Nancy Reid is the marketing and new product director at Katona Beverages, a small niche player in the beverage industry. Among Katona's products are iced tea in a can, vitamin water, fruit drinks made from natural ingredients, and bottled water pumped from underground springs. Despite some success, sales and profits at Katona are barely enough for the 65-employee company to survive. Today Reid is meeting with the owner, Al Trout, and the sales director, Louise Garcia. "The bad news," said Nancy, "is that we are barely surviving. Even big players like Coca Cola, Pepsi, and Cadbury are invading our niches. But the good news is that I have a product in mind that should vastly improve our business outlook. "My new product idea will be called Lightening Bolt. It's a caffeinated alcoholic drink. As you know, this category is a small but fastgrowing beverage popular among people under age 30. Because of the caffeine, and a high dose of sugar, we can call it an energy drink. The alcohol will give the consumer the same good feeling as beer or wine, and we will capture a little of their spending on beer, wine, and liquor. "My tentative design for the can will pull no punches. We'll have a drawing of yellow lightening bolt and show young people having a great celebration." Scratching his head, Al commented, "I recently read scientific research reported in a trade journal that people who consume caffeine and alcohol at the same time increase their risk of alcohol-related injuries or other problems. Suppose a few of our customers downed a six pack of Lightening Bolt and then had a multiple-vehicular accident? Would we be liable? "I have also read that the Food and Drug Administration and the Federal Trade Commission might be cracking down on beverages that combine alcohol and caffeine." Louise said, "I kind of like the idea of Lightening Bolt. It will be years before the government agencies get around to placing any real restrictions on this product. We can post a warning on the label about the potential dangers, like they do with medicine. Consumers have to act responsibly with whatever product they use. Look, peanut butter is about 50% fat; that can do more harm to the body than an occasional drink of caffeine and alcohol." Nancy said, "I'm glad you two are at least listening." Al said, "Before we move forward, we should study the pros and cons more carefully. But by the way, Nancy, how long do you think it would take to launch Lightening Bolt?"
Discussion Questions
1. What is your evaluation of the ethics of introducing Lightening Bolt to the market?
2. How socially responsible would it be of Katona Beverages to launch Lightening Bolt?
3. From a management perspective, what do you see as the pros and cons of launching Lightening Bolt?