cola wars Flashcards
what are some interesting facts about this case?
1 beverage after water
Americans consume over 40 Gallons
2016 bottled water exceed cola
worldwide consumption of CSD 5 gallons just not in North Korea
majority of coke sales and profits are outside the USA
-coke has over 3,300 products
-great brand awareness
what are barriers of entry?
-brand equity
-limited shelf space, vending slots, and fountains
-the bottling system is very capital-intensive and exclusive
how does a CSD company get away with charging $1-2 for a product, when the health sub - water -is free?
-subs are not always available
-csd is often an impulse buy
-lifestyle choices
-addiction
-drinking Coke/Pepsi as a status symbol
what are Porter 5 forces?
power of customers
power of suppliers
the threat of potential entrants
availability and compatibility of subs
competition among existing competitors
do suppliers have any real power in the concentrate manufacturers?
- the cost to make the concentrate is virtually nothing
- bottlers are not the exclusive buyers
- a lot
bottler power?
-little power
-high switch costs
- franchise agreements lock down bottlers
- CPS offers significant benefits
competitors are concentrated
what is rivarly like?
-coke and Pepsi aviod downward spiral
- high degree if perceived differentiation
- competition is focused on everything except price
why does the war not escalate?
opportunities are short-lived
-getting an advantage is very short-term
quickly imitate each other
who has been winning the war?
Throughout the 1960s coke was the winner = they had extensive bottling franchises and is the number one company to focus on oversea products
then pepsi gained = gives selective discounts
Coca-Cola is the most popular in the world
who has been losing?
- smaller brands
- the industry is consolidating
-smaller brands sell yo cadbury (now Dr. Pepper Snapple)
if you could be a bottler for Coke or Pepsi would you rather have NYC or central texas?
- NYC has smaller stores and getting pdts there are hard
Central TX has larger distribution centers
what is the key to barriers to entry?
exclusive franchise
high capital investments in bottling
high investment in distribution
shelf space is limited
who are the buyers?
fountains vending supermarkets
rivalry?`
geographic exclusively limits the competition
for CP every sale is a profitable sale
but CP wants an exclusive franchise
a bottler can only grow if it increases its market share
what are the likely challenges to the stability of the industry?
- coke and Pepsi are evolving into beverage companies
- the bottling requirements for non-add complexity
- Non-csd carries higher process and margins
- `Retailers consolidating have more pricing power
