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Marketing Plan: Phase III Paper Marketing MKT 421 April 21, 2008 Marketing Plan: Phase III Paper A clear vision and strategy has been developed for Gatorade’s new energy drink the Drive Energy Drink. With that said, the next step to developing the product is to determine the attributes, the product life cycle, and positioning and price strategy of the product. Knowing the right look and feel of the drink can increase sales and use of the product. How will the product be introduced to the consumers?
How long will the product last on the market until new ideas will need to be developed? What position will the drink have in the market and how will it differentiate among its competitors? What prices will the product be sold at to withstand alleviation from the market? These are all questions that must be answered and properly addressed prior to the development of the Drive Energy Drink. Throughout this paper, Learning Team A will comment and strategize the next steps in developing the Drive Energy Drink Description of the Attributes of Drive
Gatorade has created a new energy drink that is filled with ingredients to give individuals oomph to last a whole day or more. The features, functions, and benefits of this product will help with the marketing of this product (MarketingPower, 2008). The main ingredients in Drive energy drink are caffeine and ephedrine. Both of these ingredients give the energy needed for an athlete to perform in sports, for a career person to make it through the day, or for a student to get through a long night of studying.
In order to attract the targeted audience to Drive energy drink, Gatorade has to design a packaging that will catch their eye. Being that Drive energy drink is fuel for the body, Gatorade has chosen the theme of different types of cars-vintage hotrod, cutting edge racer, and professional racecar. The vintage hotrod will be the Drive Cruiser. Its flavor will be a sweet strawberry flavor with hints of blueberry and raspberry. The cutting edge racer will be called the Drive Charger. The Charger will have a lemon-lime flavor. The Drive Speedster will be the professional racecar.
The flavor for the Speedster will be a blend of orange and mango. Offering different flavors will give individuals the opportunity to find the one that will fill them up with the fuel they need to perform tasks. The potential promotional tie-ins are plentiful. Each flavor can be featured individually. Some of the possible media relations are setting up free sample stations at local vintage car shows for Drive Cruiser, at the street rod/tuner car show for the Drive Charger, and at the NASCAR events for the Drive Speedster.
To further coincide with the car branding, it is possible to target interested audiences by broadcasting all relevant advertisements on sports channels especially the ones that show car races. With the opportunities for promoting this product, Drive energy drink will be a huge success. Pace of Drive’s Product Life Cycle and the Factors that will Impact Movement The product life cycle is concerned with new categories of products to the market and is not brand specific. The product life cycle describes the stages a new product idea goes through from the beginning to the end.
A product life cycle is broken down into four stages that are market introduction, market growth, market maturity and sales decline. Since consumer needs and desires change it stands to reason that the marketing mix of any product must actually change during the various stages of the product life cycle. Since it is a new product to the market consumers are not aware that Drive is available. Therefore, during the market introduction phase of the product life cycle promotion is key to getting the information regarding Drive to the target audience.
Considering that the consumers are not aware of the benefits and advantages it stands to reason that the sales will be lower and this will result in a loss of revenue for the company. Fortunately, given the active lifestyles that are prominent in society, once the promotions sales are anticipated to rebound at a fast pace. Upon rebounding sales, Drive will proceed into the market growth stage of the product life cycle. It is during this period where the sales will skyrocket along with profits, which makes this the most profitable stage for the industry.
Unfortunately this is also the time when competition will begin and it is vital to keep a close check on the introduction of new products in the same market as Drive. The high profits are wonderful and to ensure that they do not decrease at a dramatic pace the corporation must be prepared with a marketing strategy that addresses the competition. Once the sales level off the competition gets even tougher and Drive will enter the market maturity stage in the product life cycle. New competition may enter into the picture which increases the pressure to maintain sales.
Effective promotion is imperative at this point and this results in an increased cost of promotional activities. Considering Drive will be the original product specific for sports energy and is produced by the Gatorade Company this particular stage should be the longest one for the product. The effective products that are produced by Gatorade will assist in ensuring consumers that, despite competitive promises, Drive is indeed the best available. The final stage of the product life cycle is sales decline and this is the phase when new products replace those that already exist.
Loyal consumers to the product are less likely to purchase the new products immediately and therefore the sales of Drive will continue. Profits can and will be made until the end of the life cycle; however, this stage can also be a time for improvements on the product. Product Life Cycle Impact the Marketing of Drive Every year hundreds of products are launched to the market, all vying for shelf space and consumers’ attention. However successfully launching a product is not just bringing it to the market (GlaxoSmithKline, 2007).
Organizations must examine the product life cycle for the product being introduced to ensure long-term product success. [pic] When evaluating Gatorade’s Drive energy drink, the product lifecycle will continue to change as the product reaches different stages in the cycle. As a result, Drive energy drinks will go through an introductory cycle, a growth cycle, a maturity cycle, and then show decline as the product becomes faded by the introduction of competitive products. As a result, Gatorade must continue to alter the company’s marketing mix.
Introduction Stage During the introduction stage, Drive energy drinks are developed and introduced to the market. However, in this stage, a proper marketing mix must be constructed to ensure the product establishes a market and generates customer demand. – Product o Drive energy drink is different from other energy drinks – Price o Drive energy drinks will be sold at a premium price as a means to regain development costs. However, the company will continue to monitor sales and reduce prices if necessary to gain market shares. – Promotion Gatorade must market Drive energy drinks effectively and efficiently to gain sales, introduce the benefits of the drink, and make the product know to customers. – Place o Gatorade must establish distribution channels and ensure that Drive energy drinks are moved from the manufacturer to the customer with limited costs and excellent execution. Growth Stage As consumers learn about Drive energy drinks, individuals will begin purchasing the product. As a direct result sales will increase and the company will begin witnessing substantial profit margins.
Because of increased demand, Gatorade may elect to expand distribution channels during this stage. However, Gatorade must continue to modify the company’s marketing mix to obtain customers and profitability. – Product o Improve quality, introduce new packaging options – Price o The company must examine the supply and demand curve. If the demand is high for Drive then the company will keep prices high; however if the demand is low, Gatorade will reduce the price of Drive energy drinks to increase market shares. – Promotion o The company will continue aggressive marketing and advertising campaigns to promote the product. Place o The company will continue to intensify distribution processes. Maturity Stage During the maturity stage, Drive energy drinks will be very well known and as a result advertising costs can be reduced as well as prices. However, during this phase, competition becomes fierce and products may possess similar characteristics and benefits. To counter competition, Gatorade use marketing strategies to extend Drive energy drinks life cycle and sustain positive profit margins. – Product o Drive must become different from competitive brands – Price Competition may force Gatorade to reduce costs as a means to sustain market shares. – Promotion o Gatorade must try to sustain customer loyalty. To achieve this feat, the company may offer incentives.. – Place o Gatorade must continue to examine distribution channels and promote incentives to resellers. Decline Stage In the decline stage, the market becomes saturated with many energy drinks. As a result sales decrease and the product demand declines. – Product o Because of market saturation, Gatorade will reduce the number of products manufactured.
In addition, Gatorade may elect to introduce new labeling techniques to restore the product. – Price o Prices will either be reduced to shrink inventory levels or stay competitive in a profitable market. – Promotion o Gatorade reduces expenditures and continues to promote other products. – Place o Distribution channels are reduced. Identifying the Positioning and Differentiation Strategies In order to make a product different and stand-out from the rest of the competition’s product, it is important to have effective positioning and differentiation strategy. “It is the key to building and maintaining a competitive advantage” (Tracy, 2008).
Both positioning of a product or service and differentiating can be difficult especially with so much competition in the market. “Positioning refers to the way your customers think and talk about you and your company when you are not there. ” (Tracy, 2008) This suggests that a marketer must make a strong case for their product or service that will make the consumer feel they are doing less than the best if they buy anything other than this company’s product. Since the early years of the Gatorade Company, consumers and users of sports drinks made the name Gatorade and performance synonymous.
In fact it has always been Gatorade’s goal to increase the performance of its users by giving them the proper tools they need in one beverage. Now it is no different. Gatorade’s newest addition, Drive energy drink differentiates itself from the competition by offering quality and longer lasting performance than any other energy drink on the market today. Drive’s scientifically derived formula comes straight from the Gatorade Sport Science Institute to the consumer looking for the safest and most effective energy boosting drink available today.
Gatorade has always proven itself to be the innovator and leader in sports drink technology. Now they bring that same technology to the energy drink revolution. By focusing on the already stellar and proven record of Gatorade’s quality, it will be possible to get the consumer to try a new innovation like Drive. Although there are many other energy drinks on the market none can claim the fact of being developed and produced by Gatorade. The company’s long running reputation should be left to speak for itself. Pricing Strategy
With regard to Gatorade’s Drive, PepsiCo uses value-based pricing which is a pricing strategy that prices products in which companies first try to determine how much their product is worth to the consumer (University of Idaho, 2007). In other words, the product’s price is actively dependent upon its demand. The challenge is to avoid setting prices to much higher or lower than customers are willing to pay. Currently, Gatorade’s Drive prices vary from retailer to retailer but the standard 250ml sports drinks price varies from $1. 29 to $1. 59, which are lower then its competitor PowerAde hich varies from $1. 79 to $1. 99. PepsiCo is very careful about the amount they charge to the channel members in the distribution channel, as they need to make sure that they themselves receive a profit, and as well as all others down the distribution channel. If a company’s main strategy is to emphasize lower prices than competitors, it would not likely hold on to the advantage for very long (Rosenbloom, B, 2004). This is why PepsiCo is constantly looking around the corner to ensure they are providing products that consumers want to buy (PepsiCo, Inc, 2007).
As PepsiCo has the largest market share in the beverage market in the United States and is the largest sports drink producer in the world, they have a competitive advantage. Being the largest sports drink producer allows them to reach out to many more consumers then others can, and as well have many for manufacturing plants all over the world. This leads to another advantage, by having such a global brand name, PepsiCo is able to centralize its operations in a region where productivity can be enhanced while its operation costs can be reduced.
This translates into economies of scale, which means they are producing larger quantities at a lower amount. This allows PepsiCo to lower their prices and still receive a greater profit margin then other competitors. Not only was Gatorade first into the sports drink market, but in 2006 they owned 47% of the market shares based on annual sales (University of Idaho, 2007). Conclusion Gatorade has clearly put forth the effort, time and energy to the development of the Drive Energy Drink. An overview of the product, marketing plan, strategic positioning and pricing have all been reviewed and developed towards the production of the drink.
The athletes and consumers Gatorade is targeting will be pleased with the end result, Drive Energy Drink. Team “A” clearly described throughout the paper the third stage in developing a product. What is the next phase Gatorade will embark in developing the drink, the promotion strategy. The promotion strategy will be the next step for Learning Team A explain and review in the production of the Drive Energy Drink. References GlaxoSmithKline. (2007). Business 2000: Consumer healthcare. Retrieved April 17, 2008 from http://www. business2000. ie/glaxo/index. htm MarketingPower. (2008). Dictionary of marketing terms.
Retrieved April 18, 2008 from www. marketingpower. com. PepsiCo, Inc. (2007) Performance with Purpose [Internet], MarketWatch. Retrieved April 17, 2008 from http://thomson. mobular. net/thomson/7/2222/2446 Rosenbloom, B. (2004) Marketing Channels: A Management View. 7th ed. Tracy, Brian. Customers for Life. Differentiation Strategy. (2008) [Internet] Retrieved: April 19, 2008 From http://www. 1000ventures. com/business_guide/differentiation_strategy. html University of Idaho. (2007) Drive [Internet], Moscow. Retrieved April 17, 2008 from http://www. cbehome. uidaho. edu/default. aspx? pid=104189