This is the twenty-second paper—and the 23rd and 24th studies--that follow the footsteps of twenty-two studies that have tried to analyze the competitive profiles of U.S. consumer markets: Men’s Shaving Cream, Beer, Shampoo, Shredded/Grated Cheese, Refrigerated Orange Juice, Men’s Razor-Blades, Women’s Razor-Blades, Toothpaste, Canned Soup, Coffee, Potato Chips, Alkaline AA Battery, Facial Tissue, Toilet Paper, Paper Towel, Disposable Diapers, Sanitary Pads, Automatic-Dishwasher Detergent, Hand-Dishwashing Detergent, Household Liquid Non-Disinfectant Cleaner, Heavy-Duty Liquid Laundry Detergent, and Deodorant.Michael Porter associates high market share with cost leadership strategy, which is based on the idea of competing on a price that is lower than that of the competition.However, customer-perceived quality—not low cost—should be the underpinning of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets, a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. The middle class is the socio-economic segment that represents about 40% of households in America.Quality, however, is a complex concept, consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation, as a symbol of quality.The U.S. Carbonated Beverages is a mega-market that had retail sales of $14,178 million in 2008. It had six segments: Cola Regular, Cola Diet, Non-Cola Regular, Non-Cola Diet, Lemon-Lime Regular, and Lemon-Lime Diet. We have combined them in two studies: Cola Regular and Diet Carbonated Beverages, and Non-Cola--Lemon-Lime Regular Carbonated Beverages, with 2008 retail sales, respectively, of $6,639 million, and $5,415 million.For both markets we have focused our analysis on the 12-Oz size because it was the most popular.Using Hierarchical Cluster Analysis, we tested two hypotheses: (I) That the market leader is likely to compete in the mid-price segment, and that (II) Its unit price is likely to be higher than that of the nearest competition.For the Cola Carbonated Beverages market, the data did not support Hypothesis I for both 2008 and 2007, because Coca-Cola Classic Regular, the market leader, was a member of the super-premium segment.Similarly, the data did not support Hypothesis II for both 2008 and 2007 either, because Pepsi Regular, the runner-up, had a unit price that was higher than that of the market leader, Coca-Cola Classic Regular.For the Regular Non-Cola--Lemon-Lime Carbonated Beverages market the data also did not support Hypothesis I because Mountain Dew, the market leader, was a member of the premium segment for both 2008 and 2007.However, the data did support Hypothesis II, because, Dr. Pepper, the runner-up, had a unit price that was lower than that of the market leader, Mountain Dew for 2008 and 2007.We found that relative price was a strategic variable, as we have hypothesized.We also discovered two strategic groups in the Cola Carbonated Beverages market, and four in the Non-Cola--Lemon-Lime Regular Carbonated Beverages market. A pattern is emerging in price-quality segmentation analysis. In thirteen of the twenty-four studies—that exclude Men’s Razor-Blades, Women’s Razor-Blades, Coffee, Toilet Paper, Paper Towels, Disposable Diapers, Sanitary Pads, Liquid Heavy-Duty Laundry Detergent, Deodorants, Cola Carbonated Beverages, and Regular Non-Cola--Lemon-Lime Carbonated Beverages—the market leader was found to be a member of the mid-price segment, as we have hypothesized.Also, results in eleven markets supported Hypothesis II.
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