project report on cloud 9 energy drink

Cloud 9 Energy Drink

SECTION E

Group 11

SUBMITTED BY: ALOK KUMAR PGP/14/258 LOKESH SINGH PGP/14/279 MAHTAAB KAJLA PGP/14/280 NAVEEN VYAS PGP/14/283 SHRUTI KABDAL PGP/14/303 SNEHA RAMTEKE PGP/14/304

Marketing Management Project

Submitted to: Prof. Rahul Kumar Sett

Cloud 9 – Sky is no more the limit

PGP14 | SECTION E | GROUP 11 2

Table of Contents

1 Executive Summary ................................................................................................................ 4

2 Cloud 9 .................................................................................................................................... 5

3 Energy Drinks Industry in India ............................................................................................. 6

4 Brand Choice Rationale .......................................................................................................... 8

5 Situation Analysis ................................................................................................................... 9

5.1 5 C Analysis ..................................................................................................................... 9

5.1.1 Company ................................................................................................................... 9

5.1.2 Collaborators ........................................................................................................... 10

5.1.3 Customers ............................................................................................................... 10

5.1.4 Competitors ............................................................................................................. 11

5.1.5 Climate (context) .................................................................................................... 14

5.2 Porter‟s Five Forces Analysis ........................................................................................ 15

5.3 Needs, Wants & Demands – Analysed .......................................................................... 16

5.4 SWOT Analysis.............................................................................................................. 17

5.5 Ansoff‟s Product Market Expansion Grid ...................................................................... 18

5.6 BCG Matrix .................................................................................................................... 18

5.7 Life Cycle Analysis ........................................................................................................ 19

6 Segmentation, Target & Positioning ..................................................................................... 20

6.1 Segmentation .................................................................................................................. 20

6.2 Target ............................................................................................................................. 21

6.3 Positioning ...................................................................................................................... 22

7 Marketing Action Program ................................................................................................... 23

7.1 Marketing Mix................................................................................................................ 23



7.1.1 Product Strategy ...................................................................................................... 23

7.1.2 Price Strategy .......................................................................................................... 23

7.1.3 Promotion Strategy ................................................................................................. 23

7.1.4 Distribution Strategy ............................................................................................... 24

7.2 Marketing Research........................................................................................................ 24

7.2.1 Data Collection from Secondary resources ............................................................. 24

7.2.2 Data collection from Primary resources ................................................................. 25

7.2.3 Descriptive research ................................................................................................ 25

7.2.4 Data analysis Procedure .......................................................................................... 25

7.2.5 Analysis of data....................................................................................................... 26

7.2.6 Demographic characteristics ................................................................................... 26

7.3 Implementation............................................................................................................... 39

7.3.1 Implementation Plan ............................................................................................... 39

7.3.2 Budget ..................................................................................................................... 40

7.3.3 Activity Schedule .................................................................................................... 40

8 Financial Summary ............................................................................................................... 41

9 Bibliography ......................................................................................................................... 42

10 Annexure – A ........................................................................................................................ 44

Cloud 9 - Market Research Survey ........................................................................................... 44



1 Executive Summary

Market for energy drinks has witnessed an increase of about 50% from 2002 to 2007, Crossing

Rs 500 Cr mark in the year 2008. Goldwin Healthcare Pvt limited, a new entrant in the energy

drinks market, which was pitted against the Austrian Multinational, has gained significant market

share within a span of less than 2 years. The company‟s „Cloud 9 energy drink‟ has positioned

itself as the first healthy energy drink in India, as certified by FDA.

The market is dominated by Red Bull, and other brands like drinks like Monster, XXX and Full

Throttle are also giving Cloud 9 a competition. Cloud 9 energy drink comes in 4 variants: Wild

Berries, Pomegranate, Premium and Red grapes. This document explains in detail how the new

product “Cloud 9 energy drink” should be marketed in order to gain market share and increase its

sales volume. It contains information on present market situation, marketing objectives of the

product and also the marketing actions to be taken to achieve the objectives.

Cloud has been the official sponsor of IPL team Chennai Super Kings, but still the awareness

about the product is not widespread in the market as is with the case of Red Bull, even after the

publicity campaigns of the product.

.



2 Cloud 9

Cloud 9 is a brand of Energy Drink launched by the Goldwin Healthcare Pvt. Ltd. Cloud 9 is

different from its other competitors as it is made of natural ingredients.

Vision of Cloud 9 has always been to provide India with drinks that give the consumers the

desired energy boost, yet are completely healthy and have no side effects associated with other

drinks. Before entering into the market, Cloud 9 management did a thorough study of the energy

drink and cola market in India. The study revealed that the market was mainly dominated by

foreign players and the ingredients used in most of the popular drinks were harmful to the human

body.

Keeping in mind the revelations of the study, they came up with an energy drink and also

caffeine-free cola which were made from completely natural ingredients and adhered to the FDA

standards.

Cloud 9 has penetrated the market at a lightning speed and is now the second biggest player in

the country. Usually children are discouraged from consuming colas due to the level of caffeine

present, but the Cloud 9 cola can be consumed by one and all.



3 Energy Drinks Industry in India

Energy drinks are beverages which contain legal stimulants, vitamins and minerals including

caffeine, guarana and taurine, various forms of ginseng, maltodextrin, carnitine, creatine and

ginkgo biloba. Some contain high levels of sugar and glucose.

This category traditionally included caffeine based drinks which are energy boosters. Currently,

the energy drink segment in India is dominated by two firms, Red Bull and Cloud 9. Cloud 9

somehow breaks the ice by introducing an energy drink with natural source of caffeine such as

Gaurana, Ginseng and Taurine.

According to the market research firm, Datamonitor Plc., the market for energy drinks in India

was estimated at Rs. 499.2 crore in the year 2008, still at a young stage when compared with

carbonated drinks, which was valued at Rs. 6,027.9 crore. Between 2002 and 2007, the market

for energy drinks in India grew at about 50% a year. In contrast to that, growth of carbonated

drinks in India observed a slowdown by 0.5% during the same period. With an increasing

number of modern retail stores, the energy drinks market is expected to reach Rs 1,100 crore by

the end of 2010.

This decrease in the carbonated drinks market and the high growth of the energy drink market

can be attributed to the positive changes in the perception of health and fitness among the Indian

youth. The industry foresees a huge potential for Energy Drinks. The energy drink segment is the

fastest growing segment in the ready to drink category, reason being that India has a youth

centric population and the fast urbanization.

Energy drinks in India till a year back were dominated by players such as Rhino‟s Bullet, Cloud

9 and Red Bull. Sales started picking up post the entry of established players such as Pepsi,

Ambway and the latest entry of Coca Cola & GT&T has shown the market potential of the

Energy Drink market in India.

Market players in this product category are adopting unique marketing strategies like free

sampling at schools and colleges before launching their products, sponsoring major sporting



events and fashion shows. These promotions enhance the brand recall. Brands in the Energy

Drink market are Red Bull, Cloud 9, SJ XXX, Power Horse, and Rock star, Burn, SoBe and

Amway.

Figure 1Energy Drink Market Share (India)

Red bull 62%

Cloud 9 23%

XXX 3%

Monster 4%

Power House 2% Rock Star

4%

Burn 1%

SoBe 1%



4 Brand Choice Rationale

Cloud 9 Energy Drink is a revolutionary product, being India‟s first natural energy drink

made purely from natural ingredients that adhered to FDA standards and regulations.

The energy drinks market in India is growing at a fast rate, it is in a booming phase.

Its major competitor is Red Bull, an international brand and the market leader in many

countries, including India.

It would be interesting to see what Cloud 9‟s market strategy would be in response to that

of the dominant player.

Also, its target segment will be the youth, so the project would give us a deep insight into

the consumer behavior and how to popularize the product among them.

Moreover, being a new product in the market, „Cloud 9 energy drink‟ provides us ample

opportunities in brainstorming to devise various promotion methodologies.

These are the major reasons behind our choice of Cloud 9 Energy Drink for the purpose

of this project.



5 Situation Analysis

5.1 5 C Analysis

5.1.1 Company

Cloud 9 Energy Drink is a Goldwin Healthcare product. Owned by the Mumbai based Shree

Jalaram Group and headed by Priyesh Ganatra (MD), Goldwin Healthcare Pvt. Limited provides

Health Care Business Process Management Services, Health Care Research Services, Home

Health Care Services, Medical and Health Care Software, Personal Health Care Products,

Personal Health Products in India.

It was established in the year 2008 and is headquartered in Mumbai, Maharashtra. Apart from

Goldwin Healthcare, Shree Jalaram Group also owns companies including Lotwin online lottery,

Jalaram Jyoti Builders and Developers, Goldwin Entertainment, Goldwin Film Production and

Goldwin Mobile Gaming.

Product line

The company‟s flagship beverage brand, Cloud 9, is one of the leading players in Energy drinks

segment due to its positioning as a nutritive and healthy drink, as certified by many official

healthcare bodies. It also has a number of variants like Pomegranate, Wild Berry and Red Grapes

especially for ones who do not consume alcohol, which helps the brand to maintain its position.

The company is also set to enter the soft drinks, juices, mineral water and soda business.

Moreover, they are looking at launching Aloe Vera juice, a special juice for women, and first-of-

its kind in India.

Technology and experience

Cloud 9 is manufactured using cutting edge technology and plethora of ingenious solutions and

indigenous know-how. Initially, the product was manufactured in Malaysia. But soon, Goldwin

Healthcare started manufacturing all their products at the company‟s state-of-the art facility in

Nandur, 40 km from Pune (Maharashtra), spread across 27 acres. This facility is ISO 9001:2000,



ISO 22000, IASC (USA) and FDA certified, and adheres to Good Manufacturing Practices

(GMP). All cans are made from 2 piece tin Aluminum.

Cloud 9 attempts to achieve the exact balance of energy and health through the perfect

combination of naturally occurring, energy rich resources with high-tech manufacturing

techniques.

Goals

In the future, Cloud 9 Cloud 9 aims to consolidate and grow its Indian presence all the while

expanding into the overseas market. The name, Cloud 9, itself gives a prelude to the ambitions of

the company where, “Sky is no more the Limit".

The aim is also to use the profits from these ventures to contribute towards invigorating the

economy of India. Cloud 9 wants Indians to support and be part of this initiative to energize and

empower India‟s people, its economy, and the thereby India as a whole.

5.1.2 Collaborators

Goldwin Healthcare has an experienced and dedicated distribution team across the nation, which

monitors market segments like malls, multiplexes, retail, five star hotels and restaurants, pubs,

discotheques, gym, spas, cafes and airlines. Each tie-up is supported with Promotional &

Merchandising Materials, loyalty programmes and consumer offers etc.

5.1.3 Customers

Consumers of energy drinks are in the age group 18-35. Most of consumers are college students

and middle aged working class. With rapid urbanization and increase in purchasing power of

people the demand has increased significantly. Growing middle class is around 350 million.

Consumers also include females and young people who do not drink alcohol. For health

conscious people who are averse to alcohol, energy drinks are the perfect substitutes. Consumer

profile include college-goers who feel need to stay up late nights during exams , working class

professionals who need extra boosts of energy and athletes who need energy after exhaustive

field activities.



For the purpose of this project, we conducted a survey to find out the drinking habits of various

people. Majority of respondents were in the 23-26 years of age category and were predominantly

males. The most extensive usage of energy drinks was revealed to be one during nightouts or

during weekend parties. Taste and recommendations from friends surfaced as major factors for

trying out a new energy drink. Also, people perceived Cloud 9 as an energy drink and not as any

alcoholic drink or a soft drink.

5.1.4 Competitors

Red Bull Energy Drink

Red Bull operates within the energy drinks sector of the beverages market. The product is an

example of a 'functional' drink. Functional foods respond to consumer interest in well-being and

performance. The major multinational soft drinks companies are investing in the area of

functional drinks, developing their own brands and buying up existing ones. This is seen as being

important, given that their traditional soft drinks markets are at the maturity stage in many

countries. For these multinationals, new functional drinks offer opportunities for renewed

business growth.

Red Bull – Positioning

General positioning strategy

The brand was positioned as something that,

"revitalized body and mind." It was also

intended that Red Bull be drunk whenever

consumers needed a lift, whether it was

morning, noon or night. This broad positioning

was designed to enable growth into a variety of

market segments. Red Bull's advertising did not

specify any consumption occasions, which

further facilitated an elastic positioning"

Figure 2 Red Bull Energy Drink Advertisement



Positioning through pricing strategy

In every market, Red Bull set a price at least 10 percent greater than the most expensive

competitor in order to maintain a "best of class" positioning. The 250mL can of Red Bull

cost up to 300 percent more per ounce than traditional soft drinks.

Market share

Since its launch, the brand has managed to dominate the Indian market with more than 60 %

market share.

Strengths

Market leadership – within the energy drinks market, it is the industry leader throughout

the world.

Marketing efforts- many promotions and well targeted campaigns and sponsorship e.g.

F1 helps to expand Red Bull Brand and increase customer brand awareness and recall.

Strong, fresh and fashionable brand identity

Weakness

Above average prices

Reliant on small product base – the company only markets one branded product, Red

Bull Energy Drink (along with a sugar free variety).

Lack of patent on its recipe means anyone can copy it.

XXX Energy Drink

It is a premium brand targeting the niche market of youths and trendy consumers with high

income. Entering India with a bang as the primary sponsor for the Kolkata Knight Riders (KKR)

in the DLF IPL T20 cricket tournament, it was launched with the objective of providing an

alternative energy drink to the consumer and hence giving him a winder extremely high on

energy and high on life.



The brand XXX energy comes in two variants currently- REJUVE and NICOFIX. The

USP of “NICOFIX" is that it is formulated with NPR which reduces the Nicotine urge

and “REJUVE" is an exciting energy drink specially formulated to suit India taste

buds." REJUVE” rejuvenates the mind and body and enhances your immunity, thus

increasing stamina. Both the cans are very competitively priced at Rs.75/- for 250 ml.

Monster energy drink

Depicted by a logo of three claws, Monster energy drink is distributed by distributed

by Hansen Natural Corporation, Corona California. With ingredients like guarana,

caffeine and glucose, monster artificially stimulates energy. With a fairly tolerable

taste, this energy drink sparks one up and packs quite a vicious punch. Though

Monster Energy is not widely advertised in the media it receives a large amount of

recognition from its sponsorship of various sporting events.

.

Full Throttle

Produced by the Coco Cola company, Full Throttle debuted in late 2004. This energy

drink contains ingredients such as carbonated water, high fructose corn syrup and/or

sucrose, citric acid, natural and artificial flavors, sodium citrate, sodium benzoate (to

protect taste), d-ribose, caffeine, acacia, niacinamide (vitamin B3), calcium

pantothenate, (vitamin B5), glycerol ester of wood rosin, yellow 5, pyridoxine

hydrochloride (vitamin B6), cyanocobalamin (vitamin B12). Available in great flavors

like citrus, full throttle energy drink has great flavors.

.



5.1.5 Climate (context)

Political and Legal Factors: In India, there are no standards for energy drinks under PFA Act,

1954. The standards of carbonated water under PFA Rules, 1955 specify the maximum limits of

caffeine of 200ppm which subsequently on recommendations by Central Committee on Food

Standards were reduced to maximum level of 145ppm.

Food Safety and Standards Authority constituted an expert group to examine the scientific

literature and global position on use of caffeine and non-carbonated beverages and their labeling

and to recommend the limit of caffeine in energy drinks and non-carbonated beverages under

Food Regulations. The Group was also asked to suggest whether any standards need to be laid

down for energy drinks keeping in view the assessment of risk. It made the observation that

Caffeine is not an additive but a chemical with addictive property. Caffeine up to 200 ppm is

added as a flavouring agent but above 200 ppm it is a functional ingredient. The functionality of

caffeine at 320 ppm needs to be ascertained along with justification for fixing a cut-off limit at

320ppm.

Economic Factors: Economic factor affects the purchasing power of potential customers and

firm‟s cost of capital. The following are the examples of factors in macro-economy: economic

growth, interest rates, exchange rates, inflation rate. The inflation rate in India was last reported

at 13.73 percent in June of 2010. The economy is not much developed and wide variations

among states and regions within states are there due to which we might have to make different

promotional strategies.

Socio- Cultural Factors: The key emerging health concerns amongst Indians include diseases of

the heart and digestive system, obesity, bone and joint pain, depression and anxiety, lack of

energy and stamina and sleeplessness. The growing awareness amongst Indian consumers

regarding several ingredients and their associated health benefits is making them more inclined

to use nutritional information very often to make product choices. Hence there is a demand for

food and beverages with health claims.

Technological Factors: The technological factors can lower barriers to entry, reduce the

minimum efficient production levels and influence outsourcing decisions. Some of the



technological factors include: R&D activity, automation, rate of technological change,

technology incentives. Cloud 9 is manufactured by Goldwin Healthcare Pvt. Ltd, the specialists

in the manufacture of 100% Natural Lifestyle Energy Drinks and Caffeine-Free Cola, using its

cutting edge technology and plethora of ingenious solutions and indigenous know-how. Hence,

company is highly advanced in development of product, R&D and machinery.

5.2 Porter’s Five Forces Analysis

Threat of new Entrants– High

As energy drink market is growing very rapidly new entrants are eying this market. Big soft

drinks brands like Coca Cola and Pepsi already have plans to launch energy drinks in Indian

market. Since cost of entering in this market is not very high new companies can easily enter in

this market.

Bargaining power of Buyers- High

Bargaining power of buyers is high because of availability of many similar products.

Bargaining Power of suppliers-Low

Suppliers have low bargaining power because constituents of energy drinks are easily available

and any company may produce them easily.

Current rivals in Industry-High

There are already many brands in the market. Red bull is a very strong brand capturing a major

share of market. Big companies are coming up different products. There are many players in the

market.

Pressure due to substitutes– High

Pressure due to substitutes is high because there are many alternate products in the market. Soft

drinks, fruit juices, sodas and various caffeinated products are available in the market.

Consumers have many choices to fulfill their need of caffeine or energy.



5.3 Needs, Wants & Demands – Analysed

Needs

Cloud 9 Energy Drink satisfies three primary needs:

Physical needs

When tired drivers are feeling the need to fall asleep due to fatigue; and this can

compromise their safety. A driver needs to stay awake and alert when driving to avert

danger and this need is satisfied by Cloud9, which perfectly matches with their tagline,

“Drink and Drive…Get high every time you drink”

Social needs

A social need for example is where „humans have a social need for belonging‟ and this

need is satisfied by belonging to a group. A group could be people with the same interests

such as extreme sports. Red Bull associates itself with energy, danger and youth culture,

and markets its product through its sponsorship of youth culture and extreme sports

events. Consumers who drink Cloud9 are „automatically‟ introduced to the Cloud9

culture, and their social need is then satisfied, again matches with other punch line ”Dink

and Dance…Get high every time you drink”

Individual needs

An individual may have a need for concentration or self-expression and this could be

inhibited by fatigue or weariness. Cloud9 could satisfy this need by „energizing and

stimulating the mind‟. For example, if he/she is fatigued, a university student may

experience the inability to retain knowledge and therefore an inability to express

him/herself.

Wants

A want can be defined as „the form taken by human needs as they are shaped by culture and

individual personality‟ Extreme athletes want to accelerate their performance and to revive



themselves quickly after each event and this want is satisfied by Cloud9. Cloud9 promotes

its consumption „to increase physical endurance, improve concentration and reaction speed,

improve vigilance and stimulate metabolism through natural stimulants.‟

Demands

Demands are human wants backed up by buying power and given their resources, people

demand products with benefits that add up to the most satisfaction. Demand for a product, is both

willingness and an ability to pay for the product that will satisfy a particular want. Cloud 9 is

arguably one of the most expensive drinks on the market, a can of Coke generally costs around

Rs.20 for 300ml whereas a smaller 250ml can of Cloud9 is sold at Rs.75. Consumers are willing

to pay the higher price for Cloud9 because it satisfies their needs and wants, it also delivers on its

promise to Drink and Discover.

5.4 SWOT Analysis

Strengths

Indian product

Natural ingredients

Focus on health

Non alcoholic

Variety of flavors

FDA approved

Weakness

Low awareness

Low market share

No prior expertise

Opportunities

Fruit Juices

Venturing into caffeine free cola

Gaming ventures

Consumer recognition through Sponsorship of Fashion shows and college festivals

More emphasis of youth on health food

Rapid market growth of 50% YoY

Threats

Lucrative market

Many big players

Easy entry in the market

Relatively lower pricing by big rivals

SWOT Analysis



5.5 Ansoff’s Product Market Expansion Grid

Current Product New Product

Current

Market

Market Penetration

Strategy

Product-Development

Strategy

New Market

Market-Development

Strategy Diversification Strategy

Cloud 9 is a product that is not totally new to the market. There already exists a market for

energy drinks. Also, since the energy drinks market is very well defined and has limited scope in

terms of broadening, we are looking at the “Current Market” instead of a new one. Thus,

adopting a Market Penetration Strategy seems to be most appropriate, within which, our aim will

be to maximize market share. This can be done by aggressively marketing and advertising the

product to make the target segment aware of the value propositions on offer.

5.6 BCG Matrix

The relative position of Cloud 9

Energy Drink in the market dominated

by Red Bull is quite low and the

potential for market growth is very

high. Thus Cloud 9 falls in the

“question marks” quadrant, where it

has high potential to increase market

share and move to the “stars”

quadrant, and eventually to “cash

cows” where the market growth will

slow down. Also it is to be noted that

if Cloud 9 does not succeed in

becoming a market leader, then there

is a possibility that after years of cash



consumption it will degenerate into “dogs” when the market growth will decline.

5.7 Life Cycle Analysis

Out of the four life cycle stages, Energy Drinks are in the growth stage. Since energy drinks have

been around for many years, they are no longer in the introductory stage. New products and new

emerging brands have expanded consumer choice in the energy drink market, which has pushed

them in the growth stage. The branded energy drinks sector in India is growing at the rate of 60%

as compared to 10% growth rate of the Rs 7,000-crore soft drinks market. On the back of an

increasing number of modern retail stores, the energy drinks market is expected to reach Rs

1,100 crore by 2010.

Figure 3 Product Lifecycle stages

Energy Drinks



6 Segmentation, Target & Positioning

6.1 Segmentation

Below shown is a map showing the various factors taken into consideration while the

segmentation takes place.

Accordingly, based on the above factors and the responses from a survey conducted on cloud 9,

the following 4 segments were identified:

College students

Comprising of an age-spectrum ranging from teenagers to Post Graduates, this segment

witnesses a variety of constituent individuals in terms of energy, purchasing power,

preferences, vulnerability to alcoholic beverages. This group has taken up to snacking as

a way of life as they keep missing regular meals due to erratic schedules. Energy Drinks

are percieved to be something “above soft drinks” but not alcohol, hence a cult among this group.

Besides, studying late nights, energy drinks have gained popularity among them.

Demographic Analysis Age Gender Income

Psychographic Analysis Features: taste, caffeine content etc

Attitudes to Social change: eg. conservatives, upmarkets

Behavioral Analysis Occasions User Status: eg Regular, first timers etc User rate: Regular, heavy etc Loyality Status : hard core loyalists, switchers

Geographic Analysis Metros, major cities and towns

Segmentation



Working Professionals

These represent the young working population, mainly the employees of MNCs and

BPOs. This group has resorted to energy drinks for chilling out on weekends after a long

hectic weekend for a change, or when meeting colleagues or friends at place. Working

long for hours, creates distress, monotony and fatigue, leading to burnout. Energy drinks

serve as energy boosters and hence an obvious choice for them in the short run.

Health Conscious people/ Sportsmen

This group has seen a rise in the past decade. More and more people are turning health

consious and hence choose their diet selectively. They mostly join fitness programmes i.e

physical workout, aerobics etc or jog regularly as they are confined in their jobs, hence

they want to work out. Another category is that of sportsmen, who constantly thrive on

energy drinks to get instant kick helping them maintain high energy levels.

Socialites / Party Animals

Socialites are mostly in a habit of paying regular visits to pubs, discotheques and parties.

Hence Energy drinks are a normal part of consumption habits of such consumers.

Besides, energy drinks act as an an apt alternative to alcoholic beverages, while in

socializing a group, where in the socialite prefers not drink, as mostly is the case with

females. Besides, Energy drinks mixed with alcohol, serves as a perfect combo during

parties.

6.2 Target

Cloud 9 is targeted at the youth population in the age group of 18 to 35 years. This age group

consists of working professionals and students. The young working professionals of India face

high stress levels at their work places which causes physical as well as mental exhaustion.

Today‟s students also lead a stressful and hectic life. These working professionals and college

students are the target segment for Cloud 9 energy drink. Many pubs in Indian cities are

frequented by people belonging to this age group which might be capitalized upon by offering



Cloud 9 as a complement at these high end pubs and lounges. These pubs are popular hangouts

for the party animals and socialites who are the target segment of Cloud 9.

As many as 64% of the youth feel that alcohol consumption is not at all acceptable. This segment

of the youth population is also being targeted. Being health conscious this segment of the youth

population might be a potential market for Cloud 9

6.3 Positioning

The product is a non-alcoholic healthy energy drink with natural sources of caffeine and is

targeted primarily at youngsters in urban areas. Although the target age group is 18 to 35 year

olds, currently the product has a greater appeal to the younger end of the group. The name

„Cloud 9‟ gives preludes to the ambitions of the company, as it plans to surpass all its earlier

successes and aim for higher and bigger goals in the future. The name also signifies a light,

happy and elevated state of mind which is exhilarating, alertness backed with stamina and

concentration, in which the consumer finds himself after having cloud 9 energy drinks, yet it is

not intoxicating. The „high‟ in „Cloud 9‟ comes from its natural energy boosters: Taurine,

Guarana and B- group vitamins that safeguard health.

As the market has been dominated by foreign brands, Cloud 9 energy drink‟s indigenous origins

can act as the differentiating factor. Likely to be more popular among the youth in the urban

centers of the country like Mumbai and Goa, it should be perceived as a funky, cool and in-tune

with any age group, yet healthy drink, unlike its competitors. Besides, the advertisements should

claim that Cloud 9 Energy Drink can boost physical activity and alertness. It should be projected

as a great solution to today's stressful and hectic lifestyle.



7 Marketing Action Program

7.1 Marketing Mix

7.1.1 Product Strategy

Cloud 9 is a healthy energy drink, fortified with essential nutrients and herbs that help boost up

anyone with a lull in their energy and focus. Cloud 9 is a healthy and tasty alternative to a high

sugar soda or energy drink. Also a good alternative to coffee and expensive espresso drinks.

With a proprietary blend of herbs that contain a mix of Gandoderma, Ginseng, Astragalus,

Purpurea, 'B' group vitamins and Schisandra also amino acids L-Taurine and L-Glutamine, that

give this healthy energy drink its blast of natural energy needed to keep drinkers gain back their

spunk. Cloud 9 comes in a convenient 250 ml aluminium can, which is the perfect size to throw

in a purse, backpack, gym bag, or brief case. Every flavour comes with its own colour and design

on the can distinguishing it from the others.

7.1.2 Price Strategy

Cloud 9 currently provides competitive prices ranging from Rs. 75 to Rs.90 for different

flavours. We would like to see the company branch out and start selling bulk packs in

convenience stores, and vending machines like its major competitor and market leader Red Bull

does. They provide a bulk pack of four cans in Rs. 275. We would like to keep a competitive

price of Rs. 60-70 per can as respondents gave the choice in survey. Also to offer incentives of

buying more than one can at a time, offer two cans for Rs.110

7.1.3 Promotion Strategy

To promote Cloud 9 to our target market of teens and young adults, we want to focus on

promotions in schools and university/college campuses. We also propose to offer incentives for

students to spend their money on Cloud 9 drinks by offering deals on buying more than one.

Currently Cloud 9 has major focus on non-alcohol drinking people so we want to keep the

strategy of buying in bulk through Amway/Reliance Fresh/Spencers for that demographic. To

advertise to the new younger target market we also would like to team up with dance clubs,

sports teams, and music producers. With dance clubs we would offer alcoholic and non-



alcoholic drinks in the club made with Cloud 9. For sports teams we want to sponsor new and

edgy sports such as Adventure Sports, boxing, and extreme sports to get our logo out in the

action. Lastly with music producers we hope to help sponsor musical tours and have a booth at

concerts to give out samples and also sell Cloud 9 to consumers.

Red Bull provides free cans during tech-fests, cultural fests, management fests same kind of

strategy can also be adopted for market penetration.

7.1.4 Distribution Strategy

As of now Cloud 9 is only available to the customer by buying through either an IBO

(Independent Business Owner) or through retailers directly. We want to make Cloud 9 available

to everyday customers in gas stations, grocery stores, convenience stores, and through vending

machines. We can enter into contracts with Reliance Fresh, Hotel Chains, etc; for distribution

purposes. The next goal would be to have Cloud 9 available in outlets and retail stores in other

countries. Currently Cloud 9 is transported through general mailing companies. In the next few

years we would like Cloud 9 to have its own distribution centre with its own delivery trucks.

7.2 Marketing Research

We began with exploratory research and identified many resources of econdary data available on

the internet about energy drinks which included previous marketing research reports on energy

drinks and prominent websites.

After the first step, which involved the collection of secondary data, we collected Primary data

by directly interviewing various segments of population including IIM K Campus. The type of

questions asked while collecting primary data was mostly open ended.

After this, we designed a comprehensive Questionnaire which was going to be our primary

source of Data collection.

7.2.1 Data Collection from Secondary resources

A number of secondary resources about the energy drinks market were available on the web. We

have taken the help of previous marketing research reports on industry to know the most



essential features required to formulate the plan of action.This provided us a basic overview of

the features that play a significant role in the selection of an energy drink.

7.2.2 Data collection from Primary resources

We have interviewed various segments of the people in depth to know their criteria to select an

energy drink. We have used an online spread sheet to interview people of various demographic

profiles. Our objective of exploratory research is to find the questions that need to be included in

the questionnaire for descriptive research.

7.2.3 Descriptive research

We have prepared a comprehensive questionnaire using the inputs of exploratory research. The

soft copies of the surveys were mailed to various sections of the people. We have distributed the

hard copies of the questionnaire to the people who don‟t have email ids.

The questionnaire was a prepared exhaustively as this is the primary source of data collection for

the project. The questions were designed to do a study marketing mix, segmentation, and

positioning and target market. The questions helped us to know their perceptions and awareness

about energy drinks.

7.2.4 Data analysis Procedure

Methodology and plan

The data collated from the survey was categorically input into data analytic software SPSS.

Using the tool, specific feature variables were defined and details from the survey were

transferred into the software.

Pre-processing the data

Editing

We have eliminated the responses, which were obviously incorrect. To ensure consistency of the

responses we have considered the responses which don‟t have null value.



7.2.5 Analysis of data

Methodology

We first describe the demographic characteristics of the respondents and later the source of

information from which they came to know about cloud 9 energy drink, current positioning,

pricing, attributes of an energy drink to try it, and respondents‟ characteristics about

consumption of alcohol, health consciousness, avoiding caffeine etc;

7.2.6 Demographic characteristics

The predominant response was from the age group of 23 to 26 years with a percentage 61.9%.

75% of the total respondents were males.

Age * Sex Crosstabulation

Sex

Total Female Male

Age 19-22 Count 24 59 83

% within Age 28.9% 71.1% 100.0%

% within Sex 39.3% 32.2% 34.0%

% of Total 9.8% 24.2% 34.0%

23-26 Count 36 115 151

% within Age 23.8% 76.2% 100.0%

% within Sex 59.0% 62.8% 61.9%

% of Total 14.8% 47.1% 61.9%

<18 Count 0 1 1

% within Age .0% 100.0% 100.0%

% within Sex .0% .5% .4%

% of Total .0% .4% .4%

>27 Count 1 8 9

% within Age 11.1% 88.9% 100.0%

% within Sex 1.6% 4.4% 3.7%

% of Total .4% 3.3% 3.7%



Total Count 61 183 244

% within Age 25.0% 75.0% 100.0%

% within Sex 100.0% 100.0% 100.0%

% of Total 25.0% 75.0% 100.0%

Age * To what extent do TV Advertisements, newspaper ads, billboards etc affect your choice of energy drink?

Crosstabulation

Count

To what extent do TV Advertisements, newspaper ads, billboards etc affect your choice of

energy drink?

Total 1 2 3 4 5

Age 19-22 11 17 34 20 1 83

23-26 20 32 47 44 8 151

<18 0 0 1 0 0 1

>27 1 3 2 3 0 9

Total 32 52 84 67 9 244

In the majority age group, i.e 23-26 years, around 60.3% people were somewhat strongly

influenced by advertisements.



Age * I am health conscious

Crosstabulation

Count

I am health conscious

Total 1 2 3 4 5

Age 19-22 0 8 26 31 18 83

23-26 2 14 49 65 21 151

<18 0 1 0 0 0 1

>27 0 0 3 2 4 9

Total 2 23 78 98 43 244

A majority of respondents in the 23-26 age group were found to be substantially health

conscious.

Age * I tend to avoid alcohol

Crosstabulation

Count

I tend to avoid alcohol

Total 1 2 3 4 5

Age 19-22 11 9 9 11 43 83

23-26 21 23 24 24 59 151

<18 0 0 0 0 1 1

>27 2 2 3 1 1 9

Total 34 34 36 36 104 244

Majority of respondents in all age groups were found to strongly avoid alcohol. Hence, the drink

can make full use of its “healthy” drink image.



Age * I avoid caffeine Crosstabulation

Count

I avoid caffeine

Total 1 2 3 4 5

Age 19-22 13 14 17 19 20 83

23-26 23 42 44 22 20 151

<18 0 1 0 0 0 1

>27 1 3 1 1 3 9

Total 37 60 62 42 43 244

Around 29.14% of the respondents in the 23-26 age group were found to be moderately averse to

caffeine, with majority tending towards the lower side.



The above figure shows how respondents first came to know about cloud 9 energy drink, the

marketing is predominantly based on viral marketing, although television advertisements,

promotional campaigns, newspaper ads, internet advertisements are there. Mostly 23-26 age

group can be targeted.



The respondents clearly see Cloud 9 as an energy drink, even the above analysis shows that

86.89% of females and 79.23% of males see it as energy drink therefore respondents are aware

of product category.



On what occasions do you consume energy drinks?

Frequency Percent Valid Percent Cumulative Percent

Valid 1 .4 .4 .4

Before/During/After a workout

(like aerobics) 65 26.6 26.6 27.0

During studies/ Before deadlines,

exams etc. 71 29.1 29.1 56.1

Weekend party (after a hectic

week) 70 28.7 28.7 84.8

While hitting the pub 37 15.2 15.2 100.0

Total 244 100.0 100.0



The people in the age group 23-26 yrs. consumed energy drinks mostly during weekend parties

or studies, while in the age group 19-22, majority consumed during/ after workout. The

proportion of people consuming energy drinks while hitting the pub was comparatively lesser.



Sex * What in your opinion is the ideal price for a can of Cloud 9?

Count

What in your opinion is the ideal price for a can of Cloud 9?

Total 60 – 70 70 – 80 80 - 90 Above 90

Sex Female 36 20 4 1 61

Male 122 50 4 7 183

Total 158 70 8 8 244

The ideal price for a can of Cloud 9 as perceived by majority of the consumers was between Rs.

60-70.



Sex * If you were to search for Cloud 9 in a supermarket, which section would you go to?

Count

If you were to search for Cloud 9 in a supermarket, which section would

you go to?

Total Alcoholic Drinks Energy Drinks Juices Soft Drinks

Sex Female 1 53 4 3 61

Male 17 145 7 14 183

Total 18 198 11 17 244

Majority of the surveyed people would search in the energy drinks section of a supermarket

while searching for Cloud 9.



Given the fact that it is a healthy drink that offers many flavors and

provides an instant kick, would you be willing to try Cloud 9?

Frequency Percent Valid Percent

Cumulative

Percent

Valid No 47 19.3 19.3 19.3

Yes 197 80.7 80.7 100.0

Total 244 100.0 100.0

About 80.7% of the surveyed people were willing to try Cloud 9 if it offered many flavours and

provided instant kick.



Would you be willing to participate in a promotional campaign that offers

free trials of Cloud 9?

Frequency Percent Valid Percent

Cumulative

Percent

Valid No 78 32.0 32.0 32.0

Yes 166 68.0 68.0 100.0

Total 244 100.0 100.0

About 68% of the surveyed people were willing to participate in the promotional campaigns that

offered free trials of cloud 9.



What makes you try a new energy drink? <18 19-22 23-26 >27

Packaging 0 15 17 0

Taste 1 43 75 4

Price 0 20 43 0

Composition 0 27 43 2

Variants 0 9 15 0

Brand 0 24 30 2

Celebrities 0 3 5 0

Advertisements 0 14 26 1

Recommendations of Friends 0 35 81 5

Majority of people considered taste and recommendations of friends as major attributes that

makes them try a new drink.

0 10 20 30 40 50 60 70 80 90

Packaging

Taste

Price

Composition

Variants

Brand

Celebrities

Advertisements

Recommendations_of_Friends

>27

23-26

19-22

<18



7.3 Implementation

7.3.1 Implementation Plan:

Cloud 9 Energy Drinks are currently marketed as Energy Drinks with Natural Caffeine Sources.

Through our marketing plan, we are aiming to launch our product to a younger audience as a

“Health Drink that Promotes Energy”. Since our product contains B-Vitamins and Amino Acids

that are healthy for the body and promote brain function, we would like our drink to be perceived

as healthy rather than pure energy drinks.

Our plan is to market to an audience of young adults. We are hoping since the drink contains

vitamins and nutrients healthy for the body, parents will find it to be a good alternative to the

other sugar filled energy drinks currently in stores.

Vending machines throughout college campuses, and selling our products individually through

stores will help increase awareness among younger consumers. Vending machines create

impulse buys when placed in high traffic areas, which is an area where Cloud 9 is currently

lacking. They have remained a private company and strictly provide their product through IBO‟s,

but we are hoping to get the name well known among a younger crowd through wider

distribution channels.

We are going to market the product as a health drink that promotes energy. When people think of

energy drinks they automatically think of high sugar and high carbohydrates, which is the exact

opposite of our product. Our main emphasis will be getting our consumers the energy they need

without all the added sugars and carbohydrates that no one needs to add to their diet. Health has

been an increasing trend in today‟s society and Cloud 9 Energy Drinks can be a positive addition

to one‟s daily diet. In order to get our name in the campuses, we need to put vending machines in

places that students can easily access on-the-go. Students are living in a fast paced world, and

our product needs to keep up with them. The option of buying it in campus gives an alternative

source of attaining the product. Fliers will also be placed throughout the campus in high traffic

areas to increase brand recall.



Sporting events and entertainment are very popular on college campuses, so we would like to

use banners of our product during basketball games or even during student concerts to get our

names in the mainstream of students. Athletes and nutrition-conscious students will notice our

“Health drinks that promote energy” signs, and realize they can get energy without adding sugars

that can ruin their workout and performance. When students see our signs promoting healthy

energy, they will be eager to try the new product that not only tastes good, but also is good for

them.

All in all, our main goal is to be seen as a healthy alternative to the other high sugar energy

drinks in the market. Vending machine sales are constantly increasing, and edging Cloud 9 into

that market will continually increase revenues. Through product placement in high traffic areas

and fliers throughout the school, we are hoping students will notice our diverse product and

boost sales in a new market for Cloud 9.

7.3.2 Budget

The expenses of the company for marketing include mainly that of an advertising budget. We

would like to use the percentage of sales method. For 2010, the expected revenue generation is

Rs. 25,30,000,000. Hence if we consider 30% revenue will be the first advertising campaign for

the product, the total budget for advertising is Rs 759,000,000.

7.3.3 Activity Schedule

The activity schedule around the advertising campaign will revolve around the product launch

that happens every year. 3 months prior to the product launch, the advertisements in the media,

print, television and radio, should start that create curiosity regarding the product. During the

product launch, along with the advertisements, the messages regarding natural health drinks

should be sent across to the public to facilitate conversion of Red Bull‟s buyers into Cloud 9‟s

customers.



8 Financial Summary

Purchases include packaging materials, beverage bases, and beverage ingredients. Distribution

costs arise from product delivery to a large number of markets. Cloud 9 must ship products to

Independent Business Owners, who then ship products to their customers. Other costs include

depreciation, rent, utilities, interest, and other organizational sustaining costs (Industry Report).

These costs consist of estimates throughout the soft drink industry.

Market Share Projections

Energy Drink Market Analysis

Total Market size (crore) 1100

Growth rate 50%

Cloud 9 market share (crore) 23%

Cloud 9 Price Rs 75/can

Cloud 9 market share growth rate 7%

Year 2010 2011 2012 2013 2014 2015

Total Market Size 1100 1650 2475 3712.5 5568.75 8353.125

Market share of cloud 9 23% 25% 26% 28% 30% 32%

Coud 9 Revenue 253 406.065 651.7343 1046.034 1678.884 2694.609

Marketing Expenditure for cloud 9 75.9 121.8195 195.5203 313.8101 503.6652 808.3826

Figure 4 Financial Projections

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2010 2011 2012 2013 2014 2015

Total market size (crores)

Cloud 9 (crores)



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10 Annexure – A: Survey Questions

Cloud 9 - Market Research Survey

Question 1: Age

<18

19-22

23-26

>27

Question 2: Sex

Male

Female

Question 3: Where did you first come to know about Cloud 9?

Newspaper

Television Advertisements

Internet

Friends

Promotion Campaigns / Others

Never heard of it!

Question 4: If you were to search for Cloud 9 in a supermarket, which section would you go to?

Soft Drinks

Alcoholic Drinks

Energy Drinks

Juices

Question 5: What in your opinion is the ideal price for a can of Cloud 9?

60 - 70

70 - 80

80 - 90

Above 90



Question 6: What makes you try a new energy drink?

Packaging

Taste

Price

Composition

Variants

Brand

Celebrities

Advertisements

Recommendations of friends

Question 7:On what occasions do you consume energy drinks?

Before/During/After a workout (like aerobics)

Weekend party (after a hectic week)

During studies/ Before deadlines, exams etc.

While hitting the pub

Question 8:To what extent do TV Advertisements, newspaper ads, billboards etc affect your

choice of energy drink?

1 2 3 4 5

Doesn't affect at all Very Strongly

Please indicate the extent to which you agree or disagree with the following statements:

Question 9: I am health conscious

1 2 3 4 5

Strongly disagree Strongly agree

Question 10: I tend to avoid alcohol

1 2 3 4 5

Strongly disagree Strongly agree



Question 11: I avoid caffeine

1 2 3 4 5

Strongly Disagree Strongly Agree

Question 12: Given the fact that it is a healthy drink that offers many flavors and provides an

instant kick, would you be willing to try Cloud 9?

Yes

No

Question 13:Would you be willing to participate in a promotional campaign that offers free

trials of Cloud 9?

Yes

No

project report on cloud 9 energy drink

Documents