Executive Summary
Carpe Diem Beverage Co. is a small limited liability company that has been established to manufacture and distribute healthy energy drinks in the US market.
The Mission of the company is to be a leader in the manufacturing and marketing of healthy, nutritious beverages in the USA and to satisfy consumers’ needs while at the same time enhancing the individual and society well being. The marketing objective of the company is to capture 0.015% of the US energy drink market in the first year of its operation and to create significant brand awareness in the market especially among the Generation Y population.
The Strengths of the company include a new unique product that is healthy and taste better than its competitors products. The company’s image is favorable due to its social and environmental friendly techniques. The weaknesses of the company include limited financial resources, limited knowledge and experience and lack of a distributor network.
Opportunities of the company include strong growth opportunities in the segment, global marketing opportunities, increasing demand for healthy soft drinks and low barriers of entry. Threats include a strong reaction from established and resourced competitors and possibility of imitations and launch of similar products by competitors
After considering the SWOT of the new company, there are considerable opportunities for the new product in the market and the level of threats is low and manageable. I therefore recommend the marketing plan to be implemented.
Outline
- Abstract
- Strategic Marketing Planning: Mission, Vision, Objectives and Values
- Situational Analysis
- Industry Overview
- Company position in the Industry, Positioning and Targeting
- Macro Environmental Factors
- SWOT Analysis for Carpe Diem Beverages Co. Ltd
- Marketing Mix Strategies
- Implementation, Evaluation and Control
- Time Plan and Budget.
- Work Cited
Introduction
The soft drink market in the USA has been declining gradually in the recent past which has been attributed to health concerns about carbonated sugary drinks (Rosman) and the effects of the global financial recession which has caused consumers to abandon non essential purchases (cnbc.com).
At the same time, healthy beverages such as ready to drink teas, bottled water, fruit juices and other non carbonated drinks have experienced steady growth (cnbc.com). This trend indicates that consumers are shifting away from fizzy sugary drink and prefer healthier and economical alternatives.
The energy drink segment specifically has experienced the fastest growth in the industry; since its introduction in the US market in 1997, the segment has grown at an average rate of 20% compounded annually (Heckman, Sherry, and De Mejia). The market was estimated to be worth $4.9 billion in 2008 and was expected to reach $12.8 billion by year 2013 (Heckman, Sherry, and De Mejia). This offers a very lucrative opportunity that is attractive to new entrants in the beverage industry.
Carpe Diem Beverage Company is a new company based in Ogden City, Utah which has developed a new energy drink product named Carpe Diem that intends to exploit the marketing opportunity that currently exists while at the same time delivering a superior healthy product to consumers. This paper outlines a strategic marketing plan for the introduction and marketing of Carpe Diem energy drink in the US market.
Strategic Marketing Plan for Carpe Diem Energy Drink
Mission Statement:
Carpe Diem Beverages Company mission statement is to be a leader in the manufacturing and marketing of healthy, nutritious beverages in the USA.
To satisfy consumers needs while at the same time enhancing the individual and society well being through the use of socially and environmentally friendly production and marketing techniques. To create and sustain mutually beneficial relationship between the company and its partners who include employees, distributors, suppliers, customers, shareowners and the community in which the company operates.
Vision:
Its vision is to achieve its mission; Carpe Diem Co. has developed a healthy, low caffeine, and low sugar, fruit based energy drink which it intends to manufacture and distribute using highly advanced, socially and environmentally friendly techniques. The company will invest in continuous innovation to improve both the product and processes.
Values:
The company values are similar to the values of the brand values; they include uniqueness, honesty, integrity, leadership, partnership, respect, productivity, sustainability and growth. These values are synonymous to the values of the people of Utah.
Situation Analysis
Energy drinks are beverages that directly boost people’s energy; they increase energy due to the high content of sugar, caffeine, taurine, herbal extracts and vitamins. Energy drinks are classified as functional beverages because they are consumed by convalescents, athletes and the youth to replenish energy, rehydrate the body, enhance physical endurance, reduce mental fatigue, increase reaction time and improve moods (Heckman et al).
Despite the increasing popularity of energy drinks, health concerns have been raised that concerns them. Due to the high level of sugar, caffeine and taurine contained in energy drinks, they are suspected of causing negative health effects if consumed in excess (Heckman et al).
Carpe Diem energy drink is a superior, healthy product because it uses real fruit as its base products rather than carbonated sugars. It also uses artificial sweeteners which have low calorific contents. The brand also utilizes natural energizers such as green tea extract, ginseng and guarana which in addition to being healthy are also antioxidants (Heckman et al). Thus, Carpe Diem delivers similar levels of stimulation while it contains less unhealthy content.
Industry Overview
Energy drinks first appeared in Asia in the 1960’s (Heckman et al). At the time their ingredients contained vitamins, taurine and ginseng and were used for many years to provide sustained energy, reduce mental and physical (Heckman et al).
From there they were introduced to Europe and later in 1997, brought into the US market; since their introduction into the US market, the segment has grown rapidly and is now a multibillion industry. Between 2004 and 2009 for instance, the industry grew by a staggering 240% in the US alone (Mintel).
In 2008, revenues from the sales of energy drinks in the US reached $4.8 billion and were projected to reach $10 billion and $12.8 billion in 2010 and 2013 respectively (Heckman et al). According to industry analysts Mintel, new energy drinks product launches, in this segment grew by 110% in 2008 (Mintel).
There are over 200 brands of energy drinks in the USA, which include brands from all the major companies such as Coca-Cola, Dr Pepper and Pepsi. Most of the market share is held by a few brands led by Red Bull which holds about 42% of the whole market (Bevnet.com). Despite investing heavily in product development and marketing, major companies such as Coca cola and Pepsi have only achieved marginal success in this segment. The table below provides a breakdown of market share of various energy brands that are currently at the market.
Table 1: US Energy Drink Market Share (Source: Heckman et al).
Position of the company within the industry
Carpe Diem is a small limited liability company owned by its two founder members. The company will operate from a small warehouse outside Ogden city and will employ 10 employees. The two founders will lead the organization in areas where they possess both academic training and professional experience.
One of the founders will be the president of production and operation while the other will be president of finance, marketing and administration. Due to the limited resources available, the company seeks to minimize cost and to maximize on every dollar spent.
The company will therefore pursue a niche marketing strategy and will position itself as a specialized producer of high quality and healthy energy drink which is suitable for medical, sporting and special dietary uses. Due to limited financial resources, the company seeks to exploit market opportunities that are in close proximity. Thus the company will initially concentrate on the market opportunities in Ogden city and Utah before extending to the whole of the US.
Positioning
Carpe Diem will be positioned as a healthy energy drink which contains real fruit concentrate and no sugar and caffeine. Due to its low sugar and caffeine content, the product will appeal to convalescents, diabetics, vegetarians and health conscious members that constitute mainstream market.
Targeting
Carpe Diem targets the youth’s segments who are the main consumers of energy drinks and the product is designed to appeal to young people whose age is between 15 and 35 years. It is estimated that this age group comprises about 25% of the US market (Kravewski).
The lifestyle of the members of this group makes them to consume products that give them energy boosts, which also keeps them awake for long periods of time. This segment is easily accessible and can be effectively targeted because they are mainly found in high schools, colleges and campuses and in metropolitan centers across the countries.
The segment is also accessible through most of the marketing communication channels that are currently available. These include TV, radio, newspapers and magazines as well as new media such as the internet, social media, and mobile phones amongst others. The members of this segment are able to afford the product since most of them are employed and have minimal financial responsibilities compared to other age groups.
Product Philosophy
As the name aptly suggests, Carpe Diem is a call to consumers who are mainly the youth to make the best and the most of the moment. It encourages the users to enjoy the present time, to maximize on the available opportunities and to be careful how they use the present time because it will determine their future.
This resonates with the product personality, which aim to energize users to stay longer so as to be able to make maximum use of the present moment. Its health conscious characteristics guarantee that there are no future negative consequences arising from current consumption.
Total Market Opportunity
According to industry analysts total market value of the energy drink market in the USA was estimated to be about $10 billion just recently in 2010. Furthermore the market is expected to have surpassed the $12.8 billion mark by year 2013. Carpe Diem Co seeks to capture 0.01% of the market in the first year of its operation between 2011 and 2012. This will mean that the total value of its market share is estimated to be about 1million dollars.
Macro Environmental Factors
Political Environment
The political environment in Utah and the US is conducive for Carpe Diem Beverage Company. Both federal and state governments have put in place measures to encourage investments with a hope of creating employment; as such the company should take advantage of tax benefits and better regulatory environment when establishing its operations.
Economic Environment
The effects of the economic recession are still being felt in many parts of this country. Consumers have less disposable incomes thus are limiting the purchase of non-essential products such as soft drinks and energy drinks. Others are unable to purchase products because they are out of work. However the economy is showing signs of recovery and long term prospects look favourable.
Social-Demographic Environment
The primary target market for Carpe Diem energy drink is the youth of ages 15 to 35 years. This market is substantial as it consists of about 25% of the US population (Kravewski) and keeps growing. The secondary market includes athletes, convalescents and the main soft drink market amongst others.
Technological
The technology and science in the manufacture and distribution of energy drink is well developed in the US market and a host of specialized engineering and food specialists exist which the company intends to use as its consultants.
The company should outsource these specialized services. The company has developed a unique formulation that contains no sugar and less caffeine in its products which is expected to draw the market to the company’s brand.
Ecological
Soft drink manufacture uses a lot of fresh water and is energy intensive. The packaging material used such as aluminum and plastic ends up in landfill yet its non-biodegradable. The company intends to use 100% recyclable packaging materials and has developed a system that uses 8% less water and energy.
Fig 2: Carpe Diem’s SWOT analysis
Strengths
The main strength of Carpe Diem energy drink is its healthy contents. It’s a revolutionary product in the functional drinks market segment which unlike other products in this category contains no sugar and low caffeine contents. The drink is also sweeter than other brands; the main brand in this segment RedBull has been described as ‘bitter’ by many consumers. The company has established a new production technique that is environmental friendly and this is expected to enhance its image in the market.
As a company founded and based in Ogden City, Carpe Diem Beverage Ltd has strong values such as respect, hard work, Integrity, loyalty, friendliness and partnership which are similar to the values of the people of the state of Utah; all these are its strengths. It is expected that these values will form a strong connection and bond between the brand and the market.
Weaknesses
The weaknesses of the new company are obvious even to its competitors who might use them to their advantage. Despite having a unique and revolutionary product, the company lacks both adequate financial and skilled human resources to enable it to fully implement its marketing plans.
The company also has limited experience and knowledge in beverage marketing as well as manufacture given that it is a new Company. Additionally, the company does not have an established distributor network which takes time and resources to establish and put in place.
Opportunities
The demand by consumers for healthier products is the greatest opportunity that Carpe Diem has. The market is expected to receive the new product well and the rate of growth in demand is expected to be fast and steady over the coming years based on market data. Generally, the energy drink market has recorded increased revenues since their introduction in the US market in 1997.
This indicates that the segment that Carpe Diem Beverage Co is entering is an attractive market. According to research, there are low barriers of entry into the energy drink market which could be attributed to the fact that majority of the market share is controlled by little known foreign owned RedBull Inc.
There are also numerous other small companies that operate profitably in this industry. Besides this, there are opportunities to expand into the international market which is the reason that the company is considering expanding into the North American market first, and thereafter to Europe, Asia and Middle East.
Threats
The main threat that the company faces is the possibility of a strong backlash from established competitors who besides having strong market share also have both financial and skilled human resources to effectively frustrate its entrance to the industry.
The concern amongst customers and government agencies about excessive consumption of energy drinks might affect the industry in the long term and reduce its attractiveness. There is fear that input prices may increase and this may affect the company plans especially since it is operating on a lean budget thus sudden changes in input prices will affect its plans significantly.
The following table provides a summary of additional SWOT elements of the Company
Figure 3: SWOT
The major marketing objectives of the Company include the following; to capture 0.015% of the US energy drink market in the first years of operation. Secondly, to create significant brand awareness in the market especially among the Generation Y; that is youths of between 13-30 years whom constitute the main energy drinks’ market share.
Thirdly to establish the company’s presence in the energy drink market first in Ogden city and surrounding metropolises in Utah, then in neighboring states and later in the whole of the US. Marketing Objectives:
Marketing Mix Strategies
Brand Name: The brand name selected is Carpe Diem which suggests seizing opportunities and making the best of the moment. The energy drink will be packaged in 200ml aluminum cans and in 350ml and 500ml plastic bottles. The plastic bottles are of stylish and unique design such that consumers can use them as water bottles that are popular with athletes.
It is expected that the re-usability of Carpe Diem energy drink bottles as water bottles will increase brand visibility especially among the youth and stimulate first and repeat purchases. The selected brand logo for Carpe Diem suggests boundless energy, frenzied action, fun and entertainment.
The main benefit of Carpe Diem over its competitors is its low sugar and caffeine content and will be positioned as a healthy beverage that has limited or no long term negative effects. The benefits of using the brand includes ability to provide sustained energy, reduces mental fatigue, improve moods and physical endurance as it contains antioxidants such as green tea extracts and ginseng which are healthy to the body.
Carpe Diem is unique because of its healthy contents; thus it will appeal to special segments of the market such as the convalescents, diabetics, athletes, and health and fitness conscious consumers who wish to replenish their energy without risking their health.
Carpe Diem’s brand image of an energy drink that is packed with lots of energy yet healthy and enjoyable to drink is expected to attract consumers whose values and image are similar to the brand. It will especially appeal users who view themselves as strong, full of activity and life but are careful about their health and lifestyle.
Pricing Strategy
As a new product in the market, market skimming strategy will be used. The company intends to recover much of its investment early before imitations and similar health related energy drinks flood the market leading to price competition.
In order to reinforce the brand position as a unique healthy product, it is suggested that its price be slightly higher than its competitors. However, the price should be realistic to ensure that the brand delivers value to customers.
Fundamental energy drink business is lucrative, the cost of input and production is very low and most of the expenses are incurred in marketing and distribution. The company therefore expects a profit margin of between 30-40%.
The company will use special pricing tactics to stimulate purchase; these strategies should include discounts for bulk purchases. The company will use discrimination tactics whereby prices of the brand at school and colleges will be lower compared to prices of the brand in hospitals, sports centers, bars and restaurants.
Distribution Strategies
The company should pursue an exclusive distribution strategy whereby only selected retailers will be allowed to distribute the brand. This is expected to solidify the image of exclusivity and solidify the position of the brand as a premium product.
The main distribution channel to be used is supermarkets; this is because most of consumer shopping today takes place in supermarkets. The product will also be distributed through pharmacies, drugstores, selected bars and restaurants and in sports venues.
The company intends to intensively cover the geographic area around Ogden city first and ensure it is adequately supplied. Because of close proximity to this area, limited resources will be used in distribution. The company will also take advantage of the intimate knowledge of the geography and demographics of the Ogden city and its surrounding areas.
Finally, the company intends to establish strategic distribution centers in different location so as to ensure all areas are adequately supplied at any given time. These distribution centers will stock adequate quantities of the brand to ensure retailers’ orders are quickly filled. The company will contract national distribution firms to help distribute the brand in other States, regions and other parts of the country.
Integrated Marketing Communications
The overall objectives of the company’s marketing communication strategy are to create brand awareness, establish brand position, stimulate purchase and encourage repeat usage.
The communication strategy for the new product will comprise a massive product launch media campaign in Ogden city and in State of Utah, and thereafter a targeted media campaign directed toward selected market segments. The budget allocated for market communication in the first 6 months is $300,000.
Advertising Strategy
Advertising is the most important tool in the integrated marketing communication strategy. The company will develop creative ads which will be placed on radio, TV, magazines and in mainstream newspapers in Ogden and Utah.
The company will also use outdoor advertising tools such as billboards, posters and branded vehicles. The company will invest in point of sale displays and in-store advertising to attract consumers’ attention in shopping malls.
Viral marketing strategies and social media tools will also be used. This strategy is expected to be very effective especially with the youth who are tech savvy and enjoy creative fun advertising messages. Social media marketing will also engage the youth in the brand’s activities and create a strong fan base for the brand.
The company will use celebrity endorsement strategy whereby it will recruit one of the leading sportsmen of the Utah Basketball team to endorse the product. This is expected to create a positive and direct connection of youthful consumers and the product as a result of the celebrity endorsement.
The company will use sport sponsorship as one of its main promotion strategy it should sponsor annual sporting events such as college basketball, football, hockey, skate-boarding, and extreme sports that are popular with the youth and that require extra energy to perform.
In addition to advertising and sponsorship, the company will undertake a vigorous promotion campaign that will involve personal selling. Specialists such as nutritionists and medical doctors will be recruited to give health related talks and to endorse the health benefits of Carpe Diem.
Qualified sales persons will be recruited for a short period to make direct presentations to doctors, hospitals, pharmacies, drug stores, schools and athletic teams, to explain to them the health aspects of the new product. The company will also distribute pamphlets and brochures in commercial centers that contain information about the new product.
Implementation
The implementation of the marketing plan will require the company to acquire extra talent; this will require Carpe Diem Beverage Co to create a new organization structure. The company will initially employ 10 new employees to work in production, procurement and in marketing. The new employees need to be inducted into the organization, and to be provided with training so that they can understand and appreciate the organization products, processes and values.
The Company will recruit specialist agencies to assist in its marketing strategies. These agencies include management consultants, advertising agencies, marketing research companies, media planning and buying agencies, PR agencies, physical distribution firms, financial advisory firms, and resellers among others. The directors have to carefully select among several companies and should consider the company’s limited financial ability and the enormous challenge of entering a market with established competitors.
The main activities of the marketing program are 1) product launch which will be mainly a media event where the product will be introduced to the media and the public. 2) The product goes on sale on a particular date preferably 12 -24hrs after the launch. 3) Company ensures distribution of the product in selected stores in Ogden City, metropolises in the state of Utah and thereafter in neighboring states.
Control
The company will establish control standards that will be used to guide and evaluate performance. These includes: input controls, process controls, output controls. Additional measures include, cost controls, product performance measures, price controls, distribution and integrated marketing communication controls.
Overall measures of the organization’s performance include, cost, revenues, profitability, market share and company image. Other control required are informal controls that will guide individual employees’ behavior, organization culture, and departmental expectations.
Evaluation
The Company’s actual performance will be evaluated against marketing planning objectives and specific performance standards. After evaluation, the management will use the information acquired to redesign marketing planning activities. See Implementation Schedule attached.
Works Cited
Cnbc.com. “Soft Drink Sales Fall, but Dr Pepper Gains Share, 2010.” Web.
Bevnet.com. “Channel Check; Beverage Spectrum, 2008.” Web.
Dolan, K. “The Soda with Buzz: Clever marketing helped Dietrich Mateschitz turn a so-so beverage into a billion-dollar.” Forbes Magazine. 2005. Web.
Euromonitor.com. “Soft Drinks in the US.” Euromonitor. 2011. Web.
Ferrell, O. & Hartline, D. M. “Marketing Strategy.” Ohio: South-Western. 2011. Print.
Heckman, M., Sherry, K. and De Mejia, E. G. “Energy Drinks: An Assessment of Their Market Size, Consumer Demographics, Ingredient Profile, Functionality, and Regulations in the United States.” Comprehensive Reviews in Food Science and Food Safety, 9.3 (2010): 303–317. Web.
Kravewski, K. “Generation Y and Why They Matter Suite101. 2009.” Web.
McDaniel, C. Lamb, C. & Hair, J. “MKTG4.” Ohio: South-Western. 2011. Print.
Mintel.com. “Energy drink ingredients continue down unhealthy path” Mintel Press Release. 2009. Web.
Rosman, K. “Why Diet Coke Beat Out Pepsi.” The Wall Street Journal. 2011. Web.