Company BackgroundIn the summer of 1965, a university football coach began to question why his players were suffering from heat related illnesses. They were drinking plenty of water. University researchers soon discovered that players were losing electrolytes and fluids through their sweat, and water couldnt replace what they were losing. The researchers took their findings into their lab and began to create a drink that would help the Florida Gators feel rehydrated, replenished, and refueled during their most intense athletic events. Thats exactly what the product now guarantees to achieve-rehydration, replenishment, and refueling. They called this new drink Gatorade. By 1969, Gatorade was named the official drink of the NFL (History of Gatorade, Retrieved December 2, 2006). Soon it became popular to have Gatorade on the sidelines andit started the sports drink category.By 1985, Gatorade had expandedits research in sports science by building the Gatorade Sports Science Institute.The Institute allows them to better understand the human body, its needs during the stress of competition and how to improve their products.

The Products OfferedToday, Gatorade has reached beyond the narrow market of elite athletes. They have many product lines designed to appease the most particular of sports drinkers. Gatorade has many different product lines within their Thirst Quencher Series. They distribute Gatorade Rain, Frost, Lemonade, Original, X-Factor, Xtremo, and Fierce. Within each of these different sub-categories come many different fruity flavors. Each flavor also ranges from a 12oz bottle-6 pack to a gallon jug. Gatorade also has a line of fitness water called Propel. Any consumer can purchase Propel Fitness Water or Propel Fitness Water with Calcium. Both come in a wide range of flavors similar to those found within the Gatorade Thirst Quencher Series, but with a few more. The Gatorade Performance Series products has specially designed formulated nutrition and hydration in order to aid the most intense athletes in their performance. Each product is packed with nutrition in order

to replace the electrolytes lost by each athlete through exertion. Gatorade has an energy bar that comes in 2 different flavors, chocolate chip and peanut butter. The bar is the perfect snack for athletes on the go, or anyone getting ready to do some physical activity for that matter. The nutrition shake comes in the obvious flavors, chocolate, strawberry, and vanilla to fill an athletes stomach without slowing them down. And last, but not least, there are the Gatorade Performance Series Energy Drinks. These drinks are very similar to those of the Gatorade Thirst Quenchers. However, the Performance Series drinks contain a whopping 200mg of sodium. This is so that electrolytes and body fluids will be replaced within each athlete every time they take a drink. These drinks, however, come in limited flavors and are only available in 12oz bottles (Gatorade Products, Retrieved December 2, 2006).

Company Mission StatementOur mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

SWOT Analysis/ Gatorade has become the most popular sports beverage. It is widely known and is easily distinguishable among its competitors. Gatorade also remains recognized due to the number of contracts they have with several major sports leagues. As of now, they have contracts with the National Football League, Major League Baseball, National Basketball Association, Womens National Basketball Association, National Hockey League, United States

of America Basketball, Major League Soccer, United States Soccer, Bowl Championship Series, and the Association of Volleyball Professionals (http://www.gatorade.com/athletes/leagues_and_teams/, Retrieved December 2, 2006). The NFL is also known for performing the Gatorade Dunk. This ritual is performed after a game by the winning team. Players pick up the Gatorade Barrel and dump whats left over their coachs head. This gives free publicity because its done by the teams without any prompting by Gatorade. /

Analysis on Current Business PortfolioStrategic business unitA strategic business unit is a unit of the company that has a separate mission and objectives, and which can be planned independently from other company businesses. An SBU can be a company division, a product line within a division, or sometimes a single product or brand. They are organized into four business units, as follows: 1)PepsiCo Americas Foods (PAF), which includes Frito-Lay, North America (FLNA), Quaker Foods North America (QFNA) and all of our Latin American food and snack businesses (LAF), including our Sabritas and Gamesa businesses in Mexico; 2)PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages Americas and Pepsi Beverages Company; 3)PepsiCo Europe, which includes all beverage, food and snack businesses in Europe; and 4)PepsiCo Asia, Middle East and Africa (AMEA), which includes all beverage, food and snack businesses in AMEA. The four business units are comprised of six reportable segments (referred to as divisions), as follows: FLNA, QFNA, LAF, PAB, Europe, and AMEA.

The Boston Consulting Group ApproachThe business unit that Gatorade is under is considered a cash cow. Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus they produce cash that the company uses to pay its bills and to support other SBUs that need investment. / Each SBU has a life cycle. Gatorade started out as a question mark and moved into the star category when they succeeded. They later become cash cows as market growth falls, and might die

off or turn into dogs towards the end of their life cycle. The company needs to add new products and units continuously, so that Gatorade doesnt turn into a dog.

Developing Growth Strategies/ The product/market expansion grid shows four routes to growth: market development, new markets, new products and diversification.

Market DevelopmentMarket development looks for new users or market segments which the company is not currently serving. For example, they started to penetrate the market beyond the participants in organized sports to other, more casual, occasions by producing Gatorade Frost. They also widened their market by producing Propel Fitness Water. To target the teenage market segment, they came up with Gatorade All-Stars for their appeal. Besides that, they produced Gatorade Xtremo, with bilingual labels and extra rich flavours, to attract Latinos./1 Gatorade Xtremo

/ 2 Gatorade Frost / 3 Propel Fitness Water

Product DevelopmentProduct can be modified by changing characteristics, such as quality, features or style, to attract new users and to inspire more usage. Gatorade does this in several ways: Improving Quality a. GSSI Gatorade works on new products all the time. Theyve even created a special lab where their scientists can continually test new products to ensure the safety and abilities of all athletes. Virtually no one matches the Gatorade Sports Science Institute (GSSI) when it comes to hydration expertise. Established in 1988, GSSI has conducted and published research, as well as educated sports health professionals and athletes on sports nutrition and exercise science. The information provided to athletes helps them understand how they can fuel themselves so they not only perform better, but also feel better when training or competing. This in turn ensures that Gatorade is always producing the best quality in its market. 2. Durability a. Ergonomically Designed Gatorade Experience (EDGE bottle) / 3. Taste a. Gatorade has over the decades developed over 40 different flavors in its various lines of products. Some of them include:1.

Original

Lemon-Lime * Fruit Punch * Orange * Cool Blue * Berry * Ice Punch * Strawberry Kiwi

A.M. Rain

Lemonade X-Factor Frost

* Orange-Strawberry * Tropical-Mango * Cran Raspberry * Berry * Lime * Tangerine * Cherry * Strawberry Kiwi * Watermelon * Grape * Lemonade * Pink Lemonade * Raspberry Lemonade * Lemon-Lime + Strawberry * Fruit Punch + Berry * Orange + Tropical Fruit * Glacier Freeze * Riptide Rush * Cascade Crash

4. Gatorade In-Car Drinking System / The Gatorade In-Car Drinking System (G.I.D.S.) is the most highly advanced in-car hydration system ever used in the sport of stock car racing. The system allows NASCAR drivers to drink cold Gatorade throughout the entire duration of a race to help them stay better hydrated even as temperatures inside the car soar as high as 130 F. A special pouch, that guarantees to keep any liquid cold for hours, is filled with the drivers favorite flavor and is then placed in a secure compartment within the vehicle. There is a tube with a special coming from within the pouch and into the drivers helmet. At the end of the tube is a mouthpiece that is securely fastened to the drivers mouth. When the driver is ready to take a drink, they bite down on their mouth piece, to open the tube, and push a button, to pump the cold liquid through the tube and into the drivers mouth. When the driver lets go of the mouthpiece the tube closes and the pump automatically reverse pumps the Gatorade back into the pouch in order to stay cold for next time. Gatorade keeps their body temperature down and helps replace the electrolytes and body fluids lost. (http://www.gatorade.com/science%5Fand%5Finnovation/product%5Finnovations/gids/ Retrieved December 2, 2006).

Target MarketTheir primary target market is youth leading active lifestyle. Demographics Young adults 13-30 male/female, single Lifestyle Athletic, into sports, active Behavior Before during or after activity, thirst quenching, prevent dehydration

Market PositioningGatorade positions strongly in a niche market opportunity: the only thirst-quenching sports drink or youths with active lifestyle that improves performance. No other brand has a similar position, others are simply to quench thirst. /

CompetitorsBeing in a niche market, Gatorade doesnt have many competitors only one direct competitor, while others are indirect competitors. Drinks like 100 Plus and RedBull are indirect competitors because they are either energy drinks or isotonic drinks, but not sports drink like Gatorade and Powerade. However, Gatorade still retains most market share.

// On a wider scope of Pepsico company instead of one of its SBUs, their businesses operate in highly competitive markets, competing against global, regional, local and private label manufacturers on the basis of price, quality, product variety and distribution. The chief beverage competitor, The Coca-Cola Company, has a larger share of CSD consumption, although PepsiCo has a larger share of liquid refreshment beverages consumption. Success in this competitive environment is dependent on effective promotion of existing products, the introduction of new products and the effectiveness of our advertising campaigns, marketing programs and product packaging. The strength of their brands, innovation and marketing, coupled with the quality of their products and flexibility of their distribution network, should allow them to compete effectively.

Possible Developing Strategies On Current Business PortfolioStrategies for GrowthAccording to PepsiCo, they have several key strategies for longterm, sustainable growth, including:

Building the companys global macrosnack portfolio Responsibly and profitably growing the companys beverage business Building the companys nutrition business, in dairy, grains, fruits and vegetables Leveraging the companys unique Power of One selling model across foods and beverages Delivering on environmental sustainability commitments Strengthening and refreshing the organization to prosper in a changing environment Ensuring prudent, responsible financial management

Product Life Cycle//

Gatorade is in the maturity stage. Growth slowed o This is due to increased competition compared to when they just started out when they were the only brand to sell sports drinks. Now with competitor Powerade, their growth is not as rapid as the years before. Profits o Their profits are still strong, but decline slightly because they have to spend more on promotion and product development in effort to beat out the threat of competitors and keep them from going into decline stage. The extra cost of promotion and research and development cuts into their profit. Cost o Part of the reason their profit is still strong even with competitors is because with economies of scale, they have managed to reduce cost per customer to very low. Acceptance o This is a feature of maturity stage. This is proof that they are in this stage because they have a mass market of millions of consumers. Brand loyaltyo

Another feature, due to the fact that it was the only specialty sport drink when it was created and even with new competitors, most consumers would rather purchase a product they know works than try a new product that claims to do what everyone already knows Gatorade does

They should stretch their imagination and look for new ways to innovate in the market (market development), or to modify the product (product development) and the marketing mix (marketing innovation).

Most consumers would rather purchase a product they know works than try a new product that claims to do what everyone already knows Gatorade does. As long as Gatorade continues to produce new products, they will continue to grow. They should stretch their imagination and look for new ways to innovate in the market (market development), or to modify the product (product development) and the marketing mix (marketing innovation). All these have been discussed in the above section in the analysis on current business portfolio and the possible developing strategies on current business portfolio

PRODUCT Product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Broadly defined, product also include services, events, persons, places, organizations, ideas or mixes of these. For our group, we have decided to choose Gatorade as our product for this term paper project. i. LEVEL OF PRODUCT AND SERVICE

Product planners need to think about product and services on three levels. The most basic level is the core customer value which address the question What is the buyer really buying?. When designing a product , marketers must first define the core, problem-solving benefits or services that consumers seek. The core customer value that Gatorade provides is a sports drink that have formulated to rehydrate and replenish minerals, electrolyte and nutrients during exertion that specially formulated for athletes. At the second level, product planner must turn the core benefit into an actual product. For Gatorade, the isotonic drink is its actual product and its name, parts, styling, features, packaging

and other attributes have all been combined carefully to deliver the core customer value of sports drink. Finally, products planner must build an augmented product around the core benefit and actual product offering additional consumer services and benefits. At his level, the company will make sure that all their products are available to be market and reachable by all their customers. Thus, the company has creates their own website so that all people can get a lot of information about all the products produced by the company. On Gatorade website, people may know about their products range available in market, how they are running their business, management, technology they used, mission and vision, also with contact number so that customer that have any idea, problems or questions can directly call the company management. Within this global era, the website created is very important for them to compete with other company as most of the customers nowadays will make sure about the quality of their products first before make a decision to purchase those products. To make that process fast, thus, all the customers will search on the internet about the products. Of course without much information and difficult to be contacted, the customers will not become interested to purchase on that products. Therefore, Gatorade has creates their own website which is http://www.gatorade.com ii. PRODUCT/ SERVICE OFFERING CLASSIFICATION

Product and service falls into two broad classes based on the types of consumer that use themconsumer product and industrial product. For Gatorade, it is a consumer product because of its product is bought by final consumers for personal consumption. Under consumer products there are four classification that differ the product in the ways consumers buy them and in how they are marketed- convenience products, shopping products, specialty product and unsought product. Gatorade is in specialty product which is product with unique characteristic that offer an isotonic drink to rehydrate body for which a significant group of buyers, that are athletes who are willing to make a special purchase effort. The drink is not a convenience drink that usually buys frequently by consumer because its contained electrolyte and nutrient that used to support body from dehydration and hence the price is quite expensive from normal drinks.

iii.

PRODUCT AND SERVICE DECISION

Marketers make product decision at three level individual product decision, product line decision and product mix decision.1) INDIVIDUAL PRODUCT AND SERVICE DECISION/

I.

PRODUCT ATTRIBUTES

Developing a product or services involves defining the benefits that it will offer. These benefits are communicated and delivered by product attributes such as quality, features, style and design. Quality in term of product or service is the lack of defect whereas quality in term of the customer is the value and satisfaction provided by the product or service. As for Gatorade, product quality is an important aspect to be maintained. Gatorade was been produced in lab and have their own scientists who work on new products all the time. They have even created a special lab where their scientists can continually test new products to ensure the safety and abilities of all athletes. The Gatorade Sports Science Institute (GSSI) is a research facility operated in Barrington, Illinoisthat has been featured in a number of the company's commercials. Established in 1985, this organization consists of scientists studying the correlation and effects of exercise, environmental variables, and nutrition on the human body. It regularly conducts testing and research on how hydration and nutrition affect athletic performance. By maintaining the product quality Gatorade can provide consumers satisfaction towards its product. /

A product can be offered with varying features. The company can create higher-level models by adding more features. Features are competitive tools for differentiating the companys product from competitors product. The features that is provided by Gatorade is its variety of flavor, the packaging of product, electrolyte and nutrient contained that cannot be provided by other product. Gatorade always varied the features according to the different product line. Each product line carry special features that help consumer to choose the best and suitable drink that suit with their bodys condition and taste. The company knows that the other ways they can do in order to add customer value is through distinctive product style and design. For each brands product produced by Gatorade has their own

style and design. It is important for them to make sure that once all the products are marketed in market, the styles of all those products can be eye-catching to grab attention by the customers. Whereas, design is more than skin deep as it goes to the very heart of a product. Therefore, good design will contribute to a products usefulness as well as its looks. the designs and styles created for each of the brands are shown as followed: 1) Gatorade thirst Quencher /

2) Gator gum / 3) Gatorade frost / 4) Gatorade energy bar / 5) Gatorade performance series /

6) Gatorade tiger /

7)

Gatorade G series

/

2) BRANDING

A brand is a name, term, sign, symbol or design or combination of these that identifies the marker or seller of a product or service. Consumer view brand as an important part of a product and branding can add value to a product. Branding helps buyers in many ways. Brand names help consumer to identify products that might benefit them. The brand name become the basic on which a whole story can be built about a products special qualities. And branding also help sellers to segment market. For Gatorade they have created their own symbol and sign for each of their brand so that easier for customer to recognize their products. The brandings symbol and logo of each products are shown as followed:

1) Gatorade thirst Quencher / 2) Gator gum / 3) Gatorade frost /

4) Gatorade tiger / 5) Gatorade G series /

3) PACKAGING

Packaging involves designing and producing the container or wrapper for products. Innovative packaging can give a company an advantage over competitors. To make the packaging become more interesting, the company should put at least one best statement that can attract buyers especially first time buyers to purchase on that products. As for Gatorade, tested in the lab, proven on the field for Gatorade thirst Quencher and nothing hydrates better on any planet for Gatorade tiger.

4) LABELING

Labels range from simple tags attached to products to complex graphics that are part of the packages. They perform several functions. At the very least, the label identifies the products or brands, such as the name of Gatorade and its brand was stamped on the packaging. The label on the packaging also provide products information to increase customers confident about the good side that offer by Gatorade. Thus consumer can compare the product with its competitors.5) PRODUCT SUPPORT SERVICE

Customer service is another element of product strategy. A companys offer usually includes some support service, which can be minor or a major part of the total offering. For Gatorade, they already created their own website so that easier for their customer to know details description about each of the products produced by their company. For example, if you are access on their website, we could know what are the differences between product line, events and activities joined by the company, their corporation, and also how to contact them in easier ways. To make it more convenience to the customers who have any enquiry, they can directly ask the companys manager through online by fill up the enquiry form provided by the company and then submit. Gatorade also encourage their customer to get involved in their production process by throwing out ideas to improve their products and new ideas for their designs and models through this product support service system.

iv.

PRODUCT LINE AND PRODUCT MIX DECISION Product line decision A group of products that are closely related is called product line decision because they function in a similar manner, are sold to the same customer groups, are marketed through the same outlets, or fall within given price range. In order to expand their products line, in product line filling, Gatorade had varies its product types labeled under different brands. For example:

A)

Gatorade Thirst Quencher is the first product of Gatorade which was produced in liquid and powder form under two flavor variants: lemon-lime and orange. These remained as the only two flavor options for nearly 20 years, until the addition of the fruit punch flavor in 1983

B)

Gator gum is a chewing gum dusted with electrolytes, debuted in 1978. The gum came in two traditional Gatorade flavors: orange and lemon-lime. Gatorade frost is produced with the intent of broadening the brand's appeal beyond traditional team competitive sports. Flavors in the Frost line were the first from Gatorade to divert from fruit names; it was described as consisting of 'light-tasting fruit-flavor blends

C)

D)

Gatorade energy bar was Gatorade's first foray into solid foods and contained a large proportion of protein, in addition to carbohydrates Gatorade Ice was marketed as a lighter flavored Gatorade, and came in Strawberry, Lime, Orange, and Watermelon. Ice was rebranded in 2006 as Gatorade Rain and the flavor selections altered. Other than focused on product filling, Gatorade also implant product stretching in order to make sure that the customer has various choice in purchasing their products. In this case, company has stretched their product lines upward in order to add prestige to their current

E)

products. For example, the company has introduced all the products mentioned above with various flavor.

Product mix decision Product mix consists of all the products lines and items that a particular seller offers for sale. A companys product mix has four important dimension ; width,length,depth and consistency. Product mix width refers to the number of different product lines the company carries. For Gatorade, it has five product lines that contribute to product width. Product mix length refers to the total number of items the company carries within its product lines. Gatorade produces variety of different flavor and taste for each of its product lines. Product mix depth refers to the number of version offered of each product in the line. These product mix dimension provide the handles for defining the companys product strategy. The company can increase its business in four ways. It can add new product lines, widening its product mix. In this way, its new lines build on the companys reputation in its other lines.

v.

BRANDING STRATEGY Brand equity Brand equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. It is very important in order to capture consumer preference and loyalty. For Gatorade, they should not feel worried about their brand equity as PepsiCo is one of the largest company that produce sport drink products. However, many people in Malaysia still not recognize their products. Therefore, it is important for promotion management people to take some initiative in order to make sure that their products become well known among the citizen and accepted by the customers. Higher brand equity will give larger contribution to the total financial value of that brand.

/

Building strong brand

Companies can position brands at any three levels. At the lowest level, they can position their brand on product attributes. Attributes are the least desirable level for brand positioning. Early Gatorade marketing focused on attributes such as an isotonic drink for rehydrate, give energy and electrolyte balance. Competitors can easily copy attributes. More importantly, customers are not interested in attributes as such they are interested in what the attributes will do for them. A brand can be better positioned by associating its name with a desirable benefit. For Gatorade, it go beyond technical product attributes and talk about resulting an athletes with quick and full of energy recover by maintaining body fluid and electrolyte. The strongest brands go beyond attribute or benefit positioning. They are position on strong belief and value. Gatorade is formulated to taste best during physical activity because it contains electrolytes and the right flavor profile to help drive the thirst mechanism. The right flavor profile is achieved by creating flavors that are light and not overpowering so that they can be consumed in large quantities with minimum sensory overload during physical activity . Thus Gatorade knows that, to athletes, Gatorade mean much more than just an isotonic drink. It gives the athletes chance of achieving higher performance during competition and maintaining the good performance although at the end of the game. Brand Name Selection

Finding the best brand name is a difficult task. It begins with careful view of the product and its benefits, the target market, and proposed marketing strategies. After that, naming a brand becomes part of science, part art and a measure of instinct. The Gatorade name comes from The University of Florida football team, the Gators. Gatorade Thirst Quencher was invented at The University of Florida to assist their athletes in combating the dehydration that limited their performance-hence Gatorade.

In a Gatorade context, G represents the heart, hustle, and soul of athleticism and will become a badge of pride for anyone who sweats, no matter where theyre active. Brand Sponsorship

Manufacturers brand vs private brand Gatorade can be considered as manufacturers brand as Pepsi Co sells their output under their own brand names. Licensing Name and product licensing has grown rapidly in the recent years. From the names, initials as well as symbol, everything has to be licensed. When any manufacturer using Gatorade symbol or initial as their prints, they have to pay to the legal registered trademark holder, which in this case is the Pepsi Co

/

Brand Development

A company has four choices when it comes to developing brands. Below are those four choices.

New brands PepsiCo used new brands approach for Gatorade brand development. The company might believe that the power of its existing brand name is waning and a new brand is needed. Between 2008 and 2010, Gatorade re-branded a number of its products. Beginning in February 2010, the Gatorade

product portfolio was re-positioned around what the company refers to as the G Series, categorizing varieties of its products into three main segments: before, during, and after athletic events.

The Prime 01 product line consists of a Pre-Game Fuel in a gel consistency, positioned for

consumption prior to athletic activity.

Traditional

Gatorade

products

such

as Gatorade

Thirst

Quencher(Original

Gatorade), Gatorade ice, and Gatorade energy bar are categorized under the Perform 02 classification, representing their intention for consumption during periods of physical exertion.

Recover 03 refers to a post-workout protein and carbohydrate drink, formulated with the

consistency of a sports drink. The composition of this beverage reflects its intention to provide both hydration and muscle recovery after exercise. /

PRICEi.

GENERAL PRICING APPROACHES

One of the major components in marketing that produces revenue is of course pricing. Price is one of the most flexible marketing mix elements. Prices can easily be changed depending on the situation of the current market and companies decide on the pricing of each of their product by applying many different types of pricing strategies. Price is defined as the amount of money at which a product or service is valued or the value at which a seller sets on his goods in the market. Another definition is the sum of all the values that customers exchange for the benefits of having or using the product or service. There are many different approaches to set a price of a product. Due to that, many factors are to be considered when setting a price of a product. Companies usually faces problems where prices are set too high to produce any demand from customers hence lowers revenue and sales of product or prices are too low to produce any profit. Two major factors or what is known to be the extremes that need to be considered when setting price of product is customer perceptions of value of a product and the cost of product. Customers perceptions of the products value set the ceiling for prices. Price any higher than that off price ceiling will result in declining of demand of products which means lower profit or revenue to company. Product costs set the floor for prices which means price any lower than price floor will not bring any revenue or profit to company. With that, other internal and external factors that are also important includes overall marketing strategies, objectives and mix, the nature of the market and demand and competitors strategies and prices. Gatorade is a specially formulated beverage created to replenish carbohydrates and electrolytes lost during physical activity. It is one of the many brands of isotonic drinks and sportsrelated beverage products distributed in many countries. Gatorade is manufactured by PepsiCo; a huge American global corporation which has added Gatorade brand to the companys portfolio. Gatorade is well-known worldwide and is amongst the leading isotonic drinks internationally but it is the opposite here in Malaysia. In Malaysia, the leading isotonic drink is 100 plus which is manufactured and distributed by Fraser & Neave Beverages Marketing Sdn Bhd. 100 plus is a well-known local product which commands over 90 per cent of market share of the isotonic drinks market. Due to this, it is difficult for Gatorade to dominate the market as 100 plus is a strong competitor and a leading brand in the isotonic drink market in Malaysia.

With 100 plus being the strong competitor, Gatorade is not well-known amongst the consumers in Malaysia. The company could not lower prices to meet the price of the competitor. Hence, the company applies value-added pricing strategies which is attaching value-added features and services to differentiate a companys offers and charging higher prices. Rather than Gatorade lowering the prices of their product to match the lower prices of 100 plus, the company attach value-added features to differentiate offers of that of 100 plus and thus setting higher prices for their products. Gatorade is an international brand and is a leading brand internationally therefore, it could not lower its price to capture the consumer market in Malaysia. The company came out with value-added features such as unique bottle packaging and various flavours of isotonic drinks which differs from the range of products of 100 plus isotonic drinks. The company then are able to set higher price for its products and not cut price by adopting this strategy. There are also external considerations that may affect price decisions and the general pricing approach of the company. One of it is to understand the market and demand of product. Gatorade is categorized under a type of market that has a monopolistic competition which is a market that consists of many buyers and sellers who trade over a range of prices rather than a single market price. The product is varied in terms of quality and features which increases customers value perception of product and hence customers are willing to pay more for the product. Although Gatorade and 100 plus are of different price range, the company creates unique features that differs Gatorade from other isotonic hence able to sell their beverage in a much higher price. The company creates differences in terms of packaging of product, various flavours and promotion of product for example advertising. For example, Gatorade has appointed Nicole David as its spokesperson for its product in order to increase sales of product to target market which are athletes and sports person. The demand of Gatorade in Malaysia is rather elastic which means a sudden price change would affect demand of product. If company increase price of beverage to a higher price, customers will tend to buy other substitutes of isotonic drinks which have lower prices. Gatorade is not a necessity and any price change affects customers decision to purchase product. In other regions, the brand Gatorade is the leading brand in distributing isotonic drinks but in Malaysia, Gatorade faces strong competition against other leading isotonic brands such as 100 plus. Due to the elasticity of the demand of Gatorades product, the company could not set price that is too high

as the existing brands of isotonic drinks are cheaper than that of Gatorades. Consumers will opt to buy other brands if they perceive the value of the price of product for being overpriced. ii. PRODUCT MIX PRICING STRATEGIES Most companies of various products and services main objective would be to collect profit and revenue on products that they produce. In order to do so, companies must be able to set price that maximizes the profits on the total product mix. There are a few strategies on how the company sets products price to fit in their objectives such as product line pricing, optional-product pricing, captive-product pricing, by-product pricing and product bundle pricing. Gatorade targets customers that are active in sports from teenagers to adults. Hence due to this, the product lines of Gatorade are all sports based products from isotonic drinks and nutrition bars. In Malaysia, the product lines of Gatorade are limited to isotonic drinks and sportsrelated beverages. The company distributes different kinds of isotonic drinks that offer different features in terms of flavours and types. For example, the product line of Gatorade ranges from isotonic drink with various flavours such as grapefruit, orange and lemon and also the Gatorade original isotonic drink. Gatorade has a wide range of product line from sports drinks, nutrition bars and beverage products. Each is set with a different price range according to cost differences between products in terms of packaging, cost of manufacturing and value of product. The different price of products in Gatorade brand product line is based on customers perception value on the different type of products. Hence, Gatorade applies product line pricing strategies on its wide range product line. The company sets different range of price between products in its product line with price range suitable for each type of product which takes into account customers evaluations on the different types of products. iii. PRICE ADJUSTMENT STRATEGIES Companies need to study the many factors to be considered before agreeing to one base price for their product. Upon doing that, companies must then adjust the price of the product in order to suit the customers needs or perceptions to various situational differences. By doing this, it would help company to boost product in the consumer market and gain more revenue from product.

Gatorade has applied the fixed price policies on its products which mean it sets one price for all buyers. The consumer could not negotiate on the price of the product and the price of product is fixed depending on the location of distribution of product. The brand Gatorade uses segmented pricing as their price adjustment strategy as a way to attract consumers to buy their product. Segmented pricing is defined as selling a product or service at two or more prices where the difference in prices is not based on differences in costs. In terms of Gatorades product which is isotonic drink, the price of the sports beverage sold varies due to few factors other than costs. The cost of producing isotonic drinks or beverage drinks does not vary much hence the company applies segmented pricing in the form of location pricing. By using location pricing, a company charges different price for different locations eventhough the cost of offering for each location is the same. For example, the price of 500ml Gatorades isotonic drink in the US is between 1.50 USD to 2 USD which is around RM 4.50 TO RM 6 in Malaysia whereas in India a bottle of Gatorade costs RS 30 which is RM 2.05 in Malaysia. The company sets different prices on the similar product of isotonic drink based on the difference in location. The cost of offering of product is similar but the price varies due to the difference in location of where the product is being distributed. Gatorade is a well-known product internationally and the demand of the product is very high in many regions. Gatorade faces competition amongst leading isotonic drinks in Malaysia hence the company needs to adjust the price and sets price depending on the consumer market as to increase the profit or strengthen Gatorade in the market. A few of price-adjustment strategies that could be applied includes discount and allowance pricing, promotional pricing and also international pricing. Discount and allowance pricing is a strategy of reducing prices to reward customer responses. Customer is given a straight reduction in price in purchases or in other words discount. Gatorade can attempt this strategy and give discounts on products as to capture or grab the consumers to buy their product hence increasing the profit and revenue of company. Gatorade could apply quantity discount which is a price reduction to buyers who buy large volumes. This could be applied to distributors or companies sponsoring drinks and beverages for athletes in sports events or games. The client would certainly be buying the product in bulk hence giving them discounts on buying large volume could attract them to buy in the future and at the same time it is a good promotional strategy for the company.

Other than that is promotional allowances which are payments or price reductions to reward dealers for participating in advertising and sales support programs. Price reduction could be given out to dealers distributing the product of Gatorade as they indirectly are promoting the product to other consumers. For example, distributors during sports events would certainly attract attention to other people attending the event to buy the product. Another strategy for Gatorade is to apply promotional pricing. Promotional pricing is temporarily pricing products below the list price and sometimes even below cost to increase shortrun sales. The company could lower the price of the product from the original base price and offer discounts at a certain timeframe. For example, the price of Gatorade is RM 2.70 in the market. The company could lower price of product at a certain timeframe to attract buyers to buy more isotonic drinks in that limited timeframe. Another form of promotional pricing is special-event pricing. Sellers or distributors could apply special-event pricing and lowers price of product as to push sales of the product. For example, on special events such as during sports events or during football or badminton season the distributors could use that as a strategy to boost sales of the sports beverage. Distributors could lower price during those special events as it is the best way to draw more customers to buy the product and at the same time a way to introduce or promote the product to consumer. As the brand Gatorade is an international brand which is well-known internationally, the company could apply international pricing as a way to adjust the price of product to meet the wants of consumers. Companies that market their products internationally must decide on the prices that they will be charging to the different countries in which they operate. There are many factors that the company should consider before setting the price of a product in different countries. One of the most important factors would be consumers perceptions and preferences in various countries. For example, Gatorade is the leading brand in the US hence the consumer perception and preference differs than that of in Malaysia. In Malaysia, there are many brands of isotonic drinks and the consumers have their own preferences in choosing isotonic drinks. The market of isotonic drinks in Malaysia is dominated by a leading brand which Gatorade is competing against hence the consumers preference towards Gatorades product would not be as strong as other leading brands. Due to this, the company should consider the pricing adjustment of product and not set it too high as the consumers will not buy products which are overpriced when

there are existing brands that are cheaper than Gatorades product. In other region such as the US, the price of the beverage is a bit higher than the price in Malaysia. The brand Gatorade has developed a strong market there hence setting higher price would not affect consumers demand for product. The situation differs here in Malaysia therefore the company should adjust the pricing of product in order to meet the needs of consumers in the Malaysian market.

PLACE i. NUMBER OF CHANNEL LEVELS Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. In other words, each party involved in a distribution channel needs to cooperate as each are responsible in bringing the product to the final buyer which is the consumer. A layer of intermediaries or middlemen is responsible to perform in each respective channel. Marketing intermediaries is defined as a business firm that operates between producers and final buyers or consumers. Example of intermediaries is wholesalers and retailers. The brand Gatorade is manufactured and distributed by PepsiCo which is a huge American global corporation. The brand Gatorade consists of products such as isotonic drinks and sports beverages which targets sports person and athletes. Gatorade in Malaysia is not the leading isotonic drink brand and does not dominate the market share for isotonic drinks. The brand Gatorade applies indirect marketing channel as their distribution channel in order to introduce the product into the consumer market. Indirect marketing channel contains one or more intermediaries.

PRODUCER CHANNEL 2 PRODUCER CHANNEL 3

RETAILER

CONSUMER

WHOLESALER

RETAILER

CONSUMER

A marketing channel consists of firms that have partnered for their common good. Each channel member depends on others and each has their own responsibility respectively. The channels above are examples of indirect marketing channel that is applied by Gatorade. All intermediaries are responsible to distribute products from the producer to the final buyer or consumer. In Malaysia, Gatorade is manufactured and produced by Permanis Sdn Bhd which has been primarily involved in the manufacturing, distribution and marketing of beverages under franchise from PepsiCo. The company acts as the producer and is the primary member in the distribution channel. Permanis acts as the producer which manufacturers Gatorades product line which will then be distributed and supplied to wholesaler or retailer. Wholesaler and retailer acts as dealer for the product and brings product to the final buyer which is the consumer. The dealer attracts consumers by promoting and marketing the product to the consumer in order to boost up sales of product. All the members in the channels depend on each other in order to bring the final product to the consumer.

ii.

STRATEGY USED FOR ITS MARKETING INTERMEDIARIES Companies should apply strategies when dealing with marketing intermediaries in a

distribution channels. This is to prevent any conflicts between the intermediaries and ensure flow of the distribution process of product throughout the channel is smooth. The function of intermediaries is to reduce the amount of work that must be done in order to produce product that would capture customers in buying. The company of Gatorade has applied and adopted a system in order to manage the channel and its intermediaries involved which is a multichannel distribution system. The company is a huge organization which distributes through multiple channels. Multichannel distribution system is a distribution system in which a single firm sets up two or more marketing channels to reach one or more market segments. The company applies this type of system as to increase the distribution of products at the same time increase the growth of product in the consumer market. This type of system suits the nature of huge companies that have various and wide product line. With the existence of multiple channel system, the company could cater for the more numbers of distribution channels in order to distribute the products to the customer all at once. The number of intermediaries that exists in a channel must be determined and planned by the company as to prevent any complications that may occur throughout the channel. The types of intermediaries are determined by the company and each of the members must be responsible and contribute in the distribution channel. The company need to apply a strategy in order to determine the number of marketing intermediaries in the distribution channel of the company. The strategy applied by the company is intensive distribution which is a strategy in which the producer stocks products in as many outlets as possible. Due to this, the number of intermediaries would be more than one as more dealers are needed to distribute the products to as many outlets possible. Intensive distribution is a strategic way to promote or expand the product in the consumer market as it provides maximum brand exposure.

iii.

TYPES OF RETAILER / WHOLESALER THAT CARRY THEIR PRODUCTS / SERVICES

Retailer or wholesaler acts as dealers which distributes products to the final buyers or the consumers. Retailing is defined as all activities involved in selling goods or services directly to final consumers. The brand Gatorade distributed to various retailers in order to distribute its product of isotonic drinks and sports beverages. The product can be widely found in supermarkets and convenience stores. Supermarket is a relatively large, low-cost, low-margin, high-volume, selfservice operation designed to serve the consumers total needs for grocery and household products. Convenience stores are defined as relatively small stores located near residential areas, open long hours seven days a week and carrying a limited line of high-turnover convenience products at a slightly higher price. The product of Gatorade can easily be found in any supermarket for example Tesco, Giant or Jusco and also at convenience stores such as 7-Eleven. Besides that, the beverage is also sold at petrol pumps such as PETRONAS or Shell. The products wide distribution in many outlets is a convenience for consumer to buy the product.

PROMOTION i. ADVERTISING STRATEGY

Advertising is a communication tool that used by a seller in order to inform and persuade and remind buyers about its product or organization. Furthermore in developing an advertising program, the major decisions of an objective should be involved by the seller. Here, advertising objectives can be classified into three which they are should be clear and timing. There are classified on their aims which are whether to inform,

persuade or remind. Lets we go briefly one by one. Informative advertising is used when a new product is introduced in order to build a primary demand among customers. While, persuasive advertising is important as competition increased to build selective demand. However, some persuasive advertising can be a comparative advertising which it is can be defined as a company directly or indirectly compares its brand with one or more other brands. Lastly, for mature products they need a reminder advertising to help them maintain customer relationships and keep consumers to think about their products. Bring forward, Gatorade products is running under comparative advertising. In Malaysia market, Gatorade needs to compare its nutritional contents with its rivals in the isotonic drinking company like 100plus, Red Bull and Revives. For example, lets we compare between carbohydrate contents in Gatorade and 100plus. Referred to nutritional facts in bottle label, Gatorade drink has 6% carbohydrate (actual number is 5.8% but round up to 6 just to ease consumer in remember) while 100plus drink has 7% carbohydrate (actual number is 6.8). Through years of laboratory research has shown that a 6% carbohydrate solution provides an appealing taste profile when exercising and rapidly emptied from the stomach and absorbed by the intestine. Thus, delivers performance-enhancing energy to active muscles. Sports drinks with lower or higher concentrations than 6% carbohydrate are unlikely to deliver on all these key attributes. Advertising message / Logo of Gatorade

G represents the heart, hustle, and soul of athleticism and will become a badge of pride for anyone who sweats, no matter where they are active. The Gatorade name comes from The University of Florida Label on packaging football team, the Gators. Gatorade Thirst Quencher was Creative designed in the appearance to attract people The University ofas enhancing demand athletes in invented at to buy it as well Florida to assist their from combating the to deliver the message their performance-hence consumers. Each of the products has their own style labeldehydration that limitedto the customers. Gatorade. ///Gatorade Recover Gatorade Tiger Gatorade Frost

By creating a creative label on the products, any message should be presented also in different execution style. This is for capturing the target markets attention and interest and best approach must be done by a company. The following is some of message execution of Gatorade. Lifestyle For Gatorade, lifestyle concept is matched with its products. Professional and amateur athletes, sports teams, leagues, and events throughout the world are matching with the Gatorade drinking. For example, Gatorade Series and Gatorade Recover. Products ambassadors Most of well known celebrities are tied with Pepsi Co Company in promoting their Gatorade drinking products. They are who including Ronaldinho, a football player, Maria Sharapova, a tennis player, Michael Jordan, a basketball player and Tiger Woods, a golf player. Hence, Gatorade creates a special name brand on its product as Gatorade Tiger. /

Michael Jordan with Gatorade

drink

Example of quote by Maria Sharapova : I know that staying hydrated can help me play at my best, said Sharapova. Gatorades heritage is all about science, so Im really looking forward to meeting with the GSSI scientists to make sure Im doing everything I can to prevent dehydration and stay on top of my game. Advertising media The advertiser should decide on the reach and frequency needed to achieve advertising objectives. Media is the best way for the company to engage with their customers rather than simply reach them. Generally, Gatorade already advertises its product widely through the internet, magazines, outdoor activities and others. Examples of Gatorade advertising program via internet are:a) b)

Website : Twitter :

http://www.gatorade.com http://twitter.com/Gatorade

FACEBOOK PAGE OF GATORADE

c) d) e)

Myspace: Facebook: Youtube :

Submit Celebrity Link http://www.facebook.com/Gatorade http://www.youtube.com/whatsg

WEBSITE OF GATORADE / /

TWITTER PAGE OF GATORADE /

ii.

SALES PROMOTION STRATEGY

Sales promotion is a tool involves using short term incentives to encourage customer purchasing, reseller support and sales force effort. This tool is used by most organizations including manufacturers, distributors, retailers, and non profit organizations. They are divided into three which are consumer promotion, trade promotion and business promotion. Each of them is targeting respectively toward final buyers, retailers and wholesalers and last but not least to business customers. From doing this sales promotion, there are some objectives and benefits that a company can achieved. For an instance, a company may urge short term customer buying or enhance customer brand involvement when they negotiate with consumer personally. While cooperate with trading person may give chances to retailers to carry new items and inventory. In general, sales promotion will help in reinforcing the products position and build long tem customer relationship rather than short term sales or temporary brand switching.

One of sales promotion that has done by Gatorade is presented with thousands of requests for product donations and event sponsorships from dedicated individuals, teams and organizations. Gatorade is committed to encouraging sports participation and healthy lifestyles through the support of countless national and local programs such as:

The Gatorade High School Player of the Year program The Women's Sports Foundation & Go-Girl-Go Campaign Elite youth tournaments, camps and programs such as Varsity Cheerleading, US Soccer Development Academy, Cal Ripken Camps and World Series, Jordan Brand Classic, Army All American, Football University, Womenslacrosse.com, and Five Star Basketball

Five Star Basketball Numerous youth sports camps held at Division I Universities Running events including the New York, Chicago, Boston & Los Angeles Marathons

iii.

RECOMMENDATION

It is strongly agreed that Gatorade drinking product is already great in advertising and sales promotion but unfortunately in Malaysia, more its promotion does not reach to Malaysia citizens. Most of Malaysian still does not aware on Gatorade existing market. Therefore, there are some suggestions to enhance their advertisement and promotion toward market in Malaysia. i. Collaborate with Malaysias celebrities to be the Gatorade ambassador. Even the existing ambassadors are the well known persons but using the local person more give the value and effects to the consumers. Gatorade can tie the contract with Datuk Nicole David and Datuk Lee Chong Wei, as an example. ii. As known, Gatorade is widely advertises itself on most media like magazine, television and others but in Malaysia they are lacking with advertising program. Gatorade does not appear on our local channel in television, newspapers, magazines or any outdoor events.

Therefore, Gatorade can try to market itself through all of media that have mentioned above. iii. For consumer promotions : a) Samples most powerful and effective, but more expensive way to introduce their new drinking products and create new excitement for the existing one to Malaysian consumers. It can be distributed freely at supermarkets while consumers are shopping. Besides, the sample can be attached to another product or combined into the sample packs. b) Coupons a certificate that gives buyers a saving when they purchase two and above Gatorade product, for example. It can be done in a set time of promotion to enhance activity in introducing Gatorade to peoples. c) Advertising specialties involves promotional product and event sponsorship. Gatorade should participate in sponsor the event even the small event like sports day at school. Thus, positive image and consequences have been paid by creating long term relationship with the children who are always attractive in buying such Gatorade products. Besides, Gatorade directly makes promotion on itself by gives the useful imprinted Gatorades name, logo or message that given through gift to consumers. Typical items include Tshirts, pens, mugs, key chains, bags, caps and others. d) Contests, sweepstakes and games give an opportunity for its customers to win something such as cash, trips or goods. This contest and games always be done by some organization in marketing their products such as 100plus which is Gatorades rival itself. iv. For trade promotions :

Gatorade may offer retailers free specialty advertising items that carry the companys name such as pens, calendars, paper bags, memo pads and others. By doing that, Gatorades brand name can be widely and everywhere distributed.

CONCLUSION As a conclusion, Gatorade is a brand that is strong enough to compete with other leading brand of isotonic drinks. The brand may not dominate the consumer market as the competitor is very strong but the company could survive in the consumer market. Gatorade needs to expose its brand to another level and strengthen its market by deciding on the proper promotion and pricing strategies and acknowledging its brand to the consumer in Malaysia.

REFERENCES1) 2)

Kotler P. and Armstrong G.,Principles of Marketing,13th Edition. Annual Report of PepsiCo. (2005). Retrieved December 1, 2006 from http://ccbn.mobular.net/ccbn/7/1250/1337/ History of Gatorade. (2006). Retrieved December 2, 2006, from http://gatorade.com/history/proven_on_the_field http://www.gatorade.com/default.aspx http://www.hydrationdepot.com/Gatorade-Powder-6-Gallon.html http://en.wikipedia.org/wiki/Gatorade

3)

4) 5) 6)

UNIVERSITI TEKNOLOGI MARA FACULTY OF PHARMACY MKT 420 (PRINCIPLES AND PRACTICE OF MARKETING) TERM PROJECT : GATORADE/

LECTURERS NAME:Mr. Nor Shahrul Nizam Bin Muhamad NorGROUP : BP 4B

GROUP MEMBERSSABRINA AZIZ-BAHAMAN (2009445372) FATIN IRINA ISMAIL (2009602232) NOR IZZATI BT HASAN HUSAINI (2009452476) NUR FARIZA BT HASHIM (2009829944)