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PEPSICO GATORADE GOLD MARKETING PLAN 1

PepsiCo Gatorade Gold Marketing Plan

Dave Ruffin & S. Darren Hamilton

MGMT530 - Marketing Strategies

November 4, 2013

Jim Ray

Southwestern College Professional Studies


Executive Summary

Gatorade has an advantage over competitors in the sports drink industry. Gatorade has

been profitable ever since establishing itself as a first market entry. Gatorade produces a quality

sports drink based on scientific research. Although Gatorade Thirst Quencher is the company’s

core product; Gatorade offers a variety of products to meet their customer’s needs.

Founded in 1965, Gatorade is currently owned by PepsiCo. Gatorade is a very important

and valuable company in PepsiCo’s portfolio with a brand value estimated at approximately $3.4

billion dollars. Gatorade is responsible for approximately 33% of of PepsiCo’s annual earnings,

and has the majority of market share in the sports drink industry.

Gatorade has a comprehensive marketing strategy and has allocated approximately 100

million dollars to ensure that its products receive necessary exposure. Gatorade uses multimedia

avenues for marketing, which include Facebook, Twitter, and an elaborate website. Because

Gatorade is a sports drink, the company forms valuable partnership with elite professional

athletes to help market its product.

Gatorade will develop a new sport drink, Gatorade Gold, infused with vitamins that

targets the 50 plus age group. In order to be successful, the company must test market the

product, create an advertising campaign to reach the intended market, and ensure that retailers

are willing to carry the new product line. The product will be targeted at the 50 plus age group

that maintains an active lifestyle and is concerned about personal health. The Gatorade Gold will

be a convenience product, so it is vital that supply chain and distribution issues make the product

readily available when and where the consumer wants to purchase it. Since PepsiCo and

Gatorade have good brand awareness and a reputation for quality, pricing can be slightly higher

than the competition and still result in high sales. The initial launch will include coupons and


free samples, drawings and competitions, and discounted pricing and free marketing supplies to

retailers to increase participation. The product will be launched in the next three months.

In order for PepsiCo and Gatorade to support the marketing strategy for Gatorade Gold,

the company will have to increase staff levels in marketing, support, research and development,

and customer service. All of the staff will need to be educated to the purpose of the new product

and know how to answer retailer and consumer questions regarding the product. Expanded

facilities for production will be necessary as the product becomes more popular.

Formal and informal controls will be in place to ensure employee participation and

cooperation with the marketing strategy. Investments into research and development, education

programs for employees, manager commitment, and measures of success will be part of the

formal controls for the marketing strategy for Gatorade Gold. Informal controls include personal

employee goals, group influence, and corporate culture influence. Audit systems will be in place

that measure time and profit measures to determine the level of success of the new product.

If Gatorade and PepsiCo dedicate a marketing team to promoting and educating about the

new Gatorade Gold, the company should have a new product line that taps markets the current

Gatorade product does not reach. With the current marketing aimed at 13-25 year olds, the new

vitamin infused sport drink will cater to the baby boomer generation, which is one of the most

health conscious, physically fit, and wealthy generations yet.


History

Gatorade is a popular beverage built on a sports theme. In 1965, researchers at the

University of Florida, developed Gatorade after then head football coach Ray Graves requested a

liquid that could be ingested to help replenish body fluids that his athletes lost during physical

exertion in warm weather (Walters, 2001). The drink came about quite quickly in terms of

development. After experimenting with different concoctions for approximately 1 month or so,

the sports drink made its debut in October 1965 when developers served the sports drink to

players in the Florida – LSU football game. While the drink was originally called Cade’s Cola,

named after one of the developers, it was changed to incorporate the nickname of the University

of Florida; the Gators (Walters, 2001).

Nothing promotes a product like success and that is exactly what happened to the Florida

Gator football Team. Almost immediately the team began winning and in just its second season

of consuming Gatorade, the University of Florida Gators won their first Orange Bowl game

against the Yellow Jackets from Georgia Tech, the team attributed the victory to drinking

Gatorade (Gatorade, n.d.). With the team promoting the drink, Gatorade gained instant attention

with the athletic community. Before long, requests were coming in from other college teams

wanting to purchase Gatorade for their athletes.

In 1967, Stokely-Van Camp, agreed to produce and market the new sports drink, which

was later sold to Quaker Oats in 1983 (Leith, 2000). In 2000, both Quaker Oats and Gatorade

were purchased and continued to be manufactured by PepsiCo. It was believed that Gatorade

would fare better in distribution under PepsiCo and give PepsiCo a huge psychological

advantage over Rival Coca-Cola (Foss, 2000). Since its introduction, Gatorade had become a

mainstream beverage for athletes who were thirsty (Foss, 2000). The sports drink is


scientifically formulated and proven to quench thirst, replace fluids, and provide carbohydrate

energy to improve athletic performance (PR Newswire, 2007). Today, Gatorade can be found on

the sidelines of many colleges as the official sports drink (Gatorade, n.d.).

Products Produced

Product innovation is the development of products that either have superior attributes to

existing products or that are new to the world (Hill & Jones, 2013). Companies engage in

product innovation to develop a competitive advantage over rival companies trying to position

themselves in such a strong manner that it discourages other companies from entering the

market.

When Gatorade first released its Thirst Quencher sports drink; the drink was available in

only lemon lime and orange. Gatorade understood that to appeal to broader variety of customers

they would have to offer more flavors in their sports drink. Now Gatorade offers that particular

product in many flavors.

Product variation is a process of creating products in the same line, but that offer the

customer a choice such as in size, color, or taste (Hill & Jones, 2013). Offering more variety can

help create a competitive advantage over rival companies. Gatorade offers more flavors and

portion sizes than either PowerAde or All-Sport (Tarigin, 2007).

Even in the 90’s, when Gatorade had 80 percent of the sports drink market they were

committed to expansion of their products to help satisfy their customers’ needs. Gatorade had

developed a concern about the immediate thirst market. While customers were willing to

consume Gatorade during athletic events, most people outside of those venues would simply

rather consume water when thirsty. In response to this void, Gatorade released its Frost line.


Gatorade Frost was based on the same original thirst quencher formula, however, offered lighter

colors and flavors (Theodore, 1998).

Sometimes, when companies expand their products it comes in response to competition

(Ferrell & Hartline, 2014). When PowerAde and All-Sport first decided to enter into the market,

Gatorade felt the pressure of competition as Gatorade’s market share fell from 82.4% to 73.1%

by 1997 (Tarigin, 2007).

An example of Gatorade’s product line expansion was when they decided to release a

new formula sports drink with nearly twice the sodium and three times the potassium as their

original drink (Terhune, 2005). The new product called Endurance was in response to rival

Coca-Cola’s PowerAde, and was designed to assist athletes in eliminating cramping and

dehydration (Terhune, 2005). In 2010, in an attempt to persuade more athletes to consume their

products, Gatorade launched a new line of sports drinks called Prime, Perform, and Recover

(Sterrett, 2009).

Today, Gatorade has an extensive product line which offers three different platforms of

sport drinks. The platforms are the G Series, G Series Fit, and G Series Pro (Zmuda, 2011).

Gatorade also offers the G Natural; which appeals to the health conscious consumers who desire

a low calorie version of the drink.

Major Challenges for the Near Future

In the near future, Gatorade’s overall challenge will be to continue to defend itself against

rival PowerAde, and other businesses that try to gain market share in the sports drink market.

Sports drink experts agree that there is not much more that can be done in the lines of developing

a drink that replaces lost fluids in the human body. While Gatorade currently dominates the


market in sports drinks, they also recognize that they cannot afford to become complacent while

other companies steal market share (Jaroff & Washburn, 1992).

One of challenges that Gatorade faces in the near future is securing the young consumer

market. Gatorade believes that it must appeal to teenagers to be competitive; however, Coca-

Cola’s PowerAde has the same philosophy and will be competing for the same customers

(McWilliams, 2010). There is a valuable target opportunity for sports drink companies, as the

teenage years are a time when the brand preferences really start to settle in (McWilliams, 2010).

By attracting teenage customers and trying to convert those to loyal customers should benefit

Gatorade in the future. But with so many choices of sports drinks available these days, there is a

risk that the market will be saturated and potential market share will be spread out amongst other

companies.

An example of how the two top sports drink companies are working to capture a younger

market is a testament to their dedication to develop innovative products. PowerAde released a

product called PowerAde Play; a drink specifically geared at younger athletes (McWilliams,

2010). The drink offers less sugar with more vitamins and nutrients, designed to appeal to the

parents of children who are concerned about sugary drinks. Coca-Cola’s PowerAde Play is a

drink which has 60 calories and 15 grams of sugar per 12-ounce bottle. By comparison,

Gatorade’s new "G Natural" brand has 75 calories, and their "G2 Natural" has 30 calories

(McWilliams, 2010).

Coca-Cola’s PowerAde is not the only challenger that Gatorade has to worry about in the

near future. Other challenges will likely come from enhanced water drinks that are beginning to

infiltrate the market and take share away from the sports drinks. Brands like VitaminWater and

SmartWater are becoming popular and are being offered at a less cost to the customer.


The Internal Environment

An assessment of marketing objectives, strategy, and performance should be conducted

periodically by businesses (Ferrell & Hartline, 2014). Gatorades overall strategy is to dominate

the market of 13-24 year olds who lead an active lifestyle. This is an attempt to get younger

customers to use Gatorade products. Gatorade strategically selects popular professional athletes

to help them market their brand. The company has built strong relationships and affiliations with

the NBA, NFL, NHL, MLS, and AVP Pro Volleyball association. Gatorade also uses multi-

media outlets and has engaging online content for the public to browse and learn about their

products.

Gatorade has also experimented with labeling of their products. In 2008, it was

announced that Gatorade was giving its label a facelift by utilizing a large G on their packaging.

The G was supposed to appeal to a younger, hip customer; representing the heart, hustle and soul

of athleticism (Wasserman & Hein, 2008).

As Gatorade has been challenged by rival sports drink companies; Gatorade’s innovation

helped them maintain a competitive advantage over others by introducing variations of their

sports drink to satisfy specific customer needs. To help them achieve their goal, Gatorade

reviews and continues to adapt their marketing strategy. For example, Gatorade has used TV

advertising heavily in the past, in an effort to boost awareness. Gatorade’s G Series line of

Prime, Perform, and Recover has all been featured prominently on the television (Zmuda, 2013).

However, in this next year the G Series Perform will be the focus of television ads, while Prime

and Recover beverages will be promoted primarily through print advertising (Zmuda, 2013).

Print advertising allows the company to articulate the product better, allows Gatorade the


opportunity to better explain why their customers should be drinking the product before and after

activities (Zmuda, 2013).

Despite the marketing change, Gatorade anticipates that total marketing spending will be

similar to the previous year where they used $101 million on measured media (Zmuda, 2013).

As the focus shifts to Gatorade’s newer products, PepsiCo must take care to not lose touch with

or move too far away from Gatorade’s core brand Thirst Quencher.

Gatorade which is organized under the umbrella of PepsiCo’s Americas Beverages

reported net revenue of $21.4 billion dollars in 2012, which represents approximately 33% of

PepsiCo’s total net revenue. The 2012 numbers were down slightly from 2011, where the

company reported revenues of $22.4 billion, however reflects an increase from the numbers in

2010. (U.S. Securities, n.d.). In 2012, Gatorade had approximately 74% of the market share of

the non-aseptic sports drinks with annual sales revenue of approximately $122,800,000.

Like other beverage companies, Gatorade is brought to market through direct-store-

delivery, customer warehouses and distributor networks. The system used depends on customer

needs, product characteristics and trade practices (U.S. Securities, n.d.).

The Customer Environment

The most critical part of the environment are the end users; the consumers of the product.

Gatorade understands that while their products are primarily geared toward athletes, there are

other active lifestyle customers who may want to purchase Gatorade. Demographically,

Gatorade targets teenagers to mid-20’s adults, who have grown up playing sports. Many of them

have idolized professional athletes and have come to associate the Gatorade brand with athletic

performance.


Gatorade’s businesses are influenced by different seasons throughout the

year; as their beverage sales increase during the warmer months and

decrease during the cooler times of year (U.S. Securities, n.d.). Weekly beverage

sales are generally highest in the third quarter due to seasonal and holiday-

related patterns, and generally lowest in the first quarter; however in its

entirety the seasons do not have a substantial impact on their financial results (U.S.

Securities, n.d.).

In 2010, in hopes of staying in tune with their customers better and to kick start sales,

Gatorade launched what they call “Mission Control” (Bauerlein, 2010). Mission control is

essentially a monitoring process which looks at social media in an effort to see what customers

think about Gatorade products (Bauerlein, 2010). Gatorade knows that many of their customers,

especially the younger ones in their target group, utilize the internet and socialize using Twitter

and Facebook. By monitoring social media and websites, Gatorade has found a way to look at

the behaviors of customers, and key in on their likes and dislikes about the product. Gatorade

hopes to use the information they obtain to improve marketing.

Gatorade has proven that they pay attention to their customers concerns. Just this year, it

was announced that Gatorade was removing brominated vegetable oil, an emulsifier, from its

citrus flavored product (Eng, 2013). The change was brought about by a teenager’s petition

urging Gatorade to remove the substance from its sports drink.

The External Environment

An organizations external environment is often referred to as its operating environment.

It is those conditions and factors that surround Gatorade that influence the choices they make and

determine the risks and opportunities that are present for them. Assessing the external


environment helps organizations identify strategic opportunities and threats within their

operating environment ultimately helping them determine how they will pursue their mission

(Hill & Jones, 2013).

Gatorade, which is owned by PepsiCo, is positioned extremely well for long term

expansion in China. Tingyi Holding Corporation, a Chinese food and beverage company, have

joined PepsiCo to form an alliance to manufacture, distribute, and sell PepsiCo’s products which

of course includes Gatorade (Entertainment Close-up, 2012).

In 2013, Gatorade has help solidify its marketing with China using a similar type strategy

that has worked well in the United States. Gatorade has had success exposing customers to their

product by utilizing popular professional athletes as sponsors for their products. While

attempting to connect with the Chinese youth, Gatorade is advertising their product by

showcasing former basketball great Michael Jordan with the up and coming Chinese star Jeremy

Lin. The ad makes a reference to both players being ambassadors to the game; and of course

there is the Gatorade connection.

Strengths

Gatorade was a first entry company which has made it difficult for other companies to

take substantial market share away from them. This has helped Gatorade become a market

leader in the sports drink industry. Established market leaders in any industry are difficult to

overtake.

Gatorade offers a unique product; an electrolyte restoration beverage. Other more

generalized products such as snack crackers or bread are not specific enough to deter other

companies from trying to produce similar items. It is this first market entry and the uniqueness


of the Gatorade sports drink that makes it more difficult for other new companies to enter into

the market.

Gatorade has name recognition which contributes heavily to the formulation of loyalty to

their brand. People associate Gatorade with a quality sports drink that is effective in replenishing

lost electrolytes during workouts or other activities. Certainly contributing to Gatorade’s brand

recognition has been in the use of prolific athletes in their advertising. Michael Jordan and Tiger

Woods (before he fell from grace) were the pinnacle of greatness in their respective sports.

Now, with basketball superstar LeBron James endorsing Gatorade products, the company is

optimistic that their marketing will continue to reach athletes and the younger generation.

Part of Gatorades success is that their customers make a connection between consuming

Gatorade and increased performance. This connection helps customers choose Gatorade

products when offered a choice between those and products from a competitive company.

Gatorade offers its customers a variety of flavors to choose from; having come a long

way from its original lemon lime and orange flavors. Offering different varieties of a product

helps customers stay with the Gatorade brand. Taste is a big consideration with food and

beverages as many customers will try different products if they have to in order to satisfy their

taste needs.

Weaknesses

Gatorade has in some ways saturated the sports drink market. Customers have much to

choose from, which may detract from their core product which was “Thirst Quencher.” With so

many products, it may make it difficult for Gatorade to adequately concentrate on a particular

product. Gatorade has expanded into other areas which include nutritional bars and powders.

Gatorade has to be careful and guard against moving to far away from its core product.


While there will be attempts to breach Gatorade’s market share from companies who

offer energy drinks; Gatorade may find itself in a difficult position to defend itself. Gatorade’s

money market comes from selling sports drinks that are scientifically formulated to rehydrate

individuals. Energy style drinks, can actually contribute to dehydration which just seems at its

face to be a conflict in business philosophy.

Likewise, there are companies that market other refreshing non-carbonated drinks, such

as Vitamin Water. While these companies do not propose a major threat to Gatorade’s sports

drink market, they do take a small share of Gatorade’s potential customers. Probably the bigger

issue though is that if the market continues to grow, Gatorade currently does not offer anything

to readily compete with those companies.

Unlike the soda pop industry, the consumption of Gatorade is somewhat theme based.

The product is marketed and centered around active lifestyles; primarily sports. It seems more

and more that professional sports are the victims of labor management disputes, which have

resulted in some player lockouts. This can affect marketing and sales of Gatorade products; a

problem that energy drinks and water variations do not have.

Opportunities

Gatorade needs to take advantage of conditions in its environment, which will allow them

to develop strategies that can help them become more profitable (Hill & Jones, 2013).

Understanding the opportunities that exist is key to identifying strategies.

People appear to be becoming more fitness conscious which includes the food and drink

that they consume. This is substantiated by the rising enrollment in health clubs and fitness

centers (mynewsdesk.com). As part of this movement, it makes sense that people may begin to

move further away from the consumption of soda pop, opting for healthier refreshments.


Statistics already show that there has been a decline in soda pop consumption. While soda pop

still accounts for about 40 percent of the beverage industry; ten years ago that number was a

robust 50 percent (Choi, 2013). If this trend continues, there is there is an opportunity for

Gatorade to strengthen its market share.

According to research and marketing, there may be an opportunity in the global market

for high-impact natural flavors in food and drink (researchandmarkets.com). This total industry

is currently worth approximately $3 billion dollars and is growing very quickly

(researchandmarkets.com). There may be an opportunity for Gatorade to develop products with

natural flavors in the future.

The sports drink category continues to be a valuable market and forecasts predict the

market value to reach $55 billion by the year 2018 (mynewsdesk.com). The projected growth in

the industry is supported by science as the components of sports drinks are essential for

hydration during exercise; and the fact that more sports drinks are being used as refreshment than

before (mynewsdesk.com)

Threats

Gatorade is aware that certain conditions in the external environment can threaten the

profitability of their business (Hill & Jones, 2013). While Coca-Colas PowerAde remains a

threat to Gatorade in the sports drink category, there are other threats for Gatorade to be

concerned about. Some of the companies who sell different types of Vitamin type water drinks

could potentially sway customers their direction. Additionally, with the advent of the new

energy style drinks, Gatorade may feel pressure from companies who offer a variety of flavors.

These companies, just like Coca Cola will also target the 18-24 year old males and compete with


Gatorade’s current customers. These energy drinks have become popular with many customers

and continued product interest may threaten Gatorade’s market share with sports drinks.

With the downturn of the economy and the current financial state of many Americans,

customers are apt to become much more selective and prioritize their purchase items while in

stores. If customers have to make a choice between buying food or paying a bill and whether to

purchase sports drinks, the latter will likely be passed over.

It is no secret that there is a rivalry between Coca-Cola’s PowerAde and PepsiCo’s

Gatorade. When a rivalry exists there is a competitive struggle between companies over market

share. Although Gatorade has the lead in market share over PowerAde, nevertheless, rivalries

can lower prices and raise costs subsequently squeezes profits from an industry.

Additionally at some point, most brands reach a high point in which loyalty and

recognition levels off. Essentially, the craze that got the customer there in the first place begins

to wear off. While Gatorade continues to try and reach new customers with innovative

marketing, statistically the United States is becoming an older country. Older customers will

most likely not purchase Gatorade’s product with the same intensity that their targeted market

does.


SWOT Matrix

STRENGTHS WEAKNESSES

1. First entry – established market dominance 1. Product variations/focus concerns 2. Brand Loyalty 2. Defensibility against energy drink craze 3. Unique Products 4. Professional athletes endorsing products

OPPORTUNITIES THREATS

1. Expansion through Chinese market 1. Coca-Cola’s PowerAde2. Reduced soda pop demand 2. Energy drink business3. Expansion into natural flavors 3. Vitamin Water


Developing Competitive Advantage

To be successful, companies have to develop a competitive advantage which will allow

them stay and compete in that market (Ferrell & Hartline, 2014). Gatorade now comes in many

flavors and varieties since the initial product was developed in the mid-60s. The strategic release

of innovative products is one way to establish a competitive advantage. Companies do this to

take advantage of an opportunity that is present in the market, thereby making the company

stronger, or they do it as a counter after rivals have released a newer product then theirs so they

are more competitive.

A competitive advantage is created when a company does something better than other

rival companies (Ferrell & Hartline, 2014). Essentially, the company positions themselves so

that they have an advantage over others in meeting customers’ needs. A company’s profitability

will be greater than the average profitability of the other companies in the industry (Hill & Jones,

2013).

Gatorade was a first mover into a then non-developed market. First mover companies

can create a competitive advantage because they offer a product or service that is new to

customers. Gatorade was able to get established and became successful as a first mover in the

market. This has helped pave the way for Gatorade to take command of the majority of market

share in the sports drink industry.

Gatorade also has great brand recognition and has created a loyal customer base.

Customers associate Gatorade with a quality product that helps a person compete. When a

company has a brand that is considered almost iconic, this can help create a competitive

advantage. Customers would be hard pressed not to watch a football or baseball game at the

collegiate or professional level and not see the Gatorade near the players. Most everyone


remotely interested in sports has seen players indoctrinate their winning coach with a celebratory

shower of Gatorade.

Developing a Strategic Focus

By creating a strategic focus, organizations are able to develop a clear strategy for growth

and measure the effectiveness of the adopted strategy. By analyzing strengths and opportunities

and leveraging those against potential threats and the company’s weaknesses, Gatorade can

formulate strategic plans to accomplish goals and objectives.

Gatorade seems to be focused on a niche strategy. In using a niche strategy, Gatorade

focuses on pockets of demand in the sports drink industry where demand has been fairly stable.

Gatorade is trying to connect with different types of customers; specifically the teenage

consumer and the adult who does not classify themselves as athletic, but who have an active

lifestyle.

With their newer enhanced beverages, and the G labeling, Gatorade is marketing their

products towards this broader target market (Clark, 2009). Although Gatorade has iconic brand

status, they sense a need to refresh and contemporize their products (Clark, 2009). Gatorade

hopes that connecting with a more diversified range of customer they will help strengthen the

company for the future.

Marketing Goals and Objectives

It is vital that marketing goals and objectives align with the overall mission and vision of

the company (Ferrell & Hartline, 2014). The first step in determining the marketing goals and

objectives for Gatorade Gold is to examine what PepsiCo envisions for the company and how

they are going to get there. PepsiCo vows to be the following:


Our mission is to be the world’s premiere consumer products company focused on

convenient foods and beverages. We seek to produce financial rewards to investors as

we provide opportunities for growth and enrichment to our employees, our business

partners and the communities in which we operate. In everything we do, we strive for

honesty, fairness, and integrity. (PepsiCo, n.d., para. 1)

In addition, the vision of PepsiCo “is put into action through programs and a focus on

environmental stewardship, activities to benefit society, and a commitment to build shareholder

value by making PepsiCo a truly sustainable company” (PepsiCo, n.d., para. 2).

In order for the marketing goal and objectives or Gatorade Gold to be in alignment with

and supported by the PepsiCo, it is important to take PepsiCo mission and vision into

consideration when developing the marketing goals for Gatorade Gold. With careful

consideration of the parent company’s mission, the marketing goal for Gatorade Gold is to

develop and new market for which to conveniently deliver a new, pleasant tasting, thirst

quenching sport drink that replenishes electrolytes, hydrates the body, and provides an excellent,

low calorie source of vitamins and minerals. In order to do this, Gatorade and PepsiCo will have

to develop a mineral and vitamin infused sport drink fortified with the correct mix for the 50 plus

age group. This product will be test marketed and offered to the public within the next three

months. In order to measure success, there must be an increase in the Gatorade product line by

7.5 percent.

In order to meet this goal, certain measurable objectives must be completed. The first

objective is to utilize research and development to create the new product, Gatorade Gold, in

several different flavors and test market the product. Finalization of flavor selection must occur

in the next month. The research and development team, as well as the marketing and public


relations departments will be responsible for this step. They must work together to create the

product, test market the various creations, and determine which flavors to move ahead with for

the product launch. The selection of flavors will be an important success determining factor

when this product makes it to market. Flavor naming will be determined by internal company

naming competitions.

The second objective is to create a marketing campaign. A new marketing campaign

directed towards the physically active baby boomer generation must be developed to promote the

product. This advertising campaign must be completed within a month and begin appearing on

television and in print. These advertisements will be placed in print media such as newspaper

and magazine, as well as on television and social media sites, targeted towards the 50 plus age

group. The marketing department will be responsible for creating this campaign and ensuring

that the produced advertisements perform well when tested on consumers. Currently maintained

sponsorships as well as sponsorships targeted towards an older market, such as the Senior PGA

tour will be created to ensure product visibility. Without a good advertising campaign in place,

product exposure will be limited and may result in sluggish sales.

The third objective is to confirm retailer buy in on the new product. The marketing

department will be responsible for providing information and samples to retailers that currently

carry the Gatorade product line. As soon as research and development is completed, this step

must begin. This will need to begin immediately to obtain retailer feedback and completed

within a month of the research and development objective completion to ensure that the product

will be available on shelves at retailers. This will give marketing the ability to provide samples

after conversations have already begun with retailers on the new product. Failure to ensure


supply chain demand will result in limited product availability and limited product exposure to

the consumer.

Primary Target Market and Secondary Target Markets

In order to ensure that the product is purchased, it is vital to determine the target market

for the product. The target market is the “consumers a company wants to sell its products and

services to, and to whom it directs its marketing efforts” (Target Market, n.d.). Gatorade already

markets its original line of products towards the younger market, 13-25 year olds. This leaves a

lack of advertising directed at one of the wealthiest, most physically fit generations to date. The

baby boomers, born between 1946 and 1964, are looking for new self-care methods to help

extend their lives and maintain a healthy lifestyle. 66% of this generation surveyed feels that

their best years are still to come (Club Industry Staff, 2011).

With Gatorade being invented in 1965, this baby boomer generation was between the

ages of 1 and 19 when Gatorade was introduced. Many members of this generation probably do

not remember a time when Gatorade did not exist. Since most of this generation is now aging

into the 50 plus category, Gatorade Gold will focus on that age group. Since Gatorade is

currently lacking a product to compete with Vitaminwater, Gatorade Gold will allow PepsiCo to

target a very large, currently untapped market for Gatorade. Gatorade Gold would server as a

sport drink plus vitamin supplement for the 50 plus age group.

With this in mind, Gatorade Gold would have a primary target market that would be the

50 plus year age group that are seeking a product that not only has the ability to hydrate and

restore electrolytes, but also the ability to supplement with vitamins to help maintain a healthy

lifestyle. The members of this market would be physically active, interested in maintaining a

healthy lifestyle, have a mid to high family income, and most likely no longer have children in


the home. The members of this market value their health and have a larger amount of disposable

income. They shop at local grocery and health care stores, as well as drug stores and larger retail

stores. The secondary market would be similar to that of the primary market. The members of

the secondary market would be in the same age group, but may be less physically active. They

still value their health, so are interested in the vitamin benefits that can be obtained from

Gatorade Gold.

Product Strategy

Product strategy, or the “the design, development, branding, and positioning of the

product” is the most important part of the entire marketing plan (Ferrell & Hartline, 2014, p.

151). The product must appeal to the intended market or the product will be a failure. If the

product has a lack of appeal to the intended market, the market will respond with limited or no

sales and the company will lose ground to the competition. The product has to appeal to the

customer and fill some sort of customer want or need. The product’s value is in its ability to

enhance a customer’s life and deliver a benefit (Ferrell & Hartline, 2014).

In order to appeal to the market, Gatorade Gold provides the customer with several

benefits obtained from features of the beverage. The features of Gatorade Gold include the

ability to hydrate like the original Gatorade plus an additional vitamin supplement that caters to

the 50 plus age group. A customer is able to benefit from these features by the product

contributing to a healthier lifestyle. Clinical studies show that competing products, like

Vitaminwater, deliver much needed vitamins at a fifth of the calories compared to the traditional

foods, and not only is a superior source of vitamins and wellness, but also a good tasting

beverage (Independent Clinical Study, 2006).


The product line extension Gatorade Gold is a convenience product, or one that is

inexpensive and routinely purchased with little time or effort invested (Ferrell & Hartline, 2014).

It allows PepsiCo to reposition itself and target new segments of the sport drink and vitamin

beverage market. In order for the product strategy to be successful, it is important that Gatorade

Gold differentiates itself enough from the other Gatorade products so that it is identifiable, while

maintaining brand awareness to maximize on the past success of Gatorade. This is necessary as

customers tend to expect equal quality from products in the same product line and having a well-

known name such as Gatorade can be a competitive advantage (Ferrell & Hartline, 2014).

Pricing Strategy

Pricing is the component that companies are the most infatuated with (Ferrell & Hartline,

2014). Pricing has direct ties to the revenue of the company and also usually impacts the amount

of a product sold. Apple has capitalized on the image of the product and is able to charge a

premium but is not able to outsell the quantity of competitors’ products, in part, due to this

premium (Charles & Jemima, 2013). A company can increase revenue by selling more of an

item or an item at a higher price, but not usually both at the same time (Ferrell & Hartline, 2014).

The pricing of a product is important. Not only do consumers use price as a deciding

factor in purchasing a product, but the price also determines the revenue of the company.

Gatorade Gold will need to be priced so that a consumer will want to purchase the product but

high enough that the profit margin is positive, satisfying shareholders. In order for Gatorade

Gold to be successful in the convenience product category, the product will have to be

competitively priced. If two similar quality products are next to each other on the shelf,

Gatorade may lose sales to a competitor if the pricing is not similar. However, Gatorade does

have brand name awareness and consumers trust, which will help the selection of a product if


Gatorade Gold is slightly higher. PepsiCo will have to be vigilant to monitor costs of

distribution and the price of competition to adjust prices according to fluctuations in those

numbers. Gatorade Gold pricing will have to be based on the competitive matching strategy,

determined by the going rate for the product at the time (Ferrell & Hartline, 2014).

For consumers, the perceived value of Gatorade Gold will need to be high. The

consumer benefits from the quality and satisfaction of the Gatorade name and also may replace

some expensive vitamin alternatives. The customer must have a high perceived value of the

product to help ensure satisfaction and customer retention (Ferrell & Hartline, 2014). The

product will be differentiated by the benefits advertised from the vitamins. In order to peak

consumer interest, there will be an initial discounting to undercut the competition via coupons

and discounted sales to suppliers.

Distribution/Supply Chain Strategy

Supply chain strategy concern is “at the top of the list for achieving a sustainable

advantage and true differentiation in the marketplace” (Ferrell & Hartline, 2014). Ensuring that

the consumer does not notice an interruption in the supply chain is vital to ensure customer

retention. If the product is not available when a consumer needs it, it is likely that that consumer

will look for alternatives to fulfill the need and may never return to the original product.

Ensuring that the product is at hand when it is wanted by the consumer can help a company gain

a competitive edge (Morash, 2001). If a retailer is able to maintain a constant supply of a

product when a consumer is looking for it, the consumer will most likely continue to purchase

the intended product. There are cases where this theory is not necessarily true where the need for

a product is so high that consumers are willing to wait for it to be available (Arthur & Kiss,

2013).


Fortunately for Gatorade Gold, the existing line of Gatorade products already has a

distribution and supply chain strategy in place. Since Gatorade Gold will be a convenience

product, it is important that it is easily obtainable. Gatorade Gold would be delivered to and sold

in locations that the existing line of products is already available. The current system in place

provides direct store delivery from the PepsiCo and independent bottling manufacturing

facilities. This gives retailers the ability to quickly receive necessary products and allows

flexibility depending on necessary stock levels and sales. The downside to this delivery system

is that it comes at a higher cost to retailers, increasing final sale prices of Gatorade, giving

PowerAde a competitive advantage in pricing (Montague-Jones, 2010). This distribution process

requires Gatorade manufacturers to maintain inventories to supply the retailers when a product is

needed. The Gatorade distribution system involves intensive distribution in which the product is

delivered to the maximum number of retail locations to maximize exposure and sales (Ferrell &

Hartline, 2014).

Promotion Strategy

The promotion strategy, or integrated marketing communications strategy (IMC), is

required to advertise the features and benefits of the product to the target market (Ferrell &

Hartline, 2014). In order to make sure consumers are aware of the new product, it is important

that the company draws the attention of consumers, demonstrating the product to draw interest,

making the consumer desire to have the product, and driving the consumer to purchasing the

product. There are many different ways to entice a consumer to buy and these ways include

advertising, public relations, personal selling, and sales promotions.

In order to get Gatorade Gold off the ground, the first step will be to begin advertising the

product and the benefits through channels that the baby boomers will see. Baby boomers have a


tendency to get their information from television, newspapers, other traditional forms of

advertising, and Facebook. Television commercials during prime time television, sporting

events, and newscasts would be a start. The commercials would advertise the new product and

demonstrate how the product provides benefits via the traditional sport drink and the vitamins. A

Facebook and YouTube advertising campaign would be launched as well.

Public relations would be handled through news and press articles to gain attention of

newspaper and magazine articles and television news stories. White papers on the benefits of

keeping hydrated while exercising and increasing the likelihood of good health through vitamin

supplements would be written and presented. Gatorade Silver would sponsor senior PGA

tournaments and other sporting events catering to older athletes. Gatorade would also have

internal competitions to name the new product flavors and would train employees on the new

product.

Personal selling and sales management would be handled by a sales team of

knowledgeable Gatorade employees. Visits to retailers, gyms, sporting events, and conventions

to provide free samples would raise public awareness of the product as well as form relationships

with potential customers. A knowledgeable call center would be staffed to answer calls that

consumers may have regarding the product. Customer service that is done correctly can draw

and retain customers and even allow the company to charge a premium for its product (Zmuda,

2008).

In addition to the personal selling visits, Gatorade will also hold drawings and contests to

promote Gatorade Gold. Mailings can be sent out that provide entry forms as well as coupons

and information regarding the new product. Gatorade Gold would be featured near checkout

lanes with the traditional Gatorade in Gatorade Gold refrigeration units. Gatorade would also


provide a limited supply of these refrigerators and free product to retailers that are currently not

selling the Gatorade product in an attempt to increase their retail markets and maximize

visibility. Price reductions on initial deliveries would be offered for retailers adopting Gatorade

Gold (Ferrell & Hartline, 2014).

Marketing Strategy Structure Issues

Fortunately for Gatorade Gold, PepsiCo and Gatorade already have much of the needed

marketing strategy structure in place. Since Gatorade Gold is just another product in an existing

line of products, the foundation structure for the marketing strategy is already there. In order to

meet the increased demands on employees to support the marketing strategy, PepsiCo will need

to increase staff in several areas and will need to begin looking at expanding facilities to meet

consumer demand for the product.

The specific staff needed to support the marketing strategy for Gatorade Gold will be

research and development team members, marketing staff, support staff, and customer service

staff. The increase in research and development staff will allow testing the combination of the

vitamins and the sport drink more rapidly. This is necessary so that the product can be test

marketed to determine demand for the product and gain consumer feedback on the various

flavors. At least initially, additional marketing staff will be necessary to ramp up the advertising

campaign for Gatorade Gold. With an aggressive launch plan and marketing strategy, the extra

staff will be needed to develop an effective advertisement campaign. Additional support and

customer service staff will be necessary to support the increased volume of calls due to the new

product line and the new market segment the product targets.

In order for employees to be ready to support the marketing strategy and the final

product, education will necessary. This education can include details as to why the company is


launching Gatorade Gold as well has assist employees in answering questions potential retailers

or consumers might have. This information will also help employee buy in for the new product.

It will be vital that all departments work together to support the marketing strategy for the

product launch to be successful. As demand for the new product increases, facilities will need to

be expanded to meet consumer demand.


Tactical Marketing Plan

Specific Tactical ActivitiesPerson/Department

ResponsibleRequiredBudget

CompletionDate

Product Activities1. Develop Gatorade Gold2. Partner with Physicians to test effectiveness3. Test market various flavors4. Begin production of Gatorade Gold5. Adjust levels of production based on demand

R&DR&DMarketingManufacturingManufacturing

$2 million$0.2 million$1 million$10 million-

12/10/1312/24/131/10/141/24/14Ongoing

Pricing Activities1. Research competitive pricing2. Determine break-even price3. Monitor costs and competition pricing

MarketingFinanceFinance

$0.1 million-$1 million

11/17/1312/1/13Ongoing

Distribution/Supply Chain Activities1. Secure retailers to carry product2. Ensure current distribution chain is sufficient3. Deliver product to stores

MarketingDistributionDistribution

$1.5 million$.25 millionExisting channel

1/10/141/17/141/25/14

IMC (Promotion) Activities1. Create advertisement campaign2. Create coupon and direct mailer campaign3. Sponsor events

MarketingMarketingMarketing

$5 million$2.5 million$5 million

12/10/1312/24/131/14/14


With the advanced timeline to produce Gatorade Gold, Gatorade and PepsiCo will have

to develop, test market, advertise, and secure distribution channels at an accelerated pace.

Market research will need to be done to determine the strengths and weaknesses of the

competition and advertising will need to be created to focus on the intended market. The

company will have to examine its existing infrastructure and expand staff and distribution

resources as necessary.

Formal Controls

Formal marketing controls are the “activities, mechanisms, or processes designed by the

firm to help ensure the successful implementation of the marketing strategy” (Ferrell & Hartline,

2014, p. 271). In order for a company to maximize the possibility of success of a marketing

strategy, the company must ensure consistently good employee behavior during the realization of

the marketing strategy and then measure the results after completion of the plan. The three

controls are input controls, process controls, and output controls. Input controls are

precautionary steps completed before the strategy begins, process controls are steps taken during

the plan is ongoing, and output controls are measureable standards to compare the results to

(Ferrell & Hartline, 2014).

In the case of Gatorade Gold, the company will have to invest time and money into the

research and development (R&D) phase of the product. The R&D team will not only have to

determine what mix of vitamins to add to the beverage, but also ensure that the end result still

tastes good. Teams will have to be formed to successfully market and support the product.

These employees will need education on the new product to ensure that they can answer

questions and represent the product correctly.


During the implementation of the marketing plan, Gatorade will have to implement

process controls that aid in directing employee output to support the strategy. Management must

be committed to the new product as research has found that “management commitment to the

marketing strategy is the single most important determinant of whether the strategy will succeed

or fail” (Ferrell & Hartline, 2014, p. 272). Management should ensure they support their staff to

aid them in supporting the strategy and employees should be rewarded when they take the

necessary actions to help the strategy succeed (Ferrell & Hartline, 2014).

Output controls will involve developing measures to determine the success of the

marketing strategy. In the case of the launch of Gatorade Gold, success would be measured by

the sales and profits of the new product. With promotional strategies in place, not only does

quantity of product sold matter, but also how much or if Gatorade made profit off of the launch.

Due to initial marketing expenses and discounts, it would be possible for Gatorade Gold to be a

hit, but the product may not be profitable for several months or even years.

Informal Controls

Informal controls are unwritten controls that are designed to influence employees and

groups. Informal controls include employee self-control, social control, and cultural control.

Each of these controls is designed to help influence positive employee support and success of the

marketing strategy. These controls involve goals, group pressure, and behavioral control of all

staff (Ferrell & Hartline, 2014). In order to assist employees to help successfully implement the

marketing plan for Gatorade Gold, each of these informal controls will a factor.

In order to aid employees to exhibit self-control, personal goals will be part of normal

employee behavior. The employee will be responsible for monitoring his or her progress

towards each one of these goals and reporting back to their manager monthly. The manager will


be able to determine the employee’s disposition towards the company by the goals selected and

by the effort the employee puts into meeting those goals. A rewards system must be created to

encourage employees to work towards the company goals and marketing strategy success. This

behavior gives the employee the incentive to demonstrate self-control and helps promote success

of the marketing strategy (Ferrell & Hartline, 2014).

Social control involves shaping the employee’s behavior by group reaction to the

employee. The employee’s perceived level of commitment and success induces a form of

feedback from the smaller workgroup. Employees that are not living up to their responsibilities

in supporting the marketing strategy may feel peer pressure to improve their behavior. When

employees are contributing successfully, the group should, in turn, provide positive

reinforcement to the employee. Management involvement in monitoring this group behavior

will be necessary (Ferrell & Hartline, 2014).

Cultural control must come from the upper levels of management in the company.

Gatorade management is responsible for creating a set of rules that the company operates by.

These can be unwritten, but need to be demonstrated by all management to help employees

participate as well. Employees working together in unison, following the same social behavior,

and working towards the same organizational goals increase the chance of a successful

marketing strategy implementation (Ferrell & Hartline, 2014).

Marketing Audits

Marketing audits are necessary to determine the success, or lack of, for the marketing

strategy. Specific profit- and time-based measures must be created to monitor progress and

success of marketing activities. There must be a responsible party for collecting and measuring


this data and determining where improvements need to be made, costs can be cut, or products

need to be dropped, if the strategy needs altered, or if pricing needs changed.

For Gatorade Gold, the director of marketing will be responsible for collecting data and

calculating the results for the marketing strategy. This will be an important task in determining

the course of the marketing strategy for Gatorade Gold. The measures that will be implemented

for the audit are profit margin, units sold, and the 4 Ps.

In the beginning phases of product launch, the profit margin may be a very small

percentage or even a negative percent as coupons and incentives are offered to consumers and

retailers to gain maximum exposure. As these incentive programs slow down, the profit margin

should begin to increase. The profit margin is the profit made from a sale after the cost of the

product has been subtracted. Units sold will allow the company to determine how well the

product is selling and if particular campaigns or pricing changes have an impact on the volume

of units sold. This is important information that will allow the change to be revisited and undone

if necessary. It will also be important to examine the 4 Ps, the product, place, price, and

promotion to determine the effectiveness of what, where, how much, and during what advertising

campaign a product sells.

During the initial product launch, these calculations will be performed weekly to

determine the future of the product. As advertisements and publicity increased, one could expect

the manager to see an increase in revenue and quantity sold. In order to ensure accuracy, a

contractor not associated with PepsiCo will perform the same audit. This will help prevent any

kind of unethical behavior in order to gain rewards based on product performance.


Implementation Schedule and Timeline

Month December January FebruaryActivities Week 1 2 3 4 1 2 3 4 1 2 3 4

Product Activities

Develop Gatorade Gold XTest Market flavors X

Begin production XPricing Activities

Research competitive pricing XDetermine break-even pricing XMonitor costs and competition X X X X X X X X X X X X

Distribution Activities

Secure retailers XAnalyze current distribution chain X

Deliver product XIMC Activities

Advertisement campaign XCoupon and mailing campaign X

Sponsor events X


Summary of Recommendations

In order for the marketing strategy for Gatorade Gold to be successful, there are a lot of

moving parts that have to come together. The company has built a long history of brand name

awareness and a company reputation for producing a quality product. Gatorade was the first

sport drink to the market and has been able to retain its grasp on the market ever since 1965. In

order to retain its grasp, the company must continue to strive to be the preferred sport drink of

the young, active generation. This allows the company to retain customers for the rest of their

lives through brand loyalty formed during these early stages. While this target market is vital to

future success, Gatorade must not neglect the large aging population that grew up consuming the

Gatorade products. Gatorade will have to continue developing new products and flavors to meet

the ever changing desires of the market. The differentiation from the competition via more

options is an important competitive advantage.

Gatorade and PepsiCo will need to continue to examine the competition and determine if

there is a change in strengths or weaknesses and adapt accordingly. Competitors releasing new

products or changing prices in addition to new companies entering the market pose a threat to

Gatorade’s future hold on the sport drink market. It will be important for Gatorade to watch for

other, currently non competing beverage companies to branch into the sport drink category and

the treat must be dealt with effectively. New products, such as the low sugar PowerAde

marketed to youth will need to be dealt with quickly, or Gatorade will have to improve their

offerings to compete with the competition.

Continued efforts in research and development, sponsorships, and advertising will be

necessary to maximize product exposure. Large, exclusive contracts with the NFL and other

sports organizations will ensure a public face for the company. Taking customer surveys to


determine the amount of exposure impact and brand awareness will be vital to determining the

future of the marketing campaign.

In order to successfully launch Gatorade Gold, Gatorade and PepsiCo will have to

develop a marketing strategy that will lead to success of the company. With goals and objectives

for the product that are in alignment with corporate’s goals, the product line will sync with

corporate efforts. Gatorade Gold will be a convenience product that offers hydration and health

benefits to the consumer and is targeted at one of the largest, wealthiest, fit generations of all

time. This large market is currently not targeted by the primary advertising by Gatorade and the

company has no formal offering in the vitamin beverage product line. This Gatorade Gold

targeted at the baby boomers could later be expanded to provide a sport drink infused with

vitamins targeted towards younger athletes.

As the marketing plan comes together, there are many steps for the marketing department

to take. The company must determine what the product will actually be, how it will be labeled,

how to price the product effectively, how to get the product to the consumer, and how to

maximize exposure for the product. Advertisements targeting typical media sources for the 50

plus age group will be utilized to advertise the product. Magazines, newspapers, other print

media, and Facebook will all be targeted sources.

The company will have to examine if the current marketing, distribution, research and

development, and customer service departments are capable of handling the increased volume of

work required to deploy this marketing strategy. Staff may need to be increased and facilities

and shipping lanes may need to be increased to allow for the additional volume generated by the

new product. It will be important for the company to perform audits to determine the


effectiveness of the marketing campaign and make adjustments to the product or strategy as

necessary to ensure success of the product.


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MGMT530 - Marketing Strategiesmba-eportfolio-dhamilton.weebly.com/uploads/2/6/5/2/...… · Web viewAlthough Gatorade has the lead in market share over PowerAde, ... be the world’s