GATORADE:
THIRSTING FOR COMPETITIVE POSITIONING
As Quaker Oats Company's Gatorade sports drink enters
the 1990s, it holds an estimated 90 percent share of a
S600 million worldwide market it created. Invented by a
doctor for the University of Florida Gators, Gatorade be-
came a beverage phenomenon. Sales have grown at a 30
percent annual rate over the past five years. "Gatorade is
almost generic for the isotonic, or sports, drink category”
says Michael Bellas, president of Beverage Marketing
Corp., a beverage consulting company in New York.
"That's a hard act to follow."
Gatorade's managers used market segmentation
techniques to achieve its position; however, the road to
dominance was not without its ups and downs. According
to Larry Dykstra, manager of marketing research for
Quaker Oats, the development of a focused positioning for
Gatorade has allowed the company to target core users
and identify secondary markets. Before Quaker acquired
the beverage in 1983, Gatorade' s previous owner had
promoted it by portraying users as competitive athletes,
adult men, teens, and caricatures of athletes.
"When we acquired Gatorade," recalls Dykstra, “it was a
poorly positioned brand, with a lack of consistent focus."
This position stood in contrast with the way current users
were defined. "There was no message on the uses of
this product or under which circumstances and occasions
it was supposed to be used."
When Quaker looked at marketing research, Dykstra
says the company found that Gatorade's main users
were men aged 19 to 44, that they understood the
product, had a good perception of what it did, and knew
when to drink it and how to use it.
Since Gatorade had been developed and marketed
primarily in the South, Quaker wanted to find out if there
was an opportunity to market the drink in other areas. A
study of attitudes determined that the target could be
expanded geographically. "We felt, based on research,
that we could take a narrow, solid positioning of the
product that was consistent with southern users and
market the product in the North,” Dykstra says.
"In 1987, we focused in on our primary target, but there
have been refinements," Dykstra explains. "We've tried
to portray users as accomplished but not professional
athletes." Although the drink is perceived as a "serious
beverage, the ads have added a fun component by
showing people enjoying it together."We tried to show
people who didn't alienate customers, but also people
they could aspire to be like."
An effort also was made to portray people's motivations
for using the product. A computer graphic that portrays
thirst quenching was introduced- one which, according to
Dykstra, came "across so strong we've started to change
the language."
But being well-focused and consistent in developing
the product over time can create other problems. "Because
Gatorade is narrowly positioned in terms of users and user
occasions," explains Dykstra, "growth opportunities are
probably limited. So how can we go about identifying new
opportunities?"
Competitors' attacks on Gatorade's previously un-
challenged position mean that finding new opportunities for
the 1990s is even more important. In 1987, Coca-Cola
introduced a powdered sports drink, Max; but the drink
never made it out of test markets. In 1989, three rookie
sports-drink makers tried to muscle in on the thirst-
quenching business. PowerBurst Corp. introduced Power-
Burst, a drink sweetened with fructose, which it claimed
provided sustained energy rather than the short-term
energy spike provided by the sweeteners in Gatorade.
White Rock Products Corp. introduced Workout Light, a
reduced-calorie sports drink. Sports Beverage, Inc.,
introduced Pro Motion with the claim that it had less sodium
and more potassium than Gatorade.
However, Gatorade' s most pressing concern centers
on Coca-Cola's March 1990, announcement that it would
re-enter the sports-drink market and on Pepsi's recent for-
ays. Coca-Cola indicated that it plans to distribute Power-
Ade as a fountain product primarily in convenience stores,
95 percent of which have drink fountains. National distri-
bution follows a successful four-month market test in Cali-
fornia. Coke's continuing interest in the sports-drink market
stems not from the market's size, which is minuscule in
comparison to the $40 billion soft-drink market, but from its
double-digit volume growth rate, which compares favorably
with the soft-drink market's growth rate of 2.5 percent to 3.5
percent.
Although Coke apparently feels the sports-drink
market is large enough to warrant its attention, the timing of
its entry seems to have been affected by Pepsi's an-
nouncement that it will start a second test market for its
lightly carbonated sports drink, Mountain Dew Sport. Pepsi
indicates that the drink has already been successful in an
initial test market, claiming that the drink's sales were 2 to
lover Gatorade.
Thus, Gatorade faces not only the need to develop
new opportunities to spur its growth, but also the need to
strengthen its position in order to protect its hold on the
sports-drink market.
QUESTIONS
1. What are the major variables that might be used to segment
Gatorade's consumer market?
2. Define the core and secondary targets for Gatorade.
3. Describe the position of Gatorade as defined by consumers
when the brand was acquired by Quaker Oats in 1983. Trace
the changes in positioning strategy until 1987.
4. Evaluate the pros and cons of the current multi-segment target-
ing strategy.
5. Identify new marketing opportunities that Gatorade should
pursue, including new market segments that it should address.
Develop a marketing strategy for addressing one of these
opportunities.