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.
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.
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.
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.
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.
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.
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.
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.
GlaxoSmithKline, 2011. GlaxoSmithKline Annual Report 2010. (Online) Available at:
http://www.gsk.com/investors/reps10/GSK-Annual-Report-2010.pdf (Accessed 16
November 2011)
Hanrahan, W., 2009. Market Audit: Sports and Energy Drinks
Market. (Online) Available at:
http://www2.warwick.ac.uk/alumni/services/eportfolios/bsqjfb/redbull.pdf (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:
http://manifestedmarketing.com/category/branding/ (Accessed 16 November 2011)
MMC Learning, 2011. Market Positioning. (Online) Available at:
http://www.multimediamarketing.com/mkc/marketpositioning/ (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:
http://www.ogilvy.ie/documents/Lucozade_Sport_Study.pdf (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:
http://www.livestrong.com/article/338977-the-lucozade-diet/ (Accessed 16
November 2011)
The Irish Times, 2011. Marketing Communication Fuelling Performance. (Online) Available
at: http://www.business2000.ie/pdf/pdf_10/glaxosmithkline_10th_ed.pdf (Accessed
16 November 2011)
The Irish Times, 2011a. GlaxoSmithKline:Lucozade. (Online) Available at:
http://www.business2000.ie/pdf/pdf_5/glaxosmithkline_5th_ed.pdf (Accessed 16
November 2011)
No comments:
Post a Comment