Industry Analysis: Soft Drinks

Industry Analysis: Soft Drinks Submitted by:- Prof. K G SahadevanRishi Singh Tuhin Kanti Mondal Sunita Seetharam Contents Disclaimer Contents Table of Figures Executive Summary Introduction Market Analysis Market characteristics and major players Market characteristics and major players Market analysis Consumer Behaviour Porter’s Five Forces Conclusion Reference Table of Figures Figure 1†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..2 Figure 2†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..2 Figure 3†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..4 Figure 4†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..4 Figure 5†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..5 Figure 6†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..5 Figure 7†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..6 Figure 8†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..6 Figure 9†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..7 Figure 10..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦Ã¢â‚¬ ¦.8 Figure 11..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦10 Figure 12..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦10 Executive Summary The soft drinks industry includes carbonated as well as the non-carbonated drinks. The industry leaders are Coca-Cola and Pepsi. This industry is unique in the sense that the product is bought primarily for the brand image of the company rather that the utility of the product. The purpose of a carbonated drink can well be served by a glass of water or lemonade. The companies strive to capture market share through extensive advertising and branding. The carbonated drinks were perceived as a health concern so the companies introduced non carbonated drinks like juices. The firms in this industry exercise tight control over the suppliers and compete on price to get customers. The industry is very competitive and makes it very difficult for a small player to exist. The bigger firms have an advantage due to economies of scale. Introduction Soft drink industry has been a successful growth for a long time. In recent years, the sales of basic soft drinks have been depreciated highly due to increment of health awareness, change in consumer behaviour towards other varieties of soft drinks etc. But all over the changes have been directed net positive increment in sales due affinity of consumers towards juice and bottled drinking and mineral water. The big players of original soft drinks like Coke, Pepsico etc. are acquiring or diversifying their products toward juice and mineral water industry. They are doing product extension as well (ex. Diet Pepsi, Coke Zero etc.) to remain competitive in the market. The definition of classic soft drink can be expressed as follows: Sometimes soft drink may contain alcohol but the within the limit of 0.5%. The carbonated water is made in two ways. It is either using soda siphon or by home carbonation system. The latter one is made by putting dry ice on water. In modern industry, carbondioxide is used instead of dry ice. The carbondioxide is pressured and mixed with water with high pressure. The type of soft drinks decide the addition of colour and customised flavours which distinggishes one from another. The soft drinks can be categories in the following way: Figure 3 Classification of Soft Drinks Market Analysis The market volume of soft drink industry in India in 2013 was 11,755 liters, showing a growth of 170% compared to 4369 liters in 2008. As far as predicted growth rate is concerned, market is showing around 19% growth annually. For product wise analysis, it shows that 20% annual growth rate for next year five in bottled water while the carbonated drink shows. The same figure for juice is 21%. Interestingly, the annual growth rate of carbonated drink is only 10%. This increment will come from mostly due to penetration in rural market while there is considerable decrement in sales in urban area. But if we put the percentage growth, then juice shows more than 100% growth. Market characteristics and major players The soft drink industry market can be analysed using three economic factors. These are market size, growth rate and overall profitability. As compared to hard drink, soft drink contains a share of around 48% in no-alcoholic industry. But the as discussed earlier, the market of carbonated soft drink is shrinking due to the awareness of people for their health. Figure 6 Change in consumer behaviour toward non-alcoholic drinks The above graph is an example that how the consumer’s mindset has been changed from taste to health. It is to observe that sport drinks and bottled water have seen around 40% of growth whereas packet juice along with carbonated soft drink have faced a sharp decline even upto 20%. For example, if the sales of the largest leader is considered then a tentative area-wise sales’ trend is as follows: Figure 7 year-wise change in sales of Coke in different areas From the chart it is evident the increment in sales in year 2010 and 2011 were a world-wide event. But in a growing world like Europe and North America, the sales of Coke is decreasing for last two years. In other side, Pacific and Latin America are showing positive % change of sales over previous year. This discrepancy between growing world and grown world is mostly due to difference in level of education, crave of foreign money by growing world, socio-political difference. Evidently, the soft drink companies are depending mostly on third world market for increment of sales of their original products. Market characteristics and major players The driver for most downstream operations in the soft drink industry is the syrup production. Thus, the CSD industry is largely dependent on the syrup producer. The product life cycle for soft drinks moves as follows: Figure 8 Soft Drinks Industry Supply Chain Market analysis The top three brands in the soft drink industry had a 35 percent share of the market in 2011, According to the latest report from IBIS World. This industry is fiercely competitive. Small companies must conduct soft drink market research competitor analysis to know their current positions in the marketplace. These types of data help small organizations know which strategies are best for their products. Soft drink producers or distributors are not just competing with other soft drink manufacturers. They also must consider competitors in the functional soft drink sector, which includes sports drinks and health-oriented drinks. Figure 9 Soft Drinks industry market share Despite being the world’s two weakest performing regions in 2008, Western Europe and North America continue to hold the maximum revenue for soft drinks industry in the world. Together, they account for over half the total sales of the industry. This shows one of the major strategic problems faced by soft drinks companies globally – while second and third tier markets are showing a steeper growth curve in terms of revenue, their total market share remains small relative to developed markets. Figure 10 Soft Drinks by region Critically, the industry needs to continue investments in high-yield regions of the developed nations and at the same time strengthen their foothold in the emerging market economies. This poses a huge challenge at the time of adverse macroeconomic conditions. Consumer Behaviour Global consumption of soft drinks is said to be rising by around 7% a year, much faster than the growth rate of many other industries. Consumer behaviour for soft drinks is largely volatile and there is very little brand loyalty to be found among consumers. But despite the choices given, a section of consumers tend to stick to one particular choice of CSD. The reason for this has less to do with taste, and more to do with subtle and careful marketing on the part of soft drink makers. The choice of a soda is as much about who you are as what you want to drink. Soda makers calibrate every aspect of their marketing- from their packaging, to their slogans, to the music that plays over their commercials- to create an identity around their products. Porter’s Five Forces Figure 11 Performance of Coke and Pepsi USD $ in millions The above chart shows the quarterly performance of the two biggest companies in this industry. It is evident from this chart that the revenue of Coca-Cola is much lesser than Pepsi, however the former has higher net income. The scale of the revenue generated by these companies gives a glimpse of the huge market. However a new entrant would find it very difficult to enter the market due to the high market share captured by these two companies. The large difference between the revenues and the net income shows the magnitude of the costs involved. Figure 12 Financial Analysis The increasing debt to equity ratio indicates that the biggest players are changing their funding profiles. This would be very difficult for a new firm to replicate. Conclusion From the above analysis, we found that the there was a huge change in the trend of sales of product in Soft Drink industry. We have seen that there were huge sales of traditional soft drinks earlier. But eventually the sales decreased due to rise in consciousness of people about health and increment in number of people suffering from different diseases and obesity which was partially caused by those drink. Big manufacturing companies are doing product extension in energy drink, juice etc or doing product diversification like Chips, snacks etc. The industry has strong entry barriers and the suppliers do not hold much control. The buyers however are very price sensitive and are brand loyal till other factors like taste, content etc. remain constant. References Seth, P. (02.10.2008.). slideshare. In Soft Drink Industry. Retrieved Feb 10, 2015, from http://www.slideshare.net/sethaphat/soft-drink-industry-presentation. Anonymous. (n.d.). sbtdc. In How to conduct an Industry Analysis. Retrieved Feb 10, 2015, from http://www.sbtdc.org/pdf/industry_analysis.pdf. Anonymous. (n.d.). changeabsolutions. In A Guide To Soft Drink Industry. Retrieved Feb 10, 2015, from http://changelabsolutions.org/sites/default/files/ChangeLab-Beverage_Industry_Report-FINAL_%28CLS-20120530%29_201109.pdf. Karimi, S. (n.d.). ehow. In How To Write An Industry Analysis. Retrieved Feb 10, 2015, from http://www.ehow.com/how_4811458_write-industry-analysis.html. Abraham, S. (n.d.). writing.uscb. In How To Do An Industry And Competitive Analysis. Retrieved Feb 10, 2015, from http://www.writing.ucsb.edu/faculty/holms/109EC__industry.pdf. 1 | Page Maximal versus Submaximal Oxygen Consumption | Results Maximal versus Submaximal Oxygen Consumption | Results Bree Dela Rosa Results       Table 1.   Estimated VO2 max versus the measured VO2 max of a 28-year-old male college student performing a YMCA Cycle Test. Watts Heart Rate (HR) Estimated VO2 Max Measured VO2 Max Stage 1 50 82 Stage 2 100 103 Stage 3 125 115 Stage 4 Stage 5 Stage 6 Stage 7 Stage8 Stage 9 150 200 250 300 350 400 131 142 156 167 173 180 35.7 ml/kg/min 52.1 ml/kg/min *HR = Heart Rate; VO2 = Oxygen Consumption Male participants predicted VO2 max is 35.7 ml/kg/min and the observed value is 52.1 ml/kg/min. The predicted value was statistically not significant from the observed value, 16 ml/kg/min. Questions   Was the estimated VO2max from the submaximal exercise significantly (more than 5 ml/kg/min) different from the measured at the end of the max test? What are some possible reasons for the difference? The estimated VO2 max from the submaximal test was 35.7 ml/kg/min, and the measured VO2 max was 52.1 ml/kg/min on the gold standard, and it is statistically not significant from the estimated VO2 value of 16.4 ml/kg/min. One possible reason can mean that the predicted heart rate during the test, 180 beats per minute, was not near the actual max heart rate of 192 beats per minute. Are there any assumptions that you are familiar of that you think that they have been or have not been met during the submaximal exercise test? One assumption that was not met during the submaximal is that the male college students steady state heart rate was not measured during the test at each exercise work rate after three-minute increments. Also, the difference between the actual heart rate of 192 beats per minute and 180 beats per minute is not minimal. Lastly, I was not aware if the participant took any medication, consumed high caffeine such as coffee or soda, was ill, and possibly stressed within the last week which may have altered his heart rate. Some assumptions that were met during the submaximal test were that there was a linear relationship between heart rate and work rate. The mechanical efficiency is the same for everyone because the participant was biking normally with his arms. What are the reasons that you might choose a submaximal exercise test over a maximal exercise test and vice versa? Provide at least three advantages and disadvantages. A submaximal and maximal test can be performed on either a treadmill or a cycle ergometer. A treadmill test is used to the exam for either running or walking, which requires no experience for participants. Be sure to consider your limitations as well. For example, if you recently suffered a heart attack and are obese, this may not be an option for you, and you must get cleared by your primary care provider. A cycle ergometer is one of the more common tests that individuals use that requires no specialized training at all, and the activity is not weight bearing. However, you need someone to administer the test for you. Submaximal tests will help indicate the level of oxygen consumption, the measure of aerobic fitness, and the record of your heart rate response during bouts of an exercise. As intensity increases, your heart rate will increase as well. According to ACE (American Council of Exercise), one single session of exercise can provide an excellent representation to indicate your current state of fitness without the use of expensive equipment or technology. Also, the submaximal test can track your progress over time through a consistent workout program. This inexpensive test is prescribed most commonly by clinicians to help diagnose cardiovascular disease (CAD). If you want to calculate, your maximal heart rate, use the formula 220 Age. Some disadvantages are that the small measurement can allow discrepancies in the results. A maximal test would be used to measure the direct oxygen consumption and maximum heart rate and the amount of carbon dioxide you expend during the test. Also, your heart rate and blood pressure are being monitored by a technician or by an exercise physiologist, and sometimes a physician to supervise. One disadvantage to this test that it is the high cost of each test, time-consuming, and is used correctly to measure aerobic power in athletes. Which one do you think is more applicable to a clinical population and why? I would recommend using a submaximal test if an individual or client of mine wants to focus on endurance training. I think the submaximal test would be more applicable to people who suffer from cardiovascular disease and those who are not exposed to exercise that often. It would be more appropriate for the individual to know where he or she stands on the fitness spectrum before going straight into a vigorous activity. I can use a treadmill test to increase the elevation and or a bike test to increase resistance. The speed, on the other hand, remains constant throughout the duration of the test and heart rate is continually monitored after every incremental increase. The submaximal test stops when your heart rate reaches 85 percent of your max heart rate and or you feel like you cannot continue anymore.