My product is a health orientated, functional energy drink, made using a combination of selected herbal extracts and mineral water.

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David Clayton

Introduction: product description

        My product is a health orientated, functional energy drink, made using a combination of selected herbal extracts and mineral water. It may be described as a health-orientated product as it is fortified with vitamins, which include vitamins B1, B2, and B6, and minerals that include taurine, niacin and inositol. Herbal extracts would include those of Korean Ginseng and Guarana. A full description of these ingredients and how they would benefit the consumer can be found as part of my secondary research. Our product will contain only natural sugars and will be free from colourings and preservatives.

        I will aim to compete with the growing trend towards carbonated functional energy drinks that can often contain high acidity levels, high sugar levels and a large amount of preservatives and colourings. I will aim to provide potential consumers with an alternative to ‘unhealthy’ functional energy drinks.

        My product will aim to combine high energy, with good health.

        This functional energy drink also has potential to be promoted as a stress-relieving product. It is made with from traditional herbal ingredients that can bring a welcome relief from the worry and irritability often caused by the stresses and strains of modern day living.

        It will be the first product of its kind to be launched in the UK.

Planning to achieve my marketing aims

        There are a number of phases that I must undertake in order to achieve my marketing aims.

  1. Identify the business I am in, the benefit I am providing.

My product is relatively unique in comparison with other products in the marketplace. Therefore, it would be true to say that my product will operate in a market of its own. It is essentially a health-orientated, functional energy drink and therefore, when conducting my research, I should include careful analysis of the functional energy drinks sector and analysis of the purchase of health-orientated products as a whole.

        My product will aim to provide an energy boost without compromising the health of the consumer.

  1. Identify the type of customer who would want the benefit we are providing

I believe that this product will appeal to those that are becoming increasingly concerned about their health. It may be particularly appealing to professional and lower professional people, who live busy, active lifestyles. These people are likely to undergo high levels of stress whilst at work, and will possibly suffer from high levels of exhaustion and tiredness.

  1. Appropriately identify, collect and use primary and secondary data relevant to my product

This will help me to acquire vital information about the competitive business environment in which my product will operate. It will help me to understand market share, market size and the extent of competition. It will also help me to develop a marketing strategy providing I attain material that covers distribution, product development, promotion and price.

  1. Segment and target my market

Segmentation will allow me to build up a profile of the type of customer who would want the benefit my product provides. It will allow me to develop a concentrated marketing strategy that would appeal to those potential consumers who would help form my target market.

        There are a number of factors, on which I may segment my market. These would include social stratification, age group, regional group, sex, income group, ethnic group and lifestyle.

        The segmentation of my target market will be done in context of the analysis of my secondary research. However I have already recognised that our product would appeal to those that are increasingly concerned about their health, and live busy, active lifestyles.

  1. Set out my objectives

It is important I describe the marketing mix and describe how it would be applied to my product. This would again be done in context of my market research.

  1. Consider the external influences affecting the development of the marketing strategy.

This will be carried out using a PEST analysis.

A PEST analysis will identify the Political influences, the Economic influences, the Social influences and the Technological influences affecting the development of my marketing strategy.

It is important that I identify and explain the links between the analysis of the external influences and the development of my marketing strategy.

E2/C3, Market Research: the collection of primary and secondary data relevant to the development of my marketing strategy

Market Research

        Market research involves the systematic collection and objective recording, classification, analysis and presentation of data concerning the behaviour, needs, attitudes, opinions, motivations, of individuals and organisations within the context of their economic, social, political and everyday activities.

        It is vital I make sure the data I collect is relevant to my product. It may be indicative when developing my marketing strategy.

        Market research will normally involve the collection of both secondary and primary data.

Secondary data

        The gathering and analysis of already available information is known as secondary or ‘desk’ research. This is a natural starting point as it is quicker and cheaper than any other method. However, information will normally partly be out of date, and it may not be precisely what is required. It is important to check secondary data for validity.

        As already stated, my product is unique, and therefore it will operate in a market of its own. However, as it is primarily a health-orientated functional energy drink, I have decided to collect data from the functional energy drinks sector and the market for health-orientated products. I have only included data that may have proved indicative in the development of my marketing strategy.

        There were a number of external publications that would have allowed me to gather information relevant to my product. These included government publications, market research publications, newspapers, and the Internet.

        I focused on using data that was compiled using extracts from market research publication, Retail Intelligence. Retail Intelligence is an organisation that specialises in producing reports on specific markets that exist within the UK, and has produced reports on both the energy drinks and health food markets in recent years.

        Retail Intelligence was the most accessible form of secondary data; it was available at the library and did not therefore, cost any money to retrieve. It has provided impartial, un-bias information relevant to my product.

        It has been presented in two sections; the functional energy drinks sector, and the health-orientated market. Again, the information presented is that which I believe could have proved indicative in my marketing strategy.

Functional energy drinks

        This research was compiled using extracts from Retail Intelligence, Nov 2000.


        Functional energy drinks are designed to stimulate the drinker, vitalising both body and mind.

        The functional energy drinks sector of the energy drinks market has pronounced a youth focus in recent years.

        Social trends assist the growth of particular energy drinks. An interest in healthier lifestyles has led to an increased demand for energy drinks aimed at mature, health conscious individuals, who require an alternative to glucose-based drinks that often contain many additives and preservatives.

Consumption Patterns

         Functional energy drinks have a young consumer base.  In marketing-speak, typical drinkers are the new generation Y – young and yearning – wanting to live life to the full.

        TGI sample data for 1999-2000 suggested that young males dominated consumption of functional energy drinks; 71% of consumers were male, 43% were aged 15-24, and 28% were aged 25-34.

 This would indicate that the market for young males is likely to be highly saturated. There would be dominant brands that would prove hard to compete with.

Manufacturers and Brands

        Red Bull is the most significant brand in the functional energy drinks sector. Other significant brands would include CCE’s Oasis Revitaliser, Indigo (JN Nichols), and Red Devil (from the USA).

Red Bull

        Red Bull was founded in 1984. It is now marketed in over 40 countries worldwide and has had more than 150% increase in sales between 1994 and 1999.

        It clearly dominates the functional energy drinks sector, a sector it largely created, and accounted for some 42% of market value at the end of 1999.         



        Sales through on-trade outlets accounted for two-thirds of market value in 1999. Sales of functional energy drinks through on-trade outlets increased by 170% between 1998 and 1999, due almost entirely to the outstanding performance of Red Bull. Off sales rose more modestly, however their value rose by 27% between 1998 and 1999.

Sales of energy drinks by outlet channel, 1999



Off-trade                67

On-trade                33

Total                        100


        The popularity of functional energy drinks as mixers has undoubtedly underpinned this sector dominance, with discounts offered when they are purchased in combination with spirits.

        Of the energy drinks market, functional energy drinks accounted for 35% of sales through off-trade outlets, with refreshment energy drinks accounting for 65% of sales. Growth rates continued to be highest among the functional energy drinks sector.

        This illustrates the dominance of refreshment energy drinks, but also illustrates the potential for sales of functional energy dinks through off-trade outlets.


        In the off-trade, some 45% of volume of sales were through multiple grocery and co-op outlets, with other grocery outlets taking 12%. Impulse sales through CTN’s accounted for 18%, with forecourts taking 16% and Off-licences 6%. Other outlets included vending machines.

Off-trade sales of Energy Drinks by Type of Outlet, 1999

(% of value)                                                

Multiple grocery and co-ops                45

Other grocery                                12

CTN’s                                        18

Forecourts                                16

Off-licences                                6

Other                                        3


        The off-trade has been criticised for being slow to maximise potential returns from energy drinks by not stocking enough brands and not giving drinks enough prominence on-shelf. Whilst such criticism is to be expected from suppliers anxious to increase sales, store checks for Retail Intelligence revealed relatively few brands and little aggressive promotion in-store.

Advertising and Promotion

        Advertising and promotion has been instrumental in the growth of the energy drinks market. Advertising expenditure on energy drinks stood at £18.8mn in 1999, a rise of 36% on 1998 and more than double 1995 levels. Expenditure has accelerated as brand launches have proliferated.

New product development

        Well over 150 energy drinks have appeared on the UK market since 1995, and a significant proportion have been functional energy lines attempting to cash in on the perceived potential of the sector.

        The functional energy drinks sector has remained dominated by a single brand, and listings in the off-trade are notoriously hard to obtain.


        Functional energy drinks have continued to constitute a highly branded market. Drinks remain markedly trendy and command premium prices.

        Store checks revealed almost unanimity of pricing across functional energy brands; with 89p for a 250ml can a widespread point.

        Retailers are constantly encouraged by manufacturers to afford energy drinks more listings, more shelf space and generally a higher profile in order to exploit their profit potential.


        Glass is the most widespread pack across energy drinks, as a whole, encompassing 47% of liquid volume. Plastic bottles accounted for a further 33% of liquid volumes, with cans taking 17% and other types of packaging, including guala re-sealable pouches taking just 3%.

        Packaging would be an integral part of promotion.

        In the off-trade, 30cl packs accounted for 44% of liquid volume sales, with 1-ltrie packs taking 19%, packs of 31-40cl taking 12% and both 25cl and 50cl packs taking 11%.

Off-sales of Energy drinks by pack size, 1999

(%) of liquid volume                                        

25cl                11

30cl                44

31-40cl        12

50cl                11

1-litre                19


        Pack size will also be an important part of promotion. Again we must pack our product according to our customers’ requirements.

Summary: Health-orientated Market

        This research was conducted using extracts from Retail Intelligence, Sep 2001.

        The sale of health-orientated products increased by nearly 150% between 1998 and 2001.

        The consumption of health orientated products is dominated by professional and lower professional women, over the age of 40.

These women have perpetuated themselves as innovators in the purchase of health–orientated products.

        Over 50% of health-orientated products are sold through health food shops and chemists.

        Marketing and promotion has been instrumental in the growth of the health- orientated market.


        Amino acids which are contained in my product, help to reduce high blood pressure, assist energy metabolism in the muscles, aid in the digestion of fat, and help to regulate electrical activity in the nerves and muscles.

        Extracts of guarana, are taken form the Amazonian climbing plant. It is the strongest natural source of caffeine, with three times the amount of that found in coffee beans. In addition, fatty oils slow down the body’s absorption of the caffeine, resulting in a less immediately stimulating, but longer lasting affect.

        Ginseng is a widely used herb with a number of health promoting attributes, including the combating of tired ness, and the maintenance of concentration and lethargy. It also helps to regulate stress hormones through its action on the adrenal gland.

        My product is also fortified with vitamins B1, B2 and B6 and minerals which include taurine, niacin and inositol. Our product is made using natural mineral water.

        These ingredients will help to attract a consumer that is concerned about their health and their levels of stress, concentration and lethargy.

C3, Checking validity: Secondary Research


        Although I am sure that this research will prove to be very useful. It would not be sufficient for developing a realistic marketing strategy with an associated budget. It is vital not rely on past trends to the extent that they are the only basis for developing a coherent marketing strategy.

        Also, my product is unique, compared to those that are similar in the marketplace. It will therefore operate in a market of its own.

        However, it would be true to say that this research provided evidence which further substantiated the ‘gap’ in the market for a product such as mine and indicated various competitors. The market is dominated by mass market functional energy drinks brands, which may pose a potential threat to the success of my product. It was also vital in helping me to decide what segment to aim my product at and gain a better understanding of my products positioning in relation to other health-orientated and functional energy brands.

        I should also recognise that the data used in the investigation of both markets was partly out of date and could therefore affect the validity of the data retrieved.


Segmentation and target marketing

Market research has found that in recent years, single males, under the age of 25, have dominated the consumption of functional energy drinks. This would illustrate the most competitive, yet lucrative segment of the market sector.

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In order to target it effectively, I would need to develop a unique selling point that would appeal to people who make up that segment. I would also need to invest much energy into promotion, and capital expenditure would be subject to a high level of risk.

        Market research also found that in recent years, the consumption of health-orientated products is highest amongst professional and lower professional women over the age of 40, - these women have also perpetuated themselves as innovators in the purchase of health orientated products.

        When segmenting the market, I aimed to choose a segment, in ...

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