Discussion Question: If you look at competitive dynamics, competitors are more likely to respond when attacked in a market where the competitor relies on that market for a large portion of its sales. Look at current events to tell me why is this so? Give examples. What ‘dynamic' is at work that would cause that type of response? Again, be specific and give examples - do not regurgitate the textbook - tell me in your own words.
Peer Initial post:Competitive dynamics begin with an action by a firm and a response by another. Two companies that have faced intense rivalry would be Coca Cola and the Pepsi Corporation. Both companies bottle and sell soft drinks, they operate in the same markets and oftentimes they gain the other's market share dependent on certain factors (marketing, advertising, consumer demographics, etc.). As Pepsi has emerged with new drinks and new marketing and advertising promotions focused on entertaining consumers and possible consumers with celebrities glitz and glam, Coca Cola responds by expanding its territory with its known products and changing its marketing techniques to forge ahead.
Even though they did not respond with the same tactics they did fight ferociously to win back the market share they lost and they have retained their number one position ever since. Another dynamic that they both failed to recognize were new entrants into the market. They spent so much time coming up with ways to compete with each other that energy drink makers were able to slide in and take market share from the both of them which they have been unable to gain back (Fortune, 2013). The dynamic at play between Coca Cola and Pepsi is a strategy of plagiarism and overwhelming force. Coca Cola determined what made Pepsi a threat and emulated those qualities and traits. This allowed for Coca Cola to take back its position in the soft drink industry. Coca Cola as mentioned above also undertook a massive marketing campaign in order to regain market share.
They relied on advertising and heavy promotions, undergoing huge packaging changes and other cosmetic changes to combat Pepsi. Coca Cola spent millions of dollars undergoing this transformation in order to differentiate themselves from PepsiCo. Even though there are consumers who are brand loyal there are other dynamics at play, which is that both companies have consumers in a shared pool whose sales they are constantly trying to win back through multiple sales and promotions as well as trying to garner retail shelf space in stores as well as attempting to drive down costs to spend more on marketing efforts (Warren, 1999). Resources and value also play a key role in how the two companies compete. Since both companies tend to have access to the same amount of capital and resources their competitive dynamic would be based more on value.
The value that their customers place on Pepsi over Coca Cola (and vice versa) as well as other factors such as customer service and quality, assets, the actual products, and innovation all add to a company's value thus their competitive dynamics. The effect of these dynamics on consumers is the ultimate decider on who wins the competition. Learning the competition's values and by use of a value capture model (VCM) can help to determine what areas a firm is lacking in and what they need to do to in order to gain or maintain a competitive advantage (Ryall, 2013). How Pepsi and Coca Cola responds to competitive strategies is also the key to who "wins".
Need peer response to peer initial post (Expound on peer initial post): Word Count 150