MarketingManagement2Decentralgroupprojectspring2013

Case:

&

Seedocument:MM2ProjectAssignmentSpring2013
Thiscaseisforeducationalpurposesonly.Datapresentedinthiscasemaynotbe fullyaccurateand/oracorrectreflectionofactualcircumstances.

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Howdoyouturnaproductintoabrand,abrandintoaUKmarketleaderandthensetyour sightsonEuropeandomination?WelcometotheworldofInnocentDrinks,theUKsleading smoothiebrand,whichdominatesthemarketwitha75percentshare,upfrom63percentin 2006. InnocentDrinkswasestablishedin1999bythreecollegefriendswhochoseajazzfestivalin London'sParsonsGreentotesttheirnewproduct.Theysetuptheirstallatthefestivalwith 500worthoffreshfruittobeblendedintoasmoothiecontainingnosugar,wateror concentratesandtworubbishbinsmarkedwithyesandnoaskingcustomersiftheyshould giveuptheirjobstomakethesmoothies.Iftastersthoughttheyshould,theyputtheirempty cupsinyesandifnot,no.Attheendofthefestivaltheyesbinwasoverflowingwithcartons andthenextdaytheygaveuptheirjobs.InnocentDrinkshadbeencreated.Sincethen,they havebecomeabsolutemarketleaderofthesmoothiemarketin2010.Thenumberof employeesinthecompanyhasexpandedfromthreein1999to250in2010andturnoverin 2000was1.8millionincreasingtoca.120millionin2010.Theyarethelargestfruitbuyerin EuropeandtheUK'sleadingsmoothiemanufacturer. InnocentDrinkswasestablishedinrecognitionofareductioninthepopularityoftraditional sugarbasedsoftdrinksandtheemerginghealthierlivingtrend.Innocenttappedintothe emergingcultureofhealthconscious,cashrich,timeshortconsumerswhowerewillingtopay apremiumforproductsthatarenatural,convenientand healthy.Consumerswantedhealthyoptionsnotjustin theirsupermarketsbutalsointheirconveniencestores wheretheycouldhaveeasyaccesswithminimaleffort. Innocentwasabletoaddressthisrealcustomerdemand bysupplyingtheirproducttolocalconveniencestores. ButInnocentDrinksisnotapassingfadwiththe smoothiemarketjustbeginningtoemergeandgrowing ataphenomenalrate.

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Whenthecompanylaunched10yearsago,thetargetmarketwastwentysomething urbanitesinLondonlookingforahealthfixbutwithentryintogrocerydistributionwith1 literandkidspackshaswidenedtheparameters. Reachingabroaderdemographicofshoppersmeansthatsmoothiesaremoreontheirradar andInnocentsuniquemessageofsustainabilityhasneverbeenmoreimportantasbrand value.Arecentmovehasbeentointroducebottlesthatare100percentrecycledand sourcingbananasfromtherainforestalliance. Innocentisgrowingatafastpaceansucceededweremanyhavefailedbymakingfruitfunand beinghealthyeasy.Innocenthasmanagedtomaintainitsmarketpositionbylisteningto customers,monitoringandunderstandingcustomertrendsandinnovatingitsproductlineto takeadvantageoftheseopportunities.Forexample,asthetrendofhealthyeatingextended toparents'concernsoverwhattheirchildrenareeating,Innocentlaunchedarangefor children. Thecompanytakesprideintheirproductsbeingnatural,purefruitjuiceandnothingelse, withthesellingproposition'Nosugar.Nowater.Noconcentrates.'ButtheUKfruitbeverage marketisalreadyabundantwithstrongcompetitors. ThecompetitorsinthesmoothiesindustryareTropicanaastheleadingcompetitorof Smoothiesdrinks.IntheU.Kthiscompanycurrentlyhasthesecondlargestmarketshare.It alsosellsproductsbasedonhealthconcernsandusesthephrase100%fruit.HappyMonkey isanothercompetitorinthemarket,thecompanyisstillnewwhichenteredthemarketin 2009andhasalreadyachievedmarketsalesofmorethan1.3million.Otherpotential competitorsareLucozadesport,redbull,sevenseas,YoungPinkSalmonandKelloggs Cornflakes. TROPICANA(PEPSICO) TropicanaareInnocentDrinksmaincompetitorsandthePepsiownedcompanycurrently holds29%marketshareintheUK.Theirmarketingstrategiesfollowaverysimilarpatternto itsrivalfocusingeffortsonandemphasizingthehealthbenefitsofitsproductsusingpopular termsasGDA(GuidelineDailyAmount)andtheeverfamiliar100%Fruit,phrases consumershavebecomewellaccustomedto.Othermarketingstrategiessuchasappealing artworkonpackaginghavebeenusedtoincreasebrandloyalty.Tropicanasmoothiesare approximatelyathirdcheaperthanInnocent,attractingthemorepriceconsciouscustomers thanthosemoreconcernedwiththemanufacturingprocess.Moreaggressivetacticshave beenusedbythebrandwhichhasalsocreatedproductsaimedatthekidssmoothiemarket whereithassetpricesrelativelylowtothecompetition.Sinceitslaunchinearly2008,the Tropicanasmoothierangeshasachieveditsmainobjectiveofreinforcingitspresenceinthe marketbytheaforementionedmethodsaswellaslargetelevisionadvertcampaigns.Ithas alsobuiltincorporatedethicalvaluesresemblingInnocent,regardingwhereandhowit sourcesitsfruit,environmentallysustainabilityandtheuseofrenewableenergytofurther increasebrandloyalty.PepsiCobrandPJshasrecentlybeendiscontinuedintheUK.

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HAPPYMONKEY Althoughthisbrandisnewtothemarket(launchingMarch2009)itsperformancehasbeen exceptionalachievingsalesofover1.3millioninitsfirstyearoftrading.Withitsmainfocus onthekidssmoothiesmarketamarketInnocentalsoconcentratesonithasestablished itselfasaseriouscompetitorrapidlycreatingbrandloyaltysupportedsolelybypromotions. Likethecompetition,HappyMonkeystressesitshealthfulnutritionalvalue,thequalityofits naturalcontentanditsethicalprinciplestoswaycustomersintheirfavor. LUCOZADESPORT TheLucozadeSportbrandisthemarketleaderinthesportsdrinkcategory.Ithassustained thispositionbyregularproductinnovationsupportedbyheavymarketingcampaigns, sponsorshipsandendorsements.TheyhaverecentlylaunchedLucozadeSportLitealow caloriesportsdrinktofurtherpropelsales. REDBULL RedBullisanestablishedenergydrinksbrandthatalsousesheavyTVadcampaignsaswellas outdoormaterialtosustainapresenceinthemarketplace.Itmaintainsthebrandimageby constantreinforcementofthesloganredbullgivesyouwingstowhichconsumersandnon consumersalikehavebeenfamiliarizedwith. SEVENSEAS(MULTIBIONTA) Thismultivitaminsupplementbrandsatisfiesthesameconsumerhealthneedsbydifferent meanstoInnocent.TheproductssellingpointisalsobasedonRecommendedDailyAmounts ofitsnutritionalcontent.Suchproductshavebenefitedhighlyfromtheriseinhealth awareness;however,theyarenotadvertisedasoftenassoftdrinksbrands. Belowisacomparisonofkeybrandswithinthemarketfortheperiod20062008.
Brand Innocent Tropicana/PJs(1) Ownlabel Other 2006 m 83 26 47 4

% 52% 16% 29% 3%

2007 m 125 32 47 6

% 60% 15% 22% 3%

2008(est) m 91 35 38 7

% 53% 20% 22% 4%

%change 200608
10% 35% 19% 75%

(1)PJ'sdiscontinuedinfavouroftheTropicanabrand growth growth growth06 08

Total

160

210

31%

171

19%

7%

Table1:Comparisonofkeybrands

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UKMARKET ThetotalUKjuicesandsmoothiesmarketisvaluedat1.4billion,withgrowthof7.9%in 2007,following16.7%growthin2006.AccordingtoTNSresearch,smoothiesaccountfor9.3% ofthemarket,withtotalsalesofjustover130millionperannum.Thiswasthefastest growingsector,withmarketgrowthof37.6%yearonyear.

Figure1Markettrendsandsmoothieforecast20052015

Havingseenexponentialgrowthof159%involumesalesbetween2005and2007,the smoothiesmarketthensawadramaticreversalinfortuneswitha36%declinebetween2007 and2009asconsumerspendbecameincreasinglysqueezed

Thelargesttypesofdrinks,bymarketshare,arejuicedrinksandthosewhicharemadefrom fruitconcentrate.Theserepresent31.9%and35.5%ofthemarketrespectively.However, annualgrowthinthesehasbeenlow;juicedrinkshaveremainedatthesamelevelyearon yearandjuicesmadefromconcentratehavegrownatjust2.2%. AgainaccordingtoTNSresearch,thenumberofpeoplebuyingjuicedrinksandsmoothieshas remainedstable,withshopperstendingtobuydrinkslessoftenbutspendingmorewhenthey domakeapurchase. BasedonresearchundertakenbyVisuality,86%ofpurchasesofjuicesandsmoothiesare planned,withtheremaining14%beingpurchasedonimpulse.Inthecaseofimpulse purchases,shoppersareheavilyinfluencedbyinstoredisplays,advertisingandpromotional

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offers.Visuality1identifiesahighlevelofbrandloyalty,with60%ofrespondentsbuyingthe samebrandofjuicesandsmoothieseachtimetheyshopped.Aquarterofrespondents preferrednottobuydrinksatalliftheirusualbrandwasunavailable.However,89%of shopperssaidthattheywouldbewillingtoconsiderthesupermarketsownlabelvarieties,if available.

Figure2ThedistributionofUKspendinadvertisingwithinthesmoothiemarket(Mintelgroup2008).

Consumersattitudestowardssmoothies:

Figure3Consumerattitudes

VisualityGroupLimited;researchundertakeninFebruary2008(publishedinTheGrocer,15March2008)

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Consumersarenowdemandingalotmorefrombrandsand o Smoothieshavestruggledtoconvinceconsumersoftheirvaluecredentialsand arethereforeviewedasanonessentialluxury DespiteUKconsumershavinglessmoneytospend,thedesireformorepremiumand healthyproductsremainsakeydriverforthesoftdrinkssectorandsmoothies remainswellplacedtomeettheseneeds Smoothieshavebeendamagedbynegativepublicityaroundtheirhealthcredentials o E.g.damagetoteethandhighcalorieintakedespitescientificevidencetothe contrary o However,smoothiesarestillseenbyconsumersasahealthyproductandthe drivetowardsmakingsurekidshaveahealthierdietisplayingtotheir advantage Increasedconsumerchoicemeansthatpenetrationofindividualsoftdrinktypeshas beenindeclineforthepastfiveyearsforallbutenergy/sportsdrinks Theeconomicdownturnhashadahugeimpactonthedynamicsofthemarketwith previouslygrowingcategoriessuchassmoothies,bottledwaterandpremiumsoft drinksexperiencingasharpdropinsales AnanalysisbyMintel(mysupermarket.com/Mintel,August2010)showsthatlitrecartonsof Innocentareatroughlytherightpricepointbutthattheimpulse250mlbottlesneedtocome downtostimulatemainstreamconsumerpurchasing.WithCocaColanowthemajoritystake holderinInnocent,ithastheopportunitytogrowthecompanysothattheycanleveragescale toreducetheseprices.

Figure4Priceposition

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INNOCENTDRINKS Innocent'sphenomenalsuccessisbasedonthestrengthoftheirbrandandtheirmarketing strategy.Thisinvolveddevelopingastrong,clearbrandpropositionof'makessense,feels good'andauniquepositioningstrategysocustomersknowwhattoexpectwhentheybuyan Innocentproduct. Innocenthasbuiltitsreputationonrecipescontaining100%purefreshfruit.Nosugar,water oranyotheradditives,justpurefruit.Fromitsoriginalsmoothiesin250mlbottlesithasnow extendeditsrangetoinclude1and1.5litrecartons,smoothiesforkidsandthickies(alow fatprobioticyoghurtwithoats,fruitandhoney).

Italsoinvolvedmaintainingconsistencyacrosstheir communications,brandimageandallaspectsofthe brandfromthelanguagetotheproduct,the packagingdesign,labeling,thewebsite,theircow deliveryvansandtheirdeliverysystems,thebanana phoneandeventheirofficesknownas'Fruit Towers'andhowtheyrewardstaff.Thisenabled themtomakeadramaticimpactonthefruit beveragemarketandthesaturatedbeverage marketwherebrandshavetocompetewithglobal giantslikeCoke. Whilethecompanyhasexperienceddramaticgrowthinsalesithasmanagedtoavoidthe dangersassociatedwithafastgrowingbusinessbycarefulstrategicplanning.Developingthe brandasanassetandbuildingitsimageandreputationtoaleadershippositionhasallowed Innocenttoenterthemarketwithapremiumpricingstrategythatcustomersarewillingto pay.

Innocentspriorityhasbeentoproducedrinkswhichtastegood,usingsimplebut100%pure ingredients.Animportantaspectofitssuccesstodatehasbeenitsfocusondevelopingnew recipesandoninnovation.Ithasmaintainedaprogrammeofrevitalisingitsrangewithnew recipescontinuallybeingintroduced. Innocentfacts Itbottles21differenttypesoffruitandhas25differentdrinksrecipes ItsmostexoticfruitisacoconutfromasmallislandinIndonesiaaccessibleonlyby boat SalesofitsDetoxsmoothie,containingbananas,pomegranates,oranges,blueberries andacaiberries,arerisingthefastest IthasitsownYouTubechannel ItsheadofficeiscalledFruitTowers

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Itispetitioningthegovernmenttocuttaxesonfruitjuicesfrom17.5percentto5per cent Ithasnearly70percentoftheUKsmoothiemarket Itisgoingtostopusingcompostablebottlesmadefromcornbecausetheyaredifficult torecycleintheUKandwillusebottlesmadefromrecycledplastic

Productrange

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Innocentscurrentportfolioresemblesthefollowing:

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Fig5Innocentcurrentportfolioindication

Withlittlemoneyspentonadvertisinginitiallythismeantthatpricepremiumrevenueswere pumpedstraightbackintothecompany.Ithasenabledthemtoachievealeadershipposition insmoothieindustrywithhighermarketshareandvolumegrowthasdemandfortheproduct increases.Theirpositionasabrandleaderinthesmoothiemarkethasalsoenabledthemto achieveeconomiesofscalethatallowsthemtoachievelowercosts. AtthecentreofInnocentDrinks'successistheuseofthewords'simple','honest'and'fresh', whichmakeapowerfulstatementabouttheuniquenatureoftheirproducts,thebrandand thecompany.Eventhenameitselfissimple,honestandeasytoremember,leavingnodoubt inthecustomersmindabouttheproduct.Innocentfocusedondifferentiatingtheirbrandas anassetbydevelopingafun,senseofhumourbrandpersonalitythatepitomizedfeeling good. Whiletheircompetitorsalsousedfunlanguageintheirownproductstohelpselltheirbrand Innocenttooktheirfunbrandpersonalityastepfurther.Forexample,ontheingredientslist onthesideofanInnocentdrinkhiddenamongtherealproductingredientstheyoften included'afewsmallpebbles'betweentheblueberriesandstrawberriesthenattheendof thelisttheywouldinclude'weliedaboutthepebbles'. Innocentrepresentsfeelgoodconsumerism.Thepackagingtheyuseissimple,plaincolored, straighttothepoint,withfun,witty,alternativelabelingonaclearplasticbottlenotonly

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tellingcustomerstorecyclethebottlebuttogocampingorbounceonatrampoline.Itisan extremelycleverrepresentationofthebrandandaneffectivebranddifferentiatorwhenall theotherbrandsontheshelfusebrightlycoloredopaquebottles.BuyingtheInnocentbrand meansthatyouarebuyingintotheidealofahealthier,happier,funlifestyle.Thesimple, friendly,funapproachalsoextendstootherareasofthebusiness. Thelanguageanddesignthattheyuseontheirwebsitealsoadoptsasimplebutpowerful approach,forexample,a'Bored?'sectionforvisitors.Thewebsitealsohasauniquefeeltoit: oneoflightheartednessandfunwheretheypokefunatthemselvesandatcustomers.For example,'wewantedpeopletothinkofInnocentastheironehealthyhabit;likegoingtothe gym,butwiththecommunalshowerafter.Onthecompanyfactsheet,alongwithbasic informationaboutcompany,theyincludeRichard'sshoesizeandAdam'swaistsize(twoof theoriginalfounders)tolightenthetoneandshowcustomersthattheydonotreallytake themselvesseriously.

Table2Innocentdata

Innocenthavealsodevelopedasociallyresponsiblebrandimagebyworkingtodothingsthat thefoundersbelieveareright.Theydonate10%oftheirprofitstotheInnocentFoundation thatgivesawaydrinkstothehomeless,donatestotheThirdWorldandrecyclesandplants trees.On27May2011theUKnewspaperDailyMailreportedthatthecompanyhadheldback moneythatwasintendedfortheInnocentFoundation.Thereportersaid:"Analysisofits financialrecordshasrevealed520,000intendedforthefoundationwaskeptinthecompanys bankaccount,whereitcouldcollectahigherrateofinterest.Innocentwhichsince2010is nowmajorityownedbyCocaColahasnotdonatedtothefoundationforthepastthreeyears asithasmadenoprofits" IfthecompanywastobecalledInnocentthefoundersbelievedthattheyhadaresponsibility tobeinnocentandtheywerepromotingmanyofthecurrenttopicalissueslikekidshealth, ethicaltradingandenvironmentalissueslongbeforeothercompanieshadevenstarted.Staff isalsotreatedexceptionallywell;theyaregivenmoneyonthebirthofachild,scholarshipsto achievedreamsandafreesnowboardingtripeachyear.Theenvironmentthatthestaff worksinisconducivetoentrepreneurshipandinnovation.Innocentrecognisethatenergetic brandshaveahumanfacethatcapturesthepublic'sinterest. Innocentbegansellingproductsin1999withthreerecipes,whichincreasedto24in2006and productlineshaveexpandedtoincludesmoothiescontainingblendedfreshfruit,thickies containingliveprobioticyoghurtandhoney,reallylovelyjuicecontainingpurefreshorange

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juice,juicywaterscontainingjuiceandspringwater,supersmoothieswhicharenaturally functionalsmoothiesdesignedforaspecificpurposelikefightingoffcolds,smoothiesfor childrenandtheonelitretakehomecarton.Productinnovationsarecontinuousandare basedonlisteningtocustomersandwhattheyfeelthattheyaregoodat.Somenewproducts havebeenrejectedonthegroundsthattheyaredeviatingfromthestrategicpositionofthe company.Forexample,Innocenthavedecidedagainstexploitingthecurrenttrendforadding vitamins,healthandmedicinalingredientstodrinksasthisisnotsomethingthattheyare expertsat,insteadtheyprefertofocusontheenjoyment,funandtasteoftheirproducts. RecipeinnovationsthatarecreatedintheirFruitTowersLondonofficearetestedonpeoplein thesurroundingoffices,theproductingredientsaresourcedfromallaroundtheworldand regularsamplingisconductedtoensurethatthebestingredientswiththebestflavorareused intheirsmoothies. ThemainproblemInnocenthaveencounteredwhileproducingtheirproducthasbeenthe shortshelflifeoftheproduct,asalloftheingredientswerefreshandnopreservativesor additiveswereadded.Carefulproductionandhightechnologypackagingwasdevelopedto givetheirdrinksthelongestpossibleshelflifebutwithoutinterferingwiththefresh,natural ingredientsoftheproduct.Thecompanyhascontinuedtoresearchwaysthattheirproduct lifecyclecanbeextended.In2004,withtheintroductionoftheironelitertakehomecarton, thelifeoftheproductincreasedtofourdaysonceopenedasopposedtotheprevioustwo days. Innocenthavepursuedapremiumpricingstrategy,whichtargetshealthconsciousconsumers whoarewillingtopayapremiumpriceforthehealthbenefitsthattheproductcontains. ThepriceofanInnocentdrinkvariesfromtherecommendedretailpriceof1.751.99for smoothiesandthickies,1.491.69forreallylovelyjuices,1.491.69forJuicyWaters, 3.29foronelitercartonsand2.99forfourkids'drinks. Until2003,Innocenthad notspentanymoneyon advertising,withtheir marketingstrategybased aroundlowcost,high impactmarketingbased onwordofmouth.These communication techniqueswerevery successfulandtheybuilt brandawarenessof35% inthreeyearsona budgetoflessthan 100,000.Thecompany isproudthattheywereabletosavemoneyandstillcommunicatewithcustomersusing unconventionalchannels. Forexample,inthesummerof2003Innocent'ssummermarketingcampaignfeatureda doubledeckerbuscoveredinastroturfgrassofferingcustomersfreesmoothiesandfreerides

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aroundLondon.Wordofmouthwaskeytotheirmarketingcampaignandthetheorybehind thisisthatiftheymadeagoodproductpeoplewouldtelltheirfriendsandtheyfeltthat advertisingmightbringtheperceptionofcorporatedishonestytoabrandthatisbasedonan imageofhonesty,simplicity,wholesomenessandinnocence.Infact,Innocenthasalways strivedtodistanceitsbrandfromthecorporateimagethatsuccessbringsanditsalternative, simple,'fruity',witty,brandimageisaneffectivemarketingstrategyinaworldthathaslost faithinthetraditionalcorporateworld. Aftersixyearsofgettingtheproductanddistributionrighttheystartedusingadvertisingto promotethebrand.Theywereawarethatanyadvertisingthattheydiduseneededtobe consistentwiththeirbrandimageandatruereflectionofwhatthecompanyreallywas.In March2005Innocentbeganadvertisingontelevisionandtokeepinlinewiththequirky,witty personalityoftheInnocentbrand,theyshottheadthemselves,whichfeaturedatalking cartoninaseaoffreshfruit,overaweekendinalocalpark. In2007theEuropeanUnionpassedanewlaw,thatwouldtakeeffectfrom2009,which requiredcompanieslabelingtheirproductsas'Superfoods'tojustifystatementsthattheir productsare"superfoods","healthy"or"goodforyou.InOctober2007Innocentwaswarned bytheAdvertisingStandardsAuthorityformakingunsubstantiatedclaimsaboutthehealth benefitsoftheir"superfoods"smoothiesstatingthattheirclaimscouldnotbebackedupby medicalscienceandorderingInnocenttonotrepeatthem. Asacompanytheyalsoseetherelationshipbenefitsthatcanbecreatedaspartofa marketingcampaign.Forexample,theyhavedevelopedmarketingactivitiesthatenablethem totalkdirectlytotheircustomerssuchastheannualmusicfestivalcalled`Fruitstock'.Thisisa freemusicfestivalthatInnocenthoststosay'thankyou'toitscustomersforusingtheirbrand. Thisfestivaloffersgoodcommercialvalueforthecompany,improvesitscustomers' perceptionsofthebrandandallowsittoraisemoneyforcharity. Fromtheoutset,Innocenthasemergedasabrandthatencouragescustomerengagement, usingastraightforwardcommunicationsapproachthatextendstoeveryareaofthe companysactivities:thebrandingofitsproducts,itscowprintandgrasscoveredvehicles,its interactivewebsiteand,mostrecently,thelaunchofitsfreemusicfestivalFruitStock(arather fittingnodtothecompanyshumble beginningsatsomeoneelses). Ineachcase,Innocenthasmaximized theimpactofdesignandbrandingto communicateasetofclearlydefined values,strengtheningtherelationship withitscustomersandcreatinga communityofconsumersthatgrows biggereveryyear. Itsfirstventureintothemarketwasverymodestwithalocalshoparoundthecornerfrom wherethefoundersworkedagreeingtostocksomeoftheirdrinks.Innocentsuppliedthem with20bottles,allofwhichweresoldoutattheendofthefirstday.Overthefirstweekend thatInnocentwasonsalein50shopsitwasanimmediatesuccess,with45shopswanting

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more.Initially,mostofthesalescamefromdelicatessensandsandwichshops,butCoffee Republic,whichatthetimewasalsoayounggrowingbusinessagreedtostocktheirproductin eightornineshops.Sincethen,Innocentdevelopeditsdistributionnetworktoinclude supermarketsaswellassmallerlocalconveniencestores.By2006itsuppliedsmoothiesto over6000retailers,sellingoveronemillionsmoothiesperweek. Futurechallengesforthecompanyincludehowtocontinueusingthebrandtodrivegrowth withoutsteppingoverthemarkandundoingallthatthebrandhasachieved.Thecompanyhas openedothermarketfrontsbyaddingproductlinesthatdeviatefromtheoriginalproductand manymoreproductlinescouldbetestedtoseeiftheyfitthecompany'sbrandimage.For example,couldthebrandbeextendedtoincludebabyfoodoralcoholicdrinks?Thefearis thatbylaunchingnewproductextensionsitwillunderminethebrandanddiluteitratherthan strengthenit.Itisalsonowinapositionwhere,asdemandincreases,itisfacedwiththe decisiontoeitherrestrictthedistributionofthebrandandmoveitupmarketorcontinueand getasmanydistributionoutletsandsalesaspossible.Butthequestioniswhatimplications willthishaveonthestrengthofthebrand,itsimageanditspricing?Whilethebrandimage andpersonalityaresoeasilyunderstoodandenjoyedintheUK,Innocentfacesculturaland languagechallengesastheybegintoexpandinternationally.Withtheaimofbecoming 'Europe'sfavoritelittlejuicecompany',howcantheyovercomethesechallengesofgrowth?

VEGPOTS
InnocentlaunchedarangeofvegetablebasedmealscalledVegPotsduring2008.VegPots compriseavegetablebasedmeal,whichcanbeheatedinthemicrowaveandeatenfromthe potorpouredintoapanandcookedonthehob. Themovecontinuesthecompanyshealthfocus,butitisdebatablewhetherVegPotswill havethesameappealasitspopularfruitsmoothies. InnocentDrinkshasmovedintotheproductionandsale ofvegetablebasedmealswiththeintroductionofitsnew VegPotsinfourvarieties:MoroccanSquashTagine, TuscanBeanStew,Pea&BroccoliRiceandThaiCoconut Curry.TherangesoldexclusivelyinWaitroseuntil October2008atwhichpointitwasrolledouttoother retailersacrosstheUK. Thenewrangeisdesignedtoappealtotheoffice lunchtimemarketasahealthyalternativetosandwiches. Each300caloriepotissaidtoprovidethreeportionsof therecommendedfivefruitandvegetablesaday,while beinghighinfibre,andlowinfatandsalt.Themealsarealsoquicktocook,takingafew minutestoheatinthemicrowave. Whiletheproductundoubtedlyhasahealthymakeup,thecompanycouldstruggleto convincepeopletopaytherelativelyhighprice.At3.49,theVegPotismoreexpensivethan theaveragesupermarketboughtsandwiches.Atatimewhenmanyconsumersaretightening theirpursestrings,thiscouldimpingeonsales.

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AccordingtoInnocent,VegPotsaredesignedtohelpconsumersmeettheirtargetsforeating fiveportionsoffruitandvegetablesaday.EachVegPotwillprovidethreeportionsof vegetables.CombinedwiththetwofruitportionsinanInnocentsmoothie,VegPotswillhelp consumersachievetheirfiveaday. Itsallaboutmakingiteasyforpeopletodothemselvessomegood,saidbrandmanager ClareGordon.Thereasonpeoplebuysmoothiesisthatitisagreatwaygettheirfruit portions.Inthesameway,VegPotswillhelppeoplegettheirthreeportionsofvegetablesa day.Theyarealsonaturalandhealthyatthesametime.

GordondismissedsuggestionsVegPotswouldcompensatefortheslowdowninsmoothie sales(Innocentsufferedasalesdecline2008) Thefocusofthebusinessisstillverymuchsmoothiesandjuices,shesaid.Itsnotanew strategybecauseoftheeconomicenvironmentandwearenottryingtoreplacethatbusiness wealwayslookatnewfoodopportunitieseveryyear. FortheVegPotstosucceed,thecompanywillhavetoconvincepeoplethattheyareastasty asitsfruitsmoothies,andworththeheftypricetag.Itremainstobeseenwhetherthisisan extensiontoofar,orwhetherconsumerswillmaketheVegPotpartoftheireveryday lunchtimebuyinghabits. ButwhywouldtheyintroduceaVegPotatatimewhenthecompanyisunderattackfrom AmericangiantPepsiowneroftheTropicana,PJsandCopellajuicebrandsandfacingan economicdownturn,surelyitshouldsticktowhatitknowsbest? RichardReed,whoheadsInnocent,explainedthisinaninterview(September2008): Weneversaidwewouldjustbeaboutfruit.Infacttwoyearsagotheydecided tobroadenfromdrinksintofood.Theyjustdidnttellanyone. Wetooktheleadfromthegovernmentsscientificadvisorypanelonwhatpeople shouldeatmoreoffruit,vegetables,wholegrains,dairy,andoilyfish.Weare notgoingtobecometheoilyfishcompany,butwecanworkwiththerest.Letstry

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andmakeasmanydeliciousthingsfromthosefouraspossible.Anditalwayshas totastegreat,anddoyougood. Butdontestablishedfoodcompanieshaveeveryanglecovered? Reedrubshisstubble.Listenup,hesays,Innocenthasthemarketinghookready. Buyavegpotandasmoothie,andyouvecoveredtherecommendeddailyfive fruitandveginoneshot.Thatssmart. Hepopssomenutsinhismouth.Innocenthasbeendownthisroadbefore.Ithada waterbrand,whichitpushedoutintoaseparateoperation.ItdabbledwithaUK icecreamlaunch,butthenswitchedtopushingitssmoothiesabroad.That expansionhasputInnocentin10countriesacrosscontinentalEurope. Infact,saysReed,businessisbooming,despitetheeconomiccrunch.Salesgrowth insmoothiesherehasslowed,butthenumbersarestillaheadoflastyear. Wearebeatingourtargetsandourpositionisstrengthening.Wegothitatthe beginningoftheyear[..2008..]whenNestllaunchedBoostandPepsirelaunched PJs.Butguesswhat?Boosthasbeendelisted,and,okayImbiased,butPJsisnot workingasabrand.Itsearlydays,thereisnoroomforcomplacency,butweare winningbacksomeofthespaceweoriginallylost. Andthefoodlaunchisntabigrisk,theysay,becausetheyarestartingsmall maybe1minsalesbyChristmas.TheywillknowbyJanuaryifpeoplelikethe products.Ifitdoesntwork,theywilldropit. Buttheythinkhealthandethicswillremainbuyingpointsthroughanyrecession, andtheyknowtheirbrandfostersloyalty,especiallyamongwomen.Ifitdoesnt doyougood,werenotexcitedbyit,saysReed.Wewanttosolveagenuine need.Eatmorebroccoli. VegPotbrandmanagerAlexWoodsaidtheproducthadbeensampledbyonly3.4%ofthe population,sotherewasalotofroomforgrowth.Thebrand,whichrecordedsalesof12.1m in2010,wantstoincreasethisto15min2011. InnocentisinvestinginaprintanddigitalmarketingcampaigntoboostawarenessoftheVeg Potrange,andhighlightthefactthateachproductcontainsthreeoftherecommendedfive dailyportionsofvegetables. Targetingwomenbetween25and35yearsold,pressadswillappearincelebritymagazines HeatandReveal,aswellasfreesheetMetro.Theywillcoverthebottomhalfofadoublepage spread,depictingaVegPotwithaspooninitandtheslogan,"Hot,tastylunchdate?Sorted." Theadswillalsoincludea50poffcoupon. Thecampaign,createdinhousewithTheGallery,willalsoincludeinstoremarketing,point ofsalematerialandsampling.AnInnocentteamistovisit700officesacrosstheUKtodeliver potsthatconsumerscantryduringtheirlunchbreak.Asecondwaveofactivitywillfollowin theautumn.

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Inaddition,theVegPotrangehasbeenaccreditedbytheVegetarianSociety,andallpackswill begintofeaturetheorganisation'sVshapedsealofapproval.Adedicatedprintcampaign targetingvegetarianswillbeginnextmonth. InnocentisalsolookingtodriveconsumerstotheVegPotwebsite,Innocentvegpots.co.uk, wheretheycanapplyformoneyoffvouchersandclaimafreepot. Banneradspromotingthepotswillurgecustomerstoclickthroughforafreelunchand70 couponswillbegivenawayeachday,alongwithmoneyoffvouchersforthosewhomissthe promotion. ThecompanymostrecentlypromotedthepotswithanadcampaigninOctober2011.Theads, whichwerecreatedbyFallon,visualisedthepreparationofaVegPot,showingvegetables swirlingaroundonakitchentable,beforebeingchoppedandtossedintoapot,cookedand finallyeaten.Thepushusedthestrapline"InnocentVegPots,adeliciousfillinglunch". KIDSSMOOTHIES RecentlyInnocentDrinkshaslauncheda campaignforitsKidssmoothierangeintheUK targetedatparents.Thecampaign,Innocentsaid, willrunforthreemonthsandwillinclude televisionadvertisingandanonpackpromotion. ThefirmwillalsolaunchanewKidswebsitein April. "Wehadareallysuccessfulyearin2010,witha 30+%growthonInnocentKids,soarelooking forwardtoastrong2011,"anInnocentspokespersontoldjustdrinks. Thetelevisionadiscurrentlybeingshownonchannelsincluding,Five,CITV,Nickelodeonand CartoonNetwork.TheonpackpromotionwillseeInnocentgiveawayalphabetmagnetson around5.6mpacksofKidssmoothies.Around10,000magnetswillalsofeatureinGoGirland Toxicmagazines. WhileInnocentcontinuestoresearchpackagingtechnologythatwillenableittoachievea longershelflifetheshortshelflifeoftheproductalsoposesproblemsforInnocentasitlooks toexpandfurtherintoEurope.Asdistributionoftheproductsincreasewhatstepscan Innocenttaketoensurethatthenaturalqualityoftheproduct,whichmadeitsosuccessfulin theUK,willnothinderitsexpansionintoEurope? Sofarithasmaderegularprofitswhichhaveenabledthecompanytoexpand.Thescaleat whichinnocentproductssaleisveryhigh;eachweek,thecompanysalesover2million smoothiesbothlocallyandinternationally.ThedistributionchannelofInnocentDrinksalso putsitasagoodpositionofgainingcompetitiveadvantage.Thecompanyhasoverten thousandretailedoutletsstockingalltypesandvarietiesofsmoothies.Thecompanyalsohas largerchainsofsupermarketwhichmakethecompanysoutlets.

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Theethicsofinnocentsmoothiesisbasedonrecyclingofbottlesandrecyclingpapersfor labelingthebottles.Suchrecyclingprocessimprovesthecompanysefficiencyanddevelops anenvironmentwhichisbetterforworking.Thepremiumpricesofthesmoothiestothe retailerarepreferablebecauseithashighprofits.Thecompanyhasgainedcompetitive advantagethroughthedevelopmentofnewproductsofdifferentshapesandsizes.Ithasover thirtysixsmoothiestypebytheuseofvariousmainstreamchannels.Thecompanyhasalso focusedonproductswhichhavehealthbenefitandissupportedbyhealthorganizationsand governments. Anegativepointthecompanyfacesisonitspremiumprices.Thehighpricesofsomeofits productsthereforearenotaffordabletosomepeopleinthemarketbecausetheywillprefer tobuythesameproductsfromothercompanieswithlowprices.Alsocomparedtothe competitionlevel,innocenthasarelativelysmallbaseofitsconsumers.Theplussidefor innocentDrinkarethatithasanincreasedmarketsharewhichisstillgrowingandconsumers arebecomingmoreinformedandconsciousontheirhealth. Peopleareshyingawayfromchemicallymadeandallotherprocessedfoods.Thistherefore meansthatinnocenthasasignificantoptionsforincreasingitsmarketshare.InnocentDrinks Companyisopeninguptonewmarketsaroundtheglobeswhichwillmakeitincreaseits marketshare.Thecompanyisalsoworkingtowardshavinganincreasedrangeofproducts suchasdairya,wholesgrainandvegetableproducts.Thecompanyisinsupportofeco friendlyproducts. ThethreatsfacedbyInnocentsmoothiesaretheeverchangingtastesandpreferencesof consumers,consumersareeverinneedofnewproductvarietyorrange.AsInnocent smoothiesgoglobal,itisfacedbythethreatofculturalchangesuchaslanguagebarrierand peoplepreferringthelocallyproduceddrinkscomparedtotheforeignones.Asanexample; forthecaseofAustralia,whichinnocentwillbeventuring,therearesimilarproductsfrom NudiesCompanytowhatInnocentproduces.Innocentcansucceedinthismarketinpriceand productdifferentiationstrategies. PerhapsInnocentdrinksfacetheriskofpossiblebranddilution.Thisisaneverpresentriskfor companiesthatrelyonastrongbrandforhighmargins.Acompanythatownsastrongbrand obviouslywantstoleverageittosellasmuchaspossible,buttheverystrategiesusedtopurse thisendoftenalsobringthedangerofbranddilution.

Innocentbeginnings,andwithanenergyefficientHQ,rawingredientssourcedresponsibly, 10%ofprofitsgoingtocharity;theinnocentmentalitystayedasthecompanygrewtowhereit isnow,sellingtwomillionsmoothiesaday. ButwhenCocaColaboughtamajoritystakeinthefirmlastyear,theirpublicimagesuffered thesamescrutinyasotherethicalfirmslikePrtaManger,GreenandBlacksandBenand Jerryswhohadsoldstakestomultinationals."Sellout"screamedtheheadlines,withthe companyname"Innocent"seemingtoinvitefurtherscrutinythanever.

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THISWATER
Innocenthasbeencriticizedinthepastformoving outofitscomfortzone,suchaswhenitintroduced JuicyWater,nowrenamedThisWater.Thefruit flavoredwaterwassaidtobebadfortheteethas ithadgenerousamountsofsugaraddedtoit.The brandhassincebeenspunofffromthemain company.

ThecompanyrebrandeditsInnocentJuicyWaters rangeunderthenewnamethiswaterinMay 2007,andisplanningtoaddmoreproductstothe rangeinthefuture. ThisWater,acombinationoffruitjuiceandspringwater,iscurrentlyavailableinfourvariants: Mango,passionfruit&springwater Blackcurrants&springwater Lemon,lime&springwater Cranberries,raspberries&springwater Thedrinksareavailablein420mlbottleswithanrecommendedretailprice(rrp)1.50,and availableatsupermarketsandindependentretailers.Andthoughsixteaspoonsofsugargo intoevery420mlbottle,onewouldn'tknowitfromreadingthelabel,wherethelistof ingredientsreadssimply,"somesugar".DouglasLamont,headofnewopportunitiesat Innocent,insiststhatwithholdingthefactthatsugarrepresentsupto10percentofeach bottleis"notmisleading". Herevealedthatthecompanyisconsideringlaunchingvitaminwaters,botanicaldrinksand naturalsportsdrinksundertheThisWaterbrand,butisstillintheconceptualstageof development. Ithinkthereisabigopportunityinnaturalsportsdrinks.Ifwecangettherightcombination ofnaturalingredients,greattasteandfunctionality,thereishugegrowthpotentialinthat area,saidLamont. HetoldTalkingRetailthecompanydecidedtoseparateThisWaterfromthehugelypopular Innocentbrandbecausethereisagreatopportunityinthewaterpluscategory. Wewanttoputasignificantamountofmoneybehindthecategory,butdontwanttocreate confusionincustomersminds.MostpeopleassociateInnocentwithsmoothiesand100% fruit,saidLamont. HeaddedtheThisWaterrangeretainedasimilarlookingbottleandlabeltotheInnocentJuicy Watersrangeinordertohelpconsumersmakethelinkbetweenoldandnew.

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ItmakessensetohaveatransitionbetweentheInnocentJuicyWatersbrandandThis Water,hesaid.Aswemoveforwardthatwillbecomemorecoherenttopeopleaswe launchmoreflavoursandproductrangesunderthebrand. thiswaterisreadyingasummercampaignthatitsayswillsetupthebrandsdigitalpresence forthenextfewyears. thiswaterwillrolloutFacebookandTwitteractivityforthefirsttimeforitswinthe perfectsummercompetition.Thecampaignwillalsoincludeonpackpromotion,whereevery bottleofthedrinkwinsaprize.Prizesrangefromticketstofestivals,Pumamerchandiseanda VWCampervan. ThisWatermarketingmanagerSarahSmartsays:Thebrandhaslowpenetrationatthe momentsothiscampaignpresentsahugeopportunitytoattractpeopleonshelfwithan attractiveonpackpromotiontogetpeopletryingourdrinks. ThefruitdrinkbrandispartneringwithWHSmithforPOSandwindowdisplaystopromote thecompetition. Thewaterpluscategorygrew5%in2010,largelyfuelledbyThisWaterandCocaCola ownedGlaceauVitaminWater,whichtogethercontributed88%tothegrowthofthesector. CocaColaownsa58%majoritystakeinInnocent,althoughSmartsaysthetwowaterplus brandsarenotinconflictbecauseThisWaterfocusesonnaturalrefreshmentwhereas Vitaminwaterismorefunctional. ThisWater,thefruitdrinkbrandownedbyInnocentDrinks, launcheditsfirstTVadcampaignduringMay2010.The creativeseekstoshowtheaffinitybetweenfruitandwater, highlightingthedrinksblendofthetwo.TheTVadand postersfeaturereallemons,limes,oranges,raspberriesand applesbaskingintherefreshingqualitiesofwater. ThisWatermarketingmanagerSarahSmartsays:Themedia planaddressesconsumersatpointswhentheywillreallywant refreshmentwhenthesunisshining. Theoutdoorcampaignincludesheatactivateddigitalposters whichautomaticallylightupwhenthetemperaturereaches22 degreescentigrade.

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THENEXTSTEP
Innocentnowdraws10percentofitssalesfromabroadfromScandinavia,Belgium,France andtheNetherlandsaswellasGermanyandIrelandandthegroupishopinginternational saleswillreachmorethan30percentby2010. TheexpansionhasnotchangedInnocent'sculture."It'sstillgotgrassonthefloor,it'sstillvery Innocent." ButitisclearthatsimilarexpansionofInnocentssistercompany isapotentialnew growthopportunity. Themanagementhavedecidedtoresearchthepossibilityofintroducingthiswateronthe Dutchmarket.Forthatpurposeagroupofexternalconsultantsishiredandtaskedwith writingamarketingplanfortheintroductionofthiswater. Themarketingmanagerforthiswater,Ms.Marple,hascollectedabasicinformationpackage tobehandedtotheexternalconsultants(MsMarpleFileonMM2Tdrive): Dutchstatisticssoftdrinks2011 UKsoftdrinksreport2012(forreferenceandtoseeiftherearesimilaritieswiththe Dutchmarket) WatDrinktNederland(WhatdotheDutchdrink,astranslatedbyMs.Marple)andTop TopicsFMCG2012 ThroughalocalcontactshereceivedtheDutchdocuments.Sheassumesthattheconsultants willfindatranslatortohelpthemdealwiththislocaldataorfindotherrelevantdata. AlternativelytheHvAuniversityofappliedsciencelibrarybib.hva.nlmayprovidesome leads. Avisittolocalsupermarketswillgivetheconsultantssomebasicinsightsintowhatisonoffer toDutchcustomers. ObviouslyalotmoreresearchisrequiredtogainaproperunderstandingoftheDutchmarket inordertopositionandintroduce correctly.

OOO

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Thiscaseiscompiledfromvarioussources:
http://www.philhudson.com/2010/06/examplebusinessreportinnocent.html http://www.designcouncil.org.uk/Casestudies/InnocentDrinks/Theimportanceofcustomers/ http://www.adbrands.net/uk/innocent_uk.htm http://www.innocentdrinks.co.uk/press/cheatsheet/ http://www.tutor2u.net/blog/index.php/businessstudies/comments/innocentdrinksteaching accountsexercise/ http://www.computerarts.co.uk/features/casestudyinnocentdrinks http://www.justdrinks.com/news/cocacolacotohandleinnocentdrinksdistribution_id99279.aspx http://www.insightreport.co.uk/store_focus/0902/13.html http://www.reportbuyer.com/blog/innocentdrinksmovingintovegetablescouldbefarfrom smooth/ http://www.marketingmagazine.co.uk/news/1054812/InnocenteyeslistingsVegPotrelaunch/ http://www.telegraph.co.uk/finance/migrationtemp/2809212/Innocenthaslostitsinnocence.html http://www.designcouncil.org.uk/casestudies/innocentdrinks/theimportanceofcustomers/ http://www.marketingweek.co.uk/thiswatersetsuplongtermdigitalstrategy/3026627.article http://www.growingbusiness.co.uk/notsoinnocent.html http://www.britishbottledwater.org/vitalstats.html Aaker,McLoughlinStrategicMarketManagement,Wiley2010 SmoothiesGlasshalffulloremptyMicrosoftAdvertising,May2011

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Appendix1Financialoverview20052008

InnocentDrinksLtd
FinancialAccountsSummary(allfigsinx1000) Yearto31December

ProfitandLossAccount(extract)
Turnover %change Costof sales GrossProfit Grossmargin Distributioncosts Administrative expenses OperatingProfit/(Loss) Staff costs Avgnumberof staff

2005
37.724 23.290 14.434 38,3% 6.538 4.211 3.685 2.943 75

2006
75.521 100,2% 48.072 27.449 36,3% 11.519 9.634 6.296 6.707 118

2007
112.049 48,4% 71.278 40.771 36,4% 17.066 11.506 12.199 9.915 205

2008
98.963 11,7% 68.899 30.064 30,4% 18.800 22.157 10.893 12.258 204

Balancesat31December

BalanceSheet(extract)
Tangible assets Stocks Trade debtors Cashatbankandinhand Bankoverdraft Trade creditors Netcurrentassets Stockturnover Debtordays

2005
400 2.584 5.746 2.833 14 5.020 3.908 9,0 55,6

2006
791 7.801 9.943 5.318 0 9.639 7.316 6,2 48,1

2007
2.231 14.025 15.402 1.351 2.796 11.341 14.763 5,1 50,2

2008
1.740 8.511 11.043 425 877 8.414 8.304 8,1 40,7

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