Category Analysis of Sports and Energy Drinks In Hong Kong Essay Example for Free

Category summary of Sports and pushing Drinks In Hong Kong Essay fundament Our company, Otsuka Pharmaceutical Co. , Ltd, is planning for a product strategy to its product Pocari Sweat. Pocari Sweat is a grapefruit-tasting, non-carbonated sweet beverage and is advertised as an ion supply drink. It is designed to increase endurance, replace electrolyte loss or prevent dehydration when exercise for long periods of time. Pocari Sweat is well-recognized by the local people, e excessly to the athletes. Category drawing card Analysis Category factor The product category we defined is the Sports and Energy Drinks. We gained the first mover advantage when the product was launched at 1980, which we are the foodstuff leader which has a off-trade stack of brand share of 43. 8% in 2012 (see Appendix Table 6). The threat of fresh entrants in this category is low due to the intensive competition, and thither is low pressure from substitutes as sports and energy drinks are specialized pro ducts. The bargain power of suppliers is low while the bargaining power of buyers is high. The competition in flow rate commercialize is passing intensive. Details can be referred to the analysis on Category Factors on Attractiveness in Appendix.Overall, this category is still attractive. Aggregate Factor The product life cycle of Sports and Energy Drinks is much likely in mature stage. From the historical figures of whole beverage market, the market size of Sports and Energy Drinks is relatively small. The market growth of off-trade gross sales volume of this category is increasing constantly by 5. 4% from 2007 to 2012. It will grow constantly in the future by 5% of each year. Since Sports and Energy Drinks are free-and-easy commodities for those people after exercising, the sales cyclicity and seasonality is low, as well as the profit variability.Profit train of the market is high. Overall, this category is attractive. Environmental Factor Due to the rise of childhood o besity and the increasing exit of cases of cancer, diabetes and heart disease, there are an increasing number of initiatives by both political relation and non-governmental organizations to promote healthy living and a more balanced lifestyle. The consumer awareness of doing exercises increases and consumers become more willing to engage in sports to keep fit and relieve the stress of their work.Also, there are an increasing number of participations in sports event. Each year, the number of registration of Standard hired Hong Kong endurance contest increases gradually. Other sports events such as Nike Night Run, New World Harbour Race, and charity runs are also well supported by the local residents. These take to increased consumer awareness of the benefits of sports drinks, result in the increase of purchasing of sports drinks. Competitor Analysis Level of competitions Level of competitions can be divided into Sports Drinks, Sports and Energy Drinks, Beverages and Food.Since th e sales volume of Sports Drinks is contributed to 80% (Appendix Table 1) of sales in the Sports and Energy Drinks category, analysis of competition would be focus on the Sports Drinks only. Based on the perceptual correspond analysis, the closest competitor to Pocari Sweat is Aquarius. Both Pocari Sweat and Aquarius are ion supply drinks with a grapefruit-liked flavour. Aquarius tastes a bit lighter than Pocari Sweat. For Lucozade and Gatorade, the brand images of both are more professional for athletes, with stronger taste in different flavours. Aquarius would be the principal(prenominal) competitor for further analysis.In terms of the brand shares of Sports Drinks, Lucozade would also be a main competitor of Pocari Sweat. GlaxoSmithKline, the company of the brand Lucozade, stated that strengthening core business is their strategic concern on 2012. The company objective is having growth in the Sports Drinks market, and they implant up a new innovation centre in mainland China. A quarius, which is a sport drink launched in 2011 by Coca-Cola Company, is highly involved in numerous race events in Hong Kong. Although there are no Aquarius advertisements in Hong Kong, you can find Aquarius as sponsored sports drinks in local events such as Standard Chartered Marathon Hong Kong.Maintaining growth in the market is also the main objective of Coca-Cola Company in Aquarius. Although Aquarius is a new entrant to the market since 2011, it has near 5% of volume brand shares in the market in two years. With the financial background and the brand image of Coca-Cola Company, it raises the brand awareness of Aquarius by keep involving in the public event, in order to attract the sportsmen to buy their products. Aquarius would be the main competitor in the field of isotonic rehydration sports drink. Conclusion.The Sports and Energy Drinks market is attractive, as the market size is constantly growing, the threat of new entrant is low, the pressure from substitutes is low a nd the profit variability is low. With the continuous sports and healthy lifestyle promotions by both government and non-government organizations, they will boost up the sales of Sports and Energy Drinks. In the Sports Drinks market, Pocari Sweat is the market leader with 43. 8% of brand shares of total in volume. People cull buying Pocari Sweat for retrieval after exercising comparing with other related products.Aquarius is the closest competitor related to our product. Still, the company has to maintain the brand dedication and attract more customers by marketing and denote. Recommendation The company can put more resources on advertising and also target a new market segment manual labours. Manual labours need to replace electrolyte loss and prevent dehydration while working, especially in the hot seasons. Pocari Sweat would be the best choice for them. Also, the company can invest more on RD to develop a new product which is best suited for the new market segment. Words counte d 934.ReferenceEuromonitor International 2013, Sports and Energy Drinks in Hong Kong, China, Passport. Euromonitor International 2013, Bottled Water in Hong Kong, China, Passport. Euromonitor International 2013, Carbonates in Hong Kong, China, Passport. Euromonitor International 2012, Consumer Lifestyles in Hong Kong, China, Passport Annual state 2012, Otsuka Holdings Co. , Ltd. Annual Report 2012, GlaxoSmithKline plc. Annual Report 2012, Swire Pacific Ltd. Supermarket Price Watch. Online. Consumer Council. Available http//www3. consumer. org. hk/pricewatch/supermarket/index. php? filter1=027filter2=006lang=en Erik, P.Sports drinks vs. energy drinks. Online. Available http//www. examiner. com/article/sports-drinks-vs-energy-drinks-the-good-the-bad-and-the-ugly Appendix Category Factors on Attractiveness Reasons Attractiveness Low Threat of new entrants Current market is competed intensively, and the new entrants are hardly survived in this environment. The capital requirement is hi gh as special formula for sports drinks needs to be developed. High High Bargaining Power of buyers The major buyers are supermarkets (61. 4%) and convenience stores (35%), which they have a higher bargaining power when purchasing a large amount of products.(Appendix Table 3) Low Low Bargaining Power of suppliers The ingredients of the Sports and Energy Drinks can be purchased from different suppliers. The faulting cost to other suppliers is low. High High Intensity of Rivalry There are 9 major brands in the current market. (Appendix Table 6) The competition is highly intensive. Low Low Pressure from substitutes Other carbonate drinks or juices do not have the same benefits as sports and energy drinks on performance and recovery during exercising. Bottled water would be the main substitutes of Sports and Energy Drinks. High.Attractiveness of Market Variables Reasons Attractiveness Small Market size Compare with other drinks, the market size of Sports and Energy Drinks is relatively small, only has an off-trade sale volume of 20. 3 million litres in 2012. (Appendix Table 2) Low Constant Market growth Market growth of sales volume increased by about 5. 4% each year from 2007 to 2012, the forecast growth rate of the market is also positive. (Appendix Table 4 5) The market is growing constantly. High Low Sales cyclicity Sports and exercising are daily activities across the year. High Low Sales seasonality.Sports and exercising are daily activities across the year. High Profit level With the benefit of economic of scales and mass production, the profit level is high for Pocari Sweat. High Low Profit variability Sports and exercising are daily activities across the year. High produce Life Cycle Stage Reasons Maturity There are lots of competitors in the Sports and Energy Drinks market. The set of the Sports and Energy Drinks is stable among this few years, ranged from $9. 5 13. 9, which means that the price is at the edge related to the material costs. (Appendi x Table 7) Also, the volume growth of category is about 5.4% in each year from 2007-2012, which is low to moderate growth of the market. The forecast volume growth of the category has 5% which is quite considerable. Level of competitions Product Form Sports Drinks Pocari Sweat, Aquarius, Lucozade Sport, Gatorade, Drinkazine Energy Watt and other related ion supply drinks Product Category Sports and Energy Drinks Including the energy drinks, such as Lucozade Energy, Monster Energy, Red Bull, Libogen soda ash Drink Generic Competition Beverages Carbonated soft drinks, bottled water, beers, juices, etc. Budget Competition All consumer products with similar price.Current Future Company Strategy intercellular substance on Sports Drinks Otsuka Pharmaceutical Co. , Ltd GlaxoSmithKline Coca-Cola Company Objectives Grow market share and volume Grow market share and volume Grow market share and volume Current Strategies Advertising and promotion of products. Products expanding in multiple s egments of category. Products launching and increased advertising spend. Expected future strategies Focus on product development, increased advertising and promotions. Focus on brand extensions with new flavours to fill category. Focus on raising brand awareness through local sports events.