Reference no: EM132179206

THE ENERGY BAR INDUSTRY

In 1986, PowerBar, a firm in Berkeley, California, single-handedly created the energy-bar category. Positioned as an athletic energy food, it was distributed at bike shops and events that usually involved running or biking. The target segment was the athlete who needed an efficient, effective energy source. Six years later, seeking to provide an alternative to the sticky, dry nature of the PowerBar, a competitor, also located in Berkeley, developed an energy bar with superior taste and texture and branded it the Clif bar. About the same time, another competitor introduced the Balance bar, which offered a blend of protein, fat, and carbohydrates based on the nutrition formula associated with the "Zone diet." Faced with these challengers, PowerBar responded with Harvest (a bar with a much more accessible taste and texture) and ProteinPlus (an entry into the high-protein subcategory closely related to that defined by Balance).

The makers of the Clif bar observed that many women were athletes and many more were involved in fitness. They further observed that this half of the population had unique needs in terms of vitamins and supplements, and that the energy bar industry had yet to recognize or fill them-a classic case of unmet needs. As a result, they introduced Luna as the first nutritional (not energy) bar for women, using media and promotions targeting active females. The bar had a light crunchy texture, came in flavors like "lemon zest" and chai tea, and contained nearly two dozen vitamins, minerals, and nutrients. The target market consisted of time-strapped women who wanted both taste and nutrition and would appreciate a bar tailored to their needs.

Both in reaction to Luna's success and to expand the segments for which the category was relevant, PowerBar studied why women did not buy its products. One answer was that the calorie hit from any member of the PowerBar family was simply too great. In response, the firm created the almost-indulgent, Pria. With only 110 calories, Pria was designed to respond to Luna while attracting new users into the category.

In addition to the major brands, challengers from a variety of small and large firms advanced subcategories by positioning themselves around such factors as age (bars for seniors and kids) and health (products to fit dairy-free, diabetic, and heart-conscious diets). Over a ten-year period, some 450 products were introduced. New products in the category are going in several directions. The popularity of low-carbohydrate diets has prompted a host of food bar entries, including Atkins Advantage, which gained a substantial market share that peaked in 2003 and fell off sharply thereafter. A trend toward indulgent icings, coatings, and coverings has led some to morph toward candy bars. Others went the opposite way: The makers of the Clif bar also have introduced a Mojo line of salty snack bars to provide alternatives to sweet-tasting bars and the Clif Nectar bar, an entirely organic nut and fruit bar. Power Bar introduced Nut Naturals, a low glycemic index bar. Currently, there are market positioning opportunities involving natural, sugar-free, and organic bars, those containing no preservatives and no genetically altered ingredients.

The energy bar category has gone mainstream, moving from the bike shops to the grocery stores and exploding from just over $100 million revenue in 1996 to an estimated $2 billion or more a decade later. Along the way, the market became large enough to attract the attention of major packaged goods firms. In 2000, Nestle purchased PowerBar, which has remained the leading player.

1. Conduct an analysis of this category's customers, competitors, and market from the perspective of PowerBar through addressing the following questions:

Identify PowerBar’s competitors. Who are the direct and indirect competitors ?

Write a value proposition for one of the PowerBar products linking it to customer motivations. Pick any brand the company has introduced .

2. At what stage is the energy bar market relative to the product-life cycle? Identify the market objectives and explain the strategies should be used by PowerBar given the life cycle stage and PowerBar’s position in the market