Four Loko Case Study Assignment

Marketing to Young College Hedonists

Phusion Projects, LLC was founded in 2005 when three friends from Ohio State University had the entrepreneurial 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 focus on Four Loko’s ingredients – caffeine and alcohol – the real marketing mistake likely came from the market segment that enjoyed the product. That is, Four Loko had quickly become the drink of choice for college student across the United States.

Referred to as an alcoholic energy drink, Four Loko comes in a 23.5oz can, with alcohol content of 12 percent (comparable to four beers). The Four Loko product, in several 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), taurine 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 aspect of absinth, 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 advocated content that the caffeine masks the effects of the alcohol that is being consumed when drinking Four Loko. Thus, a person is likely to consume more alcohol than he or she would normally. Four Loko and other caffeinated alcoholic beverages have been referred to as “blackout in a can” and “wide-awake drunk”.

Today’s college student grew up with energy drinks on store shelves. From the high school sports field with Gatorade and Powerade, today’s younger generation easily 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 – pre-mixed – 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 fatigues or with a cardiac condition. The alcoholic energy drink could lead to high plod 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 ranging from 0.12 to 0.35 percent (0.3 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, law makers in numerous states began lobbying for legislation prohibiting the product and universities across the nation banned the drink from cam pus. 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 ae 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

QUESTIONS

1. Profile the target market for Four Loko
2. Outline the consumer decision making process for Four Loko