Power-Up
Jesse Patterson
Jose Garcia
Arturo Falcon
BUS 306
Fall 2014
1
Power-Up
Hyperlinked Table of Contents
Abstract
Executive Summary
SECTION 1
Situation Analysis
Market Summary
Geographics
Demographics
Psychographics
Market Needs
Market Trends
Market Growth
SWOT Analysis
Competition
Product Offering
Keys to Success
Critical Issues
2
Power-Up
SECTION 2
Marketing Strategy
Mission
Marketing Objectives
Financial Objectives
Target Markets
Positioning
Strategies
Marketing Mix
Marketing Research
Financials
Controls
Implementation
Marketing Organization
Contingency Planning
References
3
Power-Up
4
Abstract
In this a detailed marketing plan for the development of the product Power-Up 2-in-1. In today’s
beverage market there are energy drinks and sports drinks that provide distinctive benefits.
Energy drinks provide a boost of energy while sports drinks provide electrolytes.
Power-Up is different than what is currently on the market because it combines the benefits of
both an energy drink and a sports drink in order to best serve its target audience. Power-Up
makes it possible for people to consume both products in one single serving. By providing a 2in-1 product, Power-Up has the potential to rival both the energy drink and sports drink markets.
Power-Up will be priced competitively in order to quickly gain a market share as people note the
combined benefits the product offers. Power-Up’s marketing will differ from both the energy
drink and sports drink markets in that Power-Up will be presented as a healthier product and not
just aggressively marketed toward males. By marketing the product to all busy adults from
young to middle aged, the marketing can resonate better within a larger demographic and reach
its potential as the next drink of choice.
Executive Summary:
When people want energy, the go-to drink is one of the many popular energy drinks on the
market. When people want to rehydrate and recover after a work out, they are quick to grab a
Power-Up
cool sports drink. However, now there is a product on the market that can give people the
benefits of both energy drinks and sports drinks in only one drink and for the same price as one
of the others. It creates a new market, and as the innovator in that market, it will have a
competitive edge if it can quickly gain momentum.
The problem with the marketing in the energy drink market is that it can seem exclusionary to
people. Many companies portray their products as a drink for a certain lifestyle which can mean
that only select groups can relate to. Energy drinks can often be portrayed as the premier type of
drink for the young male crowd or party crowd, which can make older people and women feel
less inclined to purchase.
Power-Up aims to be a more sophisticated drink that can appeal to a broader variety of people.
Power-Up will step away from traditional energy drink advertising and be more inclusionary so
that it can have mass appeal. People will look at Power-Up and feel that it is the smart and
upscale choice when it comes to energy and rehydration.
Because it will do what a sports drink can as well as what an energy drink does, it needs to be
marketed as a product that can not only help a busy person at work but complement a fit
lifestyle, thus separating it into its own market.
SECTION 1
Situation Analysis:
● When it comes to energy drinks and sports drinks, people often settle for what is on the
market. Those who want a sports drink choose to drink a beverage with electrolytes and
5
Power-Up
6
those who need energy choose one of the many energy drinks available. Although the
market is impacted with so many choices for both energy drink and sports drinks, there is
not a truly recognizable product that combines the qualities of both drinks. Someone who
participates in activities requiring physical effort would benefit from the energy obtained
from an energy drink and the regenerating properties of an electrolyte-infused drink. The
focus on exercising has grown into a huge trend and with that trend increase comes an
increase in the number of potential customers for a drink that combines the benefits of
both energy and electrolytes.
● People are unaware of the possibilities of this product because it has yet to be produced.
While people may be quick to drink a Gatorade or a Red Bull, what they gain with one
drink is at the expense of missing out on the benefit of the other. This product will gain
instant popularity in both markets and, in fact, create a new one. Consumers will quickly
see the value of this product and make it their go-to drink.
Market Summary:
● The energy drink industry is a business that is projected to grow from a $12.5 billion
industry in 2012 to a $21 billion industry by 2017 (Food Product Design, 2013). The
industry looks promising, as it has grown tremendously in a short matter of time. The
sports drink industry is growing at a constant pace; the industry grew 6.7 percent in the
year ending April 15, 2012. As a result, there has been an implementation of different
sports drinks that suit different physical activities (Beverage Industry, 2012). While the
product will be meant for all types of people, younger people who may be more active
are the target market. If they adopt the product into their lives other groups will follow.
When it comes to exercising, people focus on health and rejuvenation. If young people
adopt the product, youth and health can be associated with the electrolyte-infused energy
drink.
Geographics:
● Hot climate areas- Hot weather equates to more active people and more dehydration.
Power-Up
7
● Major cities- Major cities help with targeting a large group of people at once.
Demographics:
● High school/ college crowd- Younger people have more spare time to dedicate to fitness
and exercise as well as being more engaged in sports activities.
● 20-30 year-olds- They are also likely to be more physically active because they have
more mobility.
Psychographics:
● Fitness conscious lifestyle- People who exercise can have much to gain from drinking
this product to quench their thirst and energize them. While typical sports drinks quench
thirst, this electrolyte-infused beverage will also add energy to a workout.
● Busy lifestyle- People who are busy may find a sports/energy drink more appealing than
just a regular energy drink. Even if they are not active, people may be more inclined to
choose this product because they will believe that more is better. People want more
benefits. They will choose a product that can give them something extra even if they may
not need it.
Market Needs:
● We chose to come up with a drink that will give you a boost, like coffee or an energy
drink, and is also electrolyte infused like a sports drink. This will benefit those who are
looking for a boost of energy and the hydration of a sports drink with electrolytes. Our
research indicates that there is not a product out in the market that will satisfy both needs.
During first-hand conversation, students from the university and their family members
agreed that there is a need in the marketplace for an energizing sports drink.
Power-Up
8
Market Trends:
● The market for sport drinks continues to see growth. According to an article Energy
Drink Evolution by Donna Berry, she states, “The number of consumers who report
drinking one or two sports drinks in the last 30 days increased 7.1% between 2007 and
2012” (Berry, 2013). We can conclude the trend for these drinks will continue to
increase.
Market Growth:
● According to an article, Energy Drinks and Shots: U.S. Market Trends on the website
packagedfacts.com, “while the energy drinks and shots market may be a small component
of the non-alcoholic beverage industry, it is perhaps the most dynamic market—growing
60% from 2008-2012.” Furthermore, it also mentioned that “Packaged Facts projects
sales of energy drinks and shots will grow to a value of $21.5 billion by 2017, driven by
continued economic recovery, expansion in retail distribution, and strong potential in new
product development.
● Market opportunities are evident through product innovation (especially in energy drink
mixes)” (packagedfacts.com, 2014). In saying this we see that there is great opportunity
for a new product like ours. It is a mixed drink with two benefits that is innovative. The
potential for our drink to be successful is high because it infiltrates both markets because
it has more than one typical benefit as it combines the two major benefits within the
energy and sports drink markets.
SWOT Analysis:
● Strengths: We have a product that is different from what is readily available in
stores. Our product may feature the qualities of other products but it brings in the
features of both energy and sports drinks.
● Weaknesses: Since we will be pioneers in developing this product, there are
higher costs in researching a product and manufacturing it. This may lead to a
higher price per item which can be a disadvantage.
Power-Up
9
● Opportunities: We can take advantage of the fact that people would like to get
two results with the convenience of having two drinks in one. People want a deal,
so while there may be a convenience fee for buying the product as it is, the results
delivered will be the value behind the cost.
● Threats: There are threats to our product because there are already so many
competitors in both industries. Though our product is different, it needs to be a
knockout, gain momentum, and be the leader. If popularity starts to fall, many
other competitors can pick develop a product similar that can become more
popular.
Competition:
● Our product’s biggest competitors are companies that are already in the individual
markets of energy and electrolyte beverages such as Red bull and Gatorade. The
ease of which these similar companies could rebrand their current products will
create product competition. Red Bull markets their product as an energy drink that
“gives you wings” (Energy Drink, 2014). Red Bull focuses on the extreme sports
target market such as surfing and mountain biking enthusiasts, whereas Gatorade
focuses on the mainstream sports target market such as soccer and football. The
electrolyte-infused energy drink appeals to a much broader audience because all
types of physical activity can have benefits with both the energy and hydration the
drink will provide.
Product Offering:
● The new energy and electrolyte mixed product will be sold in the drink industry standard
of aluminium cans from refrigerators. It will have a logo on it along with the federal
required ingredients list and percentages break down of contents. The packaging will be
designed in a colorful way that is vibrant and represents the energy and hydration the
consumer can achieve by drinking the beverage.
Power-Up
10
Keys to Success:
● Timing is a key factor. The introduction of the product during a major sports event such
as the World Series or Super Bowl would target the market directly and launch sales
exponentially. People would be quick to notice the difference between other major
products on the market if the product is showcased at the forefront of marketing
opportunity during the World Series or Super Bowl.
● Where to launch the new product is also a key factor. The Super Bowl is a prime location
for the acceleration of our energy and electrolyte mixed drink. Many viewers of the Super
Bowl may be well involved in athletic activity. The promotion through social networks
such as Facebook and Twitter will also play a role in the launching of the product. Word
of mouth spreads quicker if people see the product and if the product is advertised online,
allowing people to try the product and hopefully rave about it to their social circle.
Critical Issues:
● Due to the nature of the drink market, a competitor such as Red Bull may take the idea
during the testing of the market. This is a real threat to the product’s success and could
become a “show stopper” for the company. A big company has more funds and knows
the procedures to market a product such as Power-Up.
Power-Up
11
SECTION 2
Marketing Strategy:
● Power-Up will be going after the “more for the same value” proposition. It will compete
against Red Bull and Gatorade. Power-Up will attack competitors by giving them a two
in one drink, which is a sports drink that replenishes fluids lost while engaging in
physical activities while at the same time giving a boost of energy. The target market will
be addressed by the use of the value combination of two products in one.
● People who drink energy drinks can be enticed by the fact that there is a sports drink
element to the product. People who drink sports drinks can note the fact that the product
will also give them energy.
● The value proposition is the fact that people will know that our product offers two
benefits together at a lower price than buying two separate products.
Mission:
To provide a quenching energy refreshment.
● Our mission statement lets the target consumer know that the product offer is different
than other drinks as it is not more energy drink nor more sports drink. The mission
statement sets the product apart from whatever else is on the market. The product does
Power-Up
12
not define itself as being one of the two products; it shows it is revolutionizing the drink
industry by mixing two highly desirable drinks into one.
Marketing Objectives:
● The Power-Up marketing objective is to begin marketing in California, North America
and eventually move into other countries. It will have an advantage by providing a two in
one drink and will be a superior drink that will take over the sport and energy drink
market.
Financial Objectives:
● The objectives of our product are to have a successful product that can become a
competitor to both sports drink companies as well as energy drink companies. Power-Up
is planning to maximize revenue as soon as it hits the market. This will allow the
company to invest more and expose the company in a broader range.
Target Markets:
● The target markets are going to include many ages as many people need energy and
replenishment. People today work many hours and may not get as much rest as they need.
People who exercise will be quick to note the dual benefits of Power-Up.
Positioning:
Power-Up
13
● The drink will be positioned as a go-to drink for high levels of energy with replenishing
properties by showcasing the product as the cutting edge product for the average busy
person as well as the physically active person.
● Since 64% of high-volume sports drinkers are male, the added energy is meant to also
give reason for women to be interested in the drink (Lukovitz, K., 2013). People often
want more energy throughout their day and a drink such as Power-Up will leave one
feeling0o0o[ quenched in addition to energized.
Strategies:
● The Power-Up Strategy is to commence in the state of California by distributing PowerUp drinks to local convenience stores, gyms, supermarkets, colleges, and other locations.
The strategy will incorporate the marketing mix by giving the target market more for the
same value proposition. Power-Up is affordable in price and it is a two for one deal that
will appeal to anyone that drinks sport and energy drinks.
Marketing Mix:
● Pricing- Pricing will be competitive as this product is similar to other energy drinks and
sports drinks. The price of the product will be $2.49 for a 16 ounce drink. A 32 ounce
Gatorade retails for $2.19 and a 16 ounce Red Bull retails for $3.79. Going by the
average size in ounces of the two drinks combined, the price of $2.49 is very competitive
among the energy and sports drink selections in the chosen outlets.
● Distribution- Power-Up distribution channel will include:
○ Supermarkets
○ Convenience Stores
○ Drug Stores
○ Nutrition Stores
Power-Up
14
○ Gyms
○ Food Service Chains
○ Vending Machines
○ Stadiums
○ Others
● Marketing Communications- Power-Up communication mix will include:
○ Advertising through social media, billboards, commercials, radio, athlete
advertising, and word of mouth.
○ Sales promotion will include a two for one deal as the drink is launched in the
market. This will allow more people to buy/try the product and hopefully become
loyal customers.
○ Public relations- Power-Up will also partner up with the community and sponsor
events to develop a good image and build community trust.
○ Direct marketing- through social media Power-Up will market to specific
individual targets. This will allow immediate response and develop customer
relationships.
Marketing Research:
While many energy drinks focus on promoting focus on portraying energy drinks as party drinks,
it may not appeal to women as they are geared more towards young men (Bhasin, K., 2012).
With Power-Up we want to provide a drink that presents a more wholesome image that focuses
on the benefits of the drink as opposed to portraying a specific lifestyle. In this way the product
can appeal to many more people.
Financials:
The following is the financial analysis:
● Break-even Analysis:
To break even, Power-up will have to sell 352,463 units. By projections the company will
pass the breakeven point at the beginning of the 4th quarter for the years sales projections.
Power-Up
Table 1: Approximate Break Even Point in $
Approximate Break Even Point in $
Year 1
Sales (1,000,000 units @ $2.49)
$2,490,000
Variable Costs
$942,216
Contribution Margin
$1,547,784
COGS as a % of Sales
37.84%
Contribution Margin
62.16%
Fixed Costs
$545,536
Breakeven point dollars
$877,632
Table 2: Approximate Break Even Point Units
Approximate Break Even Point Units
Year 1
Selling price per unit
$2.49
Variable Costs per Unit
$0.94
Contribution Margin
$1.548
COGS as a % of Sales
37.84%
Contribution Margin
62.16%
Total
$545,536
Break Even point- units
352,463
● Sales Forecast:
15
Power-Up
16
Looking at tables 3 and 4 you can see the massive amount of market share that is
available for growth in the energy drink sector. The sales projections have an exponential rate of
growth. The company will have only a small percentage of the overall market share and will still
continue to enjoy growth of future sales.
Figure 1: The market share breakdown of the functional beverage category in the U.S.
(Datamonitor 2008a).
Table 3: U.S. functional beverage market volume growth (%) and growth forecast, 2007–
2012.
Category
2006/07
volume
growth
(%)
2002– 2002/ 2007–
2007
07
2012
CAGR total CAG
R
2007
/12
total
Sport drinks
1.5
11.3
70.7
0.2
0.8
Energy drinks
32.0
45.8
558.7 9.9
60.2
Nutraceutical drinks
5.1
13.6
89.1
9.8
CAGR = compound annual growth rate.
Table 4: Market share of mainstream energy drinks in the U.S. market.
Brand
Company
Market share (%)
1.9
Power-Up
Amp
PepsiCo
3.6
Full
Throttle
Coca-Cola Co.
6.9
Rockstar
Rockstar Inc.
11.4
Monster
Monster Beverage
Co.
14.4
Red Bull
Red Bull Inc.
42.6
Table 5: Sales Forecast in Time
Sales Forecast Year 1
Q1
Q2
Q3
Q4
Total
Sales (per unit)
50,000
100,000
200,000
300,000
650,000
Revenue
$124,500
$249,000
$498,000
$747,000
$1,618,500
Year 2
Year 3
1,000,000
2,000,000
$2,490,000
$4,980,000
● Expense Forecast:
The expected expenses for our planned marketing strategy:
Table 6: Marketing Expenses
Marketing Expenses
Fixed selling Cost
17
Power-Up
18
Per Year
Marketing
Travel
$20,000
Marketing misc.
$11,500
Salaries(8)
$320,000
Advertising
$100,000
Total
$451,500
Controls:
Power-Up will impose strict controls on:
● Quality control
● Operation efficiency
● Protection against fraud, misuse of waste and resources
● Actual recording and reporting of financials
● Following federal, state, and international regulations
Implementation:
The drink will be introduced at gyms and will be sold in convenience stores throughout
California before moving onto larger markets. This way the company can start to gain capital
through sales and from its the growth, target investors to back the company in its expansion. By
starting at a moderate pace, the company can gain momentum and lower its risks.
Power-Up
19
Marketing Organization:
Position
Description
Objectives
Strengths
Weaknesses
Marketing
Manager
Responsible
for
implementing
and executing
the marketing
plan.
They help keep
the marketing
strategy moving
to the right
place.
They keep other
sects on the
track to execute
the marketing
plan.
They can set
prices, which is
a large part of
what the
customer may
be willing to
pay.
Creative Director Dedicated to
administering
creative work.
They help bring
in creative ideas
to the forefront
of all visuals.
They can help
position the
product in the
way the
company wants
to be perceived.
Creativity can
be restricted
and have to rely
on their
personal
creative
judgement.
Account
Executive
Responsible
for building
new client
relationships
and working
to keep
current
relationships
in order to
grow.
They help
create a
network of
potential
customers for
the product.
They help the
company grow
as it continues
with
expansions.
The way they
approach a
prospective
client can help,
but it can also
hinder the
company if the
approaches are
not fitting for
the product.
Communications
Manager
Work in the
development
of print and
online
advertising.
They can aid
the promotion
of the product
through forms
of
communication
such as email.
They have the
knowledge to
connect to the
consumer in a
personal way.
The way of
communication
held can vary in
terms of
yielding results.
Power-Up
Public Relations
Manager
Responsible
for infiltrating
media to
better
promote the
company’s
message.
They can help
the company
attain relevancy
through low
cost method of
promotion.
They can help
in writing
speech content
to portray the
company in a
flattering way.
20
Different people
in this position
can yield
different
results.
Contingency Planning:
It will be difficult for Power-Up to compete at a level with other big and well established
companies such as Red bull and gatorade. The company is small and does not have the funds
and/or investors to compete with the bigger companies. Another issue, as mentioned in the
critical section is the possibility of one of the other companies to steal our idea and develop a
similar product for their gain. This would have to be the worst case scenario if someone copied
our Power-Up idea while it was in the process of going public. Furthermore, Power-Up might
have to partner up with one of the bigger companies or raise more funds to compete. However, if
Power-Up hits the market fast and strong it has a great possibility of being successful in the short
and long-run. It will be a leader in with its two for one product.
References:
2012 State of the Industry: Sports Drinks. (2012, July 18). Beverage Industry. Retrieved October
17, 2014, from http://www.bevindustry.com/articles/85656-2012-state-of-the-industry-sports-drinks
Berry, D. (2013, August 27). Sports drink evolution. Retrieved from
http://www.foodbusinessnews.net/articles/news_home/Consumer_Trends/2013/08/Sports
Power-Up
21
_drink_evolution.aspx?ID=%7B6AA703FC-F917-444F-9581C48A48C2E3DD%7D&cck=1
Datamonitor. 2008a. Functional drinks in the United States. Available from:
http://www.datamonitor.com . Retrieved December 5, 2014.
Energy Drink. (2014) Red Bull energy drinks . Retrieved October 14, 2014, from
http://energydrink-us.redbull.com/
Energy Drink Sales Will Skyrocket to $21 Billion by 2017. (2013, February 4). Food Product
Design. Retrieved October 15, 2014, from
http://www.foodproductdesign.com/news/2013/02/energy-drink-sales-will-skyrocket-to21-billion-b.aspx
Bhasin, K. (2012, February 6). The Marketing Strategy This Energy Drink Used To Take On
Red Bull And Become A Billion Dollar Brand. Retrieved December 4, 2014, from
http://www.businessinsider.com/the-marketing-strategy-this-energy-drink-used-to-takeon-red-bull-and-become-a-billion-dollar-brand-2012-2
Lukovitz, K. (2013, July 13). Report: Sports Drinks' Growth To Slow Somewhat. Retrieved
December 3, 2014, from http://www.mediapost.com/publications/article/205453/reportsports-drinks-growth-to-slow-somewhat.html
Packaged Facts.(2014). Energy drinks and shots: U.S. market trends. Retrieved October 18, 2014
from http://www.packagedfacts.com/Energy-Drinks-Shots-7124908