America's First Sports Drink: Gatorade

Product Description
In 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 couldn’t 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. That’s 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). Today, Gatorade has reached beyond the narrow market of elite athletes. They have many product lines designed to appease the most particular of sports drinkers. No matter what your gender, your occupation, or your age, they make a drink that you can enjoy. 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. All purchases range from a 12oz-8 pack to a 1 liter bottle. Now we jump into the Gatorade Performance Series products. This series of 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. This 2.3oz bar is the perfect snack for athletes on the go, or anyone getting ready to do some physical activity for that matter. Then there’s the nutrition shake. This product comes in the obvious flavors, chocolate, strawberry, and vanilla. These 11oz shakes are a perfect way to fill an athlete’s 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). Gatorade has become the most popular sports beverage. It is widely known and is easily distinguishable among its competitors. First of all, its packaging hasn’t changed in years. Gatorade looks the same today as it did a decade ago. Because of this, Gatorade has remained popular and not forgotten. It’s easy for a consumer to remember something that is always there and never changes. 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, Women’s 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 what’s left over their coach’s head. This gives free publicity because it’s done by the teams without any prompting by Gatorade. Gatorade works on new products all the time. They’ve even created a special lab where their scientists can continually test new products to ensure the safety and abilities of all athletes. The most recent achievement Gatorade has produced is called G.I.D.S. (Gatorade In-car Drinking System). This system was specifically designed for NASCAR drivers. A special pouch, that guarantees to keep any liquid cold for hours, is filled with the driver’s 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 driver’s helmet. At the end of the tube is a mouthpiece that is securely fastened to the driver’s 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 driver’s mouth. When the driver’s 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. NASCAR race cars can reach up to 130 degrees and their driver’s can lose up to ten pounds within a single race just by sweating. 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).
Product Life Cycle
Gatorade falls within the maturity stage of the Product Life Cycle. I do believe that Gatorade is still growing however its growth has slowed. According to the text, the maturity stage is reached when “the sales of a generic product category continue to increase (but at a decreasing rate), profits decline largely because of price competition, and some firms leave the market” (Etzel, 674). Table 9.1 in the text gives another description to help define a products life cycle stage. In order to be in the maturity stage, the product must have a mass market of consumers, which Gatorade does. They have millions of consumers. The competition is somewhat intense and their growth has slowed down. Their profits, however, are still pretty strong. They aren’t as strong as they were in the growth stage, but are still significantly strong. They defend their product against competitors, water being most mentioned when addressing the health of athletes. Gatorade costs have remained stable and their prices are reasonable. If it’s too expensive to buy each drink individually, you can always buy in bulk from a grocery store or a wholesaler like Costco. There is extreme loyalty to Gatorade as well. Because they were the only specialty sport drink when it was created in 1965, they didn’t have to worry about winning their consumers away from a similar product. All the athletes and athletic trainers wanted this drink and became hooked on it after seeing the effect it had. By the time other brands came out everyone knew Gatorade and trusted its products. 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. So it’s obvious that Gatorade has brand loyalty, another way we know Gatorade has reached the maturity stage. Although they have made to the maturity stage, they still have more growth to obtain. As long as Gatorade continues to produce new products, they will continue to grow. It may not be a quickly as it was when they first introduced themselves in 1965, but they will grow (Etzel, 674).
Pricing
Gatorade has a very simple pricing strategy. Even though Gatorade is the leader in the sport drink market, they still use the going-rate for their pricing level. The overall market does not have a large difference between competitors so Gatorade prices its products relative to the market pricing structure. An increase in price could lead to a loss in sales because the consumer could start to buy a competitor’s product and have the same relative advantage that Gatorade can provide. This is evident by visiting a local supermarket store. A 20 oz. Gatorade is priced at $1.59; its main competitor, PowerAde, is priced at the same. It could be said that the market is demonstrating non-price competition (Etzel, 349). Gatorade has chosen market penetration as its pricing strategy (Etzel, 351). Some characteristics of market penetration distinctly describe the market for sport drink. The market has an elastic demand curve and low initial price for new produces (Gatorade has come out with Propel and Fierce, both coming into the market with identical or lower prices than competitors). For consumers that buy Gatorade on a regular basis, it can become an expensive habit compared to some alternatives (I.e. water). One way that a consumer can cut down on prices is by buying in bulk. Consumers will get more Gatorade for their buck when buying in bulk. Other than that, Gatorade does not have any promotions or coupons to induce sales.
Distribution
“A distribution channel consists of the set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user” (Etzel, 380). In short, a distribution channel will show the journey that a product or service takes from the producer to the consumer. It seems that everywhere someone goes, there is Gatorade for sale. How did it get there? PepsiCo. handles all the distribution for Gatorade. They have chosen to go with direct-store-distribution (DSD) (Annual Report of PepsiCo, Retrieved December 1, 2006). One advantage of DSD that PepsiCo. uses is having their delivery teams merchandise their product. This allows them to display Gatorade in a way that will induce high sales. A way they attempt to increase sales is by placing Gatorade in places that will influence impulse purchases (placing Gatorade by checkout stands at a supermarket is an example). Their retail stores are the middlemen for Gatorade’s journey to its consumers (Etzel, 379). This is what is called indirect distribution (Etzel, 384). Supermarkets are not the only place where Gatorade can be found; Gatorade is available for sales in liquor stores, department stores, supermarkets, and any place where drinks are sold. Since Gatorade is available in such a wide variety of places, Gatorade can be categorized as being intensively distributed (which means a “producer sells its product through every available outlet in a market where a consumer might reasonable look for it”) (Etzel, 393). Gatorade has been the staple in the sport drink market. Their overwhelming consistent market share can point to a strong assumption that their distribution channel is at peak efficiency.
Promotional Mix Within Gatorades promotional mix, advertising probably uses the most funds on an annual basis. PepsiCo spent 183 million dollars for Gatorade’s advertising campaigns in 2005 which is a large increase compared to the 135 million dollars spent only two years before (Hein & Beirne, 6). The most common form of advertising for Gatorade is TV commercials (MacArthur, 51). There are four main types of advertising campaigns on television. The first type highlights the history and origins of the company as well as the scientific research that goes into the product. The second type highlights individual players that endorse Gatorade or groups of competing individuals. The third type highlights teams or leagues that Gatorade sponsors such as the NFL or the Men’s National Soccer Team (MacArthur, 22). Professional endorsements are also important to Gatorade’s advertising campaign. They endorse twenty-two professional American athletes and over twenty international athletes (MacArthur, 22). Equally important to Gatorade’s promotional mix is their public relations. They sponsor ten professional leagues. Among the list are some of the most popular sports in America such as the NFL, MLB, NBA, NHL and MLS. They also affiliate themselves with 60 division one universities and 11 division one conferences. In addition to this they are affiliated to eleven professional organizations such as the American College of Sports Medicine (MacArthur, 22). Their Outstanding Player of the Year program is another way that they can reach out and recognize many outstanding high school athletes of the year around the country. This is a large program that has a state and national selection process. There is one winner for each sport. For example, Peyton Manning was the national winner for football in 93-94 (Gatorade in the Community, Retrieved December 3, 2006). Gatorade makes a large international public relations effort. They are affiliated with many international professional soccer clubs such as Juventus and Manchester United but they extend their efforts to other sports besides soccer such as basketball, water polo, rugby, volleyball, and swimming (Hein, 5). The Gatorade Sports Science Institute is another effect tool for their public relations campaign. Through this organization they put out study results from a wide range of sport related topics and on the dynamics of specific sports. This part of Gatorade is most easily accessed through their own GSSI website (www.gatorade.com). The Gatorade website is another address that is very well done and depicts a very good image of the company. They also have 12 other country specific websites that are in the domestic language of the country. Sales promotions are also important to Gatorade’s promotional mix and it is substantially occupied by event sponsorships. Most of these events are marathons throughout the world including the famous Boston Marathon and the Gatorade Triathlon Series (Hein, 5). At these events they provide free Gatorade to the competitors throughout the race and for some events they offer the Gatorade Recovery Area where all competitors can be weighed before and after the race to monitor the level of fluids lost during exercise. The area later supplies food/refreshment bags, Gatorade drinks, massage and qualified dietitians (Hein, 5). To supplement this, they also print newsletters about upcoming events. The Annual Gatorade Junior Training Camp is another example of sponsoring athletic events. This is a summer camp that combines football instruction and teaching of life skills that focus on self-improvement and motivation and is hosted by the Seattle Seahawks (Gatorade in the Community, Retrieved December 3, 2006). Limited to the Canadian website, there is a direct link to request Gatorade to sponsor an event. This all leads to the conclusion that event sponsorship is a highly used tool for Gatorade to get its product out and into the hands of many athletes. Gatorade doesn’t use many discount sales promotions in the United States but does use promotions in a number of other countries. Last summer there was a big Indian promotion in which customers who bought the six pack received an instructional soccer CD with Rinaldinho (Buy 6 Gatorades, Win Ronaldinho CD). A number of European countries are having soccer promotions as well (Gatorade e lo Sport, Retrieved December 3, 2006). Canada is having a hockey promotion in which consumers have a chance to win professional hockey gear. I suspect that Gatorade also uses a number of sales promotions directed at their retailers; otherwise we wouldn’t see the large discounts that cut the price of Gatorade by almost in half in some of the large supermarkets. Personal selling probably uses the least amount of money out of all of Gatorade’s promotional mix. They must have a team of sales personal that help get Gatorade sold nearly everywhere. Exclusive deals that their parent company makes with school campuses and gyms makes it even easier for Gatorade to get their product sold. In Canada however, they do have a direct selling/event sponsorship program where members of youth sports team can raise money for their team by selling Gatorade. Gatorade gets their product sold and gives part of the proceeds to the athlete’s team (Gatorade in the Community, Retrieved December 3, 2006).
Marketing Mix Strengths and Weaknesses
Gatorade has a very strong Marketing Mix especially when compared to the competition.
In terms of Product, Gatorade was the first sports drink ever, thus they created the sports drink market. The drink was developed in 1965 in response to problems within the University of Florida’s football team (History of Gatorade, Retrieved December 2, 2006). The players were not performing up to their full ability even if they wanted to. Their bodies just were not able to keep up. Thus, in the lab, Gatorade was created. The original flavoring was added to cover the taste of all the electrolytes and other nutrients that were in the drink (History of Gatorade, Retrieved December 2, 2006). Since then, Gatorade has grown into the leader of the sports drink market with 85% market share (Fuhrman, 23). Now, Gatorade comes in numerous different flavors allowing more selection, and drawing in more customers. There are many different Gatorade product lines such as Gatorade Rain, Fierce, Extreme, Endurance for hard core athletes who need the competitive edge and even a line of flavored water called Propel. The slogan on their website says “For every thirst, there is a flavor” indicating the amount of variety Gatorade now offers, even beyond what is mentioned here (www.gatorade.com). In terms of product they are doing extremely well and there is nothing that needs to change. Gatorade, though, is continually trying to improve their formula to give active bodies the replenishment needed when the
bodies fluids start to decrease. Not, only that but they are also constantly coming up with new flavors and product lines, thus, Gatorade is staying at the top of their game and doing well. If they continue as they are they should be fine, however, they should continue to try to find ways to improve their formula because that is the only way that competitors will be able to outdo them. If competitors can come up with a better formula before Gatorade, and get people to try it, and if they see that it does indeed work better, that could be a major downfall for Gatorade. As it is now that does not seem like it will occur any time in the near future. In terms of Price, Gatorade is fairly reasonably priced. They have not gone to extremes by charging exorbitant prices but have instead kept it moderate. If Gatorade wanted to they could probably charge more for their products because they do own so much of the market share. However, this could end up driving customers to a lower priced competitor; therefore, they are smart in keeping their prices reasonable. Chances are that because they are such a big player in the sports drink market they probably have pretty good economies of scale and that is what helps them keep their prices down. Gatorade is also very strong in terms of distribution. Gatorade is pretty easy to find, but if you try to find competitor brands it is often a lot harder to do so. Because Gatorade is so big they have the power and money to get distributors to push their products and to carry more of their products, but even if that were not the case because of customer demand more Gatorade products would be carried than competitor products because it is the brand customers tend to gravitate towards. Gatorade has proven itself time and again to athletes that it does help performance and the variety of tastes means that everyone should be able to find one that the enjoy. Gatorade takes up multiple shelves in supermarkets as well as stores like Costco, and Sam’s Club. You can also find Gatorade in Wal Mart and Target, and you can generally find it at the Gym in a vending machine. Now that Gatorade has been bought by Pepsi, it is distributed wherever Pepsi Products are allowed. In terms of Promotion Gatorade now has contracts with all the major sports leagues to be their supplier of sports drinks (McArthur 22). The only league that had a contract with PowerAde, Gatorades main competitor, was the NHL, which recently changed to Gatorade. This means that whenever any sports game is watched chances are that the orange Gatorade cooler is going to be visible for all to see, or the players may be caught drinking from the green Gatorade cups. This type of promotion has Gatorade in the public eye constantly. Every time the camera cuts to a guy in the dugout drinking out of a green Gatorade cup, Gatorade reinforces its brand name into millions of viewers minds so that when they go to the store the brand they are going to take off the shelf will be Gatorade. Gatorade also promotes its product by sponsoring a lot of community events. This brings Gatorade down to the community level and generally gives back to the community. They are showing the people that they care about them, which again, makes people want to buy Gatorades products because they know that they are valued by Gatorade. One way Gatorade gets free promotion is by the Gatorade dunk. The Dunk started in football as a spontaneous moment of celebration and since then has grown into a traditional event that occurs every season, and because Gatorade does not try to force the event to happen, it occurs quite regularly and spontaneously.
Analysis of Gatorade
Overall, Gatorades Marketing Mix is very strong.
There are not really nay changes or adjustments that need to be made. Their dominant market position indicates that they know what they are doing and are doing it very well (Fuhrman, 22). They are keeping up with current trends through research. They are constantly trying to improve their product as well as coming out with new and different flavors in order to attract new customers as well as making sure that they stay on top of keeping athletes hydrated. Their website is quite functional and makes it easy for you to find what you are looking for. All of the elements of the website tie in well together, and the familiar Gatorade lighting bolt can be seen all over the website. Gatorades use of packaging and branding has helped make them easily recognizable and remembered. Upon hearing their slogan, “It it in you?” most people could tell you that the it is Gatorade. This idea has been reinforced with their commercials where athletes have colored sweat coming out of them, indicating all the different flavors that Gatorade offers. Not only that but their presences at all sporting events and in community events makes sure that their product is constantly in the public eye and reinforcing their brand name. Gatorade is an extremely visible product. most people could probably not tell you more than one other sports drink that is out there on the market today, and even then it is not that likely that they will be able to remember
PowerAde all that well because their advertising has been almost non existent for quite some time, although they have recently begun making a comeback. But that comeback can not really compete with the visibility of Gatorade, which is visible everywhere, and has commercials of different professional athletes from all kinds of sports boasting about the products superior ability at keeping them hydrated. Gatorade has even been the focus of movies such as “The Waterboy”, which uses the Gatorade name a lot, again reinforcing the brand to the consumer. Not only is Gatorade everywhere in the public eye but they are also everywhere when it comes to purchasing. They make it very easy to buy a Gatorade. Chances are you could go to any store that sells food and drinks, or even just drinks and find a Gatorade. And if you do want to but Gatorade price is very rarely going to be a deterrent because they are competitively priced. Gatorade is doing a very good job with their marketing strategies and practices. They are constantly looking for new ways to expand and get more customers as well as ways to improve their product. There is one way Gatorade could try to increase their distribution, and that would be to put their product into restaurants. Gatorade would be able to reach more of the causal drinkers who drink it not because they are doing physical activity but because they want something other than soda or water. However, this might not be a good move for Gatorade because the increase in customers might not be great enough to offset the costs, plus it does not go that well with their idea of an active lifestyle needing this drink to replenish lost fluids. However, it does capture another segment of the market, at the same time though, it starts putting Gatorade in competition with soft drinks and juices at restaurants, which may or may not be a good thing. Overall, Gatorade is a very strong company that is on the right track, they know what they are about, what they are doing and are executing that like champions.