This analysis takes a look at the carbonated soft drink industry and competitive strategy of Coca-cola and Pepsi. This was a very attractive market at the time as Americans were consuming carbonated soft drinks more than any other beverage. Both companies needed to find ways to boost flagging domestic cola sales and generate diverse sources of revenue. Both firms modified their production strategies including their bottling, pricing, and brand strategies. They looked to emerging international markets to stimulate growth and broaden their brand portfolios to include noncarbonated beverages like tea, juice, sports drinks, and bottled water.
There are few factors that suggest trivial forecast for growth. However, demand continues to grow. Before the end of the current decade, the soft drinks market is expected to surpass the alcoholic beverages market, which constantly has shown lower growth than the beverage industry market in general. While product innovation has stimulated some growth within the industry during the 1990s by introducing new plastic bottles, innovation is slowing within the soft drinks industry recently. Since1997, in terms of market value, the global beverages market grew by 1.7% in 2002 to reach a value of $1,060 billion, and an increase of 16.6% in the global beverages market is predicted by the year 2007 to reach a value of $1,236 billion.
The high consumption of CSDs is related to the soft drink industry selling to consumers through five principal channels: food stores, convenience stores, vending, fountain and other. Out of the five channels the case describes vending as the most profitable channel for the soft drink... ... middle of paper ... ...e and Pepsi’s already established image as producers of premium product is key to discouraging other companies from entering the soft drink industry. However, as the market in the U.S has leveled off, they should continue to invest globally in marketing and advertising for further profit growth, which will in turn positively influence their well established brands to further increase soft drink sales and profits. The marketing campaigns must be tailored to meet the foreign markets’ demands, by respecting the consumers’ culture and flavor preferences. Furthermore, in the foreign markets the local brands must not be underestimated as these present high competition for Coke and Pepsi, therefore in order for the kings of the soft drink industry to expand their reign globally they must partner with the local soft drink firms and customize soft drinks with local tastes.
Competition in Energy Drinks, Sports Drinks, and Vitamin – Enhanced Beverages Identification Overview of Industry’s Situation Alternative beverages such as energy drinks, sport drinks and vitamin-enhanced beverages experienced rapid growth in mid-2000s. Each types of alternative beverage capture different customers profile and have different distribution channel. Since the carbonated soft drinks already in maturity stage, global beverage companies tries to compete on alternative beverages because its offer high profit margins and can boost overall volume sales. Due to poor economic conditions in the United States, the sales of overall beverages industry was declined. Beverage producers try to increase their sales by entering new geographic markets and expand their products selection.
This resulted in higher profits and the pricing war became prevalent in the global expansion strategies (Porter’s Five Forces Model of Coca-Cola, 2010). The scope of competition is globally, since Coca-Cola is present in about 200 countries. The soft drink industry will most likely not see growth in the future, as they have steadied out. Market and product differentiation has become more significant. Coca-Cola advertises based on conditions and have their name recognition around the world, establishing loyalty (Porter’s Five Forces Model of Coca-Cola, 2010).
The Porter’s model of competitive advantage of nations is based on four key elements including factor endowments, demand conditions, related and supporting industries and firm strategy, structure and rivalry. This makes it suitable in understanding the competition existing in the soft drinks industry in the Asian markets. The factor conditions identify the natural resources, climate, location, and demographics. Coca cola and Pepsi enjoy the growing population in the Asian markets (Yoffie, 2002). A higher population guarantees the two companies adequate revenues.
Section 1: Executive Summary Starbucks is the world’s largest coffee roaster and retailer of specialty coffee in the world. We have enjoyed great dividend returns over the past 5 years, and our growth has been on the rise. We are currently saturating the US market, while the emerging markets of developing countries offer many possibilities for growth and increased revenues. In our US market we should look at offering more items on the menu that complement our long-standing tradition of pleasing our customers. Exotic Juices, and snacks served with the same service could add a nice margin to the bottom line.
The growth of the soft drink industry will be based on staple products, like bottled water and carbonates. In the developed and the new markets is the competition increased, so it is n... ... middle of paper ... ...ry critical. So Coca-Cola have to invest a lot of money in the differentiation in the products. An advantage of this market: the distribution is all via the supermarkets and hypermarkets. The economic crisis hit this market the most, because consumers are more critical.
Soft drinks sells became steeper during the nineties probably correlated with the fact that this period is situated during the raise of generation Y. This generation was highly influenced by television and Internet, thus commercials. Generation Y has been a golden pool for marketers at that time and allowed companies to progress a lot concerning their marketing research techniques. Nowadays the soft drinks industry is booming, alcohols are not as successful as before and sodas are pointed out for their high sugar content. This is profitable for bio fruit beverages and other fruit based alternative beverages.
Case Analysis of Coca Cola 1. In the 1980s, under CEO Roberto Goizueta, Coca-Cola was a global brand with a growing presence in global-emerging markets like Europe, Russia, and South East Asia. It beat back its main rival Pepsi to be a leader in the carbonated beverage market with a 70% market share. During the 1990s however, under new CEO M. Douglas Ivester, the company’s market share started declining due to political (regulatory), economic, social (consumer), and technological (operations) challenges in the marketplace. While Coca-Cola was trying to consolidate its position in it’s core cola market, there was an increasing shift in consumer tastes in favor of non-carbonated beverages such as juice, tea, and bottled water.