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CITYGATES CORPORATION

Citygates Product
Marketing Plan
Enervita Energy Drink
Tracy-Ann Robinson-Jones, Julie Dyer, Jasmine Durrant, Garvin Dixon, Davia Bent, Craig
Reynolds & Clyon Clifford
3/13/2013

Citygates Corporation with intentions of launching an energy drink product line has therefore

embarked on developing a marketing plan gear towards this purpose. This marketing plan

will therefore examine all aspects the product marketing strategies and also the current

market situation.
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Acknowledgements

Special thanks to all group members; Tracy-Ann Robinson-Jones, Julie Dyer, Jasmine

Durrant, Garvin Dixon, Davia Bent, Craig Reynolds & Clyon Clifford who contributed to the

success of this Project. The sacrifice you all made is now reflected in the completion of this

project, which has equipped us with a greater understanding of the marketing concepts.

Special thanks to Ms. Darcia Roach for her guidance that lead us to the completion of this

Project.

Likewise, the team would like to applaud Tracy-Ann Robinson-Jones for the quality work she

produced.

Finally, special thanks to Julie Dyer for the lovely picture depicting Enervita.
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Table of content

Page

Vision & Mission Statements 5

Long Term Objectives & Market Objectives 6

Executive Summary 7

Product Strategies 8-13

Promotional Strategies 13-19

Price Strategies 19-22

Distribution Strategies 22-23

Market Analysis 23-26

Competition Analysis 26-33

Consumer Analysis 33-35

Economy & Government 35-36

Cultural & Environmental Affects 37-38

Appendix

Budget 39-40

Nutritional Facts 41
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Information Flow Chart 42

References 43

Vision statement

Our vision is to develop and maintain high sales and quality brand awareness by supplying

our customers with great taste, irresistible packaging all at a competitive price. Our vision is

driven by passion to meeting the consumer's expectation and providing our clients with

quality products and high standard of services as well as maintaining a personal approach.

Mission statement

Our mission is to be the premier marketer and supplier of energy drink in Jamaica and other

parts of the Caribbean. We will achieve this mission by building long term relationship with

the people who can make it become a reality.

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Long term objectives

To become the dominant supplier of energy drink within Jamaica.

To have at least 20% of revenue in 5 years from markets not currently been served.

To have a minimum of 20% of sales from new products by 2020. To have an

integrated planning process involving all employee.

To become recognized as one of the top 3 companies in the industry.

Marketing objectives

Our marketing objectives and strategies are to launch localized events to attract youth,

working class especially at sporting events. We will offer free samples. Enervita will reduce

customer's stress and boost up their energy level and at the same time giving them a great

tasting, healthy beverage. The overall objective of our company is to reach as many

consumers as possible with this beneficial product and keep them coming back for more.
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Executive summary

Enervita energy drink offers their consumer a superior product coupled with amazing value

providing a beverage that not only enhance their energy but also offers an enjoyable taste and

helps to fight against cancer. The target audience lives an active lifestyle both males and

females between the ages of 30-45. Thus it is at this time in the consumer's life that dramatic

changes are taking place. The primary consumer group of Enervita includes extreme sport

enthusiast, music lovers and young adults primarily why this campaign consist of promotions

which will grab the target attention. Over the past few years, the market has revealed that

there is a strong increase in the consumption of energy drink beverage. While there are

currently many brands of energy drink on the market, Enervita distinguishes itself amongst its

competitors by offering a beverage which helps to prevent cancer and at a great taste thus

enabling our consumer's to live a longer life. The strategy is to emphasize Enervita distinctive

benefits. The taste is more enjoyable and the size provides a longer boost of energy, which

led to the creation of the stronger for longer" slogan. Enervita will begin by introducing

advertisement aimed at reaching the target age group thus creating brand awareness. The

campaign has allocated an advertisement budget of $7,100,000 to execute and utilize

different media vehicle: internet, television, radio station and possible event sponsorship.

These media vehicles will allows Enervita to reach the desired audience.
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Product Marketing Strategy

New product development goals

Create a unique energy drink tailor to our target costumers

Create value in the form of an energy/health drink

Enable market penetration in the energy drink market

Launch new product line

Product mix

Enervita will lead as our main product in the energy drink product line for Citygates

Corporation, it will seek to deliver healthy and great tasting energy drinks to middle age

working professional. Its unique position or competitive edge is embedded in its ability to

provide sustained energy to the consumer while also actively fighting any cancer cells that

exist in the consumers body.

This product line will be extended by providing a variety of energy drinks with health related

benefits targeted at other illnesses such as, cancer, diabetes, sickle cell, and erectile

dysfunction. Within each category drinks will be differentiated by size and flavour, for

instance an Enervita energy drinks gear towards diabetes will have flavours such as peach or

orange and bottled in sizes such as 8oz, 12oz and 16oz.

This new product line will compliment the current product lines Citygates Corporation has,

which includes a water and fruit juice product line.

Product strength and weaknesses

Strengths:
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Health benefits- active properties fighting against diseases such as, Cancer, diabetes, Sickle

cell, and Erectile Dysfunction.

Sustain energy- provides real energy when consumers need it most

Family oriented- Enervita is CLOSER FOR LONGER with its health benefits Enervita is

keeping your love ones around for longer.

Environmentally Friendly- All Enervita products will be bottled in bio-degradable

containments.

Weaknesses:

Health oriented- most energy drinkers are young adults who care less for health related

products such as an energy drink providing these benefits.

New product- will need large promotional drive to gain consumers awareness.

Product life cycle

1. Product development stage

At this stage the unique combination of energy giving capabilities and cancer fighting

properties are combined with other ingredients to create a value added product for

the consumers of energy drinks.

2. Introduction stage

At this stage Enervita is introduced to the market through the companys distribution

channel. Our promotional cost is high because of the need to invest in marketing the

new product. Low sales are experience in this stage. (Expected time span 1 year)
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3. Growth stage

High promotional cost continues to be experienced however there is a strong rise in

sales and the company start to make a profit from the product. Strong promotional

strategies will continue to be used to position the product for high market share.

(Expected time span 3 years)

4. Maturity stage

In this stage the company will start to lower its promotional cost as the product

becomes more established. Its high sales volume will deliver strong profits for the

company. (Expected time span 5 years)

5. Decline stage

At this point consumer preferences will begin to turn from the product, as a result

low sales will be experienced. In preparation for this stages management will

conduct a repositioning strategy for the product with intentions of extending the

product life cycle. (Expected time span 18 months)

Product Competitive Advantage

Enervitas unique position or competitive edge is embedded in its ability to provide

sustained energy to the consumer while also actively fighting any cancer cells that exist in

the users body.

This products strengths such as, its health benefits, energy potentials, and family orient

approach has positioned it has the must have by middle age working professionals.
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In addition, with low operational and raw resources cost the company was able use strategic

pricing methods and techniques to allow for the product to gain tremendous edge over our

competitors in terms of pricing.

Brand Image and Name

Enervita will be branded as a family energy/health drink this approach will focus on our ideal

target markets and consumers. Promotional campaigns will focus on marketing all aspect of

the drink around this image and brand name.

Below features a sample of how we intend to position the product in the minds of

consumers.

How do you show your love ones that you care? This revolutionizing drink ENERVITA,

combine the active ingredients of an energy base drink with compounded anti- cancer

fighting properties. As a result it keeps you energetic throughout your day while actively

fighting any possible malignant cells within your body.

Energy that keeps you healthy, also keep your love ones closer for longer.

Therefore, ENERVITA shows your love ones that you really care.

BCG Growth share analysis

Enervita is the first product for Citygates newest product line. The energy drink market is

approximately a 2 billion dollar industry; Enervita introduction in this industry represents a

strategic growth strategy for the company.

Enervita will initially have a low market share because of its weaknesses, however its

strengths will allow for a high growth rate. As a result, its unique energy giving capability
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and cancer fighting attributes will allow for this SBU to gain tremendous market share by

growing on average of 7-10 percent annually.

The current market leaders are Red bull, monster and Boom, Enervita will seek to indirectly

challenge these main competitors by focusing on its heath related benefits for consumers.

As a result this will present a direct challenge to the low market share and market growth

rate product Lucozade and immuno-gizer.

PROMOTION STRATEGY

Promotional Goals

The major objective for promoting Enervita is to:

Create customer awareness

Convey a high-quality message about the new product line to the target audience.

Achieve market share large enough to consolidate the new product line as a strong competitor

in the market.

To persuade consumers to buy the new product

Promotional Mix

The following marketing mix is presented to meet the needs of persons who have set high

health standards for themselves. It is priced affordably and has surpassed the needs of our

prospective clientele.

Advertising

Personal Selling

Sales Promotion

Direct marketing

Public Relations
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Viral Marketing

We will use radio, television, internet and print media promotion. Flyers will be prepared and

dropped into mailboxes of targeted areas. A colour catalogue will be sent for distribution in

The Daily Gleaner and The Jamaica Observer.

In introducing and promoting Enervita we will also have an official launch and a road show

will be conducted.

Advertising

An aggressive six-week advertising campaign will be done on both television and radio. Radio and

television will cost $7,100,000 each. Maintenance advertisements will be continued on radio for the

rest of the financial year to further enhance our presence in the market. Selective local community

cable TV network (Flow) will also be used to enhance market presence.

The advertising campaign will be aired on the following stations, CVM, TVJ, Radio 94 fm,

Ire F.M., Hot 102, Zip 101.1; and Cool FM. Time signals will also be used, this will help to

keep the product in the minds of consumers.

In the print media; The Observer, The Sunday Gleaner. Four billboards will be erected

across the island at strategic locations (Kingston, Port more, Manchester, Montego Bay).

Other Tools of Communication

We will use a combination of both pull and push strategies to communicate the promotional messages

to our target audiences.

Pull Strategy this entails heavy advertising and promotion to the end customers.

Push Strategy this involves the offer of special incentives to our intermediaries (wholesales,

Pharmacies and supermarkets).

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MEDIA SCHEDULE FOR ADVERTISING ON TELEVISION

Segments Time Band Air Time Frequency

(Per Second) ( Per Day)

TVJ

Morning Time 05:00 am- 09:00 am 30 3

Day Time 09:00 am- 12:00 noon 30 2

Prime Time 07:00 pm-10:30 pm 30 4

Late Prime 10:30 pm- 12:00 am 30 2

CVM TV

Morning Time 06:00 am- 09:00 am 30 3

Day Time 09:00 am- 12:00 noon 30 2

Prime Time 06:00 pm - 11:00 pm 30 4

Late Prime 11:00 pm- 12:00 am 30 2

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Personal Selling

Personal selling will be an important element of the mix in order to continue to build long-

term relationships within the local community and generate high levels of corporate activity.

A team of sales representatives will be travelling island wide to different pharmacies and

supermarkets to introduce Enervita and to persuade these companies to start selling this new

product.

Sales Promotion

The Official launch of Enervita will be done at Mega Mart superstore, Mandeville. This will

be aired on RJR 95 fm live, during the Program dubbed Ruption with Miss Kitty. With

every purchase of two Enervita (in mega mart on this day) customers will get the third one

free and free cooler will be given to customers who sign up to be wholesalers and purchase a

minimum of 4 cases.

The launch will be followed be a road show featuring Romaine Virgo and other cultural

artistes, the RJR Communications Group Cross Country Team will be there and full coverage

will be aired.

Customers will be feted with free samples of Enervita and novelties such as branded key rings.

Discounts will be offered to wholesalers who buy in excess of 12 bottles of Enervita.

A free case of 12 is being proposed to be given to each wholesaler.

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A Press Release will be done and sent to media houses via email.

PRESS RELEASE

FOR: RELEASE ON FRIDAY MARCH 22, 2013

CITY CORP. Launches New Product

ENERVITA

City Gates Corporation is excited to announce the launch of Enervita, a energy drink with a unique

make up of anti-cancer fighting properties, Enervita gives you energy when you need it most with the

added benefit of fighting off cancer cells that we all have inside our bodies.

City Gates Corporation believes Enervita give us the edge over or competitors, with unique offers

health benefits.

The official launch of Enervita will be on Friday March 1, 2013 at Mega Mart superstore, Mandeville.

This new and interesting product has expanded the product line of City Corporation to three (3)

products. Enervita can be served chilled or off the shelves, the package is designed to withstand any

occasion and boast an attractive eye-catching label that stands out amongst the rest.

This will be aired on RJR 95 fm live, during the Program dubbed Ruption with Miss Kitty.

With every purchase of two Enervita (in mega mart on this day) customers will get the third

one free and free cooler will be given to customers who sign up to be wholesalers and

purchase a minimum of 4 cases.

Customers will be feted with samples of Enervita and will be given novelties such as branded key

rings.
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EnervitaCloser for Longer!

For more information contact: 277-0194

Direct selling/marketing will be done by supplying the product in shops by using our

own transports. We currently have over 8 vehicles to supply products to customers. In this type

of selling we will gain more profit margins.

Public Relations

As part of the public relation strategy, City Gates Cooperation will be the sole supporter /sponsor of

the popular rural Social Development Commission 20/20 Cricket competition by providing branded

Cricket gears with the brand Enervita, the public relations coordinator will be present at all matches.

Media houses will be invited to these matches, and coverage of matches will be aired on Raw of hope

on CVM television.

Enervita will also sponsor Business House Foot Ball Competitions, by providing refreshment in form

of drink and give a ways of novelties, such as branded drink bottles, caps, key rings, handkerchief etc.

This will be done at semi-finals and finals.

Public relations activities will continue to play an important role in the marketing mix, presenting the

company and the Brand (Enervita) as a supportive member of the community and participating in

significant local events.

The company will also use the Enervita to do sponsorships with different Wellness Fairs.

The company will also sponsor major Health Fairs Island wide.
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Public Relations Continues

Public relations activities will continue to play an important role in the marketing mix,

presenting the company and the Brand (Enervita) as a supportive member of the community

and participating in significant local events.

The company will also use the Enervita to do sponsorships with different Wellness Fairs.

Part sponsor major health fairs island wide.

Viral Marketing

Viral Marketing will also be one of the promotional strategies used to promote Enervita. This

will be done with use of the popular social media Face Book.

Face book, will be used as means to advertise Enervita, this is a free and easy way to get the

message to just the right people. A face book page will be created for the new product

Enervita viewer can log on and like this page.

In addition to print and media advertising, Face book offers a range of advertising

opportunities, including social ads that show up in users' news feeds.

Ads will be place on the side of each users page so one they login our it will be visible to

them. These ads are effective because they're in the stream of the reader.

Face book will also offer the opportunity to promote Enervita through its mobile site and to

target ads to its existing customer base. Its ad offerings are likely to increase, building on the
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rich data it's continually collecting about its millions of users. Those users spend a significant

amount of time engaging with the site and the ads on it.

Pricing Strategy

Pricing

Pricing is the process of determining what a company will receive in exchange for its

products. Pricing factors are manufacturing cost, market place, competition, market

condition, and quality of product. Pricing is also a key variable in microeconomic price

allocation theory. Pricing is a fundamental aspect of financial modelling and is one of

the four Ps of the marketing mix. The other three aspects are product, promotion, and place.

Price is the only revenue generating element amongst the four Ps, the rest being cost centres.

(Wikipedia 2009)

Pricing is the manual or automatic process of applying prices to purchase and sales orders,

based on factors such as: a fixed amount, quantity break, promotion or sales campaign,

specific vendor quote, price prevailing on entry, shipment or invoice date, combination of

multiple orders or lines, and many others. Automated systems require more setup and

maintenance but may prevent pricing errors. The needs of the consumer can be converted into

demand only if the consumer has the willingness and capacity to buy the product. Thus

pricing is very important in marketing. (Wikipedia 2009)

Pricing Objective

Pricing objective can be defined as a goal that guides a business in setting the cost of

a product or service to potential consumers. A pricing objective also underlies the

pricing process for a product, and it reflects a company's marketing, financial, strategic and

product goals, as well as consumer price expectations and the levels of available
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stock and production resources. Some examples of pricing objectives include

maximizing short run profits, increasing sales volume, matching competitors' prices,

encouraging smaller competitors to change industries, or meeting target rates of return. Each

pricing objective requires a different price-setting strategy in order to

successfully achieve business goals. (Business Dictionary 2010)

Citygates Corporation pricing objective, for Enervita Energy Drink, as it is a new product

being introduced into the market, will be to maximize market share, which is to increase sales

in order for our companys unit cost to decrease and in the long run increase our profits.

Another objective is to attract new customers from different age groups. Enervita not only

gives energy to both young and old, but also assist in fighting cancer cells. With this unique

property and the quality of this product, we intend to give our new and existing customers

value for their money. (Business Dictionary 2010)

Pricing Method

Competitive indexing was used to determine a price for Enervita as there is a lot of

competition in the energy drink market, with Red Bull being the leading energy drink in the

world and Monster being in second place. Competitive indexing is a price setting technique

used by marketers, (Wikipedia 2007) it involves using the price of competitors' products, in

determining the price of your own products.

Red Bull and monster has a price of $250 and $320 respectively, therefore in having a

competitive price for Enervita, Citygates will decide to have a price that is less than 4 % of

that of Red Bull and Monster. In other words our price will be less than that of the two

dominant energy drinks in order to create more competition in the market and to increase our

market size. (Wikipedia 2007)

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Pricing Strategy

Pricing strategy refers to activities conducted by companies, aimed at finding a product or

services optimum price. Market penetration is one of the marketing strategies used in

introducing Enervita into the market. Due to the fact that our market is very price sensitive,

market penetration is the best strategy to initiate our product. Our low prices will penetrate

into the market quickly and deeply, therefore increasing a large number of buyers and

receiving high market shares. (Business Dictionary 2010)

Price Adjustments

When Enervita has reached its growth stage, Citygates will be introducing Enervita as a

brand; therefore some pricing adjustments will be made in order to meet that objective. In the

initial staging the company will be giving discounts to customers on our already low priced

drink so as to increase profits for rebranding. After profits for re banding have been incurred,

we will move towards having the prices being fairly increased, to meet the level of credibility

that we will have for the company and its brand. Due to the fact that our energy drink has

unique properties that provides health benefits, the increase of our price to meet a branding

standard, will not affect the number of consumers we will have. (Business Dictionary 2010)

Buyers may think that it may be too high priced, but becoming a brand means the product has

great quality and value, Enervita has quality and value, no other competitor such as Red Bull

and Monster energy drink has properties that will give this much health benefits in just one

consumption. Knowing the benefits of this product, consumers will buy and consume this

unique product, no matter the price. (Business Dictionary 2010)

Segmented Pricing
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Enervita Energy Drink will have different products for different customers, with different

needs. It will not only benefit customers, in fighting cancer cells and boosting energy, but

also targeting customers with diabetes, sickle cell, and erectile dysfunctions. These products

will be retailed to both supermarkets and pharmacies, selling at different prices due to the

locations of each and the different purposes its being sold for. (Business Dictionary 2010)

Demand

The pricing of any product determines the demand for the product and vice versa.

In the introduction stage of Enervita, we had a penetration strategy to go deep and quickly in

the market. In this stage price was at an elasticity, meaning, our prices were low, hence an

increase in demand. Now in terms of branding and there is an increase in the price, there is

still a price elasticity of demand. This is due to the fact that Enervita is a unique product with

high quality and prestige, because of this our customers are less price sensitive and therefore

we will still have a great demand for the product. (Business Dictionary 2010)

Distribution Strategy

We aim to create a product that will be superior in every way to those products that already

exist in this market. The introduction of our product is expected to out sell its counters by

50% in the first years of being on the market. Our customer base will be working

professionals between ages 30-45

Well aim to segment the product by creating a product that is superior to all others and that

will make a customer want no other after they have tried ours. Well segment the market by

making customers feel that we value them and not just their money because of the healthy

product we provide them. We will target Mandeville and the major cities at the launch of our

product, to see what the response will be to the product.

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These individuals were selected as they would yield the full benefits of the product; they will

lessen their chances for developing cancer as well as giving the energy they need to take them

through their daily routines without making them crash afterwards. Individuals who consume

our product will not need to be concerned about consuming our product as the ingredient will

be 90% organic.

Mandeville, Montego Bay, and Kingston will be the targeted areas for the launch our product

to do the first test on consumer response to the product. These areas were selected as they

have a large concentration of individuals who make up our target customers. These areas are

fast paced and have a number of our major business places in the island and will create the

ideal location for the start of the product and they are also easily accessible to customers from

other locations. The main objectives for our distribution channels are:

1. To receive 90% approval and acceptance from our customers within the fir six month

the product has been on the market.

Distribution continues

2. To get approximately 50% of customer awareness of our product within the first six

months of the product being on the market

This will be done through the 8 trucks which the company currently owns and utilises for the

distribution of our other products. Well distribute most of our products in our home town of

Mandeville 40% of the product and 30% in Kingston and 30% in Montego Bay. Well be

placing our product in the major pharmacies and supermarkets.

Current Situation -Market Analysis

Market Definition and Size

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Energy drinks boost up the energy levels and make you feel healthier. Worldwide energy

drinks market is projected to grow at the compounded annual growth rate of more than 10%

by the year 2016. Increasing health awareness among people is playing a significant role in

the rising popularity of energy drinks. The Industry is also continuously experimenting with

products like light drinks or sugar free products to attract female consumers. (Energy Drink

2011)

Energy drinks industry is expected to grow with the launch of new formulations in market.

Huge market potential and growing preference is likely to boost up the growth of this market

to considerable extent. Energy drinks are expected to penetrate untapped markets and older

population. Growth of this market is largely dependent on incorporation of natural and

organic ingredients in these drinks. Growing awareness towards use of natural based energy

drinks is expected to drive this market in near future. Variety of energy drinks with natural

and organic ingredients are in increasing demand which signifies the growth potential for this

industry. (Energy Drink 2011)

Market Segmentation

This research report analyzes this market depending on its important market segments, major

geographies, and current market trends. Geographies analyzed under this research report

include

North America

Jamaica

Threat of new entrants (median pressure)

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Entry barriers are relatively low for beverage industry: there is almost 0 consumer switching

cost and very low capital requirement. There are more and more new brands appearing in the

market with usually lower price.

However Red Bull is seen not only as an energy drink but also as a brand. It has a very

significant market share for a long time and loyal customers are not very likely to try a new

brand beverage.

Threat of substitute products

There are many kinds of energy drink and soda products in the market. Coca-cola for

example doesnt really have a special flavor. In a blind taste test, people couldnt tell the

difference between Coca-Cola coke and Pepsi coke. (Energy drinks products 2009)

Bargaining power of customers

The main competitor, Monster is priced almost the same as Red Bull. Consumer could buy

those new and less popular beverages with lower price but the flavor is different and the

quality is not guaranteed. Large retailers like Shoppers fair locally and internationally Wal-

mart, have bargaining power because of the large order quantity, but the bargaining power is

lessened because of the end consumer brand loyalty. (Energy drinks products 2009)

There are many kinds of energy drink products in the market. People are getting concerns of

negative effects of carbonated beverages. Increasing number of consumers begin to drink

fruit juice, lemonade and tea instead. (Energy drinks products 2009)

Bargaining power of suppliers

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The main ingredients for a soft drink of energy drink include carbonated water, phosphoric

acid, sweetener, and caffeine. The suppliers are not concentrated or differentiated. Any

supplier would not want to lose a huge customer like Monster and Red Bull. (Energy drinks

products 2009)

Competitive Rivalry within an industry

Currently, the main competitor is Red Bull which also has a wide range of beverage products

under its brand. Red Bull, Monster predominant carbonated beverages locally and

internationally while Boom, Liquid Nitro are the predominant carbonated beverages locally.

The companies of these products commit heavily to sponsoring outdoor activities. As Red

bull has a longer history, it is advertised in a more classical approach while Boom and Liquid

Nitro Liquid Nitro tried to attract younger generation by using brand ambassadors. Currently

Red Bull and Monster controls the U.S market share. (Energy drinks products 2009)

There are other energy drinks in the market that become popular, like Liquid Nitro and

Boom, because of their unique flavors and affordability.

Competition and market share

Red Bull continues to dominate as the energy drink leader, but Monster has been catching up

quite a bit in the last two years. The energy drink market continues to grow even in light of

the tough economy and increased health scrutiny. Soda sales have been declining steadily

over the same period, while energy drink sales have been booming. (Market Research 2010)

Share of Energy
Based on Dollar
Drink Top 2 Drink Market (% Drink Top 2
sales 2011- 2012
dollar sales) 2006
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Red Bull 45 Red Bull $4.6 billion

Monster 22.3 Monster $2.6 billion

In Jamaica, Mahfood is expecting to see Red Bull volumes up in dollar sales to J$1.8 billion

by next year. Wisynco, an integrated family business is not only a distributor, but a

manufacturer of plastic products. Wisynco Group Limited, the holding company, is divided

into four divisions. There are its own brands such as its energy drink, Boom, Wata, Cran

Wata, and Bigga soft drinks. (Market Research 2010)

Share of Energy

Drink Market (% Based on Dollar

Drink Top 2 Drink Top 2
dollar sales) sales 2011- 2012

2011- 2012

Red Bull 45 Red Bull $1.8 billion

Boom 35 $ 50 million

Monster 20 Monster $ 30 million

Overview of Red Bull

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Red Bull is the largest producer of energy beverages, with a world market share of 40%.

Although in the textbook Principles of Marketing Kotler defines a competitive advantage

which is what Red Bull has over mainstream competition as An advantage over other

competitors .. by providing more benefits that justifies a higher price (Kotler 2010).

The Microenvironment consists of the forces close to the organisation that affect its ability

to serve its customers the organisation, market channel firms, customer markets,

competitors and publics. (Kotler 2010)

In respect to the microenvironment, by focusing on a product made with only little

differences in the recipe, it could make it difficult if the supplies needed to create the drinks

were lacking. Red Bull has created a good customer market, by trying to appeal to people

working or studying. They managed to expand their brand to the whole world even though

they had some problems with health issues in some countries. People have to work a lot more

and thus interested in energy drinks that can help them push themselves a bit more and

concentrate. But Red Bull mainly focused on attracting younger people through their

advertising. (Market Research 2010)

Red Bull has a lot of marketing going through the media, with lots of different advertising

and with the different sports they are involved with, which helps a lot and made the name of

the brand well-known all around the world. (Market Research 2010)

The Macro environment is the larger societal forces that affect the whole microenvironment

demographic, economic, natural, technological, political and cultural forces. (Kotler 2010)

In the macro environment, the demographics can be used to create more opportunities for the

company, they only focused on young people and they should try to attract older people with

higher buying power. (Kotler 2010)

The economy has a major part in opportunities and threats to the company, depending on the

buying power of people; the company could make more profit or lose money.
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Because Red Bull only has the same kind of product, they do not use too many different

manufacturing techniques and process to create their drinks, but if they had to, that could cost

them a lot to change or improve their equipment. (Kotler 2010)

One of the major threats to the company is the way the drinks are perceived, people become

more and more concerned about health and diet, and Red Bull has had some problems with

health.

Competitors strengths and weaknesses

Strength

Red Bulls unique to the FMCG category marketing strategy could be considered one of the

core competencies of the company. When Red Bull initially entered into the American

carbonated drinks market, Red Bull used already established distributors in order to spread

the product into stores and raise awareness of the brand. However as the drink became more

popular, the company took a different approach, by setting up warehouses, and hiring

youthful people to deliver the product, hence controlling supply to stores and giving away

branded fridges with certain quantities supplied. (Porters analysis 2010)

This type of supply meant that Red Bull could supply and market simultaneously in

supermarkets, pubs, clubs, milk bars, events etc. Red Bull then concentrated its efforts on

building a strong customer base by supplying and marketing at clubs, sporting events,

universities and other places where individuals are open to trying new things, greasing the

wheels of opening up a market segment and creating demand by offering free samples. This

strategy has led to Red Bull hosting parties at nightclubs where the main mixer is Red Bull.

(Porters analysis 2010)

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Also sponsoring extreme sporting events in order to create a customer base and stimulate

demand in the particular market segment including people who like extreme sports and

clubbing. With this wildly successful marketing strategy stems another strength of the Red

Bull brand, this is market leadership. Red bull is the quintessential energy drink and retains a

large market share despite several large competitors including Monster, Mother and V. It

therefore has the ability to set market trends for example those regarding sugar free energy

drinks and energy shots. (Porters analysis 2010)

Weaknesses

Innovation

Red Bull has a relatively small product offering, with all products being brand stretches of the

Red Bull energy drink. These include sugar free, double-size can, bottle, and shot variations

developed simply in response to market trends. Hence with a lot of competitors in the market

having brand name extensions into products such as iced coffee and additional flavours of

their product, which could be used to extend brand recognition, open up new markets

(including those who drink iced coffee as an alternative to energy drink,) and hence retain

market share. This has led to competitors taking over such activities in an attempt to

outperform Red Bull, and in Australia, Frucors V energy drink has succeeded.

This lack of effort to innovate has led to the reliance of Red Bull on small product base,

which could also be seen as a weakness. However this could possibly be seen as a strength as

the company only has one product to market and distribute and can hence concentrate on

such. (Porters analysis 2010)

Market Trends
 P a g e | 31

The energy drink market and the beverage industry at large is going through another big

change. Just 15 years after the initial launch of Red Bull in the U.S. and the subsequent

creation of the energy drink market, it appears that another big shift in consumer taste is

beginning to take shape. The constant threat of a global recession, a rising awareness of an

obesity epidemic, and increasing concerns over the negative effects of constant stimulation

have simultaneously increased consumer interest in functional drinks while making

consumers more sceptical of their benefits. (Porters analysis 2010)

Health Benefits and Nutritional Value of Energy drinks

Uncertainty about the future has altered consumer buying habits throughout 2011 and 2012.

In a 2011 study on the non-alcoholic beverage industry, nearly 70% of beverage

manufacturer survey respondents indicated that they have nominal or no plans to increase

headcount in 2012. Manufacturers are likely to see this trend continue into 2013 with the

slowdown of the economy. The global beverage industry is expected to continue year-over-

year growth of 2.6% reaching $1.6 trillion by 2013. (Market Research 2010)

With world-wide obesity numbers on a relentless march forward, consumers around the

world are increasingly interested in healthier foods and beverages. Soft drinks are largely

falling out of favor with functional drinks coming in to pick up the slack. Soft drink sales

volume has decreased 3%, 2%, and 0.5%. In the past 3 years but it also saw a 0.4% increase

in dollars sold indicating consumers are willing to pay more for quality sodas. Functional

drink sales continue to perform strongly, with energy drinks enjoying a 15.7% increase in

2010 and 14% increase in 2011. (Market Research 2010)

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A global health-conscious shift in consumer buying habits is well under way. Between 2005

and 2009 the incidence of healthy selling-points on product labeling has increased between

20-50%, depending on the benefit listed. Among the leaders are No Gluten, Natural, and

No Sugar. (Market Research 2010)

Energy Drink Market Challenges

Though the global energy market continues to grow, that growth is beginning to slow at an

alarmingly rate. Jonas Feliciano of Euro monitor believes that the energy drink market has

reached a saturation point. He believes this saturation point has been reached earlier than

expected because energy drink manufacturers have historically been poor innovators. Red

Bull, for example, has had two product lines in 15 years original and sugar free. It has had a

few minor offshoots in response to consumer concerns but no true innovations. Monster has

nearly 30 different flavors but no real clear differentiation between the products or their target

markets. (Market Research 2010)

Consumer backlash to energy drinks has been an ongoing concern. France and Denmark had

at one point banned Red Bull because of its use of Touraine. The ban was lifted in 2008.

Regular news reports questioning the negative health effects of energy drinks and the

questionable market practice of targeting teenagers continue to be a point of concern. The

negative attention energy drinks have received warranted or not, has created a large segment

of consumers who arent interested at all in the current offerings. A remarkable 74% of

survey respondents said they dont consume energy drinks and 69% of those non-users have

no interest in trying them. Many energy drink makers have introduced shot versions of

their products as a low-sugar alternative. (Market Research 2010)

 P a g e | 33

Age and market discrimination also continue to be a problem for the energy drink market.

The use of edgy brand names and predominantly black labeling on oversized and flashy cans

alienate older consumers. 18.9% of generation Y consumers (persons aged 18-29) drink Red

Bull more than double the percentage of any other generation. (Market Research 2010)

Growth Potential in the Energy Drink Market

Market research firm Zenith International estimates global per capita consumption of

functional beverages will increase 25% from 2010 to 2013 with energy drinks making up a

large part of this. Growth is expected to be minimal unless manufacturers are able to capture

new markets with targeted offerings. Though Red Bull continues to be the dollar-sale leader

in the U.S., Monster has now taken the lead for volume sales. Monster prices its products

significantly below Red Bull a near 50% discount per ounce and targets a broader range

of consumers with more flavors and slightly different ingredients. (Market Research 2010)

Consumer Analysis

The Red bull brand is predominant in the market and as such this research will focus of this

product as it relates to the nature of the buying decision. The company (Red Bull) whose

name is synonymous with energy drinks worldwide is still showing that it is bullish on the

American market. For the first time in its more than 15 years cultivating U.S. caffeine

cravings, Red Bull is adding new flavors to its line. The three new flavors or Editions, as

Red Bull calls them: cranberry, lime and blueberry. These new flavors were introduced last

fall exclusively. Packaging also plays a major role in capturing consumers. Consumers are

now more health conscious than ever and they seek products that are not only affordable but

must portray quality. Manufacturers must also put a lot of thought and money into making

colorful, graphic and even artistic containers. Looking down the beverage cooler set, they
 P a g e | 34

immediately the eye; especially the eye of the young and hip generation who may not pay

close attention to the affordability but the taste and image of the product. Affordability and

value for money motivates the buying decision as well. These facts contributes positively to

nature of the buying decisions for Enervita as not only will this product appeal to the

younger generation as it relates to the image and taste but its target market scope will broaden

to capture the more mature consumer who are seeks affordability, quality, value for money

and its contributing factors . (Market Research 2010)

Participants

The participants include:

1. Teens/Elderly

2. Working mothers/ Single parents

3. Working class

4. Male/ female

5. Athletes

6. Party Goers

Buyer motivation and expectation

Motivation and perception influence consumer behaviour in many ways. That is why a lot of

attention will be placed on marketing Enervita and sending the right message of the quality,

affordability and value for money. Motivation will derive from the concept that Enervita is

the best energy drink that not only has contributing health factors of eliminating cancers cells

that we all have inside our bodies but is overall the best buy. This drink will be the

contributing factors behind high levels of performance while maintaining health. This

perception is key tool for influencing consumer behaviour. People want to be perceived as
 P a g e | 35

being part of a particular group; they want to be perceived as having a certain taste, flair or

making good choices. (Market Research 2010)

Loyalty segments

Loyalty is located in the Geographic, demographics and the psychographic market segments.

Loyalty is placed in the geographic segments as location of consumers depends on the

availability of the product. This will pose a challenge to the Enervita brand as Red Bull is

located in every shop and store across the island. However, a niche market does exist for the

product, and by capitalizing on the psychographic segment, competition can be introduced.

Using the attractiveness of the product image, the health, performance and cost attributes the

product, growth will gradually take predominance. Based on differences in demographic

factors of different groups of consumers the defined attributes of the Enervita will appeal to a

wide scope of consumers namely: teens, athletes, the working class, party goers and the

elderly. (Market Research 2010)

Macro environment

As described by the American Marketing Association, a situation analysis is "the systematic

collection and study of past and present data to identify trends, forces, and conditions with

the potential to influence the performance of the business and the choice of appropriate

strategies."

Economy and Government

Our analysis brings Jamaica under the microscope. Jamaica is the largest English-speaking

Island in the Caribbean spanning approximately 1 million hectares in size 82 km wide by

234 km longand is more than 2 256 meters at its highest point, Blue Mountain Peak. Its
 P a g e | 36

varied topography and climate allow for a diversity of habitats and growing conditions.

(Scarlett 2013)

Jamaica currently has in place a Growth-Inducement Strategy for the short and medium term,

which establishes a strategic framework for robust economic growth, developed by the PIOJ

in March 2011. This strategy, which is aligned with Vision 2030, addresses the binding

constraints that the economy now faces, and seeks to provide the necessary support

framework to mobilize potentially productive assets and unleash entrepreneurial dynamism.

Several initiatives focused on strengthening the resilience of the built and natural

environment are being implemented as part of the Growth-Inducement Strategy. One such

initiative is commitment by government to improve road networks across Jamaica. Capital

Expenditure of $6.5 billion was recorded by NWA in its road construction drive, while

NROCC, the engineering firm leading this initiative spent an additional $1.7 billion. Product

distribution is expected to be greatly improved, as less time will be consumed to transport

goods from factories and warehouses to retail destinations. This speaks to greater

productivity in an economy that has seen anaemic growth for several decades. (PIOJ Growth-

Inducement Strategy 2012)

Additionally, the government is negotiating an IMF deal which they hope will be signed after

efforts to sure up revenue and cut expenditure in the Public Sector. In its effort to meet IMF

regulations, government has announced to bond-holders and the Jamaican people a National

Debt Exchange NDX. With 100% participation, the government according to Pamela

McLaren, senior manager of the Ministry of Finance would save 17 billion dollars per year

on interest payments. This, along with a 45 billion dollar withdrawal of funds from the

National housing Trust will provide well needed liquidity to Governments coffers. (PIOJ

Growth-Inducement Strategy 2012)

 P a g e | 37

Socio-cultural

Studies also show that gender inequality and patriarchy (social structures where men take

primary responsibility and dominate in their households) encourage multiple sexual partners

for men inside and outside of marriage, while women are required to be faithful and

monogamous. Such socio-cultural practices and norms put added pressures on men to seek

optimal sexual performance. This, of course explains why energy-drink consumption is so

strong in Jamaica and the Caribbean. Research conducted by L Hurlock; MG Lee,

Department of Medicine, University of the West Indies, Mona reveals: The use of energy

drinks has significantly increased in the Caribbean and worldwide as aggressive marketing

campaigns target adolescents and young adults. More than 30% of adolescents reported using

energy drinks and surveys have revealed that energy drinks are consumed by 30% to 50% of

adolescents and young adults. In a study in college students, 51% of participants reported

consuming greater than one energy drink each month. (Wikipedia 2013)

Additionally, the intake of energy drinks are utilized to enhance cognitive performance and to

improve mood and physical vigour.

Laws governing energy drink

The laws governing energy drinks in Jamaica are not stringent. The industry is quite

permeable from a legal standpoint. In December 22, 2011, Cabinet approved the

commencement of a Special Consumption Tax (SCT) on all energy drink. (Wikipedia 2013)

Ecological Effect

Listed boldly in the Jamaica Environmental Action Plan are stringent principles guiding the

protection of the environment! The "polluter pays" principle makes economic actors aware of

the full costs, including the environmental costs, of their decisions by making them pay for
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the cost of avoiding, abating or cleaning up pollution. This principle is often used elsewhere

to recover the full costs of cleanup services such as sewage treatment and the disposal of

wastes. In regard to the use or depletion of natural resources, the "user pays" principle

attempts to charge fees which reflect the value of the resources being used and therefore

ensure that they are not overused or destroyed. (Wikipedia 2013)

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BUDGET

$ $

Projected Sales ( $250x20x10000) 50,000,000

(Cost x case amt x #of case)

Less Cost of Production

Pre-production

Focus Group Participants 1,250,000

Research and Testing 2,000,000

Legal/ Processing 1,500,000

Miscellaneous 250,0000 5,000,000

Production

Material Sourcing 3,000,000

Product production 5,000,000

Canning 2,500,000

Labelling 1,500,000

Labour 2,000,000

Miscellaneous 1,000,000 15,000,000

 P a g e | 40

Distribution

Packaging/Boxing 1,000,000

Trucking 1,500,000

Miscellaneous 500,000 3,000,000

GROSS PROFIT $27,000,000

Less Selling & Marketing Expenses

Advertising

Radio 1,000,000

Television (including community cable) 2,000,000

Print Media 500,000

Flyers 500,000

Billboards 800,000 4,800,000

Promotion 800,000

Special Events 1,500,000 2,300,000

NET PROFIT 19,900,000

 P a g e | 41

ENERVITA

Nutrition Facts

1 can
Serving Size
(250 ml)

Amount Per Serving

Calories 110

% Daily Value*

0
Total Fat 0.0 g
%

100 4
Sodium
mg %

9
Total Carbohydrate 15 g
%

Sugars 14 g

0
Protein <1g
%

Niacin 100 %

Vitamin B6 150 %

Vitamin B12 100 %

Pantothenic Acid 50 %

* Percent Daily Values are based on a 2,000 calorie diet. Your daily values may be higher or
lower depending on your calorie needs.

Ingredients: MEDICINAL INGREDIENTS: Touraine (1000mg), glucuronolactone (600mg), caffeine

(80mg), niacin (18mg), panothenic acid (6mg), vitamin B6 (2 mg), riboflavin (1.65 mg), vitamin B12 (1
mcg) NON MEDICINAL INGREDIENTS: carbonated water, sucrose, glucose, citric acid, isonsitol,
flavours, caramel, HERBAL INGREDIENT: ginkgo biloba(50mg), anamu(9oz).
 P a g e | 42

Information flow chart

Craig Reynolds Julie Dyer

Market Analyst Market Analyst

Jasmine Durrant

New Product
Development Manager

Clyon Clifford

Marketing and Brand Manager

Garvin Dixon Davia Bent

Tracy-Ann Jones
Distribution Sales Executive
Public Relation
Manager
Manager