Cola Wars Case Analysis
1. The main way in which my case notes would be different for Cola Wars if I were to have a second try at writing them would be to include a breakdown of how they are able to apply to Porter’s five forces. For example, it is evident after reading this case that the soft drink industry is an extremely profitable one (especially for Coke and Pepsi). The reasons for this were discussed in class, and I will quickly explain each:
There are great barriers to entry when trying to dive into the soft drink industry, and because of this companies who have a competitive advantage will make it rather difficult for a new competitor to enter the market. Brand Equity is the first of many barriers, because large companies like Coke and Pepsi have become American icons. With that brings a certain culture that people are not willing to just let go by the wayside in exchange for a new brand (ie. The Pepsi Generation). Secondly, shelf space is a huge concern for this new competition, because big companies create all sorts of new variations and varieties of their products to suck up as much shelf space as they can for maximum exposure of their product. Another problem with trying to enter this market is that bottlers for the concentrate producers have signed exclusive contracts in most cases so that they can only bottle, package, and distribute a specific companies beverages. Lastly, and perhaps the hardest barrier to overcome is that of advertising. Coke and Pepsi are so well known, that even if a new concentrate producer starts up a top of the line factory and is producing great soda it could be all for nothing. The amount of advertising dollars that would have to be spent in order to obtain some of the market share from these goliath companies is so enormous that it is nearly impossible. On top of that, if the marketing schemes do not work for one reason or another those costs spent to promote are sunken costs.
Substitutes are another concern,...
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