It up to and how to be

It
is important for a company to make decisions based on the external environment.
Even though a company can’t control what happens externally they still can make
better decisions on what they can change internally within their company in
order to continuously improve their brand. Coke and Pepsi are great examples of
this because they are continuing to expand their products for their consumers every
year. One of the reasons that Coke and Pepsi are so profitable is because they both
are big named companies that are competing with one another. Just like the former
CEO, Roger Enrico of Pepsi was saying that if they didn’t have a company like
Coke they would not be able to be as successful as they are today, because a
company that is as big as their own helps keep them on their toes and pushes
them to try to be the best (David B. Yoffie and Renee Kim, 2011, pp.1). This is
where Coke and Pepsi are using the Competitor environment idea. Competitor environment
will help them predict what the other company might be up to and how to be one
step ahead and predict the outcomes. The reason having competition is good is
because if there is only one big business they will have less of a reason to
innovate. Competition encourages to make change, which will make a company stand
out from other ones that are in the same field. Companies also have more of a
reason to improve their customer service because they want to have more
customers than their competitors who are selling a similar product as them. The
company will also have a better understanding of the core market and how to
reach their audience by targeting a specific group or demographic. We can also look
at the Five Forces Model. In the Five Forces Model threat of new entrants plays
a major role because the outcomes are promising when it comes to Coke and Pepsi.
These two companies want a unique product that stands out from one another, and
at the same time want to keep their customers and have them prefer their brand over
the other, this is known as Product Differentiation. Then there’s Distribution
Channel Access under threat of new entrants. Coke and Pepsi will offer retailers
such as Wal-Mart or other certain grocery stores to help with funding in marketing
in return for shelf space for their product. In Supply Chain you learn that the
location of your product in a grocery store makes a huge difference because you
want your customers to be able to easily view your item, which eventually leads
the customer having more of a reason to buy the product due to the way the
company has advertised it in the store. Coke and Pepsi also use the 5th force,
Rivalry among competing firms. Coke and Pepsi are nowadays also competing with other
drink companies that aren’t doing CSDs and are selling healthier drinks that
consumers nowadays are more interested in. Coke and Pepsi are coming up with
new ideas that will attract more consumers due to this change. These huge
companies have purchased other drink companies like Minute Maid, Duncan Foods,
etc. which expands their brand not just to CSDs. Now let’s look into pricing
and the way Coke and Pepsi are making their CSDs. Coke incorporated the 4th
Force, Threat of Substitute Products where the company decided to switch from
real sugar to high-fructose corn syrup, a way to save money. At the same time Coke
and Pepsi are substituting other ingredients nowadays due to the health trend.
Even though more people are health conscious today Coke and Pepsi are still
doing well despite that.

 

When
it comes to comparing the bottling industry versus the concentrate business
like Pepsi and Coke they aren’t as successful due to the power of the
suppliers. Coke and Pepsi are the main suppliers, so they have a greater
advantage and have more money to leverage. Bottlers have a lower profitability.
The two companies however are dependent on each other because they rely on the same
customers. The bottling industry does not want to compromise and has their own
idea of the way they want to run things. Then there’s the market strategy that the
concentrate company beats when it’s in comparison to the bottling industry. The
CCE also made huge changes when Coke decided to have an independent bottling
subsidiary.

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Even
though Coke and Pepsi have created an extremely profitable industry they still
have an opportunity to improve in the general external environment. I chose the
sociocultural segment. Even though Coke and Pepsi need to focus on becoming
more sustainable to help the environment I don’t think it will help capitalize their
company initially because they will have to first innovate, spend time and
money, which can also lead in loss because being sustainable can also be
expensive. In today’s society people are very opinionated they have strong views
when it comes to politics, women rights, etc. The reason I chose sociocultural
was because several months ago there was a Pepsi commercial with a model named
Kendell Jenner, which was a major controversy because many believed it did not accurately
portray the issue that was going on currently. It was a commercial where
Kendell Jenner opened a can of Pepsi that she handed to a police officer to help
stop a protest and have everyone get along in the end. Unfortunately, The New
York Times said the commercial came off as trying to “trivialize the widespread
protests against the killings of black people by the police.” (Daniel Victor,
2017, pp.1). It is crucial for big companies like Pepsi and Coke to keep in mind
when advertising a message to the viewers how it can be interpreted and to
respect cultural values and keep society’s opinions in mind.  This can help get more consumers because they
will be pulled to a product where a company recognizes current issues and depicts
them in a respectful manner. This will also will lower the chances of losing consumers.