Essays on Coke AND Pepsi

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Michael Porter’s Five Forces include - the threat of new entrants, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers and competitive rivalry between firms. We will apply this framework to the soft drinks industry. 1. Porter’s 5 Forces

Threat of New Entrants: Medium Pressure

The threat of new entrants is quite real for the soft drinks industry today. The consumer is becoming more health conscious. Many governments are instituting legislation to curtail the use of sugary soft drinks like Pepsi ...

Business Level Strategy

Both, Coca-Cola and Pepsi utilize differentiation strategy for making their products unique in the customer’s eyes. Both companies spend a significant amount of money on advertising and promoting their product. The message in these advertisements is mostly focused on communicating the superiority of Coke and Pepsi products over their competition. The choice of bottle shape is another factor that defines Pepsi and Coke utilizing differentiation strategy in the business. Pepsi and Coke prefer to maintain focus on advertising and promoting their brand, over choosing price sensitive strategy as these companies have developed a duopoly in the CSD industry. ...

Historically, soft drink industry in the United States enjoyed great profitability, but in the beginning of 2010, the profitability declined because of low demand and low consumption of carbonated soft drinks. So, the companies have to respond in accordance with the demand and preferences of consumers.

Reason of Profitability of Soft Drink Industry

Soft drink industry is profitable because of its market strategies, competition with rivals, and cost of bottlers or products. Further, the Industry is profitable as buyers and suppliers do not exert their power on the industry, rivalry at internal level is intense, barriers to entry are high, substitutes are not enough for taking ...