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Innocent Drinks is a UK-based company that produces smoothies from fresh juices with the aim of helping customers to feel healthier. The brand positions in a standard drinks sector and considers the ways to grow its profits. Even though some deceleration is evident, the company’s success was significant from the date of its establishment. Speaking of the factors that led Innocent Drinks to 30 percent of the market share in the UK, one should note marketing strategy, packaging decisions, price, and founders’ commitment to their work.
First of all, it should be emphasized that Innocent Drinks was founded by three friends, Reed, Wright, and Balon, who managed to organize large meetings before they decided to start a company. Consistent with one of the course readings, they focused on 3 Rs, such as roles, relationships, and rewards (Wasserman, 2012).
In particular, each of the team members had a specific role, while their relationships were built on transparency, mutual respect, and passion associated with creating a new brand. They clearly understood that the compensation would be fair and significant since the market analysis and the business plan were prepared thoroughly. At the same time, packaging decisions were well-elaborated to meet customers’ needs with regard to both quality and price.
While creating their business, the founders relied, first of all, on the social purpose and the income to be earned, which is similar to the ideas provided by Sabeti (2011). The mentioned author states that enterprise architecture should be designed to meet these characteristics, thus ensuring that organizational issues are considered pivotal.
One more factor that made Innocent Drinks successful is its packaging decision related to price. When they evaluated the only competitor, PJ company, it became clear that it offers 330ml at £1.99. In turn, Innocent Drinks decided to produce 250ml bottles at a lower price yet with a focus on high quality.
As stated by Anderson, Wouters, and Van Rossum (2010), the highest price is not best since only value-based pricing motivates customers to buy products. Last but not least, the marketing mix applied by the company consisted of the combination with traditional and guerilla methods along with the promotion of healthy lifestyles. Currently, several growth options exist, each of which contains certain opportunities and risks.
The first growth option may be specified as the expansion to other countries in Europe. The preliminary analysis and testing project in Ireland showed that the expansion to Europe might bring relatively low revenues. Lerner and Sahlman (2012) claim that contemporary economic culture sets some significant opportunities that are related to expansion issues. For example, the identified author notes that information availability is critical while introducing product lines on the new market.
In case Innocent Drinks plans to use guerrilla marketing, it may be insufficient to attract customers and ensure further success. However, the fact that entrepreneurs often fail to meet the interests of partners, suppliers, and the local market specifics needs to be taken into account (Lerner & Sahlman, 2012). More to the point, the review of the given case study demonstrates that the company wants to hire more employees to provide the influx of financial and human capital, which is consistent with the suggestions of the mentioned scholars. Indeed, working environmental policies and remuneration amounts should also be adjusted to the levels of new markets.
The option of expanding to European markets targets such countries as France, the Netherlands, Sweden, and Denmark, especially large cities with a high demand for eating and drinking outside. Fitting the ideas of Gulati and Desantola (2016), they realize that resistance to discipline during the planning of the expansion is a misleading tactic. Instead, it is important to consider operations, hire experts, and adjust the product line and marketing to the local markets.
The reinforcement of cultural values and a clear definition of the mission are also understood by the founders of Innocent Drinks as paramount affairs. Following the method of detailed planning and forecasting before accepting any opportunity, they ensure the opportunity of achieving greater success (Gulati & Desantola, 2016). It should be stressed that although the smoothie market in Europe seems to be represented only by a few numbers of competitors, it is still vital to get focused and culturally sustainable.
The second development option that is available to Innocent Drinks refers to the expansion of the United States. The estimates show that this is the most expensive option since it requires the creation of a new supply chain, the search for new partners, and the provision of a completely new marketing strategy. In this connection, one may notice that Innocent Drinks’ CEOs fit the model of a lean strategy that implies flexibility and agility in terms of the decision-making process (Collins, 2016).
In fact, entrepreneurs should practice an opportunistic point, being able to rapidly change their course of action if required by either external or internal conditions (“Choose your business structure,”, n.d.). It is possible to state that in their discussions regarding the selection of one or another option, the founders are aware of the need to align the new idea of the existing management structure and employee interests.
The point that is missed by the company is the opportunities provided by modern technology. For example, social networks such as Facebook or Twitter may be used to gain customers’ attention in both short- and long-term periods. The key positive aspect of such a way of marketing is that social networks are available to all, and people prefer spending a significant amount of time looking for news and following the accounts they are interested in (Giamanco & Gregoire, 2012).
In their turn, Malhotra, Malhotra, and See (2013) clarify that companies should be specific, topical, and humorous in order to create brand engagement in new markets. By sharing photos and sending event-related messages, Innocent Drinks might create a common social cause affiliation, thus establishing fruitful relationships between the company and customers.
The third option is associated with the extension of the company’s product lines, from smoothies and juices to drinks with yogurt, soups, and ice cream. This option is, probably, the most relevant among others since it directs further expansion based on paying more attention to the existing resources. The identified option fits the assumption proposed by Ulukaya (2013), who examines Chobani’s brand foundation.
The author clarifies that the creator’s passion for yogurt and the purchase of the old factory were the actions that led him to success. Accordingly, if Innocent Drinks would also use the existing suppliers and manufacturers as well as find some new and reliable ones, this option may bring significant benefits. By sticking to the mission of a company, it is possible to attract investors and experienced managers. Nevertheless, the risks are serious since it is unclear how new products would be viewed by customers and whether Innocent Drinks would manage to keep a high-quality of its products or not.
The free factors that the founders of the given company should consider are expected costs, product quality, and the increase in management attention. First of all, to make a revolution in entrepreneurship in this case, it is critical to understand that there is no uniform formula, yet some roadmaps may be followed (Isenberg, 2010). It is evident that all three CEOs realize that each of the options may be accepted. At the same time, the expansion to the US is much more cost-ineffective compared to two other options. The entrepreneurial compass strategy should be taken into account as a measure that is helpful in making a proper decision (Gans, Scott, & Stern, 2018).
Since Innocent Drinks is perceived as a high-quality brand that offers only fresh juices, this image should be preserved during the potential expansion. In case customers lose their trust in the company, the latter may incur essential costs. The last factor, the increased management attention, should also be considered as it identified perspective investments, attitudes of employees, and possible threats to success.
In the view of the critical analysis presented in the previous sections of this paper, one may assume that the company founders would select the option of expanding to European countries, primarily France, the Netherland, and Sweden. According to Gilbert and Eyring (2015), the above presents fewer path-dependent risks compared to other variants. In particular, the focus on the US requires critical changes and investments with regard to the contemporary supply chain and the very vision of the concept of smoothies. In addition, the US market is characterized by fierce competition in the field of fresh juices, which is another risk.
As for the addition of new products such as soups and ice cream, this option seems to be too risky as well. Therefore, one may state with more confidence that Innocent Drinks would expand to Europe as the next step in its development. Such a decision is likely to allow the company to earn more and preserve quality simultaneously.
In my opinion, leadership issues in the company are complicated since all three CEOs stick to different options while understanding the advantages and disadvantages of each of them. Based on the article of Schoemaker and Tetlock (2016), one may note that forecasting and judging regarding uncertain events were not implemented in this company, which caused various views of the founders. It would be better if they enhanced the prediction capability of the existing roles. As claimed by McKelvie and Minniti (2015), education, cultural perspective, and access to capital are essential factors for any entrepreneurship.
However, the business structure selected by the founders is appropriate as it contains a perfectly organized supply chain and partnership among three friends. Since their relationships are good, their cooperative contributions allowed preventing many threats (“Choose your business structure”, n.d.). The company’s nature may be identified as a for-benefit enterprise that aims at making customers healthier, which is consistent with Sabeti (2011). Ultimately, the potential for differing roles and launching new companies or dividing the existing one are evident. The critical and rational differentiation is likely to allow the founders to develop several options simultaneously.
References
Anderson, J. C., Wouters, M. J., & Van Rossum, W. (2010). Why the highest price isn’t the best price. MIT Sloan Management Review, 51(2), 69-76.
Choose your business structure. (n.d.). Web.
Collins, D. (2016). Lean strategy: Start-ups need both agility and direction. Harvard Business Review, 94(3), 63-68.
Gans, J., Scott, E. L., & Stern, S. (2018). Strategy for start-ups. Harvard Business Review, 96(3), 44-51.
Giamanco, B., & Gregoire, K. (2012). Tweet me, friend me, make me buy. Harvard Business Review, 90(7), 89-93.
Gilbert, C., & Eyring, M. (2015). Beating the ODDs when you launch a new venture. IEEE Engineering Management Review, 1(43), 22-27.
Gulati, R., & Desantola, A. (2016). Start-ups that last: How to scale your business. Harvard Business Review, 94(3), 54-61.
Isenberg, D. J. (2010). How to start an entrepreneurial revolution. Harvard Business Review, 88(6), 40-50.
Lerner, J., & Sahlman, W. (2012). Reviving entrepreneurship. Harvard Business Review, 90(3), 116-119.
Malhotra, A., Malhotra, C. K., & See, A. (2013). How to create brand engagement on Facebook. MIT Sloan Management Review, 54(2), 18-20.
McKelvie, A., & Minniti, M. (2015). Understanding the environment for entrepreneurship tutorial, 1-6.
Sabeti, H. (2011). The for-benefit enterprise. Harvard Business Review, 89(11), 98-104.
Schoemaker, P. J., & Tetlock, P. E. (2016). Superforecasting: How to upgrade your company’s judgment. Harvard Business Review, 94, 72-78.
Ulukaya, H. (2013). Chobani’s founder on growing a start-up without outside investors. Harvard Business Review, 91(10), 45-48.
Wasserman, N. (2012). Assembling the startup team, 1-5.
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