Situational Analysis of Better Drinks Company
The Internal environment of the company involves the organizational culture of the company. The organizational culture of the company refers to how people do things in this company. The organizational culture of The Better Drinks Company consists of certain values that are shared in the organization and this plays a significant role in promoting the development and success of the company (Anderson, 2014). The organizational culture was the backbone of Charlie’s which collaborated honest values and resulted in a huge success of the company. The company innovation and risk-taking culture encourage the employees of the company to come up with new ideas and apply them to the market (Idealog, 2012). At one moment the company came up with the idea of mixing two juice flavors and they invested a huge amount of funds into the project ignoring the risk of failure. It turned out that the new product did very well and people loved it leading to more sales (Euromonitor. 2014). The people orientation and team orientation of the company’s employees enhances the company to move towards attaining its objectives.
The Better Drinks Company, formally known as Charlie’s, is well known for honesty and purity but there are other internal factors that contribute to its success in business. These factors include capital, nature and machinery. The company has efficiently utilized its available resources to achieve optimum results (The Better Drinks Co. 2013). The company started with little capital but it developed and gained sufficient investment and this has helped them adopt effective production techniques. The company initially used hand squeezing machines to extract fresh juice but they developed and adopted advanced machinery such as the bottling plant and the squeezing plant that improved production. Nature also plays a part in as the company acquires water from the mineral springs of New Zealand. All these internal environment factors collectively contribute to the success of the company.
Brief Background of the Better Drinks Company
The Better Drinks Company was founded in I999 as Charlie’s. The company has been producing and marketing a wide range of beverages. The company is based in Auckland, New Zealand and it has production sites in Australia and NZ. The company’s products are made from organic fruits unlike most other companies using concentrate to make similar products (Charlie’s, 2014). The company offers several types of juices including energy smoothies, lemon sodas, clementine, lemonade, raspberry, apple and orange juices, blackcurrant, mango and orange as well as fresh fruits. The Better Drinks Company vision is to provide better services to their customers. Here, ‘better’ isn’t just a word, but a promise - to deliver better drinks for everyone every day! It’s also a challenge to simply be better at everything we do. The objectives of the company are to strengthen and expand their operations as they maintain better people engagement. The company is committed, creative and it commercially sells more for more.
Brand/ Product Portfolio of The Better Drinks Company
The company is involved in the production of several beverages. They include the two iconic brands of the company consist of the Phoenix and the Charlie’s and both of them have “better” credential. The Charlie’s brand is not made from any juice concentrates while the Phoenix brand is made from entirely organic ingredients. The company portfolio has products ranging from Straight- Up Cola and Honest Fizz to the original OJ. The company offers a unique juice drink under the Charlie’s known as “The Skinny One”. This drink tastes as good as regular juice although its caloric value is 40-50 percent less that of regular juice. The drink also comes in various flavors.
Market Description of the Company
Need to quench their thirst
The refreshing aspect of the juices
On the go
They need to are busy travelling and need to drink as a substitute for food
The nutritional value of the juices
Need to experience various drinks and have limited product loyalty
The different flavors of the juice
Hold the sugar
Attracted to diet drinks
The organic nature of the drink
The Better Drinks Company Competitor Overview
· Just Juice
The positioning of the product based on the refreshing property, different flavors, B vitamins
Unique flavor, brand loyalty and the replenish positioning of the products.
· Golden Circle
Different flavors, nutritional content including the minerals and vitamins
The Better Drinks Company SWOT Analysis
- The organizational culture of The Better Drinks Company is one of its major strengths. The culture promotes innovation and creativity as well as collaboration between the company employees. The innovation and risk-taking attributes that come with this culture enable the company to invest in projects that eventually make an economic breakthrough thus giving them a competitive advantage over their competitors.
- Good public reputation. The company is having a large number of consumers due to the honest values associated with this brand. The company, unlike other players in this sector, it makes juice brands that are from fresh fruit extracts and use organic ingredients. The company is putting so much attention on the changing customer needs and ensuring that they give the best customer service and respond to customer concerns (Central Intelligence Agency. n.d.). This has helped in establishing the reputation of the company thus making them enjoy brand loyalty from their target customers.
- Capital. The company has made several investments and has acquired sufficient funds in the recent years. Having sufficient capital has enabled the company to adopt new technology that offers optimal results. Having capital to funds is an important aspect that will enable the company meet its target and objectives.
- Less brand loyalty. The company is operating in an environment with other large brands that have existed for so long. The New Zealand beverage sector is mostly dominated by Coca-Cola Amati and Frucor who are enjoying brand loyalty.
- The high cost of raw materials. Unlike their competitors in the sector who use fruit concentrate to produce their juices, The Better Drinks Company used fresh fruit extracts to make its products. Although the quality of these juices is high it is more costly compared to using fruit concentrates.
- Health concerns. Although some of the products of the company are made from organic ingredients, some health concerns have been raised about some of the products such as the caloric values of these beverages.
- Climate. The hot weather in New Zealand increases the market demand for beverages. The company also produces water hence both the juices and water will be in demand among the citizens.
- New markets in developing countries. The company does not only have to operate in New Zealand since globalization promotes international trade. There is a demand for its products in developing countries all over the world and this provides a ready market for the company.
- Favorable economic environment. The New Zealand economic environment does not have such restricting business policy for non-alcoholic beverages, therefore, making the company to operate smoothly. The competition among the companies in this sector is healthy with claims that recently the sales of Coca-Cola Amati’s company, which has dominated the market for so long, are falling.
- Consumer perception of health. There have been changing views on health concerns of beverages. For instance, the caloric value of some products and the side effects of the preservatives used in these drinks have raised concerns among the public. This probably going to affect the sales of the company and consequently, the revenue collected.
- Natural and human disasters. The company mainly relies on the availability of fruits and is a natural disaster occurs to interfere with crop production then the operation of The Better Drinks Company is going to be affected negatively. This is a threat that the company has little or no control over it.
- The changes in exchange rates. The company is in the stock market and this implies that global fluctuations of exchange rates affect the value of their shares in the stock market. The uncertainty in these rates always puts the company at the risk of suffering huge losses in the event that the rates are greatly disrupted in their favor.
Porter’s Five Forces Analysis
Bargaining Power of Buyers
The Better Drinks Company is enjoying some level of brand loyalty from its customers. Although the company may not enjoy brand loyalty like some of the giant companies in the beverage sector, its honest values have enabled it to enjoy brand loyalty from consumers. There are so many competitors in New Zealand selling beverages. Frucor and Coca-Cola Amati's are the main competitors who are selling products similar to those sold by The Better Drinks Company. The demand for beverages is however high with developing countries being a ready market for the company products. It is easy for consumers to change the switch to competitor's products. The cost would be low because most of these beverages have close price ranges (Mind Tools. (n.d), 2014). The company is very innovative in providing customers with a unique product. The Better Drinks Company at some point went ahead to blend to flavors to come out with something better and people really liked the new product. There is a difference in quality between The Better Drinks Company products and its competitors since the company does not use concentrates like the competitors. The company uses fresh fruit extracts and therefore its juice products are of very high quality. The customers have the power to drive the price since their so many alternatives and they can also survive without the product. Customers are price sensitive and any slight adjustment in price might affect the company. The buyers have a high bargaining power since the market is price sensitive and they have so many alternatives.
Bargaining Power of Suppliers
The company has several suppliers it can contact to supply them with fruits since agriculture is an economic activity all over the world. The cost of switching suppliers is however very high since it will bring several supply chain and logistics issues (Education Counts, 2014). No single supplier has a unique product since they all supply fruits to the company. The company has a strong brand name and therefore the suppliers don’t have much bargaining power over them.
There are so many substitute products since there so many beverage brands offered to the consumers. There is a perceived level of product differentiation between Better Drinks Company and competitors since they view the product to be of high quality. There is no cost to the buyer for switching to other producers since no complexities are involved in this switching process. It is not is for buyers to switch the competitors because of the perceived product differentiation. This makes the threat to substitute to be very minimal since the company has a competitive advantage.
Threats to New Entrants
There are several entry barriers for entrants in this sector this includes the high capital and high fixed rates as well as the sector entails economy of scale. Advanced technologies and elaborate supply and distribution networks this is hard for new entrants to acquire. Insurance, regulations and licenses are also needed for new entrants and the relative high sunk costs discourage new entrants to this sector. Consumers are loyal toward the brand due to the perception of the difference in the products it offers (Kloeten, N, 2014). The company product is differentiated from others in the market since the company is the only brand not using fruit extracts and it also has good reputation due to the honest values associated with the brand. The government regulates this sector and new entrants have to meet certain requirements and obtain a license for them to operate and this is a costly enterprise for new entrants thus they become discouraged.
The main competitors for The Better Drinks Company are two although there are other several brands offering similar products. The competitors are not of the same size since others such as Coca-Cola Amati's have dominated the market while others have not established their operations well. The Better Drinks Company has a competitive strategy in place as it offers products that are unique in terms of quality and it aims at improving customer services. The company is very innovative and it funds creative projects in their product portfolio (Frucor, 2014). The competitors such as Coca-Cola Amati's have more advertising resources and they have invested a lot in their advertising strategies (Coca-Cola Amatil, n.d.). There is the difference in quality between The Better Drinks Company products and the competitors. The company has a strong brand name and customers are loyal to the brand. There is no cost to the buyer for switching since there are no complexities involved.
According to Porter's Five Forces analysis above we can see that the non-alcoholic drink industry is competitive but profitable particularly for companies that are well established in the market. The Better Drinks Company is in a good position although there are several potential threats it faces. In this industry, the threat of new entrants is very low since the company is enjoying brand loyalty and there are so many barriers to new entrants. Below is an illustration of how the various factors affect the rivalry among competitors.
The Porter’s Five Forces Analysis Illustration
- The new product should increase the company revenue by 5% in a period of three months after its launch.
- The new product should make sales worth $300 million in after the end of the first phase of this project.
- Before the end of the financial year, the sales of the product should have covered at least 80% of the total capital invested in this project.
The target consumers of the new product are the New Zealand population mainly living in urban settlements where large consumer goods stores are located. The company has contracted with leading supermarkets in New Zealand such as Woolworths and this will make it possible to reach this geographic segmentation.
The demographic target of the company products is both male and female citizens of all age ranges except those with complicated health conditions. The product is mainly aimed to reach the mid-class citizens as well as those with high financial status.
The new product is targeting people who keep so much priority to quality rather than quantity. The product is concentrating on customers with honest personal traits since that has been always an identity value for this company.
The product is targeting customers who are mainly loyal to the brand and they associate with the values that the company is promoting. The product is going to be used for refreshment purpose.
The target marketing strategy that will be adopted for the new product is the undifferentiated strategy. This is because the target market for the product has a demographic segmentation including people of various age and sex. This strategy is appropriate for this product since it enables the company to reach out to many customers.
The unique selling position of the new product is it a unique taste that the company is going to get by blending several flavors appropriately. The quality and uniqueness of the product are going to differentiate the product from similar products in the market. The difference will deliver a highly valued benefit to the target buyers compared to competitors.
Marketing mix tactics/strategy
The new product is a juice a new juice flavor in the market. The product is trying to satisfy the consumer need for a having a taste that is very unique and refreshing. The product is known as the Skinny one. The product is packaged in a new colorful bottle that is attractive to the consumers. The product is a mixture of two flavors that have been blended perfectly to get a unique taste. The other benefit of this product is the fact that it has low calorific value.
The price strategy to be used for this product is the market penetration pricing. This because the target customers are price sensitive and therefore the company has to do a comprehensive price analysis. The product also does not have any new technology attributes, therefore, the market skimming pricing is not appropriate here.
The distribution strategy going to be used for the product is indirect distribution. This is because the company can make a contract with wholesalers who would help the product reach many people. This strategy will ensure the marketing of the product is successful and it offers more opportunities.
Advertising is an important marketing tool and the company has to come up with adverts to ensure the target consumers are made aware of the new product. Special events that involve the gathering of many people can be used to publicize the product. Mobile marketing is a tool that can be used to reach so many people since most of the potential customers own smartphones.
The Better Company is a beverage company that is offering unique quality products that are different from their competitors. The company has a good public reputation due to the honest values associated with it and therefore it is enjoying brand loyalty from its customers. The competition in the market fare and the company has been developing its brand gradually as time goes
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