5 Hour Energy Marketing Analysis

Dissecting A Marketing eruptline 5 Hour nothing As he returned from a insepar suitable overlaps trade show, Manoj Bhargava wondered to himself, If Im tired, do I also support to be thirsty? As he contemplated this realization, he began to process it as a comparison of treatment of both a stomachache and a headache. Six months later he was entering genius of the most pure(a) markets in the country, with a revolutionary ingathering and a trade jut out that evolved from the placeholder name it still bears on the 3. 5 million units interchange each year. -Hour energy grossed north of $600 million last year and before extensive holds a 90% market shargon in the zero- tornado business. Much of the bon tons success can be attributed to a stringent node-focused market plan, intent on distinguishing themselves in a hawkish market by sharply reacting to customer focus groups. In dissecting the marketing strategy of lifespan substantive LLCs 5-Hour Energy, I result det ail how the company was able to successfully bum a market and position its crossing for sustained, semipermanent profitability. Market segmentation is described as dividing a market into manifest segments that have same needs or behaviors and behave in similar ways. spirit Essentials Bhargava had a harvesting he believed could debate in the rapidly expanding energy bedevil market. The focus presently shifted to identifying target groups of individuals that could be pulled away from the major players, such(prenominal) as Red dogshit and Monster. With a goal to ambush the energy drink market with a customer-responsive product, Living Essential began laying out a $60 million escort plan to identify a target market and catch a solid positioning strategy.The squad up of statisticians and psychologists embarked on a 36 month, nationwide inquiry quest, utilizing focus groups, behavioral data collection, survey research and cross-sectional market analysis. At the core of t his effort was a flavour that in a monopolisticall(a)y competitive market, the product needed to differentiate itself by directly fulfilling customer demands. The most glaring result of the companys massive marketing research was that creating a profitable position in the energy drink market was hardly going to be realizable by differentiating 5-Hour Energy from much larger conglomerate distributers.The product, in and of itself, possess a arrests of parity laundry list when compared to other energy promoting softening drinks. Research showed that consumers were virtually indifferent as to the flavor, content and end-results of popular brands. The data did, how invariably, produce several(prenominal) key areas where the potential for product eminence shown out like a beacon of light in a hollow black hole. Living Essentials marketing team began swiftly developing a plan based on these very points of differentiation, which would arbalist the company into the market leader in wholly three swindle months.Equipped with the knowledge about the target market they wanted to reach and the competitive advantage opportunities within the market, Living Essential began to refine its product. The marketing research results were at the forefront of product development. The finis was made that the company would non compete in refrigerated coolers with larger producers. One of the many customer complaints about energy drinks is that they need to consume nearly 12 ounces of a highly caffeinated, sugary beverage in order to get the reel for which they were looking.From this data, 5-Hour Energys most important product concept was natural two-ounce bottles. Living Essential founder Manaj Bhargava had unknowingly identified one of the products biggest points of differentiation nearly a year prior on his return rush from the natural products conference Must you be thirsty, because youre tired? The solution from product focus groups was a resounding No Purchasers of energy drinks apparently wanted energy. They were not engrossed in the requisite consumption of gratuitous sugar calories that would, ultimately, lead to a crash, once the body had expended the celluloid energy.The 5-Hour Energy product was now developing, in an effort to fulfill customer demand. This was the first major evolution toward becoming a demand-marketed product. Simple annotation of the advertising efforts of popular energy drinks will lead you to the target demographic that energy drink producers hope their product will attract. If you have ever seen ESPNs extreme sports competition, the X Games, the percentage odds are that you are a 13-17 year old boy.Even if you dont happen to hail into that category, it would be glaringly obvious that energy drinks have deemed this demographic as their primary consumer targets. Nearly every competitors outerwear is littered with red-winged patches and most are promptly provided with a post-competition energy drink, logo lining outwards, at the conclusion of their extreme event. 5-Hour Energys marketing team consequently posed the question following their research results Are teens the only when raft in this world who are looking for extra energy? After all, it might be said that young boys have people of energy without caffeinated encouragement. Living Essential now had its second major point of differentiation on which to launch a marketing campaign. Seeking a niche that would give access to the energy drink market, Living Essential positioned itself as a product focused on individuals who work long hours, restrain non-traditional schedules and hold alertness-critical positions. Contrary to their competition, 5-Hour Energy attempted to appeal to demographics such as stay-at-home moms, doctors and professional athletes.Advertising efforts were geared toward weary professionals in secern to BMX riding thrill-seekers. The underlying theory was that everyone needs energy. That being said, there was no room in the market for yet another energy drink. Living Essential could not bring forth another comparable product and compete with the brand acknowledgment Red Bull and Monster already had in place. Using research data, Living Essential had identified the products differentiation advantages and the target market for optimizing sustained profitability in the energy drink market.The company, still directionally led by market research, now needed to determine at what price consumers would foster their product. The conclusion that 5-Hour Energy could not effectively compete with large manufacturers was made, due mostly to the follow of retail space in refrigerated coolers. By making this concession however, it forced the upstart manufacturers to explore the retail spaces and the implicit nature of the product actually created a competitive advantage. The answer lay in the somatogenetic size of the product. Because 5-Hour Energy was not marketing itself as an energy beverage, it did nt eed to place the product in coolers next to Pepsi and Coca-Cola. Instead, the company made the decision to market 5-Hour Energy as a point-of-sale item. There was no need to have the bottles chilled, as consumers placed no additional develop account in temperature of only 2 ounces of consumable liquid. Next, they determined the size of the product gave them a pricing advantage as well. The cost of production for a 2-ounce product, as compared to the average 8-12 ounces of the competitors energy drinks, was far more cost effective.By trim profit margins slightly, in order to sell 5-Hour Energy at a lower cost to consumer, they were able to increase the products value compared to competition. Living Essentials introduced the product in test markets at GNC stores in several geographic markets priced at two bottles for $5. After one week, the health pabulum store reported that some of its stores had actually implemented wait-lists for the next shipments of 5-Hour Energy. The team at Living Essential realized they had a unique product, untapped target market and price point, that had endless potential.Bound still by the inability to financially support a large mainstream distribution, the company hired slim distributors to peddle the product to convenience stores, encouraging them to put it on the proceeds next to lighters and key chains. It did not take long for larger competitors to take notice of the success that 5-Hour Energy was enjoying. The tiny, upstart package had not only stolen market share from the big names in the energy drink market, it had created from this share an entirely different market. The term Energy Shot was born.Today, all the major manufacturers of energy drinks have scrambled to enter the energy shot market, but 5-Hour Energy has the only real brand-recognition. Living Essential spends a modest amount on advertising in order to maintain its leadership position, but continues with a no-frills approach. Like the name of the produc t, which was only meant as a place holder originally until a merchantable name was conceived, 5-Hour Energy delivers an old fashioned Proctor & Gamble means Heres the product, Heres the features Heres the Benefits.It has been said, that one does not need to have invented rubber to sell tires. 5-Hour Energy did not create a market in energy promoting beverages. In fact, their recognition that they could not have survived in such a market, is the primary understanding for their success. The progression of Living Essentials energy shot product reinforces the principles of marketing and the forces that beneficial marketing can have on consumer behaviors. When the focus shifts from selling people your product, to producing the product they want, the odds of sustained profitability are exponentially increased. -Hour Energy utilized fundamentally sound research techniques to develop a marketing plan that emphasized the competitive advantage of the product. With continued attention to t he unruffled nature of their target market and demographic segmentations, the company can look forward to a long and prosperous future. After all, people will always be thirsty, and they will always be tired, however, both problems do not need to be remedied with one product.