5 Hour Energy Drink Company

Introduction

5 hours Energy is a commodity of the energy drinks market, with a caffeine-obsessed consumer base. The beverage is made in the United States and is developed and manufactured by Living Essentials Company, a company engaged in the manufacturing of energy drinks in the United States. Manoj Bhargava formed the company in 2001 and later released the product in 2003, which saw a high degree of success thanks to its fresh and exciting features (Babu, Zuckerman, Cherkes & Hack, 2011). As a result, the emphasis of this paper will be on reviewing Living Essentials Company and its market output of energy drinks. Some of the factors to be assessed, in this case, include the mission of the entity, strategies, and goals used in promoting the sales of the product, customers and employees of the entity, major competitors, financial performance, and a strategic analysis.

Mission and Strategies

Living Essentials Company is viewed as a major player in the energy-shot industry due to its effective production of commodities and its use of crucial strategies in the market. The mission of the entity is to provide its customers with high-quality energy drinks that promote their activeness and performance. The company also considers the health status of its customers through ensuring the energy drinks are medically approved where they are designed for adults and limits consumption by children and pregnant mothers. The company’s CEO; that is, Bhargava is widely known in the market due to his use of effective skills in the production and marketing of the 5-hour Energy drink. The goal of Living Essentials Company is to regulate the energy-shot industry since it experiences stiff competition from other entities. The market has expanded due to the emergence of new firms that are involved in supplying energy drinks; hence, providing substitute products to the customers. This has led to the company expanding its operations to other emerging markets in Europe where it has increased its market share. Another crucial strategy used by the company involves its packaging process of the 5-hour Energy drink. The company is involved in selling the drink in small sizes; that is, two-ounce energy shot, which is considered a better alternative to the usual 16-ounce beverage as used by competitors such as Red Bull and Monster. The use of the energy shot style has managed to boost the sales of the drink since most customers consider it a quick and easier way to consume the product.

Major Competitors

Living Essentials Company is widely recognized in the United States due to its production of 5-hour Energy drink where it is considered to dominate the market. However, other existing firms in the industry have strived to ensure the company is not dominant through the production of substitute products with unique features. Some of the competitors, in this case, include Monster, Red Bull, Full Throttle, Rockstar, and AMP Energy where they engage in the manufacturing and supplying of energy drinks in the market (Gamble, 2010). Despite the stiff competition, Living Essential Company has managed to be a more superior force compared to its competitors. This is due to the effective production and marketing strategies implemented by Bhargava that ensure the product is the most preferred by buyers. For instance, some of the competitors have begun selling the energy drinks using the smaller shot-style technique due to the success experienced by Living Essentials in its sale of 5-hour Energy. Full Throttle, AMP Energy, and Rockstar are examples of the competing firms that have implemented the use of the shot-style method of selling their energy drinks. This has been a threat to Living Essentials since the sales of its competitors have been boosted in drug stores and supermarkets in the country. Despite the energy shot market being flooded, 5-hour Energy is still considered the market leader; hence, the company is dominant.

Employees and Customers

The company is involved in recruiting and training highly-skilled individuals to enable them to identify how the firm operates in the highly-competitive market. According to statistics from the company, it has more than 1500 employees who are involved in the production and distribution process of the goods and services provided by the entity (Treloar, 2015). The employees, in this case, have been distributed to all offices of the entity to ensure challenges involving inadequate human labor are avoided. The customers, on the other hand, are the individuals in the market involved in the acquisition of the product. Most of the company’s customers are viewed to be caffeine lovers who may substitute coffee with the energy drink. The 5-hour Energy drink is the company’s main brand where factors such as consistency, credibility, and uniqueness have enabled it to attract more customers in the market.

Financial Performance

Living Essential Company’s financial performance can be viewed as stable due to the high-level of sales experienced by its main brand; that is, 5-hour Energy. After its launch in 2003, it began gaining ground in the US where its sales grew surpassing those of its competitors. The retail sales of the product in 2012 were estimated to have grown to $1 billion indicating its dominance in the energy drinks industry. 5-hour Energy is considered to be the energy-shot market leader where it is estimated to regulate 90% of the industry (Seifert & Connor, 2014). This means that most of the revenues generated by the entity are derived from the sales of the energy drink.

Functions of Management

The management team of Living Essential Company is headed by the CEO, Bhargava who is involved in the management and regulation of the company’s resources. For this managing of resources to be effective, he is associated with the execution of four crucial functions; that is, organizing, planning, controlling, and leading, which enables him to ensure the firm is competitive in the market. Planning involves the management team creating an action plan regarding how the sales of the product can be increased. The action plan may also contain the strategies to be used by the entity to facilitate its competitive advantage in the energy-shot industry. Organizing requires Bhargava to determine how resources will be distributed in the firm; that is, identifying the roles and duties of all employees depending on the action plan. Lastly, leading and controlling are also crucial management functions since they are associated with forming of working relationships between the management and the employees to identify how to conduct the operations of the firm. This means that it is Bhargava’s responsibility to interact with his employees and connect with them at an interpersonal level. The controlling function involves the management implementing policies and practices that are expected to indicate how activities will be conducted in the firm.

SWOT Analysis

Strengths

The company is associated with selling a unique and strong brand in the market; that is, 5-hour Energy, which dominates the energy-shot industry. This is a major strength since most of the revenues generated by the firm can be attributed to the product’s sales. Living Essential Company is also viewed to have an effective management system, which is led by Bhargava. The strategies created by the management have enabled the firm to have a competitive advantage over other energy drink producing firms in the market. The firm has a wide variety of flavors for the energy drink; hence, enabling customers to choose their favorite. Lastly, the company has a strong and stable financial performance due to the increase in the level of sales of the product.

Weaknesses

Despite Living Essential being dominant in the market, it experiences some challenges that affect its operations negatively. The entity has over the years being linked with some legal issues that have led to the loss of resources (Tanne, 2012). For instance, in 2017 it was noted that the company had violated some provisions of the Consumer Protection Act where it was fined $4.3 million. The product; that is, 5-hour Energy has also been linked with some deaths in the country where it has been reported that some customers died after consuming the product.

Opportunities

The company may exploit some opportunities present in the market to facilitate its growth and expansion. For instance, technological advancement is a crucial opportunity that can enable the firm to increase its market share through investing in social media platforms to reach out to people in the global market. The firm may also supply its products in emerging markets such as in Asia where the population is large. This means that investing in foreign markets will lead to the increase in the company’s market share. Lastly, additional goods and services may be introduced by the entity to promote the level of revenues generated. The firm will have more revenue sources; hence, failing to rely on 5-hour Energy.

Threats

The growth in technology has led to the emergence of other firms in the energy-shot market leading to increased competition. This is because technology is being utilized in the production of unique products that are viewed as substitutes; hence, limiting Living Essential’s market share. The legal issues facing the company are also threats since the courts may order the closure of the entity or the product. This means that revenues obtained by the entity will decline since it relies on sales of 5-Hour Energy.

Conclusion

Therefore, from this study, one can obtain information regarding Living Essentials and its production of 5-hour energy. The company operates in the energy-shot market where it is involved in the manufacturing of the energy drink. The product was launched in 2003 and it has grown over the years to dominate the energy-shot market. This is despite the stiff competition from other energy drinks such as Red Bull, Monster, and AMP Energy. The company’s founder, Bhargava has over the years implemented crucial strategies that have enabled the firm to dominate the market through the product; hence, the management is viewed as effective.

References

Babu, K. M., Zuckerman, M. D., Cherkes, J. K., & Hack, J. B. (2011). First-Onset Seizure After Use of 5-Hour ENERGY. Pediatric Emergency Care, 27(6), 539-540.

Gamble, J. (2010). Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages. Mobile, AL: University of South Alabama.

Seifert, J. G., & Connor, D. A. (2014). The Influence of Commercial Energy Shots on Response Time and Power Output in Recreational Cyclists. Journal of the International Society of Sports Nutrition, 11(1), 56.

Tanne, J. H. (2012). New York Attorney General Investigates Energy Drink Makers.

Treloar, J. A. (2015). Assessing Energy Drink Consumption by College Students Using the Theory of Planned Behavior (Doctoral dissertation, Mississippi State University).