Coca-Cola in India:

Innovative Distribution
Strategies with ‘RED’ Group 7
Chandan Satyarth

Approach
Ishaan Bhargava (1911101)
Mrinali Khemka
Sayan Chattarjee
Siddhant Saumya (1911243)
Srishti Jain (1911262)
Sujith Kumar(1911154)
Yash Sharma (1911306)
 5C Analysis
Company Customer Competitors
• TCCC founded in • Price sensitive • Other soft drinks: In brand + other
• CCI: 1950s then 1993 • 74% in rural areas brands
•Acquisition of local brands •Hot beverages: tea, coffee
•$1 billion investment up to 2003 •Juices, health drinks, energy drinks
• Break even in 2002 •Milk based drinks: lassi, chaach

Collaborator Context
•Distributors: Small + Big •Allegations (national + global)
•Bottlers •Price hikes of raw materials
•Auto rickshaws •Implementation of RED
•Push carts •Increasing customer/consumer base
•Truckers in rural India at 37%
•Increasing purchasing power of rural
consumers
RED
● Right Execution Daily was introduced in 2006 to boost sales(10-15%)
● It is implemented primarily in urban markets through direct distribution
● Efficient brand display and visibility programmes are core to this plan
● Sales team of CCI interacted with the retailers for optimum implementation of RED
● The sales team ensures proper visibility, availability and activation of brands
● Ensuring position of the cooler and the position of the products with in cooler as
per the priority
● Out of the 12 lakh outlets distributing CCI only 3 lakh outlets follow CCI
● Besides all the positive impact RED also increases the cost
● But in long run this cost gets payed for itself and helps in increasing the revenue
Coca-Cola India’s Rural Strategy
Hub & Spoke Model
● 3-Tier Hub & Spoke Model for better distribution & reduced costs in rural areas
● Model characterized by modified products, small drop sizes and frequent deliveries
● Hubs: Large distributors appointed by the company to supply weekly stock from
manufacturing plants to towns and cities
● Spoke: Small scale distributors appointed by the Hubs to carry weekly stocks from them
to adjoining areas
● These small distributors then carried the stock using local transport to rural retailers
daily
● The small scale distributors bore the distribution costs
● Entire strategy supported by extensive marketing campaign
4As Strategy
AFFORDABILITY:

● Introduction of INR 5 coke packs in rural India

● Changed the size of bottles to 200ml

AVAILABILITY

● Modification of distribution chain (Hub and spoke model)

● Changed type of vehicle used for transportation

ACCEPTABILITY

● Distribution of ice boxes in rural India

● Made Coke a generic name for cold beverages

AWARENESS

● TV, radio, cinema

● Unconventional methods like road shows, trade fairs and festivals
Rural Market
● 60% population in rural India with more than 650000 villages in India
● Different Parameters:

Income Levels Literacy Levels Penetration Accessibility Distance

Rural India as Vast Market:

● More than 60% population in Agricultural activity - good monsoon increases spending power
● Also income support by the government and tax exemption in agriculture increases spending power
Problems in Rural India:

Physical Distribution Channel Management Promotion and Marketing

● These problems adversely affect the service and cost of the company Communication
● Rural market has retail stores and Urban retail stores act as stock point - Service delivery costly and
difficult
Challenges for Rural Areas
RED approach focuses on controlling the merchandising standards in retail outlets ensured by a large
salesforce

1. Increases the cost of maintaining the sales force for rural areas
a. Rural market is heterogeneous
b. Training of rural salesman is challenging
c. Profit margin in a unit area is low
2. Gaps in rural infrastructures necessitates higher investment to reach last mile
a. Erratic power supply
b. Low banking and institutional credit facilities
3. Difficulties in Brand identification and activation
a. Less control over the channel compared to direct distribution
b. Small size of retail shops, space for visi coolers
c. Communicating offers and price messages due to low literacy
d. Clones will benefit from the branding and advertising efforts
e. Iceboxes cannot ensure visibility
Way Forward
● Go ahead with current 4As strategy along more efficient BoP strategy
● Hire local entrepreneurial youth to distribute its products in villages rather than a professional
salespersons 
● Leveraging SHGs for the credit needs of rural retailers
● Products - Diversifying affordable products – low cost tetra fruit based, localisation of taste
● Collaborate with other firms- chocolates, for common infrastructure, such as cold-chain trucks
and refrigerators
● Adopt a localised marketing strategy with local brand ambassadors
● Promotional offers for its retailers and consumers during the regional festivals
● While focussing on more visi coolers facilitate retailers with solar coolers  
Thank you