Cola Wars In China Case Study Analysis Sample

Presentation on theme: "Cola Wars in China Case Study Analysis."— Presentation transcript:

1 Cola Wars in ChinaCase Study Analysis

2 Index Competitive Position: Competitive Advantage
Competitive Strategy: The analysis of strategic positionSustainable Competitive AdvantageSources of Cost AdvantageCore competencyEconomies of ScaleExperience Curve EffectsEconomies of Scale ActivityVertical IntegrationValue Chain AnalysisMarketingMarketing Tactics - ActivityMarket ResearchMarket PositioningMarketing StrategyRationale and ObjectivesCase StudyHow to Handle a Case StudyQualitative ResearchBusiness ResearchMarketing researchMarket researchProduct researchWahaha Group – Indicative Research QuestionsIndustry Analysis and Competitive StrategyContext AnalysisIndustry InformationMarket StructuresCompetitor AnalysisPorters 5 ForcesCola WarsWater WarsThe Coca-Cola CompanyPepsiCo, Inc.Industry Analysis and Competitive Strategy ActivityMarket Analysis Activity

3 Index Life Cycles, Turnarounds, Entrepreneurs Life Cycle Analysis
Product Portfolio AnalysisProduct Portfolio Analysis – ActivityCrises ManagementFinancial CrisesPublic Relations CrisesStrategic CrisesEntrepreneursIntrapreneurshipGlobal Strategies and International AdvantageInternational BusinessMultinational CorporationsGlobalisationGlobalisation ActivityInternational TradeSWOT AnalysisWahaha Group’s Strategic OptionsEvaluation and MeasurementMeasuring the Positioning (Marketing)Business CaseBenchmarkingGap AnalysisRisk, Uncertainty and StrategyRisk managementGame TheoryDecision MakingCost-benefit AnalysisRecommended TextsResourcesCase Study Research

4 Rationale and Objectives
The resource covers the fundamentals of case study research and analysis. It focuses on a Chinese soft drinks company, Hangzhou Wahaha Group Co., Ltd and its position in global Cola Wars as well as the issues of business research including research objectives, and methodology.ObjectivesThe objectives of this resource are tooffer a holistic view business and managementdemonstrate the case study research and analysis processes, including methods, techniques and evaluationfamiliarize students with the principles and techniques of qualitative research and strategic analysisdevelop and enhance students’ transferable skills in knowledge management, strategy development and business communications.develop and enhance students’ web research skills.

5 Rationale and Objectives
Required TextStrategy Analysis and PracticeJohn McGee, Warwick Business School Howard Thomas, Warwick Business School David Wilson, Warwick Business School

6 Case StudyA case study is a particular method of qualitative research. Rather than using large samples and following a rigid protocol to examine a limited number of variables, case study methods involve an in-depth, longitudinal examination of a single instance or event: a case.They provide a systematic way of looking at events, collecting data, analyzing information, and reporting the results.As a result the researcher may gain a sharpened understanding of why the instance happened as it did, and what might become important to look at more extensively in future research. Case studies lend themselves especially to generating (rather than testing) hypotheses.How to Handle a Case StudyApproaches to Authentic Learning Experience

7 Qualitative ResearchInvolves investigating participants' opinions, behaviors and experiences from the informants' points of view.Is contrasted with quantitative research in that it does not rely on quantitative measurement and mathematical models, but instead uses logical deductions to decipher gathered data dealing with the human element.Compared to quantitative research, it is more expensive, has smaller sample sizes and is hard to measure.

8 Business ResearchBusiness Research is the systematic investigation of facts, knowledge, and information that relate to businesses or the world of business. There are several major types of business research.Types of business researchMarketing researchMarket researchProduct researchClick on Image

9 Wahaha Group Indicative Research Questions
How will Wahaha’s multinational competitors respond to ‘Future Cola’ and other Future Series carbonated drinks achieving an impressive 18% market share (2002)?How should Wahaha prepare for these responses?How should it continue to increase its maker share?Case StudyBusiness CaseClick on Image

10 Industry Analysis and Competitive Strategy
Objective: to determine the opportunities and threats that exist for firms within a competitive environmentIndustry analysis and competitive strategyContext AnalysisIndustry InformationMarket StructuresMarket AnalysisCompetitor AnalysisCola WarsWater WarsClick on ImageClick on Image

11 Industry Analysis and Competitive Strategy
The Coca-Cola CompanyPepsiCo, Inc.Industry Analysis and Competitive Strategy ActivityClick on Image

12 Context AnalysisContext analysis, also known as environmental scanning, is a method to analyze the environment in which a business operates.Environmental scanning mainly focuses on the macro environment of a business. But context analysis considers the entire environment of a business, its internal and external environment. This is an important aspect of business planning because such an analysis allows the business to gain an insight into their strengths and weaknesses and also the opportunities and threats posed by the market within which they operate.The main goal of this analysis is to analyze the environment in order to develop a strategic plan of action for the business.MethodDefine market or subjectTrend AnalysisCompetitor AnalysisCompetition levelsCompetitive forcesCompetitor behaviorCompetitor strategyOpportunities and ThreatsOrganization AnalysisInternal analysisCompetence analysisSWOT-i matrixStrategic PlanExampleDefine market

13 Industry Information Beverage Digest Beverage World BevNET
National Soft Drink AssociationBeverages (Nonalcoholic) IndustryThe Soda Pop StorySoft Drinks and HealthClick on Image

14 Market StructuresIn economics, market structure describes the state of a market with respect to competition.There are two kinds of market structures that are usually discussed: perfectly competitive market structure and imperfectly competitive market structure. Perfectly competitive market structure is an ideal state of a market in which the competition amongst the buyers and sellers is likely to be perfectly balanced.Click on ImageLarger Map

15 Market StructuresClick on ImageLarger MapThe imperfectly competitive structure is quite identical to the realistic market conditions where some monopolists, oligopolists, and duopolists exist and dominate the market conditions.

16 Market Analysis Market Analysis Related Readings Market Analysis 1
Market Analysis ActivityClick on ImageLarger Map

17 Competitor AnalysisCompetitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potentialcompetitors.Competitor arrayCompetitor profilingMedia scanningNew competitorsSee alsoExternal linksCompetitor Analysis – A brief guidePorters 5 ForcesClick on Image. Sensory profiling can help you to understand how your product differs from the competition's and how to improve it.

18 Cola WarsBackgroundCola Wars is the term used to describe the campaign of mutually-targeted television advertisements and marketing campaigns in the 1980s and 1990s between Coca-Cola and Pepsi-Cola. They first began showing people doing blind taste tests in which they preferred one product over the other, then they began hiring more and more popular spokespersons to promote their products.They focused particularly on rock stars; notable soft drink promoters included Michael Jackson (for Pepsi) and Paula Abdul (for Diet Coke). One example of a heated exchange that occurred during the Cola Wars was Coca-Cola making a strategic retreat on July 11, 1985, by announcing its plans to bring back Coke Classic.Pepsi ads often focused on regular people, particularly the young (and young-at-heart) and those in the future, choosing Pepsi over Coke, supporting Pepsi's Positioning (marketing) as "The Choice of a New Generation."Pepsi Stuff represented a major assault in the Cola WarsClick on Image

19 Global Cola Wars Global Cola Wars (and other familiar scenes)
Cola wars add spirited edge Move over, hard lemonade and Zima: Jack Daniels and Miller Brewing prepare to debut hard colaOver a Century of Cola Slogans, Commercials, Blunders, and CoupsMarketing in ChinaChinese enter Cola War!Naming in Chinese, the Coca-Cola StoryA turncoat in the Cola WarsThe Yin and Yang of ChipsCompany ProfileClick on Image

20 Water WarsBottled water is a multibillion-dollar growth industry - on its way to becoming the most consumed beverage in America outside of soft drinks. Should you buy it, bottle it, or invest in it? Here's a look at the major players, the outlook for investors and consumers, and even the results of one writer's taste test.The playersOne might salivate over the prospect of investing in this kind of growth. But doing so in any significant way in your portfolio is difficult. Mega-multinationals have taken over the industry so their bottom lines are only affected minimally by water sales.Click on Image

21 Water WarsThe largest player by far is better known in the U.S. for chocolate than water. Nestle S.A.'s (OTCBB: NSRGY) water division sells 70 bottled water brands in 160 countries. Its North American subsidiary sells nine domestic brands, including Arrowhead, Poland Spring, and Deer Park, and five imported brands, including San Pellegrino and Perrier. Nestle Waters North America, Inc. had revenues of $2.1 billion in 2001 (2002's numbers aren't available yet). Its market share is 32.5% and growing.Click on Image

22 Water WarsPepsiCo (NYSE: PEP) comes in second place with its Aquafina product, which currently only has a 10% market share but is the top-selling single-serve bottled water in the U.S. In 2001, Aquafina sales grew nearly 45% and comprised 4% of all of Pepsi's beverage sales.Coca-Cola (NYSE: KO) falls into third place, its Dasani product grabbing an 8.5% market share in 2001. Sales grew a hefty 40% in 2002, however. Coca-Cola also recently entered into a production, marketing, and distribution partnership with France's Groupe Danone, owner of a number of niche water brands, including Evian. Over the last three years, Coke's global bottled water business has grown at a compound annual rate of 59%.Click on Image

23 Water WarsFacts and figures   Key figures   Executive committee   Publications Brands portfolio   Nestlé Brands   International brands   Local brands Our markets   North America   Europe   Middle- East / Africa   Asia - Oceania   Latin America A rapidly expanding marketClick on Image

24 The Coca-Cola Company Company Analysis Bottlers Products and brands
Brand PortfolioFailuresCriticismsMonopolistic PracticesDiscriminationCoca-Cola in ChinaWorld of Warcraft Coke commercial from ChinaCoca-Cola targets rural ChinaCoca-Cola in IndiaCoca-Cola in UKPraisesHistorySanta ClausCorporate GovernanceAnnual ReportsStockKey NumbersClick on Image

25 The Coca-Cola Company See also External links Coke's Sinful World
Coca-Cola: A ClassicCritical Perspectives

26 PepsiCo, Inc. Company Analysis History Corporate governance
Annual ReportKey NumbersFormer top executives at PepsiCoSocial issuesDiversityPepsiCo brandsPartnershipsMarketingCriticismsLong-term health effectsPepsi in IndiaPepsi in BurmaRivalry with Coca-ColaTroubled popstar endorsementsSee alsoNotesExternal linksGatoradePepsi's New ChallengeClick on Image

27 Top Competitors Cadbury Schweppes Dr Pepper Schweppes 7UP A&W
Canada DryDiet Rite®Hawaiian PunchMott’sSlush PuppieSnappleSunkist SodaWelch’sClick on Image

28 Industry Analysis and Competitive Strategy Activity 1/2
Task 1Identify the key assets that Wahaha Group possesses that might give it some competitive advantage. Think about the physical assets, human assets as well as its image when compiling your list.Related ReadingsMade in ChinaWahaha Claims Top Beverage SpotBased on British Airways Activity byClick on Image

29 Industry Analysis and Competitive Strategy Activity 2/2
Task 2Use Porter's Five Forces model to analyse the market.You will need to think about the extent of the competition it is facing - how this has changed, the different needs of its customers, who its suppliers might be and what influence they can have (think oil prices, for example!) and the nature of the substitutes to air travel (are businesses finding new ways of putting people in touch with each other, for example?)

30 Market Analysis Activity
This Activity is designed to give you the opportunity to conduct a market analysis on a business using the PowerPoint Presentation [244 KB] and Mind Map as guides to help you. Look at these resources first and ensure that you understand the meaning of the key terms.TaskConduct a market analysis of Wahaha Group. You will need to consider the points indicated here.Related ReadingsWahaha Corporation – MarketBusterBeverage tycoon plans more expansionClick on Image

31 Competitive Position: Competitive Advantage
Competitive Strategy: The analysis of strategic positionSustainable Competitive AdvantageSources of Cost AdvantageCore CompetenciesEconomies of ScaleEconomies of Scale ActivityExperience Curve EffectsVertical IntegrationValue Chain AnalysisMarketingMarket ResearchMarket PositioningMarketing StrategyMeasuring the Positioning (Marketing)Click on Image

32 Sustainable Competitive Advantage
Companies that compete by selling similar products (or even substitutes) to the same group of customers constitute an industry.A company that is more profitable than its rivals is exploiting some form of advantage.The benchmark for profitability is the company's cost of capital.To consistently make profits in excess of its cost of capital - economic rent - the company must possess some form of sustainable competitive advantage (SCA).ContentsBarriers to entryMarketingStrategic managementMarketing managementCore competencyPositioningMarketing mixMarketing planMichael PorterStrategic planningStrategySynergyPorter 5 forces analysisValue chain

33 Sustainable Competitive Advantage
A firm possesses a SCA when it has value creating processes and positions that cannot be duplicated or imitated by other firms that lead to the production of above normal rents.A SCA is different from a competitive advantage (CA). However, these above normal rents can attract new entrants who drive down economic rents.A CA is a position a firm attains that lead to above normal rents or a superior financial performance.Click on ImageLarger Image

34 Sustainable Competitive Advantage
The processes and positions that engender such a position (CA) is not necessarily non-duplicable or inimitable. It is possible for some companies to, temporarily, make profits above the cost of capital without sustainable competitive advantage.Click on Image

35 Sources of Cost Advantage
Core CompetencyA company's core competency are things that a firm can (also) do well and that meet the following three conditions specified by Hamel and Prahalad (1990).It provides customer benefits,It is hard for competitors to imitate, andIt can be leveraged widely to many products and market.A core competency can take various forms, including technical/subject matter know-how, a reliable process, and/or close relationships with customers and suppliers (Mascarenhas et al. 1998).It may also include product development or culture such as employee dedication. Modern business theories suggest that most activities that are not part of a company's core competency should be outsourced.MarketingMarketing managementSustainable competitive advantage

36 Sources of Cost Advantage
Economies of ScaleBusiness EconomicsClick on ImageLarger Map

37 Economies of Scale - Activity
PlayStations at £115, colour printers for under £30, free scanners, keyboards for less than £10, a mouse for the same price as a mouse mat, CD and DVD players for less that £40! What have all these products got in common? The answer is economies of scale. The firms involved in the manufacture of these items produce them in vast quantities.Image: Sony PlayStation controls - the company have shipped 60 million units since PlayStation 2 was released. Copyright: Patricia BenitezClick on Image

38 Experience Curve Effects
The learning curve effectThe experience curve effectReasons for the effectExperience curve discontinuitiesStrategic consequences of the effectCriticismsSee alsoBooks and articlesExternal linksLearning curve calculatorClick on ImageThe learning curve effect and the closely related experience curve effect express the relationship between experience and efficiency. As individuals and/or organizations get more experienced at a task, they usually become more efficient at them. Both concepts originate in the old adage, "practice makes perfect".

39 Value Chain Analysis

40 Marketing Types of markets The Marketing Mix Four Ps Seven Ps
TechniqueCriticism of marketingList of marketing topicsMarketing Tactics - ActivityClick on ImageLarger MapMarketing, as suggested by the American Marketing Association, is "an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders".

41 Market Positioning Market Research Other types of business research
Types of marketing researchMarketing research methodsSome commonly used marketing research termsSee alsoStrategic ManagementGeneral approachesThe strategy hierarchyHistorical development of strategic managementBirth of strategic managementGrowth and portfolio theoryThe marketing revolutionThe Japanese challengeGaining competitive advantageExternal LinksMarket PositioningProduct positioning strategyProduct positioning processPositioning conceptsMeasuring the positioningSee alsoConjoint AnalysisFactor AnalysisListsReferencesClick on Image. Source: ©2006 Framework Partners Inc

42 Marketing StrategyClick on ImageA marketing strategy serves as the foundation of a marketing plan. A marketing plan contains a list of specific actions required to successfully implement a specific marketing strategy.

43 Marketing StrategyClick on Image. Larger Image.An example of marketing strategy is as follows: "Use a low cost product to attract consumers”.

44 Marketing StrategyOnce our organization, via our low cost product, has established a relationship with consumers, our organization will sell additional, higher-margin products and services that enhance the consumer's interaction with the low-cost product or service.“Click on ImageA strategy is different than a tactic. While it is possible to write a tactical marketing plan without a sound, well-considered strategy, it is not recommended. Without a sound marketing strategy, a marketing plan has no foundation.Marketing strategies serve as the fundamental underpinning of marketing plans designed to reach marketing objectives. It is important that these objectives have measurable results.

45 Marketing Tactics - Activity
Image: Having impressive adverts may be a useful marketing tactic but the role of the marketing function involves much more than this. Do customers recognise the brand? Is there a unique selling point (USP) that can be used to differentiate your product or service from another? How will the firm manage its cash flow? All these factors and more are part of the tactics that are used in the marketing function. Copyright: Gunter HoferClick on Image

46 Life Cycles, Turnarounds, Entrepreneurs
Competitive strategy: moving from theory to practice Life Cycle AnalysisProduct Portfolio AnalysisBoston MatrixGE MatrixProduct Portfolio Analysis – ActivityCrises ManagementFinancial CrisesPublic Relations CrisesStrategic CrisesNegotiation / Conflict ResolutionEntrepreneursIntrapreneurshipEntrepreneuring / VenturingClick on Image

Social Media Strategy: Learning from the Online Cola War

May 20, 2012 • STRATEGY & MANAGEMENT, TECHNOLOGY, Global Business, Social Media

By Fang Liu and Willem Smit

The battle between Coca-Cola and Pepsi1 has been one of the longest and most arduous in the history of brand competition. Over the years, these cola wars have been fought over distribution, mass-advertising via in-store competition, sports event sponsorship and video game integration. Now, with the emergence of social media, the war reignites on a new battlefield. We present the cola war in social media in two countries – the U.S. and China – and draw insights for companies trapped in a social media dilemma on how to compete with your rivals, build a consistent and coherent brand image online and offline, adapt your social media strategy in different cultures and aim for both short-term and long-term return.

Reasons to invest in social media marketing
Globally, the golden age of the cola carbonate market is over. Traditional cola drinking countries such as the U.S. still have high consumption per capita but have seen and will see negative volume growth since the beginning of the millennium. In traditionally low consumption countries, the growth rate is expected to slow, as in China where, although the volume growth was plausible – 7% from 2005 to 2010, the growth rate is forecast to slow down to less than 1% and the consumption per capita is only one twentieth of its U.S. consumers. (See Table 1)


Understandably, to generate further growth, both Coca-Cola and Pepsi have diversified into the healthier drinks market, with drinks such as tea, but neither of them is ready to give up the cola market yet. The cola market is their signature product and a strong position here is important to reflect both firms’ corporate umbrella brand. Future growth in the cola category needs to come from higher value and higher prices and market share increases. Branding will play an important role in creating a superior image and extracting that intangible value. These are not reasons to let the strong positions in these cash cow markets erode.

As two marketing giants, Coca-Cola and Pepsi are also leaders in social media branding. We shall discuss their practices in the U.S. and China – two totally different competition environments – and their relative successes and failures in pioneering social media marketing.

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