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Marketing Plan- Health drinks
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Table of Contents
Table of Contents............................................................................................. 2 Executive Summary ........................................................................................ 3 Target Market & Buyer Behavior......................................................................4 Generic Market.............................................................................................. 4 Product market............................................................................................. 4 Perceptual Map ............................................................................................... 5 Product Strategy ...................................................................................... 6 Place Strategy ............................................................................................... 8 Price Strategy ................................................................................................ 10 Promotion Strategy ....................................................................................... 13 Integrated Marketing Communication Strategy..........................................13 Operational Plan.......................................................................................... 15 Appendix A – Choosing A Target Segment.....................................................18 Industry Analysis......................................................................................... 23 Competition Analysis: Porter’s Five Forces Model.......................................24 SWOT Analysis............................................................................................ 25


Executive Summary
The consumption of energy and health drinks is increasing at a high pace, demonstrated by high compounded annual growth rates for the functional beverages market. The report presents a marketing plan for the launch of a new to market product – Nutri, which is milk and soya based ready-to-drink drink. The drink is planned to be launched in the month of March, 2012 with initially three real fruit flavors. The target customer for the new product are health conscious teenagers and young adults who would like to consume a health drink regularly to suffice for their nutritional needs in a faced paced world. The report presents an elaborate marketing plan focusing on the marketing mix strategy including – product strategy, place strategy, price strategy and promotion strategy. The report also sets timelines for implementation of various activities in the marketing mix strategy. Product strategy includes development and launch of the product and future direction of development. The place strategy focuses on the distribution strategy for Nutri including details of the channels and policies to be used. The pricing strategy indicates the product pricing for a 250ml bottle of the health drink. It focuses on the strategic pricing and its implication on product positioning in the minds of the target customers. The promotional strategy focuses on the pre and post launch promotional tactics and the integrated marketing campaign to be launched for product promotion with times lines. The report presents a complete marketing plan for the new product launch with timelines and tentative print media advertisements to present a comprehensive view of how the product has to be positioned and marketed.


Target Market & Buyer Behavior
The consumer market of health drinks can be segmented on the basis of demographics, psychographics and the behavioral attributes of the consumers of energy drinks. The customer markets can be segmented on the basis of age – infants, teenagers, young adults, adults and elderly people. The psychographic and behavioral segmentation of these markets will include the lifestyle, attitude, social or personality characteristics or behaviors. As a product, energy drinks are a part of the functional beverages market. The market for functional beverage is categorized into four different categories – Hydration, Energy/Rejuvenation, Health and Wellness; and Weight management products. Hydration drinks include anti oxidants and fruit extracts that are believed to provide hydration to the inner and outer layers of the skin. Energy/ Rejuvenation products are highly caffeinated, high energy beverages available that provide instant energy. The Health and Wellness products are beverages low on calorific value, sugar and include supplements of vitamins and other essential minerals.

Generic Market
The generic market of the new product will include a large segment of customers who purchase beverages for the purpose of taste, health, rejuvenation or thirst. These includes customers from all age groups that are looking for functional beverages to satisfy their needs for a beverage that they can consume regularly or occasionally serving their basic needs or pleasure, instant energy or nourishment.

Product market
The target customers for the new product are teenagers and young adults between 18-34 years of age, who live a hectic work life and are conscious 4|Page

their health. The product which is a health and wellness drink will target customers who are health conscious and understand that their demanding work schedules as well as their lifestyle are leading to them to not taking adequate nourishment and healthy food. The product though will have mass appeal spread across all age groups owning to the nourishment it provides.

Perceptual Map
Perceptual maps are used to graphically represent the positioning of the product vis-à-vis their substitutes and competitors.


Health Taste


The new product which is a health drink is placed on the perceptual map wherein its competitors will include global brands like Freshup. The perceptual map includes four quadrants and measured on the attributes of 5|Page

the product being perceived by its customers as a lifestyle product, Health and wellness product, taste and nourishment.

Product Strategy
The product strategy is one of the most important strategic tools in the hands of the company by which the company launches, establishes and markets its product. In other words, the product strategy enables the company to create a value offering and deliver that to its customers in a time bound manner. The product is the main element of the marketing mix. Therefore, the product strategy needs to be established before planning the marketing mix. The objective of the product strategy is to decide the value offering which is to be delivered to the target customers of the company to satisfy their specific needs. We will be developing a health and wellness product in the functional beverages segment of the market. The drink will be based on the nutritional value of its key ingredient that include milk, soya extracts and other food extracts that have not been captured till now by existing player. An important part of the product strategy will be the primary and secondary research to be taken for the initial three months to get the customer insights into health drinks / energy drinks market. The insights will be used in developing the desired product. The product will cater to the needs of the target customers who want a regular health drink that is affordable and is less in calorific value but high in nutritional value. The product caters to the teenagers and young adults, mostly working people or mothers at home who are looking for a regular health drink for themselves or their family members. Most of them are not able to intake sufficient nutrients required by them due to their hectic work schedules and living habits. The product is aimed at capturing market share from the existing energy drinks market as well as creates a new market for itself by becoming a popular drink that substitutes nutritional drinks like milk.


The basic product is a health drink. The tangible product is a milk based health drink with nutritional benefits of milk, soya and other fruit extracts that can suffice for one’s daily intake of proteins and other minerals essential for maintaining healthy diet. The product aims at providing an easy solution to its target customers for their nutritional needs and a solution that can easily be absorbed within the present lifestyle of the target customers. The augmented product in the health drinks market will provide all the necessary nutrition for the day and comes in a lot of choices in terms of the flavors and taste. The augmented product also includes health supplements that can be added to your food to make it more nutritional and healthy. The product will initially be launched with a single product line of milk and soya based drinks flavored with real fruit extracts. The initial flavors launched will be apple, grapes and blueberry. The company will extend the product line after gauging the initial response of its customers. The company will enter into new product lines that will include spreads and supplementary products used in daily breakfast that will be good in their nutritional value and can be taken with sandwiches and breakfast meals. Being a new product, the branding and packaging of the product are critical to the overall product strategy. The product needs to be strategically placed in the minds of the target customers who have an unfulfilled need for daily nutritional products and supplements owing to their existing lifestyles and schedules. The success of the product will depend immensely on the ability of the marketers in promoting the product as a regular health drink, that is easily accessible and that provides for all the daily required nutritional value. The marketers will have to differentiate between the existing products in the health drinks that may include fruit juices or cola beverages, but be apprised of the fact that the product aims at overtaking a part of their market share as the basic needs to which these different products cater overlap. The company should be able to build its brand and faith among its target customers that the product is high on quality and easy to access and store. The warranties and guarantees given by the company on the product’s


nutrition value are extremely important both in legal terms as well as for gaining the market share. The marketing team will have to take all the advantages of the product to the target customer and focus on how this nutritional product can match their present lifestyle and habits. Managing the product life cycle is important for business sustainability. We intend to launch new flavors including seasonal fruit flavors to extend the product line. We will also add new product lines in the supplementary foods segments that includes spreads and cheese based product that are consumed with breakfast of fast foods. The extended product line will include spreads based on similar ingredients as well as concentrations or pastes that can be added to the food cooked at home to provide it the required protein and minerals essential for a healthy diet.

Place Strategy
The place strategy is an important part of the overall marketing mix of the product or value offering. The objective of the place strategy for the new product is to reach out and make the product accessible to each and every target customer within two hundred yards of his or her home or office within the next three years. The company will aim at strengthening its existing channels and create and maintain new channels by leveraging the distribution ability of various players in organized retail to reach out to its target customers. The customers today look for ‘convenience’ while purchasing the product. Thus any product must be accessible to its target customers. Therefore, we aim that our product will leverage the strong distribution network of national and local retail players to each to its target customers and will be present in each mom- and- pop store in the neighboring market as well as organized retail chain in the up-market. Thus we will be requiring two separate channels for distribution of our product. The first channel will focus on the availability of our product in the super market chains as well as organized retailers that have a wide presence nationally or globally. This channel will take care of the modern trade partners like super markets, or hyper market chains for distribution and sales 8|Page

of the product. The second channel will be a larger and more comprehensive channel that will focus on creating a distribution network for the distribution of the product. This channel will segment the territory/ geography into distribution regions. Every region will have key distributors and subdistributors at the local level to distribute the product offering. At a local level the sub distributors or the wholesalers will distribute to the retailers. The sales teams will focus on enrolling more and more local wholesalers and distributors to create a strong network of sales and distribution. The distribution network of the company will be its primary channel. The company can use its existing network of distributors and retail partners to distribute the new product offering. A strong sales force at a local level will ensure availability of the product at each and every local store. We will use an indirect channel to cater to the target customers. The indirect channel has been chosen for distribution of the product as the product is intended to be a mass product and a fast moving consumer good (FMCG). It is thus not possible to directly sell the product to each and every customer as the cost of trying to establish such a channel does not make commercial sense. In the initial phase of the launch the market exposure will be lesser and limited. Though, the market exposure will rise gradually to serve the growing demand for the product. The product launch will also happen in a phased manner. A pilot launch of the product will be made in a limited geography. As the operations will settle down we will enter into newer geographies and extend our market reach. For the purpose of distribution, the company will focus on establishing and utilizing its vertical market system. The vertical market system will be a Contractual Vertical Marketing System (CVMS). The contractual marketing system will consist of the wholesaler – sponsored voluntary chains, retailer cooperatives and the franchisee organizations for distribution of the product. The contractual VMS consists of independent firms at different levels of the supply chain that come together through contracts to obtain more economies and sale impact. Thus, the company will leverage


the networks and expertise of the wholesalers, retailer networks and franchisee in reaching to the target customers. The customer service would include streamlining the operational difficulties in managing the supply chain and addressing the problem and grievances of the channel partners. The company will use high level of customer service standards that will match the best in the industry to create an increasing and loyal customer base. As our product is not targeted to a niche market, the availability of the product at key outlets is the key to the success of the distribution network. The sales and distribution tactics may include sharing higher margins, offers and incentives to channel partners for greater sales as well as forums and sharing of information among channel partners to help them be more competitive. In a Contractual VMS the wholesalers play a key role in helping the retailers in competing with the larger corporate. Therefore the strategy will be to include wholesalers with significant and wide spread presence in the target customer markets. The distribution network will include retail chains and retailers that are located at residential areas or up street markets to gain access to the large population of target customers tapped by them. The transportation for distribution will depend on serving the distributors and the wholesale/retail networks. We will use the best practices in supply chain management to bring out efficiencies in our supply chain operations. The channel will be managed by the sales team of the company. The sales hierarchy shall include area managers at local levels reporting to regional managers. The sales function will be based on geography and channel.

Price Strategy
The objectives of the pricing strategy are the overall goals that describe the role of the price in the long term plans of the organization. The objective of our pricing strategy for our new product is to penetrate the market and gain a five percent market share within the health drinks market

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in the first year with an average rate of return of 15% for the initial period. In the longer run the organization will focus on growing the market share to 20% in the next five years and taking the targeting a 20-25% rate of return on our investments. The product is targeted at the mass market segment towards the teenagers and young adults. The aim of the pricing strategy is to further the product strategy of launching the product as a regular health drinks that can add to your daily diet or be a substitute to the existing energy drinks, or flavored soft drinks. The pricing strategy is thus to price the product at the mid range of the price band that includes soft drinks and premium energy drinks. The product will use the penetration pricing strategy initially to gain customer share and later raise prices as the demand for the product rises. As the product is a new product development, there are no immediate competitors to the product, but there is competition in the product category of functional drinks. The pricing of the product has to ensure that the product is priced in a lucrative manner and the customers perceive the product as a value buy and start replacing their existing choice of health related drinks with the new product. Pricing Policy The company will use a uniform pricing policy wherein every product produced by the company will be priced the same. However given the geographical spread and competitive environment of doing business the organization will be flexible to include price adjustments following changes in demand and cost. The cost of production of the milk based health drink is open to the effects of price changes in the cost of the ingredients used to produce the final product as well as the cost of packaging and distributing the product via the marketing and distribution channels. As the demand for the product will be elastic during the initial few months of the launch, we will be happy with lesser incremental margin on our product to start with. The organization will be flexible in its pricing policy to the extent that the flexibility creates a advantage in the highly competitive markets and does

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not affect our brand name and customer share of wallet in a negative manner. To support the pricing objective of the firm, we will have to use better technologies in production and processing our product such that we are able to save cost and price our product at the mid price range. The role of supply chain management and distribution efficiencies is also critical as that will help us create competitive advantage by being leaner and more efficient. The pricing strategy and the price might have to be supported by negative or zero margins at times during the initial period of market penetration. We will leverage our existing supply chain and distribution network to help the product reach the target customer faster and more efficiently. Product Pricing A 250ml bottle of the drink will be priced at $0.95. The price is in congruence with the pricing strategy or pricing the product mid way in the functional beverages category. The functional beverage price ranges from $0.3 to $2.25 for the same amount. The price of $0.95 will position the product as a budget drink affordable to all and which can be had regularly. The price will take care of the production cost and the overheads and provide for the targeted margins. The product has to be given at a discount to the distributors, wholesalers and the retailers. The retailers will have larger margin than the distributors. Normally the margins will be approximately 5-7 percent for retailers and 2-3 percent for the distributors or wholesalers. The basic distribution pricing method includes the price volume model. However the prices of the product are influenced by a lot of other variables like geographic competition, cost to serve and mix of transaction. Thus the distribution pricing policy will remain a little flexible to accommodate other factors that may influence the distribution cost of the product.

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Promotion Strategy
The objective of the promotion strategy is to reach out to the target customer segments through different marketing channels and provide information, differentiating the product and increasing the market share of the product. Positioning the product in the minds of the target customer segments is the prime objective of the promotion strategy. We will use the promotion strategy to communicate to our customers the difference in our products with respect to the price, quality and nutritional value and taste.

Integrated Marketing Communication Strategy
The promotion of the product will involve an Integrated Marketing

communication Approach. The marketing communication strategy will involve use of different marketing channels.  Sales Promotion  Print Media Advertizing  Digital Media  Outdoor Media The marketing campaign will use an integrated approach to reach out to its target customers through different communication channels. Print Media Advertizing The print media advertising campaign is the most effective campaign to reach the masses. Print media includes local dailies, magazines, tabloids and newspaper. The print media campaign will focus on newspapers and magazines that have a large readership among the target population of the 13 | P a g e

new product – Nutri. The target customers are health conscious teenagers and young adults between the ages of 18-34 years. The target customers also include parents of young children. The frequency of advertising in print media can be twice a week, specially on the weekends as that are usually read by the target customers. Advertisements including awareness of the product details and the benefits of the nourishment value of the drink can be emphasized.

Sales Promotion The sales promotion plan includes the promotions in the form of flyers at various point-of-sales to attract and draw the attention of the target customers. Point of sales promotions are used in retail outlets, super market chains and grocery stores at the place where the customer picks up the product for purchase. It helps to improve sales by encouraging instantaneous purchase. Other sales promotion strategy will include discounts and promotional offers during the launch of the Product – Nutri. The company can also include loyalty programs or warrantee on the nutrient value of the product to promote its product. Discounts on purchase of larger packs as well as future purchases can also result in improving market penetration. Digital Media Digital media is today the most widely used communication channel to promote and position value offering of companies. The digital media includes television, internet, radio, mobile phones, social networking websites as well as blogs. Companies today can use digital media extensively to reach to their target customers and communicate their value proposition through the use of digital media. Promotions through advertisements on televisions have been a common tool for a long time. Today, the focus of marketers is shifting towards public relation activities and road shows organized to increase the impact of the product launch and communicate the uniqueness of the brand to the target customers. Social media tools and websites like facebook and twitter are subscribed by millions 14 | P a g e

of people who will also be target customers for the Nutri brand of milk and soya based health drinks. Digital media promotions can be used on by advertising on time slots that are frequented by the target customer segment on television and radio. Advertizing on the websites through clicks and banners can also be used. Outdoor Media The outdoor media is another tool used to communicate or reach out to the target customers. Outdoor media like bill boards, hoardings, banners, wall paintings are effective ways to convey the product benefits as well as advertise. We will use outdoor media to communicate the brand and our unique product and value proposition to our target customers.

Operational Plan
The operation plan for promotion strategy will include the time lines for promotions and advertising on different media of marketing communication. It also indicates the control metrics of the strategy. Activities Launch of new product - Nutri Road shows and Public relation events Launch of promotions in print media – newspaper, magazines and on social media websites Advertisement campaigns on digital media like television, radio and outdoor media Sales promotion activities- discounts , offers and point of sales advertizing Assessment of marketing campaign Rollout of new products Follow-up Marketing Campaign April 2012 onwards April 2012 onwards December 2012 January 2013 January 2013 Timelines March 2012 March 2012 – April 2012 March 2012 onwards

The Nutri brand will be launched in the month of March 2012. After completing six months of the launch of the Nutri brand, we will assess the 15 | P a g e

failures and success of the marketing campaign we have run and obtain fresh insights and customer perception studies on the position of our product in the minds of the target customers. These insights will help is to bring the necessary changes in our campaigns and improve the positioning of our product.

Below is an example of a typical print media advertisement to be used for marketing NUTRI

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Appendix A – Choosing A Target Segment

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Age groups -> Infants and children

Teenagers (13-18

Young Adults

Adults and elderly

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Needs Hydration Energy/Rejuven ation Health and Wellness Weight management

(0-12 years)


(18-34 years)

(35 and above)

Target Market Target Market

Target Market Target Market

The total market was segmented on the basis of the demographic characteristics like age, income and sex. We segmented the market on the basis of the age and on the basis of their need for consumption of various categories of functional drinks. The market size of different segments as depicted above differs and so is the potential opportunity in each market. As the behavior and attitudes of most teenagers and working young adults is shifting towards health and energy drinks, we realized that this segment presents significant opportunity for new product development. The unsatisfied needs include need for a regular health and energy drink like milk that can offer a high dose of nutrients and minerals to the consumers. Thus we choose the four sub-segments as depicted above as the target market we need to cater to and came up with an idea of milk and soya based health and energy drink for the masses that can be consumed daily.

Appendix B - Timeline for Marketing Mix Strategy
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Marketing Mix Actions Product • Primary and secondary research • Product development and research • Product commercialization and launch • • • • Product line extension New product launch Finalizing distribution strategy Appointing managers for channels • Establishing Distributors network and Retailers tie up • Price • • • Promotion • • • • • Implementing sales and promotion strategy Finalizing cost plan and structure Product pricing Devising product and distributor discounts Product launch and road show Print media campaign Launch of media campaign Outdoor advertising campaign Assessment of promotion strategy

Timelines • November, 2011 • • • • January, 2012 March, 2012 December, 2012 January, 2013


• • •

December, 2011 January, 2012 January, 2012 .

February, 2012

• • • • • • • •

December, 2011 December, 2011 January, 2012 March, 2012 March, 2012 April, 2012 April, 2012 December, 2012

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Appendix C - Situational Analysis & SWOT
Industry Analysis
Energy or health drinks form a part of the functional beverages category, which includes nutritional drinks and sport drinks. Sport drinks contain good supply of carbohydrates, electrolyte and are non caffeine, typically for the reason that they are designed to be consumed before exercise to prevent dehydration. Nutritional beverages on the other hand are designed to promote a health and fitness and they contain bioactive compounds like extracts of teas, fruits vegetables, milk and other health foods. The energy drinks segment is divided into powder and ready-to-drink categories. According to Datamonitor (2008a) energy drinks account for almost 47.3% of the overall market share of the functional beverages globally and 62.6% in the United States. The industry has seen extremely high growth rates of more than 240% globally from the year 2004 to 2009. The functional beverages industry has seen more modest compounded annual growth rates of around 8% from 2004 to 2008 and have reached to $26.9 billion in annual sales. The nutritional drinks segment has been marginal but present huge opportunities to functional beverages companies as the market is largely untapped and the need for nutritional products is rising exponentially. The entry of private labels, juice hybrids and FMCG conglomerates in the functional beverages market has given rise to innovations in product, packaging and brought about a shift in consumer demand towards ready-to-drink beverages. Energy drinks brands like Red Bulls have captured energy drinks markets. Nutritional beverages market also has established players like Nestle, Cadbury and Unilever among a few competing for the share of wallet.

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Competition Analysis: Porter’s Five Forces Model
Porter’s Five Forces Model is a tool that helps to analyze the attractiveness of the industry the firm is operating in. The model assumes there are five competitive forces that identify the competitive power in a business environment. These competitive forces are mentioned below 1. Threat of substitute products The substitute products and services include alternate beverages that similar or complimentary needs. The presence of too many substitutes indicates high level of competition within the industry as all functional beverages target almost the same target market. 2. Threat of new entrants The beverages industry has low entry barriers. There are a number of regional, local and international player. The industry is based on innovation and new product ideas. The entry of new firms in the industry providing similar or competing products will lead to higher competition and lower profit margins for the existing players. 3. Intense competition among existing players The competition from existing players include local players and large corporate like Unilever, Cadbury and Nestle in this space is intense. It is important that any new company entering the market should focus on new product development and innovation to gain market share. 4. Bargaining power of suppliers The suppliers do not hold significant bargaining power as the industry is run on marketing and distribution power of the beverages companies. Lower bargaining power of suppliers also provides an incentive for new firms to enter the market

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5. Bargaining powers of buyers The bargaining power of buyers is limited in the sense that the energy and health drink markets are related to either consumer’s health of lifestyle. Therefore in spite of intense competition among existing players, beverage companies are able to price the products to fit their strategy.

SWOT Analysis
The SWOT Analysis is an analytical tool that can be used to gauge the internal strengths and weakness of the firm as well as study the external opportunities and threats the firm is facing. The below mentioned SWOT analysis relates to the marketing strategy of the New Product - Nutri

Strengths: • • • New to market product with nutritional benefits Ready –to-use drink and packaging High margin of the business giving scope for more marketing spends • Differentiated product offering

Weakness: • • • Being a new product, the product has not yet faced competition Ability to scale up operations and production in a short time High level of competition
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Management and sales staff to be hired will be comparatively less experienced

Opportunities: • • • • Create and increase in market share for the product Change consumer spending patterns towards nutritional drinks Optimize distribution and supply chain efficiencies Creating a strategic advantage which is difficult to be emulated by competition Threats: • • Competition from existing and new players. Lower spending by clients as a result of political and economical turmoil in developed nations leading to a cut on outsourcing. • • The challenge of scaling up operations and maintaining the quality. Threat of the product being emulated by competitors and new entrants leading to disappearing of the competitive advantage.

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