Aroka’s Business Conclusion

Executive Summary

This is a company analysis project that examines the company profile of the Monster

Energy Company.  The Monster energy drink brand is the second largest seller ofenergy

drinks in the world with Monster Energy, Java Energy, Rehab, and Killer Flavor as their leading

brands.  The continued desire of Monster Energy to dominate the world energy drink market is

driven by their continued effort to unleash new energy in the teens and the youths. Monster

Energy has targeted advertisements to the 18 to 26-year male consumer group.  This has

seen Monster Energy control over 27.9% of the energy drink market in just over half a decade

since Hansen Beverage Corporation introduced it to the world.

Attributed to its growth is its competitive ability in market approach and diverse product development that increase and presents the initiating flavors of the drink in the market. The firm has developed a great team of experts and continues to grow the great relationship with its customer who offers great and new opportunities to the attainment of the monster energy brand short and long term goals.  Monster Energy uses short, targeted advertisements to attract their young users and keep them engaged on their product.In this regard, the paper provides the organizational background, industry analysis, competitive analysis, financial analysis, a detailed SWOT Analysis, strategic objectives, strategies, strategies implementation, plan, review and evaluation strategies.  This evaluation of the monster energy brand culminates in realizing the firm’s objectives.

 

 

 

 

Strategic Plan Monster Beverage Corporation

1.0 Organization Background

Monster Beverage Corporation is a subsidiary company of the Hansen Natural Corporation. It produces 34 different energy drinks Monster Energy, Java energy, Rehab, and Killer flavor as the leading brands. The monster energy drinks was introduced in April 2002 to the American market becoming the leading brand in America and second leading brand in the world (Hansen’s Natural Corporation). The energy brand comes with a natural black flavor that is characterized with a neon green claw that forms the letter M as its logo. The caffeine content of most Monster Energy drinks is approximately 10 mg/oz (33.81 mg/100ml), or 160 mg for a 16 oz can. The packaging usually contains a warning label advising consumers against drinking more than 48 oz per day (16 oz per day in Australia). Europe does not have these warning labels. The drinks are not recommended for pregnant women or people sensitive to caffeine.Monster Energy is advertised mainly through sponsorship of sporting events, including motocross, BMX, mountain biking, snowboarding, skateboarding, car racing, speedway, and also through sponsorship of eSports events. Monster Energy promotes a number of music bands around the world, like Asking Alexandria, The Word Alive, Maximum the Hormone and Five Finger Death Punch.(What’s Hot, 2013)

A mission statement should explain to stakeholders why they need to support the organization by making clear what important role or purpose the organization plays in society. (Mastering Strategic Management, 2014)  Monster’s energy divisions’ mission statement: “The mission of Hansen Beverage Corporation is to satisfy consumer’s needs for superior quality and great tasting, healthy, natural and functional beverages. Our beverages will be positioned as an upscale brand and will often be marketed at a premium to competitive mainstream products.” further, the firm has a vision that implies that the company wants to dominate the energy drink industry. According to Adrian Hunter, the Australian Monster Energy manager, the company is aiming to dominate the market and not only the top seller, “success to us is dominion.” In their attempt to do so, the monster energy targets extreme action sports and music as a way of promoting its products. (Hansen’s Natural Corporation). Monster energy vision statement articulates the organizations aspirations which are to dominate the market of energy drinks. As stated in chapter 2 of the course book, an organizations vision needs to describe what the company desires to become in the future. (Mastering Strategic Management, 2014)

As Monster Energy continues to taste the success of its products, it has developed a plan that enables its expansion to the 120 countries where the brand is sold. This indicates that a proper analysis of the competition, industry, financial and legal perspectives has been put in place with continuous success. The achievementsthat have been accomplished by the energy drink company in the last fourteen yearsis a significant milestone that has been made possible by having a goal oriented and innovative team.

1.1  Product profile

Monster Beverage Corporation, through its subsidiaries, develops, markets, sells, and distributes energy drink beverages in the United States and internationally. The company provides carbonated energy, and non-carbonated dairy based coffee and energy drinks to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, drug chains, mass merchandisers, convenience chains, health food distributors, food service customers, and the military; and concentrates and/or beverage bases to authorized bottling and canning operations. (Yahoo Finance.com, 2016)The monster energy drink is in the growth stage compared to its rival brands. The brand is new in the market even though it has been on the market for more than a decade. The continued strive to create specialty products and sponsors along with celebrities in the diverse fields of extreme sports BMX, motor cross, skate, and ski to mention a few and has proven to be successful and continue to build customer product preference. The organization is competitive and the vision and mission statement is ambitious wanting to be number one energy drink in the world.

2.0 Industry Analysis

2.1 Size

Since it was introduced in the market, Monster Energy has created a vast base of consumers that have been loyal for years. It has grown tremendously especially in the American market to be the second largest seller in the world.  The firm controls 27.9% of the American market after red bull which had control of 31.6% by 2010. This has been contributed to the engaged partnership in the music, sporting, and celebrities as indicated in the social media activities (Monster annual report, 2015).

Notably, the partnership has also increased the popularity of the brand through the increased activities to support the sport and lifestyle activities. Monster energy has more than four million fans on social media that facilitates the public popularity. The energy brand feels that it’s their obligation to continue offering encouragement to the community for the outstanding achievement thus increasing its publicity which in return expands its market size. One example of the organizations strategic partnership is with the company of Coca Cola and ithas become Monster’s preferred global distribution partner with new international distribution commitments already in place with bottlers in Germany and Norway.In connection with the closing, The Coca-Cola Company made a net cash payment of approximately $2.15 billion to Monster. (The Coca-Cola Company, 2014)

2.2 Environmental influence

The monster energy drink logo of neon green is symbolic that the firm acknowledges the importance of the green nature. It was an indicator that the environment is important and can be further maintained through recycling. The Monster Super-cross tour that was conducted in 2009 teamed up and highlighted the importance of maintaining a green environment it allowed consumers to collect the monster energy can and drop off at designated areas for recycling. The company in return gave pit passes equivalent to a free racing ticket. These types ofactions important in expanding its activities across the globe by using the green initiative.

2.3 Trends

In their attempt to keep the monster brand trending, the organization has taken challenges to sponsor events in the United States. The monster energy drink has continued to set up events aimed at “Unleashing the beast” through celebrities, modeling activities and sponsoring athletic affairs. This has increased their interaction with their customers all over the world. Furthermore, the monster energy drink logo is visible on jeeps, trucks, and other vehicles. Also, the firm has been giving away tickets to their events creating a trend for their target market. This has made the brand more popular among young consumers (Monster annual report, 2015).

3.0 Competitive analysis

3.1 Market approach

In every industry, competition is evident as firms aim at grabbing the next available opportunity to publicize their product. Monster energy competes, with its leading competitors Red Bull, Rock Star, and Full Throttle being at the top of the list. The competition is extended not only in the energy drinks brand but also in the beverage arena as well as athletic drinks. Even though, these competitors have similar characteristics while attracting their target customers. The firms also use product size and prices as an approach towards creating added advantages in the market.

Red bull and Monster have a similar approach for its target market focusing on extreme sports, music, and younger crowds. However, Red Bull has an added advantage of high pricing power over the Monster brand due to the weighing of their product. For example, while the Monster brand weighs 6.0oz, Red Bull product weighs 8.3oz. On the other hand, the competition between the Monster and the Rock Star product is quite limited. The Rock Star brand targets the music industry while the Monster is quite diversified. This gives the Monster brand an added advantage over Rock Star.

3.2 Customer evaluation

Monster energy targets advertisements in the male population between the ages of 18 to 26 years. It products goal is to get the young generation excited about a drink that brings energy and motivation. However, the cost of the product is made to be so small to increase affordability among the young generation which are youth that are often engaged in extremesporting activities. The sponsorship of these events makes the brand popular thus winning the heart of the young generation over its competitors. Additionally, athletes use fear and need for speed as their motivation towards success. This shows their ability to commit all their resources towards their profession by building a lifestyle around energy drinks. It has increased its loyalty across all ages and races of athletes creating a monster army of more than one million athletes. Which gives the firms an added advantage to further grow in the industry of energy drinks.

Often, the Monster energy drink events are remarkably memorable in the minds of the consumers. They have continued to keep their customer happy, fresh and sweet with new brands, an action that builds curiosity and desire to keep on opening another can of Monster energy drink. The energy drink continues to quench the consumers’ thirst and provide them with new energy that keeps them full of life during extreme activities. The advertisement and association with extreme sports activities continues to trigger excitement among their products. The company has continued to get stylish celebrities in the media to be their brand ambassadors. Stars are popular among the people and makes itsimple to spikeproduct sales in the market. For example, the brand has established Tom McGovern as the media contact for the Kawasaki team, Monster Energy drink. As expected, the young generation who is their target market follows these media personalities and celebrities on Facebook and Twitter pages. In this regard, the technique sounds quite viable for the monster energy to continue expanding in the market compared to other industry participants.

4.0 Financial analysis

In accordance to the market statistics, the Hansen Company which is the parent company of the Monster beverage company has a market capitalization if $7.54 billion with an outstanding share base of 88.6 million. The attest closing share price was $ 85.49 but this was far much below the expected price of $103.53. The Monster energy recorded net sale worth of $2,722.6 million in2015 and they are expected to increase with at least 10%% on additional basis from 2015. This amounted to 42% net sales compared to the 26% net sales recorded in 2013. In 2011, the firm emerged first with 19% increase in sales compared to its rival Red Bull brand that had 11% increase in sales(Monster annual report, 2015).The tremendous performance was attributed to the increase in use of technological innovations in marketing and advertisement.

Consequently, the firm has the best growth rate of 2.40% annually compare to Red bull which has a 2.21%. The firm also enjoys a weighted cost of capital of 6.20% with a variation of 0.62. The statistics puts the firm in a better position for expansion of its activities while competing with its rival firms. Moreover, in 2015, the firm recorded the best gross profit margin with 21.8% that was far much higher than its competitors. The operating income for the year 2015 increased by $174.6 million, 30.5% higher compared to $572.9 million in 2014(Monster annual report, 2015). This indicated that the firm’s effort to dominate the market was effective given the above figures.

5.0 SWOT Analysis

SWOT analysis is a tool that considers a firm’s strengths and weaknesses along with the opportunities and threats that exist in the firm’s environment. A SWOT analysis compare these internal and external factors to generate ideas about how their firm might become more successful. (Mastering Strategic Management, 2014) Below is a summarized SWOT analysis for Monster energy were strengths, weaknesses, threats and opportunities are identified.

5.1 Strengths

Over the last decade, Monster energy drink has built its brand to greater heights. This implies that the brand did not come up overnight, but it has been developed over time. The goal oriented team at Monster Energy realized the need of the firm to engage in their customer activities and such unleashing the hidden potential for the community in return for their market size growth. The Monster beverage corporation invested heavily in the community-based activities to increase its popularity and build healthy relationships. For example, the business has developed good relationships with athletes, celebrities and extreme sports events that require extra energy and focus for success. This makes the firm’s slogan that “success is dominion” while approaching these activities. Furthermore, the Hansen Corporation has given the brand a high percentage of the target customers given the wide range of products it produces. In an attempt to differentiate the product in the market, the Monster energy brand has the best and most appealing cans that are stylish in nature. This continues to offer the brand an upper hand to acquire the high percentage of the market size and sales.

5.2 Weaknesses

Despite having a great market approach, the Monster energy brand has limited access to the industry. The beverage industry is vast enough that firms occupy the market to its capacity. The fact that there is aggressive competition in the industry does not guarantee full coverage of the market as the consumers have several options to choose from the energy drinks. Additionally, having too many flavors in the industry also creates the weakness for the monster brand. Customers create loyalty with at least two flavors that often lead to high sales in the business. Besides, the energy drinks are associated with health problems and have been sued as primary causes of death. This constrains the business action to cover the diverse beverage market with energy drinks alone fully. It also has negative comments from the society especially the elder generation.

5.3 Opportunities

The target population for the energy drink offers opportunities for the brand all around the globe. Considering the support the business offers to the sporting community, the brand gathers more than enough clientele based for their products. The popularity also increases with such activities. This implies that the Monster brand opportunities lie within the community. It is, therefore, most important for the firm to engage in these activities to provide new energy for participants. The Monster energy shows their ability to engage in huge sponsorship events that revive the underlying potential as their product through the brand’s images. It creates opportunities for their fans besides new target customers for their sales. Every new event brings a new opportunity for the Monster energy across the globe.

5.4 Threats

Maintaining a public image is a threat the business faces in the industry. The firm has greatly capitalized in the social media and sponsorship activities area that continue to build its popularity and reputation. For this reason, the firm has to maintain its earned reputation by avoiding any mistakes at all cost. For example, if something weird happens to a participant in an extreme activity, the breaking news is likely to go viral through social media tarnishing the reputation of the firm. Further, failure of events held by the business is also likely to influence the popularity and trend of the business. Often the organizers of the events together with the sponsors have a bad light in the case of the misfortune of an event. This is likely to cost the organization slowly affecting the sales and market size of the firms. Death cases example

Secondly, the loss of customer loyalty is also a great threat to the firm. The increased introduction of flavors of the Monster energy drink if poorly managed can cost the business. Often customers are loyal to a flavor that have consumer popular demand. In different markets, it is likely to be a difficult task to convince the customer the originality of the brand. This can lead to customers switching to another brand which relates to their competitors. Therefore, the business should maintain individual flavors to specific consumers to avoid the confusion. Even though, the firm may continue to increase new flavors in the market to offer their customers a new taste of the same Monster energy drink.

6.0 Strategic Objectives

6.1 Short term growth goals

The Monster energy brand needs to aim at increasing its sales within the next six months this is target is geared towards attracting a 10% in their clientele base while retaining the existing customers. This is likely to increase their market size tremendously and thus the size of the profits (Monster annual report, 2015). The objective will be assigned to the marketing and advertising departments on creating new approaches to increase sales and consumer preference. The event and sponsorship organizers of activities must also be put under consideration to ensure objectives set in place are met. It is likely to give the brand an upper hand over its competitors and thus the continued increase in future sales.

This is likely to enhance the desire of the company to continue its domination of the market over its competitors. In achieving it, the advertisement and improving of marketing strategies, the sales of the firm are likely to improve tremendously over the second half of the year and in future. It is expected that the sales of the year will increase by over $250 million dollars this year over the previous financial years (Monster annual report, 2015). Such growth is quite remarkable and promising of continued growth of monster energy brand worldwide.

6.2 Long term growth goals

First, the Monster brand of “success is dominion” is the driving long term goal to the success of the business. The firm is aiming to overtake the leading energy drink brand, Red Bullto occupy the energy drink market, the firm has to lay out proper strategies to outdo the rival brand. Having a difference of less than 5% in the market share, the continued realization of the short term objective can easily facilitate the realization of this long-term goal. However, as the firm aims at reducing the rival superiority in the market, it should also realizes that the competing brand is making an effort to continue dominating the market. Therefore, critical implementation strategies have to establish to ensure the brand achieves the set goal.

Additionally, the business continues the desires to increase their sales level at the minimum cost over the coming years. The latest result is that the firm increases its sales by 2% per month in the world. This figure is quite significant as it set a good pace for the business to realize the dominion vision. It is likely to continue increasing the need to occupy the market by ruling out the current participants but rather by squeezing their market possession. To realize this, the business has to continue increasing their brands in the market with different flavors. It is likely to attract more customers by providing an alternative option to the already existing brands in the market. In this way, the set increase in sales target towards market domination will be easily met.

6.3 Communication objectives

The Monster energy brand has to continue maintaining its appealing growth trend in association to the growth objectives. It will facilitate the firm’s performance to remain at the industry top. The firm has stayed popular among its target customer and rival firm customer there is a market to continue to develop those appealing brands which increase sales.  This is not aimed at completely changing the view of the Monster brand but rather to improve its appealing look to their consumers.

Since the release of the brand, the customer response has been quite positive towards the satisfaction of their clients. This is evident as the firm bypassed most of the existed energy drink brands in the industry. The simplicity of the brand’s logo makes it more visible and easy to identify among the consumers. The popularity of the athletes and the sporting activities among the fans make it easy and fast toidentifyamong other energy drinks on the shelf. In this regard, the business must engage more communication of their brands to consumers with intensified advertisement in gas stations, sporting events as well as in the motocross areas.  This will increase the visibility of the brand among the fans and participants thus growing popularity.

Monster establishes new approaches to meet its communication objectives. Considering the firm’s target of the young generation, the company uses the website to boost the rock videos and “hot chicks” contests that it runs often. Further, the business uses initiative language that is prevalent among the youth and drives customers to purchase more drinks. The goal of bringing in a drink that is meant to move a new generation limits the business from using the traditional advertisement methods such as the television commercial and billboard. Therefore, it needs to narrow down avenue of advertisement and focus on the targeted customers. These may include sponsoring events, concerts and partnering with celebrities by also increasing social media interaction which promotes consumer interaction.

7.0 Strategies

7.1 Use of Quick Response codes Advertisement

QR codes are technologically developed encrypted website links that facilitate online advertisement. The Monster brand has a QR code that has a picture of its logo within it. A smartphone takes pictures of the QR code, and the phone generates the link of the Monster website. The web browser will then direct the user to the link, for example, http://www.monsterenergy.com/coupons. This technology is useful as it facilitates the users to view information that is not in the print advertisement. For example, the link may contain information on discounts and coupons on the purchase of a Monster drink. It drives the consumer to explore the Monster brand website learning the benefit and no sooner than later it will influence the consumption decision of the user. The codes are free of cost to customerstherefore its likely to initiate an excitement among the young generation. The fun of using this Monster brand code logo will intensify the popularity and create the associated clientele base.

7.2 Use of Print Advertisement

The business is further expected to continue the print advertisement. This is likely to boost the sales of the Monster energy drink to the non-technical ignorant population. For example, using the “unleashing the beast” advertisement has significantly lead to increased consumption of the energy drink. The backgrounded Monster logo with wide green eyes creates the excitement among the youth. The Monster slogan “unleashing the beast” further, attracts the young people to purchase the print media to earn more on the unleashing process or where the unleashed beast went. The advert is simple and very precise to the user and famous as the youth desires something to get them energized every day. Notably, the adverts will be stationed at the selling points, the sports magazine, and extreme sports activities.

The advertisement presents an artistic impression that is quite attractive to consumer’s youth rarely pay attention to spans and long advertisements. This ad, therefore, is short and straightforward enough to grab the attention of the target consumer’s young people. The Adobe impression figures the colors of the advertisement with preciseness to reflect the logo in unleashing the desire of the viewer and such more attention is paid to the advertisement. In this regard, the Monster brand team is capable of attracting a larger market size compared to the traditional sales gimmick.

8.0 Strategies Implementation

The print publication is expected to run for the next six months as a two on one basis campaign. The sporting magazines and the sales outlets will target avenues to promote print advertise.  The print materials are also to be distributed in strategic designations for the youth such as campuses and social places. This will facilitate the sales sensitization. The advertisements aimed at creating an image of the Monster energy in the mind of the target population and build the intuition of the unleashing beast. On the other hand, the QR coded advert will be a continuous advertisement that will viable and improved with improvement with technology. Since the QR poster is a guide to the Monster website, it is an ongoing activity that will be sensitized to the youths to gather knowledge consumer advantages associated with the brand consumption. With this advertisement, Monster brand will take advantage of the social media sites to continue its communication objective to the consumers. These include Facebook, Twitter and the blogging sites with the print media advertisement. This is likely created and increases the popularity of the energy drink brand. Further, the advertisement is likely to increase the partnership relationship with the sporting activities as they make the adverts practical with their followers. Merely, the advert will be implemented towards the realization of the set growth objectives. The print advertisements aimed at reaching all subscribers of the print media and magazines the QR coded advertisement is aimed to reach the vast majority uses of the Monster energy drink. Moreover, the effectiveness of the ad is positively correlated to the number of magazine subscription and frequency of the Monster energy drink consumption although the use does not limit the access of the Monster website.

9.0 Review and Evaluation Strategies

The print media is the most critical when it comes to analysis and evaluation. The impact of the print advertisement will be subjected to the pilot study with the material to be used for placing the ad. This is expected to review how the viewer’s respond when the advertisements introduced to them. Artistic impressions are known for catching the viewers’ attention. This may be applied to the dramatic monster logo to determine how effective is to influence the sales of the firm.

The effectiveness of the print advertisement will be further evaluated at the end of financial year. The increase or decrease in the level of sales before and after the advertisement will be determined when the sales values are consolidated. However, interim figures can be evaluated to establish the direction of the sales. This is because it is not easy to monitor the viewership of the print media. Also, the attention paid to the advert cannot be measured with the print material sold as the material has other exciting features. Conversely, the firm can often conduct social media surveys to determine the extent of viewership of the print advertisement.

On the other hand, the use of Quick Response is quite efficient in the online domain. The QR adverts review is easy and can be tracked through the website. The Monster team can examine the number of times the link has been accessed in a day. It is also likely for the business to track the consumption trend as the QR codes are available on the energy drink cans only. Additionally, the parties and sponsorship events can be used by the Monster team to conduct surveys and increase sale. The participants of the events can be used evaluate the use of the QR codes by entering the digits of the cans online to receive a gift. This will facilitate the introduction of the advert to the target population. Moreover, the effectiveness of the QR codes will be further evaluated from the monster website by tracking the online users, and the kind of information searched on the websites through further tabs opening by the users.

 

 

 

 

 

Reference

 

Hansen’s Natural Corporation, http://analystreports.som.yale.edu/reports/HANS.pdf

 

Monster annual report (2015) http://files.shareholder.com/downloads/HANS/2931576608x0x895901/DCE4ACE4-F0AC-4870-97CC-105A6375EF58/Monster_Annual_Report_2015.pdf

 

What’s Hot: Hansen Natural”. Businessweek.com. June 5, 2005. Archived from the original on June 25, 2012. Retrieved November 4, 2013.

http://time.com/3854658/these-are-the-top-5-energy-drinks/

https://finance.yahoo.com/quote/MNST/profile?ltr=1

http://www.coca-colacompany.com/press-center/press-releases/the-coca-cola-company-and-monster-beverage-corporation-close-on-previously-announced-strategic-partnershipStrategic

Management (2014). Washington, D.C.: The Saylor Foundation