SMG SI 422 Lecture 5: Class 5 - Cola Wars
20 Feb 2017
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The soft-dri(cid:374)k i(cid:374)dustry has (cid:271)ee(cid:374) profita(cid:271)le (cid:271)e(cid:272)ause they ha(cid:448)e(cid:374)"t had a(cid:374)y supplier or (cid:271)uyer po(cid:449)er o(cid:448)er them. The rivalry against coke and pepsi has been one that does(cid:374)"t dri(cid:448)e do(cid:449)(cid:374) profit (cid:271)e(cid:272)ause it is(cid:374)"t based on price. The barrier to entry is high because they are very dominant players in this industry and ha(cid:448)e (cid:448)ery loyal (cid:272)usto(cid:373)ers. It has made both of them grow because they compete with advertising, promotion, and new products instead of price. Their products are similar but not the same and it creates brand loyalty. Retail buyers have high costs switching from the major brands because they are what drives people into the store. They both work towards acquiring fountain rights and integrating themselves internationally. Their rivalry makes them work harder within their company, not necessarily tear each other down, which brings them more profit: compare the economics of the concentrate business to the bottling business.
