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By Tatjana Apanasevich, [email protected] Erik Bergschöld, [email protected] Jeanette Finder, [email protected] Caroline Perman, [email protected] 2304 Media Management

Sse cola_wars_6a_2011

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Page 1: Sse cola_wars_6a_2011

By Tatjana Apanasevich, [email protected] Bergschöld, [email protected]

Jeanette Finder, [email protected] Perman, [email protected]

2304 Media Management

Page 2: Sse cola_wars_6a_2011

Threat of new entrants (rather high):•Low switching costs•Low investments•Few dominating players•Great recipy is needed

Rivalry among

concentrate producers:Very high

Power of the suppliers (low)•Generic products are easy to change. •Big players and suppliers dependence       •Low switching costs

Threat of substitutes (high/medium):•Similar price and taste •High threat (switching costs for users is low)•Well known brand and status•Other beverages

Bargaining power of buyers (both low and high):•Fountains - high since they can integrate high volume, good substitutes. •Strong brand•Bottlers bargaining power is low.

Page 3: Sse cola_wars_6a_2011

Overall the market has potential of profitability, because:

barrier of entry is rather low initial investments there are many different suppliers to choose from hence

low supplier power low switching costs for end consumers people’s preferences are changing together with changing

trends, there are several ways to enter the market which might prove profitable for the new concentrate producer

there is high rivalry which means that it might be difficult to compete

Page 4: Sse cola_wars_6a_2011

Threat of new entrants (low):•Needs capital investments;•industry (high costs of entry)•Economies of scale •Contract with concentrate producer crucial

Rivalry among

bottlers:increasing

Power of the suppliers (high to low)•Dependence on concentrate producers (brands, prices..) and bottle producers (generic product)

Threat of substitutes (rather low)•Increased interest for fountains•New ways of consuming soft drinks, e.g. people can make it at home through soda stream

Bargaining power of buyers•Retailers: depends on what the brands, can be both high and low•End consumer: low bargaining power (because of small volumes)

Page 5: Sse cola_wars_6a_2011

gross profit is much higher for concentrate (83% compared to 35%) (concentrate industry is a more attractive market in terms of return)

the initial investment is lowerconcentrate market has a higher business

opportunity

Page 6: Sse cola_wars_6a_2011

Development in societyConcentrate: Health awareness increasing

(1)        For bottlers: environmental factors and

recycling is becoming more central       New distribution channels  e.g. online shifting power structures - increasing power

of retailersmore international markets = a different way

of competing        Information spread, e.g. contamination of

coke could have negative effects.more substitutes are entering the market -

increasing competition

Page 7: Sse cola_wars_6a_2011

decreasing margins more marketing costs keep up the competition, costly to

differentiate

Page 8: Sse cola_wars_6a_2011

Threat of new entrants – high•many new substitutes to soft drinks are entering the market •new ways of using soft drinks are emerging which often decrease the margins (such as soda-streamer).

Rivalry: high

Power of the suppliers (high to low)•increasing for retailers, more choices and more info for end consumers - increasing

Threat of substitutes (high)•plenty in varying forms and prices

Bargaining power of buyers•rather low, decreasing due to globalization)

Page 9: Sse cola_wars_6a_2011

Porter, ME, "What is Strategy"Porter, ME, “The Five Competitive Forces

that Shape Competitive Strategy”Case: Cola Wars Continue