[Forever Young Sting Major Project] PDF

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1 STING ANALYSIS REPORT

GROUP WRITTEN REPORT Quách Hoàng Kim Student ID: 31181024615 Nguyễn Ngọc Trúc Linh Student ID: 31181023008 Lương Thị Thanh Tuyền Student ID: 31181020066 Châu Kiều Tiên Student ID: 31181020878 Phạm Lê Phương Vy Student ID: 31181020648

August 30rd, 2019 Principles of Marketing Lecturer: Mr. Hai Ho Phu Class: PMK-DH44ISB-6

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FINAL REPORT

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EXECUTIVE SUMMARY Through this report, we discuss and analyze research regarding Sting energy drink. Moreover, the report is expected to provide brand introduction, alonging with its mission and vision which are also accompanied with customer-driven strategy in order to gain values to customers. In addition to this research, market environment including both micro and macro factors illustrates how decisions can be influenced when creating a marketing strategy. With the aim of gaining long-term profitability, Sting should apply STDP model that segments targeted customers, differetiates and postions brand image in customers’ minds. Apart from these, this report provides SWOT analysis and the marketing mix for the purpose of identifying the issues of the brand. As a consequence, recommendations are made.

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Table of Contents I. Brand Introduction II. Market Environment 1. Micro Environment 2. Macro Environment III. SWOT analysis IV. STDP analysis 1. Segmentation 2. Targeting 3. Differentiation 4. Positioning V. Issue of the brand VI. Marketing mix 1. Product. 2. Price 3. Promotion 4. Place 5. Evaluation VII. Recommendation

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I. Brand Introduction Sting - a product m PepsiCo Group - is the best representative for the challenging change story to shine. Appeared with the mission to make a difference in energy breakthroughs, with a commitment to solid quality power supply and maintain a good performance for consumer breakthrough moments. To satisfy consumers’ needs, Sting has been followed the Maslow’s Hierarchy of needs with the fourth level - esteem needs: prestige and feeling of accomplishment. Maslow indicated that the need for respect is the most important for adolescents and precedes real self-esteem or dignity. In recent times, consumers demand for energy-boosting products in order to have an effective - working hours, has been constantly increasing due to excessive energy consumption for working activities. With the understanding of the consumers’ demand and the uniqueness, Sting has become one of the top positions in the energy drink favorite of Vietnam after two years. Unlike the others, Sting is unique because of its color. The color began to cease, energy drinks were added with red and strawberry flavor unlike others were added with yellow. This uniqueness and growth build up the brands’ value. II. Market Environment 1. Micro Environment Company Board of Directors: SPV (Suntory PepsiCo Vietnam) offerings include PepsiCo which supplies Pepsi, 7Up, Sting, along with Suntory brand which provides TeaPlus, C.C.Lemon and Aquafina. SPV records successful corporation in Vietnam beverage market. Financing: SPV made business reforms and strengthened cost management. SPV sale reaches to VND 41,473 billion and the net sales is rising annually (Appendix 1).

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Suppliers SPV’s suppliers are encouraged to join SEDEX (the Supplier Ethical Data Exchange). Moreover, SPV associates with main suppliers to improve business. Usually, the SPV partners with the suppliers to provide them with the PET bottles. According to Suntory annual report (2014), SPV’s Oragina Schweppes Group takes the 3Rs (reduce, reuse, recycle) as the foundation to produce 100% recyclable products as an attempt to protect the environment. Market intermediaries Market service agencies: SPV has associated with FPT to carry out the DMS-Lite (Distribution Management System) on Mobility platform. The system not only helps SPV managing its distribution system better, introducing newest products to the market, improving management, but also helps distributors controlling financial status, ware house, services, promotion programs, etc. Physical distribution firms: Thacotrucks is a company provides the production and sales commercial vehicles (trucks and buses). The association with Thacotrucks demonstrates that SPV is one of its strategic partnerships. Therefore, SPV should continue signing contract with Thacotrucks because of their goods shipping service product supplier. Customer Sting not only targets to the young people but also focuses on some specific ones: the young, dynamic and energetic. In addition, the target audience includes the young who feels like integrating into the crowd, enjoying sports and also socializing. Competitors Number One: Realizing the potential of this market, Tan Hiep Phat Company launched Number One in 2001. With the policy of selling cheaper price, Number 1

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accounted for more than 30% of the market after only three months. However, Tan Hiep Phat used Number One brand name for many products that diluted this name in energy drink market. Sting led the energy drink market in Vietnam with 52% market share while Number One took the second place with 23% market share. Other brands share the remaining 25% including Samurai, Red Bull, Rhino, Lipovian (Nielsen, 2013). Red Bull: Red Bull is the dominant energy drink product on the market today. Red Bull presents in more than 100 countries and sells more than 1.5 billion cans per year. The group’s sales amount to 1.2 billion euros per year with thousands of production workers around the world. Public In the ASIAD 2018, Sting sponsored for the program. The brand went with ASIAD 2018, supported for the national team. Previously, Sting associated with Director Vu Ngoc Dang in a short film that conveyed the enthusiastic message and the golden hope for the success of Vietnamese sport. 2. Macro Environment Political Environment Sting holds the top position in Vietnamese energy drink market, presents throughout 89 provinces, from urban to rural areas, in 1,052 supermarkets and hypermarkets, 690 convenient stores across the country (Thu Ngan, 2016). Therefore, Sting will be constantly monitored and ensured the compliance with the required legal standards. Economic Environment The first economic problem is inflation which will be happening in case of high supply of money in the economy. As a result, Sting might increase the price to sustain the business, as well as the costs of raw materials for which production will be. Should the current economic situation continue to get worse, interest rate will rise.

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Social Environment Sting was blamed for case of unexpected poisoning of 15 students after consuming Sting. In order to limit violations of food safety in production and trading, Tuyen Quang Department of Food Hygiene and Safety also strengthens the propaganda to raise awareness for producers and traders; at the same time strictly handle if detecting violations of food safety regulations to protect consumers’ health (Vu, 2016). One study pointed out that heart palpitation might be six times more likely to occur when energy drink is combined with alcohol than using alcohol separately (Pearson, 2017). Technology Sting’s marketing strategies are known to be very controversial and unique. Therefore, they have to pay a lot of capital for the threats they face. Sting relies heavily on the Internet to promote its products such as YouTube, Facebook and Instagram, which is ideal for 15 - 30 years old target audience group. Legal With the development of the economy, Vietnam has gradually had a complete legal system with more strict principles. Hence, a greater challenge for leaders of Vietnam PepsiCo is to occur, in accordance with the slow development criteria of the company.

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III. SWOT:

Strengths -Reputation

Weaknesses is -Weak distribution

regconized

-Low consumer awareness

worldwide. -Good relation

- High advertising cost

with Franchise: working

in

various

areas

of

world

the

where

they

have

the

production efficiency -High

market

share percentage (52%)

in

Vietnam

Opportunities -Changing

Threats -Government regulation: if government applies taxes on them which

social trend: as forces them to raise the price of their product which leads to inflation

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in

world -Non-carbonated substitutes: such as juices and tea brands are

the

remaining a strong position in the market

people dispatch

fast

food

and

beverage,

-Competitive market

it

provides

the

company

an

accommodatio n to catch up with

this

fast

moving market -Increase population: the world

growth

rate

is

increasing which turns into the

increases

in the demand of products. So they

have

attract

to new

entrants -Technological innovation Segments

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Teenagers

Youngster with a job

Youngster with an unstable job

IV. STDP analysis (Appendix 10) 4.1. Segmentation

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4.2. Targeting The Generation Next campaign of PepsiCo is a distinctive strategy to portray their target customer. Through this they want to suggest that their product is not for the next young generation but who consumes their drink would be a generation towards their counterpart (Essay, 2018). Following this, Sting’s main targets also highly concentrate on teenagers, youngsters and students in the age group of 15 to 22. 4.3. Differentiate By means of better understanding of the Vietnamese market, PepsiCo launched into the market with the awareness that they should not compete directly with the two giants in energy drink: Red Bull and Number one. In terms of creating energy drink which is red in color, PepsiCo also established its own playground in this area which is appropriate for both genders. Therefore, Sting Berry Blast has been successful in differentiating their product with the traditional energy drink of the two giants. 4.4. Positioning For teenagers and youngsters who are looking for energy and consciousness, Sting offers them with a wide range of refreshing options. Each creates a positive experience for customers when they enjoy Sting as it brings back a refreshing flavor that is different from traditional energy drink. Until 2013, Sting acquired 52% market share of energy drink in Vietnam, Number One acquired 23% market share and the rest are acquired by Red Bull and other energy drinks (Nielsen, 2013).

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Positioning map HIGH PRICE MONSTER

STINNO.1 G

LOW QUALITY Red Drago

LOW PRICE

RED BULL

HIGH QUALITY

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V. Issue of the brand Regardless the fact that Sting has hold the major part of the energy drink market share in Vietnam, awareness towards changes are needed because of the extreme competitive soft drink industry. There are giants that fall from their golden position in market share. For instance: Tribeco is used to be a giant in Vietnamese energy drink market but after Number One and Sting stepped into the market, Tribeco converted their product line into soya drink to avoid facing with these giants and Tribeco fell to maintain its leading position (BrandVietnam, 2014). It is an example of a giant falling from top position after new products are launched. In recent decades, as social media also announces numerous statistics that point out how harmful energy drinks is to health. As a consequence, customers have started paying attention to their body and life style. It is suggested that energy drink often contains a huge amount of caffeine which is destructive for your body functioning process. For instance, over-consumption of energy might cause diabetes, insomnia, sleep deprivation, obesity, etc. (Cao, 2018). In order to maintain its position in this area, Sting also needs to consider about this increasing trait in customer behavior and awareness. Hence, Sting needs to adapt and establish new product flavor to keep track of recent changes and innovation as a standstill with Sting berry blast cannot help maintaining its top position for a long time. Sting is supposed to take advantage of the brand name PepsiCo, which is a famous one whose reputation is recognized and wellknown worldwide, and to establish new product and reinsurance its position in the playground of energy drink.

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VI. Marketing mix 6.1. Product The core customer value: Sting offers its customer an energetic lifestyle. With the energy brought by Sting, the drink is the motivation for those who are ready to work hard, play hard and are ready to live their challenging life (Suntory Pepsi Co, 2019). The product satisfies the people’s need of both a refreshing soda and an energy drink. The actual product: Brand name The brand name “Sting” gives its customers a sense of awakening while drinking the product, similar to the sense of being stung by a bee. With the brand development strategy, Sting has created a few different product flavours to serve the different tastes of consumers. With the “line extension” strategy, Sting has introduced to the public four flavours: Sting Berry Blast with Strawberry flavour, Sting Gold Rush with Ginseng and Vitamin, Sting Kiwi Lime and the most recently - Sting Espresso. Packaging The brand also applied the “line extension” strategy to the packaging of each individual flavour. Three common packaging types of Sting are glass bottle, tall plastic bottle and in tin cans form for convenient use. Product Features and Designs With the strawberry flavour made by PepsiCo research & development team, Sting has been evaluated as opening a new era to the Vietnam’s energy drink market because the product showed consumers that energy drink could have different colors

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and flavors. (Tuoi Tre, 2016). This makes Sting gain the competitive advantage over its competitors.

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The augmented products: What makes Sting differentiate its product from its competitors is because of the product flavor (BrandsVietnam, 2014). While purchasing an energy drink, consumer will not only receive a drink that boost their spirit but also receive the excitement and adventurous feelings. For the after-sale service, Sting often offers its consumer the chance to tell their challenging life story and how Sting becomes a part of helping them gain their energy back (see Appendix 2). 6.2. Price Customer value-based pricing As mentioned above in the segmentation of the brand, Sting targets at those who need a convenient, affordable but flavourful energy drink. It offers the customers the right value of the product, or known as a good-value strategy, because Sting has a more affordable price range compared to its competitors - Red Bull or Monster (see Appendix 3), and has the unique flavour and quality than Number one (BrandsVietnam, 2014). Product line pricing As evaluated by Nielsen in 2013, Sting had 52% of the energy market share in Vietnam. Sting differs its product by creating many packaging and charging with different prices to suit different needs. Brand Vietnam (2014) rated one of the main reasons for Sting to gain the first position in the energy drink field is because of the packaging form. Sting plastic bottle is designed to give the consumers the feel of having bigger bottles to drink compared with Number One glass bottle packaging. By applying the product line pricing strategy, Sting products are priced differently, but proportional to their respective costs (see Appendix 4). Discount and allowances pricing

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Sting also uses the discount and allowances pricing strategy for their products. As it can be referred in Appendix 2, Sting will adjust its price to offer its customers a slight discount for those who purchase in large volumes. This usually works for retailers who purchase for reselling at a higher price. Moreover, Sting usually offers discount when consumer purchases an item and pays upfront via online wallet such as Payoo (see Appendix 5). This action attracts more customer to consume more product and gain more recognition for the Sting Gold Rush. 6.3. Promotion In terms of promoting and advertising strategy, Sting usually uses Facebook as the main channel to promote their products. The introduction for the new Sting Espresso flavour has gained more than 18.000 reactions and 1,300 comments of congratulations and excitement for this new flavour (see Appendix 6). Sting also has some corporate social responsibility (CSR) programs to boost brand images and show their great concern for the society. In 2017, Sting accompanies Zing.vn in the "Chuyen xe ket noi" charitable journey to support the people in need in Khanh Hoa and Hoa Binh province and help them build their houses again after the devastation of Hurricane Damrey. (News Zing, 2017) Moreover, Sting also partners with some reality shows to promote their brands and products. In Sting's campaign to seek participants for The Amazing Race Vietnam 2015, the energy drink brand of Suntory Pepsico has partnered with Mirum Agency to launch a virtual reality technology campaign for young participants to join in Hanoi and City Ho Chi Minh City. The events end up attracting more than 4000 participants (Brand Vietnam, 2015). Being the sponsor for “The Amazing Race Vietnam 2015 and 2014”, Sting has created the real excitement while using energy drinks, which matches the core customer value the products offer (Brand Vietnam, 2015). Sting is well-known for its red and flavourful image (Brand Vietnam, 2014). Therefore, Sting has posted many campaigns using the red color as the celebration to

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support Vietnam U23 soccer team in the AFC CUP in early 2019 (see Appendix 7). By doing so, Sting will make their brand image more recognizable for the consumers because the consumer will somehow think of Sting when they want a red and flavourful energy drink. As a result, the campaign gives the public something to talk about, strengthens the customer relationship because soccer celebration is a well-known trend in Vietnam. 6.4. Place: Distribution channel: Distribution is said to be an essential aspect of a company to be successful in the beverage industry (Hashmi, 2011). According to Pepsi Co.’s annual report in 2018, the company’s products are primarily approach target customers through three distribution channels: direct-store-delivery (DSD), customer warehouse and distributor networks (Laguarta, 2018). Each channel used bases on the customer needs, the features of products and the trade state of the market. Direct-store-delivery: Pepsi's independent bottlers and distributors run the DSD systems to provide beverages to retail stores and then the drinking products will be sold by the company’s employees or their independent bottlers. DSD allows them to sell with the visibility and attractiveness at maximum level. DSD is especially suitable to the products that are restocked regularly and promotions at the stores. Customer warehouse: These systems are considered to be the company’s less costly systems which include the transaction of delivering some of the c...