A. Market Analysis and Porter’s 5 Forces
We will conduct a situation analysis by using Porter’s Five Forces, in order to analyze the market in his globality.
1) Porter’s 5 Forces
Competition in the soft drink industry is fierce. It exists 4 powerful companies which are sharing the market of soft drinks: TCCC, Britvic, PepsiCo and Schweppes. Since 1886, @@the biggest one, TCCC, has patented its’ world famous produce Coca-Cola, and, for example in 2008 it generated about $31.9 billion of revenues.
The highly saturated market prevents any entrants from entering the market. Moreover, Consumers’ brand loyalty and image is strong and permit to ensure the position for the 4 powerful company.
The industry fixed high costs of production: warehouse maintenance, economies of scale or laboratory…
Water, hot beverage such as tea, enriched drinks… all examples that show the large quantities of soft drinks’ substitutes. Furthermore, moste of the time substitutes are cheaper than soft drinks. Smoothies and other drinks based on fruits are also becoming very popular: smoothies sales have grown up 40% in 2005.
Suppliers bargaining power is pretty low because soft drink companies own their own bottling equipment (most of the time).
Concerning the packaging, suppliers all have the same products, this limits competition’s prices. They remain vulnerable to market fluctuation price of sugar.
Direct purchasers have a strong bargaining power because they usually buy in bulk, allowing them ti buy at a lower price. Thes include food discount stores and restaurants.
Final consumers still have a high purchasing power and are willing to pay for goods they value.
2) Product Life Cycle
Pepsi’s consumption has reached maturity in life cycle. Newer products such as Diet Pepsi are still undergoing development stages, others such as Raw are still under market introduction.
B. Consumer Insights