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Sunday, 27 January 2013

Marketing Analysis of Lucozade

Lucozade is one of the products of the global pharmaceutical companies, GlaxoSmithKline and it distinguishes itself as the perfect product for people desiring a little more energy to boost their physical activity (Schuna, 2011). Lucozade is produced in many forms which include drinks, bars, gels, tablets, and also in powder form. This product was originally targeted at patients who needed extra energy to get well. However, subsequent commercialisation has been done accompanied by well executed brand repositioning efforts that have transformed the products from being the ‘remedy’ to the sick children, to being the product of choice to every active individual in all ages (Manifested Marketing, 2011). The product is especially common among the young adults.
Lucazade has been in the market since the 1920s and has grown to be the leading brand in the energy drinks industry (Manifested Marketing, 2011). However, the product continues to face competition from other energy drinks produced by Coca Cola, Pepsi and other vitamin drinks available in various national markets. This is perhaps the reason why the company ensures vigilance in its implementation of the marketing mix that has seen Lucozade retain its position as the leading energy drink in the global markets. 
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The components of the marketing mix are discussed in the following sections.
The product is the good or service that the market derives the desired benefits from. It is the basis of all marketing efforts as it is by having it bought in the market that the organisations justify their existence. The product refers to the features therein and how such features help in satisfying the market needs identified (Kotler and Lane, 2006). It also refers to the variety or product range and how the different aspects help in consolidating the product’s strategic position. Lucozade is specifically designed to boost the energy levels among its users and an examination of its contents reveals this. The ingredients of the specific products are as illustrated in Appendix I.
These products come in various forms and this enables them to provide the desired benefits among a wide range of consumers. For instance, many athletes would prefer to take a break to drink their energy drinks before proceeding with their exercises. However, for those who’d want to consume the products while exercising, the tablets and bars are availed (Ogivly and Mather, 2011). This ensures that no needs are left unsatisfied and it helps in consolidating the products’ positioning in the market. The provision of the products in forms such as drinks, jelly beans, tablets, energy bars, and energy gels is strategic and one of the reasons for the popularity of the products in the market (Ogivly and Mather, 2011).
Product can also refer to the packaging and labelling and how it is perceived. To make the product appear more oriented to the boosting of energy, Lucozade changed its tag from ‘original’ to ‘energy drink’ (MMC Learning, 2011). This new label is more reflective of its core features and therefore likely to be more effective.   
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This component of the marketing mix refers to the accessibility of the products to the target clients. Lucozade is becoming a household name in many parts of the world with most of the retail outlets stocking the products. The company has an active team that ensures that the products are stocked in retail outlets such as supermarkets, hypermarkets, shopping malls, and other outlets (GlaxoSmithKline, 2011). Health care facilities such as pharmacies also tend to stock the products. The company also enters into partnerships with learning institutions such as universities around the world to stock the products in their canteens (GlaxoSmithKline, 2011). The same applies to the leading sports clubs and recreational facilities around the world. Lucozade is therefore quite easy to find and anyone wishing to consume the product would not strain in their quest to find the product. Consumers do not like having to go to extra lengths to access the product they wish to consume and they would in most cases opt to make do with the best available substitute (Mullin, Hardy and Sutton, 2007). Any inefficiency in the distribution system may therefore cost the organisations a lot in terms of lost sales. Lucozade has an efficient distribution system and this keeps their customers satisfied with the brand. 
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The price at which a product is offered determines how it is perceived and how well it sells in the market (Kotler and Lane, 2006). For most products, lower prices tend to help in attracting customers. However, where the products are perceived as high value products, the lowering of prices may actually be counterproductive. The understanding of this aspect of the consumer psychology is crucial in ensuring that the pricing strategy embraced leads to the generation of the desired results. Energy drinks are high value products and those who use them would in many cases prefer to use the products that are deemed to be of a higher quality with price often taken as the indicator of quality (Hanrahan, 2009). Lucozade is competitively priced at slightly higher than the market average and this helps with the building of the image high quality in the market (The Irish Times, 2011a). This pricing strategy has however been a source of a disadvantage in the period immediately after the global recession where many consumers in the market tended to go for cheaper products in response to their diminishing purchasing power. However, as the economies continue to recover, growth patterns are being restored. 
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Promotion is also a crucial component of the marketing process and it mainly involves the communication about the products to the market. Markets need to be aware of the existence of a product before they can start demanding for it. Lucozade is promoted in various ways which range from the use of advertisements, use of promotional campaigns and direct selling (Manifested Marketing). The advertisements are done through the mass media such as televisions, newspapers, and magazines. Of interest is the ‘YES’ campaign which is conducted on television. The advertisements are also done through popular social sites on the internet in order to be more effective among the younger generations (Hanrahan, 2009). An example of such an initiative is the alliance between Lucozade and Spotify which is a music-oriented site known to be quite popular with the youth (Manifested Marketing, 2011). The use of famous personalities for endorsements has also been quite effective. The direct marketing done by Lucozade does not involve personal selling to the end user. The direct marketing efforts are mostly channelled to front office personalities in the targeted organisations to get them to recommend the products to those they interact with.  
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Lucozade faces stiff competition from other energy drinks such as Powerade by Coca Cola and Gatorade by Pepsi. Both of these companies are global conglomerates with financial strength and technological access to counter Lucozade quite effectively. Beside these two, various national economies have vitaminwater and other supplement brands that tend to have a niche within specific groups and localities (Hanrahan, 2009). A more detailed list of competing products is listed in Appendix II. This threat by competition has the capacity to strip lucozade of its market leadership and lower its performance in the market.
There are however many opportunities in the market. There is a growing culture of physical fitness among the young adults and this only implies that that the demand for energy drinks is set to rise. With the growing recognition of sports personalities as icons in the society, opinions are changing favourably in favour of physical activity with the world seemingly focused on pursuing good heath through physical fitness (GlaxoSmithKline, 2011). The recovery in the global economy is also expected to contribute to rising disposable incomes hence more sales are likely to be realised.
The biggest strength that Lucozade can use in exploiting these opportunities is its considerably strong brand (GlaxoSmithKline, 2011). Over the years, Lucozade has distinguished itself as a reliable player in the sports drinks industry with most customers identifying it as one of the most reliable brands in the market. This brand strength helps in creating and maintaining special relationships with their clients hence enabling them inspire loyalty among their clients. The recipe for the preparation of the energy drinks is also a source of strength where the organisation is able to produce energy drinks with a unique taste and colour (Manifested Marketing, 2011). This uniqueness easily gets clients accustomed and attached to a drink in a manner that makes them prefer Lucozade to other energy drinks.
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The macro environment refers to environmental factors beyond the control of the organisation and they include the political factors, economic, social and technological factors.
The political developments in the global markets have largely been positive to businesses with governments seemingly moving towards market economies where businesses operate without excessive regulation (Hanharan, 2009). The wave of globalisation has also made it easy for businesses to enter foreign markets without much hindrance.
Economically, the world economy is recovering from the effects of the global recession and projections are that full recovery may be realised towards 2014 (The Irish Times, 2011). The growth of the economies also serves the organisations well as people are more likely to afford their products with increased disposable incomes. There is however fears regarding the debt crisis in Europe and how it may affect the world economy with fears that an ineffective solution to the crisis would plunge the world back into a recession. This is a threat that could adversely affect businesses.
The social factors seem to be favourable with more people embracing physical activity either for health reasons or in pursuance of their careers (The Irish Times, 2011). There is a huge awakening around the world about the economic potential of sport and this is contributing to rising activity levels. The emerging countries such as China are dominated by a youthful population and they present a perfect expansion opportunity for Lucozade.
Technological advancements have been high in contemporary times (Hanharan, 2009). This gives Lucozade the advantage to access the needed technologies with ease. However, the same advancements present a threat as they can be accessed by the competitors and used to come up with substitutes that could threaten Lucozade’s position in the market.      
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Having analysed the strategic positioning of Lucozade, a few recommendations can be made on how it can grow further in the market. To start with, the company should consider making more intensive inroads into emerging markets and consolidate a dominant market share there. As has been noted, the emerging markets have a youthful population who could easily take to the consumption of the product (Hanharan, 2009). Besides, the company has a good brand image that could help in ensuring the success of such endeavours.
Certain competitors have a loyal clientele who may not be easily convinced to consume a different product irrespective of the intensiveness of a marketing campaign. This is especially so with locally made vitaminwater brands which are deeply connected with local populations. To expand into such markets, Lucozade should consider buying out such competitors. Taking over of their market shares would further solidify their market leadership and ensure superior profitability (Keegan, 2002). A remarkable feat would be the acquisition of the sport drink brands of one of the global conglomerates such as Pepsi or Coca Cola which already have a huge following globally.
To ensure that they are safe from threat of increased competition through the entry of new market players, the company should consider creating certain allowable barriers to entry. The most effective one would be the quick attainment of market dominance and strength of brand that would make it difficult for a new comer to advertise their products and make significant progress (Kotler and Lane, 2006). This can be done through the intensification of their promotional and brand awareness exercises in the markets already occupied.  
Lucozade remains one of the strongest brands in the sports drinks categories and it boasts of a strong brand built after years of offering quality products to the market. Lucozade’s position in the market remains strong despite the stiff competition. However, this is a positioning that could be lost unless the company becomes proactive in tackling the competition and eliminating competition where possible. Some of the strategies that the company could use to achieve this include the intensification of brand awareness exercises, the takeover of competitors where possible and the consolidation of market shares in emerging markets.  

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GlaxoSmithKline, 2011. GlaxoSmithKline Annual Report 2010. (Online) Available at: (Accessed 16 November 2011)
Hanrahan, W., 2009. Market Audit: Sports and Energy Drinks Market. (Online) Available at: (Accessed 16 November 2011)
Keegan, W.J., 2002. Global Marketing Management. Upper Saddle River, NJ: Prentice-Hall
Kotler, P., Lane, K.K., 2006. Marketing Management. 12th Ed. Pearson Education
Manifested Marketing, 2011. Lucozade: Continuous Market Development. (Online) Available at: (Accessed 16 November 2011)
MMC Learning, 2011. Market Positioning. (Online) Available at: (Accessed 16 November 2011)
Mullin, B.J., Hardy, S., Sutton, W.A., 2007. Sport Marketing. 3rd ed. Champaign, IL: Human Kinetics
Ogilvy and Mather, 2011. Lucozade Sport: Longterm Effectiveness. (Online) Available at: (Accessed 16 November 2011)
Ranchhod, A., Marandi, E. 2007. CIM Course book 07/08 Strategic Marketing in Practice: 07/08 Edition. Oxford: Butterworth-Heinemann
Schuna, C., 2010. The Lucozade Diet. (Online) Available at: (Accessed 16 November 2011)
The Irish Times, 2011. Marketing Communication Fuelling Performance. (Online) Available at: (Accessed 16 November 2011)
The Irish Times, 2011a. GlaxoSmithKline:Lucozade. (Online) Available at: (Accessed 16 November 2011)

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