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Running head: GAME CHANGER ENERGY DRINK 1

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Game Changer Energy Drink

Dexter Johnson

BUS-599

Dr. Banto

November 1, 2019

Game Changer Energy Drink

Company Overview

Game Changer Energy Drink is a nonalcoholic beverage company that offers a wide range of energy mild flavor energy drinks to customers looking for extra energy boost. The company’s fitness related energy drink, named Game Changer, is targeted at customers seeking extra energy boost from light healthy energy drinks with no additives instead of strongly favored drinks. The name represents the company’s desire to change the growing trend of marketing non-energy health drinks as beneficial in enhancing customers’ concentration, health, and even physical appearance.

Mission Statement

The company’s mission is to offer customers with extra energy they required to finish their day to day tasks, stay focused at work, and finish the day with a light and healthy taste that is not only easy to drink, but comforting and refreshing. Game Changer Energy Drink speaks to health-conscious consumers who require some extra help to perform the daily life activities. Customers can easily get bored of strong-tasting drinks made of artificial additives that add calories to the body.Game Changer drinks help customers boost their metabolism as well as burn more calories.

Non Alcoholic Beverage Industry Trends

Energy drinks are gaining massive popularity among students, service members, and athletes as well as adult consumers across the world. The worldwide energy drink market is expected to grow at CAGR of at least 7.3 percent between 2018 and 2026 to hit nearly 85 billion dollars. These products indicate tremendous popularity among different demographics such as the Latinos, people aged between 18 and 35 years, and millennial. Demand for energy drink products are expected to be at peak among these consumer groups in the next decades (Market Watch, 2019).Vercammen, Koma and Bleich (2019), in a survey, found that 5.5 percent of young adults between ages 20 and 39 reported using energy drinks in 2016. The number increased by more than 5 percent compared to the figures in 2003. Among adolescents, energy drink consumption increased from 0.2 percent to 1.4 percent over the same duration. For middle aged Americans, the level of consumption rose from 0 percent to 1.2 percent.

Among countries, the United States is the world’s leading consumer of energy drinks. In 2016, the country’s energy drink market was estimated at $14.30 billion (Grandview Research, 2019). A May 2017 research report by Mintel Group indicated that the country’s energy drink and energy short revenue grew by nearly 6 percent in 2016, with additional room for growth. Analysts from the group forecast the United States energy drink sales to increase by 47 percent from 2016 to 2021 and reach projected revenue of $19.2 billion (Caballero, 2018). Need for healthy drinks, busy lifestyle, and increasing consumer awareness regarding health benefits of energy drinks has helped trigger the demand for these products in the United States. Nearly, 60 percent of male and 40 percent of female population in the country are regular consumers of energy drinks and the trend is expected to grow between 2019 and 2025. Consumers in the United States are demanding for a variety of new flavors within the low-calorie beverage segment. Among the leading brands in the United States are PepsiCo, Coca-Cola, Heinz, Goldwin Healthcare, NourishCo, Monster Energy, Red Bull, and GSK (Market Watch, 2019).

Generally, the United States energy drinks industry is very aggressive with companies undertaking a few activities such as mergers, strategic alliances, plus capital extension for competitive advantage. Established organizations are focusing on expanding their market share across the globe and technological innovations. Firms are focusing on ideal business development using different development approaches. They are not only forming strategic alliances with strong producers of specific province but sharing innovative expertise in the industry (Grandview Research, 2019).

Organizations are moving toward natural raw materials such as gurami extracts, coffee seeds, and ginseng as well as pomegranate. Other organizations have switched to organic forms of sugar including fructose and sucrose to produce low calorie products. Firms are merging with others to control bigger market share by increasing their customer base and product portfolio. The strategy also enables them to penetrate new markets for operational increase. For instance, Amway Company acquired XS energy brand to strengthen opportunities for new ventures and attract young customers. Monster Energy acquired Burn, Full Throttle, Mother, Relentless, and Mutant to become the second largest organization in the market (Grandview Research, 2019).

Target Market

Game Changer Energy Drinks will use psychographic and demographic, and geographic segmentation strategies to reach out to its target customers. Demographic segmentation defines customer groups based on their demographic variables such as gender, level of income, occupation, household, as well as family life cycle (Kurtz, MacKenzie & Snow, 2009). From a demographic perspective, Game Changer will target male and female youths aged 18 years. This selection is founded on the idea that young adults aged 18 years consume more sugar-sweetened beverages than their elderly and middle-aged counterparts. In addition, since young adults are more physically active than their elderly counterparts, they can consume sugar-sweetened nonalcoholic beverages without negative health implications such as diabetes, obesity, and other cardiovascular diseases.

Geographic segmentation entails utilizing geographic boundaries such as regional, national, and international market preferences for an organization. From a geographic perspective, Game Changer will primarily operate in New York City, and serve area of100 miles from which the organization is headquartered. Since the company is still a new entrant, it will mainly place emphases on local market preferences. Further, psychographic segmentation involves dividing a population into groups that have similar characteristics, values, as well as lifestyles. Young adults aged 18 years are not only fun seeking, but they also like seeking new ideas such as new brands in the market. Game Changers will meet their fun-seeking needs by providing them with affordable nonalcoholic beverages.

Since the lifestyle patterns of Game Changer’s target customers include visiting retail outlets, going to supermarkets, and attending parties and amusement parks, Game Changers will strategically distribute products to such areas where they frequent. This move will be an important step towards increasing their accessibility to the company’s products. As young adults aged 18 years, the customers like buying nonalcoholic beverages on a weekly basis. They use nonalcoholic beverages as complementary products with other foods, or when attending parties, movies, and group gatherings. Usually, their mode of payment is cash. The main factor that influences their buying behavior is price. Since a significant fraction of young adults aged 18 are unemployed or belong to low-cadre job positions, they are price-sensitive. As such, Game Changers will provide affordable and quality nonalcoholic beverages to them as a way of meeting their needs.

General Demographic Features in New York City, NY

Subject	New York city, New York
	Number	Percent
Total population	8,008,278	100.0
SEX AND AGE
Male	3,794,204	47.4
Female	4,214,074	52.6
Under 5 years	540,878	6.8
5 to 9 years	561,115	7.0
10 to 14 years	530,816	6.6
15 to 19 years	520,641	6.5
20 to 24 years	589,831	7.4
25 to 34 years	1,368,021	17.1
35 to 44 years	1,263,280	15.8
45 to 54 years	1,012,385	12.6
55 to 59 years	369,105	4.6
60 to 64 years	314,349	3.9
65 to 74 years	494,794	6.2
75 to 84 years	321,360	4.0
85 years and over	121,703	1.5
Median age (years)	34.2	(X)
18 years and over	6,068,009	75.8
Male	2,803,579	35.0
Female	3,264,430	40.8
21 years and over	5,744,033	71.7
62 years and over	1,117,793	14.0
65 years and over	937,857	11.7
Male	359,953	4.5
Female	577,904	7.2
RACE
One race	7,614,319	95.1
White	3,576,385	44.7
Black or African American	2,129,762	26.6
American Indian and Alaska Native	41,289	0.5
Asian	787,047	9.8
Asian Indian	170,899	2.1
Chinese	361,531	4.5
Filipino	54,993	0.7
Japanese	22,636	0.3
Korean	86,473	1.1
Vietnamese	11,334	0.1
Other Asian [1]	79,181	1.0
Native Hawaiian and Other Pacific Islander	5,430	0.1
Native Hawaiian	882	0.0
Guamanian or Chamorro	1,066	0.0
Samoan	879	0.0
Other Pacific Islander [2]	2,603	0.0
Some other race	1,074,406	13.4
Two or more races	393,959	4.9
Race alone or in combination with one or more other races [3]
White	3,806,508	47.5
Black or African American	2,274,049	28.4
American Indian and Alaska Native	87,241	1.1
Asian	872,777	10.9
Native Hawaiian and Other Pacific Islander	19,203	0.2
Some other race	1,363,737	17.0
HISPANIC OR LATINO AND RACE
Total population	8,008,278	100.0
Hispanic or Latino (of any race)	2,160,554	27.0
Mexican	186,872	2.3
Puerto Rican	789,172	9.9
Cuban	41,123	0.5
Other Hispanic or Latino	1,143,387	14.3
Not Hispanic or Latino	5,847,724	73.0
White alone	2,801,267	35.0
RELATIONSHIP
Total population	8,008,278	100.0
In households	7,825,848	97.7
Householder	3,021,588	37.7
Spouse	1,124,305	14.0
Child	2,410,420	30.1
Own child under 18 years	1,642,612	20.5
Other relatives	768,620	9.6
Under 18 years	242,349	3.0
Nonrelatives	500,915	6.3
Unmarried partner	155,721	1.9
In group quarters	182,430	2.3
Institutionalized population	75,870	0.9
Noninstitutionalized population	106,560	1.3
HOUSEHOLDS BY TYPE
Total households	3,021,588	100.0
Family households (families)	1,853,223	61.3
With own children under 18 years	897,856	29.7
Married-couple family	1,124,305	37.2
With own children under 18 years	532,402	17.6
Female householder, no husband present	576,354	19.1
With own children under 18 years	312,600	10.3
Nonfamily households	1,168,365	38.7
Householder living alone	962,624	31.9
Householder 65 years and over	299,920	9.9
Households with individuals under 18 years	1,026,091	34.0
Households with individuals 65 years and over	712,581	23.6
Average household size	2.59	(X)
Average family size	3.32	(X)
HOUSING OCCUPANCY
Total housing units	3,200,912	100.0
Occupied housing units	3,021,588	94.4
Vacant housing units	179,324	5.6
For seasonal, recreational, or occasional use	28,157	0.9
Homeowner vacancy rate (percent)	1.7	(X)
Rental vacancy rate (percent)	3.2	(X)
HOUSING TENURE
Occupied housing units	3,021,588	100.0
Owner-occupied housing units	912,296	30.2
Renter-occupied housing units	2,109,292	69.8
Average household size of owner-occupied unit	2.81	(X)
Average household size of renter-occupied unit	2.50	(X)

Subject	New York city, New York
	Number	Percent

Source: U.S. Census Bureau, Census 2000

Game Changer’s Strategic Position

Competitors

The nonalcoholic beverage industry is highly competitive with two behemoths- PepsiCo Company and Coca Cola Company-controlling nearly 70 percent of the United States carbonated soft drink market. Other major players such as Red Bull, Dr Pepper Snapple Group, Monster Beverage Company, Nestle, and Cott Corporation also have sizeable market share in the United States (Bailey, 2014). Although the competitors have stronger distribution networks across the United States, Game Changer will attain its target as long as it remains true to its vision and mission statements.

Competitive Strategy

According to Armstrong et al. (2015), there are many ways to distinguish a business from its competitors. Some of the strategies include customer perception factors, market segment, market share, operational and technological advantage, distribution channel, and business model. Game Changer strategic position is to offer customers with convenience. Game Changer will be available where other nonalcoholic beverage energy drinks are sold and offer an easy to find unique alternative. Convenience is the most appropriate strategy for the business because customers must access its products with ease. Customers must be able to choose the company’s products from other competing brands and pick it regularly. Game Changer will be placed near other nonalcoholic brands for ease of accessibility and differentiation. The company will offer reduced calorie options that provide health benefits. Grandview Research (2019) indicates that impact of growing consumer demand for natural products has been noticed across a wide range of beverage categories. However, the change is more drastic in energy drinks than other categories.

Company’s Message

Functions: Game Changer Beverage offers a variety of energy drinks that will have customers feel refreshed and energetic throughout the day

Finances: The Company will sell its products at affordable price that will not affect customer’s net income. Customers will get energized at affordable prices.

Freedom: Game Changer’s customers will access the refreshing aspect of the company’s products from restaurants, clubs, and retail stores.

Feelings: Drinking Game Changer’s energy drinks will leave customers feeling energized and cool. The company produces low calorie drinks designed for millennial.

Future: Consumers will continue using Game Changer’s drinks for a long time. Consumers can provide their feedback via the company’s social media platforms such as Facebook, You Tube, and Twitter.

Marketing Slogan: Drink Game Changer, Stay Energized and Refreshed

Distribution Channel

By distribution channel, the nonalcoholic beverage energy drink segment is classified into on-trade and off-trade selling. The former accounted for at least 65 percent of the entire market revenue in 2016. It comprises of bars, coffee shops, hotels plus restaurants. Product distribution in the United States through on trade channel is expected to record higher growth in the future. The off-trade sector, on the other hand, is estimated to record slow growth between 2019 and 2025 because of stringent practices regarding collaborations with retail outlets and shifting consumer preferences (Grandview Research, 2019). With this in mind, Game Changer will use restaurants, clubs, and other on trade distribution channels to distribute 75 percent of its products. The other 25 percent will be distributed via retail stores such as supermarkets and convenience stores. By doing so, the company will concentrate on production and bulk distribution for better sales.

Game Changer’s Marketing Vehicles

Game Changer will use social media platforms such as Facebook, You Tube, and Twitter to interact and engage with target customers. Social media marketing will help the company reach out to millennial, who are the company’s target market. According to Sago (2010) a big percentage of millennial use social media as primary source of information. Also, social media is a cost-effective method of marketing. The company will also use online advertisements such as sponsorships advertisements on YouTube to increase product visibility in the market. Mathew et al. (2016) indicate that online advertisement plays a major role in increasing customer awareness. The company will also use other marketing vehicles such as advertising specialists, print media, and product samples to increase sales.

Types of Risks Affecting Game Changer

Game Changer Energy Drinks is prone to three types of risks: regulatory risks, marketing risk, and stakeholder risks. With regards to regulatory risk, Outifa and Gwilliam-Beeraree (2015) indicate that the Food and Drug Administration released a series of adverse health reports associated with consumption of goods marketed as energy drinks. In this regard, energy drink companies face a wide range of lawsuits from consumers. In 2015, the Food and Drugs Administration investigated 5 deaths and 1 fatal heart attack linked to Monster product. To overcome regulatory risk, Game Changer will use organic raw materials and adhere to safety plus quality standard in its production activities.

Regarding stakeholder risk, Vercammen, Koma and Bleich (2019) indicate that energy drinks are normally portrayed as beneficial in improving users’ concentration, alertness, physical performance, risk taking, endurance, plus reaction time. Even so, various studies that overconsumption of energy drinks can lead to negative behaviors and behavioral effects. In this regard, the company’s products will have labels warning clients of the effects associated with the product. The third risk is getting enough distributors to carry the company’s products. The company will overcome the problem through relationship building with businesses. Securing contract with on trade distribution channels will be the most appropriate method. Also, the company will secure contracts with retailers such as supermarkets and convenience stores.

SWOT Analysis Matrix

Strengths: · Unique and high-quality products that is distinguishable from established rivals · High quality packaging · Unique product design · Cross category product	Weaknesses: · Limited financial resources · Inadequate distribution channel · High development cost · Limited raw material suppliers
Opportunities: · Growing market · New products categories and flavors · Global expansion · Technological innovation	Threats: · Competition from established firms · Changes in government regulations · Natural disasters such as drought · Changes in consumer preferences

Operations of Game Changer Energy Drink Manufacturing Company

Proper operations management helps increase productivity, maintain just-in-time delivery, eliminate idle time and surpass breakeven volume (Gupta & Starr, 2014). Our company will ensure the production department coordinates with inventory and distribution departments, for proper utilization of machinery to avoid idleness and overuse and have frequent maintenance. There will also be an automated inventory management system to ensure the production department is aligned with distribution and storage, for proper stock levels management and timely deliveries. Gupta & Starr, (2014) state that when inventory constitutes a big percentage of the budge, it requires computer systems to analyze huge amounts of all data concerning demand levels, production and distribution.

Given that our target market consists young and vibrant consumers, we will put in place top-notch customer experience practices such as timely attendance to complain and inquiries, attractive packaging, friendly employees and frequent customer events. Leggett (2013) states that customers want to receive accurate, relevant, and complete answers to their questions upon first contact with a company. Our marketing department will also carry our frequent surveys to gather feedback and learn customers’ changing needs, to ensure continuous improvement to meet the new demands and beat competition. This will filter into the development strategies where our development and innovation department will review and work on the feedback obtained, to produce an energy drink that is continually improving and relevant to the market. Discovering what matters most to customers and planning on improvement are among the various steps a company’s operation strategy can employ to offer great customer experience (Leggett, 2013). Poor services and lack of continuous product development could cost us attrition as most of the unhappy customers will move to competitors. Leggett (2013) supports this by stating that poor customer experience is costly while the vice versa is directly proportional to profits and revenue.

Marketing Budget

Startup Capital

The company requires an initial capital of $300,000, out of which personal savings is $200,000, donation from friends is $25,000, and bank loan is $75,000. This capital will be used to acquire premise for operations, production equipment, computers, printer, and mobile phones. Part of the money will be used for marketing purposes and employees’ salaries.

Sales Forecast

Although the nonalcoholic beverage market is very competitive, Game Changer will rely on its strategic position to attain its sales forecast for the next five years. The company’s net sales projections range from for $1,344,476 to $4,729,365. The sales projections are anchored on the assumptions that:

· The company will make 10 percent credit sales

· Sales for Essaic tea will increase by 2% every month

· Sales for tequila will increase by 5% every month

· Sales for aloe water will increase by 2% every month

However, the forecasted projects have not considered the impact of economic factors, political factors, technological changers, and consumer tastes and preferences on sales.

 

References

Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2015). Principles of marketing. Melbourne, Australia: Pearson Australia.

Bailey, S. (2014, November). Why the soft drink industry is dominated by Coke and Pepsi. Market Realist. Retrieved from https://marketrealist.com/2014/11/soft-drink-industry- dominated-coke-pepsi/

Caballero, M. (2018, May). Energy’s evolution: It’s a huge category. But where do energy drinks go next?.Bevnet Magazine. Retrieved from https://www.bevnet.com/magazine/issue/2018/energys-evolution-huge-category-energy- drinks-go-next

Grandview Research. (2019). U.S. energy drinks market size, share & trends analysis report by product (organic, non-organic, natural), by target consumer, by distribution channel (off- trade, on-trade), and segment forecasts, 2019 – 2025. Retrieved from https://www.grandviewresearch.com/industry-analysis/us-energy-drinks-market

Gupta, S. & Starr, M. (2014). Production and operations management systems. Boca Raton, FL: CRC Press
Taylor & Francis Group

Kurtz, D. L., MacKenzie, H. F., & Snow, K. (2009). Contemporary marketing. Boston, MA: Cengage Learning.

Leggett, K. (2013, February 28). Four steps for optimizing customer service operations. Retrieved from https://go.forrester.com/blogs/13-02-28-four_steps_for_optimizing_customer_service_operations/

MarketWatch. (2019, April 18). Energy drink 2019 global market net worth US$ 84.70 billion forecast by 2026. Retrieved from https://www.marketwatch.com/press-release/energy- drink-2019-global-market-net-worth-us-8470-billion-forecast-by-2026-2019-04-18

Mathews, S., Bianchi, C., Perks, K. J., Healy, M., & Wickramasekera, R. (2016). Internet marketing capabilities and international market growth. International Business Review, 25(4), 820-830.

Outifa, S., &Gwilliam-Beeraree, K. (2015). Energy drinks-regulatory risks and market growth. Vigeo Food and Health, 1-5

Sago, B. (2010). The influence of social media message sources on millennial generation consumers. International Journal of Integrated Marketing Communications, 2(2).

Vercammen, K. A., Koma, J. W., &Bleich, S. N. (2019). Trends in energy drink consumption among US adolescents and adults, 2003–2016. American Journal of Preventive Medicine, 56(6), 827-833.