These are key characteristics of Soft Drink Market.
1. Size of the organization enable the company to negotiate the exclusive supplier for a specified period of time and purchases in a large quantity that dramatically lower their costs. Large organization can have effective distribution channels to make the business more competitive.
This factor make the company in industry diversify a lot to gain market share. Merger and consolidation has been needed in the soft drinks to increase the economies of scale; for example, PepsiCo acquired Quaker Oats, who bought Gatorade which will help increase its market share.
2. Brand loyalty is a big isssue of the soft drink industry. Many consumers of carbonated beverages buy only a particular brand, and hardly purchase others. This characteristic make brand image important. Every company spends a lot on marketing and advertising in order to create emotional relationship between brand and customer.
3. Price is also a key factor because consumers who has not preferred in a strong brand will select the product with the most competitive price. This factor makes branding more important. If the company can build relationship between the brand and customer, the company will get the competitive advantage because the customer will look for the brand, not the cheapest price. The company can increase the price for its branding to have higher revenue.
4. Global expansion is a important factor in the success of a company within this industry. Due to American market saturation, Movement into the global industry is required in order to maintain growth. This characteristics cause the company to find new market, like China which has the greatest number of population in the world. The companies invest highly in the infrastructure and the marketing in order to build brand loyalty in this large group of consumer.
5. High capital investment for warehouses, trucks, and labor, and economies of scale is a great barrier for new entrants . This factor limits the number of competitor in this industry, so, there is just Coca-Cola and PepsiCo which are the main leader. Thus, these two companies compete each other for a long time, and try to come up with a campaign that will beat its main rival.
6. Product Innovation is also the important factor. The company should come up with the differentiated product which can respond the need of consumer. There is a lot of brand extension, such as coke cherry. The companies try to invest in a new product that can respond their customer’s need in that period. But some new product can hurt a lot their brand image, such as new coke.
7. Health Issue is also the key factor that affect the consumption of Soft drink. Manufacture in a range of flavors and marketed to both children and adults, soft drinks have been widespread in American society for decades. While the drinks may prove refreshing and palatable, the sugar and other chemicals found in many soft drinks can prove detrimental to your health.
Ingredients contained in many soft drinks are themselves sources of concern, for example, caffeine, when consumed in excess, is lead to the sleep disruption and anxiety, and some critics question the health effects of added sugars and artificial sweeteners. According to the researched from University of Sheffield, Sodium benzoate has been inspected as a possible reason of DNA damage and hyperactivity. Other substances have negative health effects, but are present in such small quantities that they are unlikely to pose any substantial health risk provided that the beverages are consumed only in moderation.
Obesity
The consumption of sugar-sweetened beverages is associated with weight and obesity. Weight gain and obesity develop owing to chronic overconsumption of calories, causing your body to store the excess energy as fat. While overconsuming any type of food can cause weight gain, soft drinks can easily add hundreds of calories to your daily caloric intake, facilitating weight gain. The consumption of sugar-sweetened soft drinks can also be associated with many weight-related diseases, including diabetes, metabolic syndrome and cardiovascular risk factors, and elevated blood pressure.
Bone Loss
According to the researches and studies, drinking soda correlates with a decrease in milk consumption along with the vitamin D, vitamin B6, vitamin B12, calcium, protein and other micronutrients. Phosphorus, a micronutrient, can be found in cola-type beverages, unfortunately there may be a risk in overconsumption.Phosphorus and calcium are used in the body to create calcium-phosphate, the main component of bone. However, the combination of too much phosphorus along with too little calcium in the body brings a degeneration of bone mass.
Tooth Decay
One major health problem assorted with drinking soft drinks is progressive tooth decay. Most soft drinks contain high concentration of simple carbohydrates: glucose, fructose, sucrose and other simple sugars. Your teeth, similar to bone, contain mineralized tissue that begins to dissolve after exposure to acid. Bacteria in your mouth feed on the sugars within soft drinks, and release tooth-dissolving acid as a byproduct of sugar metabolism, according to Elmhurst College.
All companies realize this problem and try to launch new brand in the new market to catch up the trend; for example, Coke launched Minute made, while PepsiCo launched Tropicana. Both are in juice market.
Source : http://www.csbsju.edu/documents/libraries/zeigler_paper.pdf
http://www.livestrong.com/article/402079-health-problems-and-soft-drinks/#ixzz2CUCjMkYL
http://en.wikipedia.org/wiki/Soft_drink
http://www.ifood.tv/blog/how-do-soft-drinks-affect-your-exercise
http://thesodasite.com/wp-content/uploads/2012/09/
