Category: Beverage

Global market forces are identified as responsible aspects in driving major changes within the food and beverage industry. However, the food and beverage industry have also been affected by the constant changes in consumer preferences as well as increasing government regulations on businesses.

The beverage industry comprises of both alcoholic and non-alcoholic drinks. The nature of competition within this industry calls for players to offer variety of products capable of meeting consumer demand; this goes hand in hand with the quality. Beverage industry experiences frequent entrance of new products and this explains the reason as to why there are hundreds of different drinks in the markets from different companies.

The beverage industry comprises manufacturers and distributors of various drinks such as soft drinks, energy drinks, coffee and tea as well as sports drinks, alcohol, nutritional drinks amongst others (Deichert et al 2-9).

Trends influence and logics within the alcohol beverage Industry touches such areas as marketing practices, success within trade agreements as well as financial progress. Globalization marketing tendencies have since affected areas of society which were previously not considered as potential economic hubs.

The beverage alcohol industry has been mostly affected by globalization which has also affected alcohol policies within different market segments across the globe. The industry is considered superior in terms of economical advantages, its marketing principles focuses on defining, forming and creating goods with target group in mind. Obtaining of raw materials and the overall process of production presents separate entity which has little to do with final product sold to consumers (Tremblay and Carol).

Major brewers within the US market are considered to be Anheuser-Busch, Inc., SAB-Miller, and Molson Coors Company. Anheuser-Busch recognized as the major supplier of beer within the market followed by SAB-Miller (Elzinga). One of the most important aspects is that companies should produce beer that is mostly liked by the customers.

One of the most sold beer brand in the US are Bud Light, Budweiser, Coors Light, Miller Lite, Natural light, Busch Light, Miller Genuine Draft, Miller High Life, and Michelob Light. USA has one of the largest beer import market with a total value of about $2.7 billion. The overall high demand for beer in USA is because of the growing demand for larger that has low amount of calorie (American Beverage Association).

There is intense pressure from competitive forces within the alcohol industry. There are high levels of competition from major brewing countries like the US, China and European countries (Elzinga). The companies within this industry have resorted to differentiating their final products to suit the current consumer desires. This as a result of the stiff competition between domestic and exotic alcoholic products, creating an environment of mergers for the purposes of gaining cost benefits and market share.

The current beer industry appears very attractive for big companies such as Heineken. This is because of the low pressure from suppliers, as well as low threat of new entrants and moderate pressure from buyers. According to analysis the industry is highly competitive since there is presence of many substitutes.

These calls for every company dealing with alcoholic products to develop competitive strategies which could help them counter pressures from the global forces. The Porters five forces have great influence within the industry when it comes to designing of strategies within the market environment. However, the level of competition within the industry determines the development of products and services that would grant the required competitive advantage (Tremblay and Carol).

Trade Publications

There is decline in traditional key markets for European beer consumption. Some of the factors contributing to these could be government’s aggressive campaign against drunken driving. This affects greatly the propensity of drinking beer within restaurants, pubs and bars.

The overall beer consumption per capita varies greatly between countries with Germany recording four times higher consumption compared to Italy. Brewers’ main purchasing costs include such things as packaging and acquisition of raw materials such as barley. Research shows that the majority of the companies within packaging industry in Europe are international. These include companies such as Crown which produces cans and Owens-IIIinois specialized in glass bottles (Tremblay and Carol).

Majority of Americans consume lots of beer since they consider it preferred beverage. Recent surveys shows various percentages of beer consumption with the percentage of beer consumers being around 65% showing an increase in the rate of consumption from previous years. There is an average of 4.5 beer drinks per week based on individual health matters. In the year 2010 statistics revealed that almost 41% of Americans prefer taking beer, 33% wine and 23% liquor (Tremblay and Carol).

Table1: Percentage of Global Alcohol Consumption (Source: GfK “Alcohol consumption” survey 2008, GfK Custom Research/).

WSJE

The beverage industry is currently dominated by three major players which are known to control the global market. These major players are Coca-Cola, PepsiCo and Cadbury Schweppes which accounts for 80% of the global market. Coca-Cola commands 50%, Pepsi 21% and Cadbury Schweppes 7% of the total global market.

The remaining market share is made up of other smaller companies such as Cott Corporation and National Beverage Company (Deichert et al 3). There is tremendous growth within the industry despite low concentration experienced. The appropriate evaluation of the general development and work of the Soft Drink industry is measured by the size of the market it is sold in and the audience it is focused on from the very beginning.

Statistics shows that soft drink consumption commands a market share of approximately 47% in the non-alcoholic drink industry. Recent research reveals that the total market value of soft drinks was estimated at over $ 305 billion in 2004 and over $ 360 billion in 2009. This shows the high level of profitability within soft drink industry (Datamonitor).

The industry is currently experiencing growth in other drinks such as tea and coffee with growth rate of approximately 12% as well as bottled water revolving around 10%. There is also inflow of sports drinks and energy drinks (Deichert et al 2-9). However, the market saturation level being experienced in the US markets contributes towards slow growth within the industry. This calls for soft drink companies to diversify their production to other markets for the purposes of maximizing profits (Murray).

People who are focused on healthy life style are often customers for those companies that produce bottled water and soft drinks that rises the popularity and provide rapid development of the company. Coffee and tea are considered by consumers to provide caffeine considered healthy by consumers. Starbucks provide special brands of coffee blends to the market making it more appealing to consumer tastes (Datamonitor).

It goes without saying that some companies are at the level of competitions at the market, for example, comparing companies producing soft drinks and the ones specializing on water, coffee and tea. The big companies have got already established brand names, competent distribution channels as well as high level on capital required for entry into the Industry.

The leaders within this industry, Coca-Cola, PepsiCo and Cadbury Schweppes invest so much in soft drinks (Deichert et al 2-9; Murray). Coca-Cola Company recorded highest sales in 2004 on soft drinks with record of over $22 billion. The company currently sells over 400 drink brands within 200 countries around the world (Coca-Cola Company).

Their product line comprises of soft drinks such as Coca-cola, Fanta, Sprite, Diet Coke and Barq. PepsiCo being the closest competitor has soft drink product line comprising of Pepsi, Mountain Dew and Slice and Cadbury Schweppes having soft drinks such as A&W Root Beer, Dr. Pepper and Canada Dry (Cadbury Scweppes; Pepsi Company Overview).

Financial Analysis

In the year 2004, Coca-cola recorded highest sales of over $ 4 billion followed by Pepsi with over $ 3 billion and Cadbury with 0ver $ 1 billion sales (Sicher). Comparing to 2003 and 2004, nowadays the share of the companies for Coca-Cola and Pepsi has greatly decreased. According to the statistic the difference makes up several percentages (Deichert et al 4).

Taking into account the research done by the American Beverage Association in 2006, the soft-drink industry sales made up about $ 70 billion. The industry net profit margin was approximately 11% while current and quick ration average were approximately 1 and 0.7 respectively. The overall financial review indicates high competition and less growth within the industry.

The top three companies within the beverage industry recorded small rate of profit growth, this could be attributed to major expansions within the companies’ product lines. The companies within the Beverage industry are experiencing average financial stability with slight annual increase in gross and net profits. There is a definite need for increasing the values of quick ratios for the companies to be ale to deal and to collaborate (if possibly) with the short-term obligations (Walker).

Changes within the Industry based on Priority Issues

Major changes are experienced within the Beverage Industry owing to some factors which are macro-environmental. Many factors contributes towards the choice of drink consumers might desire to take, these include; environmental situations, consumer tastes and lifestyles.

Some industrial companies specializing on the drinks productions benefit from economies by means of distribution. The free nature of exit and entry of firms leads to several changes. The products of the companies are really wide spread nowadays and it gives great opportunities for the further development of the companies. The mergers have made it easer for companies to improve on revenue as well as increasing market share as a result of increased economies of scale.

A good example is the acquisition of Quaker Oats by PepsiCo (Datamonitor). Globalization also presents one of the major challenges especially on the current growth in internet and other technological applications (Deichert et al 9). This has contributed to the expansion into world markets hence increase in competition. There are also major changes in societal lifestyles, attitudes and concerns with more focus given to healthy lifestyle.

Works Cited

American Beverage Association. Soft Drink Facts, 2005. Web.

Cadbury Schweppes. 2004 Annual Report, 2004. Web.

Coca-Cola Company. 2004 Annual Report. Hoovers, 2006. Web.

Datamonitor. Global Soft Drinks: Industry Profile. New York, 2005.

Deichert, Meghan, Ellenbecker, Meghan, Emily, Klehr & Kelly, Zeigler. “Strategic Management in a Global Context; Industry Analysis.” Soft Drinks Journal 2006: 2-9. Print.

Elzinga, Kenneth. Beer: The Structure of American Industry. Ed. Walter Adams and James Brock. Upper Saddle River, New Jersey: Pearson Hall, 2005.

Murray, Barbara. Comparison Data. Hoovers, 2006. Web.

Pepsi Company Overview. PepsiCo, 2006. Web.

Sicher, John. Beverage Digest/Maxwel Ranks U.S. Soft Drink Industry, 2005. Web.

Tremblay, Victor, & Carol Horton. The U.S. Beer Industry: Data and Economic Analysis. Cambridge, Massachusetts: The MIT Press, 2005. Print.

Walker, Tim. Cott Corporation. Hoovers, 2006. Web.

Business Description

Since it was founded in 2005, Tropical Coffee House (TCH) has become one of the most preferred small-sized establishments for people who like to blend unique leisure experiences with the art of healthy living. Headquartered in London, TCH operates several other outlets in Essex, Kent and Surrey in line with its core mission of taking memorable experiences and quality services to the customers’ doorstep.

TCH has enjoyed huge popularity among young and working class high-end customers who enjoy spending for quality and experience, rather than quantity and price leadership. TCH is embedded in a family business model, although it has over the years shed off the family tag by recruiting professionals based on merit and engaging in efficient management of key resources to remain competitive in today’s dynamic markets (Sirmon & Hitt 2003).

TCH offers a wide range of products and services, which include blended coffee, diet-sensitive burgers and hotdogs, organic and fruit concentrate health drinks, cakes, sauna baths and gym facilities. Most of its existing products and services are priced at a premium to penetrate the upper-end consumer market segment which remains substantially underrepresented in most European markets.

Recently, the company’s management undertook customer satisfaction surveys and found that most high-end consumers are attracted to health drinks prepared using “high protein” and “natural” products (Jacobsen 2015). Having seen this as an opportunity for growth, the company’s management and selected beverage professionals have been working on the formulation of a product that uses “high protein” and “natural” ingredients to develop a high-value health drink.

These efforts have produced a new product known as Tropical Health. TCH has also seen the need to blend the new product with different natural flavours (e.g., orange, strawberry, lemon, vanilla etc) to provide consumers with choices and enhance diversification (Barett, Balloun, & Weinstein 2000). The main objective of this business proposal is to demonstrate how Tropical Health will be launched into the market and also to seek for financial and managerial support from potential backers.

Investors in the industry might want to know why TCH is keen on diversifying its health products at the expense of more traditional products such as blended coffee and diet-sensitive burgers. The truth of the matter is that contemporary consumers have become more health-conscious and available literature demonstrates that there is a huge market for products developed using high protein and natural ingredients (Jacobsen 2015).

Business Opportunities

Potential Customers

Tropical Health will target high-end, health-conscious consumers who have the means to sample the best that the market has to offer. The company is targeting customers who want to spend their money on innovative products that provide substantial health benefits in spite of their premium cost. This market segment is substantially underutilised in the United Kingdom (U.K.) as most companies in the sector target low and middle-class consumers.

Consequently, the targeting of this consumer market will enhance customer value by assisting the company to fulfil the needs of this particular segment. It will also assist TCH to become more popular and to develop a reputation for its Tropical Health brand, hence creating competitive advantage (McMillan 2013).

Geographical Area

TCH intends to launch Tropical Health in its London establishment, although there is a possibility for expanding into other outlets in Essex, Kent and Surrey depending on initial demand. London has a wide range of high-end customers due to its reputation as a business and commercial hub.

Additionally, the city is densely populated and is also known as the preferred destination for international conferences that bring together moneyed delegates from all over the world (Lewisham Business n.d.; London n.d.). As such, potential investors should realise that TCH has a high potential to succeed in launching its high-protein health drink due to city’s population dynamics, socioeconomic endowment, and reputation as a global business hub.

Business Competitors

Although the U.K. experiences high competition in the health drinks industry (Creating New Choices 2014), only a few companies specialise in the production of fleshly squeezed juice with 100% fruit content equivalent. Some hotel establishments such as The Ivy, River Cafe, Cibo and Fat Boys are known to provide various variants of fruit juice and health drinks to high-end consumers within London and its environs.

Most of these competitors have a huge capital base and have been in operation for a long time. However, research demonstrates that these competitors rely on organic and energy-boosting ingredients to make their health products despite the fact that health-conscious customers are increasingly being attracted to high-protein health drinks (Jacobsen 2015).

This strength serves to guarantee potential investors and managerial professionals that, although the competition for the health drinks market in the U.K. may be stiff, there are still areas that can provide excellent opportunities for growth if TCH becomes keen on exploiting prevailing consumer needs and expectations (Stokes & Wilson 2010).

Marketing Strategy

Costing and Pricing

Launching a new product often occasion managerial challenges due to difficulties in setting the appropriate costing and pricing budgets (Luan & Sudhir 2010). TCH has identified how products with similar attributes have historically responded to the variables of costing, as demonstrated below. It is important to note that pricing of the new product will be premium-based not only to recover costs but also to achieve alignment with intended target customers.

Table 1: Costing for Tropical Health.

Sales Projection

Based on the previous sales of TCH’s organic health drinks, it is estimated that the company will sell €1.5 million worth of Tropical Health in the first two years of production. Sales are projected to grow at 30 percent annually for the next three to six years.

Potential investors might query how these figures have been formulated. It is important to note that the estimations are based on the ready market for high-protein health drinks (Jacobsen 2015), as well as the actual sales realised by TCH in its organic health drinks segment.

Marketing Plan

Product

Tropical Health fulfils customers’ needs due to its immense health benefits.

Place

TCH intends to use its main outlet in London as the preferred distribution channel for launching the new product. However, depending on demand, TCH will use its other establishments to reach a wider customer base and projected sales objectives.

Price

Tropical Health will be priced at a premium as it targets high-end consumers. Although the price of the new product will be determined by factors such as production costs, market share and target customers, the underlying justification is to price it at a premium to achieve product and customer differentiation (Barett et al. 2000).

Promotion

TCH will use viral marketing and word-of-mouth to advertise the new product with the view to not only differentiating it from competitors but also developing a good relationship with customers (Barett & Weinstein 2015). It is important to satisfy potential investors by underscoring that the preferred promotional tools are cost-effective and easy to use (Barett et al. 2000; Luan & Sudhir 2010).

Business Operations

Operational Function

Although TCH operates under a family business model, it has six professional managers with wide experience, master’s level education, and other key competencies in entrepreneurship. The company has adopted an innovative management style, whereby work-flows are results-oriented and senior manager always strive to develop new and better ways of doing things (Benfari 2004; Armstrong 2009).

TCH intends to use competitive recruitment to hire three more food and drink specialists to assist it in blending high-protein natural ingredients for use in the new product. Competitive recruitment will also be used to hire two senior managers and several support members to oversee the commercialisation of the new product.

Most managerial decisions are made through consultation, though a few important ones must be sanctioned by TCH’s founder. Finally, managers and employees are compensated and rewarded based on education, responsibilities, and individual productivity.

Products and Services Offered

TCH can be termed as a small enterprise interested in the provision of premium-priced products and services (e.g., blended coffee, diet-sensitive burgers, health drinks, cakes, sauna baths and gym facilities) to lock into the high-end market segment. Tropical Health product will be a new addition to the company’s staple. The new product is intended to satisfy an emerging market for high-protein and naturally blended health drinks (Jacobsen 2015).

Personnel

TCH utilises Mintzberg Five Parts of an Organisation model to not only recruit employees into respective areas of the business, but also to ensure alignment of human capital between and among the sections. This model will be utilised in the development, launch and sale of the new product.

The five parts include:

1. the operating core which is responsible for performing the basic work of developing the new product by securing inputs, processing them and arranging for the product’s distribution to customers,
2. the strategic apex which is responsible for formulating and implementing strategies that are designed to facilitate the achievement of organisational objectives,
3. the middle line managers who are responsible for linking the strategic apex to the operating core by managing information flows up and down the hierarchy and by coordinating the work of junior staff,
4. the techno-structure which consists of food and drinks specialists who are responsible for setting the standards relating to work processes, outputs and skills, and
5. the support staff who are responsible for providing back-up services to other components of the organisation (Quader 2007; Armstrong 2009).

Finances

Revenues

It is expected that the launch and commercialisation of Tropical Health will bring approximately €1.5 million in sales revenues within the first two years of business. TCH’s organic-based health drinks brought €800 million in profits within the first two years, implying that the new venture is bound to impact positively on the company’s bottom-line.

Going by the high demand for high-protein, naturally-blended health drinks in the market today (Jacobsen 2015), it is anticipated that the sales revenues for the new product may surpass €2 million within the first two years if senior management adopts an effective marketing mix and if the company serves a wider geographical reach (Barett & Weinstein 2015). These sales revenues justify why potential backers should consider investing in the launching and commercialisation of the new product.

Expenses

Fixed and variable costs for the launching and commercialisation of Tropical Health product are around €810,000. If provisions for unforeseen expenses are made, it is correct and justifiable to argue that all expenses for the launch and commercialisation of Tropical Health will not surpass the €1 million mark.

These expenses are viable for a small business enterprise that wants to make it big in the high-end consumer market. However, financial and managerial support is needed from potential backers to offset these costs and spur the product line into profitability.

Financial Projections

Owing to the prevailing high demand for high-protein, naturally-blended heath drinks not only in London but also in other major cities in Europe (Jacobsen 2015), it is expected that the sales revenues for the new product will grow at annual rate of 30 percent for the next three to six years after the launch of the new product.

It is projected that TCH will be able to attract potential investors, who will finance all activities related to the new product for the next 12 to 24 months in return for a 10 percent stake of the product’s net revenues for the next five years. Alternatively, potential investors may undertake a 50 percent equity financing in return for a 5.5 percent stake of the product’s net for the next three years.

These arrangements are critical in helping TCH to expand its product offerings to other areas and outlets within eight to twelve months after launch with the view to becoming a market leader in the provision of high-protein, naturally-blended health drinks to the high-end consumer segment.

Reference List

Armstrong, M., 2009, Armstrong’s handbook of human resource management practice, 11th edn, Kogan Page, London.

Barett, H., Balloun, J., & Weinstein, A., 2000, ‘Marketing mix factors as moderators of the corporate entrepreneurship-business performance relationship: A multistage multivariate analysis’, Journal of Marketing Theory and Practice, vol. 8 no. 2, pp. 50-61.

Barett, H. & Weinstein, A., 2015, ‘Corporate entrepreneurship, the marketing mix, and business performance’, Proceedings of the Academy of Marketing Science, vol. 46 no. 1, pp. 144-150.

Benfari, RC 2004, Understanding and changing your management style, Jossey-Bass, San Francisco, CA.

Creating new choices: The 2014 UK soft drinks report 2014. Web.

Jacobsen, J., 2015, ‘2015 new product development outlook’, Beverage Industry, vol. 106 no. 1, pp. 56-65.

Lewisham business growth strategy 2013-2023: Strengthening Lewisham’s economy by creating growth and local jobs. Web.

London: A destination guide for associations. Web.

Luan, Y. J. & Sudhir, K., 2010, ‘Forecasting marketing-mix responsiveness for new products’, Journal of Marketing Research, vol. 47 no. 3, pp. 444-457.

McMillan, J., 2013, The importance of market segments. Web.

Quader, M. S., 2007, ‘Human resource management issues as growth barriers in professional service firm SMEs’, Journal of Services Research, vol. 7 no. 2, pp. 115-161.

Sirmon, D. G., & Hitt, M. A., 2003, ‘Managing resources: Linking unique resources, management and wealth creation on family firms’, Entrepreneurship: Theory & Practice, vol. 27 no. 4, pp. 339-358.

Stokes, D. & Wilson, N., 2010, Small business management and entrepreneurship, 6th edn, Cengage Learning, Boston, MA.

It should be known that Tata Tea is a large multinational. As a matter of fact, it is the second largest manufacturer of tea. On the other hand, it also distributes tea around the world. All along, the company has been growing to enter into new markets for long term sustainability. It was founded in 1964 but it has been making forays in foreign markets in recent years. The extent of the company’s investments in foreign markets has been made through various brands. In this case, they are distributed differently depending on the location (market) that has been targeted.

Currently, the company is the largest brand in Canada and United Kingdom. In addition, it is the second largest in the United States. As a matter of fact, the company has set up different subsidiary companies in a number of foreign markets. An example of this initiative can be seen from the way it has entered the Pakistan market. As a matter of fact, the company made a 100% acquisition of Tetley Tea of the UK in 2000. All in all, it is in an acquisition mood and this can be demonstrated from the way it is warming up to Russia.

The company has been planning to double up its investments in the next five years and this is commendable. For instance, it acquired Tetley Group in the UK for £271 million. Tata Tea has been making direct investments in the ownership of tea plantations. To make it sustainable, the company has come up with a $ 7.8 million equity investment that is expected to take care of other investments. The size of the company’s investments has been increasing as time goes by and this can be explained from the fact that it has operations in all continents.

Tata Tea is the largest company in volumes (in India) and this has been replicated to foreign markets. As a matter of fact, the company has been looking out for any viable acquisitions to expand to other markets around the world. In 2007, it made more than 5 acquisitions in different markets. An example is the acquisition of Eight O’ Clock Coffee Company in USA that was valued at $220 million. It should be known that Tata Tea has made investments of more than $ 20 billion in recent years and this seems to be bearing fruits.

The company has been strengthening its global operations to accelerate growth. As a matter of fact, it has been driving functional excellence to gain enough synergies. Most of its investments have been made for long term sustainability and this is good for growth. Tata Tea’s nature of investments can be said to focus more on acquisitions as a way of entering into new markets. From the 2009/2010 annual; report, the company has launched its operations in the Middle East and this is good for business. In addition, acquisitions have given it entry into the Russian market.

Tata Tea operates in over 40 countries and this has given it the market presence that it needs for profitability and long term sustainability. To enhance its operations in foreign markets, the company has six sales and marketing regions that are spread around the globe. Closer integration has enabled the company to identify opportunities in different markets. After making investments in different markets, the company’s turnover has grown by 19%. Its most notable brands include Eight O’clock, Jemc’a, Vitax, Tata Tea Agni, Chakra Gold, Tlon and others. All in all, the company has been launching its brands in new markets depending on their needs. Wholesomely, the company has been entering new markets to stretch its global footprint. This can be explained from its branded tea sales.

The innocent drinks is a United Kingdom-based company that produces smoothies and flavored spring water products that are sold to supermarkets, coffee shops, and various outlets such as the Republic of Ireland, Amsterdam, France, Brussels, and Copenhagen. It was formed in the year 1999 by three friends who were referred to as Richard Read, Adma, Balon, and Jon Wright.

The company has a 71% market share of £169 million United Kingdom smoothie market and the company sells over one million smoothies per week. The company’s vision is to be Europe’s favorite juice company in the world that produces healthy products for its citizens so that it can be in a position to compete effectively with its competitors…

The implications of the continued fast growth of innocent drinks for the different functions of the business

The company’s success has been attributed to the production of products that are nutritionally good for human consumption, the company also pays 30% premiums on the pineapples that are produced by the company, it has also spent over four years developing recyclable bottles that are cost-effective to use so that the company doesn’t incur a lot of expenses in developing other bottles for holding the contents of the company’s products.

The company also gives away over 10% of its profits so as to assist the community and this has contributed to the growth of the company since assisting the community is a positive move since it motivates the customers to purchase the company’s products which increase the sales volume of the company’s products. The management’s utilization of its 90% profits in managing its activities effectively has contributed to the success of the company

According to Jane Burkits the head of logistics of the Innocent Drinks company she stated that in order for the company to achieve its goals and objectives it had to identify the key hurdles that would lead to the effective implementation of the demand planning that would facilitate the company’s growth in the future.

She also stated that adopting innovative new approaches would ensure that the management effectively dealt with the volatile customs demand and also by mapping a program of continuous change would lead to the maximization of the company’s return The management of company has also stated that it is committed to run its business in a more sustainable way so as to increase the sales volume of the company.

It is also committed to introducing programs whose aim is to improve the living standards of the residents of the community the programs are aimed at reducing the carbon emissions that have been polluting the environment in which the residents of the community live in and also it has implemented the program of re-cycling waste materials so as to reduce pollution that is caused by the materials that lie idly without been utilized in any useful means..

The marketing actions required for the Innocent Drinks Company

The management of the company’s marketing strategy states that they produce their products without the use of concentrates, preservatives, stabilizers, or weird stuff in their drinks so as to attract its customers since the customers’ desire products that are fresh and pure so that they cannot have a negative effect on the lives of the customers who consumed their products since the preventatives brought about health complications such as obesity, cancer, and other health-related complications..

The management of the company advertises its products through television. The reason for using the television as a mode of advertising its products is that the time in which the products are promoted is chosen according to how the customers have access to the television so as to be in a position to view the products advertisements hence this increases the sales of the company’s products hence its growth.

The management of the company carries out in-store activities so as to avoid running out of stock as it would negatively impact the company’s performance. The smoothie manufacturer of innocent Drinks promote its products through sending emails to their customer it also uses the weekly newsletter to advertise its products to all their customers and also the staff also promote their products so as to increase the sales volume of the company.

They also encourage the customers to visit their offices, they run a regular competition so as to ask the customers to create new recipes and they also organize seminars whose aim is to enable the customers to understand about the usefulness of the products in the market and also this can increase the sales revenue of the company’s products.

The possible problems that are related to the company’s growth

There have been increased reports that the company’s product known as smoothie has been exploding this is as a result of the natural fermentation of its products since the company’s objective has been to produce pure and natural products that do not have preservatives that can keep the products for a longer period of time without getting spoilt.

The exploding of the company’s products has adversely affected the sales volume of the company and has resulted in reduced revenue of the company. The Innocent Drinks Company has faced some tough competition from its competitors but the company’s management improved on the quality of its product and developed its workforce so as to ensure that the sales volume of its products increased.

Issues relating to managing a larger workforce

The company’s workforce consists of over 187 employees who occupy 65% of the domestic market of the company and a good number of the senior management including the United Kingdoms managing Director who oversees that the operations of the company are carried out effectively.

According to the group managing director Mr. Reed he stated that recruiting the right employees was the greatest challenge that the management of the company faced but it stated that it would conduct induction training programs for its employees so as to ensure they acquired the necessary knowledge and skills to run the affairs of the company.

The workforces of a company are motivated by providing them with a good environment in which they can carry out their businesses. The innocent Drinks Company has provided its workforce with a back garden with grass, trees, and picnic tables in between the desks and computers so as to provide the employees with a good environment in which they can relax and feel comfortable while carrying out their duties and responsibilities so as to increase the productivity of the company.

The management of the company has implemented programs whose aim is to utilize color and light to help design a more productive office since in investing in the office’s lighting system can lead to improved concentration levels and subsequently the productivity of the company can also increase. Although according to Cooper he stated that by increasing or decreasing the amount of light in an organization can have a very short effect on the employees who were being studied since they complained that the experiments that were being carried on them were affecting their productivity levels.

Issues relating to financing its growth

The innocent Drinks Company arranged $42 million financings from the Trafalgar. A capital specialized investment fund in the form of convertible debentures to fund the companies operations so that it could be in a position to expand its operations so as to increase the sales volume of the companies and also to enable it to grow effectively.

Implications for the structure and culture of business

The culture of a business is defined as the business sum and value of its values or its beliefs. The leaders of a company such as the authors, owners, or guardians set the company’s value set and those that allow the values to be the driving force in the way the business carries out its activities.

The manufacturer implements the design of their product as a means of reaching the customers and also as a strategy to gain a competitive advantage from the external point of view of company the company’s culture looks more or less informal and relaxed that it cannot have a serious structure and purpose. It has a very relaxed dress code and some unusual assets- a head office that is known as Fruit Towers a customer helpline that is manned by real people and it is called Banana phone and vehicles that are not cost-effective.

The value of the innocent Drinks Company is known and understood by the business leaders and it is managed to ensure the company’s growth so as to sustain a climate that motivates the performance and loyalty of the employees and other stakeholders. The implication is the way the organization is structured is that rigid hierarchies of control give way to management styles that have strong control systems over some functions that are much looser and those that are more team-based approaches.

The implication of producing large scale

The company’s product known as smoother has been the most charismatic brand in the United Kingdom since it’s made from high-quality raw materials, the management of the company has good ethical policies on sourcing, and materials thus it has been in a position to produce the best quality products in the market.

Conclusions

.The management of the company should have reviewed the way it produces its products so as to avoid the explosions from happening in the future as this would have an effect on the sales volume of the company’s products. The management of the company should have marketed its products so as attract the customers who consumed the products and also to maintain the customers and also increase the sales volume of the company’s products.

Reference

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Lawrence, J.(1998) ‘Puritanism’. The Oxford Companion to New Zealand Literature. Ed.

Roger Robinson and Nelson Wattie. Melbourne, Auckland: Oxford University Press, Charlotte. M. (1995) Merimeri Penfold, and Bridget Williams, edd. The Book of New Zealand Women. Wellington: Bridget Williams Books.

Gordon, M. (1987). The Big Con: The Death of the Kiwi Dream. Wellington: G.P. Publications.

Kirstine, M. (1998). ‘The Puritan Paradox: The Puritan Legacy in The Intellectual, Cultural and Social Life of New Zealand, Focusing Primarily On the Works Of Novelists Writing Between 1862 And 1940.’ Unpublished PhD Thesis. Victoria University of Wellington.

Roger, R., and Wattie, N. edd (1998). The Oxford Companion to New Zealand Literature. Melbourne, Auckland: Oxford University Press.

Sturm, Terry, ed. (1991). The Oxford History of New Zealand Literature. Auckland: Oxford University Press.

Marketing strategies consist of actions carried out to achieve specific objectives related to the promotion of a product or brand.

The main aim of a marketing strategy is to create and increase awareness of either a new or an existing brand or product so that sales can be increased besides gaining a greater market share (Kotler & Keller, 2012). Hence, a rigorous marketing plan is required to promote the new sports drink developed by the company.

In order to design effective marketing strategies or plan for the above product, it is crucial to take into account the desired company’s goals, available resources and capacity of the firm to meet the demand and supply of the market. It is prudent to analyze the targeted audience.

This essay offers a brief and succinct marketing plan for the newly developed sports drink.

Marketing strategies

Apart from analyzing the marketing target of the new sports drink, it is necessary to explore the current level of competition in the targeted market.

After this exploration, the marketing management team can create strategies that may permit the company to capitalize on the competitors’ weaknesses based on the techniques they are using to deliver their products to consumers.

For the best management of marketing strategies, it is prudent to divide or classify them into four aspects (Yannopoulos, 2011).

To begin with, the marketing plan for the sports drink should focus on the nature of the product itself. For instance, how is the quality of the drink?

Second, the pricing strategy ought to be devised and tested for validity. Third, distribution strategy for the drink is equally fundamental.

Finally, promotional (or communication) strategies should be clearly identified for the sake of sensitizing the market. The aforementioned elements of marketing mix will indeed be instrumental in ensuring that the sports drink is marketed successfully.

Product strategies in the marketing plan

A product is a good or service offered or sold to consumers. In this case, the product to being marketed is a sports drink that can remain cold for up to six hours. A number of strategies may be used to promote this product in the market.

First, new features should be added to the product (Kotler & Keller, 2012). For example, the targeted customers should be informed that the attributes, benefits, enhancements, functions, utilities, and applications of the new sports drink supersede those of the competitors.

The drink can be manufactured with less sugar content. Minimal use of preservatives is also highly recommended as part of the marketing strategies for the sports drink. Besides, the manufacturer can alter the product design, presentation, packaging, labeling, coloring and logo (Allender & Richards, 2012).

Launching a new line of complementary product will also enhance marketing of the sports drink. In other words, the manufacturing department should ensure that the new sports drink primarily compliments competitors’ products in terms of features and other attributes.

Moreover, the company should make sure that there is a return policy for the sports drink especially if a customer is not satisfied after an initial purchase.

Pricing strategies

A price refers to the monetary value attached to a good or service at the time of offering or selling it to buyers. The management may use numerous strategies to set the most competitive price for the new sports drink.

For example, the management should launch the new product with a low price in order to achieve rapid penetration and harboring in the market. Alternatively, the firm may launch the new sports drink with a high price in order to take advantage of purchases made as a result of the novelty of the product (Yannopoulos, 2011).

In regards to price reduction, it will attract more customers and consequently boost sales. Increasing the price of the drink will assist in attaining a higher profit margin. However, the latter strategy should not be initiated when the product is being launched into the market.

Price increase should come later after universal market acceptance of the sports drink. Price reduction below those of the competitors will obviously expedite sales. Better still; the marketing department should consider offering discounts for bulk purchases at the time when the product is being introduced in the market.

Distribution strategies

Distribution refers to locations or outlets where a product is offered or sold to consumers. It also implies the delivery or transfer options that can be used to avail a product to consumers (Kotler & Keller, 2012).

Distribution is part of a marketing plan. The company ought to use intermediaries such as agents, local distributors and retailers in order to achieve greater coverage of the sports drink. Creating a website or an online store for the product is also another viable distribution strategy that can assist in marketing the drink.

Additional strategies under this domain include selling the product through phone calls, emails or open-air campaigns, intensive distribution strategy, selective distribution strategy and exclusive distribution strategy.

Communication promotional strategies

This strategy increases awareness, informs or reminds buyers about the existence of a product. It should be able to persuade, encourage and motivate consumers to buy and consumpe a product.

Communication strategies include tender offer to acquire two products for the price of one, tender offer to purchase a second product at half price for the purchase of the former, working with coupons or discounts, and awarding small gifts to major customers (Yannopoulos, 2011).

Other strategies include advertising in print and electronic media, organizing road shows, using banners and advertising posters as well as printing and distributing leaflets, flyers and business cards to the targeted audience.

References

Allender, W. J., & Richards, T. J. (2012). Brand loyalty and price promotion strategies: An empirical analysis. Journal of Retailing, 88(3), 323-342.

Kotler, P. & Keller, K. (2012). Marketing management (14^th ed.). Upper Saddle River, N.J.: Prentice Hall.

Yannopoulos, P. (2011). Defensive and offensive strategies for market success. International Journal of Business and Social Science, 2(13), 1-12.

Industry: cyclicity, seasonality, ease of entry/exit

• Sales in the soft drink industry have been on the decline since 2004. This is unlike in the 1990s, when the main industry players enjoyed increased market share and sales volumes. However, in recent years, consumers have tended to shy away from fizzy, sugary drinks and now prefer drinks that connote a healthier image. For this reason, there has been a dramatic increase in the demand for and sales of teas, water, as well as other noncarbonated beverages, even as the sales for carbonated drinks continues to plummet.
• The decline in the sales of soft drinks can also be attributed to increased competition as an increasingly higher number of players have entered the soft drinks market. As a result, a lot of effort has been put towards the advertisement of soft drinks products in the hope of seizing a position of the market share from competitors, even as the market size for carbonated soft drinks continues to shrink year after year. At the same time, there has also been an increase in the number of substitute products in the market, thereby giving customers more options. Changes in lifestyle and cultural preferences have also affected sales in the soft drink industry.
• These beverages are available in bottles, cans and fountain, and this gives consumers a variety of choices.
• The soft drinks industry in the United States is valued at $60.3 billion.
• Carbonated beverages are commodities that people buy only when they need to consume them. There is no particular trend for the purchase of the commodity, although there is a variety of different drinking methods or time of needs (for example, during parties, on holidays, or movie trips)
• The soft drink industry is characterized by brand loyalty and as such, companies in this industry are always trying to reach out to new markets in a bid to increase their sales revenue.
• In the past years, soft drinks manufacturers have tended to manufacture products that are high in fat and sugar but due to increased consumer awareness on the need to consume healthy foods, most of these companies have had to start producing healthy soft drinks. Some of the new ideas that have cropped up include low-calorie drinks, sugar-free drinks, drinks with added fiber, drinks that have been infused with green tea, as well as drinks with added antioxidants.
• The industry tends to be Cola flavored dominated (80% of coca-cola 55% of Pepsi cola brand beverage volume) top ten brands account for 73% of soft drinks sales in US
• It has proved hard to enter into this industry because:

-There are well known and established brands in the industry, and these tend to be very competitive in a bid to protect their market share.

-It is hard and expensive to acquire bottlers/distribution

-The soft drinks sector is mature industry, meaning that products are well known with lots of history

• ¼ of the soft drinks industry is dominated by the non-cola brands and flavored soft drinks gained a lot of popularity in recent years (30% in retail sales)
• The most typical retail outlets are the supermarkets (they account for 31% of the carbonated soft drink retail sales). Others include convenience stores, vending machines, fountain service, mass merchandisers, and thousands of small retail outlets
• With such a well-established market, advertising and promotion is critical in order to gain market share

– Local advertising and promotion programs are jointly implemented and financed by concentrate producers and bottlers (costs split 50-50)

Competitors: size, strengths, weaknesses, responses

• Citra is the biggest competitor of Squirt, this is because they are in the same market, and have the same buyers (those who crave thirst quenching drinks, and are in the middle of “hip and cool” and “not hip and cool”). The major difference between the two brands is that Squirt has no caffeine (better for kids) and ranks higher in thirst quenching.
• Big brands like Coca-Cola and Pepsi Cola have their products in the Grapefruit-Citrus Carbon Beverage market, all which have good recognition and marketing efforts (Mountain dew is Pepsi and 4^th rated in top ten)
• Distribution practices are important, as are the relations with bottlers.
• Coca-Cola commands 44.1% of market share, while Pepsi- Cola accounts for a market share of 31.4%. On the other hand, DPSU commands 14.7% of the market share (see exhibit).
• Carbonated grapefruit is sold directly with Coca-Cola’s two Fresca (targets adults, as a mixer. Fastest growing in US), and Citra (sugared, with no diet version, targets teens and is caffeine free).

Porter’s Five Forces

The bargaining power of customers

In the soft drink industry, the bargaining power rests with the consumers. As an elastic product, soft drinks are not mandatory for our daily life and as such, consumers can do without them. On the other hand, consumers rarely purchase soft drinks in bulk. The preference of most customers is to find soft drinks in convenient locations. This can be a good thing for the Squirt brand because it means that they are in a better position to charge more for purposes of convenience.

Suppliers’ bargaining power

Squart has continued to enjoy comparatively good bargaining power relative to its suppliers. Bearing in mind that no exotic materials or complicated process is necessary in creating syrup concentrate, this makes is somewhat easier for Squart to replace its suppliers.

Threat of new entrants

90 percent of the soft drink market is controlled by Coca-Cola, Pepsi-Co, and DPSU. Moreover, the leading 10 soft drink brands in the United States are also controlled by the three aforementioned companies.

What this means is that it is not impossible to enter into the soft drink market, but it remains very complicated to gain a market share. On the other hand, considering that the soft drink industry is estimated to rake in $ 60 billion every year, this is an indication that a new entrant into the industry would still find room for expansion.

Threat of substitute products

In the grapefruit segment, Squirt is faced with two direct competitors, while in the citrus category, there are many more competitors. In the United States alone, we have over 900 registered brands of soda. However, none of the Squirt’s products have been targeted and positioned to serve a group characterized by same taste.

With regard to the soda market however, we have many more soda brands in the market. It is important to also note that Squart has attempted to position its brand as thirst quenching. Due to this, Squart has to also contend with competition from other beverages, including but not limited to sport drinks and water.

Competitive rivalry intensity

There is a lot of competition in the soft drinks industry. For many years, Coca-Cola and Pepsi-Cola have been fighting over the control of the cola market. As a non-cola soft drink, Squirt is ranked in a different category from the cola market.

Some of the main competitors facing Squirt in the non-cola soft drink market include Mountain Dew, Mellow, as well as Fresca and Citra. Every competitor in the market spends huge sums of money in advertising efforts with the aim of seizing a portion of Squirt’s market share.

Customer: who, when, where, how, why

• High buyer power translates into many substitutes. This results in a wide choice of products in the industry. What this means is that the availability of beverages in the soft drinks industry is very high (located everywhere).
• Large age groups: main industry buyers are those between the ages of 20 to 49 (However, Squirts’ biggest sales are not with this trend; the brand is mostly popular with consumers in the 6-12, 40-49, and 60+ age brackets. Most of them purchase it is kid friendly. Parents buy it for their won consumption and for their children. They also have an attachment to it for historical reasons. This presents the company with a huge opportunity because they can grow the brand with the buyers.
• Population growth has been compounded by rising per capita consumption.
• Frequent buyers in the U.S consume 849 ounces of soft drinks / 2.3 servings a day. The consumption of soft drinks in the United States is more than that of water. In 2000, the consumption rate for soft drinks in the United States was 53 gallons per person.
• Preference is established and depends on use (is it for supper? party? alcoholic mix? etc)
• There is established loyalties (some prefer one over the other), and this could be a challenge to the industry players.
• Per capital higher consumption is among Hispanics and African Americans
• The Hispanic community is most promising in the United States because this group has continually grown and shows a lot of preference for carbonated beverages (for example in Mexico, it is a big seller)
• It is a very convenient beverage to gain because of such large availability.

Company: SWOT, mission, goals, marketing objectives

• Candbury Schweepes PLC / Dr. Pepper/7Up
• DPSU is the largest division of Cadbury Schweppes PLC, which is the third largest soft drink company in the world (sales in 200 countries).
• Largest non-cola enterprise in North America and also owns regional brands, overall third largest soft drink seller.
• Dr. Pepper and 7Up are ranked in the top ten (measured by market share) the remaining brands are often market leaders in their sectors.

Squirt

• The Product: caffeine-free, low-sodium, carbonated soft drink that is a blend of grapefruit with a tangy, fresh citrus taste – Regular and diet (Diet and ruby red account for 20% of sales)
• Squirt unique, thirst quenching attribute should be the dominant positioning
• Squirt is the best-selling grapefruit soft drink in the United States
• Well known, historical impact (probably by 60+ is a big chunk of overall sales) – Begun during the great depression, historical recognition (page 208 history)
• Sales have fluctuated over the years
• No defined Target market, but it is clear that multi gene families have potential
• Advertising has not been effective
• Compared with the other competitors in the carbonated grapefruit drink category, Squirt has the largest brand awareness
• In the United States, 50 percent of Squart’s sales can be accounted for by 5 Squart bottlers. They are located in Chicago, Los Angeles, San Diego, Portland, and Detroit. In addition, about 50 percent of Squart case volume can be attributed to 100 bottlers. These bottlers are to be found mainly in Western United Stets. For example, about 38 percent of the overall Squart case volume is to be found in California alone.
• Squart remains the primary brand, but it also enjoys two brand extensions. They are Ruby Red Squart and Diet Squart. The two extensions have enjoyed a lot of success in the market and they are responsible for nearly 20 percent of Squart sales. The first carbonated drink by Squart to be sweetened using Nutri-Sweet is Diet Squart.
• Two brands from Coca-cola are the main direct competitors of Squart. They are Citra and Fresca. Fresca is a direct soft drink free of caffeine, with adults of 30 years and above as its target consumers. On the other hand, Fresca is a sugared caffeine soft drink with teens and young adults as the target group. The case volume sales of Squart are by far more than the combined sales of Fresca and Citra.
• One of the highest advertising and promotion expenditures of all brands in the citrus carbonated beverage market brands – Freestanding inserts in newspapers, spot TV, cable TV, and spot radio – Retail consumer and trade promo with cooperative advertising arrangements with individual bottlers – Expenditures are reasonably less than competitors and retail trade, consumer promo and coop advertising arrangements often exceed media advertising expenditures, which amounts to between 20 and 25 percent in dollar sales
• Weak slogans

SWOT analysis

Strengths and weaknesses

Grapefruit soft drink remains the leader in the soft drink market. In addition, the brand has gained the highest level of recognition in as far as the grapefruit soft drink market is concerned. On the other hand, DPSU lacks the necessary resources and market share that such leading global brands as Pepsi Co and Coca-Cola have to offer to the market. What this means is that DPSU has a smaller bargaining power in the market and consequently, a smaller advertising budget as well.

Opportunities and Threat

The Squirt brand continues to enjoy a lot of popularity among the Hispanic population and as this market continues to enjoy an increased demand for grape fruit soda, thanks to an increase in population, the company is in a better position to increase its sales volume in this particular target market.

On the other hand, the company does not have a large advertising budget compared to two of its main competitors that is, Pepsi Co and Coca-Cola. This may threaten attempts by the company to maintain the existing market share for its brand that has for the most part enjoyed flat sales.

Overview

The market for soft drinks in the country is competitive and is mainly made up of two manufacturing systems, one being the flavoring and concentrate companies while the other is the soft drink manufacturing companies. The industry is majorly dependent on the syrup produce, with analysts observing that it is the driver of several downstream operations.

The companies operating in the industry tend to follow a similar product life cycle that starts with a syrup producer then moving on to bottling before developing to distributors of products. The company finally grows to manufacture the product in large-scale, something that characterizes a merchant.

Finally, the organization turns out to be a consumer of manufactured goods. Regarding geographical location, many soft drink companies are found near the source of raw materials and the market meaning that they are situated in densely populated locations. Several distribution channels are followed when supplying the products to the consumer.

Recently, the industry is facing several challenges due to the slumping economy, as well as changes in the consumer consumption patterns, as many people are concerned with their health. Regarding the international market, all major companies operating in the industry are focused on the African and Hispanic markets, as they are viewed as the potential markets for growth given the fact that they have a stable consumer base. Another challenge facing the industry is the growing policy debate as regards to taxation of sugar beverages.

NAICs Classification

The industry name for soft drinks is manufacturing and the code is 31211. The category of industries under this classification should purely engage in the production of soft drinks, ice, and bottled water, including the carbonated drinks.

Market Segmentation

First, the industry players should understand the demands of the brand conscious consumers, which include those customers who are in their early twenties comprising of mainly the university students, the working class, and those who have the ability to join their friends in parties.

This category of consumers is carefree and exhibits a special character suggesting that they are freestyle. Therefore, they always want to be associated with the high-end products and their purchasing is based on the quality of the product. In other words, they always buy the image that signifies a stylish product, which exudes buoyancy.

The market is dominated by the average consumers as well and includes individuals who are prone to buying products out of tedious habit. These consumers acquire products because of the media influence, as they are brainwashed to believe that certain goods bring satisfaction. The teenagers dominate this category of the market, even though some university students fall under the class.

The third group of consumers is composed of peer-pressured individuals since they simply follow their friends in buying the products. The last type of customers is the soft drink addicts and this comprises of those individuals who follow the product without considering its substitutes or supplements (Gupta and Lehmann 89).

Periodicals Covering the Soft Drinks Industry

Several articles producing companies and magazines publish news and events related to the soft drinks and the entire industry. One such company is the national association of soft drinks manufactures, which is based in London, publishing Twickenham magazine since 1982.

The same organization publishes a journal article referred to as the soft drinks trade journal, which is an international journal on soft drinks industry. The periodical was published from 1947 to 1982. The British soft drinks association publishes the soft drinks management international, which is a global journal on beverages. In the US, food magazines, the global outlook, and the Poughkeepsie journal deal are some of the publications that talk about soft drinks.

Competitive Structure

The industry has a market structure that is two-tiered meaning that small group syrup producers give territorial franchises to bottling companies whereby they are made the only distributors of products. The Coca Cola was the first company to do this in early 20^th century, but others followed the same channel when they entered the market in the subsequent years. Based on this, the type of market exhibited in the soft drinks industry is an oligopoly because small groups of companies control the industry.

A close study of the market suggests that it is more of a monopoly since small firms that are not in direct competition with the distributing companies dictate policies and determine what should enter the market. Market power is defined as the ability of the company to raise the market price with an aim of increasing its profit margin (Lau 127). Companies operating in perfectly competitive markets do not have the power to increase prices without losing a substantial segment of the market.

However, the soft drinks industry is different since corporations can easily raise prices without losing any of their clienteles to opponents. Companies in the industry, including Pepsi and Coca Cola, have the capability of affecting the total quantity, as well as the prices of products in the market. The major companies operating in this industry are Coca Cola, Pepsi, Cadbury Schweppes, and the Dr. Pepper Snapple Group.

Future Prospects

An analysis of the microenvironment reveals that the soft drinks industry is expected to perform better in the future mainly because of the steady product innovation. Companies are known to identify consumer demands and needs while at the same time aspiring to adjust by adopting the new technologies in order to survive in the competitive market.

The recent trend whereby the soft drink companies are winning exclusive rights to supply products in schools and stadiums is an advantage to the industry, as this will help them in developing faster. In the industry, clients are dedicated to a variety of brands since studies show that consumers of carbonated beverages are always enthusiastic to certain foodstuffs meaning that they seldom acquire any other from the market.

The sales of many companies in the industry are expected to go up and this will facilitate profitability. Even though competition is expected to be stiff in the future, companies are already seeking markets oversees and this will ensure that they survive in the highly competitive market (Warf, Frederick and Stutz 16).

Works Cited

Gupta, Sunil, and Lehmann, Donald. Managing Customers as Investments: The Strategic Value of Customers in the end. Upper Saddle River: Pearson Education/Wharton School Publishing, 2005. Print.

Lau, Ronald. “Competitive factors and their relative importance in the US electronics and computer industries”. International Journal of Operations & Production Management, 22.1 (2002): 125–135. Print.

Warf, Frederick, and Stutz, Barney. The world economy: resources, location, trade, and development. Upper Saddle River: Pearson, 2007. Print.

Introduction: Five Forces Analysis of Food and Beverage Industry

Many firms in the beverage industry have integrated Porter’s five forces model into their marketing strategies with the aim to competitively positioning their products and services in the market against rivals firms (Porter 1985). One such typical example is the beverages industry. The beverage industry is a case study which contributes a rich body of knowledge based on Porter’s five forces leading to the successful growth the industry has experienced over the years.

In this case, this analysis provides an in-depth understanding of how Michael Porter’s five generic forces have influenced how firms in the beverages industry position their products and services in the market and the most appropriate forces an industry should emphasize on to gain an upper hand against competitors, with firms such as Starbucks as a case example.

According to Ball (2007 p 1), firms dynamically formulate strategies to enable them to gain a strong position in the market, increase the market share to optimize on profits, to gain and sustain strong brand images, and positively influence profits (Argenti 2004; Cummings & Daellenbach 2009).

In practice, clever company executives keenly learn the implications of different forces in the market on the performance of their firms and the best ways to combine the forces and isolate the best combination to strategically position their firms in the market (Parker 2000). That is in addition to conceptualizing on the best strategies to retain and grow their market shares. Ones such solution is provided by Michael Porter’s five forces.

The Aim of Five Forces Analysis in the Soft Drink Industry

The aim is to provide an analysis of Porter’s five forces on how firms in the beverages industry operate in the market to gain and create a strong market position in a competitive environment and create a strong market share and strong brand image.

The objectives used in the study were to:

1. Analyze how firms in the beverages industry have employed Michael Porter’s five forces to gain a strong market position.
2. Identify the strongest forces the firms in the beverages industry employ, which provide the right combination to gains a strong market position.
3. Provide a critical analysis of the outside-in approach to strategy formulation.

The Importance of Studying Firms in the Beverages Industry

The rationale for studying firms in the beverages industry is because of the body of knowledge the study contributes to this paper based on Michael Porter’s five generic forces. That provides an in-depth understanding of the significance and role the forces have on the positioning of firm in the market to gain a competitive advantage in their rivalry.

Beverage Industry: Porter Analysis

Based on a strategy to grow and sustain their position in the market, firms in the beverage industry have exemplified the significance of applying Michael Porter’s five forces in a competitive marketing environment (Adamy 2008). Studies have shown that many firms in the industry have integrated the five forces, which include the potential for new entrants, industry suppliers, buyers, substitutes, and new entrants into their marketing strategies to analyze competitors, and strategically position the firms and succeed in the market.

Industry Competitors

Different firms in the beverages industry have strategically positioned themselves to compete with rival firms in the beverages industry. To be competitive, firms in the industry have specialized in product based competition based on price adjustments against their rival firms (Barney 2002; Barney 2002; Mahoney 1992).

To counter the rising competition from related companies, such firms have narrowed their products by specializing in product differentiation, by introducing differently flavored coffee such as raspberry, amaretto, hazelnut, and pumpkin spices with distinctive flavors.

Threat of New Entrants in Beverage Industry

A typical example in the beverage industry is in the production of coffee beverages. The coffee industry has low premium on economies of scale leading to low barriers of entry into the coffee industry. Firms that operate in this industry with Starbuck as a typical example have endeavored to introduce a variety of products to address the entry level into the coffee industry by new firms.

That is in addition to optimizing the high switching costs, fixed costs, high costs of specialized equipment, and high costs of constructing roasting plants. In addition, firms have entered into exclusive retail chain distribution agreements, limiting access to the market by new entrants (Barney 2002).

In addition to that, other factors to include are asset specificity that can easily be converted to produce other beverages. The firms have integrated in the production processes minimum efficiency in scale using proprietary product technology (Pickering & Matthews 2000).

Substitute Products

To success, firms in the beverages industry introduce products tailored to address different customer needs to counter the effect of substitute products into the market. The impact of substitute products has had little impact on firms operating in the beverages industry’s market position (Blumenthal 2007).

Bargaining Power of Buyers

The bargaining power of buyers in the beverages industry is at a disadvantage because large firms have little abilities to negotiate with the buyers since there are few alternatives. To address the situation, firms have developed a specialization strategy of creating a significant amount of product differentiation because of price variations (Cummings & Daellenbach 2009).

In addition to that, brand premium is critically significant in diluting the power of the buyers, making the demand for a product not to be influenced by the consumer’s knowledge of the market status of a firm. Therefore the effect on the bargaining power of buyers has no positive impact on the firms operations in the market.

Bargaining Power of Suppliers in Food and Beverage Industry

Firms in the beverage industry have optimized the bargaining power of suppliers of raw material such as the supply of raw coffee bean, which are used to produce coffee with different flavors by optimizing the supply of coffee beans from unionized suppliers of the raw beans (Porter 2008; Engau & Hoffmann 2011). Here, firms optimize concentrated suppliers, different suppliers of the raw materials, and reducing the bargaining power of the suppliers, which leads to a decrease in the price of raw materials (Hall 1992).

The Most Important Porter’s Forces in the Beverage Industry

In practice, the five generic forces, according to Michael Porter’s play unique roles when formulating a strategy to position a firm competitively in the market (Hall 1992). Each of the forces play varied roles with varying significance. One typical example is how firms in the beverages industry have identified and combined the most appropriate forces to create a competitive advantage against rival firms in the market (Genzlinger 2007).

The most critical forces include industry rivalry, potential for new entrants, and substitute products. Other forces including the bargaining power of suppliers and the bargaining power of the consumer have had less significant impact on the market position of firms in the industry (Genzlinger 2007). The following is a discussion of the most important forces and the rationale for their significance in the beverages industry (Porter 2008).

Competitive Rivalry

In theory, the degree of rivalry in an industry is based on the rivalry between firms in the same industry, the cost associated with migrating from the industry, the level and ability for a firm to utilize capacity, the size of the market and growth trend of the market, and the strength and loyalty of a brand in the market (Porter 2008).

These elements, being salient features in industry rivalry are identified as critical in positioning successfully firms in the beverages in particular the coffee industry (Genzlinger 2007). Firms in the beverages industry have been very successful in positioning themselves in many retail chain outlets in many countries.

To sustain the position in the market, one critical component identified their strategy is the approach used to counter the rivalry experienced from small and large industry competitors (Gaffen 2008; Genzlinger 2007). A typical example is the rivalry experienced by Starbucks. The rivalry in the coffee and beverages industry has evidently been rising in the recent past.

That has been in the form of competitors which include Gloria Jeans Coffee, Coffee Bean & Tea Leaf, among other industry players. The industry players range from privately owned firms to small players in the industry. That is in addition to the competition that has increasingly been experienced from secondary coffee providers which include Burger King, Dunkin Donuts, and McDonalds among others in the industry (Gaffen 2008).

The strategy is to provide cost leadership based on competitive prices, create strong brand loyalties and brand image with the aim of increasing customer loyalty through product differentiation, and address differentiated focused customer needs through specialized focus. It is critical to note that rivalry because of undermining factors for the business model adopted by firms in the beverages industry is not affected by technology, political regulations, demographics, and new products.

Potential for New Entrants

The potential for new entrants into the beverages industry dominated by different firms such as Starbucks enjoys leadership in coffee has experienced growth in threat from new entrants into the industry (Gaffen 2008). New entrants pause the threat partly because of the rise in profits and dominance the firms have experienced in the industry with time, and the fact that such firms have dominated the industry for long with premium profits.

One of the strategic approaches of countering and creating barriers to potential new entrants exemplified in their strategy is to reduce product prices as a cost leadership strategy, by differentiating such products to discourage new entrants into the market (Porter 2008).

The cost leadership differentiation strategy includes providing a number of different products at different prices to ensure each category of people in different income brakes are catered for. In addition to that, the firms have created a unique and strong image in the market creating strong customer loyalty and brand image.

Here, customers have developed strong attachments to the products which are uniquely identifiable attributes, reducing the potential threat from new entrants (Gaffen 2008). The variety of different quality products the firms offer to their customers in the market and the degree of loyalty in the supply of coffee beans in the market places the firm at a competitive advantage against its rivals.

In this case, the strengths experienced by the firms based on the potential new entrants force incudes having competitive assets, strong employee skills, knowledge and experience, and strong market position. That could be used to counter the weaknesses that has in the recent past lead to a decline in profits, market share, and unproven liabilities.

Substitute Products

In theory and practice, substitute products provide customers with new and different options when trying to switch to new products that suit their needs. The ease of switching to new products depends on different factors which firms in the beverage industry have to identify when formulating the positioning strategy (Porter 2008).

The core element in view of differentiation, cost leadership, and focus that is critical in light of the threats of substitutes includes (Porter 2008). Porter (1985) shows, in the context of threat of substitutes, that it is critical for a firm to create a range of products with different attributes and quality and having a perceived value and quality that suits the needs of each customer.

In this case, the firms have enjoyed a level of near monopoly because of lack of alternative substitutes of real products such as substitutes for coffee (Gaffen 2008). That emphasizes on the strength of the firms’ position in the market and the relationship between the firm and its customers in the provision of specialized quality coffee.

The specialized products offered in the market and the unique customer loyalty the beverages firms have developed in the market has made it difficult for new entrants, limiting significantly new entrants into the industry with their substitute products (Gaffen 2008).

In addition, the strength and weakness of the buyers of beverages has been factored when formulating its marketing strategies making the firm competitive against its rival partners (Porter 2008). The opportunity for sustained a sustained position in the market is based on the ability of the firm to manufacture different products that suit different markets to address different customer needs.

Strategy Formulation: Outside-In Approach

The outside-in approach to strategy formulation emphasizes on positioning firms to address external pressures in the operating environment with the underlying paradigm drawn from industrial economics based on the structure-conduct-performance sequence (Engau &Hoffmann 2011).

Strategy is about the uniqueness of a mix of values based on the choice of activities appropriate in delivering quality services and products in the market. Strategy enables the positioning of a firm in the market with a unique and radically different approach to offering services and products in the market.

Strategy, in this case is defined as “the common thread among the organization’s activities and product markets that defines the essential nature of business that the organization was or planned to be in the future” (Engau &Hoffmann 2011). In this case, strategy is formulated at different levels of business, corporate, and strategic business area. Strategy can be formulated to be functional or competitive.

In each case, the positioning of a firm is critical in implementing strategy. Here, the positioning of a firm underlies the fundamental concept of the outside-in- approach, which is defined by the key steps of analysis, choice, and implementation outline (Cummings & Daellenbach 2009). In this case, a critical analysis of the outside-in approach to strategy formulation includes an analysis of the external environment with its key elements which include positioning.

Positioning

To be competitive in the marketing environment, it is critical that a firm is able to address external competing forces by delivering low cost services and products. Positioning can be need based, segmentation based, and access based. That is because strategy is “Customer-Innovation-Processes-Finance” (Cummings & Daellenbach 2009). The key elements of the positioning strategy are discussed below.

Structure

Positioning follows the components of structure-conduct-performance to align a firm and position it against competitors in the external environment. In this case, structure is based on a through analysis of the firm in terms of its ability to compete with other similar firms in the industry (Cummings & Daellenbach 2009).

That is in addition to the economic factors that underlie the operational capabilities of the firm and its infrastructure (Hall 1992). At this point, it is critical to identify how the firm addresses key issues that arise such as the products the customers buy, the kind of steps to take including legal steps to discourage competitors, and the internal structure of the firm to enable organizational managers introduce requisite changes to achieve better performance (Hall 1992).

A critical analysis shows that the outside-in approach enables the firm to achieve its long term goals by enabling structural reorganization to take the most appropriate actions to position the firm competitively. In addition, the current portfolio resources are factored, a self-renewing cycle is initiated, the core competencies are revised regularly, tradeoffs are eliminated, past knowledge is accumulated and used, and a clear foresight is developed in the process exhaustively leading to the next element of conduct (Gaffen 2008).

Conduct

Conduct includes identifying competitors and their strategies in the industry. Competitors are always aware of the strengths of other competitors in the same industry and always endeavor to design strategies to counter their rivals. In this case, industry analysis incorporates analyzing the five forces identified by Porter.

These include competition among companies, the use of substitute products and services, threat from new entrants into the market, the bargaining power of the customers, and the bargaining power of suppliers (Gaffen 2008). The strategy formulated in this case can either be focused on generic.

Performance

One critical element that differentiates a strategy is performance, which is based on the profitability of a firm and across the industry. That is in addition to conducting an analysis of the performance gaps in the organization to determine the past, present, and future projections in performance of the firm. The link between the actual reality and the future position of the firm are critical in the analysis based on the current trend.

Strategy Formulation: The Positioning Approach

Having discussed the impact and essence of the core elements that define organizational positioning, it is critical to evaluate the approach used to position organizations in the market, which is critical in formulating the outside-in strategy. One of the approaches and core elements are defined by analysis, choice and implementation features (Gaffen 2008).

Typically, it is a combination of different elements in a framework which consists of analysis, choice and implementation. In the analysis context, the core elements are defined in the five forces framework which is used to identify competing forces in the industry.

Here, the competitive forces can be analyzed in the context of Porter’s five forces (Genzlinger 2007). The outside–in strategy formulation is based on the assessment of the external environment based on the impact of the five forces in relation to the source of competition.

In this case, the forces can be intense depending on the type of industry, which in turn provides an indicator of the profitability of the industry. The forces can be intense or benign. Understanding the forces in any industry and associating the impact due to the forces on the performance in profitability is a critical element in the outside-in strategy formulation.

Strategic Group Analysis

The five forces framework can be combined with the strategic group analysis, another component critical in the analysis phase in the outside-in strategy (Barney 2002). In this case, the strategic characteristics of the industry players are assessed in strategy formulation.

The strategic group characteristics in the industry include identifying the groups in the industry and other players in terms of technology, innovation, and structure to determine their competing capabilities (Barney 2002). That is in addition to the type of groups critically categorized into reference groups, which constitute an execution group for customers to learn what a firm does, resource groups which underlie the approach for initiating decisions and the impact markets have in influencing the accumulation of resources.

In addition to that, a market group defines the perceptions developed by the customer of the products and service provided by a firm. In this case, the industries with a similar combination of strategies are identified as strategic groups based on geographic coverage, the degree of vertical integration, marketing efforts, branding, market segmentation, pricing policies, channel selection, technological leadership, specialization, and product and service quality (Hall 1992).

The purpose of the group analysis is to enable a firm identify direct competitors and their strengths, the flexibility and ability of competitors to shift their competing strategies, ability to identify strategic problems, and the ability to identify existing opportunities.

Value Chain Analysis

The value chain analysis is another element in the outside-in strategy formulation designed to drive an organization into gaining competitive advantage over its rivals in the same industry. Value in this case is gained from a unique combination of attributes that a customer values most in a product or a service.

In formulating the strategy, the organization seeks to identify the best method a product and service gains value when in the production process, or in the process a service is rendered to the customer (Hall 1992). It is one element that enables the configuration of discrete activities in the value chain so as to create a strategy that positions an organization at a strategic advantage over its rivals.

Choice

Choice is one element that results from the combination of five forces framework identified above, strategic analysis of groups in the industry, and the value chain analysis. The combination provides an informed capability of identifying the best generic strategy by choosing between low cost leadership, focus, and differentiation in the industry.

Low cost entails leads to competitive advantage based on economies of scale, while differentiation is defined by the degree of uniqueness in services and products, with focus signifying market segments based on differentiation and cost leadership and the best approach of implementing the strategy.

Implementation

Critically, when all the elements of analysis and choice have been integrated and analyzed to provide the best combination in the process of the outside-in strategy formulation, the organization identifies the best approach of implementing the strategy to gains a competitive advantage and position in the market with the underlying focus on providing the best customer value.

That is in addition to requiring a full comprehension of the business results that could provide the basis for organizational growth in terms of establishing strong customer engagement with brands, strong brand image, improved levels of productivity, increased levels of customer satisfaction, and generate empirical results upon which implementation occurs.

Critically, the key elements of customer satisfaction and loyalty of the outside-in strategy provide a strong basis for organizational positioning in the market against its rivals.

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Full of Life Company Description

Coming up with a name for a company is one of the most critical components of a successful business plan; the name has to not only attract customers but also be representative of the entire business itself and for what it stands. The business plan included in this paper relates to a non-alcoholic beverage company.

It is proposed to call the company “Full of Life.” This name instantly shows the customer that the brand is oriented on providing high-quality drinks that will not take their energy away and will not be harmful to their health (e.g. like Pepsi or Coca Cola). On the contrary, “Full of Life” is a brand name that represents a response of business to care for their customers’ health and provide them with a high-quality product.

Moreover, the name was chosen to fit the criteria of a successful brand name, which include simplicity, familiar sound, distinction, and vivid imagery (Hague, 2016). It is noteworthy to mention that Full of Life will position itself as a “green” brand that focuses on spreading awareness of the environmental issues and engaging the public into a conversation about the harmful effects of unhealthy beverages as well as the adverse impact the food and beverage industry has on the surroundings.

Mission Statement and Rationale

The mission statement for “Full of Life” will be “Creating the best product that will differ from any other on the market for bringing you energy, inspiration, and a moment to refresh your day.” The mission statement was chosen for communicating to customers that the company has the best intentions in mind when it comes to providing a product to consumers. The product will be different from any others on the market because of the unique combination of high-quality ingredients and reasonable pricing.

Moreover, it is important to mention that the mission statement does not place a focus on the “energy” component since the product is not an energy drink but a blend of locally sourced ingredients. The notion of energy will also be incorporated into the vision of the company is a somewhat different meaning – Full of Life will implement its Social Responsibility efforts to discuss the topics of the natural resource use as well as the incorporation of renewable energy for the production of refreshing beverages.

Strategic Management of Full of Life

Strategic management refers to the operation of an organization through using all available resources for meeting the set goals and objectives; it involves setting aims, analyzing the competition, evaluating the internal processes within an organization, exploring possible strategies and making sure that the management of an organization puts in all efforts necessary for successful operation. When developing the business plan for Full of Life, the mixed approach to strategic management will be implemented: both prescriptive and descriptive ways to develop a brand strategy will be used.

The purpose of the business plan is to develop a strategy to reach a large customer base that will be interested in purchasing non-alcoholic beverages that do not contain harmful ingredients. The potential for the company’s growth is vast, with more and more customers realizing the need to choose healthier beverage options over sugar-packed drinks that only harm them. Another important point to mention is that Full of Life will include the message of environmental sustainability into the strategic management of the company. The choice of packaging, ingredients, marketing, and public outreach efforts will align with the awareness of the company about the adverse impact of manufacturing on the environment.

Industry Analysis and Trends

The non-alcoholic beverage industry is among the largest and the most dynamic industries, with new trends appearing and old ones disappearing. With products being launched every day, it is imperative for a NAB business to keep up with trends and convince customers that their beverages are the best. In 2017, the NAB industry was expected to see an increase of beverages infused with plant-based proteins, sparkling water, non-alcoholic adult drinks, cold brew coffee, and cold brew tea (Kazonaite, 2016).

Non-alcoholic drinks are available in the market in a variety of forms like fruit juices, carbonated beverages, ready-to-drink teas and coffees, bottled mineral water, energy drinks, and many other variations. The concern of the global public with their health has led many consumers to review their attitudes towards alcoholic drinks and switch to non-alcoholic ones. Therefore, drinks made from natural ingredients present a great opportunity. This type of non-alcoholic beverage was chosen for the following three reasons:

• Healthy drinks were gaining momentum in 2017;
• The product will be suitable for both kids and adults;
• Opportunities for expanding the product line are endless.

The NAB industry is continually expanding, with healthy drinks becoming a priority for many consumers, as evidenced by the trends in the industry. Leading beverage manufacturers are currently working on new product launches to cater to the changing needs of consumers that are concerned with their health. The market size of NABs used to be approximately $1545 billion in 2015 and is expected to rise to $2026 billion in 2022, growing by 4.3% each year (“Global non-alcoholic beverage market,” 2017).

As to market dynamics, the NAB market is largely influenced by the changing lifestyle and preferences of the majority of consumers, as well as the demand associated with the growing population and the rise of disposable income. Awareness of customers regarding the adverse effect of artificially sweetened drinks is steadily growing, while governmental regulations for the use of potentially harmful ingredients in drinks drastically constrain the growth of the market.

For this reason, the global industry of non-alcoholic beverages has open opportunities for brands that produce “alternative” and innovative products that contain zero or low amounts of artificial sweeteners. The NAB market can be loosely divided into product types, distributions, and sales channels, as well as geography. Regarding product types, the market can be differentiated into carbonated and non-carbonated drinks. While carbonated beverages contain cola-like beverages that contain carbonated water, non-carbonated beverages include juices, tea, coffee, energy drinks, bottled water, etc. By types of sales and distribution channels, the market of NAB drinks can be differentiated into hypermarket, supermarket, specialty store, convenience store, department store, and online purchase.

Strategic Position and Risk Assessment

A company’s strategic positioning refers to the efforts of the management to create a certain kind of value as well as how that value could be created differently in comparison to the rivals. In the case of Full of Life beverages, benefit positioning is the most appropriate choice. The company will focus on communicating the unique benefits of the Full of Life drinks by highlighting the most powerful attributes that consumers value. Among such benefits are high quality, health benefits, ethical sourcing, and the home-made approach. While the majority of NAB companies focus on price positioning to stand out among competitors, Full of Life will take a unique approach and will place emphasis on the benefits of its drinks.

Risks and Their Management

The three types of risks Full of Life may face when entering the market and expanding the operations are associated with:

• Competition;
• Business plans and management strategies;
• Supply chains.

To address risks related to competition, Full of Life will focus on its brand positioning as a health-oriented company that puts customers (rather than competitors) first. To address risks associated with management and business plans, Full of Life will create a strategy to involve skilled staff, managers, and investors to develop an action plan for eliminating any issues. As to the mitigation of supply chain risks, the company will have to collaborate with only responsible parties.

SWOT Analysis

SWOT analysis is a technique businesses use for understanding their strengths, weaknesses, and identifying open opportunities and threats. The SWOT analysis for the Full of Life non-alcoholic beverages is presented in the matrix worksheet below:

Overall, it is expected that Full of Life non-alcoholic beverages will position itself as a consumer-oriented brand that produces high-quality products from natural ingredients. Starting as a small family brand, the company has an opportunity to capture new audiences and attract customers that are concerned with their health. Moreover, the ideas of environmental sustainability will be high on the agenda for the brand, so the company will invest time, efforts, and funds into educating the public and promoting healthy beverages. On the other hand, competition in the sector is rising, so it is imperative for Full of Life to develop a strategy to address the identified weaknesses and threats.

Target Market

Fry (2015) found that the market of non-alcoholic drinks was dominated by carbonated soft drinks ($70.6 billion); however, as some brands of fizzy drinks decline, the emerging “better-for-you” segments face tremendous opportunities to take a significant share of the market. Despite the skepticism around healthy drinks, the market is overflowing with opportunities (Moloughney, 2016), which points to the need for developing a high-quality product and offering it to consumers.

The market for health and wellness beverages and foods is driven by the growing recognition among scientists, consumers, and the government that diet and lifestyle play exceptional roles in addressing an extensive range of health conditions. Importantly, diseases associated with unhealthy consumption habits such as heart disease, stroke, some cancer types, diabetes, and high blood pressure are among the leading causes of mortality in the US. Moreover, the risk of developing such diseases is higher as the population ages, which points to the need to prompt this consumer segment to seek innovative and alternative products that will not hurt their health.

The key facts that need to be taken into consideration when defining the target market for Full of Life beverages are the following:

• Approximately two-thirds of American grocery shoppers have bought a beverage or a food product in order to address one or more of the many wellness and health issues. In particular, concerns associated with the management of cholesterol and poor digestion are high on the agenda of the health-aware population.
• With regards to many foods and drinks categories, “targeted health and wellness,” consumers show increased willingness to pay more for high-quality products that are better for their health.
• The reputation of ingredients used in foods and beverages is a highly significant factor to which consumers pay attention when making purchase decisions. Therefore, there is a need for health-oriented food and beverage brands to communicate the benefits of ingredients they use in a consistent, frequent, and clear manner.
• Health providers are the key sources of information for many shoppers with regards to nutrients found in food and beverages. Recommendations made by healthcare professionals are essential for consumers with specific health concerns.
• Consumers show an increased interest in conducting research about the positive and negative effects of certain ingredients in products of consumption. Websites concerned with health, nutrition, wellness, and exercising are all valuable resources for modern consumers; this also presents an opportunity for Full of Life to advertise beverages on such platforms.
• Generally, shoppers that take care of their health tend to visit a larger variety of grocery stores than the “average” consumer.

At the forefront of emerging opportunities for selling healthy drinks, there are three health-conscious demographics at which the company can target its product. These three customer segments include millennials, baby boomers, and overall health-conscious consumers (which make in total 64% of the customer demographic in the nearest areas), as found in the press release of the Packaged Facts (2014) division of MarketResearch.com. 83% of millennials see their wellness and physical health as essential components of their daily life (Goldman Sachs, 2016), which makes them highly likely to purchase Full of Life beverages that do not contain harmful ingredients. Similar to millennials, baby boomers are also exceptionally aware of their health.

Competition

The competition in the global market of non-alcoholic beverages is reported to be severe mostly in developed countries of regions such as Europe and North America. Markets in these regions tend to exhibit slow rates of growth and steady demand for innovative non-alcoholic beverages. Opportunities for growth tend to be less promising in developing regions such as the Asia-Pacific (“Global non-alcoholic beverage market,” 2017).

It is noteworthy that India and China are the two fastest growing markets for NABs since the vast population of these countries has had a positive impact on encouraging the demand. With multiple new products being launched each month and large marketing campaigns filling the media, smaller level players are challenged by the giant corporations to capture the public’s attention. For this reason, smart business strategies are high on the agenda for brands such as Full of Life.

The overall NAB marketplace is dominated by a handful of top players such as Coca-Cola Company, Danone, Nestle S.A., PepsiCo Inc., San Benedetto, and Dr. Pepper Snapple Group Inc. (“Global non-alcoholic beverage market,” 2017).

As to the market competition for Full of Life beverages, it is important to investigate brands that produce healthy beverages and market them to the similar demographic. Among the popular brands that are similar to the ideology of Full of Life, Feel Good, Infinite Health, Viva, Naked, Vitamin Water, Nomi, Kevita, and others are currently dominating the market of healthy beverages that do not include water.

Overall, the market of healthy beverages is considered a niche market within the non-alcoholic beverage sector, which is generally dominated by soft drinks such as Pepsi and Coke. In order to differentiate Full of Life beverages from competition, it is important to determine the ways in which the product stands out regarding its benefits, design, price, quality, and customer service. As to the benefits, Full of Life beverages do not contain any harmful ingredients such as preservatives and thus are beneficial for consumers’ health.

Regarding the design, Full of Live beverage bottles are made of sustainable materials such as recycled glass or cardboard, which contributes to the lower price compared to the competitors that use plastic for packaging. The quality of Full of Life beverages is the focus of the differentiation strategy because the drinks are made from locally sourced ingredients with a unique recipe developed by a small family business. Lastly, customer service is especially important for differentiating Full of Life drinks from competitors – the company will provide the round-the-clock customer support for complaints, feedback, and recommendations in order to reduce the gap between the customer and the company.

Marketing Plan & Sales Strategy

First, it is important to understand the definition of marketing vehicles and how they could help Full of Life succeed on the market. A marketing vehicle is a tool used for delivering an advertisement to the target audience (Lake, 2017). Marketing vehicles can be in print (e.g. newspapers, magazines) and digital (e.g. Google AdWords) forms. To cater to baby boomers and millennials at the same time, Full of Life should use both digital and print vehicles for conveying the message of a healthy lifestyle to all generations. The second step is the identification of specific marketing tactics to promote the brand (“The strategic marketing process: A complete guide,” 2015).

Among the key tactics is the establishment of the social media presence (a website, Facebook, Twitter, and Instagram accounts). Direct interactions with potential customers are the second tactic for brand promotion, which includes offering samples in grocery stores such as Whole Foods and Trader Joe’s. After tasting beverage samples, customers will be encouraged to give their feedback on the quality and taste of their drinks.

In order to arrange such tastings for consumers, Full of Life should collaborate with the resellers (grocery stores) of both general and health-oriented specialization. Reaching resellers will be possible with the help of online communication since the majority of modern grocery stores have a strong online presence. As to the direct sales and promotion of Full of Life beverages, in the first two months of the product launching, the company will have a hundred bottles of the beverage sent to random customers in exchange for reviews and feedback (Muldoon, 2016). Exposure is the key component of promoting Full of Life beverages, and the example of Amazon shows that providing consumers with products to get an honest review can potentially bring successful results.

As to brand exposure, social media presents an opportunity for the company to reach health-oriented “influencers” to collaborate with them for promoting Full of Life drinks. Since a large target segment of potential consumers includes millennials that follow bloggers on different social media platforms, reaching people with a large following is a smart strategy that not many beverage producers use.

Health-oriented “influencers” may include fitness trainers that post workout videos on YouTube, vegan and non-vegan bloggers that post healthy recipes of meals and drinks on their Instagram, dieticians with a large following, and other creators that put out health-positive content. Such an advertisement tool will allow Full of Life to target its products with the help of the vision of different people and how they choose to communicate the message of the brand. At the end of each campaign of working with influencers, it is crucial for the company to measure the outcomes to determine whether the audience received the advertisement positively.

Because Full of Life is a “green brand,” a lot of the marketing efforts will be associated with engaging the public in the conversation about the environment and what the company does to reduce the negative impact of the beverages’ production.

Full of Life will take part or organize charity and other social events associated with the issues of environmental sustainability and will promote the brand through communicating its values and ideas to the public. Such activities a more likely to increase awareness of the brand and position Full of Life beverages as products that spread a positive message of the environmentalist identity and healthy lifestyle choices.

Regarding the 5Fs (function, finances, freedom, feelings, and future), Full of Life drinks will include beneficial ingredients such as fresh spring water and locally sourced fruit that will act as refreshers during the day (function), will cost less compared to competitors (finances); the product will be available both online and in physical stores (freedom) to allow consumers embrace a healthy lifestyle (feelings). Full of Life is looking to stay in business and expand for promoting the message of positivity and health (future).

Marketing Plan Budget

The spreadsheet presented below includes the year-long budget for Full of Life beverages divided by month. What is important to mention is that December will be the focus of the marketing efforts for the company due to holidays, which means more families are getting together to watch TV and go shopping. July, October, and December will be important for marketing the product to customers directly (during tastings and sample sharing) since these months are associated with holidays as well.

Ethics and Social Responsibility Plan

First, it is important to mention that ethics and social responsibility are essential components of any business endeavor; moreover, they influence companies’ organizational identities. In the area of economic marketplaces, companies are responsible for the ethical and socially responsible operation. On the other hand, ethics are not included in the plan for achieving specific goals; rather, it is a component of the logic that a company uses to take action.

In the case of Full of Life, a company that operates on the principles of using locally sourced ingredients, collaborating with small farmers, and producing beverages that only have a positive influence on customers’ wellbeing, ethics, and social responsibility play even a larger role. The ethics and social responsibility plan for Full of Life will incorporate such strategies as voluntary hazard elimination, community development, philanthropy, social education and awareness, as well as social education and awareness regarding environment issues. Regarding the public, the plan will include strategies such as creating jobs, fair and honest treatment of employees, and nondiscriminatory practices.

Voluntary Hazard Elimination

The strategy of voluntary hazard elimination implies businesses taking action to reduce and eliminate practices of manufacturing that may have an adverse impact on the public regardless of whether or not such practices are considered harmful by law. Since Full of Life can be regarded as a “greener” business compared to others (e.g., the packaging is made from the recycled and recyclable material, the beverage does not contain any harmful ingredients, etc.), the issue of waste disposal is not as high on the agenda.

However, the problem of energy use remains. It is expected that Full of Life will use renewable energy sources such as solar energy for production. Such choice aligns with the values of the company to remain environmentally sustainable while it also relieves the burden of using natural resources that cannot be renewed.

Community Development

The operation of Full of Life will also be associated with collaborating with appropriate institutions to create a better local environment for work and life. Such institutions can include local environmental organizations, worker cooperatives, educational institutions, and other local businesses that share the same values. Full of Life will also participate in educating the public on the importance of a healthy lifestyle, environmental sustainability, and ethical sourcing.

Philanthropy

This strategy is associated with making monetary contributions to help local educational, charitable, health- and work-related organizations for assisting the under-served communities in the area. The beginning stages of the company’s development are likely not to allow make generous monetary donations to help those in need. For this reason, Full of Life may provide education for the public and create jobs for the unemployed.

Social Education and Awareness

The strategy of social education and awareness implies the implementation of use positioning for exerting pressure on other business to adopt socially responsible practices. Full of Life is considered a “green” company that has knowledge of the most useful and sustainable practices a business could use. For example, Full of Life may use social media for demonstrating the sustainable practices the company uses for exposing companies with potentially harmful activities. This will encourage the public to engage in a dialogue for the development of social community awareness. Consequently, social community awareness is expected to have a positive influence on reaching social education and awareness goals.

Creating Jobs

According to Hoffman (2013), employment should be considered a pillar of Corporate Social Responsibility since lack of jobs for the community have a devastating economic effect. For this reason, as the operations of Full of Life grow, the company will invest in creating jobs for the local community to address the issue of unemployment.

Fair and Honest Treatment of Employees

For ensuring smooth performance in the workplace and making employees productive and satisfied, Full of Life will implement fair and honest treatment strategies. Fairness in the workplace implies developing trust from employees for them to be more effective when working towards individual or group goals. Fairness practices may include “the golden rule” (treating everyone as one would like to be treated), not choosing favorite employees, not taking advantage, modeling appropriate rules and behaviors, changing the existing rules to ensure fair treatment, and being honest. The management of Full of Life will be instructed to tell employees how to do things and why they should be done, why a specific procedure should be put into place, and so on. Being honest with workers equals to treating them fairly and respectfully.

As to the more specific actions targeted at making the workplace fair, the management at Full of Life is expected to establish common rules for all workers (e.g., criteria for performance reviews, bonuses, promotions, raises, disciplinary action, and qualification for various benefits). Moreover, it is important to introduce equal footing, which means that employees with similar skills and abilities should be treated uniformly.

Other beneficial practice for ensuring fair treatment of employees will include giving workers opportunities to express their opinions, sharing new ideas and grievances, and appeal decisions or actions they see as unfair. Lastly, giving credit to the smart ideas of employees is another fair practice that Full of Life is expected to implement.

Non-Discriminatory Practices

As an ethical employer, Full of Life will introduce non-discriminatory practices to make sure that workers of all genders, cultural backgrounds, religions, races, and physical capabilities are included in the workplace and are valued for their skills and potential rather than any other characteristics.

Full of Life will be devoted to basing employment relationships on the principles of fairness and equal opportunities without discriminating with regards to all aspects of the employment relationships, such as recruitment and hiring, compensation, work conditions and terms of employment, training, promotion, discipline, and others (EBRD, n.d.). It is also important to mention that the management will pay attention to the discriminatory moods within relationships between employees to make sure that no discrimination is accepted or tolerated.

Following the topic of discriminatory practices, Full of Life will make sure to increase the diversity of the work force. While there is no perfect practice to do so without unintentionally developing “reverse discrimination,” it is crucial for the management of the company to focus on recruiting employees that are skillful regardless of their diverse background.

Following Jurisdiction Laws and the Impact of Full of Life Beverages

As to the compliance of Full of Life with the laws of every jurisdiction it operates, it is expected that a business supplying food or drinks obtains the appropriate health permits and undergoes initial and periodic inspections. Furthermore, it is recommended to pay attention to land usage laws regardless of the business type to make sure that the production plant is not affecting the local area.

While many beverage products can have an adverse effect on the health of both children and adults, the message that Full of Life beverages spread is opposite. As mentioned previously, Full of Life focuses on producing beverages that are made from high-quality local ingredients through cooperating with farmers and producers. The beverages contain minimum amounts of sugar and other substances in order to enhance the natural flavors of fruit and vegetables.

Furthermore, the range of the beverages available for purchase will depend on the selection of seasonal products; for example, apple or pumpkin drinks will be sold during the fall season while peach or berry drinks will be sold during the summer months. This allows the company to have more variety in the range of beverages and prove to the customers that locally sourced ingredients make the best drinks. Therefore, it is expected that the impact of Full of Life beverages will be predominantly positive due to smart brand positioning and attention to environmental sustainability, which many food or beverage brands tend to overlook.

It is noteworthy that no potential negative effects of Full of Life beverages have been identified yet. The company promotes a healthy lifestyle to the public and encourages other beverage brands to join the “green” movement and pay more attention to what they produce and what impact the production has on the environment. The usage of energy resources for manufacturing could be considered an adverse effect; however, the next investment into solar energy batteries will be a solution to this issue.

Concluding Remarks

The business plan presented in this paper focused on exploring vast opportunities for a non-alcoholic beverage brand that uses natural ingredients that have a positive influence on consumers’ health. It has been identified that the possibilities for Full of Life beverages are extensive, especially with the rising awareness of many shoppers to choose healthier options of consumable products in grocery stores.

Millennials and baby boomers have shown to be the most prospective target demographics for the company: while baby boomers opt for healthy beverages due to rising health concerns, millennials tend to follow healthy lifestyle trends, especially when they are heavily advertised in the media. Both traditional and alternative marketing efforts will be used to promote the beverages: TV and magazine ads will predominantly target the older generation of the audience while social media ads and collaborations with influencers will be aimed at millennials.

Lastly, the ethics and social responsibility efforts outlined in the business plan will be very prominent for Full of Life – the company will invest into spreading the message of health positivity and environmental sustainability while creating jobs for locals and educating the public. It is expected that the brand will continue expanding its product line, reach broader audiences, and hire professionals to extend the business.

References

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Fry, N. (2015). The evolving non-alcoholic beverage landscape. Web.

Global non-alcoholic beverage market. (2017). Web.

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The strategic marketing process: A complete guide. (2015). Web.

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.