Category: Energy Drink

What We Do

• Mission: Offering high-quality non-alcoholic beverages that boost energy;
• Target: Teens and Millennials (Poindexter, 2012);
• Location: Houston, TX;
• Opportunity: High market saturation (Hill, Jones, & Schilling, 2014);

Competitive Advantage:

• Goals: 10% annual growth.

To establish a foundation for discussion, Edge Incorporated specializes in offering new generation energy drinks that not only boost energy levels and have exceptional flavors but also are ecologically friendly and contain no artificial additives. Due to these aspects of the product, the company mostly targets at teens and Millennials, as these consumer groups are eager to try and explore innovative offers of the market (Poindexter, 2012). The company will start its operations in Houston, TX. Generally speaking, similarly to all B2C models, it will increase its profits by gaining the attention of consumers and enlarging its market shares by ensuring their constant retention. This aspect makes it similar to its major competitors such as PepsiCo and Coca-Cola that occupy 70% of the market, but their market sizes tend to become smaller due to intensifying competition and high market saturation (Hill et al., 2014). Nevertheless, apart from these entry barriers and challenges, Edge Incorporated will succeed in the market not only due to the exceptional taste and eco-friendliness but also with the help of the management’s ability to develop an associated lifestyle and promote health. To achieve these goals, Edge Incorporated will rely on exceptional experience and knowledge of our team of experts and the principles of digital marketing. Overall, our main goals are 1) 10% financial growth during the first and second years and 2) having enough financial resources to expand and maximize profits continuously.

The Opportunity

• High consumption rates – 670 eight-ounce servings per capita in 2013 (Bailey, 2014);
• Rising health concerns (Reece et al., 2013);
• Popularity of social media among teens and millennials;
• Possibilities for geographical expansion.

A primary rationale for having a desire to start operations in this market pertains to high consumption rates that are 670 eight-ounce servings per capita in 2013 (Bailey, 2014). Even though these numbers are not as high as before, another favorable aspect is rising health concerns, as more and more people devote their attention to the dieting habits and sports (Reece et al., 2013). Along with that, focusing on social media and its popularity among teens and millennials is an advantage and opportunity to pursue, and it will lead to subsequent growth and geographical expansion in 2020.

Target Market

B2C:

• 12-30 years old teens and millennials;
• 400,000 customers in Houston, TX, during the first year (U.S. Census Bureau, 2015);

B2B:

• Local farms.

In the previous slides, it is referred to that the main target groups are teens and Millennials. Nonetheless, they have to be 12-30 years old, and it accounts for 400,000 customers in Houston, TX (U.S. Census Bureau, 2015). Along with that, the potential customers in the B2B segment will be local farms.

Market Size

Generally speaking, the whole soft drinks beverage industry accounts for 840 billion dollars (Bailey, 2014). Meanwhile, in the USA, the consumption of these beverages remains high with 670 eight-ounce servings per capita (Bailey, 2014). Along with that, the expected 25% growth of middle class is another definer of prosperity and growth of the industry, as this aspect will increase household expenditures and, as a consequence, attract more players to this market.

Competition

Competitive Advantages

• Innovative idea;
• Focus on eco-friendliness;
• No artificial ingredients;
• Variety of flavors.

Apart from vehemently growing market size, the competition is intense. For example, 70% of the market is occupied by international giants such as Coca-Cola and Pepsi. Nonetheless, due to the rapid growth of the industry, currently, 25% of the beverage market consists of Dr. Pepper, Snapple, Red Bull, and Monster, and 5% of it is represented by the local producers. At first glance, it may seem that the current competitive environment is unfavorable for new entrants, but having innovative idea, variety of flavors, and no artificial ingredients and focusing on eco-friendliness are the major competitive advantages that can help Edge Incorporated grow continuously and gain more and more loyal customers.

The Team

Current Personnel

Scott E. Connors: CEO:

• Previous experience in B2C marketing;

Stephen Job: Computer expert:

• Outstanding experience in computation of manufacturing;

Melinda Cates: EDGE organic energy drink creator:

• Previous positive experience in marking and selling EDGE;

Advisory

Ian Glass: volunteer/consultant:

• 35 years of professional experience as PepsiCo plant production foreman;

Mary Cates: consultant:

• Ex-senior executive of Federal Trade Commission.

Nonetheless, to overcome the competition, it is necessary to have a qualified team of experts. Our company consists of me, Stephen Job (computer expert), Melinda Cates (EDGE organic energy drink creator), Ian Glass (consultant), and Mary Cates (consultant). Hiring these individuals is rational, as only a combination of their unique skills and experiences will assist the company in differentiating it from the competitors while taking advantage of know-how and digitalization.

Business Model

B2C

• Niche marketing;
• Reasonable price-to-quality ratio;
• Social media marketing (Baruah, 2012);
• Advertising via farmers.

B2B

• Corporate Social Responsibility;
• Offering a unique platform for collaboration;
• Direct contact and trade fairs such as Houston Job Fair and Houston Gordon Food Service Show (10times, 2017; TSNN, 2017).

As it was mentioned earlier, this product will target at mostly teens and Millennials, but also at individuals, who may be interested in healthy lifestyle. This strategy can be referred to as niche marketing while the company will also attempt to create a reasonable price-to-quality ratio. Due to the specifics of the target audience and its behavior, social media marketing can be viewed as the most suitable tool that cannot only inform consumers about new offers and services but also assist in cultivating and promoting healthy habits (Baruah, 2012). A combination of these factors along with distributing information via farmers will help retain consumers in a B2C segment. As for B2B, the company will attract farmers by its corporate social responsibility and its ability to provide a unique platform for collaboration. In turn, the company will seek partners by contacting them directly and having a presence at trade fairs such as Houston Job Fair and Houston Gordon Food Service Show (10times, 2017; TSNN, 2017).

Milestones

• January, 2017 – launched;
• January, 2018 – purchasing additional equipment;
• January, 2019 – expected 10% growth;
• December, 2018 – expected 10% growth;
• 2020-2021 – geographical expansion and growth (stable client base);
• 2021 – net profit of more than $1,000,000.

Overall, the company will pass the following stages: 1) being launched in January, 2017; 2) purchasing additional equipment; 3) having 10% financial growth in 2018; 4) having a 10% increase in profits in 2019; 5) expanding its areas of operation in 2020-2021; and 6) having net profit of more than $1,000,000. In this case, this sequence of steps implies that the company will continue its slow growth and have bright future.

Financials

In turn, the primary goal of this slide is to provide important insights regarding company’s financial performance. This figure shows that company’s financial performance will remain positive. This factor signifies the firm’s positive dynamics and slow growth of its market share. Nonetheless, gross profit will account for $20,000 on average, but having it at this value will allow the company to stay viable and competitive in the market.

It remains apparent that it is also of paramount importance to describe company’s financials with a five-year timeframe. In this instance, the figure displayed on the slide clearly shows positive dynamics and an upward shift in gross sales, gross profit, and net profit. It is depicted that net profit in 2017 is rather low, but this value is enough to ensure company’s financial viability, liquidity, and solvency. Along with that, it is a positive sign for investors while implying that Edge Incorporated is the company to be considered for both short and long-term investments.

Funding

Funds Sought

• $200,000 (for equipment purchases).

Current Funding

• $40,000 (Melinda Cates);
• $5,240 (inventory);

2 future funding rounds.

Apart from the fact that financial forecasts signify a positive trend in the organizational financial performance, additional funding is required. Currently, the company has $40,000 provided by Melinda Cates and $5,240 in inventory. Nonetheless, it will not be enough for purchasing additional equipment such as Mixer Beverage Filling Machines and Accutek AccuSnap Capper Bottling machines. In this instance, it will be rational to have $200,000 in additional funding to cover these expenses. This investment will help the management of Edge Incorporated balance its cash flows while two additional future funding rounds may be required to support business growth and development.

The Upside

• Positive revenues and net profits;
• Possibilities to grow within 5-10 years;
• Favorable economic environment;
• Wisely selected market niche and management team;
• Unique product;
• Highly saturated competition and only 5% local rivalry;
• Strong future potential and financial viability.

Overall, I hope that my presentation convinces you that Edge Incorporated is a favorable opportunity for investment. Nevertheless, it is essential to summarize its key benefits that include positive revenues and net profits, opportunity to grow within 10 years, wisely chosen market niche and employees, unique product, highly saturated competition, and strong future potential and financial viability. Thank you for your attention, and I think that I provided you a substantial number of insights to make a wise decision and become more socially responsible.

References

10times. (2017). Trade shows in Houston. Web.

Bailey, S. (2014).Why growth is sluggish in non-alcoholic beverage industry? Web.

Baruah, T. (2012). Effectiveness of social media as a tool of communication and its potential for technology enabled connections: A micro-level study. International Journal of Scientific and Research Publications, 2(5), 1-10.

Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: Theory and cases: An integrated approach. Boston, MA: Cengage Learning.

Poindexter, P. (2012). Millennials, news, and social media: Is news engagement a thing of the past? New York, NY: Peter Lang Publishing Group.

Reece, M., Tasner, M., Davila, T., Epstein, M., Shelton, R., Light, L., & Kiddon, J. (2013). How to innovate in marketing. Upper Saddle River, NJ: FT Press.

TSNN. National Angus Convention and trade show 2017. Web.

U.S. Census Bureau. (2015). 2015 population pyramid. Web.

Product Description

Product/Service and Industry Sector

Foot orienteering is a new sporting product that the young, the middle-aged, and the old individuals can undertake. Ferguson and Turbyhill (2013) describes foot orienteering as a sport that involves navigation of terrains on foot, which are unfamiliar to the participants. Since the firm offers foot orienteering (the sport) and Rockstar (the drink), it falls under the industry sector of sports in the United Kingdom. The participants need an energy drink to energize and rejuvenate their bodies. The United Kingdom has elaborate legal structures that define and guide the sport industry and thus support foot orienteering.

Legal Structure and Business Unit

Legal structures in the United Kingdom recognize foot orienteering as a sport, which has existed for several years and is currently under the management and control of the British Orienteering Federation (Hawkins 2010). The study selected the United Kingdom, which has a target market that comprise of the youth, the middle-aged adults, and the old adults. Moreover, Rockstar is a safe energy drink because it meets international standards of consumer safety, and thus, the participants of the sport should take it during and after engaging in foot orienteering. Thus, the service of foot orienteering and the sale of Rockstar as energy drink should occur in the same place.

Market Analysis

PESTEL Analysis and the Target Market

The political system of the United Kingdom is stable and well structured. Stable Political structures promote tranquility and economic growth of a country (Bowman & Gatignon 2010). United Kingdom has a capitalistic form of economy that encourages entrepreneurship and innovation and enhances the purchasing power of potential consumers.

Moreover, liberal socio-cultural setting in the country encourages participation in sports. The citizens of the country are enlightened, and thus, participate in sports, and consume of Rockstar. Remarkably, the United Kingdom has an advanced technology, especially in sector like ICT. Technological advancements facilitate easy marketing and sale of foot orienteering and Rockstar.

The country has created a good marketing environment for entrepreneurs to sell their products by instituting policies like well-structured legal frameworks. The country has organized legal frameworks that govern sports and business industries. The legal provisions also promote the provision of safe and high quality products.

Porters Five Forces

The first force in the Porter’s five forces is the bargaining power of suppliers and is very important for its effective application makes suppliers deliver the products on time in the right quantity and qualities, as well as fair prices. Bargaining power of customers is the second force, which enhances the volume of sales if a firm controls it effectively (Faarup 2010).

The third force is the threat of new entrants that eventually reduces the profitability of the firm and the competitors. Threat of new entrants is a challenge to the existing firms as well as new firms. The threat of substitute products is the fourth force in the model and is important as it affects the marketing environment and reduces the profit levels of the firms (Boone & Kurtz 2008). The fifth force is the magnitude of rivalry in the market that comprises of competition, advertising, and the number of competitors in the market. The forces in the model are very important since they determine success or failure of the firm.

Competitors in the Market and Barriers to Entry in the Market

Some of the competitors in the market include clubs like Lake Orienteering Club (LOC), Devon Orienteering, and Harlequins Orienteering. The strengths that the clubs enjoy include high market share and good reputation in service delivery. Some of the weaknesses that the firm can use include effective pricing and improvement of product quality to achieve successful entry into the market (Kemmer & Boden 2012). Some of the barriers that the firm can encounter in its attempt to enter the market include competition, customer loyalty, and economies of scale.

Unique Selling Point of the Products

The unique selling points for the firm centers on its ability to provide a diversity of products like foot orienteering and Rockstar to consumers during and after their participation in the activity. Subsequently, the firm’s plan to sell its products at discounted prices is another unique selling point. According to Cheverton (2005), diversity in product delivery facilitates success and growth of a firm. Furthermore, the sale of products at discounted price persuades several consumers in the target market to consume the products from the firm and acts as a unique selling point.

Marketing Plan

Marketing Mix

In the first year of operation, the firm expects to employ elements of the marketing mix to improve its market share and increase consumer base. Some of the marketing mix elements include place, price, promotion and product (Smith & Taylor 2004). The firm will place its products in areas, which are close to where the target consumers reside and prime orienteering destinations exist.

Furthermore, the firm will price its products in a range that falls within the purchasing power of its clients and gain competitive advantage. According to Strydom (2005), media such as radio, television, and the Internet will be useful in product promotion and marketing. Firm’s products, which include foot orienteering and Rockstar have to meet expectations of consumers.

Distribution Strategy, Pricing Strategy, and Promotional Strategies

After ascertaining product viability, the firm will place or distribute its products in strategic points that are accessible to potential consumers. Placements of Rockstar will be strategic in locations where potential customers are found, while foot orienteering will be undertaken in destinations like Darnaway and Leith Hill. Henry (2011) asserts that effective pricing strategy needs to consider the purchasing power of the target clients and the prices of competitors.

Additionally, the firm will price its products in a manner that does not strain the operational budget of the firm, while earning a profit. Media of communication such as televisions, radios, newspapers, and magazines are very instrumental in marketing the firm’s products and persuading potential customers to purchase the products (Richter 2012). The employment of these promotion media is appropriate because they are effective conveying the intended message to the right segment of consumers in a fast manner.

Conclusion

Foot orienteering and Rockstar are some of the products that complement each other since individuals always need an energy drink during and after foot orienteering.

The United Kingdom is a country that has a good political and economic stability, and thus, it reflects a high customer purchasing power. From the study, it is evident that the majority of the people enjoy leisure activities such as orienteering, an implication that the demand for the product is high. Competition is high and cutthroat as clubs and organizations that offer these services fight for the dynamic market characterized by the young, the middle-aged, and the old individuals.

Recommendations

Some of the short-term recommendations that the firm needs to employ include effective pricing, extensive marketing, provision of discounts, and avail free samples.

Effective application of these recommendations increases client awareness and willingness to purchase the products from the firm. Furthermore, customer awareness, loyalty, and trust will increase through implementation of these recommendations. Although the firm expects to enjoy word of mouth marketing from past clients, some of its long-term recommendations include the focus on product quality and good pricing strategy so that it sustains its growth and success in the competitive market.

References

Boone, L, & Kurtz, D 2008, Contemporary Marketing 2009 Update, Cengage Learning, London.

Bowman, D, & Gatignon, H 2010, Market Response and Marketing Mix Models: Trends and Research Opportunities, Now Publishers Inc, London.

Cheverton, P 2005, Key Marketing Skills: Strategies, Tools, and Techniques for Marketing Success, Kogan Page Publishers, London.

Faarup, P 2010, The Marketing Framework, Academica, London.

Ferguson, C, &Turbyfill, R 2013, Discovering Orienteering: Skills, Techniques, and Activities, Human Kinetics, Illinois.

Hawkins, P 2010, Map and Compass: The Art of Navigation, Cicerone Press Limited, London.

Henry, A 2011, Understanding Strategic Management, Oxford University Press, London.

Kemmer, K, & Boden, A 2012, ‘Price’ as one Parameter in the Marketing Mix, GRIN Verlag, Berlin.

Richter, T 2012, International Marketing Mix Management: Theoretical Framework, Contingency Factors and Empirical Findings from World-markets, Logos Verlag Berlin GmbH, Berlin.

Smith, P, & Taylor, J 2004, Marketing Communications: An Integrated Approach, Kogan Page Publishers, London.

Strydom, J 2005, Introduction to Marketing, Juta and Company Ltd, Claremont.

Situation Analysis

Over the recent past, New Zealand beverage industry has undergone a significant revolution (Pecotich & Schultz, 2006, p. 32). Emergence of new categories of functional drinks is one of the changes evident in the market. Energy drinks have increasingly penetrated the New Zealand beverage industry.

During the period ranging from 1999 to 2001, there was a significant change of attitude towards energy drinks represented by an increment in the degree of acceptance of energy drinks by New Zealand consumers. As a result of increased acceptance of energy drinks, New Zealand has been ranked amongst countries with the highest rate of energy drink consumption. For example, in 1999, the market the market grew with a margin of $ 35 million.

Size of Market Opportunities

Frucor Incorporation is one of the firms which operate within the New Zealand beverage industry by producing and marketing V energy drink. Over the years it has been in operation in the industry, V energy drink has successfully penetrated the New Zealand market. The high rate of market penetration has resulted from a number of factors.

For example, social change such as change of lifestyle has played a significant role in the increased acceptance of energy drinks in the market. Energy drink consumption is increasingly being considered fashionable. This has led o increased consumption of energy drinks. The rate of V energy drink consumption amongst New Zealanders is twice that of other energy drinks.

Considering the fact that energy drinks are aimed at boosting the consumers’ energy, a high rate of consumption is being witnessed amongst consumers aged between 15 to 30 years. The country’s age structure depicts a high market potential. It is estimated that the 67.3% of New Zealand’s total population is composed of individuals aged between 15 to 64 years.

However, in marketing V energy drink, the firm only targets consumers aged between 15 to 30 years. Findings of a market research conducted by Frucor Incorporation revealed that demand for energy drink reduces as customers become old. This arises from the fact that their energy requirement declines. Decline in demand for energy drinks amongst customers above 30 years presents a potential market opportunity.

In marketing V energy drinks, there is a high probability of Frucor Incorporation experiencing a significant growth. For example, the firm’s the firm’s target customers are characterized by a high level of dynamism in their consumption pattern. As a result, they easily incorporate change in their consumption pattern through consumption of new products.

Market Share Position

Since its introduction in the New Zealand beverage industry in 1997, V energy drink has managed to position itself effectively in the market. The energy drink has attained a market share of 60% within a period of four years since its introduction. The high market share has made the energy drink to be the leading energy drink in the New Zealand industry. This represents a high growth rate of the energy drink.

Strategic Considerations for Determining Strategic Route

A firm’s management team has to make a decision on the marketing strategy to adopt. The two main choices relate to primary demand strategies and selective demand strategies. Pride, Hughes and Kapoor (2009, p.85), are of the opinion that primary demand strategies involves a firm increasing market share of a product in its relevant market. Primary demand is depicted by a large number of potential customers with regard to a particular product or service.

Ineffective market communication is one of the factors which stimulate primary demand. Upon introduction of V energy drink in the market, consumers were apprehensive with regard to consumption of the energy drink due to lack of sufficient information regarding V energy drink. Pride, Hughes and Kapoor (2009, p.85) further assert that primary demand may also exist if there is a potential of attracting non users to integrate the product in their consumption patterns.

On the other hand, selective demand strategies are aimed at stimulating the demand of a particular product. Pride, Hughes and Kapoor (2009, p.85), are of the opinion that selective demand results from recognition of the need to consume a particular product.

In the process of making consumption decisions, consumers undertake comprehensive information searches which entail comparison of competing products on the basis of certain product variables such as quality and value. Selective demand strategies are aimed at enhancing a product’s competitive edge.

In marketing V energy drink, Frucor Incorporation should adopt both primary and selective demand strategies. From the analysis above, only a small proportion of the country’s population consume energy drink. This means that the firm can stimulate primary demand for energy drink amongst the non-users. The firm’s core target market includes customers aged between 15 to 30 years. Individual’s aged above 30 years are not considered. Therefore, there is a significant primary demand which the firm has not exploited.

Considering the fact that primary demand does not occur in isolation, selective demand strategies should also be adopted. This arises from the fact that there will be increased realization of the benefits of consuming the energy drink in the relevant market.

The energy drink has a characteristic of stimulating an individual’s energy requirement (Frucor, 2010). The firm’s target market includes customer who lead a busy, stressful and active lifestyle. This means that the product has a high market potential upon the target consumers realizing its benefits.

Pioneering Advantage

V energy drink was not the first energy drink to be launched in New Zealand. Other brands such as Red Bull had initially entered the market. However, the energy drink has managed to attain a substantial market share of 60% which makes it to be the leading energy drink.

Competition analysis and likelihood of competitive reaction

The industry is characterized by a high degree of rivalry which arises from a large number of domestic and multinational companies operating in New Zealand. Increase in the number of entrants arises from the industry’s lucrative characteristic.

This trend is likely to continue during the period ranging from 2002 to 2004 due to the industry’s profitability potential. The firm’s core competitors include Lift Plus and Red Bull GmbH Company. Red Bull GmbH produces and markets Red Bull energy drink which has effectively penetrated the market. In addition, Red Bull GmbH has developed a strong brand image.

Increase in industry rivalry presents a threat to Frucor Incorporation in an effort to attain a large market share for its V energy drink. New entrants will lead to an increment in the number of substitute products. Currently, V energy drink substitutes include e2, Powerade and G-force.

The energy drink also faces a threat from other categories of beverages such as soft drinks, sports drinks, and other varieties of carbonated energy drinks which are increasingly becoming popular. Competing firms are also undertaking product innovation in an effort to position themselves effectively in the market.

In an effort to attain a high competitive advantage, Frucor Incorporation should consider both primary and selective demand strategies in marketing V energy drink. The firm should undertake continuous product innovation. This would play a vital role in the process of undertaking value addition to V energy drink. The ultimate result is that the energy drink will appeal a large number of the existing and potential customers.

Resource and capabilities

Possession of necessary resources and capabilities is vital in a firm’s effort to pursuing primary demand strategies. This arises from the fact that there are numerous challenges which a firm faces in an effort to implement primary demand strategies.

Since its inception, Frucor Incorporation has developed a number of internal strengths.For example, the firm has an experienced research and development team which enables it to be effective in the process of conducting product innovation. Through intensive research and development, the firm is able to meet the market demands considering the dynamic nature of customers’ product requirements.

In addition, the firm has an effective product distribution strategy which ensures that the product is easily accessible in the market. This means that there is a high probability of the firm succeeding upon implementing primary and selective demand strategies since the product will be easily accessible in the market.

The firm distributes its energy drink through restaurants, university campuses, cafes, restaurants, supermarkets, diaries, service stations and convenience stores. In addition, the energy drink can also be accessed from more than 500 BP stations which are distributed across New Zealand.

Frucor Incorporation has also appreciated the concept of creating market awareness. This is evident in that the firm promotes V energy drink through advertising using various mediums such as television. In addition, the firm has also integrated online marketing by developing its own website on which it posts information regarding the energy drink.

This increases the firm’s capacity to interact with a large number of potential customers especially teenagers who forms a significant proportion of the firm’s target market. Through advertising and online marketing, the firm has been able to create a substantial level of brand awareness with regard to V energy drink.

Lifecycle Analysis

The energy drink is in its growth stage. According to Lamb, Hair and McDaniel (2008, p. 341), a product’s growth stage is characterized by a relatively high profitability potential. In addition, intensive product innovation is conducted on product so as to be competitive. Through the firm’s research and development department, Frucor incorporation has managed to introduce a variety of V energy drinks.

Developing consumer brand equity

Brand equity refers to everything which the consumer considers to be of value to him or her in relation to a particular product (Elliot & Percy, 2007, p.82). Through development of brand equity, a firm can be able to offer high value products and services to the consumers. Frucor Incorporation has attained brand equity through effective value addition which is ensured during the production process. In addition, the firm has developed its brand equity through creation of market awareness.

Recommended primary demand strategies

In order for Frucor Incorporation to develop its competitiveness, the management team should stimulate the primary demand in the market. There are a number of strategies which the management team can consider. The core focus of the primary demand strategies adopted should be the non users.

Increasing consumer’s willingness to purchase

A large number of consumers in New Zealand have developed a perception that energy drinks are a recent introduction in the market. This has made them to be apprehensive with regard to consumption of V energy drink. In order for the company to increase V energy drink consumption rate, the management team should create sufficient market awareness regarding the benefits of consuming the energy drink.

The market awareness strategy adopted should be both informative and educative. One of the ways through which market awareness can be created is by formulating a comprehensive promotion strategy. The strategy adopted should emphasize on the qualities and values of the energy drink.

Increasing consumer’s purchasing ability

Consumers are price sensitive in their purchasing patterns. Therefore, the price of a product greatly influences a consumer’s decision making process. A large number of consumers consider energy drinks to be relatively expensive compared to other beverages such as soft drinks. This perception can have a negative effect on a firm’s effort to stimulate primary demand. In addition, the effects of the 2007 economic recession can had a negative effect on consumer’s purchasing power.

This was due to a decline in consumer’s purchasing power. During the recession, there was a change in consumer’s purchasing pattern. Most of the consumers considered purchasing necessities compared to luxuries such as energy drinks. In order to stimulate primary demand, Frucor Incorporation should formulate an effective pricing strategy. In addition, the firm should expand its distribution strategy so as to improve accessibility of the energy drink in the market.

Incorporating electronic commerce to ensure product availability

One of the factors which have led to a low rate of energy drinks consumption in New Zealand compared to soft drinks is their limited accessibility. Only a small proportion of the total markets have reliable access to energy drinks. Through incorporation of electronic commerce technology, Frucor Incorporation will be able to increase the supply of energy drinks the market. Through electronic commerce, it will be easier for the firm to attain efficiency in monitoring the flow of the energy drink within the supply chain.

Product Customization

Considering the decline in energy drink consumption by consumers upon attaining 30 years, the firm should consider adding value to the energy drink so as to meet the demand of this customer category. One of the ways through which this can be achieved is by ensuring that the energy drink has nutritional value. This will increase the probability of the energy drink being consumed by customers aged above 30 years considering the increase in the degree of health consciousness amongst consumers.

Acquiring competitors’ customers

Considering the fact that the firm is faced by intense competition from domestic and foreign companies, the management team should formulate a strategy aimed at acquiring its competitor’s customers. In order to achieve this, the firm should conduct a comprehensive consumer market regard with regard to consumption of energy drinks.

Through the market research, it will be possible for the firm to establish the level of customer satisfaction. Findings from the market research will enable the firm to undertake an effective product innovation which will culminate into the competitor’s customers considering the energy drink to be of high value. The ultimate result is that the firm will be able to increase its customer base.

Recommended strategies for selective demand

Strategies to acquire the competitors’ customers

With regard to selective demand, Frucor Incorporation should develop strategies aimed at acquiring its competitor’s customers. The ultimate result will be an increment in the firm’s market share. In order to attain this, the firm’s management team should integrate differentiated positioning and head to head positioning strategies.

In marketing V energy drink, differentiated positioning can be achieved through product differentiation leading to development of a unique energy drink. Uniqueness in its energy drink can be achieved by adding value to the energy drink. Head-to-head positioning can be achieved through product innovation so as to improve its qualities.

To ensure V energy drink’s long term survival in the market, the firm should develop strategies aimed at retaining and expanding the product demand. This can be attained through creation of a superior customer experience and in addition to ensuring a high level of customer satisfaction.

Marketing Mix Strategies

Product

Creation of a unique customer experience and a high level of customer satisfaction should be the firm’s main goal. The ultimate result is that the energy drink’s competitiveness in the long term will be increased. Conduction of product innovation is one of the ways through which a firm can develop its competitive edge. Therefore, Frucor’s Incorporation management team should consider improving the quality of V energy drink.

In the process of undertaking product innovation, the firm should consider the customers’ product requirements. One of the ways through which this can be achieved is by considering both energy and health benefits of the energy drink. Consideration of health benefits will enable the energy drink to meet the increasing health consciousness amongst the consumer’s (Plunkett, 2007, p.46). The ultimate result is that the firm will expand its relevant market.

Pricing Strategy

From the analysis above, consumers consider energy drinks to be expensive. This illustrates the consumer’s price consciousness nature. To increase V energy drink’s market penetration, the firm should incorporate penetration pricing strategy. This will involve the firm setting the price of V energy drink at a relatively low point compared to competing products.

The resultant effect is that a large number of consumers will be attracted to purchase the energy drink. In addition, the firm should consider integrating psychological pricing strategy. Psychological pricing can be achieved by setting the price of 250 milliliter can and that of 350 milliliter can at NZ $ 1.99 and NZ $ 2.99. Incorporation of these two strategies will lead to consumers considering V energy drink to be fairly priced.

Promotion Strategy

The promotion strategy adopted in marketing V energy drink should be expanded. One of the ways through which this can be achieved is incorporation of Integrated Marketing Communication (IMC). According to Shimp (2008, p.65), Integrated Marketing Communication entails a combination of a numerous promotion methods. Some of the marketing communication methods considered include sales promotion, public relations, advertising, and internet marketing.

With regard to internet marketing, the firm should consider incorporating emerging social communication networks. Some of the social tools which should be incorporated include use of face book, YouTube, twitter, blogs, wikis and MySpace. Incorporation of these tools will increase the firm’s ability to reach a large number of potential customers. This arises from the fact that a large number of individuals access social networking tools daily.

Distribution Strategy

Efficient accessibility of a product from the market can result into its success. This arises from the fact that there is a high probability of the product being purchased by a large number of customers. Currently, V energy drink is not easily accessible in New Zealand beverage industry compared to soft drinks. To improve its market reach, the firm’s management team should incorporate both direct and indirect distribution strategies. However, the firm should conduct a market research to determine the most effective distribution channel to adopt.

Effective distribution will enable the product to be reached by a large number of consumers. One of the ways through which Frucor Incorporation can achieve this is by establishing distribution outlets in various regions in New Zealand. In addition, the firm should also integrate well established local agents.

Reference List

Elliot, R. & Percy, L. (2007). Strategic brand management. London: Oxford University Press.

Frucor. (2010). Frucor Beverages. Web.

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