Post on 19-Oct-2014
description
transcript
Coca-Cola vs Pepsi
Media Management 2304
Alexandra Drissner, Johan Ericsson, Emelie Levall, Charlotta
Storckenfeldt
21373@student.hhs.se
Outline
• Steps in industry analysis
• Porter‘s five forces – concentrate industry
• Porter‘s five forces – bottler‘s industry
• Challenges today
Industry analysis
• Industry definition:
• Concentrate industry is the industry that produces concentrates for carbonated soft drinks (only producer no service provider)
• Bottling industry is the industry that fills concentrates, which might also include DSD (producer and service provider)
• Geographic scope is North America
Value chainDefinition of participants
Concentrate raw materials
(natural flavors etc.) Concentrate Bottlers
Packagin & sweeteners
Retailer channel
Fountain channel
Consumer
Concentrate industry
Rivalry
• High intensity of rivalry due to slow industry growth and two equal sized, highly committed rivals that strive for leadership
• Dimension of competition is based on price (premium) but even more on branding
High rivalry among existing firms
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)
• Expected retaliation of existing players high Low threat of entry
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
Threat of Sub.
• Substitutes of growing importance e.g. due to health issues
• High switching costs for bottlers Medium threat of substitutes
Suppliers power
• Less concentration than in the concentrate industry
• No product differentiation
• Low switching costs
• Few or no substitutes
• Little threat of forward integration
Low supplier strength
Bottling industry
Rivalry
• Exclusive territories lowers rivalry between bottlers of the same brand
• 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.
Threat of entry
• New Entrants
• Capital intense industry
• Difficult to get retailer shelf space
• Coke/Pepsi policy of exclusive territories
Low threat of new entrants.
Buyer power
• Retailers have high negotiation power, but Coke/Pepsi are better off than small brands.
Moderate to high buyer strength
Threat of Sub.
• Substitutes
• Fountains
Threat of substitutes differs between restaurants (high) and retailers (low)
Suppliers power
• High concentration of suppliers
• Substitutes associated with switching costs.
• High threat of forward integration High supplier strength
• Packaging
• High share of bottler’s total cost
• No differentiation Low to medium supplier strength
Low supplier strength
Challenges today
• Increasing importance of private labels
• Non-CSD beverages of growing importance but adjustments of bottling facilities requires high investments
• Power of retailers increasing
• Health issues
• CSD-market is saturated
Consequences of Cola Wars
• Changed base of competition: From price to brand
• Reduced profitability because of:
• high advertising spendings
• Increased profitability because of:
• consolidation of bottlers
• only few concentrate producers (who are increasingly dependent on coke‘s/pepsi‘s bottler network)
The End