Introduction to Marketing Assignment: Innocent Smoothies Contents page Introduction/Background… Page 3 External (MACRO) Environment… Page 4, 5, 6 Segmentation, Targeting and Positioning… Page 7, 8 The Marketing Mix… Page 9, 10 Appendices Appendix A.. Page 11, 12 Appendix B… Page 13, 14 Bibliography … Page15, 16 Introduction/Background Innocent Drinks is a UK based company founded in 1999 whose primary business is producing smoothies.
The three college friends Richard Reed, Adam Balon and Jon Wright were the ones who came out with the idea; they were just three graduate students from Cambridge University who were working at advertising and consulting business at the time. They managed to save ? 500 to spend on fruits. They then to got a stall in a London festival and sold their smoothies there, were People were asked to put their empty bottles in a ‘yes’ or ‘no’ bin depending on whether they thought the three should quit their jobs to make smoothies.
At the end of the festival Richard, Adam and Jon found the yes ‘bin’ completely full of empty bottle so the next day the three went to work and resigned; and this was when they all started their journey in becoming one of the most popular smoothies in Europe (mainly in UK). An innocent smoothie uses 100% pure and fresh fruit in all their smoothies. They like to refer this too ‘fresh baked bread or floppy white bread’ as an example of what you would prefer more. Innocent also makes superfruits smoothies, thickies that are pro-biotic yoghurt based drinks, smoothies for kids, orange juice, vegetable pots, and fruit tubes for kids.
As you can see innocent smoothies have a wide range of options in order to satisfy all their customers’ needs/wants as they target markets is basically anyone. Innocent Smoothies sold some stake to the giants Coca-Cola for ? 30 million in April 2009. ‘Innocent, which markets itself as eco-friendly and distributes drinks in vans made to look like cows, has sold a minority stake of between 10% and 20% to Coca-Cola in order to raise funds so it can expand into Europe’. (http://www. innocentdrinks. co. uk) External (MARCO) Environment
The macro-environment is all the factors that are external to the company. An organisation’s proximate macro-environment includes companies that supply components and raw materials and other services. This also includes company’s agents and distributors and its competitors. One of the main reasons why marketers need to audit what is happening in the external environment is to determine the number and strength of each factor. Strategies and performance reviews can help owners and managers use the macro environment factors to create a competitive advantage for their respective companies.
When investigating on wider factors it is referred to as the company’s external marketing audit. This process is also referred to as environmental scanning. The marketing audit is an integral part of the company’s strategic marketing planning system. The model used to by marketers to audit the external environment in known as the PEST analysis (also known as PESTLE or STEP). The full listing for PESTLE is: Political, Economical, Socio-cultural, Technological, Legal and Environmental. (Lancaster / Reynolds 1991) Here is PEST in a little more depths: Political,
Current taxation policy, future taxation policy, the current and future political support, grants, trade bodies, funding and initiatives. Economical, Overall economic situation, Strength of consumer spending, current and future levels of interest rates, inflation and unemployment, specific taxation policies and trends. Socio-cultural, Demographics, Lifestyle patterns and changes, Attitudes towards issues such as education, corporate responsibility and the environment, Social mobility, Media views and perceptions, Ethnic and religious differences Technological, nventions, new discoveries, research, energy uses/sources/fuels, communications, rates of obsolescence, manufacturing advances, information technology, internet, transportation and waste removal/recycling. PEST analysis on innocent smoothies Now that we have some understanding on the pest analysis, I am going to link it to Innocent smoothies. Political Innocent smoothies had sold a ? 30m stake to Coca-Cola and then have hired PricewaterhouseCoopers (PwC) to lodge an application for a tribunal hearing to argue that its smoothies should be exempt from VAT charges.
Innocent lost their fight over VAT charge on smoothies, but not on raw fruit. The company claimed it was unfair that the government charges 17. 5% VAT on innocents 100% fruit juice smoothies. Innocent smoothies donate 10% of their profits each year to charity, primarily to the innocent foundation, which funds rural development projects in the countries where their fruits comes from. Set up by innocent in 2004, the foundation’s vision is to build sustainable futures for the world’s poorest people. (www. telegrapgh. co. k). Economical Between 2007 and 2009 innocents sales plunged by 29%, and prices were slashed. It was easy to blame the economic downturn for Innocent’s recent sales decline, but during the downturn many other premium health brands actually grew their sales by 20%-30% even as Innocent’s fell. Innocent has been working with Coca-cola since the US group took an initial 18% stake in the business in 2009. The latest deal by Coca cola has been largely due to the disposal of shares by one of the original investors in innocent.
This stake was up to 40%, meaning that coca cola has a total of 58% of stake in the company. (www. guardian. co. uk) Socio-cultural Innocent smoothies are now sold in the kid’s meal in McDonald’s. At first anyone thought something like this surely could never happen. Innocent Smoothies getting with McDonald’s was unbelievable at first by some, as they are completely separated in the spectrum. On the other side this has been a positive move for McDonald’s to making a healthier move. These move will also help them put there brand up around the world meaning it will get more opular. Technological Innocent smoothies work hard in keeping a good and nice image to their brand, for this reason innocent uses plastic bottles which are 100% recyclable but this is not all, they are trying to keep all their products natural, keep sustainable ingredients, sustainable packaging and sustainable production. They also try and make fruit towers as resource efficient as possible. Here are just a few examples of green living at fruit towers: * They use green energy for the office and they give their employees a small helping hand to use green energy at home. They offer the tax free cycle to work scheme, lots of bike racks, and some showers. * they use hybrid cars for when a bike or the train won’t suffice. * Only travelling when they have to, using the train, and keeping air travel to a minimum. * Composting all their organic waste in the office and lots of recycling. Innocent are always trying to bring new products into the market, the newest one is juices; this include orange juice with bits, orange juice smooth and apple juice. The idea in these new juices is to help their customers keep their healthy diets even during the morning for breakfast.
As every huge company, innocent smoothies have their own web page to help them keep in touch with their customers. The webpage also lets everyone know about all the products/services they have to offer. (www. innocentdrinks. co. uk) Segmentation, Targeting and Positioning A target market is basically the type of person that will want or need your product or services. By targeting a specific market, you know to who to produce too and to who to promote too. The process of identifying a target market is called market segmentation. Using market segmentation, a business can use a top-down approach to identifying a target group or niche.
After you have identified a niche using target segmentation, you will be able to concentrate your efforts on targeted marketing to attract a specific consumer group. (www. howtodothings. com) Innocent smoothies targets everyone in the market, by this I mean from young children, to men/woman and elderly people. Innocents have no preferred gender or age making it easier for them to sell, there pricing could be not as cheap as someone would actually like it to be but it’s still not that expensive. Having their product being healthy and having such a positive image in their brand helps them cover all the areas in the target market.
Innocent have a wide range of products to offer to their customers, the new juice introduced in the market, has helped them cover the area for breakfast as many people like having there orange/apple juice in the mornings. The other smoothies cover the areas during the day and night, although they don’t cover smoothies for babies yet. As you can see, innocent has have used the segmentation methods to cover nearly all areas in their target market, for this reason they are one of most popular smoothies in Europe.
Product positioning means thinking about a product in the context of the competitive space it occupies, defined by attributes that matter to the target market. Positioning follows naturally from targeting, and forms a direct link between the target market strategy and marketing programmes. Positioning is the place a brand is perceived to occupy in the minds of the target market. There are many possible positioning strategies: * Positioning on attributes/product features * Positioning by price/quality Positioning for specific usage * Positioning by the product user * Positioning on benefits or needs * Positioning against brands * Positioning with respect to another product class A positioning statement is the phrase that follows the company’s brands name. It explains the unique selling proposition and is a natural outgrowth of the brand positioning that two are inextricably linked. A positioning statement is used in conjunction with business logo to provide the target market with easily memorable and comprehensible information.
Ideally a business’ positioning statement will spring to mind whenever a person in the target market thinks of the business. (Notes from lesson, 17/03/2011, S Gregory) Innocent smoothies in the Boston matrix In order for me to give a positioning statement for Innocent Smoothies I have introduced the Boston Matrix . The Boston Matrix categorizes opportunities into four groups depending on their market growth and market share, these groups are stars, question marks, dogs and cash cows. For a deeper description on the Boston matrix please refer to Appendix A on the appendices page.
You can clearly point out that innocent smoothies are in the Stars section, as they have a market share of 77. 5%, and there market growth is expanding greatly as it has expanded to Europe and have the intentions to grow around the world. Having the support of Coca cola has helped innocent expand into Europe well. There positive brand has also helped them gain spot in the Stars as it has actually no negative side in these smoothies as it’s all natural. The Marketing Mix The term marketing mix refers to the primary elements that must be attended to in order to properly market a product.
Also known as The 4P’s or 7P’s of Marketing, the marketing mix is a very useful, if a bit general, guideline for understanding the fundamentals of what makes a good marketing campaign. Here is a brief description of each component of the 4P’s of the marketing mix. These relate to products, price, place promotion, people, process and physical evidence. (www. EzineArticles. com). For a wider description on the 7 P’s please refers to Appendix B in the Appendices page. The marketing mix on innocent smoothies Product
Innocent smoothies knew what they wanted to make from the very start, and this is healthy smoothies which are made up of 100% fresh fruit. As the years past innocent got bigger as a company so they expanded and in order to do so they started making new products such as; super fruits smoothies, thickies that are pro-biotic yoghurt based drinks, smoothies for kids, orange juice, vegetable pots, and fruit tubes for kids. Having all these range of products to offer their customer, it is what has actually helped innocent smoothies be at the top of the market. Innocent smoothies have a high class branding as its expanding is still ongoing.
With the help of coca cola the expansion towards America can actually be done, as its brand image is highly respected for being one of the healthiest smoothies in the market. (www. innocentdrinks. co. uk) Price As innocent is quite a high class product there price is not that cheap although it doesn’t mean that consumers are not getting what they are paying for. The pricing which innocent have on its product in not that bad taking onto account that they have to pay packaging, transport, manufacturers, suppliers, full VAT etc… The price innocent have does not at all devalue the brand although in the recession reduced sales happened.
Competitors cant actually keep up with innocent as they are offering 100% fresh fruit and its quality is at its highest and in order to keep up with them is quiet difficult. P J smoothies are the main threat for innocent smoothies although at the moment innocent are still on top. The problem innocent is having at the moment is that the price in fruits are going up meaning that there price will also go up. (www. claudio-becker. ch) Place Having innocent expand in Europe it’s quite obvious you can find innocent in any main country in Europe.
Innocent can be found in any major supermarket in the UK such as Morrison’s. Having innocent joining McDonalds mean that they will be basically all around the world as McDonalds is basically everywhere. Innocent are saving 20 hours per week on processing orders and invoices with a new managed service that is supporting its European expansion. The drinks maker previously handled these key supply chain processes through a managed electronic data interchange (EDI) service in the UK and manual, paper-based procedures in its growing European distribution outlets (http://www. tpro. co. uk) Promotion Being such as large brand, innocent is basically everywhere in the UK. Innocent have already done quite a few adverts on television, there news also come out on newspapers and magazines. They also advertising on billboards, posters and have their own web page. Due to its expansion to Europe innocent now spend more money advertising around Europe mainly on television. (www. innocentdrinks. co. uk) People This is one of the most important points, as without people the organisation would not be able to function.
This point can relate to whom the products/services are targeted too and as i mentioned earlier innocent target market is basically anyone as the products they make cover nearly everyone except babies. The people working in innocent are also very important as they are the ones who are giving positive image to the business. Before innocent recruits any employee, the employee’s are trained which helps innocent have an image of what there employees are capable off. Any one linked to innocent such as managers, employees, consumers etc. are the people. Processes nnocent deliver their products to customer by first selling it to supermarkets/shops. Before those products are sold they are first made in there fruit towers, once the smoothies are made and packaged ready to go they are transported in vans which are decorated as a cow or grass to their destination. These vans are painted as cows/grass keep the positive and healthy brand keep on going. Physical evidence what marker can innocent give to their customers to remind them of the service they’ve provided. This is what physical evidence basically means. Innocent is constantly advertising there brand on television and advertising boards.
Each time they introduce a new product to the market they first advertise the product to let the public know about their new product which help their sales go up. (www. resources. mediatrust. org) Appendices Appendix A – The Boston Matrix The Boston Matrix categorizes opportunities into four groups, shown on axes of Market Growth and Market Share: | | These groups are explained below: Dogs: Low Market Share / Low Market Growth In these areas, your market presence is weak, so it’s going to take a lot of hard work to get noticed. You won’t enjoy the scale economies of the larger players, so it’s going to be difficult to make a profit.
And because market growth is low, it’s going to take a lot of hard work to improve the situation. Cash Cows: High Market Share / Low Market Growth Here, you’re well-established, so it’s easy to get attention and exploit new opportunities. However it’s only worth expending a certain amount of effort, because the market isn’t growing and your opportunities are limited. Stars: High Market Share / High Market Growth Here you’re well-established, and growth is exciting! These are fantastic opportunities, and you should work hard to realize them. Question Marks: Low Market Share / High Market Growth hey aren’t generating much revenue right now because you don’t have a large market share. But, they are in high growth markets so the potential to make money is there. (www. marketingteacher. com) Appendix B – the 7 P’s here is a wide description of what is the marketing mix. Product – the term product includes services and ideas. Product decisions that need to be made include: * What to make and how to make it * How to give it a long life The product concept also include after sales services, delivery, installation, guarantees and warranties which then these also include branding and brand name, packaging and retail display.
Price – the term price include the concepts of value. When it gets to price a product some decisions need to be made. These decisions include: * What consumers get for their money * What kind of pricing strategy to use# * How to be competitive but also profitable Some important considerations need to be taken into account before making these decisions as being too cheap can devalue the brand, being too expensive can reduce sales and different consumers have differing ideas of value. Place – the term place covers various channels of distributions.
Before deciding where to get a place decisions need to be taken into consideration, these decisions are: * How to get goods to the consumer * Where to make available for purchase Channels do distribution includes: * Retailers * Dealers and distributors * Mail order * Telephone sale and e-marketing Promotion – the term promotion covers ways of communicating. When communicating you need to take to account things like which communicating channel to use and which marketing communicating techniques to use. Marketing communications technique includes: * Broadcasting advertising, television, radio, cinema Print advertising: magazines, newspaper * Outdoor advertising: billboards, posters * Point-of-scale: packaging, merchandising, displays * Other: public relations, sales promotion, direct marketing, sponsorship, exhibitions * New: internet, viral, guerrilla In recent year 3 more P’s have been added to make the 7P’s due to the additional needs of services marketing. The 3 which are left are people, processes and physical evidence. Here is a description of the remaining 3P’s: People – services needs people to perform them and be the interface between the organisation and the customer. n some markets people are the service: * A hand car-wash, a home cleaning service * Hairdressing, dentists, opticians In other people serving is part of experience: * Restaurants, bars, sandwich bars * Retail shops, estate agents, travel agents People at the end of a phone are also the experience such as banks, credit cards and broadband providers. Process – service need processes to ensure efficiency. They rely on a consistent set of quality actions. Questions marketing need to ask processes are: * How is the service delivered to the customer? * Is the consumer experience satisfying? How are operator mistakes avoided? * How are customer complaints dealt with? * How do you know whether customers are happy? Physical evidence – services still need physical presence or evidence. Premises can be designed to have atmosphere and ambience that appeal to customers. Hotels, restaurants, trains, airlines and shops are all dependent on physical surrounding. Some services exist only through pieces of paper or cards: banks accounts, credit cards, insurance policies and mortgages. For some services, external factors such as location and car parking need to be considered. (Tutorial lesson, 17/03/2011, Steven Gregory)
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