The Soft Drink Industry

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The soft drink industry is highly competitive. Characteristics of the industry include slow growth and maturity, a phase during which weak companies are weeded out of the market by the strongest corporations. In order to stay competitive, soft drink companies must be able to offer their product at a low price. A price that can at least match (or preferably, beat) a competitor’s price will allow that product to enter into a consumer’s mental set of possible brands to purchase. Because the pop industry produces a fairly standardized product, competitors in the industry cannot entice the consumer to pay a premium price for its product over another firm. Therefore, the ability to produce soda at a low cost to the company is an extremely important determinant of success. Secondly, the firm’s brand of soda must be available for consumers to purchase easily. This means that the brand must be on the shelves of stores where most consumers shop for beverages, namely, large grocery stores. Although other channels of distribution are available, once again it is important for the brand to enter into a consumer’s mental set of possible brands to purchase. The fact that there are no switching costs associated with pop . . .

As already discussed, the trends towards consolidation of the grocery store industry and consumers increasingly seeking a one stop shopping experience is the largest threat to NBC. As well as being able to compete price-wise, National Beverage Corporation is also well equipped to produce quality beverages. However, NBC may not be able to capitalize on this opportunity given its weakness in mainstream distribution channels. According to its 10K, it competes by “appealing to the ‘quality-price’ sensitivity factor of the family consumer. Of the two aforementioned keys to success in the pop industry, the National Beverage Corporation possesses strengths in one area but may be vulnerable to threats in the other. Overall, in terms of environmental threats and...
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