Company BackgroundIn the summer of 1965, a university football
coach began to question why his players were suffering from heat
related illnesses. They were drinking plenty of water. University
researchers soon discovered that players were losing electrolytes
and fluids through their sweat, and water couldnt replace what they
were losing. The researchers took their findings into their lab and
began to create a drink that would help the Florida Gators feel
rehydrated, replenished, and refueled during their most intense
athletic events. Thats exactly what the product now guarantees to
achieve-rehydration, replenishment, and refueling. They called this
new drink Gatorade. By 1969, Gatorade was named the official drink
of the NFL (History of Gatorade, Retrieved December 2, 2006). Soon
it became popular to have Gatorade on the sidelines andit started
the sports drink category.By 1985, Gatorade had expandedits
research in sports science by building the Gatorade Sports Science
Institute.The Institute allows them to better understand the human
body, its needs during the stress of competition and how to improve
their products.
The Products OfferedToday, Gatorade has reached beyond the
narrow market of elite athletes. They have many product lines
designed to appease the most particular of sports drinkers.
Gatorade has many different product lines within their Thirst
Quencher Series. They distribute Gatorade Rain, Frost, Lemonade,
Original, X-Factor, Xtremo, and Fierce. Within each of these
different sub-categories come many different fruity flavors. Each
flavor also ranges from a 12oz bottle-6 pack to a gallon jug.
Gatorade also has a line of fitness water called Propel. Any
consumer can purchase Propel Fitness Water or Propel Fitness Water
with Calcium. Both come in a wide range of flavors similar to those
found within the Gatorade Thirst Quencher Series, but with a few
more. The Gatorade Performance Series products has specially
designed formulated nutrition and hydration in order to aid the
most intense athletes in their performance. Each product is packed
with nutrition in order
to replace the electrolytes lost by each athlete through
exertion. Gatorade has an energy bar that comes in 2 different
flavors, chocolate chip and peanut butter. The bar is the perfect
snack for athletes on the go, or anyone getting ready to do some
physical activity for that matter. The nutrition shake comes in the
obvious flavors, chocolate, strawberry, and vanilla to fill an
athletes stomach without slowing them down. And last, but not
least, there are the Gatorade Performance Series Energy Drinks.
These drinks are very similar to those of the Gatorade Thirst
Quenchers. However, the Performance Series drinks contain a
whopping 200mg of sodium. This is so that electrolytes and body
fluids will be replaced within each athlete every time they take a
drink. These drinks, however, come in limited flavors and are only
available in 12oz bottles (Gatorade Products, Retrieved December 2,
2006).
Company Mission StatementOur mission is to be the world's
premier consumer products company focused on convenient foods and
beverages. We seek to produce financial rewards to investors as we
provide opportunities for growth and enrichment to our employees,
our business partners and the communities in which we operate. And
in everything we do, we strive for honesty, fairness and
integrity.
SWOT Analysis/ Gatorade has become the most popular sports
beverage. It is widely known and is easily distinguishable among
its competitors. Gatorade also remains recognized due to the number
of contracts they have with several major sports leagues. As of
now, they have contracts with the National Football League, Major
League Baseball, National Basketball Association, Womens National
Basketball Association, National Hockey League, United States
of America Basketball, Major League Soccer, United States
Soccer, Bowl Championship Series, and the Association of Volleyball
Professionals (http://www.gatorade.com/athletes/leagues_and_teams/,
Retrieved December 2, 2006). The NFL is also known for performing
the Gatorade Dunk. This ritual is performed after a game by the
winning team. Players pick up the Gatorade Barrel and dump whats
left over their coachs head. This gives free publicity because its
done by the teams without any prompting by Gatorade. /
Analysis on Current Business PortfolioStrategic business unitA
strategic business unit is a unit of the company that has a
separate mission and objectives, and which can be planned
independently from other company businesses. An SBU can be a
company division, a product line within a division, or sometimes a
single product or brand. They are organized into four business
units, as follows: 1)PepsiCo Americas Foods (PAF), which includes
Frito-Lay, North America (FLNA), Quaker Foods North America (QFNA)
and all of our Latin American food and snack businesses (LAF),
including our Sabritas and Gamesa businesses in Mexico; 2)PepsiCo
Americas Beverages (PAB), which includes PepsiCo Beverages Americas
and Pepsi Beverages Company; 3)PepsiCo Europe, which includes all
beverage, food and snack businesses in Europe; and 4)PepsiCo Asia,
Middle East and Africa (AMEA), which includes all beverage, food
and snack businesses in AMEA. The four business units are comprised
of six reportable segments (referred to as divisions), as follows:
FLNA, QFNA, LAF, PAB, Europe, and AMEA.
The Boston Consulting Group ApproachThe business unit that
Gatorade is under is considered a cash cow. Cash cows are
low-growth, high-share businesses or products. These established
and successful SBUs need less investment to hold their market
share. Thus they produce cash that the company uses to pay its
bills and to support other SBUs that need investment. / Each SBU
has a life cycle. Gatorade started out as a question mark and moved
into the star category when they succeeded. They later become cash
cows as market growth falls, and might die
off or turn into dogs towards the end of their life cycle. The
company needs to add new products and units continuously, so that
Gatorade doesnt turn into a dog.
Developing Growth Strategies/ The product/market expansion grid
shows four routes to growth: market development, new markets, new
products and diversification.
Market DevelopmentMarket development looks for new users or
market segments which the company is not currently serving. For
example, they started to penetrate the market beyond the
participants in organized sports to other, more casual, occasions
by producing Gatorade Frost. They also widened their market by
producing Propel Fitness Water. To target the teenage market
segment, they came up with Gatorade All-Stars for their appeal.
Besides that, they produced Gatorade Xtremo, with bilingual labels
and extra rich flavours, to attract Latinos./1 Gatorade Xtremo
/ 2 Gatorade Frost / 3 Propel Fitness Water
Product DevelopmentProduct can be modified by changing
characteristics, such as quality, features or style, to attract new
users and to inspire more usage. Gatorade does this in several
ways: Improving Quality a. GSSI Gatorade works on new products all
the time. Theyve even created a special lab where their scientists
can continually test new products to ensure the safety and
abilities of all athletes. Virtually no one matches the Gatorade
Sports Science Institute (GSSI) when it comes to hydration
expertise. Established in 1988, GSSI has conducted and published
research, as well as educated sports health professionals and
athletes on sports nutrition and exercise science. The information
provided to athletes helps them understand how they can fuel
themselves so they not only perform better, but also feel better
when training or competing. This in turn ensures that Gatorade is
always producing the best quality in its market. 2. Durability a.
Ergonomically Designed Gatorade Experience (EDGE bottle) / 3. Taste
a. Gatorade has over the decades developed over 40 different
flavors in its various lines of products. Some of them
include:1.
Original
Lemon-Lime * Fruit Punch * Orange * Cool Blue * Berry * Ice
Punch * Strawberry Kiwi
A.M. Rain
Lemonade X-Factor Frost
* Orange-Strawberry * Tropical-Mango * Cran Raspberry * Berry *
Lime * Tangerine * Cherry * Strawberry Kiwi * Watermelon * Grape *
Lemonade * Pink Lemonade * Raspberry Lemonade * Lemon-Lime +
Strawberry * Fruit Punch + Berry * Orange + Tropical Fruit *
Glacier Freeze * Riptide Rush * Cascade Crash
4. Gatorade In-Car Drinking System / The Gatorade In-Car
Drinking System (G.I.D.S.) is the most highly advanced in-car
hydration system ever used in the sport of stock car racing. The
system allows NASCAR drivers to drink cold Gatorade throughout the
entire duration of a race to help them stay better hydrated even as
temperatures inside the car soar as high as 130 F. A special pouch,
that guarantees to keep any liquid cold for hours, is filled with
the drivers favorite flavor and is then placed in a secure
compartment within the vehicle. There is a tube with a special
coming from within the pouch and into the drivers helmet. At the
end of the tube is a mouthpiece that is securely fastened to the
drivers mouth. When the driver is ready to take a drink, they bite
down on their mouth piece, to open the tube, and push a button, to
pump the cold liquid through the tube and into the drivers mouth.
When the driver lets go of the mouthpiece the tube closes and the
pump automatically reverse pumps the Gatorade back into the pouch
in order to stay cold for next time. Gatorade keeps their body
temperature down and helps replace the electrolytes and body fluids
lost.
(http://www.gatorade.com/science%5Fand%5Finnovation/product%5Finnovations/gids/
Retrieved December 2, 2006).
Target MarketTheir primary target market is youth leading active
lifestyle. Demographics Young adults 13-30 male/female, single
Lifestyle Athletic, into sports, active Behavior Before during or
after activity, thirst quenching, prevent dehydration
Market PositioningGatorade positions strongly in a niche market
opportunity: the only thirst-quenching sports drink or youths with
active lifestyle that improves performance. No other brand has a
similar position, others are simply to quench thirst. /
CompetitorsBeing in a niche market, Gatorade doesnt have many
competitors only one direct competitor, while others are indirect
competitors. Drinks like 100 Plus and RedBull are indirect
competitors because they are either energy drinks or isotonic
drinks, but not sports drink like Gatorade and Powerade. However,
Gatorade still retains most market share.
// On a wider scope of Pepsico company instead of one of its
SBUs, their businesses operate in highly competitive markets,
competing against global, regional, local and private label
manufacturers on the basis of price, quality, product variety and
distribution. The chief beverage competitor, The Coca-Cola Company,
has a larger share of CSD consumption, although PepsiCo has a
larger share of liquid refreshment beverages consumption. Success
in this competitive environment is dependent on effective promotion
of existing products, the introduction of new products and the
effectiveness of our advertising campaigns, marketing programs and
product packaging. The strength of their brands, innovation and
marketing, coupled with the quality of their products and
flexibility of their distribution network, should allow them to
compete effectively.
Possible Developing Strategies On Current Business
PortfolioStrategies for GrowthAccording to PepsiCo, they have
several key strategies for longterm, sustainable growth,
including:
Building the companys global macrosnack portfolio Responsibly
and profitably growing the companys beverage business Building the
companys nutrition business, in dairy, grains, fruits and
vegetables Leveraging the companys unique Power of One selling
model across foods and beverages Delivering on environmental
sustainability commitments Strengthening and refreshing the
organization to prosper in a changing environment Ensuring prudent,
responsible financial management
Product Life Cycle//
Gatorade is in the maturity stage. Growth slowed o This is due
to increased competition compared to when they just started out
when they were the only brand to sell sports drinks. Now with
competitor Powerade, their growth is not as rapid as the years
before. Profits o Their profits are still strong, but decline
slightly because they have to spend more on promotion and product
development in effort to beat out the threat of competitors and
keep them from going into decline stage. The extra cost of
promotion and research and development cuts into their profit. Cost
o Part of the reason their profit is still strong even with
competitors is because with economies of scale, they have managed
to reduce cost per customer to very low. Acceptance o This is a
feature of maturity stage. This is proof that they are in this
stage because they have a mass market of millions of consumers.
Brand loyaltyo
Another feature, due to the fact that it was the only specialty
sport drink when it was created and even with new competitors, most
consumers would rather purchase a product they know works than try
a new product that claims to do what everyone already knows
Gatorade does
They should stretch their imagination and look for new ways to
innovate in the market (market development), or to modify the
product (product development) and the marketing mix (marketing
innovation).
Most consumers would rather purchase a product they know works
than try a new product that claims to do what everyone already
knows Gatorade does. As long as Gatorade continues to produce new
products, they will continue to grow. They should stretch their
imagination and look for new ways to innovate in the market (market
development), or to modify the product (product development) and
the marketing mix (marketing innovation). All these have been
discussed in the above section in the analysis on current business
portfolio and the possible developing strategies on current
business portfolio
PRODUCT Product is anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a
want or need. Broadly defined, product also include services,
events, persons, places, organizations, ideas or mixes of these.
For our group, we have decided to choose Gatorade as our product
for this term paper project. i. LEVEL OF PRODUCT AND SERVICE
Product planners need to think about product and services on
three levels. The most basic level is the core customer value which
address the question What is the buyer really buying?. When
designing a product , marketers must first define the core,
problem-solving benefits or services that consumers seek. The core
customer value that Gatorade provides is a sports drink that have
formulated to rehydrate and replenish minerals, electrolyte and
nutrients during exertion that specially formulated for athletes.
At the second level, product planner must turn the core benefit
into an actual product. For Gatorade, the isotonic drink is its
actual product and its name, parts, styling, features,
packaging
and other attributes have all been combined carefully to deliver
the core customer value of sports drink. Finally, products planner
must build an augmented product around the core benefit and actual
product offering additional consumer services and benefits. At his
level, the company will make sure that all their products are
available to be market and reachable by all their customers. Thus,
the company has creates their own website so that all people can
get a lot of information about all the products produced by the
company. On Gatorade website, people may know about their products
range available in market, how they are running their business,
management, technology they used, mission and vision, also with
contact number so that customer that have any idea, problems or
questions can directly call the company management. Within this
global era, the website created is very important for them to
compete with other company as most of the customers nowadays will
make sure about the quality of their products first before make a
decision to purchase those products. To make that process fast,
thus, all the customers will search on the internet about the
products. Of course without much information and difficult to be
contacted, the customers will not become interested to purchase on
that products. Therefore, Gatorade has creates their own website
which is http://www.gatorade.com ii. PRODUCT/ SERVICE OFFERING
CLASSIFICATION
Product and service falls into two broad classes based on the
types of consumer that use themconsumer product and industrial
product. For Gatorade, it is a consumer product because of its
product is bought by final consumers for personal consumption.
Under consumer products there are four classification that differ
the product in the ways consumers buy them and in how they are
marketed- convenience products, shopping products, specialty
product and unsought product. Gatorade is in specialty product
which is product with unique characteristic that offer an isotonic
drink to rehydrate body for which a significant group of buyers,
that are athletes who are willing to make a special purchase
effort. The drink is not a convenience drink that usually buys
frequently by consumer because its contained electrolyte and
nutrient that used to support body from dehydration and hence the
price is quite expensive from normal drinks.
iii.
PRODUCT AND SERVICE DECISION
Marketers make product decision at three level individual
product decision, product line decision and product mix decision.1)
INDIVIDUAL PRODUCT AND SERVICE DECISION/
I.
PRODUCT ATTRIBUTES
Developing a product or services involves defining the benefits
that it will offer. These benefits are communicated and delivered
by product attributes such as quality, features, style and design.
Quality in term of product or service is the lack of defect whereas
quality in term of the customer is the value and satisfaction
provided by the product or service. As for Gatorade, product
quality is an important aspect to be maintained. Gatorade was been
produced in lab and have their own scientists who work on new
products all the time. They have even created a special lab where
their scientists can continually test new products to ensure the
safety and abilities of all athletes. The Gatorade Sports Science
Institute (GSSI) is a research facility operated in Barrington,
Illinoisthat has been featured in a number of the company's
commercials. Established in 1985, this organization consists of
scientists studying the correlation and effects of exercise,
environmental variables, and nutrition on the human body. It
regularly conducts testing and research on how hydration and
nutrition affect athletic performance. By maintaining the product
quality Gatorade can provide consumers satisfaction towards its
product. /
A product can be offered with varying features. The company can
create higher-level models by adding more features. Features are
competitive tools for differentiating the companys product from
competitors product. The features that is provided by Gatorade is
its variety of flavor, the packaging of product, electrolyte and
nutrient contained that cannot be provided by other product.
Gatorade always varied the features according to the different
product line. Each product line carry special features that help
consumer to choose the best and suitable drink that suit with their
bodys condition and taste. The company knows that the other ways
they can do in order to add customer value is through distinctive
product style and design. For each brands product produced by
Gatorade has their own
style and design. It is important for them to make sure that
once all the products are marketed in market, the styles of all
those products can be eye-catching to grab attention by the
customers. Whereas, design is more than skin deep as it goes to the
very heart of a product. Therefore, good design will contribute to
a products usefulness as well as its looks. the designs and styles
created for each of the brands are shown as followed: 1) Gatorade
thirst Quencher /
2) Gator gum / 3) Gatorade frost / 4) Gatorade energy bar / 5)
Gatorade performance series /
6) Gatorade tiger /
7)
Gatorade G series
/
2) BRANDING
A brand is a name, term, sign, symbol or design or combination
of these that identifies the marker or seller of a product or
service. Consumer view brand as an important part of a product and
branding can add value to a product. Branding helps buyers in many
ways. Brand names help consumer to identify products that might
benefit them. The brand name become the basic on which a whole
story can be built about a products special qualities. And branding
also help sellers to segment market. For Gatorade they have created
their own symbol and sign for each of their brand so that easier
for customer to recognize their products. The brandings symbol and
logo of each products are shown as followed:
1) Gatorade thirst Quencher / 2) Gator gum / 3) Gatorade frost
/
4) Gatorade tiger / 5) Gatorade G series /
3) PACKAGING
Packaging involves designing and producing the container or
wrapper for products. Innovative packaging can give a company an
advantage over competitors. To make the packaging become more
interesting, the company should put at least one best statement
that can attract buyers especially first time buyers to purchase on
that products. As for Gatorade, tested in the lab, proven on the
field for Gatorade thirst Quencher and nothing hydrates better on
any planet for Gatorade tiger.
4) LABELING
Labels range from simple tags attached to products to complex
graphics that are part of the packages. They perform several
functions. At the very least, the label identifies the products or
brands, such as the name of Gatorade and its brand was stamped on
the packaging. The label on the packaging also provide products
information to increase customers confident about the good side
that offer by Gatorade. Thus consumer can compare the product with
its competitors.5) PRODUCT SUPPORT SERVICE
Customer service is another element of product strategy. A
companys offer usually includes some support service, which can be
minor or a major part of the total offering. For Gatorade, they
already created their own website so that easier for their customer
to know details description about each of the products produced by
their company. For example, if you are access on their website, we
could know what are the differences between product line, events
and activities joined by the company, their corporation, and also
how to contact them in easier ways. To make it more convenience to
the customers who have any enquiry, they can directly ask the
companys manager through online by fill up the enquiry form
provided by the company and then submit. Gatorade also encourage
their customer to get involved in their production process by
throwing out ideas to improve their products and new ideas for
their designs and models through this product support service
system.
iv.
PRODUCT LINE AND PRODUCT MIX DECISION Product line decision A
group of products that are closely related is called product line
decision because they function in a similar manner, are sold to the
same customer groups, are marketed through the same outlets, or
fall within given price range. In order to expand their products
line, in product line filling, Gatorade had varies its product
types labeled under different brands. For example:
A)
Gatorade Thirst Quencher is the first product of Gatorade which
was produced in liquid and powder form under two flavor variants:
lemon-lime and orange. These remained as the only two flavor
options for nearly 20 years, until the addition of the fruit punch
flavor in 1983
B)
Gator gum is a chewing gum dusted with electrolytes, debuted in
1978. The gum came in two traditional Gatorade flavors: orange and
lemon-lime. Gatorade frost is produced with the intent of
broadening the brand's appeal beyond traditional team competitive
sports. Flavors in the Frost line were the first from Gatorade to
divert from fruit names; it was described as consisting of
'light-tasting fruit-flavor blends
C)
D)
Gatorade energy bar was Gatorade's first foray into solid foods
and contained a large proportion of protein, in addition to
carbohydrates Gatorade Ice was marketed as a lighter flavored
Gatorade, and came in Strawberry, Lime, Orange, and Watermelon. Ice
was rebranded in 2006 as Gatorade Rain and the flavor selections
altered. Other than focused on product filling, Gatorade also
implant product stretching in order to make sure that the customer
has various choice in purchasing their products. In this case,
company has stretched their product lines upward in order to add
prestige to their current
E)
products. For example, the company has introduced all the
products mentioned above with various flavor.
Product mix decision Product mix consists of all the products
lines and items that a particular seller offers for sale. A
companys product mix has four important dimension ;
width,length,depth and consistency. Product mix width refers to the
number of different product lines the company carries. For
Gatorade, it has five product lines that contribute to product
width. Product mix length refers to the total number of items the
company carries within its product lines. Gatorade produces variety
of different flavor and taste for each of its product lines.
Product mix depth refers to the number of version offered of each
product in the line. These product mix dimension provide the
handles for defining the companys product strategy. The company can
increase its business in four ways. It can add new product lines,
widening its product mix. In this way, its new lines build on the
companys reputation in its other lines.
v.
BRANDING STRATEGY Brand equity Brand equity is the differential
effect that knowing the brand name has on customer response to the
product and its marketing. It is very important in order to capture
consumer preference and loyalty. For Gatorade, they should not feel
worried about their brand equity as PepsiCo is one of the largest
company that produce sport drink products. However, many people in
Malaysia still not recognize their products. Therefore, it is
important for promotion management people to take some initiative
in order to make sure that their products become well known among
the citizen and accepted by the customers. Higher brand equity will
give larger contribution to the total financial value of that
brand.
/
Building strong brand
Companies can position brands at any three levels. At the lowest
level, they can position their brand on product attributes.
Attributes are the least desirable level for brand positioning.
Early Gatorade marketing focused on attributes such as an isotonic
drink for rehydrate, give energy and electrolyte balance.
Competitors can easily copy attributes. More importantly, customers
are not interested in attributes as such they are interested in
what the attributes will do for them. A brand can be better
positioned by associating its name with a desirable benefit. For
Gatorade, it go beyond technical product attributes and talk about
resulting an athletes with quick and full of energy recover by
maintaining body fluid and electrolyte. The strongest brands go
beyond attribute or benefit positioning. They are position on
strong belief and value. Gatorade is formulated to taste best
during physical activity because it contains electrolytes and the
right flavor profile to help drive the thirst mechanism. The right
flavor profile is achieved by creating flavors that are light and
not overpowering so that they can be consumed in large quantities
with minimum sensory overload during physical activity . Thus
Gatorade knows that, to athletes, Gatorade mean much more than just
an isotonic drink. It gives the athletes chance of achieving higher
performance during competition and maintaining the good performance
although at the end of the game. Brand Name Selection
Finding the best brand name is a difficult task. It begins with
careful view of the product and its benefits, the target market,
and proposed marketing strategies. After that, naming a brand
becomes part of science, part art and a measure of instinct. The
Gatorade name comes from The University of Florida football team,
the Gators. Gatorade Thirst Quencher was invented at The University
of Florida to assist their athletes in combating the dehydration
that limited their performance-hence Gatorade.
In a Gatorade context, G represents the heart, hustle, and soul
of athleticism and will become a badge of pride for anyone who
sweats, no matter where theyre active. Brand Sponsorship
Manufacturers brand vs private brand Gatorade can be considered
as manufacturers brand as Pepsi Co sells their output under their
own brand names. Licensing Name and product licensing has grown
rapidly in the recent years. From the names, initials as well as
symbol, everything has to be licensed. When any manufacturer using
Gatorade symbol or initial as their prints, they have to pay to the
legal registered trademark holder, which in this case is the Pepsi
Co
/
Brand Development
A company has four choices when it comes to developing brands.
Below are those four choices.
New brands PepsiCo used new brands approach for Gatorade brand
development. The company might believe that the power of its
existing brand name is waning and a new brand is needed. Between
2008 and 2010, Gatorade re-branded a number of its products.
Beginning in February 2010, the Gatorade
product portfolio was re-positioned around what the company
refers to as the G Series, categorizing varieties of its products
into three main segments: before, during, and after athletic
events.
The Prime 01 product line consists of a Pre-Game Fuel in a gel
consistency, positioned for
consumption prior to athletic activity.
Traditional
Gatorade
products
such
as Gatorade
Thirst
Quencher(Original
Gatorade), Gatorade ice, and Gatorade energy bar are categorized
under the Perform 02 classification, representing their intention
for consumption during periods of physical exertion.
Recover 03 refers to a post-workout protein and carbohydrate
drink, formulated with the
consistency of a sports drink. The composition of this beverage
reflects its intention to provide both hydration and muscle
recovery after exercise. /
PRICEi.
GENERAL PRICING APPROACHES
One of the major components in marketing that produces revenue
is of course pricing. Price is one of the most flexible marketing
mix elements. Prices can easily be changed depending on the
situation of the current market and companies decide on the pricing
of each of their product by applying many different types of
pricing strategies. Price is defined as the amount of money at
which a product or service is valued or the value at which a seller
sets on his goods in the market. Another definition is the sum of
all the values that customers exchange for the benefits of having
or using the product or service. There are many different
approaches to set a price of a product. Due to that, many factors
are to be considered when setting a price of a product. Companies
usually faces problems where prices are set too high to produce any
demand from customers hence lowers revenue and sales of product or
prices are too low to produce any profit. Two major factors or what
is known to be the extremes that need to be considered when setting
price of product is customer perceptions of value of a product and
the cost of product. Customers perceptions of the products value
set the ceiling for prices. Price any higher than that off price
ceiling will result in declining of demand of products which means
lower profit or revenue to company. Product costs set the floor for
prices which means price any lower than price floor will not bring
any revenue or profit to company. With that, other internal and
external factors that are also important includes overall marketing
strategies, objectives and mix, the nature of the market and demand
and competitors strategies and prices. Gatorade is a specially
formulated beverage created to replenish carbohydrates and
electrolytes lost during physical activity. It is one of the many
brands of isotonic drinks and sportsrelated beverage products
distributed in many countries. Gatorade is manufactured by PepsiCo;
a huge American global corporation which has added Gatorade brand
to the companys portfolio. Gatorade is well-known worldwide and is
amongst the leading isotonic drinks internationally but it is the
opposite here in Malaysia. In Malaysia, the leading isotonic drink
is 100 plus which is manufactured and distributed by Fraser &
Neave Beverages Marketing Sdn Bhd. 100 plus is a well-known local
product which commands over 90 per cent of market share of the
isotonic drinks market. Due to this, it is difficult for Gatorade
to dominate the market as 100 plus is a strong competitor and a
leading brand in the isotonic drink market in Malaysia.
With 100 plus being the strong competitor, Gatorade is not
well-known amongst the consumers in Malaysia. The company could not
lower prices to meet the price of the competitor. Hence, the
company applies value-added pricing strategies which is attaching
value-added features and services to differentiate a companys
offers and charging higher prices. Rather than Gatorade lowering
the prices of their product to match the lower prices of 100 plus,
the company attach value-added features to differentiate offers of
that of 100 plus and thus setting higher prices for their products.
Gatorade is an international brand and is a leading brand
internationally therefore, it could not lower its price to capture
the consumer market in Malaysia. The company came out with
value-added features such as unique bottle packaging and various
flavours of isotonic drinks which differs from the range of
products of 100 plus isotonic drinks. The company then are able to
set higher price for its products and not cut price by adopting
this strategy. There are also external considerations that may
affect price decisions and the general pricing approach of the
company. One of it is to understand the market and demand of
product. Gatorade is categorized under a type of market that has a
monopolistic competition which is a market that consists of many
buyers and sellers who trade over a range of prices rather than a
single market price. The product is varied in terms of quality and
features which increases customers value perception of product and
hence customers are willing to pay more for the product. Although
Gatorade and 100 plus are of different price range, the company
creates unique features that differs Gatorade from other isotonic
hence able to sell their beverage in a much higher price. The
company creates differences in terms of packaging of product,
various flavours and promotion of product for example advertising.
For example, Gatorade has appointed Nicole David as its
spokesperson for its product in order to increase sales of product
to target market which are athletes and sports person. The demand
of Gatorade in Malaysia is rather elastic which means a sudden
price change would affect demand of product. If company increase
price of beverage to a higher price, customers will tend to buy
other substitutes of isotonic drinks which have lower prices.
Gatorade is not a necessity and any price change affects customers
decision to purchase product. In other regions, the brand Gatorade
is the leading brand in distributing isotonic drinks but in
Malaysia, Gatorade faces strong competition against other leading
isotonic brands such as 100 plus. Due to the elasticity of the
demand of Gatorades product, the company could not set price that
is too high
as the existing brands of isotonic drinks are cheaper than that
of Gatorades. Consumers will opt to buy other brands if they
perceive the value of the price of product for being overpriced.
ii. PRODUCT MIX PRICING STRATEGIES Most companies of various
products and services main objective would be to collect profit and
revenue on products that they produce. In order to do so, companies
must be able to set price that maximizes the profits on the total
product mix. There are a few strategies on how the company sets
products price to fit in their objectives such as product line
pricing, optional-product pricing, captive-product pricing,
by-product pricing and product bundle pricing. Gatorade targets
customers that are active in sports from teenagers to adults. Hence
due to this, the product lines of Gatorade are all sports based
products from isotonic drinks and nutrition bars. In Malaysia, the
product lines of Gatorade are limited to isotonic drinks and
sportsrelated beverages. The company distributes different kinds of
isotonic drinks that offer different features in terms of flavours
and types. For example, the product line of Gatorade ranges from
isotonic drink with various flavours such as grapefruit, orange and
lemon and also the Gatorade original isotonic drink. Gatorade has a
wide range of product line from sports drinks, nutrition bars and
beverage products. Each is set with a different price range
according to cost differences between products in terms of
packaging, cost of manufacturing and value of product. The
different price of products in Gatorade brand product line is based
on customers perception value on the different type of products.
Hence, Gatorade applies product line pricing strategies on its wide
range product line. The company sets different range of price
between products in its product line with price range suitable for
each type of product which takes into account customers evaluations
on the different types of products. iii. PRICE ADJUSTMENT
STRATEGIES Companies need to study the many factors to be
considered before agreeing to one base price for their product.
Upon doing that, companies must then adjust the price of the
product in order to suit the customers needs or perceptions to
various situational differences. By doing this, it would help
company to boost product in the consumer market and gain more
revenue from product.
Gatorade has applied the fixed price policies on its products
which mean it sets one price for all buyers. The consumer could not
negotiate on the price of the product and the price of product is
fixed depending on the location of distribution of product. The
brand Gatorade uses segmented pricing as their price adjustment
strategy as a way to attract consumers to buy their product.
Segmented pricing is defined as selling a product or service at two
or more prices where the difference in prices is not based on
differences in costs. In terms of Gatorades product which is
isotonic drink, the price of the sports beverage sold varies due to
few factors other than costs. The cost of producing isotonic drinks
or beverage drinks does not vary much hence the company applies
segmented pricing in the form of location pricing. By using
location pricing, a company charges different price for different
locations eventhough the cost of offering for each location is the
same. For example, the price of 500ml Gatorades isotonic drink in
the US is between 1.50 USD to 2 USD which is around RM 4.50 TO RM 6
in Malaysia whereas in India a bottle of Gatorade costs RS 30 which
is RM 2.05 in Malaysia. The company sets different prices on the
similar product of isotonic drink based on the difference in
location. The cost of offering of product is similar but the price
varies due to the difference in location of where the product is
being distributed. Gatorade is a well-known product internationally
and the demand of the product is very high in many regions.
Gatorade faces competition amongst leading isotonic drinks in
Malaysia hence the company needs to adjust the price and sets price
depending on the consumer market as to increase the profit or
strengthen Gatorade in the market. A few of price-adjustment
strategies that could be applied includes discount and allowance
pricing, promotional pricing and also international pricing.
Discount and allowance pricing is a strategy of reducing prices to
reward customer responses. Customer is given a straight reduction
in price in purchases or in other words discount. Gatorade can
attempt this strategy and give discounts on products as to capture
or grab the consumers to buy their product hence increasing the
profit and revenue of company. Gatorade could apply quantity
discount which is a price reduction to buyers who buy large
volumes. This could be applied to distributors or companies
sponsoring drinks and beverages for athletes in sports events or
games. The client would certainly be buying the product in bulk
hence giving them discounts on buying large volume could attract
them to buy in the future and at the same time it is a good
promotional strategy for the company.
Other than that is promotional allowances which are payments or
price reductions to reward dealers for participating in advertising
and sales support programs. Price reduction could be given out to
dealers distributing the product of Gatorade as they indirectly are
promoting the product to other consumers. For example, distributors
during sports events would certainly attract attention to other
people attending the event to buy the product. Another strategy for
Gatorade is to apply promotional pricing. Promotional pricing is
temporarily pricing products below the list price and sometimes
even below cost to increase shortrun sales. The company could lower
the price of the product from the original base price and offer
discounts at a certain timeframe. For example, the price of
Gatorade is RM 2.70 in the market. The company could lower price of
product at a certain timeframe to attract buyers to buy more
isotonic drinks in that limited timeframe. Another form of
promotional pricing is special-event pricing. Sellers or
distributors could apply special-event pricing and lowers price of
product as to push sales of the product. For example, on special
events such as during sports events or during football or badminton
season the distributors could use that as a strategy to boost sales
of the sports beverage. Distributors could lower price during those
special events as it is the best way to draw more customers to buy
the product and at the same time a way to introduce or promote the
product to consumer. As the brand Gatorade is an international
brand which is well-known internationally, the company could apply
international pricing as a way to adjust the price of product to
meet the wants of consumers. Companies that market their products
internationally must decide on the prices that they will be
charging to the different countries in which they operate. There
are many factors that the company should consider before setting
the price of a product in different countries. One of the most
important factors would be consumers perceptions and preferences in
various countries. For example, Gatorade is the leading brand in
the US hence the consumer perception and preference differs than
that of in Malaysia. In Malaysia, there are many brands of isotonic
drinks and the consumers have their own preferences in choosing
isotonic drinks. The market of isotonic drinks in Malaysia is
dominated by a leading brand which Gatorade is competing against
hence the consumers preference towards Gatorades product would not
be as strong as other leading brands. Due to this, the company
should consider the pricing adjustment of product and not set it
too high as the consumers will not buy products which are
overpriced when
there are existing brands that are cheaper than Gatorades
product. In other region such as the US, the price of the beverage
is a bit higher than the price in Malaysia. The brand Gatorade has
developed a strong market there hence setting higher price would
not affect consumers demand for product. The situation differs here
in Malaysia therefore the company should adjust the pricing of
product in order to meet the needs of consumers in the Malaysian
market.
PLACE i. NUMBER OF CHANNEL LEVELS Channel level is a layer of
intermediaries that performs some work in bringing the product and
its ownership closer to the final buyer. In other words, each party
involved in a distribution channel needs to cooperate as each are
responsible in bringing the product to the final buyer which is the
consumer. A layer of intermediaries or middlemen is responsible to
perform in each respective channel. Marketing intermediaries is
defined as a business firm that operates between producers and
final buyers or consumers. Example of intermediaries is wholesalers
and retailers. The brand Gatorade is manufactured and distributed
by PepsiCo which is a huge American global corporation. The brand
Gatorade consists of products such as isotonic drinks and sports
beverages which targets sports person and athletes. Gatorade in
Malaysia is not the leading isotonic drink brand and does not
dominate the market share for isotonic drinks. The brand Gatorade
applies indirect marketing channel as their distribution channel in
order to introduce the product into the consumer market. Indirect
marketing channel contains one or more intermediaries.
PRODUCER CHANNEL 2 PRODUCER CHANNEL 3
RETAILER
CONSUMER
WHOLESALER
RETAILER
CONSUMER
A marketing channel consists of firms that have partnered for
their common good. Each channel member depends on others and each
has their own responsibility respectively. The channels above are
examples of indirect marketing channel that is applied by Gatorade.
All intermediaries are responsible to distribute products from the
producer to the final buyer or consumer. In Malaysia, Gatorade is
manufactured and produced by Permanis Sdn Bhd which has been
primarily involved in the manufacturing, distribution and marketing
of beverages under franchise from PepsiCo. The company acts as the
producer and is the primary member in the distribution channel.
Permanis acts as the producer which manufacturers Gatorades product
line which will then be distributed and supplied to wholesaler or
retailer. Wholesaler and retailer acts as dealer for the product
and brings product to the final buyer which is the consumer. The
dealer attracts consumers by promoting and marketing the product to
the consumer in order to boost up sales of product. All the members
in the channels depend on each other in order to bring the final
product to the consumer.
ii.
STRATEGY USED FOR ITS MARKETING INTERMEDIARIES Companies should
apply strategies when dealing with marketing intermediaries in
a
distribution channels. This is to prevent any conflicts between
the intermediaries and ensure flow of the distribution process of
product throughout the channel is smooth. The function of
intermediaries is to reduce the amount of work that must be done in
order to produce product that would capture customers in buying.
The company of Gatorade has applied and adopted a system in order
to manage the channel and its intermediaries involved which is a
multichannel distribution system. The company is a huge
organization which distributes through multiple channels.
Multichannel distribution system is a distribution system in which
a single firm sets up two or more marketing channels to reach one
or more market segments. The company applies this type of system as
to increase the distribution of products at the same time increase
the growth of product in the consumer market. This type of system
suits the nature of huge companies that have various and wide
product line. With the existence of multiple channel system, the
company could cater for the more numbers of distribution channels
in order to distribute the products to the customer all at once.
The number of intermediaries that exists in a channel must be
determined and planned by the company as to prevent any
complications that may occur throughout the channel. The types of
intermediaries are determined by the company and each of the
members must be responsible and contribute in the distribution
channel. The company need to apply a strategy in order to determine
the number of marketing intermediaries in the distribution channel
of the company. The strategy applied by the company is intensive
distribution which is a strategy in which the producer stocks
products in as many outlets as possible. Due to this, the number of
intermediaries would be more than one as more dealers are needed to
distribute the products to as many outlets possible. Intensive
distribution is a strategic way to promote or expand the product in
the consumer market as it provides maximum brand exposure.
iii.
TYPES OF RETAILER / WHOLESALER THAT CARRY THEIR PRODUCTS /
SERVICES
Retailer or wholesaler acts as dealers which distributes
products to the final buyers or the consumers. Retailing is defined
as all activities involved in selling goods or services directly to
final consumers. The brand Gatorade distributed to various
retailers in order to distribute its product of isotonic drinks and
sports beverages. The product can be widely found in supermarkets
and convenience stores. Supermarket is a relatively large,
low-cost, low-margin, high-volume, selfservice operation designed
to serve the consumers total needs for grocery and household
products. Convenience stores are defined as relatively small stores
located near residential areas, open long hours seven days a week
and carrying a limited line of high-turnover convenience products
at a slightly higher price. The product of Gatorade can easily be
found in any supermarket for example Tesco, Giant or Jusco and also
at convenience stores such as 7-Eleven. Besides that, the beverage
is also sold at petrol pumps such as PETRONAS or Shell. The
products wide distribution in many outlets is a convenience for
consumer to buy the product.
PROMOTION i. ADVERTISING STRATEGY
Advertising is a communication tool that used by a seller in
order to inform and persuade and remind buyers about its product or
organization. Furthermore in developing an advertising program, the
major decisions of an objective should be involved by the seller.
Here, advertising objectives can be classified into three which
they are should be clear and timing. There are classified on their
aims which are whether to inform,
persuade or remind. Lets we go briefly one by one. Informative
advertising is used when a new product is introduced in order to
build a primary demand among customers. While, persuasive
advertising is important as competition increased to build
selective demand. However, some persuasive advertising can be a
comparative advertising which it is can be defined as a company
directly or indirectly compares its brand with one or more other
brands. Lastly, for mature products they need a reminder
advertising to help them maintain customer relationships and keep
consumers to think about their products. Bring forward, Gatorade
products is running under comparative advertising. In Malaysia
market, Gatorade needs to compare its nutritional contents with its
rivals in the isotonic drinking company like 100plus, Red Bull and
Revives. For example, lets we compare between carbohydrate contents
in Gatorade and 100plus. Referred to nutritional facts in bottle
label, Gatorade drink has 6% carbohydrate (actual number is 5.8%
but round up to 6 just to ease consumer in remember) while 100plus
drink has 7% carbohydrate (actual number is 6.8). Through years of
laboratory research has shown that a 6% carbohydrate solution
provides an appealing taste profile when exercising and rapidly
emptied from the stomach and absorbed by the intestine. Thus,
delivers performance-enhancing energy to active muscles. Sports
drinks with lower or higher concentrations than 6% carbohydrate are
unlikely to deliver on all these key attributes. Advertising
message / Logo of Gatorade
G represents the heart, hustle, and soul of athleticism and will
become a badge of pride for anyone who sweats, no matter where they
are active. The Gatorade name comes from The University of Florida
Label on packaging football team, the Gators. Gatorade Thirst
Quencher was Creative designed in the appearance to attract people
The University ofas enhancing demand athletes in invented at to buy
it as well Florida to assist their from combating the to deliver
the message their performance-hence consumers. Each of the products
has their own style labeldehydration that limitedto the customers.
Gatorade. ///Gatorade Recover Gatorade Tiger Gatorade Frost
By creating a creative label on the products, any message should
be presented also in different execution style. This is for
capturing the target markets attention and interest and best
approach must be done by a company. The following is some of
message execution of Gatorade. Lifestyle For Gatorade, lifestyle
concept is matched with its products. Professional and amateur
athletes, sports teams, leagues, and events throughout the world
are matching with the Gatorade drinking. For example, Gatorade
Series and Gatorade Recover. Products ambassadors Most of well
known celebrities are tied with Pepsi Co Company in promoting their
Gatorade drinking products. They are who including Ronaldinho, a
football player, Maria Sharapova, a tennis player, Michael Jordan,
a basketball player and Tiger Woods, a golf player. Hence, Gatorade
creates a special name brand on its product as Gatorade Tiger.
/
Michael Jordan with Gatorade
drink
Example of quote by Maria Sharapova : I know that staying
hydrated can help me play at my best, said Sharapova. Gatorades
heritage is all about science, so Im really looking forward to
meeting with the GSSI scientists to make sure Im doing everything I
can to prevent dehydration and stay on top of my game. Advertising
media The advertiser should decide on the reach and frequency
needed to achieve advertising objectives. Media is the best way for
the company to engage with their customers rather than simply reach
them. Generally, Gatorade already advertises its product widely
through the internet, magazines, outdoor activities and others.
Examples of Gatorade advertising program via internet are:a) b)
Website : Twitter :
http://www.gatorade.com http://twitter.com/Gatorade
FACEBOOK PAGE OF GATORADE
c) d) e)
Myspace: Facebook: Youtube :
Submit Celebrity Link http://www.facebook.com/Gatorade
http://www.youtube.com/whatsg
WEBSITE OF GATORADE / /
TWITTER PAGE OF GATORADE /
ii.
SALES PROMOTION STRATEGY
Sales promotion is a tool involves using short term incentives
to encourage customer purchasing, reseller support and sales force
effort. This tool is used by most organizations including
manufacturers, distributors, retailers, and non profit
organizations. They are divided into three which are consumer
promotion, trade promotion and business promotion. Each of them is
targeting respectively toward final buyers, retailers and
wholesalers and last but not least to business customers. From
doing this sales promotion, there are some objectives and benefits
that a company can achieved. For an instance, a company may urge
short term customer buying or enhance customer brand involvement
when they negotiate with consumer personally. While cooperate with
trading person may give chances to retailers to carry new items and
inventory. In general, sales promotion will help in reinforcing the
products position and build long tem customer relationship rather
than short term sales or temporary brand switching.
One of sales promotion that has done by Gatorade is presented
with thousands of requests for product donations and event
sponsorships from dedicated individuals, teams and organizations.
Gatorade is committed to encouraging sports participation and
healthy lifestyles through the support of countless national and
local programs such as:
The Gatorade High School Player of the Year program The Women's
Sports Foundation & Go-Girl-Go Campaign Elite youth
tournaments, camps and programs such as Varsity Cheerleading, US
Soccer Development Academy, Cal Ripken Camps and World Series,
Jordan Brand Classic, Army All American, Football University,
Womenslacrosse.com, and Five Star Basketball
Five Star Basketball Numerous youth sports camps held at
Division I Universities Running events including the New York,
Chicago, Boston & Los Angeles Marathons
iii.
RECOMMENDATION
It is strongly agreed that Gatorade drinking product is already
great in advertising and sales promotion but unfortunately in
Malaysia, more its promotion does not reach to Malaysia citizens.
Most of Malaysian still does not aware on Gatorade existing market.
Therefore, there are some suggestions to enhance their
advertisement and promotion toward market in Malaysia. i.
Collaborate with Malaysias celebrities to be the Gatorade
ambassador. Even the existing ambassadors are the well known
persons but using the local person more give the value and effects
to the consumers. Gatorade can tie the contract with Datuk Nicole
David and Datuk Lee Chong Wei, as an example. ii. As known,
Gatorade is widely advertises itself on most media like magazine,
television and others but in Malaysia they are lacking with
advertising program. Gatorade does not appear on our local channel
in television, newspapers, magazines or any outdoor events.
Therefore, Gatorade can try to market itself through all of
media that have mentioned above. iii. For consumer promotions : a)
Samples most powerful and effective, but more expensive way to
introduce their new drinking products and create new excitement for
the existing one to Malaysian consumers. It can be distributed
freely at supermarkets while consumers are shopping. Besides, the
sample can be attached to another product or combined into the
sample packs. b) Coupons a certificate that gives buyers a saving
when they purchase two and above Gatorade product, for example. It
can be done in a set time of promotion to enhance activity in
introducing Gatorade to peoples. c) Advertising specialties
involves promotional product and event sponsorship. Gatorade should
participate in sponsor the event even the small event like sports
day at school. Thus, positive image and consequences have been paid
by creating long term relationship with the children who are always
attractive in buying such Gatorade products. Besides, Gatorade
directly makes promotion on itself by gives the useful imprinted
Gatorades name, logo or message that given through gift to
consumers. Typical items include Tshirts, pens, mugs, key chains,
bags, caps and others. d) Contests, sweepstakes and games give an
opportunity for its customers to win something such as cash, trips
or goods. This contest and games always be done by some
organization in marketing their products such as 100plus which is
Gatorades rival itself. iv. For trade promotions :
Gatorade may offer retailers free specialty advertising items
that carry the companys name such as pens, calendars, paper bags,
memo pads and others. By doing that, Gatorades brand name can be
widely and everywhere distributed.
CONCLUSION As a conclusion, Gatorade is a brand that is strong
enough to compete with other leading brand of isotonic drinks. The
brand may not dominate the consumer market as the competitor is
very strong but the company could survive in the consumer market.
Gatorade needs to expose its brand to another level and strengthen
its market by deciding on the proper promotion and pricing
strategies and acknowledging its brand to the consumer in
Malaysia.
REFERENCES1) 2)
Kotler P. and Armstrong G.,Principles of Marketing,13th Edition.
Annual Report of PepsiCo. (2005). Retrieved December 1, 2006 from
http://ccbn.mobular.net/ccbn/7/1250/1337/ History of Gatorade.
(2006). Retrieved December 2, 2006, from
http://gatorade.com/history/proven_on_the_field
http://www.gatorade.com/default.aspx
http://www.hydrationdepot.com/Gatorade-Powder-6-Gallon.html
http://en.wikipedia.org/wiki/Gatorade
3)
4) 5) 6)
UNIVERSITI TEKNOLOGI MARA FACULTY OF PHARMACY MKT 420
(PRINCIPLES AND PRACTICE OF MARKETING) TERM PROJECT : GATORADE/
LECTURERS NAME:Mr. Nor Shahrul Nizam Bin Muhamad NorGROUP : BP
4B
GROUP MEMBERSSABRINA AZIZ-BAHAMAN (2009445372) FATIN IRINA
ISMAIL (2009602232) NOR IZZATI BT HASAN HUSAINI (2009452476) NUR
FARIZA BT HASHIM (2009829944)