Case study of OBO's company

BRAND MARKETING

QUESTIONS:

By answering the following questions, you will help OBO drink to improve their marketing strategy. Be critical and propose specific and detailed recommendations.  

To help you with your decisions you can find more details on the brand’s promotion and on the soft drink market in the Appendix.

1. Define clearly what OBO’s market is. Present briefly this market. Identify and explain consumers’ expectations.

OBO’s company evolve on the soft-drink market. This market includes every non-alcoholic beverage, except for coffee, tea and dairy-based drinks. Soft-drink market is dominating by two major companies: Coca-Cola Company and PepsiCo which hold approximately 60% of the market. This market, which had passed through the economic crisis, keep growing both in sales and value. But it now comes to maturity, consumers’ expectations have changed, and the market will have to adapt.

Sodas which had always been the most sold products in the market are now decreasing, while the demand is now turning to functional drinks, value-added water and ready to drink tea & coffee. Because consumers are now looking for healthier, nature-related and original drinks. This change in consumer expectations can be explained by the rise of awareness and responsibility about health in general food. And in the global states of minds, nature is related to health: product without additives, great both for body and mind … That is why consumer are expecting some new product that will respond to those fundamental needs and will be original enough to catch their attention.

1. Conduct an internal and external diagnosis of the company. Use the SWOT tool to synthesize the information.

External diagnosis of OBO’s company:

From a political/legislative point of view, while trade barriers are relatively weak which allowed new companies to enter the market, increasing competitivity, the soft-drinks market is still sensitive to political sanctions or instability which can affect the activity and the demand. For example, the “soda tax” established by the French government in 2012 to fight against obesity, had increased to price of sodas by 4% to 9%. But this kind of policies are not very heavy for the producers, because it’s finally the consumer who bears the cost.

The demand on the soft drinks market is mainly supported by the middle-class. If the global economic context is not doing well, there is a chance that it might impact directly the sales and profits of the market. But fortunately for the producers, soft drinks are seen by the consumer as a basic product which still has a place on their budget even in time of crisis as we could have seen during the late 2000’s when the sales stayed constant.

The recent change in consumers taste and lifestyle is creating new opportunities, both for the mains companies of the market and for the new companies which tries to enter the market. In the same time, we can observe an adoption of the Western way of consumption in regions such as Latin America, Middle-East and Africa (traduced by an increase of the consumption of soft drinks) which will create new opportunities in those emergent markets. In the same time in the Western countries, the increase of health and environmental awareness will force the producer to adapt their produce and their brand image to the new trend.

Regarding the technology aspect, R&D is driving the innovations on the soft drinks market. Innovations are essentials to stay competitive for the producers by increasing efficiency and improving consumers’ engagement.

Internal diagnosis of OBO’s company:

About the product: OBO is selling a slightly sparkling, sweet tasting drink, made from essentials oils and herbal extracts. This product fit perfectly with the new consumers expectation for healthier beverages instead of traditional sugar-sweetened sodas. Even if it’s not a breakthrough innovation (the product is sweet-tasting, packaged in slim metal cans, which are one of the most used container), it offers an alternative to traditional sodas which can benefit to OBO’s company to seduce new consumers.

About the price: OBO’s positioning in terms of price is tricky to evaluate. The company is selling its only product at 1.2€ (for a 250mL can) on its website, without decreasing prices regarding the quantity ordered. Competitors such as Coca-Cola are selling their sodas at a higher price in food stores (between 1.5€ and 2€ for a 33mL can) but at a lower price in mass-market retailing stores, where the price is highly decreasing regarding the quantity ordered. Regarding that information, and because consumers must order online and bear the shipping costs, OBO’s positioning can be described as premium. But this positioning is relevant because the brand is selling a functional drink which is more valuable than classic sodas.

About marketing & communication: OBO’s company has not only created a product. The company has also created a brand: OBO Relax Drink, related to a world of nature, adventure and culture, symbolized by an iconic animal: BORIS the mammoth. The objective through the creation of all this content is to create a universe which the consumer can identify himself. In fact, customers will not buy OBO’s drinks to satisfy their thirst, but because they agree with the brand values: transcendence through adventure and nature discovery. That’s why the company has partnership with extreme sports events or is creating marketing content on its website related to the adventures of the brand ambassadors. But building a strong brand image require consumers engagement. And even if OBO is active on social media, the number of followers (4k on Facebook, 8 on YouTube, 115 on Twitter), shows that OBO is not efficiently catching the attention, probably because the content is not valuable enough.

About distribution: OBO is selling its product only through its website. This way of distributions allows the company to reduce its logistical costs, but on the other hand it’s not an efficient way to break through the market. Selling through mass-market retailers or even small stores offers a physical image of the brand to the consumer and has a biggest visual impact.

SWOT:

1. Propose at least 5 pertinent segmentation criteria. Based on these criteria choose 5 segments. Present these segments by identifying how they could be attractive for OBO. Explain also what their weak elements would be if OBO wanted to target them.

The segmentation criteria chosen are the following: [Age] / [Hobby & Lifestyle] / [Localization] / [Sex] / [Consumption habit]

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