Market Research Study of Nestle\'s

Market Research Study of Nestle's Use of ActiCaf in the PowerBar

The intent of this paper is to evaluate the characteristics of the PowerBar and its use of the ingredient ActiCaf, a caffeine-based additive developed by Nestle that enables a gradual release of caffeine instead of the single burst that occurs when coffee or another beverage is consumed. PowerBar, acquired by Nestle in 1999, began integrating the ActiCaf ingredient into the PowerBar po0rudcft line in 2004, launching the new product with Lance Armstrong as spokesperson during the Tour de France that year. The target markets for the PowerBar are sports enthusiasts in the 20 to 50 age group, specifically those amateur athletes who compete in physically demanding sports that require a high degree of endurance and stamina. In addition, PowerBar concentrates on amateur and professional athletes in the most grueling sports including triathlons, distance running and swimming (Farnady, 2007). As the target audience is concentrated in high endurance sports, the distribution channels and partnership agreements are focused on stores and retailers where amateur and professional athletes in these sports regularly shop. The distribution channel strategies continues to focus on the growing amateur market of bicycling, mountain biking, distance running, distance swimming and other sports that require high levels of endurance and stamina. The distribution channel strategy has been entirely grass-roots focused to generate higher levels of credibility and buzz, and the results have been strongly positive as a result (Goldsmith, 2003). This has in turn led to the development of "knock off" brands from larger competitors including PepsiCo and the generation of entirely new competitive brands seeking to gain the success of PowerrBars (Warner, 2004).

In terms of the internal secondary data and other secondary data Nestle considered prior to the launch of PowerrBars with the ActiCaf ingredient, the company first began with an assessment of their existing sales of food and beverage snacks to those consumers who were involved in highly demanding sports activities that required stamina and sustained attention. This is the first set of internal data the company most likely looked at to see if it would be possible to gain greater levels of loyalty from existing customers. Switching loyal customers to a new product would be much easier than attracting entirely new customers for the PowerBar that had the ActiCaf ingredient included within it. Next, the company began to study both internal company data on pricing of comparable sports nutrition products, in addition to looking at pricing studies outside the company to get a sense of what their revenue forecasts would be for the ActiCaf-based PowerBar. Pricing was critical for the entire business plan is it would also define profitability as well. Third, Nestle compared the costs of integrated marketing communications strategies internally and most likely looked at third-party information as well to make sure their launch budget for the ActiCaf ingredient-based PowerBar would also be at a sufficient level to ensure the products' successful launch. Finally and most importantly, the company must have looked at the existing distribution channels and defined a subset of those channel partners, dealers and distributors who were selling to the sports enthusiast segment, and who could feasibly sell additional products with little incremental investment in building the channel.