Cola Wars
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- Date Submitted: 11/11/2012 09:34 AM
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Cola Wars
Profitability in the cola industry has its advantages. Porter’s five forces model has shown how the industry has been able to excel in the marketplace (Hill, Jones, 2012, p 141). The carbonated soft drink (CSD) industry has created a barrier to entry so that imitated versions of Coca-Cola were not copied under trademark infringement. The courts made it difficult to enter the cola industry, due to imitations of Coca-Cola. Brands of cola, including Coca-Kola, Koca-Nola were counterfeit versions of Coca-Cola that was taken off the market. Trademark infringement has prevented these products from being in the marketplace. It was difficult to enter the CSD industry because Coca-Cola dominated the marketplace. Robert Woodruff, in 1923, emphasized brand loyalty, coupled with advertising, also created this barrier to enter the marketplace. Woodruff also made the soft drink easily assessable, including vending machines, open-top coolers, and fountain dispensers. (p.5)
When Pepsi-Cola entered the market, they relied on price differentiation and sold its product with more per ounce in their bottling than Coke. (p. 6) This approach was used to compete in the marketplace and share in the brand loyalty that Coke has been successful in doing. Pepsi-Cola and Coca-Cola, since 1950, shared 57% of soft drink market in the United States. Their shared volume reached 54.5% in 1970, 63.7% in 1980, 73.5% in 1990 and 75.5% in 2000. (Exhibit 2) Smaller brands found it difficult to compete with the growth of Coke and Pepsi.
Another barrier to entry to entering into the CSD industry was Coca-Cola recognizing that most family-owned bottlers it used had few resources to be competitive in the industry. It was difficult to convince bottlers to keep up in marketing and promotion programs, upgraded plant and equipment because they no longer had the resources to keep reinvesting in their companies. (p. 8) Therefore, in 1980, Coca-Cola announced it would...
Profitability in the cola industry has its advantages. Porter’s five forces model has shown how the industry has been able to excel in the marketplace (Hill, Jones, 2012, p 141). The carbonated soft drink (CSD) industry has created a barrier to entry so that imitated versions of Coca-Cola were not copied under trademark infringement. The courts made it difficult to enter the cola industry, due to imitations of Coca-Cola. Brands of cola, including Coca-Kola, Koca-Nola were counterfeit versions of Coca-Cola that was taken off the market. Trademark infringement has prevented these products from being in the marketplace. It was difficult to enter the CSD industry because Coca-Cola dominated the marketplace. Robert Woodruff, in 1923, emphasized brand loyalty, coupled with advertising, also created this barrier to enter the marketplace. Woodruff also made the soft drink easily assessable, including vending machines, open-top coolers, and fountain dispensers. (p.5)
When Pepsi-Cola entered the market, they relied on price differentiation and sold its product with more per ounce in their bottling than Coke. (p. 6) This approach was used to compete in the marketplace and share in the brand loyalty that Coke has been successful in doing. Pepsi-Cola and Coca-Cola, since 1950, shared 57% of soft drink market in the United States. Their shared volume reached 54.5% in 1970, 63.7% in 1980, 73.5% in 1990 and 75.5% in 2000. (Exhibit 2) Smaller brands found it difficult to compete with the growth of Coke and Pepsi.
Another barrier to entry to entering into the CSD industry was Coca-Cola recognizing that most family-owned bottlers it used had few resources to be competitive in the industry. It was difficult to convince bottlers to keep up in marketing and promotion programs, upgraded plant and equipment because they no longer had the resources to keep reinvesting in their companies. (p. 8) Therefore, in 1980, Coca-Cola announced it would...