Porter\'s Five Forces Topic Case

Porter's Five Forces

Topic Case Analysis

Coke is 'not it:'

Marketing a better-tasting alternative to the industry standard of Coca-Cola

Coke is 'not it:'

Marketing a better-tasting alternative to the industry standard of Coca-Cola

Industry competitors

The most obvious industry competitor of a new 'better-tasting' cola would be Coca-Cola itself and Coke's main industry rival Pepsi-Cola. Regional brands, such as RC, have also gained a following, and some niche taste categories exist, such as Dr. Pepper, which has a more pronounced sweetness than other colas. Non-caffeinated sodas exist as alternatives, such as 7-Up, as well as hyper-caffeinated colas like Mountain Dew. Mountain Dew is produced by Pepsi, Co. The diversity of these offerings indicates the highly saturated nature of the cola market, and the fickleness of consumer tastes.

However, while consumers may demand a wide range of beverages, they can also be extremely loyal to their main soda brand of choice. Causing consumers to break with their usual brand purchasing pattern of Coke or Pepsi, and distinguishing a new cola amongst the Sprites, 7-Ups, Mountain Dews, and Mellow Yellows could prove difficult. Coca-Cola is such an iconic brand that, despite its dominance of nearly every other soda on the market (Pepsi also produces 7-Up, for example, while Coke distributes the wildly less popular Sprite) Coca-Cola has still been able to remain solvent and dominant worldwide.

Potential entrants

Because most sodas contain the demonized ingredient of high fructose corn syrup, there has been an increased demand for natural ingredients, even sugar, in sodas. By marketing a brand as a healthier alternative to traditional, mainstream colas, local brands have been able to establish an edge in some markets. The major brands have produced limited lines of 'throwback' soda made from real sugar, and smaller brands such as Jones Soda, made from cane sugar, have also been able to secure a loyal base of customers (Jones Soda, 2010, Official website).

Substitutes

When considering the possible substitutes for a beverage, it is important to ask: why do people drink sodas and colas? Several possible reasons exist, including quenching one's thirst (even though colas are actually dehydrating, many people still drink them for their perceived thirst-quenching potential), for the caffeine boost, and because of their sweetness.

One of the most obvious thirst-quenching substitutes for cola is water. Although this may seem like a humorous suggestion, more and more individuals are making this choice, because of health concerns. Athletes have a wide array of energy drinks and sports drinks from which to choose, and these drinks often claim to have high amounts of protein or replenish electrolytes. Even diet colas have been shown to have certain negative metabolic effects that may inhibit weight loss. Other substitutes for colas include the caloric but more nutrient-dense skim milk, which is often promoted as healthier for children, particularly in schools that have banned colas (Mohl 2006, p.1).

On a less healthy note, coffee is a substitute for the caffeine in soda: the availability of highly sweetened coffee and tea drinks also makes it easier for people who do not like the bitter taste of coffee to drink this beverage. Other high-caffeine substitutes include Red Bull. Finally, juices offer a 'sweetness' satisfaction as a substitute for colas but with a greater nutritional 'punch.'

Buyers

Schools are less apt to allow sodas to be sold within their confines than in the past. Buyers may be altering their buying habits, either out of health concerns, or of fear that soda taxes are increasing. Because of the wider array of choices, even soda-drinking consumers are drinking less soda.