Dear Ronnie Stacks, As you know, Monster has recently fallen under major scrutiny due to an FDA probe

which links your energy drink with five deaths. The reports led to a great deal of undesirable news coverage coupled with a steep drop in stock prices, raising questions about whether or not the brands image would be irreparably damaged. We are writing to inform you that we have just completed the research you ordered regarding your target demographics perception of the Monster brand following its imp lications in the death of 5 people. Our team has compiled the attached report so that you can understand the potential fallout stemming from the incident and determine what actions should be taken over the coming months. The research gathered includes a survey, a focus group, and analysis of secondary resources such as related news articles and tobacco industry case studies. Our research indicates that the companys current situation is exceedingly fragile, and we believe that every move you make should be taken only after taking our findings into consideration. We hope that you will take our recommendations to heart, as we believe they will be key in restoring Monsters image and maintaining a strong following in the wake of these unfortunate events. If you have any questions, please contact me at Nathaniel.Johnson@usc.edu or reach me at 708-408-9379. Regards, Nathaniel Johnson Monster Energy Research Group

Table of Contents
Executive Summary..Page 4 Methodology.Page 5 Background/Secondary Research Insights..Page 6 Research Objectives.Page 9 Primary Research Insights...Page 9 Conclusion/Recommendations...Page 14 Appendix.....Page 17

Chart List
Figure A: One day drop in stock prices ...Page 7 Figure B: Figure B: Energy Drink Market Share ....Page 7 Figure C: Have you heard about illnesses or hospitalization related to energy drinks?................................................................................................................................................Page 9 Figure D: Which of the brands have you heard about in relation to illnesses or hospitalizations?..........................................................................................................................Page 10 Figure E: Average ranking of Monster in 5 categories in initial impressions, after learning about hospitalizations related to the drink, and then after learning about the context of the hospitalizations and their relationship to preexisting heart conditions and alcohol mixing. .................. ..Page 11 Figure F: How dangerous do perceive energy drinks in general?..................................................................Page 12 Figure G: How dangerous do perceive Monster Energy drinks specifically?................................................Page 13 Figure H: Which do you view as more dangerous, Monster Energy or Coffee?...........................................Page 13 Figure I: After learning of the Caffeine content in both, does it change which you believe is more dangerous?................................................................................................................... .................................Page 14 Figure J: How effective do you believe Monster Energys warning label s are?..........................................Page 15

Executive Summary: Situation: The deaths of five people and the illness of 40 more have been linked to Monster. Though all of these deaths and illnesses were related to either pre-existing heart conditions or mixing with drugs and alcohol, many of the initial reports failed to relay this information. The brands stock dropped by a precipitous 21% the following day, indicating that its image might be in danger and peoples perception of the brand might turn negative. Research Objectives: Conduct research to determine whether or not the negative press is causing Monsters target audience to associate the product with death or preventing them from buying the product Assess whether Monsters audience would be more receptive to an aggressive or apologetic stance by the company Determine the best way to communicate that Monster is not at fault or not dangerous to the target audience

Research Methods: One Survey Distributed for two weeks Sample size of 132 respondents 80% between the ages of 18-21 18% between the ages of 22-34 1% under the ages of 18 One Focus Group 7 participants Athletic college males age 18 22 Extensive Secondary Research Tobacco Industry Case Studies Current Energy Drink Studies Demographic Research Competitor Analysis Secondary Insights:
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Monster was negatively affected by the news of an FDA probe related to potential deaths caused by the energy drink Monster is the second most popular beverage among energy drink drinkers Monsters largest demographic, males 18-24, is on average significantly younger than that of the average energy drink Innovation plays a key role in the brands sales performance as well as paying homage to its brand image: young, edgy, skeptical yet adventurous. 4

Monster is also being negatively affected by its listing as a dietary supplement rather than a general food item Monster has had the second most reports of illnesses among energy drinks Many of Monsters competitors have benefited from releasing drinks with zero and allnatural claims

Primary Insights:
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People are relatively aware of the deaths linked with monster, but did not seem very concerned Monsters current warning labels are ineffective Informative caffeine messaging is needed, especially in relation to comparable coffee drinks Informative messaging needed on how much Monster is necessary to kill Introducing an all-natural or low-calorie drink would not be effective

Conclusion: Primary research showed us that those who tend to drink monster are not significantly concerned with the deaths linked to Monster once they have all relevant information. However, if respondents were only informed of the deaths but not given the proper context (that the deaths involved either drug abuse or pre-existing heart conditions, how much Monster is necessary to kill, and its danger relative to coffee), it was significantly detrimental to the brands image. Thus Monster needs to be as cooperative as possible with the FDA while aggressively defending the brand, taking steps to fight the claims and making its innocence known with tactics such as: -Release an informative statement that defends the brand WITHOUT being apologetic - Pioneer scientific research that proves safety of Monster - Develop crisis communication plan to anticipate any future incidents - More transparency -Closer collaboration with governments to create effective energy drink regulation in transparent discourses accessible by the public -Press conference with executives

Methodology:
Primary Research One focus group and one survey The Focus Group: The focus group was comprised of 8 people, all college age students from 18-22. The students were a mix of students who drink Monster regularly, students who drink it occasionally, and students who dont drink monster at all, in order to best understand ho w we might reach a larger swath of our target demographic. We attempted to determine what they think of the brand before knowing the links to death, what they thought of it after, how it compares to other energy drinks, and test what techniques and messages might help convince them to continue drinking energy drinks.
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We chose to conduct focus groups because this is the clearest and most effective way to understand our target audience and what they expect of the Monster brand. Focus groups, which are an example of an exploratory research tactic that use a group approach to gain an in-depth understanding of the Monster energy drink consumers and target market, allow for a controlled group discussion moderated by a member of our team to keep the discussion productive and on task. By recruiting male college students, ages 18-22, we were able to find out in more detail how and why they feel a certain way about Monster and what they expect from our product. This form of primary research will lay out the foundation for our future PR research. Sample Questions: - What is you first impression of monster versus other energy drinks? - Do you perceive energy drinks as dangerous? - If you heard that people were hospitalized after drinking monster, would that surprise you? Would you blame monster? Survey One: Our first survey will be conducted among the same demographic, college age students from 18-22, from a sample size of at least 100. It was given out without knowledge of the participants Monster drinking habits, in order to insure that our entire potential market was reached. This survey will help establish who our primary public is, the character traits, tastes and perceptions of those associated with that public, and what their opinions about Monster are after hearing about the recent emergency room visits and FDA investigation. We conducted one survey in order to reach a larger amount of people to further capture accurate perceptions of the Monster brand. A surveys main goal is to understand why people hold opinions and not just what their opinions are. This survey allowed us to get to the bottom of any negative attitudes or beliefs of the Monster brand and showed us the best and most effective way to change those negative opinions. Our survey had a sample size of 152 18-24 year-old male college students. Sampling is important because it helps us target the public that consumes Monster energy drink the most, and their responses proved invaluable as we attempt to maintain the Monster brand reputation and sales. Sample Survey Questions: - Which energy drink do you think is more dangerous to your health? - Who do you think is at fault for the hospitalizations? - How effective do you think the warning labels in preventing overconsumption of energy drinks? Secondary Research There were a number of different studies and statistics we analyzed in order to inform and shape our primary research, including: Tobacco Industry Case Studies: We examined what different cigarette companies did in the 50s up to this point to keep people using their product in spite of the fact that it was potentially harmful. These gave us a few ideas of how we might avoid a loss of consumers, including introducing an all-natural line of products and funding extensive scientific research that might help us defend the product. Current Energy Drink Studies
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We explored at all of the information currently available on energy drinks, such as their effects on health, public perception of energy drinks, and the primary public of energy drinks. Demographic Research: We examined all of the research we could find on the tastes, perceptions and likes and dislikes of our target public, once we had determined who our target public is. Competitor Analysis: We looked at what other energy drinks are doing in terms of marketing strategies, whether they are facing the same issues at us, and what measures they have taken to either avoid facing these health issues or what theyve done to repair them.

Background and Secondary Insights: Situation: The deaths of five people and the illness of 40 more have been linked to Monster. Though all of these deaths and illnesses were related to either pre-existing heart conditions or mixing with drugs and alcohol, many of the initial reports failed to relay this information including the primary source of information regarding the incident, The Dawn Report. The brands stock dropped by a precipitous 21% the following day, indicating that its image might be in danger and peoples perception of the brand was in danger of turning negative.
Secondary Insights: Monster was negatively affected by the news of an FDA probe related to potential deaths caused by the energy drink

Figure A: One day drop in stock prices On October 22, 2012, the FDA announced its probe regarding 5 deaths and 40 October 22, 2012 illnesses being linked to the drink. As is made clear from the one day drop in stock prices from $54.25 at the markets open on October 22 to $42.27 on October 23, a October 23, 2012 drop of nearly 21%, it is clear that the news was very harmful to the companys image. Additionally, the primary report of the incidents, The Dawn Report, failed to include the details of the deaths, such as information that the Monster drinkers had pre-existing heart conditions.

Monster is the second most popular beverage among energy drink drinkers
Figure B: Energy Drink Market Share Monster sits only behind Red Bull in terms of most purchased energy drinks. Monster makes up 37% of market share, while Red Bull makes up 42%. Other than Red Bull, Monster only has to worry about competition from Five Hour Energy, who holds 25.5% of the market. Further research is needed on how the brands and the target demographics perceptions of those brands stack up.

Monsters largest demographic, males 18-24, is more likely to take risks than the demographics of other energy drinks Young adults aged 18-24 are three times more likely to drink Monster Energy drink than any other demographic. This makes them Monsters target demo significantly younger than the average energy drink drinker, the age of whom can range from 18-34. Because Monsters target demographic is younger than the average that likely means that they are more willing to take risks, and may drink Monster despite its health risk. Innovation plays a key role in the brands sales performance as well as paying homage to its brand image: young, edgy, skeptical yet adventurous. As is evidenced by Monsters heavy support of motorsports such as motocross and monster truck, Monster likes to identify itself with an adventurous, thrill-seeking crowd. This likely means that those who drink Monster enjoy the thrill of doing something dangerous, and may not be turned off by drinking Monster even if they do perceive it as dangerous. Monster is also being negatively affected by its listing as a dietary supplement rather than a general food item Monster currently lists itself as a dietary supplement rather than a general food item, leading to speculation that Monster does so simply to avoid regulation by the FDA. It allows the company to not list the caffeine content of the drink, which Monster chooses to do. This looks somewhat
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suspicious to the public, and only promotes the idea that the drink is dangerous. It also leaves reporters to speculate on how much caffeine is in a can, meaning any figures on Monsters caffeine content floating around the web may be false and harming our image. Monster may not be the energy drink most perceived as dangerous, based on the number of reported illnesses versus other drinks Monster has had only the second most reports of illnesses among energy drinks, led by 5-Hour Energy(30 Hospitalizations, 13 deaths) and followed by Rockstar (13 hospitalizations, no deaths). This means that our fear of Monster being perceived as dangerous may be somewhat unfounded, as many of our competitors have had similar issues. It also means we may be able to look at how our competitors are handling similar problems. Many of Monsters competitors have benefited from releasing drinks with zero and all natural claims In order to foster a healthy image, many energy drink companys including Monsters leading competitor Red Bull have released new additions to their drink line up that include zero -sugar and zero-calorie monikers. Monster might be able to shake any image damage by doing something similar with their drinks. While this may seem difficult for a drink so closely tied with being manly and edgy, we think they might be able to go the route that Dr. Pepper Ten did with its its not for women (though in a more politically correct direction with similar success. Monster may benefit from employing some of the tactics used by the tobacco industry to ensure continued use among constituents The tobacco industry once found itself in a similar debacle, trying to distance itself from reports of illness and death. We examined their tactics, and have chosen some to test in our primary research to learn their potential effectiveness. Some examples of this include funding extensive medical research and updating warning labels, two things we directly inquired about in both our survey and our focus group. Research Objectives:
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Conduct research to determine whether or not the negative press is causing Monsters target audience to associate the product with death or preventing them from buying the product Assess whether Monsters audience would be more receptive to an aggressive or apologetic stance by the company

Determine the best way to communicate that Monster is not at fault or not dangerous to the target audience

Insights from primary research:

The public is fairly aware of deaths linked with all energy drinks 60% of survey respondents said that they had heard of deaths link to energy drinks in general, meaning that it is fairly well known among Monsters target demographic that energy drinks have resulted in hospitalizations.
Figure C: Have you heard about illnesses or hospitalizations related to energy drinks?

However, people were less aware of the deaths linked with Monster Compared to the total of 60% of respondents, only 34.6% of survey respondents were aware of deaths/hospitalizations associated with Monster Energy. This means that Monster Energy is not the only Energy drink which has been associated with death or harm, giving our brand some breathing room in terms of how endangered our brand image is.
Figure D: Which of the brands have you heard about in relation to illnesses or hospitalizations?

A similar number of participants surveyed knew about deaths or illnesses linked with Monster Energy as with Red Bull

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It is also interesting to note that a similar percent of respondents said that they were aware of deaths associated with energy drink leader Red Bull(30.1%) as they were of deaths associated with Monster (34.6%)
Figure D: Which of the brands have you heard about in relation to illnesses or hospitalizations?

This means that our major competitors are facing the same issues that we are. Additionally, it means that if we handle this situation properly, we can come out as the pioneer of the energy drink/health crisis and leave our competitors in the dust. Once given all related information, participants did not seem as concerned, nor did they blame solely Monster Energy for the incidents We had respondents give initial impression rankings of Monster on a scale of 0-5 in 6 categories: Effective, Healthy, Reputable, Responsible, Popular, and Favorable. We then had them subsequently rank them after learning about hospitalizations related to the drink, and then after learn about the context of the hospitalizations and their relationship to pre-existing heart conditions and alcohol mixing.
Figure E: Average ranking of Monster in 5 categories in initial impressions, after learning about hospitalizations related to the drink, and then after learning about the context of the hospitalizations and their relationship to pre-existing heart conditions and alcohol mixing.
Adjectives on a scale of 0 to 5 Effective Healthy Reputable Responsible Popular Favorable 3.34 1.42 3.13 2.76 3.81 3.11 Initial Impression After Learning of Hospitalization 2.78 1.16 2.05 1.99 2.62 2.05 After Learning of Context of Hospitalization 2.83 1.49 2.52 2.38 2.84 2.38

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As you can see from the chart, learning about the hospitalizations led to participants dropping their scores across the board by an average of .82 points. However, after learning about the context of the hospitalizations, those scores rose by an average of .3, meaning that it is vital that we make sure that the context of the hospitalizations is known by all. In addition, 49% of respondents and all focus group participants believed the individual was at fault and only 9% believed that just Monster was at fault. This means that our company is in a position of strength and will benefit from adamantly defending our brand with facts.
Figure F: Who do you believe is at fault for the hospitalizations and illnesses, Monster or the individual?

People did not perceive Monster Energy as more dangerous than the average energy drink When asked about how dangerous they felt the average energy drink was, 41% of participants said they were dangerous with overuse and 43% thought that they were dangerous with regular use.
Figure G: How dangerous do perceive energy drinks general? Somewhat 43% 43% 41% 41%
dangerous with regular use

Figure H: How dangerous do perceive Monster in Somewhat Energy drinks specifically?

dangerous with regular use

39% 39% 41% 41%

Somewhat dangerous with overuse

Somewhat dangerous with overuse

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In comparison, 41% of participants also believed that Monster was dangerous with overuse, but only 39% believed that it was dangerous with regular use. That means that people actually perceive Monster as less dangerous than the average energy drink, meaning that the situation may not be as dire as it appears.

Informative caffeine messaging is needed, especially in relation to comparable coffee drinks Informing respondents of the caffeine equivalence between monster and coffee had a fairly significant effect on their opinion of which was more dangerous. Initially, 80% of respondents to the survey and 100% of our focus group believed that Coffee was more dangerous than Monster.
Figure H: Which do you think is more dangerous, Monster or Coffee?

However, 27.3% of survey respondents who originally believed that Monster was more dangerous than coffee changed their mind after hearing that coffee and Monster had similar levels of caffeine.
Figure I: After learning of the Caffeine content in both, does it change which you believe is more dangerous?

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This might actually mean a successful campaign could be launched to win over those who think its dangerous. Informative messaging needed on how much Monster is necessary to kill When asked how many Monsters were necessary back to back were necessary to cause serious harm. Our focus group respondents answered all over the board one respondent answered three, one respondent answered five, and another answered a gallon. This indicates that the public has no real idea how much Monster is necessary to be harmful, and we should try to inform the public how dangerous Monster actually is. Dont introduce an all-natural or zero-calorie drink We initially believe that introducing an all-natural or zero-calorie option might be a viable option for improving our unhealthy image. However, our findings from our focus group showed that the target demographic cared primarily about how effective the drink was, not about the ingredients or content of the drink. Energy drink warning labels in general are ineffective: Almost no respondents believed that current Energy Drink warning labels are either very effective or effective. Only 4% of respondents believed that current Energy Drink warning labels are either very effective or effective.
Figure J: How effective do you believe Monster Energys warning labels are?

In addition, none of the focus group participants believed them to be at all effective, and advised strongly against changing the size of the label to make it more prominent. Thus, we would also advise strongly against wasting resources on altering the cans warning label.

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Conclusion & Recommendations

Primary research showed us that those who tend to drink monster are not significantly concerned with the deaths linked to Monster once they have all relevant information. However, if respondents were only informed of the deaths but not given the proper context (that the deaths involved either drug abuse or pre-existing heart conditions, how much Monster is necessary to kill, and its danger relative to coffee), it was significantly detrimental to the brands image. Thus Monster needs to be as cooperative as possible with the FDA while aggressively defending the brand, taking steps to fight the claims and making its innocence known with tactics such as: Release an informative statement that defends the brand without being apologetic Our research proved that our target demographic was not overly upset with Monster Energy brand once they knew the full context of the situation. This contextual information included the amount of caffeine in Monster relative to popular coffee brands, the number of Monsters necessary to kill a person from caffeine toxicity, and the information regarding the pre-existing heart conditions of the people hospitalized due to Monster. Thus, we need to release a statement which discloses all of this information in order to insure that the public is informed. Our target audience, who is edgy and adventurous, does not expect us to apologize, and we have the information necessary to defend our image; thus, we need to stay on the offensive and fight to clear our name. Pioneer scientific research that proves safety of Monster As big tobacco did when it tried to distance itself from the negative health claims being made by its users, we believe Monster to commit itself to extensive research so that it can have the facts necessary to defend itself from current and future claims. For example, though we found reports that 32-64 cans are necessary to kill someone from caffeine toxicity, we need to know considering all ingredients exactly how many cans of Monster Energy Drinks are necessary to cause bodily harm or death. We believe in our product and our innocence, and research should serve to support what we know is true in a tangible way. Develop crisis communication plan to anticipate any future incidents We were generally unprepared and blindsided by the current situation. Now that we are aware that this is a concern which may come back to hurt us, we need to be prepared with an immediate response if similar issues come up again, hopefully heavily influenced by the health research weve invested in at this point. We need to implement a contingency plan that can be used if the situation arises again in the future.

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More transparency Many reporters were wary of the fact that Monster Energy Drink is registered as a dietary supplement rather than a drink item. Though this was not our intent, many of them deduced that this was a move we made in order to avoid FDA regulation and side-step the requirement to list our caffeine content, which is detrimental to our image. We need to collaborate with the government and work alongside them to be as open with the public as we can about what is in our drinks. We should file to be listed as a drink item, and concede to all FDA regulations, as we have nothing to hide when it comes to our drinks caffeine content.

We hope you take our recommendations to heart, as we believe they will be key in the wake of this incident. Every action taken past this pointe must be taken with extreme caution, as we are in a very fragile situation which could turn very negative very quickly.

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Appendix:

Moderator Guide:
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How many of you regularly drink energy drinks? How much do you consume? How would you describe yourself, studious, athletic , partier/ outgoing? For what purpose do you tend to use energy drinks? (To study, to mix drinks, etc.) How many of you regularly drink monster? What is your first impression of monster versus other energy drinks? What does monster do right versus other energy drinks? What does it do wrong? Have you heard of any illness/death arising from any energy drink? What about monster specifically? If so how does that make you feel? How do you perceive energy drinks energy drinks in general? Do you perceive energy drinks as dangerous? If so, how much do you have to drink for them to be dangerous? Do any specific energy drinks seem any more dangerous than others? Why? If you heard that people were hospitalized after drinking monster, would that surprise you? Would you blame monster? If those people had pre-existing conditions, how would that change your perception? Are you aware of the warning label on Monster? If you are aware of the warning label have you read it? Has it prevented you from drinking Monster before? If it was larger on the can and you had read it, would it have changed your mind? What are your thoughts on a potential energy drink education program? Do you drink coffee? How frequent? Which do you perceive as more dangerous, energy drinks or coffee? Why? If we told you that the average cup and half of coffee drink and energy drinks have the same amount of caffeine? Would that change your opinion?

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Survey

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Figure C: Have you heard about illnesses or hospitalizations related to energy drinks?

Figure D: Which of the brands have you heard about in relation to illnesses or hospitalizations?

Figure E: Average ranking of Monster in 5 categories in initial impressions, after learning about

hospitalizations related to the drink, and then after learning about the context of the hospitalizations and their relationship to pre-existing heart conditions and alcohol mixing.
Adjectives on a scale of 0 to 5 Effective Healthy Reputable Responsible Popular Favorable 3.34 1.42 3.13 2.76 3.81 3.11 Initial Impression After Learning of Hospitalization 2.78 1.16 2.05 1.99 2.62 2.05 After Learning of Context of Hospitalization 2.83 1.49 2.52 2.38 2.84 2.38

Figure F: How dangerous do perceive energy drinks in general?

Somewhat dangerous with regular use

Figure G: How dangerous do perceive Monster Energy drinks specifically?

Somewhat dangerous with regular use

43%

39%

41%
Somewhat dangerous with overuse Somewhat dangerous with overuse

41%

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Figure H: Which do you view as more dangerous, Monster Energy or Coffee?

Figure I: After learning of the Caffeine content in both, does it change which you believe is more dangerous?

Figure J: How effective do you believe Monster Energys warning labels are?

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Works Cited
Denoon, Daniel. "FDA Releases Death, Injury Reports on Monster, Rockstar, 5-Hour Energy." WebMD - Better information. Better health.. N.p., n.d. Web. 10 Mar. 2013. <http://www.webmd.com/diet/news/20121116/more-deaths-illness-energy-drinks>. "Energy Drinks: An Assessment of Their Market Size, Consumer Demographics, Ingredient Prole, Functionality, and Regulations in the United States." Guayaki. N.p., 1 Jan. 2010. Web. 10 Mar. 2013. <guayaki.com/images/uploads/pages/File/ENERGY DRINKS UI.pdf>. Meier, Barry . "F.D.A. Receives Death Reports Citing Monster Energy, a High-Caffeine Drink NYTimes.com." The New York Times - Breaking News, World News & Multimedia. N.p., n.d. Web. 10 Mar. 2013. <http://www.nytimes.com/2012/10/23/business/fdareceives-death-reports-citing-monster-energy-a-high-caffeine-drink.html>. "Page 9 - DPSG 2011 Annual Report." Dr Pepper Snapple Group. N.p., n.d. Web. 10 Mar. 2013. <http://www.drpeppersnapplegroup.com/annualreport/2011/assets/assets/html/page9.ht ml>. "Update on Emergency Department Visits Involving Energy Drinks: A Continuing Public Health Concern." The Dawn Report. N.p., 10 Jan. 2013. Web. 10 Mar. 2013. <www.samhsa.gov/data/2k13/DAWN126/sr126-energy-drinks-use.pdf>.

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