Question

Your boss, Kerry Miller, has asked you to analyze the soft drink industry using Porter's five forces model. Which of the following represents a threat of a new entrant in the soft drink industry?

A. Pepsi requires stores that carry Pepsi products to commit to minimum orders of 1,000 cases.
B. Walmart negotiates a lower cost per bottle from Coke in exchange for premium shelf space in every Walmart store.
C. Zevia Natural Diet Soda begins selling directly over the Internet.
D. Vitamin water, fruit juice, coffee.

Answer 1

The threat of a new entrant in the soft drink industry is exemplified by Zevia Natural Diet Soda starting to sell directly over the Internet, challenging established brands through new market strategies.

Step-by-step explanation:

When analyzing the soft drink industry using Porter's five forces model, the threat of a new entrant refers to the potential for new competitors to enter the market. The correct answer that represents a threat of a new entrant in the soft drink industry is: C. Zevia Natural Diet Soda begins selling directly over the Internet. This is because Zevia is a new company entering the market, which could potentially take market share from established firms like Coca-Cola and Pepsi. Large advertising budgets and brand recognition are significant barriers to entry for new firms since matching the promotional budgets and brand presence of giants like Coca-Cola and Pepsi is a daunting task. Additionally, product differentiation is crucial; firms may need to grow substantially before they can afford significant marketing expenditures to create recognizable brand names. Therefore, a new company like Zevia entering the market indicates a direct threat to the established players.