SSE_cola wars_group4b_2011

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SSE_cola wars_group4b_2011

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

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