MGMT530 - Marketing Strategies - Darren Hamilton - Intro



PepsiCo Gatorade Gold Marketing PlanDave Ruffin & S. Darren HamiltonMGMT530 - Marketing Strategies November 4, 2013Jim RaySouthwestern College Professional Studies Executive SummaryGatorade has an advantage over competitors in the sports drink industry. Gatorade has been profitable ever since establishing itself as a first market entry. Gatorade produces a quality sports drink based on scientific research. Although Gatorade Thirst Quencher is the company’s core product; Gatorade offers a variety of products to meet their customer’s needs. Founded in 1965, Gatorade is currently owned by PepsiCo. Gatorade is a very important and valuable company in PepsiCo’s portfolio with a brand value estimated at approximately $3.4 billion dollars. Gatorade is responsible for approximately 33% of of PepsiCo’s annual earnings, and has the majority of market share in the sports drink industry. Gatorade has a comprehensive marketing strategy and has allocated approximately 100 million dollars to ensure that its products receive necessary exposure. Gatorade uses multimedia avenues for marketing, which include Facebook, Twitter, and an elaborate website. Because Gatorade is a sports drink, the company forms valuable partnership with elite professional athletes to help market its product. Gatorade will develop a new sport drink, Gatorade Gold, infused with vitamins that targets the 50 plus age group. In order to be successful, the company must test market the product, create an advertising campaign to reach the intended market, and ensure that retailers are willing to carry the new product line. The product will be targeted at the 50 plus age group that maintains an active lifestyle and is concerned about personal health. The Gatorade Gold will be a convenience product, so it is vital that supply chain and distribution issues make the product readily available when and where the consumer wants to purchase it. Since PepsiCo and Gatorade have good brand awareness and a reputation for quality, pricing can be slightly higher than the competition and still result in high sales. The initial launch will include coupons and free samples, drawings and competitions, and discounted pricing and free marketing supplies to retailers to increase participation. The product will be launched in the next three months. In order for PepsiCo and Gatorade to support the marketing strategy for Gatorade Gold, the company will have to increase staff levels in marketing, support, research and development, and customer service. All of the staff will need to be educated to the purpose of the new product and know how to answer retailer and consumer questions regarding the product. Expanded facilities for production will be necessary as the product becomes more popular. Formal and informal controls will be in place to ensure employee participation and cooperation with the marketing strategy. Investments into research and development, education programs for employees, manager commitment, and measures of success will be part of the formal controls for the marketing strategy for Gatorade Gold. Informal controls include personal employee goals, group influence, and corporate culture influence. Audit systems will be in place that measure time and profit measures to determine the level of success of the new product. If Gatorade and PepsiCo dedicate a marketing team to promoting and educating about the new Gatorade Gold, the company should have a new product line that taps markets the current Gatorade product does not reach. With the current marketing aimed at 13-25 year olds, the new vitamin infused sport drink will cater to the baby boomer generation, which is one of the most health conscious, physically fit, and wealthy generations yet. HistoryGatorade is a popular beverage built on a sports theme. In 1965, researchers at the University of Florida, developed Gatorade after then head football coach Ray Graves requested a liquid that could be ingested to help replenish body fluids that his athletes lost during physical exertion in warm weather (Walters, 2001). The drink came about quite quickly in terms of development. After experimenting with different concoctions for approximately 1 month or so, the sports drink made its debut in October 1965 when developers served the sports drink to players in the Florida – LSU football game. While the drink was originally called Cade’s Cola, named after one of the developers, it was changed to incorporate the nickname of the University of Florida; the Gators (Walters, 2001). Nothing promotes a product like success and that is exactly what happened to the Florida Gator football Team. Almost immediately the team began winning and in just its second season of consuming Gatorade, the University of Florida Gators won their first Orange Bowl game against the Yellow Jackets from Georgia Tech, the team attributed the victory to drinking Gatorade (Gatorade, n.d.). With the team promoting the drink, Gatorade gained instant attention with the athletic community. Before long, requests were coming in from other college teams wanting to purchase Gatorade for their athletes. In 1967, Stokely-Van Camp, agreed to produce and market the new sports drink, which was later sold to Quaker Oats in 1983 (Leith, 2000). In 2000, both Quaker Oats and Gatorade were purchased and continued to be manufactured by PepsiCo. It was believed that Gatorade would fare better in distribution under PepsiCo and give PepsiCo a huge psychological advantage over Rival Coca-Cola (Foss, 2000). Since its introduction, Gatorade had become a mainstream beverage for athletes who were thirsty (Foss, 2000). The sports drink is scientifically formulated and proven to quench thirst, replace fluids, and provide carbohydrate energy to improve athletic performance (PR Newswire, 2007). Today, Gatorade can be found on the sidelines of many colleges as the official sports drink (Gatorade, n.d.).Products ProducedProduct innovation is the development of products that either have superior attributes to existing products or that are new to the world (Hill & Jones, 2013). Companies engage in product innovation to develop a competitive advantage over rival companies trying to position themselves in such a strong manner that it discourages other companies from entering the market. When Gatorade first released its Thirst Quencher sports drink; the drink was available in only lemon lime and orange. Gatorade understood that to appeal to broader variety of customers they would have to offer more flavors in their sports drink. Now Gatorade offers that particular product in many flavors. Product variation is a process of creating products in the same line, but that offer the customer a choice such as in size, color, or taste (Hill & Jones, 2013). Offering more variety can help create a competitive advantage over rival companies. Gatorade offers more flavors and portion sizes than either PowerAde or All-Sport (Tarigin, 2007). Even in the 90’s, when Gatorade had 80 percent of the sports drink market they were committed to expansion of their products to help satisfy their customers’ needs. Gatorade had developed a concern about the immediate thirst market. While customers were willing to consume Gatorade during athletic events, most people outside of those venues would simply rather consume water when thirsty. In response to this void, Gatorade released its Frost line. Gatorade Frost was based on the same original thirst quencher formula, however, offered lighter colors and flavors (Theodore, 1998). Sometimes, when companies expand their products it comes in response to competition (Ferrell & Hartline, 2014). When PowerAde and All-Sport first decided to enter into the market, Gatorade felt the pressure of competition as Gatorade’s market share fell from 82.4% to 73.1% by 1997 (Tarigin, 2007). An example of Gatorade’s product line expansion was when they decided to release a new formula sports drink with nearly twice the sodium and three times the potassium as their original drink (Terhune, 2005). The new product called Endurance was in response to rival Coca-Cola’s PowerAde, and was designed to assist athletes in eliminating cramping and dehydration (Terhune, 2005). In 2010, in an attempt to persuade more athletes to consume their products, Gatorade launched a new line of sports drinks called Prime, Perform, and Recover (Sterrett, 2009). Today, Gatorade has an extensive product line which offers three different platforms of sport drinks. The platforms are the G Series, G Series Fit, and G Series Pro (Zmuda, 2011). Gatorade also offers the G Natural; which appeals to the health conscious consumers who desire a low calorie version of the drink.Major Challenges for the Near FutureIn the near future, Gatorade’s overall challenge will be to continue to defend itself against rival PowerAde, and other businesses that try to gain market share in the sports drink market. Sports drink experts agree that there is not much more that can be done in the lines of developing a drink that replaces lost fluids in the human body. While Gatorade currently dominates the market in sports drinks, they also recognize that they cannot afford to become complacent while other companies steal market share (Jaroff & Washburn, 1992). One of challenges that Gatorade faces in the near future is securing the young consumer market. Gatorade believes that it must appeal to teenagers to be competitive; however, Coca-Cola’s PowerAde has the same philosophy and will be competing for the same customers (McWilliams, 2010). There is a valuable target opportunity for sports drink companies, as the teenage years are a time when the brand preferences really start to settle in (McWilliams, 2010). By attracting teenage customers and trying to convert those to loyal customers should benefit Gatorade in the future. But with so many choices of sports drinks available these days, there is a risk that the market will be saturated and potential market share will be spread out amongst other companies. An example of how the two top sports drink companies are working to capture a younger market is a testament to their dedication to develop innovative products. PowerAde released a product called PowerAde Play; a drink specifically geared at younger athletes (McWilliams, 2010). The drink offers less sugar with more vitamins and nutrients, designed to appeal to the parents of children who are concerned about sugary drinks. Coca-Cola’s PowerAde Play is a drink which has 60 calories and 15 grams of sugar per 12-ounce bottle. By comparison, Gatorade’s new "G Natural" brand has 75 calories, and their "G2 Natural" has 30 calories (McWilliams, 2010). Coca-Cola’s PowerAde is not the only challenger that Gatorade has to worry about in the near future. Other challenges will likely come from enhanced water drinks that are beginning to infiltrate the market and take share away from the sports drinks. Brands like VitaminWater and SmartWater are becoming popular and are being offered at a less cost to the customer.The Internal EnvironmentAn assessment of marketing objectives, strategy, and performance should be conducted periodically by businesses (Ferrell & Hartline, 2014). Gatorades overall strategy is to dominate the market of 13-24 year olds who lead an active lifestyle. This is an attempt to get younger customers to use Gatorade products. Gatorade strategically selects popular professional athletes to help them market their brand. The company has built strong relationships and affiliations with the NBA, NFL, NHL, MLS, and AVP Pro Volleyball association. Gatorade also uses multi-media outlets and has engaging online content for the public to browse and learn about their products. Gatorade has also experimented with labeling of their products. In 2008, it was announced that Gatorade was giving its label a facelift by utilizing a large G on their packaging. The G was supposed to appeal to a younger, hip customer; representing the heart, hustle and soul of athleticism (Wasserman & Hein, 2008). As Gatorade has been challenged by rival sports drink companies; Gatorade’s innovation helped them maintain a competitive advantage over others by introducing variations of their sports drink to satisfy specific customer needs. To help them achieve their goal, Gatorade reviews and continues to adapt their marketing strategy. For example, Gatorade has used TV advertising heavily in the past, in an effort to boost awareness. Gatorade’s G Series line of Prime, Perform, and Recover has all been featured prominently on the television (Zmuda, 2013). However, in this next year the G Series Perform will be the focus of television ads, while Prime and Recover beverages will be promoted primarily through print advertising (Zmuda, 2013). Print advertising allows the company to articulate the product better, allows Gatorade the opportunity to better explain why their customers should be drinking the product before and after activities (Zmuda, 2013). Despite the marketing change, Gatorade anticipates that total marketing spending will be similar to the previous year where they used $101 million on measured media (Zmuda, 2013). As the focus shifts to Gatorade’s newer products, PepsiCo must take care to not lose touch with or move too far away from Gatorade’s core brand Thirst Quencher.Gatorade which is organized under the umbrella of PepsiCo’s Americas Beverages reported net revenue of $21.4 billion dollars in 2012, which represents approximately 33% of PepsiCo’s total net revenue. The 2012 numbers were down slightly from 2011, where the company reported revenues of $22.4 billion, however reflects an increase from the numbers in 2010. (U.S. Securities, n.d.). In 2012, Gatorade had approximately 74% of the market share of the non-aseptic sports drinks with annual sales revenue of approximately $122,800,000. Like other beverage companies, Gatorade is brought to market through direct-store-delivery, customer warehouses and distributor networks. The system used depends on customer needs, product characteristics and trade practices (U.S. Securities, n.d.).The Customer EnvironmentThe most critical part of the environment are the end users; the consumers of the product. Gatorade understands that while their products are primarily geared toward athletes, there are other active lifestyle customers who may want to purchase Gatorade. Demographically, Gatorade targets teenagers to mid-20’s adults, who have grown up playing sports. Many of them have idolized professional athletes and have come to associate the Gatorade brand with athletic performance. Gatorade’s businesses are influenced by different seasons throughout the year; as their beverage sales increase during the warmer months and decrease during the cooler times of year (U.S. Securities, n.d.). Weekly beverage sales are generally highest in the third quarter due to seasonal and holiday-related patterns, and generally lowest in the first quarter; however in its entirety the seasons do not have a substantial impact on their financial results (U.S. Securities, n.d.).In 2010, in hopes of staying in tune with their customers better and to kick start sales, Gatorade launched what they call “Mission Control” (Bauerlein, 2010). Mission control is essentially a monitoring process which looks at social media in an effort to see what customers think about Gatorade products (Bauerlein, 2010). Gatorade knows that many of their customers, especially the younger ones in their target group, utilize the internet and socialize using Twitter and Facebook. By monitoring social media and websites, Gatorade has found a way to look at the behaviors of customers, and key in on their likes and dislikes about the product. Gatorade hopes to use the information they obtain to improve marketing. Gatorade has proven that they pay attention to their customers concerns. Just this year, it was announced that Gatorade was removing brominated vegetable oil, an emulsifier, from its citrus flavored product (Eng, 2013). The change was brought about by a teenager’s petition urging Gatorade to remove the substance from its sports drink.The External EnvironmentAn organizations external environment is often referred to as its operating environment. It is those conditions and factors that surround Gatorade that influence the choices they make and determine the risks and opportunities that are present for them. Assessing the external environment helps organizations identify strategic opportunities and threats within their operating environment ultimately helping them determine how they will pursue their mission (Hill & Jones, 2013). Gatorade, which is owned by PepsiCo, is positioned extremely well for long term expansion in China. Tingyi Holding Corporation, a Chinese food and beverage company, have joined PepsiCo to form an alliance to manufacture, distribute, and sell PepsiCo’s products which of course includes Gatorade (Entertainment Close-up, 2012). In 2013, Gatorade has help solidify its marketing with China using a similar type strategy that has worked well in the United States. Gatorade has had success exposing customers to their product by utilizing popular professional athletes as sponsors for their products. While attempting to connect with the Chinese youth, Gatorade is advertising their product by showcasing former basketball great Michael Jordan with the up and coming Chinese star Jeremy Lin. The ad makes a reference to both players being ambassadors to the game; and of course there is the Gatorade connection. StrengthsGatorade was a first entry company which has made it difficult for other companies to take substantial market share away from them. This has helped Gatorade become a market leader in the sports drink industry. Established market leaders in any industry are difficult to overtake.Gatorade offers a unique product; an electrolyte restoration beverage. Other more generalized products such as snack crackers or bread are not specific enough to deter other companies from trying to produce similar items. It is this first market entry and the uniqueness of the Gatorade sports drink that makes it more difficult for other new companies to enter into the market. Gatorade has name recognition which contributes heavily to the formulation of loyalty to their brand. People associate Gatorade with a quality sports drink that is effective in replenishing lost electrolytes during workouts or other activities. Certainly contributing to Gatorade’s brand recognition has been in the use of prolific athletes in their advertising. Michael Jordan and Tiger Woods (before he fell from grace) were the pinnacle of greatness in their respective sports. Now, with basketball superstar LeBron James endorsing Gatorade products, the company is optimistic that their marketing will continue to reach athletes and the younger generation. Part of Gatorades success is that their customers make a connection between consuming Gatorade and increased performance. This connection helps customers choose Gatorade products when offered a choice between those and products from a competitive company. Gatorade offers its customers a variety of flavors to choose from; having come a long way from its original lemon lime and orange flavors. Offering different varieties of a product helps customers stay with the Gatorade brand. Taste is a big consideration with food and beverages as many customers will try different products if they have to in order to satisfy their taste needs.WeaknessesGatorade has in some ways saturated the sports drink market. Customers have much to choose from, which may detract from their core product which was “Thirst Quencher.” With so many products, it may make it difficult for Gatorade to adequately concentrate on a particular product. Gatorade has expanded into other areas which include nutritional bars and powders. Gatorade has to be careful and guard against moving to far away from its core product. While there will be attempts to breach Gatorade’s market share from companies who offer energy drinks; Gatorade may find itself in a difficult position to defend itself. Gatorade’s money market comes from selling sports drinks that are scientifically formulated to rehydrate individuals. Energy style drinks, can actually contribute to dehydration which just seems at its face to be a conflict in business philosophy. Likewise, there are companies that market other refreshing non-carbonated drinks, such as Vitamin Water. While these companies do not propose a major threat to Gatorade’s sports drink market, they do take a small share of Gatorade’s potential customers. Probably the bigger issue though is that if the market continues to grow, Gatorade currently does not offer anything to readily compete with those companies. Unlike the soda pop industry, the consumption of Gatorade is somewhat theme based. The product is marketed and centered around active lifestyles; primarily sports. It seems more and more that professional sports are the victims of labor management disputes, which have resulted in some player lockouts. This can affect marketing and sales of Gatorade products; a problem that energy drinks and water variations do not have. OpportunitiesGatorade needs to take advantage of conditions in its environment, which will allow them to develop strategies that can help them become more profitable (Hill & Jones, 2013). Understanding the opportunities that exist is key to identifying strategies. People appear to be becoming more fitness conscious which includes the food and drink that they consume. This is substantiated by the rising enrollment in health clubs and fitness centers (). As part of this movement, it makes sense that people may begin to move further away from the consumption of soda pop, opting for healthier refreshments. Statistics already show that there has been a decline in soda pop consumption. While soda pop still accounts for about 40 percent of the beverage industry; ten years ago that number was a robust 50 percent (Choi, 2013). If this trend continues, there is there is an opportunity for Gatorade to strengthen its market share. According to research and marketing, there may be an opportunity in the global market for high-impact natural flavors in food and drink (). This total industry is currently worth approximately $3 billion dollars and is growing very quickly (). There may be an opportunity for Gatorade to develop products with natural flavors in the future. The sports drink category continues to be a valuable market and forecasts predict the market value to reach $55 billion by the year 2018 (). The projected growth in the industry is supported by science as the components of sports drinks are essential for hydration during exercise; and the fact that more sports drinks are being used as refreshment than before ()ThreatsGatorade is aware that certain conditions in the external environment can threaten the profitability of their business (Hill & Jones, 2013). While Coca-Colas PowerAde remains a threat to Gatorade in the sports drink category, there are other threats for Gatorade to be concerned about. Some of the companies who sell different types of Vitamin type water drinks could potentially sway customers their direction. Additionally, with the advent of the new energy style drinks, Gatorade may feel pressure from companies who offer a variety of flavors. These companies, just like Coca Cola will also target the 18-24 year old males and compete with Gatorade’s current customers. These energy drinks have become popular with many customers and continued product interest may threaten Gatorade’s market share with sports drinks. With the downturn of the economy and the current financial state of many Americans, customers are apt to become much more selective and prioritize their purchase items while in stores. If customers have to make a choice between buying food or paying a bill and whether to purchase sports drinks, the latter will likely be passed over. It is no secret that there is a rivalry between Coca-Cola’s PowerAde and PepsiCo’s Gatorade. When a rivalry exists there is a competitive struggle between companies over market share. Although Gatorade has the lead in market share over PowerAde, nevertheless, rivalries can lower prices and raise costs subsequently squeezes profits from an industry. Additionally at some point, most brands reach a high point in which loyalty and recognition levels off. Essentially, the craze that got the customer there in the first place begins to wear off. While Gatorade continues to try and reach new customers with innovative marketing, statistically the United States is becoming an older country. Older customers will most likely not purchase Gatorade’s product with the same intensity that their targeted market does. SWOT MatrixSTRENGTHSWEAKNESSES1. First entry – established market dominance1. Product variations/focus concerns 2. Brand Loyalty2. Defensibility against energy drink craze 3. Unique Products 4. Professional athletes endorsing products OPPORTUNITIESTHREATS1. Expansion through Chinese market1. Coca-Cola’s PowerAde2. Reduced soda pop demand2. Energy drink business3. Expansion into natural flavors3. Vitamin WaterDeveloping Competitive AdvantageTo be successful, companies have to develop a competitive advantage which will allow them stay and compete in that market (Ferrell & Hartline, 2014). Gatorade now comes in many flavors and varieties since the initial product was developed in the mid-60s. The strategic release of innovative products is one way to establish a competitive advantage. Companies do this to take advantage of an opportunity that is present in the market, thereby making the company stronger, or they do it as a counter after rivals have released a newer product then theirs so they are more competitive. A competitive advantage is created when a company does something better than other rival companies (Ferrell & Hartline, 2014). Essentially, the company positions themselves so that they have an advantage over others in meeting customers’ needs. A company’s profitability will be greater than the average profitability of the other companies in the industry (Hill & Jones, 2013). Gatorade was a first mover into a then non-developed market. First mover companies can create a competitive advantage because they offer a product or service that is new to customers. Gatorade was able to get established and became successful as a first mover in the market. This has helped pave the way for Gatorade to take command of the majority of market share in the sports drink industry. Gatorade also has great brand recognition and has created a loyal customer base. Customers associate Gatorade with a quality product that helps a person compete. When a company has a brand that is considered almost iconic, this can help create a competitive advantage. Customers would be hard pressed not to watch a football or baseball game at the collegiate or professional level and not see the Gatorade near the players. Most everyone remotely interested in sports has seen players indoctrinate their winning coach with a celebratory shower of Gatorade. Developing a Strategic FocusBy creating a strategic focus, organizations are able to develop a clear strategy for growth and measure the effectiveness of the adopted strategy. By analyzing strengths and opportunities and leveraging those against potential threats and the company’s weaknesses, Gatorade can formulate strategic plans to accomplish goals and objectives. Gatorade seems to be focused on a niche strategy. In using a niche strategy, Gatorade focuses on pockets of demand in the sports drink industry where demand has been fairly stable. Gatorade is trying to connect with different types of customers; specifically the teenage consumer and the adult who does not classify themselves as athletic, but who have an active lifestyle. With their newer enhanced beverages, and the G labeling, Gatorade is marketing their products towards this broader target market (Clark, 2009). Although Gatorade has iconic brand status, they sense a need to refresh and contemporize their products (Clark, 2009). Gatorade hopes that connecting with a more diversified range of customer they will help strengthen the company for the future. Marketing Goals and ObjectivesIt is vital that marketing goals and objectives align with the overall mission and vision of the company (Ferrell & Hartline, 2014). The first step in determining the marketing goals and objectives for Gatorade Gold is to examine what PepsiCo envisions for the company and how they are going to get there. PepsiCo vows to be the following: Our mission is to be the world’s premiere 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. In everything we do, we strive for honesty, fairness, and integrity. (PepsiCo, n.d., para. 1)In addition, the vision of PepsiCo “is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company” (PepsiCo, n.d., para. 2). In order for the marketing goal and objectives or Gatorade Gold to be in alignment with and supported by the PepsiCo, it is important to take PepsiCo mission and vision into consideration when developing the marketing goals for Gatorade Gold. With careful consideration of the parent company’s mission, the marketing goal for Gatorade Gold is to develop and new market for which to conveniently deliver a new, pleasant tasting, thirst quenching sport drink that replenishes electrolytes, hydrates the body, and provides an excellent, low calorie source of vitamins and minerals. In order to do this, Gatorade and PepsiCo will have to develop a mineral and vitamin infused sport drink fortified with the correct mix for the 50 plus age group. This product will be test marketed and offered to the public within the next three months. In order to measure success, there must be an increase in the Gatorade product line by 7.5 percent. In order to meet this goal, certain measurable objectives must be completed. The first objective is to utilize research and development to create the new product, Gatorade Gold, in several different flavors and test market the product. Finalization of flavor selection must occur in the next month. The research and development team, as well as the marketing and public relations departments will be responsible for this step. They must work together to create the product, test market the various creations, and determine which flavors to move ahead with for the product launch. The selection of flavors will be an important success determining factor when this product makes it to market. Flavor naming will be determined by internal company naming competitions. The second objective is to create a marketing campaign. A new marketing campaign directed towards the physically active baby boomer generation must be developed to promote the product. This advertising campaign must be completed within a month and begin appearing on television and in print. These advertisements will be placed in print media such as newspaper and magazine, as well as on television and social media sites, targeted towards the 50 plus age group. The marketing department will be responsible for creating this campaign and ensuring that the produced advertisements perform well when tested on consumers. Currently maintained sponsorships as well as sponsorships targeted towards an older market, such as the Senior PGA tour will be created to ensure product visibility. Without a good advertising campaign in place, product exposure will be limited and may result in sluggish sales. The third objective is to confirm retailer buy in on the new product. The marketing department will be responsible for providing information and samples to retailers that currently carry the Gatorade product line. As soon as research and development is completed, this step must begin. This will need to begin immediately to obtain retailer feedback and completed within a month of the research and development objective completion to ensure that the product will be available on shelves at retailers. This will give marketing the ability to provide samples after conversations have already begun with retailers on the new product. Failure to ensure supply chain demand will result in limited product availability and limited product exposure to the consumer. Primary Target Market and Secondary Target MarketsIn order to ensure that the product is purchased, it is vital to determine the target market for the product. The target market is the “consumers a company wants to sell its products and services to, and to whom it directs its marketing efforts” (Target Market, n.d.). Gatorade already markets its original line of products towards the younger market, 13-25 year olds. This leaves a lack of advertising directed at one of the wealthiest, most physically fit generations to date. The baby boomers, born between 1946 and 1964, are looking for new self-care methods to help extend their lives and maintain a healthy lifestyle. 66% of this generation surveyed feels that their best years are still to come (Club Industry Staff, 2011). With Gatorade being invented in 1965, this baby boomer generation was between the ages of 1 and 19 when Gatorade was introduced. Many members of this generation probably do not remember a time when Gatorade did not exist. Since most of this generation is now aging into the 50 plus category, Gatorade Gold will focus on that age group. Since Gatorade is currently lacking a product to compete with Vitaminwater, Gatorade Gold will allow PepsiCo to target a very large, currently untapped market for Gatorade. Gatorade Gold would server as a sport drink plus vitamin supplement for the 50 plus age group.With this in mind, Gatorade Gold would have a primary target market that would be the 50 plus year age group that are seeking a product that not only has the ability to hydrate and restore electrolytes, but also the ability to supplement with vitamins to help maintain a healthy lifestyle. The members of this market would be physically active, interested in maintaining a healthy lifestyle, have a mid to high family income, and most likely no longer have children in the home. The members of this market value their health and have a larger amount of disposable income. They shop at local grocery and health care stores, as well as drug stores and larger retail stores. The secondary market would be similar to that of the primary market. The members of the secondary market would be in the same age group, but may be less physically active. They still value their health, so are interested in the vitamin benefits that can be obtained from Gatorade Gold. Product StrategyProduct strategy, or the “the design, development, branding, and positioning of the product” is the most important part of the entire marketing plan (Ferrell & Hartline, 2014, p. 151). The product must appeal to the intended market or the product will be a failure. If the product has a lack of appeal to the intended market, the market will respond with limited or no sales and the company will lose ground to the competition. The product has to appeal to the customer and fill some sort of customer want or need. The product’s value is in its ability to enhance a customer’s life and deliver a benefit (Ferrell & Hartline, 2014).In order to appeal to the market, Gatorade Gold provides the customer with several benefits obtained from features of the beverage. The features of Gatorade Gold include the ability to hydrate like the original Gatorade plus an additional vitamin supplement that caters to the 50 plus age group. A customer is able to benefit from these features by the product contributing to a healthier lifestyle. Clinical studies show that competing products, like Vitaminwater, deliver much needed vitamins at a fifth of the calories compared to the traditional foods, and not only is a superior source of vitamins and wellness, but also a good tasting beverage (Independent Clinical Study, 2006). The product line extension Gatorade Gold is a convenience product, or one that is inexpensive and routinely purchased with little time or effort invested (Ferrell & Hartline, 2014). It allows PepsiCo to reposition itself and target new segments of the sport drink and vitamin beverage market. In order for the product strategy to be successful, it is important that Gatorade Gold differentiates itself enough from the other Gatorade products so that it is identifiable, while maintaining brand awareness to maximize on the past success of Gatorade. This is necessary as customers tend to expect equal quality from products in the same product line and having a well-known name such as Gatorade can be a competitive advantage (Ferrell & Hartline, 2014). Pricing StrategyPricing is the component that companies are the most infatuated with (Ferrell & Hartline, 2014). Pricing has direct ties to the revenue of the company and also usually impacts the amount of a product sold. Apple has capitalized on the image of the product and is able to charge a premium but is not able to outsell the quantity of competitors’ products, in part, due to this premium (Charles & Jemima, 2013). A company can increase revenue by selling more of an item or an item at a higher price, but not usually both at the same time (Ferrell & Hartline, 2014). The pricing of a product is important. Not only do consumers use price as a deciding factor in purchasing a product, but the price also determines the revenue of the company. Gatorade Gold will need to be priced so that a consumer will want to purchase the product but high enough that the profit margin is positive, satisfying shareholders. In order for Gatorade Gold to be successful in the convenience product category, the product will have to be competitively priced. If two similar quality products are next to each other on the shelf, Gatorade may lose sales to a competitor if the pricing is not similar. However, Gatorade does have brand name awareness and consumers trust, which will help the selection of a product if Gatorade Gold is slightly higher. PepsiCo will have to be vigilant to monitor costs of distribution and the price of competition to adjust prices according to fluctuations in those numbers. Gatorade Gold pricing will have to be based on the competitive matching strategy, determined by the going rate for the product at the time (Ferrell & Hartline, 2014). For consumers, the perceived value of Gatorade Gold will need to be high. The consumer benefits from the quality and satisfaction of the Gatorade name and also may replace some expensive vitamin alternatives. The customer must have a high perceived value of the product to help ensure satisfaction and customer retention (Ferrell & Hartline, 2014). The product will be differentiated by the benefits advertised from the vitamins. In order to peak consumer interest, there will be an initial discounting to undercut the competition via coupons and discounted sales to suppliers. Distribution/Supply Chain StrategySupply chain strategy concern is “at the top of the list for achieving a sustainable advantage and true differentiation in the marketplace” (Ferrell & Hartline, 2014). Ensuring that the consumer does not notice an interruption in the supply chain is vital to ensure customer retention. If the product is not available when a consumer needs it, it is likely that that consumer will look for alternatives to fulfill the need and may never return to the original product. Ensuring that the product is at hand when it is wanted by the consumer can help a company gain a competitive edge (Morash, 2001). If a retailer is able to maintain a constant supply of a product when a consumer is looking for it, the consumer will most likely continue to purchase the intended product. There are cases where this theory is not necessarily true where the need for a product is so high that consumers are willing to wait for it to be available (Arthur & Kiss, 2013). Fortunately for Gatorade Gold, the existing line of Gatorade products already has a distribution and supply chain strategy in place. Since Gatorade Gold will be a convenience product, it is important that it is easily obtainable. Gatorade Gold would be delivered to and sold in locations that the existing line of products is already available. The current system in place provides direct store delivery from the PepsiCo and independent bottling manufacturing facilities. This gives retailers the ability to quickly receive necessary products and allows flexibility depending on necessary stock levels and sales. The downside to this delivery system is that it comes at a higher cost to retailers, increasing final sale prices of Gatorade, giving PowerAde a competitive advantage in pricing (Montague-Jones, 2010). This distribution process requires Gatorade manufacturers to maintain inventories to supply the retailers when a product is needed. The Gatorade distribution system involves intensive distribution in which the product is delivered to the maximum number of retail locations to maximize exposure and sales (Ferrell & Hartline, 2014).Promotion StrategyThe promotion strategy, or integrated marketing communications strategy (IMC), is required to advertise the features and benefits of the product to the target market (Ferrell & Hartline, 2014). In order to make sure consumers are aware of the new product, it is important that the company draws the attention of consumers, demonstrating the product to draw interest, making the consumer desire to have the product, and driving the consumer to purchasing the product. There are many different ways to entice a consumer to buy and these ways include advertising, public relations, personal selling, and sales promotions. In order to get Gatorade Gold off the ground, the first step will be to begin advertising the product and the benefits through channels that the baby boomers will see. Baby boomers have a tendency to get their information from television, newspapers, other traditional forms of advertising, and Facebook. Television commercials during prime time television, sporting events, and newscasts would be a start. The commercials would advertise the new product and demonstrate how the product provides benefits via the traditional sport drink and the vitamins. A Facebook and YouTube advertising campaign would be launched as well. Public relations would be handled through news and press articles to gain attention of newspaper and magazine articles and television news stories. White papers on the benefits of keeping hydrated while exercising and increasing the likelihood of good health through vitamin supplements would be written and presented. Gatorade Silver would sponsor senior PGA tournaments and other sporting events catering to older athletes. Gatorade would also have internal competitions to name the new product flavors and would train employees on the new product. Personal selling and sales management would be handled by a sales team of knowledgeable Gatorade employees. Visits to retailers, gyms, sporting events, and conventions to provide free samples would raise public awareness of the product as well as form relationships with potential customers. A knowledgeable call center would be staffed to answer calls that consumers may have regarding the product. Customer service that is done correctly can draw and retain customers and even allow the company to charge a premium for its product (Zmuda, 2008). In addition to the personal selling visits, Gatorade will also hold drawings and contests to promote Gatorade Gold. Mailings can be sent out that provide entry forms as well as coupons and information regarding the new product. Gatorade Gold would be featured near checkout lanes with the traditional Gatorade in Gatorade Gold refrigeration units. Gatorade would also provide a limited supply of these refrigerators and free product to retailers that are currently not selling the Gatorade product in an attempt to increase their retail markets and maximize visibility. Price reductions on initial deliveries would be offered for retailers adopting Gatorade Gold (Ferrell & Hartline, 2014).Marketing Strategy Structure IssuesFortunately for Gatorade Gold, PepsiCo and Gatorade already have much of the needed marketing strategy structure in place. Since Gatorade Gold is just another product in an existing line of products, the foundation structure for the marketing strategy is already there. In order to meet the increased demands on employees to support the marketing strategy, PepsiCo will need to increase staff in several areas and will need to begin looking at expanding facilities to meet consumer demand for the product. The specific staff needed to support the marketing strategy for Gatorade Gold will be research and development team members, marketing staff, support staff, and customer service staff. The increase in research and development staff will allow testing the combination of the vitamins and the sport drink more rapidly. This is necessary so that the product can be test marketed to determine demand for the product and gain consumer feedback on the various flavors. At least initially, additional marketing staff will be necessary to ramp up the advertising campaign for Gatorade Gold. With an aggressive launch plan and marketing strategy, the extra staff will be needed to develop an effective advertisement campaign. Additional support and customer service staff will be necessary to support the increased volume of calls due to the new product line and the new market segment the product targets.In order for employees to be ready to support the marketing strategy and the final product, education will necessary. This education can include details as to why the company is launching Gatorade Gold as well has assist employees in answering questions potential retailers or consumers might have. This information will also help employee buy in for the new product. It will be vital that all departments work together to support the marketing strategy for the product launch to be successful. As demand for the new product increases, facilities will need to be expanded to meet consumer demand.Tactical Marketing PlanSpecific Tactical ActivitiesPerson/DepartmentResponsibleRequiredBudgetCompletionDateProduct Activities1. Develop Gatorade Gold2. Partner with Physicians to test effectiveness3. Test market various flavors4. Begin production of Gatorade Gold5. Adjust levels of production based on demandR&DR&DMarketingManufacturingManufacturing$2 million$0.2 million$1 million$10 million- 12/10/1312/24/131/10/141/24/14OngoingPricing Activities1. Research competitive pricing2. Determine break-even price3. Monitor costs and competition pricingMarketingFinanceFinance$0.1 million-$1 million11/17/1312/1/13OngoingDistribution/Supply Chain Activities1. Secure retailers to carry product2. Ensure current distribution chain is sufficient3. Deliver product to storesMarketingDistributionDistribution$1.5 million$.25 millionExisting channel1/10/141/17/141/25/14IMC (Promotion) Activities1. Create advertisement campaign2. Create coupon and direct mailer campaign3. Sponsor eventsMarketingMarketingMarketing$5 million$2.5 million$5 million12/10/1312/24/131/14/14With the advanced timeline to produce Gatorade Gold, Gatorade and PepsiCo will have to develop, test market, advertise, and secure distribution channels at an accelerated pace. Market research will need to be done to determine the strengths and weaknesses of the competition and advertising will need to be created to focus on the intended market. The company will have to examine its existing infrastructure and expand staff and distribution resources as necessary. Formal ControlsFormal marketing controls are the “activities, mechanisms, or processes designed by the firm to help ensure the successful implementation of the marketing strategy” (Ferrell & Hartline, 2014, p. 271). In order for a company to maximize the possibility of success of a marketing strategy, the company must ensure consistently good employee behavior during the realization of the marketing strategy and then measure the results after completion of the plan. The three controls are input controls, process controls, and output controls. Input controls are precautionary steps completed before the strategy begins, process controls are steps taken during the plan is ongoing, and output controls are measureable standards to compare the results to (Ferrell & Hartline, 2014).In the case of Gatorade Gold, the company will have to invest time and money into the research and development (R&D) phase of the product. The R&D team will not only have to determine what mix of vitamins to add to the beverage, but also ensure that the end result still tastes good. Teams will have to be formed to successfully market and support the product. These employees will need education on the new product to ensure that they can answer questions and represent the product correctly. During the implementation of the marketing plan, Gatorade will have to implement process controls that aid in directing employee output to support the strategy. Management must be committed to the new product as research has found that “management commitment to the marketing strategy is the single most important determinant of whether the strategy will succeed or fail” (Ferrell & Hartline, 2014, p. 272). Management should ensure they support their staff to aid them in supporting the strategy and employees should be rewarded when they take the necessary actions to help the strategy succeed (Ferrell & Hartline, 2014).Output controls will involve developing measures to determine the success of the marketing strategy. In the case of the launch of Gatorade Gold, success would be measured by the sales and profits of the new product. With promotional strategies in place, not only does quantity of product sold matter, but also how much or if Gatorade made profit off of the launch. Due to initial marketing expenses and discounts, it would be possible for Gatorade Gold to be a hit, but the product may not be profitable for several months or even years. Informal ControlsInformal controls are unwritten controls that are designed to influence employees and groups. Informal controls include employee self-control, social control, and cultural control. Each of these controls is designed to help influence positive employee support and success of the marketing strategy. These controls involve goals, group pressure, and behavioral control of all staff (Ferrell & Hartline, 2014). In order to assist employees to help successfully implement the marketing plan for Gatorade Gold, each of these informal controls will a factor.In order to aid employees to exhibit self-control, personal goals will be part of normal employee behavior. The employee will be responsible for monitoring his or her progress towards each one of these goals and reporting back to their manager monthly. The manager will be able to determine the employee’s disposition towards the company by the goals selected and by the effort the employee puts into meeting those goals. A rewards system must be created to encourage employees to work towards the company goals and marketing strategy success. This behavior gives the employee the incentive to demonstrate self-control and helps promote success of the marketing strategy (Ferrell & Hartline, 2014).Social control involves shaping the employee’s behavior by group reaction to the employee. The employee’s perceived level of commitment and success induces a form of feedback from the smaller workgroup. Employees that are not living up to their responsibilities in supporting the marketing strategy may feel peer pressure to improve their behavior. When employees are contributing successfully, the group should, in turn, provide positive reinforcement to the employee. Management involvement in monitoring this group behavior will be necessary (Ferrell & Hartline, 2014). Cultural control must come from the upper levels of management in the company. Gatorade management is responsible for creating a set of rules that the company operates by. These can be unwritten, but need to be demonstrated by all management to help employees participate as well. Employees working together in unison, following the same social behavior, and working towards the same organizational goals increase the chance of a successful marketing strategy implementation (Ferrell & Hartline, 2014).Marketing AuditsMarketing audits are necessary to determine the success, or lack of, for the marketing strategy. Specific profit- and time-based measures must be created to monitor progress and success of marketing activities. There must be a responsible party for collecting and measuring this data and determining where improvements need to be made, costs can be cut, or products need to be dropped, if the strategy needs altered, or if pricing needs changed. For Gatorade Gold, the director of marketing will be responsible for collecting data and calculating the results for the marketing strategy. This will be an important task in determining the course of the marketing strategy for Gatorade Gold. The measures that will be implemented for the audit are profit margin, units sold, and the 4 Ps. In the beginning phases of product launch, the profit margin may be a very small percentage or even a negative percent as coupons and incentives are offered to consumers and retailers to gain maximum exposure. As these incentive programs slow down, the profit margin should begin to increase. The profit margin is the profit made from a sale after the cost of the product has been subtracted. Units sold will allow the company to determine how well the product is selling and if particular campaigns or pricing changes have an impact on the volume of units sold. This is important information that will allow the change to be revisited and undone if necessary. It will also be important to examine the 4 Ps, the product, place, price, and promotion to determine the effectiveness of what, where, how much, and during what advertising campaign a product sells. During the initial product launch, these calculations will be performed weekly to determine the future of the product. As advertisements and publicity increased, one could expect the manager to see an increase in revenue and quantity sold. In order to ensure accuracy, a contractor not associated with PepsiCo will perform the same audit. This will help prevent any kind of unethical behavior in order to gain rewards based on product performance.Implementation Schedule and TimelineMonthDecemberJanuaryFebruaryActivities Week123412341234Product ActivitiesDevelop Gatorade GoldXTest Market flavorsXBegin productionXPricing ActivitiesResearch competitive pricingXDetermine break-even pricingXMonitor costs and competitionXXXXXXXXXXXXDistribution ActivitiesSecure retailersXAnalyze current distribution chainXDeliver productXIMC ActivitiesAdvertisement campaignXCoupon and mailing campaignXSponsor eventsXSummary of RecommendationsIn order for the marketing strategy for Gatorade Gold to be successful, there are a lot of moving parts that have to come together. The company has built a long history of brand name awareness and a company reputation for producing a quality product. Gatorade was the first sport drink to the market and has been able to retain its grasp on the market ever since 1965. In order to retain its grasp, the company must continue to strive to be the preferred sport drink of the young, active generation. This allows the company to retain customers for the rest of their lives through brand loyalty formed during these early stages. While this target market is vital to future success, Gatorade must not neglect the large aging population that grew up consuming the Gatorade products. Gatorade will have to continue developing new products and flavors to meet the ever changing desires of the market. The differentiation from the competition via more options is an important competitive advantage. Gatorade and PepsiCo will need to continue to examine the competition and determine if there is a change in strengths or weaknesses and adapt accordingly. Competitors releasing new products or changing prices in addition to new companies entering the market pose a threat to Gatorade’s future hold on the sport drink market. It will be important for Gatorade to watch for other, currently non competing beverage companies to branch into the sport drink category and the treat must be dealt with effectively. New products, such as the low sugar PowerAde marketed to youth will need to be dealt with quickly, or Gatorade will have to improve their offerings to compete with the competition. Continued efforts in research and development, sponsorships, and advertising will be necessary to maximize product exposure. Large, exclusive contracts with the NFL and other sports organizations will ensure a public face for the company. Taking customer surveys to determine the amount of exposure impact and brand awareness will be vital to determining the future of the marketing campaign. In order to successfully launch Gatorade Gold, Gatorade and PepsiCo will have to develop a marketing strategy that will lead to success of the company. With goals and objectives for the product that are in alignment with corporate’s goals, the product line will sync with corporate efforts. Gatorade Gold will be a convenience product that offers hydration and health benefits to the consumer and is targeted at one of the largest, wealthiest, fit generations of all time. This large market is currently not targeted by the primary advertising by Gatorade and the company has no formal offering in the vitamin beverage product line. This Gatorade Gold targeted at the baby boomers could later be expanded to provide a sport drink infused with vitamins targeted towards younger athletes. As the marketing plan comes together, there are many steps for the marketing department to take. The company must determine what the product will actually be, how it will be labeled, how to price the product effectively, how to get the product to the consumer, and how to maximize exposure for the product. Advertisements targeting typical media sources for the 50 plus age group will be utilized to advertise the product. Magazines, newspapers, other print media, and Facebook will all be targeted sources. The company will have to examine if the current marketing, distribution, research and development, and customer service departments are capable of handling the increased volume of work required to deploy this marketing strategy. Staff may need to be increased and facilities and shipping lanes may need to be increased to allow for the additional volume generated by the new product. It will be important for the company to perform audits to determine the effectiveness of the marketing campaign and make adjustments to the product or strategy as necessary to ensure success of the product. ReferencesArthur, C., & Kiss, J. (2013, Oct 23). Apple signals christmas tablet war with new iPad launches: Company sticks to its premium pricing strategy: IPad air and IPad mini retina added to lineup. 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