We Persist in Incessant Communication with Consumers

By Liu Ming, Senior Manager of Customer Service, CCTV Advertising Department

	Michelle Yang, Media Director of Coca-Cola China

By the end of 2008, China had become the third largest market of Coca-Cola around the world. From March to June in 2009, Coca-Cola advertised on CCTV-1 Golden Theater. With the popularity of Going West to Xikou, My Youthfulness and Four Generations, which all secured high audience ratings, the advertising effect is beyond Coca-Cola’s expectation.

Reporter: What is the development trend of beverage industry in 2009 and beyond?

Michelle Yang: As beverage products go diversified, market competitions are expected to be even fiercer. According to a recent survey of Nielsen, advertising expenditures on beverage products have realized the largest growth margin during the first quarter of 2009; a year-on-year growth rate of 30% is far higher than the average growth rate of 2% in the market. Such a fact also reflects the huge potentials and intense competitions in the industry.

Reporter: Would you like to introduce Coca-Cola’s development goals in China in 2009?

Michelle Yang: At present, the per capita consumption of Coca-Cola products in China is 28 cups, and 500 cups in the USA. Therefore, it is obvious that China still has great potentials to tap in the future.

In 2009, we will manage to maintain a high growth rate and keep on our strategy to make it possible for soft drinks and still beverage to keep pace with each other. While maintaining the leading market position of sparkling beverage like Coca-Cola, Sprite and Fanta, we will make more efforts to tap the huge potentials in the still beverage market.

Reporter: In March 2009, Muhtar Kent, Coca-Cola President, declared in Shanghai that the company would invest USD 2 billion in China in the coming three years. Can you share the progress with us?

Michelle Yang: The new investment will be mainly on building new plants, enhancing the establishment of distribution channels, strengthening marketing and developing new products. For example, we will put two new bottling companies into operation in China this year: one in Xinjiang and the other in Jiangxi. With such two new companies put into operation, we will be able to directly serve the 30 million consumers in local areas and boost our sales hugely.

In addition, we will enhance our establishment of marketing channels. Every day, our staffs visit a total of 1.9 million clients so as to ensure more orders. Meanwhile, we need to develop new products incessantly to satisfy an ever-changing consumption market. The newly-built Coca-Cola Global Innovation and Technology Center is 5 times as big as the former Shanghai R&D Center.

Reporter: As shown in a survey, every consumer is exposed to several hundred advertisements every day. As the media environment is increasingly complicated, how does Coca-Cola get its brand communication well managed?

Michelle Yang: In our media strategy, priority has been always given to consumers; we will develop media strategies and advertisement portfolios according to the media reception habits of our consumers.

We always persist in incessant communications. Fast moving consumer goods have a very short consumption cycle and are subject to impulsive consumption. Therefore, people buy and consume our products at every moment every day. This makes our timely and long-term communications with consumers a necessity. Long-term regular communication is the base for gradually developing a preference to our brand among consumers.

Undoubtedly, in the current economic climate, apart from making purchases more efficient through hard pricing negotiations with media, we think it more important to raise the planning efficiency of media so as to realize a higher cost performance by having the plan improved incessantly. For instance, to increase advertising investments on national media like CCTV to cover more market segments while consolidating our advantages by virtue of powerful media.

Reporter: What are changes in Coca-Cola’s demands for ad placement on TV media at present?

Michelle Yang: In certain European countries and USA, the ratio of investments on TV ads to the total expenditure has dropped down to 50% while in the Asia Pacific Region, such a ratio remains at 70%-80%. Like other advertisers, we hope that TV ads placement can bring more benefits, which may not be directly reflected with a growth of sales but in the improvement of brand and advertisement awareness, brand preference and purchase inclination among consumers. Therefore, in placing TV ads one should not only focus on the rating point and the CPRP but also consider more in-depth cooperation with brand programs and realizing more brand exposure by means of soft placement of brand and sponsorship for programs so that consumers can get opportunities to experience and realize brand value and underlying ideas. From this perspective, we hope that TV media can be more flexible in their program productions, communicate with advertising clients earlier in program planning and integrate brand information into the program tactfully. Moreover, TV media should also open their arms to cooperate with other media, new media in particular, to help clients achieve integrated marketing and ensure win-win benefits .

Reporter: This year, Coca-Cola placed advertisements in the Prime Resource of CCTV for the first time. What’s the basis for such a change?

Michelle Yang: On November 18 of 2008, we attended CCTV 2009 Prime Advertising Resource Bidding, and bid for Special A, After Topics in Focus, and also subscribed TV Series Ad resource for the second quarter of 2009. Several hits broadcast on CCTV this year, from Going West to Xikou to My Youthfulness and Four Generations, all secured high audience ratings and the advertising effect is beyond our expectation.

For sure, CCTV as the dominant mainstream media in China maintains its leadership while the brand value of Coca-Cola has also been unshakably on the front row. It can be said that the cooperation between CCTV and Coca Cola is a win-win one. Actually, we had a series of cooperation projects in 2008, including the program of “With the Holy Torch” and “China Pride”, all of which had moved up the connection between Coca-Cola and the Olympics.

With the development of our brand in 2009, the Prime Resource of CCTV has become a prime option for us to further explore the market. Like other advertisers, we also calculate ROI. However, due to the limitation of rating survey, the value CCTV is likely to be underestimated, and CCTV’s potential rating and influence in the primary and secondary markets will be neglected. Our surveys in several county-level cities show that CCTV has a stronger audience base there. Moreover, the authority and credit of CCTV can helpcompanies and, especially, new products to virtually improve their brand values.

It can be said that the most direct benefits from investments on the Prime Resource are that extra cost due to ad price rising later on can be thus turned away and that a priority to obtain quality advertising resources can be thus guaranteed.