This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
When we first started, we said there is no existing market for Red Bull ... but Red Bull will create it. And this is what finally came true. Dietrich Mateschitz (Dolan 2005 p.1) Red BullÂ®'s 1987 launch established an "energy drinks" market. In 2009 they continue to dominate the globally. How did they achieve? How do they plan to maintain their stronghold?
In 1987, revolutionary marketing and advertising techniques coupled with fortunate circumstances enabled Red Bull to create the "energy drink" market. In today's diverse and ever-expanding market of 228 competitors, Red Bull is likely to lose overall global market share. Ever optimistic, Red Bull continues with extreme sports sponsorship, creating events, nurturing the Red BullÂ® "lifestyle", a strategic business plan including expanding into emerging markets and developing products and plans to include multi-million dollar resorts and theme parks. Red BullÂ® has every reason to be confident of its future.
In 2008, the worldwide Functional Drinks market was worth $26.9 billion. Relatively new and still developing, by 2013 the market is expected to expand by 64.3% to a value of $44.3 billion (Datamonitor PLC 2008), spread over three different categories: Sports, Energy, and Nutraceutical. These products aim to improve users, physically and mentally or just improve "well-being" (Moosa 2002; Datamonitor PLC 2008). With energy drinks being the largest sector at 47.3%, Red BullÂ®, was first of its kind, holding a 29% global market share in 2008. (Datamonitor PLC 2008). "Spreading its wings" internationally since its birth in 1987, 2008 saw Red BullÂ® GmbH worth â‚¬10.9 billion, selling over four billion cans worldwide in 70 countries (Müller 2009). History Red BullÂ® was the brainchild of Austrian, Dietrich Mateschitz, ex-managing director of toothpaste manufacturer Blendex, where he travelled widely, experiencing different cultures (Gschwandtner 2004). On one business trip, Mateschitz read that one of Japan's highest taxpayers was Mr. Taisho, manufacturer of an energy giving drink. Later in Thailand, he learned that taxi drivers use these drinks to counter fatigue. Mateschitz also noted that the drink's ingredients lacked a patent (Gschwandtner 2004). Armed with this information, in 1984 he approached Chaleo Yoovidhya, owner of Thai company TC pharmaceuticals, producer of the "Kratindang" energy drink (Gschwandtner 2004). Mateschitz's concept was to form a company selling its own energy drink worldwide at a premium price (Keller 2004). Chaleo agreed, each took a 49% stake, investing half a million dollars. Chaleo's son took the remaining 2%, and Mateschitz agreed to run Red BullÂ® (Dolan 2005). Red BullÂ® was first established in Austria. Initially wary of the product's unusual ingredients, Austria's government insisted on stringent scientific safety testing. Thus, Red BullÂ® was not licensed until 1987. Subsequently, this regulatory procedure proved a mixed blessing for Red BullÂ® (Gschwandtner 2004). (Kratin Daeng
The iconic eye-catching logo and slogan "red bull gives you wings" were then designed (Gschwandtner 2004). By 1990, despite high sales figures, and a lot of promotion, Red BullÂ®'s finances were in the black. To this point, funding had been 90% equity from the two partners and 10% bank loans (Gschwandtner 2004; Dolan 2005). Ambitious Mateschitz now believed Austria too small a market for Red BullÂ®. In 1993, Red BullÂ® moved into such countries as Hungary and Germany, planning to pre-market the little 250ml can by word of mouth across Europe (Gschwandtner 2004). Red BullÂ®'s Kraihamer commented, "We do not market the product to the consumer, we let the consumer discover the product first" (Keller 2004, p.119). This "Buzz" marketing proved highly successful, and inexpensive. Red BullÂ®'s controversial ingredients made it a "cool" fashion icon. Its mixability with vodka, coupled with extreme sports sponsorship, helped the drink tap into the young "hip" market (Cooney 2007; Gschwandtner 2004). By 1997, Red BullÂ® had conquered most of Europe including the UK. It then moved onto the USA, working state by state with a similar "buzz" technique (Hein 2001). Today Red BullÂ® is now Austria's most successful brand, worth more than â‚¬10.9 billion, with diamond producer, Swartzkopf being worth half as much (Muller 2009). 3.0 Does Red BullÂ® "Revitalise the Body and Mind"? Red BullÂ® is billed as a drink which: â€¢ Improves physical endurance, â€¢ Stimulates metabolism and helps eliminate waste substances, â€¢ Improves overall feeling of well-being, â€¢ Improves reaction speed and concentration, â€¢ Increases mental alertness (Keller 2004). Red BullÂ® is best consumed:, â€¢ At times of increased mental and physical strain, â€¢ On long sleep-inducing motorways, â€¢ During intensive working days, â€¢ Prior to demanding athletic activities, â€¢ Before tests and exams, (Redbull.com (a) [ca. 2009]).
Some consumers are easily convinced of Red BullÂ®'s effectiveness. Nicknames such as "liquid speed" and "liquid cocaine" along with peer pressure build hype around the product (Kumar, et al. 2004). American college student Kaytie Pickett illustrates this: "Maybe I think it works just because they say it works... I'm a slave to peer pressure" (Walker [ca. 2009]).
Other consumers are more sceptical. Brandweek reported in 2008 that Red BullÂ® was one of the UK's lowest ranked companies in a survey of perceived brand value (Brandweek 2008). Despite the odds, studies proved the drink's effectiveness. One such study was on ten individual graduate students, five of which were given a placebo, the rest Red BullÂ®. Conducted before and several hours after consumption, the results proved conclusively that: ...the mixture of three key ingredients of Red Bull Energy Drink used in the study (caffeine, taurine, glucuronolactone) have positive effects upon human mental performance and mood (Seidl, et al. 2000). Whereas most products spell out exactly what they do, Red BullÂ® uses vague terms, "Vitalizes Body and Mind" (Walker [ca. 2009] p.2) relying on consumers to purchase the drink and discover its effects themselves. (Walker [ca. 2009]) 3.1 What are the ingredients in Red BullÂ®? Red BullÂ® 250ml cans contain; â€¢ 80mg of caffeine, â€¢ Taurine, â€¢ Glucuronolactone, â€¢ Sugars, â€¢ Vitamins (Keller, 2004 p.117). Taurine is Red BullÂ®'s most controversial ingredient. In organic form, it was discovered in the bile of a bull (Irving Sax, et al. 1987). This is the likely source of not only the name, but also rumours that it is made from "Bull Testes" or that it contains "Bull Semen". In the drink, taurine comes in synthetic form (Redbull.com (c) [ca. 2009]; Walker [ca. 2009]). Human beings produce taurine in a form similar to that of an amino acid. During extreme physical activity, the body may require more taurine than is produced. Taurine's metabolic stimulatory effects help the body work harder. (Keller 2004; Healingdaily.com 2009). Equally, its detoxifying effect helps counter fat build-up on the liver caused for example by excess binge drinking (Healingdaily.com 2009; McCall 2005). Glucuronolactone is a naturally occurring amino acid in human beings, produced by glucose breaking down in the liver. It also removes toxins from the body and is a metabolic stimulator, fighting fatigue, and producing a feeling of "well being" (Keller 2004). Theoretically, these supplements should help the body to perform better, when under stress, fatigue, or performing physical exercise.
Red Bull in suspected link to deaths (BBC News Online 2001)
Despite Red BullÂ®'s beneficial effects, some users have had adverse effects from consuming it, and as many as five people have died. A 16-year-old volleyball player would faint during games, and gain a heart rate increase of 30bpm. Diagnosed with "postural tachycardia syndrome", she told the doctor that during the week she would drink four to five cans of Red BullÂ® daily. Returning to normal a month later having stopped drinking Red BullÂ®, doctors believed that high concentrations of taurine in the brain might have interfered with her cardiovascular system (Terlizzi et al. 2008).1 In 2001, an 18-year-old basketball player shared four cans of Red BullÂ® with friends, played a game, then later died of Sudden Adult Death Syndrome. An investigation was recommended into high caffeine content drinks (Medicalnewstoday.com 2004). Two clubbers died in 2001 after drinking Red BullÂ® with vodka, a third died after drinking it after extreme physical exercise. No results were published into the relationship between Red BullÂ® and their deaths (BBC News Online 2001). A WalMart shelf stacker with a heart condition would drink four cans of Red BullÂ® a night. He later died of a heart attack. The coroner had insufficient evidence to link the death with Red BullÂ® (Clarke 2008). Most major brands will open up to consumers if there is a health scare or death related to their products, in an effort to safeguard brand loyalty (Dunne 2005). Red BullÂ® prefers to take the offensive; "No one anywhere has ever shown any link between Red Bull energy drink and harmful effects" (Medicalnewstoday.com 2004). This makes them appear edgy, flaunting their "don't mess with us" attitude. 3.3 Has Red BullÂ® profited from controversy? Debate surrounding Red BullÂ® has been a double-edged sword. On the one hand, they loose some customers due to health fears, as countries such as Denmark, France, and Australia ban the drink. On the other hand, along with the bans, negative press related to the ingredients, nicknames, adverse affects and deaths, has not only made Red BullÂ® a talking point, giving them free publicity, it has also allowed the drink to keep its edge, and remain "cool". As Mateschitz himself points out; Without the old high school teacher telling his students Red Bull is evil - probably even a drug - it wouldn't seem interesting and therefore would loose its edge (Kumar, et al. 2004).
This "edge" was proved during Red BullÂ®'s launch in New Zealand. The distributor was selling a version of the drink with a UK health warning that the government did not recognise. To get round this, they re-labelled each of the 70,000 cans. When consumers found out that the authorities disapproved, ...demand went through the roof... punters would buy Red Bull and immediately pull off the sticker. They'd tell their mates: this stuff is illegal, everyone wanted to be drinking from the forbidden tin (Cooney 2007). 4.0 Red BullÂ®, a non-descript market? Mateschitz believed consumers would take Red BullÂ®'s benefits seriously only if the product cost more than an average soft drink. Therefore from the outset, the cost per can was set 10% above the most expensive competitor, regardless of country. This is why a single can of Red BullÂ® can cost up to 300% more than a traditional soft drink (Keller 2004). Conducting initial market research in 1987, Red BullÂ® had failed miserably; people said its colour and taste were disgusting (Johnson 2002). However, this was not all bad news, further research revealed; "50% of our test group were crazy about Red Bull, and 50% said it tasted terrible" (Johnson 2002). Ambivalence, as Mateschitz later says, was great for Red BullÂ®, creating discussion, controversy and giving Red BullÂ® the "edge" it needed to start a new market. Some thought it had a "medicinal taste", persuading consumers of its functional properties and added value (Keller 2004 p117). The drink's extra cost would not deter them (Keller, 2004). Red BullÂ® describes its market as; ...more than just a hot secret for the night owl and the non-stop party-animal. It is appreciated by a wide range of people, such as the overworked taxi driver, the stressed manager, the exam-anxious student and the pressured journalist ...It is used by surfers in the summer and snowboarders in the winter (Redbull.com (d), [ca. 2009]). Companies typically select their consumer group by specifying such target elements as age, job, sport, or occupation. Red BullÂ® does the contrary. Whilst talking generally about their consumers, stressed student, taxi driver, stressed manager etc, they manage to keep their market relatively vague (Walker, [ca. 2009]). So the question is, who buys such a strange tasting, expensive product, with benefits deliberately not spelled out in black and white? Rob Walker [ca. 2009] argues "...what Red Bull drinkers have in common is a taste for the edgy and faintly dangerous...". Keeping a question mark over the specific consumer allows drinkers to fit into the Red BullÂ® clique. Despite the "young hip" image, Red BullÂ®'s non-descript credentials allow it to be consumed by just about anyone, creating access to wider markets and competitive advantage (Walker [ca. 2009]).
5.0 How is Red Bull Marketed? Red BullÂ® presents an image of a small, friendly enterprise. "We don't want to be seen as having lots of money to spend" (Walker [ca. 2009]). The truth however is quite the contrary. The company spent $600 million, or 30% of its revenue on marketing in 2004, Coke spends 9% (Dolan 2005). This huge sum is spent on extreme sport sponsorship, live events, and eye-catching design, with less emphasis on media advertising (Gschwandtner 2004). This section asks how and why they use these techniques. 5.1 Sponsorship
Red BullÂ® sponsors over 500 extreme sports athletes worldwide. Examples include Formula 1 Freestyle Skiing, Break Dancing, and Free Climbing (Gschwandtner 2004). Additionally, Red BullÂ® creates events filling every niche, from DJ battles, Whacky Races, Air Shows through to Festivals. (Gschwandtner, 2004; see page 10) In 2003, 200 million people watched worldwide as B.A.S.E. jumper Felix Baumgartner leapt from a plane at 30,000ft above Dover with a carbon wing strapped to his back. He flew the 22 miles across the English Channel to Calais at an average of 135mph, setting a new world record (Wyatt 2003). The stunt was not only a dig at the outlawing of Red BullÂ® in France, but also a pre-marketing strategy to create brand recognition and a "buzz" about the product (Gschwandtner 2004). Red BullÂ® has tapped into the market of the rich and famous by purchasing Jaguar and Minardi Formula One teams in 2004 and 2005 (World Advertising Research Center 2009). Costing over $100 million a year and competing around the world, they race under the names Redbullracing and Torro Rosso (Forbes.com [ca. 2009]; World Advertising Research Center 2009). With constant media coverage, and cans of Red BullÂ® spotted in the hands of celebrities and the logo splashed all over their cars, Red BullÂ® wins even if the two teams lose! The 5500m2 Hangar-7 in Austria diversified Red BullÂ®'s influence. It is home to the 15 Flying Bull show planes, a chic eatery, and art exhibition. By night, it transforms into a nightclub, with Vodka Red BullÂ® on tap (Redbull.com (b) [ca. 2009]). Dedicated pre-market research allows Red BullÂ® to tailor events and sponsorship specifically to each consumer group, state by state, country by country, seamlessly.
5.2 Advertising Simple, playful, nonsensical cartoons help market the product at anyone with a sense of humour, regardless of language, reaffirming Red BullÂ®'s nebulous marketing strategy (see bottom of page) (Keller, 2004). Coupled with the tagline "Red Bull gives you wiiings" (Keller 2004, p119) a deliberate exaggeration, adding intrigue, it makes the consumer eager to find out for themselves (Walker [ca. 2009]). 5.3 Brand Image Two red coloured bulls charging towards one another. The small size of the can. These could not be better connotations of strength (Keller 2004). The package "says" it is a serious product, not to be taken lightly. The Red BullÂ® cut-out in the pull-ring adds class and interest, whilst the can's mixture of blue and silver portrays refreshment. The can's simple tagline "Revitalises body and mind" effectively explains the content's function in four simple words, whilst remaining non-specific (Keller 2004, p.118; Keller, 2004). With its fingers in every pie, Red BullÂ® combines well thoughtout brand image, playful advertising, media-rich events and
sponsorship not only to cultivate their edgy image, but also to ensure every consumer can relate to the product in some way. Mateschitz admits,"...we don't bring the product to the people, we bring people to the product ..." (Gschwandtner 2004). Red BullÂ® wants consumers to embrace the product and all its ideals, as he points out "Red Bull isn't a drink, it's a way of life" (Kumar, et al. 2004).
5.4 Some of Red Bull's extreme sports athletes and events in picture
Figure 1 Top to bottom, from left to right; Surfing Amazon tidal bore (Gschwandtner 2004), Red bull Playstreets (Hagena 2008), Felix Baumgartner B.A.S.E. Jump Christ Redeemer (Gschwandtner 2004), Redbullracing F1 Getty (G.M., ), Red Bull Storm Chase (Hollmann [ca. 2004 ]) Hangar-7 (Gschwandtner 2004), Felix Baumgartner Channel Crossing (Gschwandtner 2004), "The Dolomite Man" competition (Gschwandtner 2004), Flütaag flying day (Stone 2008), Red Bull cliff diving (Keller 2004)., Red Bull air race (Larson 2008), Mysteryland festival (Mysteryland 2009). Page | 10
6.0 Revolutionary Marketing This section explores the revolutionary marketing techniques Red BullÂ® uses to establish its brand. The techniques developed out of a demand. In 1987, Red BullÂ® could not be exported from Austria, as it was not a European Union member state. EU law states that if one country agrees to the sale of a foodstuff, it can be sold in all EU countries. Each EU member state has a list of allowable ingredients, and to Red BullÂ®'s dismay, taurine was on none of them. Scotland's allowed list did include taurine, so Red BullÂ®'s first EU market entry was in 1992 in the UK via Scotland (Keller 2004). During the EU ban, with demand high, individuals bootlegged the drink across borders. Red BullÂ® was not actually on the "black market", but bootlegging did help their semi-legal image (Keller 2004). Red BullÂ®'s entry to the UK market was rocky. It was not until 1995 that they made profit (see Figure 2). Long established Lucozade led the energy drink sector.
15 20 Figure 2 Red BullÂ® UK Finances (millions) (Red Bull Company Ltd 2009)
Containing energy boosting minerals and vitamins much like Red BullÂ®, Lucozade's use of "energy" as part of its tagline obliged Red BullÂ® to change to "stimulant" instead of "energy", thus targeting a completely new consumer 2002). Red BullÂ® was sold as a sports drink, not the holistic product seen in Austria. Instead of using the known "buzz" marketing, Red BullÂ® sold through supermarket chains and billboard advertising with a new tagline: "you should never underestimate what red bull can do for you" (Johnson 2002, p.5). (Gschwandtner 2004; Johnson
Profit/loss after tax Expenditure on Promotional Equipment GBP
By 1996, Red BullÂ® UK had an astronomical debt of £2.5 million (see Figure 2). Their share of the market only stood at 2% (Johnson 2002). As global director Kraihamer portrays; The UK team started from the wrong end ... they were wrong, they totally misunderstood how to create a customer base (Johnson 2002, p.5).
(Red Bull Mini 2008)
Firing the entire sales team, Mateschitz appointed an Austrian director who increased marketing spending (see Figure 2). The slogan was changed back, and "Buzz" marketing was introduced. Teams of students were hired to tap into the younger markets. Driving Mini's with big Red BullÂ® cans attached, they attended parties, and social gatherings. These "alpha bees" would be the popular ones of friendship groups. If they liked the product, so would their friends, creating a "buzz" about Red BullÂ® (Gschwandtner 2004). This coupled with sponsorship of extreme sports meant that between 1998 and 1999 profits after tax went from £85,000 to £16 million (see Figure 2) (Red Bull Company Ltd 2009). A similar success story was of Kiwi, Joseph Roberts, who, when on holiday in Slovenia, saw the opportunity to market and sell Red BullÂ® back home. Out partying, he decided he wanted a soft drink and stumbled upon a can of Red BullÂ®. When the bar man refused to sell it claiming it to be illegal, it made him want it even more. Eventually, he spent no less than $150 on three cans! Drinking just one, he realised its potential. A year on he met with Red BullÂ® in Austria. On persisting, he gained rights to sell the drink. Back in New Zealand, his marketing strategy ensured Red BullÂ® turned up at the right parties, bars, and shops. By playing the drink's illegal credentials, he used opinion leaders to create a "buzz" about the product (Cooney 2007). Before he knew it, he was rushed off his feet: ...We were delivering products from the back of our cars ... at two three in the morning... everybody had to do whatever it took... (Cooney 2007, P.5). "Buzz marketing" evolved during Red BullÂ®'s USA launch in 1997. Organising sales, marketing, and distribution from the Red BullÂ® North American California HQ was impractical. Instead, a structure similar to that of Red BullÂ® GmbH split the USA into eight units covering a set amount of states (see Appendix Figure 3). Each unit organised sales, distribution, and pre-marketing. This meant the "buzz" was created even before Red BullÂ® arrived. The "alpha bees" would poll consumers' interests, for Red BullÂ® to promote the drink in the right places and sponsor the right events (Hein 2001).
7.0 Maintaining market share Red BullÂ® dominated the global market in 1987. By 2008 however, they still led with 29%, but energy drink company Monster was catching up with 23% (The Nielson Company 2009). The next section explains how and why, it changed. In 1987, UK Lucozade and USA Gatorade, although not specifically energy drinks, crossed over into Red BullÂ®'s territory, having already been on sale for many years. Equally, Kratin Daneng held a market share in Asia, although not in carbonated form (Gschwandtner 2004; Kumar, et al. 2004). With over 228 brands listed in 2008, the picture had become very different. Energy drinks were an extremely complex market area. In can or re-sealable bottled format, the sizes varied from the slim original 250ml, to the new 300ml and 680ml varieties. Products now ranged from regular carbonated energy drinks through to "Energy Shots" with 25 new versions in 2008, natural organic non-carbonated forms, and aphrodisiac drinks (The Nielson Company 2009). In 1997, Hansen Natural brought out Monster Energy, using similar marketing techniques as Red BullÂ®. Its tagline "Unleash the Beast" evokes a certain type of consumer, together with its "Monster Army" of extreme
Figure 4 Global Energy Drink Market Share 1987 (Various sources)
Figure 5 Global Energy Drinks sales 2008 (The Nielson Company 2009)
1 RED BULL 3 ROCKSTAR 5AMP 7 NOS 9 SOBE Next 90 brands (Monsterenergy [ca. 2009])
2 MONSTER 4 FULL THROTTLE 6 NO FEAR 8 ADRENALINE 10 BOOKOO
sports athletes and promotion through events strives to put Monster on a level footing with Red BullÂ®. With a similar calorie count, and blend of ingredients it resembles Red BullÂ®, yet is double the size and half the price, it was bound to sell well (Johnson 2002; Monster energy [ca. 2009]). Coffee energy drinks recently entered the market, such as SHOCK coffee (Johnson 2002; SHOCK coffee [ca. 2009]). However companies including Red BullÂ® had already tried similar products without success, "Fair Trade" energy drinks are likely to be a popular new market entrant (The Nielson Company 2009).
8.0 Competition and Intellectual property Energy drink companies have ridden the wave of Red BullÂ®'s success bringing out similar looking products. No patent on the drink means even their taste could be the same allowing competitors to undercut Red BullÂ® and take some of their market share. How has Red BullÂ® protected its brand image in the now turbulent functional drinks market? Red BullÂ® is a registered trademark. Extremely protective of its brand image, strict guidelines govern the ways Red BullÂ® portrays itself in advertising; from use of colour to font size, they cover it all. These measures deter copycat brands but it does not always work; (Keller 2004) In 2007, Red BullÂ® took rival energy drink Boost to court, saying their can's use of silver and blue infringed the Red BullÂ® trademark. The images on the right hint that Red BullÂ® won. (Irish Independent 2007). Red BullÂ® took Music Festival organiser Mean Fiddler to court in 2004, claiming firstly that their energy drink "Synergy" had infringed their trademark with silver and blue patched cans of similar size. Additionally they believed Synergy had been "switch selling". Losing the court case, Red BullÂ® paid out £20,000 in court costs (Sweeny 2004). Australian wine company Reschke Wines bid to register the trademark "Bull Traders" in 1999 featuring the outline of a bull. The two companies went to court over the issue (Ainslie 2008). 9.0 Discussion Selling over four billion cans worldwide last year and with global sales figures up on 2007 by 13.2% Red BullÂ® remains optimistic of its future. 2009's plans to expand into new and emerging markets such as Africa, Russia, India, and Japan remain unchanged (Müller, 2009). However Red BullÂ® is not the only energy drink company weathering the economic crisis so well. Reports predict an increase in global energy drink sales by more than two thirds in 2014, at over 8 billion litres annually (Canadean Ltd 2009). What are Red BullÂ®'s plans to maintain dominance in the energy drink sector and increase revenue, especially in these times of economic downturn?
(Reschke Wines [ca. 2009]) (Boost [ca. 2009])
Page | 14
9.1 Diversification of product range When companies start out with one product, they later diversify or update the existing range to keep consumer interest, ensuring their product does not reach maturity too soon. Red BullÂ®'s sales figures are still growing, even after 22 years. Their uniqueness on entry into the drinks market as an "energy drink" has given them 16 long years before they felt the need to diversify (see Figure 5). Successes and failures of products Red BullÂ® has brought out are described below. With over one in four adults in the UK trying to loose weight "most of the time" (Talking Retail 2008, p.1), Sugar Free Red BullÂ® was launched in 2003. It contains only 8 calories when compared to the 110 of standard Red BullÂ®, so taps into the emerging "health conscious" (Moosa 2002, p.32) market (Caloriecount.about.com [ca. 2009]). With 25% of new buyers in the UK purchasing Sugar Free Red BullÂ®, it accounted for 15% of 2008 sales, Red BullÂ® intends to increase spending on advertising its sugar free variant (Talking Retail 2008).
(Sabai [ca. 2009]) (Redbull.com (a) [ca. 2009]) Global Red Bull can sales (Billions) (Kumar 2004 and Various Sources) 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Sabai is a wine spritzer originating from Red BullÂ® co-founder's son, Charlerm Yoovidya's Siam Winery in Thailand. Launched in 2005, its flavours Hibiscus and Pomegranate complement Thai foods. Although not sold under the Red BullÂ® name, business decisions regarding the drink are taken by Red BullÂ®'s UK marketing team. Sabai meaning "take it easy" (Centaur Communications Ltd 2007, p.1) fits their marketing ethic, being a bespoke wine, it is sold using point of sale promotion and consumer sampling at events with celebrities to create a Sabai "buzz" (Forbes.com [ca. 2009]; CentaurCommunications Ltd 2007). Lunaqua was a failed Red BullÂ® attempt to enter the "bottled water" market. First seen in 2001, the drink was bottled from a "previously undiscovered Alpine Source" (Lunaqua [ca. 2003]) at full moon giving the water "bio-energetic" (Lunaqua [ca. 2003]) properties. Suffice to say, it did not sell well and was withdrawn (World Advertising Research Centre 2009).
Page | 15
For 2009, Red BullÂ® plans to bring out an "Energy shot" to oppose the 25 competing products brought out in 2008 (BevNET.com 2008). 9.2 Drinks for the "Health Conscious" consumer Led by the increasingly "health conscious" (Moosa 2002, p.32) consumer, the market is still developing. With sales volume doubling from 25 million in 2000 to 50 million litres in 2002, Red BullÂ®'s entry into this niche had to be profitable. Relatively fragmented, it covers a wide variety of products, from vitamin and mineral enriched herbal drinks though to pro-biotic yogurt and fruit drinks, to fruit enriched smoothies (Hillam 2003). Owned by Red BullÂ®, Carpe Diem sells a range of five drinks. Kombucha developed in 1997 and Ginkgo 2000 are modern-day carbonated versions of ancient Asian herbal teas. Kombucha's influences stem from "the ancient philosophies of Zen", which aims to harmonise body and soul. Ginko has origins in myth and legend, containing leaves from "Asia's sacred tree", the Ginkgo Biloba aids concentration. (CarpeDiem.com (a+b) [ca. 2009]. "Homeopathic" drinks, made with spring water, herbs and plants were launched in 2003. Drawing on Greek physician Hippocrates' theories, they have relaxing, harmonising, or vitalising effects and are 100% natural with no added sugar, flavours, colouring or preservatives (CarpeDiem.com (c) [ca. 2009]). Carpe Diem's elusive nature echoes Red BullÂ®'s marketing strategies. By using very little promotion such as point of sale in Selfridges, collaborating with masseurs, offering holistic solutions to weary shoppers, they let consumers "find" the product, re-creating that Red BullÂ® "buzz" (CarpeDiem.com (d) [ca.2009]). The "Wellbeing Zone" on the Carpe Diem website details participatory events like "urban Yoga", and an "Osteopathic self-treatment programme" run by experts (CarpeDiem.com (d) [ca.2009]). Like Red Bull Carpe Diem are securing income by creating a "way of life", ensuring consumers buy into "a philosophy: an appeal to the people of our time - to live consciously and seize the day" (CarpeDiem.com (e) [ca.2009]).
(CarpeDiem.com (d) [ca.2009]) (CarpeDiem.com (b+c) [ca. 2009])
Page | 16
The Red Bull simply COLAÂ® 2008 launch was extremely controversial. Including ingredients such as the Kola nut and Coca leaf, the drink is sold as the only cola to be "organic", taking the drink back to its roots. Adding diversity, the drink is available in 250ml and 330ml can sizes (World Advertising Research Centre 2009). In contrast to Red BullÂ®'s "Buzz" marketing technique, the launch covered eight markets worldwide including Austria, UK, Ireland, USA, Russia, Germany, Italy, and Switzerland (Redbullcola [ca. 2003]; World Advertising Research Centre 2009). 9.3 New Marketing Ideas
(Redbullcola [ca. 2003])
In 2008, Red BullÂ® invested only £50,000 of its £7.6 million budget in digital marketing, a number set to increase in 2009 (Revolutionmagazine.com 2009). Below are some examples: Red BullÂ® entered the gaming industry in 2008 as the first advertiser on Playstation's virtual world. Playing an online version of the "Red BullÂ® Air Race", users interact and share gaming experiences, adding publicity (Revolutionmagazine.com 2009). The Facebook - Red BullÂ® partnership in launching the new "Facebook Connect" site enables users to access all their social networking sites using just one login and password. With Facebook being visited by 3 in 10 people online across the world and social networking sites capturing 67% of the global online population, this partnership offers a low-cost way to advertise to hundreds of millions more consumers (The Nielson Company 2009) 9.4 Expanding the business model Red BullÂ® purchased the paradise island of Laucala in 2003 for $10 million. Mateschitz' association with the rich and famous will ensure a steady flow of customers for the seven star resort, furthering the drink company's credibility with consumers (Fijilive.com [ca. 2009]). In 2004, Selling Power reported Red BullÂ®'s intention to create a $1 billion motorsport and aviation theme park in Styria, Austria. Open-air arenas holding 100,000 onlookers, F1 racetracks, as well as a motorsport and aviation academy, are just some of the features. Visitors will be able to drive go-carts, high-powered sports cars, motorbikes or planes. Two hotels will provide accommodation, whilst a shopping plaza and restaurants provide evening entertainment. To date little information exists on these projects, again adding to the Red BullÂ® mystique (Gschwandtner 2004).
Page | 17
9.5 Business Ideas and Partnerships Austrian Red BullÂ® Mobile, established in 2008, gives users voice calls, MMS, SMS and 15 TV channels showing mainly extreme sports. This multi-media link is a modernday method of spreading the Red BullÂ® "buzz" (Financial Times Ltd 2009). Not only does Toro Rosso's recent partnership with digital technology company "trust" provide the F1 team with new technology, it also gives Red BullÂ® links into a new potential consumer group (Trust Latest Press Releases 2009). 10.0 Swot Analysis 1987 versus 2009 Red BullÂ® 1987
â€¢ Strong, fresh, fashionable brand identity â€¢ "Dangerous" ingredients add "edge" â€¢ Minimal 10% bank loan re-payments, only three directors/shareholders investing the other 90%. â€¢ Kratin Daneng recipe lacks Patent so can be copied. â€¢ Non-descript consumer makes for infinite market. â€¢ High revenue with price set 10% higher than normal soft drink due to drink's function adding value â€¢ 99% global market share
â€¢ Consumers may not purchase Red BullÂ® due to "dangerous" ingredients.
â€¢ Red BullÂ®'s ingredients lack a patent so can be copied.
â€¢ Funds could dry up due to minimal 10% bank loan and 90% equity from directors' investment.
â€¢ More sales as Red BullÂ®'s is "illegal" in EU countries â€¢ Increased turnover through diversifying product range and expanding into new markets â€¢ Consumer recognition through sponsorship of extreme sports and events.
â€¢ Ban on entry to markets due to EU illegality. â€¢ Consumer might not pay 10% higher as they do not see drink's added value â€¢ Intellectual property infringement from "copycat" brands â€¢ Competition stealing market share. â€¢ Drink not accepted by new markets.
Page | 18
Red BullÂ® 2009
â€¢ Strong, fresh, fashionable brand identity â€¢ "Dangerous" ingredients add "edge" â€¢ Consumer recognition through sponsorship of extreme sports and events. â€¢ Non-descript consumer makes for infinite market. â€¢ High revenue as price is set 10% higher than normal soft drink due to drink's function adding value â€¢ Shareholder investment minimal due to huge turnover â€¢ 29% global market share selling in 70 countries. â€¢ Red BullÂ® GmbH valued at â‚¬10.9 billion â€¢ 4 billion cans sold globally per annum
â€¢ Red BullÂ® may have lost its "edge" as it is now accepted as being "safe" by most governments. â€¢ Lack of patent on Red BullÂ®'s recipe means that anyone can copy it â€¢ Red BullÂ® having to sell Toro Rosso due to F1 rules may decrease marketing opportunities.
â€¢ Turnover increased through: â€¢ New products Carpe Diem, Red BullÂ® simply Cola and Red BullÂ® energy shots â€¢ Expanding into developing markets such as Asia and Africa â€¢ Consumer recognition through sponsorship of extreme sports and events â€¢ New ventures like Red BullÂ® Mobile, partnerships with Facebook, Fijian resort and theme park â€¢ Energy drink consumption increase of more than one third by 2011
â€¢ Turnover decreased through: â€¢ Consumers purchase other more "Illegal" energy drinks containing more taurine and caffeine. â€¢ Accepted as being "safe" Red BullÂ® may lose its "edge". â€¢ Changing buying habits of Red BullÂ®'s largest market (18-24) â€¢ Market share reduction due to competition from the 228 other energy drinks. â€¢ Organic energy drinks market may steal Red BullÂ®'s consumers.
Page | 19
11.0 Conclusion Red BullÂ® has come a long way in the last 22 years. Beginning in a practically non-existent market, today the market is extremely diverse, saturated with competitors. Revolutionary marketing techniques created the Red BullÂ® "buzz" coupled with controversial ingredients ensured the drink was "edgy", and the product sold itself. Non-specific advertising captivated a non-descript audience, whilst sponsoring extreme sports and events proved effective in not only publicising the drink, but also making it become a "way of life". Competitors such as Monster may well gain global market share. However, diversifying into "Organic energy drinks" such as Carpe Diem and Red Bull simply Cola, and creating a "lifestyle" to match, Red BullÂ® has entered a new market for the "health conscious consumer". The latest business plan to include multi-million dollar island resorts and theme parks coupled with Red BullÂ®'s expansion into new and developing markets, will not only spread the name of Red BullÂ® but also boost sales. Despite the "credit crunch", Red BullÂ®'s future looks bright.
Page | 20
12.0 References Ainslie, C.A., 2008. Logo is a red rag to Red Bull. Business Source Complete, Vol. 30 Issue 42, p16-16, 1/8p. Available from: https://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 26 March 2009] BBC News Online, 2001. Red Bull in suspected link to deaths. Available from: http://news.bbc.co.uk/1/hi/health/1435409.stm [Accessed 11 April 2009] BevNET.com, 2008. 2008 Energy Drink guide complete listings for over 200 brands, 1-67. Available from: http://www.bevspectrum.com/issue/SpectumMarch2008/2008EnergyDrink [Accessed 5 March 2009] Boost, [ca. 2009]. Boost Do More [Image]. Available from: http://www.boostdrinks.com/products/energy-range.php [Accessed 13 April 2009] Brandweek, 2008. Survey: Poor economy affects brand value perception, Mintel.com. Available from: http://www.mintel.com [Accessed 1 April 2009] Caloriecount.about.com, [ca. 2009]. Calories in Red Bull Energy Drink. Available from: http://caloriecount.about.com/calories-Red BullÂ®-energy-drink-i88942 [Accessed 10 March 2009] Canadean Ltd, 2009. Energy Drinks Burn Brightly in the Gloom - Soft Drinks - 2009, , Available from: http://www.canadean.com/Default.aspx?TabId=190§ion=Press_Releases&newsId= 774&cat=2&title=Energy_Drinks_Burn_Brightly_in_the_Gloom_Soft_Drin [Accessed 14 march 2009] CarpeDiem.com (a) [ca. 2009]. History. Available from: http://www.carpediem.com/eng/Marke/Unternehmen/Geschichte.htm [Accessed 2 April 2009] CarpeDiem.com (b) [ca. 2009]. Ginkgo and Kombucha. Available from: http://www.carpediem.com/eng/Produkte.html [Accessed 2 April 2009] CarpeDiem.com (c) [ca. 2009]. Botanic water. Available from: http://www.carpediem.com/botanicwater/index3.php?lang=eng [Accessed 2 April 2009] CarpeDiem.com (d) [ca.2009]. Wellbeingzone. Available from: http://wellbeingzone.carpediem.com/public/wellbeingzone/news?locale=en [Accessed 2 April 2009] CarpeDiem.com (e) [ca.2009]. Carpediem drinking with purpose. Available from: http://wellbeingzone.carpediem.com/public/wellbeingzone/brand.html [Accessed 2 April 2009] Centaur Communications Ltd, 2007. Sabai. (Case Study). Accessmylibrary.com. Available from: http://www.accessmylibrary.com [Accessed 18 April 2009] Clarke, R.C., 2008. Experts call for tighter labelling rules for energy drinks. Functional Ingredientsmag.com, Penton Publishing. Available from: https://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 12 March 2009] Cooney, M.C., 2007. Meet the man who gave Red Bull wings. Idealog. Available from: http://www.idealog.co.nz/magazine/january-february-2007/features/meet-the-man-whogave-Red BullÂ®-wings [Accessed 25 February 2009] Datamonitor PLC, 2008. Global Functional Drinks Industry Profile, p.1-4. Available from: http://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 16 March 2009]
Page | 21
Dolan, K.A.D., 2005. The Soda With Buzz, Forbes. Available: http://www.redbull.com/#page=CompanyPage.AsTimeGoesBy [Accessed: 26 January 2009] Dunne, D.D., 2005. Crisis? What Crisis?, Marketing Magazine, Vol. 110 Issue 1, 1-3. Available from: https://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 13 April 2009] Fijilive.com [ca. 2009]. Developers mum on Fiji's 7-star resort. Available from: http://www.fijilive.com/realestate/index.php/properties/view_news/46 [Accessed 6 April 2009] Financial Times Ltd, 2009. Red Bull Mobile launches 2 all-inclusive packages, Accessmylibrary.com. Available from: http://www.accessmylibrary.com [Accessed 22 March 2009] Forbes.com, [ca. 2009]. #292 Chaleo Yoovidhya. Available from: http://www.forbes.com/lists/2006/10/13B6.html [Accessed 10 April 2009] Getty, G.M., . Vettel's First Laps in the RB5 Available from: http://www.redbullracing.com/Car/Gallery/Vettels-First-Laps-in-the-RB5-GETTY/ [Accessed 10 April 2009] Gschwandtner, G.G., 2004. The Powerful Sales Strategy Behind RedBull, Selling Power Magazine, 1-11. Available from: http://www.redbull.com/images/historysection/pdf/1/Selling_Power_DM_Sept.pdf [Accessed 26 January 2009] Hagena, F.H., 2008. redbullplaystreets, [photograph]. Available from: http://www.redbull.at/playstreets_en#page=ArticlePage.1227532555478887982091.default.media.images.5 [Accessed 13 April 2009] Healingdaily.com, 2009. taurine's health benefits. Available from: http://www.healingdaily.com/detoxification-diet/taurine.htm [Accessed 11 April 2009] Hein, H.K., 2001. A Bull's Market - the marketing of Red Bull energy drink. findarticles, Brandweek. Available from: http://findarticles.com/p/articles/mi_m0BDW/is_22_42/ai_75286777/ [Accessed 3 April 2009] Hillam, M.H., 2003. Functional Drinks Diversify In Europe, Functional Ingredients mag.com. Available from: http://www.functionalingredientsmag.com/fimag/articleDisplay.asp?strArticleId=292&s trSiteFFNSite [Accessed 19 March 2009] Hollmann, O.H., [ca. 2004 ]. storm chase gallery, [Photograph], Redbullstormchase. Available from: http://www.redbullstormchase.com/gallery/ [Accessed 13 April 2009] Irish Independent, 2007. Red Bull to Sue Boost. Mintel.com. Available from: http://www.mintel.com/ [Accessed 11 April 2009] Irving Sax, N.I.S., Lewis, R.J.L., 1987. Hawleys Condensed Chemical Dictionary Eleventh Edition. Johnson, R.R.J., 2002. Red Bull, University of Virginia Darden School Foundation, Darden Business Publishing, Available from: http://www.papers.ssrn.com/sol3/papers.cfm?abstract_id=910095 [Accessed 8 March 2009] Keller, K.L.K., 2004. Building brand equity in non-traditional ways, coolbrandstorytelling. Available from: http://www.coolbrandsstorytelling.org/dmdocuments/expert_cases/ECRedbull.pdf
Page | 22
[Accessed 11 April 2009] Kumar, H.K., Linguri, L.S., Tavassoli, N.T., 2004. Red Bull The anti-brand, London Business School, Available from: http://www.redbull.com/#page=CompanyPage.AsTimeGoesBy [Accessed 14 March 2009] Kratin Daeng, [ca. 2008]. Kratin Daeng. [photograph] Available from: http://www.taurin.se/2008/10/08/krating-daeng/ [Accessed 19 April 2009] Larson, M.L., 2008. Red Bull Air Race 2008 [photograph]. Available from: http://mel30.wordpress.com/2008/11/04/reb-bull-air-race-2008/ [Accessed 13 April 2009] Lunaqua, [ca. 2003]. Lunaqua.com. Available from: http://www.lunaqua.com/start_en.html [Accessed 1 March 2009] McCall, B.M., 2005. The ultimate hangover cure?, BBC News, Available from: http://news.bbc.co.uk/1/hi/magazine/4563760.stm [Accessed 11 April 2009] Medicalnewstoday.com, 2004. French ban on Red Bull (drink) upheld by European Court. Available from: http://www.medicalnewstoday.com/articles/5753.php [Accessed 15 April 2009] Monster energy, [ca. 2009]. monsterenergy.com. Available from: http://www.monsterenergy.com/ [Accessed 11 April 2009] Moosa, S.M., 2002. Wellbeing A cross category approach to nutrition, health and beauty. Red Bull GmbH, 132-135. Available from: http://www.globalbusinessinsights.com/content/rbcg0055t.pdf [Accessed 11 April 2009] Müller, M.M., (London@austriantrade.org), 10 March 2009. RE: Information on Red Bull, e-mail to Newall-Smith, F.N-S, (email@example.com). Mysteryland, 2009. Mysteryland. Available from: http://www.mysteryland.nl/mysteryland2008/pages/index.php/fotos [Accessed 16 April 2009] Redbullartofcan, [ca. 2009]. Redbullartofcan, Available from: http://www.redbullartofcan.com/ [Accessed 14 April 2009] Red Bull Company Ltd, 2009. Red Bull Company Ltd reports and Accounts, 1987-2008. Companies house. Available from: http://www.companieshouse.gov.uk/ [Accessed 14 April 2009] Redbull.com (a), [ca. 2009]. When Should Red BullÂ® energy drink be consumed? Available from: http://www.redbull.com/#page=ProductPage.FAQS [Accessed 11 April 2009] Redbull.com (b), [ca. 2009]. Heavenly home to the flying Bulls, About Hangar-7. Available from: http://www.redbull.com/#page=ArticlePage.1128277351977-1184907426.0 [Accessed 20 March 2009] Redbull.com (c), [ca. 2009]. Is taurine made from bulls' testicles? is taurine a derivative of bulls' testicles or semen? Available from: http://www.redbull.com/#page=ProductPage.FAQS [Accessed 11 April 2009] Redbull.com (d), [ca. 2009]. Red Bull - more than just a myth. Available from: http://www.redbull.com/#page=ProductPage.Benefits [Accessed 11 April 2009] Redbullcola, [ca. 2003]. redbullcola.com, Available from: http://www.redbullcola.com/ [Accessed 1 April 2009] Red Bull Mini, 2008. Red Bull Mini.[photograph] Available from: http://mediativity.wordpress.com/2008/10/13/red-bull-sampling-op-snelweg-a2/ [Accessed 13 April 2009]
Page | 23
Reschke Wines, [ca. 2009] Reschke Wines, [image]. Available from: http://www.reschke.com.au/about/?id=1 [Accessed 13 April 2009] Revolutionmagazine.com, 2009. smart guide to Red Bull, Haymarket business Publications Ltd. Available from: https://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 11 April 2009] Sabai, [ca. 2009]. SabaiSpritzer. [image]. Available from: http://www.sabaispritzer.com/ [Accessed 13 April 2009] Seidl, R.S., Peyrl, A.P, Nicham, R.N., Hauser, E.H., 2000. A taurine and caffeinecontaining drink stimulates cognitive performance and well-being, University of Vienna. Available from: https://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 11 April 2009] SHOCK coffee, [ca. 2009]. SHOCK coffee.com. Available from: http://www.shockcoffee.com/ [Accessed 11 April 2009] Stone, N.S., 2008. flying Aquanauts Yellow Submarine. [photograph] Available from: http://londonist.com/2008/06/red_bull_flugta.php [Accessed 13 April 2009] Sweeny, M.C., 2004. Red Bull loses fight with 'copycat' Mean Fiddler. marketingmagazine.co.uk. Haymarket Business Publications Ltd, Available from: http://www.marketingmagazine.co.uk/News/EmailThisArticle/210711/Red BullÂ®-losesfight-copycat-Mean-Fiddler [Accessed 11 April 2009] Talking Retail, 2008. Red Bull Sugarfree launches TV ad campaign. Available from: http://www.talkingretail.com/products/product-news/8477-Red BullÂ®-sugarfreelaunches-tv-ad-campaign.html [Accessed 11 April 2009] Terlizzi, R.T., Rocchi, C.R., Serra, M.S., Solieri, L.S., Cortelli, P.C., 2008. Reversible postural tachycardia syndrome due to inadvertent overuse of Red BullÂ®, University of Tor Vergata. Available from: https://mybu.bournemouth.ac.uk/webapps/portal/frameset.jsp?tab_id=_111_1 [Accessed 11 April 2009] The Nielson Company, 2009. Global Faces and Networked Places A Nielsen report on Social Networking's New Global Footprint. Available from: http://www.web-strategist.com/blog/2009/01/11/a-collection-of-soical-network-statsfor-2009/ [Accessed 11 March 2009] Trust Latest Press Releases, 2009. Red Bull Racing Put Their Trust in New Partner. Available from: http://www.trust.com/corporate/press [Accessed 11 April 2009] Walker, R.W, [ca. 2009]. The Murketing of Red Bull, robwalker.net. Available from: http://www.robwalker.net/html_docs/redbull.html [Accessed 11 April 2009] Wood, G.W., 2009. Brawn GP fear Ferrari and Red Bull, says Jenson Button. Times Online, Available from: http://www.timesonline.co.uk/tol/sport/formula_1/article6021233.ece [Accessed 12 April 2009] World Advertising Research Centre, 2009. Red Bull (AT), Mind Advertising, 1-2. Available from: http://www.warc.com/Search/WordSearch/Results.asp [Accessed 11 April 2009] Wyatt, C.W., 2003. Skydiver in record channel flight, BBC News, Available from: http://news.bbc.co.uk/1/hi/uk/3112095.stm [Accessed 1 April 2009] You Tube, [ca. 2004]. Red Bull Werbung Commercial Vogelkacke Bird Dung. Available from: http://www.youtube.com/watch?v=JgLiY5JvtBc [Accessed 28 March 2009]
Page | 24