Current Marketing Situation
Energy drink falls into the category of functional beverages which encompasses nutraceutical and sports drinks (Heckman, Sherry, and De Mejia 304). Nutraceutical beverages contain bioactive compounds extracted from vegetables, fruits, teas and fruits. They are designed to promote and enhance good health. In addition, sports drinks are designed to provide electrolytes, supply carbohydrates and prevent dehydration during exercise and other physical activities (Heckman et al. 304). As such they are the preferred drink by many consumers. Energy drinks command 47.3% of the global market share of functional drinks. Furthermore, they have shown a constant and continuous market growth over the years reaching a global sale of $26.6 by 2008 having grown by about 8.6% annually between the years 2004 and 2009. The energy drinks market has experienced the largest growth in the functional beverage industry in terms of volume and annual sale. In fact, the global demand for energy drinks is expected to grow by 10% (annual growth rate) by the year 2016 (Heckman et al. 309). This growth depicts that the energy drinks market will continue to rise year by year making it a lucrative business opportunity for investors and which has since attracted them. In addition, market indicators have shown that the market is about to receive its strongest market growth.
Industry players have adopted product differentiation as their marketing strategy (Heckman et al. 308). Some energy drinks are for women only, some for bodybuilders, carbohydrate conscious and extreme sports enthusiasts, all to carve out their niche in the market. Others make products targeting a particular market only; say the middle class while some for all classes of people. However, most of the energy drinks are for the middle and high class.
The energy drink market is divided concerning age, type of activity one is involved in and the economic class of individuals. Energy drinks are mainly consumed by the younger generation aged between 18 and 24 years who have a high energy requirement. The second group consumes energy drinks according to their energy demand that is guided by the activities they are involved in (Seifert et al.113). There include sportsmen and sportswomen and others who get involved in physical activities that can cause fatigue. The last market depends on the economic class of the individual (Heckman et al. 305). Most of the energy drinks are relatively expensive and as such their largest market segment is compromised of the middle and high class.
Energy24 contains multiple vitamins and proteins to keep the body active and energetic for 24 hours. It contains vitamins A, B, C, proteins carbohydrates and Fibre. Other important ingredients include taurine and 150 grams of caffeine (Higgins 1036). These ingredients improve aerobic endurance, increase alertness and general health.
Specific Market Segment Needs
Each market segment has unique health and energy requirements depending on its level of activity. The young population needs energy since they are very active. They are actively involved in sports and studies which consumes a lot of energy. People are taking part in sports, exercises and other physical activities usually use up energy and need to build muscle that can withstand such strenuous activities (Seifert et al. 208). These people need drinks that contain carbohydrates for the supply of energy and proteins for bodybuilding. Lastly, the entire market segment needs the vitamin for the efficient performance of body processes and protection against diseases (Seifert et al. 209).
Corresponding Features Benefits
Vitamin A helps in improving night vision, reproduction health and development of healthy teeth, vitamin B is necessary for the formation of red blood cells, and vitamin C which boosts the immune system protecting the body against diseases. Energy24 supplements taurine produced naturally by humans and which is important for many biological processes in the human body. Finally, caffeine is a stimulant that keeps people alert, therefore, enable them to function without strain (Seifert et al. 208).
Energy24 is a new functional energy drink that targets the young and the population involved in sports. It is produced by Pepco a company that that has worldwide recognition for its soft drinks that targets the whole population. The development of this product has been occasioned by the lucrative market enjoyed by other energy drink companies.
Packaging is a powerful tool for marketing this product. As such the packaging aims at making the bottle attractive and conspicuous when arranged on a shelf with other drinks. Energy24 is packed in a 500ml black can and pressurized. They can have a logo on one side big enough to be seen and isolated from the rest from far. The other side has imprints of the ingredients. The liquid itself is black to provide an appeal of strength and energy.
Competition in the energy drinks market is very stiff with Red Bull and Monster dominating it commanding 43% and 39% of the market respectively. Others include Rockstar with 10% and Amp and NOS each with 3% of the market share. It presents itself as a significant force that is difficult to reckon with especially with the customer loyalty they have to build over the years (Higgins 1036). It is even more difficult to beat Monster which has been showing continuous improvement over the years.
These competitors are well established. First, they have developed a brand name that is recognised worldwide and trusted by customers. Second, they have resources and well-established factories and distribution networks. Third, they have capable of establishing any undertaking to increase their niche. These factors give them an advantage over new entrants in the market.
Channel and Logistic Review
Right after packaging, Energy24 will be transported by rail and ship to distributors worldwide who will then distribute them via relevant means to retailers. The can are small, light and compact making them cheap to transport (Hiebing and Cooper 231). The drink has a long life making it convenient for transporting via railway and water that are slow. The cans are not returnable, unlike glass bottles that would lead to an extra cost of transporting them back to the company for re-using.
Sample of competitive products and Pricing
The marketing strategies of the key competitors are almost similar. Red Bull has an attractive package with a conspicuous blue colour and the logo written in red packaged in 250ml cans. They are sold either as a single can or in a pack of 12 or 24 cans. On the other hand, Monster Energy Drink is packaged in a black can with three green tear stripes like ones made by a monster. The black colour, name and tear stripes are a representation that appeals to the market. Similarly, the bull in the logo of Red Bull is a symbol of energy (Heckman et al. 303). Apart from the packaging; the two brands are similar in pricing. Their prices are relatively high, a marketing strategy they use to attract customers.
Energy24 contains more proteins and fibre than other energy drinks lack giving it a competitive advantage. The company manufacturing energy24 is part of a larger, well-established company hence will utilise its established distribution network for the new product. Energy24 has enough capital and resources to execute its advertising strategy.
There is a negative image being created that energy drinks cause health issues. There are very many competitors offering unique energy drink products. The company lacks enough capacity to improve constantly the current products.
A wide market that is yet to be reached by the current player is an opportunity to expand. Energy24 can increase its product line to serve specific tastes and preferences.
New competitors are likely to join the already flooded market. The bargaining power of the customers is increasing therefore affecting the price and which is likely to cut on profits. There is a possibility of the price of inputs increases jeopardising the current marketing strategy of selling at low prices.
Objectives and Issues
The company aims at making Energy24 the best brand of energy drink by giving it international recognition and a wide market presence. The recognition and presence will be achieved through vigorous advertisement (Hiebing and Cooper 203). The product is expected to have covered at least ten other countries within the first five years into the market.
Energy24 is like to receive negative publicity, especially from competitors. Negative publicity is likely to be a major setback considering that our product is new in the market. Since this has been anticipated, the company aims at maintaining a constant link with the customers so that measures can be put to compact it immediately it is detected.
Initially, the product will be sold locally and depending on the market response, the product will be sold to other countries. The company aims to make the drink available in many markets around the world. To achieve this, the product will use its current distributors of soft drinks around the world as this is a cheaper option for creating new distributor outlets. This strategy is aimed at selling the product at a relatively low price while maintaining its appeal as a middle and high-class drink.
A lot of money will be spent during the initial stages of advertising to make the public aware of the product and create demand in the market for the product. Adds on television will be aired during prime times when most families are watching. We will also use Newspaper especially to reach people working in offices and also use magazines to persuade the with class people. In addition, we will place the advertisement on the internet and social platform to persuade the young population (Strydom 87). Finally, we will appoint a brand ambassador who will be a sportsman to provide a special appeal for the young generation and sportsmen and sportswomen. The ambassador will appear on many advertising platforms mentioned here including billboards and banners that will be on display at various strategic locations around the city (Strydom 115).
The main aim of this is to develop a positive image of the product especially with the increasing perception that energy drinks are full of chemicals and that they do not have nutritional value as asserted by manufacturers. The positioning process will on emphasize creating awareness that the product: has no side effects, is a drink and not medicine which is cheap, superior to other energy drinks and suitable for all ages above 10 years old. These perceptions will reach the market through an advertisement that will be included in the advertisement.
Product Marketing Strategy
Energy24 will be sold at slightly lower prices compared to that of its competitors while at the same time maintaining its appeal to the high-class population who form the largest market segment of energy drinks. We will also focus on product differentiation that will make the product unique and superior in the market and the creation of products that is more appealing to a particular segment of the market.
Railway and water transport is the preferred means of transporting the product to the distributors. Other means such as trucks will be used to transport them to the retailers only where the two means of transport are not available. The products will be transported to selected distributors who will then distribute them to the retailers.
Marketing Communication Strategy
The product will utilise advertising as the main channel of communication. The channel encompasses both electronic and print media. Other channels will be the distributors who are expected to pass on comments from the retailer and also ensure that the products are well displayed (Strydom 147). Additionally, promotional campaigns will be held at strategic times.
Research is considered as key to the success of the product. We will rely on distributors to give us information from the suppliers regarding consumer preferences. Otherwise, we will use experts to carry out market research. Their results will enable us to determine the favourability of the new markets for Energy24 and also the customer response (Strydom 180).
In the initial stages of product introduction into the market, we will adopt a functional type of market organisation where activities will be grouped according to the function they perform. Later when the product has gained some market recognition, marketing will be organised around the customer where we will be looking at delivering what the customer prefers (Strydom 206).
After successfully launching the product, the company will embark on vigorous advertising programs to create awareness in the market and maintain a good image. The company will do pre-planning on how the advertisement will take place so that it reaches the targeted market. The company will run several promotional campaigns. As such banners and hoardings will be fixed at strategic positions. The appointed brand ambassador will be used especially for major sporting events. The brand ambassador should be able to attract a quick market response (Hiebing et al. 215).
We will also carry out surveys to gather customer feedback. Surveys will be carried out by experts who are expected to formulate a platform through which customers will communicate with the company. More action plans will be formulated if the current ones are found to be ineffective.
Budgeting is the responsibility of the finance department. The Department is tasked with creating a statement for profit and loss by taking into account all activities taking place during manufacture, selling and advertising of the product. They do this by estimating the number of units that will be sold and consequently the revenue. The statement will be used for evaluation and control purposes to check that the cost of advertising and distribution does not eat into the profit. Advertising will be undertaken by experts who will ensure that it reaches the targeted market and is still within budget (Strydom 256).
The company’s management will need feedback after some time after the product stays in the market for a particular period. As such, the marketing department is expected to take control measures. These controls will include; setting specific marketing goals, measuring the performance of the product in the market, finding the causes of gaps between actual and expected results and finally creating and implementing corrective measures (Strydom 257). These control measures aim to ensure goals are achieved, and the whole marketing plan is not derailed.
Social Responsibility Marketing
Although the company’s main objective for marketing is to increase sales and consequently revenue, it has a social responsibility. In line with this, the company will undertake marketing that promotes the welfare of people. In this sense, the company plans to sponsor several sporting events to help the youth hold it successfully while at the same time promoting its product. The company will be looking at promoting the best interest of society (Vargo and Robert 13). Moreover, the company will use locals of a particular region to advertise the product to give back to the society that forms its market.
Social responsibility marketing is very expensive and likely to have serious economic implications for the company’s overall revenue. Due to this fact, the company, through its financial department will come up with a budget for sponsoring such events (Strydom 163). The budget acts as a check that will prevent too much spending. In line with this, the company has selected a few events that it will sponsor. The events are chosen on the basis that sponsoring them will lead to a win-win situation in which the best interests of the society and that of the company are served (Vargo and Robert 16).
Heckman, M. A., K. Sherry, and E. G. De Mejia. “Energy Drinks: An Assessment of Their Market Size, Consumer Demographics, Ingredient Profile, Functionality, and Regulations in the United States.” Comprehensive Reviews in Food Science and Food Safety 9.3 (2010): 303-317. Print.
Hiebing, Roman, and Scott Cooper. The Successful Marketing Plan. 3rd ed. Contemporary Publishing Group, 2000. Print.
Higgins, John. “Energy Beverages: Content and Safety.” Mayo Clin Proc 85.11 (2010): 1033-1041. Print.
Strydom, Johan. Introduction to Marketing. 1st ed. Juta and Company Ltd, 2005. Print
Seifert, Sara M., et al. “Health effects of energy drinks on children, adolescents, and young adults.” Pediatrics (2011). Print.
Vargo, Stephen L., and Robert F. Lusch. “Evolving to a new dominant logic for marketing.” Journal of Marketing 68.1 (2004): 1-17.