There was rapid growth of the energy drink market which led to the increase in the number of energy drink producers. Lucozade was chosen to be investigated in this report in order to understand the current situation of the energy drink market and to see how Lucozade could remain its position of market leader. Also, the growth of the industry would be investigated in order to give a deeper understanding of the industry and the challenges of Lucozade to keep its market position would be explained and suggestion of a new marketing plan would be conducted.
Company overview- Lucozade
Lucozade under GlaxoSmithKline (GSK) was chosen as the company would be analyzed. Lucozade was found in 1927 by an English Pharmacist and had operated worldwide and was a successful multinational enterprise (MNE) in energy drink market. Lucozade was made from a unique formula which provided a concentrated, appealing and readily absorbed source of food energy and the soft drink was subsequently named as Lucozade. Its main product was easily digestible glucose drink which could help recovery from sickness by providing energy when people did not feel like eating food and soon it became the symbol of recovery.
By the healthier trends of people life style, Lucozade had repositioned as a healthy provider of energy to help people recover from the natural daily lulls in energy people might suffer during the day. Thus "Aids recovery" was replaced by "Replaces lost energy". Finally, Lucozade became a brand that could provide energetic, busy and successful people with the energy they needed to perform to their full potential. Lucozade had develop further with the launching of Lucozade Sport and Lucozade Sport Hydro Active in 1990 and 2003 respectively. And Lucozade Extra was designed with a stronger formulation that could help to sharpen mental performance and focus. As Lucozade was a MNE, this report would be focused on the global issue.
Lucozade's internal and external environment could be analyzed by SWOT analysis. For the strength, Lucozade had been a market leader in the energy market for around 30 years with long history and with sustainable growth worldwide. Also, it had a family reputation with substantial financial position would secure the brands future. For the weaknesses, Lucozade in some places was still considered as a recovery drink and had not repositioned and it would take time to gain stronger place in the sport drink market. These strengths would help to formulate the strategies.
For the external environment, there were the opportunities, Lucozade could constantly launch new flavours to keep the products at the front of customers' minds and development of the drink for use with alcohol could create a new market as its competitors were launching these products recently. For the threats, as Lucozade was one of the world's first functional drinks, the launch of Red Bull had give challenges to Lucozade to compete in the market.
Lucozade's strategic intent
Based on the SWOT analysis, the strategic intent could be defined. The mission of GSK was to advance the quality of human life by enabling people to do more, feel better and liver longer. The marketing objective of Lucozade was to concentrate on bringing in a great number of the new customers to the energy drink market. How the marketing strategies meet the mission and objectives of Lucozade would be investigated in the later part.
For the growth strategies, a theory of Ansoff Matrix could be employed to explain. For market penetration, Lucozade had continuosly market its existing products in order to gain more market share in the market and it could keep on the strategy. For diversification of new products and new markets, Lucozade had differentiated its products as there were Lucozade Energy, Lucozade Extra and Lucozade Sport in order to meet different customers' needs. For product development, Lucozade has continuously putting effort to develop new products, for example, it had launched new tastes of Lucozade Extra of grapefruit and lemon and it was suggested to develop more new flavours of the drinks as to attract more customers to try. For market development, different type of Lucozade products were target on different group of customers depend on how it market its products. The most preferred mode of development was product development and diversification as the energy drink market was matured and Lucozade was a market leader in the industry.
Strategic advantage of Lucozade
The strategic advantage could be explained by Porter Generic Strategies. The strategy was depended on the market size, as the market size of the energy drink market was board, the strategy would be focused on differentiation. Lucozade had differentiate its products from other competitors like Red Bull and Gatorade, Lucozade's products were focused on providing energetic, busy and successful people with the energy they needed to perform to their full potential. As other competitors' products were focused on the just giving energy to the customers.
Competitive position and competitor analysis
To the energy drinks market globally, there were many competitors for Lucozade to compete with and Lucozade need to formulate its marketing strategies in order to keep its market leader position and to acquire more market share around the world. Recently, Red Bull would be its main competitor as they were targeting the same group of people who want to increase the energy levels.
In order to compete in the market, competitive advantages need to be sustained. For Lucozade, it had the good reputation and brand image all over the world. Also, its products were superior and were widely adopted globally. In addition, the global strategies for brand image and promotion had done well in order to keep the competitive advantages. Besides, the relationship between the partners could help Lucozade to develop competitive advantages as a MNE could not only withstand by selling their products but as well as to promote its brand by holding events or sponsoring sport activities.
For the competitor analysis, the main competitors of Lucozade are Red Bull and Gatorade as they were target on the similar group of customers which providing them with energy drinks. Among these two main competitors, Lucozade need to be outstanding so as to compete with them. In order to remain to be the market leader, new products were needed to create and thus focusing on the research and development. Lucozade had increase the usage of its products as not just giving energy but also could make drinkers brain be more clear.
In addition to the competitor analysis, industry analysis would be conducted to give a deeper understanding of Lucozade. Porter five forces could be used, buyers are people who want to be more energetic and have a clear brain. Take Hong Kong as an example, many students would drink Lucozade before exam as they believe that it could help them to have a clear mind during the exam. The switching cost was low for Lucozade as there are many substitutes and thus the bargaining power of the buyers are high. For the suppliers, Lucozade was backed up by its mother company and the suppliers are those supplying ingredients. For competitors, it had mentioned in the pervious part. For the new entrants, there are high entry barrier and the cost of entering the industry was high as it was matured and a new company is hard to survive. For the potential substitutes, Red Bull and Gatorade would be its main substitutes.
There were different types of forecasting, they are product, market and industry. The forecast was based on the past trends. For the products, Lucozade would constantly launch new taste of flavours and new product line would be created by adding innovation factors like adding special colour to the drinks. Besides, forecast could be based on the sales revenue as to predict the new products would increase the sales revenue or not.
For the forecasting of the market, simulation model would be used. The black box model of consumer responses could help to understand consumer behaviour and the decision making process. Lucozade could use the data on consumer behavior to formulate the strategies as to encourage unplanned purchases by promotions and the points of sale could be increased as not all convenience store have sold Lucozade.
For forecasting the industry, market sensing framework could be used to decide what the events were related to the industry, business, markets, competition, segments, customers and the impacts. Rating would be formed to rate the importance of the event and how the events could help Lucozade to forecast its market of the industry. Forecasting was most likely to base on the competitors action and strategies and reaction could be made afterwards.
Segmentation, targeting and positioning strategies, branding, partnership and innovation of Lucozade
Lucozade had two main categories of Lucozade Energy and Lucozade Sport and their segmentation and targeting were different. For the segmentation and targeting of Lucozade Energy, it had employed demographics and psychographics segmentation. The demographics segmentation was men and women of all ages and especially focused on people aged 16-29 as they would be more likely to consume Lucozade. For psychographics segmentation, Lucozade targeted on people who are tired or feeling a little bit of sickness and want to increase their energy levels.
For the segmentation and targeting of Lucozade Sport, it had employed demographics, geographic and psychographics segmentation. Lucozade had targeted on men and women who are aged 15-25 and the outlets are available in many shops in the city especially sporting locations. Also, it had targeted on athletes who want to increase the performance and endurance.
For the positioning of Lucozade, it was initially developed as a health recovery product, but it had repositioned itself which made it one of the world's first product line targeted at healthy adults who needed and energy boost. This was achieved through heavyweight advertising campaigns. Afterward, it had concentrated on building relationship with partners of sporting events and iconic athletes.
For the branding of Lucozade, it had established a position which related to the competition from the viewpoint of consumer and banding is part of the process to differentiate in the mind of customers. Lucozade was a well-known brand with its unique brand image as a famous brand providing energetic drinks.
For the innovation of Lucozade, it was suggested that it need to put more effort on innovation as there were more and more competitors raised and innovation could help to generate more customers. In addition, innovation would be supported by many factors, for examples, exchange of information, rewards, teamwork, support and systems, external inputs and senior management. Innovation always referred to new product development, thus Lucozade need to develop new products for new segment or for new market.
After investigating the performance of Lucozade and the new marketing plan suggested, control should be formed by the measure of strategic fit. The budgets, resources, project management, forecast and measurements should be controlled as to manage the new marketing plan and it could be compare with the existing marketing plan in order to measure the differences.
After investigating the performance of Lucozade in maintaining its market share and continue to expand its business in the competitive market of energy drinks. Lucozade should maintain the development of international scope by entering new markets and develop new products. It should enter the markets with little knowledge of energy drinks and product penetrations were not advised to carry out in mature markets such as UK.
In addition, in the US market, Red Bull had been gaining strengths, thus Lucozade need to put more effort in innovation of product development and marketing as to target on more customers so as to increase market share worldwide. Also, marketing researches should be carried out in order to understand what its competitors are doing and help in new strategy formulation. Also, adaptation was very important for a MNE as different market would have different cultural background, this need to take into consideration of cultural bias and adapt to local culture.
To conclude, Lucozade was a successful MNE which have long history and in order to withstand its marketing position, more effort need to be putted as there were more and more competitors rose in the markets. Besides its competitive advantages, the new marketing plan of new product development to increase market share could help to expand its market to target on a wider range of people and to promote its products worldwide.