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Our sample paper on Innocent drinks marketing strategy explores Innocent market share, business model, positioning, campaigns, and other aspects. Learn more about Innocent marketing strategy with the help of our sample!
Executive Summary
Innocent Company sells its fruit smoothies at one point five million (1.5M) rate yearly and has conquered sixty percent (60%) of the United Kingdom market. The company has spread its wings to various countries such as the Low Countries and France. It has also advanced into Germany, Australia, and Scandinavia. From the companys humble start, it has rapidly grown into an international brand with a 76 million pounds turnover. Sustaining and developing an extremely creative culture among its employees has enabled Innocent Drinks to celebrate its principal brand values through expansion and growth for extended periods.
The companys founders were Adam Balon, Jon Wright, and Richard Reed, who saw a need to make peoples lives a bit healthier. The company came into being as a result of a simple idea that each and every product contains one hundred percent (100%) fresh, pure ingredients without food concentrates. The companys target market is young and urban professionals. From its humble beginning, Innocent has excited its clients with its straightforward business approach. It uses down-to-earth, simple communication techniques highlighting its products and brand honesty. The companys market strategy is imperfect as it does not take care of the needs of the elderly population. Therefore, the company must identify a target market to satisfy its needs.
Through various means of Integrated Marketing and communication strategies promotion mix such as advertising, public relations, and sales promotion, the company has created awareness among its customers on the health benefits of its products. It is evident that the company has done much to keep the products brand competitive in the current market. The present brand image of Smoothies has to be sustained throughout the inflationary market using various market strategies. Consumers typically have meager income to dispose of during a recession; hence they become more price sensitive. Therefore, the worth of their money needs to be emphasized. Innocent Company is faced with aggressive competition from its rivals, but the good thing is that the competitors seem to be imitating Innocents brands.
It is a relief to the firm since consumers know how to distinguish between the brands (Kemsley, 2006). Despite the recession, the Smoothies company is still experiencing growth. Last but not least, the company has just embarked on its tactic to target the aging population, with more advocacies for healthy lifestyles, enabling them to produce more non-alcoholic products. Online advertising has also been instrumental in the promotion of the products. The Integrated Marketing Campaign aims to reposition the Innocent smoothies in the UK market through various IMC promotion mix with a budget of ten million pounds within one year. Therefore, the project will be divided into two main parts. Part A will comprise the projects rationale, and the other part will be the integrated marketing communication plan.
Introduction
Overview and Clarification of the Topic
This paper documents the supporting evidence and rationale for the Innocent Industry in the United Kingdom. From the macro extensive review of the industry, the paper will provide an extensive analysis of the Innocent Smoothies brand. The principal idea of the project will be to reposition the brand to change the existing consumption behavior of the companys target market. This will be made possible by encouraging the brand consumers to incorporate the product into their daily endeavors. The rationale of the company is to increase both revenue and volume sales. In addition to that, it aims to increase consumer interaction with the brand.
The budget proposed to make the communication campaign successful is ten million pounds (10M). The budget will be equitably distributed above the line of traditional advertising and also tactical below the marketing line activity. Given the target niche audience relativity, and in light of the objective of the communication, it is estimated that approximately 60% of spend will be utilized on the latter.
Having experienced an exponential growth of one hundred and fifty-nine percent (159%) sales volume between the years 2005 and 2007, the market for Smoothies saw a fortune dramatic reversal with a thirty-six percent (36%) decline between the years 2007 and 2009 due to the squeezing of consumers spending. The three years have been extremely tough for the Innocent brand, whose value has decreased by one-third. As a matter of fact, this has been triggered as a result of the recession. Furthermore, the brand equity has experienced a lot of hits making it extremely difficult for it to recover in the long run (Smoothies, 2011, p.6). Despite the brand losing its revenue, Innocent market share has increased significantly by eighty percent (80%). By repositioning the Innocent brand in the United Kingdom Market, Innocent Company aims to change the consumption patterns among its target group of 18-34 years old. This is in order to increase its volume sales and revue.
The Host Organization
Innocent Company sells its fruit smoothies at one point five million (1.5M) rate yearly and has conquered sixty percent (60%) of the United Kingdom market. The company has spread its wings to various countries such as the Low Countries and France. It has also advanced into Germany, Australia, and Scandinavia. From the companys humble start, it has rapidly grown into an international brand with a 76 million pounds turnover. Sustaining and developing an extremely creative culture among its employees has enabled Innocent Drinks to celebrate its principal brand values through expansion and growth for extended periods.
The companys founders were Adam Balon, Jon Wright, and Richard Reed, who saw a need to make peoples lives a bit healthier. The company came into being as a result of a simple idea that each and every product contains one hundred percent (100%) fresh, pure ingredients without the presence of food concentrates. The companys target market is young and urban professionals. From its humble beginning, Innocent has excited its clients with its straightforward business approach. It uses down-to-earth, simple communication techniques highlighting its products and brand honesty. Uncommonly, this approach is also utilized by retailers who get Innocent regular communications. The communication techniques include newsletters that integrate fun stories with product information. With this method, Innocent Company has expanded its partners and customer network.
Crucial to the success of the company is its strategy of employment. The company is trying to employ relevant expertise in various fields, from web design to ethical procurement. Guardian newspaper ranked the company as the top employer in the industry. In the same year of its ranking, it reported a turnover of thirty-eight million pounds (38M) (Innocent Drinks, N.d). In the United Kingdom, the companys biggest competitor is PJ Smoothies, purchased by the giant PepsiCo. To conquer the UK market, Innocent has joined Jamie Oliver (Marketing Smoothies, 2006).
Innocent Company Values
Make natural, delicious food and drink that helps people live well and die old (Sweeney, 2009). The mission statement helps the company to reinforce its brand values. In addition, it makes it a hundred percent clear what the companys purpose is. For instance, the company aims to give people a reason and a goal to put all their energy into their work. The companys products are often 100% delicious, natural, and nutritional. As a result, people are mentally and physically well after consuming Innocent products.
Scope of the Business Activities of Innocent Company
The company aims to equip its consumers with healthy eating habits by providing natural foods. The objective of any business is to maximize profits and become a leader in the market when it comes to products, and so does Innocent Company. In addition to profit maximization and becoming a product leader in a highly competitive environment, the companys key objective is to provide employment. Employment creation is for the farmers supplying the company with raw materials and the companys workers.
Corporate Objective
The company takes responsibility for its business impact on the environment and society. The company shifts the business effects from negative to neutral. Innocent Companys principal objective is to create a sustainable business by using healthy, renewable, and natural ingredients for its drinks. In the year 2007, the company started measuring its carbon footprint. It started from the firm to the fridge and ended with the recycling bin. By the end of 2007, the company had reduced its smoothies carbon footprint by fifteen percent (15%). Another area of its focus was to ask its suppliers to go green (Innocent Annual Report, 2007, p.6).
Financial Performance
With significant dominance in the United Kingdom market, the company has extended its markets by entering the Danish market and consequently targeting Australia, Germany, and Sweden (Anonymous, N.d, Innocent Drinks). Innocent Drinks exhibit the largest market share in the United Kingdoms smoothie industry. Various factors have significantly contributed to the most significant share of the market. First is the change in consumption patterns among the United Kingdom citizens. It has dramatically triggered the high demand for the companys products.
Furthermore, the companys brand awareness and marketing strategies have increased its market share. The company makes use of a variety of strategies to market its products. The marketing strategies are such as traditional marketing and Internet marketing. This has made it easier for people to have a wide range of information concerning the company and its products (Solomon et al., 2009).
A great deal of effort has been diverted to product marketing to maintain its market share. In 2010, the companys profit was almost one hundred and twenty-eight million pounds (128 million pounds). The highest amount of profits recorded by the company is associated with the quality of the products and perfect marketing strategies. The majority of the population in the UK prefers smoothies to other products, which has made the company significantly increase its profit margins. In 2007, as highlighted in the table above, the companys revenue almost reached the one hundred and thirty-eight million pound mark. On the contrary, in 2008, the companys revenue dropped due to the countrys economic crisis. The crisis impacted the smoothies demand in the UK and other parts of the globe where the company has its stores (Aaker & McLoughlin, 2010, p. 235).
Research Sources
Various kinds of literature have been reviewed for the IMC research purpose to get information about the smoothie industry sector trends. Various library websites such as Proquest and Ebscohost and internet articles have been reviewed to get adequate information regarding Innocent Smoothies, consumption patterns, and planning the media vehicles and communication strategies to support it.
Campaign Rational
The companys macro and microanalysis (external and internal analyses) will be performed through PEST and SWOT analyses to find its position in the UK market. In addition, the findings summary, recommendations, and conclusion will be produced from the micro and macro analyses to answer the companys future plans.
Competitors Current in the Market
The major competitors of Innocent Drinks are Tropicana and Pepsi-owned companies. Pepsi owns approximately twenty-nine point three percent (23.9%) of the UK market share. The Innocent Drinks competitors use a similar marketing strategy focusing on their products health benefits. In addition, various marketing strategies, including packaging appealing artwork, have been used by these companies to improve their brand loyalty. In comparison to Innocent smoothies, Tropicana smoothies are a third cheaper. Therefore, attracts more customers who are more concerned with the price rather than the process used to manufacture the products.
Extremely aggressive tactics have been applied to the brand, triggering the creation of products aimed at the smoothie kids market. As such, the Tropical company has set low prices to maintain its competitive advantage. Since the launch of Tropicana smoothies in 2008, the company has achieved its principle objective of strengthening its market presence by various means, such as using broad television advert campaigns. Its ethical values regarding environmental sustainability, its fruit sources, and the use of renewable energy to increase its brand loyalty further are similar to those of Innocent ( All about smoothies ). Hence, Innocent needs to utilize the 10 million pounds allocated in the budget to improve its integrated marketing campaign.
Micro (SWOT Analysis)
Strengths
The company (Innocent) drinks have distinct capabilities that have enabled it to survive in the highly competitive smoothie industry. How the companys products are packaged has made contesting with its competitors easier. For example, the packaging is done to combat environmental issues. The bottles used for product packaging are always transparent. Similarly, the bottles contain succinct information about the product.
Moreover, the packaging bottles have one color. Numerous customers have easily identified Innocent Companys products in supermarkets and restaurants because of their uniqueness. The unique packaging is the companys differentiation strategy to distinguish its products from other products. The packaging bottles undergo recycling after being disposed of by the consumers.
Apart from the effective packaging, Innocent Company has adequate resources. For example, the company has enough financial and human resources. The companys employees have a wide range of capabilities and expertise. It has significantly impacted the companys innovativeness and creativity. The companys competitive advantage is provided by its human resources. The companys financial resources have made it highly competitive, enabling it to invest in new technology (Leeman, 2010, p.35).
The company exhibits a powerful brand. As such, the brand makes it to compete effectively with its competitors in the industry. The development of the brand has been done perfectly to create awareness of the brand. Just like other companies, Innocent Drink offers its consumers unique products that are of high quality. The companys smoothies are produced from natural fruits rather than chemicals. With its unique products, the company has easily targeted a wide range of consumers like the elderly and young children. This has increased the companys profits and maintained its market share (Leeman, 2010, p.50).
Innocent company has good communication with its retailers and consumers. The company keeps routine communication with its suppliers, giving them direct support. In addition to that, its retailers database is the best. The database helps the company manage its communications with smaller corner shops and large supermarket chains. As for consumers, the company keeps in touch with them via letters, emails, and postcards, among others. In addition, the company possesses a banana phone where consumers can air their opinions regarding company performance and products (Hutton, 1996, pp. 155-162).
Weakness
Innocent Drinks face challenges in response to prices. It is tough for the company to smoothly adjust its prices to meet the consumers changing needs. For example, in case of low demand, the company cannot lower the product prices. It is because when the company lowers the price, it will significantly impact the companys brand and lead to losing clients. As such, the companys sales have been greatly affected during the recession. It is because the company cannot adjust its prices accordingly.
Furthermore, the entire market is the companys target as it does not possess proper strategies to separate its market according to the consumers needs. For example, the elderly consumers need has made it difficult for the company to split its market. As a result, it has been challenging to concentrate its resources and efforts on a single market segment. As a matter of fact, the company needs to review its marketing and segmentation strategies if it wants to meet the expectation of its consumers. Without the two, the company is easily prone to aggressive competition since the majority of the firms in the industry have market segments and a single target market (Westwood, 2002, p.65). In addition to the above, Innocent company exhibit a low customer base. In comparison to its competitors, its customer base is relatively smaller.
Threats
Like Innocent Company, numerous companies also supply the market with soft drinks and smoothies. The companies have come up with brands that are unique to achieve competitive advantage. Some of the Innocent competitors have brands similar to its brand. This makes it extremely difficult for the companys customers to distinguish its brand from its competitors despite being clearly packaged and correctly labeled. As a result, the companys sales have been affected as some individuals confused the brands and end up purchasing brands that other firms offer.
Another threat is that customers keep changing their tastes regarding product variety and range. Another threat is in terms of cultural differences. The success of Innocent Company has primarily relied on language. Differences in terms of culture might create a barrier for the company while expanding to other continents in the world. Brand susceptibility is another challenge. Given that the company is expanding, the value of its brand will be subjected to greater scrutiny regarding its actions. For instance, it received much criticism when it collaborated with McDonalds.
Opportunities
There exists a trend in the global market that encourages individuals to be health conscious. As a result, people have diverted their attention to naturally produced foods such as Innocent smoothies and drinks. It is because of their natural characteristic and their market reputation. Most people in Innocent markets such as Australia have been forced to stop drinking alcohol and sugary and fatty foods. The main reason is to improve life quality and prevent chronicle disease incidents among the population. These individuals have been coerced to take natural foods such as vegetables and fruits. Most people prefer non-carbonated drinks and smoothies because of their lower harm to the body compared to fast foods. Despite its green credentials criticisms and tie-up with McDonalds fast food chain, Innocent is good at balancing ethics and size.
Increased market share: The market being occupied by Innocent is continuously increasing as customers are becoming more and more health conscious. It presents an excellent opportunity for the company to conquer more and more markets.
Macro Analysis (External Environment)
Analyzing the external environment is significant to the Innocent Company as it helps it understand the external environment. For instance, the company can understand how various social changes and policy affects it and how it helps it achieve its objectives. Macro analysis helps the company plan well to achieve its goals. Just like other companies in the smoothie industry, Innocent Drinks needs to analyze its external environment to make the right export decisions (Keller, 2001, p. 820). In that case, the company must analyze its legal, economic, and political environment. Other things that need to be analyzed are social and technological factors. For purposes of analyzing Innocent companys macro environment, PEST will be used.
Political Environment
The United Kingdoms trading standards ensure the safety of the consumers. In addition to that, quality and fair trading standards are maintained by the UK. Office of Fair Trading is in charge of enforcing legislation. Various pressure groups such as ASA (Advertising Standards Agency) and Pepsi have raised complaints concerning Innocent to ASA.
Economic Environment
The United Kingdoms economic conditions have not favored numerous businesses for years. It is a result of the countrys economic recession. The recession impacted many businesses growth and the countrys gross domestic product. In addition, the consumers purchasing power was also affected by the recession period. As a result, the consumers could not purchase services and goods, lowering the demand for services and products. In addition, the United Kingdoms economic trends and situation have affected the companys costs, such as the cost of ingredients and energy.
Social Environment
Ethics of the business: Ten percent (10%) of the companys profit is channeled to Innocent Foundation, which empowers the community through various activities, including post-tsunami regeneration. In addition, the company ensures that its fruits are grown ethically in acceptable work conditions.
Health: Health awareness has grown tremendously in the United Kingdom via NPO advertisements. As a result of the advertisements, consumers have become more health conscious. The Innocent Company has capitalized on this advertisement by highlighting its products principal health benefits.
Consumers attitude: Consumers have become more health conscious. As a result, the Innocent Company is making its smoothies using pure natural fruits to meet the consumers demands. As such, consumers are willing to pay high prices for the companys products because of their high quality. In order to increase the choice of consumers, the company has developed a variety of products.
Brand image: Innocent developed a trust with diverse health benefits. In addition to that, the brand is affirmed with unique and subtle humor communication. The communication strategy is identified easily with products containing natural ingredients. Finally, poster and television adverts have helped in the strengthening of the brands image and growth of the company.
Technological Factors
The company utilizes green technology to carry out its operations. Furthermore, the company recycles its products. For instance, its packaging bottles are recycled after they have been used. The company has also advanced in terms of manufacturing.
Environmental Factors
The company has come up with ways to reduce the wastage of resources. The companys founders allow the companys employees to work in their expertise areas. The attitude of the companys staff is in the brand value testament, being good to the environment and the people. The morale of the staff has been boosted by the companys rewarding and friendly environment. The Innocent Company also offers healthy products and diverts all its effort towards interaction and communication. For example, they have a blog membership website enabling the company to get valuable consumer feedback.
In the current highly competitive market, Innocent Company should understand perfectly well the environment in which it operates. In addition, the company should focus on the external factors that impact its performance. The external factors impact the businesss internal factors and marketing strategies or objectives. Therefore, it should devise ways to deal with all its macro and micro environment to remain competitive in the market (Anonymous, N.d, All about innocent smoothies, n.d).
Strategic context
Ansoff Matrix
The Innocent company will determine smoothies market growth through the Ansoff growth matrix given the aggressive competition from Tropical Smoothies, PepsiCo, Happy Monkey, Locozade Sport, and Red Bull, just to mention a few. The company can develop its business strategy direction through market development and market penetration, diversification, and product development (Watts et al., 1998, p.101). Through product development, the company should come up with new types of product flavors, added value, or improvements, increasing its market share in the current market. In addition, the company should strive to exploit the existing market opportunities over competition without adding any value to its existing products. Segmentation strategy is the main issue affecting the Innocent Company. In that case, the company needs to expand into new markets by considering developed segmentation strategies. As such, they should satisfy the needs of both the young and the elderly population. It can also be achieved by the company going global. Furthermore, as shown in the figure below, the company needs to reposition itself into additional or other industry sectors or diversify into new markets and products.
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