Module Number: MK4037

Module Name: Delivering Customer Value

through Marketing

Module Tutor: Robert Harris

Submission: Individual Assignment

Report - 8th January 2010

Student Name: Colin Hopson

Student Number: 0482647

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Contents

1  Case Study – The Fruit Juice Revolution .............................................................. 1 

1.1  Report Brief ................................................................................................... 1 

1.2  Task One ........................................................................................................ 1 

1.3  Task Two ....................................................................................................... 1 

1.4  Task Three ..................................................................................................... 1 

2  Introduction – Company Profile ............................................................................ 2 

3  Task Analysis ......................................................................................................... 2 

3.1  Task 1 – Marketing Communications Analysis and Plan .............................. 3 

3.2  Task 2 – Future Channel Management Strategy ............................................ 9 

3.3  Task 3 – Product Management, Market Share and Profitability .................. 10 

4  Summary and Conclusion .................................................................................... 12 

4.1  Summary ...................................................................................................... 12 

4.2  Conclusion ................................................................................................... 12 

5  References and Bibliography ............................................................................... 13 

5.1  References .................................................................................................... 13 

5.2  Bibliography ................................................................................................ 13 

6  Appendices ........................................................................................................... 14 

6.1  Pricing Comparison ..................................................................................... 14 

6.2  Marketing Communications Planning Framework ...................................... 14 

6.3  Auditing the Market Environment Levels ................................................... 15 

6.4  PESTEL and MC Chart ............................................................................... 15 

6.5  Product Life Cycle Chart ............................................................................. 16 

6.6  SWOT Analysis ........................................................................................... 16 

6.7  BCG Matrix ................................................................................................. 17 

6.8  GE Matrix .................................................................................................... 17 

1 Case Study – The Fruit Juice Revolution

1.1 Report Brief

You work as a Marketing Consultant and have a specialist interest in the fruit juice

and soft drinks sector. You have been asked by the Board of Innocent Drinks to

prepare a 6000 word report addressing the following tasks.

1.2 Task One

Develop a communications strategy and plan that will enable Innocent to maintain its

dominant market position in the UK. Your strategy and plan should demonstrate how

Innocent will build and maintain its competitive advantage in its chosen markets.

1.3 Task Two

Evaluate the key factors which will influence Innocent’s future channel management

strategy.

1.4 Task Three

Analyse, using appropriate marketing tools and models, the value that product

management can add to Innocent in its bid to grow market share and profitability.

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2 Introduction – Company Profile

Since Innocent was founded some ten years ago by Jon Wright, Adam Balon and

Richard Reed, its production of smoothie drinks from natural fruit has been recently

exploited by other competitors. From when the three Cambridge University students

first launched their idea from a music festival stall in London, the business has grown

considerably and now sells more than two million smoothie drinks a week. Whilst the

organisation continues to be innovative and creative, it also focuses on environmental

aspects as well as endorsing sponsorships and donations to charities. The company

maintains high standards of corporate social responsibility by using ingredients from

environmentally and socially aware organisations as well as endorsing sustainability

and recycling product packaging. However, its triumphant market share of over 70%

(August 2007) has recently been threatened by increasing competition and the

consumer downturn. Although Innocent continue to uphold their ethical standards in a

“promise that everything innocent ever make will always be natural, delicious,

healthy and sustainable.” (Innocent Drinks, 2009); the question remains of how

Innocent can continue to devise marketing strategies that keep them market leaders.

“growing up brings its usual share of challenges as it faces the dual

threat of a consumer downturn and the efforts of a bigger rival to force it

out of business.” (Jonathan Sibun in Case Study, 2009, Appendix Six)

3 Task Analysis

In order to research the Innocent Drinks organisation and their product range, I firstly

read The Fruit Juice Revolution Case Study (Case Study, 2009) after which I

examined Innocent’s website (http://www.innocentdrinks.co.uk/). Other research

regarding the company came primarily from the internet; links from the Google

search engine plus online reports and journals. However, to inspect their product from

a practical perspective, I purchased two smoothie drinks of which were arranged close

together in a local store. After noticing that the Innocent drink was relatively more

expensive (Appendix 6.1 Pricing Comparison) for the same bottle size (250ml), I

noticed that its appearance was plain and less appealing. Although the taste was not

dramatically different, it was not until I read the labelling that I noticed that the

innocent pure fruit smoothie was made from a blend of crushed fruit & pure juices,

and not with concentrate or purée as shown on the co-operative summer fruits

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smoothie. The innocent drink also contained two of your 5 a day, whereas the co-

operative explained 1 bottle = 1 portion. Moving on from this practical comparison, I

continued to analyse Innocent as an organisation, looking at their brand, market,

competitors and their customers.

Each of the three tasks that follow in this report, concentrate on certain aspects

concerning Innocent. The first task analyses the company using different context and

briefly proposes a marketing communications strategy by referring to the SOSTAC

process (Situation, Objectives, Strategy, Tactics, Action and Control). This process is

referred too again in the closing summary and conclusion. The second task focuses on

channel management strategies whilst task three analyses product management and

how Innocent can increase their market share for profitable future.

3.1 Task 1 – Marketing Communications Analysis and Plan

To help formulate a communications strategy that will be successful for Innocent over

the next few years, I reflect on the stages in the Marketing Communications Planning

Framework of Chris Fill (Appendix 6.2 Marketing Communications Planning

Framework), as this relates more appropriately to currently marketed products. It is

not only important to investigate contemporary issues through market research

(Telegraph.co.uk, 2009), but to analyse the context of the business as a whole. To

effectively conduct a marketing environment audit, it is best to divide environments

into sections (Donnelly, 2009, Chapter 5). Firstly, I will reflect on the external

environment; such as political, technical or environmental issues, secondly the market

and Innocent’s competition, thirdly the internal environment (or business context) and

finally the value to the consumer (Appendix 6.3 Auditing the Market Environment

Levels). This analysis will help generate strategic options.

“Information on both external forces and internal capabilities are

required if an organisation is going to develop effective marketing

plans.” (Donnelly, 2009, p.59)

The Context Analysis

After accumulating the necessary market research regarding Innocent, the first

analysis (The Environmental Context) reflects on the external issues affecting the

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organisation. This macro-environment, as it is sometimes described, is investigated by

the PESTEL (Political, Economic, Social, Technological, Environmental and Legal)

analysis, of which examines the broad range of factors that affect Innocent. Included

in these ‘non-controllable’ factors, but which are more closely related to Innocent, is

its market and competitors (Appendix 6.4 PESTEL and MC Chart). After

investigating the business context, with help from the SWOT analysis tool, I will

briefly reflect on the customer context, before attempting to generate a marketing

communications plan with SMART (Specific, Measurable, Achievable, Realistic,

Targeted and Timed) objectives.

The Environmental Context

Due to the fact that the environment in which Innocent operate is constantly changing,

they must match these demands with the capabilities of their organisation, especially

when entering European or global markets, where cultures diverge. By using the

PESTEL model, Innocent can develop a more systematic approach in analysing their

external environment. This analysis segments key environmental factors into

relational categories and helps the organisation to plan for and control changes to

resources, market position, conditions and competitors. After reflecting on the

PESTEL model, analysis is directed to Innocent’s market and its competitors.

Political

With the enlargement of the European Union and opportunities to Innocent being

more global, Corporate Social Responsibility (CSR) is increasingly becoming a

lawful requirement and not just an advantageous ingredient for business. As Innocent

have already penetrated the European market by their £30m investment with Coca-

Cola, they must keep a close eye on political developments around the world. One

European law which raises argument for Innocent recently are the tax rules set on

food starting 1st January 2010 as stated by Jonathan de Wilton “the problem for the

Government is that many of these tax rules on food are set under European law and

cannot be tinkered with individually” (Telegraph.co.uk, 2009). However, the

Government message to the public to consume more healthy food has been largely

communicated by Innocent and so they must find this political issue somewhat

disturbing. Conversely, the Government’s concern, especially toward the eating habits

of our young generations, is directed to the long term costs in health care.

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Economic

Although the increase in VAT set for 2010 is one that may affect Innocent

economically, the most recent and influential concern must be the affect of the

downturn in the global economy. The direction of this issue must be addressed

frequently and plans must be incorporated into the marketing communications

strategy that will help Innocent combat a fall in revenue. As depicted by my personal

comparison earlier (Appendix 6.1 Pricing Comparison), Innocent are priced higher

than most brands, but deliver quality and reassurance for the health conscious public.

Although Innocent’s brand is well established and has adequate labelling to

implement healthy advantages, the disposable income, especially for the public in

lower wage groups, has become less and less. People of these lower incomes probably

either spend more wisely or purchase other cheaper brands, such as fruit juice

concentrates. “Consumption tends to be lower among children and people on low

incomes” (Case Study, 2009). However, it is important that Innocent continue to

deliver the message about their healthy product(s), as shoppers can be influenced

especially by pro-active advertising, promotions and in-store ‘touch-points’.

Social

Before the current recession took a firm grip on the UK economy in 2009, the public

and media interest into environmental concerns had grown significantly and with

healthy promotions proving successful for Innocent; such as their trial promotion of

smoothies for kids at a subsidised price into 550 schools (Case Study, 2009), their

social responsibility would have been glamorised. From the accomplishment of this

promotion, Innocent has increased flavours for kids’ smoothies and now stock many

more schools. However, Innocent soon learned a lesson from the public when

messages posted to their website blog (Case Study, 2009, Appendix Four) stated how

loyal customers did not like their trial run selling smoothies in McDonald restaurants.

From their experience, Innocent must incorporate the central essence of any

marketing strategy and expand on the value and services that meet the needs of their

customers. Recently, a lot more corporate advertising has been engaged in making the

public aware of business sponsorship or charity donation. Throughout 2009, Innocent

has used a smart promotional mix (the big knit 2009) that supports Age Concern and

Help the Aged, whilst elaborating on the healthy aspect of their product. Although

endorsements like these socially promote Innocent, this is only communicated

through their website. However, Innocent must have reason to be proud this year as

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although their social recognition could be greater, they won the Cause Related

Marketing Award at the Business in the Community Awards and the finance team

scooped the award as Finance Team of the Year.

Technological

People may think of technological aspects being concerned with computers and the

internet, but one big advantage that Innocent has over competitors that use juice

concentrates, is that science proves that smoothies are more healthier for the

consumer “Nutritionists believe that concentrated juice drinks are not as healthy as

those made from pure fruit ingredients” (Case Study, 2009). Some of the additives

that extend a products shelf life, or make it more tasteful, may make a person more

susceptible to obesity, mental illness, stroke, heart disease, or even cancer and yet

many consumers ignore what ingredients are integrated in their diet. Obviously, with

the increasing accessibility to the internet and the popularity of mobile phones,

technology is affecting consumer habits more radically. In-store promotions giving

vouchers, tokens, special offers or store cards are now technologically improved to

retain customer purchase behaviour and to incite feedback “there has been a distinct

shift away from traditional promotional instruments to the use of digital media in

order to reflect consumers’ preferences and media behaviour” (Fill, 2005, p.675).

Even though Innocent have already used technological aspects, a promotional mix

with a good customer service backing, could be hugely advantageous. It is sometimes

the understanding of the mobile or internet technology given in promotions that

bewilders public interest and overwhelms the customer benefit. A recent promotion

for Pot Noodle, of which Innocent could make a healthy rival to, was to collect pot

lids in order to text codes to receive downloadable mobile games. This is an example

of the type of innovative promotion that could benefit Innocent technologically.

Environmental

With the increasing concern of environmental issues, such as global warming and the

responsibility for an organisation to reduce its pollution output, Innocent will find it

necessary to consistently address these issues. From its beginning in producing

healthy drinks, Innocent have always being concerned with environmental factors and

consistently review the sustainability of their packaging along with reducing their

carbon foot-print. As detailed in their annual report, Innocent only use fruit suppliers

which are signed up to the International Labour Organisation standards, and in

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Latin/South America, they work on high levels of sustainability with the Rainforest

Alliance. Lately they are diverting from using compostable bottles to the use of

recyclable plastic. However, as more political meetings, such as the G8 Summit (July

2009), address environmental factors such as climate change, the economic crisis,

development in poorer countries, international trade, and health; this will have a

cascading affect on many businesses such as Innocent.

Legal

Issues related to Innocent Drinks consist... high cost of fruit smoothie but tax man has

17.5% plus a lot of revenue goes toward sustainability, sponsorship and charity...

The Market

The market for Innocent Drinks consists mainly of smoothies, of which Innocent hold

70% of the current market? But also consumers buy concentrated juices but sacrifice

natural product by having additives to prolong shelf life...

The Competition

The competition for Innocent Drinks mainly comes from a number of competitors,

including...competitor analysis! *** paragraph to be cemented in ***

In devising strategies for Innocent’s expenditure on advertising I reflect on Figure

16.3 (Fill, 2005, p.461) where it is shown “that advertising spend should be varied

according to the spend of the company’s competitors in different markets.” As

Innocent’s major strength is with its natural product, extension to promote this aspect,

and the company, becomes justifiable. However, as the competitors share of voice

(SOV) increases, Innocent may find that their large share of market (SOM) maybe

decreased, especially if competitors advertise productively or actively price their

products more affordably. Therefore, Innocent must promote (or rebrand) their

product(s) whilst devising strategies that can make a range that is more competitive

and appealing to the consumer. The Market/The Competition All managers, wherever they work in their organisation, need to keep in touch

with their market. An organisation will have a view of its market and how it is

changing. Market analysis can of course be difficult, but among the important

questions are:

(a) what the market is

(b) how big is it

(c) how is it changing

(d) how fast

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The Business Context

As Innocent has enjoyed a decade of tremendous growth since being founded on 28th

April 1999, the simplistic idea of producing healthy drinks from combinations of fruit

has been exploited by new competitors... *** STARTS LIKE THIS ***

Some competition names (stats) and customer types plus current retailers...

Eg. The internal environment (analysis of business from SWOT)

Reflect on (i) Brand Situation with reference to PCL/BCG Matrix but more in Task 3,

(ii) Corporate situation and plans with reference to GE Matrix,

(iii) Market situation and market conditions with reference to internet stats,

(iv) Marketing plans to own thoughts but referenced to arguements/proof

The Customer Context

Eg. Value to the customer – product shelf life, what the customer’s perspective is at

mo (online stats)

Pricing ~ comparison to other competitors...

Generating Strategic Options

Eg. Incremental innovative + promotions of stretching brand (new product

promotions)

Big section here on promotional mix, in-store push advertising and personal sales

promotion, publicity of new product may PULL customers with new packaging and

direct marketing techniques (direct customers to website for online promotion off

packaging of product, therefore online direct marketing/e-marketing, sponsorship –

Delia Smith or Alan Titchmarsh ~ fresh fruit+veg (5-a-day) for growing and cooking-

getting right vitamins/minerals...

Finished Text toward strategy...

Propose to raise the popularity of key accounts (Task 3.1) by placing trained sales

staff in-store in moderately sized kiosks to interact with the public to help to establish

new smoothie mixes. The original idea would be to promote British produce from

local farmers who are having difficult times whilst raising the awareness Innocent’s

bid to advertise while lowering the carbon footprint. The British brand (possibly

known as Innocent Own) would be made from British produce by the British public

and sold at a slightly cheaper pricing strategy to compete against competitors whilst

still retaining the health conscious ethos of the Innocent brand. As Mark Rae, director

of Brandhouse, states (Case Study, 2009, Appendix Two) “The challenge is to

manage the price cut so there is no change in the perception of quality or health

benefits.” In tasting customer-made recipes and promoting popular mixes through

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website links to social networking sites, Innocent receive popular feedback for future

product development in relation to popular flavours. This could become part of

Innocent’s 10th Birthday celebration (Case Study, 2009, Appendix 6) to reflect back to

the company’s origin.

Whilst promoting public made British smoothie recipes, a redesigned product range

with promotional packaging invigorates customer interactivity with the Innocent

website through social network links, text promotions, competitions, sponsorship and

games. Therefore, this British Own promotion not only stands out to the health

conscious British public (Differentiate) but actively involves them to purchase

(Remind, Inform, Persuade) Innocent products (Fill, 2005, p.183). Innocent could use

this new product range to sell at venues sponsored on their website through

competitions or prize draws. Not only would the cheaper drinks be popular at

festivals, concerts and community events, but fruit and vegetables which are abundant

to a particular time of year, could be capitalised upon; such as a Summer Fruits

smoothie at summer festivals, or a Winter Punch that contains natural spices for a

festive flavour.

The collated data from public interaction, such as surveys and customer feedback, can

be used for future product augmentation, such as stretching the brand to include fresh

sandwiches, wraps, soups or vegetable meals, or rebranding Innocent’s own water

product This Water to Innocent Mineral or Innocent Pure.

Future promotions such as the Innocent Break, Innocent Wake, Innocent Lunch,

Innocent Dine, Innocent Go, Innocent Brunch, could all include healthy made

meals. For example, the Innocent Wake (a breakfast meal combination) could

incorporate; a scrambled egg croissant, orange/mango smoothie, and an oats/raisin bar

for a reasonable price of £1.99. Promoting a combination of mixed products from the

Innocent range like this, could be advertised as meal deals.

3.2 Task 2 – Future Channel Management Strategy

25% of marks... Rebranding can stimulate public interest in store of key accounts so

store is obliged to authorise it. People can ask questions face-to-face about product(s)

so a higher service is perceived from the beginning. Customers become more

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involved and aware of process (or service). Production should be closely integrated

with marketing promotions in order to sell cheaper and more abundant produce,

which is strategically related to the time of year.

Key account management of large supermarket channels is important as gives

opportunity to open other doors (i.e. more future channels for in-store promotions).

Not so for other big names like Macdonalds, although Coke ok but for international

recognition – this is for national revision of product as it is important to update

managerial methods of fast moving consumer goods (FMCG). Necessary to monitor

interaction between data storage systems so Innocent products are compatible with

key account systems. This assists the management of product delivery against sales

(demand). Stores give feedback about suppliers products, maybe get involved with

development/promotion therefore become not just a client in relationship marketing

ladder but supporter or advocate. Interaction of product & company with customer

raises awareness with fun theme helps popularity of store. Need to control/monitor

processes and feed into product development. This assists logistics and quick

warehouse turn-around.

3.3 Task 3 – Product Management, Market Share and Profitability

25% of marks...

Diversification already a different juice product to normal concentrates and do not

want to divert from strong ethical morals about health.

Market Development expand by recognition of Coke (see what they do?)

Product Development Product needs to be rebranded and stretched to fill health

conscious market but keep value of product as Lucozade (Donnelly, 2009, p.102)

found successful over a period of five years.

More of the same Product needs to be revamped for recognition

Product has limited shelf life. Products usually have time restricted contracts so need

to analyse product popularity and promote most successful of in-store promotion.

Strategic consumer analysis from in-store promotions would help Innocent to device a

dominant advertising campaign as Kelloggs (Fill, 2005, p.133) did when they began

to lose market share after becoming the brand leader. It is also necessary to find out

what to do with the product and how it is perceived by the consumer (reflect more

strongly here towards PLC and BCG matrix). A process to implement most of the

product management techniques mentioned in Task 3.2 is to firstly promote the

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original idea with more customer interaction. Relate to task 3.1. Customer interaction

continues by using direct marketing technology to acquire and profile consumer

groups, which may assist the direction towards niche marketing. Finalise this area

with GE Matrix to support decision of my communications strategy.

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4 Summary and Conclusion

To close my analysis of Innocent Drinks and to give the company recommendations

for future innovation and strategy, I have finished with a brief Summary and

Conclusion.

4.1 Summary

More text here...

The control and management of product promotions, such as meal combinations,

could drive future innovation for Innocent, even if they need to merge with

experienced restaurant or food chains such as Subway. Unlike Innocent’s interest with

Coke, which sacrificed a stake between 10-20% (Lightmaker.com, 2009) of business

to attract international brand recognition, future arrangements should incite more

commitment to business recognised with Fair Trade, or like Innocent, show awareness

to health and environmental issues that the public are becoming increasingly aware

due to the increase in child obesity, mental illness, stroke and cancer.

4.2 Conclusion

Text... Refer to SOSTAC process...

After all, Richard Reed, a founder member of Innocent admitted; (Case Study, 2009,

Appendix Six) “We’ve got to find a way to make quality affordable.”

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5 References and Bibliography

5.1 References

Case Study (2009) The fruit juice revolution case study 2009. Wolverhampton:

University of Wolverhampton.

Donnelly, R. (2009) The marketing planning process: CIM coursebook 2009-10.

Oxford: Butterworth Heinemann.

Fill, C. (2005) Marketing communications; engagement, strategies and practice. 4th

ed., Harlow: Financial Times Prentice Hall.

Innocent Drinks. (2009) the first ever innocent annual report [online]. Innocent

Drinks [cited 9th December 2009] Available at:

<http://www.innocentdrinks.co.uk/AGM/innocent_annual_report_2007.pdf>

Lightmaker.com. (2009) innocent drinks : all about us [online]. Innocent Drinks

[cited 2nd December 2009] Available at:

<http://www.innocentdrinks.co.uk/us/our_story/2009-investment/>

Telegraph.co.uk. (2009) Innocent seeks VAT exemption for smoothies - Telegraph

[online]. Innocent Drinks [cited 10th Novermber 2009] Available at:

<http://www.telegraph.co.uk/finance/newsbysector/retailand

consumer/5141209/Innocent-seeks-VAT-exemption-for-smoothies.html/>

5.2 Bibliography

Donnelly, R. (2009) Delivering customer value through marketing: CIM coursebook

2009-10. Oxford: Butterworth Heinemann.

Fill, C. (2005) Marketing communications; engagement, strategies and practice. 4th

ed., Harlow: Financial Times Prentice Hall.

Jobber, D. (2007) Principles and practice of marketing.5th ed., Maidenhead:

McGraw-Hill.

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6 Appendices

6.1 Pricing Comparison

6.2 Marketing Communications Planning Framework

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6.3 Auditing the Market Environment Levels

6.4 PESTEL and MC Chart

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6.5 Product Life Cycle Chart

Source: R. Donnelly, The Marketing Planning Process, FIGURE 8.2, pg.100

6.6 SWOT Analysis

Major Strengths Major Weakness Promotes healthy lifestyle and natural

product Short shelf life compared with

concentrates/fruit juices Majority share in UK smoothie market Simplistic appearance maybe unattractive

Taste and quality with natural ingredients Expensive compared to other products Coca-Cola investment raised

international sales Difficult task in continuing the concept of

healthy eating and living Major Opportunities Major Threats

Appealing by ethical standards and continues to maintain ethics/charities

Competitors (such as Pepsi) delisting Innocent products in major supermarkets

Promoting natural product(s) to reduce obesity, heart disease, stroke and cancer

Coca-Cola cost £30m for minority investment to stake 10-20%

Coca-Cola investment is giving more advertising distribution/expenditure

Economic downturn may direct consumers to purchase cheaper products

Strong key accounts of supermarkets may open new distribution channels

Increasing number of competitors in market are stretching their brands

Using market research (such as the short list in the chart above) the SWOT analysis assists the formulation of objectives and strategies

Strengths Weakness Opportunities S/O strategies W/O strategies

Threats S/T strategies W/T strategies Analysis helps with tactical decision making and what marketing mix to implement

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6.7 BCG Matrix

Source: R. Donnelly, The Marketing Planning Process, FIGURE 8.3, pg.103

6.8 GE Matrix

Source: R. Donnelly, The Marketing Planning Process, FIGURE 8.4, pg.106

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