>> I don't wanna downplay advertising
in a certain way, when
we're talking about Monster
so I want you to know,
advertising is very important.
You know the old saying is, you spend
twice as much on
advertising as you should.
You just don't know which half to cut.
And that's the problem with advertising.
But keep in mind, as
you read through these,
the only task of advertising is to sell.
All the rest isn't pertinent.
You're not out for awards.
Like it says, "Look at all
things to the eyes of the buyer."
When you're trying to design
an advertising program,
who's buying your product or what would
they look at in your product?
Analyze everything and
that means everything.
Win the market not award contests.
I had a real problem with Coke.
I had too many people trying to award,
to win award contests.
The hero of your advertising
is the buyer not you.
Do not seek recognition and that's another
downfall in the marketplace.
That's an ego thing.
What was ego again, Jacob?
>> Student: Edging God out.
>> Edging God out.
Okay, you gotta keep that in
the back of your mind too.
That along with arthritis will
really help you get a long way okay.
Your advertising is perceived
with the presumption of guilt.
You know, golly, what
are they trying to do?
Sell me a new car that I don't need one?
Assess your advertising, not the monitor
but rather in real environment.
Don't make it so spacey,
people can't believe your advertising.
Do not trust yourself or do
not love your advertising.
Probably, Larry would endorse this.
People fall in love with advertising.
They run it too long.
They love it because they spent months
trying to design it and create it.
So, we're not just gonna
just be talking advertising
but since it was on the back of this,
I wanted to at least touch it.
Because advertising is something
people do get romanced by.
Alright what we have on the
back there, a bunch of diagrams,
is we're gonna talk about
the Ten P's of Marketing.
It may be eleven, it may be
twelve by the time I finish.
But there's a bunch of P's.
You deal in the lower rent district,
then you're only dealing with four, right?
Can anybody tell me
the four you deal with?
>> Student: Price.
>> Okay hold it now, price.
>> Student: Product, Promotion
>> Promotion
>> Student: Place.
>> Place, okay.
We'll do those four but we're
gonna add a lot more to it.
Now, we're gonna talk about Monster.
At the very top line there, just write,
'The Ten P's of Marketing.'
And as I say, you may
have to scratch through it
and put eleven or something else
on there by the time we finish.
But I just want you to know,
there's a lot of P's in marketing.
Okay, we left, we left it all.
This Red Bull can came to town.
We tried the energy can for Hansen's.
It didn't quite do the trick.
Now keep in mind, Red Bull developed
their marketplace in Mars.
And you get, I don't know, a shot of vodka
and you pour the little can
in and that was the deal.
That's really got them jump started.
Well we gotta figure out, now do we
want to go to market with this new,
remember this new division
we set up over here?
Now we're all ready to
go, this Chinese wall
and this whole thing.
So you're the marketing team now,
we're gonna go after these guys.
And now we have the
ability to put guarana,
ginseng, caffeine into these products.
So we've gotta decide, how do we wanna
go against them in the marketplace?
So we gotta have a marketing meeting.
And you're part of this marketing deal.
So what would be, sort of
the first thing that you
would want to think of?
They're in a what, seven ounce can.
And it's selling for
$2 in the marketplace.
So, what do we wanna
think about first then?
>> Student: Price.
>> What?
>> Student: Price.
>> No, I'm gonna be
very blunt with ya, no.
>> What?
>> Student: Customer?
>> No.
Well, very close, very close.
Customer weaves in in this
discussion all the way.
I shouldn't have been so
abrupt with you, Wakeen.
We know who that customer
is, that Red Bull customer.
Now, we gotta figure out
what to do to go after them.
But everything we're gonna
talk about, yes you're right.
The customers in it.
Do you accept my apology
for getting on you?
>> Student: Yes.
>> Alright, okay, okay.
>> Student: How are are
you gonna differentiate?
>> Okay how, if we're
gonna go into the market,
do we wanna be a 'me too' or
do we wanna differentiate?
So if we're gonna
differentiate, what is one
of the things we gotta look at?
>> Student: Size, the size of the can.
>> Well the package, right?
Is that?
>> Student: Yes.
>> Okay, so do we go in a squatty 7 ounce?
Like a little, you know little sqwoot?
Do we do a slim deal?
How do we look at the package
and how do we analyze it?
What would you think
as a marketing person?
>> Student: I would wanna
know what the customer wants.
>> Well you're right
but I have the advantage
in this meeting because my dad went
through a process with Pepsi and Coke.
Coke came out, I mean Pepsi came out
with a 12 ounce bottle for the same price
as the six and an ounce Coke bottle.
The same price.
Hmmm, well that's a value added.
So you look at the differentiation,
how will you have value added?
So what did one of the
marketing people say to me?
Instead of going to a 7 ounce can,
we should go a?
>> Student: 14 or 12.
>> Or a 12 ounce can.
That's the marketplace
is the 12 ounce can.
Okay, that makes some sense.
Can we do it for the same price?
So I would turn to
Deedee, who's in this room
as representing the
finance department and say,
"Run the numbers and
see what it does to us
"in the gross margin if we sold
it for this and have that."
So anyway, she comes back very excited.
And she says, "Oh, if we only get
"just a bump in sales, our bottom line-"
And you know what I used
to tell all of our guys,
I've never been to a bank
yet that I've banked margin.
I've only banked dollars.
You gotta have margins and you gotta have
margins around your business a little bit
but I've never banked a margin in my life.
I've banked the dollars.
So Deedee comes back and tells me,
"You know, the dollars fall out of the
"bottom pretty good on that package."
About two days later, my marketing guy
comes back and he's really excited.
He say, "You know, we went to a
16 ounce can for the same price."
Oh whoa, whoa, whoa,
we're getting out of the,
we're getting out of Deedee's realm now,
that's gonna ruin our margin.
No, no, I went with Deedee.
She said we're very close, we're
only giving up a few cents.
So package was really critical.
So the meeting was, and by the way
I'm not running the company,
I'm only on the board.
But I'm certainly vocal
in my, giving them some...
I sit on the board as the
marketing/sales operating guy.
We have attorneys.
We have attorneys that don't even know
what a can looks like.
And then you've got, you know,
all those kind of people there.
But they're really valuable
but not in this exercise.
So anyway, so we talked about the package.
So gee, do you think we
oughta try the 16 ounce?
So, yeah but we better
do some focus studies.
So we spent $50,000 in focus studies.
Do you know what a focus study is?
Where you get your age group,
we get 15 to 34's...
in a room.
And we give them a focus about
package size and products and that?
Well that's what we did.
So, $50,000 on these focus groups.
And what we do, we
lined up on a big shelf,
silhouettes of different packaging.
Plastic bottles, the 7 ounce can.
You can't see any labels,
they're just silhouettes.
But what we did at the very end,
we put the 16 ounce can,
that sat right here.
And so we wanted to go around the room
and get everybody's opinion,
that's in the focus group.
They went down, "Oh, we like that"
and "Gee, we like plastic."
"Plastic would be great because
it doesn't, da datta da."
Someone say, "Yeah but the cans recycle."
And we're hearing all this stuff.
And it gets around to it and Brian says,
"I don't know about everything
"what everyone else is seeing but that can
down on the end is a monster
compared to the rest of them."
Brian just named the product.
And that name, we went into 16 ounce.
That's how Monster was named.
Alright now we got the package,
so that's on number one.
You got package, slash,
you put package then you put a slash.
What else do you need
if you have a package?
>> Student: Price?
>> Huh?
>> Student: Price
>> No.
What are you gonna put in it?
>> Student: The product.
>> The product, slash product.
Now, what kinda product
are you gonna put in it?
Well, we did a lot of taste
tests at these focus groups.
And we came out with a taste test
that really hit into this age group.
And I don't know what combination it was
but it had a little flavor of different
lemon limes and grapefruits
and this and that.
It really came through to this age group.
So, we ended up getting all
the verification we needed.
So now, we've got the package
and now we've got the product.
So number two then, we gotta
move to, is one of your P's.
Alright we got it, now what?
Where are we gonna sell it?
The place.
As an example, I'm not sure we would
start in North and South
Dakota in December.
But we need to know
where the juggernaut is,
of the energy drink consumption
in the United States.
And if you close your eyes,
where do you think it is?
>> Student: Los Angeles.
>> West Coast is one.
>> Student: East Coast
>> East Coast, that's where it's consumed.
Now, you're gonna get some other markets
but those are the two big ones.
So, we had to do some evaluations there.
So when we really got down to it, we said,
"All of the places we're
gonna sell it, comes through-"
Now, this is logistics talk
but marketing people need to know this.
More marketing people design
products that we can't produce.
So, we knew this was a standard
can that we can produce
and we're going to sell
it on the East Coast.
Do we want to...
produce it on the West Coast?
Well, gotta lot of freight, a lot of cost,
a lot of disruption to that product.
So the thing that you wanna do,
is line up your production
across the United States
that is as close to your
consumer as you can.
So the key is, that's what we did.
And we only did five or six of that.
So, number three would be production.
We had to line up our production places.
Because the way you
make money in business,
is not running your trucks in
your distribution long ways.
That's called stem time
in the financial markets.
Stem time costs you money.
So if you can go from
this block to this block
and deliver something to this block,
then you're making money.
But if I have to go from
L.A. to San Francisco
to San Diego to Phoenix, I'm
not making a lot of money.
So we had to get these production
sites close to our end.
It gets back to Wakeen, the consumer.
Now we gotta focus on this consumer.
We've got these production
sites, East Coast, West Coast.
Now, how we gonna go after this consumer?
Well, we do the study of consumer
and ended up with 18 to 36.
So now, how do we wanna go to this market?
Well, we wanna go to the market
by understanding this consumer.
So, we run down to Newport
Beach and we go to Malibu
and we go to San Diego,
and we are on the beaches.
And we start talking to this group.
You know what this group fed back to us?
They want their own brand.
They don't want mother
and dad's Coca-Cola.
We'll drink Coca-Cola
but that's not our brand.
7Up's not our brand,
Sprite's not our brand.
We want our brand.
So, that gave us an idea that we need
to market to this group heavily.
Well before we could do
that, we're gonna get back
to you in just a minute
on price, hold that.
I'm gonna ask the question
and I want you to go, Price!
So we have to be very
careful in the price category
because look who we're
gonna market against.
By the way, we learned that group
has more money than anybody, the 18 to 36.
They can buy anything.
So, that shot our theory about pricing.
Now we have to procure the raw materials
to get them to the
production plants, right?
So, four is?
Procurement.
This is where you pay top dollar
for a purchasing guy in a company.
He can make you money hand
over foot if he's a pro.
And it could be a gal but most
of ours were guys in this business.
So we negotiated can contracts
and all the things you need to do.
Now remember, we only had
one green Monster can.
I mean, today we have
twenty four or something.
But I mean, one green
16 ounce Monster can.
That's all we were
negotiating for procurement.
The problem is, the production guys
wanted you to buy out their lines
for month after month after month.
Well, we didn't even know
what we were going to sell,
how many we were going to sell.
So now we're in Catch-22
in production, procurement.
So we had to really focus
in on that procurement.
Based on that we had another really,
cost that we had to look at.
People.
You can put that down number five.
Now why do I say that's a tough one?
I'm gonna ask you an
organizational question.
It probably doesn't come
up in marketing much
but it should if you're looking at it.
Does organization lead growth?
Or, does growth lead organization?
Now, you're the head of marketing
and you're on the CEO's committee.
And this is coming up and you're going
to expand your business.
So, do you hire 50 new sales people
and all of this before you've sold a case?
Or, do you grow it slowly
and then bring on the people later?
So, does organization lead growth
or growth lead organization?
>> Student: I'd say
growth leads organization.
>> Alright, lets take a vote.
How many think growth leads organization?
There's one, two.
One, two, three, well it
must mean, alright then.
What was the other one?
>> Student: Organization leads growth.
>> Organization leads growth.
Did I say growth leads organization first?
>> Student: Yes.
>> Growth leads organization,
organization leads growth.
Must be you two because
there's no more options, right?
Organization leads growth or
growth leads organization.
>> Student: I say it's a really fine line.
>> You're absolutely right.
It's a very fine line,
there's no right answer.
On your exam, feel free
to do that tonight.
Say, "Sorry Dr. Martin,
there is a fine line.
"There is no right answer.
"There's no right answer
to this question."
So what you have to
do, you have to go back
to Deedee who is our CFO and say,
"Deedee, what kinda cash flow
do we have to invest in this?"
Remember what's the risk,
when we talked about risk?
What kinda risk can we take in this?
Now we got this all set
up and Deedee's gonna say,
"Well, what are you
gonna price the product?
"What's the margin gonna
be, what's the return
"on that gonna be against
all these expenses?
"Then I can tell ya."
So, we have to analyze the next thing.
>> Student: Price.
>> Price, you got it.
So, you have to have
to have price in there.
Because now, you have expense some people.
Now, remember that people
aren't always your employees.
They're distributors, they
could be distributors.
But you gotta keep those distributors
jacked up for your product.
They're handling everybody else's product.
So, there's a lot of expense into that.
Now there's one that I don't really...
like, that always said,
a marketing and sales program ran on,
and I've told you this before.
And that's competition.
I think you gotta know
what competitions doing
but you gotta drive your own boat.
But see, competition starts with C.
And that doesn't work.
So, what're we working
on, number seven now?
>> Student: Six, oh, seven.
>> Seven isn't it?
>> Student: It would have been this.
>> Well we have product/package.
Then we have place and we have
production and procurement.
Number five was what, people?
And number six was what?
>> Student: Price.
>> Number seven, we
can't put a C on there.
So, you have to put predator.
>> Student: Predator?
>> Predator.
So now, you the marketing people say,
"Great, how're we gonna promote this
"and how're we gonna do this?"
And Deedee's saying,
"I can't tell you how much
money you're gonna have
"to promote it until I
determine a profit and an ROI."
And that's number eight.
So now, we know what the
profit is at the gross line
and now we got expenses against it.
She works the expenses down.
By the way, I know this
isn't a management class
but you always wanna manage your business
at the gross profit line.
Always, manage the business
at the gross profit line.
If you're making a 52% gross margin
and you slip to 50%, that's
2% less you can spend
down below in marketing,
advertising and people.
Never let that gross margin line slip.
Now, sometimes you can
increase sales and it'll slip
because you created a
product that it costs more.
Diet Coke costs more than Coca-Cola.
And somebody told me when
you line extend in here,
who was it?
What happens to your line?
>> Student: Cannibalization
>> Cannibalization.
So if you're cannibalizing Coke
that has the highest profit in your line,
there's a slippage at the gross line.
I'm not giving you the
financial class today
but I'm just telling you,
in marketing you gotta understand that.
It's marketing, people.
Okay, so now that you got
the profit and the ROI
and Deedee's holding her breath about,
'Oh no, these marketing
people are gonna come
in with promotions stuff and all that.'
So number nine, is promotional.
You see those two boxes,
left and right there?
One says push and one says pull.
Do you know those terminologies?
Can anybody define them to me?
Push versus pull.
>> Student: I think pull is when you like,
throw out something you know,
encouraging the customer,
or the purchaser or the consumer
to attract to your product.
>> Such as?
>> Student: Like, discount coupons.
You bring people to buy the product
because of that coupon or samples.
And I think that's pull
and push is, when you...
I can't remember the right term.
So pull is when you give out samples
and push is when you make
people buy your product.
>> How do you make them buy it?
>> Student: I'm thinking of an example.
>> Who said that?
Close, now what do you do then?
>> Aide: Think about the MetaboLite case,
we did talk about this.
>> Now, you have a product
and I wanna encourage you to buy it.
And it's $2 on the
shelf and you're saying,
"Ah maybe not, I'm not gonna pay $2."
So what do I do, as the
marketer, to create something.
We're gonna get into those
triangles in just a minute.
What do we do?
Discount.
So, pushing the product is
discounting the product to $1.50.
Now, you're encouraged to buy
it because for the next week
you can buy it for a buck and a half.
That's how you drive the product.
Now, what is the problem with the push?
>> Student: They come to
expect it at that price.
>> Perfect, that is the problem.
They come to expect the price.
So you gotta get in and out
of that, in and out of that.
Because what happens
is, when they expect it,
they will never buy it at two, right?
So now, you gotta shift it
over and you gotta sell then.
That's all at the store level,
which we said was the customer, right?
Okay, you knock it down to here.
So now, we gotta turn
it over to the consumer,
purchaser/consumer and get them to buy.
So, that is in the pull activity.
So what would we do then, to create
awareness for the brand in that arena?
>> Student: You would put, kinda like
put up a display case or something
that would pull them in to wanna pay that.
>> Lets get out of the store for now.
Lets just get out of the store.
So, what do you see?
>> Student: Advertisement
>> Alright, what kind?
>> Student: Commercials.
>> Okay, TV.
Okay, what's next?
>> Student: Print ads
>> Print, print ads.
What's next?
>> Student: Sponsor Motocross events.
>> Uh yeah, sponsorships.
No, there are sponsorships.
Alright, what else?
I mean it's right under you,
everyday you listen to it.
>> Student: Radio.
>> Radio, radio's a key vehicle.
I know we talked about outdoor
but now lets get into your age group.
>> Student: Social media.
>> Social media is really,
really a high flyer.
All of those are trying to...
make you say, "Wow, I
gotta try that Monster."
And so, that's what we had worked over.
We had not spent anything on radio.
We had not spent anything on TV
because we figured we needed to go right
to the consumer who told us what?
We want our own brand and
we want you to be our brand.
So now, we gotta joint project.
We've gotta have you
thinking of us as your brand
and we want you to be our brand
so that's how we went after them.
And we switched over to sports marketing.
It's a huge field.
Did you know that people are talking
about the labor market in California?
Do you know that last year 10,000 jobs
in California were given
in sports marketing alone?
That's how big sports marketing is.
So I'm saying, we went
into sports marketing.
We had Motocross.
Because we would go to
this 15 to 25, up and down.
So, we decided we'd sponsor
the whole Motocross circuit.
In the stadiums and
they go do their thing.
Well, that's getting
to somebody as saying,
"I may not drink Monster right now,
"but I like that brand and
I'm gonna line up with them."
Then we went to snowboarders and then
we've gone to just about anything.
Drag racing and we've got
a NASCAR running this year.
I mean everything gives you an
image of, that's your brand.
Now lemme tell you there's
a little group over here
that we almost missed,
unless we would have done
some market surveys and focus groups.
We almost missed a critical
element of consumers
for Monster and that's
the construction worker.
They drink a ton and here we
were just taking them as, okay.
Well they would go into
7-11 at six in the morning
and get about four of these,
four Monsters and walk out.
But the business in the
construction industry went down
so it was hard for us to notice this dip.
So, we still love those
guys and they do good.
They're the ones who helped
up develop Java Monster.
Because they said, "What you outta do
"is take this Monster
and put coffee in it."
We said, "No way, that couldn't happen."
So, I'm getting ahead of my story.
There's this line of extension.
But we took Monster...
and we took the top
three items at Starbucks
and we duplicate them right on the button.
And we put out Java Monster
in those three flavors.
And it just jumped off
the shelf, they loved it.
The 7-11 guys sort of loved it
but he missed out on his
coffee sales everyday.
But the issue is, that's
how we parlayed that.
So, all the way through that.
Now, you've got push and pull
and you understand that social media.
You know back where I said, people?
I want you to go, slash, partners.
Because remember I said, it
wasn't just our employees.
It was partners in the
business, distributors.
There were people who
provided us production.
People who provided us
long haul distribution.
A lot of that so, people/partners.
But the people was, when I
said organization leads growth,
I was talking about hiring employees.
Based on all that, when
Deedee shakes all this up
and says, "I think it's a go.
"I think we can make a
little bit on every case."
And volume drives everything,
productivity drives everything.
And so, I was the only one in
the room that did number ten.
>> Student: Pray.
>> Pray.
So, ten is prayer.
So, that's how we basically did the
preliminaries to get
Monster on the market.
The scary thing is, it takes a ton
of money to get a product to market.
So we go back to our
place, remember number two.
And we said, "We can't
afford to go everywhere.
"We don't have the cash
flow or the resources."
So what we did, we did a strategic
marketing and sales plan.
Again, our hot spots
were East and West Coast.
You couldn't buy this in Nebraska.
You couldn't buy this in Texas.
You couldn't buy this in,
and we just sort of moved it
as we found enough money
to move it to the next.
Do you see how we got to market then?
Does that make some sense to you?
Well, we're gonna get to
those three triangles,
which I think are critical
for your understanding
and they're very simplistic.
I call them success pyramids.
The first one on that triangle,
you go up the first leg, write sales.
Coming down the second leg, write share.
At the bottom, write profit.
Maybe I'd better, sort
of, take a stab at this.
Sales.
Share.
And profit.
Anybody remember those questions
I asked you, way up front?
Does share mean anything
to you and if it does,
how much are you willing to invest in it?
Anybody wanna take a shot at that?
Boy, from a marketing director standpoint,
that's one of the key questions
a president or CEO will ask you.
Do we ever bank share?
Huh?
Anybody want share?
Do you wanna invest money in a share?
>> Student: Are you talking
about in your marketing?
>> Share a market.
>> Aide: Do you remember in
the Reeves Center market case,
the CEO wanted to
increase the market share
by a certain percent and we
looked at the effect that
that would have on their
margins and other profits?
And how much it would cost to get there?
Same thing.
>> That's it exactly.
So, lets say that we wanna invest.
Maybe not necessarily in share
but we wanna invest into some marketing.
And we invest and we go up...
to here.
Sort of an isosceles triangle.
So, we took this much....
profit and invested it.
Okay, so we drove the sales to here.
Now here's the question,
did we drive the share?
That's the next question the
president of the company's
gonna ask you as the marketing director.
>> Student: Sales go up,
share goes up too right?
>> Does it?
Okay, lets say the sales went up 10%.
Okay, what else do you need to know?
>> Student: Depends on the
loss to the rest of the market.
>> The rest of the market.
Lets say the rest of
the market went up 15%.
So what happened to share?
>> Student: Lost it.
>> Lost, so you gotta
have all the components.
Remember arthritis, you gotta
ask the right question, right?
I mean, that's why you
gotta hone in because now,
the CEO's not upset like in your case.
Hey, we gotta drive more so you keep
driving and you keep spinning.
Somewhere in your strategic long range
three to five year plan,
you gotta get back to
this triangle.
Now, the government
doesn't believe in this.
They've wiped this line out
and they just keep going up.
But we're not the government so,
we're trying to run a business.
So, everybody got that down now?
That sales increase but
not necessarily share
unless you're exceeding the market.
That clear?
Okay.
Because that's number
three on your quiz tonight,
your final and you gotta know that.
Okay now the next, the middle one.
Now this is what we
call the value triangle.
You can write value
anywhere you want on it.
There's the value triangle.
I always put the V or the value here.
It reminds me this is the value triangle.
Now, you've probably dealt with this
in your marketing because...
you've got quantity, you've got quality.
Quality, it's close.
Okay, quality.
Price.
Service.
Okay, that's what runs your company.
And the reason it's of value
is because lowest price
doesn't always mean the best
thing in the value triangle.
We rarely cut our price of Monster.
We have it at a high price because we want
people to know that's the
value they're getting.
You want something cheaper,
go buy somebody else's.
But we're not discounting way deep
for the reason we talked about,
we don't wanna get that
in their head, right?
This is it.
So when you're developing
your product from a marketing
standpoint, you gotta be
sure it has the quality.
Everything in Monster has
the highest ingredient,
cost price is in there.
It lowers our margin a
little bit but it has
the best guarana, the
ginseng, the whatever.
Here is a factor that is
overlooked in marketing.
Because marketing people say,
"Well we don't give the service.
"We're just developing the
products and the pricing."
And by the way, I asked that question.
Should the pricing be
structured in the marketing
department or by Deedee over as the CFO?
Remember that question
I asked you earlier?
What do you think?
>> Student: I think both.
>> Both.
But marketing has to
have an understanding,
they can't just go wild
on a product until they
understand the cost components
from Deedee's group.
Okay, service is really
something that's overlooked.
Because the differential,
remember what'd we say?
We're not gonna hone in on the predator,
we're gonna hone in on the?
>> Student: Customer.
>> Customer, consumer, whoever right?
That's who we're, but the only way
you can hone in on them
is emphasizing service.
So as a marketing group,
you have to start taking
a report card on your
sales and your delivery
and your manufacturing and
getting that there on time.
Or all of this is for naught.
So, everybody understand that triangle?
Okay.
I know this is pretty rote
stuff but this is real stuff.
This is what you do.
The last one is what is asked of you
and this is probably one
that you've already digested.
Awareness.
Trial.
And repeat.
Now, there's two components
inside of that little box
that make this triangle move,
and that's quality and
that's distribution.
The problem I had with
Hansen's was distribution.
I just couldn't get it out there.
Highest quality product going.
So when you develop this product,
you gotta figure out, in your own matter,
how're you gonna create awareness?
How're you gonna get people to try it?
How many times have you
been, people wanting to try
new toothpaste for you and
this and that and whatever?
You look at the Sunday
section and what does it have?
50 pages of colored coupons
and they want you to try it.
You gotta get trial but the real issue is,
this quality, guarantees...
basically, you get a repeat sale.
Remember when I told you about taste?
Every single focus group we tested.
Taste was number one.
Taste.
I could give them anything, a paper sack.
But if it tasted okay that's
what they'd have wanted.
So here you are, awareness, trial, repeat.
And you've got distribution
and you've got quality.
Now what your job is, is to create
more awareness, more trial, more repeat.
More awareness, more
trial and more repeat.
That's how you build a company.
Remember that little company I told you
we did about eighty some million?
Yeah, that's gonna be about
two and a half billion this year.
Those are pretty big triangles.
But the issue is, this is the way
the marketing team looked at the product.
So now that you've got,
what I wanna call product saturation.
What do you think the
percentage of distribution
should be in the market place to say
your service saturated on a product?
Zero to a hundred, just pick a number.
>> Student: Fifty.
>> Fifty.
>> Student: Twenty five.
>> Huh?
>> Student: Twenty five.
>> Well it's basically, you better
get your product at 70 to 75%.
Distribution and that's Monster.
Now we do a study and find out,
all of the sudden some gals like Monster.
Holy cow, we didn't even think about them.
We weren't even marketing to women.
They want a zero calorie Monster.
So, we come out with a line extension
of zero calorie Monster.
Okay Brian, what'd our zero
calorie Monster do to Monster?
You gave it to me earlier.
>> Student: Cannibalized it.
>> Cannibalized it because we had guys
that were saying, "Hey,
I'm working out at the gym.
"If I'm gonna drink the Monster,
I might as well drink the
one with no calories,"
You know, da, da, dada.'
Well we weren't counting on them.
Because we made more money
on the green, blue can.
Do you know what I mean
by green can or blue can?
Well, you wanna go out and look
at the stores and you'll
see the difference.
Alright so, how are we gonna
take this across the board?
Now we need distribution,
we need distribution bad.
But what distributor wants to take
us on when we're not selling a lot?
See, it's easy now.
Well, we had to just work very hard
and get little tiny distributors.
Today, half the United States
is Anheuser Busch and half is Coca-Cola.
That's where we went from here to here.
Monster's ten years old and it
took us a good half of that,
five or six years to get at
those kind of distributors.
We're in 70 countries today,
with some big distributors.
But the issue is, that's what it took.
But you can't just do red and green
so now we're gonna do, lets get back
to our easiest way to
go to market is what?
You helped me didn't you?
Line extension.
>> Student: Line extension.
>> Line extension, that's
what Coke did remember?
So we're saying, "Hey, if
it's good enough for them,
"it's good enough for us."
So, line extension.
We have every kind of Monster you'd want.
We have orange Monster and
this and that and whatever.
But then somebody came to us and said,
"Why don't you have a Monster tea?"
We said, "What, a Monster tea?"
Well, we took a survey and there're
a lot of people out there
that are tea drinkers.
So there's a product on the
market, our Monster Rehab.
R-E-H-A-B.
We have something like, an Arnold Palmer.
We have tea and lemon juice.
We have tea and cranberry juice.
We have tea and something else.
Peach.
Very good products but we
put electrolytes in them.
Like you get in Gatorade and stuff.
So, it is really a great product
and it's selling like hotcakes.
Tonight you all will be gifted a coupon,
if you'd like to go try this product.
Or, give it to your son or give
it to anybody you'd like to.
But the point being is, that's where we
got out of the line
extension of carbonation
and went to a non-carbonated product.
Because there's some people
that don't like carbonation.
So, we kept line extending this thing.
This kept getting you
know, put another product.
Well you say, "Wow, how
do you get a distributor?
"You're just loading these trucks up."
And by the way, in the Java
Monster, we had a real problem.
Because it is a retort
system that retorts milk.
Because of the pasteurization
process, it is very tricky.
And there is only two places
in the United States that would do cans.
Now you see retort bottles
like Starbucks little bottles.
Those are retorted but
they're in a bottle line.
We couldn't find any, only two can lines.
So we said, one of the
key marketing drivers,
as you a marketing person when
you're developing a product,
is barrier to entry.
If you can develop a
product that keeps somebody
out of the market until
you can get established,
they can't really take you out.
Barrier to entry is the real key.
So, what did we do when we brought
the coffee Java Monster out?
We bought up all the line
capacity in the United States.
That's sort of a barrier to
entry, wouldn't you think?
So, we had about almost a
two year run on that product.
It's in a tan can and if
you like coffee it's good.
But the point is, you
can't just keep expanding.
Because you get a lot
of copycat's out there.
We already have copycat's.
So, that's the triangles.
Let's stop there and do some Q and A.
>> Student: Somebody asked
me because I told them that
I was coming tonight and
is a fan of Motocross.
How does that fit in
you know, the Christian
with like, the Monster Energy Girls.
You know, sex sells and
you know, typically.
>> Well first of all, Monster's
not a Christian product.
I mean that's not a Christian company.
I had Anecoop partners.
They're great guys, the most
ethical guys I've ever seen.
I've seen them lose a million
dollars to do the right thing.
But on the other side of it,
when you do your product development,
that's why that's a separate division.
And when you do it, you wanna do it
in the best taste you
can but you're trying
to reach a market that feeds back to you.
The Monster Girls aren't as bad to me
as sometimes, just the bands and the...
How would you like to be
this as a marketing person,
"I got a great idea for you."
I say, what?
"We wanna twenty foot van."
You know the big things that
haul all of the products?
You see them on the road,
you'll see Monster, big ones.
"We wanna outfit that so
we can go into drag races
"and things, pull in, hit the button,
"the sides fall down into
tables and umbrellas.
"And you go in the back and you can
"sample all our Monster products."
I told those guys the problem is,
marketing guys are smoking
dope during the workplace.
Five hundred and fifty thousand
for that thing and we did it.
It's the most popular
thing we have on the road.
People can hardly wait for it to pull in.
We have them just swarming this thing.
So sometimes you know, my
judgment is old fashioned.
You know I'm getting a little crickety.
My son, who's in the
concert promoting business,
he's got Transparent Productions;
the largest Christian
concert promoter in probably the country.
"Dad, you just don't
understand our music."
You know, he's 41, I mean he's 43.
But I'm saying, "What'd you
mean, understand your music?
"I understand your music,
"I don't understand
today's music, you know."
And so, he had a band called Prayer Chain
and they were a hotshot group.
And they marketed
themselves in the early 90's
and made a couple of world tours.
Well, their warm-up group was Third Day.
So when they traveled,
Third Day was traveling.
So he and Mac are big friends.
But I said, "Well I like Third Day."
He said, "They started
with us back in the 90's.
"You like us, you just don't
like what's out there today."
So anyway, that's a side story.
But come on, lets get some questions.
Your question was, "How
do I deal as a Christian?"
I try to deal with it the best way I can.
They know my value system.
They never jeopardize my value system.
And I think they probably
don't tell me everything.
I mean, I don't see every single marketing
thing there is on Monster
but I will tell you,
they do things as ethically as
they can and how they reach.
But the real key is, they want
that Motocross kind of rider.
Your son when he gets a few years older.
>> Student: He doesn't
like carbonated drinks.
>> Well, we got the Rehab.
You can take this Rehab home tonight.
>> Aide: Can you tell us that
Las Vegas Monorail story?
>> Yeah, there was another little deal.
This one was a stretch
because we didn't have a lot of money.
>> Student: This is Monster?
>> This is Monster.
>> Student: Early on, right?
>> Yep and a guy from Las Vegas came over
and said, "You know, we
gotta deal for you guys.
"We're building a monorail that runs
"up and down the strip in Las Vegas.
"And we'll paint one of the cars
"your black and green Monster and give you
"a couple of TV flat screens so you can
"show your commercials, if you like."
So people riding them like,
"Hey, look at that commercial."
So our marketing guy, who's
by the way, a brilliant guy.
He said, "How much is this
little thing gonna cost us?"
"Well we want a three year contract
"for a million dollars a year."
Okay now you're the marketing committee,
you gotta figure out, how do I justify
a million dollars a year for
people to ride up and down.
A lot of them probably,
been drinking too much,
then you don't know what
they're looking at up there.
So are you gonna get
enough exposure out of that
flat screen to pay for
this million bucks a year?
So, this should've been a
project that was assigned
to you to figure out how to
get your money back on this.
Anybody have an idea?
>> Student: Sell Monster.
>> Hmm?
>> Student: Sell Monster in a drink?
>> Well, even if you did
that, you wouldn't sell enough
because they're drinking other things.
But you don't know all the facts.
You can't really give me that answer.
But what we had was a contract
with ampm, nationally.
And we paid ampm nationally, eight hundred
and fifty thousand a year for displays
in all their stores, nationally.
Got a great return on that $850,000.
We probably sold, we
probably made ten million
on that eight hundred and fifty thousand.
So this is what the marketing guy says,
"Ah, a million dollars is nothing."
He said, "I'll cut a deal
with ampm to sell them
"the visibility for commercials
on the Monster Monorail."
He said, "It just happens to be,
"I'm gonna give them an
$850,000 tab on that."
They took it just like that.
So basically, all of our displays
in all the stores cost
now a 150,000, right?
And the monorails free.
So we offset the 850,000
we're paying them nationally,
with 850,000 for them to get
the exposure of the monorail.
So we did our three year
contract and we're out of it now.
But that's the reason I think
Erin wanted the story told.
See, that's creative marketing.
You can't sit on your tail and say,
"Oh, a million dollars,
we'll never do that."
Well no, think of ways to manage that.
Think of that aggressiveness
and how you're gonna do that.
Because remember I told you I was gonna
give you a few of the Taber truisms?
In fact, I'm testing it out on you
because I speak on this, these truisms.
And I'm gonna do...
An hour presentation to
Chick-fil-a, all their executives
and things out in Southern
California in a couple weeks.
So, you can pray about that.
But the reason I'm giving you this,
this is more in management but I think
it really curtails into your marketing.
The one thing in marketing
that I can never overcome,
you cannot teach or train attitude.
You get somebody in marketing that has
an arrogant, haughyy attitude;
they are gone.
Because there's either
their way or the highway.
And most of them found the highway.
Because you cannot teach or train.
That's one of my deals,
I gave you one earlier.
What did I give you earlier?
Oh, organizational values drive behavior.
I put that up there didn't I?
Yeah, values drive behavior.
Your value system will find its way
through the organization.
Do you know there's only two
things that a non-Christian
and a Christian agree
on in an organization?
A secular organization.
You probably don't know this.
They both agree on how
to treat the environment.
It's amazing.
Going to meetings, golly a consensus.
I mean, I'm Christian, a Christian.
And the other one of course is,
doing the right thing for women
and hiring correctly and all that.
Those are the only two things.
Other than that, there's little agreement
between a Christian and a non-Christian.
So you gotta deal with that.
That isn't one of my,
that was just a freebie.
For all of you that, of course
have mentoring, one of mine is,
"Leadership insurance in
a company is mentoring."
If you set up a proper mentoring program
within a company, that
gives you leadership
insurance in case somebody leaves.
Now you probably say, that's
training or whatever it is.
No, it's mentoring.
Gotta get to the heart
of the people so you know
you're putting the right
people in the right job.
I know that this is
getting a little bit into,
I know you read some
things on Peter Drucker.
I really like what Drucker
says all these years.
But efficiency is doing things right.
Maybe you got this in
your book, I don't know.
Efficiency's doing things right
versus effectiveness
doing the right thing.
Oh, is that really key in marketing.
Do you know that we ran at 98%
in our production one year?
One year, I mean one day.
And our production guy was so happy,
he came in and told me ran 98.4.
We normally run about 94.
So that's four percentage points greater.
So, what we did was efficiency.
You know, we were doing things right.
Really running this line.
He comes back in about four hours later,
throws his hat in the door and said,
"The problem is we never
put any syrup in the cans.
"We put just carbonated water."
So effectiveness is doing the right thing.
He didn't do the right thing but whatever
he did, he did it with efficiency.
So, that's a key thing when
you're really looking at it.
And I'm not gonna, you know
give you a lot of these.
But I wanted to be sure
that if you're managing
a marketing group in a company,
keep in mind that people leave managers,
never the organization.
You got that?
People leave managers,
not the organization.
Most of them that I gave exit
interviews to, loved the company.
They just couldn't stand
who they were working for.
>> Student: Can you go
back to the efficiencies .
That efficiencies are...
>> Efficiency is doing things right.
We ran at a 98%, okay.
>> Student: Versus doing the right thing.
>> But we didn't do the right thing.
>> Student: Got it.
>> See, so you gotta be
sure those two match.
>> Aide: You have the right staff,
doing the right thing when
it comes to management.
>> And I'll give you one more.
Did you have a?
>> Student: We talked a little bit
about risk, kinda at the beginning.
What were some of like, the biggest risks?
I mean I know, becoming the
president of operations or...
>> You mean starting Monster?
>> Student: Or just you know, personal.
>> Starting Monster was a personal thing.
We took that company with no money
and twenty two million in debt.
You wanna take that risk?
Would you sign your mortgage
on your house over to that deal?
I didn't but I didn't take a
paycheck for six months either.
Because I knew that, you know,
we weren't in that position.
And I only had eight employees,
that's all I could afford.
So the risk was, how do I pay that off?
That's a whole financial
creative scenario.
But we paid it off, every dime of it.
But the key is, it took some creative
accounting with guys
that owed us the money
and they were able to do this and that.
The one big thing was, I wanted to sell
the manufacturing plant and save industry.
Remember I told you that Taj Mahal?
I put nineteen and a half million on that.
I wanted to get almost the
twenty two five out of it.
And the guy I was selling
it to was a friend
of mine who ran Tropicana
and he wanted it.
But he was owned by Seagram's and he could
only get thirteen million from Seagram's.
So, how we gonna get from thirteen million
to nineteen and a half?
Well, since I didn't
have a production plant
if I sold it to him, I said it's simple.
How about producing for me?
At 20% lower than my lowest bid
that I can get for production.
So if somebody said, "I'll
produce for you for a dollar."
He had to do it for eighty cents.
So he put the twenty cents in the hopper
to pay off this difference.
And in five years if I
got five million back,
that was short.
That's my worry.
But if I got eight million
back, that's my benefit.
But he absorbed overhead, so
he made out like a bandit.
And by the way, we made
about a half a million more.
So those are the creative
things, but that was risk.
And we didn't have a lot of risk at Coke.
I mean, we were pretty flush.
I mean, I could make mistakes.
But the real key was
Monster, really it was.
I mean, big time risk all the time.
And you know, we had to pay
bills before we got money.
Same way in a the household,
just like your household.
But the issue is, yeah
that was a risk issue.
Last one of these and
then I'll ask for some
of your questions and I'll get outta here.
I really believe there's a misnomer,
especially with the Christian employee,
that they can duck behind law.
And by ducking behind law, I mean
law that's stated by the state
or how to do business or whatever.
I'm not saying that you violate it
but I believe in my heart
that ethics trumps law.
And you come and tell
me that you did a deal
and it's totally legal
but it hurt a customer
or it hurt an employee,
if you're an HR guy, I
wouldn't put up with it.
Ethics trumps law in my base.
So don't tell me that you
gave Albertsons something
and you gave Vons a different
one but that was legal.
It wasn't legal because we're treating
the same class of customer differently
and that's unethical to me.
And that's what you have to deal with
when you're making marketing
decision a lot of time.
Okay.
>> Aide: Tell the story
about when you do need
the trucks but they were
painted a certain way.
>> Do what?
>> Aide: Remember you took over the trucks
and they were painted
with, was that Hansen's?
>> Hansen's
>> Aide: But you didn't
need the distribution,
what you did with that.
>> Well when I bought it,
I had to get every dime
as I told you, where I had to
pay out twenty two million.
So I had a truck fleet that I bought.
Big over, the haulers.
So there was a coach at
SC named Rod Dedeaux.
He was their baseball coach for years
and he had a trucking company
and I knew him a little bit.
So I went out and sat down with him
and I said, "Hey, why don't
you buy these trucks from me?"
And he said, "Yeah,
what'd you want for it?"
And he said, "Well that's
reasonable, that's reasonable."
And I said, "Well then, I
should of asked for more."
If he thought it was reasonable,
then I shoulda asked more.
But those are the negotiations you do.
Well he said, "Well who's
gonna do your hauling for you?"
And I said, "Probably you,
if you give me a good rate."
He said, "I'll give you a good rate."
I said, "There's only
one caveat in this deal."
All the trucks were painted with fruit
and Hansen's on the side
and I needed awareness.
So I said, "I'll give
you a three year contract
"and you don't paint
out any of our trucks."
So he had trucks, our
trucks all over the place
with this advertising but
he may have had Wheaties
on the inside or something else.
But those are the ways you leverage,
the kind of exposure and advertising
when you're starting a business.
Oh, he kept them for five years.
We did five years of business with him.
He even repainted them.
So the point is, that's how sometimes,
that's the story you wanted right?
>> Aide: Yeah, just the creative thinking.
>> It's the leverage-
>> Aide: Just the leverage
when you have minimal
resources between that and-
>> You just gotta leverage it.
>> Aide: That's creativity.
>> And did we cover
Monster like we should of?
>> Aide: Do you have any
other questions on Monster?
We've only got a few minutes left.
What questions do you have on Monster?
>> Student: I have a question.
Do you think there's any
kind of ethical issue
if your target market is young teenagers?
Giving them a product
with that much caffeine?
>> Well let's talk about the caffeine.
Well first of all, that's why
I put up here choice, choices.
The key being is, there's
a choice in everybody.
It has twice the caffeine a Coke does.
But listen to this, one half
the caffeine of a Starbucks.
I see more kids in Starbucks
than I do buying our stuff.
I was in a Starbucks the other day
and I couldn't even get waited on
because there were junior
high kids in there.
Probably 50 junior high kids in there.
I'm just trying to say is,
no we haven't had a problem.
Now the government is gonna find a problem
because we're a capitalistic
company, making money.
And you know, we do a little bit better
than Slow-Orenda and
all those other things.
But the issue, but the issue being,
I'm trying to answer the question, is no.
We would not ever violate,
that would be a damage.
We are on the GRAS list.
And GRAS list is,
Generally Regarded As Safe.
And we're on the government GRAS list.
Oh, there'll always be
senators poking at us.
I mean, that's just part of the deal.
>> Aide: Okay, we got time for maybe one
or two more and then we're gonna wrap up.
>> Student: I have a question.
So you mentioned that Monster's
in 70 countries today.
So did you, did the company have to alter
some of these P's, any
of the first nine P's
in going into other countries to address
like, maybe different cultures?
>> We really have to address the package.
Because we have to put some
of their language on it.
Sometimes it can't be 16
ounce, it has to be 15.4.
Those are the kind of things.
We have to look at how we have protected
our trademark around the world.
Every guy comes out of the woodwork trying
to copy our trademark and they're wanting
us to give them a million dollars.
Great question because yes.
This was a domestic chart for you.
Yeah, we have to do that.
I mean partners is the biggest P
that we have in those P's.
We have to have partners
because they know the culture.
The culture is so different.
We're just going into Japan now.
I mean, Japan's going
nuts over this product.
But we have to do it in a different size
and the whole thing but yeah.
We're producing it in Bakersfield
and shipping it to Japan.
>> Aide: One more?
>> Well I don't wanna overrun my stay,
I probably have worn it
out but I just wanted
to say, all of you I appreciate.
We've spent time talking and visiting.
Thank you for treating your mentors well.
Don't ever pass up these two years
with a mentor because
you'll love it at the end.
You'll say, "Aw man, I don't
wanna give up that mentor."
And thank you Larry for
inviting me to come in here.
And if any of you have a
question, you know where I am
and you know the email, zip it in here.
You know, do well on your test.
I gave you most of the answers
anyway in my presentation.
But I think the main thing is,
you know marketing is a floating vessel.
But you gotta get your arms around it
or it'll float you right out
of the financial realm of a company.
>> Narrator: We hope you
enjoyed this message.
Biola University offers a variety
of biblically centered
degree programs ranging
from business to ministry
to the arts and sciences.
Learn more at Biola.edu.
