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Non-CSD beverage Non-CSD beverage cytosine and Pepsi are attacking these categories themselves, each trying to become a be beverage company. Will this approach lead to brand dilution? Do oscillation risk becoming a less profitable job if they do not extend the brand? No good answers yet to these questions Pepsi, so far, has had more success and has been more aggressive with non-CSDs. 7/20/2011 32 academic session led by Prof. J. K. Mitra, FMS, Delhi Non-CSD beverage Non-CSD beverage The business illustration for non-CSDs is somewhat different from the classic CSD model (pp. 1-14) The supply chain and bottling requirements conduct complexity to the value chain, compared with the relatively simple CSD model. 7/20/2011 33 Session led by Prof. J. K. Mitra, FMS, Delhi Non-CSD beverage Non-CSD beverage The basic principles of the business remain the alike(p) atomic number 6 and Pepsi own the brand and control harvest-feast development Dedicated bottlers leverage economies of sc ope in diffusion (selling to same outlet, same trucks). There are exceptionse. g. , Gatorade is delivery through food wholesalers. As niche products, non-CSDs carried prices and margins that are higher for everyone in the value chain. /20/2011 34 Session led by Prof. J. K. Mitra, FMS, Delhi The Implications of Bottled pissing The Implications of Bottled Water Will gust and Pepsi be able to repeat their success with CSD in the water segment, or will a new competitive dynamic emerge? (page 14) 7/20/2011 35 Session led by Prof. J. K. Mitra, FMS, Delhi Bottled Water Bottled Water Repeat of CSD New (less attractive) Industry Structure Economies of scale in advertising Hard to create brand loyalty Barriers to entry in distribution Highly fragmented, competitive structure Similar economics of concentrate crocked High price sensitivity Little differentiation (e. . , taste) 7/20/2011 36 Session led by Prof. J. K. Mitra, FMS, Delhi Bottled Water Bottled Water Unless Coke and Pepsi can ge nerate brand loyalty and establish their brands, water is more likely to become a commodity-like product, where despite the scale and barriers in distribution, close of the profits will be extracted by the distribution channel (retailers) kinda than by the concentrate companies or (especially) the bottlers. 7/20/2011 37 Session led by Prof. J. K. Mitra, FMS, Delhi Summary of the CaseSummary of the Case 1. superstar of the clearest examples on how firms can create and exercise market power. 2. To really infer the opportunities for strategy, we have to look at the underlying economics of the firm and the industry, and its related to (upstream and downstream) parts. Without understanding the economics of the CP and bottler, we cannot understand the motivations and the likely success of moves like good integration. 7/20/2011 38 Session led by Prof. J. K. Mitra, FMS, Delhi