Situation Analysis for Gatorade

Situation Analysis for Gatorade

History: Gatorade was first synthesized by physicians, lead by Dr. Robert Cade, at the University of Florida in the summer of 1965 in order to hydrate the school’s football team more adequately. The “aiding” of the Florida Gators is how it got its name. After a few seasons of growing success that the team attributed largely to being properly hydrated from Gatorade, other universities began to place orders. That has continued to grow, as Gatorade can now be found on the sidelines of over 70 Division 1 men’s and women’s teams. In 1983, Gatorade became the official sports drink of the NFL. In 1985 the Gatorade Sports Science Institute was founded in Barrington, IL, where the company conducts experiments to improve in exercise science, hydration, and overall sports nutrition. Gatorade was purchased by the Quaker Oats Company in 1987, which, in turn was acquired by PepsiCo in 2000. The mission statement of PepsiCo is “to be the world’s premier consumer products company focused on convenient foods and beverages.”

Competitive Analysis: Gatorade has many competitors, the most predominant being Powerade, Lucozade, and Vitamin Water. However there are also a number of smaller regional competitors, an example of which would be Kwikade which is manufactured by Kwik Trip. Despite the abundance of competitors Gatorade has a dominant hold over of the market with 70% of the sports drink market share.

In addition to controlling a dominant portion of the market share of sports drinks, Gatorade continues to expand their product mix, unlike their competitors. In 2001, they launched their “Performance Series”, which included an Energy drink, to consume before a sporting event or workout, an Energy Bar, and also a Nutrition Shake, meant to be consumed after a workout or as a meal replacement. Since then, Gatorade has expended their mix even more. They have introduced an Endurance Formula, which has a higher concentration of sodium for endurance athletes, Energy Chews, gummies that have the same effect as the Energy Bar and Energy drink, and mainly their protein line. Their protein line alone feature many options. Premade protein shakes and protein bars are available, as are tubs of protein powders varying in size from one serving up to 20. Another key addition to Gatorade’s product mix was G2. G2 is essentially the same as the original Gatorade differing only in that G2 is lower in calories. The newest addition to the product mix is Gatorade Organic, which has the same rehydrating purpose as the original Gatorade, but has only 7 ingredients. These ingredients include organically grown cane sugar and sea salt being used for the sodium. In addition to all of these, Gatorade is constantly launching new flavors of their original thirst quencher.

Environmental Scan: There are many influences that have an effect on Gatorade. The competitive environment is relatively steady. There may be many changes with the smaller, regional brands entering and exiting the market, but for the most part the big national brands, i.e. Gatorade, Powerade, Lucozade, are mainstays within the market. Another influence on Gatorade is the economic environment. Since Gatorade is a convenience product there is little brand loyalty. Even if a consumer does prefer Gatorade over a competitor, if there is an economic downturn they may turn to the cheaper competition. The social environment also has a large influence on Gatorade. This can be seen in the newest addition to Gatorade’s product mix, Gatorade Organic. Currently in society there is a trend that heavily values organic products because they are seen as healthier, safer, and cleaner than the non-organic counterparts. A final influence on Gatorade would be demographic factors. A main demographic that Gatorade targets would be that of athletes and other people who are physically active, usually between the ages of 18-38. If that demographic changed their favors, say a new trend emerged where people stopped drinking sports drinks, then a large number of their customer base would be gone.

SWOT Analysis:

Strengths:

• High Quality Product

• Known Brand Name

• Has research to back up the product

Weaknesses:

• People unaware of all the benefits

• Higher price than competitors

• Many varieties can confuse customers

Opportunities:

• Increase advertising

• Celebrity endorsements

• Can continue to expand product line Threats:

• Have many competitors

• Have many substitutes, for example fruit juice, milk, etc.

Competitive Advantage: The main advantage that Gatorade holds over its competitors is the name recognition and the quality associated with that name brand. An instance where the name recognition could pay dividends for Gatorade would be if a consumer was at either a gas station or other convenience stop, and was trying to decide on buying either Gatorade or the regional brand. Even if the regional brand is cheaper, that consumer knows Gatorade, and has likely had it before, so they know the quality of the product. This would lead to the consumer buying the Gatorade over a competitor despite the extra cost simply because of the brand recognition. Another key advantage that Gatorade has, as shown in the SWOT analysis, is that they have research to back up their products. As told in the history of Gatorade, the Gatorade Sports Science Institute (GSSI) was founded in 1985. From that point on Gatorade has conducted countless experiments to make sure that their products are not only up to par, but are the premier provider in sports nutrition. This is what Gatorade does better than anybody else. Whether it is an Energy Chew to prepare and psych someone up before their big game, a Protein Shake to help them recover and grow muscle after a hard lifting session, or even the original thirst quencher to hydrate and replenish someone’s electrolytes after going for a run, each and every Gatorade product has been tested countless times in the Gatorade Sports Science Institute to ensure that the product