GB410 Cola Wars Assignment
1. Industry Value Chain (20 points)
1. Carbonated Soft Drink Value Chain
The value chain for Coke involved in the Carbonated Soft Drink (CSD) industry begins with the syrup producer who is responsible for the production of the soft drink. The syrup producer is an actor involved in accessing raw materials required for the manufacturing of the coke soft drink as well as a combination of different components within the certain condition to come up with the product. They require colas, caramel coloring, phosphorus acid and caffeine during production. They play a vital role as they are involved in the main production process.
Bottlers require input such as packaging and additive sweeteners which are added to the concentrate. Carbonated soft drink industries usually reach the end market in several ways. One approach is by selling the product that has already been produced made by bottling facilities owned by the company to the distributors of the product. The other approach involves the sale of the concentrates to bottling companies that have been licensed who then combine the product in a form that it can reach consumers through the addition of carbonated water. This product may go to distributors or directly to retailers. In both cases, the associated bottling companies and manufacturing companies come up with a fountain syrup with they sell to the fountain retailer. In this case, the fountain product is distributed to hotels and stores that come up with beverages that are for instant consumption.
This actor is involved in the distribution of already process products. The distribution process involves several processes where the main company partners with the various organization under license to produce certain products on their behalf. The distribution of CSDs in the United States took place through supermarkets (29.1%), fountain outlets (23.1%), vending machines (12.5%), mass merchandisers (16.7%), convenience stores and gas stations (10.8%), and other outlets (7.8%). Marketing and Sales are involved in this process where pricing is conducted.
The merchant is responsible for delivering the products to the end consumers. Due to the competitive nature of the carbonated soft drink industry, these products are sold at a similar price.
The End Consumer Involve people consuming the finished Coke product. They may purchase them from convenience stores or consume in restaurants.
2. Competitive Forces Model (30 points)
Concentrate producers involves a very large supply chain of farmers who work in collaboration with Coca Cola and thousands of farmers in the supply of raw material. Their partners comply with various policies that involve environmental sustainability as well as positive workplace culture. Coke utilizes the five forces model to maintain control over the soft drink industry. They keep an eye on competitors such as Pepsi, analyze potential new entrants in the soft drink industry, balance the power of suppliers and consumers as well as look out for alternative products. At the moment, non-carbonated drinks have threatened the industry. Declining CSD sales, declining cola sales and the rapid emergence of non-carbonated drinks appears to be changing the game.
Bottlers are focused on acquiring the concentrate from the manufacturers which they purchase and package in bottlers based on agreed-upon terms. Coke is responsible for branding as well as its consumer market. It has licensed various partners to produce, bottle, and distribute the product based on their terms and conditions. The Coca Cola bottle has been developed into different shape models throughout the years. This is licensed by the brand thane implemented by bottlers to suit the consumer initiative of the organization.
The Distributors are responsible for delivering bottled products to wholesalers and retailers. They have partnered with the company and have set up various distribution deports where they sell the bottled soft drink in warehouses and distribution ports.
Merchants purchase the soft drink from distribution ports and distribute to different restaurants and convenience stores for the consumers to purchase. They act as retail channels through which the product is reached by consumers.
3. Corporate Strategy (10 points per example, 30 points in total):
The Coke company utilizes vertical integration as an approach through which it controls its raw material suppliers and concentrate manufacturers to have complete control of its supply chain. For instance, while remaining in control of the brand, it has various partnerships with its suppliers and distributors to ensure that it maintains control of all matters involving marketing through licensing of concentrate producers and major retail channels. This benefits the Coke company by allowing them to remain in control of the manufacturing process through regulations made to their manufacturing partners. Through this process, the company can improve efficiencies and all branding rights.
Coke maintains a strategic alliance with its partners to maintain control over its brand. For Instance, the Coke company owns the manufacturing rights of Dr. Pepper while remaining independent. They remain as different business entities with certain policies that maintain the business partnership. The company has used strategic alliance as a means through which it increases its authority over other actors by maintaining all rights to the Coke brand while the industries assist in distribution and supply management.
The Coke company has utilized the product diversification approach by allocating its funding in ways that reduced its exposure to particular assets. The company owns all branding rights and marketing strategies while leasing manufacturing and bottling to other organizations. While they maintain control of the brand; they ensure that they reduce any expense that goes into production and distribution. Through these processes, they ensure that they maintain authority over the brand while other industries work under them to produce the coke product.
4. Competition between Pepsi and Coke (20 points):
Number of players
Coca-Cola had a vast number of partners which enables them to dominate most markets around the world. They have opened manufacturing plants in multiple countries to ensure that they reach all possible distribution channels. They also partner with smaller businesses to act as regional depots where their products can be found.
While coke and Pepsi have been at war for over a century, they maintain different marketing strategies to adhere to their audiences. Pepsi is renowned for the use of popular celebrities in music to endorse the product while coke utilizes campaigns such as “Share a coke” and “Hey Brother campaign” to connect to its audience. It has also partnered with several football associations and involves itself in football sponsorships to adhere to consumers love for the game.
The companies have been at war for over a century. In the midst of a war, Coke and Pepsi have managed to continue to profit because of their marketing strategies. While they remain at war with one another they ensure that they remain the most dominant in the carbonated soft drink industry. The organization have focused on different marketing strategies. While Coke appealed to its audience with the “share a Coke with”, Pepsi has had headliners in its campaigns including Cindy Crawford, Britney Spears and most recently Cardi B.