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Pestel Analysis
Pest analysis of usa
Coke and pepsi face stiff competition within the global market
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Cola Wars Environmental Analysis 1. Introduction External environmental analysis of US carbonated soft drink (CSD) industry allows concluding that declining CSD sales call for changes in industry operations whereby market players can benefit from the fundamental shift in the industry development and maintain its leadership positions in beverage market. Analyses of macrolevel, industry, and competitive environments suggest that expansion, strong brand recognition, and changes in value chain will be key success factors in the future industry development. 2. External environmental analysis a. Macrolevel environment (PESTEL analysis) i. Political New federal nutrition guidelines identified CSD as the largest source of obesity-causing sugars in the American diet. Schools throughout the US banned the sale of soft drinks on their premises. ii. Economic People can afford to buy more soft drinks under current economic situation. Recessions do not seem to affect sales of CSD. Although produced by main market players soft carbonated drinks cost more than similar products of local and private label manufacturers, consumers are willing to pay an extra price for the name, particular taste, and image. Fierce competition in CSD industry forces Coca-Cola and PepsiCo to expand into new and emerging markets which present high potential for the company’s development. However, some foreign markets proved to be highly competitive. Coca-Cola Company’s operation in China faced antitrust regulations, advertising restrictions, and foreign exchange control. iii. Social Media and advertising are able to create a strong brand presence and a distinctive image of CSD that appeals to particular social/age groups. Therefore, some consumers perceive particul... ... middle of paper ... ...reness, led successful advertising campaigns, expanded successfully, and diversified its distribution channels and product line by creating new products. Its advertising spending is third largest in the industry. Dr Pepper enjoys 16% of the market share with fourth largest advertising spending. The company firmly holds the position of US third largest CSD industry player with its attractive product mix. ii. IMPLICATIONS Key success factors in the industry are a strong brand presence, maintaining customer loyalty as exploring new markets and distribution channels as well as offering a diversified product line. Implications of these factors are strong competition and dependency of company’s behavior and marketing strategies on competitors’ behavior. This is especially true for Coca-Cola and PepsiCo since their flagship products are very much alike in look and taste.
The industry is concentrated, with a few major companies owning the majority of brands. The Coke vs Pepsi rivalry itself is very intense. Market growth is not as high as it once was, and the market appears to be fragmenting because of obesity concerns and the need to develop more nutritious offerings
Coke continuously out-stands Pepsi, even though they share a very similar taste and colour, however Coke should not be the drink that receives all the love and attention for what it offers. Despite their similar soda colour, the drinks actually contain some different ingredients, which produce a different taste, and affect the body differently. Furthermore, the way the companies markets their drinks makes a huge contribution to how successful their products will become. The major element for success however stems from their impact on society and how the companies utilize their social power to evolve. The two major soda companies are constantly head to head with one another, yet it is what they do that sets them apart.
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
In both cases companies under this contract are not allowed to handle a direct competitive brand e.g. no possibility to bottle Pepsi and Cola at the same time. In 2000 Cokes bottling system was the most concentrated with its top 10 bottlers producing 94% of domestic volume followed by Pepsi with 85% and Schweppes with 71% of their respective franchisees. Focusing on the upstream of the supply chain it is to be said that bottlers have to contribute to CSD companies cost on Marketing but on the other hand have the right to refuse to contribute in promotion acitivities i.e. test marketing requested. Bottlers also play an important role in negotiating cooperative merchandising agreements with retailers i.e. retailers agreeing to specified promitional activity and discount levels in exchange for a payment from the bottler i.e. bottlers have a final say in decisions concerning retail pricing, new packaging, selling ads etc. In 2000 the distribution of CSDs in the US took place through food stores (35%), fountain outlets (23%), vending machines (14%), convenience stores (9%) and other outlets (20%).
The Coca-Cola Company - American multinational corporation operates in a nonalcoholic segment of Beverage Industry. The history of the industry goes back to the 17th century, when the first marketed soft drink came to the Western Market.
Therefore, the long-term brand of Coca cola and better pricing strategies would help in competing with Pepsi. Unlike, Pepsi, Coca cola had targeted entering into partnership and alliances with local distributors and firms. This helps to develop strong relationship within the domestic firms to reduce the domestic barriers and thus, enhance the company’s competitiveness (Thabet, 2015). Lastly, the Asian markets consist of related and supporting industries to the soft drink industry that helps the companies in gaining a strong competitive position in the markets. Based on the competitive advantage of nation’s model, Coca cola has more home based advantages to develop a competitive advantage in relation to other countries on a global
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
The company known as Coca-Cola today was started in September of 1919, but the first Coke brand was served as early as 1886. Since that time it has grown to be one of the most globally recognized brand names with a stock value of $167 billion. Coke’s plan has always been developed with the future in mind. Right away the company realized that it was more profitable to manufacture the concentrate used to make carbonated drinks than to bottle it. From that point on they saw the entire world, not simply the originating country, as their desired market. It seems only practical that the company should pursue this agenda until conquered then focus the effort on expanding into different product lines. This logical idea has catapulted them into the much sought after position of number one.
For more than a century now, two major companies of soft drinks Coca-Cola and PepsiCo have been battling. Both companies have very long history in inventing, advertising, and selling their soft drinks.
Dr Pepper Company is the oldest major manufacturer of soft drink concentrates and syrups in the United States. Dr Pepper is the company's principal brand. Cadbury Schweppes PLC acquired Dr Pepper/Seven-Up Cos. Inc. in March 1995. The new business will be called the Dr Pepper Company, which will focus on the Dr Pepper brand by handling all beverage system sales, which account for 75 percent of its business, in addition to related independent bottlers. The second operating group will be Cadbury Beverages/Seven Up Co., which will service independent bottlers not carrying Dr Pepper. Dr Pepper/Seven Up soft drink brands now hold about 16 percent of the U.S. market. Dr Pepper and Seven-Up are among the top 10 carbonated soft drinks, with Dr Pepper being the top non-cola soft drink. Other soft drink include: A&W Root Beer, Canada Dry, Schweppes, Welch's, Sunkist, Squirt, Crush and Hires (Levy 1999). According to the soft drink industry report, there is large sales growth recently in non-colas. Dr Pepper was number three in the industry. The reason is because non-colas have above-average caffeine level, and will be aimed at the 12-to 21-year-old market. Obviously, management sees this product as an opportunity to more fully participate in the growing popularity of non-colas.
However, Coca-Cola was going after the larger markets for a quick turn around with the market shares (Schindler, 1992). Unfortunately, Coca-Cola spent four million in research and marketing for a product that lasted a short time on the grocery store shelves (Schindler, 1992). Had Coca-Cola surveyed consumers before investing in all the research for a new product (Schindler, 1992)? Coca-Cola may have found out that consumers did not want a new cola to replace the original (Schindler, 1992). Coca-Cola could have spent less time and money if Coca-Cola just asked consumers their thoughts about the current product line and services (Schindler, 1992). With this information, Coca-Cola could have done an internal analysis which would have given them a competitive advantage over Pepsi-Cola (Ferrell & Hartline, 2014). A competitive advantage would have given Coca-Cola a way of focusing on their ability to create and capture values (Kaleka & Morgan, 2017). Consumers should have been Coca-Cola’s targeting market all along with the current product line (Ferrell & Hartline,
If you are a global company, like Coca-Cola and PepsiCo, or a local manufacturer. They all have to develop new soft drinks, to full-fill the changing or new needs for consumers. This development can be done on brand new markets or on the traditional markets. It is a big challenge for the companies to differentiate their product towards the competition. In the more developed markets it is hard to differentiate your product, because there is a lot more competition. The future of the soft drink industry are in the upcoming countries. These upcoming countries are: China, Brazil, India, Indonesia, Nigeria, Venezuela, and Colombia. The current products is the biggest part of the growth in these new markets, but these countries have other lifestyles and that will lead to the obligation to develop new products. The growth of the soft drink industry will be based on staple products, like bottled water and carbonates. In the developed and the new markets is the competition increased, so it is n...
Precisely, this study assesses the impact of the Coca-Cola system on the soft-drink network, globally. Part of the job of designing a plan is deciding specifically what is intended to accomplish. The most striking trend in business today is the growing globalization of markets worldwide for goods and services. In sharp contrast to such market integration is the uncertainty and turmoil of market fragmentation. These changes pose great threat to the marketing strategist, as years of central control have hampered development of the necessary market mechanisms and infrastructure to support the implementation of marketing strategies. Coca-Cola has emerged as a leading brand in the whole world, when we talk of the beverage industry. In case of a tangible product like Coca-Cola, marketers need to focus on several other important issues like establishing a strong distribution network, ensuring the availability of their product at the right place, at the right time and at the right price. In addition to this, Coca-Cola can forecast the future demands for its products and can preplan its production schedules. It can also keep control over the quality of its products through improvements in production processes and strict controls over the quality of inputs. While considering the case of Coca-Cola it can be said that the company is in a position to charge a premium over its original price because of its strong brand recognition globally. However, practically speaking tough competition from rivals, especially from Pepsi has forced the company to reduce its prices to the minimum possible level. In the late 1980s, competition with Pepsi led to a discount war in which the margins of bottlers were abruptly torn away. As a result, many of the ...
Changes in the external environment will create opportunities or threats in the market place Coca cola must be aware off. Fluctuations in the economy, changing customer attitudes and values, and demographic patterns heavily influence the s...
Coca-Cola Company is the leading soft drink and beverage company across the globe that has constantly achieved tremendous success and profitability throughout its operations. The company’s success and profitability throughout the years can be attributed to effective management strategies of its business operations. This has contributed to a strong reputation that has not only attracted a huge customer base but also resulted in enhanced performance. The success and profitability can also be attributed to diversification of its products and provision of excellent customer service. However, the company has experienced significant challenges in the recent past that has forced its former executive to