Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.” PepsiCo PepsiCo is one of the largest food and beverage companies in the world. The company manufactures, markets, and sells a range of salty, convenient, sweet and grain-based snacks, and carbonated and non-carbonated beverages. The company holds 38% market share of the total US savory snacks market and a 25% market share of the US liquid refreshment beverage market. The company figures at the 58th position in the Fortune 500 ranking for 2008. Strong market position allows the company to launch new products and also increases its bargaining power in the market.
The energy beverage companies are targeting same group of people as Red Bull and it is hard to make significant increase in profit. To make more profit companies should target diverse types of consumers to differentiate your company from the other companies in the same branch. The heavy consumers of energy beverages are consist of males between 12 and 34 ages. In this market is high brand loyalty which means that average consumer is limiting his/her choice to only 1.4 different brands. The convenience stores and supermarkets are the dominant off-premise retail channels for energy beverages.
Today, Coca-Cola offers nearly 400 brands in over 200 countries and controls the highest market share (44%) in the soft drink market. In addition to its leading global market- share, Coca-Cola also retains the title of having the most popular individual beverage in the world in Coca-Cola Classic, with an 18.6% market share Pepsi-Cola assumed its place at the heels of Coca-Cola through its creation of an extensive franchise bottling network and distribution outlets Over the years, the Pepsi Cola company has expanded its product offerings, through R&D and acquisitions, to include: Diet Pepsi, Mountain Dew, Mug Root Beer, Slice, Sierra Mist, Lipton, Aquafina, and Starbucks Frappuccino, among others. As of 2003, Pepsi controlled 31.8% of the market in the soft
Red Bull holds a 70 percent share of the world market for energy drinks, or functional beverages, a category it was largely responsible for building. Its dominant position in the fastest-growing segment of the soft drink market in a number of countries has drawn a number of imitators. Red Bull has become a case study in successful guerilla marketing in the United States and United Kingdom. Marketing is aimed at hip young people with active lifestyles, though the formula began as a popular tonic for blue collar workers in Thailand. Globetrotting Origins Dietrich Mateschitz was born in 1946, a native of the
The differences between the beverage industry and the alternative beverage industry when comparing economic characteristics can be seen from a few components of the Macro-Environment. For example, global forces are the reason the carbonated beverage industry has had significant advantage over the alternative beverage industry simply because the alternative beverage industry is slowly moving into the global market. (This is why Coca-Cola Company has the highest total revenue of sales vs. any other competitor… they are an international powerhouse.) Another
But because Dasani is the highest sold bottled water, they recognized that they have majority of the market share, and started to branch out to make them monopolistically competitive. They do this by branching out other than bottled water. Reason Dasani holds most of the market share is because they know how to transform their product while offering many different options and pairing up with the competitors. Dasani made over 8 billion dollars last year. Due to Dasani’s constant efforts to evolve and be at the top, they have placed themselves in a perfectly monopolistic market.
The marketing of energy drinks, sport drinks, and vitamin-enhanced beverages targets many segments, so much so that Coke and Pepsi now own or distribute many of the labels vying against their mainstay brands. This case deals with the competition within the alternative beverage segment by exploring the strategic components, competitive forces, changes in the market, group map, and success factors. In addition this case focuses on key recommendations that will be needed to navigate the complex arena of the alternative beverage segment. Strategic Components of Alternative beverage segment The US beverage market grew by 0.9 percent in 2011 and although this marked the second year of growth for the beverage industry, after two consecutive declines in 2008 and 2009, the pace of growth slowed from 2010 (Berk, CNBC, 2012). This study emphasizes a point of a societal shift of Americans being more health conscious and not consuming as much carbonated beverages as in years past.
From this fact we can learn that the soft drink industry is dominated by these 2 firms which holding the market power and a competitive fringe with many smaller firms acting as price takers. Also, both concentrate producers and bottlers are profitable. These two parts of the industry are extremely interdependent which sharing costs in production, marketing and distribution. ( many overlapped functions) The industry is already vertically integrated to some extent. The above mentioned data regarding the soft drink market & industry in the US could explain why this industry is so profitable.
According to Bloomberg Business Week, Coca-Cola remains the best globally recognized brand across all industries for years, while Pepsi’s brand ranked number 25 in the year 2008. Thus, Coca-Cola is able to charge premiums for its syrup concentrates due to its larger market shares and better brand name recognition. In order to compete against Coca-Cola and increase revenue, Pepsi has diversified its businesses as I stated above into other markets such as snacks, chips, and breakfast foods, with its core business focusing on soft drinks. Undoubtedly, the company’s strongest and most identifiable brand is indeed Pepsi but it has a certain advantage over Coca-Cola since it is more diversified. On April 9, 2009, Coca-Cola Company reported cash and cash equivalent to be $6,816,000,000 and on December 26, 2009, Pepsi reported cash and cash equivalent to be $3,943,000,000.
Cola Wars Continue: Coke and Pepsi in 2010 1. Why, historically has soft-drink industry been so profitable? “Strategic Management” by Hitt, Ireland and Hoskisson (2008) states that the interaction between the elements of the industry environment determines an industry’s profit potential (38). Therefore, In order to determine why the soft-drink industry has been so profitable, we should conduct an analysis of the industry environment forces: threat of new entrants, the power of suppliers and buyers, the threat of product substitutes, and the intensity of rivalry among competitors. Threat of New Entrants Both Coca-Cola and Pepsi-Cola has a high percentage of the market shares, respectively 15.3% and 8.8%, according to Exhibit 8.