Cola war

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Cola War
Dominant firm to the suppliers, sugar/water
Monopsony to bottlers

Historically, Pepsi focused on sales through retail outlets, Coke had dominated fountain sales
Concentrateproducers/Company required few inputs
Bottlers purchased two major inputs: packaging and sweeteners
Concentrate producers and bottlers maintained relationships with more than one supplier
Coke’s industryanalysis show that the main threats to industry profitability come from buyer power (bottlers), rivalry(Pepsi), and substitutes


▪ Coke’s strategies
• Coke is able to pursuelow-cost strategies and still enjoy higher profit margins
• The global reality that its success is determined in one local market at a time puts it in the unique posture of needing focusstrategies by local geographic markets
• Not only does this allow Coke to penetrate existing markets and channels but it preempt new product efforts of weaker competition
▪ Coca-Cola(General)
• Promote brands
• Gain market share
• Grow in domestic market and expand international market
• Build up good relationship with its bottlers
•Diversify into non carbonated beverages

Coca-Cola/Pepsi started with selling only their flagship brand; Pepsi challenge; in the 1980s, smaller concentrate producers were squeezed by Coke and Pepsi,small independent franchised bottlers weakened due to high advertising spending, product and packaging proliferation, capital requirements for bottlers
Coke, refranchising allowed its larger bottlersto expand outside the traditionally exclusive geographic territories, creation of Coca-Cola Enterprises (CCE), independent bottling subsidiary
Pepsi also adopted the model: the Pepsi Bottling Group(PBG)
Bottler consolidation ( smaller concentrate dependent on Cola and Pepsi

• 1960 Coke focused on market development and product development in its core business-soft drink; This...
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