Executive Summary Prior versions of the case have been used to teach various subjects, including industry analysis, competitive dynamics, and vertical integration. While this case tries to incorporate some of the essential elements about the history of competitive dynamics and the historical patterns of vertical integration the primary teaching purpose of this case is to discuss the economics of the U.S. soft drink industry. Concentrate producers (CPs) sold syrup and concentrate to franchised of
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analysis 3 Industry Analysis 3.1 Industry Structure - U.S. soft drink market share of concentrate producers - Suppliers within the carbonated soft drink industry 3.2 Market Structure - U.S. Liquid Consumption Trend (gallons/capita) - U.S. non-alcoholic refreshment beverage volume 2009 - U.S. soft drink market share – soft drink brands 3.3 Marketing Channels 3.4 Porter’s five forces 4 5 4 2 2 2 2 4 Competitive / corporate strategies of Coke and Pepsi 5 SWOT Analysis 6 Questions 6.1 How has the competition
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Product and Brand Strategies Cola Wars Continue: Coke and Pepsi in 2010 1. Why, historically, has the soft drink industry been so profitable? Coca Cola was formulated in 1886 by a pharmacist in Atlanta who started to sell it in drug stores as a ‟portion for mental and physical disorders.“ Five years later the Asa Candler acquired the formula for Coca-Cola syrup which was a well-protected secret of the company. He also granted the first bottling franchise which grew qucikly. In the following
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Why, historically, has the soft drink industry been so profitable? Americans enjoy carbonated sugary beverages. The industry itself, because of its tasty product, focuses on marketing and advertising to make a profit. Coke and Pepsi employed the following technique to make the soft drink industry profitable: marketing (Yoffie 21). Coke and Pepsi have dominated the market on soft drinks by offering a product that people enjoy, at a price that the average Joe can afford, and by utilizing marketing
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Discussion Questions 1. Why, historically, has the concentrate sector of the soft drink industry been so profitable? The concentrate sector of the soft drink industry has been very profitable because of low capital investment and maintenance costs. Moreover, it has relatively low COGS compared to other sectors in the industry. These producers also have more negotiating power with both the buyers and the suppliers. To add more, this is also because concentrate business can avoid fixed operating
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number one soft drink rivaling Coca Cola. Even though Coke’s primary power is its brand name, Pepsi has a quick diversification and aggressive marketing strategies that develops and promotes new ideas and brand packaging. According to an analysis made in the beverage industry in the global market, Pepsi is set to become the globe’s leading soft drink as worldwide consumption of such drinks is rising by 10% per year. This report will analyze and evaluate the marketing mix that Pepsi has used ever since
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fastest growing industries is the memory chip industry, which supplies memory chips for personal computers and other electronic devices. Yet the average profitability has been very low. Using the industry analysis framework, list all the potential factors that might explain this apparent contradiction. Concentration and Balance of Competitors • The concentration of the memory chip market is relatively low; • There are many players competing on a global basis, none of which has a dominant
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fastest growing industries is the memory chip industry, which supplies memory chips for personal computers and other electronic devices. Yet the average profitability has been very low. Using the industry analysis framework, list all the potential factors that might explain this apparent contradiction. Concentration and Balance of Competitors • The concentration of the memory chip market is relatively low; • There are many players competing on a global basis, none of which has a dominant share
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explain why the major concentrate producers have historically been so profitable. Soft drink industry is very profitable, more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this, using the Porter’s five forces model of market profitability analysis we can clearly demonstrate how each force contributes the profitability of the industry. (Goutham
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Courtney Lee Cola Wars 1) Why, historically, has the soft drink industry been so profitable? The increase in available concentrate flavors upped the desirae for soft drinks. Accessing more channels (vending machines, fast food chains, markets, etc.) Advertising budgets increase. 2) Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? * Sales strategies for pepsi and coke/big companies is via direct delivery as opposed
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