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The Soft Drinks Industry Analysis
Transcript of The Soft Drinks Industry Analysis
"A soft drink is a sweet drink that contains no alcohol" (Collins English Dictionary) Outline
Applying Porters Five Forces
Industry S.W.O.T Analysis
The Market Leader: Coca Cola through the 4 Ps
Current Trends In Irish Market The Soft Drinks Industry Segmentation of soft drinks market, by volume (%), ROI and NI, 2010 Brand Shares In One shots in 2010 Porters Five Forces Applying Porters Five Forces To the Soft Drinks Industry There Is strong Competition:
Duopoly Industry with strong competition between Coke and Pepsi but also now introduction of "Own Brands" by major retailers.
The threat of substitutes essentially does exist:
Increasing introduction of Juice, Energy and Tea drinks.
Introduction of such products by both Coke and Pepsi has reduced this threat to them. e.g. Coke and Powerade Suppliers have less Bargaining Power:
A lot of Substitutes for sugar and packaging.
For Example Sugar can be replaced by Sweeteners or Corn Syrup and Packaging can be glass, plastic or metal cans.
Different levels of bargaining power exists between different groups of buyers:
Vending Machine- No bargaining power
Fast Food Chain - More bargaining power
Barriers to new entrants:
Amount of capital investment needed to compete
Tough to get access to retail channels Source: Mintel .
Coca Cola 31%
Red Bull 5%
Club Orange. 6%
Private label 5%
Others. 13.5% S.W.O.T Analysis of the Industry Strengths Basic Consumer Need.
Large and Growing Market.
Many Different Flavours and Packages available.
Low Cost Of Production
Soft Drinks are Dominant in The Non-Alcholic Market.
Excellent Branding and advertising by the Market Leaders in the industry.
Addictive Nature of Soft Drinks.
Distribution Channels. Source: http://www.begleys.com/stats.html Weaknesses Health issues associated with drinking Soft drinks:
Oral health: Effects on Teeth
Obesity and weight gain due to the high levels of sugar
Type 2 Diabetes
Metabolic Syndrome- umbrella term used to group risk factors of heart disease, stroke and diabetes
Dominance of Big Brands makes it hard for new entrants to gain market share.
Environmental effects of Packaging. Threats Threat of substitutes
Tea, Coffees, Juices put pressure on Carbonated Beverages
Health Issues associated with Soft Drinks Industry
Due to the recession consumer buying power in this market has reduced
Changing attitudes and demands of consumers- More health conscious suciety
Introduction of "Own Brands" from major retailers with cheaper price
Increase in Government taxes against soft drinks- already 23 per cent VAT on Soft Drinks e.g. 10 per cent sugar tax.
Distribution Costs- Rise in Cost associated
Negative Press Opportunities Reduce Environmental Impacts of Packaging:
Reduce the ammount of packaging used
Increasing Recycling content
Reduce ammount of water used
Diversify more into health conscious drinks
Continue to dominate the Non- Alcoholic drinks market and Tea and Coffee
Establish facts and use as potential PR
e.g. Promote recycling and Excercise
More Partnerships with Alcohol Brands The Market Leader Reasons Why? The 4 Ps Pre tax profits in 2012 of 18 million in Ireland alone.
Available in more than 200 countries around the world
One of the main Reasons is there Marketing mix Product Not just the liquid inside but also the packaging.
Many sizes available
Many Brands such as Sprite and Fanta
Eye catching appearance and Brand recognition immedietly associate Cola with the colour Red because of Coke Price Create consumer perceptions and values.
Higher Price= Better Quality.
High End Brand.
Different prices for Different Units. Distribution Channels Readably available everywhere you go.
Easy To identifty in retail stores
Make up a great portion of products to buy as aresult of its variety of products.
Vending Machines in Offices, Shopping Centres, Airports.
Available at many sporting events and concerts. Promotions Use of All Mediums available Pull Strategy:
Coca Cola Fridge in Supermarket.
Create Attractiveness from intelligent advertising.
Sponsor to many major events such as the World Cup and The Olympics.
Check lid for an instant prize.
Innovative Marketing and Advertising e.g. Working with Google Share the World a Coke I envisage Coke staying as market leaders because they are quick to innovate their advertising and brand awarness using all the new mediums available to them such as social media and Web 2.0 as this particular project shows when they teamed up with google. Current Trends In Soft Drinks Industry In Ireland Impact Of the recession:
Less people have disposable income and cutting back on expenditure in areas that are deemed unnecessary
As a result the per capita volume consumption of carbonates has fallen from 148 litres in 2002 to 103 litres in 2011 and continues to fall.
Discounting has picked up and companies within the industry are using aggresive price and volume promotions.
Any Questions? Still strong Brand Loyalty to Major Brands:
Despite new product developments by smaller players, there appears to be very little that is capable of shaking the domination of the main players.
Supermarkets, Hypermarkets and discounters continue to grow:
Aldi and Lidl for example still opening new stores despite the recession.