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SSE_cola wars_group4b_2011

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  • 1. Coca-Cola vs Pepsi
    Media Management 2304
    Alexandra Drissner, Johan Ericsson, EmelieLevall, Charlotta Storckenfeldt
    21373@student.hhs.se
  • 2. Outline
    • Steps in industryanalysis
    • 3. Porter‘sfiveforces – concentrateindustry
    • 4. Porter‘sfiveforces – bottler‘sindustry
    • 5. Challengestoday
  • Industry analysis
    • Industry definition:
    • 6. Concentrate industry is the industry that produces concentrates for carbonated soft drinks (only producer no service provider)
    • 7. Bottling industry is the industry that fills concentrates, which might also include DSD (producer and service provider)
    • 8. Geographicscopeis North America
  • Valuechain
    Definition of participants
    Fountainchannel
    Packagin& sweeteners
    Consumer
    Concentraterawmaterials (naturalflavors etc.)
    Concentrate
    Bottlers
    Retailerchannel
  • 9. Concentrateindustry
  • 10. Rivalry
    • High intensity of rivalry due to slowindustry growth and two equal sized, highly committed rivals that strive for leadership
    • 11. Dimension of competition is based on price (premium) but even more on branding
     High rivalryamongexistingfirms
  • 12. Threat of entry
    • High entry barriers due to high capital investments for research, branding, advertising etc. and unequal access to distribution channels (dependent on bottler networks of Coke & Pepsi)
    • 13. Expected retaliation of existing players high
     Low threat of entry
  • 14. Buyer power
    Bottlers:
    • Low negotiation power as “anchor bottler” account for the majority of volumes from the concentrate producers; high switching costs for buyers
     Low buyer strength
    Fountain Channel:
    • High negotiation power as switching costs for fountain accounts are low
     High buyer strength
  • 15. Threat of Sub.
    • Substitutes of growing importancee.g. due to health issues
    • 16. High switching costs for bottlers
     Medium threat of substitutes
  • 17. Suppliers power
    • Less concentration than in the concentrate industry
    • 18. No product differentiation
    • 19. Low switching costs
    • 20. Few or no substitutes
    • 21. Little threat of forward integration
    Low supplier strength
  • 22. Bottlingindustry
  • 23. Rivalry
    • Exclusive territories lowers rivalrybetween bottlers of the same brand
    • 24. Franchise agreements forces each area to have several bottlers (higher concentration than needed?)
    High rivalry between different brand bottlers and low rivalry between same brand bottlers.
  • 25. Threat of entry
    • New Entrants
    • 26. Capital intense industry
    • 27. Difficult to get retailer shelf space
    • 28. Coke/Pepsipolicy of exclusiveterritories
     Low threat of newentrants.
  • 29. Buyer power
    • Retailers have high negotiation power,but Coke/Pepsi are better off than small brands.
     Moderate to high buyerstrength
  • 30. Threat of Sub.
    • Substitutes
    • 31. Fountains
     Threat of substitutesdiffersbetweenrestaurants (high) and retailers (low)
  • 32. Suppliers power
    • High concentration of suppliers
    • 33. Substitutes associated with switching costs.
    • 34. High threat of forward integration  High supplierstrength
    • 35. Packaging
    • 36. High share of bottler’s total cost
    • 37. No differentiation  Low to mediumsupplierstrength
     Low supplier strength
  • 38. Challengestoday
    • Increasingimportance of private labels
    • 39. Non-CSDbeverages of growingimportancebutadjustments of bottlingfacilitiesrequires high investments
    • 40. Power of retailersincreasing
    • 41. Health issues
    • 42. CSD-marketissaturated
  • Consequences of Cola Wars
    • Changedbase of competition: Fromprice to brand
    • 43. Reducedprofitabilitybecause of:
    • 44. high advertisingspendings
    • 45. Increasedprofitabilitybecause of:
    • 46. consolidation of bottlers
    • 47. onlyfewconcentrateproducers (whoareincreasinglydependent on coke‘s/pepsi‘sbottlernetwork)
  • The End