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Exhibit 7: Analysis and Major Findings

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Exhibit 7: Analysis and Major Findings

Analysis:

This exhibit shows where a typical bottler in the US delivers its CSD products to retail outlets. This is based on year 2000 annual data. Graphically, this is shown in the following chart:

The exhibit also shows the market share of the major players: Coca-Cola, Pepsi, and Other Brands (taken as one) on their product deliveries to retail outlets.

It can be seen from Exhibit 7 that the two major players: Coca-Cola and Pepsi combined, dominate on all the retail outlets. This dominance is shown higher in the fountain and vending machine categories. The fountain sales is basically an advertising strategy for both companies that is called “paid sampling” (Yoppie, pp.5).They make sure that restaurants or fast food outlets retain most of the profit, which is to encourage the proliferation of more fountain outlets.
For each outlet, the bottler’s cost per case (Yoppie, pp. 21) is also shown. It is lowest for the foodstores at $3.53 per case and highest for the bending machines at $8.48 per case. This is because the total cost per case consisting of delivery, advertising and marketing is lower for the foodstores because the products are delivered in bulk quantities and bottler’s also spend little in advertising in these outlets because it is a necessity for people to go to foodstores or groceries regularly for their basic needs.
For each of the retail outlet categories, the profitability per case is $0.23 for the foodstores which is the dominant retail outlet.This net operating profit before tax(NOPBT), is lesser than $0.97 for the vending machine which is profitable for the bottler.On the other hand, it is considerably greater than $0.09 profit for the fountain, which used as an advertising medium is designed to be less profitable for the bottler but gives good profit for the fast food outlet(eg. KFC, McDonald’s,

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