PowerAde's strategy to challenge Gatorade in sports beverage marketing

PowerAde

Marketing plan

Controls: PowerAde

Implementation milestones

Coca-Cola's PowerAde is one of the primary rivals of PepsiCo's Gatorade in the sports beverage market. Gatorade is the most popular sports beverage drink "with sales of 553 million cases last year" (PowerAde seeks to gain zero-calorie consumers to rival Gatorade, 2011, Sports Business Daily). However, PowerAde has undertaken some aggressive moves to position itself ahead of its rivals. In 2011, PowerAde replaced another of its rivals, Vitamin Water "on the sidelines of 88 NCAA non-football championships, including baseball and basketball, giving it wide-ranging marketing rights" (PowerAde seeks to gain zero-calorie consumers to rival Gatorade, 2011, Sports Business Daily). PowerAde sales have tripled in the last ten years, showing Coca-Cola's ability to expand its marketing outreach in this area.

PowerAde has positioned itself as a lower-cost alternative to Gatorade, offering the same electrolyte replenishment at a lower price. But overall, Coca-Cola does not want to over-emphasize the cost factor, for fear of creating a perception that PowerAde is a 'down-market' brand. Instead, Coca-Cola has tried to emphasize the diversity of its product line, adding fruit flavors and introducing a low-calorie version called PowerAde Zero. This has proven to be the brand's most effective innovation, boasting an 84% increase in third-quarter sales (McWilliams, 2010, Gatorade spin-offs).

PepsiCo "has declined to compete directly with PowerAde Zero, arguing that sports drinks need calories and carbohydrates, by definition" (McWilliams, 2010, Gatorade spin-offs). Some fitness enthusiasts prefer PowerAde because of the option of consuming a drink without calories that can supposedly improve their athletic performance and feel that a zero-calorie drink offers little more than chemically-sweetened water. Although PepsiCo's decision not to produce low-calorie beverages may seem eccentric, Pepsi believes that its marketing for Gatorade took a wrong turn, when it marketed the product for non-sports uses. Now, it is returning its focus to Gatorade as a sports drink, and stressing the potential for its use by serious athletes by diversifying into energy gels used by marathoners and triathletes (McWilliams, 2010, Gatorade spin-offs). Coca-Cola remains focused on marketing PowerAde to a wider market segment, rationalizing that although non-athletes may be more attracted to the zero-calorie fitness water, athletes that need the extra calories and carbohydrates can drink regular PowerAde.

However, Coca-Cola has not abandoned its attempts to market PowerAde as a sports drink or to cultivate sports associations with the beverage. For example, in 2000 Coca-Cola partnered with ESPN/ABC to create "PowerAde Break" segments during SportsCenter, and made PowerAde a featured sponsor of the widely-watched sports network (Keep playing campaign, 2008, Marketing case studies)

Contingency planning

The slightly cheaper price of PowerAde could be an advantage for Coca-Cola, given the shakiness of the economy. However, Pepsi is considerably better leveraged than Coca-Cola as a company, because it possesses a far more diverse line of products. As the owner of Kraft foods and Quaker Oats, amongst other brands, PepsiCo sells food as well as beverages, which consumers may consider more of a 'necessity' in terms of what they purchase during difficult economic times.

However, one problem that both Coca-Cola and PepsiCo must both face is the growing resistance to sodas and sugary beverages as a company: "Worries about obesity and skepticism about the nutritional value -- or lack thereof -- of sodas, sports drinks and other beverages containing sugar has created some resistance to sugary drinks in the U.S.Soda sales in North America have slid for several years in a row" (McWilliams, 2010, PowerAde, Gatorade). With this in mind, Coca-Cola is actively marketing more 'healthy' beverages, such as its zero-calorie PowerAde. Also, it recently created PowerAde Play, a product specifically marketed to mothers. 'Mommy bloggers' or mothers who blog about child-related products with large audiences of readers, have been enlisted in Coca-Cola's advertising campaign. The supposedly healthy PowerAde product has been advertised on grocery carts and other areas commonly used for marketing to mothers. It is hoped that through this method, PowerAde can continue to grow its base in the youth sports market and dodge criticism.