Product life cycle
Product life cycle of AMP
Based upon the product life cycle stages, which include introductory stage, growth stage, shake out stage, maturity stage and decline stage, AMP's current stage proves to be the growth one. In fact AMP used to be in the introductory stage from around seven years ago or maybe more, at that time AMP was first introduced into the beverage market in Egypt. Built upon that evidence customers were not aware of what AMP is, as an outcome the purchase was limited. Accordingly AMP increased its market share through improved awareness among customers. Consequently AMP moved to the next stage which is the growth stage. In order to keep, maintain and expand this stage, the marketing strategy should be determined first. In fact marketing strategy is applied in either pioneer or follower companies. AMP is a using the follower strategy due to the presence of other competitors in the same market. In other words the existence of Red Bull, Bison, Burn and Power Horse before the arrival of AMP. AMP have benefited a lot from being a follower because it have witnessed the major positioning, product, marketing and technology mistakes that were made by the competitors. As a result AMP will be much resistant to common obstacles. Recently AMP plans to launch new products with new and competing features that include, more flavors, low calories and decaffeinated energy drink, which are currently underserved by Red Bull which is known as the major competitor in the market. More over AMP's marketing program is recognized as a balanced mixture of mass penetration, niche penetration and skimming strategy. In fact each of these strategies was adopted according to the PLC stage that AMP is positioned in.
In the introductory stage AMP used the mass penetration strategy by pushing its product to the market, through advertisements and free trials that help in encouraging consumers to purchase it. Furthermore as mentioned before that AMP targets A and B class the penetration pricing was used too. For instance the price of the can was 10 L.E, which can differentiate AMP and make it recognized as a classy product. As AMP moved from the introductory stage to the growth stage, the marketing strategy used was changed too. In this case AMP is applying the niche strategy, which focuses on reducing the price of product (from 10 L.E per can to 5 L.E).
Actually when talking about market share and how to grow the market share; it is important to decide whether you are a leader (pioneer) or a follower. In fact, when talking about AMP, it is well known that Red Bull was a leader and AMP was a follower. As we mentioned before that AMP is in the Growth stage in the product life cycle, there are objectives that AMP seeks in achieving them, the crucial and the main objective is to grow their market share. Thus AMP has to highlight its main competitors and starts working on how to be a powerful competitor. In order, AMP to compete in the energy drinks market; it has to distinguish itself from the other brands. Basically, PepsiCo is working on making AMP unique and different among its competitors.
For instance, both Red Bull and AMP are targeting A and B class, but the price of the can differs from one company to the other, as Red Bull costs 11 Egyptian Pounds however AMP costs 5 Egyptian pounds. Accordingly, people in Egypt link quality with price so they might think that AMP has a low quality, but actually the opposite happened as it is launched and produced by the second world wide beverage company which gave AMP a competitive advantage and made the customers trust AMP easily. Moreover, Red Bull is well known that he has the bigger market share; therefore AMP has to gain a competitive advantage by meeting unmet needs and wants of Energy drinks customer. For example, producing or launching a new product with different flavors, in addition to low calories and decaffeinated products.
Achieving growth in AMP's market share is not easy; actually it will start to seek for methods and ways to attack the other competitor. There are several strategies can be used to attack the competitor such as frontal attack, Leapfrog, flanking & encirclement, and guerrilla attack strategy. The first strategy is frontal attack which is to achieve a sustainable advantage over the competitors, for example lowering the price, or if you do not want to decrease your price then you can do more promotional activities and programs. From my point of view, AMP is using this strategy because when AMP was first introduced in Egypt in 2006, the AMP can was for 10 L.E but now AMP is for 5 L.E, but unfortunately the promotional activities that are made by AMP is not enough, actually AMP needs to increase its promotional program to enhance the customer's awareness. The second type is the leapfrog; this strategy depends on introducing a new product with new features over the existing competition. For instance, AMP should introduce a new product with new flavors, as it can also introduce products with low calories and decaffeinated, by launching these new products, AMP will gain a competitive advantage which will distinguish it from other competitors and it will help in attracting customers easily as you are satisfying an unmet need and want. Moving on to the third type which is flanking & encirclement, actually it is nearly similar to the previous type, as at this strategy the company is seeking a segment that has an unmet needs, and starts to work on satisfying and meeting their needs. But mainly, what differentiate the flanking & encirclement from the previous strategy is that it avoids direct confrontation. The last type is the guerrilla attack strategy, promotional program and sales effort such as coupon drops is the basic means for carrying the guerrilla strategy.
As previously mentioned that AMP is in the growth stage, it means that the market share of AMP has increase. Based on an online review, it showed that AMP's market share in 2006 was 3.6% on the other hand Red Bull was 42.6%, in 2007 AMP's market share has increased and reached 5.1%, and in 2008 AMP continues its growth by reaching 8% and becoming the forth energy drink all over the world. The following table will show you the market share among the competitors (figure 1), and a graph will illustrate and show you how they increased and decreased through the previous three years (figure 2). The following graph will emphasis the product life cycle of AMP (figure 3).
The Customer Environment
- One of the most important aspects that AMP takes into consideration is its customers. AMP is not only interested in their current customer but it is targeted to get new customers. AMP collects information that categorizes both the current and potential customers, the marketing manager also identify the needs of both kinds of customers. AMP is mainly facing its competitors by meeting the customers need and be flexible to any change can occur in the consumers' needs or wants.
- AMP is customer oriented, so it is always interested in knowing and getting more information about its consumer, and there is a method that AMP applied which is understanding the buyer behavior and the characteristics of AMP usage by the customer.
v Who are our current and potential customers?
- To identify the current customers and potential customers. Indeed AMP is using some characteristics to pinpoint its consumer; it can be demographic which is mainly based on the gender, age .Our target customer is 12 to 22 because they're interested in trying new types of drinks. It also uses the geographic characteristics to identify the location of the product and where it will be located? And to whom it will be placed? AMP is not cheap and can't be purchased by all categories of people. AMP distributes its products in the retail market, hypermarket and supermarket.
v Where do customers purchase our product?
- AMP is a well known product and is classified in the first class comparing to the Energy drinks. AMP is targeting class A and B of its customers. That is why it is sold in the hypermarkets such as Alfa market, Spinney's and Carrefour.
- AMP is also well distributed in small booths in the street so that different types of people who don't usually enter hypermarkets can go and buy AMP.
- AMP can be found in organization that are based on the hospitality themes such as:
- Cafés and restaurant: AMP is one of the most accepted and admired energy drinks that is presented in the Egyptian restaurant and cafes.
- Hotels: AMP is also found in all the Egyptian hotels which help to create high brand image for the people who prefers to drink AMP.
v When do customers purchase our products?
- Seasonal purchase: there are some occasions where AMP sales are increasing to reach the peak. For example in Ramadan, a lot of families tend to buy AMP every day to drink after long hours of fasting. For this reason, AMP launches a special promotional campaign to position AMP in a distinctive position in the customers' minds.
- Periodic purchase: AMP's customers tend to buy AMP products every day and in some times more than one time daily. People may not go especially to buy AMP but they buy it while they are doing their daily actions as it is the drink that gives them the power of their day.
v What do customers do with our products?
- Consumers choose AMP other than any different product because of its distinctive taste and the energy that it gives them.
- Ways of understanding customer needs AMP one of its core values is to reach to their customer and their mind and to know what exactly they need.
- Accepting complaints and suggestions through e-mails and phone calls for each country there is a phone number and website.
- Customer satisfaction surveys: For example, when you enter the Pepsi website, you will be asked to answer a customer survey in order to get your opinion about their products, prices, promotion, packages and many different fields and other Pepsi products.
Developing marketing goals and objectives
Organizations can develop its competitive advantages through analyzing the available opportunities in the market. Each company should develop its marketing plan's goals and objectives to set strategies that help the companies to gain more sources and implementing each single planning cycle without facing difficulties. Goals and objectives of any company must consist with its vision and mission to set accurate strategies to accomplish the firm's goals (Ferrell & Hartline 2007: 137, 139). AMP considers all the organization's functional areas specially the marketing function through developing the marketing goals.
Developing marketing goals
AMP sets realistic goals to be attainable. Maintaining cost differentiation and a high quality is the main goal of AMP. AMP is sold in Egypt with 10 EGP unlike their major competitor Red Bull that is sold at 13 EGP and that will give them advantage over their competitors. AMP focuses more on increasing its market share than gaining the highest profit. Also, it aims to satisfy its customers through caring of the customer's services. It based its process of setting goals on the collaboration and sharing the information between all functional areas to develop consistent goals. AMP's goals are more comprehensive as in each functional area in the organization. They developing their goals according to the nature of goals in the other areas, such as; when AMP's production department sets goals to develop a new product, they collaborate with the marketing department to set their goals of the advertising campaign related to the goals of the new product. AMP's goals clarify all the functional areas roles and tasks. AMP motivates its employees through developing some intangible goals of having the largest market share through having the best sales force in energy drink field (Ferrell & Hartline 2007: 139, 140).
Developing marketing objectives
AMP achieves its goals through using diverse objective to be able to monitor the progress and measure the outcomes of accomplished goals at each functional area. AMP has realistic objectives that were developed after addressing and evaluating the market by identifying customer, internal, and external environment that have been clarified in the situation and SWOT analyses. So, does not assume that their competitors are an "inanimate and inept” to maintain and develop the values perceived by the employees. AMP sets objectives that enable the company to continue in the market. The continues objective save the company time and effort to develop new strategies so, they have the time to achieve better and good implementation. AMP avoids the overload objectives to motivate, maintain, and develop the employees' creativity. AMP also has discontinues objective to raise their performance level of the current outcome factors and develop new objective's factors (Ferrell & Hartline 2007: 141). It enables AMP to generate new strategies to develop and expand its customer base and collect and analyze more data to improve its implementation for the current strategies (Ferrell & Hartline 2007: 142). AMP's marketing manager identifies the responsibilities of each member in the plan to be able to determine the time frame to achieve the organization's objective. It is vital and extremely important to know when they are going to gain the expected outcomes and the time to start implementing a new objective. AMP has two sets of plans; the first one covers three years which is called STRAT PLAN, the other covers one year which is called ANNUAL OPERATING PLAN. The AOP serves the Strat plan of AMP but with a specific execution points and activation that are used in the coming year (Ferrell & Hartline 2007: 143).
AMP's differentiating strategy is built on two complementary bases which are:
- Distinctive formula: the formula of AMP is very distinctive so its taste is very unique. Target customers prefer AMP on competing products because of its taste. This is a major competitive advantage for AMP.
- Distinctive image: AMP's image is very unique because of its high performance in the Egyptian market. Once AMP entered the Egyptian market, it gained a reputation of being an elite drink. This image, as mentioned in the promotion section, is based on perception rather than on reality. AMP's marketing team is very successful in creating a unique image in the customers' minds.
The channel power
Concerning the channel power, there is no doubt that AMP's managers are the powerful in the supply chain management this is true because all the supplier seek to work with a huge brand name like AMP in order to sell more of their goods and it is also a good fame for them to say that they are one of AMP suppliers.
The second part in the place analysis is the distribution:
From our interview we can hypothetically draw a distribution chart for AMP as follows:
The promotion strategy
In order to be in the top of the Egyptian market AMP is doing a lot of marketing efforts depending mainly on the integrated marketing communication.
- Print advertising: print advertising is a good way to reach special segment of customers, it reaches consumers in a respective context, and can be much targeted. Print advertising can be found in Magazines, periodicals, serials or newspapers that are published in a daily, weekly or monthly basis. AMP prints its ads on posters, magazines such as Teen Stuff, as the target customers are mostly attracted by these kinds of advertising. Its ads are very effective, attractive, and can immediately grab the reader's attention. Also the print ads and billboards of AMP are found in lots of cafes, internet-cyber and PlayStation cafes where teens spend most of their time and this complements its marketing theme which is connected to entertainment and enjoy of life
- Television advertising: is a broad reach mass media that is greatly used by AMP marketing team in order to communicate their marketing message.
- Radio advertising: radio advertising in Egypt has passed through a lot of declining years because of the unpopularity of radio channels among youth. But this view has been changed in the last decade after the launching of Nogoom and Nile F.M. radio channels and there is a dramatic increase in the youth attractiveness to those music radio channels. A lot of the famous brand names including Pepsi, Mobinil. Vodafone, Lipton and Fine began sponsoring Programs and advertising on those channels. AMP still lacks the appearance in those radio channels and this could be a weakness in their promotional strategy that we recommend to be fixed in the next year plan
- Online advertising: online advertising is a form of advertising that uses the Internet and World Wide Web in order to deliver marketing messages and attract customers. Pepsi as a worldwide brand name doesn't need e-mail spam, search engine banners and other online ads to position its brand. AMP is just marketing through its very famous website and its name is put with any product or event it sponsors. AMP has its own section in PepsiCo website. Its website has enough information about its brand, products, and company which provide the consumers with valuable knowledge about the brand. It is an interactive and dynamic site where the consumers viewing the website can listen to background music and flip through the flash content. The site has official online stores for the latest in Pepsi fashion under shopping category. The site also has others features such as a hot spot, topics about sports, fashion, car culture, and entertainment. In addition to its website, PepsiCo places banner ads on famous websites suc
- h as Yahoo and Msn in order to attract more visitors to the website.
- Sponsorship / Public relations/ Celebrity endorsers: Compared to Red Bull. AMP is not sponsoring events like it should. They do however admit that sponsoring events will increase the market awareness of their product and will be able to maintain its market share and generate customer loyalty.
Implementation and Control plan
The most important part in any plan or process is the implementation part, where any idea is transformed into real life activity and if any mistakes go wrong the whole plan might be jeopardized. Then comes the control part that sets the right track for the plan, at this stage the strategy must be evaluated and measured to see whether a corrective action must be taken or not.
First is the implementation part and at this stage the company uses most of its power to achieve what they want. As known the aim of any company is to reach their target audience in the most effective way, raise product awareness, and increase satisfaction in order to gain profit. And with PepsiCo their main aim is not only to increase profit but also to increase their market share and become the leading worldwide soft drink company in the world. And for that to happen we will choose to do that in multiple steps.
For AMP to succeed we must first raise product awareness by using all of their media channels, so people would be familiar with the product. And that would happen by increasing advertising such as TV ads which are the most successful, in channels such as MBC, Rotana and Melody that highly viewed by young people that are the target audience. Radio ads are a trend now a day in Egypt with radio channels such as Nile FM and Nogoom FM. We would also increase AMP appearance on billboards in areas such 6th of October Bridge. We could also sponsor events such as Beyonce's concert in Port Ghaleb. Facebook is now another way to use for advertising by publishing AMP ad in.
After people becoming aware of our product, we must then deal with our competitors. We will choose a price that is less than our major competitor that is Red Bull that is sold at 11 Egyptian Pounds. But place our price higher that other competitors such as Bison and at the same time pointing out the differences between those product and ours. We will start to compare our product with our competitors such as taste, smell, price, as well as nutritional benefits that our product contains. And point out all our competitive advantage.
Then comes the control part that must be done properly so the plan would be achieved as wanted. Here several questions must be asked:
- Has AMP become popular?
- Did AMP sales increase?
- Is AMP drink wanted by supermarkets?
- Are people satisfied with AMP product?
These all are questions that will help a lot in evaluating the strategy used. Surveys can also help in assessing the situation. And with answering these questions it will be easy then to know the point of weakness and improve it.
A contingency plan is a plan that is created to be used as a backup and preparation for specific situations that could go wrong or any unexpected situation that could occur at any time that can damage your work. These plans are also known as Back-up plans, Worst-case scenario plans, Scrap situation or Plan B. These plans are used very carefully to help any business recover from serious damage in the minimum time with the minimum cost.
In the case of AMP energy drink some of the things that are likely to go wrong are like if the market share or sales volume of AMP did not increase with the expected percentage and in the specified period of time or since there are a lot of competitors in this field of energy drinks what if the marketing plan for AMP failed to achieve the goals that the company planned for and these competitors exceeded them by many levels and many ways. Another thing is what if AMP could not reach their target customers? Actually a lot of questions could be asked in this field of things going wrong, but the most important part is how to back-up those threads if they really happened. Several reasons could be behind the use of the contingency plan in AMP for example.
- The marketing strategy could have been inappropriate and as a result it did not serve the organization's mission and vision.
- The taste of AMP might not be liked by the consumers which might lead to a huge failure of the product and result consumers to go for another competitor.
- The implementation was inappropriate as well, which means that the implementation process in itself was not necessarily of poor quality but was one which did not help the company to succeed.
- The implementation process was not well managed and hence poor execution of the marketing strategy has led the company to fail in achieving its marketing goals and objectives.
- There might have been several changes in the internal and external environments in the period between developing the marketing strategy and its implementation.
During the planning period there are a lot of actions to be taken if these threads appeared. Some of these actions are
- We first have to know what are the current marketing activities for AMP and their performance outcome right away.
- Collect information concerning changes in the internal and external environments that can affect current marketing activities which are still being implemented.
- Make surveys to random people in the streets or regular customers to know their feedback and opinion about how to improve the taste for example or even question them about the price.
- Explore various solutions to improve the performance of marketing activities.
- Provide another supported marketing goals and objectives that could be used if the first ones failed.
- Ferrell, O.C. & Hartline, M. (2007) Marketing strategy, 4th ed. South-Western.
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