Wednesday, April 1, 2015

How to Strategize Against Changing Tides of Customer Demand

 Readings from “Cola Wars Continue” were entertaining to say the least – as if destined for rivalry, Coca-Cola and Pepsi are constantly pulling and pushing against one another. However, due to recent changes in market trends, the CSD industry is seemingly under a threat. A similar example that came to my mind was that of fast-food chains. Worldwide, demands for fast-food chains are declining, resulting in loss of sales in major fast-food franchises such as McDonald’s and Burger King. Likewise, in South Korea, market share in restaurant industry for family restaurant franchises such as Outback and TGI Friday’s have been sharply falling in the past ten years. In the case of TGI Friday’s, it has closed over 70% of its franchise restaurants across the nation of South Korea. When the average global customer’s eyes are turning towards healthier, more nutritional drinks than traditional CSD’s that Coca-Cola and Pepsi take such pride in? How shall they proceed to maintain their brand value in this industry they so fiercely competed for, invested into, and pioneered? Should they entirely re-strategize and target a new market? “The Five Competitive Forces that Shape Strategy” and “Competitor Analysis” offer some guidelines for the future of these two companies.

Who are competitors against Coca-Cola and Pepsi? In my opinion, just to name a few, competitors would include any non-carbonated beverage producers as substitutes for Coca-Cola and Pepsi, such as VitaminWater, Naked, and so on. Should Coca-Cola and Pepsi stay in the CSD industry, there is very little threat for new entrants as the industry is on a decline as it is.

What should be their next strategic target to keep up with the changing market trends? Should they seek out a whole new field and release a healthier, more customer-taste-friendly products, their brand value and image may play both a positive and a negative role. With the pre-established structure for CSD business and consolidated system for bottling and supplying, starting anew would mean a whole new direction and a re-structuring for manufacturing, supplying, and marketing. However, their image as the world’s main “sugar-heavy” drinks producers may elicit a negative customer reaction despite a launch of new products.

The future of the Cola wars lay in a carefully calibrated positioning of both Coca Cola and Pepsi and the entire industry. For so long, Coca Cola advertised itself as the “Classic American Drink” while Pepsi maintained the drive for “the young.” Times are shifting, and unless they respond to the market trends by analyzing the competitor groups, popular demands, achievable level of profitability and market share, and the companies’ own vision and values, the Cola wars might soon lose its stand in the drink industry.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.