I first learned about Porter's 5 Forces when I was in my Strategy class in college. I enjoyed my Strategy class as I learned a lot and found the concepts and ideas that I learned in the class to be around me in ways that I never imagined. For my assignment using Porter's 5 Forces, I detailed about the two major airline players - Boeing and Airbus. For today's blog post, I decided I would use Porter's 5 Forces and apply them to the beverage industry, particularly in the soda industry. Diving deeper, I am going to be analyzing Coke and Pepsi.
1. Competition in the industry
There's no competition between Coke and Pepsi. The two drinks have been around for the longest time and if you try to enter the market with a product that's similar to either, you probably wouldn't succeed due to the long history and established brand loyalty that these two products have.
2. Potential of new entrants in the industry
So far, I don't think that there are new entrants or any upcoming entrants of sodas in the market. It would be very hard to enter the industry due to the high barriers of entry.
3. Power of suppliers
It's very strong for Coke and Pepsi as everything is handled in house as they produce their own products and there's no need for outside suppliers.
4. Power of customers
The reason why I invest in Coke and Pepsi is because of the fact that Coke and Pepsi will withstand any changes in the economy. No matter what, Coke and Pepsi will remain the same and produce the same products that we all can rely on. Customers have different preferences between Coke and Pepsi but it seems that there are more fans of Coke than Pepsi.
5. Threat of substitute products
It seems that the trend for 2019 is towards flavored sparkling water and if there would be threats to Coke or Pepsi, it would be from products that have similar taste/flavor/texture and can provide the same level of satisfaction that could lean towards the healthier side. Sparkling water is carbonated and the flavors make it more appealing to choose these beverages over Coke and Pepsi due to their nutritional profile.
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