Innocent Drinks - Case Study Example

Table of Contents Task 2 Task 2: 4 Task 3: 5 Task 4: 6 Task-5 7 References 8 Innocent Drinks – Case Study Task The immature brand of Innocent drinks was started by Richard Reed, Adam Balon and Jon Wright back in 1998. The three of them were the Cambridge University Graduates and they started the business with an investment of about £600. The idea behind naming the drinks as innocent was because of their purity. According to Reed, they had never done anything like this before starting the business of innocent drinks and everyone in their social circle advised them not to go for it as they will eventually fail badly. And in today’s time, innocent drinks has become one of the most popular brands across Europe. From the time of its beginning, it has far left behind the struggle period in its early life span that most of the new companies face. The product range of innocent drink offers smoothies, juices, and veg pots. Innocent drinks is a UK based company and their primary products were smoothies and flavored water. Their outlets are located all over Europe, Ireland, Amsterdam, Germany, France, Austria, Brussels and Copenhagen and they are also available in coffee shops and supermarkets. According the Business news of British Broadcasting Association, 2009 Innocent drinks has a 71 % of market share in the beverages industry of UK and the stats tells that the per week sales of the company are about be estimated to 2 million. The sales of Innocent drinks were started from a stall at a music festival in London. The founders of the innocent drinks had their first breakthrough when Maurice Pinto invested £250,000 in the business of innocent drinks. Their drinks are made up of 100% fruit smoothies. An organization is a joined team of individuals that may refer as societies. The approach of management towards the business operations formulates the basis of organizational structure. In the top hierarchical structure of innocent drinks, the front man is Richard Reed as a Former ad executive. Whereas Balon and Wright, who used to be ex management consultants, take care of the finance and operations department of the company. The London HQ “Fruit Towers” of innocent drinks fantasizes every candidate who wishes to work there. Reed was replaced by Jamie Mitchell, a Harvard University graduate who was hired by the Innocent drinks as their marketing director in 2005. The work space of the organization has a very healthy fruitful environment. No one will point out an employee in the Fruit Towers even if they have been roaming around all day in their socks. All in all Innocent drinks have a very few number of employees, i.e just 250. 38 employees of them are the marketers. All the employees enjoy their workspace and refer it as a dream workplace. They conduct regular events for educating the ethical practices to the employees. The company follows a great history of creativity and doing the right things according to their own perspectives. Innocent drinks face a lot challenges when they had to expand internationally. The decision of expansion was being made in 2007. The firm had always quite simple and easy marketing strategies. According to Oracle, 2008, innocent drinks was the first ever company who has brought up 100% recycled plastic bottles. And they all did this on the basis of just one question that they asked in their first time sales event of music. And the question was that “Do you think we should give up our jobs to make these smoothies?” Moreover they have always restricted themselves with certain set of principles. In the current times Innocent drinks is exporting their smoothies and juices in the 17 European states successfully, Except for Sweden. The company’s growth rate was quite visible after their four years operations in 2003, when they were successful in achieving the 30% market share of the UK market. There have been continuous improvements from that time in the flavors and formats of the brand. Innocent Drinks is a brand that is being built by innovation in their product ranges catering their consumers in a great way. Task 2: The main reasons behind the continuous growth of innocent drinks from the time of its beginning to 2005 is keeping the originality of their brand and still keep experimenting with the products. Not only the creativity is a major part of their growth but their customer service management approach is also plausible. According to a case in 2003, Innocent drinks completely evolved the recipes of their two smoothie flavors; strawberry and banana. This was done as they have been receiving negative feedback from their most loyal customers. They have been very active in responding to their customer queries and their response via journalists, consumer surveys or from retailers. They never take their customer for granted. The green packaging of the innocent drinks have also provided their consumers more reasons to stay loyal with the brand. According to the front man of the company, Richard Reed, it has never been easy to maintain the ethical and sustainable practices in the commercial business world. But the founders believed that this can be achieved and as this were their core business strategy to stay pure, and then they had to work hard for it. Their sustainability squad structures around marvelous principles of reduction of carbon emissions, remaining ethical on the business grounds and continuing their charity projects for recycling purposes. Their major success factor lies in their strength of supplying fresh juice whereas the management’s market knowledge has also played a great role in the success path as all the management staff of Innocent drinks had previous work experience. Another success factor of innocent drinks is their informal style of business. Their organization culture is so full of activities and the employees get bonuses frequently. The environment of the company is so friendly that if you have joined them once, you would never want to leave the place. Task 3: The business strategy of Innocent drinks started to change its dimensions. They had decided to expand the business internationally. The company has started analyzing that how will they integrate their ethical practices when they will expand in the international markets. They started personalizing their relationship with their retailers and suppliers in order to remain positive towards their sustainability principles. This motivation to remain ethical was the basis of innocent drink’s achieving the tag of being the first company to gain 100% recyclable and renewable packaging. Their strategy of value based selling has gone beyond the traditional strategies like 4 Ps’. Moreover, innocent drink started expanding their marketing department in particular as they before the expansion they did not have well defined marketing structure. They started targeting the consumers just like them. Like their consumer profile highlights the hygiene awareness and believing in doing good things. For this purpose they strategize to market themselves as the ethical business company and highlighted their views on social responsibility. Their decision of being an official partner of Olympics 2012 brought them more popularity and a lot of new customer gained knowledge about this natural smoothie business. In the expansion period, the hardest target for them was Sweden. In fact, Richard Reed said that they have been failing in Sweden and it has been four years that we have been losing money every single year in Sweden. It seems like it is just not working for them in Sweden. Task 4: Coca Cola, the big giant in the beverages industry initially invested in the Innocent Drinks back in 2008 with buying the 18% stakes of Innocent Drinks. At that time, there was a great hassle in the evangelist consumers of Innocent Drinks. Most of the customers assumed that now the ethical firm will be swallowed by the multinational culture. The international reputation of unhealthy fizzy drinks and Coca Cola causing issues in India lead customers cry over this deal of great future. Then along the time, environmental in 2010 they increased their stakes to 58%. But it was important for Innocent drinks to have some sort of such a deal as Richard Reed said in one of his interviews that before joining Coca Cola, their company was not capable of bearing losses. But after the deal, the situation has changed on 180 degree scale for them. Innocent Drinks has their own reasons of investment issues for dealing with Coca Cola. On the other side, Coca Cola was interested in Innocent because there was a particular market of health cautious people that was out of Coca Cola’s reach. They observed the competitive advantage of Innocent Drinks lies in their ethical values and the good company image in the market. After receiving negative comments from the customers like there was one very common that the Innocent juices and smoothies will not taste same as before, Reed has to clarify that there has nothing changed in the company’s culture and core principles. He explained that Coca Cola has promised to remain with them as silent investor and will not interfere in the company’s management matters. Coca Cola helped Innocent in reducing their advertising costs and supported them in being the official sponsor of Olympics 2012. According to Reed in 2012, he already mentioned their intention of giving more stakes to Coca Cola as the deal worked for them exceptionally. Task-5 The main reason of Coca Cola investing in Innocent Drinks is grabbing that part of market which actually considers fizzy drinks as a great source of health damage. The good company image of Innocent Drinks will facilitate Coca Cola to hide itself behind it. Not only this, one of the main strategic reasons of this great investment is falling behind in the race of Natural drinks as Pepsi had launched their great quality product of Tropicana. Pepsi is like the absolute competitor of Coca Cola and Coca Cola was going all crazy with the success patterns of Tropicana. The investment and major share of Coca Cola will not affect the decision making criteria of Innocent Drinks as per the information given by Richard Reed. Richard told BBC that joining Coca Cola was one of their best moves and there could not be a better marketing strategy than joining a sugar daddy of the beverage industry. There have been claims from the three founders that there will not be any modifications in either the inner culture of their organization and management nor in the quality of their products. Coca Cola has also promised Innocent to give charity of a certain amount of 10% of profits. He concluded by saying that they have been working very hardly for the growth of their business so there is no chance that they would just take the money from someone and leaves the place. References Salisbury, P. 2011. Green Business: Innocent. [online] Available at: http://www.theecologist.org/green_green_living/green_business/803911/green_business_innocent.html  Anderson, E. 2012. Innocent Drinks founder Richard Reed: Exporting pushed us into the red. [online] Available at: http://www.managementtoday.co.uk/news/1156817/innocent-drinks-founder-exporting-pushed-us-red/ Read More