Strategic Marketing Plan for Lemon Thirst Energy Drink

Introduction
The American soft drink market has been gradually shrinking over the last two decades due to health concerns. Many health experts are warning against sugary and carbonated drinks, so the sales have naturally reduced. And several reports are showing that those who are no longer taking sugary and carbonated drinks are turning to alternative drinks such as teas, natural juices, water, and so on. This has resulted in the steady growth of healthier non-carbonated drinks (Al-Shaar et al., 2017). Among the many alternative drinks recording, steady growth in energy drinks.
The energy drink market has seen steady growth since its launch in the United States in the year 1997. According to Kunst (2019), since energy drinks were launched in the United States in 1997, the market or segment has grown steadily at an annual rate of about 20 percent every year. The market is now valued at over 53 billion U.S. dollars in sales every year and has recently overtaken the soft drinks market (Kunst, 2019). More and more energy drinks are being sold every year for increased energy. The popularity of energy drinks is also increasing because of their association with different sports disciplines and with the alcoholic beverages industry.
The Lemon Thirst Beverage Company is one of the latest entrants into the energy drinks segment of the beverages industry. The Company is based in Ogden City in the State of Utah. Its flagship beverage will be the Lemon Thirst energy drink. The drink is targeting the rapidly expanding energy drinks segment and is different from other energy drink products in the sense that it is healthier. This paper outlines the strategic marketing plan for the drink in the United States energy drinks market.
Mission Statement
The mission statement of the Lemon Thirst Beverage Company is to produce products that satisfy the needs of the consumer and enhance the community and the society at the same time via the use of eco-friendly production and marketing methods.
Vision:
The vision of the Lemon Thirst Beverage Company is to become a leader in the manufacturing of healthy and nutritious drinks in the United States.
Values:
The Lemon Thirst Beverage Company has the following values: integrity, honesty, uniqueness, respect, collaboration, leadership, sustainable growth, and productivity. These values were adopted by the Company since they are the same values upheld by many people across the State of Utah.
Situation Analysis
An energy drink is a special beverage that is formulated to provide an increase in physical and mental energy. Most energy drinks on the market provide energy because they are formulated with special active ingredients such as caffeine, guarana, sugars, creatine, herbal supplements, Taurine, and vitamins (Mahajan, 2020). The main ingredient is usually caffeine. This is because caffeine provides an almost instant spike in physical and mental energy when consumed.
Examples of popular energy drinks already in the market include NOS, Monster, Red Bull, and Rockstar.
While the Lemon Thirst Company has some serious competition, it intends to become a serious competitor in the energy drinks segment by positioning its energy drink as a healthier product. According to the Company, Lemon Thirst is a healthier product because it is made of natural ingredients such as guarana, green tea extract, and ginseng as opposed to most of the popular energy drinks on the market that are made of artificial ingredients and carbonated sugars.
In addition to being made of natural ingredients, Lemon Thirst is superior in the sense that it has artificial sweeteners instead of real sugar. This means it has a very low-calorie count.
In short, Lemon Thirst can provide the same kind of mental and physical energy boost that popular energy drinks like Red Bull provide but has fewer calories per volume. This makes it healthier in two ways. First, because it is made of natural ingredients. Second, because it does not deliver too many calories (Mahajan, 2020).
Industry Overview
As of 2018, the international energy drinks segment was estimated to be worth at least $53 billion. The segment or market is expected to grow at 7.2 percent annually over the next couple of years and reach 86 billion by the year 2026 (Roy & Deshmukh, 2019). An energy drink is any beverage that is formulated with stimulants such as guarana, ginseng, Taurine, or caffeine to enhance physical energy and mental alertness.
As of 2019, there were more than 200 energy drink brands in the United States alone. The brands include reputable companies such as Pepsi, Dr. Pepper, and Coca-Cola. Table 1 below shows the market shares of the major energy drink brands as of 2019.
Table 1. U.S. Energy Drink Market Share (adopted from Mahajan, 2020; Roy & Deshmukh, 2019).
Brand
Company
Market share (%)
Red Bull
Red Bull, Inc.
42
Rockstar
Rockstar Inc.
11
Monster
Monster Beverage Co.
14
Full Throttle
Coca-Cola Co.
6.9
Amp
PepsiCo
3.6
Others
Others
22.5
Total
100.00%
Position of the Company within the industry
Lemon Thirst is currently a relatively unknown company compared to the more established brands. It was founded just recently by two founders in the City of Ogden in the State of Utah. As of now, it only has two employees who are the founders. However, the founders plan to hire ten staff soon.
When the Company starts full operations, the two founders will be in charge of the entire structure. One of the founders will head the production and operations departments of the Company, while the other will head the administration, marketing, and finance departments of the Company. Because the Company does not have limitless resources, the two founders intend to minimize operational costs and other costs to make sure every dollar spent counts.
Positioning
The Lemon Thirst drink will be introduced on the market today as a super healthy energy drink because it contains no caffeine, no sugar, and uses real plant stimulants. Because it has no caffeine or sugar, Lemon Thirst will appeal to health-conscious consumers, vegetarians, diabetics, convalescents, and others who do not want ordinary and unhealthy soft drink beverages.
Targeting
Lemon Thirst intends to become a product for young people because young people are the majority of consumers of energy drink products. The young people that Lemon Thirst wants to target are those between the ages of fifteen to thirty-five. Young people in this age group make up about a quarter of the United States energy drink consumers (Freeman et al., 2016).
The fast-paced lifestyle of young people in this age group also makes them the perfect candidates for energy drinks. They go about life doing energy-demanding things throughout the day and, therefore, need to consume energy drinks to get an energy boost.
The people being targeted for this drink can be found easily since they are mostly found in metropolitan cities, in colleges, on campuses, and in high school.
Product Philosophy
This product has a catchy and clever name. The name is meant to motivate people to buy it to quench their thirst for a refreshment. It encourages customers to act now to quench their thirst instead of later.
The product philosophy is to energize both the brain and the body so that people can do more, be more active, and accomplish their goals. And the product provides an energy boost without any accompanying negative health consequences.
Total Market Opportunity
As per industry analysts, the United States energy drink market segment is worth approximately 53 billion USD. The analysts expect it to top 86 billion USD by 2026. This means that there is a lot of potential and money to be made on the market.
The Lemon Thirst Beverage Company aims to capture just 0.01 percent of the U.S. market in its first year of operation. If this goal is achieved, the Company will have a market value of $0.53 billion. After capturing this market percentage, the Company hopes to work up from there.
Macro Environmental Factors
Political Environment
The political environment in the City of Ogden and the State of Utah is pretty conducive for business. This will help the beverage company to move forward as it intends to. Both the state government and the federal government are putting measures in place to encourage the establishment of more companies to create employment. Some of the measures include pro-business regulation and tax benefits. Therefore, in terms of the political environment, the Company is in a good place.
Economic Environment
The coronavirus pandemic has made life difficult and reduced the amount of disposable income in people’s pockets. This has reduced the buying of non-essential items like energy drinks, and so on. However, there are hopes that a vaccine will soon be found or a cure will be developed to help the world return to doing things the way it always used to.
Social-Demographic Environment
This drink is being made to primarily target those who are between the ages of fifteen and thirty-five years. People in this age group amount to a quarter of the United States population, and they are continuing to increase (Freeman et al., 2016). The secondary market for the Company include convalescents, athletes, and those who hate soft drink companies.
Technological
The United States has advanced science and technology to manufacture safe energy drinks. The country also has many food specialists and engineers that can help set up and run an energy drink company. The Company intends to hire such specialists as consultants.
Ecological
The manufacture of soft drinks is quite an energy-intensive and uses massive quantities of freshwater. The soft drinks industry also uses plastic bottles and aluminum cans to package most drinks. The intensive use of energy and water and the use of non-biodegradable packaging materials are not very eco-friendly ways to do things. In contrast, the Lemon Thirst Beverage Company has plans to use less water and energy and 100 percent biodegradable packaging.
Lemon Thirst’s SWOT analysis
Strengths
The Lemon Thirst Beverage Company has several strengths. First, its energy drink is healthier than most energy drinks on the market. This is because it uses no sugar or caffeine to provide an energy boost. It uses natural ingredients.
Furthermore, it is also healthier in the sense that it has fewer calories per drink. Second, its energy drink is sweeter than most energy drinks on the market, including Red Bull. Third, the Company will use a special production technique that will use less energy and water. So it will appeal to environmentalists and receive a lot of free publicity. Lastly, it is based in a city that has strong values such as partnership, friendliness, loyalty, integrity, hard work, and respect.
Weaknesses
The main weakness is that the Company is new in a market segment that has more established and popular brands. Another weakness is that the Company does not have the financial resources and skilled staff to give it a competitive edge over its competitors manufacturers. Lastly, the Company has no experience in the manufacture and distribution of beverages.
Opportunities
The greatest opportunity for the Lemon Thirst Beverage Company is the fact that there is an increasing demand for healthy beverage products in the United States. This means that people are likely to embrace a new healthy product in the beverage industry. Another opportunity is that the energy drinks segment is expected to grow strongly over the next couple of years. Lastly, the Company has the opportunity to sell its drinks not only across the United States but also in places such as Europe, Middle East, Asia, and Africa because energy drinks are not heavily regulated in most places across the planet.
Threats
The biggest threat the Company is facing is the potential competition from the serious, well-established, and well-experienced competitors. One more threat is the fact that state governments and regulators across the country are starting to look at ways to impose tighter regulations on the rapidly growing energy drinks market. Lastly, the Company also faces the threat of not having sufficient financial resources to operate to the stage of breaking even and making a good profit.
Table 2. Lemon Thirst’s SWOT analysis
Strengths
Weaknesses
· It is a unique and healthy energy drink
· It is based on the good values associated with Utah
· It has fewer calories per bottle
· It is a lucrative market segment
· The Company hopes to use eco-friendly manufacturing methods
· It is a sweeter and better-tasting drink
· The Company has lean financial resources
· No geographical presence
· No experienced staff
· No distribution network
· Only one product at the moment
Opportunities
Threats
· There is higher demand for healthy drinks
· The energy drinks market is rapidly expanding
· There is a low barrier to entry
· There is opportunity to expand globally
· There is increasing concern from the authorities
· There is the potential for serious competition
· New regulations could be approved at any time
Marketing objective
The main marketing goal of the Lemon Thirst Beverage Company is to capture just 0.015 percent of the American energy drink segment in the first three years of operation. The second marketing objective is to become popular in the target market (Generation Y) because the majority of Americans consuming energy drinks are in the target market. The third and last main marketing objective is to make the Company popular in Ogden City and surrounding cities like Salt Lake City.
Marketing Mix Strategies
The Company has a nice brand name that suggests it quenches thirst. This can be taken advantage of during marketing. The Company’s drinks will be packaged in stylish bottles that can be reused. This will make sure the Company becomes more visible to consumers as a brand and inspire repeat purchases (Raheem, Vishnu & Ahmed, 2014).
The Company hopes to produce a product with minimal caffeine and sugar content. This will be its competitive edge over other energy drinks that are made of caffeine and have plenty of sugar. Moreover, the Company wants to create an energy drink that has multiple benefits, including enhancing mood, reducing mental fatigue, providing good energy, and increasing mental alertness. All these things can be utilized in marketing the drink and healthy and extremely beneficial product (Ahmed et al., 2016).
The Company can potentially become very popular if it specifically targets fitness-conscious people, health-conscious people, athletes, diabetics, and convalescents as they are probably the persons who would prefer this energy drink and become loyal customers.
Pricing Strategy
Since this is a new energy drink in a well-established market, the Company intends to use market skimming as a pricing strategy. The Company wants to recover a significant chunk of the money it is investing early before any price competition, or moves by bigger players make it difficult to do so.
The Company also intends to discount bulk purchases to encourage people to buy. Moreover, the Company will use price discrimination tactics by lowering the price of the drink in colleges and schools to encourage more purchases in such areas where there is lower disposable income than bars, restaurants, and sports centers.
Distribution Strategies
Initially, the Company will work with only select retailers. This will create the image of exclusivity and position the brand as an exclusive and premium product. This will justify slightly high prices initially to help the Company recoup its investments.
The beverage company wants to first dominate Ogden City before expanding beyond the city and into the State as a whole.
To make sure every affiliate retailer has a good supply of the Company’s drinks at any given time, the Company will set up strategically placed distribution centers across the city from which orders will be fulfilled.
Lastly, to distribute the product across the country, the Company will work with reputable national distribution companies.
Integrated Marketing Communications
The overriding objective of the beverage company’s communication strategy is to popularize the Company, build a brand position, and motivate purchase and repeat purchase.
The Company will start by launching the drink in a massive function in Ogden City and, after that, targeting the youthful population known to be the largest population consuming energy drinks in the United States.
The communication budget for the initial six months is $300,000.
Advertising Strategy
Advertising is perhaps the most important marketing tool. The Company will develop advertisements for Ogden and Utah newspapers, magazines, T.V. stations, and radio stations. These advertisements will reach many people.
Moreover, the Company intends to use branded vehicles, posters, and billboards to reach even more people in Ogden and across Utah. The Company also wants to create fun and creative advertisements for its social media company. The Company hopes to target the youth to build a massive fan base among them (Hitt, Ireland & Hoskisson, 2012).
The Company will recruit an athlete for an advertisement. This celebrity endorsement is hoped to appeal to sportsmen and women and gym-goers and motivate them to buy the drink for workouts and general consumption (Hitt et al., 2012).
Lastly, the Company will recruit salespeople to sell the product directly to companies, schools, drug stores, pharmacies, hospitals, and so on. The people will explain the product and distribute booklets to spread more information and awareness about Lemon Thirst and its benefits (Ahmed et al., 2016; Kotler & Armstrong, 2010).
Implementation
The Company will need to hire people to work in distribution and marketing (Barney & Hesterly, 2010). These are the people who will be very crucial for the implementation of the marketing plan.
The Company will also need to hire specialist marketing agencies to refine and drive their marketing objectives. The agencies, including marketing agencies, research agencies, and management consultants.
The directors of the Company or employees in charge of marketing will need to undergo training to manage better or implement the Company’s marketing plan or schedule. Lemon Thirst’s limited financial resources will be a challenge for the implementation of the plan, but through proper planning, the Company can manage.
The company marketing director should create a marketing program that will begin with the launch of the product, the marketing of the product in the media, and then the distribution of the product.
Control
The Company should establish controls to evaluate its performance. The controls should include output controls, process controls, input controls, cost controls, price controls, and so on.
The Company should also constantly evaluate its revenue, market share, and profitability performance, and other expectations.
Evaluation
The Company will evaluate its actual performance using its set objectives and plans. After evaluating itself, the Company’s directors will utilize the information to redesign its marketing plans and goals.
References
Ahmed, R. R., Vveinhardt, J., Streimikiene, D., & Awais, M. (2016). Mediating and Marketing factors influence the prescription behavior of Physicians: An Empirical Investigation. Amfiteatru Economic Journal, 18(41), 153-167.
Al-Shaar, L., Vercammen, K., Lu, C., Richardson, S., Tamez, M., & Mattei, J. (2017). Health effects and public health concerns of energy drink consumption in the United States: a mini-review. Frontiers in public health, 5, 225.
Barney, J. B., & Hesterly, W. S. (2010). Strategic management and competitive advantage: Concepts and cases (pp. 4-25). Upper Saddle River, NJ: Prentice-Hall.
Freeman, B., Kelly, B., Vandevijvere, S., & Baur, L. (2016). Young adults: beloved by food and drink marketers and forgotten by public health?. Health promotion international, 31(4), 954-961.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.
Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson education.
Kunst, A. (2019). Energy drinks consumption: consumers of energy drinks in the United States in 2018. Statista.
Mahajan, S. (2020). Sports And Energy Drinks Market Size & Share Analysis Report, 2019-2026.
Raheem, A. R., Vishnu, P., & Ahmed, A. M. (2014). Impact of product packaging on consumer’s buying behavior. European journal of scientific research, 122(2), 125-134.
Roy, A. & Deshmukh, R. (2019). Energy Drinks Market by Type (Alcoholic and Nonalcoholic) and End User (kids, Adults, and Teenagers): Global Opportunity Analysis and Industry Forecast, 2019–2026. Allied Market Research.