Answer :

Business Marketing (Level 5)

Assessment 2: Individual Report

The Better Drinks Company

Executive Summary

Marketing can be described as the process for creating and delivering value for customers, organisations and society as a whole. The Better Drinks Co., formerly known as Charlie’s Group Limited, is a New Zealand company, which provides greater emphasis on honesty and integrity in its business model to compete in the not-from-concentrate segment of home and overseas markets. Concerning the importance of marketing in promoting a highly promising brand presence throughout the target markets, this report is aimed at preparing a new marketing plan that enables introduction of a new product for the selected company. Throughout the assessment, the company is introduced briefly along with analysing its position and industry, followed by describing the new product to explain marketing strategy in line specific marketing objectives. Ultimately, the report explains marketing mix decisions associated with the selected product to provide a vital understanding of marketing management

1. Introduction

In the late 1990s, three childhood friends, Marc, Simon and Stefan decided to set up a company to serve fresh orange juice, without any concentrated elements and preservatives for the New Zealand customers. This marked the foundation of Charlie’s Group Limited, which had later changed its name to Better Drinks Co.

Company Logo

(Source: The Better Drinks Company, 2019)

Product lines of the business quickly expanded to include different categories, such as fruit smoothies, coconut coolers, quenchers and water to offer higher quality, not-from-concentrate products to New Zealand customers. The eventual acquisition of Phoenix Organics, an Auckland-based organic drinks company, has allowed Better Drinks to solidify its position across the home market while creating an opportunity for the Australian beverage segments. Apart from its home market, the company is now operating in more than 16 countries worldwide with its multiple brands. Honesty and integrity are the two primary factors associated with the company’ vision statement, which suggests ‘thinking big but acting small’ (The Better Drinks Company, 2019).

Product ranges

(Source: The Better Drinks Company, 2019)

2. SWOT Analysis

Strengths:

• The company’s vision to think big and act in line with health and safety of consumers is one of the major strengths, differentiating the business from other rivals out there in the contemporary marketplace.
• Growing emphasis of global population towards consuming products made from health ingredients, as well as a particular shift towards organic materials, goes in line with the manufacturing process of Better Drinks to facilitate smooth progression of the business (Petersen et al., 2017).
• The company’s decision to change its name from Charlie’s to Better Drinks is another strong attempt to increase consumer trust and expectations from different brands offered by the company.

Weaknesses:

• The company operates mainly in the not-from-concentrate segment, which means fulfilling the challenging requirement of a controlled, high-volume supply of fresh fruits.
• In the Australian market, the company’s old-fashioned lemon quencher solely accounts for 70 percent of business revenues, suggesting the lack of marketing and distribution of other brands offered by Better Drinks.
• Advertising approach of Better Drinks, which often attracts controversies, needs to be improved by thinking innovatively in line with the business model and operations.

Opportunities:

• As the CEO Craig Cotton said that the company is continuing to move from adolescence to adulthood by the name-changing event, it also provides Better Drinks to fulfil challenging requirements related to better choice, better range and better operations, including sourcing manufacturing and distribution.
• The separation of corporate and brand identify expected to provide freedom to the company to promote innovative mindset and approach while facilitating achievement of business goals (Ashurst, Hargitt & Palmer, 2017).
• Brand profiles of different brands offered by the company, Charlie’s and Phoenix, for example, can be more precise to allow the company to create new brands, thereby expanding market presence.

Threats:

• Strict competition in both home and overseas markets due to the presence of strong competitors, such as Coca-Cola Amatil, Frucor and Heinz Wattie’s are continuously creating pressure on promising growth of Better Drinks by introducing new and unique approaches (Vandevijvere et al., 2017).
• Increasing costs of investments in the form of overseas subsidiaries or manufacturing facilities is another significant threat affecting the continued growth of Better Drinks.
• Wide varieties of drinks, offered by competitors without any artificial preservatives, vitamins and added sugar, continue to mount pressure on company’s prospect of becoming a strong competitor in the overall markets.

3. Porters’ Five Forces Analysis

Bargaining power of suppliers:

Bargaining power of suppliers is medium for Better Drinks. The company, due to its specialisation in producing fresh drinks of various categories from non-concentrated and non-preservatives, need to depend heavily on the supply of raw fruits and other ingredients. However, the company’s decision to set up overseas manufacturing facilities near orchards and gaining exclusive ownership of their produces significantly curb such an impact associated with bargaining power of suppliers (Richards, Bonnet & Bouamra-Mechemache 2018).

Bargaining power of customers:

Bargaining power of customers is high, as revenues of the company depend largely on gaining positive perception among customers regarding its different range of products. As consumers prefer products in line with their growing awareness regarding health and safety, Better Drinks decided to adopt a business model that supports offering fresh beverages made from natural ingredients, unlike many competitors, using concentrated sources, as well as preservatives. Customer demands and expectations are likely to fluctuate across global markets, causing the company to face higher impacts in this perspective.

Threat of new entrants:

In the not-from-concentrate segment of the beverage industry, the threat from new entrants is generally low due to several factors discouraging new brands from competing at par with the existing players. Developing and strengthening a brand overnight is not a smooth task for a new entrant, which needs to make significant investments from operations to marketing (Frésard & Valta, 2016). Although some local brands may start their business at the smaller scales, advertising and hiring qualified staff still attract a high level of costs, implying lower threats from new entrants.

Threat of substitutes:

Although there is a significant number of market competitors like Coca-Cola Amatil, Heinz Wattie’s and Frucor, with their wide range of competitive offerings, threat of substitutes is medium for Better Drinks. Regardless of the competitors offering high quality, hot and cold beverages alongside several juices, there is a limited chance of substitution in the not-from-concentrated segment (Borges et al., 2017). Furthermore, switching costs for the customers in the particular industry is low, causing a medium threat for the company.

Competitive rivalry:

Due to the involvement of several indigenous brands, such as Nekta and Teza, alongside some international brands, such as Ocean Spray, V8 and Ribena, competitive rivalry is high throughout the particular industry. Similar to Better Drinks, competitors have their adequate brand presence throughout the market while having a fair share of the entire business. Companies like Coca-Cola Amatil and Frucor, with their significant brand positioning and numerous diversified offerings extern strong influence on market presence of Better Drinks.

4. The New Product

Apart from fresh juices and organic drinks, the market for energy drinks, a specific type of non-carbonated drink, have significantly shrunk the global market share of carbonated soft drinks within a short period (Kim et al., 2015). Better Drinks operate with several brands covering fruit juices, flavoured sports water, quenchers, coconut coolers and water using eco-friendly bottles. However, the company needs to explore the energy drinks segment due to its vast potential contributing to the growth of company’s revenues and position in the global environment. The new product could be named ‘Better Chargers’ to develop a commitment to boosting energy levels of target customers while contributing to healthier options preferred by the population.

Global Energy Drinks

(Source: Caffeine Informer)

5. Marketing Objectives

Objective One:

Specific – To earn a market share of 10 percent in New Zealand by the end of 2020.

Measurable – To increase total revenues of the company by 5 percent by the end of 2020.

Attainable – To develop and strengthen brand position related to the product across major cities within the first three months of its launch.

Relevant – To survive harsh economic impacts and competitive rivalry from other brands.

Time-based – To achieve the intended target by the end of 2020.

Objective Two:

Specific – To increase consumer awareness of Better Chargers throughout the target market by the end of 2020.

Measurable – To conduct an online survey measuring customer perception using company website.

Attainable – To use tailored promotional strategies and social media to raise awareness.

Relevant – To use simple Yes-No answers to limited questions to increase participation in the surveys.

Time-based – To enable achieving 70 percent positive answers from customers by the three months of the launch.

Objective Three:

Specific – To increase sales of the energy drink by 4 percent within the next six months of its launch.

Measurable – To sell more than 100,000 products per month after its introduction to the market.

Attainable – To hire specialised sales staff and department for achieving the agreed target.

Relevant – To set up additional manufacturing facilities to accommodate the demands concentrating the product.

Time-based – To increase employee skills and improve collection of accounts receivables over the coming six months.

6. Marketing Strategy

6.1 Market Segment

Geographic – As energy drinks are produced and marketed by concentrating the growing need for nutrition and strength for young athletes, sports enthusiasts and individuals with their hectic lifestyles, the regions with maximum population should be targeted to achieve marketing objectives (Schlegelmilch, 2015). Therefore, some of the popular cities of New Zealand, such as Auckland, Wellington, Christchurch and Hamilton will be prioritised principally for marketing activities given the growth of urban population.

Demographic – Apart from teenagers, both males and females belonging to the age group of 20 to 35 years will be primarily targeted given their inclination towards consuming such products, promising to fulfil nutritional needs.

Psychographic – Consumers for Better Chargers in this group can be best described as the ones who are looking for easily affordable energy drinks that may help them to energise their life, improve attentiveness and elevate mental and physical performance (Begunca, 2017). Persons involved in sports activities, as well as students of schools and universities,  are the primary target in this category.

Behavioural – Individuals across the country, with their inclination towards sports to lead an active lifestyle or remaining fit throughout their lives, are the ones who belong to this category, thus becoming the primary target of the new product.

6.2 Targeting strategy

As the new product is produced and designed to target young population of the country between the age group of 15 and 35 years, targeting strategy of Better Chargers aims at youth segment of New Zealand, mainly comprising of consumers of energy drinks. With more than 75 percent of the population coming from European descent, one-third, i.e. 36 percent of the New Zealanders belong to the age group of 18 to 35 years, indicating a promising market for energy drinks for Better Drinks (Larson et al., 2015). This particular segment is also accessible through a wide range of available communication channels, television, newspaper and social media, in particular. Furthermore, members of this particular segment have increased affordability to buy this kind of products, reflecting higher possibility for the company to achieve marketing targets.

6.3 Positioning

There is a growing concern over the excessive amount of caffeine in almost every energy drink available in the market, thereby drawing numerous criticisms across the world. However, this new product of Better Drinks will be promised to be made from natural ingredients while maintaining various flavours, in addition to positioning as the carbon neutral product. While most of the energy drinks have limited flavours, Better Chargers will be produced from all the organic materials while developing variants according to the types of sports or activities (Grant, 2016). Furthermore, this product will be priced less, compared to other competitors, as there is a growing concern among customers regarding higher prices of energy drinks, averting them from buying as per demands.

Better Chargers will be positioned as a product, which promises to offer nutritional benefits to consumers by concentrating real fruits with no sugar and caffeine. Due to its low sugar and caffeine content, the energy drink will be able to generate an increased appeal among vegetarians, diabetics, convalescents and health conscious individuals, which constitute the mainstream market (Gallo-Salazar et al., 2015).

7. Marketing Mix

Product – The product will be packaged in three divisions, such as 200ml, 350ml and 500ml using eco-friendly bottles, made entirely from plants in line with ‘Honest’ campaign and sustainable commitment of the company. The bottles will provide the facility of re-usability, thereby increasing brand visibility while stimulating consumers to engage in repat purchasing. The product will add different flavours to improve taste while providing required dose of energy to target consumers (Bhamra & Lofthouse, 2016).

Price – A price skimming strategy will be used to recover maximum amount of investment before competitors coming up with similar energy drinks and leading to price competition (Temple, Ziegler & Epstein, 2016). The price in the next stage of the product lifecycle will be fixed on a realistic basis to enable the brand delivering right values to consumers.

Place – In order to reinforce the brand image and create exclusivity of the new product, Better Drinks will pursue with an exclusive distribution strategy, with only some selected retailers will be allowed to distribute the brand. Apart from using supermarkets to reach a wide array of urban consumers, Better Drinks will take advantage of its intimate knowledge of geography and demographics to supply the product adequately.

Promotion – An integrated marketing communication strategy will be used to create desired brand awareness, stimulate purchase and establish brand position. The particular strategy will include a massive product launch campaign in Auckland and a targeted media campaign thereafter directed towards selected market segments (Pennay et al., 2015).

8. Conclusion

Given the impressive growth of Better Drinks in both home and overseas markets, alongside its commitment towards health and wellbeing of population, it is decided that the company will launch a new energy product, named Better Chargers to exploit more market shares. A systematic approach along with planned marketing strategies will be applied to target consumers from certain demographic profiles. Actual performance of the company will be evaluated against specific performance standards and specific marketing planning objectives.