BA 7050: Marketing Plan

3.) Marketing Opportunity Analysis

a.) Describe current market for your product or service.

• Synergy will be strategically positioned to compete in both the energy

drink market and the sports beverage market.

QuickTimeª and a
decompressor
are needed to see this picture.

Define industry.
• The energy drink and sports beverage markets are two segments of the
overall non-alcoholic/soft beverage industry. This is the industry that Synergy
will be marketed in.
What is the history of the industry?
Functional beverages are growing at the fastest rate – 6.4 per cent in 2008 or two
to three times faster than conventional refreshment beverages according to Beverage
Marketing Corporation. Manufacturers have evolved to combine consumer needs such as
hydration, sustenance, and refreshment whilst also looking at issues such as mental
clarity and acuity - considering their wider target audience who range from mothers to
athletes.beveragedaily.com
 BA 7050: Marketing Plan

"Energy Drinks were the #1 most profitable product from 2005 '
2007 worldwide″
Have there been any recent technology innovations or trends?

• A recent trend in this sports drink segment of the beverage industry has
been the increasing demand from consumers for the manufacturers of sports
drinks to create products which caters to both the needs of the committed athlete
and the casual shopper. Promoting and innovating products to satisfy both types
of buyers has become a key focus and trend in the beverage industry.
• Energy drinks, including sports drinks, are gaining momentum at the
expense of carbonated beverages, according to a new report from Packaged Facts.
The report "Energy drinks in the US forecasts the total US retail value, including
products sold through foodservice channels, will grow at a compound annual
growth rate of 12 percent and reach $9.3bn by 2011.
b.) What is the size and growth trend of the market?

• In 2006, per beveragedaily.com, energy drink sales in the US beverage

market grew by 49.1% over the previous year and outperformed all other
categories in regards to sales increases over 2005
• Market research analyst company, Packaged Facts in Sports Nutritionals
for Active Lifestyles in the US report has predicted that retail sales of sports
nutritional products, including large brands such as Gatorade and Redbull, will
top $12.7bn by 2011.

• The report "Energy drinks in the US" forecasts the total US retail
value, including products sold through foodservice channels, will grow
at a compound annual growth rate of 12 percent and reach $9.3bn by
2011.

• The energy drinks market is embracing natural ingredients and

“sustainable, longer lasting energy” according to a new international
report from Business Insights.

How much revenue per year?

• The market researcher estimates the total retail market value for energy
drinks in the US stood at approximately $5.4bn in 2006, up 18 percent from
$4.5bn in 2005. The market - which includes sales through food and drink service
establishments - grew at a compound annual growth rate of 45 percent for the
2002 to 2006 period. Source: http://www.nutraingredients-usa.com/Consumer-
Trends/Energy-drinks-to-steal-soda-s-thunder .

• Sports drinks-annual retails sales of $7bn (€5.4bn)

Is the market in a growth, mature of decline stage?
 BA 7050: Marketing Plan

• This market is in a growth stage as new product innovations and consumer

demands drives the energy and sports drink market forward.

Both the energy and sports drink segments have shown strong growth in recent
years, driven by demand for natural ingredients that also provide “sustainable, longer
lasting energy”, according to findings released last year by analyst, Business Insights.
The report predicted five per cent growth in the sports and energy
drink sector up to 2011 as result of changing demand amongst consumers.
http://www.beveragedaily.com/Industry-Markets/Sports-drinks-scratching-
surface-of-mainstream-potential-Powerade

c.) Competitive Overview: Who are your primary and secondary competitors?
What are their strengths and weaknesses?

d.) External Market Environment: Are there any economic, political, legal, cultural and/or social
environmental factors to consider?

Social: More than three quarters of US adults show some kind of green
motivation, according to Natural Marketing Institute (NMI)

Economical: Functional foods still booming, despite recession dent

http://www.nutraingredients-usa.com/Industry/Functional-foods-still-booming-
despite-recession-dent

Political: Obama’s administration is expected to update many of the US food

safety laws. Currently energy drinks ingredients are not regulated by the FDA or
any government agency.

4. SWOT Analyze
The report, The 10 Key Factors for Success in Energy Drinks - Europe and the US,
published by The Centre for Food & Health Studies, highlights areas that define
success in the category including:

A benefit that the consumer can feel

Focus on one benefit
Focus on one brand
Lifestyle marketing
 BA 7050: Marketing Plan

Packaging innovation
Innovation in distribution
Premium pricing
Internationalisation
Asian innovation

Strengths

• market share opportunity

• satisfies growing health awareness trend

• offers functionality

• Synergy is superior product and more appealing to health cautious people

Distributors love the product because they make about $8 per every case
they sell compared with about $2 to $4 for their other products. Retailers
love it because they can make from $16 to $20 per case.

Weakness

• no market share

• no brand recognition

• with that comes no customer basis

• many competitors-soft, sports, energy drinks

Opportunities

• growing market, meeting demands for stimulation and active lifestyles

• Has the potential to partner with other store and health-related businesses.

• Innovation opportunity in dynamic beverage category.

 BA 7050: Marketing Plan

Threats

• Competition

• Economy

• location of plants

• union labors

• product pricing,

• The barrier of entry to get into the market is not very high

• drop-off in interest in new products according to the The Natural Marketing Institute.
http://www.nutraingredients-usa.com/Consumer-Trends/LOHAS-consumers-present-
new-challenge-to-food-industry

5. Target Audience
• Gerneration X (Ages between 18 – 40)

• health and fitness

• athletes young and professional athletes, fitness minded adults.

• Gyms

• Education (Colleges and Universities).

• the consumer seeking an energy boost, while not worrying about potential impacts on
their weight.

• Women, Hispanics and a growing aging population as key target groups.

“Well Beings”, 25 % of the population - spend more on natural, organic and healthy products,
indifferent to cost.

“Food Actives”, 16% dedicated to achieving health through proper nutrition.

“Eat, Drink & Be Merry” 23 % - do not care much or know about healthy eating.

http://www.foodnavigator-usa.com/Financial-Industry/Segments-driving-the-health-market

6. Marketing Objectives:
 BA 7050: Marketing Plan

In terms of brands, Red Bull remains the number one energy drink marketer, with
43 percent of the market in 2006. This is followed by the Monster brand energy
drink, at 16 percent of the market, and Rockstar at 12 percent.

The report says that at seven percent of the market, Coca-Cola's Full Throttle also
shows promise. http://www.nutraingredients-usa.com/Consumer-Trends/Energy-
drinks-to-steal-soda-s-thunder

Goals: build customer loyalty in the new market, increase repeat customers by 7% per quarter,
decrease customer acquisition cost by 8% per year., maintain positive, steady growth each
month.

* in sales revenue: $862,464M first year

* units /gallons 1684.5M-2% is 33,69M gallons

* market share: to gain 10% of the market share by 2011

chart with year over year projections for five years. (1)
2011 15%
2012 18%
2013 20% Units

Sales Revenue
2009
400,000,000$243,750,000
2010 $300,000,000
350,000,000$600,000,000
2011
2012 $720,000,000
300,000,000$800,000,000
2013

250,000,000

200,000,000 Units
150,000,000

100,000,000

50,000,000

0
2009 2010 2011 2012 2013
 BA 7050: Marketing Plan

2011 15%
2012 Market
18%share % of 2B units
2013 20%
20%
20%
18%
18% Sales Revenue
2009 $120,000,000
16%
2010 $300,000,000 15%
2011 $600,000,000
14%
2012 $720,000,000
2013
12% $800,000,000

10%
8%
8%

6%

4% 3%

2%

0%
2009 2010 2011 2012 2013

Market share % of 2B units

Sales Revenue

2011 15%
2012 18%
$1,400,000,000 $1,280,000,00
2013 20%
$1,152,000,00 0
$1,200,000,000 0
Sales Revenue $960,000,000
$1,000,000,000
2009 $192,000,000
2010 $480,000,000
$800,000,000
2011 $960,000,000
2012
$600,000,000 $1,152,000,000
2013 $480,000,000
$1,280,000,000
$400,000,000
$192,000,000
$200,000,000

$0
2009 2010 2011 2012 2013

Sales Revenue

7. Pricing Strategy: quality maintenance - Substantiate a quality image positioning.

Match price of top 3 competitors. Looking to position based on a price relative to competition.

List pricing for each offered product or service. $3.2 for 16oz bottle or $0.2 per ounce

Why did you choose your pricing strategy? We follow rivals who have dominant share.

How will your pricing position you against your primary competitors?

Price is an important attribute sought by first time customers. We offer a new product with better
quality on the same going rate price.

Create a chart that lists all of the relevant features on the left. Across the top, list your product
and all of your competitors. Check off which competitor has each feature. List product price at
the bottom of each column. (1-2)
 BA 7050: Marketing Plan

Features/
Competito Synergy RedBull Monster Gatorade PowerAde FRS
rs

Sustained, long
Energy lasting energy, Sustained
effect no crash none none energy, no crash

Healthy brown Sugar&gl Sugar&g Natural juice

Sweetener rice syrup ucose lucose HFCS, sugar HFCS concentrates

Energy Natural Caffeine/

origin Guarana Caffeine guarana None none Caffeine

Source of
electrolyte
s for
rehyrdatio
n ✓ ✓ ✓ ✓

Carbonati
on ✓ ✓

Artifitial
coloring/fl
avoring ✓ ✓

Vitamins/
minerals ✓ ✓ ✓ ✓

Antioxida
nt source ✓ ✓

Fruit juice
based ✓ ✓

Price per
oz 0.23 0.25 0.12 0.23

8. Distribution: What is your distribution strategy?

Synergy will be distributed through these channels: health food stores, coffee houses,
 BA 7050: Marketing Plan

supermarkets, convenience stores, vending machines.

Why? Create a chart to show channel design.

Synergy Plant Wholesaler Retailer Customer

Give examples of channel members as appropriate. (1)

Whole Foods Market distributors; F&M Distributors, Warren, MI-distributor to local health food
stores. Biagi Bros Trnasportation&Warehousing (nationwide)

9.) Promotion Budget

Promotional Strategies:

1. Advertising

• Television – reaches large audience and support Synergy’s “for everyone”

target market

Lifetime – targets both single and married females

MTV/VH1/BET – targets younger consumers; early 20’s and college students

ESPN/FOX Sports – targets athletes and sports fans; mostly men

• Magazines – reaches several different segments separately; reaches athletes

through sports magazines, single and married women through women’s
magazine, and the working professionals through business magazines

• Internet – paid internet advertising uses current technology to reach a variety

of different types of consumers and is cheaper than television advertising;
viral ads via YouTube has minimal costs because its free to mass distribute

• Direct promotion in the stores, where customers are able to try the drink

2. Public Relations

• College Campus campaigns – set up booths on college campuses where students

frequent (food courts, book stores, open areas where students pass to get to class);
pass out free samples and opportunities for students to sign up for coupons via
email and to enter a contest to win a free supply of Synergy
 BA 7050: Marketing Plan

• Corporation Partnerships – provide free samples for company meetings and/or

conferences where there will be a large number of working professionals

• Co-sponsor local athletic events to raise the visibility of the brand name.

3. Sales Promotion

• Athletic Partnerships (professional and college sports teams) – offer Synergy

at a bulk price or significantly discounted price for sports teams who purchase
a large quantity

• Attached coupons on bottles to encourage consumers purchase more of the

drink

• Offer coupons via email and as a cut-out in magazine ads

• Place colorful displays in large supermarket chains with coupons and an

opportunity to enter a contest to win a free supply of Synergy

• promote a video contest on youtube... the best video wins 1000 bucks cash
and a year supply of Synergy.

Why did you choose that mix?

• Synergy’s greatest competitors are sports drinks (Gatorade and PowerAde) and
energy drinks (Red Bull, Monster Energy, 5 Hour Energy)

• Gatorade and Powerade target athletes through television commercials, viral ads,
magazine ads, and sports team partnerships

• Red Bull targets college students through college campus campaigns

• 5 Hour Energy targets athletes through television commercials and athlete spoke-
persons

• * Synergy’s promotional mix encompasses all of the promotion methods of its

competitors, which ensures that we are visible and actively competing within the
same market segments. In addition, Synergy also utilizes some innovative
methods that many of its competitors are not using in order reach non traditional
segments and give Synergy a competitive edge.
 BA 7050: Marketing Plan

• Once Synergy has obtained strong brand awareness, some not traditional methods
may be eliminated.

Media Schedule

Fe
Jan b Mar Apr May June July Aug Sept Oct Nov Dec
Tevlesion
Internet
Magazines
College
Campus
Campaigns
Corporate
Sponsorships
Super
Market
Displays

Why did you choose this media schedule?

Brand awareness and image are necessary to succeed. Our marketing campaign must connect
with the target to encourage trial purchase and eventually brand loyalty. Frequency-to ensure the
consumer recognizes the brand. Target market is among the world’s most intelligent and active
consumer segments.

10.) Promotion Budget (5-20% of sales)

• Once annual sales have been projected, 20% of sales will be allocated to the promotion
budget.

• 20% will be allocated in the first few years to infiltrate the population and create brand
awareness

• After the first few years , once a strong brand awareness has been created, the promotion
budget may be decreased to 10% or 15%

*Figures will be based off of 5 year sales projections from #6.) Marketing Objectives*
BA 7050: Marketing Plan