1. Potential of new entrants into theindustry:Thepotential of new entrants is high as beverage industry requires a large levelof investments, marketing, and product development and to compete with the existingbrands like Coca cola and Pepsi which has a strong brand image and huge loyalcustomer base.
The ability of existing brands to ensure same product taste andexcellent customer service has made further raised the entry barriers to thisindustry. Following could be hurdles for new entrants§ Huge investment and marketing§ Loyalty of customer with coca cola§ Huge distribution area and channels§ Enormous bottling network 2. Power of suppliers:Theraw material of coca cola includes color, caffeine, sugar, etc. The main rawmaterial required is flavor syrup which coca cola produce by itself so otherraw material required is very common and there is large number of suppliers ofthese commodities. So these suppliers have no bargaining power because thesecommodities are readily available and as coca cola requires them in bulkquantity every supplier is readily available to provide them raw material. Dueto lack of product differentiation, the suppliers do not hold a strong positionand bargaining power in front of Coca cola and thus cannot raise pricesaccording to their wish. Thus the supplier has very low bargaining power. 3.
Power of customers:Beverageindustry comprises of corporate buyers as well as individual buyers. The mainbuyers of coca cola are fast food industry, restaurants, catering services,super marts. They have a high bargaining power because they buy in bulks. Thesecustomers have different level of bargaining power.
Fast food industry hasbargaining level because they are the main customers. The shop keeper andretailers do not have a bargaining power because they buy in less quantity sothey could not have great profits. Therefore it can be stated that thebargaining power of buyers is moderate4.
Threat of substitute products:Beverageindustry have many substitutes such as juices, energy drinks, tea, coffee, etc.as there is a lot of awareness about health issues people are now trying tohave healthy drinks but still these substitutes need huge advertising , brandloyalty and make sure people are changing their choices. As it need hugeadvertising and marketing cost it is difficult to give tough completion toexisting players like coca cola. Coca cola spends huge amount of money onadvertisement and marketing campaign to create brand equity and to increaseloyal customers. 5. Competition in the industryTheintensity of competition in the beverage market is moderate. The maincompetitor is Pepsi while other manufacturers of soft drinks and juices have alower market share. Because they are small scale industries and do not have apotential to affect the market share of coca cola, as it requires a hugeadvertisement and marketing.
Coca cola is one of the biggest companies in theworld to hold the market share. Coca cola has a well-established brand name andloyal customers which could be easily affected by other competitors§ Biggest competitor The beverageindustry is well known as duopoly with Pepsi and coca cola competing eachother. Both of them have the majority market share while the rest have a littlemarket share. Coca cola and Pepsi are giving though time to each other on thebasis of advertisement and marketing strategies instead of pricing.These both are the main players because local markets likegourment cola and other have no effect on their sales.