Triwa Incorporation is a private limited company that is was established in 2006 within the non-alcoholic drink industry. The firm’s headquarters are located at New York; US. The firm’s operation involves production and supplying soft drinks within the domestic market. It has employed one hundred employees who conduct the various operational activities. Over the past three years, the firm’s performance has been on an upward trend. This is associated with the vibrant nature of the industry. In 2007, the firm’s level of profit increased with a margin of 25% compared to the previous year. Its profit level further increased in 2008 to settle at 37%.
The company’s primary mission is to become the leading firm in relation to production and supplying soft drinks within the domestic and foreign market. All the operations of the firm are focused at developing customer loyalty. This is by ensuring that the consumers are satisfied through production and supplying high quality soft drink products.
To tap the benefits from this industry, Triwa Incorporation is in the process of reorganising itself to minimise the impact of the risk of market saturation that is looming within the industry. The strategy that has been considered is introducing new soft drinks in the market. The soft drink will be produced from fresh fruits to ensure that is of high value to the consumers. The drink will be produced by blending a variety of fruits to ensure that it has a high nutritional value. In addition, there will be no chemical additives to the drink.
Most of the soft drinks that are in the market have got chemical additives which have side effects to the consumers. The management of the firm has also been established that the consumers are more sensitive to the quality of the products they consume. This is due to the fact that consumers are becoming more health-conscious. By producing the drink using fresh fruits, it will be possible for the drink to be consumed by diverse consumer categories. The soft drink will be produced from a variety of fresh fruits to ensure that there is a variety of flavours. The effect is that the drink will be able to meet the diverse consumers’ tastes and preferences resulting into increased customer satisfaction (Lenskold, 2003, p.23).
The soft drink will serve dual purpose, that is, as a refreshment drink and an energy drink. As refreshment drink, the drink will serve psychological and social needs. In its production process, the management will ensure that the drink’s rate of absorption is high. This will ensure that there is quick rejuvenation of the consumers lost energy. The soft drink will be distributed in bottles to ensure product safety.
The non-alcoholic drink industry has witnessed a rampant growth over the past few years. It is estimated that soft drink accounts for 46.8% of the total market within this industry. According to a survey by data monitor, the market value for soft drinks in 2006 was $307.2 billion. The survey forecasted that the market value for soft drinks would increase in 2009 to $ 367.1 billion. This indicates that the industry is very lucrative (Meghan, Ellenbecker, Klehr, Pesarchick, & Kelly, 2006, p.1). Currently, the management of firms within the non-alcoholic drinks sector are increasingly emphasising on product innovation. This trend has emerged from the attempt of firms in this industry to satisfy the health-conscious nature of the consumers. In the future, products that meet the consumer’s health needs are likely to witness increased demand.
Firm’s SWOT analysis
- The company has superior soft drink manufacturing capabilities. This means that it will be efficient in the process of producing the soft drink.
- The firm has a well established distributional channel within the domestic market. This will ensure that the new drink penetrates the entire domestic market.
- Strong financial base. The firm has adequate financial resources in the form of retained earnings.
- An efficient research and development team to ensure effective product innovation.
- The company’s brands are not well recognised in the foreign market.
- High cost of promotion, and research and development means that the management of the firm will have to source for finances from external sources.
- The firm does not have all the expertise that is required for a firm to attain a high competitive advantage in the industry.
- High probability of the firm increasing its market size. The firm can expand the size of its market by expanding into the foreign market.
- High chances of adding value to the soft drink. This will ensure that there is an increase in the customers’ level of satisfaction.
- Increase in the consumption rate of functional drinks. Consumers are increasingly consuming functional drink as opposed to carbonated soft drinks.
- Increased competition from leading companies within the industry such as Coca-Cola, Cadbury Schweppes and PepsiCo.
- Increase in the number of substitute products such as bottled water, speciality coffee and sports drinks (Meghan et al, 2006, 8).
- Changes in consumers’ tastes and preferences in relation to soft drinks resulting in a decline in product demand.
- Threat of new entrant into the sector. This would increase the degree of rivalry culminating into reduction in the level of profit.
- Decline in consumer purchasing power as a result of the current economic recession.
In developing the new soft drink product, the management of the firm conducted a market research to identify the target market. In developing and supplying the soft drink to the market, the firm’s major target markets include individual and institutional consumers. The institutional consumers include the various sports clubs such as athletic and football clubs. These institutions demand high quality energy drinks that do not have side effects for their teams due to chemical additives. In addition, they also demand a soft drink that would result into instant energy rejuvenation.
The management has also segmented the individual consumers in relation to age as a demographic variable (Kottler &Kevin, 2009, p. 34). The new soft drink will be of value to individuals of different ages. This is due to the fact that the drink will serve as an energy drink and at the same time it will have a high nutritional value. This will make the drink to be of value to both the elderly and the youth. The elderly consumers demand soft drinks that will be of nutritional value upon consumption. On the other hand, the youth are very active. This means that they demand a soft drink is effective in boosting their energy. In addition, the drink can also be consumed by the children. This will be of help during their formative years since it will enable them to be healthy.
By eliminating of chemical additives in the process of producing the drink, the management is able to completely eliminate health risks. The production process also entails a comprehensive quality control to ensure that the drink meets the specified standards.
By targeting the institutional consumers, there is a high probability that the firm will increase the volume of sales in relation to the new soft drink. This is due to the fact that these consumers make purchases in large quantities for their clubs. During major sporting event, the firm can make a high profit if it is contracted to supply the soft drink to the clubs. Sports clubs exist for a long duration of time (Klaus, 1999. p.77). This means that there is a high probability of the firm to sustain its level of revenue by selling to these clubs. Currently, sports clubs are undergoing rampant growth from local to international scale. In addition, the percentage of female participation in sports is limited. For instance, in UK only 19% of women are inactive participation of sports compare to male which is 24% (Mairi, 2007, 2). This shows that there is a high potential of growth in the target market. There is also a high potential of the individual consumers increasing since they are currently more inclined to consuming healthy products.
According to Meghan et al (2006, p.8), it is expected that there will be a global growth in the size of soft drink market. The industry’s Compound Annual Growth Rate is expected to increase to 3.6% in 2009.
Competitor and substitutes
The firm faces intense competition from large competitors within the soft drink industry such as Coca-Cola, Cadbury Schweppes and PepsiCo. These firms operate on a global scale which makes the intensity of competition to be high (Meghan et al, 2006, p. 12). Coca-Cola’s market share is 43.7% while that of Cadbury Schweppes and PepsiCo is 48%. In addition, these firms produce numerous substitute products such as energy drinks, bottled water and other soft drinks. Their brands names are globally recognised which makes their sales volume to be high due to well established brand loyalty. In addition, well established brand loyalty has culminated into increased customer loyalty in these firms.
These firms have strong financial base which enables them to penetrate the foreign market effectively. For instance, Coca-Cola Company has formulated as strategy that enables it to penetrate the foreign market effectively. In this strategy, Coca-Cola Company only supplies the concentrates used in production of the soft drink while the bottling process is undertaken by the local firm. This has enabled the firm to attain a competitive advantage within the foreign market (Meghan et al, 2006, p.7). Their financial strength also enables them to conduct their product promotion effectively in the entire market.
To counter the increase in competition within the industry, these firms have invested heavily in research and development. This enables them to conduct an effective market research and identify the changes in consumer’s demand in relation to soft drinks. The result is that they are able to incorporate these changes through innovation of new products that result into increased customer satisfaction.
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Kottler, P. & Kevin, L. (2009). Marketing Management. New York: Pearson Education.
Lenskold, J.D. (2003).Marketing ROI: the path to campaign, customer and corporate profitability. New York: McGraw-Hill Professional. Web.
Mairi, I.(2007). Women still under represented in sporting roles. UK sports. Web.
Meghan, D., Ellenbecker, M., Klehr, E., Pesarchick, L.& Kelly, Z.(2006). Industry analysis: soft drinks. Web.