Pepsi Case Study

955 Words 4 Pages
Register to read the introduction… Many new companies have enters the specialty beverage market and taken a significant chunk of market share. An example would be Five Hour Energy, which in 2009 held an 85% share of the energy shot market. The competitive pressure stemming from supplier bargaining power varies greatly in the industry. Some supplier categories such as manufacturers of aluminum cans, plastic bottles and caps, and most particularly labels and packaging, have many different suppliers, sparking competition amongst them for Pepsi’s business. However in other areas, such as supplements like taurine, suppliers have more bargaining power and thus have more control over pricing and sales agreements. On the other hand, buyer bargaining power hits PepsiCo less than many of its competitors. Whereas many other companies must pay high shelving fees, and slash their margins to accommodate convenience stores demands, Pepsi has distribution agreements across the U.S. that allow them to keep their distribution costs quite low while dramatically increasing the market penetration of their new product …show more content…
From costly convenience store shelving fees, to high distribution costs, all beverage companies are essentially fighting the same battles. Or are they? PepsiCo (and Coca-Cola) has a distinct advantage over many of its competitors in that it has already established a huge distribution network throughout the United States (which accounts for 47.8% of the alternative beverage market). This allows Pepsi to make sure its specialty beverages are available anywhere where its other Pepsi products are. Distribution is a key area for success in the beverage industry. Another key success factor in this market is product innovation. It is imperative that any company in this industry differentiate its products from those of the regular carbonated beverage market, if not, the company will be competing with much lower priced soft drinks and sales will surely suffer. Another hugely important factor is a company/beverage’s image. A consumer image shapes everything they think about your product, so through packaging, advertisements, celebrity and athlete endorsements, and event sponsorships we must work to create the image that want our consumers to look at us with. Branding is another factor which is key to success in this industry. This is one area where Pepsi has an advantage over many of its lesser known competitors. Pepsi has developed numerous successful brands and has the skills to properly develop a

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