This report will focus on a particular niche of the soft drinks market, smoothies. Innocent Smoothies is the brand chosen to be evaluated. Innocents brand and the threats from own label will be discussed in this report. The soft drinks market is very competitive with similar products being sold. Therefore there is great need to market your product effectively so that to gain significant market share. Innocent Smoothies are currently the market leaders with 80% of all value sales in 2010, this was followed by own-label versions, which made up a further 13% (Mintel, 2010). Innocent has a presence in 13 European countries and is Europe’s number one smoothie brand (Stodell, H. 2010).
Own Label threats
Competition has increased a lot, with particular pressure from own label brands such as Tesco, Sanisburys and Asda. Own label smoothies are designed to try and stand out alongside the colorful and vibrant brands, this is done to give the consumer the perception of a better quality product. They’re also cheaper than the branded equivalent giving them the competitive edge in price, this makes them type two own label. These brands are positioning themselves as low cost alternatives, thus a major threat to Innocent’s premium position that consumers may not be able to afford. With own label taking up 13% of the market share, they’re an encroaching threat to the innocent brand.
Own label have gained market share since the financial crisis in 2007 (Levey, A. 2011). Due to the recession and declining consumer confidence, disposable income has decreased, therefore sales have been affected negatively, leading to consumers buying cheaper shelved products. The smoothies category has seen its exponential growth driven by the success of Innocent checked in the past three years, with the economic downturn seeing many consumers switching to cheaper alternatives such as own label and fruit juices (Mintel, 2010) (See appendix A, for price positioning and appendix B, for brand consumption compared to their competitors). Therefore own label capitalized on the market share with their cheaper smoothies.
Own label has also encroached upon the available shelf space for Innocent smoothies. Supermarkets prefer to stock their own label because it generates more revenue. This means they will charge branded products more for the shelf space if their own label is in competition. However own label is not normally the desired choice for customers, this is due to brand loyalties, awareness, associations and perception of quality. Customers shopping at Sainsbury’s may go in especially to pick up an Innocent smoothie, if they were not stocked by the supermarket then those customers will go to a rival supermarket instead. Therefore Sainsbury’s keeps the best-selling smoothies positioned in key places to entice customers in. Also the premium price of their products make Innocent more favorable to retailers as they are more profitable. All this gives Innocent products positioning power and adds value to their brand.
Brand Identity, Loyalty and Equity
Design is an integral part of of the product itself, affecting not only its overall aesthetic qualities but also its ergonomic properties and even its components and materials (Brassington, F. Pettitt, S. 2007). Innocent have had to persuade their customers to see their version of the product as distinct from the alternatives provided by own label and other smoothie brands. It’s essential for Innocent to create brand identity as they have to persuade consumers to pay a premium price for their smoothies.
The products brand name ‘Innocent’ suggests good intentions and that the products themselves are good for you. The product packaging is vibrant, unique, yet simple in-keeping with the brand name. The front of all innocent products pictures a round pice of fruit as an angel, linking image with the name, further creating brand identity. Innocents have successfully added brand value through association, perception and reputation.
The green relationship concerns the company’s way of handling environmental and health issues in its offerings (Gummesson, E. 2003). Innocent Smoothies states online, It’s part of our quest to become a truly sustainable business where we have a net positive effect on the wonderful world around us. Coddington,W (1993) states, “environmental marketing is the strategy that the times demand.” Innocent Smoothies have totally embraced the environmental marketing stance. They’ve managed to add value to their smoothie products, creating a brand reputation of environmentally good products.
Innocent donates 10% of their profits to charity as well as using sustainable sources of production and picking the best produce for their products. These are the reasons why consumers don’t just pick up the cheaper option, they are aware and conscious of the impact their choices make. However consumer choice is also effected by what luxuries they can actually afford to purchase, this has played a significant part in consumer buying behavior since 2007.
The challenge now facing manufacturers will be convincing increasingly cost-conscious consumers that healthy eating should continue to be a priority (Alarcon, C. 2008). Therefore drinking an Innocent smoothie says something about you as an individual. Branding Innocent smoothies as environmentally friendly and as a superfood has appealed to many consumers in the UK looking to fulfill a lifestyle choice (See appendix C, for more information on consumer choices). The environmental action has distinguished themselves from the type two own label by creating a distinctive brand and obtaining customer loyalties.
When Coca-Cola acquired a 60% stake in Innocent, many believed Innocent’s founders had ‘sold-out’ sparking a consumer backlash (Macalister, T. Teather, D. 2011). Innocent have done their best to hide this fact from the public as the perception of Coca-Cola is not in keeping with that of Innocents. Innocent smoothies do not want to be associated with Coca-Cola, who are seen by many in the UK as a giant consuming corporation. Smoothies have also been damaged by negative publicity around their health credentials, as Adams, S (2012) states, “surveys show half of five-year-olds exhibit signs of ‘tooth wear’, caused by acidic drinks dissolving and softening enamel”. However, smoothies are still seen by consumers as healthy and the drive towards making sure kids get a healthy diet is playing to their advantage. Innocents have also recently sponsored the London Olympic which realigns Innocent with all it originally stood for, reminding consumers of Innocent’s core brand values.
It’s important for businesses to create and maintain competitive advantage through innovation and better serving the customer’s changing needs and wants (Brassington, F. Pettitt, S. 2007). Innocent Smoothies have created line extension of their smoothie product, launching juicy drinks, kids smoothies, kids juicy drinks and vegetarian pots. They have all been sold under the umbrella brand to install trust in the new products. These products have been launched with the recent sociocultural shift towards healthy eating. The government campaign to get the public eating five fruit and vegetables a day.
As well as the Food Standards Agency recommending that everyone has five portions of fruit or vegetables per day in their diet has helped Innocents leverage their brand as a healthy option, by moving with changing consumers attitudes (BBC news. 2011) (See appendix C and D, people’s attitudes towards smoothies). Consumers are becoming increasingly educated, and demanding of healthy options, Innocent’s products are suited to meet these needs. Innocent has built a brand that consumers are willing to pay a premium to be a part of. The connection it has developed with consumers from the outset is virtually impossible to replicate (Bainbridge, J. 2006).
Adams, S. (2012) Healthy’ smoothies not so innocent for teeth, says dentist. [Online] Available at: http://www.telegraph.co.uk/health/healthnews/9013144/Healthy-smoothies-not-so-innocent-for-teeth-says-dentist.html [Assessed on 6/03/12]. Alarcon, C. (2008) Own-label brands could benefit from smoothie slow-down. MarketingWeek, [Online] Available at: http://www.marketingweek.co.uk/own-label-brands-could-benefit-from-smoothie-slow-down/2063315.article [Assessed on 6/03/12]. Bainbridge, J. (2006) Sector insight: Smoothies-five-a-day helper. Marketing. [Online] Available at: http://www.marketingmagazine.co.uk/news/608623/ [Assessed on 6/03/12].