Strategy Coke vs. Pepsi由刀豆文库小编整理，希望给你工作、学习、生活带来方便，猜你可能喜欢“百事可乐pepsicola”。
1.Consider the CSD industry.Have Coke and Pepsi’s profits historically been high? Do you consider it surprising or not surprising given the product they produce? Both Coke and Pepsi have enjoyed moderate growth.Because of the market position, it’s not surprising that both of them enjoyed high growth.Compared to the airline industry, fore say, the CSD is relatively stable.The succe of the carbonated soft drink(CSD)industry described in this case is a great example of how firms can create and exercise market power.Coke and Pepsi did not just inherit this busine – they created it!
2.What are the primary barriers to entry and how important are they? You should use specific numbers from the case when considering economies of scale.Barriers to entry are strong.Brand equity is high – Coke and Pepsi are well established parts of our culture.Although it is hard for many of us to distinguish the brands in a taste test, many people are brand loyal and “perceive” product differences.Acce to shelf space, vending spots, and fountains are limited, and bottlers are bound by exclusive contracts.There are significant scale economies in bottling and advertising.3.How intense is rivalry between Coke and Pepsi on both price and factors other than price? Why? Rivalry among the concentrate producers is softened due to high concentration(Coke and Pepsi together have 75% of the market), a high degree of perceived product differentiation.While they compete vigorously in advertising, they have avoided head to-head competition on price.4.How large is the threat of substitutes? How should Coke and Pepsi respond to the growth of non-carbonated beverages? Substitute products – including water, coffee, juice, etc.– abound.But soft drinks are distinctive for many people, are often more convenient, and can represent a “lifestyle choice.” There are no substitutes for the bottlers, except perhaps for direct delivery to the fountains by the concentrate producers.5.Who are Coke and Pepsi’s buyers and suppliers? How much power does each have? Supplier power is low.The concentrate formulas are proprietary, but the ingredients probably don’t cost much and are likely to be competitively supplied.(Recall that sweeteners are typically added at the bottling stage.)The bottlers have had relatively little buyer power over the last few decades.Concentrate accounts for 40 to 45% of the bottlers’ cost of goods sold.They have high switching costs due to dedicated machinery and the exclusive nature of their franchise contracts.Exclusive territories eliminate intra-brand competition protecting the bottler’s profit margins.However Coke’s bottlers face vigorous competition from Pepsi’s bottlers and vice versa(as well as from other bottlers with other brands), but this is softened by consumer loyalty and perceived product differentiation.Buyers can credibly threaten to integrate backward and produce the industry’s product themselves if vendors are too profitable.Producers of soft drinks and beer have long controlled the power of packaging manufacturers by threatening to make, and at times actually making, packaging materials themselves.Coke and Pepsi’s relationship with bottlers is designed to increase bottler efficiency(scale and cost cutting)while reducing head-to-head price competition.Giving bottler’s a profit motive improves incentives to cut costs, while charging a high price for the concentrate limits the bottlers’ ability to engage in destructive local price competition.The concentrate producers have tremendous power over the bottlers, but other suppliers(such as can makers)are intrinsically weak.The concentrate producers negotiate contracts on cans and sweeteners on behalf of the bottlers, reducing the supplier power for other inputs.Fountains, such as McDonalds, have significant power and can “play off” Coke against Pepsi at the corporate level.The vending channel is quite profitable for bottlers, probably reflecting the price-insensitivity of the final consumers in select locations.The costs of supplying supermarkets are not insignificant, given the stocking and aisle-management functions performed by the bottlers and bottlers compete fiercely for shelf space.Strategy can be viewed as building defenses against the competitive forces or finding a position in the industry where the forces are weakest.In 2009, 92% of the u.s concentrate sales are covered by the 1987 master bottling contract.
