Overview In the fall of 2003, the new products division of Palmer Jackson, Inc., a Cincinnati-based food and beverage manufacturer, successfully perfected a technique for dissolving common antioxidants such as Vitamin E and Selenium into high-glucose beverages. The result was a new line of sports beverages with the added benefit of antioxidants. While the medical community was far from unanimous in its opinion of the benefits of antioxidants, some reputable studies linked the use of these vitamins and minerals to a reduced risk of certain types of cancers. Natural food stores, health food stores, drug stores, and even conventional grocery retailers often carried antioxidant pills. Palmer Jackson hired AccuityBrand, a brand consultancy specializing in developing product names and logos, to name and develop creative packaging for this new product. AccuityBrand recommended the name Green Ox for the new beverage, and after a short discussion with management, that name was adopted. Now Palmer Jackson needed to make several important decisions about the introduction of Green Ox. Palmer Jackson hired Marketing Studies Incorporated (MSI), a well-respected marketing research firm, to work on this product and to provide some basic competitive intelligence. Management believed the main competitors for Green Ox were other established sports drinks and some vegetable juices, most notably V7. There also appeared to be some surprisingly strong interest among those who currently purchase antioxidants in pill form. Research conducted by MSI indicated that up to 10% of the people who purchased antioxidants in pill form would be interested in obtaining these vitamins and minerals from a beverage rather than from a pill.1
Because the vegetables that make up V7 contain a significant amount of Vitamins A and C, V7 is high in natural antioxidants. V7 beverages are an excellent source of antioxidant vitamins and minerals that are essential to maintain a healthy dietary balance.
This case was prepared by Darden Professors Marian Chapman Moore and Ronald T. Wilcox, and by Associate Professor Geraldine R. Henderson, Medill School of Journalism, Northwestern University. The product names have been disguised. The case was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2007 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to firstname.lastname@example.org. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Rev. 12/09.
-2The Sports-Drink Market
Sports drinks were one of the fastest-growing categories of the beverage market, growing a robust 15% per year, averaged over the last five years (compared with 5% for overall beverages and 2% for carbonated soft drinks). During physical activity, the human body burns carbohydrates and loses electrolytes. The purpose of a sports drink is “to re-hydrate, provide energy, and to replace electrolytes lost during physical activity.”2 The special blends of carbohydrates found in sports drinks (mainly glucose) quickly provide fuel to working muscles. Sports drinks also contain various electrolytes such as potassium, sodium, and chloride, which restore and maintain hydration. The large, well-established sports drinks included Croc-Ade, Sport-Ade, and PowerBoost. At over 50%, Croc-Ade had by far the greatest unit market share. Retailers viewed Croc-Ade as a very low-risk product for them to carry. A long history of strong sales provided ample evidence that Croc-Ade sold well, and demand for it followed a predictable seasonal pattern. Croc-Ade was advertised as a “thirst quencher.” The sales of...