Marketing Of German Brand Bionade

Marketing Of German Brand Bionade The German brand BIONADE which produces and distributes organically lemonade brewed like beer but without alcohol {BIONADE #1}, tries to enter markets all over the world. {Dagmar Mussey 08/10/2007 #2}. With the threat of going bankrupt with its beer brewery {Dagmar Mussey 08/10/2007 #2}, the head of the company Leipold, tried to spread its product range and invented a brewed soft drink for children. With its superficial marketing strategy with just few money BIONADE managed to get known all over Germany in shortest time by sponsoring events and viral marketing. {Ralph Atkins #3} In 2009 the large German group Dr. Oetker bought with 70% the majority of BIONADE. {Weiguny 2009 #18} After distributing in most European countries since 2008 the companys aim is now, that their organic drink will become a Weltdrink.{Ralph Atkins 12.12.2007 #3} How BIONADE can reach the target and what they should considered, it is indicated in this paper on the example entering the US beverage market. Environmental Analysis BIONADE needs to analyse the market of US. The retailing market in the United States is very competitive and dynamic. Consumers can choose out of a large number of retailers. With the information of the internet consumers can easily compare all products and retailers. So retailing has been led to a hard job and you have to observe the consumers needs, because consumers have the power. {Weitz 2010 #4} Market trends BIONADE aims to go on the American beverage market. The carbonated drink sector is the most established in the soft drink industry with about 40% of the volume. {Jonathan Thomas 2010 #6} But the growth almost stagnates with just 1.2% growth rate and the share will fall more, because more consumer prefer healthier beverages like fruit juices, fruit based drinks or bottled water. In this case, there is a chance for BIONADE to put its organically healthy and nearly sugarless beverage on the US market. In addition it should be mentioned, that the market shares for sport and energy drinks within the carbonated soft drink segment has raised about 7% last year, and it is assumed that this trend will last. {Jonathan Thomas 2010 #6} The study, which was ordered by just-drinks, says that the fruit-based drinks are expected to remain strong. Customers BIONADEs target group are healthy, young consumers and aware of the health. Examining the consumers in US nowadays it can be noticed, that there is a change in lifestyle. For decreasing the problems of fat children, which has become a major issue in the US, the government planned to ban sugared drinks like Coca Cola from school. {Atkins 12.12.2007 #3} Consumers strive away from convenience and fast food to fresh cooked meals and healthy, organic products, which are traded fair. {Lifestyle Food and Drinks Future 2008 #10}Business Insides report Lifestyle Food and Drinks (2008) says in addition, that many habitants of the US do have work-related stress, which they try to compensate with healthy drinks and food to get more energy and fun. Additionally America has an ageing generation. These people do all their best to stay young and healthy. Therefore they consume e.g. many anti-ageing products, which aim this target group. Altogether there is a broad diversity of different reasons, why people want to live healthier, which is shown in the illustration 1. Figure : The complexity and diversity of modern lifestyles {Lifestyle Food and Drinks Future 2008 #10} Competitiors The beverage market is a strong market in the United States. Global players like Pepsi and Coca Cola are settled in America as well as the US brand Dr. Pepper. These three brands are in 2010 the best-selling companies, and most customers bought drinks of these companies. {Sector Soft Drinks Non-Alcoholic 2010 #11} They also try to establish healthier drinks, to follow the trend. Coca Cola put The Spirit of Georiga on the market, which is competitive lemonade to BIONADE. They also try to do a partnership with Honest Teas, which also is settled in the health and wellness segment.{Beverage World 2011 #13} Nestlà ©, who is also a big player one the beverage market, also put some health drinks, like ready-to-drink teas on the market. Viewing the global health drink and food segment it can there were more than 4000 new products came on the market in 2009, which are more than double as much as in five years ago.{Heather Landi #12} There is a keen competition in this field. Analysis and Theories With entering a new market there are many topics which should be considered. The SWOT analysis is a management tool which shows clearly arranged which strength and weaknesses a company has, and which opportunities and threats are given from the environment of a company. The points are aimed on the target, a company has. In this case it targets the entry of BIONADE on the American market. {Simon 2002 #9} Strengths Weaknesses Large Network Only breed lemonade Experience on other markets Large target group Good references in Europe Plans for adopting the product for the US market (new flavours) Unique product (the only brewed lemonade) Just one product site Workers with no knowledge Large Supply-Chain High costs New unknown market Opportunities Threats Changing Consumer Behaviour Growing sustainable and health market Growing Beverage Market Banning sugared drinks in schools Market niche Large Beverage Market Many Competitors like Coca Cola (Georgia) Other organic certificates in the US than in Europe Many other healthy drinks Figure : SWOT-analysis for BIONADE on the US-market {Simon 2002 #9} To get an overview of the market, Porter invented the tool Porters 5 Forces. {Porter 1998 #14} Porter has identified five competitive forces at work in every industry and every market. The expression of these forces determines the intensity of competition in an industry and thus its profitability and attractiveness. The objective of corporate strategy should therefore in looking for ways to weaken competitive forces in relation to the company itself. {Porter 1998 #14} Figure : Porters five forces {Porter 1998 #14} Analysing the American health beverage market, which BIONADE wants to enter, there is a variety of forces, which should be considered. Buyers: It can be a threat, because buyers have the force to choose other drinks. Substitutes: There are some substitutes. They are and mainly they will become a threat. There are not only other healthy lemonades but also bottled waters, ready-to-drink teas and fruit juices. Suppliers: Meanwhile there is no big threat by suppliers, because BIONADE exports its own bottles form Germany and uses the concentrate which is produced in its producing site in Germany. Potential Entrants: This would be the biggest threat. Because of the large market and the huge chance because of the trend of changing lifestyle, many competitors will get on the market. There will be keen competition which should be considered by entering the market and solutions must be found for each problem. Some solutions can be in the marketing mix, like pricing politic or with clever product placement. Strategies With its aim generating a larger turn-over, BIONADE entered the US market because there is a niche market. There is no other brewed lemonade in America, but there are customers who would buy healthy drinks. With this unique position, they have a chance to challenge other companies and take market share. {Doole 2004 #20} Because of the large competitors like Coca Cola and Pepsi, BIONADE should distinguish in marketing, product, product placement and aim with a unique marketing-mix at the target group to prevent other companies taking their business idea.{Kotabe 2008 #21} The best strategy for BIONADE was Differentiation. {Doole 2004 #20} Because of the flexibility of a SME, the company can meet customer needs very fast and can distinguish from other beverages. To have not a high level of risk BIONADE made a joint venture with a German noodle company, which piggybacks the product. This indirect exporting method can work, because both products are organic, but they are no competitive products. BIONADE can profit of the reputation of the noodles. As the noodle company does not have the knowledge in the beverage segment it would be a better strategy to get help of an agent, who knows the market. With direct export the companies risk shrinks but the cost raise. {Kotabe 2008 #21} BIONADE established a production site in the US. With this strategy they can save costs for transport, which are mainly the highest costs of the supply chain. {Kotabe 2008 #21} But with this strategy the quality of the beverage can decrease. The employees dont have the knowledge like the staff in Germany. In addition there is also the risk, that BIONADE does not sell as much as calculated and the assembly lines are not working to their full capacity. Recommendation To keep successful BIONADE can go different ways. There is the possibility of entering more markets, or to penetrate new markets or put new BIONADE products on the market. In this chapter is shown, how BIONADE can manage these two different paths of expanding the brands value. Staying competitive with entering new markets or products New Products ExistingAnsoff(1957) invented a method, which makes it for companies possible to generate more profit and growth. His theory is divided in four ways, which are entering new markets or inventing new products. This method can help BIONADE to succeed on the market during the next years. Existing Markets or segments New Figure : Ansoff matrix {H. Ansoff #15} Potential strategies are: Market development: BIONADE can generate growth with entering new markets with existing products, like BIONADE already has done in countries around the domestic market. There are the possibilities which are shown in chapter 4.1. It is recommended that BIONADE searches for a partner in US who supports the company by selling the beverage. A good partner could be McDonalds, because it changed the strategy to healthier food. There already exists a partnership between both in Germany, which can be expanded to North America. {Weiguny 2009 #18} Market penetration: In this field, Ansoff describes in his theory, there are is not much growth expected. {H. Ansoff #15} But BIONADE can use its experience to gain new customers on the existing market or sells more to regular customer. It can be aimed with setting up a marketing campaign like making cocktails with BIONADE. New product development: This strategy has more risks than just market penetration. {Thommen 2009 #16} It is useful to stay successful. BIONADE can remain successful on the existing market with introducing new flavours like Cranberry for the US market, new design of bottles or maybe thermo jugs of BIONADE to keep the beverage cool in summer. Diversification: The strategy of entering new markets with new products has the highest risk rate. {Thommen 2009 #16} BIONADES has a variety of possibilities from putting a sports drink on the US market or inventing sweets or ice cream for kids. But another strategy to stay competitive is to keep an eye on the global market trends and spread the beverage in more foreign markets. Entering new markets BIONADE is on shelves in almost in the whole northern part of the hemisphere, like in almost whole Western Europe, North America, and Russia, as it is shown on the map below. Figure : BIONADES current and potential market entries {Daniel Dalert #17} As the SWOT analysis shows in chapter 2.1 BIONADE has many opportunities and chances, not only in the US market. The trend to a healthier life exists in almost all Western countries. To expand the market, it is recommended to enter step-by-step all Western European countries, like the missing countries Portugal and the East European countries, with new special flavours adopted for the countries. Because of the short trade routes it could be made by exporting the bottles. If North America runs well, there is the opportunity to go to Australia, which is also a Western country with loads of sportive, healthy living people on the beaches. It could be the strategy to sell the beverage first on the coast in cafes and bars. With the same strategy like in Germany and with just low marketing campaign they could sponsor surfing contests. Also Brasilia is a good target market with healthy living, open-minded people. With their favourite trend fruit Acai berry there is even a flavour for this ma rket. Because of its hot climate there is the possibility to sell it as a healthy refreshing drink for day and night, even for cocktails. It is recommended not to concentrate to just a view countries, because the beverage market has keen competition. Entering more markets and to have in all countries a little market share is the key to BIONADEs success. Conclusion For BIONADE, there is still high potential to raise the growth like in the last few years, especially with entering new markets. {Weiguny 2009 #18} But BIONADE gets harsh critics, especially in Germany, because they had a change of their strategy. {Matthias Benirschke 05.02.2011 #19} It is said BIONADE is not that bio like they say and it is not any more a drink for a better world, and they stopped sponsoring some events. In Germany there is at the moment the threat of losing regular customers because of just trying to gain the highest profit. The target group is very sensible and should be taken very into account. {Matthias Benirschke 05.02.2011 #19} Appendices