The marketing strategy is solid, production costs are relatively low as the infrastructure for making the new bottles is almost identical to the classic style. The advantage is that the market leader now has a larger portfolio of drinks that they can squeenze into their clients fridges. Red Bull have found great success with this strategy releasing Red Bull sugar free & the new large cans.
The strategy of portfolio expansion does have its downsides, as Sam pointed out to me, cannabailisation of the current product tends to see a reduction in indiviudal line sales, however an astute marketer will look at the portfolio on the whole and see that more refridgerator facings means better chance of making a sale and less room for competitor products.
The new formulation of sugar free is aimed at a growing section of the market, the ultra health conscious. Bottled water is the only real product targeting this market and with $460 million dollar worth of sales in Australia alone, it is a very attractive market to target. If Powerade could steal just 1% market share, they would make a tidy profit!
Josh Strawczynski's Opinion:
The advertising will need to really focus on the positioning of the product. To be truly effective, they need to steal marketing share from the bottled water market. Powerade already has a healthy brand image, so it is not likely to boost consumption too highly without doing so.
Sam Berringer's Opinion:
I don't really see the value in it all, the product is too similar to the original, which I understand is a market leader, but what has happened to most of the coke extensions, they are more niche players than successful stand along products!
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