The Growing Health Consciousness Commerce Essay

It is credible because it is an in-house magazine published by a major player in the industry; the manufacturers and marketers of pepsi and 7up brands. It is given to employees to update them on current issues relevant to the industry.

It is reliable, because it deals with and provides accurate information about the products in question. It is published bi-monthly hence it is always up to date on industry issues.

The magazine focuses on quality, leadership and provides a long term perspective on business strategy in carbonated beverages manufacturing and marketing.

Nigerian Journal of Medicine

Highly credible, because it is the official magazine of the Nigerian Medical Association. The Nigerian Medical Association is the sole registered body for physicians.

It is reliable because the journal is published regularly and the information provided is up to date and relevant.

The information and data published in it is verifiable and peer-reviewed. They state and publish empirical fact that is based on irrefutable evidence.

They carry out pragmatic research and are an excellent source of secondary data.

Summary of sources (Continued.)

Nigerian Health Journal

It is credible because it is an online magazine published by a team of medical professionals. They are recognised and the website is registered with the Nigerian health ministry as a credible medical publication.

It is reliable because the website is regularly updated with relevant content.

The website offers a wide readership to more people, especially young adults who seek information over the web with computers and handheld devices, rather than traditional print magazines. It reaches its target audience effectively.

Soft Drinks International

This source is highly credible because it is a 139 year old magazine first published in 1873 as the “Mineral Water & Allied Trade Review”. The magazine is as old as carbonated soft drinks itself and has followed the product through history.

It is a magazine that is published and sold all around the world, it is also available online. It is reliable because it is a platform where industry insiders and experts write articles and provide valuable information about products.

It is available and circulated to players within the industry. The magazine itself is a major player and stakeholder in the industry and is highly respected.

Mintel Beverage Industry Report

It is credible, because The Mintel Company is a 40 year old company that is in the business of providing food and drink research and business intelligence globally.

It is reliable, because the information and data contained is used by global businesses and players in the industry. They are clients to Mintel.

Mintel’s reports are available to purchase. Their reports are concise and easy to understand. It provides a professional, unbiased outsider outlook of the industry.

Agusto & Co. Research

It is highly credible because it is Nigeria’s foremost crediting rating agency. They also carry out research on industries and sectors in Nigeria.

The information from their research is reliable, as it is an indigenous company that constantly captures situations as they are domestically.

The benefit of using this report is that it is a monthly report; it gives an update on food and beverage sectors in Nigeria.

(Task one word count: 548 words)

TASK TWO

DISCUSSION PAPER: THE GROWING HEALTH CONSCIOUSNESS AMONGST CONSUMERS TOWARDS CARBONATED SOFT DRINKS & ITS IMPLICATIONS ON THE CARBONATED BEVERAGE INDUSTRY IN NIGERIA

2.1 Background: General Overview of this Emerging Theme

Identification and critical assessment of how the growing health consciousness among consumers towards carbonated soft drinks will fundamentally change the carbonated beverage industry:

Consumption of carbonated soft drinks has substantially increased over the decades in Nigeria; for the most part this has been driven by growing household incomes and the emergence of a vibrant middle class in Nigeria, an embracement of western lifestyles and culture by Nigerians, improved production and efficient distribution networks of carbonated beverage companies and the “sweet tooth” of Nigerians (Nigerian Health Journal 2011).

According to research carried out by Mintel a can of Pepsi in Nigeria is sweeter than a can of Pepsi produced in Europe or China (Mintel 2012). Nigerians like sweet things and beverage companies feed this indulgence by increasing the amount of sugar in their products.

A recent report by the Nigerian Health Journal suggests health awareness is rising among Nigerian consumers and this concern is not unconnected with an increase in diabetes and obesity among young adults and in a few cases children. The consumption of sugar-sweetened soft drinks is associated with obesity, type 2 diabetes, dental cavities, and low nutrient levels. Experimental studies tend to support a causal role for sugar-sweetened soft drinks in these ailments, though this is challenged by other researchers. Obgera (2010) asserts that “Diabetes is both a disease of poverty and affluence especially in Africa and I can say without any fear of contradiction that some people wouldn’t have had diabetes if not for the fact that the food they eat and how they live changed with an increase in their income”.

Many soft drinks, notably colas like Coke contain ingredients that are themselves sources of concern: caffeine is linked to anxiety and sleep disruption when consumed in excess, and some critics question the health effects of added sugars and artificial sweeteners. Sodium benzoate has been investigated by researchers at the University of Sheffield as a possible cause of DNA damage and hyperactivity. Other substances have negative health effects, but are present in such small quantities that they are unlikely to pose any substantial health risk.

Nigerian consumers are now more interested in product information and are more likely to be conscious of the contents of what they consume and its effect on their health and well-being.

This growing awareness and health concern of consumers and their perception of risks associated with consuming carbonated soft drinks is an emerging theme that will definitely redefine the beverage industry on a macro scale. This has implications for sales, products; their ingredients and composition, raw material selection and sourcing/procurement, increased regulatory scrutiny and reduced consumer confidence amongst many others.

To buttress this fact, you take a can of Pepsi for instance; a 33cl can of Pepsi is made up of carbonated water, high fructose corn syrup, caramel colouring, sugar, phosphoric acid, caffeine, citric acid and natural flavours. In nutritional content, this can of Pepsi has 41 grams of carbohydrates (all from sugar), 30 milligrams of sodium, 38 milligrams of caffeine and 150 calories (Soft Drinks International 2011). This formulation is high in both sugar and calories.

Increasingly, more Nigerian consumers can now decipher and interprete such information and make judgements on them, most people are now aware that a 33cl/35cl bottle or can of Coke contains the equivalent of seven cubes of table sugar. They compare this quantity of sugar with what they typically consume when they are making a cup of tea, coffee or hot chocolate; very few people would consume seven cubes of table sugar in their beverage at the breakfast table.

This thinking and rising awareness will fundamentally change the industry because consumers will respond and take action about their consumption of carbonated soft drinks. They will be more conscious of the quantities they consume; this will have a negative impact on sales and consequently industry output. There are also serious implications for the corporate reputation of players in the industry; consumer perception towards the industry would change unfavourably.

2.1.0 Activities and Efforts of Advocacy Health Groups towards Changing the Attitudes and Perceptions of Consumers

There are more governmental organizations, health organizations and groups involved in public enlightenment on the new trend of diabetes and obesity. Some of these groups have robust platforms for public debate across different media, including social media and their key objectives are to tackle the issue through public enlightenment and advocacy against scientifically proven and perceived causes of these conditions.

Another likely impact of this emerging theme is that advocacy groups could lobby lawmakers to introduce taxes on carbonated soft drinks and other beverages. This will have a ripple effect on the industry, increasing the prices of CSDs to consumers who are already contemplating switching to healthier alternatives. Some of them are already getting signed petitions online to gather the needed momentum for their bill to sponsored and passed to lawmakers (Nigerian Medical Association, 2012). The activities of these groups are no doubt increasing the consciousness of consumers towards their health and causing them a lot of concern because they are aware of the amount of calories and sugar contained in carbonated soft drinks.

2.2 CRITICAL EVALUATION OF HOW RISING HEALTH CONCERNS AMONGST CONSUMERS TOWARDS CARBONATED SOFT DRINKS WILL BRING ABOUT CHANGE TO CONSUMER BEHAVIOUR.

This emerging theme will bring about change in consumer behaviour in the Nigerian CSD (carbonated soft drink) market. According to Kuester & Sabine (2012), consumer behaviour is the study of individuals, groups, or organizations and the processes they use in selecting, securing, and disposing of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Kotler (1997) put forward 5 stages of a consumer buying process they are:

The problem recognition stage.

The search for information about CSDs.

Consideration of alternative CSDs.

The choice to purchase a particular CSD.

Post-purchase evaluation.

This shows the complete process that a consumer will most likely go through when buying a product.

Post-purchase Evaluation

Post-purchase evaluation processes are influenced by the preceding decision-making process. Relevant here is the level of purchase involvement of the consumer. According to Hawkins et al (1983), purchase involvement is “the level of concern for or interest in the purchase” situation, and it determines how extensively the consumer searches information in making a purchase decision. Suppose one buys a certain brand of soft drink like Pepsi habitually; for him/her, buying a cola drink is a very low purchase involvement situation, and he/she will unlikely search and evaluate product information extensively. In such a case, the consumer would simply purchase and consume the product with very limited post-purchase evaluation, and generally maintain a high level of repeat purchase motivation (Figure 1).

Figure 1: Low Involvement Purchase

Source: Hawkins, Best, and Coney (1983)

However, if the purchase involvement is high and the consumer is involved in extensive purchase decision making, he/she is more likely to be involved in a more elaborate post-purchase evaluation. This often takes the form of questioning the rightness of the decision: “Did I make the right choice? Should I have gone with another kind of beverage like juice or tea?” This is a common reaction after making a difficult, complex, relatively permanent decision.

This emerging theme will alter the consumer buying behaviour because it will now require rigorous post-purchase evaluation for a product that erstwhile required limited post-purchase evaluation.

Consequently the fundamental changes to the industry as a result of changes in consumer behaviour will manifest itself in the following ways:

2.2.1 Lifestyle Changes

As people become aware of diabetes and obesity, their first response will be to see how they can change their life styles and reduce their exposure to risks associated with these conditions.

These consumers will seek out product information and base their judgements and consequent purchase decisions on the prevailing popular opinion. Mintel’s research has shown Nigerian consumers are trying to adopt a healthier lifestyle – in its survey two thirds of consumers said they were likely to purchase lower-calorie drinks. (Mintel, 2012)

2.2.2 Changes in Consumer Perception

Consumer behaviour is changing with the perceptions of consumers. Over time, and with continuous exposure to so much negativity towards CSDs in the media and in public discourse (as seen in section 2.1.0 of this paper), consumers will change their perceptions towards CSDs and this will lead to changes in purchasing decisions.

2.2.3 Controlled Consumption

Some consumers have a sense of guilt when they purchase and consume alcohol or tobacco products, that feeling of “I know it’s not good or healthy for me but I just cannot help it”. Such feelings trigger a sense of moderation and controlled consumption and even non-consumption all together. Consumers could develop such attitudes towards CSDs.

2.2.4 Financial, Psychological & Health Implications

In making purchasing decisions, consumers will begin to consider the implicit and explicit costs of consuming carbonated soft drinks. Besides the financial cost of buying the product they will begin to consider the risks of having diabetes, dental problems or becoming obese and they will weigh the financial, psychological and physiological costs of having such health problems. This will undoubtedly affect consumer behaviour in the carbonated beverage industry and bring about fundamental changes.

2.3 ONE RECOMMENDED STRATEGIC MARKETING RESPONSE BY PLAYERS WITHIN THE CARBONATED SOFT DRINK INDUSTRY IN NIGERIA.

Through analysis of secondary information and research of some of the key players including Coca cola, Pepsi, Dr Pepper and Snapple Group; the strategic Marketing response recommended is Strategic Innovation.

2.3.0.1 Strategic Innovation

Strategic Innovation is the creation of growth strategies, new product categories, service or business models that change the game and generate significant new value for consumers and corporation (Innovation Point 2007). Strategic Innovation takes the unconventional route; it challenges organizations to look beyond their established business boundaries and mental model and to participate in an open-minded, lateral, creative exploration of real of possibilities.

Palmer and Kaplan (2007) assert that strategic Innovation is an encompassing, systematic approach focused on generating beyond-incremental, breakthrough or discontinuous innovations. Innovation becomes “strategic” when it is an intentional, repeatable process that creates a significant difference in the value delivered to consumers, customers, partners and the organization. A Strategic Innovation initiative generates breakthrough business growth opportunities using a disciplined but creative process.

Organizations in the CSD sector must adapt this process to their businesses if they intend to be relevant in the long term.

2.3.0.2 Product Innovation in the Carbonated Soft Drink Industry

Industry players must invest in product innovation. This product innovation will centre on redesigning existing products and introducing new products (NPD) that are low-sugar and low-calorie in nature and contain no artificial additives or preservatives. Consumers’ health consciousness will only increase and the only option available to players is to innovate or be run out of the market over time. Consumers are increasingly opting for healthier beverages. As already mentioned, research suggests a stronger appeal of non-carbonated drinks such as juices, tea drinks and even mineral water, prompted by rising concern over obesity and the growing desire of Nigerian consumers to adopt healthier lifestyles, these factors will dampen growth in the CSD sector.

Natural sweeteners like Stevia could be used in the place of sugar or artificial sweeteners like aspartame. As a sweetener and sugar substitute, stevia’s taste has a slower onset and longer duration than that of sugar (Wikipedia 2012).

Stevia is already being used in some foods in China, as well as in juices and carbonated soft drinks (Mintel 2012).

2.3.1 Why Strategic Innovation is the only Feasible Response

Health consciousness towards carbonated soft drinks may be an emerging theme for the Nigerian carbonated soft drinks industry but it is a front burner issue in developed countries. Players in developed markets have long taken steps to innovate and invest in new product development, formulating their products with ingredients that give their soft drinks a health appeal for example Coke Zero. The issue is no longer a debate in developed countries, rather the current debate lies in innovation; how can companies develop ingredients and natural additives without sacrificing the distinctive tastes of their brands that consumers are already accustomed to? Therefore Nigerian players must begin to think strategically and anticipate the impact of a market that could stop consuming carbonated soft drinks almost “over night”. The segment for health conscious consumers used to be a tiny niche segment in the Nigeria beverage industry, but the characteristics of consumers that defined them in this niche segment is gradually taking a hold across the entire market.

2.3.2 Benefits of Strategic Innovation

It will be a proactive move that ensures the industry is not caught unawares by sudden shifts in consumer preferences.

Players will be meeting the needs of consumers as they evolve.

It will pre-empt any government regulation that could be in the works, self-regulation is always best as industry players can set boundaries that are convenient without the direction of regulatory agencies that usually set rigid boundaries.

It will offer an opportunity to introduce relevant new products.

Innovation is cheaper in the long-run; although it requires a princely sum in terms of initial investment, it ultimately reduces the costs of doing business as it guarantees improved efficiency.

2.3.3 Challenges and Risks of Implementing Strategic Innovation

Innovation costs money and it would require industry players to invest in new product development and R&D. This obviously has inherent risks, as the market may not respond as expected.

Strategic innovation automatically places a demand on an organization’s knowledge base and it will definitely test the organization’s ability to learn and adapt rapidly. Industry players would have to acquire the required knowledge and expertise by bringing in knowledge workers with the required skills. Players will also have to acquire the skills, attitude and behaviour that will enable strategic innovation.

2.4 ADAPTATION OF MARKETING PROFESSIONALS IN TERMS OF SKILLS, ATTITUDES AND BEHAVIOURS

Ofek (1960) observes that firms often spend great resources developing new products only to find that consumer adoption falls shorter than expected. Sometimes the problem is that the final product fails to deliver on its promises. More often, however, the problem is marketing related- either the firm has not involved marketing effectively early on to understand evolving customer needs prior to committing R&D resources, has not properly estimated the product’s market potential or has not adequately determined the most effective marketing actions to persuade consumers to buy. Such failures should be avoided by fostering a cohesive understanding of how marketing skills, attitudes and behaviour at all phases of the innovation process can maximize ultimate commercial success.

As a consequence of the strategic response of innovation by players in the carbonated soft drink industry, professional marketers also need to develop new skills, change their attitudes and display new patterns of behaviour.

2.5 CONCLUSION

The world is constantly in a dynamic state of flux, and every aspect of life is changing. Professional marketers must think strategically and pay rapt attention to the emerging themes and trends in their industries. Only then will they be able to reap the rewards for satisfying needs flawlessly.

(Task 2 word count: 2,740 words)

TASK THREE: LETTER TO THE CONFERENCE ORGANIZER

Julien Consulting

15 Victoria Avenue

Lagos, Nigeria.

15th August, 2012

The Conference Organiser,

Nigerian Carbonated Beverage Industry Summit

Lagos, Nigeria.

Dear Sir/Madam,

REQUEST FOR MY DISCUSSION PAPER TO BE INCLUDED IN THE DISCUSSION AT THE UPCOMING CARBONATED BEVERAGE INDUSTRY SUMMIT IN NIGERIA.

It is with great pleasure I am writing, requesting for my discussion paper on The Growing Health concerns amongst Consumers towards carbonated soft drinks & it’s implications on the carbonated beverage industry in Nigeria, to be included and discussed at the Nigeria Carbonated Beverage Industry Summit coming up on 10th September 2012.

I have carried out thorough research on the topic above, and I am confident that it will be of immense benefit to you as organisers as well as your delegates.

This paper highlights the rising health concerns of consumers towards carbonated soft drinks and its implications on the beverage industry. This issue is an emerging macro-environmental change that has the potential of changing the fundamentals of the carbonated soft drinks industry in Nigeria. The areas covered include;

The paper gives a critical evaluation of how growing health concerns amongst consumers towards carbonated soft drinks can bring about a change in consumer behaviour

A recommendation suggesting one strategic marketing response players in the beverage industry can use to respond to the growing health concerns of the consumers of their products.

Finally this paper makes a call to action; a discussion predicting how professional marketers will need to adapt in terms of skills, attitude and behaviour, to the changes in the carbonated soft drinks industry.

This discussion paper promises to offer these benefits to all stakeholders and participants in the conference:

Benefit to Delegates

This paper will give delegates the opportunity of acquiring knowledge on an emerging macro-scale issue which will soon become a major front burner topic in the industry. The knowledge and information they will receive will empower them and prepare them for the changes that loom just nearby over this industry’s horizon. This body of work is not just another paper, rather it is material being delivered by an industry insider and professional who has analyzed the issue from all the angles. It will be presented with the proper language and context that delegates can easily understand and relate with. They will be able to anticipate and analyze what consumers’ needs are, and the probable market scenarios. It will enable marketing professionals in the industry think about the future of this industry and prepare for this future to secure their continual relevance to the market.

Benefit to the Conference

The conference will be the most ideal platform to discuss, the growing health concerns of consumers towards carbonated soft drinks. It will be to the organiser’s credit to provide the avenue for discussions and robust debate on an important emerging issue relevant to the industry, as will be featured in the proposed discussion paper. It will further strengthen the relationship between the organisers and participants. Another outcome of this discussion paper is that delegates will be looking forward to this conference, knowing very well that an industry emerging theme could be discussed at each summit, and finally helping in achieving the set goals of the summit.

I will appreciate it if my write up, could be considered worthy enough to be included and discussed in the upcoming summit.

Yours sincerely,

CIM NUMBER 14243178

(Task three word count: 540 words)

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