The company was first opened by Adolph Coors, Sr., in Golden Colorado in 1873, and then Adolph Coors, Jr., stepped in 1929 when his father died. In 1933, prohibition was repealed and Coors sold as many as 90,000 barrels of beers, and began to expand outside Colorado by adding Arizona to its distribution territory. During the 1930s, Coors also expanding their territory onto eight other western states: Idaho, California, Kansas, New Mexico, Nevada, Utah, Oklahoma, and Wyoming. By 1941, Coors had introduced its premium “banquet” label, in 1948 Texas became one of their target distribution until it confined to those 11 states through 1975. The strategic issue in this case is product differentiation. Segmentation is one way to do product differentiation, and can be broke down into different segments: Coors banquet (1958), Coors Light launched in 1978, Coors extra gold (1985). The introduction of Coors light which created technical and operational problems, the reasons was that light beers used less of everything but water. Strategic analysis
In analyzing this case, Porter’s five forces analysis were conducted: •
Threat of new entrants: Low- existing companies will have an advantage, given their established production and distribution system. Economies of scale and scope are significant in the industry. •
Threat of substitute products: Medium – there are many substitutes for beer such as soda but it’s consumed differently. •
Power of suppliers: Low- the inputs used in the brewing industry is basically commodity based, which sell in efficient market. •
Power of buyers: Low-the wholesaler most likely compete with other wholesalers for the right to sell that particular brand. They also have exclusive right to sell a particular brand in one particular area. •
Rivalry among existing firms: High – the beer industry is highly competitive; brewers have to differentiate their products through variety of advertising, segmenting, and packaging.
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