
In the same year, Coca-Cola beverages Vietnam limited was honoured in the top 10 sustainable
enterprises in Vietnam. The company has replaced the fossil fuel in delivery transportation to CNG
(compressed natural gas) and Biomass in order to reduce CO2 emissions from vehicles.

Legal factors

According to the Department of Taxation, the price of imported ingredients from the Coca-Cola parent
company accounts for about 60%% of the cost of each product sold in Vietnam. However, this data
cannot be verified because the Department is not able to collect those ingredients and compare them
with other suppliers due to their exclusive right on the materials. This is also the main reason for Coca-
Cola to demonstrate its loss so that they can dodge the taxation policy in Vietnam. However, in 2015
and 2016, as stated by Coca-Cola Vietnam, the company started submitting the Income Tax with 5,4
million USD and 8,6 million USD respectively.

1.3. Market analysis

The soft drink market in Vietnam is still small compared to other countries, with only 1,800 enterprises
working on 7,000 different kinds of drinks while the number in Japan has reached 14,000. However, its
consumption rate is incredibly high, estimated to hit 8.3- 9.2 billion liters in 2020, with scale up to 2
billion dollars. These data shows that the soft drink market in Vietnam has lots of room to grow, which is
both a threat and an opportunity for Coca-Cola to continue thriving in Vietnam. By that, it means that
the brand would have to cope with the possibility of newcomers to this promising market. On the other
hand, it is profitable because Coke is now having spare space to expand its network of customers and
develop more market exploitation plans in the near future.

1.4. Marketing Strategy Analysis: STDP process

1.4.1. Segmentation

Arsim Begunca concluded that “Soft drinks consumers can be segmented according to benefits sought
testing proposed hypothesis based on current theories.” (2017)
Soft drink manufacturers mostly address their products into young-and-middle customers aged
between 5-45 in urban areas because according to the Vinaresearch (2013), people from this age
range have higher need to buy soft drinks than the elderly ones.

1.4.2. Targeting

Coca-Cola’s advertising campaigns appears that there is no particular targeted group. Actually, the
brand has the intention to target all groups of people who want to find happiness in their daily life or at
some special moments which at first seems so universal. However, as stated by Elizabeth Eifenbein on
the company’s website, happiness is a choice and it is also a ‘niche product” that can be given through
different ways, such as through obtaining Coke. This mass market targeting has given Coca-Cola a
broad range of customers; however, it might prevent the brand from focusing on its most potential
market group.

1.4.3 Differentiation & Positioning:

According to Vinaresearch (2013), when asked about the brands of carbonated soft drinks in Vietnam,
61.3% of respondents immediately think of the Coca-Cola brand, and Total brand awareness is
almost at maximum with 99.1%. The two brands which closely chase after Coca Cola are Pepsi and
7Up with 98.5% and 94.9% respectively. (ibid)

In order to achieve such a public recognition, Coca-cola has long taken full advantage of its own unique
features mentioned in the positioning map below to stand out in the market and convey a strong
impression to consumers. With numerous messages of happiness and maturity-orientation, Coca-
Cola can make their customers feel merry and optimistic, yet reach as many as potential consumers
from all walks of life, especially undergraduates and workers with the age from 20 to 24 years old
accounting for the most 45.6% according to Vinaresearch while Pepsi pays particular attention to
younger consumers. However, although they approach such a multitude of customer segmentation,
Coca-Cola are still able to quench their customers’ thirst (86%) and bring a refreshing feeling (59.5%)
as stated by Vinaresearch (2013).

2. THE MARKETING MIX

2.1. Product:

Obviously, the taste of Coca-Cola is so unique and refreshing. In general, Coca-Cola in Vietnam has
twelve portfolios, but the most well-known products are Coca-Cola, Diet Coke and Coke Zero. As a
consequence, Coca-Cola brand features their highlight products by using a red color and hand-written
logo to be different from its competitor-Pepsi, which considers blue as the mainstream. Besides, the
company also lays a concentration on the size of the bottles to control the amount of energy their
customers consume. In 2017, Coca-Cola Vietnam’s strategy was to print calorie content on bottles with
capacity of 250ml and less. However, they still produce the bigger size of bottles for many purposes
(parties, family reunions,...). In the same year, there was another strategy called “Inside the Bottle”,
which led to a launch of Coke Light (Diet Coke) and Coke Zero in order to help the customers control
the amount of sugar they consume.

2.2. Place:

Coca-Cola is delivered to consumers by many ways, namely in visual stores (supermarkets, grocery
and convenience stores) as well as in virtual ones (e-markets and e-commerce). Additionally, Coca-
Cola brand also displays their products through distributors, wholesalers, retailers or vending machines.
According to the Nielson’s research (.n.d), there were 70% of traditional retail stores that followed the
FMCG distribution system and then became successful. As a matter of fact, Coca-Cola is in the top
three of trademarks that are supported by most of the retailers in Vietnam, standing with Hao Hao and
Vinamilk according to Doanh Nhan Sai Gon, (n.d).

2.3. Price:

Since the beverage market is said to be an oligopoly market (few sellers and large buyers), all
companies signed a contract to ensure a mutual balance in pricing among companies; but the price of
Coca-Cola has a subtle difference compared to its competitor, Pepsi. Besides using the low valuation
strategy to enter the market (competitive price), Coca-Cola company also has the pricing discount
strategy called “3P and 3A” in order to gain advantages and serve consumers best.

In addition to those intangible values, Coca-Cola also offers tangible value. For example, the feeling of
holding a can of Coca-Cola in one hand and a can of Xa Xi Chuong Duong in the other hand is totally
different. Obviously, consumers will feel more luxurious and satisfied with Coca-Cola rather than
Chuong Duong.

2.4. Promotion:

Coca-Cola through various advertising campaigns has created great demand in market and promotion
becomes the most crucial element in Coca-Cola’s marketing mix. Promotion mix in theory has five
types but Coca-Cola company applied only four over five:

-Advertising

Coca-Cola company broadcasts many TVCs on national channels such as VTV, HTV,...with two key
messages “Give Coca-cola, give happiness” and “Give Coca-Cola, connect with friends”. Besides,
many distinct advertisements also appear on social media such as Youtube, Facebook,
Instagram,...According to cocacolavietnam.com, from 9/2009, all advertisements will not target children
under 12 years consumers on a global scale as they want to ensure the health of its consumers.

-Direct Marketing (Coca-Cola does not apply this on their business)

-Sales Promotion

Coca-Cola in Vietnam has some annual promotions as providing special codes to consumers for secret
prices. The purpose of these promotions are to provoke the curiosity from consumers and increase
profits. However, the most outstanding promotion of Coca-Cola company in Vietnam is “Share a Coke”
campaign; which prints consumers’ name on the bottle’s label in the summer of 2014. The purpose of
this campaign was to deliver the product to buyers in a more interesting way and to increase the
frequency of brand mentions. This campaign appeared first in Australia, then in 09/06/2014, this was
brought to Vietnam and became a hot trend on social media that was shared most at that time. Until
now, this campaign is still one of the most iconic promotions of Coca-Cola.

-Personal Selling

According to cocacolavietnam.com, in National Conference on Sustainable Development in 2018,

Mr.Dam Hoanh Chien, Director of Strategy and Operations of Information Technology, said that Coca-
cola company in Vietnam applied technology on their business; one of them called iMentor, which was
used to train and improve their sales teams’ skills as well as enhance the relationships among them.

-Public Relations

Coca-Cola has an outstanding public promotion program called “The World’s Cup” in 2014 and this
campaign was popular in Vietnam as well. Thanks to this worldwide event, Coca-Cola successfully
promoted their products and brought them to millions of footballers and viewers. Coca-Cola was the
main sponsor at that time. In Vietnam, in 17/09/2011, Coca-Cola company built an impressive image by
started a program called “Clean the international beach” in Hai Phong with the attendance of 150
volunteers. Besides, Coca-Cola also collabed with many brands from other fields such as cosmetics
(The Body Shop x Coca-Cola), clothes ( CoupleTX x Coca-Cola),...; printed their brand name on it in
order to spread the identification to people of all ages and backgrounds. Such those activities like that
can convey the strong impression to consumers and make them remember Coca-Cola more.

3. The evaluation for the 4Ps strategy:

- Product: Owing to the popularity of Coca-Cola Original Taste, the other products in the same line
such as Coke Light and Coke Zero are not as common to consumers as Coca-Cola Original is. In
modern days, as consumers are concentrating more on health, this phenomenon can be a threat to
profit of the other products.

- Place: (Marketing AI) The distribution network of Coca-Cola in Viet Nam is allocated throughout the
country, from large cities to the countryside, from considerable distributions to small retailers, available
in retail locations across the country, cafes, restaurants or bars… As it can be seen from reports and
articles, Coca-Cola in Viet Nam, has always done a great job in implementing strategies, maintaining
long-term relationships with agents in order to expand its distribution network throughout Viet Nam

- Price: Coca-cola’s pricing strategy is flexible, although changes are infrequent, but when competitors’
prices are lowered, Coca-cola decreases their prices as well to prevent harmful competition ( Behram,
2014; Coca Cola, 2015). This is actually beneficial because it confirms that Coca-Cola’s prices won’t
surpass too much from those of competitors and lose customers’ loyalty. Also making sure that Coca-
cola’s prices won’t decrease too much compared to others and results in people misunderstanding their
products’ quality.

- Promotion: During Coca-Cola’s operation in Vietnam’s market, it has been released a large number
of promotions and advertising campaigns, many of them were going viral such as “Share A Coke”,
which played an important role in bringing Coca-Cola’s image closer to people’s mind. These
campaigns cost Coca-Cola a large amount of money, but then it will help the brand gain more potential
consumers as well as higher its profit.

4. SWOT Analysis and Recommendation

4.1. SWOT

4.2. Recommendations

First of all, as consumers are becoming more and more health-conscious. Therefore, “adding a
healthier Coke to a line of brands already positioned to be “better for you” could be a winning formula.”
(Yann Cornil, 2014), Coca-Cola should take in consideration to launch more healthier products in
Vietnam’s market, for instance: Coke Life in America’s market. By doing so, the brand could reduce the
abandon rate due to health-conscious customers increasing rate as well as dealing with the negative
prejudice from its customers and Vietnamese government about sweetened drinks.

Moving on to environmental factors, even though Coca-Cola has implemented many sustainable
projects in order to make good its shortcomings to Vietnam’s environment. However, it is undeniable
that Coke makes up a large proportion in the number of plastic waste of Vietnam.”Greenpeace said the
big six drinks companies* had to do more to increase the recycled content of their plastic bottles”
(Laville & Taylor, 2017). As a result, Coke should try to find more sustainable material in replacement
for plastic containers for its mass production. For example, the aluminum bottles which are mass
produced in Japan. Moreover, the company may also consider innovating its recycling process or
producing more environmentally material, like: rPET*.

Thirdly, by looking at the Segmentation table (1.4.1), it is clear that the highest purchasing power of soft
drink derives from young adult, approximately from 20 to 29 years old, this is also the segment that
Coke should aim at. Moreover, as stated by Hansel Anggie Susanto (2016) being based on Sandison
(2007), targeted customers of Coke, especially Coke Diet, are people aged between 20 to 30 years old.
This means that there are several reasons why Coca-Cola should focus on this segment. Firstly, in
terms of Economics, this age-range involves nearly half of Vietnamese main workforce and they are
also the higher contributors in the Vietnam’s total income (Tap chi tai chinh, 02/2019). Secondly,
according to Vinaresearch (2013), the Vietnamese mostly use carbonated soft drink when gathering or
eating with friends. Moreover, the major respondents of this research was arranged from 24-29 years
old, it could be assumed that people at this age have higher intention to enjoy this beverage on
hanging-out occasions. Having the advantage in financial aspect as well as consuming habits, this age-
group is the most potential one compared to its counterparts, concentrating on this group is a beneficial
strategy of Coca-Cola.

Next, in terms of financial problems, Coca-Cola should be more transparent in announcing its total
sales and net profit as “the company’s vision and objectives in respect to taxation” is illustrated through
a transparent yet assessable tax strategy (Xander Urbach, Bob Made & Evita Aar-Melger, 2018). By
doing so, the company has the capacity to show its good will to cooperate with the Vietnamese
government. Consequently, this will help the company in gaining back trust from the public as well as in
recovering their brand image after tax evasion scandals.

Last but not least, to deal with the threat of competitors, the brand should expand its retail channels
(“Coca-Cola Vietnam Analysis”, n.d.), and also consider to promote its strengths which are marketing
capabilities, differentiated flavors, etc. Particularly, Coca-Cola ought to make the most of their secret
recipe in order to maintain its sustainable competitive advantage (Abhijeet Pratap, 2018).

5. Conclusion

In general, Vietnam is indeed a remarkably potential market for Coca-Cola to continue investing in.
However, in order to keep thriving in Vietnam, they have to make the most of their strengths as well as
take advantage of the country’s offered opportunities. For instance, with the healthy trend, Coca-Cola
should not see it as a disadvantage but a chance to exploit new market by boosting sales of healthier
products and launching new line of less calories, less sugar Cola drinks. More than that, in both
economic and political aspects, Vietnam is now having an astonishingly positive trend which is
advantageous situation for Coca-Cola. Meanwhile, the brand could consider to implement solutions for
arising problems and threats; especially, they should seriously take action in solving its environmental
side effects.