The aim of this report is to evaluate the marketing strategy of Lucozade in the United Kingdom. Lucozade is a successful company in the industry of energy and sports drink. The exploding growth in the energy and sports market means the needs of this kind of healthy food is increasing rapidly. It is becoming a popular food culture not only in the United Kingdom but also the whole world.
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This report uses marketing mix as a tool to analyse the marketing strategy used by Lucozade to understand how the company promote its products. After that, by analysising the market share and the performance, the brand’s position in competition is identified. Then, through comparing with Lucozade’s rival- Red Bull, strength and weakness are showed. SWOT analysis is used in this part. Next, the recommendations will be given to the company after the analysis to increase sales and expand market share.
1.Overview of Lucozade
- 1.1 History of Lucozade
Lucozade is a sports energy drink. It was first launched in 1927 by a chemist in Ireland. At that time, its name was Glocozade till 1929, it was bought by Beechams rebranded into Lucozade .From 2000 to present, it is owned GlaxoSmithKline pls which also produces healthcare products such as vaccines. It extended the brand into Lucozade Sport, Lucozade Energy, and Lucozade Alert (Wikipedia, nd).
- 1.2 Lucozade’s Achievement
Lucozade is the original energy drink as well as the category driver. The sales of Lucozade Energy was £150 million in 2003 (Facebook, nd) and it went up to £229.3 million in 2004 and 253.3 million in 2005(Nielsen, 2006).
In 2010, Lucozade appears on the list of Top Britain’s 100 Biggest Brands, ranking the 9th (Nielsen, 2010).
2.1 Marketing Mix
Brassington F. and Pettitt (2006, p.30) shows that marketing mix “as the combination of the major tools of marketing was first developed by Borden in 1964,and the mnemonic ‘4ps’ describing those tools was coined by McCarthy(1960).They also points out that the marketing mix can help the company understand the nature of customers and their needs to act on the information, in order to develop and implement marketing activities that actually deliver something of value to the customer”.
2.2 4Ps analysis of Lucozade
- 2.2.1 Product
“Lucozade is a glucose carbonated drink. The drink is a highly concentrated source of energy which is quickly assimilated into the bloodstream. It is easily digested” (Banyard and Philip, 1999, p.70).The company always works hard on new product development since it is launched. Till 2010, it has four product lines: Lucozade, Lucozade Energy, Lucozade Sport and Lucozade Alert.
Lucozade Energy: “Being launched in 1929, Lucozade Energy is the original product and is designed to provide an energy boost. It provides glucose fuel for physically active people. It is available in the following 6 flavours: Original, Lemon, Orange, Apple, Cherry and Tropical” (Facebook, nd).
Lucozade Sport: “Lucozade Sport was first launched in 1991 and was the UK’s first isotonic sports drink”.(Lucozade Website,nd) “It is developed to meet the needs of athletes, football player and those sports lovers. It also launched Lucozade Sport Hydro Active: It is a new fitness water specially designed for exercisers and gym-goers”(Facebook, nd). “In 2010, Lucozade sport is attempting to extend its potential audience with the launch of a new low calorie sports drink called Lucozade Sport Lite, which contains 50 calories and already appearedÂ at the end ofÂ MarchÂ in shops in UK”(UK Marketing News Online,2010).
Lucozade Alert: “Lucozade Alert is designed to sharpen your mental performance, is low calorie – 45 calories per bottle and has a great refreshing lemon flavour. It contains caffeine to help improve Focus, Alertness and Concentration”. (Facebook, nd)
- 2.2.2 Price
Being a historical company, Lucozade has gained more experiences on how to reduce the cost of producing, hence, it is cheaper, compared with Red Bull.
- 2.2.3 Promotion
For Lucozade, the recipe to success is science and product promotion.
advertising and sponsorship
Lucozade is very good at using advertising and sponsorship as tools for promotion. On one hand, in terms of ad campaign, their advertisements on TV always keep pace with their changing target market. To illustrate, it was used to boost ill or sick children’s energy at first and their target market was mothers, hence, its first advertisement in 1960 was “about a mall boy who was recovering from being ill and he drunk the Lucozade with his mother” (Coursework, 2004).Nextï¼Œthe company aimed at athletes and sports lover, therefore, the Olympic decathlon champion, Daley Thompson showed in the TV advertisement .In 2001,Lucozade wanted to target at new market segments which is teenagers, the company used Lara Croft who is a character in the famous video games called Tomb Raider to attract teenagers and children since they all love the video games(Coursework,2004).On the other hand, the company also sponsor famous player and teams. For exampleï¼ŒDavid Jobber and John Fahy(2009:236) points out that “sponsorship of athletics by Smithkline Beecham for its Lucozade Sport brand reinforces and its market position and its energy associations”.(åäººæ•ˆåº”)
Cooperation with Ipod
Recentlyï¼Œwith the increasingly big fans of Apple, young people are seen walking on the street with Ipod clipped on their belts, Iphone hold in their hands. To better promote and better compete, now individuals can find FitCoach which is supplied by Lucozade Sport on the iTunes download page. It is a free software for Ipod and can help people keep fit and lose weight.
In addition, in September 2010, Lucozade Energy offers customers to win an Iphone every hour. Everyone has a chance as long as he/she buys a bottle of Lucozade Energy.
- 2.2.4 Place
“Place is a very dynamic and fast moving area of marketing. It covers a wide variety of fascinating topics largely concerned with the movement of goods from A to B and what happens at the point of sell”.(Brassington F. and Pettitt,2006,p.31)Lucozade is sold in many places in United Kingdom such as retail chains like ASDAï¼Œschools, gyms, sports center, even in desert stores or bread stores.
3. Competition position
- 3.1 Energy and sports drink market size
“In today’s market, every industry and business is very competitive and tough with so many different brandss ,the historical ones, the news ones. However, in the cold market, the market of energy drinks boosts every year. The market has proved recession proof and continues to perform impressively.Value sales of the sports/energy drinks market are forecast to grow from £941 million in 2008 to £1,035 million in 2009.Over the next five years the market will grow by 48% to reach 1.5 billion in 2014” (Mintel oxygen data, 2009, p.8) .
- 3.2 Market share of Lucozade
Cara Traboulsi et al. (2004,p.6),gives an extensive commentary on the market share that in 2003,Lucozade already had the largest market share(60%) followed by the major competitors such as Red Bull and Powerade with the value share of 27% and 4.50% individually .The rest of the market is made up with some small brands. It can be seen in the first pie chart.
In 2010, Lucozade is the leader in United Kingdom for its market share in United Kingdom and Ireland is 90%(Bihua Ye,2010,p.19).The second pie chart shows the market share in Ireland. Lucozade still dominates the market with 75% value share (Begleys,nd).
- 3.3 Compared with Red Bull:
Lucozade was the first energy, however, in the market of the energy drinks today, many Lucozade’s competitors have raised, the main and the most powerful competitor Lucozade has to face is Red Bull
“Red Bull is an energy drink brand which was launched in Austria in 1987. In just 20 years it has gone on to become a global best-selling beverage brand” ( ).
It is clearly to see that the two companies have some similarities. First, they both target young people .Second ,not just Lucozade, Red Bull is also very good at advertising . “The company spent around 30 percent of its annual turnover on market and sponsorship”( ).
However, Shirisha Regani pointed out that “Red Bull was unable to successfully extend its product line although a sugar-free version was introduced in 2003″( ) ,which puts Lucozade into a more advantage position while competition since Lucozade has successfully extended their brand.
Lucoade used to be positioned as an invalid’s drink. ( )”During the period 1974 to 1978 the sales of Lucozade declined consistently” ( Banyard and Phillip,1999,p.70).The market changed that time, people had better medical technology and better living conditions which take the place of Lucozade. SmithKline Beecham, the brand’s owner, repositioned the brand from its original position as thea product for the sick to a brand which is essentially for the fit and healthy. ( )In the early 1990s,Lucozade successfully reinvented itself as a sports energy drink and by the end of the decad it was looking to step into the main stream and become a brand that would be sold out of the same fridges as Cock and Pepsi.( Tom Farrand, David Nichols, Tom Rowley,Matt Avery Journal: Young Consumers P12 2006 Volume:7 )
- It has many different flavors to meet the need of different kind of customers and attract customers.
- It tastes very nice.
- Lucozade still dominant the energy drink market.
- The company has good reputation. Lucozade was established in 1927,which means it was the first energy drink product, the longer history means the company has longer time to build the brand into success.
- Lucozade always focuses on developing new products such as Lucozade Sport Lite, it can be benefit, however, people are curious and always want to try new products, which will put the old products such as Lucozade Energy into dangerous position. Microsoft is an good example to approve this, less people are using Windows xp after Windows 7 is launched.
- Lucozade is a soft drink but contains 0.01% ethyl alcohol to aid flavouring which goes against the concept that Soft drinks are non-alcoholic. (BBC News Online,2004)
- Lucozade has the potential to expand their market share.
- It faces the threat of being substituted by Red Bull
Lucoade has a great scientific team trying to work on how to develop people’s energy.
The boosting energy market,expand the market share in the whole beverage other than in the energy drink market.Since Lucozade is already dominant in the energy drinks market, what the company should do now is try to remain the old customers and attract new customers.
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