If you are a new brand trying to position yourself in the market or you are an established brand trying to change your positioning strategy this post is for you.
Let’s start by defining positioning, then how to select a position in the marketplace and give it context using a new energy drink brand as an example.
The positioning of the brand is how consumers’ give meaning to your brand based on impressions, feelings, and perceptions. The brand and products (or services) of your organization occupy a particular space in the consumers’ mind in relation to your competitors.
Selecting a positioning strategy is critical to long-term success. Identification of the target consumer and segmenting the market are critical strategy elements prior to choosing a positioning strategy.
In the case of the energy drink category, the target audience is the millennial consumer.
Here is a quote I like from the marketing legends Al Ries and Jack Trout who coined the word “positioning” in the best-selling book Positioning: The Battle for Your Mind:
“Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect.” -Al Ries and Jack TroutClick To Tweet
Determining your organization’s competitive advantages is essential in the process of positioning strategy. The competitive advantages provide a position to establish significant value for consumers.
An organization should be cautious in identifying a competitive advantage. The following questions (guidelines) can be used to identify true competitive advantage:
There are several choices to determine a competitive position based on differentiation such as service, product, channel, image, personnel, and channels.
An understanding of the competitor’s product positioning is essential in designing the positioning for any new brand. The basis of competition in the energy drink segment is differentiation, requiring a differentiation generic strategy.
The suggested promotional strategy of a new energy drink brand requires various brand and product differentiation strategies and tactics to succeed in the marketplace. The promotional strategies of the brand and its products need a two-pronged millennial and millennial subculture strategy to reach the target audience effectively.
Energy Drinks were first introduced in the United States in 1997 when Red Bull entered the market. The energy drink market is a segment in the larger functional beverage category including sports and nutraceutical drinks.
Red Bull, Monster, and Rockstar are the top brands with 90% of the market with other brands such as Amp, NOS, and Full throttle representing 10% of the market share. The competitor’s positioning was based on the top three brands in the marketplace; this provides enough information and comparison points for the research proposal.
Red Bull is the largest selling brand in the energy drink market across the United States with 39% of the market. Red Bull sells approximately 4.6 billion cans per year, and the product is available around the globe in 164 countries. Red Bull’s “it gives you wings” slogan serves as the brand message to target millennials and the brand is associated with extreme sports and other activities and events like music festivals. Red Bull endorses recognized sports figures and artists.
Red Bull uses a progressive marketing strategy as part of the marketing promotion strategy including sponsorship of inspirational and extreme sports and music events with high media coverage. The founder of Red Bull, Dietrich Mateschitz, explains his philosophy as “We don’t bring the product to the consumer, we bring consumers to the product”.
Red Bull’s content marketing strategy is the core of their strategy. Red Bull operates as a marketing company that uses an association of the brand with extreme sports events, music, and valuable content delivered using digital and social media to differentiate the brand. The strategy uses videos and articles related to extreme sports and music with minimal correlation to the Red Bull energy drink.
Areas of interest for Red Bull’s target audience have been excellent sources to create content, and they attract consumers to spend time accessing digital and social media content.
Monster Energy is the second leading competitor in the US market with 28.9% market share. Monster differentiates itself as a brand offering 34 different drink varieties of energy drink with the regular flavor distinctively packaged in black cans with the green logo in the shape of the claws of a monster.
Monster also supports extreme sporting events like Red Bull and Rockstar, but they are mostly recognized for supporting BMX, Supercross, and Motocross events.
Initially, Monster was distributed by Anheuser-Busch, but in 2012 Coca-Cola became the distributor for the brand.
Rockstar is another leading energy drink brand with 9.8% of the United States market share. Rockstar has a large variety of flavors and options with approximately twenty product varieties. Rockstar also sponsors sports and music events like Monster and Red Bull.
Rockstar cans are known for their bright, distinct colors with each flavor (product line extension) having a unique color. From a consumer perception viewpoint, Rockstar differentiates the brand with the Rockstar lifestyle brand and slogan “party like a rock star”. The distribution channel for Rockstar has been managed by Coca-Cola since 2009.
The energy drink market is monopolistically competitive based on a large number of competitors, easy entry and exit from the market, and product differentiation.
Consumers have formed negative perceptions of energy drinks based on lawsuits, proposed legislation, and media attention the category must address. Despite the negative perceptions, the energy drink category continues to experience growth.
Product positioning for a new brand must utilize research methodology based on primary and secondary research. Primary research includes an online survey of energy drink consumers within the target audience. Secondary research includes research from industry publications, articles, analyst reports, and trade associations.
Energy drinks offer consumers a boost of energy, through large amounts of caffeine and sugar, to start off his or her day or for an afternoon energy boost to accomplish more tasks or feel less sleepy.
Young adults consume the most energy drinks and are often unaware of how much caffeine and sugar he or she is consuming. Energy drink manufacturers are not required to label their product with the amount of caffeine contained in the drink, and most do not put this information on their product. The lack of regulations with respect to labeling poses a health risk since some of the larger energy drinks can contain as much caffeine as 14 cans of cola.
It is highly recommended a new energy drink take a healthier approach to the energy drink market with a labeled amount of caffeine and sugar content on the packaging. A new energy drink brand should focus on the millennial market and offer a variety of products to meet the needs of this target market and the major subculture segments.
Offering different product varieties based upon; taste and flavor is critical to an energy drink brand. An energy drink brand dedicated to the safe consumption with labels clearly indicating the caffeine and sugar content provides the best method to appeal to consumers.
A health conscious product with no calories, carbs, or sugar should be offered to appeal to the millennial market as a whole. Research has shown that including combinations of fruit juice flavors and reduced sugar content will make the product more appealing to the different subcultures of the millennial market. Offering product line extensions (5-% juice, dual fruit-flavor, and organic options) will appeal to the African-American and Hispanic subcultures, because of their taste and flavor preferences.
Labeled product information is also very important to these subcultures, and any new energy drink brand must appeal to the authentic and transparent requirements of the millennial group. In order to appeal to the millennial target audience, an energy drink brand must differentiate itself by providing labels clearly identifying the caffeine and sugar content.
A new energy drink in the market should focus on three key considerations:
The company sees three areas where there are currently no energy drinks sponsors; kitesurfing, mountain climbing, and soccer. Kitesurfing, mountain climbing, and soccer present a unique opportunity for a new energy drink brand to appeal to the millennial audience and associate the lifestyle brand with “high energy” activities.
In addition, to the new areas of sponsorship, a presence at sporting events and music festivals or concerts is strongly encouraged to compliment the cognitive associations of the brand and provide value.
Digital and social media are the preferred way to reach the target market, and a significant amount of marketing should be dedicated in this area.
The new brand should use television commercials to change the perception about energy drinks, with messaging that energy drinks are a safer alternative to other energy drinks. In addition, promoting a cool and more relatable image than Red Bull using a more focused strategy than Monster and Rockstar is recommended.
The new energy brand should use a lifestyle and self-expression brand image that appeals to the younger segment of the millennial generation.
The cognitive processing model of decision making provides insight into the effect of promotions on consumers. A consumer in the cognitive processing model has to be exposed to the promotion, give the promotion attention, and understand the intended meaning. The beliefs, knowledge, and meanings are integrated with other knowledge that form brand attitudes that influence purchase intentions.
A less complicated consumer decision-making process includes five steps when purchasing goods or services that include:
A new energy drink brand should use a generic strategy of focused differentiation based on the somewhat high number of competitors in the energy drink segment, and competition is formed on the basis of product differentiation.
A two-pronged millennial and subculture marketing strategy is recommended for any new energy drink brand to achieve its objectives. A homogeneous millennial culture marketing strategy and marketing strategies based on subculture to reach the target audience effectively is the most effective method to enter the market and achieve long-term goals.
The combination of the two-pronged marketing strategies should be used in the following areas including:
The focus of the millennial strategy includes concepts unique to all millennials with characteristics that include more technologically advanced, use of a variety of media, and view brands as a partnership and form of self-expression.
Other millennial characteristics include action on behalf of brands millennials are loyal to and significant brand loyalty with brands and products of preference.
The millennial generation is more educated and most racially and ethnically diverse. The millennial generation likes music and events and requires authenticity, two-way communication, social responsibility, and connection with a personal touch.
The cultural differences play a significant part in the product options offered (product line extensions). In addition, the subculture promotions strategies further elaborate on the generic millennial promotions strategies and tailor the promotion to each subculture.
Each subculture will be targeted using placement of commercials on television programs and radio stations, events (music), product placement (convenience and grocery), and digital media that resonates with the target audience and each subculture.
The marketing mix uses a combination of affect and cognition, behavior, and the environment to influence the consumer purchase decision-making process.
The events, sponsorship, television and radio, and digital and social media components are used to create a cognitive segment differentiating a new energy drink brand from the other energy drink brands.
The logo acts as a paired stimulus across all communication channels triggering an association in the purchasing environment with the additional influence of price, package design, and promotion display playing a part in the process.
Trade promotions allow the product to enter the environment with widespread availability on off-premise and on-premise retailers. Each promotional element provides a purpose that assists in reaching objectives that include sales, market share, and profitability targets.
Television commercials and radio spots are used to focus on change in negative consumer perception followed by scheduled product focused commercials and radio spots. Television commercial placement will be on cable channels that include ESPN, History, Discovery, and TBS. Commercials placed on broadcast channels including Fox, ABC, and CBS are also highly recommended.
The cable and broadcast channels are the channels most viewed by millennials. Television and radio are used to create awareness of the brand and change negative perceptions of energy drinks. Television and radio will assist to create and influence affect and cognition placing stimuli in the television and radio environment that best reaches the target audience.
The promotional events for the company consist of music festivals, regionally selected festivals, and events used to create and maintain brand awareness. Promotional events provide a positive cognitive association pairing fun, memorable events with the brand to influence affect and cognition in a pleasurable environment. At promotional events, free product samples will be provided to attendees to influence brand awareness, stimulate trial, and achieve brand loyalty.
Social media and digital media support the promotional events allowing a brand to continue to engage with the customer after an event and to provide a medium to continue to influence the target consumer’s cognition.
A content marketing strategy using extensive use of video and pictures on the website and social media should be used to market to the target audience’s cognition and leverage engagement.
The social and digital media strategy is based on several brand factors critical in marketing to millennials. Critical factors involved in marketing to millennials include:
The social and digital media strategy continues to focus on affect and cognition providing valuable content the target millennial audience desires resulting in connection and engagement with the consumer driving brand loyalty.
Sponsorships include music festivals, music events, regionally selected festivals and events, and sports sponsorship.
The Sponsorship strategy provides a meaningful way to engage with millennials with events that are important to them while cognitively differentiating the brand from competitors. A new brand can create value in areas where Red Bull does not have a significant presence by segmenting music and sports.
Extreme and Traditional Sports Sponsorship
Red Bull also has a limited presence in tennis and basketball providing an opportunity to any new brand. A new energy drink brand can use a more limited and focused traditional and extreme sports mixture. A mixture of traditional and extreme sports gives the feel of aspirational sports while relating to the sports that people play more often within the target audience.
A new brand can focus on kitesurfing where Red Bull does not have a presence and soccer more extensively and later expand into other extreme sports such as snowboarding. The new brand will sponsor the Pro Kiteboard Riders Association (PKRA) world events and other kitesurfing competitions in the United States targeting these sports that are popular with the millennial audience.
Recommended sponsorships include adult amateur soccer leagues and tournaments, professional soccer teams in the United States, the United States national soccer team, and ESPN’s coverage of the World Cup. Soccer is the second most popular sport amongst all ethnicities in the United States. Millennials are more inclined to purchase (95%) a brand after participating in an event and have significant (70%) positive associations with the brand.
Music is extremely important to the millennial generation with facts that include millennials stream and download more music than any other generation, one-fourth of millennials will try a product or brand that sponsors a music event. The results of music and brand have shown to increase market share 2.4 points and increase purchase rate by 25%.
Sponsorship also provides an influence on affect and cognition providing a paired stimulus with a fun and positive environment that is linked to the energy drink brand. The samples provided stimulate trial to drive consumer behavior to purchase the brand.
The trade promotion tools encouraged include a per case promotional allowance and a per case display allowance to obtain the desired off-premise retailers to achieve the highest availability. Trade promotions are used to affect consumer behavior and without product availability; the brand will not have the required exposure and result in lost sales opportunities.
Consumer promotions and coupons will also be used to influence purchase behavior in the on-premise retail environment. A new drink brand should seek any opportunity to distribute samples at locations based on key strategic locations for the millennial target audience. Samples are used as a stimulus to create consumer trial in general and in the on-premise retail environment.
The logo should use colors to stimulate emotions of excitement and youth that fits with the energy drink category. The logo should also use the color green in the packaging that reflects qualities of natural, youth, and adventurous that speaks to the millennial target audience.
The packaging, labels, promotional items, and all visual communication tools should feature the brand and product logo used as a stimulus. The packaging should be designed to influence the target audience in the different retail environments.
The packaging is used to acquire customers and achieve brand loyalty at off-premise retailers (grocery, convenience store, pharmacy, and club) and on-premise retailers (restaurant, club, pub, and bar).
Packaging and the logo are used to influence the customer and provide a stimulus. The packaging and the logo activate the knowledge, beliefs, and meanings from the brand’s television commercials, radio spots, events, and content marketing paired with the energy drink brand. The paired stimulus using the logo and packaging influences the consumer’s purchase behavior in a retail environment with the brand logo stimulating affect and cognitive elements in the evaluation of alternative stage of the decision-making process.
The package sizes at the on-premise retailers concentrated in the grocery and convenience channel should include product offerings that compete directly with the competition (Monster and Red Bull). It is also suggested to offer all products (varieties) in single-serve 8.4-ounce and 16-ounce cans. The regular flavor and sugar-free products will be offered in 12-ounce single-serve cans.
Four-packs (cans) should be offered in the 8.4-ounce size for all product lines including:
Other four-pack offerings include 12 and 16 ounces (cans) limited to the regular and sugar-free products. Eight packs of 8.4-ounce cans will be offered in the regular and sugar-free products. Offering regular flavor and sugar-free in 16-ounce ten packs and 8.4-ounce 12 packs is also recommended.
A new energy drink brand should price its products just below Red Bull and on par with Monster and in some cases Rockstar to gain entry into the energy drink market and influence overt behavior. A premium pricing strategy will assist to give the consumer the desired lifestyle brand that Red Bull has acquired, but pricing just below will entice consumers to the product.
Energy drinks are a functional beverage used for an energy boost. Push it to the Limit customers’ will derive added value from sponsored and promotional events and content marketing with content that is psychologically and socially important to the targeted audience.
The competitive advantage for a new energy drink brand exists in the taste of the product and cognitive differentiation as a brand. The new brand will be transparent and authentic, differentiated based on the premise of a healthy energy drink that acts responsibly as a lifestyle brand that is both relatable and aspirational.
Millennials want brands that represent them, and the combination of the marketing mix elements provides an energy drink and a lifestyle brand that resonates with the target consumer (Nielsen, 2014).
The energy drink market is monopolistically competitive based on a large number of competitors, easy entry and exit from the market, and product differentiation.
Pricing is a critical role in identifying with consumers at a cognitive level as a lifestyle brand positioned below Red Bull slightly. A new energy drink brand should price its products slightly above or on par with Monster and Rockstar based on price in order to gain entry into the energy drink market. The price identifies the brand as a premium product on par with Red Bull.
A premium pricing strategy is recommended with pricing each product just below Red Bull and competitively priced compared to Rockstar and Monster products. The pricing strategy employed will assist a new energy drink brand to gain entry into the energy drink market and influence overt behavior in the grocery store and convenience retail environments. A premium pricing strategy will assist to give the consumer the desired lifestyle brand that Red Bull has acquired, but pricing just below will entice consumers to the product in a market experiencing continuous growth.
Pricing is not the basis for competition in the energy drink market and, therefore, a new energy drink brand should not compete on price. Cognitive differentiation will be the basis for differentiation using the combination of promotional strategies and product variety. The premium pricing strategy is one of the components that is used to create a lifestyle brand in the mind of the consumer.
The research and information provided give insight on how to position a new energy drink brand as a safe, healthy, effective energy drink occupying a unique position in the energy drink consumers mind.
The two-pronged millennial and subculture marketing strategies provide significant differentiation for the new brand. The two-pronged strategies form the basis of the marketing promotions that include a premium pricing strategy.
The promotions are specifically used to influence the energy drink consumer’s affect and cognition, behavior, and the environment.
The alignment and combination of suggested strategies provide the ability to attain the target objectives. The target objectives include entry into the energy drink category along with sales, return on investment, and market share objectives defined in the pricing strategy.