University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard

Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

Harwell LTD-Strategic Positioning and Key Theories

Executive Summary

Harwell LTD have decided to enter the established Energy drink market sector, thus I have recommended
Porters ‘Focus differentiation’ strategy as a means of penetrating the market and differentiating them from
market leaders such as Lucozade, Monster, and Red bull. The differentiation focus strategy will aim at
manufacturing a ‘Bite-sized’ energy drink, targeting health and Fitness enthusiasts to give them an efficient
source of energy before physical activity. The drink will aim to source customer loyalty, high margins, and
limited competition. Although targeting the health and fitness industry may seem like a large market, limited
numbers proceed to consume energy drinks for health speculations. Through exploiting the differentiation focus
model, I hope to grow Harwell LTDs brand and secure a large market share within a short time frame.

Food and Drink-Industry Breakdown

The food and drink sector remains strong, with consumer expenditure reported to be £203 Bn in 2016, and
exports valued at £20.1 Bn within the UK alone. The food industry is however under pressure globally with
population increasing at a rapid rate. Other metrics such as global warming and possibilities of a ‘two-tier’ food
structure is becoming a rising concern with price increases on healthy ‘whole-foods’. This has led to increased
obesity levels with “58% of women and 68% of men being overweight or obese” in 2015 alone (Niblett 2017).
However, this could have a positive affect for Harwell LTD, as an increase in health consciousness has led to
more people attending health and fitness clubs with 1 in 7 people being members of a gymnasium. With obesity
set to rise further, Porters differentiation focus strategy could bring future opportunities for Harwell LTD.

Harwell LTDs target industry for the past five years has
prospered, with the UK Drink sector growing year on
year from 2012-2017, currently standing at 17.5 Bn Euros
(Statistica, 2017). However, a sugar-tax levy due to enter
legislation in March 2018 could have an adverse effect on
the soft drink industry within the UK. According to the
UK government: “The levy will make soft drinks
companies pay a charge for drinks with added sugar, and
total sugar content of five grams or more per 100
milliliters” (HM Treasury, 2016).Thus, Harwell LTD
manufacturing ‘bite-sized’ energy drinks will avoid the
levy, and place focus on adding caffeine as a stimulant for
(Fig.1 [Statistica, 2017]) consumers.

Energy Drinks in particular have grown significantly as a market in recent years, with “More energy drinks
launched globally in 2015 than in any year since 2008, with the number of energy drink products launched
growing 29% between 2010 and 2015” (Beckett, 2016). This shows strong signs of growth for the Energy drink
market, however represents increased competition. As a
result of the differentiation focus strategic approach, Harwell Market Leaders in Energy Drinks U.K. Users (In
LTD will have lowered competitiveness through the targeting 1,000)
energy drink consumers within the health and fitness sector. 8000
Lucozade are ranked Market Leaders in the U.K. followed by 7000
RedBull, Monster, and Relentless. Lucozade reported nearly 6000
7 Million users of its Sports and Energy drink range in 2016. 5000
Thus making it hard for start-ups to enter that part of the 4000
drink industry, yet none of the established brands have 3000
targeted consumers with a ‘Bite-size’ drink and could be hit 2000
hard when the levy on sugar tax enters legislation. Ultimately 1000
making it easier for Harwell LTD to gain early market share 0
within that market with the differentiation focus strategy. Redbull Lucozade Monster Relentless

(Fig.2 Created in Excel with stats adopted from: [Statistica, 2017])

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 University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard
Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

Macro-Environmental Analysis

Economic Environment
• Taxation-policy on sugar could affect cost control for Harwell LTD ultimately affecting their profit margin. In a bid to reduce NHS
expenditure on obesity the U.K. government: “Will introduce the much-debated 'sugar tax' in 2018, levying brands that sell sugary drinks in
a bid to protect children's health.” If the government taxes sugar based drinks then Harwell LTD will position themselves around this issue
and focus on a ‘Low-Sugar’ bite-sized energy drink, avoiding levy's and enticing diet conscious consumers.
• ‘Brexit’-Britain leaving the EU could cause issues for Harwell LTD venturing into the energy drink sector. With British pound volatility
affecting consumer spending and buying power, rises in labour and operational costs could result in higher expenses and less distribution.
Harwell LTD will therefore produce ‘bite-size’ cans, to cut costs and absorb the inflation spike.
• Hiking Interest rates will have an adverse effect on Harwell LTD in terms of strategic positioning. Due to tightened consumer spending,
and higher rates on available capital. According to one source: in 2017 “The Consumer Prices Index (CPI) climbed to 3%, a level it last
reached in April 2012, and up from 2.9% in August” (Milligan, 2017). A rise in interest rates will have a ‘knock on’ effect on consumer
spending also, thus Harwell LTD must price their drink sensibly if diet conscious consumers are to purchase.
Social, Demographic Environment
• Population is a key driver on entering the market with vigorous growth forecast within upcoming years: “The UK population grew to an
estimated 65.1 million in 2015, the largest ever, an increase of just over half a million people since 2014” (Randall, 2017). This increases
business opportunity for Harwell LTD with more demand for energy drinks bound to come as a result from population increase.
• Health consciousness will be a key driver for Harwell LTD as obesity levels are rising more people are looking into Health and Fitness.
Obesity levels have increased drastically, with U.K NHS statistics stating: “In 2015, 58% of women and 68% of men were overweight or
obese. Obesity prevalence increased from 15% in 1993 to 27% in 2015” (Niblett, 2017). Although a negative macro-environmental factor
this will increase revenue for Harwell LTD. With increased Health and Fitness memberships Harwell LTD will offer a supplementary good
to increase performance.
• Age distribution will be the most prominent factor when evaluating the external environment for Harwell LTD. Energy drinks focus on a
younger audience and are mainly consumed by 15-35 year olds with age distribution in this region making up ‘24%’ (Statistica, 2017) of
the UK’s population. This results in a competitive market for Harwell LTD with active use of energy drinks from over a quarter of the
UK’s population.
Technological Environment
• Social media will assist Harwell LTD in achieving its marketing goals more efficiently with the help of SEO marketing. Social media will
allow the organisation to target the specified age group it needs to raise awareness of its product launch. An advantage of social media is
that Harwell LTD will be able to launch content, track, and adjust their strategy if needed. With an estimated 2.96 Bn users of social
media, this offers Harwell LTD both great scope and flexibility when raising awareness for promotion.
• Machinery will help Harwell LTD in manufacturing its products and achieving supply for demand once economies of scale are achieved.
Machinery on producing both the drink and the packaging will aide Harwell LTD in turning resources (inputs) into goods (Outputs).
Moreover, if Harwell LTD can exploit a wall-to-wall production line, the company can save on transportation costs and invest the extra
savings into strategic marketing channels or a celebrity endorsement contract.

Swot Analysis
Internal
External

(Fig.3 SWOT Analysis-Harwell LTD)

 University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard
Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

Competitive/market forces that would impact this business both positively and negatively

Porter’s Five Forces

Threat of substitute products or services

Energy drink consumers seek a dual purpose of both taste and energy when looking to purchase an energy drink.
However, there are many cheaper alternatives when it comes to getting a much needed energy boost with
substitutes such as coffee, tea and juice making suitable replacements over RTD (Ready to Drink) Energy
drinks. This is especially important when taking into consideration health concerns over energy drinks, with
consumers becoming more conscious of macro-nutrients such as sugar often due to metrics such as social media
and personal appearance. Secondary options for consumers include increased sleep and rest time for optimum
energy without having to result in purchasing a quick ‘Energy-fix’.

Bargaining power of suppliers

Due to the nature of hardwell LTD’s product, suppliers will have significant bargaining power as they will need
specialised ingredients for their high caffeine ‘bite-sized’ drink as well as being a new company entering an
unknown market they’ll have poor distribution channels. Non-extensive supplier options will lead to an initially
steep cost curve due low economies of scale, however “As the scale of production increases, certain economies
occur which serve to reduce the average cost of production” (Britton, 2009). Harwell LTD, are therefore faced
with a problem as high costs may occur if they are to produce the components needed for distribution.

Bargaining power of Buyers

Bargaining power from consumer is moderate. The product will be

(Fig.4 Cost Curve Analysis-bargaining power if Buyers)
strategically positioned using Michael Porter’s Differentiation Focus
strategy, and will offer a high caffeine solution in a bite-sized can,
targeting health and fitness-energy drink consumers. Despite there being
limited products like this on the market, consumers will be faced with an
abundance of variants. Porter’s selection of generic strategies “are
“Designed to secure a long-term sustainable advantage in a competitive
market. Unique differentiation can enjoy a price-premium because of the
special character of its products” (Dyson, 1990). Harwell LTD will
therefore push the unique product out at a premium to entice favourable
perception amongst consumers.

Threat of new entrants

Threat of new entrants are high for Harwell LTD with the new sugar tax levy due to be enforced next year, high
equity market players may adjust to a similar strategy of differentiation. The energy drink market structure in
the U.K is heavily oligopolistic, with few firms dominating market share. This could pose Harwell LTD to be
vulnerable to cash-cows such as Lucozade, RedBull, or Monster entering the market and gaining dominance
with lower manufacturing costs and high brand awareness. However, with
the differentiation focus strategy being deployed in the ‘Bite-sized’
energy drink market Harwell LTD would position themselves as a ‘star’
NPD (New product development) dominating market share in a new
sector.

Rivalry Among existing Firms

Within the mainstream energy drink market competitors have utilized

Porter’s Cost-leadership strategy, and brands such as Lucozade could be
looking to re-target their market. Thus, rivalry among existing firms
remains intense for Harwell LTD despite utilizing Porter’s differentiation
focus strategy. There are many high-equity brands within the energy drink
sector, yet despite these brands not having a lot of diversity Harwell LTD
could trigger a price war if the differentiation strategy is successful. This
could result in limiting Harwell LTDs profit potential, it’s therefore
important that Harwell LTD enter the market first to gain market share. (Fig.5 BCG Matrix Model)

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 University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard
Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

What marketing/penetration strategies do you think can be implemented to boost the market share of this
product, hence increasing sales and profit margins?

STP Analysis (Segmentation, Targeting, and positioning)

 Segmentation

 Targeting
Consumer Profitability
Student Students consume energy drinks to not only spike energy levels, but for focus and concertation. This target audience usually has
poor income levels, and seek substitute energy sources such as coffee/tea as a more cost-effective alternative. Students usually
switch brands based on promotional offers from market leaders such as Lucozade, Monster and RedBull as their disposable
income is often low. Profitability is therefore minimal within this market segment and would have to operate a Cost-Leadership
strategy. Hardwell LTD being a start-up within a competitive and established market would struggle to target this consumer.
Athlete/Sports Health conscious/sports enthusiasts often consume energy drinks for their sole function of energy. Usually consumed either
Enthusiast before/after a workout, health enthusiasts seek for a more efficient alternatives to coffee, with RTD (Ready to Drink) cans
(Health Conscious) providing a quick energy fix. Income is usually stable for this consumer and health is prioritised, with personal appearance being
fuelled by social media. A differentiation focus strategy would be utilized to penetrate brand equity leaders Cost-Leadership
model. With efficiency being a primary metric, condensing the can to a ‘Bite-size’ energy drink would meet this niche demand.
Premium pricing would deliver optimum profit margin for Harwell LTD.
Working Male-Aged The consumer often has sufficient income to spend on RTD energy drinks, with consumption for the dual-purpose of taste and
22-35 energy levels. Health is occasionally prioritised and the consumer is usually loyal to one brand of energy drink. Harwell LTD
would therefore struggle to penetrate the market and gain access to this target group, as market leaders such as Lucozade have
already gained their loyalty. Much like the student consumer, Harwell LTD wouldn’t be able to operate a Cost-leadership
strategy due to brand equity and size.

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University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard
Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

 Positioning
Differentiation Focus Strategy
After analysing Harwell LTDs options for strategic positioning, I recommend that Harwell LTD allocate a Differentiation
Focus strategy targeting Fitness Enthusiasts. To gain a sustainable advantage over market sector leaders, Harwell LTD will
offer an efficient energy source condensed into a ‘Bite-size’ RTD can for Fitness Enthusiasts to consume on the go. The
pricing strategy will be premium based to reach optimal profit margins within this new market sector. The product will
consist of High-caffeine to assist the consumer’s workout.
In the figure on the left is a visual representation I have constructed to
show Porter’s differentiation focus strategy and how it will deliver a
sustainable advantage for Harwell LTD from targeting the ‘Narrow market
scope’ of Health Enthusiasts Energy drink consumers.

Product Development Strategy

The differentiation focus strategy has a related diversification to the
standard energy drink market, with Harwell LTD carrying out NPD (new
Product development) developing the product by reducing its sugar content
to comply with the 2018 sugar-tax levy. Sugars will comprise of natural
sugars to not only comply with taxation policies, but fitness enthusiasts are
health conscious when considering a products macro-nutrients. The NPD
strategy may take some time for Harwell LTD to develop and could be a
costly operation, however, once completed Harwell LTD can continue to
charge at a premium and grow organically from increased revenue.

Bowman’s Clock
Bowman’s clock reveals that Focused Differentiation (5) will be of a high price, yet of high perceived value to the customer.
This places a strong strategic positioning of Harwell LTD as a perceived value of high quality and ‘Luxury’ is associated
with the product. Moreover, this will help penetrate the energy drink market as other equity brands are positioned between (2
and 3) on the clock, consisting of ‘low price’ and a ‘hybrid’ model in correlation to Porter’s Cost-leadership strategy.
Critically analyse the marketing mix and suggest the most appropriate marketing mix for this product.

Marketing Mix Analysis

 Product
The name of the product will be: ‘ViperShot’ consumed as an RTD (Ready to Drink) anywhere, at any time, once purchased.
The name Viper derives from a snake with a resemblance of a ‘Snakebite’ duplicating the aggressive impact of the product.
The product itself will be contained within a bite-size can of approximately 250ml. There will initially be one size of the
product entering the market at 250 ml, and if the product succeeds with the differentiation focus strategy then future
investment into other flavours/sizes will be developed as a result.

High energy levels must be contained within the product to meet the consumers’ needs, including added caffeine/taurine
levels for optimal energy levels. The consumer is aiming to get a ‘quick’ energy fix before/after a workout and consumed by
simply pulling a ring back on the can lid. The product is different compared to over competitors as within the energy drink
sector there is limited diversification amongst its products. What makes Vipershot different to others is that it provides the
consumer with an efficient energy boost within a short time frame.

 Place
Selective distribution will be a key metric for optimising sales. The differentiation focus strategy focuses on a niche
market, thus carefully choosing where to place the product will be key in reaching optimal sales. The clients will be
able to purchase the drink from local stores within cities and vending machines within gymnasiums. My distribution
strategy varies from my competitors as they operate a Cost-leadership strategy distributing to a mass market.

 Price
The product must be manufactured at a price below £0.70 per unit as the retail price will be around £1.50. The strategic
position enforced will enable premium pricing as Harwell LTD will be entering a new-founded/growing market. The
perceived product value for the consumer will be a high quality instant energy hit to assist them with a workout/physical
activity. The current price of the product will be able to absorb price wars through holding strategies retaining the perceived
value of ‘high-quality’.

 Promotion
Advertising will consists of both traditional and digital techniques to focus on targeting the correct age group and
demographics for generating revenue. Traditional marketing will be utilised by using posters within gymnasiums.
Furthermore, digital marketing will be utilized through SEO (Search Engine-optimization) techniques to track fitness
enthusiasts when looking at fitness videos/clothing. Moreover, when Harwell LTD achieves a sustainable growth rate,
celebrity endorsement could be a marketing metric to look into as a means of high quality and enhancing the premium
pricing strategy.

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 University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard
Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

Bibliography

Type In-Depth In Text

Webpage Euromonitor. n.d. Market value of soft drinks in the United Kingdom (UK) from 2012 to 2017 (in (Statista,
million euros). Statista. Accessed 23 November, 2017. Available from 2017)
https://www.statista.com/statistics/491383/soft-drinks-united-kingdom-uk-market-value/.

Pdf URL: https://www.gov.uk/government/news/soft-drinks-industry-levy-12-things-you-should- (HM

know Treasury,
Author: HM Treasury HM Revenue & Customs Department of Health 2017)
Year: August 2016
Accessed: 3rd November 2017
Webpage URL: http://www.mintel.com/press-centre/food-and-drink/energy-drink-launches-grow-29-in- (Beckett,
five-years-as-global-sales-reach-8-8-billion-litres 2016)
Author: Alex Beckett
Year: August 2016
Accessed: 2nd November 2017
Book Book Title: The Business Environment (Britton,
Edition: 6th 2009)
Authors: Ian Worthington & Chris Britton
Year: 2009
Book Book Title: Strategic Planning: Models and Analytical Techniques (Dyson,
Edition: 1st 1990)
Author: Robert G. Dyson
Year: 1990
Webpage URL:https://www.ons.gov.uk/ (Randall,
Author: Melissa Randall 2017)
Year: March 2017
Accessed: 3rd November 2017
Webpage URL:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/613532/obes- (Niblett,
phys-acti-diet-eng-2017-rep.pdf 2017)
Author: Paul Niblett
Year: March 2017
Accessed: 5th November 2017
Webpage Office for National Statistics (UK). n.d. Population of the United Kingdom in 2016, by age group. (Statistica,
Statista. Accessed 23 November, 2017. Available from 2017)
https://www.statista.com/statistics/281174/uk-population-by-age/.

Webpage URL: http://www.bbc.co.uk/news/business-41649498 (Milligan,

Author: Brian Milligan 2017)
Year: October 2017
Accessed: 1st November 2017

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University: Southampton Solent Course: Business Administration (Top-Up) Name: Lloyd Alexander Chard
Unit: Strategy for Management and Marketing (STR364) Student Number: Q12674141

Appendix

Image of resource used ‘In-Text’ Source Details

This source was adopted from (Statistica, 2017), showing
the market value in Euro millions for the year on year
increase of Energy drink growth from 2012-2017. This
was utilised to show the possibility for growth within the
energy drink sector for Harwell LTD.

Office for National Statistics (UK). n.d. Population of the

United Kingdom in 2016, by age group. Statista. Accessed
23rd November, 2017. Available from
https://www.statista.com/statistics/281174/uk-population-
by-age/.

This source was adopted from (Statistica, 2017), showing

the market leader in energy drinks within the U.K.
covering market leaders such as: RedBull and Lucozade.
This was utilised to show the possibility for growth within
the energy drink sector for Harwell LTD.

Office for National Statistics (UK) .n.d. Population of the

United Kingdom in 2016, by age group. Statista. Accessed
3rd November, 2017. Available from
https://www.statista.com/statistics/281174/uk-population-
by-age/.

This source was taken from a student forum to show the

cost curve analysis when analysing consumer bargaining
power. It can be accessed at:
http://textbook.stpauls.br/Business_Textbook/
Operations_management_student/page_29.htm
Accessed: 3rd November

This source was taken from online to show the BCG

Matrix Model when analysing strategic positioning. It
can be accessed at:
http://www.fam99.com/portfolio/fam_003_growth-share-
matrix/
Accessed: 3rd November
Source: Boston Consultancy Group

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