PREPARE FOR TAKEOFF
LMNOP Marketing Group is thrilled to introduce JetBlast – a wildly exciting ready-todrink energy beverage exclusive to the North American market. Now is the perfect
time to enter this relatively new industry, while consumers are developing an
affinity to energy drinks and are likely to try a variety of brands before deciding on
their favorite. JetBlast’s powerful brand image, functional ingredients, great taste
and pervasive North American distribution strategy will take advantage of this
consumer susceptibility for maximum profitability.
JetBlast will be a well marketed and profitable energy drink in North America. This
is far from an easy task but failure is unlikely with LMNOP Marketing Group’s
determined strategy detailing what it takes for an energy drink to enter and thrive
in the market.
MADE IN CANADA
JetBlast will be produced in Montréal, Canada.
Montréal’s location facilitates
distribution throughout North America and takes advantage of Canada’s supply of
clean water that requires minimal treatment to comply with the strict requirements1
of regulatory agencies to make the water suitable for the production of ready-todrink beverages such as the Food and Drug Administration (FDA) in the United
States,2 Health Canada,3 and the Secretaría de Salud de México.4 Constructing a
production facility from the ground up would require a significant capital investment
that a company just entering the energy drink business may not have. Montréal is
an ideal starting point because there are numerous existing bottling operations5 to
approach for outsourcing the production and packaging of JetBlast until the
business becomes financially prepared to build its own facility.
The Port of Montréal6 eases the import of ingredients required in the production of
JetBlast, particularly Guarana from Brazil, an important flavoring component and
stimulant. 7 Montreal is also strategically located to ship the finished product to
distribution centers in the United States and Mexico and eventually throughout
North America. Such a strategy is an example of what any energy drink company
should look for when choosing a location for production to minimize cost and
distribution time. Once sales of JetBlast increase considerably in all markets served,
a variety of distribution methods may need to be considered in order to best suit
the company. Road, rail, air and sea transport are all available in Montréal.8
THE ENERGY DRINKS STORY
Energy drinks have roots in Austria in 1987 when Red Bull was introduced, a
beverage
containing
ingredients
claimed
to
“improve
endurance,
alertness,
concentration and reaction speed.”9 Red Bull is now available in 120 countries and
1.9 billion cans were reported to have been consumed worldwide in 2004.10 The
potential for the continued success of energy drinks, especially in North America, is
high considering these products have only last year been approved for sale in
Canada and new entrants to the market are numerous in the United States and
Mexico.10 Sales of energy drinks in the United States in 2004 were estimated at
about US$1 billion, and Mexicans consume the highest per capita rate of related
soft drinks, after the United States. 11
These three countries are potentially
challenging but lucrative markets for JetBlast.
JETBLAST IS A WINNER
Creating the perception that a beverage can help accomplish goals is the most
important marketing objective on an energy drink company’s list.
experience and not just an energy drink.
JetBlast is an
It does more than provide energy.
JetBlast is the experience of “taking off” from mediocrity and achieving something
otherwise considered impossible. Energy drinks are an increasingly common sight
all over the world and this differentiation is essential as they have a functional
unique selling proposition – they are the metaphorical sidekick helping an
adventurer succeed along whatever tiring journey he or she undertakes.
Energy
drinks that do not create this impression will likely not survive because the product
is not intended to quench thirst like the typical beverage. The consumer must be
aware that it is more than a drink.
JetBlast will be marketed as a functional
“success potion” helping to reach new heights, but this will not be an
unsubstantiated claim. Like most energy drinks currently available, it will contain
ingredients intended to reduce fatigue, increase concentration and stimulate the
mind. Without these characteristics, the functionality of the product would not exist.
JetBlast will add another dimension to these desired effects with innovative
packaging, motivating promotional activity and an inspirational, encouraging
relationship with the consumer.
WHO IS JETBLAST UP AGAINST?
JetBlast will be available in Canada, the United States and Mexico, taking on small
competitors with local operations and large globalized companies. The energy drink
market in North America has grown rapidly over the last decade.
In fact, it is
almost 40 times the size as it was in 1998. 12 Red Bull has been the dominant
energy drink in the United States since its introduction in 1997,10 however, an
increasing number of competitors have recently taken market share as more
variety-searching consumers have become aware of the products.
Leading soft-
drink companies like Coca-Cola and PepsiCo have introduced their own line of
energy drinks in the United States while new entrants continuously appear.
The
Canadian energy drink market is currently unsaturated because Health Canada
restricted the sale of beverages using caffeine as an additive until the summer of
2004 when these restrictions were revised.10 A variety of energy drinks are
available to Mexico’s highly populated universities,13 a country where the median
age in a population of over 100 million is a very young and potentially energy drink
friendly 24.6 years.14
Energy drinks distributed widely in North America include Red Bull, Monster, Bawls,
Guru, Hype, SoBe Adrenaline Rush, Energy 69 and Blue Shot. All of these brands
have highly graphical interactive websites giving product details, where it is
available, events sponsored by the company, games and other entertaining
features.
PepsiCo’s Mountain Dew AMP, Coca-Cola’s Full Throttle, and Anheuser
Busch’s 180 are these large companies’ responses to the energy drink craze and
have the advantage of existing distribution systems.
Hundreds of other brands
exist bearing upbeat names: Jones Soda’s Energy, Impulse, RockStar, Shark, Dark
Dog, Pink, Tornado and Venom, to name a few.
Table 1 - Overview of Major Competitors in North America 15
Company
PepsiCo
Anheuser Busch
Coca-Cola
Red Bull North America
Hobarama Corporation
Hype Energy Drinks
Monster Beverage Co.
Sobe Beverages
Energy 69, LLC
Blue Shot
Product
Size
Brand Name
Website
(ounces)
Mountain Dew AMP
ampenergy.com
8.4
180
180.com
8.2
Full Throttle
coca-cola.com
16
These brands have the advantage of established distribution channels,
the financial support of a large company, strong core brand
recognition,
and long specialized histories in the beverage industry.
Red Bull
redbull.com
8.3
Created the energy drink market, worldwide brand recognition,
financial
support of the company, has the "first mover"
advantage.
Bawls
bawls.com
10
Distributed throughout the United States, also offers sugar free version
and mints with guarana. Online ordering.
Hype
hype.com
16
Regular, extra strength and sugar-free versions available. Distributed
worldwide.
Online
Ordering.
Monster
monsterenergy.com
16
Regular, low-carb and extra-strength "assault" versions. Distributed
in North America. Also offers branded clothing. Online ordering.
Sobe Adrenaline Rush
sobeadrenaline.com
8.3
Regular and sugar free energy drinks are extensions of the existing
Sobe beverage line. Well distributed throughout North America.
Energy 69
energy69.com
8.4
Available in the United States. Uses sexuality as unique selling
proposition. Online ordering.
Blue Shot
blueshot.com.mx
10
Produced, distributed, and widely recognized throughout Mexico,
has a good connection with the spanish-speaking
market
JetBlast will not only be competing with other energy drinks.
Alcoholic beverage
companies have realized consumers enjoy mixing energy drinks with alcohol16 and
have responded. Anheuser-Busch has introduced BE, a beer “infused with caffeine,
guarana and ginseng”17 in the United States. Molson’s Kick, a beer similarly infused
with guarana, became available in Canada on March 21, 2005. 18 Coffee, the
traditional “pick-me-up” beverage, has not been ignored either.
Starbucks’
Doubleshot 19 is a 6.5 ounce ready-to-drink espresso beverage containing no
guarana as do the other competing products, but the high caffeine content provides
a similar stimulating effect.
These beverages benefit from the strength of the
companies’ existing distribution capabilities, promotional dominance and brand
recognition.
JetBlast’s successful competition with traditional energy drinks and other related
products depends on the ability to connect with and excite the consumer. Engaging
e-commerce, aggressive promotional activities, appealing packaging and the
product’s extensive availability are vehicles to achieve this goal. The hundreds of
different brands on the market greatly reduces the consumer’s attention span and
patience for comparing differences. Most of these brands will likely not survive if
the energy drink market continues to grow and large companies like Coca-Cola and
PepsiCo, who have so far not aggressively competed, 20 decide to become more
forceful. JetBlast should strive for brand recognition and equity to position itself to
either defend against a hostile takeover or become attractive enough to be the
number one choice for a large company to buy and use as a competitive tool.
INFRASTRUCTURE
JetBlast energy drinks will be available to consumers throughout North America.
Shipping by truck in Canada and the United States is highly efficient over the
1,408,800 and 6,400,000 kilometers of roadways available in each of the respective
countries over a combined 18,000,000 square kilometers of land.21 Various routes
are available allowing adverse conditions such as weather or construction to be
avoided to ensure JetBlast can be timely distributed throughout both nations.
Mexico has about 330,000 kilometers of roadways14 over approximately 1,900,000
square kilometers of land, still allowing for effective ground transportation between
nations and to major urban centers in Mexico.
The proximity of the three nations and accessibility to both the Pacific and Atlantic
oceans provides the opportunity for shipping by sea, if alternative means of
distribution were to become necessary.
Transportation by air is very common
within North America between the 233 airports in Mexico, 823 in Canada, and 9,729
in the United States. Extensive railway networks also present an alternative means
of ensuring distribution never becomes an issue.21
DEMOGRAPHICS
Canada, the United States and Mexico are populous nations with about 32.5 million,
293 million, and 105 million people in 2004, respectively.21 Comparing purchasing
power parity figures estimated in 2003, US$29,800 in Canada, US$37,800 in the
United States and US$9,000 in Mexico, the question of whether the Mexican market
is a lucrative choice arises. However, the richest 10% of the population (10 million
people) account for about 36% of the consumption in Mexico.21 This group is likely
to include university students and young professionals who would consume energy
drinks. The median age in Mexico is 24.6 years, very young compared to 38.2 in
Canada and 36 in the United States,21 further supporting the profile of a typical
JetBlast consumer.
The Roman Catholic and Protestant religions represent the majority of the
populations in all three North American countries.
The consumption of energy
drinks should not conflict with the teachings of these beliefs, minimizing the
concern that faith would interfere with the product’s success.
Language differences are of extreme importance when marketing in North America.
Mexico is the most populous Spanish-speaking country in the world and the
language is the second most common in the United States after English, spoken by
11% of Americans.21 70% of Canadians speak English and 22% are native French
speakers,21 meaning the marketing of JetBlast must include all three languages in
order to succeed.
INFORMAL TRADE BARRIERS
According to Transparency International, 22 Canada scores 8.5 out of 10 on the
corruption index, placing 12th in the world. The United States scores 7.5 out of 10
which placing 19th in the world.
Mexico, on the other hand, scores significantly
lower at 3.6 out of 10, 65th in the world on the corruption index. 23 This index,
although not a total measure of the actual business environment, illustrates the
informal barriers to doing business in a developing country. Bribery and other
unethical business practices are common occurrences a company attempting to do
business in Mexico needs to recognize.23 Understanding corruption exists will help
JetBlast avoid it and possible adverse regulatory action.
POLITICS
In January 1994, Canada, the United States and Mexico launched the North
American Free Trade Agreement (NAFTA) and formed the world's largest free trade
area.
This has allowed for the free flow of goods for the most part tariff free
between the three countries. The NAFTA Agreement has brought economic growth
and rising standards of living for people in all three countries. 24
Since September 11, 2001, increased security at the United States border has
made expensive and slow the inward flow of goods.
Setting up a facility in the
United States to receive, store and act as a distribution epicenter makes sense to
minimize the number of times goods need to cross the border. This is a strategy
JetBlast will employ not only in the United States but also in Mexico. Facilities will
initially be situated near Chicago and Mexico City as centralized locations for
distribution coordination within each country.
Basing the manufacturing process in Canada is an economical decision.
“The
corporate tax rate in Canada is now below the average U.S. tax rate and will be
more than 6 percentage points lower by 2008.” 25
Non-residents of Mexico are
generally subject to higher taxes than residents further supporting the decision to
base operations in Canada.
Setting up a Mexican based distribution center,
however, will take advantage of low Mexican property taxes.26
REGULATION
Government bodies like Health Canada, the Food and Drug Administration, and La
Secretaría de Salud de México impose regulations1 JetBlast will need to carefully
follow to make sure the product remains available for sale. For example, JetBlast’s
labeling must adhere to strict guidelines from Health Canada27 identifying:

The recommended use or purpose of the product;

The recommended route of administration;

The recommended dose and duration of use of the product;

The risk information relating to the product, including any cautions, warnings,
contra-indications or known adverse reactions associated with its use;

The name and address of the product license holder, and if the product is
imported, the name and address of the importer;

The common name of each medicinal ingredient, and its proper name when
that name is not a chemical name;

The quantity per dosage unit or potency, if any, of the medicinal ingredients;

A list of all non-medicinal ingredients;

Storage conditions, if any are recommended;

The product’s lot number and expiry date;

A description of the source material of the plant used, such as the root, for
Vitamin C, source could be sodium ascorbate) (www.cbc.ca)
Few studies have been conducted on how safe energy drink ingredients are for
human consumption.
France, Denmark, Norway and Sweden have completely
restricted the sale of energy drinks because of this lack of study.10 Any company
competing in this industry needs to use caution when making claims about the
benefits of drinking their product and have a contingency plan to handle media and
regulatory agency inquiries in case an incident arises implicating the brand.
JetBlast would indicate on its labeling the potential danger of mixing it with alcohol,
pregnant women should not drink it and only a limited amount per day should be
consumed by others as a way of avoiding legal hassle and to comply with the rules.
INTELLECTUAL PROPERTY RIGHTS
Protection of intellectual property rights in Mexico is significant especially for
American companies because of the enormous volume of trade between the
countries. In 2004, bilateral trade totaled $167,543 billion, including $111,752
billion in U.S. exports to Mexico. This trade is increasingly composed of products
protected by intellectual property rights under international treaty obligations and
NAFTA.28 Even with improving government regulations piracy is still a huge concern
when doing business in Mexico. The protection of intellectual property is
complicated by Mexico's extensive poverty and corruption. Black markets are a
significant source of employment in the informal sector, which may account for up
to 50 percent of the total economy.28
Since the implementation of NAFTA in 1994, protection of intellectual property has
been improved in Mexico.
Canada and the United States have very developed
regulations dealing with intellectual property. The announcement by the Canadian
government on March 24, 2005 introduces legislation that will implement the
provisions of the 1996 World Intellectual Property Organization29 (WIPO) Treaties,
clarify liability for internet service providers, facilitate the use of the internet for
educational and research purposes, and harmonize the treatment of photographers
with that of other creators. This is good news for companies like JetBlast who run
the risk of competitors using the established brand name to take market share
away from the legitimate company.
Once JetBlast gains market share, brand
equity and continent-wide recognition, these laws will help ensure the JetBlast
brand is protected.28
ECONOMIC CONSIDERATIONS
The stability of the North American economy is conducive to JetBlast’s entry. The
currency exchange rates between nations on March 29, 2005 are outlined below.
Table 2 - Currency Exchange Rates30
base
target
USA
USA
CANADA
0.82001
MEXICO
0.08842
MEXICO
CANADA
11.31
1.2195
9.26609
0.10792
It is evident that the US dollar is still the strongest currency amongst the three
countries but with rising deficits in the US the Canadian dollar will continue to rise
against the American dollar. This means that it will become more economical in
terms of real dollar amount to do business in the US. The advantage Canada used
to hold over the US in being able to do the same business cheaper because of the
exchange rate is no longer so dramatic.
High levels of inflation reflect a volatile economy in which money does not hold its
value for long. Canadian inflation fell in January to 2.0% from December’s 2.1%
and analyst’s forecasts of 2.2%. Core inflation, the statistic that factors out the 8
most volatile components, fell to 1.6% from December’s 1.7% and forecasts of
1.8%. The fall in inflation should further prolong the Bank of Canada from raising
interest rates as Canada’s economy and inflation stagnate at present levels.31 In the
past decade Canada has had extremely low inflation rates and this should continue
into the future.
The United States, on the other hand, in January and February 2005 according to
the government statistics had an inflation rate of 3%. In January however,
inflationdata.com shows it as 2.97% and in February it shows it as 3.01%.
Therefore instead of the inflation rate being "flat" it is actually rising slightly. In
another example we see August 2003 and September 2003 the Government
claimed the rates were 2.2% and 2.3% respectively. 32 In the US with climbing
governments deficits inflation rates will continue to rise.
Mexico experienced hyperinflation during the late 1980’s but in recent years has
experienced more reasonable rates.33 Comparing the US and Mexico, however, the
core rates (discounting historically unstable goods) have stayed almost the same in
Mexico while they have substantially increased in the US.33 This would suggest
inflation stability in the Mexico while a looming inflation problem in the US.
Economically, the US and Canada are safe markets to enter for JetBlast. Even with
the rising inflation rates in the US and the loss of value on the US dollar they are
still the largest economy in the world. In Mexico high interest rates and inflation
problems have made investors less inclined to fund long-term projects. Mexico is an
overwhelmingly trade dependent country, which tends to cause problems in
demonstrating the real stability of their economy.
These are several important
issues
34
that
explain
Mexico’s
volatile
economy.
Despite
the
historical
unpredictability of the Mexican economy, NAFTA has contributed to its stability and
investors
from
the
United
States
and
Canada
are
increasingly
confident,
representing a positive outlook for JetBlast.
HUMAN RESOURCE CONSIDERATIONS
JetBlast employees will specialize in the coordination of the energy drink’s
movement from production to consumer. Outsourcing production and packaging is
logical for a company just entering the industry because the large initial capital
investment required to build new facilities would be better used for strategic
marketing.
Based in Montreal, Canada, JetBlast will hire an already established
bottler from the many existing facilities.
This will eliminate the need to hire
production personnel but create the need for JetBlast representatives to oversee
the production process and ensure the finished product is acceptable.
Personnel
will be needed to ambitiously seek accounts in North America and to arrange for
transport of the product to centralized distribution facilities in the United States and
Mexico. Staff to receive, manage and ship the product from these facilities will be
hired locally and directly employed by JetBlast to maintain control and efficient
handling.
Marketing and sales representatives will cover territories where JetBlast is available
for sale making certain JetBlast is properly presented to consumers.
These
employees will be hired in Mexico, Canada and the United States to promote the
brand at trade shows and to retailers, and to get potential consumers excited about
the JetBlast brand.
These positions could be paid with a salary but with large
incentives based on commissions on the amount of product the reps can sell. It is
important to hire these people locally to avoid language issues and to ensure
familiarity with the culture.
Finally,
salaried
administrative
and
management
staff
at
the
company’s
headquarters in Montréal will handle accounting, financial and daily operational
requirements.
Information on the employment structure of companies already
competing in the energy drink market is difficult to find, but for new entrants hiring
a large number of people right at the start may not be financially feasible. Each
employee may be required to handle multiple tasks until the venture becomes
profitable and individual responsibilities are more clearly defined and necessary.
For example, JetBlast’s founder might have to initially be responsible for keeping
accounting records, auditing the production process for quality assurance,
arranging the shipment of the product from Montréal to the distribution centers,
finding and presenting to clients, and creating promotional activities. Many hours
of extra work would be required until the company earns a profit, so JetBlast would
need to be especially particular about who is hired. Only those who are passionate
about success should be on board.
PRODUCT CONCEPT
The purpose of energy drinks is not to quench thirst or re-hydrate. They contain
stimulants to inhibit fatigue and let the mind keep going as if superhuman.
Caffeine, taurine and guarana are combined with sugar so energy drinks can
provide the benefit consumers desire - basically preventing sleep. “The American
dream” is an important pursuit in the United States35 This concept of working hard
to be successful is prevalent throughout North America and the ability to work even
harder and longer is believed to lead to even more success. Those who tire first
will be the first to fail.
Consuming energy drinks to reduce fatigue would also
reduce the likelihood of failure.
Table 3 – Stimulants Defined36
Caffeine
An alkaloid present in coffee, tea, chocolate, cola drinks and supplements. Caffeine is considered
an ergogenic in athletics because it tends to enhance endurance and improve reaction time.
One of the most abundant amino acids in the body. It is found in the central nervous system,
Taurine
skeletal muscle and is very concentrated in the brain and heart. Taurine inhibits and modulates
neurotransmitter in the brain. Helps maintain cardiovascular and eye health.
Guarana
Also known as Brazilian cocoa; native to South America. Guarana contains caffeine which has
stimulating and invigorating properties.
PRODUCT FEATURES
Energy drinks commonly consist of mostly carbonated water and sugar. Guarana,
taurine and caffeine are usually added along with a variety of flavorings, colorings,
preservatives, and vitamins. As long as the product complies with regulations in
Canada, the United States and Mexico, altering it would not be necessary to
distribute throughout North America.
Table 4 – Ingredients of Selected Energy Drinks15
carbonated water, high fructose corn syrup and/or sugar, citric acid, orange juice from
Moundain Dew AMP
concentrate,
natural
flavors,
guarana,
sodium
benzoate,
sodium
polyphosphates,
maltodextrin, caffeine, gum arabic, erythoric acid, taurine, panax ginseng, calcium
disodium edta (to product flavor), potassium benzoate, brominated vegetable oil, yellow 5
carbonated water, high fructose corn syrup, natural flavors, guarana, citric acid, potassium
180
sorbate, (preserves freshness), malt extract, sodium benzoate (preserves freshness),
ascorbic acid (vitamin C), FD&C yellow #6, FD&C red #40, vitamin B6, Vitamin B12
carbonated water, high fructose corn syrup and/or sucrose, citric acid, taurine, natural and
Full Throttle
artificial flavors, sodium citrate, sodium benzoate (to protect taste), ginseng extract,
caffeine, carnitine fumarate, maltodextrin, niacinamide (vitamin B3), yellow 5, pyridoxine
hydrochloride (vitamin B6), guarana extract, cyanocobalamin (vitamin B12)
Red Bull
Bawls
carbonated water, sucrose, glucose, sodium citrate, taurine, glucuronolactone, caffeine,
inositol, niacin, D-pantothenol, pyridoxine HCL, vitamin B12, artificial flavours, colors
carbonated water, corn syrup, citric acid, natural guarana flavor, sodium benzoate (as a
preservative), caffeine, artificial flavors and caramel color
carbonated water, sugar, fruit juice, citric acid, natural flavors, taurine, sodium citrate,
ginseng root extract, guarana seed extract, caffeine, ascorbic acid (vitamin C), nicotinamide
Hype
(vitamin B3), calcium pantothenate (pantothenic acid B5), pyridoxine hydrochloride
(vitamin B6), thiamin mononitrate (vitamin B1), riboflavin (vitamin B2), folic acid (vitamin
B9), vitamin B12, biotin (vitamin B8)
carbonated water, sucrose, glucose, citric acid, taurine, natural flavors, sodium citrate, l-
Monster
carnitine, panax ginseng root extract, ascorbic acid, caffeine, sodium chloride, niacinamide,
riboflavin, guarana seed extract, inositol, glucuronalactone, pyridoxine hydrochloride,
cyanobalmin
filtered water, high fructose corn syrup, citric acid, taurine, d-ribose, l-carnitine, natural
SoBe Adrenaline Rush
flavor, inositol, sodium citrate, ascorbic acid, caffeine, monopotassium phosphate, salt, gum
arabic, ester gum, siberian ginseng root extract, pyridoxine hydrochloride, guarana seed
extract, caramel color, beta-carotene, folic acid, cyanocobalamin
filtered water, high fructose corn syrup, citric acid, vitamin A palmitate, vitamin E acetate,
Energy 69
natural and artificial flavors, gum arabic, ester gum, taurine, guarana seed, green tea leaf,
caffeine, d-ribose, epimedium (whole plant), shisandra chinensis seeds, damiana leaf, lcarnitine, eluitherococcus senticosus (root)
JetBlast will include the typical carbonated water and high fructose corn syrup base.
Guarana, caffeine and taurine will be added as stimulants, along with vitamins,
ginseng and an invigorating citrus flavor.
PRODUCT LIFE CYCLE
It was only in 2004 that Health Canada revised regulations on the ingredients of
energy drinks to make them available in Canada.10 This puts energy drinks in the
introduction stage in the Canadian market, a contrast to the situation in Mexico and
the United States where they have been available for sale for over ten years.
JetBlast will need to appropriately employ introduction stage strategies in Canada
and growth stage strategies elsewhere in North America. Fortunately, both stages
involve focus on rapid acquisition of market share and heavy promotional activity so
JetBlast’s efforts can be somewhat uniform in implementation.
Recognizing that
the products are in different stages between the countries, however, will allow
JetBlast to effectively compete in all three nations.
BRANDING AND PACKAGING
The JetBlast brand aims to become synonymous with the phrase “energy drinks.”
The English name will be used, despite the product’s availability in French and
Spanish speaking markets, to facilitate consistency. “JetBlast” is easily pronounced
in French and may be pronounced “Het-Blast” in Spanish, but the term does not
have a negative phonetic translation in either language.
Legal requirements in Canada stipulate all packaging of goods for human ingestion
must contain the list of ingredients, nutritional value, and be written legibly in both
English and French. Mexican law requires packaging to be in Spanish.37 JetBlast
will be packaged in 8 ounce aluminum cans with appealing graphics and English,
French and Spanish labeling to comply with the rules everywhere in North America.
This will facilitate distribution by eliminating the possibility of accidentally shipping
an English-only package to Mexico, for example, where it could not be legally sold.
TARGET MARKET
JetBlast aims to appeal primarily to university students needing the energy boost
when studying for exams, athletes wanting a quick rush as a performance enhancer,
and young adults desiring the effects of caffeine without the coffee in social settings.
These profiles are similar to the target of many energy drinks,10 reinforcing the
need for a strong positioning strategy to differentiate.
DISTRIBUTION
After production in Montréal, JetBlast will be shipped to centralized distribution
centers in Rockford, Illinois and Mexico City.
Rockford 38 is close to the powerful
infrastructure of Chicago but offers more affordable storage costs.
Mexico City
offers the most geographically convenient location to base a distribution center.
Ground shipments would be the least expensive but the most logical considering a
new entrant to this market would need to concentrate on reduced expenses. Once
the product is received, these facilities will act as epicenters for the distribution
networks in each country.
Technology has affected how consumers receive their products. The internet offers
the convenience of direct selling from manufacturer to consumer, complementing or
replacing “brick and mortar” systems. JetBlast would be wise to take advantage of
this form of distribution by setting up an online ordering system and using a third
party to ship to consumers.
PRICING
The individual price for competing products does not vary greatly. Despite different
sizes of packages, a consumer can expect to pay between US$1.50 and US$2.50.10
JetBlast will be available similarly at approximately US$2.00 per can.
PROMOTION
JetBlast should strive to gain a 10% share of the North American energy drink
market, employing aggressive and clever promotional activities. Close attention to
competitors’ strategies will help JetBlast be truly different and noticeable.
“If imitation is the highest form of flattery then Red Bull should feel extremely
honored since most energy drinks hitting the market have followed the brand's
lead”.39 The majority of new competing brands in the energy drink market have
followed-suit with the undisputed market leader, Red Bull.
Major beverage
companies like Anheuser-Busch, PepsiCo, Snapple, Coca-Cola, and Hansen’s have
recognized the potential of the market and introduced their own competing brands,
many of which have been moderately successful. Few of the competitors, however,
have reached the same level of success as that of Red Bull.
Entry into the energy drink market takes innovation and creativity in order to
differentiate from the sea of brands currently available. Energy 69,40 for instance,
has implemented a sexual performance/energy marketing standpoint.
The ads
distributed by sales reps for the product are directed towards nightclubs, bars,
restaurants, and special events and are extremely sexually provocative in nature.
This position might differentiate Energy 69 from the rest of the market, but it also
might hinder their growth. The notion of a sexual enhancer might not appeal to
consumers in terms of everyday usage as opposed to the bar scene. Some of the
successful brands have positioned their products as additions to a busy lifestyle,
providing the energy needed to make it through the day.
JetBlast will position itself as the embodiment of the 24/7 lifestyle of today’s young
adults and will incorporate word-of-mouth marketing strategies. In order to appeal
to the target market, JetBlast will send sales reps around North America to organize
“JetBlast Bashes.” These events will take place primarily at universities around the
continent, but will also be conducted near locations at which young people socialize.
The goal of these events will be to associate JetBlast with the youth culture,
adventure-related sports, and dance music.
The “JetBlast Bashes” will showcase
local DJs from each location chosen around North America. The outdoor events will
be held primarily during the summer months in JetBlast Energy Tents, where
samples of the drink and information will be provided.
In addition to the JetBlast events, the product will also be marketed through less
conventional means. JetBlast will provide cans of their product to DJs at popular
bars and nightclubs around North America. Sales reps will also randomly distribute
the product to people on the street, asking the question “Have you been
JetBlasted?”
GET JETBLASTED
An energy drink company just starting out would be wise to consider these
strategies. Fully knowledge loaded, JetBlast can enter the North American market
and be confident consumers in Canada, the United States and Mexico will soon feel
the JetBlast heat.
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27