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. However, PepsiCo is not comfortable
with promoting the brand for this purpose. 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 18-34 year olds. Your task is to increase
brand awareness by 10 percentage points (to 24%) in fiscal year 2012. Your
research shows that Monster enjoys a fiendish 39 percent awareness, second only to
category leader Red Bull, with awareness typically in 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 2009, the brand
spent $9.9 million on advertising, and zero dollars before that. By 2011, 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 2010 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 $24 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 $28 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 eLearning Commons 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 fiscal year campaign beginning with July

2011. 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 how the media budget for amp should be
spent. 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 media used to promote
the sales promotion plan.

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.

6. SWOT or Situation Analysis: Competitive Media Reports (CMR), MRI, spreadsheet

market data, etc., are all available online: [e-learning commons] The quality of your
SWOT, and the effort you invest is the key to unlocking some of the most important
issues in this case study. As you prepare your SWOT, follow the seven points outlined in
Chapter 2. amp’s marketing director suggests special attention be given to the following
in your SWOT:

a) The four P’s: Critical analysis of amp and major competitors b) Competitive
Spending Analysis with SOV (Share of Voice). Review MFP Exercise 8 if you
need help with the SOV. SOV is of particular interest to amp marketing
experts - make sure it ties into your media mix strategy. Print out a complete
SOV analysis in your SWOT. c) Geography strategy: Should spending be
focused or broadened? How can amp maximize its advertising voice in
national and/or spot markets?

7. Creative strategy: Write a creative brief for an integrated campaign that positions
amp, and write a tag line. Why a creative brief? It’s all about intelligent positioning. When
integrated thoughtfully, creative becomes a major driving force in your media strategies.
 8. Media Flight Plan software: Execute a media buy using Media Flight Plan. Include
a flowchart in the body of your work, and other printouts as required by your
professor. Make sure all decisions stated on these printouts are supported with logical
and intelligent objectives/strategies.

CAUTION: Be sure the buys on your flowchart are consistent with your media
objectives/strategies! Your marketing/media plan will be judged less on the buys you
make than on the objectives/strategies that drive the buys.

You will also be asked to create a flowchart using the data you will get from the
Mediaflightplan flowchart program.

9. Strategy is everything – write media objectives/strategies for the following:

• A clear definition of amp’s target audience with an intelligent media mix strategy.
Media mix should include a list of vehicles, e.g. – radio formats, new media
approaches, magazine titles, TV programs, etc.

• Monthly reach/frequency goals and accompanying strategies.

• Geography: Should amp be advertised nationally, in spot markets, or a
combination of both?
• Monthly media allocations and budgeting strategy demand logical marketing
support.
• Timing/scheduling decisions are vital to amp’s marketing success - justify your
timing.
• Nontraditional media & sales promotion: Be original and don’t underestimate the
value of sales promo.