The Coca-Cola Company Introduction of Barqs Root Beer in Brazil Marketing Plan Ashlee Jorgensen Pooneh Ghana Oscar

Garza Pedro Hernandez Ryan Davidson

Table of Contents:
Page 1 2-3 4-5 6-7 8-11 12-13 14-15 Description Executive Summary Project Definition Cultural and Economic Analysis Market Attractiveness Analysis Marketing Plan Conclusion References

Executive Summary The Coca-Cola Company incorporates our mission statement in every bottle we serve; At the Coca-Cola Company we strive to refresh the world, inspire moments of optimism and happiness, create value and make a difference. Established in 1886, The Coca-Cola Company has grown to become one of the most valuable brands in the world (according to Interbrand in 2011). Currently, we offer over 3,500 beverages and are present in over 200 countries around the world. This equates to over 1.7 billion servings each day. A recent venture that we are planning to undertake is entry of Barqs root beer into the country of Brazil. Currently, Coca-Cola controls 50.1% of Brazils market share. While we are present in the market of Brazil, our research has found a gap in the root beer industry, which is not available currently in Brazil. At this time, Barqs root beer controls 12.06% of Coca-Colas total stock price, providing potential for a profitable entry into a new market. By establishing a localized street team, extensive promotion, and corporate sponsorship/responsibility, we are hoping to successfully introduce Barqs into Brazil as a nation with in 5 years. One advantage we already have is being one of the largest sponsors for the FIFA world cup, which is taking place in Brazil in 2014. With this, we plan to launch Barqs root beer in a big way at their games through FIFA related ads and free samples to game attendees. Overall, we believe Barqs entry into Brazil will increase our market share, decreasing the market gap, and provide Brazilians with a new, refreshing carbonated beverage of choice.

Product Definition We at the Coca-Cola Company are looking to launch Barqs root beer into the country of Brazil. In 1890, Edward Charles Edmond and Gaston Barq set up Barq Brothers Bottling Company in New Orleans, LA. It wasnt until around 1898 though that the company began producing a sarsaparilla-based carbonated drinking that is now renowned as Barqs root beer. This drink gained rapid popularity over other root beer brands due to its unique taste and mixture of ingredients. Specifically, Barq made this root beer more carbonated, less sweet, and less foamy than his competitors. After decades of success, Barqs set up their first franchise in 1934, sold the company to entrepreneurs John Oudt and John Koerner in 1976, and in 1995, our company, The Coca-Cola Company, ultimately acquired it. Going through many package redesigns over the past 100 years, Coca-Cola has recently decided to redesign Barqs root beer package yet again, only this time itll be something similar to the sodas 1898 packaging. The design will also include a label with a slogan reading Its Good. Since 1898. It is important for Barqs to remain true to its roots and heritage, and this is just one way to do so. With more than 1.7 billion servings of Coca-Cola products around the world daily, we are familiar with international business and market entry. Our mission at Coca-Cola is to refresh the world, inspiring moments of happiness, while creating value and making a difference (Coca-Cola Company website). We believe that with a population of over 203 million, as the worlds 7th largest economy, and with no other similar beverage currently on the market, Brazil is a perfect place for Coca-Cola to launch Barqs root beer.

Cultural Analysis The country of Brazil is a powerful marketplace to focus on in Latin America. It is the worlds fifth largest country as well as the worlds seventh largest economy. With a population over 203 million, Brazils purchasing power is impressive, estimated to be around $1.04 trillion and growing at around 3% annually. Considering these points, we believe that Brazil is a profitable market to launch Barqs root beer. But before we do so, well have to learn more about the countrys location, climate, family, education, political/legal systems, business customs, religious beliefs, living conditions, and language. Brazil covers nearly half of Latin America and borders on the Atlantic Ocean. It also borders every Latin American country besides Chile and Argentina. The climate in Brazil is mostly tropical to semitropical, except southern parts of Brazil that have more of a temperate climate. With many variations in terrain, Brazil obtains dense forests in the northern regions, with mountains, hills and plains in the south, including the worlds largest wetland region with coastal lowlands. The family structure in Brazil is highly valued, and family ties are extremely strong. Most family members almost always contribute to their fair share of duties, such as financially supporting the household. The family heads often encourage their family to make a home that is suitable to have a good family environment, and tend to live relatively close to outer family members. Brazilians place an importance on their paternal last names, which describes their ancestors and where they come from. The family is viewed as an extremely important social factor that benefits all who are a part of the parentella, meaning a large extended kin group formed for bonding as much as a support group. Education in Brazil is often tied to social class. Two-thirds of the education budget is directed for funding public universities, which offer free tuition for their students. Although the tuition is offered at no cost, the entrance exams for the universities ore often extremely difficult and competitive, sparking a strong motivation to pass them. One-third of the countries education budget is left for primary and secondary schools, and not all young students get a chance to continue their higher

learning at a college level. Poorer families often cannot afford further education, and statistically, students who attain a primary or secondary education at a private school tend to continue their studies at the colligate level. Brazil has a multi-party political system, where more than two political parties have a chance to attain political power (either separately or together). During election period, Brazil votes on a president for a four-year term, with no chance for re-election. Brazil also has a governor that is elected for a four-year term. The majority of Brazils legal structure is based on civil law, or civil codes. These civil codes generally cover areas that involve property law, family law, torts, contracts, and wills. Most of the civil codes being implemented are derived from Spanish and/or Portuguese civil codes. The country also has a bicameral congress. The main religion in Brazil is Roman Catholicism. According to the CNBB (National Conference of Brazilian Bishops), 76% of the population associate themselves as Catholics. Most people in Brazil are baptized and married through the Church. While that is a high number of people who practice Catholicism, it can be misleading as the number of people who actually attend Mass and participate in church activities are right around 20%. The decline over the years in Catholicism in Brazil has led to a diverse group of Christian based religions, as well as an increase in Muslim and Jewish practices. Religion plays a large role in their everyday life. When interacting with elders, one may ask them for their blessing and use phrases such as God willing as a response to see you tomorrow. To understand Brazilian business customs, we must also understand their culture. Brazilians believe in a hierarchal structure and score an above average rating when it comes to power distance. Men have a firm hand shake while maintaining steady eye contact, and if a women wishes to shake hands with a male, she is to extend her hand first. As part of their business culture, they put an emphasis on appearance and how you dress (which also tends to represent your status). Brazil tends to be a group orientated society, or collectivists. Brazilians feel the need to establish relationships before

doing business negotiations. They prefer face-to-face meetings so that they can get to know the person. This is because they believe that the person they are dealing with is more important than business in which they work for. Since Brazilians value their relationships, they tend to wear their emotions on their sleeves. One crucial factor in dealing with Brazilian business is that culture is tied into their high uncertainty avoidance. They tend to take a more informal approach to business as well as life, and social interactions are very important as they are seen as a way of relaxing. One must be patient with Brazilians, never rush them, and let them be the one to bring up the business matter. Brazils living conditions vary depending on the part of the country, or even city, you are in. The northern regions vary from the southern regions, as the northern cities are more poverty stricken. Even within the city, favelas border rich neighborhoods. The country also has a notoriously poor public healthcare system. In Brazil, the Internet wasnt made available until 1995, and even today, the Internet is expensive and is not readily available. This has a lot to do with the high price on phone bills. Of the Internet used in Brazil, 80% are upper class, 16% are middle class, and 4% are lower class. Even so, its usage is growing, mainly for political and advertisement purposes.

Economic Analysis With The Coca-Cola Company introducing Barqs root beer into Brazils market, we must first establish a market plan for Brazil. We will take the following factors into consideration: countrys population, economic status, transportation systems, principal industries, foreign direct investment, trade statistics, inflation rates, labor force, levels of diffusion of technology, channels of distribution, and availability of advertisement media. Brazils population is 203,429,773. The countries GDP is also quite impressive. Brazils nominal exchange rate GDP is $12,917, per capita GDP is $11, 845, and overall GDP is a high $2.09 trillion. This makes Brazil the 7th largest economy in the world by its nominal GDP. Brazils distribution of wealth is also important to understand as a marketer. On a scale of 0-100 (with 50 being perfectly equal), the country measures in at 53.9, making its distribution of wealth only slightly unequal. With a more methodical approach, Brazil has adopted integrated means of transport through roadways, railways, and water transportation. With one million miles of roadways, only 9% are paved, and Brazils government has jurisdictions on over 35% of these paved roadways. Brazil uses railways to move non-perishable cargo over a long distance. With over 18 thousand miles of railway, this is the second most important means of transportation in Brazil. Brazils principle industries include agriculture, mining, manufacturing, and some service sectors. Approximately one fifth of Brazils workforce is involved in agriculture. As the worlds largest producer and exporter, Brazils main commercial crops include coffee, fruits, and many others goods. Brazil is also the worlds largest producer of Iron, with infinite mineral wealth that includes gold and platinum. Recently, Brazilians have discovered offshore petroleum and natural gas deposits. These findings could make the nation a significant gas and oil producer in the near future. The Federal Direct Investment (FDI) has been entering Brazils market due to its large growing economy. Brazil keeps a protectionist policy in place to guarantee profitability of investments made by

other countries. With an FDI rate lower than last year at 3.5% (compared to 7.5% in 2010), Brazil still exceeds at $65 billion. With a large exporting market, Brazil has many countries with which they do business. China exports at a rate of 12.4%, the United State at 10.5%, and Argentina at 8.4%, amongst others. This is very important to Brazils economy, with exports totaling $201.9 billion dollars. Brazils primary importing allies include the United States, China, Argentina, Germany and Japan, with a total value of imports at $181.9 billion. The monetary exchange rate in the country is 1.88 Brazilian reais to 1 US dollar. If this rate were to increase it could result in an increase in demand and a decrease in exports. Brazils inflation rates have been reported relatively low, at a rate of 6.2% as of January 2012. This rate is rather high, considering Brazils past inflation rates where much higher at an average 445.98%. The drastic decrease of this rate implies that the Brazilian population is very capable of entering markets as consumers. With a fast growing economy, Brazils labor force continues to grow each year at a rate of 102.2 million (estimated in 2010). Brazil has a relatively low unemployment rate at 4.7%, which helps their labor force and economy as a whole. Levels of Diffusion technology in Brazil (which has increased by 51.5% in 2010) show positive results. Brazil dominates Internet usage in Latin America. For every 1,000 Brazilians, there are 429.9 computers. With high levels of growth due to rapid mobile phone growth, there are more Brazilians with cell phones than landlines. We at Coca-Cola believe this is a great way of marketing to our prospective consumers. Retailers in Brazil, including Wal-Mart, Carrefour, and Pao do Acucar, are growing rapidly. Wal-Mart and Carrefour are opening more than 70 stores each per year in Brazil, and Coca-Cola would like to introduce the Barqs product through one or a few of these major retailers. In order to obtain their licenses to import goods, all importers have to register with the Foreign Trade Sectarian through a system called Siscomex. Thankfully, our team at The Coca-Cola Company has already completed this

process. Advertising in Brazil has also grown quickly over the years through Internet and cell phone usage. We plan to invest in both forms of advertising, as well as television slots and event/corporate sponsorship. With efficient channels of distribution, The Coca-Cola Company can penetrate the rural and urban markets while bringing the refreshing, unique taste of Barqs root beer to Brazil.

Market attractiveness Analysis: Coca-Cola After extensive research, we at Coca-Cola have found enough evidence to support our entry into the Brazilian market. The country of Brazil is the worlds 3rd largest soft drink market, with a market growth rate of nearly 18% per year. In the last 30 years alone, Brazils soft drink industry has grown by 400% total, which is a vital piece of information supporting Barqs introduction into Brazil. In addition, there is currently no root beer in the Brazilian market. Coca-Cola owns 50.1% of the total soft drink market share in Brazil, with more room to grow. With over 90% of Brazils total population consuming a carbonated beverage consistently, and with no other root beer competitors, we believe that Barqs would experience enormous success. Brazilians place a high priority on living in the present, as opposed to planning for the future. With their present day mindset, Brazilians devote a large share of their overall income to flexible spending. They prefer to spend rather than save, which we feel is an advantage for Coca-Colas entry of Barqs. Out of the 4 emerging countries (BRIC), Brazil is the most modest, with consumers saving only 10% of their yearly earnings. Convincing Brazilians to embrace Barqs root beer could result in a high level of repeat purchases. According to Global Edge, Brazil has a 21 out of 50 rating for market size, with a market growth rate of 36 out of 50. This ranks Brazil has number 11 out of all emerging countries in terms of market growth. The main competition of Coca-Cola would face would be Guarana Antartica, a carbonated beverage flavored with Guarana, the second most consumed drink in Brazil. Guarana Antartica has a distinct flavor of apples and berries, and is not as similar to Barqs as Coke is (provided by CocaCola). Barqs root beer has somewhat of a similar appearance and aesthetic to Coke, which we feel will help boost the launch of Barqs root beer in Brazil. The packaging of the product could also help Barqs success. Brazil is known for its bright festive colors, and the people of Brazil embrace that aspect of their lives in any way possible. The package for Guarana Antartica is green with a white label and red letters. It is sold in aluminum cans or plastic liter sizes. Since this package is widely

recognized in Brazil, as is the Coca-Cola logo and color scheme, coming up with a distinct label for Barqs in Brazil should capture the Brazilian lifestyle and culture. In Brazil, Barqs Root Beer has multiple forms of competition. Competition includes imported sodas, such as other Coca-Cola brand products, as well as Pepsi and domestic carbonated beverages of choice. In addition to Guarana Antartica, another popular drink of the domestic market that would be of most concern for competition is Caipirinhas. Coca-Cola has an advantage to stand out in Brazil because its cheaper than Caipirinhas and it contains less sugar. Coca-Cola is the most popular brand in Brazil, but not the most popular individual soft drink. Competitors in Brazil have used multiple forms of promotion for their products, and Coca-Cola has also taken this initiative and built a stage on a beachfront property in Rios beach to promote their brand. From television commercials to mobile phone advertising, we try to target men and women from ages 10-25 in multiple forms. Coca-Cola has about 50.1% of Brazils market share in the soft drink industry, with its closest competitor, Ambev, holding 17.7% of the market share. Ambev is a bottling company in Brazil that has a long-term agreement with PepsiCo through 2017. This makes Ambev PepsiCos largest bottling company outside of the United States. Through their agreement, Ambev is able to distribute PepsiCos major brands such as Pepsi, Gatorade and Lipton. Another major competitor in Brazil would be Anheuser-Bush InBev, which uses a subsidiary of Ambev as its channel of distribution.

Marketing Plan In order to introduce Barqs Root Beer in the country of Brazil, we at Coca-Cola must successfully create a market plan. Collectively, we will consider the following factors: marketing objective, possible issues that may arise, product, price, distribution, promotional elements, advertising methods, sales promotions, event sponsorship, public relations, use of direct marketing, personal selling, and pricing. With Brazil being worlds 7th largest economy, Barqs has a large potential market for entry in the country. We would like to have direct focus on men and women ages 10-25 who desire a unique tasting, carbonated, non-alcoholic beverage, which would be a welcome change from the sugary drinks and alcoholic beverages. Coca-Cola would like to allow all 10-25 year old men and women to purchase Barqs root beer in all regions of Brazil within the next 5 years. At Coca-Cola, we set high expectations and like to strive to provide happiness to our consumers with our products. Within 1-5 years, we would like to increase overall sales for Coca-Cola as a company by 25% with Barqs introduction. Directly, Coca-Cola would like to focus on increasing Barqs sales by 15% alone within 1-5 years. Furthermore, we are aiming to increase Coca-Colas profit by 35%, as well as Barqs profit by 18%. With our entry into Brazil, both Coca-Colas total market share in Brazil and Barqs market share will rise steadily. There are a few issues we considered might arise with Barqs entry, and subsequently Coca-Colas expansion, in Brazil. One issue is that the root beer flavor is not a common taste in the country. Seeing as this flavor is so distinct and acquired, and the fact that root beer is currently not even available in Brazil, it might be a bit difficult for Brazilians to embrace the drink initially. Another problem is the price competition. Coca-Cola drinks are basically viewed as premium products in Brazil, and their prices are significantly higher than some Brazilian competitors (almost twice the price). These competitors are called tubainas, and are able to sell their drinks at a lower price because they can avoid certain taxes. So an issue could be that a majority of the population will choose buy a cheap

alternative as opposed to dishing out for a Coca-Cola product. There is also the possible Brazilian nationalism that may arise with the expansion of Coca-Cola/Barqs in the country. As a result, more people may shift to buying local and supporting Brazilian companies, in fear that Coca-Cola will run them out of business. A last issue that Coca-Cola can face with their expansion is the rising health concerns in Brazil. Its been reported that the Brazilian government is trying harder to increase health awareness in the country (in efforts to help prevent dietary related diseases). Some initiatives theyve proposed are to advertise healthy living, take out junk food from schools, and promote smart shopping techniques. All of this may cause a backlash, and maybe even a campaign, against drinking sodas. We also need to consider the fact that most (if not all) sodas in Latin American are made with real cane sugar, whereas in America theyre made with high fructose corn syrup. High fructose corn syrup has drawn in a lot of criticism, not only for its negative health effects, but also for its taste. As a result, we are looking into switching over to real cane sugar for our Barqs root beer line in Brazil. We will also introduce a Diet Barqs Root Beer as a sugarless alternative. Our product strategy will initiate a number of changes for Barqs product design and packaging to adapt to a Brazilian market. While our product name will still remain Barqs Root Beer, our product size will initially be a standardized 20-ounce bottle. We will also primarily adopt glass, see-through bottles for our packaging (see-through except for the labeling, which will go across the middle). A somewhat drastic change we plan on undertaking is color and design for Barqs packaging. Seeing as Brazilian culture is known to be quite vibrant, flashy, and colorful, we at Coca-Cola concluded that it would make sense to also make our package design more colorful and fun. While our current label background is a metallic silver color, our Brazilian label background will be changed to a bright, sun orange (which compliments the dark color of the root beer well). Another change we will make on the label is the lettering. While the design of the logo will remain the same, we will translate the slogans Famous Olde Tyme Root Beer and Since 1898. Its Good! from English to Portuguese. Also, to promote the Coca-Cola brand and a warranty, we will add on the bottom of the label the words

Product of Coca-Cola. Satisfaction Guaranteed. in Portuguese. As for our product scent, we prefer to describe it as having a weak but slight scent of wintergreen. Hopefully this appeal to the visual senses of the Brazilian population, and Barqs will become an eye-catching product that they cant help but notice on the shelves. Since Brazil is in the middle of a major overhaul of their self-image with their health awareness campaign, we will aim to make Barqs Root Beer a healthier alternative while maintaining that distinctive Barqs bite. One idea we have is infusing vitamins into the soda, such as vitamin B12 to help the nervous system as well as vitamin D to help bone growth and fight deficiencies. This will push the idea of living a healthier lifestyle while putting us in front as a company that recognizes Brazils motives and a company that will work for the consumer. When creating a marketing plan and introducing a new product into a new market, distribution is an important factor to focus on. Coca-Cola and our marketing team believes that a direct investment mode of entry would be best since Coca-Cola is already a large market controller in Brazil. With 39 bottling plants located directly in Brazil, our Barqs product will be made within the country, giving a local touch to our target market. AKQA, a marketing agency that focuses on interactive marketing, will be Coca-Cola and Barqs agent responsible for advertisement and promotion. Coca-Cola Femsa will furthermore be responsible for Barqs distribution. To begin, they will distribute Barqs to the specific regions of Campinas, Santos, Sao Paulo, parts of Mato Grosso de Sul, and parts of the state of Goias. Within 5 years, Coca-Cola Femsa will be distributing Barqs throughout all regions of Brazil. From a retail perspective, Coca-Cola will offer Barqs root beer at Wal-Mart, Carrefour and Pao do Acucar. Wal-Mart and Carrefour are launching 70 stores a year in Brazil, giving Coca-Cola more reason to offer Barqs at those retailers. Barqs message in Brazil is that Barqs root beer has a bite that reflects teens passion for living life to the fullest (VirtualVender). We will spread this message through our strategic advertising tactics. One way we will execute this is with an aggressive Internet campaign that will

include pre-rolled ads, mobile ads, and social media. Sex appeal in our ads will also help us reach the target market that is young and has a growing purchasing power. We will also appeal to our target market by establishing ourselves as the cool alternative for the younger generation, who want to be like the older generations by drinking root beer instead of actual alcoholic beverages. In order to combat one of Coca-Cola major competitors, Barqs will have a street team that will be responsible for giving out our coupons, as well as sample to as many consumers as possible. In order to monitor feedback, we will use mycokerewards, a promotion where consumers can redeem points/prizes by entering a code on our site or by text messaging. Since Coca-Cola doesnt offer this to international users, we will monitor this service through one of our local offices in Brazil. We will also advertise ourselves as a healthier alternative to the alcoholic beverages and sugary drinks (such as tubainas), and market ourselves as the new drink of choice to lead a better lifestyle. Coca-Cola will be one of the largest corporate sponsors of the FIFA World Cup. Through promotion of Barqs, we will be able to establish national recognition. In Brazil, futebol(soccer) is recognized more as a religion than a sport, and is a great source of national pride. As part of a consumer orientated promotion, Coca-Cola will conduct a sweepstakes promoting Barqs, which will give people a chance to win tickets to the World Cup. The number of tickets will depend on the allotment of tickets that are not yet finalized, and will be communicated at a later date by FIFA for corporate sponsors. Coca-Cola plans on establishing a family image through local investments and development in Brazil. For instance, we will re-plant trees in the most devastated parts of the rain forest. With our advertising plan and corporate sponsorship of events like FIFA, Barqs public relations in Brazil can reflect the positive images Coca-Cola has already established in Brazil. The main objective in direct marketing is to make Barqs recognizable amongst a variety of soda brands, sugary drinks and alcoholic beverages. The types of activities that will help directly with the marketing of Barqs will consist of mobile advertising and sampling. Distribution of soda samples will

give prospective customers a trial to evaluate how well they like a product. We also hope to capture the essence of Brazil in our marketing strategies. Coca-Cola does a tremendous job putting an importance on family and a strong community. With Brazil being an extremely family-oriented country, we believe that this will only help with our launch of Barqs by following Coca-Colas footsteps when interacting with the population. With a specific marketing plan for Barqs, we will need to employ an outgoing group of sales professionals to help with the launch. We would like these field reps to be from different parts of Brazil, as theyd know what it is that makes Brazilians react positively to our product. Overall, our main focus is to bring a strong awareness to Brazilians about how delicious a drink like Barqs is. The typical bottle of soda consumed by an individual is 20oz (600mL). In order for Barq's root beer to compete in Brazil's market, we need to price competitively, but in a way where we dont go bankrupt and our product is still viewed as premium over competitors. In the US, a typical 20oz soda runs anywhere from $1 to $3, depending on the venue. In Brazil, a typical 600mL soda runs anywhere from 1,80reais 3,50reais ($1-3). With these prices in mind, we would like to gain 5% of the market share with Barqs in our first year. We find this a very achievable goal, but at the same time it is a goal that will make us push our product. Furthermore, having the Coca-Cola logo or name on the Barqs bottles will help persuade people to try Barq's root beer. Looking at sales figures, our product cost is $1.22 per unit, and the average price of a bottle of Coke in Brazil is $1.46. To meet our sales goal, we plan on selling Barqs in Brazil for $1.60 (2,94 reais).

Conclusion Overall, as the worlds fifth largest country and seventh largest economy Brazil is ever evolving, with endless growth. The purchasing power in Brazil is growing exponentially at around 3% annually, yet another advantage for Barqs entry into Brazil. With a growing purchasing power, the current lack of root beer, Brazilians interest to change, and Coca-Colas current presence in the market, we believe it would be advantageous to introduce Barqs into Brazil. Currently, Brazil has been experiencing a drastic decrease in inflation rates, which implies that the population of Brazil is highly capable of entering new markets as consumers. With Barqs currently not available in a most of Latin America, and the country of Brazil covering over half of the continent, our successful entry into Brazil has potential to spread throughout Latin America. As a collectivist culture, we would like our field reps to establish face-to-face relationships throughout Brazil. We believe that with 39 bottling plants and over 20,000 employees in Brazil, we can penetrate both urban and rural markets more effectively than our competitors. As with our other beverages, we hope Barqs will be a drink that the entire family can enjoy, while providing the same happiness and optimism that we promise in our mission statement.