Coke's central focus

Questions are being raised over Coca-Cola's future marketing strategy in light of the expected centralisation of its European marketing operations into a London hub as part of a wide-reaching restructure.

The company currently uses a roster of agencies from countries across the region, all of which contribute to its activity. As a result, its advertising often varies by market, as it is selected by marketers at a national level, rather than a region-wide one. According to one former employee, the existing set-up has not been a success and has caused frustration at its global HQ.

'Europe has always been a nightmare for Coke,' he says. 'The restructure indicates that Atlanta has lost patience with these local, feudal European markets because of how they want to operate.'

Local self-interest

Moreover, the former employee believes that many of the markets in Europe operate, on occasion, purely for their own benefit, without considering a wider regional picture. 'The Diet Coke Duffy activity was never going to work outside the UK, as a Welsh singer in a supermarket would not appeal to any other audience. It was an idea that cost Coca-Cola money.'

Such issues mean that the introduction of a more centralised, consistent marketing approach is long overdue, he claims, citing arch-rival Pepsi's success at using strong creative ideas that translate across multiple territories. 'When you look at Pepsi you see big, high-profile assets leveraged across Europe and beyond. Pepsi is better than Coke in that respect, and it is only a matter of time before it hits Coke,' he adds.

Coca-Cola was unable to comment on the restructure, but even some of its roster agencies admit that the current arrangement does not make for overly strong marketing. One source describes it as causing 'a lot of wastage'.

He adds: 'There is always conflict between the central marketing team, regional teams and then the creative excellence team, which fits into the middle. Projects can come from anywhere in Europe, and the fact that it moves around so much shows they are not clear about what to do. It is overstaffed as a result.'

The move toward centralisation, then, seems sensible for Coca-Cola, if it is to create efficiencies and improve consistency.

However, Hugh Burkitt, chief executive of The Marketing Society, counsels that it is not an approach all brands could or should follow. 'There is no perfect marketing system and all organisations need to try to find the correct balance to suit their needs,' he says. 'Coca-Cola is interesting because it has tried it lots of ways but has still maintained a steady grip on the cola market, but less so in other categories.'

Burkitt also argues that a 'one size fits all' approach still needs to have an element of flexibility, especially if it is to retain marketers with specialised knowledge. 'The system needs to be sensitive to local markets. There needs to be some incentive for local people to have creative freedom in order for the company to keep hold of talent,' he says.

Stephen Woodford, chairman and chief executive of DDB UK, believes that greater centralisation can deliver benefits for brands, if it is achieved with the right talent, the right structures and the sensitivity and insight to allow a 'highest common denominator' solution.

'The additional benefits of greater centralisation are the scale economies in research, in NPD, in client management costs, as well as agency fees and production costs,' says Woodford. 'The interesting challenges lie in-between, where aspects of the brand's management are centralised and some remain local, like below the line,' he adds.

Coca-Cola may appear to be an overwhelmingly dominant force in the cola market, but scratch beneath the surface in Europe and it seems you are confronted by all kinds of parochial bureaucracy and internecine politics.

It now looks likely that management in the company's local markets will need to work more closely together or risk further influence from its worldwide headquarters. Whatever they do, Atlanta will be watching closely.

This article was first published on Marketing