External Environment Analysis of Lucozade

This report discusses the external environment analysis of Lucozade, including the strategic position, production differentiation, marketing, human resources management, and the competitive forces in the industry.

BUSINESS MANAGEMENT

Contents
Introduction...........................................................................................................................................3
Lucozade................................................................................................................................................3
Strategic position of Lucozade...............................................................................................................4
Production differentiation.................................................................................................................4
Marketing..........................................................................................................................................5
Human resources management........................................................................................................5
External environment analysis..............................................................................................................6
Threat of new entrants......................................................................................................................6
Competitive rivalry............................................................................................................................7
Bargaining power of customers.........................................................................................................7
The bargaining power of the suppliers..............................................................................................7
Threat of substitutes.........................................................................................................................8
Recommendation and conclusion.........................................................................................................8
References...........................................................................................................................................10

Introduction
This report brings out a discussion on external environment of the Lucozade. Further, the aim
of this report is to look after the competitiveness of the departments of the organisation.
Porter five forces model identifies and analyse five competitive factors and forces that further
shape the industry. It help to determine organisation`s weaknesses and strengths against
industry. Competitor’s analysis is an assessment of organisation`s weaknesses and strengths
and also the potential competitors. Apart from this, this analysis provides an offensive and
defensive strategic context in order to identify threats and opportunities. In order to foresee
the competitiveness and strategic position of the departments, the organisation conducts an
analysis of on the basis of human resource management, production differentiation, and
operational segment (Odukah, 2016).
Lucozade
Lucozade is a soft drink produced by company and market a range of energy and sports
drinks. The organisation`s slogan is “Lucozade aids recovery”. The organisation offers
considerable range of health conscious products such as low cal, body fuel, elite, and
Fitzwater. The company also offers training packs. It is a glucose water solution that is a
carbonated with slight orange flavoured drink in a glass bottle wrapped in the yellow
cellophane (The drum, 2018). Currently, the organisation offers Lucozade original, Lucozade
cherry, Lucozade orange, Lucozade pink lemonade, Lucozade pineapple crush, Lucozade the
Blackcurrant Bliss, and Lucozade the Brazilian. Some of other zero energy products are
Lucozade sport orange, Lucozade Fit water, Lucozade orange zero, and Lucozade original
zero. Sports drinks provide many calories of the energy extracted from the sugar so that it can
improve the endurance and performance.

Strategic position of Lucozade
The company strives to use a specific strategy particularly for sportswomen and sportsmen to
sell the products. Lucozade undertakes to provide and offer wide range of products such as
energy drinks, Lite, elite, and the Lucozade sports.
Production differentiation
Production differentiation is the procedure of differentiating the product or service from
others to create them more attractive in order to target appropriate audience. This includes
differentiating from others especially from the competitors. The company takes care of
different ingredients that are to be used in the production specific products to cater specific
demand.
Some of the products are being offered in the shops, sport shops, which has to offered to
newsagents to the supermarkets. Lucozade sport offers a popular item and sells to most shops
that sell drinks. It is well known for the products that have good position against their rivals.
The company has emerged and managed to promote Lucozade sports by segmentation,
targeting and positioning. Lucozade has scientifically proved to benefit the athletes in order
to give more energy. Due to which, Lucozade targets the sports enthusiasts by advertising
through athletes and other sports programmes (Turner, McIntosh, Reid, and Buckley, 2019).
Lucozade sport has stored in the most shops, which sells the drinks in all the countries by
strengthening the positioning of the drink products. While looking at the product range of the
Lucozade`s that create market dominance through which differentiation between Lucozade
“Sport” and “Original”. According to its offering, the company enjoys strategy that is much
more appropriate that purely focus on recreational usage and competing with the mixed
drinks in the nightclubs by positioning the products as the healthier alternative to Red Bull
and Vodka. With its huge offerings, the company has competitive edge.

Marketing
As an initial brand positioning that has remained rooted in concerns related to health and
recovery that has sought to position itself as health provider of the energy in order to help
people so that they can recover from the natural daily. The company`s most successful
repositioning took place “Aids recovery” that has removed the removed from its bottle and
replaced it with “replaces lost energy”. The company has become a brand, which provides
energetic products to the busy and successful people. Further, the company provides
diversified with the launch of Lucozade sport with a range of isotonic sports drinks. The
company targets the young people aged 18 to 34 and consider it as potential audience as these
people are concerned about the health.
Human resources management
HRM is essential part of the organisation as their productivity competitive advantage for the
company (Mittal, and Dhar, 2015). As the development of the department is the crucial step
and it depends on the ground on which the future of the organisation depends. It is important
to consider that as the company operates in different several countries and HRM polices
differ according to culture-to-culture (Anwar, 2018). The competitive edge for Lucozade is
due to the secret of attracting younger people in a want to focus on health and the wellness
gains for the employees as per the survey as per the well-being at work (Anwar, 2018). It is
seen that four among 10 employees, which are aged between 18-24 who considers health and
wellness packages of the company that is an important factor to join the organisation. On the
other hand, 61% of the employees in this age category feel that their work has negative work
on the health (Evans, 2016).
Undoubtedly, the company enjoys competitive advantage in regards to motivate other
businesses so that it can closer look the needs of the workers. The research conducted shows
that priorities have been shifting where employees ageing between 18-24 wanting the
employees to emphasize on health and well-being. In 2016, the research conducted by

Deloitte indicates that 16.8% of the millennial says that they value good work-life balance
over the career progression (Evans, 2016).
External environment analysis
Under the external environmental analysis, the porter five forces model describes five levels
such as bargaining power of the customers, threat of competitive rivalry, threat of substitutes,
bargaining power of suppliers, and threat of new entrants (Mao, Liu, Zhang, and Deng,
2016).
(Source: Bashir, and Verma, 2017)
Threat of new entrants
This threat is usually high as this industry is very attractive and it has good growth due to
increase in health conscious people. This factor is affected by premium price of products and
national and local opportunities. This industry is attractive as due to low investment, which
the production requires but at the same time, the industry is ruled by main brands such as red
bull, burn, monster, and many more (Bashir, and Verma, 2017).

Competitive rivalry
The main competitors include a wide range of the beverage goods under different brands such
as Pepsi, Coca-Cola, red bull, and Powerade. It has been seen that introduction of private
label sport and other energy drinks from other major grocery that has disturbed the customer
loyalty towards Lucozade. Tesco kick, feelfine, red devil, red bull, pruderies and Solstis.
Apart from this red bull has stake in Germany and UK (Anwar, 2018). Red bull highly
focuses on energy drinks that can hamper the Lucozade in functional drinks market. Many
other copycat manufacturers such as red devil and mad bull has threatened the market share
of Lucozade. Along with this, Coca-Cola with PowerAde brand, Pepsi, Orangina, Ribena,
and other packaged fruit juices are threatening the existence of Lucozade (Jacobi, Freund,
and Araujo, 2015).
Bargaining power of customers
The bargaining power of customers is high as decrease in the purchasing power of the
customers can affect the sales of Lucozade. On the other hand, customers with high
purchasing power will choose to switch and shift to other product (Riasi, 2015). In order to
gain competitive advantage over other competitors, the drink brand has official supplier of
drinks since when in 1992, the league started. The company has stepped down for a role that
will help them to invest more on research. The company is shifting to develop more advanced
products, which better supports the necessities of the athletes in UK (Riasi, 2015).
The bargaining power of the suppliers
There are large number of suppliers that produces the basic commodities of the soft drink
such as flavours, sugar, beverages, and ingredients needed for manufacturing soft drink. The
supplier`s bargaining power is limited as it cannot exert pressure on the price structures. The
main ingredients needed for soft drink are phosphoric acid, caffeine, carbonated water, and
sweetener. The power was lowered when Lucozade announced slash in the sugar usage by

50%, so that it can bring products below the threshold of penal government sugar tax as set
5g per 100 ml (Riasi, 2015).
Threat of substitutes
Sports drinks and soft drinks that include lemonades that affect the sales of Lucozade.
Further, natural juices have become substitute, which will influence this sector, as people are
aware of organic products. Apart from this, substitute products are really the threat to
Lucozade especially while considering sports drinks that offer similar benefits to all the
customers at very low price. Other substitutes are some of the competitors such as Albeit who
have identified the untapped niche market that are broad in their believe to target potential
audience Jacobi, E.S., (Freund, and Araujo, 2015). This company is trying to attempting the
target the items for sports and nightlife usage that differ from occasional segmentation that
focus on one occasion such as Coca-Cola`s repositioning. This risk is to attempt to appeal as
both sports product for leisure usage, Rockstar Pink that has become positioned by the
consumers as the unsuitable for the occasion (Cockburn, Schubert, Nguyen, and Ford, 2018).
Recommendation and conclusion
In order to maintain a strategic competitive edge in the industry among the rivals, the
company has an efficient team that is trying to create people`s energy. As per the statistics, it
is seen that the global market for the energy drinks has been rapidly growing. According to
the experts, the industry has the expectation to increase the market share (Coffie, 2018). It is
seen that market is projected to expand nearly 5% per annum. This energy drinks comprises
of energy drinks, energy shots and also the extra energy drinks mixes. Energy drinks promise
to extra energy to the customers that includes the ingredients such as Guarana, vitamin-B, and
taurine. This increasing demand of the energy drinks provides a chance and opportunity to
grab the market with larger sales. For example- sales volume for the liquid refreshment and
the beverages in US is 33.69-bn gal (Farris, Shames, Johnson, and Mitchell, 2016).

Lucozade is already dominant player in the energy market, which the company is trying to
remain among the old customers and attract the new customers. It is seen that organisation
conducts survey that further indicates that y6ounger workers are increasingly returning and
enforcing the employees to create a healthy and well-balanced life. From the above
discussion, it can be concluded that the organisation has been seen that company has flashed
with different kinds of the customers. The organisation enjoys a good brand name since it
was established in 1927 that means it was the first energy drink product as the longer history,
which means the organisation took a very long time to create its own brand. On the other
hand, there is a need to use the potential in order to expand the market share. At the same
time, the Lucozade is soft drink but it contains 0.01% of ethyl alcohol in order to aid
flavouring that goes against the concept soft drinks are not alcoholic. The company faces a
threat.

References
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