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Innocent Smoothies Marketing Contents Page Page 2 ???Introduction ???Chapter 1 Perceptual Map Page 3 ???1. 1 Axes of Perceptual Map ???1. 2 The Marketplace Page 4 ???Chapter 2 The Marketing Mix ???2. 1 Product Page 5 ???2. 2 Price ???2. 3 Promotion ???2. 4 Place ??? Page 6 ???Chapter 3 Segmentation ???3. 1 Demographic Segmentation Page 7 ???3. 2 Geodemographic Segmentation Page 8 ???3. 3 Product Diversification ???3. 3. 1 Families ???3. 3. 2 Young Children ???Conclusion Introduction Innocent owns over 60% market share of the smoothie niche market (appendix 1), and are currently looking to expand into the volume juice market.
Objectives: To show Innocent’s position in the market in relation to niche and volume competitors. To use the marketing mix to assess the challenges faced when expanding into a new market. To advise Innocent on how to segment their market. 1. Perceptual Mapping Perceptual mapping is a strategic management tool used by companies to communicate the correlation between marketplace competitors and the criteria used by consumers when making purchase decisions. It looks at the current strengths and weaknesses of each company and is used to understand a company’s position in the marketplace.
Innocent is placed on the perceptual map along with three competitors of the beverage industry: ???PJ Smoothies ???Minute Maid Co ???Just Juice 1. 1 Axes of the map The vertical axis of the map represents the price that consumers pay for the product. This is an important aspect to consider when planning for product positioning. It is assumed by customers that a higher price equals better quality. In the smoothie market quality can be categorised in terms of the amount of fruit evident in the drink. This is not only because the smoothie is consumed as a drink but also as a healthy alternative to a light snack.
The horizontal axis of the diagram illustrates the fruit content. 1. 2 The Marketplace Innocent and PJ Smoothies are at the higher end of the market with an emphasis on quality. The fruit content is an important attribute to this segment of the market as today’s society is more health conscious than ever. The UK population have been driven by trends towards healthy eating; in particular the Government’s campaign to ensure the population eats at least 5 portions of fruit and vegetables a day. Consumers use smoothies to meet this daily requirement.
Until recently Minute Maid was the juice used by the fast food outlet McDonalds as part of their meal deals to appeal to a wider market and promote wellbeing. This was a strategic move for Minute Maid in terms of competition as McDonalds is a global brand, however, as there was nothing unique about the product and no emphasis on quality it did not inspire customer loyalty. Innocent can offer total quality and a promise of 100% fruit which is the unique selling point that has driven their success and built a large customer base. The shelf life of the beverage reflects the quality of the fruit content and freshness of the ingredients used.
Innocent has the shortest shelf life consisting of 2 weeks which shows that this is an important attribute, whereas Just Juice which is 100% concentrate has a 7 month shelf life. PJ’s is slightly longer (4 weeks) than Innocent as it uses an ultra violet treatment system which extends the shelf life of the product. Minute Maid has an expiry of 6 months which again reflects the importance of this attribute. The price of the Innocent smoothies out of the four shown above is the highest. The majority of this cost goes towards producing the drink rather than packaging which many other smoothie companies do not produce.
PJ smoothies are very similar to the Innocent products however the price structure is slightly lower. This is because the brand is targeted at a younger, less affluent consumer. Less emphasis is placed on the naturalness of ingredients since some used are from concentrate. These products are fairly similar and serve a purpose, which is why people are prepared to pay more. Minute Maid (owned by PepsiCo) and Just Juice serve the bottom end of the market in terms of price and are targeted at the masses rather than a niche market. Their products are relatively cheap and are purely functional products.
They can afford to keep their prices down as ingredients are cheaper and it is assumed that more people will be buying the product (both are sold in most shops and stores). 2. The Marketing Mix As Innocent are currently looking to expand their business from the niche market into the volume market they will have to re-evaluate their marketing mix (Appendix 2) so that their products match the needs of the market they are entering into. The marketing mix consists of the ‘4 P’s’ and is vital to the success of any companies intended growth. (Borden 1964). The 4 P’s are: ???Product ???Price Promotion ???Place (Distribution) 2. 1 Product Innocent is infused with liberal values, operating from a funky warehouse’ (Times online). The company has a fun and informal feel which is reflected in the design and packaging of their products, all bottles are eco-friendly. The name Innocent indicates that the drink is pure. When moving into a broader market Innocent will need to develop their product so that is more appealing to a wider customer base. They will need to ensure that they maximise their range to guarantee customer satisfaction, especially as they are targeting larger audiences.
For instance a variety of flavours, sizes and products will be necessary to remain competitive. 2. 2 Price In order to be successful in the volume market Innocent will have to decide whether they will keep their current price of ? 1. 99 or change it for competition purposes and to suit the wants of their new consumers. ‘The customer is going to weigh up the product against the price and decide whether it is worth paying’ (Zeithaml, 1988). I would advise Innocent to not change the price of their product for a number of reasons. Firstly, from residing in a niche market they will have built a brand image of quality.
If the price structure is lowered it may be perceived that the standard of quality has decreased. This may mean fewer sales when the launch is made. ‘The customer may expect price to reflect the quality level of the product,’ (Erickson and Johansson, 1985). Innocent has also acquired customer loyalty; their customers are already paying the current price and will continue to do so. They do however have to remain competitive and demand sensitivity to price (or price elasticity of demand) will have to be considered as they are appealing to a different segment (Calantone and Beneditto). . 3 Promotion From the years 2000 to 2004 Innocent’s above the line expenditure was ? 100,000 annually (Mintel). In order to dominate and ensure growth Innocent must use promotional activity to strengthen the brand image and create awareness. The image is already one of high quality and excellence so this should be portrayed to engage potential customers. Innocent’s advertising budget will have to be increased in order for the launch to be successful. The best way to promote the smoothies when expanding is by TV campaigning as it will capture a wide variety of consumers.
Each advert can then be tailored to a specific audience i. e daytime TV will be targeted at ‘stay at home’ mums whereas prime time will be aimed at young professionals. The marketing campaign can be extended further by advertising in gyms (for young males) and magazines such as Marie Claire for affluent women. 2. 4 Place Location is extremely important when expanding as the product has to be accessible to everyone within the target market. It is not just about where the product is sold but it is also important to maintain control and competitive advantage.
Innocent is intending to expand on a national level so it is advised that all stores that supply the product have stock prior to the launch, this will ensure that Innocent have a large impact. The distribution channels must also be outlets that the target consumer market would go to. At present the products are supplied in middle to upper market cafes and coffee shops mostly found in urban areas. Innocent mainly sell their product throughout London. As Innocent will be penetrating the volume juice market is imperative that all products are present in major supermarkets such as Sainsbury’s and Tesco as well as smaller chains. Using multiple channels of distribution is becoming a rule rather than the exception’ (Frazier, 1999). 3. Segmentation It is important for Innocent to segment their markets when expanding their business as it categorises consumers and allows for a deeper understanding of their wants and needs. ‘Segmentation can be viewed as the art of discerning and defining meaningful differences between groups of customers to form the foundation of a more focused marketing effort’ (Smith, 1957). 3. 1 Demographic Segmentation It is advised for Innocent to use demographic segmentation as detailed knowledge of the consumer is obtained.
For example: ???Age ???Sex ???Race ???Income ???Occupation ???Socioeconomic status ???Family structure As it offers a clear profile of target consumers, companies can adapt their marketing strategy to suit. The product will then be marketed differently through a number of channels to specific groups of consumers. 3. 2 Geodemographic Segmentation This can be described as ‘the analysis of people by where they live’ (Sleight, 1997). Geographic and demographic information are combined to help organizations develop a deeper understanding of there customer base.
The data is acquired through the Census and companies such as ACORN (A Classification Of Residential Neighbourhoods) and Mosaic which offer geographic databases. It is advised that Innocent use this type of segmentation when planning sampling areas and assessing locations in which to sell the smoothies when moving from the niche to volume market. By using geodemographics Innocent will be able to monitor each area that its products are sold in terms of catchment, shopper profiles and competitive effects. This will allow them to decide what and how much they will stock in each location around the UK. Retailers find geodemographics invaluable’ (O’Malley et al, 1995). 3. 3 Product Diversification Innocent may want to think of launching a new product using these variables of segmentation as a basis for research to see if there is a gap in the market. 3. 3. 1 Families An ideal product would be an extension of the smoothie for example a baby food range. The target audience would be families which is a segment of consumer that Innocent does not yet appeal to. This product can also be in conjunction with family size bottles of the smoothies. Affluent females aged 20 – 35 with young children can also be targeted.
This is ideal as the Innocent brand is targeted to this age bracket already so there may already be brand loyalty. This product would strengthen Innocents brand as it would diversify into a new market with a new product that fits with the Innocent promise of 100% naturalness and fruit. 3. 3. 2 Young Children Innocent could target young children as well as adults by changing the packaging of the product very slightly. They could launch a children’s drink similar to that of PJ Smoothies Frooties. This would be ideal as the Innocent bottles and jokey advertising already appeal to a child’s sense of fun.
This campaign could coincide with the move that Ofcom have made to ban products like junk food and ones containing high suger levels being advertised to children. As Innocent is 100% fruit it could be one of few companies that can do this. 4. Conclusion For Innocent to remain competitive with current smoothie companies and to expand successfully it is important for them to develop new products and diversify into new markets. It is also important to stay control, manipulate and have competitive advantage. References BRASSINGTON, F. AND PETTITT, S. , 2006. Principles of Marketing. 4th Edition. Harlow: Pearson Education Limited.
Kotler,P. et al, 1999, Principles of marketing. Second European Edition. Milan: Prentice Hall Europe Weitz, B. A, and Wensley, R. , 2002 Handbook of Marketing. London: SAGE Publications Ltd Borden, N, 1964, The concept of the Marketing Mix, Journal of advertising research, June Carter, M, 2004, ‘Opportunity Beckons’, Marketing, 16 June www. timesonline. co. uk (accessed Feb 16th 2007) www. mintel. com (accessed Feb 13th 2007) www. athens. ac. uk (accessed Feb 13th 2007) www. warc. com (accessed Feb 13th 2007) www. poplus. com (accessed Feb 13th 2007) www. innocent. co. uk (accessed Feb 17th 2007)