Strategies of Innocent Drinks Company - Case Study Example

Marketing Strategies Report- A Case Study of Innocent Drinks Company s 10 March Marketing Strategies Report- A Case Study of Innocent Drinks Company 1.0 Introduction Innocent Drinks was incepted in 1999 in, London UK by three founders namely Adam Balon, Richard Reed and John Wright. Initially, Innocent Drink started out by selling smoothies after which the founders realized the potential of the business. The founders started pursuing the business although they had to be sponsored in order to get started in a wider scope. The company has to this day grown exponentially to become the market leader in the smoothies market in UK having a market share of close to 80 percent (Simons 2011, p. 24). Innocent Drinks has also expanded its operations to about 15 other countries including Spain, Belgium and Netherlands among others. This report will outline the process of launching new products in the developed economies and other stagnated markets. In this light, the discussion will look at some of the key challenges and success factors that come with this process in this markets. Other areas of discussion will be the product idea, its unique competitive advantage, the product’s market, its competitive analysis and the marketing strategy employed by the producer. The paper will base its case study on the Innocent Drink. 2.0 The Product 2.1 Product idea As earlier mentioned, Innocent Drinks Company was launched in 1999. The drink (smoothie) which is the main product created by the company is made up of wholly crushed fruits that are used to make natural juice with no additions and other artificial flavours. Additionally, the company also produces a super smoothie which is comprised of a mixture of both fruits, crushed seeds, botanicals and vegetables. Other products by Innocent Drink include smoothie for kids and kids’ fruity water and noodles pot among others. The company prides itself on producing purely natural products and juices that are unique from its competitors. 3.0 The market As earlier mentioned, Innocent Drinks dominates the UK smoothies’ market with a market share of about 80 percent. The company also currently operates in about 15 countries, most of these in Europe. Following the acquisition of about 90 percent of its share by Coca-Cola, Innocent Drinks has been able to penetrate more markets while leveraging on the Coca Cola’s expansive market. However, the acquisition process met various challenges with the customers airing their dissatisfaction citing a probable loss of the product’s quality. However, a double assurance from both Coca-Cola and Innocent Drinks was provided that nothing will be altered in the products. The company currently sells over 2 million smoothies every week (Rashid 2014). 4.0 Macro environmental trends 4.1 Political factors According to the UK law, a company is required to specify its products’ ingredients and thus Innocent Drinks is compelled to provide evidence concerning the contents of its juices especially after doubts started coming out in the recent past. Additionally, any employer is required by the law to adhere to the minimum wage which can lead to increased expenses. 4.2 Economic factors Perhaps one of the most conspicuous economic factors that affected Innocent Drinks was the global recession that affected the world in the period between 2009 and 2010. Such occurrence affects the buyers through reduction of their purchasing power due to issues such as unemployment. As a result, the buyers moves on to the cheaper alternatives. 4.3 Social-cultural factors In today’s world, people are increasingly becoming health-conscious which makes Innocent Drinks’ products become more popular among the population. Additionally, the attitude of the market towards the Innocent Drink’s brand is that it produces clean products thus this has been phenomenal in propelling the company to huge success. 4.4Technology Innocent Drinks has a very innovative approach towards its productions and the marketing pursuits, continuously making use of technology to achieve this. For example, the company uses technology to manufacture most of its products such as the eco-friendly bottles for products packaging. 5.0 Competitive Analysis The smoothies market in the UK and other markets that Innocent Drink serves are very competitive and thus a competitive analysis can be achieved through the analysis of the strengths, weaknesses, threats and opportunities (Pickton & Wright 1998). Additionally, the Porter’s forces of the market can also be used to determine the same. 5.1 SWOT analysis 5.1.1Strengths Currently, the position of Innocent Drinks in the smoothies market can be described as strong especially after the acquisition by Coca-Cola. The company is capable of consistently maintaining a competitive pricing that makes its products quite affordable and thus popular among the population. The superior technology and the attractive brand makes the brand a respectable one in the market. 5.1.2 Weaknesses Despite Innocent Drinks having the largest market share in the smoothies market, the market is still small and thus the customer base is limited. The company is also quite poor in making business alliances which can help propel it better in the market. 5.1.3 Opportunities There is still a large room for Innocent Drinks to make improvements especially in its technological advancements, online presence through the social media, and creation of market segments by introducing more expensive (premium) products while also attracting new customers from its non-traditional markets. The company should also invest more in their marketing programs in order to tap into new markets that have the potential to bring them more revenues. 5.1.4 Threats There are various probable threats facing Innocent Drinks today including changes in the demographic factors such as consumers’ lifestyle, new products being produced by new entrants and competitors, and the technology being used by the company becoming obsolete. 5.2 Porter’s forces of a market Using this analysis, various aspects of a market are highlighted including the competition within an industry, potential for new market entrants, power of suppliers, power of customers and threats posed by the substitute products (Hill & Jones 2010, p. 42). 5.2.1 Competition in the industry Currently, the closest competitors to Innocent Drinks in the UK market are FeelGood and PJ Smoothes. It is, therefore, necessary that Innocent Drinks keeps up by bringing new innovations. 5.2.2 Power of Suppliers In the water and soft drinks industry, this might not apply as this is only affected by the number of suppliers in the market which consequently influences the price of the product. 5.2.3 Power of the buyers Awareness levels and competition in the market is quite influential to the buyers purchase of the products, and this leads to adjustment of the prices by the company. The market of soft drinks can be competitive although the relatively large number of buyers affects the price decision and competition level. 5.2.4 Threat of substitute products The industry substitution for products in the market is one of the major threats in most industries today. In the industry of soft drinks especially, the availability of a large variety of products makes it quite easy for this process to take place. It is, therefore, necessary that a company ensures a consistency and standards in its productions. 5.2.5 Threats of new market entrants With the increasingly growing number of new companies in the soft drinks market in UK, consumers are easily swayed away by the new companies. However, the main threats to Innocent Drinks still lie with the market leaders. 6.0 Marketing Strategies The marketing strategies largely lies in the analysis of the marketing mix factors such as the product, price, promotion, place and people (Ettenson 2013). 6.1 Product As a marketing strategy, Innocent Drinks provides an exclusive product (smoothie) that has a unique flavour for the supermarket stocking. The fruits are checked for quality which ensures that the products are of proven quality. 6.2 Price The value of a product should always correspond to the value of that product to the user. According to Innocent Drinks, the price of its products is affordable as well as even cheaper than the homemade juices. This approach has ensured that its products enjoy massive popularity among the smoothies market. 6.3 Place/environment An increased competition and low demand in the smoothies market has led to Innocent Drinks adopt a more proactive approach which goes beyond lying back and waiting its products to sell in supermarkets and cinemas. This has prompted the company to produce its products in more environmentally friendly and more attractive packages. 6.4 Promotion Innocent Drinks has embarked on various promotional campaigns over the years with one of its most creative coming in 2011 when they used Kriss Akabusi, a retired athlete, as their brand image. Additionally, the companys engagement in charity activities has also had a great impact on the growth of the brand. 6.5 People It is always important that a company targets a broad scope of its target market in terms of the demographic, age groups and cultures. Innocent Drinks’ products are natural and without any additional artificial products. This makes it a prime attraction to most consumers in this market segment. 7.0 Recommendations Having looked and analysed the strengths and weaknesses of Innocent Drinks, it is important that the report provides a few recommendations that would make the brand better and cement its position as the market leader in the smoothies segment. The company should focus on widening its market to bigger markets such as Asia as well as Africa. The company should also portray more openness and transparency especially regarding issues of its products constituents that has become a huge source of debate in the recent past. Finally, the company should consider creating their own point-of-sales such as self-run retail shops in order to increase its revenues. Bibliography Ettenson, R., Conrado, E., & Knowles, J. (2013). Rethinking the 4 P’s. Available at https://hbr.org/2013/01/rethinking-the-4-ps (Accessed 10 March 2015) Hill, C., & Jones, G. (2010). Strategic management theory: an integrated approach. Boston, MA, Houghton Mifflin. Pickton, D. W., & Wright, S. (1998). Whats swot in strategic analysis?.Strategic change, vol. 7, pp. 101-109. Rasheed, F. (2014). Innocent Drinks. Available at http://www.slideshare.net/shareslides321/the-innocent-drinks-s11423051 (Accessed 10 March 2015) Simmons, J. (2011). Innocent the inside story of Innocent told from the outside. London, Marshall Cavendish Business. Read More