MAN 320F CASE STUDIES EXAM 2
1. Cola Wars: Barriers of Entry: Brand
equity Limited shelf space, vending slots, and
fountains
The bottling system is very capital intensive and exclusive
2. Cola Wars: Scale economies in advertising: - Exhibit 8 "bang for the buck"
- Coke spent $15 million per share point
- Dr. Pepper spent $19 per share point
- Gatorade spent $38 million per share point
3. Cola Wars: How do soft drink companies get away with charging $1-2 for a
product when the "healthy" substitute (tap water) is free?: - Substitutes not always available
- CSD often an impulse buy
- Lifestyle choices
- Addiction
- Drinking Coke or Pepsi as a status symbol
4. Cola Wars: Porter's five forces of competition: - The Power of Customers
- The Power of Suppliers
- The Threat of Potential Entrants
- The Availability and Comparability of Substitutes
- Competition Among Existing Competitors
5. Cola Wars: Bottlers have had very little power in the last 25 years even when
independent: - High switching costs
- Franchise agreement lock down bottlers
- Concentrate producers otter significant benefits
1/
13
, - Competitors are concentrated
6. Cola Wars: Rivalry: Coke and Pepsi avoid downward
spiral High degree of perceived ditterentiation
Competition is focused on everything except price
2/
13
1. Cola Wars: Barriers of Entry: Brand
equity Limited shelf space, vending slots, and
fountains
The bottling system is very capital intensive and exclusive
2. Cola Wars: Scale economies in advertising: - Exhibit 8 "bang for the buck"
- Coke spent $15 million per share point
- Dr. Pepper spent $19 per share point
- Gatorade spent $38 million per share point
3. Cola Wars: How do soft drink companies get away with charging $1-2 for a
product when the "healthy" substitute (tap water) is free?: - Substitutes not always available
- CSD often an impulse buy
- Lifestyle choices
- Addiction
- Drinking Coke or Pepsi as a status symbol
4. Cola Wars: Porter's five forces of competition: - The Power of Customers
- The Power of Suppliers
- The Threat of Potential Entrants
- The Availability and Comparability of Substitutes
- Competition Among Existing Competitors
5. Cola Wars: Bottlers have had very little power in the last 25 years even when
independent: - High switching costs
- Franchise agreement lock down bottlers
- Concentrate producers otter significant benefits
1/
13
, - Competitors are concentrated
6. Cola Wars: Rivalry: Coke and Pepsi avoid downward
spiral High degree of perceived ditterentiation
Competition is focused on everything except price
2/
13
