Problem Set Cola Wars Essay

1049 words - 4 pages

Question 1: Conduct a Porter's Five Forces Analysis on the soft drink industry and pull out strategic implications for each of the five forces. The threat of new entrants in the soft drink industry is relatively low. Barrier for entering the CSD industry is relatively high because the industry type is oligopoly, and consumers have high brand loyalty towards either Coke or Pepsi. The new entrants are facing large‐scale investment, or cost disadvantage, and the challenge of brand recognition.
The bargaining power of suppliers is low. ‐ "The concentrate for most cola consisted of caramel coloring, phosphoric or citric acid, natural
flavors, and caffeine." Coke and Pepsi have extremely low switching cost on these inputs. ‐ The two major inputs for bottlers are packaging and sweeteners. "The strategy toward can
manufacturers was typical of their supplier relationships. Coke and Pepsi even negotiated on behalf of their bottling networks, and were among the metal can industry's largest customers."
Coke and Pepsi face low switching cost, so the suppliers virtually have no bargaining power over pricing. The bargaining power of buyers (intermediate customers as bottlers and retail channels) is weak.
‐ Bottlers are locked into "franchise agreement" that give concentrate producers the right to determine concentrate price.
‐ Retail channels are highly fragmented, and the respective share of industry volume / index of bottling profitability vary from each other. Consequently, they don't have much power to reach a lower price with Cola or Pepsi.
The threat of substitutes such as bottled water, juice, and sports drinks is getting higher. The increasing challenge is due to the shift in consumption patterns. Even "Coke's 2009 annual report identified obesity and health concerns as the number one risk factor to its business". More and more "aware" consumers tend to buy non‐carbs drinks especially when there is very low switching cost. However, Coke and Pepsi started innovation on their own non‐cabs drinks and diet sodas to fight against this force. Rivalry among existing competitors is getting fierce. Coca‐Cola and Pepsi are two dominate players in the industry, and Pepsi keeps challenging Coke's leadership. The fact that these two companies almost share the whole market volume that keeps them staying profitable over the years, even though they both have ups and downs. Question 2: Using the Four Box Model, outline and analyze Coke's business model. Customer Value Proposition: "lifestyle" as the role that Coke played in consumer's life This CVP can be easily adjusted by consumers' demand or by Coke's prediction to create new demand. Profit formula: higher price to fit "premium brand" image; low Cost of Goods Sold; high Operating Income

Based on its CVP, Coke established premium brand with premium price image since day one. So Coke is always at advantage position whether to react to Pepsi's price attack or not. Thanks...

Find Another Essay On Problem Set - Cola Wars

Analysis of the Coca Cola Company

4632 words - 19 pages Coca-Cola is installing a massive integrative system called SAP Applications (Strategic Alliance Program) which will eventually replace the outdated Basis. This program is designed to share knowledge with each bottler and set up common systems and applications that are integrated with each and every bottler within the Coca-Cola organization. SAP is in the beginning stages of development, but Coca-Cola plans on using SAP for multi purposes which

'The Cola Wars Continues: Coke and Pepsi in the 21st Century': Competitive Strategy Case Study

4581 words - 18 pages ;………………………………………..16References………………………………………………………………..…………19Executive SummaryThe Cola Wars between the two industry giants Coca-Cola Company and

Market Plan Phase I Paper

1563 words - 6 pages delivering the freshest of the fresh. It is Pepsi Cola's desire to respect the environment as well. Therefore, Pepsi Cola follows through - going distance to work with local markets (affiliates) supporting local farms and farmers.OverviewPepsi Co. is a company that has been known for their trend setting advertising campaigns and marketing strategies for a very long time, most notably in the 80's when the cola wars where in full swing. Through out all

Cola Wars

1585 words - 6 pages persuade people into purchasing their products, both companies have successfully publicized their drinks. As a result they have become the two leading soft drink brands in the nation. The competition between Pepsi and Coke will not only prolong the greatly known cola wars, but will also allow new advertising techniques to be aired on television. Pepsi uses excellent marketing strategies, such as celebrity appearances and contemporary product

Critically evaluate and discuss the advantages and disadvantages of Customer Boycotts. Compare and contrast two consumer boycotts and discuss appropriate microeconomic theoretical models.

2588 words - 10 pages cheaper finance, therefore operating on a lower cost curve. New firms would find it hard to compete and be likely to lose any price wars. Aggressive tactics or intimidation could also be used. (John Sloman, 2003. Economics. Fifth edition. (s.l.): Pearson Education).Because Nestle and coca cola are in the oligopoly markets they both are affected by their rivals actions and vice versa. Because of this the firms could wish to collude and act as


635 words - 3 pages purchased the bottling rights from Asa Candler for $1. Benjamin Thomas, Joseph Whitehead and John Lupton developed what became the Coca-Cola worldwide bottling system.Challenges during the early daysOne of the biggest challenges for early bottling, were imitations of the soft drink by competitors and lack of packaging consistency among the 1,ooo bottling plants at the time. The bottlers took note of the problem, and in 1916, they came into an agreement

Cola War

1058 words - 4 pages into purchasing their products, both companies have successfully publicized their drinks. As a result they have become the two leading soft drink brands in the nation. The competition between Pepsi and Coke will not only prolong the greatly known cola wars, but will also allow new advertising techniques to be aired on television. Pepsi uses excellent marketing strategies, such as celebrity appearances and contemporary product packaging, to sell their product, whereas Coca-Cola's realistic approach has placed them at the top of the soft drink industry. Although Pepsi is "simply irresistible", according to the soda loving customers, it is "always Coca-Cola, Yeah".

Analysis of Coca Cola Company

2719 words - 11 pages high of unemployment rate happened in US. In order to overcome this problem, Coca Cola Company can use the technology to help production of products. In fact that, US is known as world’s most powerful nation state with its advanced technology. 8. Conclusion Coca Cola Company as world’s largest beverage company where United States as Coca Cola’s national headquarter. The size, population, growth in the economy and technology of United States

Supply Chain Management in Purchasing

2443 words - 10 pages and the selling firm is in danger of losing the contract. According to the code of Coca-cola conduct, it has been set that always deals fairly with suppliers, treating them honestly and avoiding unfair, deceptive or misleading practices and always presents Company products in an honest and forthright manner.Besides, Coca-Cola firm builds long-term business relationships with suppliers to mutually achieve interest. This action is likely to be

Research marketing application for the industry of Coca-Cola

2052 words - 8 pages vending machines which are set up in school, or public place. Further more, this drink seems to be always having good taste with sandwich, chips, snack…Somehow, those foods are also common buying habit in market. On the other hands, Coca Cola reach to the consumer's habit. The company already grows up net income around 15%-20% per year in 1997 and beyond. In case of market share, Coca Cola accomplished nearly 45 percentage of worldwide

Branding and communication

1480 words - 6 pages value that some customers value enough to buy".Strong brands, like Coca-cola, evoke a more extensive, richer set of associations.Visual images and words or phrases linked with strong brands are likely to be more easily retrieved from memory.A brand may provide confidence to the consumer about the quality of the product and gratification of image of self. Based on this conception, brand equity can be defined as "everything the consumer walks into

Similar Essays

Competitive Study Between Leading Brands: Pepsi Vs Coke

4800 words - 19 pages PREFACECola wars is the term used to describe the campaign of mutually-targeted television advertisements in the 1980s between Coca-Cola and Pepsi-Cola. They first began showing people doing blind taste tests in which they preferred one product over the other, then they began hiring more and more popular spokespersons to promote their products.They focused particularly on rock stars; notable soft drink promoters included Michael Jackson (for

Coca Cola Life Essay

2193 words - 9 pages and industry, Coca-Cola Life set up three different stands to correlate with three different seasons. At the first stand, visitors are approached by nutrionists who’ll explain Coca-Cola Life and its crucial content stevia. The second stand serves to refresh the visitors with serenity from the nature and the final stand offers the new product to consumers, while the commercial song music plays in the background. This ingenious approach for

Marketing Plan For Coca Cola Alcoholic Beverage

7210 words - 29 pages problem for the product that are labeled detrimental to you health.3.3 OpportunitiesCoca-Cola has a few opportunities in its business. It has many successful brands that it should continue to exploit and pursue. Coca-Cola also has the opportunity to advertise its less popular products. With a large income, it has the available money to put some of these other beverages on the market. This could be very beneficial to the company if they could start

Strategic Plan Essay

6361 words - 25 pages management, productive water use and hygiene. Through its partnerships with such organizations as WWF, FEMSA and SOS Mata Atlantica, The Coca-Cola Company has set the standard for creating a positive impact on every country in which it conducts business, significantly increasing its ability to reach its goals of global sustainability in water use and achieving long-term success (Sustainable Times, 2007).Industry EnvironmentThe industry environment to