Monster Energy Company Analysis

In the 1930s, Hubert Hansen and his sons started a business to sell fresh non-pasteurized juices in Los Angeles, California. In the 1970s, Tim Hansen (the grandson of Hubert) developed and marketed a variety of sodas and juices, under the Hansen's label. The company became Hansen's Juices, and later The Fresh Juice Company of California. The company filed for bankruptcy in 1988, and was acquired by the California CoPackers Corporation and renamed Hansen Natural Company. In 2012, shareholders agreed to change the name of the company from Hansen's Natural Corporation to Monster Beverage Corporation, under the new ticker MNST (“Monster Beverage Corporation 2013 Annual Report”, 2013).




Mission Statement

Although there is no mission statement listed on Monster Beverage Corporation website (www.monsterbevcorp.com) or in annual reports, we can assume that the company still has the same mission that they were listing on Hansen’s Natural Corporation website.

The mission statement that can be reached via web archive services states: “The mission of Hansen Beverage Company is to satisfy consumer’s needs for superior quality and great tasting, healthy, natural and functional beverages. Our beverages will be positioned as an upscale brand and will often be marketed at a premium to competitive mainstream products.”


Company Sales Performance

Company’s annual report for the year 2014 is not published yet, but from the press relases section we can gather the information about the financial analysis of the company.

Current stock price (as of 5/5/2015): $140.63

Sales Revenue for 2014: $2,464,867

Forecasted Revenue for 2015: ~$2.7B (forecasted with the 5-year trend)


Target Market

Primary: Males between teen to middle age, who follow the lifestyle associated with extreme, action, and motor sports and prefer this “New Age beverage” because it exudes a hip and edgy vibe that reflects their lifestyle.

Secondary: Athletes, college students, working professionals, females who have active lifestyle


Value Proposition

The company provides tasty energizer refresher drinks. The proposition of Monster lies behind it’s motto: “Monster is way more than an energy drink, a lifestyle in a can”. Monster sees every customer as a member of special fan club and offers them a lifestyle in action sports, punk rock music, partying, hangin’ with the girls, and living life on the edge ("Monster Energy - About Us", n.d).


Positioning

Monster’s primary competitor is Red Bull which holds nearly half of the market share, while Monster holds just over a third of the market share. Monster’s secondary competitor is Rockstar International, followed by Amp. Rockstar has less than 10% of the market share and Amp has 3% ("The Energy Drinks Industry", 2015).


Marketing Objectives

Capturing the market by gearing the products and advertising to appeal the target market, males’, natural desires and ambitions. Also Monster aims to expand its target audience by appealing to women 18-34 with busy lifestyles, while maintaining its current target audience of males. Monster’s low-calorie and sugar-free drink options should be highlighted to attract more females, many of which are a part of the health-conscious trend.


Marketing Mix

Products

Energy drinks and soda’s under 4 brand names (Monster Energy, Hansen’s Natural, Peace Tea, Blue Sky). Top selling products of the company are as follows:

· Monster Energy: “Unleash the Beast”
· Ultra Blue: Based on Epic Snow Mountains/Towns (Zero Calories; Zero Sugar - Less sweet than regular Monster)
· Ultra Red: Homage to the Coming of Age in America (Zero Calories; Zero Sugar - “Change is good”)
· Lo-Carb: Low calories
· Zero Ultra: No calories for the Monster Girls
· Cuba Lima: Based on the Cuba Lima Cocktail
· Absolutely Zero: Helps fight fatigue, improve mental performance and focus and motivates you to work (No calories)
· Ubermonster: “Declare war on the ordinary”


Promotion

Marketing tools are used to enhance and exaggerate these natural male reactions. Extremely attractive models are used on posters, promotions or events. Also the allure of the action sports realm also remains key in Monsters promotions. Monster is known for its high dollar sponsorship of large key events in many different aspects of sports. Monster has been key label sponsors in the Dew Action Sports Tour, the X-Games, the Monster Energy Pipeline Pro, and more. Monster uses a way to exploit the feelings of jealousy and envy in its market by allowing aspiring athletes an easily obtained sense of success. On the same claim that through Monster one can gain the skill and performance of professionals Monster finds a way to make young men fell as if they are able to be as famous and successful as their top sponsored athletes. Through the amateur sponsorship system Monster has established over the internet on monsterarmy.com it has become possible for just about anyone to feel as if they are achieving fame through their label. All one has to do to receive a sponsorship from Monster is to submit a simple resume of contest results and pictures of themselves in the sport they specialize in and hope for favor in the eyes of the overseers of this process ("Monster Energy Drink’s Marketing Strategy", n.d).

To conclude, Monster promotions can be categorized as follows:

· High contrast, recognizable posters in retail stores
· Sponsoring extreme sports athletes (eg. Ricky Carmichael), music bands
· Sponsoring amateur athletes
· Sponsoring public events or celebrity endorsements
· Product hand-outs by young attractive vendors


Price

Monster Energy drinks are one of the cheapest one among competitors. Common can size and pricing are as follows:

Monster (16 oz): $2.99 -> $0.19/oz
Redbull (8.3 oz): $2.99 -> $0.36/oz
Rockstar (8 oz): $2.99 -> $0.37/oz
Amp (8 oz): $1.49 -> $0.19/oz


Placement (Distribution)

In August 2014, Coca-Cola purchased a 16.7% stake in Monster Beverage. It agreed to amend their current distribution agreement in the US and Canada to include additional territories and long-term agreements. Through the deal, Monster Beverage will be able to leverage Coca-Cola’s strong distribution network. Main placement locations for Monster Energy drinks are retail grocery and specialty chains, wholesale stores, convenience chains, vending machines, food service customers, and the military ("Monster Beverage and Coca-Cola", n.d).


SWOT Analysis

Strengths

· Strong brand identity: Well-known in North America brand has a cool reputation within its target demographic (youth and young adults) as it is associated with extreme sports; sponsors over 100 famous athletes and musicians.
· Second place in the market share.
· Partnered with Coca-Cola distributors.
· Competitive price.

Weaknesses

· Little international presence: Monster is sold in 70 countries where Redbull is sold in over 165 countries.
· High percentage of sugar and caffeine in drinks: Poses potential health risk and deters healt-conscious consumers.
· No mass media advertising.
· Target audience is limited by extreme sports and aggressive music fans.

Opportunities

· International development: Monster is in process of expanding internationally.
· Wider range of products: Monster offer a variety of products (energy drinks, zero calorie drinks, sodas, etc.) and it differentiates it from the competitors.
· Growing demand for energy drinks.

Threats

· Strong competitors: There are lots of competitors in the market. Currently Redbull is the strongest competitor and new entries to market happens constantly.
· Price: Lastly, Carrefour decided to enter into energy drink market with it’s own brand and offers energy drink with a lower price.
· Increasing public awareness about harm of energy drinks.
· Enhancing government’s regulation of energy drink market.


Recommendations

Monster currently holds the second place in the energy drinks market and Redbull can be catched and passed by improvement actions on weaknesses and usage of the opportunities. Three recommendations are provided below to drive topline sales revenue.

1. Target market should be expanded: Current target market of Monster Energy Drinks is teen to middle aged males who are interested in extreme sports or aggressive music. If Monster expand the target market from a specific group to a general audience (both male and female professionals, students, casual sporters and soda consumers), the company can use it’s wider range of products opportunity. Beside this, Monster is trying to enter emerging markets and since extreme sports, aggressive music bands are not common in these markets, an expansion on target market seems a must for Monster Energy Drinks.

2. Mass media advertising should be used: Monster mostly uses it’s advertising budget on sponsoring athletes, sport events and aggressive music bands. This approach limits the awareness of the product just around the fans of these sports and music bands. Currently, Monster has an online community of fans called “Monster Army”, but it is like a close community because no one else knows what does those cool tshirts and stickers mean for. Competitors use mass media advertising very effectively and they are trying to reach everyone for creating a brand awareness. For instance Redbull organizes and sponsors different kind of entartaining competitions all around the world (Redbull Flugtag, Redbull Paperwings, Redbull Sailing, etc) and give advertisements of these competitions in national media sources. In this matter, Monster should follow a similar strategy as Redbull to create a better brand awareness and protect loyalty.

3. More vending machines should be placed: Vending machines around colleges, universities, malls, work offices, bus stops and military provides opportunity to build brand awareness, giving try-outs and increasing sales. Currently Monster has a strong advantage of partnering with Coca-Cola, so company can use Coca-Cola’s distribution network which is the best network in the world. If Monster Energy Drinks can use the advantage of Coca-Cola’s distribution network and place more vending machines; not only it will increase brand awareness and expand target market, it will also pump sales.

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References

Monster Beverage and Coca-Cola. (n.d.). Retrieved May 4, 2015, from http://marketrealist.com/2015/03/monster-beverages-international-sales-grow-in-2014/

Monster Beverage Corporation 2013 Annual Report. (2013) Retrieved May 4, 2015, from http://investors.monsterbevcorp.com/common/download/download.cfm?companyid=HANS&fileid=746046&filekey=8bb1c204-a666-4a75-a933-178abd4742d9&filename=Monster_Beverage_2013_Annual_Report.pdf

Monster Energy - About Us. (n.d.). Retrieved May 4, 2015, from https://www.monsterenergy.com/#!/pages:about

Monster Energy Drink’s Marketing Strategy. (n.d.). Retrieved May 4, 2015, from https://monsterenergydrink.wordpress.com/

The Energy Drinks Industry. (2015, February 23). Retrieved May 4, 2015, from http://www.investopedia.com/articles/investing/022315/energy-drinks-industry.asp

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Author

Burak T. Dogan

San Diego