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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.
The Panic
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 alcoholic 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 17 to 19, 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.
Response
In response to the panic around the safety of Four Loko, law makers in numerous states began
lobbying for legislation 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 company noted that it marketed its products
responsibly to those of legal drinking age and shared the concerns of college 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 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 surrounding 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; Mike
Hughlett, “Caffeinated Alcohol Drinks Stir up Legal Concerns,” Chicago Tribune, August 24,
2009, http://articles.chicagotribune.com/2009-08-24/news/0908230370_1_caffeine-energy-
drinks-alcoholic; Giselle Phelps, “College Students Going Loco for Four Loko Drink,” October
22, 2010; Noah Rosenberg, “Maker Halts Distribution of Alcoholic Energy Drink,” New York
Times, November 14, 2010, www.nytimes.com/2010/11/15/nyregion/15loko.html; Jacob Sullum,
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“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.
Open-ended questions
1. Profile the target market for Four Loko.
Age: college student, probably under 21, although should be at least 21 years of age since
2. Outline the consumer decision-making process for Four Loko.
a. Need Recognition
• Internal stimuli: Student decides he or she wants to party
• External stimuli: Friends and depiction of partiers having more fun
b. Information Search
Close-ended questions
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True/False
1. University and governmental policymakers responded to consumer behavior rather than the
legality of Four Loko.
2. The founders of Phusion Projects went to college together and quickly founded their
company after graduation. They did not need sophisticated market research to know their
potential customers.
3. There is no such thing as “bad press.” The banning of Four Loko increased its sales.
4. When Phusion Projects defended its product and compared it with mixing rum and Coke, it
was actually repositioning Four Loko.
Multiple Choice
1. What consumer value does Four Loko address that is in the American tradition of such
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products as the Egg McMuffin and the breakfast bar?
a.
Portability
b.
No waiting
c.
Convenience
d.
Surprise
e.
Colorful packaging
2. Which of the following factors or influences provided a “gateway” to drinking and abusing
Four Loko?
a.
Sport hydrating drinks consumed in childhood
b.
Social class
c.
Income
d.
College drinking subculture
e.
All of the above
3. It was the __________, that psychological factor in particular, which made Loko Four
seem healthy.
a.
convenience
b.
perception
c.
eye candy cans
d.
hierarchical need of thirst
e.
motivation
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4. Four Loko is obviously a product that relies on peer pressure and self-image. Does this
product depend on nonaspirational groups in influencing its consumers? Choose the best
answer.
a.
No, Four Loko is entirely dependent on its athletic, herbal lifestyle image.
b.
Yes, drinking Four Loko separates its largely male athlete consumers from female
college students.
c.
Yes, Four Loko uses legal wormwood extract and thus disassociates the product
from drug addicts.
d.
Yes, Four Loko relies on groups perceived as unhealthy or social pariahs, such as
drunken beer drinkers and hard core alcoholics.
e.
No, Four Loko relies more on the consumer achieving the ideal, athletic drinker
self-image.
5. Phusion Products used __________ to make Four Loko attractive to young people mixing
and abusing such energy–alcoholic drink combinations such as Red Bull and Jägermeister.
a.
perceptual mapping
b.
positioning
c.
product differentiation
d.
cannibalization
e.
niche marketing
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. In the end, Phusion Products had to remove caffeine and other stimulants that masked Four
Loko’s inebriating effects. New variations of the product will be an alcoholic beverage.
This is an example of __________.
a.
repositioning
b.
cannibalization and repositioning
c.
cannibalization
d.
an FDA ruling
e.
a change of product class
Critical Thinking Case
Mary Kay Inc. Taps into a Changing Demographic
Founded in 1963 by Mary Kay Ash and her son, Richard, Mary Kay Inc. is a company that has
long believed in the power of women. Dedicated to making life more beautiful for women, the
company was founded on the Golden Rule of “praising people to success” and on the principle of
placing faith first, family second, and career third. Before her death in 2001, Mary Kay Ash
received numerous awards that exemplified her personal beliefs, which were embedded as the
heart and soul of the company.
Beauty and Personal Care Products and Direct Selling
While the economic situation is such that consumers are scaling back on spending for high-end
nonessential items, many beauty and personal care products are considered necessities. At the
same time, beauty and personal care products do not have country boundaries—such products
are universal. According to one report, beauty and personal care products are a cornerstone of the
direct selling industry and, likewise, direct selling is good for the beauty and personal care
products industry. By 2009, direct sellers were capturing more than $10 billion in annual sales of
beauty and personal care products.
Direct selling is a method of distributing products directly to the consumer via person-to-person
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selling or party plan selling and away from permanent retail locations. According to the Direct
Selling Association, there are an estimated 15.1 million people involved in direct selling in the
United States, with more than 66 million people engaged worldwide. Interestingly, more than 80
percent of direct sellers in the United States are women. The predominance of women in the
direct selling marketplace has proven especially important for direct sellers like Mary Kay Inc.
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
products.
Sources: www.marykay.com; Lauri Dodd, “Youthful [R]evolution,” Direct Selling News,
December 2010, 10–21; Michael Rice, Ivy Carter, and Rebecca Larson, “Beauty Everlasting,”
Direct Selling News, October 2010,
www.directsellingnews.com/index.php/site/entries_archive_display/beauty_everlasting
(Accessed February 9, 2011); Barbara Seale, “Younger every Day,” Direct Selling News,
October 2010, 24–33.
Open-ended questions
1. The younger demographic is important to Mary Kay Inc. both as consumers of the
company’s products and as its sales force. Since the market is one and the same, can
the company utilize one marketing strategy targeting both consumers and sellers?
Why, or why not?
No, the company cannot use the same marketing strategy to attract both its independent
sales consultants and consumers. While both groups are in the same demographic and thus
possess the same demographic characteristics, Mary Kay Inc. must utilize this
2. What are particular characteristics about this younger demographic that Mary Kay
Inc. will have to tap into in order to capture and maintain the segment’s attention?
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Close-ended questions
True/False
1. Mary Kay Inc. relies on consultants and direct-selling, which is essentially one-to-one
marketing.
2. The marketing that exists between Mary Kay Inc. and its consultants is not B2B.
3. Mary Kay’s seeking consultants who fit the segmentation of the target market is a form of
product user positioning.
4. Mary Kay Inc. is not vulnerable to losing a younger generation of consultants to direct-
sellers like itself.
Multiple Choice
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cultures and the like.
4. Unlike other companies, Mary Kay Inc. must compete with other direct-selling firms for
____________ from a business-to-business perspective.
a.
beauty care product customers
b.
the same demographic segments
c.
a largely female demographic
d.
its beauty consultants
e.
none of the above
5. When Mary Kay Inc. identifies and focuses on the younger age of its largely female
clientele, their unlimited earning power, their preferences for certain product lines, and the
like, it is looking at __________.
a.
segmentation descriptors
b.
target market variables
c.
evoked sets
d.
consideration sets
e.
optimizers
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6. From reading the Mary Kay Inc. case, which of the following would be the least important
in its approach to one-to-one marketing?
a.
loyalty
b.
technology
c.
personalization
d.
time-savings
e.
none of the above