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AGENDAAGENDA
IntroductionIntroduction BartBart
Economic ForcesEconomic Forces TorreyTorrey
Social, Cultural, andSocial, Cultural, and
Demographic ForcesDemographic Forces ChadChad
Technological ForcesTechnological Forces BartBart
Global SegmentsGlobal Segments EdwardEdward
Competitive ForcesCompetitive Forces Leslie Leslie
ConclusionConclusion EdwardEdward
Segments of the Segments of the IndustryIndustry
Soft Drinks-$53.4 billSoft Drinks-$53.4 bill
Beer-$53.28 billBeer-$53.28 bill
Sports Drinks-$1.4 bill Sports Drinks-$1.4 bill
Bottled Water-$4 billBottled Water-$4 bill
Fruit Drinks-$1.4 billFruit Drinks-$1.4 bill
Water46%
Coffe & Tea33%
Other3%
Alcohol6%
Juice8%
Soft Drinks4%
Worldwide Worldwide Beverage Beverage
ConsumptionConsumption
Growth RatesGrowth Rates::
Fastest GrowingFastest Growing
– Water - 9.5%Water - 9.5%– Sports Drinks - Sports Drinks -
8.3%8.3%
OthersOthers
– Soft Drinks-3.4%Soft Drinks-3.4%– Fruit Drinks-1.7%Fruit Drinks-1.7%– Beer - 1.4%Beer - 1.4%
Driving ForcesDriving Forces
Expanding Market PowerExpanding Market Power Desire to fill Consumer NeedDesire to fill Consumer Need Personalization of the Personalization of the
Market SegmentsMarket Segments Building Brand RecognitionBuilding Brand Recognition Maximization of Growth Maximization of Growth
PotentialPotential
Economic Forces
Growth rateGrowth rate GDPGDP GDP per capitaGDP per capita InflationInflation UnemploymentUnemployment
Economics Around Economics Around the Globethe Globe
GDP $8.511trillion
$2.9trillion
$815billion
$4.42trillion
$1.8trillion
Growth 3.9% -2.6% 4.8% 7.8% 2.7%
GDP percapita
$31,500 $23,100 $8,300 $3,600 $22,100
Inflation 1.6% .9% 18.6% -.8% .9%
Unem-ployment
4.5% 4.4% 2.6% 10% 10.6%
U.S. Japan Mexico China Germany
Discretionary Discretionary Income in the U.S.Income in the U.S. Income is increasing in American Income is increasing in American
householdshouseholds Consumers are spending moreConsumers are spending more Consumers are saving lessConsumers are saving less
Impact of Impact of Economic FactorsEconomic Factors
Demand on beverages should Demand on beverages should remain stableremain stable
Brand label beverages should do Brand label beverages should do wellwell
Low interest rates and low inflation Low interest rates and low inflation provide new business opportunitiesprovide new business opportunities
Other Economic Other Economic Factors to ConsiderFactors to Consider
Lower restrictions on trade and Lower restrictions on trade and investment in foreign countriesinvestment in foreign countries
Foreign currencies are weak Foreign currencies are weak against the U.S. dollaragainst the U.S. dollar
YenYen German MarkGerman Mark Mexican PesoMexican Peso various Asian currenciesvarious Asian currencies
Markets for the Markets for the IndustryIndustry
Markets are becoming internationalMarkets are becoming international Latin American, Eastern European, and Latin American, Eastern European, and
Asia-Pacific region countries are favorableAsia-Pacific region countries are favorable JapanJapan ChinaChina BrazilBrazil MexicoMexico LithuaniaLithuania ThailandThailand United KingdomUnited Kingdom
Ethnic/Age Ethnic/Age DemographicsDemographics
Hispanics-33%Hispanics-33% African-Americans- African-Americans-
14%14% Asian-American-49%Asian-American-49% Baby BoomersBaby Boomers
– healthhealth– convenienceconvenience
Younger generationYounger generation
Target MarketTarget Market Focus on Focus on
traditiontradition Stress Stress
convenienceconvenience
Marketing Marketing Strategies/ Strategies/
ExpendituresExpenditures
Pepsi31%
Coca-Cola44%
DP/SU21%
Triarc4% •Sports
•Tradition
Beverage Beverage TechnologyTechnology
Product LabelerProduct Labeler
C C
HH
I C Pressure SensorI C Pressure Sensor
L AL A
L N L N
Life Top PackageLife Top Package
Injects Probiotic Bacteria ( Reuteri )Injects Probiotic Bacteria ( Reuteri )
Bacteria lives 5 to 6 DaysBacteria lives 5 to 6 Days
Extended Shelf LifeExtended Shelf Life
““Good Bacteria”Good Bacteria”
Superior PlasticsSuperior Plastics
Keep beverages from going flatKeep beverages from going flat
Increased Shelf LifeIncreased Shelf Life
Gas-Tight BarriersGas-Tight Barriers
Liquid Crystal PolymersLiquid Crystal Polymers
““Chill Can”Chill Can” Bad Bad Idea?Idea?
Heat the Whole WorldHeat the Whole World with with Greenhouse EffectGreenhouse Effect
Same Effect on Global Warming as Same Effect on Global Warming as Driving Car Driving Car 200 200 MilesMiles
Not EPA ApprovedNot EPA Approved
Synthetic CorkSynthetic CorkGuards against Cork ContaminationGuards against Cork Contamination
Affinity PolyoleifinAffinity Polyoleifin
PlastomerPlastomer
Natural Cork Natural Cork 8%8% Failure Failure
Research/SurveyResearch/SurveyTaste is one of top Determining FactorsTaste is one of top Determining Factors
Desire for “Adult Sophisticated and Desire for “Adult Sophisticated and
Complex Taste”Complex Taste”
Strategy Implemented by Strategy Implemented by
Ocean SprayOcean Spray
Important FactorsImportant Factors MergersMergers
Currency ratesCurrency rates
Health and Health and Stability of Stability of economieseconomies
World Cup SoccerWorld Cup Soccer
North AmericaNorth America
Highest per capita Highest per capita consumption in consumption in the worldthe world
Largest market Largest market salessales
Growth potential Growth potential relatively smallrelatively small
Latin AmericaLatin America
Population 481 Population 481 millionmillion
Young populationYoung population
Many individual Many individual cultures and cultures and tastestastes
EuropeEurope Population of 866 Population of 866
millionmillion
Strong increase with Strong increase with new governments in new governments in Eastern EuropeEastern Europe
Potential growth Potential growth very highvery high
Middle and Far Middle and Far EastEast
Population of 3.6 Population of 3.6 billionbillion
Largest potential Largest potential for growthfor growth
Largest population Largest population concentration on concentration on EarthEarth
+29 billion 8 ounce +29 billion 8 ounce servings per dayservings per day
AfricaAfrica Population of 594 Population of 594
millionmillion
Introduction of Introduction of bottled drinks into bottled drinks into everyday lifeeveryday life
increase amount increase amount of exposure on of exposure on individual individual communitiescommunities
Rivalry Among Rivalry Among Competing Competing
FirmsFirms
Level of Level of intensityintensity
ImplicationsImplications
Implications of Implications of IntensityIntensity
New Product IntroductionsNew Product Introductions
Sales Promotion OffersSales Promotion Offers
Price WarsPrice Wars
Media SpendingMedia Spending
Media Media ExpendituresExpenditures
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
1994 1995 1996 1997 1998
Coca-colaPepsiDr.PepperRC
Media Spending Media Spending FactFact
Soft drink companies spent Soft drink companies spent more than $530 million to more than $530 million to promote their brands in 1998.promote their brands in 1998.
Potential Entry of Potential Entry of New CompetitorsNew Competitors
N eed forLarge
F inancia lR esources
H igh B randEquity
for ExistingBrands
ExperienceC urves
Barriersto
Entry
Substitute Substitute ProductsProducts
Wine/SpiritsWine/Spirits MilkMilk JuicesJuices Fruit DrinksFruit Drinks Coffee/TeaCoffee/Tea Gourmet DrinksGourmet Drinks WaterWater
Bargaining Bargaining Power of Power of SuppliersSuppliers
Competitive PricesCompetitive Prices Dependable ServiceDependable Service Product QualityProduct Quality Supplier ReliabilitySupplier Reliability Turnaround TimeTurnaround Time
Bargaining Power of Bargaining Power of ConsumersConsumers
Buying Private Buying Private Label BrandsLabel Brands
Product LoyaltyProduct Loyalty
Changing Changing DemandsDemands
FactFact
One of every four beverages One of every four beverages consumed in America is a soft consumed in America is a soft drinkdrink
Average over 56 gallons of soft Average over 56 gallons of soft drinks per year per individual.drinks per year per individual.
MergersMergers The Coca-Cola Company The Coca-Cola Company
merges with Cadbury merges with Cadbury SchweppesSchweppes
ComplementsComplements
Snack Food IndustrySnack Food Industry– potato chipspotato chips– chocolatechocolate– peanutspeanuts
ConclusionConclusion $154 Billion Dollar Industry$154 Billion Dollar Industry Thriving World Market with High Thriving World Market with High
Growth PotentialGrowth Potential More “Health Conscious” WorldMore “Health Conscious” World Intense Competition with Barriers Intense Competition with Barriers
toto
EntryEntry