Sse cola wars_group#4a_2011
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The concentrate industry is highly profitable and attractive due to relatively high bargaining power of suppliers and buyers, high barriers to entry for competitors, and low switching costs for consumers despite potential emotional costs to change brands. In contrast, the bottling industry has relatively low profitability and attractiveness due to high bargaining power of buyers, high barriers to entry, and high switching costs for retailers. The two major concentrate producers, Coca-Cola and Pepsi, control prices in both industries, with the concentrate market having low competition and the bottling industry facing high competition.
Sse cola wars_group#4a_2011
- 1. Yu CaoCeline DelacourKaterynaGorokhovaJustinasLegasCola Wars Continue1
- 3. Rivalry – Attractiveness of MarketRelatively high bargaining power of suppliersRelatively high bargaining power buyers (Bottlers)High barriers to entry for new competitorsLow switching costs for consumers, potentially high emotional costs for consumers to change drinking habitsTwo major players – Coca- Cola and Pepsi playing out each other but both are winning the war= Profitable and attractive for the concentrate industry3
- 5. Rivalry – Attractiveness of MarketRelatively high bargaining power of suppliersRelatively low bargaining power buyers (retailers)High barriers to entry for new competitors due to established long-term contractsRelatively high switching costs due to investmentsCompetitive industry (many players)= Low profitability, not attractive for the bottling industry5
- 6. Comparison of Concentrate and BottlesThe difference between profitability levels The concentrate producers control prices for product in both industries. The concentrate market has a low level of comptetion while bottling industry has a high level of competition.6
- 7. FutureChallanges for Pepsi and Coca-ColaHigher health awareness among consumers – drink less CSD than other non-CSD alternativesCompetition from vitamin water alternatives as a health conscious alternative for the consumers – Acquisitions needed. Needs for expanding the portfolio of brands even further, and reduce the production of the core products - cola drinks7