Coke v. Pepsi – 5 Forces Analysis
Industry concentrate produces
High intensity (depends on price/advertising cost/ high number of substitutes(low calorie drinks/no carb drinks/ not carbonated drinks like orange juice) Pepsi products /Coke products
New Entrants (barriers/rivalry)
High Intensity-Brand recognition dominant market/ patents on style and colors Network relationships & high cost of entry
established such as distribution, warehouse, bottlers, and shelf-location high marketing costs
Coke dominance on international market makes it hard for Pepsi to enter international markets where Coke is dominant (Mexico) Suppliers (Bargaining Power of Supplier)
Medium intensity- Coke and Pepsi can and do renegotiate contracts with bottlers on prices, marketing, distribution territories, and etc. High intensity- for new entrants because the bottlers determine price of product (price takers), shelf- place is determined by retailer and less price discount control. There is a small number of important suppliers since Coke and Pepsi supported suppliers to buy other smaller suppliers to keep up with their needs. Buyers (Bargaining Power of Buyers)
High Intensity- due to the high number of substitutes, health concerns, and few key buyers (fountain outlets/vending machines) E.g.) Coke and Pepsi battled for the right to sign a contract with fast food restaurants like Burger King. Substitutes ( threat of substitutes)
Medium Intensity- high number of substitutes(low calorie drinks/no carb drinks/ not carbonated drinks like Orange juice /ice tea/ flavored water/etc.
Low intensity – competition among other pop drink because it’s based on brand recognition.
After Coke & Pepsi bought major bottlers, they started bottling in house and delivering their own products directly to retailers. Suppliers have seen their bargaining power dwindle. Concentration produces especially the ones with the highest market share (Cola and Pepsi) bottlers, retail channels...
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