Intensity of competitive rivalry - High
There is a fierce competition among very few players on Saint-Petersburg beverage market. This is a duopoly industry because it is almost dominated by the Coca-Cola and Pepsi. These companies have the majority of the market share and the rest of the players have very low mar- ket share. Companies mainly are competing on advertising and product differentiation rather than on pricing. Perceived price in this industry is very low because all products are comparatively the same and are only differentiated by promotional activities.
Threat of substitute products and services - High or moderate
This industry is enriched with enormous alternative drinks and substitutes such as tap water, tea, beer, coffee and hot beverages. Drinking beverages at a restaurant or at a cafe also might be considered as an alternative. The existence of products outside of the common product boundaries increases the propensity of customers to switch to alternatives but on the other hand the treat of substitutes is reduced by the expansion of product portfolio.
Bargaining power of customers (buyers) - Moderate
Fast food courts, vending operators, stores, restaurants etc. are the most important buyers for this industry. Different levels of bargaining power exist among these groups of buyers. For ex- ample, vending operators provide products to the customers in a straight line with no bargain- ing power and final buyers of soft drink products always have the option to switch to the other major producer and have moderate bargaining power.
Risk of entry of new competitors - Moderate to Low
There is a fierce competition among very few players on Saint-Petersburg beverage market. This is a duopoly industry because it is almost dominated by the Coca-Cola and Pepsi. These companies have the majority of the market share and the rest of the players have very low mar- ket share. Companies mainly are competing on advertising and product differentiation rather than on pricing. Perceived price in this industry is very low because all products are comparatively the same and are only differentiated by promotional activities.
Threat of substitute products and services - High or moderate
This industry is enriched with enormous alternative drinks and substitutes such as tap water, tea, beer, coffee and hot beverages. Drinking beverages at a restaurant or at a cafe also might be considered as an alternative. The existence of products outside of the common product boundaries increases the propensity of customers to switch to alternatives but on the other hand the treat of substitutes is reduced by the expansion of product portfolio.
Bargaining power of customers (buyers) - Moderate
Fast food courts, vending operators, stores, restaurants etc. are the most important buyers for this industry. Different levels of bargaining power exist among these groups of buyers. For ex- ample, vending operators provide products to the customers in a straight line with no bargain- ing power and final buyers of soft drink products always have the option to switch to the other major producer and have moderate bargaining power.
Risk of entry of new competitors - Moderate to Low
It’s difficult for new companies to enter the market because of few factors. First of all, soft drink
industry needs huge amount of investments and capital on advertising and marketing. For in-
stance, Cola and Pepsi spend significant amount of money for promotion. Also current companies have got longstanding relationships with end customers, have got exclusive territories in
distribution channel and the access to retail channels. It makes it very difficult for new players
to persuade retailers to carry their new product. Another barrier for a new entrant is that cur-
rent market leaders have already established customer preferences for their brands. These companies have well-recognized brands which fostered customer loyalty and created real opportunity for real market share and further growth. This implies high barriers to the new entrains
and makes it exceptionally hard for new companies to struggle for the market share with the
current market leaders.
Bargaining power of Suppliers
Soft drink producers need supplies from syrup concentrate producers and bottling supplies. Inputs utilized such as sugar, carbonated water, various chemicals, aluminum cans and plastic bottles are widely available. The bargaining power of suppliers is very low due to the fact that there are no suppliers producing unique resources, so suppliers of raw materials, components, labor have very little impact on the final cost.
Bargaining power of Suppliers
Soft drink producers need supplies from syrup concentrate producers and bottling supplies. Inputs utilized such as sugar, carbonated water, various chemicals, aluminum cans and plastic bottles are widely available. The bargaining power of suppliers is very low due to the fact that there are no suppliers producing unique resources, so suppliers of raw materials, components, labor have very little impact on the final cost.
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