Marketing and Sales Strategy for Bottled Drinks - Assignment Example

Business Decision Making Introduction The paper aims at analysing the existing demand for bottled drinks in London for a given company, which is planning to introduce a new fresh-fruit based drink for health conscious customers in the market. The researcher will conduct primary as well as secondary research in this regard and present a formal report to the senior management for better decision making related to the project. Primary research The primary research was conducted in various markets of London for better coverage and quality of research. The researcher implemented two important tools of primary research methodology, namely questionnaire and face-to-face interview. During the research, the researcher primarily focussed upon factors that influence the purchase of consumer drinks such as, consumer profile, preference and attitude. In market research, especially in retail industry, the role of primary data is very crucial. Given the scenario, the data will be useful for determining the product’s potential market and support validity and reliability of the research report. The questionnaire in this research will have close-ended questions so that data can be generated from participants without any hassle. Furthermore, a close-ended questionnaire will minimise ambiguity and confusion on the part of participants as well as researcher. In addition to questionnaire survey, the researcher will also observe the participants through face-to-face interview. The interview will be semi-formal in nature, where the researcher will ask relevant questions in order to support data generated through questionnaire. The sole reason for selecting interview method along with questionnaire survey is to access consumers’ behaviour and attitude, which are generally not expressed verbally (Scandura and Williams, 2000). The questionnaire and interview methods are quite helpful for in-depth study and wide coverage. However, the methods can often prove time consuming and costly under certain circumstances. Personal interview involve direct interaction between participants and researcher, which may increase scope of personal biasness in the research process (Patton, 2005). Sampling method A sampling technique forms the foundation of data collection method. There are mainly two kinds of sampling techniques; probability sampling and non-probability sampling. Keeping in view the project requirements, the researcher will implement probability sampling method such as, simple random sampling. Under simple random sampling, the researcher will select participants randomly so as to develop a rational representation of the total population. Simple random sampling is useful as a randomly selected sample is the best representative of total population. This method is considered apt when the target population is vast and difficult to cover (Welman, Kruger and Mitchell, 2005). Simple random sampling also suffers from certain drawbacks. It is highly time-consuming in nature and it is often difficult to determine effectiveness of the sample as a representative of the overall population. While random sampling method is devoid of personal biasness, it is subject to certain sampling errors. It is, therefore, preferable to select a large sample that again may result in excess consumption of resources. In this context, it is noteworthy that conducting random sampling in a perfect manner is extremely difficult (Kumar and Phrommathed, 2005). Questionnaire Age group:  20-30 years  30-40 years  40-50 years  50 years and above Gender:  Male  Female Q1. Do you prefer health drinks over other bottled drinks such as soda and tonics?  Yes  No  Sometimes Q2. Do you check calorie and sugar content while purchasing bottled drinks?  Yes  No  Sometimes Q3. Do you prefer packaged fruit juices over fresh fruit juices?  Yes  No  Sometimes Q4. Do you favour naturally sweetened fruit flavoured drinks over other artificially sweetened drinks?  Yes  No  Sometimes Q5. Do you think fruit based flavours influence buying behaviour of consumers regarding health drinks?  Yes  No  Sometimes Secondary market research The secondary sources of market research mainly include published and unpublished journals, annual reports and presentations, news bulletins, trade journals, market survey reports from reliable sources and news paper. As a part of secondary market research, the researcher will focus upon determining the market size for consumer drinks, competitors profile, market structure and market shares of key players in the beverage industry of London. Size of market for consumer drinks: The consumer drinks include alcoholic as well as non-alcoholic beverages (American Beverage Association, 2014). Even so, consumers are increasingly becoming health conscious and are favouring fruity beverages and health drinks over alcoholic beverages. In the United Kingdom (UK), various studies have indicated that about 80% of individuals prefer consuming juice in the morning and at least five such servings throughout the day. According to the British Soft Drink Association (2014), nearly 61% individuals prefer drinks that are low on calorie and have minimum added sugar. Competitor profile: There are a number of companies operating in the United Kingdom that sell fruit juices and fruit based beverages (The brand republic group, 2013). The companies that can be considered as important competitors are Tesco Plc, ASDA group Ltd, Tropicana UK, Cobell, Britvic, Fruitapeel, Calavenna, Refresco and Ribena. These companies occupy a major market share in the UK beverage industry (Euromonitor, 2014). Market structure: According to the British Soft Drink Association (2014), the soft drink industry in the UK can be classified as: carbonates, dilutables, bottled water, still and juice drinks and fruit juice. Among these, fruit juice comprises only 7%, while preference towards carbonated drinks is about 45% and that of dilutables is about 22%. Nonetheless, 61% of consumers were found to prefer low calorie and sugar free drinks. As per the report, the consumption trend of consumers in the UK is slowly changing and sugar-free beverages are gaining popularity. Among these drinks, functional drinks such as, sports drink and protein drink, are given greater preference. Market share: The majority of market share in the UK juice and fruit based beverage industry is occupied by Tesco Plc, ASDA group and Tropicana UK (Euromonitor, 2014). Data analysis The survey was conducted on 50 individuals and the analysis is done using the following tools- 1. Correlation coefficient analysis 2. Dispersion 3. Quartile 4. Percentile Findings of the primary research: Questions Yes No Sometimes 1 39 11 0 2 35 13 2 3 40 10 0 4 35 7 8 5 45 5 0 Correlation coefficient analysis In correlation analysis, those who prefer fruit-based health drinks will be marked as 2 and the rest (those who said ‘no’ and ‘sometimes’) will be marked as 1. The most relevant questions in this paper for establishing correlation were question 1 and 5. Figure 1 (Source: Author’s creation) The data analysis exhibited positive correlation, r= 0.71, between purchase of health drink and impact of introducing fruit flavour in health drinks on purchasing behaviour (Von Storch and Zwiers, 2001). Dispersion In the current paper, dispersion is exhibited through quartile, percentile and skewness. Quartile analysis: The quartiles present data sets that act as boundaries on both side of median and divide the entire data range in four equal sections. The inter-quartile range in this context is most important as it represents the data spread. Inter-quartile range present the most robust form of dispersion as it is not affected by outliers in the observation process. Percentile analysis: Percentile analysis is another very common measure of dispersion and is very beneficial in market survey analysis. Percentile analysis acts as an indicator of relative standing of a particular data value. The interpretation of percentile analysis is situational in nature, where a particular percentile can be interpreted as good or bad depending upon the situation (Kleinbaum, et al., 2013; Johnson and Wichern, 1992). Skewness: Skewness is a measure of symmetry in distribution. Skewness can be measured using two methods, namely Pearson coefficient of skewness and quartile coefficient of skewness. The symmetry of any distribution exhibits positive skewness, negative skewness and no skewness (Kim and White, 2004). Quartile Table 1 (Source: Author’s creation) Figure 2 (Source: Author’s creation) The quartile calculation shows that value of the first quartile is 35 and that of third quartile is 40, while the median is 39 as calculated in the excel tool. Also, the inter-quartile range is quite small, that is (35-40) 5. The median was observed to be more inclined towards third quartile and data spread is dense near the median. Skewness In this paper, the researcher implemented quartile coefficient of skewness so as to determine symmetry of the distribution. The coefficient of skewness is calculated as: (Q3 - Median) - (Median - Q1) (40-39) – (39-35) = -3 A distribution is considered highly skewed if the value of coefficient is greater than 1 and less than -1. The coefficient of skewness as calculated was found to be negative. Hence, the data distribution in the current research is high skewed on the negative side. Percentile In statistical analysis, the quartile and median can be represented in terms of percentile. In this regard, one quartile is equivalent to twenty five percentile. Thus, first quartile will represent 25 percentile, while the third quartile will represent 75 percentile. Table 2 (Source: Author’s creation) The percentile analysis shows that 25 percentile of consumers or less preferred purchasing health drinks irrespective of the flavour, while 75 percentile or more individuals preferred purchasing health drinks that have fruit flavour. Findings and interpretation Analysis based on gender The following table exhibits an elaborate description of data collected through the questionnaire survey: Table 3 (Source: Author’s creation) Figure 3 (Source: Author’s creation) When the survey was conducted, it was observed that purchasing behaviour and beverage consumption is highly influenced by gender variation. A very limited number of women, only one, compared to 10 male individuals reported that they give equal preference to all kinds of beverages. On the other hand, 78% of total participants agreed that health drink is more preferable over other liquid consumables such as, soda, tonic and other packaged drinks. It was surprising that of 78%, almost 24 individuals were female, while only 15 were male. Figure 4 (Source: Author’s creation) As the data collected in respect of the second question were analysed, it was seen that sugar and calorie consumption level related to a particular bottle drink is accessed by 70% of the participants, which include both men and women. It was concluded from the observation that not only women, but men are also becoming health conscious. About 26% of male participants agreed that calorie or sugar level is not a concerning factor, whereas almost all the women stated that they avoid beverages with high sugar content. Figure 5 (Source: Author’s creation) In the UK, during the survey and through personal interview, the research had gathered that though individuals mostly prefer fresh fruit juice, but due to their busy schedule, they buy packaged fruit drinks. Hence, life style is also an influencing factor for the purchasing behaviour of consumers. About 80% individuals were observed to prefer packaged fruit drinks. Of this statistic, 48% were observed to be male and only 32% were female participants. On the other hand, about 18% of female participants suggest that they prefer natural fruit juices compared to only 2% of male participants. Figure 6 (Source: Author’s creation) In the survey, it was witnessed that consumer preference is shifting from artificially sweetened drinks to naturally flavoured beverages. Participants admitted that they are purchase more of naturally flavoured drinks such as, fruit based iced tea and other drinks, over cold coffee, artificially sweetened sodas and tonics. On an average, women were found to be more conscious in this regard compared to that of men. 5 male compared to 2 female participants opined that naturalness of flavour is not very relevant for them while selecting a drink. Around 16% of the total participants agreed to have interchanged their preferences between artificial and natural flavours. Figure 7 (Source: Author’s creation) The last question of the questionnaire is most important as it mainly reflects consumers’ acceptance or rejection towards the product that the company plans to launch in the market. About 90% of the participants support the fact that introducing fruit flavoured or fruit based health drinks will increase product sale. Only 10% of participants, who were male, proposed that flavour will not greatly influence the purchase choice. On the contrary, all the female participants stated that fruit flavours will enhance demand of the health drinks. Analysis based on age group Table 4 (Source: Author’s creation) Figure 8 (Source: Author’s creation) The survey pointed out that health drinks are highly preferred among individuals under the age group of 30 to 50years, while it is moderately preferred by the lowest and highest age group. Figure 9 (Source: Author’s creation) Calorie and sugar level is gaining considerable importance regarding product consumption among the UK individuals. Sugar level in consumer drinks was found to mostly influence purchasing behaviour of the higher age groups. Figure 10 (Source: Author’s creation) In the UK, packaged fruit drinks are mostly chosen by the youth population followed by the middle-aged individuals. The graph shows that individuals who have a busy life, in terms of work and education, prefer buying packaged fruit drinks over fresh juices. Figure 11 (Source: Author’s creation) In the survey, individuals belonging to the lower age group exhibited little interest towards the nature of flavour (natural/artificial) used in drinks, while older people supported and preferred natural drinks without any additives. Figure 12 (Source: Author’s creation) The data analysis findings revealed that a majority of individuals from different age groups supported that introduction of fruit base in the health drinks will improve their sale. Product development project plan Developing project plan for a new product is similar to that of a new business plan as it incorporates all major components of a new venture. There are several activities related to product development that require categorisation. 1. Resource allocation 2. Marketing and sale strategy 3. Sale forecast 4. Financial planning Resource allocation The resources that require allocation for the new product development include human resources, raw materials for the health drink production, equipments such as, machinery and containers, special handling equipments, unoccupied production facility and packaging materials. The company will require spare or unoccupied production facility as it is not possible to produce a new product with exiting products, which are different in nature. The production department will need additional equipments unless the company already has them. The packaging materials will include recyclable bottles and packages for storing and selling the drinks. The company have to develop integrated supply chain management with various suppliers for supply of high quality fruits at competitive price, antioxidant preservatives and flavouring agents. In addition, the company will have to recruit manpower for production activities or reallocate its existing manpower. Marketing and sales strategy The UK beverage industry is highly dynamic and growing at a rapid rate. A number of companies have entered the beverage industry in recent years and are crafting products considering the consumer demand. The company in discussion will employ STP (Segmentation, Targeting and Positioning) strategy as a part of its marketing strategy. The company will primarily focus on health conscious consumers of different age groups as the target market. From a geographical point of view, main consumer base of the company will be London. From the market research, it was observed that health drinks are preferred among both men and women, but attitude of the latter implied that fruit based health drinks will be very popular among them. Hence, from demographic aspects, working individuals (both gender) and other female individuals will be the target consumers. The product will be positioned as fruit being served in the form of health drink. The marketing strategy will further include promotion of the product through advertisement and personal selling at healthcare centre, gyms and supermarkets. The company’s sales strategy is to launch the product at a market price that is 15% less than that of competitors. In addition, the company will act as co-sponsor to various health and sports related event for increasing brand visibility. The company will also increase its sales force and distribution channels for approaching greater consumer base. Project cost The total project cost will include cost of raw material, human resource, power and water supply, vendor related cost, cost of sales force management, procurement and logistic charges as well as cost associated with indirect materials such as, packaging materials, advertisement and other promotional costs. The project cost will be analysed through projected revenue and projected cash flow. The projected revenue and cash flow are presented through a projected cost sheet. Table 5 (Source: Author’s creation) Reference list American Beverage Association, 2014. Beverage industry terms. [online] Available at: [Accessed 24 July 2014]. British Soft-drinks Association, 2014. About soft drinks. [online] Available at: [Accessed 24 July 2014]. Euromonitor, 2014. Juice in the United Kingdom. [online] Available at: [Accessed 24 July 2014]. Johnson, R. A. and Wichern, D. W., 1992. Applied multivariate statistical analysis (Vol. 4). Englewood Cliffs, NJ: Prentice hall. Kim, T. H. and White, H., 2004. On more robust estimation of skewness and kurtosis. Finance Research Letters, 1(1), pp. 56-73. Kleinbaum, D., Kupper, L., Nizam, A., and Rosenberg, E., 2013. Applied regression analysis and other multivariable methods. US: Cengage Learning. Kumar, S. and Phrommathed, P., 2005. Research methodology. US: Springer. Patton, M. Q., 2005. Qualitative research. New Jersey: John Wiley & Sons, Ltd. Scandura, T. A. and Williams, E. A., 2000. Research methodology in management: Current practices, trends, and implications for future research. Academy of Management journal, 43(6), pp. 1248-1264. The brand republic group, 2013. Sector Insight (interactive): fruit juice, juice drinks & smoothies. [online] Available at: [Accessed 24 July 2014]. Von Storch, H. and Zwiers, F. W., 2001. Statistical analysis in climate research. UK: Cambridge university press. Welman, C., Kruger, F. and Mitchell, B., 2005. Research methodology. Oxford: Oxford University Press. Read More