International Marketing
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TABLE OF CONTENTS
Introduction 1
Re-evaluation using PEST model 1
Political re-evaluation 1
Economic re-evaluation 2
Social re-evaluation 2
Technological re-evaluation 3
Competition analysis 4
Strategic market advice 4
Reference 5
Executive Summary
The following report was conducted to investigate the UK soft drinks market to make conclusive decisions about the expansion of the Coca Cola company. It involved looking at the marketing environments using the PEST model and the completion in the market. The PEST model included looking at the Political, Economic, Social and Technology in the UK soft drink market to ascertain the expansion of the Coca Cola company. The recommendations were presented to the company for consideration.
Introduction
Following the rise of global markets, the Coca Cola company seeks to expand its global market in the UK. Companies that seek to engage or expand their businesses in global marketing often face challenges in their target countries. The UK soft drinks market has seen continuous growth from 2013 to 2019. According to the Gross Domestic Product analysis (GDP), the only drop witnessed was in 2015 (Steenkamp, 2017, p.75-109). Bottled water and energy drinks specifically increased their supply due to the increased market. The UK is a good consumer of soft drinks, and we will re-evaluate The Coca-Cola company market operation to ascertain its viability and profitability. To conduct a market analysis for the expansion of the Coca Cola company in the UK.
Re-evaluation using the PEST Model
Political Re-evaluation
The UK market activities take place within the political environment of government institutions, political parties and organizations through which people exercise power. When re-evaluating its political environment, we will look at its sovereignty, political risks and taxes. In terms of sovereignty, the UK is a sovereign union where trade has been regulated. Its power to control its domestic market without outside interference has led to the growth of many companies. The soft drinks company in specific remains one of the flourishings in the market due to the sovereignty nature of UK. Antitrust laws and regulations have been established to ensure free trade (Rodger, 2017, p. 219-227).
The political risk of the UK is very low, and no change in political government or environment would adversely affect the soft drinks market. Political risks deter global companies from investing abroad because high levels of uncertainty in politics would decrease productivity, where a company is welcome one day and the other day they face being attacked and belittled by opportunistic politicians. Such countries fail to attract the foreign market. As for the UK, the political risk is relatively low, and the soft drinks companies perform very well. Political risks are, for example, war, social unrests and international disputes that alter the wealth distribution.
The government’s taxation policies on the sale of goods and services influence global companies to either benefit or continually make losses. According to (Law, 2020, p10086), the UK passed a sugar tax on the Soft Drinks Industry Levy (SDIL). Any company the engaged in the soft drinks business had to pay a tax depending on the level of sugar in their drinks. This was termed as a very unfavourable move that would cripple the soft drinks company. Taxes on business operation has been an issue in the UK, where businesses are highly taxed where corporation taxation has been a challenge, especially for global companies.
Economic Re-evaluation
Economically, we look at the UK’s trade agreement and supply and demand of the soft drinks market. Regional and international agreements is a crucial aspect of global marketing. By 2020, the UK had secured over 23 trade agreements with different countries. That means companies would be able to trade efficiently through imports and exports. Following their withdrawal from the European Union, the UK has focused on improving trade by making other trade agreements with the United States and other countries. It is doing this to supplement those countries that engaged trade and were focused on their continuous relationship. The economic environment in the UK is largely growing and very hopeful for global companies.
The supply and demand are at the top-notch, especially for the soft drinks industry. People in the UK have embraced the industry, but in the recent year due to the covid-19 pandemic, this has slowly declined. Covid-19 has affected the economy in various ways where businesses have crumbled and are not receiving support from the government. Import and exports of products are also slow as the virus has affected the economic environment globally.
Social Re-evaluation
The social environment highly depends on the culture of the UK and their view toward soft drinks. To increase consumption, global companies must understand the culture, attitude and beliefs behind their target country. Social set up in business comes with aesthetics, dietary preferences and language and communication. Global companies may want to use a standard colour in every market, but this might be welcome everywhere. Blue colour, especially in the UK denotes loyalty, resilience and trust while red is associated with most drinks. This is because red is viewed as active and vibrant and appealing colour to beverages and soft drinks (Keegan, 2017). It is therefore important to take notes of the colours, adapt to such local preferences and increase consumption.
In dietary preferences, it is important to understand the soft drinks related preferences. Companies that ignore this are bound to make serious marketing mistakes. Although the UK has food strongly embedded in their culture, this is fast changing as the fast food and soft drinks markets are high rising. It is important to also accommodate other people with interest in soft drinks but have a different taste; for example, some people prefer low sugar drinks while others want drinks with high sugars. Learning the dietary market in the UK, soft drinks consumption is very high, with most people preferring a normal soft drink with average sugars (Tahmassebi, 2019, p.109-117). The language and communication, especially in marketing, is very crucial. Global marketers should understand that words have a different meaning in different countries. The way they are pronounced also is very different. Coca-cola company being originally in the United States should be very careful in the wording in the UK.
Technological Re-evaluation
Technology is fast growing in the UK. The government highly supports any technological research and inventions. Any technological inventions in the soft drinks markets are welcomed and supported highly. Recently, the soft drink company has made several innovations challenged by consumer tastes. Any change in consumer tastes calls for the technological invention to support this. Changes in shapes and sizes of the soft drinks require the companies to come up with innovative ideas to counter the challenges.
Concerning covid-19, the soft drinks market in the UK has been largely hit. Soft drinks producers are expected to suffer from low demands due to the straining economy. The industry is experiencing a shortage of raw materials and increased costs, such as labour and transportation. Following the government imposed a closure on trade agreements, the soft drinks companies and industries at large are bound to suffer low demand and supply.
Competition Analysis
There is healthy competition in the soft-drinks industry in the UK. Coca Cola being an alcoholic beverage company, In the UK, it is bound to compete with Red Bull and Pepsi, which are also global companies. To gauge the performance of Coca-Cola company, such competition is very healthy. Consumers are also able to get the best possible prices, quality and quantity of goods through such competition. The industries are kept on toes through competition. They can produce the best quality soft drinks and maintain ethics.
Strategic Market Advice
As a marketing consultant, expanding Coca Cola market in the UK can be a great idea. The economic market, despite the covid-19 pandemic in the UK, is flourishing. The industry is doing well, and I would advise the expansion of markets. The social environment is accommodative where most people are not embedded in culture and embraced the fast food and soft drinks in specific. (Schlegelmilch,2016). The economic environment is also very welcoming where apart from taxation, the government supports global markets and their technological invention. In response to Covid-19, The government is providing Corona Virus Business Interruption Loan to the businesses that have been greatly affected. It includes giving loans to struggling businesses. I would therefore encourage and push for Coca-cola expansion of markets in the UK using the colour code Green. That is the operation of Coca Cola activities be intensified and increased. This would call for the opening of more stores.
References
Keegan, W.J., 2017. Global marketing management. Pearson India.
Law, C., Cornelsen, L., Adams, J., Pell, D., Rutter, H., White, M. and Smith, R., 2020. The impact of UK soft drinks industry levy on manufacturers’ domestic turnover. Economics & Human Biology, 37, p.100866.
Rodger, B.J., 2017. Implementation of the Antitrust Damages Directive in the UK: limited reform of the limitation rules. European Competition Law Review, 38(5), pp.219-227.
Schlegelmilch, B.B., 2016. Global marketing strategy. Cham: Springer Nature.
Steenkamp, JB, 2017. Global marketing mix decisions: global integration, not standardization. In Global Brand Strategy (pp. 75-109). Palgrave Macmillan, London.
Tahmassebi, J.F. and BaniHani, A., 2020. Impact of soft drinks to health and economy: A critical review. European Archives of Paediatric Dentistry, 21(1), pp.109-117.