Marketing Plan for Hydra-Energy Shot - Essay Example

? Marketing Plan: Hydra-Energy Shot of the Table of Contents Table of Contents 2 Executive Summary 3 Situation Analysis 3 Marketing Strategy and Programs 10 References 13 Executive Summary This piece of the report is a marketing plan of Hydra-Energy Shot which is a new sports beverage. The product is manufactured by Coca Cola and is an energy drink targeted to individuals and sports persons. Hydra-Energy Shot can be described as a smooth tasting, low in calories (50 calories), added electrolytes, B12 (for energy) and assorted fruit flavors. Also, it is a sports drink which hydrates human body as well gives guaranteed additional 6 hours of energy for performing the daily activities. This marketing plan is meant to be effective only in the United States and as of now the company does not have any plans to operate in the overseas market. The study carried out a detailed analysis of the energy drink market of USA in order to get an idea of the business environment. The study revealed that the industry is fiercely competitive due to the presence of a large number of established players. However, Coca Cola being an established firm will get certain advantages in the market such as the brand identity and trust of consumers. The short term objective of the company is to create awareness of the product and achieve 2-5% of the market share by the end of the 1st year. In order to achieve it, the company has been strongly recommended to use a variety of promotional techniques and pursue a competitive pricing strategy. In addition, intensive distribution and entering into a treaty with sports companies has also been recommended. Situation Analysis Before the launch of a new product in the market, it is essential to perform a thorough analysis of the external business environment of a country. In addition, the industry in which the business will operate also needs to be assessed. Apart from that it is also essential to assess the competitors and customers. The sections below will try to examine the aforementioned factors and draw a conclusion based on which the marketing strategy for the energy drink will be designed. Description of the Product The product which will be marketed is an energy drink named as Hydra-Energy Shot. The product generally falls into the category of sports beverage product and is meant for providing additional energy to the consumers. The product can be described as smooth in taste, contains added electrolyte, Vitamin B12 (for energy), assorted fruit flavors and low in calorie. The product promises to provide an additional 6 hours of energy to the consumers for performing their routine activities. Customer Analysis A business cannot operate in vacant and requires a base of customers for continuing operation and sustaining in the marketplace over a long period of time. The analysis of the customer is the recording and evaluating the data associated with the needs of consumers as well as market trends. Hydra-Energy Shot will principally target sportspersons. In addition, the product is also targeted for office goers and individuals who work out at different fitness centers. Energy drinks generally falls into the group of functional beverages and encompasses ‘nutraceutical’ and sports drinks. The share of the same is presented in the figure below: - Figure 1 – Market Share breakdown of Functional Beverages (Source: Heckman, Sherry & De Mejia, 2010) Sports drinks are essentially designed to consume before or during the process of action so as to prevent any kind of dehydration and supply carbohydrate and electrolytes for maintaining proper metabolism in the system (Coombes & Hamilton 2000). Smith Kline Beecham Energy & Sports Drinks Report suggests that in the USA, around 53% of the people who consumes energy or sports drinks are within the age group of 14-34 years. Initially, athletes are the sole consumers of energy drinks, but the course of time and increased awareness the market grew tremendously and expanded to other niche segments. A study by Mintel (2009) made it evident that 34% US people of age group 18-24 years are regular consumers of energy drinks. Furthermore, another report stated that half of the total number of university students consumes 1 energy drink each month with an expectation increase their energy levels. Thus targeting young adults and adolescents will be a safer option for the company other than sportspersons. The rationale of consumption however differs from one person to the other. Studies have suggested that a majority of the consumer intakes it for the sole purpose of gaining energy from it and accomplish their tasks successfully. On the other hand, certain group consumes it for making their reflex actions more active. The study by Scholey & Kennedy (2004) confirmed profound impacts of energy drinks on psychological and cognitive aspect. The concentration level and memory speed dramatically increase after the consumption. In the similar way, some individuals consume it for getting rid of sleepiness or to bring attitudinal changes. In the context of buying events and buying channel, there are hardly any special factors. It is generally consumed at clubs or gymnasiums, and athletes consume it during the beginning of a game. The products are generally purchased from the retail outlets, however for special cases such as large sporting events it is generally acquired from the company itself due to the requirement of large volume. Although the effect of each energy drink may be similar, consumers consider certain factors before preferring a brand. One of the most evident one is the taste of the drink, because this is the only factor by which a consumer associates itself with the brand. However, this always does not hold true. Reports have suggested that Generation Y has been skeptical over advertisements due to the bombardment of media on their lives. As a result of that, the marketing efforts of the companies have a strong influence on consumer preferences. However, established players in the industry have enjoyed high percentage of brand loyalty. Hence, it is obvious that Hydra-Energy Shot will require time to become an established player in the industry. (Source: Moore, 2009) Therefore from an overall point of view it is evident that marketing activities have a strong influence in customer decision making purchase along with the taste of the product. The consumer profiling, assessment of their tastes and preferences and study of influencing factor has been carried out and on the basis of that the following group of customers will be targeted by Hydra-Energy Shot. Target Target 1 Target 2 Target 3 Group Sportspersons Young adults and adolescents Individuals active in fitness activities and clubbing. Competitor Analysis By the overall scenario of the energy drink industry, one this has become clear that the industry is fiercely competitive. Since, the industry is currently undergoing through the maturity stage; a number of players are trying to explore its potential. Some of the established players of the industry are Red Bull, Rockstar, Monster and Amp. Their product details are presented below: - Figure 2 (Source: Hargrave, 2013) The following are strengths and weaknesses of the major competitors from the perspective of a Hydra-Energy Shot. Company Strengths Weaknesses Red Bull Market Leader and has been able to gain trust of consumers Lacks variation in products Monster Huge Product Depth and strong brand identity Limited or no use of advertisements Rockstar Portrays an image “I want to be a rockstar and party like a rockstar, so I will drink like a rockstar!” greatly appeals young generation (Rockstarenergy., 2013). Allegation against the company about poor product quality and health impacts. Figure 3 (Source: Energyfiend, 2013) Hence, the figure made it evident that Red Bull is the market leader in US with a staggering market share of 43%. While Monster and Rockstar follows with 39% and 10% respectively. Overall Market Trends Reports have suggested that the US energy drink and sports beverage industry will grow at a robust rate and will be valued at $21.5 billion by 2017 (Prweb, 2013). The industry is driven by expansion in the retail distribution and strong potential pertaining to the new product development. The industry during the phase of 2008-2012 has witnessed a growth of over 60% and was valued at a staggering $12.5 billion. One of the key facts of the industry is energy drinks are among the lowest consumed beverages and thus reflecting an infant stage yet have strong growth potential. However, one of the positive factors is that the consumption rate of energy drink has increased to 17% in 2012 from 13% in 2006. Furthermore a segment exists that are adjudged as heavy consumers, who generally consume 5-7 times each month and encompasses 5% of overall consumers (Reportsnreports, 2013). One of the most evident trends of the US energy drink industry is the use of natural ingredients. For example, Scheckter's Organic Energy is fully organic. The industry is driven by the fast paced lifestyle and rapid urbanization. Given the hectic schedule, a majority of the population relies on energy drinks to successfully accomplish their activities (Yahoo Finance, 2013). Figure 4 –Sales Figures (Source: Energyfiend, 2013) The companies belonging to this industry generally uses traditional marketing activities. The products are intensively distributed across a wide range of stores. However, these companies often enter into a treaty with sports companies to sell their products during sporting events. The pricing is also done on a standardized basis and as a result of that the switching cost is low. Figure 5 (Source: Consumerreports, 2012) Porter’s Five Forces Analysis The five forces to be analyzed for the energy drinks industry of USA are as follows: - Bargaining Power of Buyer: - The buyers are the customers to whom the product is targeted. The bargaining power of the buyers greatly depends upon the number of providers of energy drinks in the US market and the switching cost. In the US, there are a number of established energy drink providers and the switching cost is also low. Hence the bargaining power of buyers is therefore assessed to be high. Bargaining Power of Suppliers: - The suppliers are also the organization who supplies the company with the raw materials and its bargaining power depends upon the number of suppliers. The raw materials required for healthy energy drinks depend upon the formula used by the companies in the manufacturing process. The suppliers for these raw materials such as water, caffeine, are large in numbers and hence the bargaining power of suppliers is assessed to be low. Threat of New Entrants: - The threat of a new entrant is greatly dependent upon the attractiveness of the industry (Lawfer, 2004). Furthermore, the startup cost is also a decisive factor. The threat of new entrant is assessed to be moderate due to an average start up cost and high marketing cost. Threat of Substitutes: - There are a number of substitutes of energy drink. Although all the substitutes do not provide equal results but can be classified as a vital substitute (Holmquist, 2012). For example, water, glucose and sugar can be classified as the substitute of energy drinks. The Threat of Substitutes is therefore extremely high Existing Rivalry within the Industry: - The industry of energy drinks in the US is fiercely competitive. This is because a number of established players operate in the market. Some of the well known players are Red Bull, Monster, Rockstar and Amp among others. The existing rivalry within the industry is therefore extremely high. Marketing Strategy and Programs The analysis of the situation has made it evident that the industry is fiercely competitive and to get success in this industry and establish as a major player, practical and result oriented marketing strategy needs to be developed. The marketing strategy for the product is discussed below. However, before actually divulging the marketing strategy, the study will highlight the objectives of marketing. The areas which will be covered in this section are the four P’s of marketing as well as the other supportive marketing activities. Marketing Objectives The first objective is to create awareness among the minds of consumers about the new energy drink from Coca Cola. The next objective is to attain a market share of 2-5% by the end of 1st year. Another objective is to drive sales and increase the overall revenue. Product Strategy The product is probably the most vital component of the marketing mix strategy because ultimately a consumer purchase product from it. In the energy drink category, Coca Cola will launch its maiden product Hydra-Energy Shot. The product will be available in Can and in Bottle as well. Although, energy drinks are mostly available in Can, but to different itself from the competitors, the company is recommended to make the product available in bottled form. This will allow the customers to use it during parties and other events and can acts as a substitute of both hard and soft drinks. As of now the product will have only one variant and flavor, but depending on the success rate the company will come out with new flavors. The product can be described as smooth in taste, contains added electrolyte, Vitamin B12 (for energy), assorted fruit flavors and low in calorie. Price Strategy Since the industry was assessed to be highly competitive, it is wise to go for competitive pricing, rather than going for any other methods of pricing. Hence, the following will be the pricing structure of the company. Product CAN Bottle Hydra-Energy Shot $2.00 $2.75 Place Strategy The placement of the product will be a crucial task as it is one of the ways by which awareness about the product can be created and along with that the product visibility can be increased. Hence, the company is recommended to carry out intensive distribution. In addition, the company will also enter into treaty with different sporting events so as to increase the sales. Moreover, this strategy will also allow the company to increase the overall visibility. Promotion Strategy The target customers of the company are the athletes, young adults and adolescents and individuals active in fitness activities and clubbing. Hence to target each of this group the company will use the following mediums and strategies. Television Advertisement: - Television advertisements with catchy taglines will be greatly effective in targeting the customers. Endorsement with sports personalities will also help the company. Sponsorship: - With strong financial situation of the company has the ability to sponsor large sporting events. This will be an effective step in creating mass awareness. Print advertisement and Social Media: - Print media in the form of magazines and newspapers will help to attract clubs and gymnasiums. Lastly a social media page will help in creating a fan base and can be an option to reach out to mass customer base. Market Research Efforts It is obvious that the four P’s of marketing plays the most vital role in the success of a firm, but prior to that market research activities also play crucial roles. The company is strongly recommended to undertake the following research activities: - The company is strongly recommended to carry out periodic market research activities so as to properly identify the needs and wants of the consumers and makes modifications in the strategy accordingly. The next recommendation is to measure the effectiveness of the advertisements This can be done by consumer surveys. References Consumerreports. (2012). The buzz on energy-drink caffeine. Retrieved from http://www.consumerreports.org/cro/magazine/2012/12/the-buzz-on-energy-drink-caffeine/index.htm Coombes, J. S. & Hamilton, K. L. (2000). The effectiveness of commercially available sports drinks. Sports Med, 29, 181–209. Energyfiend. (2013). The Top 15 Energy Drink Brands. Retrieved from http://www.energyfiend.com/the-15-top-energy-drink-brands. Hargrave, M. (2013). Is this Stock Over-Caffeinated? Retrieved from http://beta.fool.com/mhargra/2013/05/16/is-this-stock-over-caffeinated/34281/. Heckman, M. A., Sherry, K. & De Mejia, G. (2010). 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), pp. 303-317. Holmquist, L. E. (2012). Grounded Innovation: Strategies for Creating Digital Products. Massachusetts: Elsevier. Lawfer, M. R. (2004). Why Customers Come Back: How to Create Lasting Customer Loyalty. California: Career Press. Mintel. (2009). Energy drink ingredients continue down unhealthy path. Retrieved from http://www.mintel.com/press-release/Energy-drink-ingredients-continue-down-unhealthy-path?id=386. Moore, M. (2009). Does brand image or taste have more influence on consumer preference for energy drinks? Retrieved from http://digitalcommons.bryant.edu/cgi/viewcontent.cgi?article=1004&context=honors_marketing. Prweb. (2013). U.S. Energy Drinks and Shots Market Analysis and Forecast to 2017 in New Research Report at ReportsnReports.com. Retrieved from http://www.prweb.com/releases/us-energy-drinks-and/shots-mrket-forecast/prweb10412008.htm. Reportsnreports. (2013). Energy Drinks and Shots: U.S. Market Trends. Retrieved from http://www.reportsnreports.com/reports/218314-energy-drinks-and-shots-us-market-trends.html. Rockstarenergy. (2013). About Rockstar Energy Drink. Retrieved from http://rockstarenergy.com/company/. Scholey, A. B. & Kennedy, D. O. (2004). Cognitive and physiological effects of an “energy drink”: an evaluation of the whole drink and of glucose, caffeine and herbal flavoring fractions. Psychopharmacology, 176, 320–330. Yahoo Finance. (2013). Research and Markets: Energy Drink Market in the US 2012-2016. Retrieved from http://finance.yahoo.com/news/research-markets-energy-drink-market-151700012.html. Read More