Competitive Analysis - Essay Example

Its cost only includes market research, advertising and promotion hence enabling the company to minimize on the cost of production. On the other hand, bottlers are provided by syrup by the concentrators’ where they then they mix it with sugar, treat with local water and carbonate it. Finally, they bottle it and then deliver it to the retailer. All these activities make the bottling business capital intensive as it requires high technology in production. Returns received by concentrate producers greatly differ from those received by the bottlers due to various reasons.

The main factors as indicated in the above paragraph are the financial cost incurred by both companies (Fleisher & Bensoussan, 2007). Bottlers for instance incurs low cost of production as it only concentrates mainly on advertising, market research and product development whereas bottlers activities involve investment of huge amount of capital as its main concern is to archive its main goal of improvement and modernization of the bottling lines which as a results requires high amount of capital (Fleisher & Bensoussan, 2007).

Secondly, the other cause of variance in returns is the availability of raw materials. The concrete producers require fewer raw materials hence its major spending is on purchase of cheap inputs like citric acid, natural flavors and also caffeine; on the other hand bottlers require large number of production materials. They invest in purchase of inputs such as packaging materials like cans, bottles and also sweeteners such as aspartame which prove to be expensive hence reducing their profitability as they are unable to reduce on the outflow of money (Fleisher & Bensoussan, 2007).

The returns received by bottlers are also less than those received by the concentrate producers due to the risk levels each of the company face. Concentrate producers are responsible for the brand promotion and also invest hugely on trademark to stimulate sales; on the other hand, bottlers have little risk in their operations as they already have an advantage i.e. have a famous name which is well known all over the world .This development provide them with stable returns and low risk (Bensoussan & Fleisher, 2008).