Lucozade – Market Development

Lucozade is a great example of ‘Market Development’ – one of Ansoff’s Matrix marketing strategies that involves finding new customers for existing products, normally with the aim of increasing sales revenue and volume. Not only has Glaxosmithkline, the producer, recently announced plans to bring Lucozade to the American consumer, but throughout the product’s history, Market Development has been almost continuous.

Despite being now used as a sports drink, it was originally created by a chemist in the 1920s as a result of experiments to provide sufferers of common illnesses – like colds and flu – with a source of energy, thereby increasing their recovery time. And, hence, it was distributed to hospitals, which shows this product was in a slow-growth business-to-bussiness market. It was not untill the 1980s that Lucozade became marketed for sports-people; the slogan was changed from “Lucozade aids recovery” to “Lucozade replaces lost energy” and athlete endorsements became common features of their advertising. Ever since, the product has become synonymous with high-performance sports fuel.

Glaxosmithkline want to continue this success and push for even greater sales in America, a particularly important aim to improve their revenue streams from fast-moving consumer goods when their pharmaceutical market faces long-term decline – a benefit of diversifying one’s company. Although, Glaxomsithkline can compete effectively against ‘Reckitbeckinser’ and ‘Proctor and Gamble’ in the UK market, they may find the lack of brand recognition overseas in the USA means they may struggle abroad. Therefore, Lucozade faces strong competition from Pepsi’s ‘Gatorade’ and Coca-Cola’s ‘Powerade’; Market Development is a risky strategy, and the USA is often a tough market to penetrate, for instance Tesco’s ‘Fresh and Easy’ stores exaggerated the similarities between the US and British consumer. Hence, the success of this Market Development depends mostly on very good market research.

Overall, this story shows the importance of Marketing: research and development may create an innovation, but the marketing department will create a product.

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