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Analysis Of Competitors Within The Softdrink Industry

1123 words - 4 pages

C.Competitive Environment AnalysisCoca-Cola and Pepsi are the two major industry players in the soft drink industry, they account for a total of more than 60 percent and more than 70 percent of the U.S. and world markets, respectively. (Refer to Table 1 below)Table 1 World Soft Drink Market Shares (%)Company199519941993Coca-Cola Co.47.245.644.8PepsiCo Inc.22.121.821.7Cadbury Schweppes7.98.07.8Other 22.824.633.5Source: Beverage Marketing Corporation, c.f. Beverage World 3/15/97, p. 65.Coca-Cola has long been a part of American culture for over a century. Its product's image is laden with sentimentality--image many people have taken deeply to heart. It is displayed on T-shirts, hats, and collectible memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest strengths.Furthermore, cost management, product differentiation and marketing have become important for Coca-Cola as market growth slows and market share becomes the key determinant of profitability. In foreign markets the product life cycle is in more of a growth trend. Coke's advantage in this area is mainly due to its establishment of strong branding and is now able to use this area of stable profitability to subsidize the domestic "Cola Wars".Pepsi's success on the other hand, is attributable to its experienced management team, a competitive product line, a global marketing realm, and the continuous efforts by their research and development to research trends in the industry and to be creative in exploiting those trends. Pepsi's culture is informal and entrepreneurial. Their people are empowered to make the decisions necessary to grow the business. They seek to achieve outstanding results through innovation, long-term partnerships, and an open work environment that respects the individual and promotes personal and professional growth. The company's strategy is to concentrate its resources on growing their businesses, both through internal growth and carefully selected acquisitions. Their strategies are continually fine-tuned to address the opportunities and risks of the global marketplace.The biggest source of added value for Coca-Cola and Pepsi products is their proprietary, branded products. Coke for example, has protected its recipe for over a hundred years as a trade secret, and has gone to great lengths to prevent others from learning its cola formula. As a result of extended histories and successful advertising efforts, Coke and Pepsi are respected household names, giving their products an aura of value that cannot be easily replicated. Also hard to replicate are Coke and Pepsi's sophisticated strategic and operational management practices, another source of added value.More importantly, Coca-Cola and Pepsi have vertically integrated backward, buying many of their bottlers and combining their territories. For example, in 1986, PepsiCo acquired one of its biggest bottlers (MEI, a western and mid-western bottler). That same year, Coca-Cola bought two of its biggest...

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