Red Bull GmbH, is an Austrian firm, which is known for its energy drink called ‘Red Bull’. It is headquartered in Fusehl Om See, Austria. It is a 28 year old company which came into existence in mid 1980’s. Dietrich Mateschitz was inspired by functional drinks of the Far East and invented the formula of Red Bull, with unique set of marketing strategies. On April1, 1987, the company unleashed a brand new product which became a new product category in its own. The company has its operation in 168 countries providing employment to more than 10997 people. It is planning further expansion in place, from where the founder drew his inspiration i.e. , Far East as well in USA and Europe (Barrett, 2015). It has sold more than 60 billion can since its inception and more than 5.9 billion got sold in 2015 only, which is 6.1% more than previous year. It boasts the turnover of EUR 5.903 billion in 2015, which is 15.5% more than figures of 2014. The major markets responsible for this phenomenal growth are Turkey, South Africa, India, Saudi Arabia and Poland.
Finding and Analysis
Red bull is the category leader in the segment of energy drinks all over the world. It owns 50% of the market share. Though its competitors like Pepsico and Cocacola have launched various products like Mountain Dew Amp, So Be No Fear, Rockstar and Fast Throttle, with better financial resource are already in the market, yet they are not able to defeat Red Bull and take sufficient market share ( Carpenter, 2015). Red Bull with its reach in 168 countries presently, has huge markets in its hands already and it plans to expand in USA, Europe and Far East more deeply, opening large markets for its sales. This save it from product maturity and provide positive long term prospects for the company. Being the first mover in many countries and holds the position of market leader.
Though it’s the market leader in the category, but it lacks the variety in its product line, which created a need (Pavlou, 2015). The financially strong rivals have vast range of products to offer the customers. The high content of caffeine makes it target of many food and regulatory authorities.
The emerging economies of the world provided Red Bull with many new countries to expand into and penetrate the current markets more deeply. It is considering expanding its production sites in many countries, making products cheaper by avoiding imports (Rahmani, 2015). They did this in Brazil and considering Asia further.
Various competitors like Pepsico, Cocacola and Monster have wide range of products and good strategies. In addition, some of these some use natural ingredient in their recipes, which is becoming the new preference of the customers. The market in the new countries tends to move towards maturity, posing threat and creating need for more investment in marketing and advertising.
Marketing mix is the set of components that needs to be decided for any new product. It is important for the strategic decision making of the firm (Culley, 2015). It has four components, which are product, price, place promotion. To start a business, the basic need is product. Therefore product decisions are the most crucial ones. These decisions affect the other three variables. The components that are needed to be considered are what product is to be sold and what would be its USP. The decisions like product variety, quality, design, features, brand name, packaging, size, services, warranties and returns are to be made before the product is rolled out.
Pricing is another crucial variable of the mix, which keeps changing as it depend on the costing of the product, marketing expense, price fluctuation in markets, distribution, inventory etc. It is also influenced by competition heavily and increased or decreased according to the necessity. It affects the targeting and positioning of the brand and also used for promotions (Vortman, 2015). It includes components like list price, discounts, allowances, payment period, credit period etc.
Places include channel, coverage, assortments, locations, inventory and transport. Depending on the product type, the distribution is considered. For consumer goods maximum reach is necessary and for premium goods, selected locations are enough. This decision depends on the STP, product and pricing decisions (Gandhi, 2015). This factor influences the company budget. If the prices of the oil rise, the distribution becomes costly and so does the products.
Promotion is the part which in turn influence STP the most, because if the positioning is done right, the product would generate demand and meet the revenue goals (Esteves, 2016). It depends upon the product, product stage, pricing, product categories and other variables. This is the part which is responsible for message delivery.
The marketing mix of Red Bull GmbH would be analyzed in the following paragraphs and the solutions would be considered further. The firm offers very limited range of products in each product category. It offers 6 flavor to the people while its major competitors like Monster and Rockstar provide wide range of flavors and blends to the public. Among the 6 flavors of the company, three are almost identical, as these three are the different versions of the same product. The difference is, one is fully flavored, other is sugar free version and another one is zero calorie version of the basic product. It can consider offering coffee blend products as the company prefers natural ingredients. A coffee infused energy drink would do well in the future, as it is healthy and would be able to give company, broad markets. It would be able to attract coffee addict young generation and older generations for providing them the traditional choices in new way. It can also venture into non-carbonated drink, by offering juice or tea blend with energy drink. It will open another kind of market in all the countries. Proving energy drinks with extra strength qualities in the same price would encourage customers to try and further opt for it. It can also provide substitute for competitor’s product. It provided lime, cranberry and blueberry flavors in 2015, and can continue adding more flavors to its portfolio.
The company approximately sold 5 billion cans per year with the rate of$ 1.86 per 8.4 ounces. Though the price is almost similar as that of the competitors, the firm is able to generate more profits. It should not consider increasing prices, as it can drive away the consumers to other products. But, it can encourage bulk selling to the normal public, offering discount on it. This will promote sales and induce customer loyalty.
Red Bull has kept its advertising to extreme sports, but now it should approach the traditional sports like, baseball, basketball and football for its promotions (Giles-Corti, 2015). It will help them target the older generations as they are loyal to these sports. It can also use Ansoff’s matrix strategies to get new markets and penetrate the existing one. For distribution it use aluminum cans as is cheaper, healthier and easily available (Neudecker, 2015). It currently offers its products in 169 countries; it can further increase the number of countries as well as number of retail store per country.
Red Bull’s tagline is ‘it gives you wings’ and it connects itself well with the aspirational youth.
Red Bull Air Race: This is an annual international event created by Red Bull GmbH since the year 2003. It is a series of air races in which participants have to cover the distance in fastest time navigating through a series of obstacles. This takes place on various territories like water airfields or natural wonders. It is conducted on weekends and it attracts huge crowds as well as broadcasting is done through live or taped media. The air racer with the highest number of points at the end of the competition becomes the winner.
Red Bull BC One: This is another annual international competition by Red Bull. It is a an individual B-Boy competition and it is famous as one of the major international breaking championship without a crew event. The main event is knockout tournament, featuring 16 players (Hollensen, 2015). It used to release DvDs, but had to stop due to controversies.
RedBull Dolomeiten is considered as ‘World’s toughest team relay race’ It is held yearly in September in Austria. 110 teams initiate the race organizer is Werner Grissmann. Each team includes mountain runner, paraglide, whitewater kayaker, and mountain bikers. It has been conducted since 1988.
Red Bull X Alp is one of the world toughest adventure races, launches in 2003, which includes hiking or flying 1000 kms in the Alps. Around 30 athletes takes part in it and each team consist of one athlete and one supporter.
|New York Red Bulls||Sports sponsorship and acquisition|
|Red Bull Battle Groud||Events|
|Rickie Fowler, Hakaru Nakamora||Endorsements|
|Red Bull Stratos||Events|
|Red Bull X- Fighters||Events|
|Red Bull Cold Rush||Events|
|Red Bull Sailing Team||Sports sponsorship and acquisition|
The 28 year old firm has experienced huge success since its inception in almost every country, they operate in. But the company needs to consider the saturating market and limited range of products they offer. By rectifying these situations, they can tackle competition and future challenges. Using their popular brand image, they can introduce many new products, considering consumer preferences for it. They can take on its weaknesses by performing market research and modifying the strategies according to the need. The strategies in marketing mix should continue to evolve in every stage, as it forms the core of the product. It should keep renewing the products, maintaining value prices, least cost distribution strategies and better promotional activities for its product line and newly captured audience.
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