Following a 30% downturn in the UK smoothies market and a significant decline in market share, Innocent have commissioned a report evaluating the UK smoothie market that recommends a marketing plan for the Smoothies product range in the UK for the next two years. The objective of this report is to inform Innocent of the status of the current climate, and propose options to grow sales and market share. 2. Methodology
This report is compiled primarily from secondary research. Quantitative data will be sourced from business databases such as Mintel and qualitative data will come from sources such as BBC Online. A wide range of comparative data will be used to ensure a balanced report. A PESTEL analysis will be used, however not in the acronymic order. A SWOT analysis of the current Innocent business will be used. The Analysis of data will inform the recommendations given.
3. Analysis & Findings (Part 1)
3.1 Economic Factors
Gross Domestic Product (GDP) 2004 – 2009
The graph below shows the development of GDP for the period Q3 2004 to Q3 2009.
(Direct Gov, 2009)
GDP fell from a steady 2 – 3% into a rapid decline in 2008 and to a low point of -5.5% in 2009. This decline in GDP reflects the reduced demand for goods and services both in the UK and worldwide. The resulting increase in unemployment and decline in consumer confidence had an adverse impact on business performance. Consumer confidence is a key indicator for any business as this will impact buying decisions. The luxury goods sector will be impacted harder as consumers focus on essentials such as fuel, food and clothing. Personal debt levels have reduced as a consequence of the consumers lack of confidence in the employment market. To stimulate growth in the economy the Bank of England has reduced interest rates (see appendix 2) to the lowest levels for decades however, consumer confidence still remains low as unemployment continues to grow (see appendix 1) and consumers are unwilling to spend on the high street. Key Points
· Consumer confidence is low in spite of actions to stimulate recovery · Unemployment levels remain high
· Interest rates are low are will remain low for the foreseeable future How does this relate to Innocent?
The recession is one of the main reasons why Innocent is losing sales and market share. High unemployment levels and low consumer confidence has caused consumers to switch to cheaper brands, e.g. own brand supermarket smoothies, or even juices so that they are still able to obtain their fruit, but cheaper. Premium high street brands such as Waitrose are introducing own label lower costs competing products. As Innocent is a premium brand, a review of the sales and marketing strategy is key to growing sales and market share, in a changing market environment, where Innocent are the key market leaders. Innocent will also have to consider to what extent their target consumers (ABC1’s) are being affected by the recession. Consumer confidence is forecast to steadily increase as we gradually head towards positive GDP. 3.2Ageing UK population
The graph below shows the 2009 age distribution of the UK.
(Direct Gov, 2009)
In mid-2008 the average age of the population was 39 years, up from 37 in 1998.” (Direct Gov, 2009) The graph above visually demonstrates the age structure of the UK in 2009. “The number of 45-54-year-olds is set to rise, underlining the importance of extending the appeal of smoothies beyond the core range of 16-34s.” (Mintel Group, 2008) As smoothies are predominantly a ‘younger product’, the strategic importance of broadening the age range of consumer is clear. The future market segmentation and product range of Innocent should include a strategy to attract these consumers, who typically have more disposable income. Ageing population is not a fast moving process, but is something that Innocent will have to deal with at some point. Innocent may have to re-asses their brand image to focus...
Please join StudyMode to read the full document