Coca Cola/Pepsi Case - Assignment Example

Threat of New Entrant This force is quite low in this industry. The new players have to establish reputation, strategic relationship, distribution channels which require both time and cost. Since the distribution channels of the established players are set in place, it would require new entrants to provide huge incentive them so that they can agree to keep their products besides the other products. Threat of Substitutes This force is quite strong in this industry. This force has forced both Pepsi and Coca Cola to acquire the competitors and substitutes.

The main substitutes are non-carbonated soft drinks like sports drinks, fruit juices, sweet teas, alcohol and water. Rivalry within existing Firms The main competition is between top three players like PepsiCo, Coca-Cola and Nestle. The small players are gaining the market share with growth in population. Internal and external analysis: Strengths: Strong brand value for both companies Weakness: Less focus on product differentiation Opportunity: More markets can be tapped Threat: Health issues and norms and regulations of many countries Answer 2 Coca Cola is the market creator for their products.

Coca Cola was the first company to make their entrant in the soft drink market. Coca Cola was constantly in competition with Pepsi Cola in terms of market share. During this time they introduced “New Coke” in 1985 with new cola recipe. This was replaced by Coca Cola Classic. It resulted in rise in the market share of the company. It is important for any company to apply product differentiation strategies to sustain in the competitive market. It is quite important to judge the tastes and the preferences of the customer in different markets (Kim 2).

Coca Cola has applied this strategy effectively which contributed in tapping the markets of soft drinks. They have come out with differentiation strategy like Diet coke which has been a tremendous success in the world. It is terribly refreshing for the consumers to drink Diet Coke. It takes care of the health concern of some of the European and British food safety measures. Coke has presently 17 per cent market share in the United Kingdom market. Coke has used its marketing strategy to good effect to make their presence known.

The effective differentiation strategies coupled with smart marketing techniques paved the path for Coca Cola to create their products. Answer 3 Both the companies have been affected by slowdowns in the market. They need to recast their strategies through a combination of price differentiation, price cuts, and trade discounts, stepping up of the capacities at their bottling plants and restructuring their distribution networks. All the Coca-Cola’s 200 ml beverages are sold at Rs. 10, down from Rs. 11-12. Hence they have to give heavy discounting at the cost of their profitability.

The customers are sometimes concerned about health issues on drinking soft drinks. So the companies can make the manufacturing process more transparent to the customers. This is involve a sense of comfort among the customers and can contribute to raise the sales level. Both the companies are trying to push for volumes. Coca Cola will push for this move through aggressive advertising. The inflationary conditions have resulted in more pressure for the executives to deliver good results. PepsiCo must step