Project Report on Cloud 9 Energy Drink

Cloud 9 Energy Drink

Marketing Management Project Submitted to: Prof. Rahul Kumar Sett

SECTION E

Group 11 SUBMITTED BY: ALOK KUMAR LOKESH SINGH MAHTAAB KAJLA NAVEEN VYAS SHRUTI KABDAL SNEHA RAMTEKE

PGP/14/258 PGP/14/279 PGP/14/280 PGP/14/283 PGP/14/303 PGP/14/304

Cloud 9 Sky is no more the limit Table of Contents

1

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

2

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

3

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

4

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

5

Situation Analysis Analysis .............................................. ....................................................... ..................................................................... .............. 9 5.1

6

7

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

5.1.1

Company .............................................. ....................................................... ..................................................................... .............. 9

5.1.2

Collaborators Collaborators .................................................. .................................................... ......................................................... ..... 10

5.1.3

Customers ............................................................................................................... 10

5.1.4

Competitors Competitors .................................................... ........................................................................................................ ......................................................... ..... 11

5.1.5

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

5.2

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

5.3

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

5.4

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

5.5

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

5.6

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

5.7

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

Segmentation, Segmentation, Target & Positioning...................................................... ..................................................................................... ............................... 20 6.1

Segmentation Segmentation ............................................... ....................................................... ................................................................... ............ 20

6.2

Target ............................................................................................................................. 21

6.3

Positioning Positioning................................................... ....................................................... ................................................................... ............ 22

Marketing Action Program Program ............................................................................. ...................... 23 7.1

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

PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit 7.1.1

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

7.1.2

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

7.1.3

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

7.1.4

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

7.2

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

7.2.1

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

7.2.2

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

7.2.3

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

7.2.4

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

7.2.5

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

7.2.6

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

7.3

Implementation......................................................................................... Implementation......................................................................................... ...................... 39

7.3.1

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

7.3.2

Budget Budget .................................................. ....................................................... ................................................................... ............ 40

7.3.3

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

8

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

9

Bibliography ......................................................................................................................... 42

10

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

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


3

Cloud 9 Sky is no more the limit

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 “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. .


4


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.


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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 PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit 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. Power House SoBe 2% Rock Star Burn 1% 1% 4% Monster 4% XXX 3%

Cloud 9 23% Red bull 62%

Figure 1Energy Drink Market Share (India)


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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 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.


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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-ofits 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 state-of-the art facility in Nandur, 40 km from Pune (Maharashtra), spread across 27 acres. This facility is ISO 9001:2000, PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit 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.


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Cloud 9 Sky is no more the limit 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 B ull Energy Drink Advertisement


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Cloud 9 Sky is no more the limit 

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 – 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



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


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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 e xciting 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. .


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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 T he 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 PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit 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. PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit 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 ma tches 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. w eariness. Cloud9 could satisfy this thi s need by „energizing and stimulating stimula ting the mind‟. For example, if he/she is fatigued, a university student may experience the inability to retain knowledge and therefore an inability inabilit y to express him/herself.

Wants

A want can be defined as „the form taken by human ne needs eds as they are shaped by culture and individual personality‟ Extreme athletes want to accelerate their performance and to revive PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit themselves quickly quickl y after each event and this thi s want is satisfied sat isfied by Cloud9. Cloud 9. Cloud9 promotes physical endurance, its consumption „to increase physical enduranc e, improve concentration and reaction speed, spe ed, improve vigilance and stimulate metabolism through natural stimulants.‟ Demands

Demands are human wants backed up by buying power p ower and given their resources, people peop le 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

Weakness

Indian product

Low awareness

Natural ingredients

Low market share

Focus on health

No prior expertise

Non alcoholic Variety of flavors FDA approved SWOT Analysis Opportunities

Threats

Fruit Juices

Lucrative market

Venturing into caffeine free cola

Many big players

Gaming ventures Consumer recognition through Sponsorship of Fashion shows and college festivals

Easy entry in the market Relatively lower pricing by big rivals

More emphasis of youth on health food Rapid market growth of 50% YoY


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5.5 Ansoff’s Product Market Expansion Grid

Current Market New Market

Current Product Market Penetration Strategy Market-Development Strategy

New Product Product-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


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Cloud 9 Sky is no more the limit 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.

Energy Drinks

Figure 3 Product Lifecycle stages


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6 Segmentation, Target & Positioning 6.1 Segmentation Below shown is a map showing the various factors taken into consideration while the segmentation takes place.

Demographic Analysis Age Gender Income

Psychographic Analysis Features: taste, caffeine content etc Attitudes to Social change: eg. conservatives, upmarkets

Segmentation

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

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


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

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 PGP14 | SECTION E | GROUP 11

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Cloud 9 Sky is no more the limit 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 dri nk‟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.


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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. PGP14 | SECTION E | GROUP 11

With dance clubs we would offer alcoholic and non23

Cloud 9 Sky is no more the limit 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


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Cloud 9 Sky is no more the limit 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. 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. value.


25


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 Female Age

19-22

Count

<18

>27

Total

24

59

83

% within Age

28.9%

71.1%

100.0%

% within Sex

39.3%

32.2%

34.0%

9.8%

24.2%

34.0%

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%

0

1

1

% within Age

.0%

100.0%

100.0%

% within Sex

.0%

.5%

.4%

% of Total

.0%

.4%

.4%

1

8

9

% within Age

11.1%

88.9%

100.0%

% within Sex

1.6%

4.4%

3.7%

.4%

3.3%

3.7%

% of Total 23-26

Male

Count

Count

Count

% of Total


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Cloud 9 Sky is no more the limit Total

Count

61

183

244

% within Age

25.0%

75.0%

100.0%

% within Sex

100.0%

100.0%

100.0%

25.0%

75.0%

100.0%

% of Total

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? 1 Age

Total

2

3

4

5

Total

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

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.


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Cloud 9 Sky is no more the limit Age * I am health conscious Crosstabulation Count I am health conscious 1 Age

2

3

4

5

Total

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

2

23

78

98

43

244

Total

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 1 Age

Total

2

3

4

5

Total

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

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.


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Cloud 9 Sky is no more the limit Age * I avoid caffeine Crosstabulation Count I avoid caffeine 1 Age

Total

2

3

4

5

Total

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

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.


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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.


30


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.


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On what occasions do you consume energy drinks?

Frequency Valid Before/During/After

a

workout

(like aerobics) During studies/ Before deadlines, exams etc. Weekend party (after a hectic week) While hitting the pub Total


Percent

Valid Percent

Cumulative Percent

1

.4

.4

.4

65

26.6

26.6

27.0

71

29.1

29.1

56.1

70

28.7

28.7

84.8

37

15.2

15.2

100.0

244

100.0

100.0

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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.


33

Cloud 9 Sky is no more the limit 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? 60 – 70 Sex

Female Male

Total

70 – 80

80 - 90

Above 90

Total

36

20

4

1

61

122

50

4

7

183

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.


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Sex * If you were to search for Cloud 9 in a supermarket, which s ection would you go to? Count If you were to search for Cloud 9 in a supermarket, which section would you go to? Alcoholic Drinks Sex

Female Male

Total

Energy Drinks

Juices

Soft Drinks

Total

1

53

4

3

61

17

145

7

14

183

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.


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Cloud 9 Sky is no more the limit Given the fact that it is a healthy drink that offers many flavors and provides an instant kick, would you be willing t o try Cloud 9? Cumulative Frequency Valid

Percent

Valid Percent

Percent

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.


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Cloud 9 Sky is no more the limit Would you be willing to participate in a promotional campaign that offers free trials of Cloud 9? Cumulative Frequency Valid

Percent

Valid Percent

Percent

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.


37

Cloud 9 Sky is no more the limit 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

Recommendations_of_Friends Advertisements Celebrities Brand >27 23-26

Variants

19-22 Composition

<18

Price Taste Packaging 0

10

20

30

40

50

60

70

80

90

Majority of people considered taste and recommendations of friends as major attributes that makes them try a new drink.


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Cloud 9 Sky is no more the limit 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 B-Vitamins -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.


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Cloud 9 Sky is no more the limit 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.


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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) Growth rate Cloud 9 market share (crore) Cloud 9 Price Cloud 9 market share growth rate Year Total Market Size Market share of cloud 9 Coud 9 Revenue Marketing Expenditure for cloud 9

1100 50% 23% Rs 75/can 7% 2010 1100 23% 253 75.9

2011 1650 25% 406.065 121.8195

2012 2475 26% 651.7343 195.5203

2013 2014 2015 3712.5 5568.75 8353.125 28% 30% 32% 1046.034 1678.884 2694.609 313.8101 503.6652 808.3826

9000 8000 7000 6000 5000

Total market size (crores)

4000

Cloud 9 (crores)

3000 2000 1000 0 2010

20 1 1

2 01 2

2013

2 01 4

20 15

Figure 4 Financial Projections


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9 Bibliography 

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http://www.financialexpress.com/news/twothird-of-indias-youth-find-drinkingunacceptable/484312/ http://www.allbusiness.com/sports-recreation/sports-games-outdoor-recreationcricket/14558967-1.html http://www.mid-day.com/news/2010/apr/100410-Energy-drinks-liquor-market-ThaneRaigad.htm http://www.wand.com/NTDB/template.aspx?ContainerID=24663&templatefilename=Tpl t0048.asp&mfg_code=50403699 http://www.business-standard.com/india/news/beverage-firms-activists-in-freshwarwords/405366/ http://www.afaqs.com/news/story.html?sid=26091 http://www.adgully.com/agtalk/cloud-9-we-are-more-than-ready-to-take-on-any-nationalor-international-giants.html http://daily-india-live.com/2010/04/05/energy-drink-companies-take-health-route-togain-market/ http://www.nagalandpost.com/ShowStory.aspx?npoststoryiden=UzEwMjE5NDk%3DcakhtMke6IE%3D http://www.packagingsouthasia.com/news/Pushpam_foods_and_1151.html http://www.scribd.com/doc/27918270/Cloud9-Presentation#open_download http://www.scribd.com/doc/2444837/Integrated-Marketing-Communications-Plan-forRed-Bull-Energy-Drink http://marketingpractice.blogspot.com/2008/08/red-bull-it-gives-you-wiings.html http://www.indiaprwire.com/pressrelease/food/2010021643698.htm http://www.citeman.com/4318-market-size-for-energy-drinks-in-india-is-growingrapidly/ http://www.indiaenvironmentportal.org.in/node/288223 http://www.mid-day.com/news/2010/apr/100410-Energy-drinks-liquor-market-ThaneRaigad.htm http://lifestyle.iloveindia.com/lounge/healthy-energy-drinks-1163.html http://in.biz.yahoo.com/100504/50/bavj0o.html http://www.rncos.com/Press_Releases/Non-Alcoholic-Drinks-Market-Set-to-Boom-inIndia.htm http://www.just-drinks.com/news/united-spirits-mulls-energy-drink-launchreport_id93536.aspx http://www.just-drinks.com/news/energy-sports-drinks-market-set-todouble_id96992.aspx http://timesofindia.indiatimes.com/india/Energy-drinks-could-beharmful/articleshow/6112737.cms http://www.livemint.com/2008/05/08223800/PepsiCo-to-tap-health-energy.html http://www.dancewithshadows.com/business/coca-cola-burn-energy-drink-launched-inindia/


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Cloud 9 Sky is no more the limit 

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http://www.dnaindia.com/money/report_coke-s-burn-to-fire-up-rivalry-in-energydrinks_1270542 http://economictimes.indiatimes.com/news/news-by-industry/cons-products/liquor/USLprepares-for-a-big-push-in-energy-drinks-segment/articleshow/5653686.cms http://www.scribd.com/doc/14493798/Energy-Drinks-Market-in-India-is-expected-totouch-Rs-1000-Cr-in-year-201011 http://www.squidoo.com/how-energy-drinks http://www.indiaprwire.com/pressrelease/food/2010021643698.htm http://researchwikis.com/Energy_Drinks_Market http://energydrinks.factexpert.com/907-energy-drink-target-market.php https://usd.swreg.org/cgi-bin/s.cgi?s=47502&p=475021220&v=0&d=0&q=1&t = https://usd.swreg.org/cgi-bin/s.cgi?s=47502&p=475021220&v=0&d=0&q=1&t = http://www.adgully.com/agtalk/cloud-9-we-are-more-than-ready-to-take-on-any-nationalor-international-giants.html http://www.cloud9energydrink.com/about.php http://www.cloud9energydrink.com/marketing.php http://www.livemint.com/2010/05/31224142/Energy-drink-firms-keen-to-lau.html http://www.livemint.com/2010/05/31224142/Energy-drink-firms-keen-to-lau.html http://spoonfeedin.blogspot.com/2008/10/business-indiawill-energy-drinks-become.html http://www.afaqs.com/perl/news/company_briefs/index.html?id=45366 http://www.mid-day.com/entertainment/2010/apr/090410-Cloud-9-Cola-Cloud-9-EnergyDrink.htm http://www.business-standard.com/india/news/cloud-9-to-foray-into-soft-drinks-mineralwater/385486/ http://www.adgully.com/marketing/event-marketing/energy-drink-plans-to-reach-cloud9.html http://sify.com/topics/Goldwin-Healthcare.html http://www.scribd.com/doc/27918270/Cloud9-Presentation#open_download http://www.bmj.com/content/338/bmj.b929.full?view=long&pmid=19325180


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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


44

Cloud 9 Sky is no more the limit 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 Strongly disagree


2

3

4

5 Strongly agree

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Cloud 9 Sky is no more the limit Question 11: I avoid caffeine

1 Strongly Disagree

2

3

4

5 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


46

Project Report on Cloud 9 Energy Drink

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