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After analyzing the case study, we can conclude that strategically relevant components of the global and U.S beverage industry macro environment are the rapid growth of the product inclusive of high profit margin and premium pricing of alternative beverage. Each group demands for different types of alternative beverages which divide the global market into various types of products such as energy drink, sports drink, relaxation drinks. In the year of 2009, the US drink data was accounted of sport drink at sixty percent, vitamins enriched drinks and energy drinks about twenty three percent and alternative beverage sales at eighteen percent.
In the context, when consumers are focusing on reducing the consumption of carbonated soft drink, alternative beverages are the medium of the soft drinks companies to maintain the sales volume growth as well as furnishing to different demographics. The number of sales of the drinks depends on the demand of the group for example children prefer juice drink, adults to energy shots, athletes to the vitamins enhanced drinks. This all demand differs alternative beverages from the usual carbonated soft drinks that people were used to drink. Now, alternative beverages offer variety of products which consumers could consume for different activities.
2. What is the competition like in the alternative beverage industry? Which of the five competitive forces is strongest? Which is the weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?
Innovation is the vital source of creating the competition in the globalised market and alternative beverages are facing competition on the basis of differentiation from the traditional drink or the fruit juices. Alternative beverages are inclusive of vitamin enriched drinks, energy boosting drinks, sport drinks etc. and to develop the brand loyalty it totally relies on the test, properties and ingredients of the drink. To meet with the competing company works on the advertisement, brand name, nutritional properties, packaging and unique flavors.
The PepsiCo and the Coco Cola having a big market share and their products have a strong presence on the consumers and the production of alternative beverages is very easy job for them. This action can dominate such channels of the alternative beverages. Therefore, from all the five competitive forces, strongest is the action of the firm which is already providing a variety of drink products.
However, the weakest competitive force is the bargaining power which is exercised by the buyers only. At the time when alternative beverages were introduced company use to sell it at the high price and customers pay for it and now if customers are willing to pay a higher price for the product company will have to sell it on the same price.
The established companies seem to have a greater effect on the new entrants like PepsiCo and coco cola because they already have a huge number of loyal customers that follows their brand. If they introduce a new product in contradiction to the new entrants, customers more willingly adopt their products more than the new company.
3. How is the market for energy drinks, sports drinks and vitamin-enhanced beverages changing? What are the underlying drivers of change and how might those forces individually or collectively make the industry more or less attractive?
Customers are becoming more health conscious and they are aware about the positive and negative effects of the drinks. Therefore they reduced their consumption of the alternative beverages which slow down the demand and sales of the product. Due to recession customers are becoming more money conscious and spending very less in the alternative beverage and it indicates that the market becomes mature and there is no scope for longer growing.
Change in the product innovation, long term growth rate and industry consolidation are the driving force of the alternative beverages. The second forces segmented with the alternative beverage industries have consolidated as the market has matured and leaders have been established for example in the year of 2010, Coco Cola controlled the Red Bull GmbH and Henson natural corporation. However, the individually or collective effect of the industry driver of change is likely to make the alternative beverage companies less attractive until and unless such companies gain a first mover advantage.
4. What does your strategic group map of the energy drink, sports drink, and vitamin-enhanced beverage industry look like? Which strategic groups do you think are in the best positions? The worst positions?
Strategic group map of the energy drink, sport drink and vitamin-enhanced beverages shows that companies are competing in the scope of brand portfolio favor and geographical distribution. It indicates that the company which is competing globally and having broad brand portfolios is positioned well in the market. However, companies which are working regionally and on national distribution only or having a single brand seems to be the worst position in the industry. As per the case analysis PepsiCo and Coco cola are in the best position due to having a wide range of products and Red Bull considered as being in the worst position as they are having a low variety of products.
5. What key factors determine the success of alternative beverage producers?
The following key factors determine the success of alternative beverage producers.
The test should be appealing and unique to the customers.
Advertising and Promotions in such an effective way that spread awareness about the products and can establish the brand image.
Access to the distribution of the product in order to achieve good sales volume and market share.
An innovating Product skill which can differentiate the alternative beverage from the traditional drinks.
6. What recommendations would you make to Coca-Cola to improve its competitiveness in the global alternative beverage industry? To PepsiCo? To Red Bull GmbH?
According to the case, Coco- Cola should research the country and conclude about the test, customer preference and demand than introduce the product in the market. They should try and introduce new flavors also and should discontinue the non preferable and profitable products.
PepsiCo has largest market share in the US as well as in the global market. In the case study it mentioned that PepsiCo had introduced alternative drinks blood shot, charge, defend and rebuild but customers are not aware about this product. Therefore, PepsiCo should enhance their marketing and promotional activities. PepsiCo could also try for more energy drinks.
Red Bull GmbH should improve their strategy to increase their market share. As red bull is a very popular flavor therefore they should introduce more flavors instead of focusing on one flavor. They should enhance their water line drinks or sport line drinks. The company can research the market requirement and can develop a new line of products to become competitive in the market.