Sse Cola Wars Group4


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Sse Cola Wars Group4

  1. 1. Case 1 Cola Wars Continue<br />Group 4<br />Erika Brag (20200) <br />Anna Ohlsson (20313) <br />Xin Guo (70397) <br />Liang Wang (70404) <br />
  2. 2. Major Participants involved the production and distribution of CSDs<br />Concentrate producers<br />Bottlers<br />Retailer channels<br />Suppliers<br />2<br />
  3. 3. Concentrate Industry<br />Dependent on:<br />Technology: R&D for soft drinks recipes<br />Buyers: customer base, retailers, distributors<br />Geographic location of production, outsourcing.<br />Local distribution channels<br />3<br /><br />
  4. 4. Porter’s Five Forces (I)<br />SUPPLIER POWER<br /><ul><li>Suppliers of ingredients / raw material
  5. 5. Not very high supplier power
  6. 6. Suppliers’ price sensitivity
  7. 7. Relative bargaining power</li></ul>THREAT OF ENTRY<br /><ul><li>CSD market
  8. 8. More profitable to produce CSDs other than cola
  9. 9. Time and capital requirements for building of brand image / recognition /Customer loyalties
  10. 10. Economies of scale
  11. 11. High profit margins compared to bottlers
  12. 12. Switching costs
  13. 13. Product differentiation and positioning for success
  14. 14. Access to distribution</li></ul>channels, contracts, retaliation<br /><ul><li>Legal/ regulatory barriers
  15. 15. Cost disadvantages dependent on scales</li></ul>INDUSTRY RIVALRY<br /><ul><li>Concentration
  16. 16. Competitors: All CSDs </li></ul> (red bull…)<br /><ul><li>Coca Cola and Pepsi are market leaders brands
  17. 17. Diversity of</li></ul> competitors<br /><ul><li>Product differentiation
  18. 18. Excess capacity &</li></ul> exit barriers<br /><ul><li>Cost conditions for competition (advertising…)</li></ul>SUBSTITUTE<br />COMPETITION<br /><ul><li> Buyers’ propensity</li></ul> to substitute<br /><ul><li>Substitutes: non alcoholic</li></ul>Beverages ( tea, coffee…)<br /><ul><li>Relative prices & </li></ul> performance of<br /> substitutes<br />BUYER POWER<br /><ul><li> Buyers’ price sensitivity
  19. 19. Low price, fast decision making
  20. 20. Large customer base
  21. 21. Relative bargaining power</li></ul>4<br />
  22. 22. Bottling Business<br />5<br /><ul><li>Brand distribution strategy---”Direct Store Door” (Industrial leaders)
  23. 23. bottler’s relationship with retail trade networks is crucial for brand availability and maintenance.
  24. 24. Franchised bottling networks for industrial leaders
  25. 25. Cooperative merchandising agreement---promote soft drink sales
  26. 26. Bottlers need to adapt to Coca Cola and Pepsi demands
  27. 27. Higher opportunities for local bottlers (no direct store door delivery from brands (DSD) )
  28. 28. Higher demand for CSDs and therefore bottles, in countries with higher customer base ex: china </li></li></ul><li>Porter’s Five Forces (II)<br />6<br />SUPPLIER POWER<br /><ul><li>Two or three can manufacturers competed for a single contract</li></ul>Buyers<br /><ul><li>Long term relationship with customers
  29. 29. Dependence on suppliers</li></ul>THREAT OF ENTRY<br /><ul><li>Producers started to launch bottling business: Pepsi Bottling
  30. 30. Switching barriers
  31. 31. Contracts with producers
  32. 32. Relationships with material suppliers
  33. 33. Economic conditions, high costs of sale
  34. 34. Packaging technology and cost threats</li></ul>SUBSTITUTE<br />COMPETITION<br /><ul><li>Relative prices & </li></ul> performance of<br />substitutes<br /><ul><li>Restaurants automatic dispensers (Mc Donalds…)</li></ul>INDUSTRY RIVALRY<br /><ul><li>Producers have more than one bottling suppliers
  35. 35. Competition based on relationships</li></ul>BUYER POWER<br /><ul><li>Long term relationship with producers
  36. 36. Relationship based </li></li></ul><li>Economics comparison: Concentrate Producers and Bottlers<br />7<br />Source: Company annual reports.<br />
  37. 37. Attractiveness<br />Concentrate Producers (more) <br />Higher industrial profit margins<br />Lower cost for production<br />Few inputs from suppliers-less rely on suppliers<br />More costs for advertising, promotion, and bottling relationship -more external relationship- high risks but high net profit<br />Bottlers: <br />High dependenceon producers-Relationship with producers<br />More inputs(packaging and sweeten) -High reliable with suppliers<br />8<br />
  38. 38. Challenges<br />Repositioning of Cola Industry<br /><br />Jack Trout Q&A: Cola Wars<br />9<br />