Threat of new competition poses the greatest impact in the carbonated drinks industry. New significant competition may destroy the comfortable market top companies enjoy. In this case Coke and Pepsi would not prefer another competitor since there would be a great division in the market in terms of demand. However, the market still has competitors but none of them has come close threatening the supremacy of the two companies. Coke and Pepsi enjoy 75% of demand of the whole market. In the rise of new competition this number may decrease significantly and may cost the two enterprises in terms of profit returns (Yoffie, 2004). Additionally, emergence of new competition may bring the rise of a different product which the market may find appealing and more satisfying than the products available in the market. In this occurrence, there is even a greater threat of the current companies in the market loosing the majority of the market share they enjoy. For instance, if company X comes up with a carbonated drink that is well received in the market then this would automatically mean that the demand of other carbonate drinks would decrease significantly. If the company X takes control of the market with the new product, then the company would enjoy majority of the market demand.
After 10 years after the case between Coke and Pepsi, emergence of new competition would still pose the greatest threat in this particular market. It is an obvious assumption that 10 years from now the twin companies would still have the largest control of the market. It is at this time that the companies would really like to prove the originality of their products. Under these circumstances it would an easy take for any stable company to take control of the market with a more quality product.
This factor would have a general effect on the market. Even without Coke and Pepsi in this particular market, new significant competition poses the greatest threat in any market regardless of the control one or more companies have on a particular market.
Coke and Pepsi control the soft drinks market since the duo have the best marketing strategy in the market and they have been in the market for a long time. This has made the market their sanctuary and consumers have been significant in these changes. The general population of consumers has been helpful for both companies in ensuring that they enjoy the monopoly. However, analysts have argue that the products coke and Pepsi provide to the market are of the highest quality. This is an undeniable fact because since the consumers usually choose what products to demand and by choosing coke or Pepsi it is obvious that the quality of the two drinks have the greatest competitive advantage in the market. Additionally, the marketing and supply strategy of the two enterprises are outstanding. For instance, Coke has the best food commodity adverts across the globe in terms of quality and its ability to reach to the people (Hill & Jones, 2007). On the hand Pepsi has the incorporated sports stars in many of its advertisements to get the attention of the greater population.
In terms of soft drinks, the suppliers make the most of the customers. The suppliers in this case comprise of major enterprises and channels trough which retailers get their product share. In words by Caroll (2008) suppliers are best buyers since they have a ready market in which a company can rely on completely. Suppliers in the soft drink industries are known for their multi diverse capabilities. This means that the suppliers purchase, market, supply and sell soft drinks as agents of the enterprises. Analysts also argue that dealing with suppliers involves more solid working contracts that cannot be broken on premature terms.
The issue with bottling between Coke and Pepsi revolved around the originality of the presenting options the two companies have. Each company needs signature bottling design that would enable its consumers to locate and know the products with ease. In case of a similar bottling design, there could be a mix up in the market. This may also provide room for imitation and fraud. The New York Magazine (1981) argues that one could easily change the labeling of a product if the packaging of the latter resembles the original package.
It is an obvious observation of the similarities between Coke and Pepsi. This is greatly brought about by the competition the two companies have. However, analysts argue that this was an obvious prediction which needed time to take to action. For example, some of the drinks supplied by both Coke and Pepsi only differ in brand and manufacturer. This is because each company wants to imitate the success of the other enterprise using the same strategy and structure. Under these conditions, the consumers are supplied with a less variety for products. For instance, if Coke provides the market with specific ingredients in its drinks then the products registers a great success, another competitor will seek the same ingredients and create another brand. This leaves the market with the same supply of products from different manufacturers.
The case of imitation has risen in recent years with the emergence of new competitors in the market. This is because the success story created especially by Coke is outstanding. Every other enterprise in the market knows that the strategy and operations applied by coke are the best offers than the market can be provided with. For instance, the case on bottling of Coke and Pepsi was viewed as way in which one company had the intent of imitating the other. Accruing to Gill & Gill (2008) the relevance of imitation is only significant if the consumers change their preferences in terms of taste and selection. The authors further argue that minus this, imitation may not register the same success as it did in a rival company.
Coke and Pepsi find coexistence more profitable than airing their confrontations in public. This is because the two enterprises aim at protecting the majority market they control from their competitors. With 75 % control of the whole market, it would be an obvious assumption that this percentage is healthy enough for a logical coexistence between the two giants.
The competition between Coke and Pepsi is beneficial to both lines. The quality of products produced by the two organizations is almost similar. This means that if one product loses it market stability on price the demand will shift on the other product which will force the price of the product to decline. However, if Coke quotes higher prices the Pepsi would comfortable quote higher as be sure to enjoy the same market acceptance. The competition between the two companies has no significant change in the market as they remain the most successful soft drink companies on the globe.
Gill, M. & Gill, C. (2008). Coke or Pepsi. New York: Fine print publishing Company
Carrol, A. (2008). Business and society: Ethics and Stakeholder Management. Boston: Cengage learning
Hill, C. & Jones, G. (2007). Strategic management. Boston: Cengage learning
Yoffie, D. (2004). Cola wars continue: Coke and Pepsi in the 21st Century. Harvard: Harvard Business School
New York Magazine. 5th, Oct 2, 1981. Vol 14, No. 39. New York: New York Media, LLC.