Sports Drinks Industry Analysis

Executive compend We set much than or less nonice an increase physique of businesses catering to the late(a) rise of a radical rate grocery store the soundlyness- cognizant consumer. At Nike, our goal has forever been to give consumers what they want now, as comfortably as to anticipate their future tastes, and to consequently tailor our strategy to accommodate those tastes. We pass on recognized an unfilled merchandise probable resistence in the non-carbonated activation sports swallow arna, thence developing an entirely smart convergence category. Our denounceing strategy is to enter the mart by carving a new niche of protein-enriched energizing sports drinks.Our verifiable is to take consumers about the new drink, as head as to curb a gather and gain trade shargon in the effort. We apprehend that by being trade coll atomic estimate 18rs, our name terminus become identical with the new drink category, and give precaution in our sustaining a agonistical service e realwhere the copy-cats that be sure to clop the commercialise after the new ingatherings door and subsequent success. Our original fanny mart is 18-34 stratum previous(a) females who leave behind use of impregn harmonizes and services our sports drink whenever they inquireed a advance at work, in the gym, or and when they felt like it.The substitute(prenominal) site merchandise is 18-34 year old males who surrender into much the same socio-cultural and economic category as the primary print market. The Nike interrogative sentence nothing drink will be powered as a risque-end item, costing $2 per environ noeticly-friendly gutter. It will come in a variety of fruit flavors and will skylark the replenish custodyt of electrolytes and different essential vitamins and minerals. We hope that eminent- absolute frequency bargain market penetration employ multi-media advertisements will spread the word and face-lift aw arness abou t Nike proceeding. field of study statistical distri besidesion will follow in supermarkets, pharmacies, puff upness food stores, and gourmet retailers.The Nike marking name, attended by its strong marque image, will differentiate the produce and maintain its popularity via the market leader and differentiation strategy the association has chosen. 2. 0 Environmental analysis Economic Trends The X and Y generations, our target markets, comprise about 110 million slew of the join States population. They argon, customaryly speaking, comfortably-educated, and earn relatively higher(prenominal)er(prenominal) incomes, thus allowing for much of their disposable income to be spent on health-oriented products, much(prenominal) as the new beverage we are preparedness to launch, Nike deed.N both positive, nor negative economic trends, much(prenominal) as flip-flops in involvement rates, inflation, DGP, and so forth are not likely to accommodate a epoch-making impact on our product, since its not a high priced luxury item whose fill would be affected by theses factors. The quality of sports drinks consumed doesnt truly depend on the income of the consumers, since these are relatively inexpensive, e veryday products. As a general trend stock-still it is worthy mentioning that the economy as a consentient is growing in the United States as well as in early(a) parts of the world, allowing for an ever increasing bill of living.Cultural and Demographic Trends Socio-culturally, our target market is health-conscious and youth-oriented. The individuals comprising our target market of 18-34 year old men and women, are generally perceive as individualistic, with a center on on making healthy decisions via food choices (salad nix and the organics market take a crap boomed), and exercise (from passing game on athletics-oriented vacations, to spending lunch hours in the gym). There is likewise a change in the lifestyle of Americans, and deal ro und the world fast paced, always on the go, eating out and socializing to a heavy(p)er extent.These people rarely energize the time to get to at home, decreasing the regularity of go through healthy meals. One of the best alternatives of acquire the needed vitamins and nutrition is via healthy beverages, such as Nike interrogation. The U. S. populations general aversion to high calorie, high sugar, and high carbohydrate beverages will likely be beneficial to our new product. Demographically, a handed-down family structure is becoming less typical, with an increasing number of couples co-habitating without being married, set about birth-rates, and a massiveer concentration on health and weight maintenance.As a guide of these trends, consumption of youth-oriented products has grown as people strive to be in good shape. The Nike Motion energizing sports drink will provide the energy these people need to accomplish their nonsubjectives. Ethnic trends are to a fault changing, with baby boomers retiring, and an increasing young Hispanic population emergent, on with an influx of Asians. The Hispanic population, becoming the largest minority segment in 2002, has grown 70 pct over the past decade to approximately 37 million (14. 1 share of the U. S. population). These youths lead fast-paced lifestyles, frequently juggling school, work, and ad hominem lives. For the younger generation, regardless of heathen background, belief tired is not an option. The popularity of the sports and energy drinks has rise up this fact. We at Nike thus believe that Nike Motion will be a wonderful success, attracting to a health-conscious population with our tempting natural ingredients, while simultaneously welcome the increasing need for energizing products. governmental and Legal Environment The political environment could have a significant perfume on us if we were to market Nike Motion in foreign countries.Constant changes in exchange rates and political syste ms are important to keep in mind. As to the legal environment, each and every degraded operates in nations of laws and rules that have to be obeyed. coca plant Cola recently got into trouble cod to an advertising message in which they, allegedly, visualised Gatorade in an unfavorable light. The case was colonized outside of court, plainly has cost millions of dollars for Coke. 2 Physical Environment and technological Trends The menses physical environment, especially in metropolitan areas such as large cities, is very much conducive to the use of our product. purchasable in a large number of various retailers, our goal is to be the Starbucks of sports drinks on every corner, thither when you need it. Retailers stocking our product will be dispersed throughout the city, with a significant concentration in areas of business and entertainment (for example, in the downtown financial district, as well as near the Broadway theaters), as well as near learning centers and gyms. We w ant to make sure that Nike Motion is widely distributed and promptly available, two to impulse shoppers, as well as for the more(prenominal) traditional image of buyer.Changes in technology may lower entry barriers and attain new product processes. To enter the sports drink perseverance, large majuscule investments are required for production facilities, marketing, and etcetera. Technological changes, such as the internet, can create additional possibilities for promotion, via viral campaigns via the internet and emails that are so popular with our target market. world-wide Trends Due to advances in technology and communication, we can safely say that the world has never been as united as it is soon.The internet, along with television, and to a lesser full point, radio, have served as outlets for disseminating cultural views, and incorporating adaptations of traditional ethnic ideas and beliefs into the mainstream, both within a country and internationally. Products rangin g from wear to music to the culinary arts have become widely accepted. We feel that sports drinks glisten into this global category as well. From atomic number 63 to Latin America to the United States, lifestyles are becoming faster-paced (though to leaveing legs) and are influencing the demand for products that will accommodate such consumer choices.In the last year alone, sales of sports drinks have increased by 10%. 3 3. 0 Mission Statement Nikes direction expresss If you have a embody, you are an suspensor. Nike Motion, the new protein infused energy drink brought to you by Nike, targets the athlete in us all, whether you are on the track or on the couch, by providing hydration and energy with essential vitamins, minerals, and exotic herbs, proven to enhance performance, raise energy aims, as well as enhance mental agility. Nike motion is crucial for both body and mind. 4. 0 Market / attention / Competition AnalysisCompetition Analysis of Sports Drink Industry Sports drinks experienced a remarkable outgrowth in the late 1990s and archean 2000s, growing al some 56 portionage between 1997 and 2002. As a result of this increase in demand for sports drinks, a large number of products started flooding the market. This influx, however, is controlled by a limited number of naturalised and potent companies, namely Gatorade and Powerade. Gatorade, produced by PepsiCo, is a market leader, boasting 80 percent market share. Its chief competitor, Powerade (produced by coca Cola), accounts for 19 percent of the remaining sports drink market.PepsiCos market share however is not safe. Since 2002, its share dec krisd by 4 percent, while Cokes Powerade grew by nearly 30 percent. 4 virtually of the industrys growth is dictated by reaching new demographics, including ethnic groups, children and more serious exercisers. Attempts by other companies to market sports drinks have often failed, or achieved considerably less success than the exist players. Nike , in an attempt to avoid territorial battles, plans to carve a new niche, the energizing sports drinks with various essential nutrients, thus emerging as a market leader in this new category.As mentioned previously, devoted(p) its established, strong brand image, and its association with everything healthy, such a move should not prove impossible. Porters private-enterprise(a) Forces tally to Porters Five Competitive Forces, the power of suppliers is low because the ingredients used, as well as the packaging, are commodities that can be easily substituted, and therefore do not involve high switching costs. The market is not dominated by a few large suppliers, but is kind of fragmented, allowing for price competition. The power of buyers is medium, because even though there are many buyers, round of them are rather powerful.There is teensy chance that existing customers would integrate backwards. Sports drinks are differentiated products but can be replaced by a limited numbe r of substitutes, water being the biggest nemesis. The consumers, according to trends in the macro environment will progressively search for sports drinks on the store shelves. The low-pitched number of firms makes for a high degree of rivalry, with a few large companies competing amongst themselves, as well as vying to establish a significant foothold in format to prevent smaller firms from entering the market.The energy and sports drink products are thus differentiated, and vary in more than good price. The threat of new entrants is low to medium payable to the fact that the attractive high-growth industry of sports drinks has very high barriers to entry namely, it is capital intensive, requiring a lot of marketing and advertising of these products, discussing their benefits, as well as positioning them obscure from the rest. Likewise, it necessitates large economies of scale in production. such resources are difficult to achieve, and if marketing to the masses, it is somet hing merely large, wealthy companies can achieve. The threat of substitutes in this arena is quite high, in that the products currently on the market often differ in little other than brand and consumer perception. The switching costs from one brand to another are virtually zero, but companies can succeed if theyre able to retain their faithful customer bases. 4. 0 Summary of marketing activity in the industry Pricing strategyIt is safe to state that there are no significant pricing differences among the brands, they are competitively priced. both(prenominal) Gatorade and Powerade sell at about $1. 50-2. 00 for a 32 oz. bottle, depending on the location and on the type of retailer. There are really no pricing wars in this industry, since consumers are very brand loyal. Looking at the distribution channels, we can see that these sports drinks are sold at some retailers that sell groceries and other beverages. Retailers include supermarkets, delis, vending machines, passage vend ors, cafeterias at gyms, etcetera.We see a potential advantage in selling Nike Motion at existing Nike outlets, such as sporty goods stores, and in Nikes flagship stores, Niketowns, that are located in major cities around the world. Advertising and Promotions When discussing advertising and promotional strategies, we have to note that even the most boffo companies need advertising and other promotional vehicles to further the success of their brands. Sports drink makers, given the degree of competition in the industry are doing just this. Gatorade spent $ clxxx million on advertisements last year while Powerade spent less than $20 million, per Nielsen Monitor-Plus. Since these sports drinks primarily target health-conscious consumers and athletes, some of the most important promotional vehicles include sponsorship of sporting events, and signing of top athletes for promotional deals. coca Cola was, for example, the official sponsor of the pass Olympic Games in Athens with its Po werade Drink. We focus on niche audiences of top athletes, either through major events such as the Olympics, close relationships with sporting bodies, or by working with sports experts to produce targeted advertorial, says a Coca-Cola spokeswoman. Consumer statement is key, she adds. 6 Powerade earlier launched an online version of its LeBron pile comic in its quest to position the brand as the sports drink for the close generation. A first for Coke and its render DC Comics, the interactive site include flash technology and voice-overs by Mr. throng across 12 Webisodes, as well as an instant win subdivision and video games. 7 Gatorade on the other hand is the official sponsor of the issue Football League, the official sports drink of the National Basketball Association, WNBA, major(ip) League Baseball, Major League Soccer and a master of ceremonies of others around the world.In all, Gatorade has struck close to 900 sponsorship deals with sports events over time, according to tracking by the IEG Sponsorship Report. Gatorade also will sponsor brand content during the National Basketball Associations playoffs on ESPN, TNT and FSN networks. On TNT, broadcast personalities will var. live sideline segments dubbed perceive Around the Cooler about game strategy, injuries, statistics and other insights, while ESPN will air branded Cooler Talk segments on its Sports Center. ChallengesOne of the biggest challenges these companies face is the problem of attracting more female consumers. According to the Mintel International Group, an industry observer, consumption patterns always leaned heavily toward males, but the trend showed signs of changing as more female teens reportedly were drinking more and more sports drinks. This reflected female teens ongoing evoke in losing weight and increasing interest in exercise. 8 Sports beverage producers also began targeting the fast-growing Hispanic population.Gatorades Xtremo was the first to appeal to this potential mar ket with a line of more exotic and tropical flavors including mango and tropical. The effort was supported by bilingualist packaging and Spanish-language advertising. Coca-Colas Powerade brand also began use Spanish-language advertising to tap into this market. We think that the most important industry factors that will be influential in our planning is the degree of competition that were hoping to offset with powerful and wide-reaching marketing campaigns.As Ive mentioned earlier, there is a very high level of competition especially between Gatorade and Powerade. both(prenominal) these companies spend millions of dollars on building their brands and their loyal customer base. We can see, however, a little(a) difference between the promotional techniques of the two. Gatorade is more centered on the top-athlete, while Powerade tries to fork over a more cutting-edge supply that appeals primarily to the iPod generation. There top executive be another niche that is underserved, a nd that could be just what Nike Motion needs.An underserved niche, such as women and men of Generation X and Generation Y, might have a need for nutritious, on-the-go beverages that fit into their busy life-styles. Nike could target these niches successfully collectable to its existing brand image. 5. 0 Marketing object glass The Nike brand is a well know brand, its swoosh is one of the most recognisable signs out there, having established brand allegiance among many. Based on our market research, the brand attachment of Nike Motion would have great potential for being the next great beverage among athletes and non-athletes.We would pursue a mass market penetration strategy for a saturated market, while still allowing for a vast opportunity in high profits and gaining market share collectible to Nikes brand recognition. Our primary objective is to create product awareness among the target audience by 30 percent in one year and our secondary objective would be to increase market share. We would also want to inform our target audience about the features and benefits of our product and its competitive advantage, leading to a 10 percent increase in sales in one year.Many individuals are unmindful(predicate) of Nikes new brand extension of a sports drink. Therefore we would pursue a high reach and high frequency strategy in our advertising in order to have maximum exposure. In order to accomplish this we would conduct a SWOT analysis to gain a better understanding of our target market and market segment. We want to achieve this objective by using secondary and primary research to get an in perspicaciousness understanding of our target and to formulate a strategy to develop our campaign. Based on our research, trends and attitudes are moving toward health conscious products.