Transcript Social, Cultural, and Demographic Forces
AGENDA Introduction Economic Forces Social, Cultural, and Demographic Forces Technological Forces Global Segments Competitive Forces Conclusion Bart Torrey Chad Bart Edward Leslie Edward
Introduction
+ $154 Billion Industry
Segments of the Industry Soft Drinks-$53.4 bill
Beer-$53.28 bill
Sports Drinks-$1.4 bill
Bottled Water-$4 bill
Fruit Drinks-$1.4 bill
Worldwide Beverage Consumption
Water 46% Other 3% Soft Drinks 4% Coffe & Tea 33% Alcohol 6% Juice 8%
Growth Rates
: Fastest Growing Others – – Water - 9.5% Sports Drinks - 8.3% – – – Soft Drinks-3.4% Fruit Drinks-1.7% Beer - 1.4%
Driving Forces
Expanding Market Power
Desire to fill Consumer Need
Personalization of the Market Segments
Building Brand Recognition
Maximization of Growth Potential
Economic Forces
Growth rate GDP GDP per capita Inflation Unemployment
Economics Around the Globe
GDP Growth $8.511
trillion 3.9% $2.9
trillion -2.6% $815 billion 4.8% GDP per capita Inflation $31,500 1.6% $23,100 $8,300 .9% 18.6% Unem ployment 4.5% U.S.
4.4% Japan 2.6% Mexico $4.42
trillion 7.8% $3,600 -.8% 10% China $1.8
trillion 2.7% $22,100 .9% 10.6% Germany
Discretionary Income in the U.S.
Income is increasing in American households Consumers are spending more Consumers are saving less
Impact of Economic Factors
Demand on beverages should remain stable Brand label beverages should do well Low interest rates and low inflation provide new business opportunities
Other Economic Factors to Consider
Lower restrictions on trade and investment in foreign countries Foreign currencies are weak against the U.S. dollar Yen German Mark Mexican Peso various Asian currencies
Markets for the Industry
Markets are becoming international Latin American, Eastern European, and Asia-Pacific region countries are favorable Japan China Brazil Mexico Lithuania Thailand United Kingdom
Social, Cultural, and Demographic Forces
Ethnic/Age Demographics
Hispanics-33% African-Americans 14% Asian-American-49% Baby Boomers – – health convenience Younger generation
Target Market
Focus on tradition Stress convenience
Marketing Strategies/ Expenditures DP/SU 21% Triarc 4% Coca-Cola 44%
•Sports •Tradition
Pepsi 31%
Beverage Technology
Product Labeler C H I C Pressure Sensor L A L N
Life Top Package
Injects Probiotic Bacteria ( Reuteri ) Bacteria lives 5 to 6 Days Extended Shelf Life “Good Bacteria”
Superior Plastics
Keep beverages from going flat Increased Shelf Life Gas-Tight Barriers Liquid Crystal Polymers
“Chill Can” Bad Idea?
Heat the Whole World Effect with Greenhouse Same Effect on Global Warming as Driving Car 200 Miles Not EPA Approved
Synthetic Cork
Guards against Cork Contamination Affinity Polyoleifin Plastomer Natural Cork 8% Failure
Research/Survey
Taste is one of top Determining Factors Desire for “Adult Sophisticated and Complex Taste” Strategy Implemented by
Ocean Spray
World Segment
Coverage Area
Important Factors
Mergers Currency rates Health and Stability of economies World Cup Soccer
North America
Highest per capita consumption in the world Largest market sales Growth potential relatively small
Latin America
Population 481 million Young population Many individual cultures and tastes
Europe
Population of 866 million Strong increase with new governments in Eastern Europe Potential growth very high
Middle and Far East
Population of 3.6 billion Largest potential for growth Largest population concentration on Earth +29 billion 8 ounce servings per day
Africa
Population of 594 million Introduction of bottled drinks into everyday life increase amount of exposure on individual communities
Competitive Forces
Porter’s Five Forces Model
Rivalry Among Competing Firms
Level of intensity Implications
Implications of Intensity
New Product Introductions Sales Promotion Offers Price Wars Media Spending
Media Expenditures
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 1994 1995 1996 1997 1998 Coca-cola Pepsi Dr.Pepper
RC
Media Spending Fact
Soft drink companies spent more than $530 million to promote their brands in 1998.
Potential Entry of New Competitors
Barriers to Entry Need for Large Financial Resources High Brand Equity for Existing Brands Experience Curves
Substitute Products
Wine/Spirits Milk Juices Fruit Drinks Coffee/Tea Gourmet Drinks Water
Bargaining Power of Suppliers
Competitive Prices Dependable Service Product Quality Supplier Reliability Turnaround Time
Bargaining Power of Consumers
Buying Private Label Brands Product Loyalty Changing Demands
Fact
One of every four beverages consumed in America is a soft drink Average over 56 gallons of soft drinks per year per individual.
Mergers
The Coca-Cola Company merges with Cadbury Schweppes
Complements
Snack Food Industry – – – potato chips chocolate peanuts
Conclusion
$154 Billion Dollar Industry Thriving World Market with High Growth Potential More “Health Conscious” World Intense Competition with Barriers to Entry