A target market is a distinct group of buyers that might prefer or require a product or service mix and depends on the demographic, psychographic, and behavioral aspect of people (Kotler & Keller, 2012, p. 10). It is based on the fact that not everyone likes the same products or services, which prompts marketers to divide markets into small segments according to the aspects mentioned above and to develop a market offering which delivers benefits to each of the small market segments. The soft drink company will operate in the Tampa, Florida, area, which, according to US Bureau (2016), has an estimated population of more than 8.4 million people. The company will target consumers in the 5-65 years age bracket. It considers such people to be very active and to have a constant need for refreshment. It also realizes that such people are very health conscious. Around 81.6% of the city’s population falls under this age bracket. The company will not have any other criteria for segmenting its market. It will target people of all levels of education, gender, income, and ethnicity within the city.
The company will use a combination of two market-positioning strategies to position its product in the market. The two are the benefits strategy of positioning whereby the company will position the drink as having a refreshing and cooling effect and the product attribute strategy whereby the company will position the drink as healthy drink whose calorie, carbs, and sugar content is very low, thereby attracting health-conscious consumers. The strategy will enable it to attract the most active people in the city.
The company will sell its products through other businesses such as grocery stores and other retail trade facilities within the city. According to DADS (2014), Tampa has around 9961 retail trade facilities.
The company’s competition is discussed in the present part. Elements of the competition covered include who the competitors are, the basis on which the company competes, the manner in which it competes and compares with competitors, its potential future competitors, and the barriers faced by the potential competitors.
Coca Cola and Pepsi are the company’s primary competitors. According to Bailey (2014), the two companies control approximately 70% of the US soft drinks industry. Coca Cola has more than 500 brands, 17 of which generate revenues of more than billion dollars per annum each. Pepsi also has various brands that also produce more than a billion dollars in revenue every year.
The company will base its competitive advantage on the value it will create to its customers. It will take advantage of its ability to readily distribute ad reach its customers to create a competitive edge. As indicated in the marketing budget spreadsheet below, the company has better access to distribution within the Tampa market than its competitors. This also explains the manner in which the company will compete with other players in the market. It will transfer the distribution advantage to consumers in terms of reduced prices.
Just like most other profitable industries, the soft drink industry attracts many potential entrants. Some of the most likely entrants into the Tampa market include Dr Pepper Snapple Group, Cott Corporation, National Beverage, and other foreign companies. However, the potential entrants will face numerous barriers to entry. The barriers include access to distribution channels, government policy, capital requirements, economies of scale, and product differentiation.
The marketing budget is completed in the separate spreadsheet accompanying this document.
The company will use an aggressive selling strategy to win as big market share as possible. It will use irresistible means such as reduced prices, which is referred to as market penetration pricing strategy, to win over customers. It will also take advantage of its access to its distribution, suppliers, and the market to gain a competitive edge over its competitors. It will place its products to as many retail outlets in the city as possible. The fact that it will only cover a small market during its first six months in business will enable it to distribute its products effectively and to promote them in the market than its competitors will.
The Five Fs
The following part of the business plan explains the message that the company will use to position itself and sell its products. It uses the Five F’s of marketing to represent the message.
The functions of a product refer to its ability to meet the concrete needs of the consumers. The company realizes that its target customers are very active and that they need something to refresh them and to boost their activeness from time to time. The product function is one of two benefits on which the company will benefit, the other being the freedom benefit. It will use a benefit marketing strategy to emphasize on the ability of its drinks to refresh consumers and to boost their activeness.
The finances benefit to the effects that the purchase of a company’s products has on the financial situations of customers. It includes aspects such as the price of the products and the effects on savings and productivity. The company will use a market penetration pricing strategy to enter the New York market during its first six months in business. As such, its prices will be slightly lower than that of already established companies such as Coca-Cola and Pepsi. Therefore, the price will be pocket-friendly and will enhance the ability of consumers to save more money. The product will also improve the productivity of its customers. It will keep them refreshed and boost their activeness, thereby influencing their productivity positively.
Freedom refers to the ease or convenience with which consumers purchase and use a company’s products or services. It also relates to the attributes of the products and services and their effects on different aspects of their consumers’ lives. The company will sell its products through other businesses such as grocery stores and other retail establishments. As stated elsewhere in this business plan, the Tampa area has approximately 9961 retail trade facilities. Therefore, the company’s products will be readily available throughout the city. The products will provide consumers with health benefits. They will have a low calorie and sugar content, which will protect consumers from worries about the effect of the products on their health.
Feelings refer to the effects of the consumption of a company’s products or services on the self-image of consumers. It also relates to the relationship between the customers and the sales persons and the company. The health benefit is the primary feeling benefit that the customers will derive from consuming the business’s products.
Future refers to the manner in which customers will deal with the product or service and the company over time. It relates to factors such as the availability of support services and the effects of goods or services on their lives over time. The company develops and maintain a website through which will make direct communication between it and its customers possible. The site will contain contact information that the clients can use to get through to the company. The company will also hire and maintain a customer relations department that will provide customers with the necessary support all round the clock.
The company will use various marketing channels to promote and advertise its products to the target market, as described below.
TV and Radio Advertisement
The company will invest in television and radio adverts to communicate its promotion messages to the market. It will ensure that the adverts are aired in the evening, mostly between seven and eight o’clock, which is the average dinnertime in New York, to enhance their ability to reach as many potential audiences as possible. Pepsi uses TV and Radio advertisements effectively (“Pepsi Promotion”, 2012). It has used different commercials over time to attract customers.
The company will endorse various celebrities as a way of advertising its products to the fans of such sports and music stars. The channel will mostly be used to attract teenagers and young adults. Pepsi successfully uses this marketing channel to reach out to teens. It has endorsed famous musicians such as Beyonce and Shakira and athletes such as soccer superstar David Beckham and basketball superstar Shaquille O’Neal (“Pepsi Promotion”, 2012).
The company will also advertise its products over the internet to reach out to technologically conscious consumers. The website will highlight the distinct features offered by the company. It will also provide customers with all the information they will need about the company and its products to make informed purchase decisions. It will also provide online customer services to resolve its customer’s issues in real-time. The company will also advertise on social media platforms such as Facebook, Twitter, LinkedIn, Pinterest, and YouTube. It realizes that the majority of its target customers use such platforms to interact.
- Bailey, S. (2014). Why the Soft Drink Industry is Dominated by Coke and Pepsi – Market Realist.Marketrealist.com. Retrieved from http://marketrealist.com/2014/11/soft-drink-industry-dominated-coke-pepsi/
- DADS,. (2014). American FactFinder – Results. Factfinder.census.gov. Retrieved from http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk#
- Kotler, P. & Keller, K. (2012). Marketing Management. Boston [Mass.]: Pearson.
- Pepsi Promotion. (2012). soft drink cola war. Retrieved from http://softdrinkcolawar.blogspot.co.ke/2012/12/promotion-over-last-decades-and-since.html
- US Bureau,. (2016). County Business Patterns (CBP). Census.gov. Retrieved from http://www.census.gov/programs-surveys/cbp.html