Marketing Activities of Gatorade UK - Case Study Example

Marketing Activities of Gatorade UK Background of the Company Gatorade UK is a store that sells Gatorade products. It provides nutrition products to athletes in UK in order to meet their sports needs. Gatorade was formed about 40 years ago when a group of scientists from University of Florida sought to find solution to problems faced by members of the University’s football squad (Gatorade, 2015b). The players lost a lot of electrolytes and fluids through sweat without being replaced. The scientists came up with drinks that contain carbohydrate-electrolyte to replace the electrolytes and fluids lost during training and competitions. Citrus fruits from Florida were used to reduce the loss of electrolytes and fluids. A formula was developed to improve the flavor of the fluids, leading to the famous drink named Gatorade. In 2008, Gatorade was introduced in UK. The product range of the company comes in form of ready-to-drink, powder and nutrition products. Ready-to-drink products include 4-pack tropical burst, orange and cool blue flavours (Gatorade, 2015b). These products have fluids that replace the fluids lost by athletes during training and competition. The products also have carbohydrates that maintain the performance of athletes by replacing the lost carbohydrates during competition. They also contain electrolytes that replace the electrolytes lost by the body through sweat during training and competition. The company markets its products to sports clubs in UK including Arsenal FC, FC Barcelona and Liverpool FC. These football clubs are famous clubs in UK and Spain which have a lot of money to purchase the Gatorade products. The company also sells its products to other athletic events including the Brighton Marathon and uses the names of famous athletes including Lionel Messi, Michael Jordan, Serena Williams and Usain Bolt to advertise its products (Garotade, 2015a). Competitors UK’s Sports and Energy Drinks are sold by several companies. The leading brand is Lucozade which has placed its manufacturer GlaxoSmithKline Plc as the leader in the industry with 46% market share in 2013. Other brands competing with Gatorade include Powerade manufactured by Coca Cola (4.5%) market share and Red Bull manufactured by Red Bull GmbH of Australia (27%) market share (Euromonitor International, 2014). Consumers are increasingly becoming conscious about their health, so manufacturers have realized the need to produce low-sugar drinks. Marketing Mix of Competing Products Product Lucozade’s product lines are three: Lite, Sport and Elite. The product line that competes with Gatorade is the Sport product line which has wide range of products including Orange Drink, Raspberry drink, Caribbean Drink and Brazilian Drink (Lucozade, 2015). Unlike Gatorade which comes in packs of 4, Lucozade is sold in 12-packs. Lucozade’s products are also scientifically manufactured to increase hydration to improve endurance during competitions and training (Lucozade, 2015). The products are also composed of carbohydrates and sodium. Red Bull includes product ranges such as Red Edition (cranberry), Yellow Edition (tropical fruit), Blue Edition (blueberry), Lime Edition (lime) and Shot (concentrated form). Red Bull produces sugar-free products by dropping sugars, sucrose and glucose; replacing them with aspartame/sucralose and acesulfame K (Red Bull, 2015). The product strategy for the company is to provide different flavours but the same Red Bull benefits enhanced with the same ingredients and different flavours. Powerade products include Powerade which includes sugar and Powerade Zero which is sugar-free. In both cases, the products come in different flavours including orange, fruit punch, lemon lime, mixed berry, strawberry and melon. This brand has a lot of product ranges and depth compared to other companies. Price Lucozade sport drinks are sold in a 12-pack at a price of $11.99. This price is constant for all the Lucozade sport flavours. Powerade sells its products with different prices; $4.03, $3.60 and $4.00 for Powerade Zero Mixed Berry, Powerade Orange and Powerade Zero Fruit Puch respectively (Amazon, 2015). These prices are lowly priced compared to Lucozade in order to increase demand because the law of demand suggests that low prices leads to high demand. Red Bull also sells its sports drinks of 4-pack at different prices. The red bull blue edition, red bull red edition and silver edition cost $5.98 at Asda Stores (Red Bull, 2015). Promotion This includes methods of communication that marketers use to provide information about their products to different stakeholders, especially customers. Products may be promoted through advertisements, public relations and sales promotion. Most of the sports drinks are advertised through the media with sports personalities, events and personalities as the main theme starring for the advertisements. Red Bull mainly uses Motorsports to make its brand famous. Powerade uses public relations and rewards. On the other hand, Lucozade uses sports events to advertise its products using banners and posters in the field. It mainly promotes its products through Football, Rugby and Running. Lucozade also uses sponsorship by sponsoring the Lucozade powerleague and providing kits to grass root teams (Lucozade, 2015). Place Powerade distributes its products through distributors and partners worldwide as a marketing strategy of Coca Cola. One of its distributors is Amazon which ships Powerade to customers who order it online (Powerade, 2015). Redbull also distributes its products through retail and whole sale distributors such Wallmart (ASDA). It also sells directly to sports clubs and teams, and during sports and other events. Lucozade has an effective online shop which delivers products ordered by customers online (Lucozade, 2015). The company also sells its products directly to sports teams and clubs who make special order directly from the company. Perceived USP of competing products Unique Selling Point (USP) refers to any aspect of a business marketing that differentiates brands, services or products of a business from those of competitors (Levitt, 1986). It is a proposition to a customer that attracts his or her attention. According to Brassington & Pettitt (2013), Unique Selling Point of a business tells the customer that they should buy a product or service because it has specific benefits, and they explain those benefits through advertisements and other elements of marketing. The unique selling point of Lucozade is its market share and brand image enhanced by its product quality. The company manufactures quality sport drinks scientifically to improve hydration for sportsmen during training and competitions (Lucozade, 2015). The products are differentiated from those of competitors through its unique ingredients, flavours and benefit to sports people. Therefore, the unique selling point is mainly product development. Powerade’s unique selling point is pricing. The product has one of the lowest prices, attracting more customers who are looking for lower prices for beneficial products. Low prices leads to higher demand. Powerade segments its market and targets the lower-tier segment where customers need sports drinks at lower prices due to their low purchasing power. The company’s positioning is mainly on the low-class markets. Red Bull’s unique selling point is the high number of product lines and product line’s depth. The product lines include canberry, lime, orange, blueberry, tropical, etc (Red Bull, 2015). within this product lines, the product depth is uniquely huge. This gives customers a wide range of flavours, while serving the same purpose of adding carbohydrates, sodium and fluids in the body when they are lost during sports. Marketing Objectives, Marketing Mix and Measurement The primary marketing objective of Gatorade is to win a significant amount of market share in UK and increase its brand value, and to become the number 1 sports drink manufacturer in the world (Gatorade, 2015a). It attempts to achieve this by providing products that meet the energy, hydration and nutritional needs of players during training and competitions. Through marketing Gatorade aims at providing sports fuel products and maintain a good heritage of the brand by using appropriate marketing strategies. These marketing objectives can be examined using the 4Ps of the marketing mix. Product The product range of the company comes in form of ready-to-drink, powder and nutrition products. Ready-to-drink products include 4-pack tropical burst, orange and cool blue flavours (Gatorade, 2015a). These products have fluids that replace the fluids lost by athletes during training and competition. The marketing objectives of Gatorade can be achieved in different ways throughout the life cycle of its products. Armstrong and Kotler (2013) suggest that a company should understand the length or duration of its product’s life cycle. The company’s fuel sports products are at the growth stage and they require intensive marketing strategies. As the products grow, they are being manufactured with the intention of fueling the performance players; hence they are produced innovatively with ingredients that add electrolytes, fluids for hydration and energy (carbohydrates) to fuel to the performance of players. Price Pricing is also an effective way of ensuring that the company achieves its marketing objectives. Price determines the profits of the company; hence improving its market share. Gatorade Prime products cost £26.99 while Gatorade Perform costs different prices for different flavour e.g. £8.99, £11.49, £17.99, £8.99, and £11.49 for 350g orange powder, 12-pack 36g lemon powder sachets, 12-pack 500ml Gatorade Perform drink, 350g lemon powder and 12-pack 36g orange powder sachets respectively (Gatorade, 2015). These prices with different packaging are a unique pricing strategy that ensures that customers can choose the packages, flavours and quantity that meet their price requirements. This shows that Gatorade considers the perceived value of customers when choosing their prices. It is a market penetrating strategy which involves setting prices which customers need (Needham, 1996). This differs from Lucozade which offers constant prices for different flavours, and few price packages for customers to choose from. Promotion Promotion involves mechanisms used by marketers to provide information to various stakeholders, especially customers (Armstrong and Kottler, 2013). Gatorade communicates to its stakeholders through the internet, advertisements, and public relations. Through the internet, the company uses attractive pictures of its products and conspicuously written messages including: “World’s number one Sports Drink” and “Fuel Your Performance”. Through public relations, the company sponsors clubs such as Liverpool, Barcelona and Liverpool. They also have programmes that enable customers to win tickets to major games played by the teams it sponsors. Billboards and posters are also used to advertise Gatorade sport drinks during sports events. Promotion helps in enhancing the company’s positioning in UK’s sports industry by selling drinks to major clubs and special events. This leads to the achievement of the marketing objective of improved brand image and market share. Place Gatorade distributes its products through retailers and partners. Retailers such as Tesco buy Gatorade products and sell them in their High Street Stores (Gatorade, 2015b). This method achieves the marketing objectives of the company by ensuring that customers access their products conveniently, leading to increased customers and market share. The company also has online stores where the company allows customers to buy their sports drinks and get them delivered. Gatorade also sells through sports partners such as Liverpool, Barcelona and Arsenal who buy the products in large quantities and give them to their players during training and competitions (Gatorade, 2015a). This is intensive distribution and ensures that the company’s positioning in the sports industry is unrivalled by competitors. Summary of the Marketing Mix of Gatorade and its Competitors Gatorade Lucozade Powerade Red Bull Product Innovative manufacturing with ingredients and electrolytes Wide product ranges Scientifically manufactured products Wide varieties Sugar-free products Wide product ranges and product depth Powerade zero products are sugar free Produces different flavours with the same benefit Sugar-free products Price Different prices for different flavors Competitive pricing strategy Constant prices for all flavours Relatively high prices Different prices for different price ranges Low prices Constant prices across its flavors Medium prices Promotion Internet advertisement Public relations – Sponsors clubs such as Liverpool and Barcelona Advertisements in sports events Sponsoring through sports events Lucozade Powerleague Sponsoring grass root sports teams Advertisements in sports events Public relations and rewards Advertisement in sports events Sponsoring motorsports Place Direct selling to clubs and in sports events Using retailers and wholesalers, e.g. Tesco Online selling Online selling Direct selling to sports teams and clubs Uses distributors and partners, e.g. Amazon Uses retail and wholesale distributors, e.g. Walmart. Direct selling to sports clubs and in sports events Conclusion and Recommendations Gatorade positions itself well in the sports industry through its unique public relations methods of promotion which involve sponsorships and partnership with sports clubs. The product also wins customers from the sports industry by advertising its products in events through billboards and posters. Gatorade uses price strategies to achieve market penetration objectives by setting different prices for several packs flavours so that customers can choose the packs and flavours that meet their flavors. In terms of distribution, the company uses retailers such as Tesco to reach customers conveniently. These strategies enable the company to fight against competition from Lucozade (with high market share), Red Bull (wide range of products), and Powerade (with low prices). Therefore, it is clear that Gatorade has good marketing strategies and objectives that can enable the company to overcome competition. However, there are areas that the company needs to consider. One of the recommendations of the company is to increase its product lines and product line depth. According to Lin et al (2011), engaging in multiple product lines enables a company to maintain market competitiveness. For example, the company may sell pineapple, berry and other product lines or flavours. This will enable the company to compete with other companies like Red Bull which is constantly developing different product lines. The company should also invest heavily in innovation and promotion to rival Lucozade in its product differentiation and market position. Innovation can be improved by allowing employees to work independently in projects or teams and share ideas of innovation and product development. References list Amazon (2015). Grocery and Gourmet Food: Powerade Beverages, Drops and Powders. Accessed March 31, 2015 from http://www.amazon.com/grocery-breakfast-foods-snacks-organic/b/ref=sa_menu_gro?ie=UTF8&node=10177652011&tag=powerade.com-20. Armstrong, G. and Kotler, P. (2013). Marketing an Introduction, Eleventh Ed. Harlow Pearson Publishing Ltd Brassington, F. & Pettitt, S. (2013). Essentials of Marketing. 3rd ed. Harlow: Pearson Education Ltd Euromonitor International (2014). Sports and Energy Drinks in the United Kingdom. Accessed March 31, 2015 from http://www.euromonitor.com/sports-and-energy-drinks-in-the-united-kingdom/report. Gatorade (2015a). Teams and Athletes. Accessed March 31, 2015 from http://www.gatorade.co.uk/athletes-team. Gatorade (2015b). Products. Accessed March 31, 2015 from http://www.gatorade.co.uk/products. Levitt, T. (1986). The marketing imagination. New York: Free Press Lin, C., Kilicay-Ergin, N.H., and Okudana, G.E. (2011). Agent-based Modeling of Dynamic Pricing Scenarios to Optimize Multiple-generation Product Lines with Cannibalization. Procedia Computer Science, 6, 311–316. LucozadeSport (2015). Products: The Lucozade Sport Range. Accessed March 31, 2015 from http://www.lucozadesport.com/products/sport/ Needham, D. (1996). Business for Higher Awards. Oxford, England: Heinemann. Powerade (2015). Products. Accessed March 31, 2015 from http://www.us.powerade.com/ Red Bull (2015). Products: Red Bull Editions. Accessed March 31, 2015 from http://energydrink.redbull.com/red-bull-editions. Read More