Innocent Drinks and Strategic Marketing Management - Assignment Example

Contents Contents 1. INTRODUCTION: 3 2. CORPORATE OBJECTIVES: 3 3. MARKET OVERVIEW: 4 4. MARKETING AUDIT 4 4 MARKETING MIX: 4 4 1 Products: 4 4.1.2. Price: 5 4.1.3. Promotion: 5 4.1.4. Place: 5 4.2. SWOT ANLAYSIS: 5 4.2.1. Strengths: 6 4.2.2. Weaknesses: 7 4.2.3 Opportunities: 7 4.2.4. Threats: 8 4.3. PESTEL ANALYSIS: 8 4.3.1. Political: 8 4.3.2. Economic: 9 4.3.3 Socio-cultural: 9 4.3.4. Technological: 9 4.3.5. Environmental: 9 4.3.6. Legal: 10 4.4. PORTER’S FIVE FORCES: 10 4.4.1. Threat of Substitute Products: 10 4.4.2. Rivalry Among Firms: 10 4.4.3. Threat of New Entrants: 11 4.4.4. Bargaining Power of Customers: 11 4.4.5. Bargaining Power of Suppliers: 11 5. ASSUMPTIONS 11 6. MARKETING OBJECTIVES AND STRATEGIES FOR NEW PRODUCT 12 6.2. GOALS AND OBJECTIVES: 12 6.3. MARKETING MIX: 12 6.3.1. Product: 12 6.3.2. Place: 13 6.3.3. Price: 13 6.3.4. Promotion: 13 7. ALTERNATIVE PLANS: 13 8. PROMOTIONAL PROGRAMME: 14 8.1. Pre-Launch Strategy: 14 8.2. Post-Launch Strategy: 14 8.3. Sales Promotion: 14 9. MEASUREMENT, REVIEW, AND CONTROL: 15 1. INTRODUCTION: Innocent Drinks is a well known UK based company that was established by three Cambridge graduates jointly-namely Richard Reeds, Adam Balon and Jon Wright in the year 1999 (Innocent 2011b). The company has expanded its services in different regions of the world like France, Brussels, Ireland and Amsterdam etc. The sales of the company have reached a huge figure of two million smoothies per week. The main products offered by the company are smoothies and there are various variety of smoothies offered like January Detox, Veggie Smoothies, Superfoods Smoothies, Breakfast Smoothie, Smoothies for Kids, This Water, Smoothies for Kids Competition and Thickies (Innocent 2011a). The most favourite smoothies in UK are offered by Innocent brand and it is leading the market with total annual sales of approximately £130 million. Innocent’s growth has been significant and it has achieved considerable successes in the 10 years since its launch (Germain, Reed, & Hamilton, 2009). 2. CORPORATE OBJECTIVES: The main purpose of the innocent drinks is to ‘make food good’. The vision of the company is to become the favourite and most popular little food provider all over the world. The management of the organisation is striving to increase the customer satisfaction and hence increasing the number of customers. This in turn will increase the overall profits and revenues of the organisation (Innocent, 2007). 3. MARKET OVERVIEW: The smoothies industry in UK is very competitive and it has grown in recent years (Ruxton, 2008). One of the main reasons for this growth is the change in demand of consumers as they are demanding healthier drinks (Mintel Group, 2009) The market of juices and smoothies in the UK has a total value of £1.4 billion out of which 9.3% constitute of smoothies with total annual sales of approximately £130 million (The Chartered Institute of Marketing, 2009). Last year the industry experienced the fastest growth with a growth rate of 37.6% on year to year basis (Mintel Group, 2009) The market share of the leading smoothie brand is 77.5% of the total smoothie market and this brand is offered by Innocent Drinks (Mintel Group, 2008a). The other dominating brand in the industry is Tropicana with a market share of 29.3% (Mintel Group, 2008b). 4. MARKETING AUDIT 4.1. MARKETING MIX: There are four marketing mix elements which are accessed in order to explore the marketing activities of the organisations (Borden, 1984). 4.1.1 Products: The main product offered by Innocent Drinks is the smoothies which are prepared by mixing crushed fruits with fruit juices. There are different varieties of smoothies offered by the company which mainly includes January Detox, Veggie Smoothies, Superfoods Smoothies, Breakfast Smoothie, Smoothies for Kids, This Water, Smoothies for Kids Competition and Thickies. 4.1.2. Price: Innocent Drinks price is £1.75 for a 250 ml bottle. The Innocent recipes work fantastically well and they taste nicer than its competitors. Prices of Innocent Drinks are higher as compared to its competitors. Cheaper are the P&J Smoothie at £1.19 (250ml bottle) and Tesco Finest Smoothie at 99p (250ml bottle) (Ciao, 2011). Neither of these tastes quite as nice or luxurious as the Innocent one. So, Innocent Smoothies are a premium product and they are good value for money. 4.1.3. Promotion: Innocent Drinks uses Informing Future Developments (IFD) to promote their new or existing products. IFD is a strategy used by Innocent Drinks to promote their new or existing products through TV, radio, news papers, magazines, emailing and website to their customers. 4.1.4. Place: Innocent Drinks do not have their own Lorries, so they hire out other Lorries to get the materials to its store in West London. Innocent’s products are sold at the UK supermarkets, coffee shops and various other outlets. Innocent’s products can be seen at Waitrose, Sainsbury, Tesco Metro and Londis, among other, smaller stores. 4.2. SWOT ANLAYSIS: SWOT analysis is one of the most beneficial strategic management tool which helps in investigating and exploring internal and external environment of the organisations and identifying important strengths, weaknesses, opportunities, and threats (Houben, Lennie, & Vanhoof, 1999). 4.2.1. Strengths: Market Share: The market share of the leading brand of Innocent Drink is 77.5% of the total UK smoothie market therefore it is the dominating brand in the market. Product Quality: The product is made up of natural fruits and company ensures the fruits are fresh in order to produce high quality products. The company is also aware that consumers are demanding natural products and therefore they have a department to ensure quality of the products thus this is one of the main competitive advantages that company is able to provide what the consumers are demanding i.e. healthy drinks. Scale: Weekly the total sales of the company are approximately 2 million smoothies (Homesights). Distribution Channels: The products offered by Innocent Drinks are distrusted in more than 10 thousand retail outlets in different parts of the world which also includes supermarkets. Product Development: The company is able to expand its product line with the passage of time and right now it is offering 36 different types of smoothies. Consistent Growth: The company has been growing since its inception in the year 1999 and it has been able to earn consistent profits which it has reinvested and because of this, the company has been able to expand its business (Reed, 2007). 4.2.2. Weaknesses: Price: One of the weaknesses of the company is that the premium price charged by the company and because of this reason some people might be reluctant to buy products of Innocent Drink. However, with premium price the company offers natural fruit drinks. Low Consumer Base: Innocent has a relatively smaller consumer base that is European Union as compared to its competitors (Homesights). 4.2.3 Opportunities: Increase Market Share: The company can increase its market share and grow even further as the market is still rowing and there has been a significant increase in the total sales of the market. Emerging Markets: Another important opportunity for Innocent is to go for Global expansion. Increase Product Range: Increase in the product range is also a significant opportunity for Innocent. 4.2.4. Threats: Changing Customer Tastes: Changes in the tastes of the consumers might emerge as a threat for the company therefore company needs to keep on coming up with new flavors and variety to minimize this threat (Homesights). Competition: Another important threat is increased competition, with particular pressure from brands such as Tropicana, PJ smoothies and others. These brands are using low cost alternatives, therefore a major threat to Innocent (Homesights). Economic Factors: Several economic factors can impact the sales of the company like recession, disposable income of the consumers etc. 4.3. PESTEL ANALYSIS: PESTEL analysis is also one of the important tool for assessing the external environment of the organisation (Haberberg & Rieple, 2008). 4.3.1. Political: There are different political factors that might impact the business of Innocent Drinks and these factors range from health department of the government, advertising standards agency etc. Therefore the company has to ensure that it follows all the laws and regulations in whichever part of the world it is operating. 4.3.2. Economic: There are several economic factors that might affect the business of Innocent drink as well which are inflation, increased cost of ingredients, cost of gasoline, recession etc. Therefore company needs to have backup plans to minimize the impact of such economic factors affecting its business. Change in taxation policy might also affect the company and its profitability. 4.3.3 Socio-cultural: Several socio-cultural factors might affect Innocent drink as well like consumers attitude towards fresh fruits and natural fruit drinks. Also with more people becoming extra cautious over their health, it might help Innocent Drink in improving its market share. 4.3.4. Technological: The company should keep working to improve the quality of its products and come up with new products to maintain its position in the market. 4.3.5. Environmental: Innocent introduced first 100% recycled plastic bottles and with this, the company has been able to not only save costs but it has been able to reduce the wastages. Also the labels of the company are recycled up to 25%. 4.3.6. Legal: The company should keep in mind the laws and regulations of different countries in which it is operating and it has to consider the specific laws for each country regarding employment, health, consumer protection etc. 4.4. PORTER’S FIVE FORCES: The analysis of the environment with the help of porter’s five forces is helpful for the organisation, as it enable the management to get a outlook of the whole industry (Grundy, 2006). 4.4.1. Threat of Substitute Products: There are different competitors of the company operating in the industry like Tropicana, Happy Monkey and PJ Smoothies and few other products and these substitute products are causing fair amount of threats to the products of the company. However the products of Innocent Drinks have been able to dominate the market. Besides the abovementioned smoothies available, there are other drinks and juices in the market as well which are a substitute of innocent drinks. 4.4.2. Rivalry Among Firms: By looking at the Smoothie and Juice industry, Innocent finds many players in this field. This industry has many small companies offering smoothies along with the juices, soft drinks, and etc. But the main focus of Innocent is on providing wide variety of high quality Smoothies to its customers. So Innocent is competing on quality and product differentiation with rivals. There have been threats in terms of price as well from the substitutes and rival firms as the products offered by Innocent are relatively expensive than the other products available in the market. Though, with market leadership, quality products, and different varieties available the products of innocent are dominating the market and causing little threats. 4.4.3. Threat of New Entrants: New entrants can cause threat to Innocent Drinks. Innocent is providing smoothies and any new entrant entering into this industry may cause damage to the Innocent’s market shares, profits, prices, sales of our product and relationship with customers. Innocent aims to promote its product in a way that it creates word of mouth. 4.4.4. Bargaining Power of Customers: The products offered by the company are made up of natural fruits and healthy for the consumers and with consumers demanding healthier drinks, the smoothies offered by the company is the first choice that they have. Therefore the company is able to charge a premium price because of its higher quality. Thus this reflects the bargaining power of consumers is low. 4.4.5. Bargaining Power of Suppliers: Innocent’s strategy to deal with suppliers is to work with them as partners. Innocent has proper agreement with them and company revises the prices at different intervals. Innocent focuses on having good terms with them by agreeing on their acceptable terms so that they may provide company supplies as per its requirements. However, innocent drink being the market leader of smoothies industry has relatively high bargaining power over its suppliers. 5. ASSUMPTIONS Beverage industry of UK has been showing increasing revenues and profits. Overall usage of soft drinks in the market of UK reported an increase of around 4.1 percent in the year 2010 and was 14,585 million liters. At the same time, soft drinks market reported an increase of around 5.8 percent in term of value or revenue and was 13,880 pounds in the year 2010 (British Soft Drinks Association, 2011). It is being assumed that industry will show growth in the coming years and it will be beneficial to introduce new products in this category. 6. MARKETING OBJECTIVES AND STRATEGIES FOR NEW PRODUCT 6.2. GOALS AND OBJECTIVES: To provide high quality soft drinks to the customers. To significantly increase the market share of soft drinks within five years of operations. To earn profit from soft drinks from the second year of operations. To provide a diversified range of soft drinks to customers. To maintain a safe environment for the customers. 6.3. MARKETING MIX: 6.3.1. Product: Innocent Drinks will introduce a new product that is Soft Drinks. Innocent will offer high quality soft drinks in order to meet consumers’ changing preferences and demands. Innocent will offer two types of soft drinks: Lemonade Ice-cream soda Building the Innocent Brand is an integral part of Innocent’s product strategy. The brand and logo will be displayed on Innocent’s new product and packaging and will be reinforced by its prominence in the introductory marketing campaign. 6.3.2. Place: The way Innocent will place its new product will be different to the rest of the Innocent’s products. Innocent will place its new product in: Supermarkets because this is the most popular place of purchase for customers. Canteens or vending machines because this is where most customers said they would like to buy Innocent’s drinks. Coffee shops and restaurants for the same reason as vending machines in canteens. 6.3.3. Price: Innocent will keep its prices same for Soft drinks as well that is £1.75 for a 250 ml bottle. 6.3.4. Promotion: Innocent will use different pre launch, post launch, and other sales promotion in order to increase the sales which in turn will increase the customer base. 7. ALTERNATIVE PLANS: If the lunch of the new soft drinks is not able to give the desired results, and attempt will be made to penetrate in the market by reducing the price. Company will decide to increase the market penetration of the new product by limited time low introductory price. 8. PROMOTIONAL PROGRAMME: Different promotional strategies will be used to promote Innocent’s new product, they are defined as follows: 8.1. Pre-Launch Strategy: Before the launch of the Soft drinks, Innocent will place its buntings and promotional material around the shops and Supermarkets where the soft Drinks will be placed. Innocent will place ads in newspapers, magazines and also on the local cable networks (TV, radio and internet). 8.2. Post-Launch Strategy: The ads placed on TV, radio, newspapers, magazines and internet will be repeated but with low frequency. Those who visit the shops and supermarkets will be given pamphlets featuring the product and its prices. After the launch, Innocent will promote its membership offer through ads and pamphlets. 8.3. Sales Promotion: Innocent will use Buy One Get One Free Strategy to promote high sales. Another strategy Innocent will use is “Innocent on a Restaurant Menu”. It will increase awareness about the product and will lead to repeat sales not only from restaurant but also from Supermarket sales. Innocent will also use a “Meal Deal” Incentive that is when one will buy a salad he will get an Innocent’s soft drink at half price. 9. MEASUREMENT, REVIEW, AND CONTROL: In order to ensure that the lunch of the new product is successful, the company will take appropriate steps for measurement, review, and control. Some of the indicators which will be used in order to measure the performance of the promotional and sales activities are: The number of customers are increasing The company is able to make 10% profit from the introduction of the new product in the end of the second year. Company is able to increase the market share by 5%, after the introduction of the new product. Proper steps and methods will be used in order to measure the performance of the organisation on the indicators mentioned above. If there will be any deviation from the indicators described above the management will take necessary steps to identify issues and problems and solve them. All this will enable the organisation to keep a check and control over the complete process of launch of new product. References List Aguiar, L 2006, ‘Recent Changes in the Consumer Behaviour in the UK and Its Impact in the Red Meat Chain in Southern Brazil’, Available from [Accessed 15 November 2011] Borden, N 1984, ‘The concept of marketing mix’, Journal of Advertising Research, 7-12. British Soft Drinks Association 2011, ‘UK Soft Drinks Report: Soft Drinks Market Grew Strongly in 2010’, Available from http://www.britishsoftdrinks.com/default.aspx?page=936 [Accessed 14 November 2011] Ciao 2011, Innocent Smoothie. 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