Assessment of the Red Bull Business Plan

Assessment of the Red Bull Business Plan Red Bull is an adaptation of the Thai energy drink Krating Daeng, which means Red Bull. The company was founded by Thai national Chaleo Yoovidhya and Austrian national Dietrich Mateschitz. Together with his son, Chaleo owns a controlling 51 percent interest in the company; however, Mateschitz is responsible for the companys operations through the Austrian company Red Bull GmbH.[1] 1.1 Product Red Bull is a sweet, caffeinated drink aimed to give consumers the high energy kick. Available only in rather expensive 250ml cans, 350ml bottles, with 4 packs and only two flavours (original or sugar-free). It contains caffeine, taurine, glucuronolactone, and B vitamins. Founded in 1984 by Austrian businessman Dietrich Mateschitz, Red Bull has become the worlds leading energy drink, a staple in many young, and active peoples lives. 1.2 Competitors Big global companies such as Coca Cola and Pepsi have introduced their own energy drink versions to their product base. Mother (by Coca Cola), Amp (Pepsi), V, Battery, 180, RedEye and Bennu being just some in the ever-growing energy drink market. Competition also presents itself in original sports drinks, such as Gatorade (Pepsi) and Powerade (Coca Cola). Furthermore, premixed alcoholic drinks like the Smirnoff range form part of the competition. 1.3 Industry Red Bull has becoming hugely successful and operates within the global soft drink marketplace. Within the soft drink industry its niche is the energy drink market, of which Mateschitz was largely responsible for creating. Red Bull currently is the leading energy drink across the entire globe. It holds 70% of the market worldwide (Gschwandtner, 2004). Once the drink was passed by health ministries, Red Bull entered the Austrian market, soon thereafter then moved into Germany, United Kingdom and the USA by 1997. 2. Needs, Wants and Demands satisfied by Red Bull 2.1 Needs There are three basic human needs that Red Bull satisfies, physical, social and individual needs. Human needs are states of felt deprivationà ¢Ã¢â€š ¬Ã‚ ¦ marketers do not invent these needs; they are a basic part of human makeupà ¢Ã¢â€š ¬Ã‚ ¦People in industrial societies might try to find or develop objects that will satisfy their needs. (Kotler et al. 2006) Firstly, a physical need is when 4.1. Recommendations For Red Bull To Sustain Their Marketing Momentum The marketing strategy of Red Bull can be considered as one of the most successful one over the years. Red Bull has been famous for building a beverage brand without relying on mass-media. The central component in all marketing activities of Red Bull was Word- of mouth. Besides, Red Bull also created adult cartoon advertisement, pushed trial programme, invented an extensive network of events, sponsored leading athletes of extreme sports and branded refrigerated sales units to complete their marketing strategy. However, in order to sustain the marketing success, besides their traditional marketing campaign, we think that Red Bull need to take the following actions: Ø Boosting mass-marketing campaign to embed the image of Red Bull an energy drink- in customers minds: in the current harsh competition market, where multiple brands of energy drinks are available, it is hard for Red Bull to keep their position as the first choice in customers minds when they need an energy drink if customers do not have chance to see the image of Red Bull regularly. Therefore, now it is the time for them to use other tools like billboards, banner ads or posters at the public places to maximize contact with customers. Ø Increasing advertising on the internet: as the internet is so popular now and more and more people spend much of their time surfing the internet, Red Bull also needs to popularise their brand through some activities on the internet like creating some extreme games online and advertising on appropriate websites which are quite familiar with students and business people in different countries. Ø Diversifying their products: Red Bull should show their innovation to customers to freshen the image as well as to create entry barriers against other competitors through product diversification. They can introduce new kinds of drink with more vitamin plus or more flavours but they have to make sure that the new kinds are also energy drinks to maintain the Red Bull Equity Red Bull Brand Equity According to Keller (2008, p 53), brand equity is the strong, favorable and unique brand associations in the memory of customers. He goes on to identify (p 54) two sources of brand equity: 1.) Brand Awareness; and 2.) Brand Image. Red Bull has well defined tactics for both sources. The Brand Awareness Source for Red Bull Brand Equity Keller (p 54) notes the key elements of Brand Awareness: 1.) Recognition; and 2.) Recall. He postulates that if buy decisions are made at the point of purchase, then brand name, logo, packaging and the other elements of brand recognition are important factors. If the buy decision is made before arriving at the point of purchase, then brand recall is centrally important. Duncan (2005, p 140) concludes that low-involvement purchase is usually done for products that are relatively cheap, bought frequently, and are low risk. In such cases, in addition to traditional advertising with its reach and frequency drills, it would be productive to spend time getting the name, logo and packaging correct. Red Bull did just this. The Pearson Case Study 4 (2006, p 70) describes how Red Bull selected a distinctive, slim can. They also created a prominent and eye-catching logo of two bulls and a yellow sun. Package wording effectively communicates the products benefits: Energy Drink. The packaging is an important part of the branding, as we might expect for a low-involvement product. Pearson Case Study 4 goes on (p 70) to note that changing the carefully selected package elements, in Germany substituting a glass bottle for the slim can, resulted in a dramatic drop off in sales. To increase brand recall, Keller (p 55) advises that a slogan or a jingle can establish the memory linkages that improve recall. Pearson Case Study 4 (p 69) relates that Red Bull developed an effective slogan, Red Bull gives you wiiings. They use little advertising but when they do it consistes of unusual animated shorts that end with the Case 2 Red Bull Red Bull, using unconventional marketing tactics, has uniquely positioned itself in the beverage industry. Red Bulls unique positioning has allowed it to capture a considerable amount of the energy beverage market share in the countries it is distributed in. Although the companys financial information is not released to the public, it appears Red Bulls marketing strategies have been successful in terms of market share, revenue, and units sold. While I personally think overall the tactics will prove successful for years to come, the same mysterious quality surrounding the drink that has proven successful currently likewise has the potential to erode the brands equity in the future. Unique positioning strategies targeting high-school burnouts and college students, nightclubbers, and athletes have built the brands equity. Grassroots marketing campaigns emphasize the drinks image as being a cool and trendy drink for cool and trendy young adults. Word of mouth and an intentionally vague strategy have made the brand mysterious. By not emphasizing what the company itself feels are the products strengths, it allows consumers to decide for themselves, as well as facilitates the emergence of rumors, some quite outlandish, adding to the drinks perceived value and increasing the brands equity. Red Bull does not have a passive hand, however, in the marketing of its energy drink. The company provides college students free drinks to give away at parties and owns sports teams and events. All of these branding events, unconventional as they are, align well with the products perceived unconventionality, and are strong elements of the brands strong equity, many of the tactics, including those contributing to the lack of public information concerning the company and the Red Bull drink, also provide the potential to erode the brands equity. Health officials have concerns over its ingredients and it has not been approved for sale in Canada or France. It has been linked to a number of deaths and it appears particularly dangerous when mixed with alcohol. The company also has created untrue documentaries. As Bob Walker states in his article Observer Bull Marketing, Red Bull has never let the truth get in the way of its brand message. As more and more consumers are becoming health conscious consuming less carbohydrates and sugars, seeking out organic foods, and being weary of what they put in there bodies, they will be less likely to drink Red Bull, especially with the uncertainty regarding the effects of its ingredients. I have never had a Red Bull and would not put something made of ingredients of uncertain effects in my body. Further, although the company contends it does not market Red Bull in bars or for use in conjunction with alcohol, many bars carry Red Bull and the majority of Red Bulls college-aged consumers drink it in conjunction with alcohol, particularly with vodka, an obvious dangerous mix, as Red Bull is an upper and alcohol is a depressant. Although I may not be representative of the majority of consumers, the companys somewhat deficient corporate ethics make me cautious of trusting the brand and wanting to try its drink. As the number of reported deaths increase and speculation over its potentia lly harmful health effects grows, brand equity will likely erode. While one might argue these factors serve to further contribute to the brands mystique and therefore increase equity, over time I think lack of public information and an increase in negative publicity will erode the brands equity. The fact that France and Canada have not approved Red Bull for sale in their countries is indicative of a less than inconsequential health issue surrounding the drink and the lack of ability of the company to reach these markets prevents the company from building brand equity in these locations, no matter how well marketed the product may be.