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The document discusses the competitive dynamics of Coke and Pepsi in the carbonated soft drink industry. It notes that in the past, buyer power was low due to lack of knowledge about product composition and high brand loyalty. Coke and Pepsi established contractual agreements to influence concentrate prices and sales terms. There was also a threat that distributors could backward integrate into manufacturing. The competition between Coke and Pepsi intensified over time and spurred both companies to cut costs through vertical integration. They also introduced new products, sizes, and aggressive marketing to counter each other. Carbonated soft drinks have been in high demand since the 1970s as shown by increasing sales over the years.

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himani rathore
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51 views1 page

Case 1 Script

The document discusses the competitive dynamics of Coke and Pepsi in the carbonated soft drink industry. It notes that in the past, buyer power was low due to lack of knowledge about product composition and high brand loyalty. Coke and Pepsi established contractual agreements to influence concentrate prices and sales terms. There was also a threat that distributors could backward integrate into manufacturing. The competition between Coke and Pepsi intensified over time and spurred both companies to cut costs through vertical integration. They also introduced new products, sizes, and aggressive marketing to counter each other. Carbonated soft drinks have been in high demand since the 1970s as shown by increasing sales over the years.

Uploaded by

himani rathore
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

The bargaining power of buyers (bottlers, food chain outlets & consumers) was

low because:
There was less knowledge of the composition of the product which restrained buyers
from negotiating.
Brand loyalty of consumers: for the consumers taste was an important part of the
preference even though there was no monetary switching cost and because of this
consumer have historically been brand loyal and

Coke and Pepsi were influencing the concentrate price and other terms of sales through
contractual agreements.

There was a threat of backward integration where the distributors could themselves start
manufacturing.

They either retained exclusive deals with non CSD companies

Competitive rivalry
The competition between the 2 major players coke and Pepsi had become fiercer over time, and the
price competition due to the explosion of new brands eventually urged both the companies to cut
costs and they managed to do so through vertical integration.

They took CSR activities during the world war 2, offering coke to soldiers at lower price as well as
making sure of easy availability of the product.

They started introducing new products with various packaging and sizes and both the companies
countered each other with aggressive marketing efforts by doubling their advertising spending and
acquiring independent franchised bottlers. Besides, the packaging strategies helped them to boost
up their sales in competitive market.

Carbonated soft drinks have always been in demand since the 1970s and have
continued to gain popularity and we see an increased consumption over the years
through exhibit 1 which increased the sales.

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