Trends of Soft Drink Industry

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STEEP Analysis: Soft Drink Industry

Factors, other than those internal, affect an organization’s strategic options. It is therefore important for every industry to build a picture of how these organizations affect the process of planning. The STEEP analysis provides a tool through which decision-makers can build the industry image and as such develop safeguards within its strategic objectives. The soft drinks industry although diverse is driven by a few strong players including coca-cola, Pepsi, and Cadbury Schweppes (Pepsi CO 1; Michael,86). To fully comprehend the soft drink industry, STEEP analysis is used in this paper to evaluate the key elements including Social factors, Technological factors, Economic factors, Ecological factors, and lastly, political factors.

Social factors	More and more people are getting conscious of healthy lifestyles (Berry and Ed 67; Courtney, 231). This is dictating the kind of shift that the industry needs to adopt in its product line. This is the factor behind various companies switching to bottled water and colas. In most families, both spouses are increasingly involved in work and hence there is a need for time management. This amounts to increased demand for bottled water as well as soft drinks convenient and healthy to day to day lifestyles (Rankin 1). The mature population (37-55 years) also experience increased concern for their nutritional intake. People want to increase their life span and this directly impacts the soft drink industry as demand for non-alcoholic and healthier beverages rises (Zee-Sun, Yuna. et al 208; Toops 56). Various demographic patterns for instance age and gender also define the purchasing trends of soft drinks.
Technological factors	Technology is no doubt taking the world by storm. More and more people are relying on the internet for getting new information as well as purchasing of products (Howard, 19). Advertisements, marketing as well as promotional activities are increasingly reliant on technology, including internet and television. Advertisement not only creates brand awareness but also makes the consumers get more knowledge and make decisions on what to buy (Hannaford 12; Howard, 21). Technology is therefore an important selling point for products. Production is also dependent on technology. Additionally, as other factors of production rise and hence the overall cost of production rises along, the industry will be seeking new technologies that can lower production overhead (Courtney, 1997). This will help in keeping the product price within client reach. Additionally, technology has allowed the introduction of easy-to-carry cans which make it easier for people on the move to buy soft drinks without having to pay for the bottle separately.
Economic factors	The recent past has seen the worst economic downturns in many years. The global recess as well as the financial crisis have hugely impacted consumer spending (Goldsberry et al., 86). Fuel is a crucial factor of production. Sadly, its price has been on a constant rise of the recent past and hence impacting on production overhead. Inflation concerning raw materials and other factors of production has the potential of directing impacting on the cost of production (Majumder 23). Economic improvement in other countries, for instance, the BRIC countries have stimulated increased sales in these countries.
Ecological factors	Corporate social responsibility is a necessity in the current world. There is a need to adopt a manufacturing process that does not pose a threat to the environment (Corporate Bureau 56; George 102). The packaging is also a key ecological issue. There is a need to entrench the use of recyclable packages within the production line.
Political factors	Soft drinks are regulated by the FDA, within food categories. The manufacturing process is closely regulated by the government and hence there is potential for fines for failure to fully abide by the standard regulations (Howard, 102). Multiple jurisdiction operations subject the industry players to different legislation increasing the risk of legal actions, varying legal guidelines, tax rate changes, divergent legal interpretations, as well as different environmental legislation (Heaney & Rafferty 45). While developed countries have already established environmental laws, developing countries are yet to develop comprehensive laws and such susceptible to regular changes (Sicher 17). Increased competition by existing as well as emerging players. New players are increasingly scrambling for the soft drink market (Duffey, et al., 423; Harvard Business School 34). Political situations in international markets remain a possible challenge especially in the parts of the world considered volatile and prone to civil strife, changes in governmental regulations and restrictions as well as the ability to transfer capitals across the various national borders.

In general, the factors which influence the strategic decision within the soft drink industry are cross-cutting and diverse. Ranging from minor consumer behavior to the sophisticated aspects of meeting jurisdictional requirements, soft drink manufacturers find themselves having to carefully review the landscape of factors that impact their performance (Rainie 23). Innovation, technology, as well as politics also play an active role in dictating the direction to be adopted by players in the soft drink industry. With the major players already enjoying global presence, they find themselves having to deal with respective local players within the countries of operation and hence the need for strong marketing campaigns. The STEEP analysis breaks down the elements into chunks easily understandable and addresses within strategic plans of respective organizations.

Works Cited

Berry, John and Ed Keller. The Influential: One American in Ten Tells the Other Nine How to Vote, Where to Eat, and What to Buy. New York: The Free Press, 2003.

Corporate Bureau. Coke Sales fall 11% on Pesticide Controversy. 2003. Web.

Courtney, Harold. “Games Managers Should Play”.World Economic Affairs (1997): 91-102.

Duffey, et al. “Food Price and Diet and Health Outcomes”. Archives of Internal Medicine, 170 (5), 2010: 420–6.

George, Newton.Colas Called safe, but not at EU Standards. The San Diego Union, 2002.

Goldsberry, Klein. et al. Visualizing Nutritional terrain: A Geospatial Analysis of Pedestrian Produce Accessibility in Lansing. Michigan, USA, 2010.

Hannaford, Steven. G. Market Domination: The Impact of Industry Consolidation on Competition, Innovation and Consumer Choice. Westport, CT: Praeger, 2007.

Harvard Business School. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century. Harvard: Harvard Business School, 2008.

Heaney RP. “Carbonated beverages and urinary calcium excretion”. American Journal of Clinical Nutrition, 74 (3), 2001: 343–347.

Howard, Peter. “Consolidation in the North American organic food processing sector, 1997 to 2007”. International Journal of Sociology of Agriculture and Food, 16(1), 2009: 13-30.

Howard, Peter. “Visualizing consolidation in the global seed industry: 1996–2008”. Sustainability, 1(4), 2009: 266-1287.

Howard, Peter. “Visualizing food system concentration and consolidation”. Southern Rural Sociology, 24(2), 2009: 87-110.

Majumder, Singh. “Indian State Bans Pepsi and Coke”. BBC News, 2006.

Michael, Frajow. Liquid Candy: How Soft Drinks are Harming Americans’ Health. Washington DC, 2005.

Pepsi Co. PepsiCo’s R&D Team Focuses on Health and Wellness Products. Beverage Industry, 2011.

Rainie, Lee. How the Internet is Changing Consumer Behavior and Expectations. Washington, DC: Society of Consumer Affairs Professionals in Business, 2009.

Rankin, Jocelyne. Think bottled water is harmless? 2011. Web.

Sicher, John. D. Beverage Digest/Maxwell ranks U.S. soft drink industry for 2004, 2005. 2005. Web.

Toops, Diane. The Trends: Another Cola War Brewing?Food Processing, 2008.

Zee-Sun, Yuna. et al. “Cultural influences on new product adoption of affluent consumers in India”. The International Review of Retail, Distribution and Consumer Research, Vol. 18, No. 2, 2008, 203–220.

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Trends of Soft Drink Industry

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