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SM - Cola wars
Eric Duon 18 April 2013
Transcript of SM - Cola wars
Advertising - more investment and celebrity endorsement
Distribution - promotion to distributors, from rural to urban The Respondance from Coca Cola and PepsiCo to Wahaha Future Cola The Improvement of Their Relationship between Bottlers and Distributors Joint-venture Bottlers Distributors Retailers Coca Cola and PepsiCo Consumers Problem: selling across the province
Reason: different wholesale prices in different regions
Approach: bottler - retain the ownership of products; distributor - carrying inventory and delivering to the retailer Compared with Wahaha Retailers Customers Wahaha Bottlers Distributors Manufactured by Hangzhou Wahaha Group in China
3rd Largest manufacturer of soft drinks in China
Lauched Future Cola in the year of 1998
Advertisement adopt nationalistic tones Background of Future Cola THREAT OF NEW ENTRANTS
Closest competitors – PepsiCo & Coca-Cola
Low entry barriers with single product
Brand equity destroyed
Restriction on foreign investment
Fenhuang Cola from Guangzhou Fenhuang Food company emerged in the year 1998
Coca-Cola & PepsiCo success againts the domestic cola producers
Coca-Cola & PepsiCo offered low price Porter Five Forces of Future Cola THREAT OF SUBSTITUTE PRODUCTS BARGAINING POWER OF CUSTOMERS Price sensitivity in the rural areas
Concerned with quality assurance the retailer provided COMPETITIVE RIVALRY Wahaha Future Cola concerned and put much effort on advertising to compete with others
Penetration pricing caused affordable alternative to its rivals ‘China’s own cola’
Small cities and rural market Avoid face-to-face competition with the two giants Similar positioning with dominant players Find competitive advantages from the other market impact factors Value Curve Analysis Key factors affect Chinese cola market Cooperation instead of price war (1). Improving brand awareness
(2). Improving the added brand value
Replace the low price strategy
Increase more profits 2. Branding Developing New Flavors of Cola (Diet Coke, Cherry Coke, etc )
Expand New Kinds of Carbonic Products
Combining With Domestic Market 1. Innovation Conclusion: Sometimes Cooperation is better than Competition For Pepsi and Coca-Cola Framing strategic decisions as interactions between competitors
Predicting outcomes of competitive situations involving a few, evenly-matched players Game Theory: Prisoner's dilemma For Coca-Cola and Pepsi
Game Theory: Prisoner's dilemma
Cooperation rather than Competition
For Future Cola
Differentiation Advantage: Innovation
Cooperation Recommendations For Wahaha Future Cola For Wahaha Future Cola For Coca Cola, PepsiCo and Wahaha Future Cola Bibliography: Chan Kim, W. and Mauborgne, R. (2002), Charting Your Company's Future, Harvard Business Review, June 2002.
Chan Kim, W. and Mauborgne, R. (1997), Value Innovation: The Strategic Logic of High Growth, Harvard Business Review, January - February 1997.
Dai, N. (2004) Cola Wars in China: the Future Is Here. Richard Ivey School of Business: the University of Western Ontario.
Grant, R. (2010) Contemporary Strategy Analysis, 7th Edn., New York: John Wiley & Sons.Robertson, D. (2013) Lecture 7 - the Resource Based View. [Lecture to MSc Finance and Management Year 1]. 22 March.
Robertson, D. Lecture 9 - 'Network Competition'. [MSc Course Strategic Management] 19 March 2013.
Brandenberger, M. and Nalebuff, Barry. (1996), 'Co-opetition' London: HarperCollins.
Thorelli, H. (1986) 'Networks: Between Markets and Hierarchies', Strategic Management, 7(1), pp. 37-51.
Dyer, J. and Nobeoka, K. (2000) 'Creating and Managing A High-Performance Knowledge-Sharing Network: Toyota Case', Strategic Management, 21(3), pp. 345-367.
Gulati, R., Nohria, N. and Zaheer, A. (2000) 'Strategic Network', Strategic Management, 21(3), pp.203-215.
Gulati, R. (1998) 'Alliances and Networks', Strategic Management, 19(4), pp. 293-317.
Thanks for Your Attention Cola Wars in China: the Future Is Here Effectiveness Limitation How effective is the
Future Cola? Table of Content: Background of Future Cola
Porter's Five Forces
Positioning and Value Curve
The Competitive Strategies of Future Cola
The Respondence from Coca Cola and PepsiCo
Game Theory and Recommendation
Bibliography Greater Pricing Flexibility Liu Ming
Toh Hsien Harn