Cola Wars Bottling vs Concentrate

The phrase “channel cooperation” refers to a situation where: a. all members of the channel earn equal margins on the products sold. b. there is harmony between the marketing objectives and strategies of channel members. c. all members of the channel have equal amounts of “power.” d. there is no “channel captain” and no need for one. e. channel members are kept in line by a “channel captain.” A 15. Which of the following is true? a. The optimal product mix is hard to detect. b. A very high percentage of profits from a few products of a product mix is a good indicator of the optimal product mix.

However, Pepsi began to slowly catch up to their status and in the early 1980s, Coke had only a one percent lead over Pepsi in exclusive drinkers. Coke was very concerned with this because there product was more readily available than Pepsi’s and they spent more than $100 million more annually on advertising and they really didn’t want Pepsi to usurp their rank as the leading cola. However, Pepsi had been running commercials on television where they put Coca Cola and Pepsi head-to-head in a blind taste test that came to be known as the Pepsi Challenge. In this challenge, Pepsi had faithful coke drinkers take a sip from two different glasses and pick which sample they preferred. One of the cups was marked with a “Q” and the other was marked with an “M.” They consistently chose the cup marked “M,” which would be the cup holding Pepsi. When Coca Cola heard of this challenge, they immediately wanted to prove it to be false, so they conducted blind taste tests themselves. However, when their tests were performed, they got the same results as Pepsi, and the majority of the testers, 57%, preferred Pepsi over Coke. These results really concerned Coca Cola, and they began to do a plethora of other market research projects. They couldn’t figure out exactly what it was that made testers prefer Pepsi, but eventually decided that it must be the taste. From this came the creation of what came to be known as “New Coke.” Coca Cola had their scientists experiment with the secret

c) The method showed that the pricing that was being used for the three products were not correct. The price at which the pumps were being sold was low were high whereas flow controllers were low. Because of which the most profitable product was coming out to be flow controllers whereas it was actually the least profitable.

Pepsi vs Coca Cola For more than a century, Coca Cola and PepsiCo have been the major competitors within the soft drink market. By employing various advertising tactics, strategies such as blind taste tests, and reward initiatives for the consumer, they have grown to become oligopolistic rivals. In the soft-drink business, “The Coca-Cola Company” and “PepsiCo, Incorporated” hold most of the market shares in virtually every region of the world. They have brands that the consumers want, whether it be soft-drink brands or in PepsioCo’s case, snacks. With only one soft-drink market, the two competitors have no choice but to increase sales by stealing the other competitor’s clients. This led to the term, the “cola wars” which was first used

1. A/B. Buffalo Ale: A. Direct Materials: 62.80 Direct Labor: 108.00 Labor Hours: 18 Hours 18 x 15.57 = 280.26 Cases Created: 22 x 24 (Quantity of Bottles/Case) = 528 Total Cost Per Batch: $451.06 Cost Per Bottle = 451.06/528 = $0.85/Bottle B. Direct Materials: 62.80 Direct Labor: 108.00 Fermentation Days: 13.06 x 3 = 39.18 Direct Labor Hours: 1 x 18 = 18 Machine Hours: 0.07 x 110 = 7.7 Number of Orders: 8.36 x 2 = 16.71 Quality Control Inspections: 5 x 2.16 = 10.8 Bottles Produced: .10 x 528 = 52.8 Total Cost Per Batch: $315.99 Cost per Bottle: $0.60 Bismark Bock: A. Direct Materials: 88.95 Direct Labor: 72.00 Labor Hours: 12 Hours 12 x 15.57 = 186.84 Buffalo Ale: 1.05 Per Bottle x 528 = $554.40 (Selling Price Per Batch) Labor Allocation: 554.40 - 451.06 = 103.34 GM GM Percentage: 103.34/554.40 = 18.64% ABC Method: 554.40 - 315.09 = 239.41 GM GM Percentage: 239.41/554.40 = 43.18% Bismark Bock: 1.50 Per Bottle x 384 = 576.00 (Selling Price Per Batch) Labor Allocation: 576.00 – 347.79 = 228.21 GM Percentage: 39.62% ABC Method: 576.00 – 614.94 = (38.94) GM Percentage: (6.76%) Four Heads Stout: 1.40 Per Bottle x 432 = 604.8 Labor Allocation: 604.8 – 369.96 = 207.84 GM Percentage: 34.37% ABC Method: 604.8 – 377.96 = 226.84 GM Percentage: 37.5% 3. Both systems have their advantages and disadvantages, the labor-based allocation method provides a fast straightforward method for businesses with labor intensive processes that in many businesses make up the majority of these costs. For this microbrewery however, especially within overheads the percentage of costs labor attributes towards is relatively minimal. Therefore reducing the effectiveness of such a method. ABC however represents a more in depth look at cost allocation and within such a business where there are a huge variety of factors involved looking at a more segmented form of activity based cost allocation is extremely important.

case). Supermarkets, the principal customer for soft drink makers, were a highly fragmented industry. The stores counted on soft drinks to generate consumer traffic, so they needed Coke and Pepsi products. But due

Rivalry: The rivalry between Coca-Cola and Pepsi is extremely high; however, both companies continue to remain profitable. Prior to the 1980s, pricing wars negatively affected profitability for Coca-Cola and Pepsi. After Coca-Cola renegotiated its franchise bottling contract and both companies increased concentrate prices, the rivalry began to focus on differentiation and advertising strategies. Through creative advertising campaigns, such as the “Pepsi Challenge” where Pepsi ran blind taste tests to demonstrate that consumers

Wilkerson’s competitive situation is that of declining profits due largely to chronic and severe price-cutting on pumps, the company’s main product in terms of units produced (Exhibit 4). Being a standard commodity product, demand for pumps is price elastic, and customers look for the cheapest price irrespective of the company they buy from. With its competitors constantly lowering their prices, Wilkerson’s only option for remaining competitive in the pump market was to match these price cuts. As a result, the actual selling price of pumps is $87, well below the target selling price of $107.69 (Exhibit 2). Consequently, Wilkerson’s actual gross margin of 19.5% on pumps is well below the company’s uniform target line of 35% for all

27.3 – Changes in the Operating Cycle Operating Cycle = number of days in inventory + number of days in receivables a) Receivables average goes up. Operating cycle increases. b) Credit repayment times for customers are increased. Operating cycle increases. c) Inventory turnover goes from 3 times to 6 times. Operating cycle decreases. d)

Beverage and bottling industry For beverage and bottling industry, the cost of acquiring and converting aluminum and PET resin constitutes the majority of bottlers ' packaging costs. Packaging costs represent approximately 45% of

Caribbean Brewers: Transfer Pricing, Ethics and Governance Case Summary Gera International is a well established international brand of beer that is ranked amongst the top three brands of beer in the world. With transportation prices rising, Gera International decided to purchase a plant in Antigua in 2005 and they renamed the subsidiary,

Inventory Control (Coca-Cola Beverage and Bottlers) In all of Coca-Cola’s plants, inventories are made up of supplies, concentrates, raw materials and syrups. These are valued at a lower

Although financial information is not available for all competitors, the top 3 competitors show a discrepancy in production efficiency. This would lead the analysis to support the existence of other significant factors influencing the value chain outside of production. These could be the cost of supplies, distribution and marketing.

. Soft Drink Industry Five Forces Analysis: Soft drink industry is very profitable, more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this, using the five forces

Analyzing Cola War Case based on Porter’s Five Competitive Forces Due to globalization and this fast-growing business environment, firms struggle to earn above-average returns. They strive to establish a competitive advantage in order to earn higher returns. It is not enough for firms to establish a competitive advantage, they should also