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Copy of Cola Wars: A Strategic Analysis
Transcript of Copy of Cola Wars: A Strategic Analysis
Strategies are always changing
An analysis of the 5 Forces
Strengths & Weaknesses
Marketing Strategy Recommendation
Don't listen to me!
Cola Wars Continue
Coca-Cola was created
Coke- 1 Franchise
Pepsi was founded
Pepsi- 270 franchises
Coke- 370 franchises
Coke went public
1923 & 1932
Pepsi went bankrupt twice
Pepsi gained momentum during the Great Depression by decreasing their prices for double the amount
compared to what Coca-Cola was selling. $.05 for 12oz
Pepsi began targeting families by
targeting the fast growing grocery industry.
CSD's achieved average annual revenue growth of 10%
New flavors introduced
Healthy Mindset Era
Focus on international markets
-Long term contracts
-Consolidation of Bottling Franchises
-Expansion into non-CSD markets
-Focusing on Pepsi as who WE need to BEAT! (vice versa)
-Competing against one firm of relatively equal size
"America's Preferred Taste"
"No wonder Coke Refreshes Best"
- Pepsi challenge vs. Coca-Cola
-Renegotiation of franchise bottling contracts
-Switching to high fructose syrup (cheaper alternative)
-11 new flavors (Pepsi 13)
-Diversification into new non-CSDs
-Bottler Consolidation AGAIN!
Intensity of Rivalry
-Few competitors of equal size
-Degree of differentiation
-Fixed storage costs
-Low exit barriers
Bargaining Power of Customers
Retail outlets have varying degrees of power
-Fast food chains
Bargaining Power of Suppliers
Raw materials are basic commodities
Importance of buyer industry to suppliers
Threat of Substitutes
Perceived price/value: LOW
Many alternatives in numerous categories
Threat of New Entrants
-Top competitors spend lots on advertising
-Customer and brand loyalty
-Fear of retaliation
-High costs for investing in bottling company
-High competition in shelf space
The Value Chain
- Blended ingredients
- Packaged mixture
- Delivered to bottler
- Purchased Concentrate
- added carbonated water and
high fructose corn syrup
- shipped to retail channels
- Concentrate ingredients
- Supermarkets (29.1%)
- Fountain Outlets (23.1%)
- Vending Machines (12.5%)
- Mass merchandisers (16.7%)
- Convenience & Gas Stations (10.8%)
- Other (7.8%)
Globalization of the Brand Name
- Brand Value $70,452 billion
according to Bloomberg
Relationships built into the value chain
Increase demand for healthy products
Market needs/wants are changing
Schools banning CSDs
Marketing strategy must change
Coca-Cola is the 'Healthy Choice'
Do not emphasize the cheat day...
But keep it as an option
Irrefutable truth is "the market is changing"
By not changing marketing strategy you risk losing
out on a market that is calling for something healthier.
We have to change with our end consumers
We need to show the customer that the company
is willing to grow along side of them, and not
push them towards unsatisfactory lifestyles.
Diversification is a means of leveraging the company in areas that we know are struggling with areas that we are certain are growing.
Diversification will decrease our risk when entering these new markets and changing our strategic approach!
CSD consumption increased 3% annually
-Brief History and Past Strategic Modifications
- Anthony Angelo
-Industry Analysis using the Five Forces Model
- John Price
-Company Value Chain & SWOT Analysis
- April Habeger
-Recommendations & Implications
- Alyssia Shaw
- Packaging and sweeteners
Largest CSD market share (34%)
Low in Diversification
Focus is on a declining CSD industry
Increase demand for bottled water
Advertising spending data
Decreasing CSD consumption calls for diversification into areas that we already know are growing
Gross Profit Margins for Selected Beverages
Ready to Drink Coffee
Ready to Drink Tea