Product Strategy - Samson Energy Drink - Case Study Example

1. Situation Analysis Being in the energy drink market and established for long, Samson Energy Drink (SED), found a new market for a drink that wouldgive boost prior to the exercise session. Due to obesity and health concerns, the soft drinks market has come under pressure from energy drinks especially successful drinks like Powerade and Gatorade (Halliday, 2006). SED thus wants to diversify into energy drink primarily for those who engage in early morning exercise sessions. This is necessary because it has been established that after the whole night fast it is essential to have an energy drink before exercises. 1.1 Historical background Samson Energy Drink, based in New Jersey, makes the best tasting energy drink in the market. Their product is of the highest quality and contains Vitamin B12, caffeine, Taurine and Glucoronolactone (Company website). It tastes like most popular energy drinks but without the after taste. They have varied products on offer and all their products are sugar free. The company has now started to bottle and can its energy drink formula as a co-packer for smaller companies (PRP, 2008). 1.2 Consumer analysis Their main product is "Bag in a Box" energy drink concentrate which is mostly bought by bar owners, nightclubs, health clubs, restaurants and convenience stores. They have consumers from all income levels and all ages. They also have energy drink for children and for women. However for the current product the target audience include both men and women from ages 18 till 55 years. The younger segment visits the gym more often early morning. 1.2 Competitive analysis There are plenty of energy drink brands available in the market. While Red Bulkl is leading there are other brands that are available - Wired X3000, Power Trip Energy Drink, Bliss Energy Drink, Gorilla Juice Energy Drink, Zoom, Sobe Energy, XS Citrus Blast, Hype, Wild Bull, and Pitbull. The energy drink market was expected to reach $17bn in 2007 as the market is driven by growing consumer awareness for healthier lifestyles (Merrett, 2007). This segment is expected to grow by 33.7 percent. Thus despite competition and especially because the new product is focused on catering to the segment that exercise early morning, it is envisaged that competition would not be tough for this product. 2. Marketing Objectives 2.1 Short and long-term sales objectives Since this is an entirely new concept, the objective is to derive the early mover advantages. It is envisaged that the company would enter and capture a sizeable market before competition steps in. Eventually, the company intends to enter the global market and no obstacles are foreseen as the product is innovative and demand is huge due to changed lifestyles. The goal is to become market leaders in the energy drink market with wide variety of products on offer. 2.2 Profit generation This is one of the main objectives. It is expected to increase the net profits by about 25% in view of the innovative product and no competition. Besides, the brand is well known and hence the new segment can be easily captured. 3. Strategy The firm's strategy is to attract the existing customers through brand image. This would make the market penetration easier. Based on the innovative product benefits, the marketing strategy has been devised. 3.1 Product strategy 3.1.1 Product name The new product that is being introduced has some distinctive features. It is especially meant for those who intend going to gym or swimming early morning. It is supposed to give the consumer a kick-start to the day. When an individual wakes up after 7 or 8 hours of sleep the body glycogen levels are low and during a workout he would using up stored up energy. Thus this product would be able to provide the needed energy early morning and hence the demand is expected to be high due to the demand for healthier lifestyles. This would be the product package with the company logo Samson Energy Drink trademark being same as for all the other products. The product is called Samson Fit which itself would indicate that it is meant for fitness. 3.1.2 Market segmentation The market would be segmented based on the psychographic characteristics as lifestyle changes have posed a challenge to retailers to address the ever changing trends. Buisson (2006) cites from a WHO report which suggests that more than 1.3B people are overweight or obese around the world. While obesity has attacked all the age groups, the segment that visits the gym falls between the ages of 18 and 35. As life style has become faster people have less and less of time at hand and hence look for quick-fix solutions. Body conscious and body image have become of prime importance to all ages especially the women and the youth. Hence these would the two segments that would be stressed upon. 3.1.3 Research Process The market for the product has been researched thoroughly as secondary data is available. Based on the psychographics and the secondary data, a test market was chosen. In five Gyms of New Jersey free samples were distributed for one week to all those who came in for exercise between 7 and 8 am. The trend was observed and based on the trend the market potential was determined. It was found that 60% of the people were keen to try the new product while 10% were apprehensive. About thirty percent of the people declined to try as they claimed not to experience any difficulty in the morning. Based on this it was found that people are keen to have a sleek packaging of the product, and it should be readily available at the Gym. They expressed lack of time to go hunting for it at stores and would prefer to have it on arrival for the workout. Since the brand name SAMSON is familiar, association of the new product with the corporate image was not difficult. Hence it is expected that Samson Fit would get a sizeable market capture. 3.2 Pricing strategy The objective of pricing was to capture the maximum market size. It is also expected that sustainable competitive advantage should be had for long-term presence in the market. Pricing thus has to be affordable by the maximum number of people. At the same time, if the prices are kept too low, it affects the corporate brand image and the product is labeled as inferior. Thus differential pricing has been used. Two sizes of the Samson Fit are available - for single person use, for family or for use by two people. Accordingly, the pricing also varies: Size Price 1 liter bottles US$ 1 2 liter bottles US$ 1.5 The prices are very reasonable compared to the market and for families or couples it works out even more reasonable. In addition, a special price is kept for those who want to take it directly on arrival at the Gym. 3.3 Distribution strategy The average American consumer looks for immediate consumption outlets and hence convenience is the key channel that most energy and health drink sellers are using. Samson Fit would be marketed through retail stores, convenience stores, at gas stations, at the Gyms and the health clubs and online as well. Health food retailers would be concentrated upon because many consumers would like to stock for a fortnight. They prefer to consume the Samson Fit before leaving home while there are many who would like to have it on arrival at the Gym. There is also another category of consumers who do the workouts at home and do not go to any gym. This it is essential that the product is available at health retailers, at Gyms, online stores, at convenience stores, at gas stations and discount stores. A distributor would be appointed area wise to cover all the stores. The Gyms would also be catered to by the distributors. 3.4 Promotional strategy The promotion strategy includes advertising and advertising should reflect the changing needs of the society based on the changed lifestyles. Since the consumers give importance to body image and health, all the advertising should carry the message of a healthy life style. The promotion mix includes advertising, personal selling, online selling, and the use of the media. Communication takes place through packaging as well. Small, sleek, bio-degradable packing would be done which would reflect slim but strong bodies, this would go well with the concept of the product - slim and firm. Innovative packaging can change the product perception and bring in new customers. To spread the brand awareness local advertising agency would be employed which would give professional touch to the promotion. Promotion is the most important part of the strategy. Product life cycles have become shorter and innovation is a necessity rather than a strategic option. In such cases word-of-mouth (WOD) publicity, an uncontrolled form of communication has a stronger influence on brand attitudes. At the same time, negative image can be as easily formed and hence it will be ensured that no negative WOD publicity takes place. Pull strategies have been employed to bring about awareness of the product in the initial stage. Thus, at Gym and health clubs free 1 liter bottles were distributed at fixed time for a week and then discontinued or a week. During this one week it was observed how many bought the drink from the stores at the Gym and how many asked for it. At the retail stores, initially personal contact is essential. Hence after prior appointment with the managers, presentation would be given with details of how the product can be beneficial to the end consumer as well as to the retailer. The retailers would be offered incentives based on different slabs of sales. Why the products would sell will be explained and then handout of the product would be given for free distribution. He displays at all the stores would be made to bring immediate attention of the shoppers. For purchases of high amounts at one time, 1 liter bottle of the product would be given as a free gift. This would draw the attention of the consumers who might have missed other promotional strategies. At the Gas stations, scratch card would be issued to those who buy more than a certain amount of gas at a time. In addition some amount of pay off would have to be given to the gas station owners for allowing us to use their outlets for our product. The usual retailer incentives would be passed on to them. Internet usage and internet purchases have also picked up and this would be a good source of distribution. After two months of rigorous campaigning, it would be reviewed. During this period it would be physically seen how many actually buy the product at Gym in the morning and through interviews it would be ascertained how many have it at home before coming here. It would also take into account how many at the Gym are not even aware of the product and how many decline from using it. The source of their information would help the company to ascertain the best mode of promotion. Based on these, the promotional budget would be allocated and used for different forms of advertising. While 50% of the budget would be spent on advertising, 25% would be on sales promotion and the balance 25% would be spent on sponsoring events at the Gym and the health clubs. 3.5 Financial strategy The benchmark for the overall success of the strategy would be derived from the sales figures. As per statistics available there has been consistent growth in the energy and health drinks market in the US. It is still targeted to grow further by 2010 as obesity continues to be a major health problem. Even with lesser investment it is possible to enter the market and create awareness through innovative strategies. Direct marketing and face to face interaction with the consumers would go a long way in ensuring the success of the brand and also avoid negative advertising. If financially successful, global market would be studied for entry. If not successful, the strategy would be reviewed to understand why the product has failed or the strategy has failed. Correction/changes would be made accordingly. References: Buisson, D. H. (2006). The Changing Consumer: Trends in preferences and tastes. Available from: http://www.conferenz.co.nz/the-changing-consumer-trends-in-preferences-and-tastes-2.html [accessed 19 June 2008] Halliday, J. (2006). Cocaine drink could further confuse energy drinks market. Available from: http://www.nutraingredients.com/news/ng.asp'n=70640-redux-beverages-cocaine-energy-drinks [accessed 19 June 2008] Merrrett, N. (2007). Energy drinks market will grow, says report. Available from: http://www.foodnavigator-usa.com/news/ng.asp'id=78128-global-industry-analysts-energy-drinks-formulation [accessed 19 June 2008] PRP (2008). Samson Energy Drink Launched To Help Start Up Companies Enter Energy Drink Market. Available from: http://www.pressreleasepoint.com/samson-energy-drink-launched-help-start-companies-enter-energy-drink-market [accessed 19 June 2008] http://www.samsonenergydrink.com/ Read More