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Marketing - Research Paper Example

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Threat of Substitute The food drinks mainly represent the fast moving consumer goods market and therefore the markets mainly rely on creating impulse purchase. Price sensitivity is quite low in the market; mainly marketers mainly rely on customer loyalty and brand loyalty. There are a lot of products that can provide boost and act as replacement to the energy drinks. Due to the nature of the product the target customers may switch to soft drink and carbonated drinks. Also the customers have a lot more health conscious. Therefore the customers may also look to drink lot of fluids such as herbal tea and water. Hence, there are a lot of alternative options for the customers. Overall, the level threat of substitute of products is high. Bargaining Power of Suppliers While considering the bargaining power of the buyers from the perspective the energy drink market only it can be interpreted that the bargaining power of the buyer would be quite low as there are very few players in the market. Also buyers in the market are not very price sensitive as the products are targeted towards the higher end market. The relation between the manufacturer and retailer has also evolved over the course of the market life cycle. However, the buyers should be wary of the fact that there are a lot of substitute products in the market (Williamson, Cooke and Jenkins, 2004). Bargaining power of Buyers The production process to develop the energy drinks is quite simple and bargaining power of the suppliers is quite low. The supply chain of the top players in the market is quite short. The value added in each and every stage of the production process leads to significant level of profit. The only access to the attractive market for the suppliers is through the brand owners. All in all as there are small numbers of players in the market the bargaining of the suppliers is quite low (Brown, 2009). To summarize thing it can be said that the competition level competition in market is moderate as there as few players in the market. The threat of new entrants varies between medium to high as it is likely that more and more competitors would look to enter the market due to the high level of profit. However, the economies of scale, high level of brand loyalty and the recent economic downturn would act as a major barrier to entry. The bargaining power of the suppliers and the buyers is low as there are very players in the market. However, the major threat for would be the presence of various substitute products (Kolb, 2008). Industry Rivalry The market is mainly dominated by companies like GSK and Red Bull. Lucozade is a brand of GSK. These companies have made the market saturated. The market has moved from being a niche market to mass market. It is most certainly a market for the multinational companies. Familiarity of brands would definitely play a key role to play in gaining competitive advantage. Also product dedifferentiation would play a key role. Already Lucozade has been successful in achieving product differentiation through the introduction of the caffeine versions. One of the recent entrants in the market has been the Taut, which has looked to position itself as a clean sports drink. Due to high industry margins, large of companies have looked to enter the market; but the rivalry among the brands have no lead to any kinds of adverse conditions. Although some of the smaller players have tried to imitate the strategies of Lucozade and Red ...Show more


Marketing Answer 1 Porter’s Five Force Analysis Threat of New Entrants As it has been mentioned before due to high level of industry margins various companies are looking to enter the market. Coca Cola has already entered the market through the launch of new product called relentless…
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