Coca Cola excels at leveraging opportunities. During the 2008 Olympic Games, it seemed that Coca Cola’s red cans were everywhere in the venues; in a global TV program jointly released by Coca Cola and the movie makers of Quantum of Solace, the famous spy, James Bond, was shown tied up with a black can of Coca Cola Zero.
“Coca Cola is a company relying on marketing, not on producing,” says Coca Cola China CIO George Kuan. In fact, Coca Cola mobilized for the Olympics as soon as Beijing was awarded the Games back in 2001. Various Olympic-related marketing programs helped propel Coca Cola’s sales in China to new highs: on the night of the opening ceremony, nearly 300,000 cans of Coca Cola were sold at the Bird’s Nest (the National Stadium in Beijing).
It might seem that an IT division wouldn’t have much to do with Coca Cola’s slick ads. But in reality, these promotions require billion dollar marketing budgets, and that kind of money needs to be precisely monitored through the IT system.
Although Coca Cola China’s IT division is just one part of the company’s massive global IT infrastructure and an executor of its strategy, Kuan and his group have a relatively large space to make innovative move thanks to the market’s rapid growth and uniqueness. With the support of a powerful advertising and marketing campaign over the past seven years, Coca Cola’s sales have more than doubled in China. It is now the fourth largest market for Coke after the US, Mexico and Brazil.
“In spite of the financial crisis and a sliding global economy, the demand in China’s market remains robust, which suggests the best opportunities for IT innovations,” explains Guan. The China region used to simply follow the business system or procedures developed by Coca Cola for other regions. Now, however, some innovative programs of the China IT division have caught the attention of Coke’s other global branches, and some of its programs[K2] are even being implemented in other countries and regions.
Kuan is not a unique case. With the increasing strategic significance of the Chinese market, CIOs from other multinationals in China have new opportunities to become more influential in their corporate environments.
Local Practices
Coca Cola China’s IT division has about 30 employees；Kuan is the IT director of Coca Cola Greater China. Like most multinational IT divisions, the China region IT division is part of Coca Cola’s global IT operation. One of the advantages of this vertical organizational structure is that an optimized global distribution of human resources is available. For instance, when the China region was implementing the ERP (enterprise resource planning) system and it needed a technology expert familiar with a certain module, Kuan was able to tap Coca Cola’s global IT network for the right person. Similarly, Coca Cola China’s IT employees are often sent abroad to provide support. Because the IT projects are standardized and implemented globally, the global organizational structure can be optimized.
Nevertheless, the uniqueness of China’s consumer market has forced Kuan to make some innovative attempts while complying with the global standards. “Chinese consumers are very price-sensitive,” Kuan points out. Even a slight price difference can tilt Chinese over to buying a Pepsi instead of a Coke. This is in contrast to Western countries where consumers tend to be more brand loyal. Consequently, Coca Cola spends hoards of cash on advertising and marketing in a bid to build brand loyalty.
“99.61% of Coca Cola is carbonic acid, syrup and water. Who’s going to buy that unless you advertise?” That comment came from Robert Woodruff, the[K5] former head of Coca Cola.
In the fast-growing Chinese market, branding is taking on special significance and is always the focus of Coca Cola China. The day after Beijing was awarded the 2008 Olympics in 2001, Chinese consumers suddenly saw store shelves stacked full of glistening commemorative Coca Cola cans in honor of the winning bid. During the 2008 Olympic Games, the entire city was festooned with Coca Cola ads. Coke’s status as a top Olympic sponsor belittled Pepsi Cola.
Member Comments