Developing External Environment of a New Soft Drink for Teenagers - Essay Example

?Analysis of an external environment Development of a new soft drink for teenagers Introduction of a new soft drink in the market needs a study of the external environment that might affect the operations of the company. Often enough, these external factors are identifiable elements found in social changes, competitors, economic environment, political and regulatory environment, and new technology that affect the survival, operations, and growth of an organization (netMBA) The most important factors that are relevant in the development of a new soft drink for teenagers are social changes and competitors although other factors affecting business operations are significant as well. Social factors that affect economic environment of a business are the cultural influences of time. For instance, the influences at this time are general rise of teenage alcohol abuse. British Medical Association highlighted in its 2009 report that more 11-15 year olds are not only regularly drinking alcohol, but also increasing in the amount they are drinking on each occasion. Teenagers drink and behave that way because of youngsters’ culture that is influenced by peer pressure. This behaviour is extended in order to get someone to act in a similar way, and often, teenagers drink because everybody else is doing it. Peer pressure encourages teenagers to change their behaviour either on a negative and positive way (Wise Geek). It may be dangerous to children, especially the younger or insecure children. In group gatherings of teenagers, they may be encouraged to take dangerous actions simply because everybody else is drinking alcohol. Another external environment that is a very important consideration is the competitive condition in the market. This requires an analysis of the competitive environment that the business will operate. Some businesses may offer similar products that the company is contemplating on doing. Thus, it becomes necessary that an analysis consist of study of the strengths and weaknesses of the soft drink industry in UK, as well as the company’s own strengths and weaknesses; a study of the demographics and desires of marketplace customers, and barriers that can impede the introduction the new soft drink (Competitive analysis). First, it is important to discover the magnitude of competition in the soft drinks manufacturer in the market. Then, there is need to consider the chances of the new soft drinks on how it will compare and compete in this market. Second, what are the taste preferences of the teenagers when it comes to soft drinks? For instance, competition in the industry includes giants such as Coke and Pepsi. The study should look into reasons why companies like Coke and Pepsi succeed, or why others failed. For example, why did Pepsi “BLUE” fail in the market when it was introduced in 2004? It is worth looking into what are the motivational factors that encourage people to buy a product. Let us look at Pepsi “Blue” again. Pepsi spent a lot of money in its development, advertisements and promotions, but after a while, it lacked the needed luster to remain in the market (PepsiCo – bolt from the “Blue”) Technological factors are also vital consideration for development of new soft drinks in the market. We all know that technology is fast changing and this likewise change the production process and product innovations. The relevant factor here is the product presentation or packaging, its appeal and process needed. In the ready to drink category of the new soft drink, what is the most appropriate for the 11-15 teenage market; will it come in an aluminium can, tetra-packs or in bottles. Comes next is the appropriate theme in the brand labels to create an appeal. For instance, Mountain Dew became a popular drink when it turned into aluminium cans, and used eye appealing labels as well as durability, fast chilling capability and recyclability (Shelf Impact, 2008) Economic environment becomes an important factor of analysis because these are the taxation, government spending, general demand, interest rates, exchange rates and European global economic factors. Taxation is the most relevant consideration of the new business, as they have to find out if there are taxation incentives for new business. For the moment, new company should not be concerned yet with global economic factors as it is assumed that marketing of business will be concentrated in UK. As a new company, they should be concerned on regulations on health and food safety of the product as well as regulations on business registration. Company should take a look into interest rates that is required when they borrow capital from private banks or lenders, of equity shares if they would go public. This would require studying the form of business structure that the company would enter into. Demand should be analyzed as to price elasticity. Consumers switch consumption and demand based on several reasons. Demand is affected if the substitute product such as the one being developed would come out to be a good substitute to alcohol drink. It also depends on the necessity of the product; if teenagers would strongly feel that it will improve their health, growth or personality. Demand is also affected by the household income and by how much money is allotted for drinks; it is likewise affected by the peak or non peak season. Summer or hot weather increases demand for cold soft drinks rather than alcohol drinks (tutor 2u). Price also dictates demand, and if it habitually consumed such as alcohol and cigarettes, study showed consumer does not mind price change at all. Upon knowing all these factors, the company now may go into a SWOT analysis framework that summarizes all the strengths, weaknesses, opportunities and threat a company deals with in its new venture. This would also allow the company to formulate a marketing strategy, company policy that will make them ready to enter the soft drinks industry. Accordingly, the SWOT analysis will appear like this: Strengths of the new soft drink. Support of the government to control teenage drinking alcohol New product appeal to 11-15 age categories Health consciousness is starting to be a new trend. Weaknesses Untested strength in the market. A great amount of effort is needed to launch the product. Financial capability. A big amount of investment is required from the production process to marketing. Lack of experience Opportunity The interest of the British Medical Association to change youths’ attitudes by making it more acceptable for teenagers to drink soft drinks when they are with friends Threat Competition is stiff. Rivalry is great among existing soft drinks manufacturers. Market acceptance. There is no indication as yet that teenagers will change behavior and drink soft drinks instead of alcohol when they are with friends. References Competitive Analysis. Reference for Business. Encyclopedia of Business, 2nd ed. Retrieved 23 March, 2011 netMBA, SWOT Analysis. Retrieved 23 March 2011 PepsiCo – bolt from the “Blue”. Icmrindia.org. Retrieved 23 March 2011 Shelf Impact. 15 Sept. 2008, Bottle as art grows Mountain Dew’s market share. Packaging World. Retrieved 23 March 2011. Read More