5 Hour Energy: Market Entry Strategy for Australian Market

This report provides a comprehensive analysis of 5 Hour Energy's market entry strategy, focusing on the Australian market. It begins with an executive summary and table of contents, followed by an introduction that defines market entry and its various strategies. The report identifies the Australian market as an attractive international market for 5 Hour Energy, justifying this choice based on the demand for healthy energy drinks and the target market of young adults and health-conscious consumers. It then explores different market entry modes, including mergers, acquisitions, joint ventures, and franchising, ultimately recommending a joint venture strategy with a local Australian company like Dan Murphy's. The report further outlines the company's pricing strategy, advocating for a low-pricing approach to gain a competitive advantage. It also details promotional strategies, encompassing both online (social media) and offline (networking, trade associations) tactics. Finally, the report provides an overview of the distribution channels to be utilized in the Australian market, ensuring product accessibility.

Running head: MARKET ENTRY
MARKET ENTRY
Name of Student
Name of the university
Author Note

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Executive Summary
Market entry refers to carrying out business activities in international countries and it includes
the distribution and delivery method of different goods and services in that international country.
There are different strategies of market entry such as franchise, acquisition, joint venture and
mergers. The company selected for the purpose of this study includes- 5 hour Energy Company
and the product is the healthy energy drink. The main aim of the paper was to discuss about the
different market segment and why the same has been selected, the different modes of entry and
discussing the framework of pricing, promotion and distribution. The paper will therefore discuss
about the market segment, the mode of market entry and selection of one particular mode of
market entry and will also include- the framework of promotion, distribution and pricing.

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Table of Contents
Introduction..........................................................................................................................3
Discussion............................................................................................................................3
Identification of an international market and justification as to why the market is
attractive......................................................................................................................................3
Markey entry choices mode and selection of a particular mode.....................................5
Framework of pricing, distribution and promotional strategies......................................7
Conclusion.......................................................................................................................8
References............................................................................................................................9

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Introduction
Market entry refers to a strategy for planned delivery and distribution of good and
services of a company to a new market. In case of export and import of goods and services,
market entry strategy will include creation, establishment and management of foreign entry
contracts. There are different strategies of market entry mode such as direct exporting,
franchising, partnering, joint venture, acquisition and mergers and similar others. Market
segment on the other hand refers to groups of individuals sharing some common characteristics.
The market entry strategy needs to target a particular market segment for introduction of goods
and services for that segment (Andreu, Claver & Quer, 2017). The company selected for the
purpose of this study includes- five hour energy and the product selected for the purpose of this
study includes- healthy energy drink. The aim of the paper is to discuss about the market
segment which will be offered the selected goods and services, carry out market entry into a
particular market and also discuss about the different strategies for pricing, promotion and
distribution.
Discussion
Identification of an international market and justification as to why the market is
attractive
The international market that is selected for the purpose of market entry is the Australian
market (Girdzijauskaite et al., 2019). The company 5 hours energy will be expanding its
operations into the Australian market because the Australian market has good prospects for the
healthy energy drinks offered by the company. The 5 hours Energy Company is engaged in
providing its products in three main categories that includes- regular energy drinks made of

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berry, grape, orange, citrus lime, pink lemonade and also pomegranate. Further the company also
offers energy drinks that provide extra strengths such as berry extra strength, grape extra strength
and others. Moreover it also provides products and services that can provide energy which will
last up to 5 hours through its lemonade tea, peach tea and also raspberry tea. Moreover the
healthy energy drinks offered by the company help people in regaining energy in just a few
minutes and therefore whenever customers need an energy boost they can have this energy drink.
It can also be helpful for all those people who are working because it can provide energy to them
after their lunch and therefore help them in fighting the urge to have afternoon naps (Grünig &
Morschett, 2017). Therefore working people will be able to focus on their work even after their
lunch. It is the best drink to feel energized whether it is in the morning or afternoon or even late
at night. Moreover the 5 hour energy drink is sugar free and therefore it is the best fit for all
those customers who are looking for a healthy option of energy drink. It can be used by all those
people who are looking for an important meeting, or have a long drive or even have a second job.
Therefore the market segment that is targeted by the company in Australia is young adults who
face issues related to staying wake in office after lunch, or suffers from lack of energy and also
who is health conscious (Mittal, 2018).
However 5 hour Energy Company needs to prepare a market segment profile for
understanding the characteristic of the target customers in Australia. Therefore the demographic
and psychographic factors need to be understood. The demographic factors include
understanding the preferences of the customers based on factors such as their age, gender,
income levels and also location. The psychographic factors include understanding of the lifestyle
and personality and offering products and services according to the same.
Criteria Target

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Gender Both men and women are the targeted
Age The age group 22-35 or the young adults are
targeted.
Income The people who have income range of 85000
Australian dollars per annum or above.
Others Other factors include socio-cultural factors,
lifestyle and other similar factors and these
factors also have a major impact on the choice
of products and services.
Therefore from the above table it can be understood that both men and women will be targeted
for the purpose of offering the healthy energy drinks to them. Moreover the young adults will be
targeted for the purpose of selling the healthy energy drinks since they are the ones who will be
benefited the most with the energy drinks as these drinks will help them in boosting their energy
and they will be able to regain their energy at any time. Further all those people who are
conscious about their health and prefer sugar free drinks can also opt for this drink and moreover
they will get energy for up to 5 hours. From a research it has been found that the citizens of
Australia prefers healthier food and are spend almost 13.5 billion dollars on the purchasing
healthier food products. Australians are known for their healthy eating options and the same
opportunity is being used by different companies for the purpose of offering healthier food and
beverage options for them (Laufs, Bembom & Schwens, 2016). From research it has also been
found out that the average rate of sleeping for Australian is quite low and therefore there are
many chances that those who are working feel tired too soon and especially after lunch tend to
lose their energy and therefore these healthy energy drinks can be used by them for regaining
their energy and working with focus and concentration.

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Markey entry choices mode and selection of a particular mode
An organization decides to expand its operations for the purpose of increasing its
profitability and then they decide to enter into the international market (Hofer & Baba, 2018).
There are different market entry strategies that can be used by a company for the purpose of
entering an international market such as- mergers, acquisitions, joint venture and also franchisee
options. Mergers refers to an agreement between two companies to unite as one company. There
are different reasons why companies may decide to merge with each other. Some of the reasons
includes- expanding the reach of the company, expanding activities into new segment, gaining a
better market share (Schellenberg, Harker & Jafari, 2018). These activities further lead to
increase in the shareholder value and therefore it includes a voluntary fusion between two
companies. There are different types of mergers such as conglomerate, market extension,
congeneric, horizontal and vertical. However one of the major disadvantages of merger includes
cultural clash between the companies which are getting merged and the attrition rates also
increases. Joint venture includes an agreement between two parties for pooling their resources in
order to carry out a particular task. This task can include any new projects or even business
activities. In case of the joint venture each party has equal liability towards profits or losses. This
strategy of entry mode is usually used when a foreign company decides to enter into a new
market and therefore it enters into joint venture with a local business for operating successfully
into the international market with the help of entering into partnership with them. One of the
major disadvantages of joint venture- inappropriate division of resources and work between the
business entities. A franchise business refers to and includes- providing a license to another
party to make use of the payment or copy right of the former company when it is a brand. In
such a situation the ones taking the rights is allowed to make use of the owners company name,

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property and also products and services and technology. However the one who is taking this right
is called the franchisee has to pay a fee or royalty to the franchisor. This way the franchisor can
expand its operations in different countries in its own name while also serving the local needs of
the customers. One of the major disadvantages of franchisee includes- strict product ruling,
franchisee fees and royalties can turn out to be a major concern for the franchisee business. The
compliance with the franchisee agreement has the potential of restricting growth in business
areas. Acquisition refers to a business scenario when one company acquires either only a part or
all the shares of another company in order to gain control over that company. Moreover
acquisition gives the power to the acquirer to take part in major decision making of the company
without consulting the shareholders of the company that is acquired (Shen, Puig & Paul, 2017).
Acquisition is used in order to enter an international market, used a strategy for growth by
companies, it is also used for reducing the competition in the market and also for reducing the
excessive capacity. One of the major disadvantages of acquisition includes- integration problems
between the employees and high cost. High or detrimental financial consequences are also a
result of acquisition. Therefore after analysing the pros and cons of each of the market entry
mode, it can be said that the strategy of market entry that will be used by 5 hour energy drink
includes- the joint ventures. This is so because there is lower risk in case of joint venture,
infrastructural cost is also low because the infrastructure of the local business can be used.
Therefore lower investment made for infrastructural development and the brand image of the
local company can also be used. Therefore 5 hour Energy Company can enter into a joint venture
with the local company of Australia that is Dan Murphy.

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Framework of pricing, distribution and promotional strategies
The pricing strategy that will be used by the 5 hour energy company is that of low pricing
and this is so because there is high competition in the market and the only way to gain a
competitive advantage over the competitors is through cost leadership. Cost leadership strategy
includes- reducing the operating cost in order to gain a competitive advantage over the
competitors and in order to gain the same company’s try to improve their efficiency or increase
its scale of production and other similar techniques. This strategy will help in making the energy
drink a prat of everyone’s life by making it affordable for almost everyone. The promotional
strategies used by the company includes making use of both online and offline promotional
strategies. Some of the offline promotional strategies that will be used includes- networking,
trade associations, and publications and also direct mailing activities. These activities can also
help in improving the awareness of the customers about the products and services in the local
markets and they can also ask questions directly from the operators through trade associations
and other industrial events (Hollender, Zapkau & Schwens, 2017). Some of the online
promotional strategies used by the company includes making use of social media platform such
as Facebook, instagram, YouTube and also twitter. The distribution channel used by the
company in the international market includes making use of the distribution channels of Dan
Murphy (Murphy, 2018). Further online distribution channels can also be used. These includes-
selling the healthy energy drinks through physical stores in Australia and also by making use of
online techniques.
Conclusion
Therefore from the above discussion, it can be concluded that it is necessary to identify a
particular market segment in case of market entry on order to meet the needs of that particular

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segment with the products and services of the company. From the paper it has been understood
that the target market for the selected product that is the healthy energy drink is health conscious
young adults. Moreover from the paper, the different modes of market entry have been
understood and the market entry mode that will be selected by the company chosen for the
purpose of this study has also been understood. Moreover frim the paper, the pros and cons of all
the modes of market entry have been understood and the entry mode of joint venture is used
because the benefits offered by this mode of entry is much more than those offered by the other
modes. Further from the paper it has also been understood that pricing strategy selected by the
company in the new market will depend upon the market conditions of that particular new
market. Therefore from the paper, the pricing strategies, the promotional strategies and the
distribution strategies used by the company for meeting the needs of the customers in the new
market have been understood.

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References
Andreu, R., Claver, E., & Quer, D. (2017). Foreign market entry mode choice of hotel
companies: Determining factors. International Journal of Hospitality Management, 62,
111-119.
Girdzijauskaite, E., Radzeviciene, A., Jakubavicius, A., & Banaitis, A. (2019). International
Branch Campuses as an Entry Mode to the Foreign Education Market. Administrative
Sciences, 9(2), 44.
Grünig, R., & Morschett, D. (2017). Determining the Market Entry Modes. In Developing
International Strategies (pp. 105-123). Springer, Berlin, Heidelberg.
Hofer, K. M., & Baba, A. (2018). Market Entry Strategies, Innovation and Performance of SMEs
in the Service Sector. Key Success Factors of SME Internationalisation: A Cross-Country
Perspective, 155.
Hollender, L., Zapkau, F. B., & Schwens, C. (2017). SME foreign market entry mode choice and
foreign venture performance: The moderating effect of international experience and
product adaptation. International Business Review, 26(2), 250-263.
Laufs, K., Bembom, M., & Schwens, C. (2016). CEO characteristics and SME foreign market
entry mode choice. International Marketing Review.
Mittal, S. (2018). Choice of market entry mode: A critical issue in international
business. Choice, 4(6).

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Murphy, M. J. (2018, July). Competing for Emerging Markets: A Resource Dependence Model
of Foreign Market Entry Mode. In Academy of Management Proceedings (Vol. 2018, No.
1, p. 18681). Briarcliff Manor, NY 10510: Academy of Management.
Schellenberg, M., Harker, M. J., & Jafari, A. (2018). International market entry mode–a
systematic literature review. Journal of Strategic Marketing, 26(7), 601-627.
Shen, Z., Puig, F., & Paul, J. (2017). Foreign market entry mode research: A review and research
agenda. The International Trade Journal, 31(5), 429-456.