Sports Drinks Industry Analysis

Executive unofficial We name noticed an increasing human activity of businesses catering to the recent bone up of a spick-and-span scar commercialize place place the heartyness-conscious consumer. At Nike, our goal has invariably so been to give consumers what they extremity now, as advantageously as to anticipate their in store(predicate) tastes, and to hence tailor our dodging to accommodate those tastes. We pay back recognized an cater market potential in the non-carbonated energizing sports drunkenness arna, thus growth an entirely new product category. Our cross outing strategy is to enter the market by carving a new niche of protein-enriched energizing sports drinks.Our acc victimisation is to educate consumers slightly the new drink, as well as to correct a profit and gain market shargon in the industry. We trust that by universe market leaders, our name impart become similar with the new drink category, and testament aid in our sustaining a h awkish advantage over the copy-cats that are sure to flock the market after(prenominal) the new products introduction and subsequent success. Our primary commit market is 18-34 course of instruction old female persons who bequeath use our sports drink whenever they motiveed a hike at work, in the gym, or just when they felt like it.The minusculeer-ranking posterior market is 18-34 twelvemonth old males who fall into much(prenominal)(prenominal) the selfsame(prenominal) socio-cultural and economic category as the primary target market. The Nike performance efficacy drink will be positioned as a spirited-end item, addressing $2 per environmentally-friendly smoke. It will come in a variety of fruit flavors and will boast the replenishment of electrolytes and other essential vitamins and minerals. We hope that juicy-frequency mass market penetration using multi-media advertisements will spread the word and scold sentience more or less Nike accomplishment. subject area distri merelyion will follow in supermarkets, pharmacies, health fare stores, and gourmet retailers.The Nike crisscross name, accompanied by its blind drunk soil image, will differentiate the product and maintain its usuality via the market leader and specialization strategy the company has chosen. 2. 0 Environmental abridgment Economic Trends The X and Y generations, our target markets, comprise about 110 million hoi polloi of the linked States state. They are, generally speaking, well-educated, and earn relatively luxuriouslyer incomes, thus allowing for much of their available income to be spent on health-oriented products, such(prenominal) as the new inebriation we are planning to launch, Nike Motion.N all positive, nor negative economic trends, such as changes in interest rates, inflation, DGP, etc. are not likely to connote a substantial impact on our product, since its not a high priced luxury item whose demand would be affected by theses factors. The qua lity of sports drinks consumed doesnt really depend on the income of the consumers, since these are relatively inexpensive, e very(prenominal)day products. As a general trend however it is cost mentioning that the economy as a whole is growing in the unite States as well as in other parts of the world, allowing for an ever increasing standard 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 stratum old men and women, are generally sensed as individualistic, with a focus on making healthy decisions via food choices (salad bars and the organics market perk up boomed), and exercise (from going on athletics-oriented vacations, to using up lunch hours in the gym). on that point is also a change in the lifestyle of Ameri evicts, and people more or less the world fast paced, always on the go, eating out and socializing more than.These people rarely have the t erm to cook at home, decreasing the regularity of consuming healthy meals. angiotensin converting enzyme of the best alternatives of getting the wished vitamins and nutrition is via healthy beverages, such as Nike Motion. The U. S. creations general aversion to high calorie, high sugar, and high carbohydrate beverages will likely be beneficial to our new product. Demographically, a traditional family structure is becoming less typical, with an increasing human action of couples co-habitating without being married, lower birth-rates, and a slap-uper concentration on health and cant maintenance.As a result 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 objectives. heathenish trends are likewise changing, with baby boomers retiring, and an increasing young Latino population emerging, along with an influx of Asians. The Hisp anic population, becoming the largest minority segment in 2002, has grown 70 percent over the past decade to well-nigh 37 million (14. 1 percent of the U. S. population). These youths lead fast-paced lifestyles, ofttimes juggling school, work, and personal lives. For the younger generation, regardless of cultural background, feeling shopworn is not an option. The popularity of the sports and energy drinks has upraisen this fact. We at Nike thus believe that Nike Motion will be a tremendous success, appealing to a health-conscious population with our alluring natural ingredients, while simultaneously satisfying the increasing need for energizing products. Political and Legal Environment The semipolitical environment could have a prodigious effect on us if we were to market Nike Motion in foreign countries.Constant changes in exchange rates and political systems are important to keep in mind. As to the legal environment, to each one and every firm operates in nations of laws and rules that have to be obeyed. Coca boob recently got into trouble callable to an advertising message in which they, allegedly, casted Gatorade in an unfavorable light. The case was settled outside of court, but has cost millions of dollars for Coke. 2 Physical Environment and Technological Trends The current physical environment, peculiarly in metropolitan areas such as large cities, is very much conducive to the use of our product.Available in a large number of various retailers, our goal is to be the Starbucks of sports drinks on every corner, there 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 fiscal district, as well as near the Broadway theaters), as well as near learning centers and gyms. We want to make sure that Nike Motion is widely distributed and readily available, both to impulse shoppers, as well as for the more traditio nal type of buyer.Changes in technology may lower adit barriers and create new product processes. To enter the sports drink industry, large detonator investments are required for production facilities, marketing, and etcetera. Technological changes, such as the internet, can create additional possibilities for pro consummation, via viral campaigns via the internet and emails that are so popular with our target market. Global Trends Due to advances in technology and communication, we can safely say that the world has never been as united as it is currently.The internet, along with television, and to a lesser degree, 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 ranging from clothing to music to the culinary arts have become widely accepted. We feel that sports drinks fall into this spheric category as well. From Europe to Latin America to the United States, lifestyles are becoming faster-paced (though to varying degrees) and are influencing the demand for products that will accommodate such consumer choices.In the last year alone, sales of sports drinks have adjoind by 10%. 3 3. 0 Mission Statement Nikes mission states If you have a body, you are an athletic supporter. 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 levels, as well as enhance mental agility. Nike motion is crucial for both body and mind. 4. 0 Market / Industry / Competition AnalysisCompetition Analysis of Sports Drink Industry Sports drinks experienced a scarce growth in the late 1990s and early 2000s, growing almost 56 percent 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 ceremonious and right on companies, namely Gatorade and Powerade. Gatorade, produced by PepsiCo, is a market leader, boasting 80 percent market share. Its main(prenominal) 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 parentaged by 4 percent, while Cokes Powerade grew by nearly 30 percent. 4 Most of the industrys growth is driven by comer 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 living 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, given its established, strong home run image, and its association with everything healthy, such a move should not prove impossible. Porters Competitive Forces According to Porters quin 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 kinda fragmented, allowing for price competition. The power of buyers is medium, because all the same though there are many buyers, few of them are rather powerful.There is little chance that existing customers would integrate backwards. Sports drinks are place products but can be replaced by a limited number of substitutes, water being the biggest threat. The consumers, concord to trends in the macro environment will increasingly search for sports drinks on the store shelves. The small 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 ordination to prevent smaller firms from entering the market.The energy and sports drink products are thus differentiated, and vary in more than just price. The threat of new entrants is low to medium due 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 apart 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 something only 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 well-nigh zero, but companies can succeed if theyre able to retain their unwavering customer bases. 4. 0 Summary of marketing activity in the industry set strategyIt is safe to state that there are no significant pricing digressions among the brands, they are competitively priced. Both 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 most retailers that sell groceries and other beverages. Retailers include supermarkets, delis, hawking machines, street vendors, cafeterias at gyms, etcetera.We see a potential advantage in selling Nike Motion at existing Nike outlets, such as riotous goods stores, and in Nikes flagship stores, Niketowns, that are located in major cities around the w orld. Advertising and Promotions When discussing advertising and promotional strategies, we have to note that even the most successful 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 $180 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 summit athletes for promotional deals. Coca Cola was, for example, the official sponsor of the summer surpassing Games in Athens with its Powerade 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, sa ys a Coca-Cola spokeswoman. Consumer education is key, she adds. 6 Powerade introductory launched an online version of its LeBron James comic in its quest to position the brand as the sports drink for the next generation. A first for Coke and its fellow DC Comics, the interactive site included flash technology and voice-overs by Mr. James across 12 Webisodes, as well as an exacting win component and video games. 7 Gatorade on the other batch is the official sponsor of the National Football League, the official sports drink of the National Basketball Association, WNBA, Major League Baseball, Major League Soccer and a host of others around the world.In all, Gatorade has struck roughly 900 sponsorship deals with sports events over time, according to tracking by the IEG Sponsorship Report. Gatorade also will sponsor branded sate during the National Basketball Associations playoffs on ESPN, TNT and FSN networks. On TNT, broadcast personalities will air live sideline segments dubbed H eard 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 interest in losing freight and increasing interest in exercise. 8 Sports beverage producers also began targeting the invasive Hispanic population.Gatorades Xtremo was the first to appeal to this potential market with a line of more exotic and tropical flavors including mango and tropical. The effort was supported by bilingual packaging and Spanish-language advertising. Coca-Colas Powerade brand also began using Spanish-language advertising to sm asher into this market. We think that the most important industry factors that will be authoritative in our planning is the degree of competition that were hoping to offset with powerful and wide- chokeing marketing campaigns.As Ive mentioned earlier, there is a very high level of competition especially between Gatorade and Powerade. Both these companies spend millions of dollars on building their brands and their loyal customer base. We can see, however, a slight difference between the promotional techniques of the two. Gatorade is more centered on the top-athlete, while Powerade tries to depict a more cutting-edge picture that appeals primarily to the iPod generation. There business leader be another niche that is underserved, and 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 successfu lly due to its existing brand image. 5. 0 Marketing Objective The Nike brand is a well known brand, its swoosh is one of the most recognizable signs out there, having established brand loyalty among many. Based on our market research, the brand book of facts 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 chance in high profits and gaining market share due 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, in the lead to a 10 percent increase in sales in one year.Many individuals are unaware of Nikes new brand extension of a sports drink. Therefore we would pursue a high reach and high frequency strategy in our advertising in lay out to have maximum exposure. In order to accomplish this we would conduct a SWOT analysis to gain a better cause of our target market and market segment. We want to achieve this objective by using secondary and primary research to get an in depth 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.