Cola War Continue: Coke and Pepsi in 2010 The following characteristics are important to conclude the competitive intensity and attractiveness of the CSD industry: the threat of substitute products, the threat of established rivals, the threat of new entrants, the bargaining power of suppliers and the bargaining power of buyers. First, the threat of substitute products such as sports drinks, juice and bottled water is relatively high to the CSD industry due to the shift in consumption patterns
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large, established industry, it is almost impossible for a smaller organization to enter the trade and be profitable. It is especially difficult to compete in the soft drink industry with the two tycoons The Coca-Cola Company and PepsiCo. Having been around for as long as they have –Coca Cola 1892, PepsiCo 1965 the two companies have crushed their industry rivals and dominated the soda trade making the threat of potential entrants extremely low. The barriers to entry are too high because of unequal
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making the profit of the industry. * Bottler: Bottles’ gross profits routinely exceeded 40% but operating margin were usually around 8%. Therefore the Coca-Cola and Pepsi organize a nationwide franchise bottling network, made a huge investment in their network, provide franchise agreements allowed bottlers to handle the non-cola brands of other concentrate producers in order to maintain the business value because the bottler is important business but it don’t earn the money appropriately.
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Although the concentrate business and the bottling business both work together to ensure that the finished products are delivered to the retailers and then the consumers, their economic responsibilities are very much separate from one another. Firstly the concentrate producers are responsible for blending the raw materials and packaging the blended mixtures into containers that will later be shipped to the bottlers for more processing. Much of the concentrate business deals with very little machinery
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1998, the demand for CSD started to level off with a flat declining curve all the way to 2004. Although the cola segment is still dominating the soft drink market with almost 40 percent share (Exhibit-1), the reality is that cola companies found themselves very difficult to boost their market share growth again. There are many causes to this phenomenon. First of all, the similarity taste of cola products from different companies could easily incentivize companies to cut prices in order to compete competitors
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RISK OF ENTRY Several factors contribute to the risk of entry into the carbonated soft drink (CSD) industry. Although profitable for existing concentrate manufacturers, the carbonated soft drink industry has a low risk of entry. The investment required to achieve competitive economies of scale increases the risk of entry into the market. Investments in capital to furnish the manufacturing plant are relatively low; however, the majority of the expense is in marketing, promotion, advertising, market
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Why has the concentrate business been so profitable historically? * Concentrate producers are price setters * Splitting of promotional and advertising costs with bottlers * Aggressive advertising and promotion over many years allowed concentrate producers to establish very strong brand equity * Concentrate producers retain the majority of sales margins * Ability to influence suppliers who operated in a highly commoditized market * Low capital investment for setting up a concentrate
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An inexorably changing climate toward a more health conscious consumer has created a strategic quandary for the carbonated soft drink (CSD) giants, Coke and Pepsi: how to regain lost market share of their premier products and return to high annual growth rates seen previously? Although consumer craving for CSDs is not to be underestimated, the growing market demand for alternatives must not be ignored. The strategy going forward should be multifold. 1. Both Coke and Pepsi must actively try to
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Coca Cola’s capabilities; Coca cola has great tangible and intangible resources. This ranges from its products, factories, strong financial resources that enable coca cola to ensure quality, flexibility and responsiveness. In addition to the capabilities is a prestigious brand, talented and diverse human resources who understands the market and works in a positive work environment. Coca cola strategic competitiveness; They include but not limited to the following, developing business model to continue
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Cola Wars Continue: Coke and Pepsi in 2006 Question: Identify the key marketing issues (Company weakness and the main opportunities and threats for company) met by Coke and Pepsi. SWOT | Cola | Pepsi | Strengths | * The flagship of soft drink global market share, approximately 40% * High profit margin by shifting some cost to bottlers * Strong marketing campaign * Expanded manufacturing and distribution system that kept prices low, Coke located in more than 200 countries. | *
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