Energy Drink Industry: Developing a Challenging Marketing Plan - Research Paper Example

 Abstract Marketing is one of the core management functions. Without proper marketing techniques no product or service can reach the customers. Customers determine the success or failure of a product or service and hence the marketing strategies must be customer focussed. Customers are different culturally, socially, economically, politically and geographically and the marketing strategies cannot be unique everywhere even if the same product or service is being marketed. Target market must be carefully studied and segmented properly to execute the marketing functions successfully. Energy drink industry is one of the popular industries in the world because of the wide acceptance and usage of such drinks in almost every part of the world. Irrespective of age, sex, religion or culture, people use energy drinks quite regularly and in some countries it is an essential part of their daily food habits itself. Red Bull, Rockstar, Wired, AMP, and Monster are some of the business giants in the world as far as energy drink industry are concerned. This paper is written as a marketing plan for a new energy drink which is going to introduce in the market. Introduction Energy drink industry is somewhat monopolized by the American business tycoons alike Red Bull, Rockstar, Wired, AMP, and Monster etc. Moreover, Pepsi and Coca Cola have also similar kind of products which makes the energy drink industry is one of the heavily contested business in the world. Most of the small energy drinks business groups, all over the world, were either merged or acquired by these major players of energy drink industry in order to reduce competition and to establish their supremacy in international market. Any new energy drink products which are going to introduce into the market should be unique in their contents and appearances to cop up with the possible challenges from the competitors. The new energy drink product developers should also concentrate in developing a challenging marketing plan in order to counter the challenges they may face from their competitors. “Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders” (Solomon et al, 2008, p.9) Globalization and liberalization policies have opened the doors widely open for the business people and energy drink manufacturers must consider marketing of their products globally in order to exploit the international markets. We have decided to introduce a new energy drink product into the global market since we feel that the global consumers have some unmet needs as far as the energy drinks are concerned and moreover the present drinks available in the market are not completely fulfilling the requirements of the consumers. A brief description of the Product “A product delivers a benefit when it satisfies a need or want. For marketers to be successful, they must develop products that provide one or more benefits that are important to consumers” (Solomon et al, 2008, p.10)The new energy drink provides increased mental focus and concentration, increased memory, and improved cognitive skills. After a thorough research we found that most of the energy drinks available at present are providing energies through their advertisements alone. In practice majority of such drinks failed to yield the advertised results. Our product guarantees the customers, whatever we have advertised as the advantages of using our product. Moreover, we have concentrated in preparing a drink which is absolutely safe and contains no harmful ingredients to the health. It can be used by any people irrespective of their gender or age differences. It is equally useful to all the peoples across the world irrespective of the climatic conditions or environment is concerned. Our drink is environment friendly and we have avoided the usage of plastic materials for packing purposes in order to make our drink more environment- friendly and to increase its acceptance among public. Directed towards individuals in the professional workspace, sports arena, and academia, this product provides individuals the extra mental edge needed to succeed in today’s hectic on-the-go world. An analysis of the market Market analysis is the major segment of a marketing campaign, especially for a new product. No marketing campaign can yield the desired result if the marketers fail to analyse the market properly. “No matter what size the firm, a marketer’s decisions affect—and are affected by—the firm’s other operations. Marketing managers must work with financial and accounting officers to figure out whether products are profitable, to set marketing budgets, and to determine prices. They must work with people in manufacturing to be sure that products are produced on time and in the right quantities. Marketers also must work with research-and-development specialists to create products that meet consumers’ needs” (Solomon et al, 2008, p.7) The market size, demographic peculiarities, potential competitors, growth potentials etc need to be analysed thoroughly before deciding about the nature of the marketing campaign for the proposed energy drink. Market Segmentation “Market segmentation is the process of dividing a market up into different groups of customers, in order to create different products to meet their specific needs”(Segmentation). “The division of a market into different homogeneous groups of consumers is known as market segmentation” (Market segmentation). It is difficult to have a standardised market. Choices of the customers are different everywhere. It is not necessary that a product which is moving greatly in a market may move well in another market. For example, halal (A Muslim ritual) chickens are a favourite dish in Saudi whereas same thing may not be correct in America. Market Segmentation - Size and demographics of the markets Instead of trying to sell something to everyone, marketers select a target marketing strategy, in which they divide the total market into different segments based on customer characteristics, select one or more segments, and develop products to meet the needs of those specific segments. Segmentation is the process of dividing a larger market into smaller pieces based on one or more meaningful shared characteristics. (Solomon et al, 2008, p.203) For example, energy drinks are mainly used by the teenagers and adults. Teenagers need extra memory power whereas the adults often require to revitalize themselves, when a heavy toll of their energy used up by their daily routine of professional works. So our energy drink should target these people mainly and our promotional activities should be developed in such a way to target these segments of consumers in the market. Size and diversity of the market is so important while implementing the marketing campaigns for the energy drinks. Market segmentation is not an easy task. The person who is in charge of the marketing activities should consider so many different aspects of the market like the culture, social and economical factors before segmenting the market. For example, consider a place like Dubai where lot of foreigners are staying. Some locations are mostly occupied by the locals; some other areas occupied by the westerners, Indians, Pakistanis, Pilipinos etc have their own locations in Dubai. Because of these demographic differences even in a small city like Dubai, marketers must market their products after studying these demographic differences. The food supplied in the restaurants which operate in areas where the westerners are mostly gathering cannot be used in other areas where the Indians or the Pakistanis were assembling. Target Market Identification Target markets for energy drink can be identified by considering mainly the geographical traits, Demographic traits, Psychographic traits and Behavioural traits Geographical Traits Geography plays an important role in formulating the marketing strategies. Indians Pakistanis and the Sri Lankans or in short most of the Asian people use lot of spices in their food whereas the westerners use very little spices in their food. So the taste of customers about certain product might be geographically different. Sachin Tendulakar might be a good brand ambassador in cricket crazy countries whereas he might not be a better choice in countries like France or America. In such countries, personalities like David Beckham or Zinadine Zidan would be a better choice. So we have to address these geographical trait differences before deciding about the energy drink marketing strategies. Demographic Traits Age, Gender, Geographic location, Annual Income, Marriage Status, Education level etc can also affect the marketing process. Energy drinks are mainly utilized by the teenagers and youths and hence their traits and behaviours need to be evaluated more specifically. Economy is another factor which affects the buying decisions of consumers. Expensive items will be better moved in developed countries and cities whereas it is foolishness to think that the same item might move well in a poor country. “Demographics are statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure. Demographics are vital to identify the best potential customers for a good or service” (Solomon et al, 2008, p.204) Psychographic Traits Consumer psychographics is another area needed to be addressed while developing our marketing plan for the energy drink. Psychographic segmentation of marketing is the grouping of people based on their psychological and behavioral similarities such as shared activities, interests, and opinions. Behavioral segmentation slices consumer segments on the basis of how they act toward, feel about, or use a product (Solomon et al, 2008, p.215) It is not necessary that all the teenagers and the youths use the same energy drink for their drinking requirements. Some of the people may have taste preferences while they selecting their energy drink. Some flavours which are tastier for somebody may not be the same for others. So the consumer behaviour and their preferences need to be taken into the account while formulating marketing strategies. The perceptions about the Value, Price, Entertainment, Convenience, Safety, Travel distance, Activities etc might be different for different people because of the psychological differences. (Bragg, p.5) Some people give more value to entertainment and hence they will be ready to spend much on such activities. For example, horse race is a crazy entertainment activity in Gulf and the Arab sheikhs are not much bothered in gambling in such activities. Consumers can be classified into 8 groups based on the VALS questionnaire; Innovators, Thinkers, Achievers, Experiencers, Believers, Strivers, Makers and Survivors (The VALS™ Segments) Marketing strategies for the proposed energy drink must be formulated only after identifying such psychographic traits of the consumers. Behavioural Traits Behaviours, like all complex traits, involve multiple genes, a reality that complicates the search for genetic contributions. (Behavioural Genetics, 2008)Brand perceptions might be different in different locations. For example Japanese brand Sony has a good reputation in American markets whereas same thing cannot be said about the Chinese products or Korean products in America. Some people interested more in bargaining whereas some others may not be much interested in such things. Customer behaviour is not unique in all the markets because of their differences in political economical, social intellectual and cultural differences. These behaviour aspects must be given prime importance while developing marketing strategies for the energy drink. Potential competitors Potential competitors include Red Bull, Rockstar, Wired, AMP, and Monster to name a few in the market currently. But since our product stands out because of its focus on providing additional mental focus and increased energy, I strongly believe that our product can overcome the possible challenges from the above mentioned competitors. But Coke and Pepsi also started to make energy drinks which may create problems for our products also because of the enormous abilities of these two business giants to monopolize the market. Our product image is one of cutting edge, influential in attaining professional and academic achievements and productivity through enhanced cognitive abilities, focus, concentration, and memory which will help us to overcome the strong resistance from the competitors. Marketing strategies that will be used for the introduction of the energy drink Customer relationship management (CRM) is one of the major developments happened in the current century in marketing and business activities. Marketers have realized the importance of building and sustaining of relationships with the customers in order to succeed in their marketing campaigns. In addition to building long-term relationships and focusing on social responsibility, New Era firms place a much greater focus on accountability—measuring just how much value is created by marketing activities (Solomon et al, 2008, p.15). Successful firms must have viable products at prices consumers are willing to pay, the means to get the products to the place where consumers want to buy them, and a way to promote the products to the right consumers (Solomon et al, 2008, p.51) Pricing Pricing is one of the major determining factors of the success of a new product in the market. Customers may stay away from a new product if they feel that the price of the product is so high compare to other existing similar products in the market. So in order to attract customers towards the newly introduced energy drink, it is better to put a competitive price initially. Price is the assignment of value, or the amount the consumer must exchange to receive the offering or product. (Solomon et al, 2008, p.337) Promotion Promotion is another area which determines the success of a new product in the market. Even though there are many ways to reach the customers at present, still advertising is still used as the major weapon in promoting a product. In 2005 alone, U.S. marketers spent over $271 billion to do it. (Solomon et al, 2008, p.407) Sales promotions, brand development, advertising and marketing campaigns etc are essential for promoting a product. Distribution Logistics or distribution or supply chain management is another are which determines the success of a product in the market. The market always should have sufficient inventory of the energy drink to cater the consumer demands. A shortage of product at any time in the market may create unnecessary doubts in the minds of the consumers about the product which may damage the reputation of the product and the company. Regular inventory checkups and efficient supply chain management will definitely improve the marketing scopes of the product. Sales support According to Pragmatic Marketing’s product management survey, marketers spend nearly half of their time on sales support (Don't Confuse Sales Support with Marketing: A Case for Buyer Persona Profiling).The sales team should get proper assistance from the management in promoting the product. In some cases, costly promotions may require, to overcome stiff challenges from the competitors and the management should be ready to assist the sales staff by providing enough resources to them for market penetration. Conclusions Introduction and Promotion of a new product in the market is a complex task which requires thorough analysis about the scope of the product in the current market. Energy drink industry is mainly targeting teenagers and youths in their marketing campaigns. Demographic differences, regional peculiarities, psychographic and behavioural traits are some of the major areas should be covered before formulating the marketing campaign for a new energy drink product. Marketing strategies should consider innovative ideas in pricing, promotions, distributions and sale support areas in order to make the marketing campaign more successful. References 1. Behavioural Genetics. 2008, Retrieved on 06 October 2009 from http://www.ornl.gov/sci/techresources/Human_Genome/elsi/behavior.shtml 2. Bragg Russ, Target Market Identification & Development. Retrieved on 06 October 2009 from http://docs.google.com/gview?a=v&q=cache:cGR9Y23M0l0J:cpa.utk.edu/pptpresentations/agri-tourism/targetmarketpres2-04.pdf+Target+Market+Identification&hl=en 3. Don't Confuse Sales Support with Marketing: A Case for Buyer Persona Profiling, 2009, Retrieved on 06 October 2009 from http://www.pragmaticmarketing.com/publications/magazine/3/4/0508ar 4. Market Segmentation, Retrieved on 06 October 2009 from http://www.quickmba.com/marketing/market-segmentation 5. Segmentation. 2009. The Times 100. Retrieved on 06 October 2009 from http://www.thetimes100.co.uk/theory/theory--segmentation--246.php. 6. Solomon Michael R., Marshall Greg W. and Stuart Elnora W., Marketing: Real People, Real Choices, Fifth Edition,. Published by Prentice Hall. Copyright © 2008 by Pearson Education, Inc. 7. The VALS™ Segments Retrieved on 06 October 2009 from http://www.sric- bi.com/VALS/types.shtml Read More