Analyze Innocent Drinks’ pricing, decision-making, and market strategy using economic theories and comprehensive PESTLE and SWOT analyses for business insight.
Business economies implies to field of economic which studies organizational, financial, environmental and market related issue faced by the business entity. For students seeking assignment help cheap, this analysis provides key insights. This is the most effective concept which helps organization in identifying the scarcity, demand and supply within the business entity. Innocent drinks are the British based organization which involved in producing smoothies and juice. The firm was established in year 1998 by three friends Richard Reed, Jon Wright and Adam Balon. Innocent Drinks earned annual revenue of 17.9 million British pounds and has a market share of 10% in year 2023 (Description of Innocent Drinks, 2023). The current report is based on business and situational analysis of Innocent drinks over the years along with some economic theories. It will also include critical evaluation on the actions of innocent drink to sale out 90% of its share to Coca- Cola. Lastly, it includes Pestle and SWOT analysis of Innocent Drinks as to gain in-depth knowledge regarding various macro and micro factor impacting on overall functioning.
Price is the crucial element which should be effectively decided as it impacts the overall profitability and financial position of the organization. Each company aims at initiating effective pricing strategy which helps in attracting the customers and also supports in managing the overall profitability of business entity (Dabić et al, 2020). Further, decision making policies of organization also has huge impact on the overall working of business as entire actions are initiated on the basis of decision taken by the top level manager. Following is the in-depth evaluation of the pricing and decision making strategy of Innocent Drinks along with their pros and cons:
Pricing strategy of Innocent Drinks
An Innocent Drink offers high quality smoothies and beverages to customers due to which company focused on charging higher prices from the customers. Firm believes that customer will ready to pay premium prices for high quality goods and services (Kher, Terjesen and Liu, 2021). This strategy has been chosen to cover the cost of raw material and fresh fruits and to indicate firm’s aim of offering high quality services. Blue Skies is the biggest competitor of Innocent drinks which follows penetration pricing method and offers 330 ml drink in less than 1.99 pound. To compete with the firm’s strategy, Innocent Drink has also introduced 250 ml bottle at 2 pound which helps in covering the firm’s cost and also assists in fulfilling customer’s needs & preferences (Pricing Strategy of Innocent Drinks, 2023). This strategy helps Innocent Drink in enhancing the overall economic position as premium pricing includes higher profit margin.
Further, premium pricing supports in enhancing the overall perception and brand value for the customers. Premium pricing indicates a high quality service which helps in attracting the quality-conscious customers. This method has been selected as it helps in sustaining competitive edge within the industry as Innocent drink is able to capture target market with high price product which creates barriers for other firm to enter in the concerned industry (Kreiser et al, 2021). However, this pricing strategy is not capable in attracting the lower, middle and cost-conscious customer which leads reduction in the overall market reach of business entity. Moreover, premium pricing creates issue in sustaining competitive edge for the longer time frame as competitors could offer high quality product at comparatively less cost which leads decline in the overall profitability.
Decision strategy of Innocent Drinks
It has been identified that decision strategy of organization also has huge impact on the overall working and profitability of business entity. Innocent Drinks has been recognised for taking decision and carrying out operations in a non-traditional manner (Coccia, 2023). In this regard, Innocent drinks has emphasised over data driven decision which helps in understanding the market needs effectively. By taking into account, the most effective decision could be taken by the organization. It has been determined that company should focus on evaluating the past information and data prominently based on which the most accurate decision could be initiated by organization.
Moreover, firm has also adapted an innovative method of taking decision by conducting market survey with the help of bins (Decision strategy of Innocent Drinks, 2023). This is the creative decision making procedure which helps organization in identifying the customer’s needs. This decision making strategy also denotes the firm’s concern over fulfilling the customer’s needs and adapting to latest changes prevailing in the industry (Mansoori and Lackéus, 2020). This decision making also denotes firm’s emphasis over cultivating an atmosphere which promotes out of box thinking and aids in resolving problems. Further, firm has also introduced an innovative marketing strategy which includes sharing brand experience and stories with customer which assists in creating the long lasting impact on the customer’s perception. Following are the various advantages and disadvantages of Innovative decision making strategy of Innocent Drinks:
Advantages:
Disadvantages:
In the year of 2006, founder of Innocent Drinks has decided to maintain control in decision making due to which company have decided to sell out only 10 to 20% of their stake. Eventually, they have sold out 58% of shares for the sum of 65 pound million which was further increased to 90% at the end of 2013 (Innocent Drinks deal with Coca-Cola, 2024). Many studies suggest that this decision of Innocent Drinks was effective from the economic perspective. “Nudge theory” is the type of behavioural science concept which depicts that individual’s behaviour and decision is influenced in a predictable manner (Nudge theory of economics, 2023). This theory suggests that when two alternatives are available, individual generally opt for the option which is more convenient and easier rather than other which offers better outcome in the longer timer period (Amankwah-Amoah, Khan and Wood, 2021). On the basis of Nudge theory, it has been identified that decision of selling out 90% of stake to Coca-Cola is effective as it will help in easily reaching out the larger target market and supports in enhancing the overall profitability.
Coca-Cola is having effective reputation across the world which will help Innocent Drinks in gaining the trust of customer which leads enhancement in the firm’s overall sales. This decision also helps in gaining confidence of customers which further enhances the firm’s earning without incurring the huge cost over marketing. Additionally, Coca Cola is having effective presence across globe which helps in enhancing overall scope of Innocent Drinks. This enables organization in getting required technical and managerial support and thereby helps in effectively carrying out operation of the business entity (Malerba and McKelvey, 2020). Coca-Cola is having effective R&D department which will help Innocent Drinks in adequately introducing innovation and modification in the existing product that aids in enhancing the overall growth and development of company. On the other hand, Sludge economic theory suggest that individual should opt for option will help in gaining higher economic benefit rather than focusing on convenient and easier method.
On the basis of this theory, it has been depicted that Innocent Drinks should not opt for selling its 90% stake to Coca-Cola rather than working hard to build value and goodwill of their own brand which helps in earning the higher amount of profits in the upcoming time. The entire founder has lost their control and ownerships over brand which will create issue in prevailing adequate benefit in the future (Giudici, Milne and Vinogradov, 2020). Moreover, Coca- Cola has undertaken deal with the view of expanding its product line and entering into new market of health conscious people which boosts their overall profits. The strategy of Innocent drinks was not accurate as the firm could introduce new product line in the existing business which would help them in gaining the higher return and sustaining differential identity in the market.
Conclusively, after critically evaluating Innocent Drinks decision on the basis of both theories, it can be stated that company’s decisions was optimum. Innocent Drinks was facing high criticism due to its incapability in managing cost and sticking to its promise of offering the healthy product (Porfírio, Felício and Carrilho, 2020). This would create issue in managing customer loyalty for the longer time frame which could result into dissolution of firm. From the economic point of view, Founder have made an optimum decision which helps in changing behaviour and perception of people regarding the firm and aids in higher growth in the upcoming time. However, founder have 10% of shares in it company which help in gaining adequate monetary benefits with the growth of Innocent Drinks.
Pestle analysis
Below is the in-depth pestle analysis of Innocent drinks which aids in determining all the macro factors that are impacting the working of business entity
Political:
There are large number of government regulatory related to labelling, food and beverage safety and advertisement standards which innocent drinks needs to follow. Introduction of Brexit has put restriction on firm to expand its operation in other countries which negatively impact on overall profitability. Further, due to Brexit firm is unable to sources raw material from other places which increase overall cost.
Economical:
There is a constant increase in the inflation and interest rate within UK which creates issue in managing the overall profitability of business entity. High inflation leads to making raw material expensive for company and also leads to decreasing purchasing power of customer leading to deducting profitability (Cai, 2020). High interest rate results in creating issue in sourcing loan at cost effective prices which increases firm’s overall interest obligation.
Social
There is positive shift towards maintaining overall health and wellness of individual and increasing demand for low sugar and healthy drinks which increase the firm’s overall sales (Pestle analysis of Innocent Drinks, 2024). Moreover, consumers have focused on sustainable and ethical consumption which leads to increase firm’s overall sales and profitability.
Technological:
There is an introduction of new technology within the country which leads to rising cost of the business entity. Further, it is cost consuming for the company to introduce the new techniques on regular basis which create issue in managing the competitive edge.
Legal:
Innocent Drinks needs to comply with various regulations which are provided by Food Standard Agency and Food and Drug Administration (FDA). This facilitates offering or delivery of high quality goods to the customer (Espinosa, Wang and Huerta de Soto, 2022). Moreover, Innocent Drink should align with the employment law such as safety and legal standard which aids in avoiding the legal penalties.
Environmental:
Firm should also focus on initiating activities for protecting the overall natural resources and environment of the country which aids in creating positive image within the industry. Moreover, firm should manage waste and use effective material for packaging which help in overcoming legal obligations.
SWOT analysis
Below is the in-depth SWOT analysis of FreshGo:
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Strengths
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Weaknesses
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Opportunities
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Threats
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Strengths:
4 Years | MBA
Innocent drinks have established effective market identify by offering sustainable and health product which helps in creating strong brand identity. Further, firm is fulfilling customer’s preferences and deity requirement by providing effective product leading to managing long term stability in industry (Gane, 2021). Moreover, firm is involved in regularly communicating with its customers which aids in developing customer loyalty.
Weaknesses:
It has been found that Innocent Drink does not provide diversifying product option to customer that creates issues in fulfilling needs of numerous customer. Further, firm is involved towards offering organic and fresh product which leads to increasing overall cost of product (SWOT analysis of Innocent Drinks, 2023). Due to premium price firm is unable to attract lower and medium income class people resulting in reducing profitability. Further, Innocent Drinks is having over reliance over UK market which creates issue in attracting customer all across the globe.
Opportunities:
Innocent Drinks should expand its operation in new country which will help in attracting new customer base and enhancing overall profitability position. Further, firm is not having an effective online presence which limits overall market research of the business entity. In this regard, innocent drinks should concentres offering good through online mode which help in increasing sales (Hortal, 2023). Moreover, company should emphasis over introducing new product range which will help in expanding customer base and support in enhancing overall sales and profitability of Innocent Drinks.
Threats:
Research reveals that there is an increase in the number of competitors which create issue in managing the long-term customer loyalty. Further, due to premium price Innocent drinks faces issue in attracting cost conscious customer which limits overall sales and market research.
Feasible strategies for innocent drinks
Following are the various strategies and measures which should be initiated with the propose overcoming all the weaknesses and threats:
Diversify product line: Innocent Drinks should focus on introducing new product in their organization which helps in attracting new customers (Congiu and Moscati, 2022). It will result in boosting overall sales and profitability of the business entity.
Align with regulation: For overcoming legal obligation, Innocent Drinks should focus on critically evaluating changes in regulation so that effective decision could be taken on timely basis. Firm company should focus on introducing sustainable practices which help in protecting environment and effective compliances with regulation
Invest in Research and development: Innocent Drinks should focus on investing towards R&D session which helps in identifying innovative ideas which assist in creating competitive edge in the industry (Petel, 2020). Moreover, this strategy support in fulfilling customer’s needs and preferences which result in boosting overall profitability.
Conclusion
By summing up the report, it has been identified that Innocent Drink adopted premium pricing strategy which help in attracting quality conscious customers. This strategy supports in increasing overall profits and financial position of the company leading to creating competitive edge. It has also identified that Innovative decision making strategy have been adopted by company which aids in determining market trends based on which adequate decision could be taken. Innocent Drinks is concentrating over implementing each decision after identifying customer needs which help in sustaining competitive edge in industry. Further, from the economic view point, firm’s decision of selling out 90% of its stake to Coca- Cola is optimum as it helps in providing higher growth potential in upcoming time. Moreover, trade restriction, high inflation and interest rate, change in customer preference, continuous change in legal and environment policies are major factors impacting on firm’s operation. Further, constant increase in competitors and limited amount of products are major issue in overall growth of Innocent Drinks.
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