One thing that I have learnt in my study of marketing is that there is always something new and more enticing brewing in the market. The decline of one product ultimately means there is another product that is on the emergence either as a direct substitute or a trend changer. This is the case with the beverage market since there has been a steady decline in the soda market and an increase in energy drinks and the growth of beverage selling chains such as Starbucks. The energy drinks market has been steadily and surely taking a bigger chunk of the soda market as more health issues are raised about sodas and energy drinks providing the consumers with a new alternative. One of the main brands of energy drinks is Rockstar which is ranked third in the USA.
This takeover of the market share however is not a product of providing an alternative but it’s a result of opportunistic and consumer oriented production and marketing through market analysis to determine the target markets taking into consideration consumer concerns and preferences which is what this paper will be analyzing.
In the creation of a new product one of the most important aspects is the existence of a market niche which the new product should therefore satisfy. However, for the product to be successful the customers perceived tangible and intangible benefits should be more than the sacrifices therefore making the product valuable to the customer (Rao, 2011). The customers’ value perception is influenced by a number of factors key among them being situational factors, service processes and environment and internal factors among others. Rockstar energy drink therefore had to create more value to the customers than just being an alternative to soda or an alternative energy drinks among the many in the market. For this to be achieved Rockstar had to satisfy the four utilities of customer value which are form, time, ease of possession and place (Bjerke and Hultman, 2002).
Form utility refers to the products ability to meet customer needs which is product of market research and ingenuity of the product development team. Rockstar was developed with the intention of providing high energy to its consumers which is achieved by the provision of high caffeine drinks and it has the highest caffeine levels among the top five brands in the USA which gives it a competitive advantage. The Second utility is place which is derived from the availability of the product at a convenient location. This has been achieved by partnering with Pepsi which has a wide distribution network around the country and international thus ensuring that our products are available to the consumers. Time utility on the other hand is derived from the storage during the time lag between production and consumption (Bjerke and Hultman, 2002) ensuring that the products are available when needed. The last utility is that of possession which is derived from the customers owning the product such that they can use it for their own benefit. Rockstar provides 20 different flavors most of which have an option of an 8.4 and 16 can size and a package of 24 thus giving the customers a wide range of options to choose from depending on the level of utility derived.
To achieve success in the highly competitive market an organization has to do more than just producing quality products. There is need to identify a specific market which to market the products to and research on its tastes and preferences. The process of identifying the target market involves two main processes which are market segmentation and targeting and positioning. Rockstar being known for its high levels of caffeine and explicit advertisements follows the demographic approach and mainly targets young men mostly in the early 20s in the USA market. The energy drink also targets the party goers by organizing various events and sponsoring various sporting activities. On the international market, the Chinese market is one of the main targets for Rockstar mainly due to its increased uptake of American products such as Starbucks. The market has a young population and known for their hardworking nature, the energy drink will attain great success in the market especially among the youthful working class.
As indicated earlier, Rockstar is not the market leader nor is it a monopoly but it is in a highly competitive market. Therefore analysis of the competition in the market is an important activity for Rockstar as the competitors form an integral part of the decision making process. The most effective tool for competition analysis is Porter’s five forces model whose core is the competitive rivalry in the market. Competitive rivalry is usually determined by the number of competitors in the market and the homogeneity of the products offered. In the energy drinks sector, Red Bull and Monster are the market leaders and the competition among the smaller brands is very intense. This means that Rockstar has very little influence on the market and it can only work on its competitive advantage to improve its share of the market.
The industry has a large number of suppliers of the various inputs such as ingredients and can manufacturers which mean that they have limited bargaining power hence have very little influence on the market (McGuigan and Larris, 2008). The high level of competition in the market however favors the consumers since they have a wide variety of products to choose from. Therefore the company has to maintain the market prices, invest a lot in advertisement and produce quality consumer oriented brands to gain a competitive edge. The threat of new entrants is rife in the industry with alternative products such as sports drinks, energy powders and soft drinks which mean that Rockstar has to maintaining a favorable value-price gap (McGuigan and Larris, 2008). There are no barriers to entry in the market and the amount of capital required is relative which makes the threat of new entrants rife further limiting the powers of the existing brands.
Market Segmentation, Targeting & Positioning
Marketing is usually an effective tool whichever approach is applied provided that it’s to the right audience. It is for this reason that the first activity in marketing as indicated earlier is market segmentation. This is the process of identifying a group of people or organization that have one or more characteristics in common that cause them to have relatively similar product needs (Pride and Ferell, 2010). The success of a market segment is anchored on the heterogeneity of the customers’ products needs, divisibility of the market, comparability, sustainability and accessibility of the identified segments. Segmentation can be carried out based on various bases which can be demographic, geographic, psychographic and behavioral. Just like in the US, the company will employ the demographic and psychographic approach in the Chinese market. The demographic approach will generally focus on the age bracket which should be the early 20s. This age group has indicated a high preference for western products and lifestyle and Rockstar is a definition of the American lifestyle. The psychographic approach on the other hand will trim the market further to the working class of the identified age as the country is known for its hardworking nature and a little energy boost will be of great use.
The second process after segmentation is targeting which is basically choosing the company’s targets. This will involve the development and application of various strategies to fit your chosen target. This process involves three general strategies with the first being undifferentiated targeting which approaches the market as a singular segment and therefore apply a single marketing strategy. The second strategy is concentrated targeting strategy which involves the focusing of marketing efforts to a single market segment using a single marketing mix (Pride and Ferell, 2010). The third and final strategy which is Rockstar’s option is the differentiated approach which involves the development of various market mixes all focused at to various segments of the market. The final process is positioning which is the creation of the brand image in the minds of the consumers which is achieved through extensive market research.
Environmental Facts & Trends in International Markets
The world is always on the move and new issues concerning the environment are emerging quite frequently in various markets. One of the most vocal issues especially in the European market has been sustainability. There is increased awareness and concern about the sustainability of companies’ sustainability practices with consumers inclining to products from sustainable companies and a good percentage willing to pay more for products from a company that has minimum environmental impact. There has been a shift on the most effective channels of advertising whereby TV commercials are no longer the most effective channel of advertising. The internet and social media platforms have provided alternative channels which are equally effective thus being the preferred marketing method.
The international market has generally been on a rollercoaster in the recent past with emerging markets increasing their potential each year. This has led to the emerging markets being the international target markets for most products and Rockstar should also be among them. Demographic shifts is another trend with populations growing, increased urbanization and increased youthful working population a factor that should affect the workforce and uptake of youth oriented products such as Rockstar. There have also been enhanced ties between the governments and private sector a situation that Rockstar should take advantage of to establish its brand name in various emerging markets.
Marketing is a very involving process and Dogra describes its essence as being a managers duty being the power to make decisions about the controllable marketing variables better known as the 4 Ps of marketing (2010). The four Ps are; product, price, place and promotion which together constitute the marketing mix. In the creation of a marketing campaign, research about the market needs of each of the elements so as to come up with solutions to the demands of the market. The product is the good or service that is offered to the market to satisfy a need or a want (Dogra, 2010). In product development, the quality, packaging, features, design and after sale services are taken into consideration so as to create a competitive edge for the organization.
The second factor that should be taken into consideration is the price which is the amount paid to acquire a product or service (Dogra, 2010). This factor takes into consideration the customer value, competitors’ prices, cost to company and strategic and pricing objectives which enables Rockstar to choose the right price which should be at par or lower to that of competitors due to the high level of competition in the market. Place is the third factor that Rockstar will use as to create a competitive advantage through the creation of an effective distribution network such is the case with the partnership with Pepsi and the use of online selling platforms to make the drink more available. The last element is promotion which entails the communication of the value of the energy drink to the consumers. This is one of the widely used tools of marketing and Rockstar will use advertising, direct marketing and sales promotion to increase not only the sales but also its customer base.
The 4 Ps marketing model poses a very unique characteristic whereby the four elements can be used on a reversed role. The 4 Ps of marketing can also be used to assess the success of a marketing exercise. An analysis of the product reveals which needs are satisfied, the effectiveness of the package used and the products differentiation from competitors. An analysis of place determines whether the distribution channels are effective and whether any new developments are required. The analysis of the product on the other hand is able to reveal the appropriateness of price in relationship to value of the energy drink and the competitiveness of the price. Finally analysis of promotion measures the impact of each promotional strategy and determines its effectiveness.
Ethical Issues in Marketing
Ethics form an important part in marketing and in all other activities of the organization because they inject a sense of humanity and sanity in doing business. Ethical issues are defined as identifiable problems, opportunities or situations that require the organization to choose from several actions which must be evaluated as either ethical or unethical (Pride & Ferell, 2010). They are more like the legal issues though we try to draw a boundary between them, their distinction in decision making is blurred and consequences of ignorance are practically almost the same. The issue has been rife in the energy drink sector due to the inconsistent actual levels of caffeine in different products compared to the advertised levels. This has resulted in a string of law suits while some calling for more stringent regulations in the industry since the ethics have failed to bring sanity.
Marketing and ethics do not always rhyme and the acceptance of puffery makes the relationship all more slippery but there are various factors that must be put into consideration. The product information given to the market need to be accurate and not deceptive and side effects and health warnings should be indicated on the products. In promotion, no important issue should be held back and the channels of advertising should also be ethical and considerate to vulnerable audiences such as children. In international marketing, the most important issue is the consideration of host culture and practices and ensuring and application of ethical standards equally in all markets.
Rockstar has been extending its market share marginally over the last few years and most of its new customers are from the two leading brands. The company established itself as a high caffeine product and as the uptake of energy drinks increases it’s bound to expand its market share. The success is however a conglomeration of various processes and strategies that not only help the sales but also help on improving the products due to the increased market knowledge. The company may be positioned in an island position but there is need for continuous improvement to ensure sustainability and increased customer satisfaction taking into consideration environmental factors and competitors actions.
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