CHAPTER 1 INTRODUCTION

Transcription

1 1 CHAPTER 1 INTRODUCTION 1.1 Background Health is the main capital for life. Society lifestyle that now tends to 'modern' human that demands must always be fit all the time. In some communities, energy drink has become an absolute necessity, particularly to restore stamina after doing heavy work or increase the power. Therefore, energy drinks (sports drinks) can be a complementary one of many efforts to maintain health and stamina of the human body. Over time, the health beverage industry showed a fairly rapid growth along with the rising levels of prosperity and the level of public awareness of health for the body. Demand for beverage products that supplements continue to rise. Extra Joss, Red Bull, Lipovitan are among the famous brands in the industry drink especially energy and stamina drinks. Business opportunities in the energy drinks sector remains lucrative. Competition in this business is also quite frequent. Almost all energy drinks producers make a major campaign such as through television, billboards or just small ads in the form of posters. Energy beverage products are quite aggressive in these promotional activities. This is the strength of this product in capturing consumers. Every day these brands are always competing to be promoted on television, either in

2 2 the form of advertising, including talk shows and handing out gifts, especially for sports programs. The ultimate goal, of course is to boost the sales. Today's dynamic markets and technologies have called into question the sustainability of competitive advantage. Under pressure to improve productivity, quality, and speed, managers have embraced tools such as TQM, benchmarking, and reengineering. Dramatic operational improvements have resulted, but rarely have these gains translated into sustainable profitability. Operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. In contrast, the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match. Extra Joss the market leader of energy drink in Indonesia was launched into the market since late However, this success would not be achieved so easily. One advantage - is the price that is relatively cheaper than other similar drinks. No wonder if the product is still able to maintain its market share in the middle of the emergence of new products alike. But now, Extra Joss realized that competition in energy drinks is not easy. In the past when the competitors had not yet existed, many people have used Extra Joss. Now the competitors come with quality products and more innovative strategies. It makes the energy drinks competition become stronger. It s interesting to learn how Extra Joss generates strategies to maintain its performance as energy drink market leader in the dynamic market of Philippines.

3 3 1.2 Problem Statement Extra Joss is a pioneer of the first energy drink manufactured by PT Bintang Toedjoe - one of the most reputable pharmaceutical and consumer goods companies in Indonesia. The emergence of awareness of the need for supplemental energy drinks for the community encourage PT Bintang Toedjoe to produce sports drinks that are healthy and affordable for those who have to work extra hard. Currently, Extra Joss has been exported to the Philippines, Malaysia and Vietnam. After Extra Joss expansion to the Philippines, it led the energy drink market there by creating an Energy Drink consumption trends in the form of sachets and dominate the market in sachets of 96%. In 2006, Extra Joss has controlled over 80% share of energy drink market in the Philippines, while other brands like Red Bull, Lippovitan, Revicon Ion, Enerva, Baccus, and other brands just under 10%. 1 This case describes the story of Extra Joss Philippines from the beginning 2008 until the mid-2009, during this time line, Extra Joss experienced indirect competition. Consumer preferences of Energy Drinks have changed. Few years ago they liked powder format because it was affordable, now they liked glass bottles that cost "only" twice as sachets, a trend to 'ready to drink'. The market changed in line with changing consumer preferences. This hampered Extra Joss growth. Since Extra Joss had very strong growth in sachets, now the consumer liked the form of 1 Joss calls creative review in Indonesia/34102

4 4 energy drink in Returnable Glass Bottle (RGB), so that the growth shifted to the RGB now. Indirectly, RGB eventually became competitors of sachets. First thought that the phenomenon of market changes because of changes in consumer preferences, but ended up towards directed to "different" market categories. Here are some key issues faced by Extra Joss Philippines: Why do consumers change their behavior in consuming energy drinks? Why the form of ready to drink can so quickly become a trend? How does Extra Joss deal with this? By following the trend? What can Extra Joss do to avoid its sachets die? 1.3 Learning Objectives The learning objectives of this case are: Analyze the Philippines energy drinks industry. Analyze the strategies Extra Joss used to penetrate Philippines market successfully. Analyze the trend of energy drinks industry in Philippines. Analyze how competitor s move affected Extra Joss sales volume. Analyze what strategies Extra Joss developed as its responses to its competitors move.

5 5 1.4 Scope and Limitation This case limits its discussion to valuation topics on Strategic Management focused on Competitive Strategy, evaluating how Extra Joss Philippines generated business level strategies in the Philippines dynamic markets that intensify in The source of the quantitative data used on this case is restricted from internal company, Beverage Marketing Corporation and AC Nielsen report. The writer also limits the timeline of the case from the beginning 2008 until the mid Written Systematic This case consists on five chapters where each chapter has sub chapters that relate on each other. The written systematic will be explained below: Chapter 1 : Introduction Chapter 1 consists of the background, statement of the problem, learning objectives, scope and limitation, written systematic of the case. Chapter 2 : Literature Review Chapter 2 consists of the literature and theories used in the case analysis, which are connected in the case study. Chapter 3 : Methodology Chapter 3 contains the case method that is used on this case, research methods, analysis methods, until the source of data used on this case. This chapter also en lights the framework

6 6 for writing a case study in order to maximize the learning process. Chapter 4 : Case Description and Analysis Chapter 4 gives details about the case description and its problem statements as well as the case analysis itself. The part starts with analysis of the energy drinks industry, until how company generated strategies to maintain its position as market leader in the dynamic markets competition. Chapter 5 : Conclusion Chapter 5 consists of the summary of the case, with the list of lessons learned and recommendations.