Launching a product in energy drinks industry

Launching a product in energy drinks industry Gatorade is a brand of sports drinks, which is available in multiple flavors, and is manufactured by Quaker Oats Company, which is now a part of PepsiCo. Ltd. Gatorade is basically into the production of sports drinks which are used by athletes and non-athletes all around the world. Energy drinks are those non-alcoholic drinks that serve the purpose of an energy-booster and revitalization. These drinks usually do not emphasize on energy derived from the calories they contain, but rather through a choice of caffeine, vitamins, and herbal supplements that the manufacturer has combined. We have come up with a new product, an energy drink under the banner of Gatorade, Which is called as Powergade. The Energy drink that we plan to launch in the market, shall meet all the requirements that any consumer expects from such a drink. Unlike the other Gatorade drinks, this energy drink will be a carbonated drink and shall consist of all those ingredients like caffeine, sugar and other vitamins, which are present in an ordinary energy drink. But compared to other energy drinks, our product will have other features which make it suitable for consumers of all age groups. This drink will be initially launched in the Indian market, since the scope of promotion in this financial year in India is very good, because of the Common Wealth Games 2010 and also the soon approaching ICC Cricket World Cup in 2011. Branding through such popular and large scale events will definitely be a good advantage to the product, and large number of people can be made aware of the drink as these above mentioned events have a huge fan following. Marketing Objectives SMART Objectives: Setting objectives and milestones is of crucial importance for any planning activity and is the core of its success, or failure. Knowing how to set objectives is not exactly rocket science in terms of complexity, but any strategist should know the basic rules of how to formulate and propose objectives. SMART illustrates 5 characteristics of an efficient objective; it stands for Specific Measurable Attainable/Agreed/Accepted Relevant/Realistic Time1. For our new Energy Drink, Powergade; the following objectives are going to be taken into consideration, for an effective and goal-oriented marketing process: To increase the market share of our product in the Indian drinks market up to 10% till June 2011 To increase profit by 10% by the end of financial year 2010-11 To propagate the brand name and the product in all tier 1 and tier 2 cities in the first 3 months of the launch. To survive in the current recession and slowdown period in the Indian Market. To have a constant growth with of 10% each year To improvise sales by 25% quarterly. To increase the market share of our product in the Indian drinks market up to 10% till June 2011: This is one of the most important objectives, as the energy drinks market in India is increasing and improvising at a constant rate. A lot of companies and brands have come into this field of food and drinks industry, hence increasing the competition in the existing market. We plan to have at least 10% of the market share by the period of one year. This will be of a great advantage to meet our other objectives  [1]  . To increase profit by 15% by the end of financial year 2010-11: Profit is one of the most important aspects for any commercial organisation. We, by launching this new energy drink in the market; plan to increase the profit of the brand Gatorade. Since cheap and effective energy drinks have a high demand in the existing market, high profits from this new product can be expected. Hence we plan to increase the net profit of the company by a minimum 15% by the end of this financial year. To propagate the brand name and the product in all tier 1 and tier 2 cities in the first 3 months of the launch: It is a very important challenge for any brand to have a strong goodwill in the market. If the company is expecting to make profits out of the launch of new product, it is very much essential to have good promotion tactics, and to make the new product, as well as the brand name popular amongst the population of the market. Hence, we plan to promote our brand and our new product Powergade in the markets of tier 1 and tier 2 cities within the 3 months launch period of our product. This will give a boost to the sales and result in higher profitability and market share. To survive the current recession and slowdown period in the Indian Market: The recent slowdown in the world economy has affected a lot of industries in the global market. This has led to low income levels and failure of new brands and their products in its launch period itself. Hence, it is a great challenge to survive and maintain a successful launch in the current market conditions. We plan to have effective promotion and sales strategy, so that our new product Powergade can survive in the market. To have a constant growth of 10% each year: As one of our core objectives, we also plan to have a constant growth of 10% each year. By growth, it is meant that we can expand this division of the company. This means to increase production and hence improvise sales. By constant growth, employment can also be assured and new opportunities will be given to fresh ideas. Growth also includes coming up with new flavours and variations in our Energy Drink. That is why; the goal of having a growth of 10% each year has been set. To improvise sales by 5% every month: Sales is one of the most important aspects of any company dealing with manufacturing and selling of goods. Sales can be considered the heart of any organisation. If the sales are smooth, it generates higher profit, improves the goodwill of the company in the market, which leads to having a higher rate of market share in the industry. Hence it has been set as an objective to improvise sales by at least 5% each month to have a better productivity and profit. Target Market/s The Drinks Market Food and drinks industry is one of the largest industries in the world. Its basic target is to cater the population with energy supplement products, which are essential for the survival of any living being. Food and drinks industry consists of products which have inelastic demand for e.g. salt, sugar, water etc. as well as products with elastic demand such as protein supplements and expensive alcoholic drinks. Substantial part of the consumer income is spent on this industry worldwide. Today the drink market is booming in India and it has become a complete new segment in the Indian market. As per the climatic conditions in India, major part of the population tends to buy drinks, especially cold drinks t o quench their thirst. The sales of drinks gets at its all time high during the summer time, this is because the climate is hot and humid in most of the places in India, which exhausts people, which leads them to buy drinks. Drinks market is becoming very popular all around the world, since many people are now attracted towards the drinks market. There are many types of drinks that are available in the market, ranging from fruit drinks to alcoholic drinks. The Indian Drinks market can be categorized in to different sub markets. The following chart shows the various categories and sub-categories of drinks available in the Indian market. The drinks market is broadly classified into: Alcoholic drinks market Non- alcoholic drinks market Alcoholic drinks are those which have high concentration of alcohol content. It is generally considered to be harmful because of its carcinogenic and hazardous nature. Unlike countries having cool climates, the Indian climate is comparatively warm, hence the body cannot adapt to the heat that is attained from such drinks. That is why alcoholic drinks are generally considered to be leisure drinks and the number of regular customers is comparatively less in India. A few famous types of alcoholic beverages are as follows: Beer Vodka Champagne Rum Breezier The Non-Alcoholic drinks, as the name suggest, do not contain any alcohol and are generally considered to be a safe drink for all type of consumers. The non- alcoholic drinks market can be further classified into two type types: Non- carbonated Carbonated Non- carbonated drinks are not concentrated and have no fizz in them, they are like Fresh juices, even Gatorade is a non- carbonated drink which doesnt have fizz and caffeine. These non- carbonated drinks are health based drink, which help for a healthy body, and doesnt harm a person, but revitalizes them, and get back their energy. Examples of Non-carbonated drinks are Real juices Gatorade. Carbonated drinks are those drinks which are concentrated and have carbon content in them, which is generally called fizz. In carbonated drinks energy drinks also come in, which consists of caffeine, which is a certain type of drug, caffeine is there but in a small quantity, it does the work to keep the consumer active and energetic. Examples of carbonated drinks are: Pepsi, Thumbs-up Coke Redbull Cloud 9 Energy drinks are beverages that are meant to be a quick fix for the exhausted and sleepy. Energy drinks are canned or bottled beverages sold in convenience stores, grocery stores, and bars and nightclubs (in mixed drinks). Most energy drinks are carbonated drinks that contain large amounts of caffeine and sugar with additional ingredients. Energy drinks are beverages that also contain vitamins such as vitamin B, taurine and herbal extracts, which help us to gain energy  [2]  . Market Segmentation The whole market can be segmented into different target groups, which are shown in the chart below. Children, who are of age of 11- 15 years, can buy this product, but they may not be having enough money and knowledge about any energy drink to go on and buy an energy drink. And it should also be noted that energy drinks contain caffeine for which children should not be encouraged. Teenage youth will surely be attracted to a product, as they are the younger generation who are prone to experimentation, and they shall buy new products. The energy drink also benefit these people as they are very active and have a very hectic and stressful schedule, this energy drink can generate energy in them and remove all stress and exhaustion. Generally, youth of this age get allowances from their parents, so it depends on the amount they get to spend for a certain period of time.Consumers, who get low allowances, might not spend a lot of money for such drinks, but those consumers who get moderate or high allowances can certainly afford such energy drinks. Hence, it can be said that youth at this age can be divided into two different target groups. Same goes in for Young adults. Unlike the teenage youth, they may not go be so experimental with new products in the market, but this energy drink will surely be of an advantage to them as they also have a hectic and stressful life, this energy drink, will give them energy to work all through the day. These people will be working, so definitely they will have money to buy the product. Even still, the young adults can be divided in to two target groups depending on their income levels. Skilled executives are working class people who work all through out the day and have a very stressful life, they dont do any kind of physical activity, but they can still buy our energy drink to feel refreshed and energetic to work, and will have a complete different approach towards their work and shall be more time efficient. Their income level is generally good enough, so energy drinks will certainly be affordable by this target group. Unskilled Labor are also working class people but they are generally into physical labor, which requires a lot of energy to do work, they really need a energy drink to boost up their stamina and to work for longer hours. Yet again, the income level of such consumers plays a very important role, unlike the skilled executive, their income level is less, and hence affording such drinks is questionable, even though this drink is of much more use to these people. Last but not the least are the Sports athletes, they are recommended to have a energy drink, this is because their work is to participate in sports and physical activities, at the end of the day the sport makes them exhausted, so to take out the exhaustion they need to have an energy drink which not only makes them energetic but also provides them with proteins and vitamins, so that they perform their regular tasks for long hours. This energy drink also increases stamina of these athletes. Potential Segments So we can say that by the above consumers there can be five potential consumer groups which will buy our product, and so we shall concentrate majorly on these consumer groups and they are: Teenage youth with high spending capacity, Young adults of both income groups, Skilled executives, Sport athletes. We target teenage youth as they are risk takers and love to experiment new drinks, thus we will target them who are with high allowances so that they can buy more of our product. We target young adults as they work, and have a stressful lifestyle with work and some other extra curricular activities thus, this energy drinks will be very good for them. As they are working they can buy the energy drink. We target the skilled executives as they have high spending capacities and since they have tedious work procedures and long working hours, the energy drink is for their advantage. And the sports athletes, these we will target as they have to drink a energy drink because of their lifestyle and constant practice of their sport, these athletes have a rigorous routine of sports and for them to not be exhausted, they need to have a energy drink. Criteria for selecting target markets CONSUMPTION: Our energy drink can be consumed by youngsters, working people and sports athletes. Pregnant women are not encouraged to consume our product as it dangerous for them. The reason for consuming our product is because our product refreshes you and quenches thirst faster than other liquids (except water) and it balances our sugar and calorie intake. LIFESTYLE: As our lifestyle is changing day by day, consumers get influenced by new products in the market, especially young generation from the age group 15-25 years. This age group has the resources to buy a new product as they are innovators. They always try exploring new products that come in the market. There are few people who do not have the resources to buy the product but are eagerly wishing to have that product. The consumers of age, ranging from 25-35 is independent considering their spending, and these people have the capacity and resources to buy and consume our product. CONSUMERS ATTITUDE: Consumers attitude towards a new product consist of many things. Few criteria are listed below: Packaging. Taste Brand name Brand ambassador of the product Importance to Packing plays a major role as consumers get excited when they see a product which looks very attractive. BENEFITS: Our Product is comparatively excellent from rest of the drinks because it does not contain artificial flavors and it can be consumed by all age groups starting from 11 years and above. It contains caffeine, vitamins, and minerals which balances the sugar level in our body. For sport athletes our product is like an apple to their eye because our product acts like an energy booster for them. Caffeine after workout provides them with good amount of energy that they have lost during workout and re-builds it. DEMOGRAPHIC: Demographics play a major role which selecting out target market. Our product would mainly be launched in Metropolitan cities like Delhi, Mumbai, Bangalore, Chennai and Kolkata, which come under category of tier 1 and cities like Ahmadabad, Hyderabad, Goa and etc. come under tier 2 cities. Population of the mentioned cities is more and consists of innovators and early adaptors. So our initial target would have a strong consumer base in the markets of these cities. Applying Criteria to potential segments Potential Target Groups Criteria Teenage Youth (high spending capacity) Young Adults (Low income group) Young Adults (High Income Group) Skilled Executives Sports Athletes 1.Consumption 2.Lifestyle 3.Attitude Towards New Products 4.Benefits 5.Gographic Considering the above table, we have concluded that our major concentration would be on the following target groups: Teenage Youth, Young Adults with high income, and Sports Athletes. Customer Profile The above mentioned target groups consists of those consumers, who generally indulge into experiment with new goods and services in the market. They easily take the risk of trying out new products. These consumers also have high capacity to spend on such leisure products, since their allowances or income is generally high. These consumers are generally found in tier 1 and tier 2 cities as they have more exposure to the market and all the on-going promotional activities. They are benefited with our energy drinks, as for the teenage youth, most of their time is spent in their academics, and hence they have busy schedules. Other than that, they also indulge in various physical activities that is taxing to their bodies. The energy drinks help them keep fresh and energetic throughout the day, and hence the results in their respective endeavors is comparatively good Young adults are benefited with our product, as this is the group which is mostly indulged into hard work, be it office or on-site work. They work long hours, and especially in growing cities, travelling and cut-throat competition is also a factor that can tire any individual. Having our energy drink, which contains caffeine; it helps these consumers in being awake without actually affecting their health. The efficiency of these consumers is improvised and they can work longer hours keeping up with the task at hand. Sports athletes will have a complete different approach and usage for this drink. They are generally into more of physical work compared to the above mentioned groups. They need supplements to replenish their body and rejuvenate them. Energy drinks play an important role for such refreshment. Though, they do not prefer carbonated drinks during their games, but they certainly consume it during practice sessions and work outs. Customer perceptual positioning map For this task, our group performed a sample survey, by preparing a questionnaire. A sample of a blank questionnaire can be viewed in Appendix 1. In this survey, we asked different people questions relating to our existing brand Gatorade, its competitor brands and energy drinks. After the survey we could derive the following conclusions. In the survey, it was asked, that which of the attributes play an important role in an energy drink. The attributes included: Effectiveness Taste Packaging Style/Trends Flavor options. The conclusion derived from this survey gave us the following result. Pie chart 1. From this research we concluded that EFFECTIVNESS and TASTE are the appropriate attributes that the consumer keeps in mind to judge the product and to compare the product with that of the competitors. For the positioning process, for our product, we chose 5 brands which are popular in the Indian market, and decided to position of product on the basis of comparison with the following five brands: Redbull Burn Bling Xenia Cloud 9 The sample population was asked to prioritize these brands on the scale of their preference considering the above mentioned five attributes. The results for the attributes TASTE and EFFECTIVENESS is shown in the following pie-charts.We made these pie charts on the basis of the ratings and then derived the percentage of preferred brand for these attributes. A Perceptional-positioning mapping is a kind of visual tool which shows the customers perception of a product or brand in relation to others in the market relating to certain attributes. In our product of Powergade from Gatorade we have considered the most relevant attributes like Effectiveness and the Taste of the drink. The following graph was made on the basis of the ratings given by the sample population to each brand based on the above mentioned attributes of the brands product. They were asked to rate the attributes on the scale of 1 5 in which 1-3 was considered low and 3-5 was considered high. High Taste Powergade We did a primary research on the effectiveness and the taste of our various competitors. From the perception mapping in the above graph and table we got to know the standing of each of our competitors in the market. Red Bull being high in taste and high in effectiveness becomes a tough competitor for Powergade as our product aims to give best of taste and prove to be quickly effective. The marketing mix is a combination of elements needed to successfully market any product. The marketing mix is at the heart of marketing planning. It is used to review and develop marketing strategy. These elements are commonly known as the Four Ps of marketing Product-Our main focus is that our product must be exceptional in taste and quickly effective. Since Gatorade has an experienced research team, we will be able to achieve our goal efficiently. Price-Initially we will come up with a penetration pricing strategy to gain a good amount of market share and create awareness of our product. Keeping low price will help us against our premier competitor, Redbull. Place-As Gatorade is already an established drink worldwide, Powergade will take advantage of this and will use similar distribution channels as well as new distribution channels. Promotion-Since we have a good promotional budget, high scale advertisements will be made and shown on television; radio channels and huge hoarding will be put up all over the country. We will also be aiming to have celebrities to be the brand ambassadors of our drink. Other than that, we will take full advantage of the upcoming ICC Cricket World Cup, scheduled to take place in February 2011 in the Indian subcontinent. Concentrating on all the four Ps of Marketing we will be able to achieve our desired position in the Perceptional-positioning mapping. Product Product Type: Energy Drink. The term product includes two things tangible and intangible. It also includes services, ideas, goods, people and a mix of various elements. Our product would come under category of shopping products and non durable goods. There are three product levels: Core product. Embodied product. Augmented product. Core Product: Core product means the core benefits and the reason why people would want to buy our product. The Youth age group (11-21) would buy our product because as they are prone for experiencing new product and they consider it as a style statement. Now-days young generation is facing a problem of very hectic, stressful and tiring schedule. Our product would relief them and provide with energy and necessary minerals. Age group (22-30) these people come under the category of Intense working people and they have a very stressful life, and as they devote very less to physical activity; for them our product would refresh them and would give them energy to work more efficiently. Last but not the least is Sport athletes which are our main target; would buy our product because as their major time goes in playing physical sports, the water and energy level drenches down very quickly and they become exhausted very fast. Our product will be a great beneficial for them. For people who are Chain smokers for them our product is like an apple to their eye and health because our product coconut pulp which works as a nicotine reducer. EMBODIED PRODUCT: Embodied means physical goods or delivery services that provides benefits. It consists of design, packing, ingredients and brand name. Logo of Powergade Description: C:UsersArchitDesktopbackprint.png Product can design front and back Ingredients: Coconut pulp, Water, sucrose, glucose, sodium citrate, taurine, glucuronolactone, caffeine, instol, niacinamide, calcium-pantothenate, pyridoxine HCL, Vitamin 612, artificial flavors, colors. Source(s)- (Red bull can) Durability of our product (Expiry of the product)-24 Months from the date of Manufacture. Augmented Product: Augmented product means post-purchase activity or services. In case of defective goods we will replace the defective goods within a period of 5 working days and would give cash back if defective quantity is more than 2%. Minimum order of 300 pieces. Discounts are provided if there is a bulk order. We will also have a scheme of lucky dip when you buy 4 powergade, and get 25% off. Core Product When a consumer wants to buy a product, what will he or she will look into, the uniqueness of the product, and will also differentiate between two products that how a product is different with its same type of competitors product. After comparing the consumer will buy the product which will give him maximum benefits and, also will give him maximum satisfaction. We see that there are many energy drinks in the market and all have a same thing to say, and same benefits to give that are- Increases performance Increases concentration Improves mental alertness Stimulates metabolism Our product powergade is a very unique type of product, and its uniqueness will take this product at the top of the Non-Alcoholic beverages market. You may think that how can an energy drink can be as unique as any other energy drink. Our product has all the benefits that all top energy drinks have in common, but we have added some more three features in our energy drink. Common benefits shared with the competitors will be- Increases performance Increases concentration Improves mental alertness Stimulates metabolism Unique features of Powergade- Nicotine reducer More of Vitamins Additional fibre (fruity taste as fibres will be taken from fruit nectar) The nicotine reducer will help those consumers who are addicted to cigarettes, while people have cigarettes nicotine automatically gets in their blood, whereas when that consumer will have our product his nicotine count will be reduced. We will use a pinch of coconut oil as coconut is the best nicotine reducer. Our product will also have more of vitamins which will help the consumer revitalize his mind, be active and energetic all throughout the day. Additional fibre is fruit nectar which will be used in our product; this will give a good and additional taste  [3]  . As we know today, the demand for energy drinks is increasing day by day in the Indian markets, there is tough competition between competitors, and every company is having a price war with its competitors to sell its products. Red bull in that case has kept its price of a can is Rs.85, and cloud 9 has kept the price of its can Rs.90. These drastic differences in prices will be because of many reasons as for example the ingredients which are there in the drink or mainly the packaging or manufacturing of product will be different from the others, or there may be a simple reason for high prices that will be the profitability of the company. For setting up a price for our brand powergade we need a certain pricing objectives which will help in our pricing decision, pricing objectives are goals that describe the role of price in an organizations plans, the objectives help managers as a basic guide line to develop further pricing and marketing strategies  [4]  . The pricing objectives which are required for this product will be- Market penetration Target rate of return Price stabilization Meet of follow competition Market share Profit maximization Cash flow Product line promotion Survival in the market.  [5]   Our price will overcome the cost and therefore earning us a good profit margin. The cost will include all the internal and external costs. Pricing will be considering the taxes also on the product. Customers will feel value for money for our product as they will be satisfied to the fullest. Our pricing will be complementing other Ps of the marketing mix. It should be complementing with the place it is marketed, the promotion used and the value of the product. Strategies Market Led Pricing Strategy Market led pricing strategy are based on the level of customer demand for a firms products or the level of demand in the industry in which the firm operates. Market led Pricing strategy include Penetration Pricing, Skimming price, Price Discrimination, Loss leader, Psychological pricing and Promotional pricing. In all the market led pricing strategies our product will be using Penetration pricing and Psychological pricing. Penetration pricing is a strategy used for a new product to help establish itself in the industry. This method involves setting a relatively low price in order to gain market share and awareness. Over time, as the product established itself, the price can be raised. This strategy is suitable for mass market products that sell in large enough volumes like our powergade. It will help Gatorade to enter a well established market efficiently. One drawback of using this strategy is that customers might consider the product of low quality as it priced low. Combining with Penetration pricing is the psychological pricing. Psychological pricing is a strategy that involves using numbers like, such as $ 9.99 to make price seem lower. Hence customers psychologically feel that they are getting a bargain or better price for the product  [6]