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V Energy Drink offers their consumers a superior product coupled with amazing value, providing a beverage that not only enhances their energy but also offers an enjoyable taste.
The target audience lives an active college lifestyle and is primarily males between the ages of 18-24. Thus, it is at this time in the consumer’s life that dramatic changes are taking place. The primary consumer group of V includes extreme sports enthusiasts, music lovers, and young adults which are why this campaign consists of event sponsorships and promotions which will grab the targets attention.
Over the past few years, the market has revealed that there is a strong increase in the consumption of energy drink beverages. While there are currently many brands of energy drinks on the market, V distinguishes itself amongst its competitors by offering different size cans, thus enabling our consumers to get more for their money. According to Tablebase data, V is positioned first amongst brands such as Red Bull, Mother and Monster with 60% market share.
The strategy is to emphasize V’s distinctive taste of Guarana and taurine. The taste is more enjoyable and the size provides a longer lasting boost of energy, which led to the creation of the ‘vitalizes body and mind’ slogan. V will launch specific event sponsorships that will attract the target and increase revenue.
Based on V’s estimated sales from the previous year, the campaign allocated an advertising budget of $10 million to execute and utilize different media vehicles: magazine, internet, prime-time television, ambient, and event sponsorships. These media vehicles allowed Rockstar to reach the desired reach and frequencies while keeping within the budget. Research dictates that the top 4 DMAs are heavily populated with the target audience that V is aiming to attract current and future consumers.
The main objectives are to increase female users and to continue to retain the market share as it is almost on breakeven point and try to increase it if possible. The communication objectives are to eliminate gender biases and to break the image and perception that V is only for a distinctive group.
Contents
2. Introduction
Frucor Beverages Australia is primarily an importer, marketer and distributor of a range of non-alcoholic cold beverages into the Australiasian market. Frucor’s brand portfolio includes fruit juices, fruit drinks, energy drinks, waters and soft drinks, suitable for every drinking occasion. Most of Frucor’s brands are household favourites throughout New Zealand, and increasingly Australia. (http://en.wikipedia.org)
2.1 Company Background
Since its New Zealand beginnings in the early 60’s, Frucor has evolved from a small New Zealand juice business to a leading Australasian drinks company. Frucor Beverages Newzealand is primarily an importer, marketer and distributor of a range of non-alcoholic cold beverages into the NewZealand market. Frucor’s brand portfolio includes fruit juices, fruit drinks, energy drinks, waters and soft drinks, suitable for every drinking occasion. Most of Frucor’s brands are household favourites throughout New Zealand, and increasingly Australia.
The Group’s head office and main manufacturing plant is based in Auckland, New Zealand, together with national functions for Sales and Marketing, Quality, Human Resources, Finance, Distribution and Administration. New Zealand has regional Sales offices in Tauranga, Hamilton, Palmerston North, Wellington and Christchurch and a water bottling plant in Kaiapoi, South Island.
Frucor is 100% owned by Groupe Danone, one of the world’s leading Biscuit, Dairy and Drink companies. But its been Acquired by Suntory of Japan in October 2008 from its previous owner Danone.
Frucor’s product range includes Mizone sports water, V energy drink, GForce fruit drink, Evian mineral water and h2go spring water. Mizone, V, and GForce are manufactured in New Zealand, by Frucor Beverages New Zealand Limited and imported to Australia. Evian mineral water is manufactured in France and imported to Australia. The h2go pure spring water brand is contract-packed for Frucor by a third-party filling operation in Australia.
In the year 2009 Suntory Japan overtook the frucor. (http://en.wikipedia.org)
2.2 Market
Share
History
Energy
drinks
only
hold
2%
of
the
market
share
within
the
non alcoholic
beverage
market.
 (www.ebrolcreative.com)
V drink is a dominant product in competitive Australian- New Zealand energy drink market. Statistics from 2007 reveal that the Australian energy drink market is worth $325 million, up from approximately $200 million in 2004. At that time, two products Red Bull and V dominated the market, capturing 90% of the market share. Coca Cola, in their failed attempt to initially capture a slice of the market, reformulated their Mother energy drink in 2008 backed by a $3 million advertising campaign. As a consequence of successfully reformulating and relaunching their Mother drink, Coca Cola at present holds approximately 14% market share eroding the once dominant positions of Red Bull and V. In response to this, Red Bull and V have both added additional product lines into the market place including increased drink/can sizes, compact energy shots and additional flavours and variations of their original products. Now there are three dominant leaders in the energy drink market. (www.oppapers.com)
Currently V drink holds 60% [1] market share, Red Bull has the 20% [2] market share, Mother has 14% and Monster and Demon have equal proportion I.e.5% and others 1%.
3 External Environment
3.1 Demography
The primary target market will be the students mainly males between the age of 18 to 24, those people who has the high energy needs with an instant kick of guarana. It is the time in the consumer’s life that dramatic changes are taking place.
The primary consumer group of V includes extreme sports enthusiasts, music lovers, and young adults. This may be the result that V sponsored and promoted themselves through events of extreme sports and music concert tours. This group of consumers is excited by speed, energy, flash, and instant thrill.
3.2 Economic environmental analysis
The energy drink market in Australia and abroad is very competitive. The market is approaching the maturity stage where room for growth is limited and this puts V drink in a vulnerable position even if the V drink is the number 1 selling energy drink. because they are more likely to fail in such a market. According to the MarketWatch (2009) global energy drink volumes have risen by 2% in 2008 to 3.9 billion litres which represent almost double the 2.0 billion litres sold in 2003. North America represents 37% of global volume followed by Asia Pacific which is 30% and Western Europe representing 15%. The report suggests that while Asia Pacific has experienced a decline in volume, Australia is surging with volumes soaring at 33%. Factors which may have contributed to this surge include the stress of economic downturn, work pressure and general fatigue. Energy drinks are appealing to younger consumers because of their convenience when compared to coffee, the novel taste and trendy image of such drinks. This makes them very appealing to younger consumers. Furthermore there is a growing trend for the consumer to mix energy drinks with spirits and create an energy cocktail. There is escalating health concerns about energy drinks which could damage its appeal. Health concerns are around the high caffeine and sugar content in such drinks. New avenues of growth will therefore come in the form of energy drinks that address these concerns and health promoting using organic alternatives rather than caffeine. According to the Australian Food & drink Report (2010) the coffee industry in Australia is still strong but has began to level off slightly. This could be partly because of the rise in energy drinks. (www.oppapers.com)
3.3 Politics and Legal
V drink is manufactured on the basis of the following FDA act
TITLE 21–FOOD AND DRUGS
CHAPTER I–FOOD AND DRUG ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN
SERVICES (CONTINUED)
PART 182–SUBSTANCES GENERALLY RECOGNIZED AS SAFE–Table of Contents
Subpart B–Multiple Purpose GRAS Food Substances
Sec. 182.1180 Caffeine.
(a) Product. Caffeine.
(b) Tolerance. 0.02 percent.
(c) Limitations, restrictions, or explanation. This substance is
generally recognized as safe when used in cola-type beverages in
accordance with good manufacturing practice.
This means that the minimum caffeine content should be 145mg per litre of energy drink and maximum of 30mg/L and the same rule is followed by Australian manufacturing companies.
3.4 Social and Culture
V energy drink has its own unique external culture. As we all know the target audience of V drink is specifically males between the ages of 18 to 24.
Typically, this age group of 18 to 24-year-olds is either thinking about college, in college, or just recently graduated from college with or without a career. In the same way, situation it appeals to the young ones who are casually dressed with the hoodies and the rapper’s clothes in its advertisement. The professionals are never included in these adverts as they are mostly health conscious and they prefer coffee for the energy. So V creates its own unique environment.
3.5 Technology
With the introduction of the Nitrous technology (an advanced way to manufacture energy drinks) the carbonated ways is in intense pressure. Soon the carbonation will be outdated and V drink has to adopt this nitrous method to manufacture the drink. The taste of the nitrous manufactured drink is far better than the carbonation taste that is another reason of adoption of nitrous method.
It’s apparent in its approach to technology, which helps it deliver those hot new products. For example, the company custom-built its own PDA-based sales system way back in 1994 when it couldn’t find what it wanted on the market. This was when serious PDAs were still quite rare beasts.
Computer tells you where to go
Literally, in this case… Six months ago, Frucor installed a new Vocollect “voice-picking” warehouse technology. It’s basically a talking computer which tells warehouse staff where to go, via a wireless headphone set, says Cowsill. It will say, go and pick up seven cartons from bay 47, the warehouse man will then confirm he’s done this verbally and the computer will immediately update this, or, if he picks up five cartons, the computer will update that change too.
The result has been much better in order-picking accuracy and fewer customer complaints, which was the reason for installing it in the first place. Frucor has had a smooth run with the technology too. Basically, it’s an interface that sits on top of the company’s SAP warehouse management system and works without keyboards, and is paperless too, so has great green credentials.
The new system replaced a previous manual printed-list system. The headphone set is actually a Windows mobile client equipped with a microphone. Instructions from the computer system are converted into voice and then, in turn, the warehouse staff’s instructions are converted back. Frucor says the error rate is low because the voice recognition software learns to recognise individual accents. (www.energyfiend.com)
4.0 Competitive Analysis: Battle of the beverages
Within energy drinks, V’s main competitors are Red Bull, Mother and Monster Energy. It is ranked 1st in the market with 60% share, followed by Red Bull [20%], Mother [14%], Monster Energy [3%].
Red Bull is known to be the 2nd energy drink in the New Zealand. Its main headquarters are in Austria. Their popular slogan is ―Red Bull gives you wings! Red and travels. However, they also sponsor in many different activities like video gaming and cultural arts. Red Bull has only two products, the Original, Sugar-Free, while V has 7 products with different flavours. Red Bull has sold more than 4 billion cans in Red Bull earned $79,817,000. Their growth increased by 26.5%.
Mother is an energy drink marketed to Australians and New Zealanders by Coca-Cola. Coca Cola,in their failed attempt to initially capture a slice of the market, reformulated their
Mother energy drink in 2008 backed by a $3 million advertising campaign. As a consequence of successfully reformulating and relaunching their Mother drink, Coca Cola at present holds approximately 14% market share eroding the once dominant positions of Red Bull and V. In response to this, Red Bull and V have both added additional product lines into the market place including increased drink/can sizes, compact energy shots and additional flavours and variations of their original products.
Monster Energy started in the United States. It was under the Hansen Natural Corporation until it was bought by The Coca-Cola Company in 2008.
Their slogan is ―Unleash the Beast, which supports its image as the ―meanest energy supplement on the planetâ€- according to its own homepage. Similar to Red Bull and V, Monster Energy sponsors sporting events, concerts, and parties. Monster Energy offers 7 flavors with an addition of 8 flavors mixed with coffee known as Java Monster. Unlike V who has 5 international locations,
Monster Energy’s international locations are limited with only 3, which are in United States, Ireland, and United Kingdom. As of May 18, 2008, Monster Energy earned $28,359,000. Their growth increased by 43.5%.
Despite these three main competitors, Red Bull, Mother and Monster, the energy drinks industry is heavily competitive. V needs to maintain its market share by continuing to maintain its position.
As for other competitors that do not fall under the energy drinks category, they range from coffees, fountain drinks, and sports drinks. Popular cafes like Starbucks, Dunkin Donuts, and McCafe provide the everyday aromatic warm coffee to help individuals start off their early days.
Upon request, these stores can increase a boost of caffeine in the coffee like the double or triple 5 shots of caffeine option added to any Starbucks drink. Starbucks is the well known coffee drink provider to everyone who does drink coffee and does not drink coffee. Its popularity has allowed them to sell their own specialty energy drinks in stores such as the Starbucks Double Shot which reflects the taste of an ice coffee. Starbucks is a definite concern for V because it has an already well-established name and definitely similar targets to some of V’s. Many companies are well established and have developed brand loyalty with their customer. These brands are Pepsi, Coca Cola, 7 UP, Ginger Ale, Sprite. Thus, many people would still prefer to drink sodas over energy drinks.
Another competitor that appeals to the health conscientious consumer is the sports drinks category. These drinks are specially formulated to help athletes with their body and performance energy. Some brands that fall under this category are Gatorade and Vitamin water. These beverages provide the consumer with vitamins, carbohydrates, electrolytes, and many more important elements that aid in keeping the individual hydrated and energized.
With all of the variety of beverages out there, it is no surprise that the market of energy drinks is extremely competitive and filled with a lot of advertising clutter, making it difficult for V to stand out and for the consumers to decide what drink best fits their needs.
Below is the product positioning map for the V drink and its competitor. This describes the price of the 500ml can of each brand and the amount of energy they provide.
5 Market Segments
5.1 Target Demographic Analysis: A sneak peek of the audience
The target audience of V drink is specifically males between the ages of 18 to 24.
Typically, this age group of 18 to 24-year-olds is either thinking about college, in college, or just recently graduated from college with or without a career. Thus, it is at this time in the consumer’s life that dramatic changes are taking place.
Changes such as with education, sports, clubs, and part-time jobs are far more demanding in a college setting. V is targeting customers across the New Zealand that are at this turning point in their lives, when energy is a necessary component to successfully make it through any given day. V energy drink is the perfect solution for 18 to 24-year-olds who live fast-paced, hectic lifestyles making it through long days and nights of classes, studying, projects, and overtime work.
The primary consumer group of V includes extreme sports enthusiasts, music lovers, and young adults. This may be the result that V sponsored and promoted themselves through events of extreme sports and music concert tours. This group of consumers is excited by speed, energy, flash, and instant thrill.
The main areas where the marketing campaigns are focused are given and pointed below:
6. Internal environment
6.1 Financial analysis
The finance team works with all of Frucor to make sure the best commercial decisions are made, with the most accurate and up-to-date information.
They work alongside each area in terms of financial planning, budgeting, reporting, payables and receivables, so they’re always part of the business – they don’t just report on it. (www.frucor.co.nz)
The budget statement is given below:
Frucor doesn’t separately disclose sales for V, It is selling about $90 million of the drink a year, based on results of Red Bull, which has 20 per cent of the market.
And the estimated gross margin for the V is 38%.
The estimated budget amount is 10.000,000.00
(explained in detail in assignment 2)
6.2 Internal organisation structure
The internal organisation structure includes all the organisational factors that contribute in the production of the V drink. This structure includes the following:
6.2.1 Manufacturing services/processes
Frucor itself is a giant company. It has 220 different product lines with the flexible production staff, working 24/7. The production team is also included into the day to day planning and decision making. As they are the once who holds the credit for the product. Their opinion as a feedback is taken time to time.
6.2.2 Management
The management includes highly skilled and talented people with the new innovative ideas. Management always includes the whole staff in the process of decision making. This involvement makes the staff feel that they are an important part of the company and leads to highly motivated workforce. Frucor’s long-time managing director, Mark Cowsill, helped come up with the innovative V energy drink and says the drink is typical of the company’s overall approach to business. Innovation is the name of the game. It’s all about ‘V’. Frucor’s bright green energy drink has captured consumer interest big-time. So much so that it now accounts for 60 percent of the Australian energy drink market, despite being only 10 years old.
Part of its secret is guarana, the stimulant extracted from the Brazilian plant. This is then combined with caffeine to create the popular new drink that is giving consumers the buzz they want when they fancy a change from hot coffee. (www.istart.co.nz)
6.2.3 Human Resource (HR)
Brands are great assets but people are even greater assets. Without the best people, frucor wouldn’t be where we are today. That’s why the Human Resources team is so important. It’s their job to find and keep the best people out there.
HR will help us to find out the best people suitable for the advertisement making, Web designing as we will upgrade our website v republic. And there is need to employ some student brand managers who would be used to promote the V drink in the university campuses (www.frucor.co.nz).
6.2.4 Research and development
The research and development group is responsible for thinking and developing new drinks. They are the one who comes up with the new drinks and flavours. These flavours then converted into brands, and then they become an inevitable part of the company and people’s life as well.
The research and development group is also responsible for the new product packaging. They develop the new packaging and design for the products according to the market demand and trends. As a leading company in non alcoholic drinks Frucor has to be updated in every aspect of the business.
6.2.5 Market function
The market team of Frucor has to work according to the mission and values of the company. The team is responsible for the making new marketing plans and actually implement them. They are the one who advertises and promotes the product range of Frucor. The group with the cooperation of the other departments employ new people and creates advertisements, websites to attract the people and make Frucor drinks a part of their daily routine. In this way it helps the company and develops strategies to grow and expand its business. (www.frucor.co.nz)
6.3 Location
The location of the company is the main and important tool to its success. As the company’s headquarters and manufacturing is done in New Zealand. It is easy to distribute the product in New Zealand and is cost efficient to manufacture it here and then export to Austrailia as compared to manufacture it in Australia.
The location of the headquarters is
Frucor Beverages Ltd
PO Box 76202
Manukau City 1730
New Zealand
PHONE+64 9 250 0100
FREE PHONE 0800 502 929
FAX +64 9 250 0150 (www.frucor.co.nz)
6.4 External relationships
Frucor has tie-ups with different companies for the purpose of the product packaging and supply, for its IT needs and for the purpose of the international export.
Cormack Packaging is the first example of this. Cormack packaging ltd. is the company that packages and delivers a large proportion of the Frucor brands.
New sunrise group is another company that deals with the packaging and the supply of the Frucor products.
The introduction of the Fujitsu for the cloud SAP system is another example of the company. As Frucor wants to move all its databases in the cloud networking that enables it to operate globally with almost no cost of moving the databases and its guidelines and timelines.
6.5 Competitive postioning
This is how we position our products in the market. Below is the product positioning map for the V drink and its competitor. This describes the price of the 500ml can of each brand and the amount of energy they provide. This makes the customer aware about how much energy they are getting on what price.
6.6 Ethical standing
The company is actively participating in different types of activities to help the society nationally and internationally. The examples are given below:
LIFE EDUCATION TRUST
As a major sponsor of Life Education Trust, Frucor is helping Kiwi kids throughout New Zealand in enjoying some very important health-based education programmes. Over 7000 children visit each of Harold the Giraffe’s mobile classrooms every year!
BOOKS IN HOMES
Frucor has been a proud sponsor of Books in Homes since February 2003, supporting Dawson Primary School in Otara, South Auckland. This initiative was developed to help break the cycle of ‘booklessness’ and the 460 pupils are each given at least five books a year, which they get to select and keep.
WORLD VISION
Just Juice has been the official sponsor for the 40-Hour Famine for over 20 fun-filled years. Every year it gives World Vision a donation to go towards their cause, this includes helping free children from slave labour, and feeding malnourished children in Malawi.
