The reports answers five questions elated to the case of cola in China.These questions include; 1 How effective is the positioning of Future Cola? ; 2 What are the factors that have contributed to Future Cola’s growth so far? ; 3 How might Coca Cola and Pepsi Co.Respond to Wahoo in the carbonated drinks category? ; 4 What should Wahoo do to anticipate and respond to the next level of competition? ; 5 what other strategies and tactics could Future Cola employ to continue to grow its market share?
The author has used different tools to answer these questions including SOOT, PEST, Five Forces Model, Anions Matrix, Core Competencies and Competitive Advantages.
To measure the effectiveness of Strategic Positioning of Future Cola the author first analyzed its strategic positions using competitive advantage theory followed by SOOT and PEST analysis as well as porter’s five forces model which helped to explore the strengths, weaknesses, opportunities and threats for the business.
Also the political, social, economic and technological factors that are contributing to the success of Future cola have been discussed. Also the business environment was analyzed by identifying threats of substitute products, threat of new products, intense rivalries among existing players, bargaining power of appliers and bargaining power of buyers. It was found that Future Cola has become a successful brand and is competing with international brands in China because it has been advertised as a patriotic brand Intelligent.
Further Wahoo Group holds vast wholesale and retail network. Also the prices of Future Cola are low as compared to other brand. Pepsi and Coca Cola can meet the rising demand and success of future bola by adopting a localized marketing strategy, lowering prices and introducing new flavors that are close to the taste that Chinese people like. 4 Report also offers recommendation to Future Cola for becoming leader in China and or succeeding globally. These recommendations include; target developing nations, medium calorie drinks as well as drinks with natural ingredients Q-1.
How effective is the positioning of Future Cola? Strategic Positioning “Pretax profit last year at Hangout Wahoo, the Chinese beverage giant controlled by the country richest man Gong Singing, climbed by 18% to 10. 1 billion Yuan, or $1. 6 billion, amid a fall in raw material costs, a company spokesman told Forbes”. (Forbes, 2013) The Company started its operations in 1987 as a milk factory that was run by a School with the goal of providing children with nutrient drinks. The company is among top five global beverage producers.
Future Cola was introduced by Wahoo Group of China in 1998 at the time when carbonated drinks had become popular and this category was covering half of the volume of the soft drink industry. In 1997 the output of cola in China was 1. 36 million with 80% combined market share of Pepsi and Coca Cola. Currently on number three in China and Number five in the world among soft drink manufacturers Wahoo has successfully achieved and maintained its position. (Nancy Dad, 2004) Competitive Advantage The competitive advantage of Future Cola lays in its generic business strategy that fermentation strategy.
The Future Cola gained success because the CEO was prepared on how multinationals will respond to this new brand and prepared to compete with response as well increase its market share in the future. (Nancy Dad, 2004) The outward evidence of competitive advantage for Future Cola can be seen in its success in China as third major soft drink in China and high growth in sales. Future Cola is enjoying superior delivered cost position due to low costs 6 international brands and close to the Chinese taste and culture. Positional advantage has many benefits and cannot be exploited
In theory, the competitive advantage is described from two perspectives; 1 . Resource 2. Capabilities As regards resources Future cola has competitive advantage that because it has vast distribution network, financial capacity, its manufacturing and distribution network in low cost, has production capacity, it purchases raw material. Capabilities include focused knowledge, orientation of customer service, expertise in design, experience as a food and beverage company, holds trade relationship in China, is able to utilize relevant technologies, capability to design system as well as to response capability.
SOOT Analysts Strengths Weaknesses ;Brand name resembling to Coca Cola ;Fifth biggest brand in the world ;Third Major Brand in China ;China’ National Brand ;Vast network of wholesale ;Cheaper than its competitors ;Attractive Marketing Strategies ;Brand Management Skills ;Not an international brand like Pepsi and Coca Cola ;Focusing less on Threats Opportunities ;Great Competition ;Changing consumption trends ;Restriction on carbonated drinks ;Can expand its network to emerging markets and developing nations to ;Can introduce different flavors to grow sales ;Can acquire major players in China
Figure I-SOOT Analysis Future Cola Brand name resembling to Coca Cola which is already familiar One among the five biggest brands in the world Third Major Brand in China Established as China’ National Brand Vast network of wholesale Cheaper than its competitors Attractive Marketing Strategies and Brand Management Skills Weaknesses 8 Not an international brand like Pepsi and Coca Cola Can expand its network to emerging markets and developing nations to increase sales and profits Can introduce different flavors to grow sales Can acquire major players in China Great Competition with presence of major brands Changing consumption trends