New Beverage Term Paper

Excerpt from Term Paper :

New Beverage

Raspberry Delight

Target Market Segment

The fitness drink market is highly segmented, and one of these segments includes energy drinks. However, energy drinks are not exclusively subsumed by the fitness drink product category; energy drinks overlap to some degree with other product categories such as soft drinks. An example of an energy drink that represents the overlap of both fitness and soft drink categories is Red Bull.

Not only is the market segmented according to usage, but also by ingredients into a spectrum with distilled water at one end and sugary drinks like Gatorade and Red Bull at the other. Somewhere in between we find the mineral waters, vitamin enhanced water, vitamin and mineral enhanced water, flavored vitamin and mineral enhanced water, sweetened and unsweetened varieties of the same, sugary and sugar-free varieties, and so forth. Propel is a popular vitamin and mineral enhanced flavored bottled water while Dasani is a mineral enhanced water purified by reverse osmosis.

From this approach, we (the company) have identified an undeveloped product category: vitamin and mineral enhanced carbonated fruit juice. One could draw overlapping Venn Diagrams showing people who drink beverages a) for energy, b) for the vitamin and mineral content, c) for the drink's ability to refresh them, d) for its pleasant taste, and e) for the pleasant way carbonated drinks "go down." Our initial target market segment is represented by the area where all of these diagrams overlap.

Consumer Behavior Patterns

Most consumers fall into two categories: innovators or imitators. Innovators are consumers who adopt a product as soon as they become aware of its presence in the market. Imitators are those who adopt a product only after they have become aware that others are using it. There are various ways to categorize imitators; as early majority adopters, laggards, and so forth. However, at least initially, we are depending on absolutely delighting the innovators in this segment with our product. If we can do a good job of this, then innovators (who are also opinion leaders), will positively influence the imitators to give the product a try.

Product Features and Packaging

The product is a carbonated raspberry-flavored fruit juice product enhanced with vitamins, minerals, and a special enzyme. The vitamins and minerals are special: they contain L-Carnitine and Alpha Lipoic Acid -- two supplements that have received a lot of positive press recently for their energy-boosting and anti-oxidant properties. The other minerals are derived from sea water. But the supplement that really distinguishes the beverage is its inclusion of telomerase. Telomerase is an enzyme that lengthens the telomeres located at the end of chromosomes. Telomeres regulate how often a cell can divide and each time it does divide the telomeres get shorter. When they are completely "used up," the cell can no longer divide -- instead, it dies. Telomerase restores telomeres to their more "youthful" lengths. The inclusion of telomerase in the recipe actually lengthens the lifespan of each cell in the human body. Essentially, the introduction of Raspberry Delight creates a new sub-category within the fitness drink product category -- longevity drinks.

Regarding the packaging, the product will be dispensed in bottles, not cans, and come in 250ml, 500ml, and 750ml sizes. It will be available as singles, six packs, twelve packs, or cases of 24. All of the bottles are designed to be drunk from "on the fly" and contain an innovative vented cap that permits the user to take multiple swallows without withdrawing the bottle from his or her mouth to let air back into the bottle.

Price

Innovators are fairly price insensitive, and low prices sometimes send a signal that the product is of low quality, a product characteristic that innovators find off-putting. So the introductory price will be high. Not only will the high price signal a high quality product, but innovators are also sometimes motivated by prestige, which is also signaled by high price.

For these reasons, we are going to adopt a skimming pricing policy. Once the product has diffused through the 3% - 5% of the market represented by innovators, we can begin to lower the price so that more affluent imitators will be more inclined to adopt it, then the less affluent, and so forth. This policy also offsets some of the losses due to high costs of production, marketing, and distribution that are incurred until the cost-saving benefits of experience effects accumulate later in the product's life cycle.

Marketing Channels

The…

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