Coca Cola is in the news quite a bit these days, and that's largely because they have been making quite a bit of news by acquiring a number of brands. But what hasn't been covered very thoroughly is the company's emerging approach to new product development -- appealing to regional tastes across the globe by letting local units make more decisions.
Marketers have been customizing products in international markets for quite some time now; but, rather than tending to make centralized decisions about far-off markets, Coke is now actively encouraging its international units to conduct research and develop their own products that appeal to regional tastes. Perhaps one of these highly successful product introductions might have potential for mass appeal, but the marketers who developed this strategy are far more concerned with developing and marketing successful products on a regional basis.
International arms represent about half of Coke's revenue, and so the company's global strategy is just as important as its domestic one. And with tastes differing across the globe, it certainly makes sense to decentralize new product development by allowing international partners to decide what the people in their countries might want to drink. India's Maaza Chunky (a successful mango-based juice product), for example, probably would not have been an idea that executives at the Atlanta-based company would have come up with. Locals, however, probably have a better idea of what folks within their own culture might prefer.
Interestingly, Coke has long embraced this more decentralized approach to new product development in Japan where it has continued to introduce all kinds of interesting concoctions such as a fizzy, alcoholic citrus drink and, on the wilder side, a "functional beverage" under the Sprite brand that also functions as a laxative. But in other countries, Coke's partners have been more apt to sell beverages that were made for Americans. This is clearly a much more contemporary approach.
Discussion: Do you think decentralization is a good strategy? Why or why not? Why do you think it took so long for Coke to embrace a more decentralized approach to new product development?
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