Coke v. Pepsi – 5 Forces Analysis
Industry concentrate produces
High intensity (depends on price/advertising cost/ high number of substitutes(low calorie drinks/no carb drinks/ not carbonated drinks like orange juice) Pepsi products /Coke products
New Entrants (barriers/rivalry)
High Intensity-Brand recognition dominant market/ patents on style and colors Network relationships & high cost of entry
established such as distribution, warehouse, bottlers, and shelf-location high marketing costs
Coke dominance on international market makes it hard for Pepsi to enter international markets where Coke is dominant (Mexico) Suppliers (Bargaining Power of Supplier)
Medium intensity- Coke and Pepsi can and do renegotiate contracts with bottlers on prices, marketing, distribution territories, and etc. High intensity- for new entrants because the bottlers determine price of product (price takers), shelf- place is determined by retailer and less price discount control. There is a small number of important suppliers since Coke and Pepsi supported suppliers to buy other smaller suppliers to keep up with their needs. Buyers (Bargaining Power of Buyers)
High Intensity- due to the high number of substitutes, health concerns, and few key buyers (fountain outlets/vending machines) E.g.) Coke and Pepsi battled for the right to sign a contract with fast food restaurants like Burger King. Substitutes ( threat of substitutes)
Medium Intensity- high number of substitutes(low calorie drinks/no carb drinks/ not carbonated drinks like Orange juice /ice tea/ flavored water/etc.
Low intensity – competition among other pop drink because it’s based on brand recognition.