Producing soft drinks for a wide market would require a significant investment in production equipment, brand material, and advertising. The high cost of operating in this industry prevents many companies from entering the competitive arena. Last, these two companies engage in non-price product differentiation. Rarely will you see Pepsi attempt to undercut Coca-Cola in price. Instead, you see these companies use creative advertisements to compete (Neary
Entry Barriers: Low to Moderate • Since brand names are highly important in this industry it would be difficult to convince major retailers for shelf space. • New entrants may find it difficult to compete with prominent, multinational brands that already exist. • The strong growth in the U.S. market within the last five years should encourage new entrants. Substitute Products: Low • The only substitute for bottled water is tap water. Competitive Rivalry with Sellers: Moderate • Factors such as switching costs and high storage costs tend to intensify rivalry.
2.2 The number and price of substitute items: Coca-Cola has more than a few substitutes available in the marketplace; Pepsi is close to a superb alternative. So, if the price of Coca-Cola increases, this will likely make Pepsi more attractive to the customers. The Law of Demand lets us know that fewer individuals will buy Coca-Cola; some customers may change to Pepsi. Henceforth, it can be reasoned a positive relationship between the price of one good, Coca-Cola in this case, and the demand for the substitute, Pepsi. 2.3 The number and cost of Prices of Related Goods and Services complementary goods: Coca-Cola is often complementary to various fast foods such as
Substitutes: Other alcohol drinks. Customer requirements? How do firms compete? Key Success Factors More flavor and natural product, fresh beer Unique receipt, brewing contract It was time of the unique receipt Place: Everyplace (restaurants, beverage markets) Monitoring and controlling system Short shelve-life, always fresh Achievable price Seasonal beer Competition leads to the decrease of
Playing the same game leads to competitions among companies. Each one wants more customers and they want more profit. They work hard to compete each other in the market with a (lower – costs) products, better services and qualities. In case of losing the competition and if it was strong rival, the industry will leave the market and normal to face bankruptcy. 3- Threat of substitute products or services: the substitute products or services become high in the presence of similarity between different brand such as Coca-Cola and its competitor Pepsi that are indistinguishable from each other.
The soft drink industry is a very large industry not only supplying to shops but restaurants, hotels, sporting events and more. There are many companies that produce their own unique soft drinks that appeals to some type of market group. Why do these soft drinks appeal to these markets? What makes them so appealing? Answering these questions that deal with consumer interests is the reason why this topic was chosen.
The soft served ice creams are very cheap compared to our price. Also, our competitors near our location is already an established brands. Another risk for our business is also the availability of substitute products like smoothies, frappes, ice candy, cold soft drinks, etc.5 FORCES ANALYSIS Bargaining power of suppliers (Medium)
8/19/2016 Executive summary This report we analysis, Pepsi cola in soft drink/beverage industry in order to recommend the better company for investment. The conclusions are drawn based upon results of financial analysis. A recommendation is given at the end of the report. Both PepsiCo and Coca-Cola are strong leaders in the highly profitable soft drink/beverage industry. PepsiCo achieved slightly better growth rate in sales and net profit.
Although the trend of drinking the alcoholic beverages may different from time to time, Carlsberg still has its own competitive advantage over the substitute products especially during festival season. The demand for beer will exist for celebrating special events and festival. However, due to the undifferentiated product with the substitute products, therefore, the threat of substitute product is
Expect now to hear the boon of cannons when the Coca Cola& Pepsi co. battle it out for, as the Jordon goes a bigger share of throat. By buying over local competition, the two American Cola giants have cleared up the arena and are packing all their power behind building the Indian franchisee of their globe girdling brands. The huge amount invested in fracture has never been seen before. Both players seen an enormous potential in his country where swigging a carbonated beverage is still considered a treat, virtually a luxury. Consequently, by world standards India’s per capita consumption of cold drinks as going by survey results is rock bottom, less than over Neighbors Pakistan & Bangladesh, where it is four times as