Download Analysis Based on Comparative Statistics

Running Head: BA340 – PRINCIPLES OF MARKETING
Global Market Analysis: Analyzing Powerade (drink) in the U.S.A and Brazil markets.
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Institution
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BA340 – Principles of Marketing
Table of Contents
Executive Summary .............................................................................................................................. 3
Industry Overview ................................................................................................................................ 3
USA Industry Analysis ....................................................................................................................... 3
PowerAde’s Competitive Position in the US markets ........................................................................ 4
Brazilian Industry Analysis................................................................................................................. 5
Summary Analysis of the Two Countries ........................................................................................... 5
Analysis Based on Comparative Statistics .......................................................................................... 6
Analysis of the Broader Market .......................................................................................................... 6
Demand drivers in the two markets. ................................................................................................... 6
The approach towards STP and the adoption of 4Ps........................................................................... 7
Conclusion .............................................................................................................................................. 8
References ............................................................................................................................................... 9
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Executive Summary
The bodybuilders have recently used Powerade majorly and more focused group of
athletes. There is, however, the notion that target demographics has in traditionally shifted
towards mainstream athletes. The changes in the target demographic are however not clearly
reflected by the marketing mix. This report presents the global market analysis of the
PowerAde drink that compares the performance of the product in two markets; USA and
Brazil. This comparison is achieved through the analysis of various market aspects such as
the industry overview and the marketing strategies.
Industry Overview
USA Industry Analysis
Based on the data presented in March 2015 by the Beverage Marketing Competition,
there was a growth of about 3.0% in volume of the US sports drinks. This translates to about
1.4 million gallons of volumes of beverages consumed by the US sports industry. According
to their statistics, the beverage category significantly surpassed the 2011 figures by
approximately 1.0 billion gallon volumes. There is a remarkable decline in the overall growth
of the sports drinks. However, the sports drinks still perform better about the carbonated
drinks. Precisely, the largest category of drinks in the Liquid Refreshment Beverage market
primarily comprises of PowerAde. The graph below gives the overall behavior of how the
sports drinks industry has shifted over the past few years with close reference to PowerAde.
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PowerAde’s Competitive Position in the US markets
Powerade, which is a product of the coca-cola, is one of the greatest competitors of
the leading Gatorade drink, which is manufactured by the PepsiCo. It is, therefore, one of the
leader products in the industry of sports drinks in the US sports drinks market. Ideally,
according to the statistics of the Beverage Digest, PowerAde has a market share of about
28.8%, which closely follows its strongest competitor Gatorade at 69.5%. The table below
gives a gist of the overall market share of PowerAde in the US sports drink industry.
PowerAde’s
market
2010
2011
2012
2013
2014
1.57%
3.01%
2.32%
2.92%
3.15%
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978.32
895.78
923.91
970.32
share
of the US LRB
total volume
Rank in the US 7
LRB market
Volume in a 873.3
million gallons
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Change
in 5.20%
6.10%
5
-0.97%
5.28%
3.23%
volume(YoY)
Brazilian Industry Analysis
On the other hand, Brazil provides one of the largest markets of sports drinks and
beverages for the coca cola company. The PowerAde drinks contribute to about 7% of the
entire sports drinks industry. Through this vast market share, the coca cola company
contributes to about 27% of the total market share in the production of sports drinks that are
crucial in ensuring the sports industry’s development.
The Brazilian sports drinks have enhanced the performance of PowerAde’s drink
through the increase in the individual’s level of disposable income. Besides, the revival of
various economic activities has also increased the marketing of PowerAde’s. According to
the statistics obtained from the Beverage Corporation. The Brazilian sports drinks continue to
show a consistent growth annual growth in the level of expected return to be about 6%. This
translates to a general incremental amount of $3 annuals sales. This assumes the absence of
annual foreign exchange effects.
Summary Analysis of the Two Countries
Based on the analysis of the market share of PowerAde’s in the United States and
Brazil, significant differences can be highlighted which are quite significant in coming up
with appropriate market strategies that will transform the market shares for the two countries.
Powerade is an energy drink used commonly by the athletes. This implies that there will be
high consumption of the drink in areas with most users such as Brazil, which makes about
75% of the total global share of the sports energy drinks.
BA340 – Principles of Marketing
The projected market is quite large in Brazil about the USA. This is because a good number
of those who consume are more in Brazil with a population
Analysis Based on Comparative Statistics
Analysis of the Broader Market
The generic market captured in this report is the sports drink industry. Focus is on the
drink PowerAde, and a comparison is made between two countries. The countries of US and
Brazil have the highest consumers of Powerade since a large number of athletes who need a
lot of energy. The marketing strategies and product mix are quite different in the two
countries either. This implies that various factors such as culture and geography of the land
may affect the quantity of PowerAde. Possibly, the high sales of Powerade in Brazil about the
US are the perception that many athletes come from the country and the fact that the
geography requires a lot of energy.
Demand drivers in the two markets.
The driver of the demand for PowerAde in the US is the satisfaction that athletes get
when taking PowerAde. Ultimately, a lot of consumption takes place, and the resultant sales
increase exponentially. On the other hand, the primary demand driver in Brazil is the
geography of the land and the better place. Also, an adequate understanding of the
competitive forces in the market, as well as the bargaining power of both the suppliers and
the consumers of PowerAde, is crucial. This is a principal factor that has seen Brazil do well
in its marketing strategies compared to the United States.
Competitive rivalry, which is principally determined, by the number of competitors in
the market is important in determining the sales of a particular commodity. In the two
countries, PowerAde has no close competitors that affect the sale of the merchandise and the
fact that the product has no close substitute give it a better performance index in the market.
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Both the two markets experience no threats of new entrants into the industry. The
primary producers are the coca cola and the Pepsi that act as the controllers of the market.
The implication is the lack of close substitutes that can affect the sales margin of the
PowerAde. Consequently, there are high sales of the product with an increase in time.
The approach towards STP and the adoption of 4Ps.
Effective marketing requires the identification of the product's customer at the right
time, right place, and the right price. This forms the core of marketing for any given product.
The two countries, US, and Brazil are exemplary in the adoption of the STP and 4Ps of
product mix. Brazil uses differentiated PowerAde to make its product appear attractive to the
consumers, and so is the United States of America.
The capitalization on the features of the product is essential. Brazil for example
brands its PowerAde to capture what the producer thinks the customer needs. This is quite
similar to the branding done in the United States and they both know the essence of that.
Product modifications are also significant, and the way a product is modified will
significantly affect its sales in the market. In this analysis, the two countries are quite efferent
in achieving this strategy of delivering the best mix of product differentiation. Despite the
fact, that other drinks can compete PowerAde, the strategy of differentiation makes it appear
distinct and the sales margin is boosted.
The pricing basis used in the United States and Brazil are slightly different. This
depends on several other factors that affect the demand for some products. The prices and
sales may differ significantly based on some cultural factors such as the motives of buying
such drinks. This affects sales to greater margin. The creation of awareness through product
promotion is what gives the two countries better competitive advantages with the other
competitors. Consequently, they end up making huge sales that make the demand for the
product go even higher. This means the sales have to go up.
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Conclusion
The core business of marketing implies putting products at the right place, in their
correct prices and at the right time. Thus, the consumers are able to access them at affordable
prices in a more easy way. Therefore, the strategies that a particular firm will adopt has
significant impact of defining the sales on both local and global basis. In any circumstance,
the adoption of the STP and the 4Ps of product marketing mix are quite crucial. The
comparison analysis presented in this paper instills much insights on how these strategies
may be different in different countries and are affected by different factors such as culture
and geography. Nevertheless, the fundamental principles of marketing as discussed should be
duly embraced.
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References
BA340 – Principles of Marketing
CIA, Report, The Arab-Israeli Handbook, September 1975, Secret, CIA. (n.d.). U.S.
Intelligence on the Middle East, 1945-2009.
Kyung, J., Kim, B., & Lee, D. (2006). A Comparative Analysis of Market Structure-Market
Performance Model by Growth Stages in Global Mobile Market. 2006 Technology
Management for the Global Future - PICMET 2006 Conference.
MarketLine Advantage. (2012). Choice Reviews Online, 50(02), 50-0645-50-0645.
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