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. 4- Bargaining power of buyers: each company tries to make a development in its low-cost strategy so they try to attract more customers this is because they believe that every customer can make his own decision and can bring the concept bargaining power and he has the power for
Fligstein explains the four threats to a firm's stability. The first threat is a supplier. THey can control a lot of aspects like “inputs, raise prices, and make firms who require their inputs unprofitable” (17). The second, competitors, engage in price competition. For example Coke and Pepsi, they are both really popular companies and have a wide range of consumers.
It understands deeply consumers’ needs and tries to fully satisfy consumers’ requirements for its products. For example, Coca-Cola has good quality in refreshing drinks. In addition, Coca-Cola is superiority as it offers advantages in some aspects that other brands cannot. It plays role in emotional relationship with consumers and offered classic icon, symbol, and image (Sagar, 2012). Its classic logo was designed by writing the word of Coca-Cola in Spencerian script with red and white colour (Feloni, 2015).
Legal factors Pepsico meet challenges producing their product with rules and regulations of Food Standard Agency (FSA) to be strictly followed. With a recent case of microbiological contamination, Pepsico recalled the 277 units of “Tropicana Kids Orange Juice Drink” which does not meet the quality standard due to the units containing water instead of blend orange juice. In such an event have slightly affected consumer’s loyalty towards Pepsico, reducing their sales of the particular product or even worse , the consumer’s appeal towards other similar drinks. Bargaining Power of Suppliers The ingredients required for pepsi are commodity products , despite the demands by companies are largely fulfilled , as Pepsico has the advantage due to the materials that require are commonly found , the bargaining power of suppliers would be relatively
Pepsi is the main substitute for Coca cola as both products are having similar pricing. Many people cannot differentiate the taste between them. Availability, convenience of carbonated drinks and Brand loyalty plays an important role. As a long term strategy different varieties of coca cola and Pepsi have emerged. There are more substitutes both internally and externally.
184.108.40.206 Weakness Despite coca cola being a successful company they have some weaknesses, they include the following, • Product diversification Ansoff Matrix a strategic planning tool by Igor Ansoff helps the senior managers to develop strategies for future growth. Diversification involves the firm introducing a new product in a new market. The cola company has a low diversification as it only serves in the beverage market unlike its rivals Pepsi Co. that has diversified into the food market; they produce snacks such as Lays, Doritos, and Ruffles etc. Hence coca cola is missing in this segment and it can possibly give Pepsi a competitive advantage. • Health issues The concerns on sugar level, calories, obesity have been on a rise, this is due to the trend of living a
Even though people favored the “New Coke”, product, they still didn’t want the company to completely discontinue the original Coke. But the company made a mistake by taking the original Coke off the market and replaced it with new Coke. This decision caused the Coca-Cola Company to lose millions in profit. They decided to discontinue the New Coke product and brought back the original Coke product. From the lessons learned, the company can use secondary research by reintroducing the new coke to the market and use the studies from prior research to improve the
Having a strong brand for an organization is very important, especially if the organization is still in existence. It is necessary for an organization to stay competitive if it wants to keep the customers satisfied and excited for new products. With an overwhelming of the consumers with numerous brands under a specific product line, it is easy to have a relating brand suffer and lose their interest to their consumers. In the market, one of Coca-cola’s major consumer product that has been struggling is the Dasani bottled water. After the lunch on the Dasani bottled water by Coca-cola, the product was not as strong in the market as the Aquafina bottled water product by Pepsi has been.
Positioning is basically creating the image of product that is constant in the mind of consumers. Positioning helps customers understand what is different about the product when compared with other competitors. Coca Cola desires creating positions that will give their products the greatest benefits in their target markets. Most consumers tends to create an picture of a product by contrasting it to another product. We have seen that through the infamous battles between Coca Cola and Pepsi products and Coca cola had the upper hand most of the times.
Political • Political Instability Trade and import policies have been changed rapidly in Pakistan because of the change in government which causes problems in importing raw material. Prices and duties on the syrup which was imported by USA which increase the operational cost a bit. • Laws & regulations Changes in taxation requirements entrance of new tax law, Tax rate changes • Non-alcoholic business era Pressure of competitive product and pricing policies & ability to increase share of sales market compared to rivals. Economic • Market Routes & Distribution Trends In 2105, company was in a phase of direct distribution to Indirect distribution to improve the service level & to minimize the Operational cost & fixed cost. • Seasonality & weather issues Seasonality and weather is directly related to sales trend and mostly had a negative impact on sales.