Executive Summary
Athletic drink market is continuously growing. Currently, this market is worth $7 billion, and it is expected to grow into a $20 billion market by 2020. The products available in the market are of “one size fits all” type with Pepsi and Coca-Cola dominating the market share. Since the nutritional requirements vary from one person to another on the basis of size, weight, height and type of sports, the “one size fits all” type of products fail to fulfill all the bodily needs of a sports person. Customade is a product that has been designed to provide customized nutrition solution to people involved in endurance sports. The product will be available in powdered form to be used in different quantities according to individual needs. Among all the endurance sports in USA, triathlon is witnessing the maximum growth in recent years with the number of participants having almost quadrupled in the last decade. Launching “Customade” in this segment will be a good idea for quick growth. Customade will create a buzz in this segment easily as none of the current products has the potential to fulfill the customized electrolyte, protein and carbohydrate nutrients needs during and after an event. Customade has a huge potential to do well if it receives solid back-up of a great marketing campaign.
Introduction
The athletic drink and nutrition market has been one of the ever-growing markets for the last 20 years. When Pepsi launched Gatorade, it was predicated that it would prove to be a failure like similar other Pepsi innovations. However, since its launch Gatorade has successfully created a niche for itself contributing to the growth of a new market segment called “Athletic drink market” (Reeves, 2011). Currently, this market is dominated by Pepsi and Coca-Cola products, and these two companies jointly control more than 95% of the market share (Reeves, 2011). Products like Gatorade and PowerAde are designed like “one product fit for all customers”. However, each individual is different. During the course of a marathon run or a triathlon event, the nutrient, electrolyte, calorie and hydration requirement of each individual is separate (Rothman, 2013). The current athletic drinks, gels and bars that are available in the market may function well for some people but may not help others. Some products may work remarkably well for few people in a marathon race, but the same product may not fulfill the nutritional needs to perform at an optimum level in a triathlon. The needs are highly individualistic, but there is no availability of a customized athletic drink in the current market. This creates a market opportunity for a customized athletic drink for sports people. This article will explore the sports market to find out the opportunities for the development of a customized athletic drink and will present a marketing plan for the product launch of the same.
Situation Analysis
Market Analysis
Industry Analysis. Currently, the drinks market is flooded with one-size fit for all products. This market is growing exponentially with dozens of new products being launched in this industry segment every year. The rate of growth for this industry segment is healthy. The current market size for athletic drinks in USA is estimated to be worth $7.0 billion (Reeves, 2011). It is estimated that by 2020, the market size may grow to become worth $20 billion (Reeves, 2011). This is a lucrative industry to get into, and understanding the real demand of the customers and different sub segments of the industry is the key to success. The growing market provides a sea of opportunities to the new entrants.
One of the major potential markets for specialized and customized athletic drinks is the event of triathlon. The number of people participating in triathlon is on the rise. In 2001, the number of people who took part in triathlon events across USA was 127,000. By 2012, that number increased to about 534,000 (USAT, 2013). In a decade, the number of people partaking in this sport event has increased by more than 400%. It is estimated that the penetration of athletic drinks in the early 2000 among the triathlon athletes was somewhere between 10-20%. Currently, more than 80% of the triathlon participants use some kind of athletic drinks or energy drinks (USAT, 2013). Assuming a consumption of an average $2 per day per person, the market size has increased from a mere $15 million in 2001 to $350 million in 2011.
Competitor Analysis. Though there are many companies existing in this market, the whole market is currently dominated by one Pepsi product, and that is Gatorade (Rebranded as “G”). The second largest product in the market is Coca-Cola’s PowerAde. Pepsi and Coca-Cola together control almost 95% of the total US athletic drinks market. The fierce competition exists mostly between these two big players, but as the overall industry growth rate is high with many new players entering the market, there is no dearth of opportunities for the new entrants to launch their products and make their own place.
Customer Analysis. Currently, the majority of the customers of athletic drinks are people who are either aspiring sport persons or involved in different kinds of sports. These customers of athletic drinks go to the gym regularly trying to remain fit and active. Though this market segment is mostly dominated by energy drinks, athletics drinks are slowly making an entry. However, the main revenue from the athletic drinks is earned from sports people. The penetration of athletic drinks is good in sports like football, soccer, basketball and ice hockey. Also, athletic drinks are very popular in the endurance sports arena like triathlon, biathlon, cross country rowing and marathon. Initially, when the product was introduced, it was a big performance booster for endurance sports athletes because earlier they only relied on candy bars, gels and water to keep the nutrient level high so that they were able perform their best in the events. The current athletic drinks like Gatorade provide electrolytes, calorie and caffeine to boost up performance (Rothman, 2013). However, this product is not effective for all the athletes as the body requirements vary from one sport person to another. As of now, there is no customized product available. This provides a great opportunity for the new entrants.
SWOT Analysis
Product Offering
Endurance sports require an athletic drink different from others. In the case of a typical endurance sport like triathlon, the athletic drink should have proper combination of long and short chain energy components that will fulfill both the short term and long term calorie needs. The athletic drink must contain carbohydrates to satisfy the long and short term calorie needs. It also should contain electrolytes to help the muscles function. Caffeine in the product will provide the contingency power when required (Rothman, 2013). The product will be available in powdered form in different sizes and flavors. The powder can be easily mixed into other drinks or water and consumed to get the required energy. The measurement of the quantity of powder required to be mixed with other drinks or liquid will be based on the size and weight of the person consuming it, and the race length and the race type in which he is participating. Every package will have adequate information regarding the product. For example, a person, weighing 150 lbs., who is taking part in a triathlon event, may require 50gms of the powder consumed before the race, and 100gms every 30 minutes after the race starts. This customization will provide optimum performance for different body types and weights. This type of customization is not yet available for the current products like Gatorade or PowerAde.
Marketing Strategy
Mission and Marketing Objective
The mission of the company is to introduce a product in the athletic drink market to make sure that the individual energy and body needs are met by the drinks before, during and after the event. The product will be best in the segment in terms of helping a body perform at its peak in all the endurance sports events.
The marketing objective is to research and come up with products suitable for the endurance sports athletes. As of now, the endurance sports athletes mostly use the “one-product-fit for all” products like Gatorade and PowerAde. However, the company wants to come up with a product that besides catering to the individual energy needs will improve the performance of every athlete.
Segmentation and Strategies
The main customer segment for the product is triathlon athletes. There are two main reasons for such segmentation. Firstly, triathlon is an endurance sport that requires replenishment of energy and other nutrients before, during and after the event. The current products available in the market do not provide comprehensive solution. For example, Gatorade is good in terms of electrolytes and power boost (Reeves, 2011). However, it does not fulfill the long term and short term energy needs. PowerAde is good in providing instant energy but falls short of meeting electrolytic needs (Rothman, 2013). None of the existing products has a comprehensive offering. They also contain a typical mixture of electrolytes, caffeine and proteins. Since the requirement of each of these nutrients varies from one person to another based on weight, age, type of event and other bodily functions, a powdered product with a good combination of all the ingredients will show better result in terms of revitalizing the body than the existing products (Rothman, 2013). Secondly, the new product will also fulfill the customized needs. Each individual can use a customized amount of powder based on his bodily needs. This customizability will be a great selling point of the product to the triathlon athletes. Thirdly, the number of triathlon athletes is on the rise. The number of triathlon athletes has increased by almost 400% in last one decade. The market value of this segment is estimated to be around $350 million (USAT, 2013).
Once the product is established in triathlon market, it can be expanded into other endurance sports like marathon, cross country rowing, biathlon and cycling tours. The whole of endurance sports market size for athletic drinks is estimated to be around $2 billion (USAT, 2013). At first, the company will address only the triathlon athletes that constitute about 17% of the total endurance sports market.
Positioning
As discussed above, there is yet no product in the current market customizable to the individual needs. All the products available are “one-size-fit-for-all” type of products. Therefore, the new product will be an exception in the sense that it can be launched and branded as a comprehensive solution to all the individual body needs during a sports event. This product will stand out in the market as it will provide customized nutrition.
Marketing Mix and Marketing Research
Product. The product will be available in powdered form in packets of different sizes. Each individual pack will carry three sub packs and a leaflet. One sub pack will contain short term energy boosters (mainly sugar and protein). Second pack will contain long term energy boosters (mainly carbohydrates and caffeine), and the third pack will contain muscle revitalizer (mainly different electrolytes). The leaflet will provide detailed information as regards the utility of each of the sub packs. The product can be named as “Customade” to signify its ability to fulfill the individual customized nutrition needs.
Price. Pricing is an important factor for any new product. Since Customade will be different from other existing products in terms of providing customized solution to the nutritional needs of the customers, the product cost will be higher than the competitive products. It is important to know how much customers are willing to pay for Customade from the voice of customer (VOC) surveys. Based on the feedback received from the surveys and the cost of goods sold, the company should determine the product price and the promotional price. Currently, on an average, a standard size (32 Fl. Oz) Gatorade orange bottle is priced around $4.0 (Reeves, 2011). Typically, one to two standard sizes are used by an athlete during the course of a triathlon event. Looking at that figure, “Customade” should not be priced more than $6.0 per standard size packet, which will be equivalent to a bottle of Gatorade in terms of quantity.
Promotion. Promotion is extremely important for athletic drinks. All the successful brands have used sports icons as brand ambassadors to endorse their products. As Customade will be launched in the triathlon segment, it will be a great idea to use triathlon icons for the brand promotion. Triathlon stars like Deboom brothers, Normann Stadler or Chris McCormack will be a good selection for the brand ambassadorship (Trialhlete, 2011). Apart from TV ads, posters and print ads featuring the stars would draw attention of the potential customers. It is also a great idea to provide free samples of Customade at triathlon events. Additionally, the company may sponsor or co-sponsor some triathlon events like the Hawaii ironman or California ironman event to draw notice.
Place. The product should be made available through the conventional channels like the supermarkets and drugstores. It should also be made available in the small gas station retail chains and even on the online deals.
Marketing Budget and Financials
The main objective of the company is to launch a unique product in a segment still relatively unexplored. This way the company will be able to sell more products within a short period of time and make profitable figures. The triathlon USA market is estimated to be worth $350 million (USAT, 2013). In the first year, the company is expected to grab 10% of the market share with its innovative product. By the third year, it is expected to grab 20% of the market share. The triathlon market is expected to grow at a rate of 10% YOY for the next three years.
The company needs to spend a lot of money initially for marketing and promoting the product. The marketing budget will be a substantial percentage of the total cost. In fact, in order to keep the market share growing, the company needs to keep its advertising budget high. The average cost of production for energy drinks in the industry is around 50% of the revenue. As “Customade” is a customized product, it is assumed that the production and transportation cost will be 60% of the revenue. The company needs to spend around a million dollar every year for the R&D to improve its product features so that it remans ahead of its competitors in terms of innovation. As can be seen from the above numbers, if “Customade” is able to capture the market share as predicted by the end of the third year, then it will start making money from the third year itself.
Controls
Implementation Plan
The company will use a big bang implementation approach to launch the product in the US market. It will first launch and showcase the product in the Hawaii Triathlon event and co-sponsor the event. This will generate early interests for the product. Subsequently, it will establish its presence in all the triathlon events nationwide to address its target customers. Depending on the response in the first few years, the company will launch “Customade” for other endurance sports segments like marathon and cycling.
Marketing Organization
The company cannot afford to have a full-fledged management team from the day one. As the business grows, it probably will be able to have a complete management team. There will be four departments each of which will be headed by management personnel. R&D department will be headed by a manager who will be knowledgeable in nutrition and bio-chemistry. This person will be responsible for product development. Operations manager will be responsible for production and logistics operation. Marketing manager will be heading the marketing campaigns and will also be responsible to manage demands. Marketing management will work hand in hand with the operations manager for product launches and delivery of the products to the right customers. Finally, an administrative manager will be responsible for legal, human resource and finance activities. This manager will be responsible for product patents, acquisition of talented resources and also the management of the company overhead costs.
Contingency Plan
It is extremely important for a new venture to continuously monitor the effectiveness of its marketing plan compared to its objectives. To monitor that, a control plan and contingency plan needs to be developed. The action plan will try to achieve the marketing goals. The control plan will make sure that the marketing expenditure is within limits, and the actual achievements are within the expected range. If the outcome is far below the expectation, then a contingency action plan needs to be followed.
- First of all, a project timeline based approach should be followed for the marketing plan. The expenditure plan should be well laid-out by channels. Marketing plan should include the resource requirement as well as the desired outcome. If a marketing campaign completely fails to achieve its objective, then as part of the contingency plan, a review should take place to understand where the breakdown occurred. Once the cause is found, the contingency management team will address the issue to take corrective actions.
- Monthly plan vs. actual will be monitored for all the marketing objectives in the initial years. Then they will be monitored on a quarterly basis. Marketing manager will be directly involved in this process.
- If the product sale goes down, the head of the company along with the management team will take a look at the initial plan and make adjustments accordingly to reduce the immediate loss and improve the situation in the future.
Conclusion
Athletic drink market is one of the fastest growing markets in USA. This market is almost perpetually growing for the last 20 years. As of now, the market is dominated by Pepsi and Coca-Cola. The athletic drinks currently available in the market are of “one product fits all” type. The company thinks that a customized athletic drink will be a huge hit in this market. Especially, the triathlon market is growing, and there is no player offering any customizable athletic drinks in this market as yet. Triathlon athletes have special nutritional needs during and after the event. A powdered product, which can be customized based on the individual needs, has the potential to become the market leader in that segment. “Customade” will definitely be able to create a buzz and acquire significant market share. From the financial analysis, it seems that the company will be able to make money within the initial three years of its launching the product. As it is a new product, it is important to create control plans to regularly monitor any deviation from the original objectives. If any significant deviation is seen, then corrective action should be immediately taken. There is huge potential in the athletic drink market, and “customade” is sure to do very well.
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