Context

Our client is SuperSoda. SuperSoda is a top-three beverage producer in the United States and
has approached McKinsey for help in designing a product-launch strategy.
As an integrated beverage company, SuperSoda leads its own brand design, marketing, and
sales efforts. In addition, the company owns the entire beverage supply chain, including
production of concentrates, bottling and packaging, and distribution to retail
outlets. SuperSoda has a considerable number of brands across carbonated and noncarbonated drinks, five large bottling plants throughout the country, and distribution agreements
with most major retailers.
SuperSoda is evaluating the launch of a new product, a flavored sports drink calledElectroLight. Sports drinks are usually designed to replenish both energy (sugars) and electrolytes
(salts) in the body. However, Electro-Light has been formulated to focus more on the
replenishment of electrolytes, and has a reduced sugar content compared to most other sports
drinks. The company expects this new beverage to capitalize on the recent trend away from
sugar-rich products.
SuperSodas vice president of marketing has asked McKinsey to help analyze the major factors
surrounding the launch of Electro-Light and its own internal capabilities to support the effort.
Which factors should SuperSoda consider and act on before launching Electro-Light into the US
beverage market?
Answer:
A good answer would include the following:
Consumers. Who drinks sports drinks? Are there specific market segments to address?
Cost/price. Is the sports drinks market more profitable than those markets
for SuperSodas current products? Is it possible to profitably sell (price set by the market,
internal production costs) Electro-Light? Given the fixed costs involved, what would be the
break-even point for Electro-Light?
Competitors. Which products will Electro-Light compete with? Which companies are key players
and how will they react?
A very good answer might also include multiple additional key factorsSuperSoda should
consider. For example:
Capabilities and capacity. Are the required marketing and sales capabilities available
within SuperSoda? Does the product require specialized production, packaging, or distribution?
Is it possible to accommodateElectro-Light in the current production and distribution facilities?
What impact does geography have on the plant selection?

Channels. What is the ideal distribution channel for this product? Are current retail outlets willing
to add Electro-Light to their product catalogue?
After reviewing the key factors SuperSoda should consider in deciding whether to
launch Electro-Light, your team wants to understand the beverage market and consumer
preferences to gauge potential success of Electro-Light.
Your team has gathered the following information on the US sports-drink market. The
information shows an estimate for the share of electrolyte drinks, as well as the current share for
the two main electrolyte products:CoolSweat and RecoverPlus.

Based on the target price and up-front fixed costs, what share of the electrolyte drink market
would Electro-Light need to capture in order to break even? Here is some additional information
for you to consider as you form your response:
Electro-Light would launch in a 16-ounce presentation (one-eighth of a gallon) with a price of
$2.00 to retailers.
Electro-Light, SuperSoda would need to incur $40 million as total fixed
costs, including marketing expenses as well as increased costs across the production and
distribution network.

deliver in the newly established process.

A very good answer would include the following:

Electro-Light would need to capture a 12.5 percent market share of electrolyte drinks in order to
break even. Therefore, Electro-Light would need to be the number-two product in the market:
Electro-Light would need to sell 400 million units in order to break even:
Variable profit per unit = $2.00 $1.90 = $0.10
Break even units = Total fixed costs/Variable profit per unit = $40 million/$0.10 per unit = 400
million units

Electro-Light would need to capture a 12.5 percent market share:

Electrolyte drinks market = 5% x 8,000 million gallons = 400 million gallons
Electro-Light sales in millions of gallons = 400 million units/8 units per gallon = 50 million gallons
Market share = 50 million gallons/400 million gallons = 12.5%
SuperSoda executives believe that the company's position as a top 3 beverage company gives
them strategic strengths toward achieving the desired market share. However, they ask the
team to outline what would be needed to achieve the target of 12.5% share of the electrolytedrinks market. What would SuperSoda need to do to gain the required market share for ElectroLight following its launch?
A very good answer would include the following.
Match with consumer preferences. Ensure product image, attributes, and quality fulfill the needs
of all consumers or niche segment, reaching desired market share. Ensure target price is
consistent with other products in the market and the consumers expectations
Strong branding/marketing. Create a successful introductory marketing campaign, including
advertising, pricing, and bundling promotions. Leverage top-three producer status and limited
market fragmentation in order to position Electro-Light brand within top three in the market
segment. Anticipate response from competitors (for example, advertising, pricing, distribution
agreements). Ensure product positioning does not cannibalize on other, more
profitable SuperSoda products. (Note: In marketing, the decreased demand for an existing
product that occurs when its vendor releases a new or similar product is called cannibalization.
It is not important for you to use this business terminology.)
Operational capabilities. Ensure access to preferred distribution channels. Ensure sales force
capabilities to sell the new product. Ensure production ramp-up that allows response to
increased demand.
SuperSoda executives believe that the company's position as a top 3 beverage company gives
them strategic strengths toward achieving the desired market share. However, they ask the
team to outline what would be needed to achieve the target of 12.5% share of the electrolytedrinks market. What would SuperSoda need to do to gain the required market share for ElectroLight following its launch

A very good answer would include the following.

Match with consumer preferences. Ensure product image, attributes, and quality fulfill the needs
of all consumers or niche segment, reaching desired market share. Ensure target price is
consistent with other products in the market and the consumers expectations
Strong branding/marketing. Create a successful introductory marketing campaign, including
advertising, pricing, and bundling promotions. Leverage top-three producer status and limited
market fragmentation in order to position Electro-Light brand within top three in the market
segment. Anticipate response from competitors (for example, advertising, pricing, distribution
agreements). Ensure product positioning does not cannibalize on other, more
profitable SuperSoda products. (Note: In marketing, the decreased demand for an existing
product that occurs when its vendor releases a new or similar product is called cannibalization.
It is not important for you to use this business terminology.)
Operational capabilities. Ensure access to preferred distribution channels. Ensure sales force
capabilities to sell the new product. Ensure production ramp-up that allows response to
increased demand.