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Functional Beverage Drinks and Blue Ocean Strategy....A Case study of France and UK manufacturers.

The concept of functional beverages was first suggested by the Japanese Ministry of Education, Science and Culture in the 1980’s. In 1991, the Ministry introduced regulations on Foods For Specific Health Use (FOSHU), which gave a start to the functional food and beverages industry. Since the inception, the demand for functional beverage drinks with health benefits has continued to grow, this has forced some manufacturers to carry out extensive research in other to become more creative.

The functional beverages market comprises of several sub-markets including energy drinks, sports drinks, enhanced water, functional dairy beverages, functional juices and specialty beverages. Consumers all over the world are

seeking healthier option to carbonated beverages or sugar and preservative filled juices. These drinks come with added ingredients such as herbs, minerals, vitamins, or amino acids, to boost nutritional value.

For my doctoral thesis, I have chosen to carry out a research, to enable me understand the industry and gain more insight, so far, it has been extremely difficult finding scientific articles related to my research, so the strategy of my research would be to make good use of the book “Blue Ocean Strategy” published by Kim and Mauborgne (2005) and market reports on functional beverage as well as articles covering blue strategy.

As suggested by Kim and Mauborgne (2005) industries and companies pursuing blue ocean strategy must consider innovation that holds value for their target market. As defined by Kim and Mauborgne (2005) “Blue Ocean strategy, is described as untapped market space, demand creation, and the opportunity for highly profitable growth and making competition irrelevant”.

The main significance of blue ocean strategy is that, in other to succeed in this market, one does not need to battle with competitors, but instead focus on making the competition irrelevant by creating new demand and exploiting new market space. The blue ocean strategy focuses on a different level of strategic concept that is known as “Value Innovation” and be able to maintain leadership.

Value innovation greatly contributes to a company’s growth, and only few are able to take that leap, due to the fact that its high risk. But the question which lies in the mindset of a strategist is: how do I break barriers and change the rules of the game? And people wonder how do they do it? How do these companies come up with bright ideas and hit the mark that others have clearly missed? Well this doesn’t happen overnight it takes proper understanding of the market, looking at trends and respond proactively.
In other to bring new ideas to life, strategists have to deeply understand three main things:
1. Who are our customers?
2. What are we going to offer that is currently being missed by the big players?
3. How are we going to offer these products?

The “Who, What and How” becomes the paramount focus which he studies and tries to identify gaps in the existing market before everyone else does. Many companies fail to study customer needs and emerging trends, but focus on grabbing market share and ignore areas where they can make good profits. This is where the Blue Ocean Strategy can be applied, because the benefit that comes from using the blue ocean strategy are enormous, for a start, it opens the doors to becoming a strategic low cost leader and product differentiation, ultimately, the aim is to improve product offering which no one expects. So in the end by successfully offering consumers quality functional beverage with health benefits, manufactures can fully see the market potential and then encourage demand.

I will be studying this Blue Ocean Strategy and the Functional Beverage industry with focus on two countries, France and United Kingdom. I would like to gain more insight and understand the factors influencing Blue Ocean Strategy of Functional Beverage Drinks for my Doctoral Research. I look forward to the exciting journey!