Since Pepsi is a well known product and has been so for decades, customers are hesitant in giving a new cola drink a chance. In recent years, a very small number of cola manufacturers have been able to establish themselves amidst the raging cola war between Pepsi and Coca Cola but none have been able to pose a threat to their duopoly. The Power of Buyers Even though cheaper consumables have always been a priority for the public, Pepsi has done well to fight keep the power of buyers to substitute Pepsi with immediate competition on a low (Kavilanz).
The aggressive marketing campaigns by tea and coffee manufacturers cannot change the fact that consumers of Pepsi have almost no bargaining power since Pepsi and Coke are the sole constituents of this rare duopoly. The Power of Suppliers For Pepsi, the power of suppliers ranges from low to as high as medium. Even though governments in many countries are making efforts to step in and reduce monopolistic behavior, yet Pepsi has the benefit of requiring nutrient and non-nutrient sweeteners from its suppliers.
The threat of Substitutes Even though more and more consumers are choosing to try and adapt to energy drinks and drinks such as tea and coffee, the threat of consumers leaving cola drinks altogether and opting for energy drinks and drinks such as tea and coffee is relatively low considering the fact that Pepsi and Coke are considered unparalleled in the cola segment.
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Competitive Rivalry Prominent rivals of Pepsi include Coca Cola, Jolt Cola, Inca Kola and Royal Crown Cola also known as RC Cola. Competition is most severe between Pepsi and Coca Cola, with RC Cola often coming in third. Rivalry is severe with Coca Cola and Pepsi both on the lookout for niche markets throughout the year.
on Porters Five Forces – Pepsi
PepsiCo Porter’s Five Forces Analysis. Porter’s Five Forces analytical framework developed by Michael Porter (1979) focus upon five separate forces that shape the overall intensity of competition in the industry. These forces are represented in Figure 1 below: Bargaining power of PepsiCo suppliers is insignificant.
These Porter’s five forces are as follows: The Porter’s Five Forces model can be used to analyse the industry in which PepsiCo operates, in terms of attractiveness through inherent profit potential. The information analysed using the model can be used by strategic planners for PepsiCo to make strategic decisions.
Threat of new entrants or new entry (moderate force) Recommendations. PepsiCo’s Five Forces analysis indicates that competition, the bargaining power of customers, and the threat of substitution are the issues most significant to the company. PepsiCo can improve competitiveness through aggressive marketing combined with product innovation.
Porter Five Forces Analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry.
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