Consumers Preferences and Behaviour in the Energy Drinks Industry in the UK and China - Case Study Example

A Comparative Evaluation of the Impact of Culture on Consumers’ Behaviour Student’s Name Professor’s Name Course Title Date A Comparative Evaluation of the Impact of Culture on Consumers’ Behaviour Executive Summary In the face of chronic diseases such as obesity, diabetes and cancer, consumers throughout the globe are shifting from consuming carbonated soft drink to consuming alternative healthy beverages. This has, therefore, affected the consumption patterns, with older adults preferring energy and vitamins enhanced drinks, on one hand, and children preferring juices on the other hand. Therefore, the demand for alternative beverages such as energy drinks is expected to increase globally as buyers’ purchasing power increases (Deichert et.al, 2006). Leading beverage companies, including Coca-Cola, PepsiCo and Red bull are putting efforts into deep investigation of how beverage customers behave, after and throughout the purchasing process. Each consumer has unique needs and, therefore, beverage firms should predict the trends in buying behaviour in order to develop products that meet the diverse needs of their clients (Hitt, Ireland, & Hoskisson, 2013). This paper will analyze and discuss how cultural factors affect consumers’ preferences and behaviour in the energy drinks industry in the UK and China. Brief Description In today’s world, energy drinks have become a major source of energy, especially among the children. These alternative beverages play a critical role of providing extra burst in energy, promoting wakefulness, maintaining attentiveness and enhancing moods. Recent investigation shows that energy drinks contains caffeine which causes physical and psychological addictions. Statistics reveals that, in the UK and China, more than 70% of the kids’ population consumes energy drinks each day. They are found in most colleges and high schools. They are mostly packed in packed in appealing cans to catch the attention of energy drinks’ enthusiasts. Table 1. 0: Worldwide and Regional Market Shares for the Three Largest Producers of Alternative Beverages, 2009 Company Worldwide United States Asia-Pacific Europe PepsiCo 26.5% 47.8% 12.4% 12.9% Coca-Cola 11.5% 10.2% 13.7% n/a Red Bull 7.0% 10.6% n/a 10.1% Others 55% 31.5% 73.9% 77.0% Total 100% 100% 100% 100% Figure 1. 0: Worldwide and Regional Market Shares for the Three Largest Producers of Alternative Beverages, 2009 Source: Euromonitor, 2009 The above figures show that the alternative beverage industry has recorded remarkable growth in the recent past. After experiencing slow and erratic growth for decades, the energy drinks industry is presently performing much better (Heckman, Sherry & Mejia, 2010). In an effort to gain a larger share of the market, marketers in the energy drinks industry are launching new products. In addition, they are researching on customers’ needs in order to discover their latent needs and hence produce appropriate goods. Red Bull and Coca-Cola are the global market leader as far as energy drinks beverages are concerned. Other players in the alternative beverages industry include PepsiCo and Rockstar. It is worth noting that competition in the alternative beverages industry is still. For this reason, firms have to predict changes in client’s trends and take steps to be ahead of them (Heckman, Sherry & De Mejia, 2010). Considering that there are new trends in the alternative beverages industry, it is important to compare and contrast the cultural differences between the United Kingdom and China to see the impact. A quantitative research on existing documented data will be used to collect this information. Cultural factors affect consumers’ preferences and behaviour in the energy drinks industry Culture could be defined as customs, values and beliefs that provide the background of key human factors, including motivation, attitude, personality, social class among others. The artefacts of culture are passed down from one generation to another, and members of the society are required to abide by cultural norms without deliberation. Thus, failure to obey cultural norms is regarded as unnatural. Individuals who flout cultural norms are punished. Members of the society view themselves in terms of their culture and react to the external environment based on their culture. However, as culture evolves with time, beliefs, norms, attitudes and values may be modified. Individuals normally associate the benefits of a product or service with the new beliefs. Therefore, they may abandon the consumption of a product if it does not satisfy their needs. The choice of alternative beverages is also influenced by cultural values. The following sections analyze and discuss how cultural factors affect consumers’ preferences and behaviour in the energy drinks industry in the UK and China. How cultural factors affect consumers’ preferences and behaviour in the energy drinks industry in the UK One important aspect of culture is that it satisfies the needs of societal members. Thus, it provides direction, suggestion, problem solving methods, orders and standard practice to the people, which are tested and effective in satisfying social, psychological and physiological needs. In recent years, the consumption of energy drinks in the UK has exponentially expanded. Kids prefer taking them in order to stay wake all night. According to many, the consumption of energy drinks provides them with superpowers. Most students in the UK believes that energy drinks’ consumption have a positive impact on remembrance and alertness. As mentioned earlier, most energy drinks contain caffeine. In the wake of chronic diseases such as renal disease, coronary heart disease, diabetes and cancer, most patients throughout the UK are associating energy drinks with medical use. According to them, caffeine use enables them to forget about their chronic pain. Therefore, most people in the UK believe that consuming energy drinks helps to relieve pain. The ageing population crisis in the UK is causing major concerns for the government. An ageing population will most certainly cause a reduction in the number of employed persons. This could cause the economy of the country to crumble. In this regard, UK residents between the ages of 40 and 70 are increasingly consuming energy drinks with a view of reducing the signs of ageing. Figure 2.0: Absolute Retail Value Growth in Developed vs Emerging Markets for Top Five Functional Trends, 2013. Source: Euromonitor International The above figures show that the consumption of energy drinks in the UK has increased tremendously in the recent past because of its association with improving people’s mood and sharpening reasoning ability. Also, most people believe that energy drinks enhances muscular endurance (Jay, 2014). Therefore, energy drinks in the UK are used by weight lifters, athletes, chess players and mathematicians (Rama (2008). Figure 3.0: The consumption of energy drinks in the past six years The above figures show that energy drinks have become symbols of national identity in the United Kingdom. Most people throughout the UK are consuming energy drinks as a way of life. Figure 4.0: UK underestimating sugar levels in popular beverages Source: the University of Glasgow, 2005 A survey, which was carried out by the University of Glasgow in 2005, revealed that most people throughout the United Kingdom takes three or more varieties of energy drinks in an average day. The United Kingdom residents are however, miscalculating the amount of calories in popular energy drinks. How cultural factors affect consumers’ preferences and behaviour in the energy drinks industry in China The consumption of energy drinks in China has increased significantly over the last two decades (Bray, 2014). Qili of Hangzhou Wahaha Group was the first to introduce energy drinks in the Chinese market in 2012. Since then, more companies including Fujian Dali Food Co Ltd and Red Bull have successfully introduced their energy drinks brands in the Chinese market. The Chinese energy drinks industry is very competitive and, therefore, leading companies in energy drinks have continued to be more competitive by producing brands that captures the hearts and wallets of Chinese consumers. By 2013, Red Bull was the market leader in energy drinks in the country due to its effective marketing and promotional strategies. Other popular energy drinks in China includes Gatorade, Jianlibao, Hi-Tiger and Pocari Sweat (Euromonitor International, 2014). Figure 5.0: Worldwide Energy Drink and Tonics and Bottle Nutritive Drink Sales (US$, RSP), 2007-2012 Source: Euromonitor International In recent years, the lifestyles have become extremely busy, and therefore, most Chinese consumers are turning to energy drinks in search of endurance. Thus, energy drinks are providing Chinese consumers with a wonderful experience that relieves them of the hustle and bustle of the harsh life. According to Euromonitor International (2014), the core consumers of energy drinks in China are young adults below the age of 35. Therefore, most Chinese consumers believe that energy drinks have potential health benefits. According to the Euromonitor International (2014), emerge drinks in China are mostly used by Mahjong fans. Mahjong is a noisy game that is played in private clubs, at home and at social occasions. Most Chinese view the game as a way of life. Mahjong is easy to play and understand. According to many, it plays an imperative role of enhancing mental concentration. Most Chinese has fully embraced the game (Hill, 2014). Most people sit down with their loved ones to play the game after a busy week at work. It is a common way of entertaining business customers in China. Leading energy drinks companies in China has taken this opportunity, and thus, they have launched various advertising campaigns aimed at wooing the fans to consume their products. In this regard, consuming energy drinks in China is a way of life amongst Mahjong fans. As Lee, Fabish and McGraw (2005) explain, identification of core values upheld by individuals in a society is essential for a marketing campaign to be successful. Despite their popularity amongst Mahjong fans, some people associates energy drinks with satanic beliefs. For instance, a Christian woman recently argued that the Monster energy drink promotes Satanism (wyattxhim, 2014). Therefore, some people in China refrain from consuming energy drinks due to their beliefs, perceptions and attitudes towards them. Conclusion The assignment has analyzed and discussed the impact of culture on consumer behavior in both China and the UK. Based on the above analysis, it can be concluded that the impact of culture on purchasing behavior varies from one country to another. For instance, some Christians in China associates energy drinks with Satanism, and this influences their buying behavior. However, most consumers in both countries believe that the consumption of energy drinks revitalizes burst of energy as a result of their high caffeine content. In addition, they believe that energy drinks have numerous health benefits. Investors must, therefore, carry out a careful culture analysis in order to establish whether their brands will succeed or not in a particular country. Reference List Bray, G. A. 2014. Handbook of Obesity -- Volume 1: Epidemiology, Etiology, and Physiopathology (3rd ed.). Florida: CRC Press. Deichert, M. et al., 2006. Industry analysis: Soft Drinks. Retrieved from http://www.csbsju.edu/documents/libraries/zeigler_paper.pdf Euromonitor International. 2014. Sports and Energy Drinks in China. Retrieved from http://www.euromonitor.com/sports-and-energy-drinks-in-china/report Heckman, M, Sherry, K & De Mejia, E. G. 2010. Energy Drinks: An Assessment of Their Market Size, Consumer Demographics, Ingredient Profile, Functionality, and Regulations in the United States. New York (NY): John Wiley & Sons. Retrieved from http://guayaki.com/images/uploads/pages/File/ENERGY%20DRINKS%20UI.pdf. Hill, M. 2014. Energy drinks go ‘natural’ as the market roars on. Retrieved from http://www.lohud.com/story/life/2014/01/12/energy-drinks-go-natural-as-the-market-roars-on/4417745/ Hitt, A. M., Ireland, R. D., & Hoskisson, R. E. 2013. Strategic management: Competitiveness & globalization: Concepts and cases (10th ed.). Mason, OH: South-Western Cengage Learning. Jay, H. 2014. Physiological Aspects of Sport Training and Performance (2nd ed.). Illinois: Human Kinetics. Lee, R.G, Fabish, L. & McGraw, N. 2005. The Value of Corporate Values. Retrieved from http://www.strategy-business.com/article/05206?pg=all Rama, R. 2008. Handbook of Innovation in the Food and Drink Industry. Florida: CRC Press. Wyattxhim (2014). REACTION: to Monster Energy Drinks Being Satanic. [Online Video]. 09 November. Retrieved from http://www.youtube.com/watch?v=Rnx0Q_3V7Lc. [Accessed: 09 November 2014]. Read More