Product Development Strategies of Energy Drink - Case Study Example

Product Development Strategies: Energy Drink Table of Contents Introduction 3 Brief situation analysis 3 Opportunities and Problem 4 Strategy for Product Development and Marketing 5 Economic summary 5 Tactical plans 6 Control objectives 7 Major support activities 7 Schedule of activities 7 Conclusion 8 Reference 9 Introduction Product development is the process of generating a new product with creative design and utility. Products or services are the core essence of a business as entire business activities revolve around the offered products or services. Therefore, product line must be able to satisfy the expectations of target consumers. In case of new business, the product development is the most importance task that determines its sustainability (Traill and Grunert, 1997, p.29). This paper will attempt to present a business plan by developing a new product that will help the new venture in achieving success. Brief situation analysis The global beverage industry has been experiencing rapid improvements since last decade. People’s lifestyle and food habits have changed significantly, and fast food and beverages are being very popular among consumers. However, available fast food products and beverages are not able to meet proper diet of people and hence, there are greater opportunities in this area. ‘Energy Booster’ is new product that strives to meet consumers’ demands as it is a better alternative of existing available energy drinks. This energy drink offers greater level of refreshment and energy as it contains carbohydrates, fat, energy, protein, vitamin, fructose syrup etc which are very necessary for people in their daily diet. There are large numbers of energy drinks available but most of them are cola drinks or alcohol beverage which is not good for health. Opportunities and Problem Human activities and society has become very fast and people have less time to denote for their health. Moreover, their food habits have become unhealthy causing obesity, diseases and reduction in energy level. The European and other Western countries are more affected with these issues (Powell, 1999, p16). The flowing table shows the daily required nutritional component for a human body. Table 1: Nutritional Components (Source: United Nations University Centre, n.d.) Existing available energy drinks or other beverages do not include all of above stated necessary nutritious components and hence, those energy drinks are unable to meet health requirements. Therefore, there are greater opportunities in market for the new energy drink, ‘Energy Booster’. However, there also certain major issues like competition. Currently, Coca-Cola and PepsiCo are two giant leaders in beverage sector and they have captured more than 75% of global market share. Moreover, their effective promotional programs have developed a huge base of loyal consumers. Strategy for Product Development and Marketing “Marketing planning is a logical sequence of activities leading to the setting of marketing objectives and the formulating of plans for achieving them” (McDonald, Rogers and Woodburn, 2000, p.156). In order to frame comprehensive marketing plans and marketing strategy, a number of steps need to be followed chronologically. However, in case of new product development the four Ps of marketing i.e. product, price, place and promotion related strategies are inevitable. These four marketing components for Energy Boosters are given below. Product: The product is innovative and able to meet necessary diet requirements for human body by enhancing their energy level. Price: Considering market price, consumer’s purchasing power, and cost of product, the price of new product has been determined at £2.5 for per 250 ml. Place: The product will be available in most of retail stores and restaurants where a large number of consumers like office goers, students etc are available. For efficient distribution, it is necessary to partner with major distributors and stockists. Promotion: promotional programs are very necessary for spreading product awareness regarding the healthy benefits of Energy Boosters. For this integrated marketing communication approach will be followed. Economic summary Financial planning and economic summary for a new business plan is very crucial for avoiding risks, controlling, managing the operational process and for allocating resources. As per the market analysis and prevailing market demand, the forecasted sale is expected to be 50000 for the first year. Following table shows the expected revenue as per forecasted sales. Table 2: Projected Revenue Besides, for starting the new venture, initial start up cost is required for capital expenditure, cost of goods sold and other fix overheads for initial operating year. The following table represents total cost including fixed cost, variable cost and capital expenditure for initial year. Table 3: Initial Start Cost (in £) Due to high capital investment for land and building, machineries etc, the net return on start up cost will be negative for first year. However, from second year onwards, the company is expected to earn higher rate of return. Tactical plans Tactical plan in marketing defines the short term and long term planning for distinct areas like IT, operation, distribution etc (Rubin, Griffin and Weiss, 2009, p.414). For launching Energy Booster in market, it is necessary to maintain quality and hence, cross functional transparency and coordination is very necessary. In this respect, implementation of e-business is very effective for better internal process. Control objectives New business plan and new product is always exposed to greater level of risks like financial risk, market risks and other business risks. Therefore, it is very necessary to indentify and control these areas. In this respect, foremost tasks are quality control and cost control. Financial control is very crucial as it is related with other departments. Major support activities In case of product development, various supporting activities are very essentials like maintenance of proper communications, IT used in daily operational process, research and developments etc (Contractor, Kumar and Kundu, 2010, p.442). Marketing and R&D are the major supporting activities that must be managed and organised properly. Marketing and promotional are very important for generating sales and R&D is important for further quality improvements. Schedule of activities Launch of Energy Booster involves certain specific tasks and these tasks must be met within proper timeline, so that, Energy Booster can able to capture higher market share. The following chart presents different necessary activities and its timeline schedules. Table 4: Timeline Schedule As per the above table, the entire tasks for launching Energy Booster in market is expected to over within 18 weeks. Conclusion This paper has presented a business plan focusing on new product development strategy. This business plan has dealt an innovative energy drinks ‘Energy Booster’ which is capable to meet daily diet requirements of human body as it contains necessary nutritious components. In order to launch Energy Booster, this paper has presented its marketing strategy, financial projection, tactical plans, control objective and schedule of activities. Reference Contractor, F. J., Kumar V. and Kundu, S. K. 2010. Global Outsourcing and Offshoring: An Integrated Approach to Theory and Corporate Strategy. Cambridge University Press. McDonald, M., Rogers, B. and Woodburn, D. 2000. Key customers: how to manage them profitably. Butterworth-Heinemann. Powell, J. 1999. Food Matters. Evans Brothers Rubin, D.L., Griffin G. and Weiss, D. L. 2009. Practical Imaging Informatics: Foundations and Applications for PACS Professionals. Springer. Traill, B. and Grunert, K. G. 1997. Product and process innovation in the food industry. Springer. Read More