COM21: Ass 1

Situational Analysis

Xtreme Beverages Pty Ltd is considering expanding their successful soft drink range to include energy drinks. This will require a new brand and communication strategy for the company to fully capitalise the existing market. Already placed in the top 5 companies behind Coca-Cola Amatil, Cadbury Schweppes, Pepsi Co and Red Bull, Xtreme Beverages envisage capturing a core component of the rapidly expanding energy drink market (Palmer 2009). Whilst the current corporate strategy focuses on soft drinks, the introduction of a new line of products will inject freshness via innovation and differentiation.

Our Research and Development (R&D) team have investigated ways to create a revolutionary product that has the capacity to garner a niche group within the beverage market. In assessing this expansion, consideration must be given to how the company will enhance its image and complement its existing corporate identity. A well rounded communication strategy will ensure the long term direction of the company is maintained yet allows for future growth and the success of this diversification. There are no direct competitors to this ground-breaking new product idea and ensuring capitalisation on this opportunity would be paramount.

The current demographic for Xtreme soft drinks is the youth and adolescent age groups which will continue well with the energy beverage market; however it should be noted males are more likely to consume energy drinks (Miller 2008, pp. 487-8). This demographic is well suited to both the corporate strategy and existing brand names. As the company’s identity revolves heavily around extreme sports and an active lifestyle, an energy drink that offers both hot and cold serving temperatures (with scope to improving the nutritional content of the recipe) will be well received by athletes and help to promote the healthy, youthful image of the brand.

The New Concept

Xtreme’s R&D department have created a concept for an entirely new way to package and deliver energy drinks. Using existing technology, but in new and fresh ways, it will be possible to offer a can of drink that can be self-heating or self-cooling. Like coffee, tea and chocolate, the flavour will be appealing, regardless of which option the user chooses. This type of packaging differentiates the product from all others available in the marketplace and allows expansion into previously untapped markets: namely, cold climate athletes, extreme snow and water sports-people, hikers, campers and cyclists. Because the can has the capacity to be served either warm or cool (and generates the temperature itself), it lends itself to refreshing and innovative marketing.

The Execution

Because this is such a marked departure from the usual carbonated soft drinks distributed, Xtreme will create a new brand that encapsulates this exciting technology. The overall product will be named “8” with individual flavours forming words that express the energy found within each can. The flavour Hydr8 would be launched initially, with the potential for additional products such as Stimul8, Invigor8, and Accerler8.

With the introduction of a new product line, it is important to create a cohesiveness of communication to the consumer about our new product. Branding needs to represent what consumers think they want or need but it is much more than this: Belch et al (2008, p. 162) explains that “Branding encompasses the entire spectrum of the consumers’ awareness, knowledge and image of the brand as well as the company behind it.”

While a product line extension would be a possible way to market 8, energy drinks form a new product classification and are better suited to a brand extension instead (Bhimrao 2008, pp. 4-12). Studies have shown that by creating 8 as an extension of the Xtreme Beverage brand, we can leverage the trust and awareness of Xtreme and transfer it on to our new brand (Reast 2005). The linking of the two products, while maintaining each as individual brands, streamlines expenses associated with the start up of an entirely new brand and automatically gives pre-established brand equity for 8. Keller (2003, p. 595) agrees, saying that brand extensions are a way to improve a company’s brand image. This will give 8 a significant boost in the marketplace and assist in marketing the new product.

The Communication Strategy

The brand 8, like its competitors, is aimed toward the youth market (Heckman, Sherry & De Mejia 2010, p. 304) Therefore a communication strategy must be implemented that appeals to this audience and encourages consumption and interaction. We anticipate that our brand associations will be terms such as fun, excitement and zeal; our overall image should be engaging, transparent, open and clear. It is envisaged that all employees that represent the 8 brand will embrace these ideals and be fit, healthy and vibrant; participants of active sporting behaviour would be held in high regard, and team bonding exercises would promote physical activity. It is expected that the brand 8 will be visually active in the community, again reinforcing the vitality and energy of our new product to our customers (Miller 2008, pp. 481-2).

In line with engaging our audience, marketing for 8 will embrace social media vigorously. A detailed Social Media Policy (SMP) will be produced to ensure all employees represent the company in a uniform manner particularly when addressing consumers. The SMP will cover all aspects including telephone, blogs, Facebook, Twitter, YouTube, SMS, email, and newsletters. All written material will be multilingual, giving access to the many dialects spoken in Australia, with translations available for the eight most frequently spoken languages. The use of colloquialisms by employees will be supported by management to strengthen the rapport with our audience, particularly online.

The 8 Style Guide (8SG) will be created to emphasise the uniqueness and cohesiveness of our new product. Fonts will be uniform across all media, and we will market the 8 brand as both culturally aligned and socially responsible. Sans Serif fonts will be used as these evoke a contemporary feel and are well suited to both print and web media. Coles (2006) explains that these techniques complement the trend for current logos utilising Web 2.0 technologies.

Using these procedures will ensure that our communication strategy will be consistent across all media types (Lee & Colarelli 2003, pp. 6-8) and that the image 8 projects to the public is hip, modern and approachable.

Further Action

The Appendices attached outline specific details relating to the packaging and marketing of 8, along with suggested flavour analysis, the science of the can and the SWOT analysis. These show how we can capitalise on our strengths, bolster against any weaknesses, invest in opportunities and identify and offset any threats to this proposal. Further recommendations will need to be properly investigated and more customer feedback is needed.

It should be noted that there have been some negative studies on the impact of energy drinks on adolescents, and on their low nutritional value. Nevertheless, this has not deterred our competitors from the market and we should see this as something to study further and monitor. If we are able to add nutrient value to 8, this will be seen as a further example of the superiority of our product.

Executive Summary

Xtreme Beverages Pty Ltd, a leader in the manufacture of soft drinks, is considering creating a brand extension called 8, that will target the fast-growing energy drink market. At the crux of the concept is a revolutionary can that can self-heat and self-cool, offering differentiation among other products currently available. 8 has the capacity to garner an expanded market share quickly by leveraging Xtreme’s current brand equity and by forming a new niche market, particularly for those who require energy drinks in remote locations. While further market research is necessary, the initial outlook for this type of product is promising.

Appendix A: The Science of the Can

The packaging of this product is vital to its success. A section at both the base and top will have the ability to rotate, creating a chemical reaction to the agents inside these compartments. These chemicals will have the capability to either cool or heat the contents of the entire can.

How it will work

Based on technology found in emergency cold packs (LiveStrong.com 2010), the upper division will contain a non-toxic urea tablet and water. Rotation will cause the urea tablet to enter the water and dissolve, thus creating the ability to absorb heat. It can self cool to refrigerated temperature in less than two minutes. Whilst ammonium nitrate is also sometimes used in cold packs, it is a toxic chemical and can be harmful to the body so the use of urea is the better alternative (LiveStrong.com 2010).

The lower segment holds the heating agents. Hot-Can is already a patented product serving milk beverages and soups in a can (Hot-Can.com n.d.-b). Whilst their delivery method involves pressing a button, the rotational capability of our product’s packaging differentiates it sufficiently to emulate their concept without breaking their patents. Rotation will mix Calcium Oxide with Hydrogen Dioxide which produces Calcium Hydroxide and will be able to heat the can in approximately three minutes (Hot-Can.com n.d.-a).

As can be seen, the technology already exists to make a self-heating and self-cooling can of beverage possible. Not only does this innovation form the impetus for the existing environment, it also opens up new markets that are currently untapped. In this area, 8 will have no direct competitors and this bodes well for increasing our market share.

Appendix B: Creating the Ideal Flavour

Ingredients


8

 Coffee1

 Mother2


Red Bull3


V4

Sugar

x

x

Guarana

x

Caffeine

250mg/L

300–467mg/L

320mg/L

338mg/L

287mg/L

B Vitamins

x

Taurine

x

Artificial Sweetner

x

x

x

x

Kola Nut5

x

x

x

x

Cayenne Pepper6

x

x

x

x

Cloves6

x

x

x

x

Gingko6

x

x

x

x

Energy
KJ per 100 ml

16

1.2

195

192

195

 Sources: 1 http://en.wikipedia.org/wiki/List_of_energy_drinks 2 http://en.wikipedia.org/wiki/Mother_(energy_drink)#Nutritional_Information_.28Reformulated.29
3 http://www.redbull.com.au/cs/Satellite/en_AU/Products/Red-Bull-Energy-Drink—-Red-Bull-Australia-Products—-Red-Bull-AU-021242762194251
4 http://www.v-energydrink.com/index.aspx  5 http://www.anniesremedy.com/herb_detail475.php

8 aims to provide a unique flavour: peppery in taste and high in herbal stimulants. By creating a taste that energises, uses more natural ingredients and is sugar-free, 8 will be able to seek new market spaces and expand its customer base.

Appendix C: Packaging the Product

Packaging serves two main functions –  to prolong shelf-life and for marketing purposes (Hawkes 2010). To formulate a strong sense of brand identity of 8, the aluminium can shape will be the same width and height as a normal 375ml beverage, but will be shaped like the numeral eight; the ring pull and straw sections will also form a distinctive 8 pattern.

In keeping with our existing corporate focus and direction, the Xtreme logo will also be placed on every unit, giving the consumer continuing faith and confidence in this new release. These changes to the shape of the can enable Xtreme to garner significant differentiation from other products available. Studies have shown that focusing on differentiation is the key to gaining attention and excitement from consumers and offers a “competitive advantage to the firm” (Bhimrao 2008, pp. 4-12) This unique packaging also heightens expectations within the consumer that what they are purchasing is truly new and different (Levitt 1980, pp. 88-90).

Image 1: Hydr8, the first flavour, comes in an aluminium can shaped like an 8 yet the same width and height of a standard soft drink container. The Can Lid has an 8-shaped ring-pull and straw pop-down buttons. The removable Sipping Guard makes it perfect for hot liquids.

Functionality is also a key factor to this design, and straw pop-down tabs can also be used as air holes to allow for easy pouring. A removable sipping guard is suited to hot beverages while straw holes suit cold beverages. By adding the 8 shape to the can, it becomes easier to grasp than a regular can. By combining these practicalities and expected uses of 8 with clever branding techniques, we are able to reinforce the brand image with the convenience of each product (Rundh 2009, pp. 998-1001).

Visual cues are crucial for the customer to immediately understand the benefits of the new style of packaging (Silayoi & Speece 2007, p. 1497). The top and bottom of the can use visual aids to indicate temperature options and the arrows give easy-to-follow instructions for use. The can exterior is coated in hyper-colour: like a mood ring, it changes colour depending on the current temperature. As it heats, the entire can turns red; as it hydro-cools, the can colour turns blue. At room temperature, the central section of the can is white. Using previous studies, we can ascertain that specific fonts, logo shapes and positioning can communicate much about a brand directly to the consumer (Orth & Malkewitz 2008, p. 66) and as such have utilised font style, spacing and colours that best represent an affordable and easily accessible product (Ampuero & Vila 2006, pp. 104-7).

Appendix D: SWOT Analysis

SWOT Analysis

Viability of introduction of a new energy drink to the Xtreme Beverage Pty Ltd product line, named 8. The product will be packaged in a self-heating and self-cooling can.

Strengths:

  • Existing distribution and manufacturing capabilities are adequate for new line.
  • No direct competition
  • Only drink able to be heated and cooled instantly
  • Will enhance the innovative nature of the company.
  • Aligns with our current sales demographic, corporate image and audience
  • Unit size is comparable with others on the market, making transportation simple.
  • Product can self-heat and self-cool – suits all seasons
  • Established Personnel and Management suited to new product.

Opportunities:

  • Rapidly expanding market, particularly in Australia (AustralianBeverages.org n.d.)
  • Sales are not dependent on flavour (AIS n.d.)
  • Niche market will garner new markets
  • Similar products not available in Australia
  • Taps into new market-spaces including hiking, extreme sports, travelling, camping and outdoor activities
  • New technology presents the opportunity to surprise competitors and consumers
  • Additional flavours can be added later
  • Competitors only provide hot or cold, not both

Weaknesses

  • Some negative studies on the impact of energy drinks on adolescents (understandingteenagers.com.au 2010)
  • Energy drinks are high in sugar and caffeine
  • Market may not yet be ready for such innovation and consumers may find the product confusing
  • Product contains only 210ml; may be seen as less value for money
  • Will require greater marketing resources to educate consumers on new can technology
  • Product will be more expensive to create than previous product lines.
  • Further study needs to be conducted on consumer needs and expectations

Threats

  • Will invigorate competitors to imitate product causing price competitiveness and loss of market share
  • Packaging is not as environmentally friendly as current product line.
  • Economy may continue to decline, affecting sales and cost of creation of product

References

 

AIS n.d., Sports Drinks Fact Sheet, Australian Government Website, viewed 20 September  2011, <http://www.ausport.gov.au/ais/nutrition/supplements/supplement_fact_sheets/group_a_supplements/sports_drinks&gt;.

 

Ampuero, O & Vila, N 2006, ‘Consumer perceptions of product packaging’, Journal of Consumer Marketing, vol. 23, no. 2, pp. 100-12.

 

AustralianBeverages.org n.d., Beverage Market Reports, viewed 20 September 2011, <http://www.australianbeverages.org/scripts/cgiip.exe/WService=ASP0002/ccms.r?PageId=10063&gt;.

 

Belch, G, Belch, M, Kerr, G & Powell, I 2008, Advertising and Promotion: An Integrated Marketing Communication Perspective, McGraw-Hill Australia.

 

Bhimrao, MG 2008, ‘Building brand identity in competitive markets: a conceptual model’, Journal of Product & Brand Management, vol. 17, no. 1, pp. 4-12.

 

Coles, S 2006, The Logos of Web 2.0, The Fontfeed, viewed 27 July 11, <http://fontfeed.com/archives/the-logos-of-web-20/&gt;.

 

Hawkes, C 2010, ‘Food packaging: the medium is the message’, Public health nutrition, vol. 13, no. 02, pp. 297-9.

 

Heckman, M, Sherry, K & De Mejia, EG 2010, ‘Energy drinks: an assessment of their market size, consumer demographics, ingredient profile, functionality, and regulations in the United States’, Comprehensive Reviews in Food Science and Food Safety, vol. 9, no. 3, pp. 303-17.

 

Hot-Can.com n.d.-a, How to Use It, viewed 25 September 2011, <http://www.hot-can.com/Australia/howto.html#How_to_make_it_heat_up&gt;.

 

Hot-Can.com n.d.-b, Welcome to Hot-Can, viewed 25 September 2011, <http://www.hot-can.com/Australia/index2aus.html&gt;.

 

Keller, KL 2003, ‘Brand synthesis: The multidimensionality of brand knowledge’, Journal of Consumer Research, vol. 29, no. 4, pp. 595-600.

 

Lee, Y & Colarelli, OC 2003, ‘The impact of communication strategy on launching new products: The moderating role of product innovativeness’, Journal of Product Innovation Management, vol. 20, no. 1, pp. 4-21.

 

Levitt, T 1980, ‘Marketing success through differentiation–of anything’, Harvard business review, vol. 58, no. 1, pp. 83-91.

 

LiveStrong.com 2010, Chemicals used in a Cold Pack, viewed 25 September 2011, <http://www.livestrong.com/article/150747-chemicals-used-in-a-cold-pack/#ixzz1YSwAc23y/&gt;.

 

Miller, KE 2008, ‘Wired: energy drinks, jock identity, masculine norms, and risk taking’, Journal of American College Health, vol. 56, no. 5, pp. 481-90.

 

Orth, UR & Malkewitz, K 2008, ‘Holistic package design and consumer brand impressions’, Journal of Marketing, vol. 72, no. 3, pp. 64-81.

 

Palmer, D 2009, Australian energy drink growth among world’s best15 September 2001, <http://www.ausfoodnews.com.au/2009/10/15/australian-energy-drink-growth-among-worlds-best.html&gt;.

 

Reast, JD 2005, ‘Brand trust and brand extension acceptance: the relationship’, Journal of Product & Brand Management, vol. 14, no. 1, pp. 4-13.

 

Rundh, B 2009, ‘Packaging design: creating competitive advantage with product packaging’, British Food Journal, vol. 111, no. 9, pp. 988-1002.

 

Silayoi, P & Speece, M 2007, ‘The importance of packaging attributes: a conjoint analysis approach’, European journal of marketing, vol. 41, no. 11/12, pp. 1495-517.

 

understandingteenagers.com.au 2010, Energy Drinks and Teenagers: Do You Understand the Risks?, Understanding Teenagers, viewed 15 September 2011, <http://understandingteenagers.com.au/blog/2010/08/energy-drinks-and-teenagers-do-you-understand-the-risks/&gt;.

 

 

 

 

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