Report on Monster Beverages-Samples for Students-Myassignment

Question: Write a Report on Monster Beverages. Answer: About the Organization Monster Beverages is a California Based holding company which conducts their marketing and distribution operation through its various subsidiaries (Monster Beverage, 2017). Their main business segment includes Monster Beverages energy drinks. Their business has been classified into three segments: Finished products, concentrated and others. Their Finished product segment includes selling and distribution of their energy drinks products (Forbes, 2017). There beverage segment includes sports drinks, iced teas, energy drinks, cocktails etc. They are the second largest energy drink manufacturer who are responsible for selling around 10 billion energy drinks since its incorporation. When they first started they were into the business of selling fresh fruit juices and lime soda but after witnessing the popularity of its major competitor Red Bull, they entered into the energy drink market. Initially they failed to impress the audience and pulled back their energy drinks. They redesigned the ir energy drink composition structure and increased the content of caffeine and sugar along with the doubling the size of their drink as compared to Red Bull. In 2014, they signed a historic deal with Coca Cola, who agreed to purchase their 16.7% stake. This allowed Monster Beverages to access the distribution network in US and Canada to strengthen their market position (Bailey, 2015). Type of innovation Innovation is the Key for surviving in the market and ensure sustainability in the long run. Monster Beverages has been ranked number 7 in the Forbes list of 10 most Innovative Companies of 2016 (Forbes, 2016). They have done innovation in their product segment. In order to compete with Mountain Dew, they have introduced Mutant in order to remain competitive in the market. They have also launched Monster Hydro in three different flavours but with the same energy boosting capacity of Monster Beverages (Coca Cola, 2017). They are also planning to diversify their attention from non-carbonated drinks by launching Caf Monster but due to production issues, the launch has been delayed. To deal with the production shortage in Europe they have introduced new flavours and they have also started production in United States. They are also planning to launch white lightening which is a zero-calorie carbonated soft drink. Not only has this they are adding new flavour such as Mango Loca to their Monster energy juice segment which will be launched later this year. The CEO Mr Rodney C. Sacks reportedly said that Monster Beverages is also planning to launch X-Presso Monster Energy drink in two different flavours packed in 8-oz slim cans before year end (Watrous, 2017). The beverage industry indicated a slow growth in the first quarter of the year but expanding into the International market and launching their new products has helped them to achieve growth in the industry. Product Life Cycle of Monster Beverages The energy drinks market is dominated by two major players Red Bull being the leader and the number second spot has been captured by Monster Beverages (Mitchell, 2015). According to a research, the year 2015 the popularity of energy drinks increased about 10 percent and the total consumption was about 8.8 billion litres. The reason for their popularity is the demand of consumers for instant energy boosters (Mintel, 2016). This clear indicates that Energy drink market across the globe is witnessing growth stage in the product life cycle. Monster Beverages has signed a deal with Coca Cola to access their distribution line which will help them to boost their sales in the international segment. The global market share of Monster Beverages in the year 2015 was 21.10 percent due to their positioning as lifestyle beverages which appeal Millennials who search out for energy drinks to boost their energy (Starling, 2016). They have high content of caffeine in their drinks which provides mental and physical stability. The energy drinks have also claimed that they reduces stress and remove mental fatigue. Some Analysts estimated the sales figure of Monster Beverages in the last quarter of 2016 as $722.5 million but the actual net sales figure was $753.8 million. Monster Beverages yearly growth shown an increasing trend of 16.8% in United States. They performed exceptionally well in their international market which includes countries like Europe, Middle east and Africa as the sales figure rose by 33 percent. Which means they outperformed the expectations of market analysts and continue to grow strong (Bailey, 2017). (Source: Market Realist, 2017) Attributes of Adoption Monster beverages with bold tag line message Unleash the beast targets the young audience. Their advertising and marketing campaigns are more related to adventure and sports. Initially when they entered into energy drink segment their major focus was on athletes who wanted a beverage so as to satisfy their thirst and energy needs. But over the time they have expanded their reach and shifted their focus on other consumer segments. They regularly sponsor sports events with an aim of attracting adventurous and sports enthusiast audience which can related with the Monster Energy drinks. They also claimed that the presence of high caffeine structure has fetched attention of many millennials who seek a way to release stress and their overall day fatigue with the help of Monster Energy drinks. Other favourable factors which has induced consumers to try energy drinks in International market is due to growing population and increase in disposable income of middle class consumers. The Monster energy drinks are still not popular in their female segment because they perceive that the brand Image and its slogan is masculine and sporty. But by adding low calories drinks in their product portfolio with colourful packing and new flavours they are definitely try to attract more female audience. The main purpose of these energy drink market is to provide energy. The most common segment that is most attracted towards purchasing these beverages are young and millennial generation who are suffering from hectic personal professional lives. They have to balance many things at a time and due to their busy lifestyle they are more vulnerable to physical and mental exhaustion and lack of energy. Monster beverages not only keeps their target market hydrated but also provide them with high energy. Both young and older millennials of the age group of 18-26 years and 27-37 years have shown a strong interest and taste in the Monster Beverages. Older Millennials consumer more drinks than young er millennials (Bailey, 2015). Other demographics of an energy drinks are that they are consumed more by US military members in order to fulfil their energy needs. The Monster beverages are also served in clubs and bars which attracts young audience who consumes the beverage as they can related with the brand image. Network effects Network effects refers to the utility derived from consuming a particular product by the user and its consumption creates value for the other users also. When the deal was signed between Monster Beverages and Coca Cola to access their international distribution segment outside the US it created positive synergy for Monster Beverages. With the help of Distribution network of Coca Cola they were able to boost their sales globally and their sales numbers rise tremendously. It also helped Coca Cola to strengthen their brand image in the energy drinks market. It created a positive networking effect on both Coca Cola and Minster beverage. Monster Drink have a positive impact on the health and productivity of consumers as it contains high caffeine content and other stimulating ingredients which keeps individual alert and boost their Central nervous system. It also helps to increase their performance and productivity at workplace. Which means it has a strong and positive impact on managers who are expecting their employees to be more productive at workplace. Monster Beverages are quite popular in US military as these energy drinks are a necessity because they have a tough routine from waking up early to running several miles and engage in tiring physical activities. Monster Beverages have replaced coffee among military people and an energetic army force provide value to country and the residents (Lutz, 2014). Switching cost The major players in the energy drink market are Red Bull and Monster Beverages. The Switching cost refers to the cost incurred by a consumer when they switch from one brand to another. The switching cost between both the products is very low. Though Monster beverages are quite a hype among the younger audience the major reason for their success can be credited to the price at which their beverages are offered. Another reason why they are more successful as Compared to Red Bull is because the caffeine content in Monster Beverage is 33.8 mg per 100 ml as compared to Red Bull which has caffeine content of 32 mg per 100 ml which is just slightly more (Duncan, 2013). The only thing that sets Monster Beverage apart from its competitor is price offering. The Beverage industry is very attractive as they are number of player beside Red Bull who are providing high concentrated caffeine product for e.g. Pure Cofain an energy drink launches in Europe has caffeine content of 175 mg in 250 ml pac k. The substitution effect is high in this market segment. First Mover Advantage Model The first mover advantage in the energy drink segment goes to Red Bull who started operating into the market much before even Monster Beverages. Their popularity was on rise as there were no energy drinks that were able to match the caffeine content and quality of Red Bull. In 1997, they first launched their Energy drinks which was quite different than their previous product line which included fruit juices and Sodas. But they knew the secret of the success and launched a better energy drink with high caffeine content. Over the years both Red Bull and Minster Beverages have made ensured their competitive space in the beverage industry. While Red Bull has kept their focus on just energy drinks but Monster Beverages understood the importance of innovation to survive the competition. They have introduced diversified range of products in many flavours which caters the need of every market segment. This has given them a first mover advantage as Red Bull is still focus on only one segment and Monster beverages has exploited the opportunity and slowly moving ahead in the market with their price and product offering. Existing Innovation Strategy The innovation strategy followed by Monster beverages is launching and diversifying new products in their product portfolio to have a competitive advantage over its competitors. Red Bull hasnt changed its design over the years but Monster Beverages understood the importance of packaging to target and engage younger audience. To create a distinct image than the Red Bull they have increased the caffeine content and sell their products in 500 ml cans also. By launching new flavours tailored according to the needs of local market segment. Their brand identity directly appeals to sports person or individual who are adventurous. Innovative Strategy Monster Beverages have already introduced many flavours and product line in their beverage segment. The other innovation that can be exploited by them is their competitor Red Bull has launched its Virtual Reality Platform which enables an individual to access hear wrenching sports such as cliff diving, skiing, helicopter aerobatics and many outdoor sports experiences by just sitting at home. These games can be accessed on desktops and smartphones but for the more realistic and thrilling experience by connecting through VR headsets such as Google Cardboard (Sulleyman, 2017). Red Bull has followed a smart and innovative approach of targeting youth. They have been associated with many sports events but the VR platform has helped them to achieve a brand image which is directly associated with the younger audience. Monster Beverage has also been associated with sports persons and adventure. By introducing their own virtual reality gaming platforms they can engage more young sports enthusiasts. They already have a strong base of young audience and by introducing thrilling outdoor games on a virtual reality platform like Red Bull can help them to expand their customer base and can increase brand loyalty among the audience. References Bailey, S, 2015, Mintel Forecasts Strong Growth in the US Energy Drink Market, Accessed from https://marketrealist.com/2015/06/mintel-forecasts-strong-growth-us-energy-drink-market/ on 13 June 2017. Bailey, S, 2017, Monster Beverages Sales: Key Drivers behind Strong 4Q16 Growth, Accessed from https://marketrealist.com/2017/03/monster-beverages-sales-key-drivers-behind-strong-growth/ on 13 June 2017. Bailey, S., 2015, An overview of Monster Beverage Corporation, Accessed from https://marketrealist.com/2015/01/overview-monster-beverage-corporation/ on 13 June 2017. Coca Cola, 2017, Monster Energy Announces All New MONSTER HYDRO, Accessed from https://www.cokecce.co.uk/news-and-events/news/monster-energy-announces-all-new-monster-hydro on 13 June 2017. Duncan, G, 2013, Monster v Red Bull: High octane energy drinks battle brews in UAE, Accessed from https://www.thenational.ae/business/industry-insights/retail/monster-v-red-bull-high-octane-energy-drinks-battle-brews-in-uae on 13 June 2017. Forbes, 2016, 10 Most Innovative companies of 2016, Accessed from https://www.forbes.com/pictures/fhgl45kied/monster-beverage/#22d5375530fe on 13 June 2017. Forbes, 2017, Monster Beverage on Forbes Lists, Accessed from https://www.forbes.com/companies/monster-beverage/ on 13 June 2017. Lutz, A, 2014, How Monster Energy Became The Military's Favorite Beverage, Accessed from https://www.businessinsider.in/How-Monster-Energy-Became-The-Militarys-Favorite-Beverage/articleshow/42200784.cms on 13 June 2017. Mintel, 2016, ENERGY DRINK LAUNCHES GROW 29% IN FIVE YEARS AS GLOBAL SALES REACH 8.8 BILLION LITRES, Accessed from https://www.mintel.com/press-centre/food-and-drink/energy-drink-launches-grow-29-in-five-years-as-global-sales-reach-8-8-billion-litresn on 13 June 2017. Mitchell, D, 2015, These Are the Top 5 Energy Drinks, Accessed from https://time.com/3854658/these-are-the-top-5-energy-drinks/ on 13 June 2017. Monster Beverage, 2017, Monster Beverage Corporation , Accessed from https://www.monsterbevcorp.com/ on 13 June 2017. Starling, S, 2016, The worlds unquenchable thirst for energy drinks, Accessed from https://www.beveragedaily.com/Markets/The-world-s-unquenchable-thirst-for-energy-drinks?utm_source=copyrightutm_medium=OnSiteutm_campaign=copyright on 13 June 2017. Sulleymann, A, 2017, Red Bulls new extreme sports VR platform is not for the faint hearted, Accessed from https://www.independent.co.uk/life-style/gadgets-and-tech/news/red-bull-new-vr-platform-extreme-sports-cliff-diving-virtual-reality-adrenaline-a7558096.html on 13 June 2017. Watrous, M, 2017, Monster Beverage c.e.o. touts 'robust innovation pipeline, Accessed from https://www.foodbusinessnews.net/articles/news_home/Financial-Performance/2017/05/Monster_Beverage_ceo_touts_rob.aspx?ID=%7B75BA44A2-B44D-40E1-954D-4E95A84614D4%7D on 13 June 2017.