SYNERGY ENERGY DRINK

MARKETING PLAN

Prepared By:Damien Rossetto

GeorgeScott

AdityaPrepared For: MKTG600

Table of Contents

Executive Summary

This marketing plan report on Synergy energy drink, an Australian owned and

produced company provides an analysis and evaluation of the current and future

performance and marketing strategies for the future growth and establishment. Being

one of the leading brands of energy drinks in Australia, its main competitors are Red

Bull, ‘V’ and Mother. Beginning with the introduction and then the environmental

analysis which indicates the trend and consumption of energy drinks in Australia and

worldwide. Followed by a SWOT analysis of Synergy energy drinks and then there

are the marketing goals and objectives that needs to be achieved for the re-

launching their brand of energy drinks. Furthermore, there is the marketing strategy

for different target markets and ages along with the implementation plan and method

of these strategies and later on is the success evaluation of the synergy re-launch

along with the qualitative measures to be implemented.

Introduction

Synergy Energy Drink, from an Australian owned and produced company, came to

fruition in 2009, and entered the ever-competitive Australian 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 the time, two products in 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 30% 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.

With now three dominant leaders in the energy drink market, Synergy has entered

the market in a precarious situation. Some 250 brands of energy drink have

launched since 1999, most of which have come and gone. To separate the Synergy

brand from their competitors, they have marketed their selling point as “it contains no

carbohydrates and sugar”. Hence, it’s being targeted at the health conscious

individual with a busy lifestyle, yet it still contains the core ingredients featured in

most energy drinks including caffeine, taurine, brahmi and B vitamins.

Furthermore, in addition to the launch, cricketer Michael Clarke and model Lara

Bingle were hired as the “face” of the company. This partnership was said to be

worth in excess of “several hundred thousands dollars”. When the couple announced

their relationship and engagement was off back in March 2010, Synergy dumped the

couple citing that “they no longer represent Synergy’s core values; that of forces

combining to create greater healthier energy”.

This was a significant blow to the company, in that they lost as significant amount of

advertising capital in what was ultimately an unsuccessful advertising campaign.

At present, Synergy’s energy drink is available in a single and four-pack 300ml can

from Woolworths, Woolworths Petrol and BP at a RRP of $2.95 each ($6.99 for the

four-pack).

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

Synergy in a vulnerable position 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 party because

of the rise in energy drinks.

SWOT Analysis

Strengths:

Synergy energy drinks have a foothold in the market.

Product available at Woolworths stores – Australia’s largest supermarket

retailer – as well as Woolworths Petrol, BP chains and selected convenience

stores.

Uniquely marketed towards a specified niche target market – the health

conscious individual with a healthy lifestyle.

Product contains no sugar and carbohydrates. Thus, it is being marketed as a

drink that is “good for your body”.

Contains less caffeine per ml than a cup of coffee.

Australian made and owned company. They have expertise and intimate

knowledge of the Australian market.

A company that promotes social responsibility, donating 5 cents from every

can sold to the “Youth off the Streets” charitable organisation.

People preferring an energy drink “on the go” rather than having a coffee. This

will lead to greater demand in the market.

Weakness:

Limited scope to make an impact in the energy drink market by targeting what

is a niche market (health conscious individual).

Initial marketing campaign to launch the drink involving Michael Clarke and

Lara Bingle was expensive and ineffective, and ultimately cut-short due to the

couple separating.

Not stocked at Coles supermarkets. With increased popularity comes greater

product demand from retail chains.

Can size of 300ml can’t compete with Red Bull, V, Mother and other brands

(such as Monster, Wicked etc.) that all stock “double size” cans now.

Opportunities:

Re-launch Synergy Energy Drinks keeping the current product in the market,

but re-branding it as “Diet Synergy”.

Introduce a new Synergy Energy Drink in a 550ml can – this will be the largest

available in the market. This will be branded “Synergy H!T”.

Establish a modern, cutting-edge TV campaign(s) to promote both variations

of the Synergy brand.

Launch an equally modern, cutting-edge internet campaign to promote the

relaunched Synergy brand.

Improve connections with retailers to stock the drink in more places –

including more independent stores.

New product design/redesign to re-launch Synergy with a fresh slate.

Threats:

Increasing awareness with the general public regarding energy drinks and the

negatives involved such as health risks.

Market dominance from the major three brands, as well as smaller brands

such as Rockstar, Monster and Wicked. Very difficult to make inroads.

Pricing point, and whether it’s feasible to offer an energy drink that can

compete price wise with the major competitors and still appeal to consumers

in terms of taste.

Marketing Goals and Objectives

The following marketing goals and objectives are what is to be achieved in relaunching the Synergy brand of energy drinks.

The original Synergy energy drink to be relaunched as “Diet Synergy”.

Launch a new 550ml can to be called “Synergy H!T”. This will be a brand new

formula that will aim to compete with the likes of Red Bull, V and Mother.

o Consequently, unlike the original Synergy drink, this all-new formula

will contain sugar, carbohydrates and increased caffeine content.

Synergy H!T will be aimed primarily at the teenage/young adult demographic

(15-28 age bracket).

Synergy Diet will be orientated towards the current target market (health

conscious individual) with further emphasis on marketing towards females –

as competitors haven’t explored this avenue.

TV commercial campaign to be launched, with a separate commercial for

each of the two Synergy drinks.

Aggressive internet marketing campaign to launch via Synergy’s website with

full utilisation of social networking media including Facebook.

Expand product placement throughout retail chains, Coles in particular, after

first 12 months.

Overall, achieve a healthy increase in market penetration while at the same

time establishing a solid foundation in terms of brand awareness.

Marketing Strategy

Target and Market Segmentation

Buyers Age Bracket Needs

Health conscious individual 18-40 Diet Synergy: People who care about no

sugar, carbohydrates and less caffeine

than a cup of coffee.

People ‘on the go’ 18-40 Synergy H!T: Need a quick, cost effective

energy supplement.

Teenagers 15-19 Synergy H!T: Trendy, peer-pressure, need

energy to cater for active lifestyle.

Young adults 20-28 Synergy H!T: Need energy for busy

lifestyle with work and other activities.

Young adults 20-28 Synergy Diet: Need energy, however,

conscious about sugar content.

Females 15-40 Synergy Diet: Conscious about social

acceptance, and image while mindful of

excessive sugar contained in such drinks.

The strategy aims to attract more female consumers as no other competitor has tried

this. Typically competitors will use a unisex marketing approach. This strategy is

focusing on targeting the weaker points of competitors rather than attacking

competitors on strong points. It would be pointless to compete against our main

competitors by just offering more quantity at a cheaper price. Bryce, D., & Dyer, J.

(2007) recommends that new entrants in a competitive market should attack

competitors at weakest points which will create a competitive advantage.

By offering Synergy Diet consumers will perceive more value in the product and will

eventually be willing to pay more for it. Synergy Diet will increase in price once

consumers are well aware of the brand and the sales generated meet expectations.

The Synergy Diet is targeting a niche market with specific needs where as the

Synergy H!T is aimed at the mass market. Synergy Diet will be effective in

penetrating this niche which will in turn generate consumer awareness of other

product offerings such as Synergy H!T. Therefore the marketing strategy used for

Synergy Diet will also benefit Synergy H!T.

Furthermore the report recommends three basic strategies for penetrating a

competitive market:

* Leverage existing assets

* Reconfigure value chains

* Establish niches

Leveraging existing assets involves using the existing assets of a company and

channelling them in different ways. In this case Synergy is already established and

has been since 1999 and has 2.3% of the Australian energy drink market. By

leveraging advertising resources at a new target market Synergy can effectively

increase overall market share. Changing the way Synergy delivers value is a very

important factor. Delivering value will be created when the drink size is increased to

550ml making it the largest energy drink on the Australian market. Furthermore the

strategy will continue to undercut competitors by being cheaper. However prices will

increase from $6.99 for four 300ml cans to $8 for four 550ml cans. Despite the

increase prices will still be lower than all competitors.

Incentives will need to be offered to retailers who stock Synergy products. The

strategy will aim to first penetrate major retailers such as Woolworths and Coles.

Synergy will use large displays at these retails outlets to promote the drink and also

offer incentives to retailers such as large discounts. Once distribution has effectively

succeeded amongst large retailers the brand can spread amongst smaller retailers.

Implementation

Synergy Target Amount Timeframe

TV advertising campaign $800,000 First 6 months

Internet marketing campaign $20,000 First 12 months

Product taste testing $50,000 First 4 months

Further market research $25,000 Second 6 months

Rebranding of Diet Synergy (product design) $10,000 Prior to re-launch

Formulation of Synergy H!T (recipe, product

design)

$75,000 Prior to re-launch

Improve distribution channels $20,000 First 12 months ongoing

Allocated Budget $1,000,000

A total of $1 million in investment capital will be used to re-launch the Synergy brand

– much of which will be allocated to the Synergy marketing team to implement the

following strategies. The original Synergy energy drink is to be relaunched as Diet

Synergy. This will be backed by an $800,000 television advertising campaign that

will focus on the health conscious individuals, young adults and females. The age

bracket will vary, ranging from teenagers (15 years) to health conscious individuals

and particularly females (40 years). The Diet brand will have a strong emphasis

toward the female market. This is due to the fact that Synergy’s market competitors

haven’t focussed on this particular segment – and is one which has much potential.

The Synergy brand will launch a new 550ml can to be called Synergy H!T. A total of

$75,000 will be dedicated to the development of formulating a new recipe and

product design. This brand new formula will aim to compete with the likes of Red

Bull, V and Mother. Consequently, unlike the original Synergy drink, this all-new

formula will contain sugar, carbohydrates and increased caffeine content. This

Synergy H!T will be aimed primarily at the teenage/young adult demographic (15-28

age bracket), as well as ‘people on the go’ (18-40 years).

A television commercial campaign will be launched, with a separate commercial for

each of the two Synergy drinks. In addition, an aggressive internet marketing

campaign is to be launched via Synergy’s website with full utilisation of social

networking media including Facebook.

Implementation Plan and Method

TV Advertising Campaign: The aim is to advertise both brands of Synergy on

commercial, free-to-air television. Our two main avenues of marketing will be on

Channel 10, Channel 7 and Channel GO! (Channel 9’s secondary channel). As

stated above, a budget of $800,000 will be dedicated towards the marketing

campaign. Timeslots will be as follows:

Time Channel Demographic

7:00am-9:00am

(Before work, during breakfast)

7 Health conscious, people on

the go, females

3:30pm-5:30pm

(After school, university)

GO! and Ten Teenagers, young adults

7:00pm-9:00pm

(After school, work, dinner etc.)

GO! and Ten All target markets

Our aim through advertising on television is to reach all of our target markets utilising

the appropriate time slots (eg: females preparing for work during breakfast). Prime-

time television advertising rates (7-9pm) are more expensive than morning and

afternoon slots, however, with a greater audience this timeslot has the potential to

reach more of our target markets. The Synergy marketing team will have full control

over this project.

Internet Marketing Campaign: A total of $20,000 will be used to promote Synergy

drinks through the internet. Various social networking sites, mainly Facebook, will be

utilised to their full potential and prizes and giveaways will be part of the initial

promotional push. The Synergy website will also adopt this strategy, integrating

social networking sites to generate internet traffic directed to the homepage.

This will help with product and branding awareness – with the aim of increasing our

drinks overall popularity.

Product Taste Testing: Various test testing promotions will be rolled-out throughout

Australia. $50,000 will be allocated to this project, and includes Synergy sales

representatives offering free taste testings/samples at Woolworths supermarkets and

shopping centre complexes.

Further Market Research: Although we have our initial marketing strategies in place,

a further $25,000 will be allocated to the marketing team, for future research to help

improve our product, marketing strategies and promotional techniques.

Rebranding of Diet Synergy: In order to effectively re-launch the original Synergy

drink, $10,000 will be allocated to redesign the product to coincide with the current

marketing campaign.

Formulation of Synergy H!T: The research and development team will be allocated

$75,000 to formulate a new recipe for the brand new 550ml can. Importantly, this

new product will be differentiated from the original as a drink that will attract our

target markets, and those who are consumers of Red Bull, V and Mother. With this

sum, product design will also have to reflect ‘what is trendy’ with great visual appeal.

Improve Distribution Channels: In looking towards the present and the future,

relationships with current and potential future distributors will play a pivotal role in

determining the success of the re-launch. Our sales team will be allocated $20,000

to forge relationships with new distributors, and strengthen existing relationships

(such as Woolworths) to ensure our product is adequately supported. Future goals

will be to improve our channels and have full distribution through Coles

supermarkets after the first 12 months of the re-launch. Such increased distribution

will determine the ongoing success of the Synergy brand and establishing future

growth.

Evaluation and Control Recommendation

To measure the success of the Synergy re-launch, the following qualitative

measures are to be implemented and monitored:

Increase overall market share within the first 12 months to 7.5% of the overall

Australian energy drink market.

Maintain growth throughout each quarter – with greater product awareness

resulting in a continuing steady increase in sales.

Maintain over 60% of “new” customers who will repurchase Synergy drinks on

a regular basis.

Increase product and brand awareness so that 75% of our target market

know/are aware of the Synergy brand after the first 12 months of the relaunch.

Performance will be monitored on an ongoing basis. The goals are set to be

achieved over a period of 12 months however sub targets must be set in order to

track performance. If sub targets aren't set then shortfalls in performance won't be

detected until it's too late. Therefore monthly targets will be used to track

performance. Furthermore a treasurer will be assigned to ensure financial control.

Performance standards

Financial controls

Monitoring procedures (audits).

Recommendation

References

(2009). Australian consumers give energy drinks a boost. MarketWatch: Drinks, 8(12), 13. Retrieved May 5, 2010, from Business Source Complete database.

Bryce, D., & Dyer, J. (2007). STRATEGIES TO CRACK: WELL-GUARDED MARKETS. Harvard Business Review, 85(5), 84-92. Retrieved from Business Source Complete database.

(2010). Drink. Australia Food & Drink Report, 34-46. Retrieved May 5, 2010, from Business Source Complete database.

PRICE COMPARISON

Hey guys, this is some good info for when we set the price in the implementation stage:

Single cans (Woolworths pricing):

Brand PriceRed Bull 250ml 2.89V 250ml 2.68Mother 500ml 3.31Monster 500ml 3.21Rockstar 473ml 1.71Wicked 375ml 2.68Synergy 2.95Red Bull 473ml 4.50V 500ml 2.99

Multi Packs (Woolworths pricing):

Red Bull (4x250ml) 10.41Red Bull (8x250ml) 20.40V (4x250ml) 8.99V (6x250ml) 12.89V (4x500ml) 9.49Mother (4x500ml) 11.27Wicked (6x375ml) 8.37Synergy (4x300ml) 6.99

Over the last 3 months, Synergy’s price has fluctuated. Highest price was $8.62 and lowest (current price) is $6.99.

Mother entered the market with their new formula in 2008, with a 500ml can size that had a price point of approx $2.10 – so with their increased level of market share they have been able to increase their price point, while obviously still selling the same amount but you would assume they have increased profits as well. Compared to V and Red Bull, they are priced similarly in terms of those bigger cans, although V have reduced their prices significantly in response to Mother’s increasing dominance. Obviously with ours, we need to price Synergy low, then build brand awareness and customer loyalty, then you can justify an increase on price.