amp Energy Drink Case…what’s powering you? Thanks to the following companies for use of their syndicated data: Mediamark Research & Intelligence, LLC (MRI) TNS-Media Intelligence SRDS Lifestyle Market Analyst The Category Nationally branded energy drinks got their start in 1995 when Pepsico launched Josta. By 2001, the US energy drink market had increased to $8 million in annual retail sales. Historically, the category grew an amazing 50% annually. In recent years sales increases have pulled back somewhat to a 15-20 percent annual growth rate, with sales estimated north of $4.8 billion in 2011. Diet energy drinks are growing at nearly twice that rate within the category, as are 16-ounce sized energy drinks. Major companies' such as Pepsico, Molson, Coca-Cola and Labatt have tried to match smaller companies' innovative, edgy marketing styles, but they have enjoyed only modest success. Most brands target teens and adults between 13 and 35. Heavy users skew to males who account for about 65% of category volume. A 2008 study conducted by the Pennsylvania Medical Society’s Institute for Good Medicine found that: 20 percent of respondents ages 21–30 had used energy drinks in high school or college to stay awake longer to study or write a paper; 70 percent of respondents knew someone who had used an energy drink to stay awake longer to study or work. Energy drinks are also popular as drink mixers. Although energy drinks are stimulants, alcohol is a depressant. The mix can be particularly hazardous as energy drinks can mask the influence of alcohol and a person can fail to take its effects into consideration. Normally fatigue would set in as large amounts of alcohol are being consumed, but the stimulating effect of energy drinks can override this effect. Often used with vodka or in shots, it has led to an increase in the purchase of pre-mixed drinks also known as alco- pops, often containing guarana or taurine extract which provides energy drinks with their flavor. Pounding Down Bigger Cans Since 2001 there has been a growing trend to package energy drinks in bigger cans. In many countries, including the US and Canada, there is an government limit on the maximum caffeine per serving. Hence, bigger cans allow manufacturers to increase the amount of caffeine by including multiple servings per container. Rockstar was first with a 16 ounce can, followed by brand leaders Red Bull and Monster. amp followed initially with a 16 ounce can, and brought out their jumbo 24 ounce Big Rig. More recently, the industry has begun a trend toward the use of natural stimulants and reduced sugar. A few brands in the category include: amp Sugar Free Mother amp Overdrive Rockstar amp Green Tea Vault SoBe Relentless Red Bull Cocaine Monster Red Rooster Liquid X Pimp Juice Full Throttle Who’s Your Daddy? Burn Lost Caffeine: the golden goose? A 24 ounce can of energy drink is caffeine equivalent to 16 cans of caffeinated Coca- Cola or Dr. Pepper, and thus is not intended to be consumed in one sitting. Evidence suggests that most energy drink consumers do drink responsibly. However, there is also convincing scientific evidence that frequent consumption of energy drinks not only has the potential for psychological addiction, but can also cause symptoms ranging from headaches and withdrawal anxiety to insobriety. In October, 2007, a Lehi, Utah teen driver failed a sobriety test after drinking several cans of Red Bull. Blood tests proved he was stone cold sober (no alcohol), but his brain was definitely pickled. Given its potential drawbacks, why is caffeine such a popular ingredient for energy drink manufacturers? One need only reference Coca-Cola’s original 1831 formulation with cocaine leaf as the magic ingredient. An immediate success, it was originally sold in drug stores as a “pick-me-up.” Following FDA sanctions, caffeine became the next legal substitute. The resulting loyalty of regular users of stimulant drinks has always caught the eye of manufacturers of coffee, soda, and now energy drinks. As one marketer observed, “once a consumer, always a consumer”. Marketing/Media Planning Challenge Your campaign will cover all amp brands and sizes. Given the growing number of brand entries, your primary challenge is to distinguish amp from the field, steal share from competitors, and knock off the number two brand, Monster. MRI data shows that amp (Pepsico) has roughly one third the user base of Monster. Current brand awareness is 14% among teens through adults age 34. Your task is to increase brand awareness by 10 percentage points (to 24%) in one year. Your research also shows that Monster enjoys a fiendish 39 percent brand awareness, second only to category leader Red Bull, with awareness typically in the high 60’s to low 70’s. The twist is that by comparison with amp, Monster spends a pittance in measured media advertising. Most of its budget is dedicated to aggressive retail distribution strategies and event sponsorships rather than mass media spending. The Monster brand may owe a great deal of its success to “being first”, i.e., Monster entered the market when the field was much less crowded. amp has boosted ad spending significantly over the past few years. In 2007, the brand spent $9.9 million on advertising, and zero dollars before that. By 2008, they ramped up measured media spending to $18.3 million compared to Red Bull’s $51.3 million. Contrast these two brands with Monster’s 2008 spending of only $1.3 million in measured media, mostly geared toward event advertising. As the agency media director for the amp account, the pressure is on you to generate increased traction for your brand within one year. Pepsico is willing to increase spending to $22 million for next year’s campaign, and has agreed to keep your agency on the business if you can deliver a killer campaign that will unseat number-two Monster. You’ll have to outthink Monster’s marketing team, and you'll need a plan that raises awareness of amp by 10 points. amp already participates in many of the same types of events and sponsorships as its competitors. To knock Monster out of its current winning position, you’ll also need to come up with creative media solutions to make amp the new "in drink" for teens and young adults. Pepsico is willing to spend $25 to $30MM in future campaigns as the brand grows. Branding Challenge 1) A primary goal for your agency is awareness building (think mass media). The cool factor will have to come from a new, killer creative strategy that differentiates your brand from the field. Specify your creative strategy. 2) amp brand personality needs a fresh appeal. Pepsico expects you to invent some new media that will create tons of brand buzz. 3) Along with the strategic use of any new media, the client wants to see some examples of your strategy. For example, if you create a viral message, be specific. Likewise, if you create event marketing or point-of-purchase promos, be specific about the event and how it will be executed. Will mass media advertising be integrated with new media? Campaign Parameters Write a media plan applying the principles outlined in MFP chapters 1-7. Review all chapters well. See MFP website [www.mediaflightplan.com] for targeting, competitive, and marketing data. 1. Target audience & media mix: A well justified target audience is vital to the success of this brand, and your job is to accurately define the segment of the market that will buy amp. Study your brand and competitive brands carefully and critically. Write a profile for the target audience using all relevant online sources for amp. Be sure to justify both the target profile and your media mix decisions using quantitative and qualitative data from the case and from other online resources you may be able to find. 2. Timing/Scheduling: Plan a 12-month campaign; each of the 12 months may or may not include advertising or promotions depending on your timing strategy. Pepsico definitely wants you to include mass media in your plan, as well as new media. You decide which month to launch, and which months to accelerate spending. Your timing/scheduling strategy is vital to your success. Your client expects you to research target lifestyle and to justify peak spending periods with strong support. 3. Media budget: You’ll need to recommend a media budget for amp. Analyze the information in the case combined with all available online data to establish a defensible budget. Keep in mind that although amp’s marketing team is willing to spend the necessary dollars to be effective, the CFO expects a step by step quantitative explanation of how you arrived at your budget. Your budget should include traditional media as well as any alternative/new media or sales promotional spending. 4: Scope: Geographic strategy is especially important for amp. Make a very clear commitment to one of the three scopes in MFP software: National, Spot, or Both. Justify your decision by citing relevant data from all available sources. This should include data from the case itself, MRI, and keep in mind that amp’s CEO is especially interested in your quantitative analysis of relevant data. 5. Spreadsheet: If you choose to support local markets, use the method outlined in the MFP Exercise, Learning to “Weight” Spreadsheets. Calculate Estimated Value Percents (EV%) for all markets selected, and rank them from strongest to weakest. Data for spot market planning is online (mediaflightplan.com). Evaluate all selected markets using Excel, and employ a weighting strategy.