Future Outlook and Raising Capital in the Sports Drink Market Justin Hickey
Dr. Eddie Montgomery
Entrepreneurship & Innovation BUS 521
The approach and obstacles to raising capital and managing future change can make or break a new company that is trying to compete for market share in the sports beverage industry. According to a recent monthly labor report, most new businesses have the best chance of surviving during the first two years (Knaup, 2005). The young company must also determine how to best utilize legal services. It is one thing a new business venture should not only consider but plan for. Another area of concern and attention must go to the issue of raising money to fund the business. The competitive and lucrative sports drink market has in the past been dominated by two main players, Gatorade and Powerade. Together they have long held over two thirds of the market share. However, the future outlook shows that the market is starting to include a wider variety of sports drinks that are targeting a broader range of personal needs. LJ Enterprises will utilize more than one avenue in raising capital. This will help to ensure the new company is funded well from the start in order to give it the best chance to succeed.
1. Discuss the future outlook and industry trends related to the new venture. Future Outlook and Industry Trends
The future outlook for the sports drink industry involves many new companies entering the market and offering different types of non traditional sports drinks. Gatorade has been leading the market for years but has yet to really come out with a new product. They have pushed different marketing campaigns and tried to repackage their product a bit, but the formula and product remain fundamentally the same. This is where new companies are able to gain ground against the bigger and more established market leaders. One new trend in the industry is to target a specific segment of the market such as kids or athletes. The now discontinued product Gatorade Tiger was one way the market leader and our competitor tried to innovate and take advantage of this trend. This product was heavily marketed to the endurance athlete and team sports. Powerade is now targeting the kid segment of the market with their product called Powerade Play for kids. This product contains 20% of the Daily Value (DV) of four B vitamins, 100% DV of vitamin C, 20% DV of zinc, a trademarked electrolyte system and 25% less sugar (Spano, 2005).
Another industry trend being seen involves the concept of ‘nutrient timing“. This involves drinking certain nutrients around the time of physical exertion or exercise to allow for shorter recovery time and for specific needs such as strength training or endurance. So far, this practice has focused mainly on carbohydrates and protein but in the future the trend will be nutrient timing for non-nutrients. The most well known sports drink currently involving nutrient-timing are protein based recovery drinks or Ready-to-Drink beverages. LJ Enterprises new product offering, Sore-B-Gone will be a perfect fit for this emerging market trend. 2. Discuss the legal or concerns related to the venture idea Legal Services and Industry Concerns
In most cases the entrepreneur will need to protect his or her intellectual property. The practice of acquiring patents, trademarks, copyrights, and trade secrets will ensure this property is protected by the courts and through the services of an attorney. An attorney can be specialized in one area such as patents or real estate. It is important for the attorney and the client to develop a good working relationship. This can help to give the entrepreneur much needed confidence and help to ease some of the risk launching a new venture.
One if the first things a new company will want to do after hiring the services of an attorney is to have a conversation about patents. Most of the work will...
References: Hisrich, R.D., Peters, M.P., & Shepard, D.A. (2010). Entrepreneurship. Boston, MA: Mcgraw-Hill.
Knaup, A.E. (2005). Survival and longevity in the business employment dynamics data. Monthly Labor Review, Retrieved from http://www.bls.gov/opub/mlr/2005/05/ressum.pdf
Spano, M. (2010, June 1). Trends in sports drink formulations. Prepared Foods, Retrieved from http://www.preparedfoods.com/Articles/Feature_Article/BNP_GUID_9-5-2006_A_10000000000000842893
Methods to find funding for your new business . (2010, October 1). Retrieved from http://www.go4funding.com/Articles/Methods-to-find-funding-for-your-new-business.aspx
Sugars, B. (2007, September 20). The 6 biggest mistakes in raising startup capital. Entrepreneur, Retrieved from http://www.entrepreneur.com/startingabusiness/startupbasics/startupbasicscolumnistbradsugars/article184350.html
Please join StudyMode to read the full document