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Coca-Cola's 5 competitive forces model

admin August 05, 2022

The big challenge for a business in general and Coca Cola in particular is the model of 5 competitive pressures. Through the model, businesses can see "heavyweight" competitors, market impacts, risk of substitute products, etc. To learn more about Coca Cola's 5 competitive pressure model, please read. Please refer to the analysis article below.

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Detailed analysis of Coca Cola's 5 competitive pressure model

The model of 5 competitive pressures has appeared very early to help businesses shape and map out directions to overcome the 5 main competitive pressures of the brand. Coca-Cola's competitive pressures include: industry competitors, bargaining power of customers and suppliers, substitute products, threat from new entrants.

Pressure from Coca Cola's competitors in the industry

In the carbonated soft drink market, customers will not be too unfamiliar with the continuous appearance of two brands Coca Cola and Pepsi. Pepsi itself is Coca Cola's biggest competitor. The two even confronted each other very early, from the 19th century.

As can be seen, the Coca Cola and Pepsi brands are almost the same size, implementing similar strategies and product development. Therefore, the pressure from competitors Pepsi and Coca Cola in the beverage industry in terms of price and market share is fierce. Besides, Coca Cola competes for the market and competes directly with a number of other competitors, including: Keurig Green Mountain Group, Schweppes, RC Cola, Hires Root Beer and Nehi, etc.

After identifying the pressures coming from Coca Cola's competitors in the same industry, marketers can realize that: If consumer tastes and trends change, Coca Cola will face great pressure from consumers. opponents.

However, with its long life and good grasp of consumer needs, the pressure from Coca Cola's competitors is at a moderate level. In particular, with strong financial potential and a large number of loyal customers, Coca Cola has surpassed all competitors.

Coca-Cola's 5 competitive forces model

Bargaining ability of customers

The customer in the competitive five-force model is the end consumer, distributor, or industrial buyer. Most businesses still use the criterion "customer is god" as a guideline for operation.

Therefore, customers directly affect the competitiveness of enterprises when there is a desire for businesses to provide products at low prices but still ensure quality. Customers only have a high "bargaining" ability in the following cases: buying products in large quantities, few buyers exist, switching costs to suppliers are low, there are many other substitute products, etc.

In Coca Cola's 5 competitive forces model, the customer's supremacy for Coca Cola is very low. Because Coca Cola's customers are often individual and retail customers, their bargaining power is not high. Moreover, both Coca Cola and Pepsi do not have too many differences to help the two brands receive the support of customers. Where customers have the ability to negotiate prices with Coca Cola are mainly retailers, buyers in large quantities. However, in general, the Coca Cola brand does not face too much pressure from the bargaining power of customers like other specific industries.

Negotiating power from suppliers

Suppliers are organizations and individuals participating in the supply of goods/services in the market. Suppliers often create applications for businesses by increasing the price of products / services, reducing the quality of goods provided, selling goods that do not meet the expiry date or at the wrong locations, ...

These things directly affect the price, quality of output products and even directly affect the competitiveness of enterprises.

The bargaining power of Coca Cola suppliers is said to be very weak. This is due to the large number of suppliers with low switching costs for Coca Cola. In fact, the Coca Cola brand can be transferred from one supplier to another, but not every supplier can switch away from Coca Cola easily because of its own regulations.

Therefore, the pressure coming from Coca Cola's suppliers is relatively low, due to several reasons: large number of suppliers, size of individual suppliers mainly from small to moderate, switching costs short,…

The danger of substitute products

Substitute products are goods/services that can be substituted for other goods/services with similar values, uses, and practical benefits. Almost, the replacement products are often feature-rich, good quality, competitively priced, and are applied from improved technology. Therefore, the appearance of substitute products will reduce the number of products consumed, profit, and even remove that product from the market of each business, in which Coca Cola is no exception. rate.

The risk of substitute products in Coca Cola's 5 competitive pressure model is Pepsi's drinks, fruit juices, various other beverages, etc. There are many alternative beverage products. drink Coca Cola to meet the needs of customers who do not want to use a lot of carbonated soft drinks. Therefore, Coca Cola launched sugar-free Coca products to catch up with the trend.

Importantly, the substitute products on the market are of good quality, competitively priced, and have low switching costs for customers. Based on the above analysis factors, the risk from Coca Cola substitutes is very large.

Threats from new entrants

However, when looking at the beverage industry, it is not easy for new competitors to set foot in this market. The way to build a reputable brand in the eyes of customers requires not only an investment of money but also a collective investment of time and effort. To turn customers into loyal customers to use carbonated soft drinks, Coca-Cola has to spend hundreds of years to develop. Therefore, the threat to new entrants is not a big pressure for Coca-Cola at the moment.

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