VIEWS: 29 PAGES: 2 POSTED ON: 7/18/2012
Question: Explain about “Pepsico Brands - Competitive Analysis”. Solution: PepsiCo produces soft-drinks, snack foods and other beverages. Its operations are conducted through PepsiCo, Frito-lay, and Quaker brands both domestically and internationally. The competitive analysis of PepsiCo is done using Michael porter’s Five Force Model. Rivalry among existing competitors: The PepsiCo and Coca-Cola form a strong duopoly market in this industry. The desire to be the market leader or to corner a large market share leads to great rivalry between these two giants. Greater competition for market share and increased cost pressure has resulted in weaker companies losing market share to these two companies (Kazmi, 2002). Threat of New entrants: The beverages and food industries are highly saturated, as a result of which the barriers to new entrants are generally very low. With strong presence in the market Pepsi and Coco-cola enjoys good relationship with retail channels. This has enabled them to defend their position in the market thus increasing the barriers for new entrants. Threat of Substitutes: There seems to be a perceptible threat of substitutes emerging as replacements with increasing popularity of fresh juices. This occurred due to the shift in consumption pattern of the people towards increased awareness of health consciousness. This is further enhanced by the declining prices of substitutes like Tea, Milk, Beer, Coffee, and Wine etc. Juices already enjoy high levels of penetration and frequency as a result of habitual drinking by consumers in the morning (Mintel, 2009). Bargaining power of Buyers: The bargaining power of buyers is more in case of purchases made at super markets and mass merchandisers. This will reduce the profitability of PepsiCo. Whereas in case of then vending machines the buyers do not enjoy any bargaining power. Bargaining power of Suppliers: The primary suppliers are those who supply sugar and packaging materials. As both sugar and aluminium are present abundant in the market, also there exist huge competition in these two industries, the bargaining power of the suppliers is low.