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Gatorade Marketing Plan 2

Gatorade Marketing Plan

Gatorade Marketing Plan

Nancy Arteaga

Allied American University

Author Note

This paper was prepared for MKT220, Module 1 Homework Assignment taught by Theodore Framan.

MKT 220: Module 1 Homework Assignment

Marketing Plan for: Gatorade Plan

EXECUTIVE SUMMARY

The Gatorade Company is mainly concerned with the manufacture and distribution of cleaning equipment for commercial and domestic uses based on their knowledge of the best industry practices for the production of cleaning equipment. The primary agenda of this market plan is for it to work as a strategy to guide the company on how to supply the customers of Gatorade with quality yet affordable products. This brand of cleaning equipment will be produced and supplied in many different designs and colors that will be appropriate for both genders. Approximately half of the clients of the Gatorade brand, range between the ages of 18-34.These clients are ardent customers as they make the most purchases and are the company’s primary target. Gatorade cleaning equipment is purchased more by those who dwell in the Northeast regions and Midwestern parts of the United States. This market plan focuses on the introduction of a range of Gatorade environmentally friendly brand of cleaning equipment into the United States market.

INTRODUCTION The highest percentage of the company sale are as a result of making impulse purchases; hence this requires a good point of sale support team. The market is very competitive. There are a couple of competitors that offer the same products as Gatorade, for example, MW, M.I.T and A.U.I. The experience that the firm has in the industry will be an essential asset in surviving in the already crowded market. The company has experience in distribution and has a vast distribution network ranging from household cleaning equipment dealers, retail outlets, and some supplies are made to major supermarkets in the cities. During the past ten years, the company has made a profit margin of approximately fifty million which is just 10% of Gatorade’s sales over the same period. The growth rate in the sales volume has been on a steady decline and was currently at five percent. It is anticipated that the growth experienced in the current markets will be minimal; therefore, the entry of the new Gatorade environmentally friendly project will improve Gatorade’s profits and growth rate.

MARKET ANALYSIS The Gatorade brand will be in competition with some established brands already trading in the market. The demand for Gatorade cleaning merchandise is anticipated to increase. This is founded on a recent survey carried out by the company on the market. The study showed that there is bound to be an increment in purchases to the tune of 524 million dollars in the succeeding three years. The expected growth rate per year is bound to exceed the company's growth rate of five percent per annum (Cohen, 2006).

TABLE 1: MARKET CLASSIFICATION BY AGE .

Age

Percentage of consumers

Relative Percentage of the population above the age of 20

Relative purchase index

20-25

20%

14%

1.47

25-35

34%

20%

1.85

36-56

36%

42%

0.9

56+

14%

30%

0.54

The population above thirty-five years makes purchases of cleaning equipment of over 36%, as shown in the table above. The age group between 25 to 35, purchases the most environmentally friendly cleaning equipment, of all the age groups in the market (Kerin, 2006). The order of purchase is expected to vary among the various genders and age demographics in the market. Women aged between twenty and thirty-five between are expected to be very future conscious thus are expected to make a lot of the purchases than the males. There is also evidence of regional imbalance in the buying of cleaning equipment with certain regions buying more cleaning equipment than others (Grewal & Levy, 2010).For instance, as indicated in our table 2,sales are above the mean in the north central region, northwest region, and the central regions if the United States. These regions are likely to be our focal areas of focus (Cravens & Piercy, 2006).

TABLE 2: REGIONAL CLEANING EQUIPMENT SALES

Region

Cleaning equipment sales

Population

Index of cleaning equipment sales

East region

21%

16%

1.32

Southern region

17%

18%

0.93

Mid region

16%

14%

1.14

West region

16%

21%

0.70

West north region

11%

11%

1.00

Northeast region

9%

8%

1.13

Southeast region

7%

6%

1.19

Northwest region

6%

7%

0.82

CONSUMER BEHAVIOR other brand manufacturers seem to be encouraging the purchase of several affordable cleaning equipment. This seems to be applicable only to those cleaning equipment that are of low cost. A consumer acquires a couple off cleaning equipment that is beautifully designed and cheap that he can be switching for different occasions (Kurtz & Boone, 2010). The feature that most customers look for in cleaning equipment includes; but not limited to, durability, affordability, packaging, and the design of the brand and the color of the cleaning equipment. For such customers who look mostly on the aesthetical features of the cleaning equipment, so as to buy, distribution and display can play a significant role in impulse buying. The consumer can be contacted through six avenues (Kerin, 2006). We presently have contact to these customers through four of these channels making up 85% of all cleaning equipment sales. To reach customers best, it is wise to use such channels so as to maximize sales. Most cleaning equipment sales are made in the departmental outlet thus to maximize sales. Gatorade will capitalize on discounts and supply to such stores to maintain availability and proximity of the product to the customer. For the moment, it does not make much sense to provide to the rural stores thus, this will be postponed till Gatorade and the Gatorade product is firmly grounded in the urban retail channels (Cohen, 2006).

COMPETITIVE ANALYSIS There is fifteen cleaning equipment manufacturers in the market with BQ, M.I.T, A.U.I and M.W, taking the prime share of the market holding 65% of the market. These are our primary competitors. They have strong names and presence in the market, strong marketing and advertising skills, good and established networks and are also well spoken of in the cleaning equipment industry. The aspect of manufacturing of cleaning equipment that have a good futuristic sense is new in the market thus providing an opportunity for growth (Cravens & Piercy, 2006).

COMPANY ANALYSIS Gatorade currently holds 85% market share in cleaning equipment distribution through the various avenues of supply. The manufacture of cleaning equipment that have a good sense of the future is slowly taking over the industry thus, a better venture as compared to our current brands. Our experience in the industry, distribution and advertising prowess, high-quality products, and design, affordability of our products will be a great boost as we venture into this market (Kennedy, 2006).

SWOT ANALYSIS Strengths : Gatorade has creative personnel that can create new designs that can compete favorably in the market. The company is endowed with the resources and knowledge of the market having been in the industry for a while. This coupled with good networks, and real partnerships will see us take over the market (Lamb Et al, 2006). Weaknesses : Currently we are not connected with any rural car dealers. The futuristic concept of cleaning equipment is a new aspect both to the market and to us. Opportunities : Probability of growth of the market is high; Customers are currently into the futuristic cleaning equipment. The market for cleaning equipment has a great potential for growth. Threats : This is in the form of competition, the chance of new market entrants

OBJECTIVE The combination of high-quality production of affordable yet durable cleaning equipment and an aggressive distribution campaign will see us breakeven in three years’ time. We should have acquired a market share of at least 4% in the first two years this represents sales of 10 million dollars. Based on this market plan the venture will break even in the next three years (Cravens & Piercy, 2006). MARKETING STRATEGIES Gatorade will introduce the new Gatorade brands of cleaning equipment into the market through an aggressive and well-planned distribution campaign. The cleaning equipment will sell at affordable prices and will promise high-quality service. This will increase revenues earned thus facilitate the growth of both the brand and the firm (Kotler & Keller, 2009).

ACTION PLAN Product : The Gatorade brand stands out among all the current cleaning equipment in the market. This will be introduced in varieties for women and men and all age demographics. This will account for at least 40-50 different models per annum. A portion of this will have metal designs; these target the adult population. We will manufacture Gatorade cleaning equipment with favorite cartoon personalities to lure the families with children. This will require licensing and patent that we already have. This counts as an advantage for the firm over its competitors (Kotler & Keller, 2009). We will produce futuristic cleaning equipment designs in a variety of models, which will differ greatly from the traditionally known and used models.

Price : To reach our desired targets, Gatorade will offer the Gatorade cleaning equipment at an agreed selling price of $200.Our price is affordable, and the quality of the product is impressive. The features are new to the market thus validating the price so coupled with our aggressive distribution plan, will ensure a high market share of the Gatorade cleaning equipment (Kurtz & Boone,2010). Distribution : Our present distribution has coverage of about 85% of the market share. At this stage, we will not target the rural car dealers but instead, we will hire marketers and a marketing instructor, to add gusto to our marketing plan. We plan to distribute our cleaning equipment in the whole United States and across all demographics (Grewal & Levy, 2010). Advertising : Advertising worth half a million dollars is intimated, so as to add clout to the unique range of cleaning equipment on offer and to emphasize better on the quality and price of the cleaning equipment. This will be centered towards print and point of purchase displays. This and telecast advertising campaigns will take approximately two-thirds in the first quarter of the campaign. To achieve leading market share, the idea is to make more noise In terms of advertising and getting the masses aware of the product as compared to our competitors (Kerin, 2006). Promotion : We will maximize all potential distribution avenues and market our product across all regions.10 new marketers will be added to the team. Services of a marketing instructor will also be sought so as to empower the marketer’s with the required skills for efficient marketing. The salaries and allowances of all this new personnel are expected to be within the intimated budget of half a million dollars (Kurnit & Lance, 2009). The voice share of each firm in the market can be known by dividing the total advertising incurred with the market share. Since our product will be new to the market, we will require making considerable noise so that all know the Gatorade brand. The budget set of half a million set for advertising Gatorade’s voice share will be considerably higher than that of its competitors (Grewal & Levy, 2010).As indicated in table three.

TABLE 3: FUTURISTIC CLEANING EQUIPMENT ADVERTISING AND VOICE

Company

Market Share

Voice Share

Voice/

Market

Advertising

Million dollars

Gatorade

21%

29%

1.5

5.4

Audi

22%

25%

1.3

4.7

Mercedes

21%

22%

1.06

4.1

Mitsubishi

4%

6%

6%

1.0

We will target most of our media campaigns; for instance radio broadcasts, television broadcasts, and newspapers towards our significant market segment. These are women between 25-35 and lesser media efforts towards other market segmentations.

CORPORATE SOCIAL RESPONSIBILITY

The company plans to handle environmental issue that arises by working best at preserving the environment. The Gatorade Company will impact its environment positively through the introduction of environmentally friendly products, contributing to waste management and efficient disposal of the same and by launching campaigns against pollution that will target other companies in the industry. All legal issues will be sorted through sourcing the required license, patent and registration of the new environmentally friendly range of cleaning equipment.

FINANCIAL ANALYSIS AND EXPECTED RESULTS. It is anticipated that the first year Gatorade will make the sale of at least 10million Gatorade cleaning equipment and break even in the next three years. It is expected that the firm will achieve a market share of four percent and sales of 10 million dollars in the first year. The firm is expected to recoup its investment in the first two years. The future predictions of the likely behavior of the market do not suggest that there will be any new cleaning equipment entering the market within that period. The competition will be majorly centered on the design, packaging, affordability and best distribution practices. Based on these it is our expectation that we will be able to compete with all the big players (Kennedy, 2006). CONTINGENCY PLANS to cater for the increase in competition, marketing of other products, or if our sales margins are not as initially expected, Gatorade is ready to pump into the project another half a million dollars for advertising. TABLE 4: CHANGE CAUSED ON FINANCIAL STATEMENTS .

Total budget

Breakeven year

Net present value in millions of dollars

$2600000

2015

36.8

$3100000

2016

35.0

$3600000

2017

31.0

$4000000

2018

29.0

Price wars that might be triggered by the entry of Gatorade cleaning equipment are not likely to occur. But an increase in promotional efforts especially in the media will lead to increased industry promotional campaigns(Kennedy, 2006) An in-depth sensitivity analysis, on the result of an increase in trade advertising on the break-even year, is indicated in the table above. Other brand manufacturers seem to be encouraging the purchase of several affordable cleaning equipment. This appears to be practical only for those cleaning equipment that are of low cost (Wood, 2011). A consumer acquires a couple of cleaning equipment that is beautifully designed and cheap that he can, be switching between for different occasions. The feature that most customers look for in cleaning equipment includes but is not limited to, durability, affordability, packaging, the design of the band, the color of the cleaning equipment and brand. For such customers who look mostly on the aesthetical features of the cleaning equipment, so as to buy distribution and display, can play a significant role in promoting impulse purchases (Cohen, 2006).

CONCLUSION Additional advertising will be needed sequentially, from half a million dollars to four million dollars. This is if further gains in market share have a negligible effect on the performance of the company. In the rare instance, that there is increased industry advertising, Gatorade is more than equipped and ready to add to the advertising budget as much as one million six hundred thousand dollars per annum. Additional advertising will be appropriate, in order to adequately inform all clients of the product. Also increased advertising will help address the problem of less than planned distribution branches and in the rare instance that Gatorade cleaning equipment are not received with the enthusiasm that is anticipated or foreseen. The new Gatorade brand is bound to be a big hit in the market. Company sales are expected to increase steadily after its release and distribution all over the United States. The futuristic brand of cleaning equipment has for quite a while, been demanded by the customers and at last Gatorade, will be making that a reality to the delight of its clients. FINANCIALS

TABLE 1: PRO-FORMA INCOME STATEMENT AT $12

For current year 2019

R &D

Before launch

Suggested retail price=$200

Investigation costs

$260000

Less retail discount=$20

Development costs

$760000

Price to retail=$180

Discount rate per year

5.00%

Less Wholesale discount=$30

Selling price=$170

Annual costs and sales

2015

2016

2017

2018

2019

Manufacturers unit price

$7000

$7000

$7000

$7000

$7000

Variable unit cost

$8000

$7000

$8000

$6000

$5000

Fixed cost p.a.

$2100000

$2100000

$2100000

$2100000

$2100000

Retail sales expected

$5260000

$5750000

$6180000

$6800000

$7300000

Industry sales p.a.

104900000

114900000

123500000

134600000

145000000

Gatorade market share

2.10%

4.20%

7.00%

8.10%

11.00%

Gatorade sales p.a.

21000000

46000000

74000000

110000000

150000000

.

Income Statement

Before launch

2015

2016

2017

2018

2019

Sales

$6300000

$13800000

$22180000

$32000000

$43000000

Variable cost

$3200000

$6500000

$10000000

$14000000

$17000000

Fixed cost

$1500000

$2100000

$2100000

$2100000

$2100000

$2100000

Profits

(1500000)

$1200000

$5400000

$11000000

$16000000

$24000000

Cumulative profits

$200000

$5500000

$16000000

$32000000

$56000000

Net present value

$35 400000

TABLE 2: PRO-FORMA INCOME STATEMENT AT $10

Research and development

2015 Before launch

Suggested cost=$200

Investigation costs

$260000

Less retail discount=$20

Development costs

$760000

Retail price=$180

Discount rate per annum

1.00%

Less Wholesale discount=$10

Selling price=$190

REFERENCE

Cohen, W. A. (2006). The marketing plan. Hoboken, NJ: J. Wiley & Sons.

Cravens, D. W., & Piercy, N. (2006). Strategic marketing. Boston, Mass: McGraw-Hill.

Grewal, D., & Levy, M. (2010). Marketing. Boston: McGraw-Hill Irwin.

Kennedy, D. S. (2006). The ultimate marketing plan: Find your hook, communicate your message, and mark your mark. Avon, Mass: Adams Business.

Kerin, R. A. (2006). Marketing. New York: McGraw-Hill/Irwin.

Kotler, P., & Keller, K. L. (2009). Marketing management. Upper Saddle River, N.J: Pearson Prentice Hall.

Kurnit, P., & Lance, S. (2009). The little blue book of marketing: Build a killer plan in less than a day. New York: Portfolio.

Kurtz, D. L., & Boone, L. E. (2010). Contemporary marketing. Mason, OH: South-Western Cengage Learning.

Lamb, C. W., Hair, J. F., & McDaniel, C. D. (2006). Marketing. Mason, Ohio: Thomson/South-Western.

Wood, M. B. (2011). The marketing plan handbook. Boston: Prentice Hall.