The fruit juices and juice drinks market sector has enjoyed steady growth up until the last few years. However, the market has now stalled due to the economic recession. Juice drinks are less expensive than fruit juices and this latter segment of the market has consequently grown whilst the fruit juices segment has declined, a trend that is expected to continue for the next few years at least. New product innovation and advertising expenditure are also in decline but in-store promotions are increasing as brands fight for market share. Established brands are paying more attention to the growing children's market with specially positioned and targeted products.
The Food Standards Agency has actively promoted healthier eating and pressurised the drinks industry to do the same. However, tough economic times and unemployment are affecting both consumer confidence and the ability of consumers to finance a healthier eating lifestyle.
Even so, there is undoubtedly a market gap for a new brand to exploit. A healthy juice drink aimed at children, for consumption at breakfast time, would have little direct competition, in terms of its brand positioning, and would satisfy the need parents have to monitor their children's 'five-a-day' intake. Equally, it could also compete effectively in 'school lunch box' market segment, which is an identified growth area.
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A new brand in this market segment would need a strong brand name and a distinctive brand position that resonates with consumer needs and stands out amongst the plethora of well -known brand names, which include Tropicana and Innocent smoothies. The new brand will also have to spend heavily on promotion during its launch phase to establish a sustainable market share. The promotional plan will need to deploy communications tools such as TV, which can deliver the right audience in sufficient numbers to achieve this goal in the shortest time possible. Other support media, such as online advertising, public relations, and sales promotion, will be required in order to support the TV advertising and extend the coverage and frequency of the promotional campaign.
The positioning of the new brand is crucial in relation to all aspects of the marketing mix plan, as is the integration of both these activities and the key communications messages, all of which will help to ensure, as far as it is possible, the success of the new product launch.
The market sector consists of two distinct segments, namely fruit juices, which are 100% pure fruit juice and juice drinks, which contain ingredients other than pure fruit, such as water.
The value of the market sector in the UK grew in 2010, compared to 2009, with an annual increase of just over 3% to £3.2 billion (Euromonitor, 2011). However, it only recovered to 2008 levels (Mintel, 2008) following a dip in sales value to £3.1 billion in 2009 (Mintel, 2010).
Whilst both overall volume sales and values have grown steadily in recent years, the effect of consumers trading down, together with a reduction in advertising expenditure and new product innovation and development by all brands, the market sector, in terms of product life cycle, appears to be reaching maturity (Mintel, 2010) - see Figure 1 below:
Figure 1: Product Life Cycle (Source: adapted from Kotler, 2001, p. 349)
1.2 Sales Trends - Fruit Juices Vs Juice Drinks
In 2010, there was a notable shift in consumers buying value-for-money juice drinks rather than premium fruit juice products. Volume sales in the fruit juices segment declined whilst the juice drinks segment increased its volume sales by 1% and its value by just over 3% in 2010, compared to 2009 (Euromonitor, 2011).
This has resulted in a narrowing of the gap between the volume sales of fruit juices versus juice drinks - see Figure 4 below. Mintel (2010) expects this trend to continue to at least 2015.
Table 1: Volume Sales Trends - Fruit Juices Vs Juice Drinks
(Source: Mintel, 2010)
1.3 The Competitive Environment
1.3.1 Fruit Juices
The brand leader and dominant player in the fruit juices market sector is Tropicana with an estimated 30% share followed a long way behind by Princes with just 3%.
Tropicana has achieved its success through maintaining a balance between its premium brand positioning and a pricing strategy that is both appropriate for a premium brand and sufficiently appealing to consumers. Tropicana also benefits from being the UK's most recognised brand in this market sector (Euromonitor, 2011).
Orange remains by far the most popular flavour in the fruit juices market segment accounting for about 58% of total sales volume in 2010 (Bainbridge, 2011).
1.3.2 Juice Drinks
The major brands in this market sector are Oasis, Ribena, Capri Sun and Robinsons, which together account for about 50% of all sales. For juice drinks, according to Mintel, blended flavours are the most popular (Bainbridge, 2011). Tropicana has also extended its brand into this sector with its 'Tropicana Go!' product for children.
1.4 Consumer Targeting
According to TGI, the fruit juice and juice drink market sector is strongly associated with families with 83%, penetration of those UK households with children aged from five to nine. This is believed to be because parents and housewives in particular, are aware of the perceived health benefits of products in this market (Bainbridge, 2011). In addition, children account for one third of the consumption of all juice drinks (Euromonitor, 2011).
1.5 Media Advertising Expenditure
The following three tables detail media advertising expenditure for fruit juices and juice drinks overall, by main monitored brands, and by main monitored products.
Date
Expenditure
2009/10
Index
2005/06=100
Adspend: Sales
£m
Ratio (%)
2005/06
28
100
0.9
2006/07
29
104
0.9
2007/08
30
107
1.0
2008/09
23
82
0.7
2009/10
18
64
0.6
(Note: year is from July-June. Main monitored brands only - excludes smoothies).
Table 2: Total Overall Media Advertising Spend 2005/06-2009/10
(Source: Nielsen Media Research, 2010)
Advertiser
2007/08
2007/08
2008/09
2008/09
2009/10
2009/10
Total
Total
£000
%
£000
%
£000
%
£000
%
Coca-Cola Great Britain
4,656
16
6,675
29
4,853
27
16,184
23
Britvic Soft Drinks Ltd
8,106
27
3,693
16
2,284
13
14,083
20
PepsiCo Intl Ltd
4,872
17
2,122
9
3,036
17
10,031
14
Ocean Spray Intl Inc
4,457
15
2,053
9
1,846
10
8,355
12
GlaxoSmithKline Plc
2,307
8
1,573
7
989
6
4,869
7
Gerber Foods Intl
1,211
4
1,815
8
1,386
8
4,412
6
Nichols Plc
1,104
4
1,089
5
1,332
7
3,525
5
Rubicon Products Ltd
892
3
1,138
5
411
2
2,441
3
British Sugar Plc
661
2
973
4
633
4
2,267
3
Sunsweet Growers
158
1
132
1
411
2
701
1
Others
1,092
4
1,707
7
610
3
3,409
5
Total
29,516
100
22,971
100
17,791
100
70,278
100
(Note: year is from July-June.
Main monitored brands only - excludes smoothies).
Table 3: Media Advertising Spend by Advertiser 2007/08-2009/10
(Source: Nielsen Media Research, 2010)
Brand
Advertiser
2007
2007
2008
2008
2009
2009
Total
Total
£0
%
£0
%
£0
%
£0
%
Oasis Drink
Coca-Cola
2,260
8
2,676
11
2,135
11
7,071
9
Ocean Spray Cranberry
Ocean Sp.
2,235
8
2,604
10
1,751
9
6,590
9
Tropicana Pure Premium
PepsiCo
5,129
17
1,134
5
-
-
6,264
8
Tropicana Pure Premium Orange
PepsiCo
322
1
1,961
8
3,331
17
5,613
8
Capri-Sun
Coca-Cola
755
3
674
3
2,521
13
3,950
5
J2O Fruit Drink
Britvic
1,659
6
21
-
2,179
11
3,859
5
Robinsons Fruit Shoot
Britvic
2,720
9
348
1
743
4
3,812
5
Vimto - Soft Drinks
Nichols
1,197
4
1,305
5
1,121
6
3,623
5
Welch's Purple Grape
Gerber
341
1
2,230
9
966
5
3,537
5
Robinsons Drink Range
Britvic
2,333
8
1,136
5
-
-
3,469
5
Others
Others
10,416
35
11,000
44
5,390
27
26,806
36
Total
29,367
100
25,089
100
20,138
100
74,594
100
(Note: Main monitored brands only - excludes smoothies).
Table 4: Media Advertising Spend by Brand 2007-2009
(Source: Nielsen Media Research, 2010)
1.6 Distribution
1.6.1 'Off Trade'
Most 'off trade' sales take place through the large supermarket chains. Tesco sells more fruit juices and juice drinks than any other retail 'off-trade' outlet accounting for around 18% of all sales in 2010 with Asda accounting for just over 11% (Euromonitor, 2011).
1.6.2 'On Trade'
The key 'on-trade' distribution channels in the UK are fast food and other restaurants, plus pubs, bars and clubs, where juices are typically used as mixers. However, the adult juice brand J2O is positioned as an alternative to alcohol in pubs, bars, and clubs and is increasing its sales year-on-year (Euromonitor, 2011).
1.7 Price
Unit prices vary considerably depending on whether the drink is a fruit juice or a juice drink, and its fruit content if it is a juice drink. In addition, unit price varies according to the product's positioning i.e. if it is a premium, supermarket own label standard or budget product. A selection of typical retail prices are shown in the two tables below.
Positioning
Brand
Retail Price
Premium
Tropicana Orange Fruit Juice 1L
£2.18
Supermarket Own Label Standard
Tesco Apple and Mango Fruit Juice 1L Litre
£1.60
Supermarket Own Label Budget
Tesco Value Apple Juice 1L
£0.62
Table 5: Fruit Juices - Typical Retail Prices
(Source: mySupermarket.co.uk, 2011)
Positioning
Brand
Retail Price
Premium
Prices Cranberry Juice Drink 1L
£1.42
Supermarket Own Label Standard
Tesco Exotic Juice Drink 1L
£0.90
Supermarket Own Label Budget
Tesco Value Apple Juice Drink 1L
£0.53
Table 6: Juice Drinks - Typical Retail Prices
(Source: mySupermarket.co.uk, 2011)
Unit prices in 2010 were reported as being stable even though some brand owners passed on cost increases associated with fluctuations in currency exchange rates between the euro and the pound. However, this move was counterbalanced by discounting and promotional offers for private label and leading brand in the retail marketplace (Euromonitor, 2011). Generally, consumers were inclined to trade down to juice drinks from fruit juices, due to price considerations. Whilst the recession undoubtedly encouraged discounting and sales promotions, it is evident that both own labels and leading manufacturers offered discounts and promotions long before the recession actually started. This practice is forecast to be a permanent strategy in the market sector in the future as brands jostle to establish and consolidate their competitive positions in an increasingly price sensitive market (Euromonitor, 2011).
1.8 The Macro Environment - PESTEL Analysis
Organisations can examine their external macro-environment by using the PESTEL analysis framework (Gillespie, 2007). A PESTEL analysis for the fruit juices and juice drinks market sector appears below:
Political
This refers to any government policy that may cause an intervention in the marketplace.
In 2004, the Food Standards Agency (FSA) in the UK stated that it had a mission to convince consumers to adopt healthier food options for a healthier lifestyle. The FSA also required that the food and drinks industry support it in trying to achieve its aims (Food Standards Agency, 2004). The FSA suggested that organisations should include healthy eating strategies for their customers as part of their overall corporate social responsibility programmes rather than simply as a marketing tactic.
In addition, the government has promoted healthier eating through an increased intake of fruit and vegetables with its '5-a-day' campaign. This has been successful with 74% of those consumers questioned claiming they were aware of the campaign and nearly 60% having taken some action as a direct result of being exposed to the campaign (Food Standards Agency, 2008).
Economic
This includes such factors as interest rates, taxation changes, economic status and growth prospects, inflation, and exchange rates.
Interest rates remain at an all time low with correspondingly low mortgage servicing costs for the majority of homeowners. However, unemployment, together with the threat of unemployment, is negatively affecting consumer confidence, which, in turn, is causing middle-income consumers to trade down higher priced, premium and luxury products (Warc, 2010).
Social and
Cultural
This covers social and cultural trends that can affect consumer demand.
There is a noticeable trend towards healthier eating habits in the UK. The importance of this to brands owners and marketers was highlighted in the 'Health of Britain' Survey conducted in 2008 when Giles Quick from the research company, TNS Worldpanel UK said: 'It is unlikely that we will ever put health before taste, but brands that manage to combine great taste with practicality as well as a positive health proposition, are in an ideal position to win full marks from the consumer'(Quick, p. 3, 2008)
Technological
This looks at how new technologies can help create new products and new processes.
The ubiquitous internet and the growth of mobile electronic communications devices will have an increasing influence over the way in which consumers interact with, and buy, brands, products, and services (Ericssson White Paper, 2011)
Environmental
Includes the weather and climate change and how these may affect the marketplace.
Global warming and climate change are affecting the UK inasmuch as climatologists expect a generally warmer climate in the future. This may result in consumers drinking more water and, equally they drink more fruit juices and juice drinks (just-drinks, 2011).
Legal
This includes the legal framework within which the organisation and its competitors operate.
There are currently no legal issues that may affect the market.
2.0 Identification of the Market Opportunity
2.1 Rationale for the Market Opportunity
As has been seen from the analysis in Part 1.0, the ongoing economic difficulties in the UK have caused consumers in the market sector to trade down from fruit juices to juice drinks. This has been borne out by volume sales figures showing a decrease in fruit juice sales and an increase in juice drink sales over the last three years with the trend forecast to continue to at least 2015 (Euromonitor, 2011). However, fruit juices and juice drinks targeting children have seen their volume sales increase. For example, in 2010, Innocent saw sales of its children's 'Wedge Cartons' grow and subsequently launched a new product for children, 'Pure Fruit Squeezies', designed as a snack to go in children's school lunchboxes. 'Feel Good Drinks for Kids' and 'Tropicana Go!' were also launched to target the school lunchbox market (Euromonitor, 2011).
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For juice drinks, breakfast time is when 50% of all such drinks are consumed (Euromonitor, 2011). All fruit juice and juice drinks, even if they contain no added sugar, contain natural fruit sugar. Consequently, for children, it is especially important that they consume juice drinks at mealtimes, such as at breakfast, as this is less likely to damage their teeth than if they sip at juice drinks during the day (Food Standards Agency, 2011). Equally, parents can monitor their children's intake of juice drinks at breakfast and ensure that they clean their teeth afterwards before they go to school. In addition, parents are becoming increasingly aware of the need to provide a healthy diet for their children and this message is being actively promoted by government through the Food Standards Agency (2004). Research by Euromonitor (2011) has identified a specific market gap for products targeted at children and believes that brands in this marketplace need to strengthen their 'five-a-day' messages.
2.2 Defining the Market Opportunity
The gap in the market, therefore, is defined as:
A high fruit content (50%), healthy juice dink for children to consume at breakfast as part of their 'five-a-day' needs.
2.3 Competition
Competition for such a product will come primarily from those brands that have developed, and successfully marketed, products specifically aimed at children. The identified competitors in this respect are:
Innocent's 'children's wedge cartons' and 'Pure Fruit Squeezies',
'Feel Good Drinks For Kids'
'Tropicana Go!'
3.0 Marketing Mix Plan
3.1 Marketing Objectives
To generate sales worth £120 million within 12 months of launch.
To achieve a 4% share of the overall fruit juice and juice drinks market sector within 12 months of launch.
3.2 Marketing Strategy
3.2.1 Launch Strategy
According to accepted marketing theory, for a new product launch in a competitive and price sensitive marketplace, such as for fruit juices and juice drinks, a brand needs to build consumer awareness quickly and achieve rapid market penetration to establish itself successfully (Kotler, 2001, p.355).
Consequently, it is proposed to launch the new juice drink product using a rapid penetration strategy, which is one of four identified strategies for a new product launch- see figure 2 below:
Figure 2: Marketing Strategies in the Introduction Stage
(Source: adapted from Kotler, 2001, p.355)
The rapid penetration strategy involves launching the new product at a relatively low price, compared to competitor products, with heavyweight promotional support in order to achieve the fastest possible market penetration and to gain the highest possible market share. This is a sensible strategy in a market with a number of established competitors where a new, and by definition, unknown brand has no consumer awareness. It is also a strategy more likely to succeed where there is price sensitivity in the market, as there is for fruit juices and juice drinks. In terms of cost, then the unit manufacturing cost falls with the volume production scale and with accumulated production experience (Kotler, 2001, p.356).
3.2.2 Competitive Position
There are four basic competitive positions that the new product could adopt as follows:
Market Leader
Market Challenger
Market Follower
Market Nicher
As this is a new product launch targeted at a segment of the overall market, which, although relatively immature, has some established players, it is proposed that the product is positioned as a 'Market Challenger'. This competitive market positioning is relatively high-risk but also high-gain and helps to build a sustainable competitive advantage (Kotler and Armstrong, 2010)
3.2.3 Analysing Competitors
The fruit juices and juice drinks market sector is characterised by intense competition between organisations, many of which now operate on a global scale. In view of this, even though the main competitors have been identified, it is crucial that the new brand gains a detailed insight into the nature of these competitors if it is to consolidate its long-term competitive position following its launch (Wilson and Gilligan, 2005, p. 223).
According to Kotler and Keller (2006) there are a number of strategic steps that need to be undertaken in order analyse competitor actions in the marketplace. See Figure 3 on the next page.
Figure 3: Strategic Steps in Analysing Competitor Actions
In the case of the proposed new product, with its Market Challenger position, it is proposed that all fruit juice and juice drink brands competing within its market segment are attacked -see '3.2.3 Brand Positioning' below. However, the brand needs to constantly monitor and evaluate the activities of its competitors.
3.3 Product Strategy
3.3.1 Product Specification
A blended*, high fruit-content (50%) juice drink with no added sugar or colouring available from the soft drinks section of the supermarket (not chilled).
* Actual flavour blend to be determined through research and pre-testing with consumer sample.
3.3.2 Brand Name
The proposed brand name is START! The product targeted at children will be called START! for Kids.
This name is intended to help position the brand as a product for consumption at the start of the day i.e. at breakfast. It is also a short and memorable name, which will help the product to stand out in a crowded marketplace and will also help facilitate the establishment of the brand in the consumer consciousness. In addition, the brand name has connotations of a healthy start to the day for kids. The brand name START! is also not exclusively for children and lends itself to extensions into other market segments, such as for the adult market.
3.3.3 Brand Positioning
Positioning a brand has been described as an attempt by a business to influence the way in which consumers perceive and behave towards that brand in the marketplace (Perreault and McCarthy, 1999). For example, a brand could position itself to appeal to a particular consumer segment by promoting a particular attribute of the brand that would appeal to that segment (Pechmann and Ratneshwar, 1991). The following two figures illustrate the proposed brand positioning for the new product.
High Price
Juice Drink
Pure Fruit Squeezie
Children's Wedge
Fruit Juice/ Smoothie
s
START!
For Kids
Low Price
Figure 4: START! Brand Positioning - Children's Fruit Juice/Juice Drinks
Price per 100 ml/100 g and Pure Fruit Juice Content
School Break Times
Juice Drink
Pure Fruit Squeezie
and Children's Wedge
Fruit Juice/ Smoothie
START!
For Kids
Breakfast
Figure 5: START! Brand Positioning - Children's Fruit Juice/Juice Drinks
Price and Consumption Time
3.3.4 Packaging
The packaging will be a 'Tetra Classic Aseptic' pack in two pack sizes - 100 ml and 200 ml (Tetra Pak Website, 2010). This is to enable it to be used primarily as a breakfast drink in (200 ml size) and secondarily as a 'snack' drink (in 100 ml size) at school break times. The tetra pack is easy to drink from and is also easy to pour into a cup or glass. The pack is also stable on the kitchen counter and on the school desk. See Appendix I.
For retail distribution, the individual packs will be sold in rectangular multi-packs of 10 for the 100 ml and 5 for the 200 ml. The rectangular packaging will assist ease of display and stacking in the retail environment
3.4 Distribution Strategy
In line with the rapid market-penetration strategy, the product will be sold though all supermarket chains and convenience stores in the UK with a heavy intensity. In view of the target audience, it will not be sold through the 'on-trade'.
The product will only be available for retail sale in multi-packs at the prices shown in Table7 on the next page.
3.5 Pricing Strategy
Unit prices in the market segment are currently stable and subject to discounting on promotion (Euromonitor, 2011). The rapid market penetration strategy determines that the pricing strategy for START! will be highly competitive and challenging to the market leader and to other brands in the market segment.
Brand/Product
Retail Pack Size
Price per 100 ml/ 100 g
Lowest Retail price per pack
START! For Kids
5 x 200 ml
£0.20
£2.00
START! For Kids
10 x 100 ml
£0.22
£2.22
Tropicana Go!
4 x 200 ml
£0.25
£2.00*
Feel Good 'Drinks For Kids'
1 x 400 ml
£0.32
£1.27*
Innocent 'Children's Wedge cartons'
4 x 180 ml
£0.41
£2.92*
Innocent' Pure Fruit Squeezies'
6 x 40g
£0.83
£2.00*
Table 7: Retail prices for START! and Competitor Products
(*Source: mysupermarket.co.uk, 2011)
3.6 Consumer Segmentation and Targeting
Kotler, (2001, p.286) suggests that consumer markets can generally be segmented in three ways as shown below for the new product:
Socio-demographics - Primary: Housewives with school age children from 4 to 11, male and female. Secondary: The children themselves.
Psychographics - families with a healthy lifestyle or intending to adopt a healthy lifestyle.
Behavioural factors - Parents of children who have a positive attitude to the benefits of a healthy diet.
3.7 Marketing Communications Strategy
3.7.1 Marketing Communications Budget
The average advertising spend to sales ratio over the last five years has been 0.82%. In order to achieve the marketing objectives stated and implement the rapid market penetration strategy it is proposed that the budget for the first year for START! For Kids be set at double this ratio i.e. 1.6%. This will result in an advertising budget of £1.92 million. A summary of the overall marketing communications budget by activity appears in appendix II
3.7.2 Marketing Communications Tools
According to Kotler (2001), there are five main categories of marketing communications tools:-
Advertising
Sales Promotion
Public Relations
Personal Selling
Direct marketing
3.7.3 Marketing Communications Tools - Characteristics/Objectives
According to Fill's '4Cs' model (2002), the five main communications tools, are characterised by four principal dimensions:
Communications Impact
Credibility
Costs
Control
See Figure 6 on the next page, which shows how these dimensions apply to the various component of the communications mix.
Figure 6: Fill's '4Cs' Model
As has already been established, START! needs to gain rapid penetration through the use of high impact promotional activity that delivers a large audience within the identified consumer segment. In view of the target audience definition, and the need to create high levels of product acceptance, it is proposed that the consumer promotional activity includes a mix of tools including advertising, sales promotion and public relations.
3.7.4 Integrated Marketing Communications (IMC)
The concept of IMC was acclaimed by Moriarty (1994) as being one of the most significant developments in the marketing communications business in the 1990's. Kotler first discussed IMC back in 1997 but it was not until 2003 that defined the concept thus:
'Integrated marketing communication is a concept according to which the company integrates and coordinates its communication channels to send a message clearly, consistently and convincingly about the organization and its product' (Kotler, P, 2003, p. 672).
Fill's promotional planning framework (2006, pp.174-176) summarises all the aspects of the marketing communications planning process - see Figure 7 below.
Fill categorises the tasks achieved by communications activity into three areas namely, Push, Pull, and Profile, as follows:-
Push - The activity is 'pushed' from the product provider to the supply chain intermediaries to help develop relationships.
Pull - The activity is from the product provider to the end consumer to generate a call to action - either a purchase or an enquiry.
Profile - The product provider implements a mix of communications strategies to build brand reputation with all of its target audiences.
Figure 7: Fill's Promotional Planning Framework
(Source: Fill, 2006, pp.174-176)
If a formally structured approach to marketing communications planning, such as that detailed above, is not followed there is a risk that the goals and strategy of the marketing communications plan will not link to the high-level corporate goals, or to the marketing goals of t
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