Marketing Plan: Coca­Cola to Cuba

12/17/15 Final Marketing Plan

Lars Anderson, Kelsey Parkin, Austin Barr, Taji Onesirosan

Professor Cardona, Global Marketing BUS318

Background Coca­Cola: Coca­Cola is a thriving and massive company with over 3,500 products in over 200

countries. The company was founded in 1886 and has been established as the world's largest beverage company comprised of over 500 brands, 20 of those brands being worth over 1 billion dollars. Because of the company's success Coca­Cola has made it an effort to improve the social well being of many different countries. Some of the countries that Coca­Cola has been active in are China, Colombia, South Korea, Turkey, and the United Kingdom. The Coca­Cola Foundation has given a significant amount of money to meet the needs of these countries and also a number of other countries. Some of the ways Coca­Cola serves these countries is by providing water, education, and disaster relief. Coca­Cola has a very positive presence in most every country it is current in. Because there are only two countries that the Coca­Cola brand does not reside, it is our desire to target one of those countries so that we can provide a great product but also so that we can invest into their culture.

Potential in target country:

With Cuba and North Korea being the only countries that do not sell Coca­Cola and with the new Cuban relations with the United States, we plan on entering Coca­Cola in the Cuban market. Coca­Cola desires to be the first American product to enter into the Cuban Market and we believe the Coca­Cola brand that has the capability to do so. Because of the world­wide recognition that Coca­Cola has it is anticipated that the Coca­Cola products will be well received as Coca­Cola provides a high quality product. It is assumed that Coca­Cola will be able to provide beverage products at a lower cost because of their ability to mass produce their product at a low cost, this is a plus for the Cuban Market. Also, because Coca­Cola is in almost every other country in the world that proves that the Coca­Cola company knows how to operate in many different cultures, which is clear by their outstanding success and dominance in the beverage industry. It will also be an effort of Coca­Cola to invest into the Cuban culture where necessary. Coca­Cola is passionate about giving back to the communities and Cuban is a country that could greatly benefit from the Coca­Cola company in a number of ways. Launching this product into the Cuban Market will also help in the rebuilding of relations between the United States and Cuba. Potential Challenges:

Potential challenges would be the new relationship and acceptance of the American brand in the country. How easy and successful will it be to start selling Coca­Cola in Cuba? Since Coca­Cola is a widely well known American based company and Cuba could see our company as a pressing Americanizing company that will change the way they live. Cubans could associate our product/brand with the “American stereotype”. This global opportunity will be a new venture for the brand to enter a country that had prohibited it for so long. We will have to find a new approach to market Coke to this country. If it goes smoothly, this could be a huge profit for the company.

II. Economic Analysis Guideline

I. Introduction The government continues to lower the socialist economic system to have a more firm political control. Since the Cuban Communist Congress that was held in 2011, the Cuban government has slowly and incrementally implemented limited economic reforms, including allowing Cubans to buy electronic appliances and cellphones, stay in hotels, and buy and sell used cars. As the Cuban government has cut state sector jobs as part of the reform process, it has opened up some retail services to "self­employment," leading to the rise of so­called "cuentapropistas" or entrepreneurs. Currently, approximately 476,000 Cuban workers are registered as self­employed. Despite some reforms, the average Cuban's standard of living remains at a lower level than before the collapse of the Soviet Union and the resulting downturn of the 1990s. (www.cia.gov). II. Population A. Total 1. Growth rates As of 2014, there was an annual growth rate of 0.146 (http://globaledge.msu.edu/countries/cuba/statistics) 3. Birthrates 9.9 births/1,000 population (2015 est.) (www.cia.gov).

B. Distribution of population 1. Age 0­14 years: 15.96% (male 904,800/female 855,309)

15­24 years: 13.29% (male 752,160/female 714,384)

25­54 years: 47.16% (male 2,620,536/female 2,581,344)

55­64 years: 10.65% (male 562,207/female 612,438)

65 years and over: 12.95% (male 639,515/female 788,740) (2015 est.)

(www.cia.gov)

2. Sex

at birth: 1.06 male(s)/female

0­14 years: 1.06 male(s)/female

15­24 years: 1.05 male(s)/female

25­54 years: 1.02 male(s)/female

55­64 years: 0.92 male(s)/female

65 years and over: 0.81 male(s)/female

total population: 0.99 male(s)/female (2015 est.)

(www.cia.gov) 3. Geographic areas (urban, suburban, and rural density and concentration) urban population: 77.1% of total population (2015)

rate of urbanization: 0.07% annual rate of change (2010­15 est.)

(www.cia.gov) 4. Migration rates and patterns ­3.66 migrant(s)/1,000 population (2015 est.) (www.cia.gov). 5. Ethnic groups white 64.1%, mestizo 26.6%, black 9.3% (2012 est.) (www.cia.gov).

III. Economic statistics and activity A. Gross national product (GNP or GDP)

Image provided by Global Edge 1. Total $128.5 billion (2014 est.)

$126.9 billion (2013 est.)

$123.5 billion (2012 est.)

(www.cia.gov) 2. Rate of growth (real GNP or GDP) 1.3% (2014 est.)

2.7% (2013 est.)

3% (2012 est.)

(www.cia.gov) Transportation/ Exports/ Imports/ Further Breakdown

Something that is important to know about Cuba’s economy is the amount of imports and exports from other countries and how efficiently goods are able to be spread across the country. Because we are Coca­Cola this is very crucial information to know as we need a reason to feel that our product/brand can be successful in Cuba. Of course Cuba is just recently becoming more available to the world market with some changes in the politics, our numbers may be a bit

skewed, and we would argue that the export and import number will rise with the trades between Cuba and U.S. To know this we need to know how many different airports there are, ports, railways, roadways, waterways, etc. A few major sea ports include Antilla, Cienfuegos, Guantánamo, Havana, Matanzas, Mariel, Nuevitas Bay, and Santiago de Cuba. Cuba ranks 25th in the world in the amount of railways, which is a very good sign to create availability of transporting goods throughout the country. Cuba also ranks 43rd in the world in the amount of airports there are, which is another great sign for expanding Coca Cola into the region (cia.gov).

A couple things that definitely need to be highlighted are the amount of exports and

imports Cuba’s economy persists of and who they have been trading with. (Trading with Cuba is a recently new opportunity for the US).

Imports:

$14.7 billion (2014 est.)

$14.77 billion (2013 est.)

Where they rank in the world: 89

Imports ­ commodities:

petroleum, food, machinery and equipment, chemicals

Imports ­ partners:

Venezuela 38.7%, China 9.8%, Spain 8.4%, Brazil 4.7%, Algeria 4.4% (2014)

(cia.gov)

Exports:

$5.62 billion (2014 est.)

$5.566 billion (2013 est.)

Where they rank in the world: 112

Exports ­ commodities:

petroleum, nickel, medical products, sugar, tobacco, fish, citrus, coffee

Exports ­ partners:

Venezuela 33.5%, Canada 15.9%, China 9.5%, Netherlands 4.5% (2014) (cia.gov)

These numbers represent great opportunity for the US, especially a massive brand like Coca­Cola that has such an amazing customer base around the world and who has the ability to

succeed in just about any country with the world class research and marketing and product representation. Cuba may not be the largest country in the world, but they are a very economically respectable country that Coca­Cola has not yet penetrated since the trade restrictions. Income Classes As far as income classes goes, Cuba is unique in that they have recently been working towards a more capitalist economy from a more communist type economy. Some individuals are in a position to take great advantage of the switch and then there are also individuals who are not in a good position to take advantage and this is creating great economic inequality (NY Times). This can be chalked up as economic “growing pains” in a way at a microeconomic level as citizens are adapting to the economic changes (www.cia.gov). This presents another great opportunity for a brand like Coca­Cola to expand into Cuba and create jobs for locals and help the stretch towards capitalism. More information about economic distribution will be revealed moving forward.

Working Conditions 1. Salaries and benefits

Minimum Wage: CUP 225 per month (source: ILO, 2011).

Average Wage: Average monthly gross earnings in Cuba is CUP 440 (USD 19).

Social contributions:

­Social Security Contributions Paid By Employers: Employer's contribution: 14%

­Social Security Contributions Paid By Employees: Employee's contribution: 0%

I. Principal industries The top industries in Cuba are Petroleum, Nickel/Cobalt, Pharmaceuticals, and Tobacco. 1. What proportion of the GNP does each industry contribute?

Services contribute the largest portion to the country's GDP followed by industry, a distant second, then manufacturing, and finally agriculture. According to The Federation of International Trade Associations the Cuban economy is extremely dependent on tourism (services) and raw materials.

Image provided by Global Edge

J. Foreign investment 1. Major exports According to Global Edge the major exports of Cuba are Pharmaceuticals, and Tobacco.

Image provided by The Federation of International Trade Association

Image provided by The Federation of International Trade Association

a. Dollar value

The dollar value of Exports of Goods most recently is about $6.2 million as of 2013. The dollar value of Exports as of 2013 is about $12.4 million, re­affirming the reliance Cuba has on the service industry.

b. Trends According to the graph above, the imports and exports of Cuba have in general been increasing over the last 5 years, demonstrating a growing economy.

2. Major imports

Image provided by Global Edge

Image provided by The Federation of International Trade Association

a. Dollar value Total dollar value of goods and services as of 2013 in Cuba is over $15.6 million. b. Trends

Trends in regards to imports can be identified in the image above. From 2010 to 2011 there was a significant increase in imports which have since stayed rather consistent around the upper $15 million range since the dramatic increase in 2010.

3. Balance­of­payments situation

The balance of payments is the difference in the total value between payments into and out of a country over a period. In the case of Cuba their BoP as of 2011 is $110 million. a. Surplus or deficit?

According to the provided graph there is a surplus of $110 million. They are receiving more payments into their country than they are paying out of the country.

4. Exchange rates

Image provided by xe.com

L. Trade restrictions writing guide 1. Embargoes

There is an embargo in place between the United States that was established in 1960. Within the last few months President Obama and Cuban President Raul Castro have agreed to lift them embargo between the two countries. For the embargo to actually be lifted an act of the United States Congress is necessary (www.cfr.org).

2. Quotas

There is no quota system in Cuba. The importation process is heavily controlled by the state. All the purchases of merchandise and services from abroad have to get the approval of the Central Bank Currency Approval Committee (CAD). (The Federation of International Trade Association)

3. Import taxes Average rate for customs tax, 21.3% (2006)

Average rate for agricultural products 37% Average rate for other products 9.4% Merchandise coming from WTO members the import tax is 10.8%

N. Labor force

Image provided by Global Edge 1. Size The size of the total labor force is over 5.3 million. 2. Unemployment rates

Image provided by The Federation of International Trade Association

O. Inflation rates writing guide Due to Cuba being a communist country there is some information that is unavailable, one of those pieces of information being the inflation rate.

IV. Developments in science and technology

Due to the repressed status of the Cuba the country is, as a whole, lagging behind most other countries when it comes to science and technology.

V. Channels of distribution (macro analysis) This section is focusing on how we will get our products to the consumers of Cuba. To figure this out we will look for potential distributors for our company in the foreign market. This will allow us to understand if we will have enough business to make a profit from shipping our product to a new country (www.cfr.org). A. Retailers

In this section we want to find the retailer structure within Cuba. In our research we found that competing products are distributed in local and major cities through convenient stores, gas stations, grocery stores and other means of distributing soft drinks (www.cfr.org).. 1. Number of retailers There are not many privately ran retailers in Cuba. This country is a socialist country where the government has control of production, distribution and exchange of products. 2. Typical size of retail outlets The typical size of a retail outlet in Cuba is very small compared to the rest of the world. In the higher populated cities of Cuba, you may see little stores on the side of the road. 3. Customary markup for various classes of goods Markups for soft drinks are very high for soft drinks. The markups can be between 300­600 percent. This means that restaurants and other distributors of pop can buy bulk and only spending nickels for 12 ounces. Then these same places can sell it for over two dollars. 4. Methods of operation (cash/credit) Cuba is not the best place to use credit cards because they have few tolerance of different credit cards. For instance master card was not accepted in Cuba. However, Visa cards are accepted in this country but is charged a 2.5% foreign transaction charge. It was a myth for a long time that Cuba had a 11% plus charge when using credit cards but that didn’t hold for a long time as foreigners did more business with their retailers. ATMs will not accept american based bank credit cards. 5. Scale of operation (large/small) Compared to other countries Cuba has a very small scale operation overall. Cuba is the 136th largest exporter in the world. 6. Role of chain stores, department stores, and specialty shops The role of chain stores, department stores and specialty shops is to obey the government policies and to supply the community with their specific products. B. Wholesale middlemen writing guide It is an important aspect to know the wholesale middle men of a market because they play a vital role in the distribution of products. We are looking to see that the wholesale middlemen are able to get our products to the retailers adequately to distribute our product.

1. Number and size Just as the number of retailers in Cuba there are very few wholesalers in Cuba due to the socialist government who are controlling the distribution. 2. Customary markup for various classes of goods As stated before, sota has the one of the highest markups, even in this stage of distribution. The price at which it is bought is much lower than the price of how much it is sold for. 3. Method of operation (cash/credit) The same rules apply to wholesale middlemen in Cuba as is does to retailers. They do not tend to take foreign credit from businesses but they will still due business. They may charge extra by having a plus charge for the transactions. Cash is the best way to deal with Cuban wholesalers and not use credit cards. We see this in the way that other foreign companies do business in their markets. C. Import/export agents A very important aspect to keep in mind when importing goods into Cuba is to achieve joint ventures that have a permit to import particular items into the country. To receive a permit, importers and exporters need to appoint an agent who will be able to get a license that will allow the company to receive and send goods; although these agents will not be able to distribute the products. In order to get the items in the country they will have to pass through customs regulations. Our company will have to obtain correct documentation because that is a crucial step to get the products into Cuba. Exports from Cuba have to go through the same process but since they rely so much on exports to boost their economy, the process is much more relaxed compared to getting materials into Cuba. D. Warehousing To warehouse our items we will have to rent out a warehouse space or buy one of our own for this is crucial to distribute our products. Without a warehouse we could not have option to distribute to retailers in a timely manner and resort to shipping products directly. This would be a mistake and harder to manage our time and resources. E. Penetration of urban and rural markets writing guide By looking at a population map of Cuba we can tell that there are many rural spot with very few people to go purchase our goods. Coca­Cola will be looking to distribute to the major cities across the country instead of hitting every gas station or retailer that would buy our products. Our product is more for a city with higher traffic than a city with very few population of people. We’ve came decided that there are eleven quality cities with a high population to make our profits worth the cost to distribute to those cities.

VI. Media This section will look at all the means of media in Cuba to detect how our company can advertise in this country. A. Availability of media All media is strictly censored by the Cuban government. This means that the information and opinions in the media is severely bias and restricted. Our company will have to create content that the government would deem to be socially valuable, and free from concerning for high ratings or commercial success. It wasn’t until four years ago that Cuba allowed for American advertising to be included in their media. B. Costs This section will deliver the costs of the given media in Cuba. From our research we found that advertising is heavily ran by the government. 1. Television Television advertising is nearly impossible for foreign companies due to the high state regulations on what is aired. The commercials that are aired on TV are local company advertisements that promote Cuban products. The state is very intentional on what the public views. The government charges foreign companies much higher fees than they do for firms in Cuba. 2. Radio Radio is the primary source of advertising we see fit to our company. Cuba has let foreign companies promote themselves on radio ever since 1985 when Ronald Reagan the Radio Broadcasting to Cuba Act. This allowed for America to have a voice in Cuba through the radio and continue to resolve tensions between the countries. This also includes very low cost to promote product because we would be working with a station that is dedicated to foreign voices. 3. Print The largest newspaper in Cuba is called the “Granma”, which was founded in 1965 to serve for the official news organ for the communist party. The next two biggest newspapers in the country are called the Juventud Rebelde and Tradbajadores. Many other newspapers are published in Cuba but are primarily local for the fourteen different provinces on the island. The cost for advertising in the local newspapers are much lower than the more popular newspapers and would have less restrictions. Our company would much rather market our ads in these smaller papers.

4. Other media (cinema, outdoor, etc.) Just as the other forms of media and advertising, the state has total control. However this is outdoor advertising is not as heavily restricted as say Television because it is hitting smaller audiences. Renting billboard advertising costs the least of all the other advertising. Other media sources will be a great advantage for our company as well. We plan to utilize every opportunity of advertising we can achieve through their strict regulations. Cost is not much of our worries due to our high amount of funds in our advertising budget.

C. Agency assistance From our research we found that Cuba is lacking in Advertising agencies due its high regulation from the state. Reports show that th D. Coverage of various media Coca­Cola will do all it can to that it can to advertise across as many forms of media that it can. The key to do this is to obey the government regulations and analysis the culture of Cuba so that our efforts communicate well to the entire country. E. Percentage of population reached by each of the media Radio: 38.4% of the population Television: 23.6% of the population Print: 29.2% of the population

VII. Executive summary writing guide As the Cuban government is decreasing their restriction and regulations on America we notice that companies are gaining more control we intend to utilize this for our marketing strategies of Coca­Cola. The Cuban government has been working to raise their economy by allowing more retail and firm freedom by changing old policies. Some individuals are in a position to take great advantage of the switch and then there are also individuals who are not in a good position to take advantage and this is creating great economic inequality. This presents a great opportunity for Coca Cola to be a positive impact by creating jobs through transportation needs, manufacturing needs, marketing needs, promotional needs, etc. There will be a major benefit to both sides of the deal.

Cuba ranks 25th in the world in the amount of railways, which is a very good sign to create availability of transporting goods throughout the country. Cuba also ranks 43rd in the world in the amount of airports there are, which is another great sign for expanding Coca Cola into the region (cia.gov). III. Market Audit and Competitive Market Analysis

A. Evaluate the product as an innovation as it is perceived by the intended market The Coca­Cola brand and products would not be an innovation to the Cuban market but rather a well received improvement. Cubans drink a lot of soft drinks, what they call refrescos. Pepsi is present in Cuba but the variation that Coca­Cola would bring would most likely be appreciated by the Cuban market. 1. Relative advantage

The advantage of having Coca­Cola in Cuba is for Coca­Cola Cuba is one of two counties in which the Coca­Cola brand is not present. The opportunity for Coca­Cola to be in a new market is very advantages for them to continue to grow their brand and their influence around the world. For the people of Cuba, the advantage is more variety in their choices when it comes to soft drinks. Also, prices of soft drinks could drop do to increased competition within the country. The graph below shows how Coca­Cola is the most recognized brand in the world, which can give us the upper hand when it comes to marketing to Cuba as a worldwide brand.

(statista.com) 2. Compatibility

The Coca­Cola product is very compatible as it is in all but two countries in the world. Coca­Cola provides a sought after product and has had great success in most every market they have entered. 3. Complexity

The process of bringing the Coca­Cola product to Cuba is not terribly complex as the product itself is very simple. The complexity arises when talking about the opportunity to actually bring Coca­Cola to Cuba. Due to the trade restrictions that are in place between Cuba and the U.S. getting Coca­Cola into Cuba will be difficult, but there is hope as the relations between Cuba and the U.S. are improving.

4. Trialability

Once the U.S. has the ability to trade and enter into the Cuban market trialability will be rather easy. Because Cuba consumes a lot of soft drinks the people of Cuba will be interested in a new option. Coca­Cola will be able to place and promote their brand in high­traffic areas for weeks or months and receive pretty good feedback as to how their brand and product is received. In addition it will be rather easy for the Coca­Cola company to observe the trial and the success of their product in Cuba. They have gone through this process dozens of times with many different countries and they have been very successful in their execution. B. Major problems and resistances to product acceptance based on the preceding evaluation The major problems that are relevant to bringing Coca­Cola to Cuba are the trade regulations that are currently in place between Cuba and the U.S. If those regulations were not there it is almost guaranteed that Coca­Cola would have a presence in Cuba already. Once the relations between Cuba and the U.S. are mended Coca­Cola should have no problem entering the Cuban market and having great success. III. The market A. Describe the market(s) in which the product is to be sold 1. Geographical region(s) Coca­Cola is being sold in over two hundred countries and the only two countries that it is not sold in, because of the US Trade embargo, is North Korea and Cuba. With the restrictions recently being lifted from Cuba, we think that it would be the perfect opportunity to enter this new market for Coca­Cola. 2. Forms of transportation and communication available in that (those) region(s) All across the world the transportation for these regions can be by plane, train, boat, truck, and automobiles. 3. Consumer buying habits a. Product­use patterns Examples: “It’s hot outside, an ice cold Coke sounds amazing.” “Do you know what would go great with this pizza? A Diet Coke.” (Ordering at a restaurant)“Oh, and I’ll have a Coke with my meal please”

A few of the many quotes we have all heard a million times over our lifetime. Everyone knows the feeling of wanting to have that satisfying taste of a Coke. When thirst comes to mind a lot of people will think about drinking a Coca­Cola product. b. Product feature preferences Better taste. Higher quality of soda. Some people may prefer it over Pepsi.. c. Shopping habits Coca­Cola goes on sale and is seen on the endcap of an aisle and they buy it on a whim thinking they need it when they see it or they forgot that they should stock up on it. Coca­Cola can be a very hedonic purchase. For some people it could also be very utilitarian. 4. Distribution of the product a. Typical retail outlets

Coca­Cola’s system operates through multiple local channels. Their company manufactures and sells concentrates, beverage bases and syrups to bottling operations, owns the brands and is responsible for consumer brand marketing initiatives. Their bottling partners manufacture, package, merchandise and distribute the final branded beverages to our customers and vending partners, who then sell our products to consumers. All bottling partners work closely with customers, grocery stores, restaurants, street vendors, convenience stores, movie theaters and amusement parks, among many others, and then they execute localized strategies developed in partnership with our Company. (www.coca­colacompany.com) b. Product sales by other middlemen

As stated above, Coca­Cola has many different partners they work closely with to get Coca­Cola distributed to as many people as possible. Reaching to more than 1.9 billion servings a day. (www.coca­colacompany.com) 5. Advertising and promotion The Coca­Cola Company is dedicated to offering safe, quality beverages, marketing those beverages responsibly and providing information consumers can trust. The Coca­Cola Company has always taken seriously its commitment to market responsibly, across the globe, across all advertising media, and across all of our beverages. (www.coca­colacompany.com) a. Advertising media usually used to reach your target market(s)

Some of the ways Coca­Cola decides to target their markets is with celebrity sponsors, charity sponsors, and other ways that reflect Coca­Cola’s brand. They use television commercial

ads, print ads, radio ads, sponsorships, and word of mouth. There are a lot of different ways the Coca­Cola company targets their market, but one market they do not market to is children. Coca­Cola follows a responsible marketing policy and they are one of the top companies currently abiding by this strategy. They want to give parents the freedom to make choices for their children so they will not put advertisements for Coke on kids television networks, radio stations, and print. They also will not advertise on the internet or mobile phones or in schools and youth education (http://www.coca­colacompany.com/stories/responsible­marketing­policy/). b. Sales promotions customarily used (sampling, coupons, etc.) A consumer can find Coca­Cola in almost any store they enter. Sales and promotions usually appear in the form of coupons, advertisements for sales, or signs in stores letting the customer know coke is on sale. The price of a Coca­Cola product could decrease by 50 cents or ten percent off. Coca­Cola should look at their cash flows and see when it is lower than other times and choose to make a mark down during those times to attract more customers. Big promotions could be used during the Super Bowl to get consumers to buy more Coke than they need or purchase it more than the competitor's brand. 6. Pricing strategy

The long­term pricing strategy of Coca­Cola can be best described as value oriented. Despite being a leader in its industry, its fierce rivalry with Pepsi has forced Coca­Cola to maintain affordable price points to appeal to its vast middle class market. The company was criticized by shareholders and analysts in 2011 for maintaining relatively low price points in response to economic recession in the United States. While this point emphasizes the risks to any company of adopting a price­driven strategy, Coca­Cola's strong global brand allows for brief periods of price drops. (Kokemuller). b. Types of discounts available

Because Coca Cola is so widely successful and does use a large percentage of their money towards advertising and promotion, this allow them to use sales promotions at stores to drive sales during slow periods. In Cuba, this may show in the form of selling 12­packs at a discount when the consumer purchases more than one. This would be a great way to get the Coca Cola taste out and drive sales down the road. 1. Competitor’s product(s) writing guide

Cuba would have a few competitors in the soft drink industry, but far

less than most other countries. Gaseosa is a lemon­lime drink made by Ciego Montero. Iron Beer tastes like a mix of cola, Dr Pepper and root beer. Malta is a drink made of malt. TuKola is a Cuban cola brand by Ciego Montero. Materva is a Cuban mate­based soft sweet drink. Another big name is the Cawy Bottling Company was one of the most successful bottlers of soft drinks in Cuba. The company started in 1948, and Cawy Lemon­Lime soda became Cuba's best selling soft drink, even outselling Coca­Cola. With four bottling plants and an efficient distribution network, Cawy was one of the most successful Cuban­owned and run companies. Until 1959, that is, when the communists took over the plants and two of the original partners fled to the United States. In 1964, the company was re­incorporated in the United States (threeguys). a. Brand name Coca­Cola, “Open Happiness”, is the leading provider of soft drinks in the world. In 2010, it not only had the No. 1 selling soda with regular Coke, but it's Diet Coke brand outpaced Pepsi for second billing. Within the pop category, Coca­Cola has a number of brand variants, including Dr Pepper and Sprite. The company also produces fruit juices and sports drinks. Emphasis on the soft drink industry, though, has contributed to Coca­Cola's ability to distinguish itself as a quality provider (Marty). c. Package

Coke will be able to use the same packaging that they use in the US and other countries as Cuban soft drinks are often in bottle or cans. They can also bring some of their new innovative looks to the soft drink industry and spark the interest of consumers with new packaging and new products. Coca Cola has such a great ability to change packaging to fit the country and area that it is distributing too that I believe packaging will not

be an problem, but only a way to create competitive advantages. Diet coke will also be able to replace words on the can

with words that are more prevalent to Cuba’s culture giving a unique flavor to the soft drinks brand.

2. Competitor’s prices Ironbeer and Materva, along with other Cuban brands are prices fairly similar if not more expensive than Coca Cola would be able to sell their product for. 3. Competitor’s promotion and advertising methods

Cuba is not known for having very good advertising and promotion for goods and in many cases it has not been allowed in past years so I believe it will be a great opportunity for Coke to use their expertise and hopefully be able to dominate the market as much as allowed. 4. Competitor’s distribution channels I was not able to find anything unique about Coke’s competitors distribution channels in Cuba, and I do not think there is very much information on the topic. I would assume that if we are able to expand and distribute in Cuba that we would not lack the resources of distribution that other soft drink companies have.

C. Market size We were not able to find the exact market size of soda in Cuba. In order for us to get a full scale report we would have paid for a two thousand dollar report from Report Buyer. We also found another marketing research service called Euromonitor who offered the same type of report for the same price. We did find that Coca Cola has 46% of the market share in North America and 10% in Latin America. Even though there is a 36% difference in the two regions we do believe this is enough to join the Market in Cuba. 1. Estimated industry sales for the planning year We were not able to find the sales reports of any of the local soda pop brands in Cuba or foreign soda market sales. 2. Estimated sales for your company for the planning year By looking at industry sales from competitors in Cuba and Coca Cola’s sales in neighboring countries we concluded that Coke could have sales as high as $20.9 million.

D. Government participation in the marketplace Cuba is a socialist country and has much control over the market however businesses still thrive. Cuba puts taxes on their products much the same as we do here in America. This country also has total control of production.

1. Agencies that can help you We did not find any agencies in Cuba that could help our company bring our products to customers other than stores and distribution companies. 2. Regulations you must follow

Research shows that Cuba’s tariff rates have been decreasing ever since 1993 to 10.3%. Also not to mention, our President and Cuba’s dictator have released the embargo to make it easier for the countries to do business with each other. IV. Executive summary

From what we have found in this market audit we concluded that Coca Cola would be a great addition to the Cuban soda market. Branching out to Cuba will mean that our company is one country shy from serving the whole world with our product. This one step closer to reaching the whole world isn’t a hard step to take but will be very simple. However, the main problem will be getting through the trade regulations into Cuba. We are fortunate to be able to take any means of getting our products across the world and will have the same connections to get to Cuba. Coca Cola will perform the same marketing tactics to Cuba as they always have which includes not marketing towards children. We will not advertise on the internet, mobile phones or in schools. When entering Cuba, customers can expect to see our products sold for low prices due to our strong global brand. Our prices will have to compete with those of our few competitors in Cuba. These competitors have the advantage of being local but we will break this brand loyalty by holding up to our word of excellent consistent service. Lastly our knowledge in advertising and ability to do it so well will allow us to dominate the soda market. From the top to the bottom line, our sales will be foreseen as substantial as it is in surrounding countries. IV. Preliminary Marketing Plan Guideline

I. The marketing plan A. Marketing objectives

The objective of our marketing approach is to quickly and dramatically enter into the Cuban market. A penetration approach is best for this mentality. Coca­Cola is a brilliant and successful product therefore it is assumed that Coca­Cola will be well received by the Cuban market and we will receive a quick response from them, a market that has a high consumption of soft drinks. 1. Target market(s) (specific description of the market) The geographic target market is Havana, the nation's capital. This is by far the most populated city in the country having over 2 million residents, over four times as many people

living in the city then the next most populated city, Santiago de Cuba with around 500,000 people. Coca­Cola will hit the fast food market hard trying to get contracts with fast food companies to be their sole supplier of soft drinks. The fast food industry is growing in Cuba, according to Havana­Guide, making this a great time and opportunity for Coca­Cola to get a lot of contracts from fast food companies. Coca­Cola will also target convenience stores, gas stations and supermarkets in efforts to abruptly penetrate the market. Also, because Coca­Cola has a large variety of products they will be selective at first, only selling their basic products which are appealing to most every demographic and age group. Coca­Cola will focus on selling their original Coca­Cola and also their Diet Coke. In general younger people will be drawn to the original Coca­Cola and older people (35+) will be drawn to the Diet Coke. 2. Expected sales 2016 Expected sales for Coca­Cola in Cuba are The 2014 sales for Coca­Cola in Latin America were about $4,695,000,000, according to CSI MARKET. The population of Latin America is approximately 500,000,000, the population of Cuba is about 11,000,000 which is 2% of the total Latin American population. Because of this it can be expected that the sales in Cuba be approximately 2% of the overall Latin American sales, which is about $94,000,000. Because this will be a new product in the Cuban market it cannot be assumed that these kind of sales will be had, maybe in a couple years, but not in the first year while the market is still getting used Coca­Cola. Therefore, the expected Coca­Cola sales for 2016 should be $70,000,000 knowing that the sales will grow from year to year as the market gets more used to the product. 3. Profit expectations 2016 According to Stock Analysis on Net, Coca­Cola has a gross profit margin of about 60%. If the expected sales for the Cuban Market in 2016 are $70,00,000 then 60% is expected to be profit which would be $42,000,000 for the Coca­Cola Company. 4. Market penetration and coverage

As far as market penetration the goal is to hit fast food locations, convenience stores, gas stations and supermarkets. These are the most common places where soft drinks can be found. Coca­Cola should focus on covering Havana, the capital of Cuba with advertisement as this is the most populated city in Cuba by far.

B. Product adaptation or modification writing guide The Coca­Cola product does not need to be modified when entering into the Cuban Market. The official language of Cuba is Spanish, therefore all promotions, advertisements and packaging needs to be in the Spanish language. Otherwise the product does not need to change but Coca­Cola could eventually look into manufacturing their product in Cuba and naturally modifications would be had due to the culture and process of manufacturing differences. 1. Core component

The core component is the soft drink, the actual product that consumers drink. It is the core product that has made Coca­Cola so successful and we anticipate nothing different with this new market, a market that enjoys soft drinks, we are providing them the very best soft drinks in the world. 2. Packaging component Packaging is a very big deal for Coca­Cola as it fuels their brand recognition, one of the most recognizable brands in the world and that is significantly due to the packaging that makes the Coca­Cola brand stick out. The only thing that needs to change in regards to packaging, as it would need to in any country, is the language in which the information on the container is written. The national language of Cuba is Spanish, therefore everything written on the packaging needs to be in Spanish. 3. Support services component Due to the product Coca­Cola sells there is not much need for support services. As always though there will be a customer service number on every Coca­Cola product in which consumers can call at any time if they need any kind of support or service in regards to the Coca­Cola product they are consuming.

C. Promotion mix The Coca­Cola promotion mix will focus heavily on advertising and really developing brand recognition. Even though the Coca­Cola brand is not sold in Cuba we believe somehow, somewhere most of the people in Cuba have heard or seen the Coca­Cola logo. What we are selling is not complex and does not need explanation therefore if Coca­Cola focuses on simply getting their name out there and letting people know that there is a new product on the market we believe there will be a great response from consumers. 1. Advertising In regards to advertising Coca­Cola wants to focus and centralize its advertising in the capital city of Cuba, Havana as they have a very dense population, and far more people than any other city in Cuba. Because there isn’t much explaining to do or anything of that sort in regards to the Coca­Cola product we believe making the Coca­Cola brand seen is our best means of advertising. We plan on doing this by having a number of billboards with our logo on them and also by resourcing all of the fast food restaurants, convenience stores, gas stations, and supermarkets with posters and window graphics that they can put up at their location at no cost to them. The more people can see our brand and know that we sell soft drinks the better for Coca­Cola and the more quickly consumers will not only try our products but hopefully become regular consumers of our products. a. Objectives

The objectives of Coca­Cola in regards to advertising are to resource every fast food restaurant, convenience store, gas station and supermarket in Havana, Cuba with signage/window graphics/posters to be displayed at every location that Coca­Cola is sold in the city of Havana. In addition Coca­Cola wants to have at a minimum of 4 billboards that will have

the Coca­Cola logo and a tagline. If these objectives are met we believe Coca­Cola will have great success in Cuba.

b. Media mix Coca­Cola will not focus heavily on media as a means of production, as Cuba is considered a lagging nation in regards to technology. With that said we will have a presence on the radio but it will be in tandem with any commercial by a fast food restaurant, convenience store, gas station, or supermarket. These entities will have their normal promotion but at the end of their commercial they will say something briefly about the new Coca­Cola products they now offer. We will also replicate this with TV commercials, having any of these entities that have commercials mention the new Coca­Cola products they offer at the end of their commercial. c. Message The message to be had at the end of these commercials on the radio or on TV will be as follows. “Now offering Coca­Cola products at all participating locations. Come try out the best and most popular soft drink in the world”. This message will probably differ from commercial to commercial as Coca­Cola wants to defer preference to the entity that we are partnering with. d. Costs Becauses we are only asking for literally 3 to 5 seconds of a commercial which are usually 30 seconds long, Coca­Cola will be willing to pay 10% of the total cost of the commercial, which differ from commercial to commercial. In regards to the billboards we are willing to pay full price for 4 entire billboards and will pay whatever monthly fee to keep the Coca­Cola billboards up for one whole year. After that first year Coca­Cola will re­evaluate the effectiveness of the billboards and decide whether or not to continue to invest in that means of promotion. 2. Sales promotions There will be no sales promotions during the first year of Coca­Cola sales in Cuba. Coca­Cola does not what it to be an expectation to consumers that Coca­Cola always has sales promotions especially not as we are beginning to enter the market. Coca­Cola will sell their product at a competitive cost in comparison to the other soft drinks available in Cuba. After the first year of establishing the Coca­Cola brand we will look into starting to do promotions but once again we do not want the Cuban people to assume that Coca­Cola will always have promotions. After the first year doing some promotions we believe will be very effective as the brand will have already been established and consumers will really appreciate the sales promotions at that time. a. Objectives There are no objectives in this first year in regards to sales promotions as Coca­Cola will not be implementing any sales promotions. b. Coupons There will be no coupons in this first year in regards to sales promotions as Coca­Cola will not be implementing any sales promotions.

d. Costs Sales promotions will not cost Coca­Cola anything as Coca­Cola will not be implementing any sales promotions. This is a strategic move and will save Coca­Cola money. 4. Other promotional methods

Coca­Cola does not believe any other promotional methods are needed for success. Coca­Cola has a simple product that will be offered at a competitive cost. We will get the name out there and develop brand recognition quickly, this is all that is necessary for Coca­Cola to be successful in entering the Cuban Market.

D. Distribution 1. Port selection To cut cost on shipping of our products we’ve chosen the closest factory and distribution center in USA which is Baton Rouge, Louisiana. This will be a short distance (about 53 miles) to the Port of South Louisiana (http://www.mcclatchydc.com). a. Origin port The Port of South Louisiana is right on the Mississippi river just a few miles before opening up to the Gulf of Mexico. This port allows for easy access to trade with Cuba by ship. This is also the same way that Coca Cola now ships their products to the rest of the Caribbean, which means Cuba will be one more stop to add to the ship’s route (http://www.mcclatchydc.com). b. Destination port The port we have chosen to be shipped to is the Port of Havana. We chose this port because it is the ideal city for exposure of our product, as well as a short drive to it’s final destination. Havana will be our main exclusive market to introduce our product but once Coca Cola sees the product succeeding, expanding throughout Cuba will be the next step. 2. Mode selection: Advantages/disadvantages of each mode There are advantages and disadvantages to each of the modes of transportation of goods. The disadvantage to railroads is that we cannot use them due to geographical logistics. The advantage of shipping by air is the short amount of time it takes to get the products from point A to point B. With that speed comes high cost which we are trying to avoid. The advantage of ocean carriers is how both the start and end locations are so close to sea that it is easy to deliver and receive goods from ports. The disadvantage to motor carriers is the limitation on how many shipments it carries. This causes many trips back and forth or higher number of motor carriers needed (www.cia.gov) a. Railroads

Due to the geographic locations of our factories and distribution centers being so close to seaports and Cuba being on an island we will have no need for railroad transportation. b. Air carriers As stated above, the geographic circumstance shows distributing by sea is the company's best option. Delivering products by sea will allow Coca­Cola to cut cost on shipping (http://www.mcclatchydc.com). c. Ocean carriers Delivering products buy sea is slower than air carries but it will save on shipping expenses. To cut even more costs on ocean carriers we plan to us FAS (Free Alongside) to ship our goods. This means our products will be sent alongside a vessel of our choice to Cuba. Since trade restriction between our two nations have been lifted more firms are breaking into the new market and have high demand travel by sea to Cuba. d. Motor carriers The motor carriers will play a part when getting the goods to and fro from the ports. This will be the least expensive in shipping expenses. Our trucks will get the soda to the American port and the Cuban motor carries will have to get the goods to the desired locations upon arrival. 3. Packing Packaging is important to consider when sending products into global markets. Firms are left with two choices; standardization or adaptation. Standardization is keeping the product the same between multiple nations. Adaptation is altering the product to fit the cultural desires and needs to be successful in the foreign market. Much of Coca Cola’s global strategy uses adaptation to meet demands abroad. When packaging and marketing our goods to Cuba we will use adaptation to better our brand in the foreign market. The main reason we must adapt is due to the language barrier. Cuba is a spanish speaking country, apart from America which speaks English. Coca­Cola has much experience in altering packaging to different languages from its global outreach. a. Marking and labeling regulations

Cuba does have marking and labeling regulations, as most countries do, however there is nothing already on our product’s packaging that the government would restrict. b. Containerization Coca­Cola has many different styles and sizes of bottle containers. The price of the our good at the store not only reflects the amount of fluid ounces but the container as well. We provide containers in aluminum, plastic and glass. The classic glass style of container is the most spendy but it fulfills the classic old coca­cola vibe. We have also found that customers prefer different containers due to the difference in taste and the resealability. We plan to provide a wide variety of our containers to Cuba to meet every consumer preference. c. Costs

Manufacturing one bottle or can in any size or material (aluminum, plastic or glass) costs less than one cent. Depending on the amount of the actual coca­cola drink in the container, the cost to manufacture the product is forty to fifty cents per container. The cost per can for transportation is anywhere around fifteen cents. This low cost in manufacturing and transportation gives Coca cola a high profit margin per item sold. 4. Documentation required Coca­Cola is one of the largest global companies by hitting almost every country across the globe. In order to stay on top they have to keep track of how, where, and when they are moving their business to global markets. The mode of recording this activity is via documentation. There are many types of documentation that need to be accounted and collected to keep the order of business. a. Bill of lading Bill of lading is a document we issue with our traveling products which give the shipment details and title of the shipments to the specified parties. When shipments are made in advance and we need the carriers to deliver our goods to our customers, we use straight bill of lading. When shipments are sent prior to payment, requiring a carrier to ship the merchandise to the importer, we use order bill of lading. b. Dock receipt Currently Coca­Cola uses dock receipts which provide us with proof of delivery of our products to the international carrier in good condition. We do intend to use these dock receipts in some cases in Cuba. These cases include when the inland carrier deliver the goods to a warehouse. This documentation let us know that the shipment obligation is no longer our liability and ownership has been transferred and completed. c. Air bill Coca­Cola uses air bills when shipping products by plane. Air bills are the same as dock receipts except it is a different mode of transport. When shipping our goods to Cuba we will not need these air bills unless we have emergency shipments that need to get there in a hurry. d. Commercial invoice Commercial invoices are another type of documentation that many global companies like Coca­Cola to secure trade. These are used as a customs declaration provided by corporations that it is shipping an item abroad. Our new shipments to Cuba will have to include our brand and a Cuban customer onto our commercial invoice. e. Pro forma invoice We will also have to include a documentation or pro forma invoice to our new Cuban customers to clarify the order. This invoice will give them information on the purchased items, costs, and other important information like shipping weight and transporting charges. To get the products through Customs and into Cuba this specific invoice must be included. f. Shipper’s export declaration

Our company uses shipper’s export declaration (SED) for two purposes. First, it serves as a record of U.S. exports which helps our government calculate accurate statistics. Second, because the commodity’s export license designation shows up on the form. It would be unwise if we did not keep this documentation included with our shipments to Cuba. g. Statement of origin This documentation is used to clarify where the product was originally produced. It’s used in international trade. The statement of origin can be printed or in an electronic document from the exporter to inform foreign customers where the item came from without question. The NAFTA requires this on American traded goods so we must agree to carry out this documentation. It isn’t anything new for Coca­Cola because we already trade our goods internationally. h. Special documentation

Our desired product does not require special documentation because our good is simple and small. There is no need for special orders. We don’t have custom orders as an option to purchase. Special documentation would include specifics on how, what, where and when our products will be shipped. We don’t plan on making distributing complicated orders to Cuba to avoid risk and expenses. 5. Insurance claims Insurance claims are used when a payment based on the terms of the insurance policy are requested. These instances are usually when an accident happens and the insurance can cover the damages. The insurance claims are only the forms sent to the insurance company to ask for coverage in specific instances. To be able to use these claims a company must pay insurance. Luckily Coca­Cola has insurance coverage for the majority of the company. 6. Freight forwarder Coca­Cola has no need for a freight forwarder because we have a transportation and traffic management department.

1. Retailers a. Type and number of retail stores 1.2 Million customers sell beverages to consumers. (in store). 2.4 million vending machines, beverage dispensers, and coolers. Coca­Cola uses the distribution strategy. Coca­Cola can be found in almost every retail outlet. b. Retail markups for products in each type of retail store $0.99­$1.25 per bottle.

(https://infogr.am/The­Coca­Cola­Company)

c. Methods of operation for each type (cash/credit) Credit

d. Scale of operation for each type (small/large)

Large 2. Wholesale middlemen a. Type and number of wholesale middlemen

Warehouses across the country. To ensure consistency and reliability, Coca­Cola created Coca­Cola Operating Requirements (KORE). KORE guarantees the highest standards in product safety and quality, occupational safety and health and environmental standards across the entire Coca­Cola system by outlining clear requirements for the policies, specifications and programs that guide our operations. (http://www.coca­colacompany.com/stories/quality/) b. Markup for class of products by each type

To make a bottle of Coke, it takes about 40­50 cents. 10 cents for the syrup and 25 cents or more on packaging. They normally sell the bottle for about 99 cents to $1.25, which is a markup of 100%­125%.

A fun visual of how much retailers make when they sell Coke in a vending machine.

c. Methods of operation for each type (cash/credit) Credit d. Scale of operation (small/large)

The plan is to scale large, as Coca­Cola is built for it. 3. Import/export agents

Coca­Cola uses their own agents for importing and exporting, named Coca­Cola Enterprises. Coca­Cola Enterprises helps 170 million people in Europe enjoy a coke each day. (https://www.cokecce.com) 4. Warehousing a. Type Large Warehouses. b. Location

Warehouses are located all over the United States and other parts of the world.

F. Price determination Based on where the product is being sold, the price is determined by the customer when given to the consumer. 1. Cost of the shipment of goods

( http://www.coca­colastore.com/customer­care/shipping­charges)

2. Transportation costs 3. Handling expenses a. Pier charges b. Wharfage fees c. Loading and unloading charges 4. Insurance costs (Due to the complications of the trade embargo on Cuba, it is hard to find these answers, so I looked at the next closest country that I was able to find, which was Jamaica)

For goods arriving by sea, the insurance charge is 1.5% of the total Cost and Freight(c. & f.), that is, if the goods cost US$100 and the freight charge is US$50, then C&F would be US$100 + US$50 = US$150. 1.5% of US$150, i.e. 150 x 3/200 = US$2.25.

Total c.i.f. therefore is $100 + $50 + $2.25 = US$152.25.

For shipments arriving by air the insurance applicable is 1% of the total of the Cost and Freight. (http://www.jacustoms.gov.jm/home_template.php?page=duties&group_id=1)

5. Customs duties

(Due to the complications of the trade embargo on Cuba, it is hard to find these answers, so I looked at the next closest country that I was able to find, which was Jamaica) Jamaica applies duties and tariffs of the CARICOM Single Market and Economy (CSME) Common External Tariff. Duty rates vary between 0% and 70%, with an average rate of 17.45% (http://www.dutycalculator.com/country­guides/Import­duty­taxes­when­importing­into­Jamaica/). 6. Import taxes and value­added tax

(Due to the complications of the trade embargo on Cuba, it is hard to find these answers, so I looked at the next closest country that I was able to find, which was Jamaica) Sales/Import Tax: 16.5% (http://www.dutycalculator.com/country­guides/Import­duty­taxes­when­importing­into­Jamaica/) 7. Wholesale and retail markups and discounts Coca­Cola will go on sale once ina while and will be sold at a discount price for a limited time. 8. Company’s gross margins

(https://www.stock­analysis­on.net/NYSE/Company/Coca­Cola­Co/Ratios/Profitability)

9. Retail price 23 CUP per bottle. G. Terms of sale There are a few supplier requirements that Coca Cola requires of all who sell their products. Those include; prohibition on cartel activity, supplier code of business conduct, supplier guiding principles, and trade sanctions policy (Staff). Coca­Cola has a terms of agreement for any overseas suppliers, and this will definitely come into play when entering Cuba and deciding how much control we want of our products in Cuba. 1. EX works, FOB, FAS, C&F, CIF We are going to distribute through a Free Alongside Ship as it gives Coca Cola more control. "F.A.S." or "free alongside ship" requires the seller to deliver the goods alongside the ship on the quay. From that point on, the buyer bears all costs and risks of loss and damage to the goods. Unlike F.O.B., F.A.S. requires the buyer to clear the goods for export and pay the cost of loading the goods (Freightgate).

H. Methods of payment writing guide 1. Cash in advance

This is commonly used in general business and certainly Spain and is when the importer must pay the exporter in cash before a shipment is made. The logic behind the structure of such a transaction that if an exporter ships a product to an importer and the importer does not pay for the item, the exporter has very little recourse. 2. Open accounts An open account transaction in international trade is a sale where the goods are shipped and delivered before payment is due, which is typically in 30, 60 or 90 days. Obviously, this option is advantageous to the importer in terms of cash flow and cost, but it is consequently a risky option for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms (Export Gov). As Coca Cola, this is something that we would not like to do with Cuba off the bat because it is risky, and we need to develop a relationship before this is a good idea.

3. Consignment sales As Coca Cola looking to export to Cuba, we definitely do not want to agree to consignment. Consignment in international trade is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. An international consignment transaction is based on a contractual arrangement in which the foreign distributor receives, manages, and sells the goods for the exporter who retains title to the goods until they are sold (Export Gov Ch.1). This would be even less secure compared to an open account and is not a good idea.

4. Sight, time, or date drafts We do not plan on this type of payment method as it just would not make sense for the Coca Cola company. None of our products are very expensive so it would not make sense to create a form of credit such as this. 5. Letters of credit Letters of credit are going to be a great idea for Coca Cola as an LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects the buyer since no payment obligation arises until the goods have been shipped as promised (Export Gov). We really like this idea because it protects both parties.

II. Pro forma financial statements and budgets A. Marketing budget Coca Cola has a massive marketing budget and it is put to good use as sales are driven by Coca Cola’s innovative ways of coming across as a brand that customers want to drink. For entering a new country, of course the marketing budget is going to need to be high. That is why we are planning on having a marketing budget of $150 million dollars to enter Cuba and penetrate Cuba’s beverage industry fast. 1. Selling expense The selling expense will include any costs that are incurred by the sales department. Essentially it will be paying our employees and retail specialists their regular wages and salaries. We could also choose to create an incentive for our sales team in order to encourage them to get into as many stores as possible. 2. Advertising/promotion expense Coca Cola spends a lot of money on advertising and promotion, and this will not be different when we enter Cuba as our brand should be promoted and people need to be aware of what the brand brings with it. This number will definitely be in the millions close to $100,000 million. 3. Distribution expense This is the cost of moving goods from our manufacturing centers to the actual store. This cost can be extremely high, especially since we are shipping overseas. However, there are many ways we can cut this cost. Coca­Cola is sold at a fairly cheap price, but relies are large amounts of sales. This is important because each shipment should hold a very large amount of inventory bringing down the per unit distribution expense down. Coca­Cola is very experienced in this category, so it will not be a problem. 4. Product cost Product cost refers to the costs used to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. Each bottle of coke

costs approx. $0.16 to produce. Then of course the distribution and selling cost goes on top of that before it reaches the consumer’s hand. III. Resource requirements A. Finances Finances are not an issue for Coca­Cola, but we do need to figure out if our marketing plan is going to create growth for the company and if that is going to outweigh the risk of entering a new country. B. Personnel This is who we choose to hire and work for us. Entering a new country, it is incredibly important to hire someone who has an open mind and people who are familiar, or can become familiar, with the new market and culture. We want people who have good people skills and are good at observing. Obviously we want very creative minds and people that are goal driven and run by our company’s mission statement. C. Production capacity This is the volume of products that can be generated by a production plant or enterprise in a given period by using current resources. IV. Executive summary

Coca­Cola is eager and excited to one of the only markets we have yet to conquer. Our product is simple and our brand is powerful .We want to share our product with the Cuban Market who is keen on the soft drink market. We believe we have the best product in this industry and our marketing plan will be sure to share our product in the most effective and efficient way.

We will begin by targeting the capital of Cuba, Havana. Havana has over four times the population than the next largest city in Cuba. Because it is the capital and has the highest population we will focus almost exclusively on Havana and making sure our product is well represented in that area, in the future we will look to other cities but it is assumed that naturally our product will find it’s way throughout the rather small nation of Cuba, it is only a matter of time.

We want this marketing plan to be simple and because of that we are going to focus on selling our two main products that cover most every audience and demographic. We are going to focus on selling the original Coca­Cola and also Diet Coca­Cola. Because these are Coca­Cola’s most popular and most recognizable products we will promote these heavily to the Cuban Market. We will certainly make other Coca­Cola products available to the market but we will ensure that our best products are being promoted and represented well.

In regards to promotion we will once again focus on heavily promoting our product in the capital city of Havana. To do this we plan on leasing a least 4 large billboards that will have the Coca­Cola logo and a tagline. We will also be resourcing fast food restaurants, convenience

stores, gas stations, and supermarkets with signage/window graphics/posters that they can put at their various locations to promote the new Coca­Cola products that they offer. We will also have a presence via media, including radio and TV commercials. We will be working with companies that already have commercials and having them add a short 3­5 second part in their commercial about the new Coca­Cola products that are offered at their businesses. This promotion plan is simple, cost effective and will target exactly who we want it to.

Finally, the price will be approximately $1.25 per 16oz. bottle.This is a competitive price with the other soft drinks that are available on the Cuban market. With the selling price Coca­Cola will be able to maintain their 60% profit margin.

If Coca­Cola can effectively and efficiently implement the appropriate plan laid forth in regards to place, product, promotion and price Coca­Cola will have great success in the Cuban Market. V. Sources of information

Best Cuban and Latin American Beverage Guide. (n.d.). Image P.1:

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2015. http://yourbusiness.azcentral.com/marketing­mix­coca­cola­12969.html Responsible Marketing Policy­ The Coca­Cola Company. (n.d.). Retrieved October 29,

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The Coca­Cola Company ­ Infogram, charts & infographics. (n.d.). Retrieved November 22, 2015, from https://infogr.am/The­Coca­Cola­Company

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Coca­Cola? Retrieved November 23, 2015, from https://www.quora.com/How­much­does­it­cost­to­manufacture­355­ml­12­fl­ounces­of­Coca­Cola

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23, 2015, from http://www.dutycalculator.com/popular­import­items/import­duty­and­taxes­for­coca­cola­soft­drink/

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Locations ­ Coca­Cola Bottling Company United, inc. (n.d.). Retrieved November 24,

2015, from http://cocacolaunited.com/locations/ Chapter 1: Methods of Payment in International Trade. (n.d.). Retrieved November 24,

2015, from http://www.export.gov/tradefinanceguide/eg_main_043221.asp#P45_5158 What is the cost structure of a single Coke bottle? (n.d.). Retrieved November 24, 2015,

from https://www.quora.com/What­is­the­cost­structure­of­a­single­Coke­bottle­What­does­the­price­consist

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Cuba: Currency and Credit Cards. (n.d.) Retrieved October 16, 2015 Cuba imports, exports, freight forwarding, and shipping. (2015, February 15). Retrieved

October 26, 2015.

"Cuba Information, Income Tax Cuba, Agriculture Cuba, Cuba Import, Cuba Export &

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2

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