Marketing Research Report for Canadian Energy Drink

Marketing Research Report Good4U Drinks co. Exporting Beaver Buzz Product Line to India Prepared for¬: Richard Debanks, Director of Marketing, GOOD4USports Nutrition 15621 Marine Drive White Rock, British Columbia V4B 1E1Canada Email:[email protected] com Prepared by: Hot Point Marketing DepeshMohindra, Ankush Sharma, Gautam Sharma CONTENTS 1. CONTENTS…………………………………………………….. 2 2.

EXECUTIVE SUMMARY……………………………………… 4 3. INTRODUCTION………………………………………………. 5 4. BUSINESS OPPURTUNITY……………………………………. 5 5. RESEARCH OBJECTIVES…………………………………….. 7 6. METHODOLOGY………………………………………………. 11 7. DATA ANALYSIS…………………………………………………. 12 8. BUSINESS IMPLICATIONS…………………………………… 12 9. CONCLUSION … ……………………………………………….. 13 10. BIBILOGRAPHY…………………………………………….. 13 ? December 2 , 2012

Richard Debanks Hot Point Marketing Director of Marketing 80 Rouge River Drive GOOD4USports Nutrition Toronto, Ontario 15621 Marine Drive, White rock, Canada British Columbia , Canada M1B 6K3 V4B 1E1

Dear Mr. Richard Debanks, Hot Point Marketing is a team of Marketing Management students at Centennial College who are determined to achieve and succeed. Our team boasts a diverse background in experience. With our collective skills we seek to provide GOOD4UDrinks co. with the opportunity to launch their product line of Beaver Buzz energy drinks in India. Attached is a copy of our marketing research report which explains how we have evaluated the business opportunities for the company in India and also the methodologies and sources we have used..

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We appreciate your cooperation and assistance and thank you for taking the time to read our report . We are indebted to you for helping us apply our knowledge and skills. We look forward to hearing from you. Yours Respectfully, Depesh Mohindra Director of Hot Point Marketing? EXECUTIVE SUMMARY The market of energy drinks in India has witnessed an increase of about 50% from 2006-2011 crossing the Rs 600 crore ($109 million CAD) in 2011. Beaver Buzz Canada as a new entrant in the energy drink market can gain a significant market share in the market due to its unique flavours and product line of energy drinks.

The market is dominated by Red Bull, and other energy drinks brand like Monster, Cloud9, Full throttle and XXX. This research report explains in detail the business opportunity for Beaver Buzz Canada in the Indian energy drink market. and also explains how the product should be marketed in order to gain a significant market share and increase the sales volume. It contains information on present market situation, marketing objectives of the product and also the marketing actions to be taken to achieve the marketing objectives.

The document also explains about the various methodologies used to conduct the research and how data was interpreted from the various sources. ? INTRODUCTION (Beaver Buzz Canada) Good4u Drinks co. was established in 2001 in Vancouver, British Columbia by Andrew Drayson and Richard DeBanks (nutrition). They are known for making sports nutrition drinks which include drinks for endurance, recovery, calorie burning and relaxation and also Beaver Buzz product line of energy drinks (overview). Beaver Buzz was created by Good4u Drinks co. in 2005 as a purely Canadian energy drink that Canadians will be extremely pleased to call as their own.

Beaver Buzz became an instant hit after its launch in the Canadian market to such an extent that the Americans also started to demand for their product, so the company started selling the product via internet to the Americans initially and the company launched the product line later on in August 2009 in the United States (Buzz B. ). The Buzz Beaver product line is also available in the UK by the name of Bulldog Buzz (Buzz W. t. ). Buzz Beaver is devoted to efficiency in all its efforts, from the tiniest details, to the greatest venture. Above all, the company is devoted to provide the customers with the best beverages on the planet. Buzz B. ) BUSINESS OPPURTUNITY (Energy drink market in India) Energy drinks contain legal stimulants, vitamins and minerals, including caffeine, guarana and taurine, various types of ginseng, malt dextrin, carnitine, creatine monohydrate and ginkgo biloba. Some contain high levels of glucose and glucose. This category typically included caffeinated drinks which are used for boosting energy. Currently the market of energy drinks in India is lead by two major firms namely Red Bull and Cloud 9. Beaver Buzz can break the ice in this market by introducing its unique energy drink line of products.

Flavours Saskatoon Berry, Black current, Citrus, Core energy, Green tea and pink grapefruit can make the brand famous in the country as they are new. Also their energy shot version which is a small black bottle of 60 ml can help them capture a significant market share (Buzz B. ). According to marketing research company Datamonitor Plc, the market for energy drinks in India was estimated at Rs 600 crore($109 million CAD) in the year 2011, still at a young age when compared to carbonated beverages, which was valued at Rs 7000 crore($1. 27 billion CAD).

Between 2006 and 2011, the market of energy drinks in India has grown constantly at a rate of 50%. Contrary to that the growth of carbonated drinks experienced a decrease by 0. 5% during the same period. With an increase in number of modern retail stores the energy drinks market is expected to reach Rs 1100 crores ($197 million CAD) by the end of 2012. This decrease in the market of carbonated drinks and a high rate of growth in the energy drink market can be linked to the change in perception of the Indian youth towards carbonated drinks. The industry foresees a huge potential for energy drinks.

The segment of energy drinks is one of the fastest growing segment in the ready to drink category, reason being the youth centric population of India and also growing number of urban areas. The energy drink market till a year back was dominated by Red Bull and Cloud9. Sales started to pick up with the entry of recognized players such as Pepsi, Amway and the latest entry of Coca Cola and GT&T proves the market potential of the energy drink industry in India. The market players in this category are adopting different styles of unique marketing strategies like distributing free samples at schools and colleges before launching their products.

They also sponsor big events like sporting events and fashion shows to attract youth. These promotions are done to build a relationship of the brand with the target customer. This is a part of marketing communication strategy. The major brands in the energy drink market are Red bull, SJ XXX, Burn, Sobe, Power Horse, Amway and Rock star. The market share for the following brands is determined by the following pie chart. RESEARCH OBJECTIVES Demand trends in the energy drink market (Consumer Behaviour) It has been observed that most of the energy drink users in India drink it because of the energy it provides.

Basically a majority of students consume energy drinks because it gives them energy and due to the high concentration of caffeine in the energy drinks it allows them to stay up all night and because of this they are able to study better. They are motivated by the self esteem and stats that good grades provide them with. The students are sensitive to the price of the energy drinks as the energy drinks are priced higher when compared to carbonated beverages, if the energy drinks were priced lower the consumption of the students is bound to increase.

There are also certain types of energy drink consumers in the country who believe that energy drinks are superior to carbonated beverages and therefore they should be sold at a premium price. These people also believe that by drinking premium priced energy drinks they can impress others as not everyone can afford these products on regular basis. So, these people look towards maintaining a status by consuming energy drinks. There are some other important customers of the target segment also like people who like to party hard and stay awake all night. They tend to use energy drinks because they want to stay awake throughout the night.

They consider waking up for the whole night very important as they want to enjoy with their friends. It’s the sense of belongingness to the group that these type of consumers value. They are not sensitive to the price of the product as they do not use the product very frequently; they use it only for the purpose of staying awake throughout the night, so price of the product does not matter to them. One of the most interesting group of consumers has been those who have started using energy drinks as a substitute for alcohol. This is because they are not comfortable consuming alcohol anymore.

These consumers feel that it is difficult not consuming anything or consuming carbonated beverages in front of people who are consuming alcohol. Segmentation of the target market The map below shows various factors taken into consideration while doing segmentation Based on the above factors the following three segments were identified College students- The age of the college students range from the ones who are teenagers to those who are post graduates. This segment sees a variety of constituent individuals like energy, power of purchasing, preferences, shifting attitude towards alcoholic beverages.

These types of people have adopted snacks as alternative to regular meals because of the tight schedule that they have. Energy drinks are viewed as something above carbonated beverages but not alcohol, hence a tradition among this group. Moreover, because they have to study late at nights, energy drinks are becoming popular among them (India`s youth). Working Professionals- These people represent the young working population of India. These people are mainly the employees of MNCs and BPOs. They consume energy drinks when they go to pubs and bars on weekends to relax after a long week of work.

They also consume energy drinks when they are working on certain occasions like when they are suffering from stress and fatigue. An energy drink at this time works as a energy booster for them and hence becomes an obvious choice for them (India`s youth). Socialites/Party Animals- These are the people who par regular visit to pubs, parties and discotheques. Therefore, energy drink consumption is normal for these people. Moreover, energy drink act as an alternative to alcoholic beverages for these king of people. Also, they are in a habit of mixing energy drinks with alcohol to serve their purpose (India`s youth).

Evaluation of major brands Red Bull Energy Drink Red Bull is only functional in the energy drink segment of the beverages market. The product is an example of functional drink. The functional foods are those kinds of food that respond to consumer preferences in terms of well-being and performance. Some of the major multinational soft drink companies are trying to enter this segment of functional drinks in the country because the traditional market of soft drinks is approaching a maturity stage and the rate of growth is minimal. For these multinationals, new functional drinks offer opportunities for a new business growth.

Red Bull- Positioning General positioning strategy The brand is positioned as something that energizes body and mind. It was also intended that Red Bull be drunk whenever consumers needed a lift, whether it was morning, noon or night. This broader type of positioning was developed to increase growth into a variety of market segments. Their advertising strategy didn’t specify any particular consumption occasions, which further helped them to elastically position themselves in the market. Pricing strategy Red Bull set the price of it product at least 10% higher than any of its competitors in the segment.

This means they used product philosophy to position themselves into the market. The 250ml can of Red Bull is 300% more expensive than the traditional soft drinks in terms of per ounce. Market Share The brand has managed to maintain at least 60% of the market share in this category since its launch. XXX Energy Drink This Brand currently comes in two different forms namely – REJUVE and NICOFIX. NICOFIX contains NPR which is used to reduce the nicotine urge. This is useful for people who are trying to leave cigarettes. REJUVE is a new type of energy drink which is specially designed to suite Indian taste buds.

It is made to energize the mind and the body and also to enhance the immunity system of the body, in turn, increasing the stamina of the body. Its 250 ml bottle I priced at Rs 75. Monster Energy Drink It is depicted by a logo of three claws; it is distributed by Hansen Natural Corporation, Corona California. It includes ingredients like guarana, caffeine and glucose and is designed to artificially stimulate energy in the body. Although it is not widely advertised in the media still it receives a large amount of recognition from the sponsorships that it provides to the various sporting events around the country.

METHODOLOGY Data collection from secondary resources A significant number of secondary resources were available about the energy drink segment were available on the internet. We have also taken references from the various marketing research reports on the energy drink industry to evaluate the most essential features required to formulate the plan of action. This provides us with a basic knowledge of the features that play a significant role in the selection of an energy drink. Data collection from primary resources

Data collection from primary resources can be done by interviewing various segments of people in depth to know the criteria to select an energy drink. We can use an online spread sheet to interview various people of various demographic profiles. Our objective of the exploratory research is to find the questions that need to be included in the questionnaire for descriptive research. Descriptive Research We have prepared a comprehensive questionnaire using the inputs of exploratory research. The soft copies of the surveys can be mailed various sections of the people. Also hard copies can be distributed to people who do not have email ids.

The questionnaire was prepared for collecting primary source of data for the research. The questions were designed to do a study of marketing mix, segmentation and target market. The questions can help us to know their perceptions and awareness about energy drinks. DATA ANALYSIS The secondary data taken from the internet was mostly used to conduct this research report. This data was used as the required funding for the primary data collection methods was not available. But still we have mentioned about the method in the methodology that we will use if funding was available for primary data collection.

The data used for the research was derived from various marketing research reports found on the internet. and also some government sites on which we searched about business implications. The results found on the internet were analysed and cross referenced and then only they were included in the research. BUSINESS IMPLICATIONS Legal and political factors: In India, under PFA act 1954 no standards are there for energy drinks. Under the PFA rules 1955 the max limit of caffeine were reduced to 145ppm from 200ppm on recommendation by central committee on food standards.

For inspection food safety and standard authority established a proficient team to gather scientific literature and global positioning on usage of non carbonated and caffeine beverages and labelling and acclaim the limit under food regulations of caffeine in energy drinks. The team was supposed to recommend if there were any risk for using the energy drinks. The report determines that there was only addictive property in the chemical used but not in the caffeine. Caffeinated drinks up to 200 ppm are added as a flavouring agent but above 200 ppm it is an efficient component. The performance of caffeine at 320 ppm needs to be determined long with justified reason for solving a cut-off restricts at 320ppm. Economic Factors: Economic factor influences the power of purchasing of promising customer and cost of capital of a firm. In macro-economic the examples of factors are as follows: exchange rates, inflation rate, interest rates, economic growth. The last reported inflation rate in India in June 2010 was 13. 73 percent. The economic system is not much designed and extensive variations among declares and areas within declares are there due to which we might have to create distinguished promotional strategies.

Social-cultural factors: The Indians are conscious about health and wants to be away from diseases of heart and digestive system, obesity, bone, pain in joints, anxiety and depression, lack of stamina and sleeplessness, etc. Indian consumers are more concerned about ingredients and health benefits; to make product choice Indians confirms the nutritional information. Therefore health claims are demanded for food and beverages. Technological Factors: The technological factors can lower limitations to access, reduce the minimum effective development levels and impact freelancing decisions.

Technological factors comprehend: R and D activity, rate of technology change, technology incentives automation. CONCLUSION To conclude this proposal our team Hot Point Marketing would like to say that the energy drink market in India is worth$109 million dollars and there are only 4 major brands in the whole country so there is large scope for Brands like Beaver Buzz who have differentiated themselves from brands like red bull in Canada and still generate a gross income of around 600, 000 dollars a month, which means they are capable of doing the same in India.

So, it will be beneficial for Beaver Buzz Canada to launch its product line of Beaver Buzz energy drinks in India as the Indian energy drink market is growing at a rate of 40% every year and red bull owns 70% of the market share. Works Cited Buzz, B. (n. d. ). Beaver Buzz Energy. Retrieved November 11, 2012, from http://www. beaverbuzz. com/about-beaverbuzz. htm Buzz, W. t. (n. d. ). Bulldog Buzz. Retrieved November 11, 2012, from http://www. bulldogbuzz. co. uk/ Health, P. (n. d. ). Public health.

Retrieved November 11, 2012, from http://www. publichealthgreybruce. on. ca/home/publications/Board/BOH_Resolutions/2011/GBHU%20BOH%20Motion%202011-16,%20Energy%20Drinks. pdf India`s youth. (n. d. ). Retrieved November 30, 2012, from financialexpress: http://www. financialexpress. com/news/twothird-of-indias-youth-find-drinking-unacceptable/484312 nutrition, G. s. (n. d. ). Retrieved November 11, 2012, from http://www. gd4u. com/aboutus. htm overview, P. (n. d. ). Retrieved november 11, 2012, from http://www. gd4u. com/products. htm

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