5 Hour Energy

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IndexExecutive Summary…………………………………………………………………………………………………………………………………………………..………....3Situation Analysis………………………………………………………………………………………………………………………………………………………………….4-13

History/Purpose of the Brand…………………………………………………………………………………………………………………………..………....4Current Business Climate……………………………………………………………………………………………………………………………………………..5Relevant Sales/Usage Data…………………………………………………………………………………………………………………………………………..6BDI/CDI and Competitive Analysis………………………………………………………………………………………………………………………………..7-9Geographic/Trade Market Characteristics…………………………………………………………………………………………………………………….10Target Analysis……………………………………………………………………………………………………………………………………………….....…………11-12Target Segment……………………………………………………………………………………………………………………………………………...…………….13

Marketing Objectives……………………………………………………………………………………………………………………………………………………………14Creative Objectives…………………………………………………………………………………………………………………………………………………………….…15The Media Plan…………………………………………………………………………………………………………………………………………………………………….16-17

Strategies…………………………………………………………………………………………………………………………………………………………………….16Specifics on Chosen Media…………………………………………………………………………………………………………………………………………..17

Tactics…………………………………………………………………………………………………………………………………………………………………………………..18-20Media Mix Cost Breakdown……………………………………………………………………………………………………………………………………….…18Budget Breakdown………………………………………………………………………………………………………………………………………….……………19Flowchart……………………………………………………………………………………………..………………………………………………………………………20

Appendix………………………………………………………………………………………………………………………………………………………………………….……21-22Added Value…………………………………………………………………………………………………………………………………………………….……………21Sources………………………………………………………………………………………………………………………………………………………………….……..22

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Executive Summary

As the innovator of the energy shot category, 5 Hour Energy is looking to expand

its presence among current users and individuals who drink coffee and energy drinks. To

accomplish this goal a mix of traditional media will be employed to generate increased usage,

brand loyalty and demand by targeting individuals who are moderate to heavy users of coffee

and energy drinks. In addition to delivering 5 Hour Energy’s messages on a national basis,

carefully selected DMA’s will be used as a complement to drive sales and ensure a strong

brand presence among consumers who are likely to use such a product.

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Situation AnalysisHistory/Purpose of the Brand

5-Hour Energy is a flavored energy shot made in the United States based in Farmington Hills, Michigan. It is sold in 2-oz containers. Its manufacturer, Living Essentials, focuses on the energy shot category rather than the energy drink category. The makers of the drink claim that it will provide hours of energy and, unlike other energy drinks, will not cause a sugar crash. After its introduction in 2004 it sparked a wave of "energy shot" drinks, and it is the number one selling product in the energy shot category in the US. The drink claims to be quick, simple, and made to help hard working people. 5-Hour Energy is different than any other energy shot because of its target. 5-Hour Energy appeals to working adults instead of teenagers and young adults.

5-Hour Energy has targeted a segment of the market that other energy shot companies have not. It’s for work. It helps you feel better. It helps you get over that afternoon slump.. Executives at Living Essentials set out to create a product that could compete in the tremendous energy-drink category. They wanted to create a small energy boost that was not 12 ounces. Also they knew it should have less sugar than others to avoid the crash and to promote a healthier choice. They planned to create a package that could sit and not get lost among the competitors. Last, they set out to target working adults, as opposed to the teenage boys that are the cornerstone of almost every other competitor.

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Situation AnalysisCurrent Business Climate

Both Coca-Cola and PepsiCo have released energy shots, as have Monster, Red Bull and Arizona. The category is expected to nearly double this year to $400 million wholesale, up from $210 million a year ago according to Beverage Marketing Corp. Still, 5-HourEnergy, which launched in 2004, is the undisputed leader in the field. It controls roughly 70% of the market and is expected to top $320 million in sales this year, which is almost double its sales of $170 million last year. The ever-present 2-ounce red-capped bottles can be found in retailers as diverse as Walmart, Home Depot, Dick's Sporting Goods, OfficeMax, Kroger, Duane Reade and GNC.

Living Essentials has invested heavily

in advertising over the past couple of

years to secure a leading position for 5-

Hour Energy. While the competition is

heating up it's also helping build the

market for energy shots. Red Bull recently

introduced a "shot" version of its market-

leading beverage. Dr Pepper Snapple

began test-marketing a shot of its Venom

energy drink (Venom Bite), and Coca-Cola

has added a shot based on its NOS

energy drink. Shotz, which made its

vending industry debut at last fall's

National Automatic Merchandising

Association National Expo, is another

contender in the fast-growing category.

This year, Living Essentials plans to spend

$60 million to promote 5-Hour Energy.

 

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Situation AnalysisRelevant Sales/Usage Date

There's still plenty of room for growth. 5-Hour Energy needs to prove and reassure to women that it's safe, and useful.

Convenience stores are on track to achieve such growth. According to Nielsen data they have posted the largest dollar sales increase in the first half of 2009 for "liquid vitamins, supplements and energy shots" – up 120.5% over the same period last year.

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Situation AnalysisBDI/CDI and Competitive Analysis Cont.

Breakdown of our Best DMA’s:

Atlanta favors energy drinkers over coffee. 5 hour energy has the second strongest brand presence/usage, but also has several close competitors.

 

Chicago 5 hour energy has a steady index at 132. Although Arizona Extreme Energy Shot dominates with a 445 index this market is still a great opportunity to increase brand usage with the right creative messaging.

 

Dallas 5 hour energy’s index is insignificant but overall high energy drink usage allows for advertising dollars to be allocated here.

 

Houston With 5 hour energy’s index at 263 being the second highest, a focus on brand loyalty is recommended.

 

Los Angeles This might possibly be the strongest market for energy drinks with overall high indexes across the competition. Despite such high usage, 5 hour energy still has considerable room to gain market share, indexing at 118.

 

San Antonio Also one of the strongest markets for energy drinks. 5 hour energy indexes at 82 though, which may be due to a lack of advertising dollars being spent in this market.

 

San Francisco This is another great market with a lack of advertising dollars possibly being spent on 5 hour Energy. An insignificant index could be due to the geographic nature and demographics/psychographics of the people in this market.

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Situation AnalysisBDI/CDI and Competitive Analysis Cont.

Breakdown of the Worst DMA’s:

Cleveland is by far the worst DMA. It did not index above average for any coffee/energy drink category. Its highest index was 78 for “coffee drinkers,” and it’s not a viable market to spend advertising dollars in.

 

Detroit’s highest index was 131 for Amp. A majority of categories indexed far below average, which is about the same weighting as Washington DC.

 

New York indexes low across the board except for a few competitors. However it is a big enough market that could be an opportunity to extend brand awareness and usage.

 

Washington DC’s highest index was 112 for Red Bull. Every other category was below average or insignificant which is about the same weighting as Detroit.

Breakdown of Some Considerable DMA’s:

Boston has moderate energy drink usage, with a few competitors dominating the market. It may not be wise to spend much, if any advertising dollars.

 

Miami 5 hour Energy indexes the highest at 205. An emphasis on brand loyalty is key here since this market has moderate energy drink usage.

 

Philadelphia has several competitors cemented their presence, but 5 hour Energy still has an index of 53, which could pose as a red flag when allocating advertising dollars.

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Situation AnalysisBDI/CDI and Competitive Analysis

As shown in the previous table of the top 14 DMA’s Atlanta, Houston and Miami are 5 Hour Energy’s highest established markets. We are going to continue to advertise to reinforce brand loyalty in these markets, and ultimately steal share from competitors. Chicago and Los Angeles index high, but there is significant room for BDI growth, especially with all high indexes from competitors. Dallas, San Antonio, San Francisco and Philadelphia are lacking a strong brand presence, making them 5 Hour Energy’s biggest opportunity markets for a higher BDI. With substantial advertising dollars being allocated in these markets, increased usage is highly possible.

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Situation AnalysisGeographic/Trade Market Characteristics

DMA 5 Hour Energy’s Index Market Type

Atlanta 174 BDI Opportunity

Chicago 132 BDI Opportunity

Dallas 97 BDI Opportunity

Houston 263 Well Established

Los Angeles 118 BDI Opportunity

Miami 205 Well Established

Philadelphia 53 BDI Opportunity

San Antonio 82 BDI Opportunity

San Francisco 90 BDI Opportunity

Targeted DMA’s

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Situation AnalysisTarget AnalysisDemographics/Psychographics:

According to Simmons research among males and females between the ages of 22-39 who are employed full and part time, and full and part time students will be included in our target audience, because although they do not index the highest for 5 Hour Energy they are still prevalent users of energy drinks. The indexes show that consumers with these demographic characteristics equally divide their preferences between drinking coffee and energy drinks. 5 Hour Energy has an index in the middle among top competitors (Rockstar, AMP, Arizona Extreme Energy Shot, Full Throttle, Red Bull, and Sobe Adrenaline Rush).

Homemakers and those that are unemployed will be excluded from 5 Hour Energy’s target audience, because they are the least likely users of the product.

From these demographics we can conclude that those in our target audience that are full time and part time students are our biggest opportunities because their indexes were the lowest.

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Target Analysis

Supplemental information for demographics/Psychographics:

Targets who are employed and have two or more kids are more likely to drink 5 Hour Energy, because their daily activities would require an energy boost, as opposed to individuals who are employed and have no kids.

*Race shouldn’t play a major factor in targeting. The major DMA’s that we are advertising in we’re targeting the overall lifestyle, not the individual lifestyle of the people that live there. In these big cities, the focus is on the workforce not on race.

Demographics/Psychographics:• Adults 22-39 with a slight male skew• Finishing school, but most likely in the

workforce• Career and starting a family are most

important to him/her• Fairly active social life • Moderate exerciser• Establishing a professional identity is likely

a priority• Convenience and efficiency play big roles

in his/her work and personal life• Business trips may require more added

energy than other target segments• Likely to be adopters of new products once

they see others using them• Average salary of $45,000

Situation Analysis

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Situation AnalysisTarget Segment

• Female usage- Ages 22-24 and 25-29 use energy drinks the most. Ages 30-34 and 35-39 have low usage, but are still users of competitors products. The lowest users are ages 40-44 and will be excluded.

• Male usage- Although men drink energy drinks more than women they still indexed relatively low for 5 Hour Energy compared to other energy drinks. Men ages 22-24 and 25-29 drink energy drinks the most.

• 5-Hour Energy- Ages 25-29 and 30-34 drink 5-Hour Energy the most. The lowest users are 35-39 year olds.

• All energy drinks- Ages 22-29 consume the most and widest range of energy drinks . Sobe, Rockstar, and Red Bull do well with ages 35-39.

• Target- By analyzing our data we choose to leave out 40-44 year olds from our target. Even though 5-Hour Energy did not do well with ages 35-39 we decided to target them anyway to steal share from other energy drinks that favor well with 35-39 year olds.

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Marketing Objectives

a. To capture new customers likely to recognize and actualize the benefits of 5-hour Energy to increase trial and one-time users 12% in one year.

b. To increase average purchases among current, light and moderate users by 1.5 bottles per month.

c. To reinforce brand identity as the sole or authoritative source in the “Energy Shot” category.

d. To increase demand and ultimately requests for retailers to stock 5-hour Energy at mainstream retail locations target audience is likely to visit for other reasons (i.e. grocery, drug stores and big box.

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Creative Objectives Tagline: Hours of energy now, no 2:30

feeling later.

We want the creative to fit in to how our target audience’s lifestyle is. For example: functional, smart, modern, young etc. 5 Hour Energy’s current advertisements are clear and straight to the point, and that’s a good place for them to stay. These advertisements show the target that this product is a convenient smart choice for energy during key times in their life when a shot of energy will make you more efficient to keep doing, working, exercising, or playing.

5-Hour Energy needs to focus on its health attributes. 5-Hour Energy has zero sugar, is non-carbonated and is low in calories. The message should communicate 5-Hour Energy’s health benefits to working professionals. They are always on the go, and need a quick energy fix, yet they are still health conscious. It’s an energy shot, not a drink. It keeps up with their hectic lifestyle and won’t give them a crash later.

The vibrant packaging, although not the most attractive, stands out among its competitors, and is easily recognizable.

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The Media PlanStrategies

The media classes we chose are OOH, Network Radio, Spot Radio, Network TV, Cable TV, and Spot TV. We chose this media mix because it is a broad way to reach our target audience through the media that they are most likely to use. Network TV and OOH are heavily weighted compared to radio and Network cable which is used as a supplement to reach our target audience and reinforce our message.

Geographic Weighting Rationale:

We will be weighting the schedule during fall and winter months. However, from our research we found that 5 Hour Energy is more popular in warmer states. By focusing on colder DMA’s it will allow the brand to grow.

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The Media PlanSpecifics on Media Chosen

OOH Busses, Taxis, Subways, Airports, Wallscapes, Small Billboards, Vinyl Graphics

Network Radio Morning Drive, Evening Drive

Network TV Early Morning, Prime

Network Cable Late Fringe

Spot TV Early Fringe/News, Prime

Spot Radio Morning Drive, Evening Drive

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Tactics

38%

8%11%

11%

8%

24%

Media Mix Cost Breakdown

Net TVNet CableNet RadioSpot TVSpot RadioOutdoor

Low Months – 42% of budgetHigh Months – 58% of budget

Spot – 42% of budgetNational – 58% of budget

More emphasis will be placed on National advertising, because it provides the greatest opportunity to reach new users and establish a brand presence.

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Tactics

20

Tactics

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Appendix

Added Value 5-Hour Energy will be sponsoring many

athletic events. If successful, sponsorship will capture new customers, increase average purchases among current users and reinforce brand identity. Sponsorships will help promote 5-Hour Energy’s image, use of the product, and benefits.

Sponsoring athletic events establishes a relationship between the brand and an active lifestyle. Unlike traditional advertising, sponsoring does not deliver a direct message to consumers; instead sponsorship conveys an indirect message to consumers. Consumers will find the advertisement less intimidating, therefore feeling less pressure to try it.

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Appendix

Sourceshttp://www.5hourenergydirect.blogspot.com/ http://www.vendingtimes.com/ME2/dirmod.asp?nm=Vending+Features&type=Publishing&mod=Publications%3A

%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=F9AE131E4ED44232B844CFADA5F40430

Zmuda, Natalie. "5-HOUR ENERGY." Advertising Age 80.39 (2009): 22. Business Source Premier. EBSCO. Web. 24

Apr. 2011.