Business Marketing Proposal for Gatorade's Expansion Into Term Paper

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Business Marketing Proposal for Gatorade's Expansion Into International Markets

Please see the attachment, which contains my analysis and marketing recommendations on Gatorade's Strategy for International Markets. The analysis and recommendations have been developed based on recent market trends. I am strongly convinced that given Gatorade's undisputed success in the U.S. sports drink market; there is a strong case to invest in expanding its consumer franchise in international markets. Such expansion will allow Gatorade to build on its already existing status as the world leader in sports drink, reduce dependence on the U.S. market and lead to strong revenue and profitability increases.

Introduction: Gatorade's sales, which was acquired by Quaker Oats in 1983, has grown from $100 million in 1984 to over $2 billion worldwide in 2001. The brand commands 85% share of the sports drink category in the U.S.,1 contributing 33% of total sales and growing at an annual double-digit rate, outpacing the ambling general foods industry. Realizing that 80% of its customers were in the U.S. And Canada, Gatorade turned its attention to potentially large and important global markets such as Latin America, Europe and China. 2 Gatorade was launched in Australia, Brazil, Singapore and Mexico in 1994; China, Indonesia, Columbia and the Philippines in 1995; and the Middle East and South Africa in 1996.3 However, given Quaker's relative lack of global resources, Gatorade faces many challenges in international markets.

Objective: The objective of this paper is to evaluate the opportunities and challenges for Gatorade in key international markets and to recommend marketing solutions.

Situation Analysis: A key factor in Gatorade's success has been the ongoing research conducted by the Gatorade Sports Science Institute (GSSI), where scientists work to ensure that nothing hydrates an athlete's body faster and better than Gatorade.

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This implies that Gatorade's target audience lies among the youth. Though the 'Baby Boomers' are ageing in the U.S., this trend is also accompanied by an emerging 'youth bulge' (refer Table 1). Therefore, Gatorade will continue to see further growth potential, especially since non-carbonated drinks still account for only about 14 gallons of single-serves, as compared to 55 gallons per year for carbonated beverages. Year 2000 saw the $17.8 billion U.S. market for individually sold non-carbonated beverages grow by 13%, while the $60 billion carbonated soft drink market increase by only 4%.5

However, competition is increasing, with Americans becoming more health conscious leading to soda sales becoming flat, resulting in both Coke and Pepsi turning their attention to the higher margin, non-soda business (including All Sport and Powerade) and launching a number of brands in segments ranging from calcium-fortified waters to vitamin-enriched drinks.6 The increased focus of the cola majors on non-sodas is taking place, not just in the domestic market, but globally as well. October 2001 will see Coke launch Powerade in Europe, with plans to make the campaign its biggest marketing project in the region in six years, with investments ranging from $40 to $50 million 7 (including a high level sponsorship plan such as Powerade being the Official Sports Drink of the Italian team for the 2002 FIFA World Cup) in order to enter the fast growing European sports drink market.8

The moves by the cola majors are not surprising considering that both companies have been focusing on growing international markets, given flat soda sales in mature markets such as the U.S., and the fact that consumers worldwide are growing more health conscious (by the end.....

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