Monster energy – MONSTER BEVERAGE COMPANY ANALYSIS Group 12. Marieke Middendorf 3467317 Sjoerd – StudeerSnel

MONSTER BEVERAGE

COMPANY ANALYSIS

Group 12.

Marieke Middendorf 3467317
Sjoerd Dirkson 3508722
Jeffrey Oude Engberink 3352927

Ruhi Chatterjee 3206106

Table of contents

  1. Introduction
  2. Internal analysis
    a. Energy drink market
    b. Company position
    c. Market offering and value proposition
    d. Strengths, weaknesses and marketing mix
  3. External analysis
    a. Competitor analysis
    b. Market segmentation
    c. Macro environment
    d. opportunities and threats
  4. Strategic advice
    a. SWOT analysis
    b. Growth development strategy
    c. Expansion opportunities to other countries
  5. Conclusion
  6. References

1 Company position

Finances

The financial report for the year of 2016 as presented by Monster energy drinks displayed a
relatively positive financial performance. The report illustrated a $0 billion increase in
gross sales along with $0 billion gain in net sales compared to the previous year. Figure 1.
shows the cumulative performance of the company including the comparison to a peer group
consisting of TCCC, DPS Group, National Beverage Corporation, Jones Soda Company and
Cott Corporation (Monsterenergydrinks 2018). However, a significant decrease in total return
has been illustrated between 2015 and 2016 in the figure. The graph also shows significantly
better returns compared to their peer group over 5 years which can be considered as a
strength of the company. Furthermore, considering the small peer group presented in the
graph, other competitors will also be analysed and compared to the Monster beverage
company.

figure 1: Monster beverage company’s cumulative 5-year total return comparison (Monsterenergydrinks
2018).

Market capital position

The market capital chart is headed by Coca Cola as they have the highest market
share. The Coca Cola company achieved a market capital of $187 Billion whereas
Monster beverage company produced only $37 Billion in capital in 2017. The
dominant companies in the stock market mainly comprise of soft-drink companies
including Coca Cola, PepsiCo, Dr. Pepper, and Coca Cola subsidiaries. Therefore,
the presence of Monster beverage company in this area is not strong while
compared to the stock market leaders. However, the data shows a significant
position of the Monster company in the stock market. This has been illustrated by the
chart in figure 1.( The New York Times 2018)

figure 1: 2017 market capital comparison in the non-alcoholic beverage market (The New York Times 2018)

Market position in the energy drink market

The pie chart shown in figure 1 illustrates the market position of Monster energy drinks
in the global energy drink market. The figure shows that the company’s primary
completion and concern in this market is Red Bull. Additionally, the company Rockstar
also possesses a significant level of market share. The critical market share of 39% could
be considered as a strength. However, the competitive nature of the firm would requires
efforts to gain more market share. Finally, there is a large scope for growth in market share
considering the potential market worth growth over the next ten years. The market position
of the second largest energy drink provider can be translated into a strength for the
company.

figure 1: Market share distribution in the global energy drink market 2017 (Mitchell 2018)

energy, “Life in a can” and “Unleash the beast”, categorize their target demographic
very well, that combined with the bold packaging, neon coloured icons and a sleek
black background, illustrates their intelligence in marketing their product.
Additionally, adaptation to different new target demographics, such as a white
background in targeting women, and different neon styled colours when showcasing
a new product.

The price of the product is very comparable to other high-end energy drinks,
however can be considered cheaper and therefore more desirable due to the size of
the cans monster cases their products in. Due to the fact that red bull is currently the
market strategy and therefore can employ a premium pricing strategy, therefore
monster energy is taking a back seat and prices their products at a slightly lower
range, however that is their strength due to customers appreciating that more value
is gained from buying monster even when priced the same as red bull.

In considering place, monster energy is quite brilliant in their employ of third party
outsourcing in order to minimize transport costs and manufacturing. Since monster
energy sells its products in over 100 countries, the company tries to minimize all
costs related to that.

Monster energy is rather unconventional in their marketing strategies regarding
promotion, since they don’t employ standard methods such as advertisements,
monster tries to employ their slogans in their advertisements. Monster endorses
extreme sports and bands in order to promote the extreme lifestyle that their slogans
entice. Their creative promotion creates a unique brand that tailors well to its
consumers.

CHAPTER: 2 EXTERNAL ANALYSIS

2 competitor analysis

In this wide oriented energy drink market there are several big companies which
have a considerable percentage of the market in hands. On the other hand since the
customer preferences change all the time the big companies may just be too big to
quickly adapt to every change. Therefore small local companies and b-brands can
be seen as serious competitors. This paragraph is going to analyse the following
competitors: Red Bull, Coca Cola and B-brands.
RED BULL: Red bull is the largest producer of energy drinks worldwide with an
market share of 43%. (Time, 2018) Despite the recent rise of market share for
Monster, Red Bull maintains its dominant position in the energy drink market.
Therefore one can conclude that Red Bull is the main competitor of Monster since
other big brands only have a small percentage of the market and do not depict any
signs of significant growth. (Caffeineinformer, 2018) Monster does not differ much
from Red bull since they sell the same product: Energy drinks. Moreover in terms of
advertisement they focus on the same aspects: sports, extreme sports. However

Red Bull takes advertisement one step further with bold campaigns such as Red Bull
stratos. (En.wikipedia, 2018) Moreover Red Bull does not focus specifically on
the male customers and promotes its product more as an good and quick source of
energy for everyone to use.

COCA COLA: Coca cola is one of the largest and most valuable brands in the world.
Coca Cola is the market leader when it comes to the total non alcoholic beverage
market with an market share of 45%. (Sure Dividend, 2018) It is hard to say, to
which extent Coca Cola has the same customer base as Monster Energy. However,
given the fact that Coca cola has spent 5 billion on advertisement in 2015,
(Company, 2018) and knowing that the budget of advertisement has risen almost
every year Coca Cola must have to appeal to Monster energy customers. Therefore
we see Coca Cola as an important competitor in the market of non-alcoholic soft
drinks. Coca Cola differs from Monster in several aspects. In the first place Coca
Cola produces only soft drinks that contain no taurine so they can not be described
as energy drinks. Secondly Coca Cola is a much bigger company that has a much
bigger customer base that does not focuses on one specific customer group. Also,
some smaller energy drink companies are operated by Coca-Cola in the market.

2 Market segmentation

Monster beverage company has been divided into warehouse and direct store delivery
operation segments. The direct store delivery system concentrates on the company products
of energy drinks whereas the warehouse focuses on fruit based juices and carbonated drinks
(Bailey 2015). Furthermore, the customers of the company have also been divided into
various segments based on the following:
Demographic factors
Firstly, young adults and teenagers have been segmented as the tech savvy generation.
Secondly, millennials form an important segment as millennials between the ages of 27 and
37 years have been shown to consume considerable amounts of energy drinks (Bailey 2015).
Geographic factors
Finally, the geographically divided segment depicts the energy drink consumption behavior
regionally as the US consumes more energy drinks compared to other regions. Moreover,
there is higher energy drink consumption in developed countries.
Psychographic factors
The main target market of Monster includes people who have the ‘monster lifestyle’
including extreme sports activities.
Behavioural
segments such as students and hard-working professionals rely on energy drinks for dealing
with long hours.

Product portfolio

Direct store delivery

environment. In the last years the concern about the natural environment largely
increased, also the environmental sustainability movement became a big object for
all companies. Monster describes themselves as a company who wants to improve
environmental sustainability and to reduce their impact on the environment through
arrangements such as water conservation, energy efficiency and waste reduction
(monsterbevcorp). Nevertheless, Monster does not provide details in their
articles which they provide online. Moreover, there is a lot of negative criticism
regarding Monster`s environmental regulations. An example is Monster ́s support of
motorsport events which have a negative impact on the pollution
(ethicalconsumer). Therefore, Pressure groups might have a negative
impact on the buying behavior of Monster ́s consumers. The company needs to be
aware of these critics. Monster should be looking for new, alternative and eco-
friendly innovations. The fourth force refers to the technological environment.
Nowadays, many companies disregard the importance of technological
development. However, Monster is a beverage which does not need to add special
technological innovations to their product to satisfy their customer’s needs. Still
Monster is operating in the technological environment. Next to extreme sport and
music events, Monster is also supporting technological expos and "Gamers ́ ́
(monsterenergy). The fifth force is the political environment. As mentioned
before Monster deals with some environmental issues, new regulations and laws
regarding the environment can force Monster towards profound changes. Next to
environmental regulations, Monster needs to be aware of every other law and
regulation. Currently, five former employees have accused the company, especially
some brand’s top executives for sexual harassment (thedailymeal). The
last force describes the cultural environment which includes “institutions and other
forces that affect society's basic values perceptions, preferences and behaviors”
(Kotler & Armstrong, 2010). Monster Energy might also be affected from the cultural
environment. Many people have a different view on energy drink consumer and fans
of extreme sports and the kind of music Monster supports. Monster targets a specific
customer segment. Other people might find Monster ́s image and the lifestyle they
convey too extreme. Monster ́s opponents might influence potential customer.
Moreover, parents might not allow their children to drink too much caffeine or to go to
dangerous events such Monster ́s extreme sport events. To conclude, Monster also
needs to continuously analyze their environment and must be able to adapt to
different environmental changes.

CHAPTER 3

3 Strategic issues
In analysis of the strengths, weaknesses, opportunities and threats, it is clear that
monster owns a great part of the market they operate in, and have formed important
strategic alliances in order to thrive in a difficult market. The strategic issues revolved
around this are concentrated in the fact that red bull owns the greater part of the

energy drink market, even though monster has a number of strategic advantages
over their competitors, they do not own a greater part of the market.

Strategically speaking the company should try to gain advantages other than they
own, since what they have done up until now has led them to be very close to being
a market leader, and every advantage they gain could be the thing that pushes them
to be the market leader.

3 Growth development strategy

Monster energy should change their current strategy which is focus because
Monster is focusing on a small segment of the customers. Monster energy has
concentrated marketing strategy at the moment. Differentiation is more appropriate
for Monster at the moment because they want to challenge Red Bull in the energy
drinks market and their customer base requires more opportunities to grow. It is
difficult to compete with Red Bull with their main product because their regular
energy drink already has a large market share. Therefore Monster should broaden
their product line and sell more diverse products to a more diversified target market.
Therefore Monster should sell more of its other products based on differentiation and
innovation under the same Monster brand name. This would aid in making their
brand more appealing to the customers in this segment of the market. Monster
should look to different marketing probabilities and not only the ‘extreme segment’
target. If they want to broaden their customer base, and therefore their market share
they have to change their image and appeal to a larger demographic.

3 Expansion opportunities in other countries

Monster energy is indirectly situated 128 countries, since this number is so large,
one can conclude that Monster is distributing and selling in almost every developed
country in the world expected of for a major energy drink company. Therefore, there
are limited options for countries which have been primarily chosen according to
maximal growth potential and political stability. Furthermore, the current market
offering is that of the ‘Monster energy lifestyle’ for young demographic segments.
The combination of the market offering and the differentiation strategy require the a
suitable fit. This means that the best choices for expansion involve developing
countries. The following countries have been considered:

Table 3: Expansion analysis for Monster beverage company

Country Motivation Disadvantages

Vietnam Higher disposable income means
that customers are demanding
more products suitable for long

Redbull is the main
competition in the
established energy drink

sufficient in order to increase their customer base or market share. The Monster
Beverage Company has strong competitors such as Coca Cola and Redbull which
dominate the market. External analysis has indicated that factors such as low pricing
support the brand but further efforts are required by the company in the field of
ecological responsibility. Furthermore, their ‘Monster Lifestyle’ only targets a limited
number of customers. Therefore, broadening in their target market is recommended.
Furthermore the recommendation of adopting a differentiation strategy has also been
suggested as it fits well with their current innovative structure. Finally, the Monster
energy beverage company can adapt their lifestyle target to include motivated
individuals on a global scale.

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