Monster Life Cycle
The market for energy drinks is dominated by Red Bull. First launched in 1987, its UK sales
have grown steadily to reach £234 million in 2012. With the market for energy drinks still
rising at 10-15% per year, many other companies are determined to take their share of this
success. The attractions are obvious. Not only are sales rising faster than for soft drinks as a
whole, but the price per litre is much higher. On December 30th 2012, Tesco charged 49p for
a 330ml can of Coca-Cola and £1.58 for 330ml of Red Bull.
As the Coca-Cola Company observed the growth of Red Bull during the ‘noughties’, it resolved
to launch its own rivals. First came ‘Relentless’ in late 2006, which received its first serious
promotional push by being given away at the 2007 Reading and Leeds Music Festivals. Since
then it has focused on sponsoring ‘extreme’ sports. As shown in the graph below, Relentless
has achieved significant sales, though sales slipped back in 2012 (from £60.3m to £59.3m).
Perhaps sensing that Relentless was not the
answer, in 2010 Coca-Cola took over the
distribution of a U.S. energy drink called
Monster. The brand holds a 35% share of the
$30bn U.S. market for energy drinks, though
there have been questions raised in Congress
about the safety of the product. Energy drinks
are heavy in three ingredients:
caffeine, taurine and sugar. In fact the caffeine level is no higher than in coffee, but the
combination of ingredients is thought by some to place it in between alcoholic and soft drinks.
Is Monster a real challenger to Red Bull in the UK? With a sales increase of 46% in 2012
compared with 6.5% for Red Bull, Coca-Cola can hope. But the risk must remain that the
Monster life cycle will end up following that of Relentless. Time will tell.
Questions (25 marks; 30 minutes)
1. Briefly explain the meaning of the term Product Life Cycle. (3)
2. In which stage of its product life cycle was a) Relentless and b) Monster in 2012? (2)
3. Examine two possible extension strategies Coca-Cola might use with Relentless in 2013.
(8)
4. Discuss the factors that will influence the future life cycle of Monster in the UK. (12)
Marking suggestions: Monster Life Cycle
1. Briefly explain the meaning of the term Product Life Cycle. (3)

The theory that every product goes through similar stages of birth, growth, maturity and decline
...

... though decline can be delayed by extension strategies that reinvigorate the product
2. In which stage of its product life cycle was a) Relentless and b) Monster in 2012? (2)

Relentless – maturity just edging towards decline

Monster – growth
3. Examine two possible extension strategies Coca-Cola might use with Relentless in 2013.
(8)

An extension strategy needs to be based on a clear understanding about why sales growth has
dried up and then devise a medium-long term plan for repositioning the product to make it
more attractive to existing customers or give it new attractions to new customers

One approach might be to move the brand away from the music festival/extreme sports young
image towards a wider market (eg ‘Ever short of energy at work? Then take a break with
Relentless’). This could make consumption more of an everyday occurrence (instead of a
Saturday night drink); this could boost sales significantly

A second approach might be to develop a new ‘cross-over’ Relentless product that offers energy
to sportspeople in the way that ‘Lucozade Sports’ currently claims to do; this might broaden the
appeal of the brand considerably
4. Discuss the factors that will influence the future life cycle of Monster in the UK. (12)

Although it looks as if Monster is in the middle of a sharp growth period, the future pattern of
sales should not be taken for granted; when a giant such as Coca-Cola takes over distribution,
huge sales increases arise simply from placing the product in more outlets; but when that oneoff boost to sales has finished, there may be little more growth in future

So the first factor is whether regular users of energy drinks are keen on Monster and likely to
switch to it in future; if Monster is trendier among night-clubbers than Red Bull, continuing sales
growth is highly likely; market research can easily answer this question

At present Red Bull is the dominant force in the energy drinks market; therefore its marketing
policies will be an important factor; if it decides to increase its advertising spending while also
upping its investment in Formula 1, perhaps Monster will start to get squeezed out; Coca-Cola
has deep pockets, but it will not be willing to put vast sums behind Monster (its sales of £70m
compare with over £1,000m for Coca-Cola in the UK)

A further factor is the life cycle of energy drinks as a whole; sales have been growing and
growing for years without much questioning by the market about their safety or ‘function’; what
if people start to question the wisdom of taking in large quantities of caffeine and sugar? If the
market slides as a whole, Monster will struggle to buck the trend