Energy Drinks Market

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The objectives of this report are to identify how the Energy Drink market is segmented according to demographic, geographic, psychographic and behavioral variables. The Energy Drink industry which is dominated by Red Bull and V energy drinks is worth 151 million dollars and is growing by 47% per year. Energy drinks is the fastest growing category in the soft drink market. I have chosen three different companies in this report to analysis which segments they target, Powerade, Red Bull and Coca Cola. Red Bull is the market leader in energy drinks and Coca Cola which is very good at mass marketing has fallen behind and needs to adopt new and exciting marketing techniques to appeal to the younger demographic. I have also selected three different sub-brands to explain how the product is positioned. I have chosen Powerade Energy Edge, Red Bull Sugar Free and Coca Cola’s new carbonated green tea drink Enviga.

Demographic segmentation consists of certain variables such as age, gender, income, ethnic background and family life cycle. Energy drinks are targeted to the 20-34 age brackets. Energy drinks target generation y and generation x by using modern labels and exciting ads with dance music, and extreme sports. The older generations such a baby boomer would be more inclined to stick with coffee for a quick pick me up. There is more emphasis on marketing to males but lately there has been an increased interest in marketing to females by producing low calorie, low sugar energy drinks. Income of the consumer is not an important characteristic because of the low price of energy drinks.

Geographic segmentation describes segmenting markets by part of the world, region of the country, market density, market size or climate. Energy drinks practice geographic segmentation by advertising higher in more fast paced, high density urban areas rather than sleep country town. This has to do with the hectic lifestyles most people live that work in high density, big cities. Another contributing factor is the higher population. Also energy drinks would geographic segment a product in countries or regions with higher temperatures because energy drinks are best drunk cold so in colder climates people would tend to purchase a hot drink such as a coffee for a caffeine induced energy burst.

Psychographic segmentation refers to market segmentation on the basis of socioeconomic status, values, attitudes and lifestyle groupings. Social class does not matter when it comes to energy drinks because any one can purchase a can from the local shop or petrol station at a reasonably cheap price. People’s interest in energy drinks is sometimes affected by their lifestyle. For example people who work long hours, work hard, don’t sleep enough will be more inclined to purchase energy drinks because of the practicality and energy buzz afterwards. And now even energy drinks are targeting people who try to live a healthy lifestyle by promoting their products as low calorie, low sugar and claim they increase your metabolism.

Behavioral variables
Behavioral segmentation allows companies to group customers and buyers into segments according to the benefits they seek from the product. Occasion status is when customers can be grouped according to the occasion when they get the idea to purchase an energy drink. Energy drinks are often consumed before work and any other part of the day when an individual is feeling tired, but energy drink companies are now promoting the beverage as a good pre exercise drink for an increased physical performance. Benefits sought are an effective way of identifying buyers according to the benefits they seek from energy drinks. The main benefit segments for energy drinks are, taste, economic, health and the energy burst. Some people might prefer to purchase a product that claims to give more of an energy burst then another product, even if the taste is less desirable....
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