Analysis Of Coke And Pepsi Porter's Five Forces

Porter’s Five Forces Analysis The threat of the entry of new competitors is very low in the soft drink industry. The largest competitors in this market are Coca-Cola and Pepsi. The fact that they spend approximately 2.5 billion dollars a year in the marketing campaign which makes it hard for a new competitor to enter the market and gain visibility. Another factor that inhibits new competitors is the fact that both Coke and Pepsi have built a high level of customer loyalty and brand image. Both Coca-Cola and Pepsi are generous with their retailers giving them margins of 15-30%. These relationships build loyal retailer groups. One other strength of these top soda producers is the fact that they have non-compete agreements with their bottlers

These buyers basically fall into four segments or groups that have varying amounts of profitability or revenue. They show their bargaining power by the prices that they pay. Fast Food Fountain buyers are basically the slightest profitable for Coca-Cola and Pepsi. Those buyers buy in bulk have high bargaining power. Vending Machines provide products to customers directly. There is no buyer power whatsoever. Convenience stores are fragmented group which buys and sells in smaller quantities and wields no bargaining power and pays high premium prices for the products. Food Stores are as whole are merged into numerous chain stores with a few local supermarkets. These stores have much more shelf space devoted to the soda products and buy in highest lower

It has grown into a multibillion dollar international company. It also owns one of the most valuable brands in the world. Their Coca-Cola banner has won the world’s top brand 13 times on brand c-consulting firm Interbrand’s annual list (Fraser, 2012). In addition to its main product, Coke, the company owns over 3500 beverages. One of its core competencies is brand building. They have built their brand to have respectability and dependability. Their brand and logo are recognized all around the globe. It has actually become a new known on almost all households worldwide (RNWILKIN,