Case study 2
?Case Study Marketing Miscue part 2
Four loko targets Young college hedonists
Phusion Projects, LLC was founded in 2005 when three friends from Ohio State University had the entrepreneur- ial idea to start their own company. From this company came the Four Loko product that caused much panic in the fall of 2010. While news reports focused on Four Loko’s ingredients—caffeine and alcohol, the real marketing mis- take likely came from the market segment that enjoyed the product. That is, Four Loko had quickly become the drink of choice for college students across the United States.
Referred to as an alcoholic energy drink, Four Loko comes in a 23.5-ounce can, with alcohol content of 12 percent (comparable to four beers). The Four Loko product, in sev- eral fruit-flavored varieties, was displayed on store shelves in brightly colored cans at a retail price of $2.50 to $3.00. In addition to the alcohol, the energy drink is packed with caffeine (equivalent to that found in a cup of coffee), tau- rine, and guarana. What sets Four Loko apart from other energy drinks, however, is wormwood oil. Wormwood oil is the key ingredient in absinthe, a very high-proof spirit believed to cause hallucinations. The hallucinogenic as- pect of absinthe, from the thujone in the oil, resulted in its prohibition for years in many countries. However, federal regulators now allow absinthe as long as the thujone has been extracted from the wormwood oil.
Health advocates contend that the caffeine masks the effects of the alcohol that is being consumed when drink- ing Four Loko. Thus, a person is likely to consume more al- cohol than he or she normally would. Four Loko and other caffeinated alcoholic beverages have been referred to as “blackout in a can” and “wide-awake drunk.”
the target market
Today’s college students grew up with energy drinks on store shelves. From the high school sports field with
Gatorade and Powerade, today’s younger generation eas- ily graduated to Red Bull, Monster, Rockstar, and AMP. As such, this twenty-something generation was a primary target market for Four Loko. These energy drink consumers could go away to college and consume their energy drinks in conjunction with alcohol—premixed—and get drunk quickly and cheaply.
According to health experts, ingesting caffeine with 12 percent alcohol can lead to a heart attack, especially for someone fatigued or with a cardiac condition. The alco- holic energy drink could lead to high blood pressure and arrhythmia. Four Loko gained national attention in the fall of 2010 when nine university freshmen, ranging in age from seventeen to nineteen, were hospitalized with blood-alcohol levels from 0.12 percent to 0.35 percent (a blood-alcohol concentration of 0.30 percent is considered potentially lethal). One of the nine students almost died. All nine had consumed Four Loko in conjunction with drinking vodka, rum, and beer.
In response to the panic around the safety of Four Loko, lawmakers in numerous states began lobbying for leg- islation prohibiting the product, and universities across the nation banned the drink from campus. In the state of Washington, an emergency ban was put into effect, with the product pulled from store shelves almost immediately.
In a statement released by Phusion Projects, the com- pany noted that it marketed its products responsibly to those of legal drinking age and shared the concerns of col- lege administrators about underage drinking and abuse of alcoholic beverages. However, the company held strongly to its belief that combining caffeine and alcohol was safe and provided examples such as Irish coffees and rum and
?CASE STUDIES 1
© iStockphoto.com/Bill Noll
cola. Plus, anyone could mix vodka and an energy drink such as Red Bull. In support of Phusion Projects, some commentators expressed concern over the apparent panic surrounding the consumption of alcohol and caffeine and, in particular, Four Loko. It was noted that the publicity sur- rounding Four Loko was probably one of the best forms of advertising—that is, politicians jumped on the ban- Four-Loko bandwagon, which resulted in a lot of press for a product targeted to hedonistic young people that then prompted more and more young people to sample the product.
Sources: Phusion Projects, www.phusionprojects.com; Shannon Dininny, “Four Loko Sickened Several Central Washington University Students,” Huffington Post, October 25, 2010, www.huffingtonpost.com /2010/10/25/four-loko-sickened-centra_n_773597.html (Accessed November 8, 2012); Mike Hughlett, “Caffeinated Alcoholic Drinks Stir up Legal Concerns,” Chicago Tribune, August 24, 2009, http://articles .chicagotribune.com/2009-08-24/news/0908230370_1_caffeine-energy-drinks-alcoholic (Accessed November 8, 2012); Giselle Phelps, “College Students Going Loco for Four Loko Drink,” October 22, 2010, www.the33tv.com/news/kdaf-loko-alcoholic-energy-drink-health-story,0,3345148.story (Accessed November 8, 2012); Noah Rosenberg, “Maker Halts Distribution of Alcoholic Energy Drink,” New York Times, November 14, 2010, www.nytimes.com/2010/11/15/nyregion/15loko.html (Accessed November 8, 2012); Jacob Sullum, “Loco over Four Loko: The Moral Panic behind the Ban,” Patriot Post, November 24, 2010, http://patriotpost.us/opinion/jacob-sullum/2010/11/24/loco-over-four-loko-the-moral-panic-behind -the-ban (Accessed November 8, 2012).
Complete this case study using this outline; remember to FOLLOW this order:
1 Identify the situation, and the basic issues presented. Think to yourself—what’s the problem? What happened?
2 Identify ALL the stakeholders that have been, or COULD be affected by this situation. This may be MORE than just the company, customer, or others mentioned in the case discussion.
3 Identify ALL the alternative actions that you think might/can be taken.
4 Determine a final recommendation, course of action. (Note: you may want to answer this AFTER you complete the questions posed in the case.
5 Answer the questions posed in the case itself.
1. Profile the target market for Four Loko.
2. Outline the consumer decision-making process for Four Loko.
Please—identify EACH item by the numbers, and information presented here. Keep things in this order, and list the item numbers—do NOT write this up as a description paragraph—rather a bullet/number list will make it easy for me to see that you’ve answered everything.
Complete ALL case studies as a Word document, attached to the assignment submission link. DO NOT type your answers in the text box of the submission link.
Case study 2