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By Aresh Shirali
Consider the signals. By one series of reports, the venerable old company is plunging headlong into the FMRI business. It is busy using hi-tech machines to watch wave patterns in the consumer's head in the hope of grasping the mysterious triggers of 'identity associations' ('Ah, that's my brand!'). At another level, the management thrust under new CEO Neville Isdell is to mitigate some of the nasty effects of the 'Coca-Colonization' of its bottling operations. Distribution is back on top of the agenda. Bottlers are to be given their due---as intermediary customers. Coordination systems are to be strengthened. Chiller-space is to be invaded with renewed force. Meanwhile, what happens to the consumer mindspace game? In this quart-to-quart business, is the famous curvaceous bottle---the means---to reign supreme? Or will the fizz of refreshment wrapped cursively in that latitudinal label---the end---have something to say? Both, perhaps... as ground conditions specify. According to the eminent Emory marketing professor Jagdish Sheth, Isdell's special advantage is that he is "both an insider and outsider". An old Coke hand, the newly appointed chief made his way up the bottling side of operations, not the syrup business. Now that he is boss, Isdell is looking to give the bottling system some respite from the squeeze put on them by his predecessors (a process that began at the end of the 1960s). "They're so consumer-centric," says Sheth, "they forgot they have an immediate customer." This may well be history, now. "You have to serve both constituencies," says Sheth, approvingly, "they need to balance." The first issue: protecting bottler margins. "It's like with McDonald's---you need to please the franchisee," explains Sheth. This is also an issue that has been getting the company plenty of bad press---largely for reasons of legacy. It was the bottlers who first showed the syrup guys how much more cola could be sold in America (at a time it was just a fountain drink). Ever since, bottler families have occupied an important part of the company's cultural heritage. This has helped them resist the company's attempts to consolidate bottling as a separate corporate operation. When an unhappy third-generation bottler groans publicly about the company's insensitivity, he has little trouble gathering local townsfolk to rally around him---for TV crews to broadcast. "It's the attitude," regrets Sheth, "Coca-Cola was behaving like Microsoft." Not any more, if Isdell has his way. Then comes distribution expansion, vital to growth. Bottler cooperation is also what Wall Street is looking for, so the new moves should buoy the stock too (a stock that's still stricken by one-time chief Roberto Goizueta's demise). "Investors will be calmed." Disintermediation, presumably, does not strike investors as much of an idea. But then, the demands of pragmatism often differ from those of theory. In Sheth's opinion, "Collaboration is a better model." Even if the brand finds other forms of benefit delivery, the bottle is not going to decline as the primary medium for cola supply anytime soon. That's how things are on the ground. Bottler loyalties, for instance, can still make a huge difference to the competitive picture. Coca-Cola was trailing Pepsi in Venezuela-till it won a big bottler switchover. The bottler squeeze, meanwhile, traces part of its logic to the sugar crisis of the 1970s-which prompted the company to start buying out bottlers. Sugar crisis? Well, sugar is the original formula's biggest cost, so securing sugar supplies has traditionally formed a crucial part of the company's cost strategy. While Pepsi switched happily to corn syrup, Coca-Cola found its corn syrup product, New Coke, rejected by the market (its aspartame product, Diet Coke, which accounts for 30 per cent of revenue, has achieved the same cost objective since). As the classic marketing story tells it, Coca-Cola is so strong a brand that its formula is now held hostage not by the company in some secret locker, but by the very consumer---who insists on the 'real thing' as an invaluable part of modern existence. Yet, says Sheth, "I do believe we have exaggerated the power of the brand. Most brands are built by distribution strength." P&G, for example, needs Wal-Mart to grow for its brands to grow---and penetrate markets such as China. P&G, in his view, will manage to counter Hindustan Lever's strength in India only after Wal-Mart enters. But, but, but... what about advertising? What about the space secured in the consumer's heart-n-mind by brand communication? Isn't this what gives the brand its 'pull'? In Sheth's analysis, that happens mostly with highly differentiated products, or new products. Or old products in emerging markets---as Coca-Cola is in India. In mature markets, a brand is simply a mark of trust, and once that distinction is achieved, and the product becomes a routinized part of people's lives, it's all about putting the cola 'within an arm's length of desire'. India, Sheth hastens to add, is not close to maturity as a market---since the consumer is still new to cola. Just as well, then, that the previous CEO, Doug Daft, drafted a fairly decentralized marketing model for the brand. One that gave sufficient independence to the local unit of McCann to think up a highly localized campaign to wow the market. This decentralization, however, might be under threat now. Rumbles from Atlanta indicate that the company is wondering if the idea went too far, and whether some re-centralization under Isdell would be a good thing. Prasoon Joshi, the creative mind behind Coca-Cola's highly localized campaign in India, does not seem terribly perturbed by the thought. It's market performance that counts, he shrugs, and so long as that's the case, creative freedom should not get cramped. Moreover, it's not as if McCann's Joshi is a 'local' adman in any way that connotes a kind of insularity. A champion of the local idiom he may well be, but he has just become regional creative director for South and Southeast Asia. This is a global role. And he is quite comfortable with making local interpretations of global propositions. "Sure, the layering of a campaign is local," he says, "But before culture comes the idea---which is universal." Indeed, Coca-Cola in India is faced with an opportunity as much as a threat. The threat is that Atlanta turns into a control freak. The opportunity is in making the best of the moment to show what the creative resources are capable of. The brand could come up with such a refreshing end-oriented campaign that it makes the folk over at Atlanta sit up. Sit up, that is, and ask some questions. Is brain tissue imaging really the cutting edge of marketing? It still sounds crazy that anybody should be so taken in by an 'identity' part of the brain lighting up on seeing a Coke bottle. Besides, is that all the brand wants---to merely be identified with? Not much a relationship would that make, for sure. Would it? See bottle, get thirsty-and glug down cola. Feel satiated. Wham, glug, thank you ma'am. It involves trust, distribution and plenty of management brains and investor dollars, no doubt. But it is still commodification. Sure, it pitches Coca-Cola against water, as Goizueta dreamt of doing. But it also turns Coca-Cola into a coloured sort of water. Y'know, a liquid you drink because it's there to drink. Meeting the 'thirst' need. Coca-Cola, the brand, deserves better. It deserves a consumer relationship that's emotionally and intellectually refreshing, beyond the physiological. And all this, while retaining exquisite clarity on the balance of power: neither the brand nor the consumer need have unquestionable authority over each other.
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What's
going on in Atlanta? Every marketer should be interested. That's where The
Coca-Cola Company is headquartered. Coca-Cola, the cola it markets, is the
world's most valuable brand, going by the present value of future
cashflows it is expected to deliver. So says Interbrand, a London-based
consultancy.