competative strategy of coca cola
Examines the industry structure and competitive strategy of Coca-Cola and Pepsi over 100 years of rivalry. The most intense battles of the cola wars were fought over the $74 billion CSD industry in the United States, where the average American consumes 46 gallons of CSD per year. In a "carefully waged competitive struggle," from 1975 to the mid-1990s, both Coke and Pepsi had achieved average annual growth of around 10%, as both U.S. and worldwide CSD consumption consistently rose. However, starting in the late 1990s, U.S. CSD consumption started to decline and new non-sparkling beverages become popular, threatening to alter the companies' brand, bottling, and pricing strategies. The case considers what has to be done for Coke and Pepsi to ensure sustainable growth and profitability. A rewritten version of an earlier case.\ http://image.slidesharecdn.com/caseanalysiscokepepsi-101020163411-phpapp01/95/slide-1-728.jpg?1287610486 Historically, why has the soft drink industry been so profitable?
Historically, the soft carbonated soft drink (CSD) industry has been valued at $74 billion in the United States. In order to understand the reasons why the industry has been hugely profitable despite the ‘Cola Wars’, an examination of the CSD industry with Porter’s five forces analysis will be conducted. As market leaders, the analysis will be centred on both Coke and Pepsi (hereafter “C&P”).
Threat of new competition: Barriers to entry in the CSD industry are extremely high and there are various factors to support this. Firstly, both C&P spend gargantuan amounts of funding of advertisement. According to Exhibit 8, in 2009 alone, both C&P spent $234 million and $145 million respectively in advertising expenditure. Therefore, while the actual initial capital investment needed to start up a CSD company is relatively economic, the amount required by new entrants to continually push their brand and gain visibility is extremely high. Due to these extreme levels of expenditure
Historically, the soft carbonated soft drink (CSD) industry has been valued at $74 billion in the United States. In order to understand the reasons why the industry has been hugely profitable despite the ‘Cola Wars’, an examination of the CSD industry with Porter’s five forces analysis will be conducted. As market leaders, the analysis will be centred on both Coke and Pepsi (hereafter “C&P”).
Threat of new competition: Barriers to entry in the CSD industry are extremely high and there are various factors to support this. Firstly, both C&P spend gargantuan amounts of funding of advertisement. According to Exhibit 8, in 2009 alone, both C&P spent $234 million and $145 million respectively in advertising expenditure. Therefore, while the actual initial capital investment needed to start up a CSD company is relatively economic, the amount required by new entrants to continually push their brand and gain visibility is extremely high. Due to these extreme levels of expenditure