The Business Functions Of Red Bull Commerce Essay


Functional drinks market worldwide was worth around $26.9 billion in 2008 (Datamonitor PLC, 2008). Energy drink Sales are expected to increase more than two-thirds by 2014 (Canadean Ltd , 2009) and Drinks market will be expanded to a value of $44.3 billion by 2013 with three segments being Nutraceutical, Sports and energy (Datamonitor PLC , 2008). They are primarlily aimed for vitalizing and improving mind and body and alleviate tiredness quickly (Moosa , 2002; Datamonitor PLC, 2008).

Energy drinks account to a biggest sector nearing 47.3% in the beverage category (Datamonitor, 2008 & 2009 ), of which Red Bull Gmbh leading player operating in energy drink segment category stays top with 40 % of market today, being highest in UK. Red Bull with its iconic eye-catching logo with two red bulls charging each other and slogan "red bull gives you wings" came from the original Thai Version in 1962 sold under Kratindang (red bull). The history of the today's Red Bull energy drink started back in 1984 with a joined partnership of present CEO Mateschitz with 49 % stake and Thai based Chaleo with son holding a 51 % stake (Dolan, 2005) and with 10 % bank loans (Gschwandtner, 2004 & Dolan , 2005). Red Bull is headquartered today in Fuschl am See in Austria. (Keller , 2002)& Gschwandtner ,2004). It's today not only known its energy drink but also its presence in extreme sporting events (Gschwandtner, 2004) and is a fashionable brand.

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Red Bull employs over 6,900 people in 160 countries and sold over 3.906 billion energy drinks wide (Red Bull ,2010). Red Bull energy Drinks are available in more than 130 countries with 70% of the market across the world (Gschwandtner, 2004). By the year 1997 Red bull entered into USA, Germany, UK and other overseas markets (Hein , 2001 & Cooney ,2007) and plans for further expansions in Japan, Asia and African areas (Muller, 2009) with more diversified products .Red Bull Energy Products are highly caffeinated drinks that stimulates body metabolism improving physical endurances and vitalizes mind and body quickly giving mental concentration and alertness .It is presently available in cans of sugar fee or its original variants as Red Bull energy drinks , Red Bull Cola and Red Bull energy shots . (Red Bull ,2010) .The composition of Red Bull consists of mainly caffeine , taurine ,B vitamins , glucuronolactone , glucose or sucrose and Aspartame .(Red Bull , 2009).

The Generation Y's (15 - 30 year olds) account to Most of The Red bull customers. Red

Viral marketing model relied on Buzz or word of mouth. This Buzz technique thou inexpensive were very successful and got them a rapid proliferation in sales making the brand as a cool fashion icon quickly .(Cooney, 2007 & Hein, 2001). Red Bull products are priced higher than its competitors at least 10 % more because of its focus to make it a premium brand , and its believed that only then customers would understand the real benefits of using This product (Keller , 2004 & Economist, 2002) . The nature of Business is Energy Drinks But ever since its initial viral campaign, Red Bull's efforts have coupled it with sponsorships of extreme sports and events including ,Formula 1, Rallies , cliff diving, BMX, skiing, flying and skateboarding which made them a very fashionable and popular brand and boosting the revenues as shown in the graph in 2009 from £85,000 To £16 million . (Red Bull , 2009). Despite the Global Economic Depression red bull earned more than US$4.6 billion .

But Red Bull like other energy drinks today faces the following challenges .Health implications (Clarke , 2008) adding to negative publicity. Despite proving that Red Bulls product are risk-free critics still remain .(Red Bull , 2008).

Stiff competition from other health Energy and Amp, Pepsi , Gatorade , Coco- Cola trying and others to regain its market share even thou red bull still stays ahead today as most successful brand with more than €10.9 billion (Datamonitor , 2008 & 2009 & Red Bull ,2008). On the road to further developments and maintaining market dominance the future of Red Bull stays optimistic with its plans to expansion in new markets like India, Japan, Asia and African areas (Muller, 2009) with more diversified products.

SWOT and Why SWOT?

For this case study , In order to develop a strategic integrated communications plan for Red Bull , a SWOT Analysis is needed to determine where the company's position is at the moment and direction , as it provides a good framework highlighting the key issues of strategic capability and development . (Hill & Westbrook , 1997).The SWOT analysis tool is great for developing an understanding Red Bulls business operation and analyzing how strong and vulnerable they are to ensure prosperity and survival which may help them in preparing a plan of action or an action plan to act on contingencies .Organizations today integrate rigorous and systemic Corporate planning process as a part of Strategic business planning techniques enable business ventures to plan , evaluate and achieve its business objectives . (Piercy & Giles , 1989). Strategic business planning techniques and frameworks for Telescopic observations or scans of a organizations can be done by Swot analysis (Panagiotou ,2003). SWOT is an acronym for Strength, Weaknesses Opportunities, and Threats. Internal factors of an organizations being Strengths and weaknesses and threats and Opportunities account to external factors. The internal factor that make them competitive in the marketplace and external factors must be

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Strengthened to ensure success. The internal and external analysis factors are shown below

An overview matrix is shown below -

At times combination of all these factors are used called for deeper SWOT analysis .A combination matrix strategy of SWOT is pictured below can be used in organizations to fully utilize the functionality .

Red Bull SWOT Analysis


Red Bull has a Very Strong Global brand and fashionable identity with innovative advertising and marketing and huge consumer reputation and recognition. It's a Fashionable brand via sponsorships and extreme sporting events like Formula 1 and is well leading dominant energy drink .Red bull today is Valued at €10.9 billion with 29 % market share which means it's has high demand in market . Red bull generates High revenue even thou priced higher than others demand for Red bull's product is more .Red Bull is a Major competitor in high energy drink segment and sells over more than 4 billion energy drink cans are sold globally each year .


Red Bull may in future, face tough price battles with too many competitors in the market. This may result in sales drop (Cirillo, 2008) a 1.7-per-cent sales revenue loss in 2009. Strikingly it doesn't have more products to compete and their product lines are non-diversified still. Over Health Consciousness and Fear among people (Clarke , 2008) can draw people becoming cautious about use of energy drink ingredients as even Health fears exist that Energy drinks causes even death due to dangerous ingredients.(BBC ,2001). Management decisions like selling Formula 1 Toro Rosso will face blows to its marketing opportunities of the brand if continued and will negatively affect them as competitors look on an oppurtunity . There is no patent for ingredients used in red bull. There exist fears that Due to its minimal 10% bank loan and investments in form of 90 % equities from directors Funds might dry up which can affect stake holders. Sales restrictions in some countries could be a problem due to its growth.


Energy drink Sales are expected to increase more than two-third's by 2014 (Canadean Ltd, 2009). Future expansions in Asian, Russian and African Markets (Muller, 2009) can be advantageous to them with increased turnover through diversifying its products with more focus on health products. This can Target even older community for product development and expanding into new markets. More organic energy products like Red bull simply Cola and Red Bull energy shots, Carpe Diem, expected to diversifying product range and focus on health conscious consumers could be a value to them. Red bull can be more customer driven with New Business Opportunities and marketing techniques like Face book , video games (Kemp ,2007) associations with theme parks , Mobile partnerships , I phone applications , Red Bull mobile sponsorships like privilege customers etc which can improve .Consumer recognition along with its sponsorship of extreme sports and events. They can also go for Local production instead of exporting from Austria to Cut operational costs and beat low-cost rivals.


The major threats to Red Bull are its Reduction in market share due to a lot of energy drinks in market today due to its competitors. Organic Energy drinks segments may force customer's purchase them as even red bull is priced higher besides issues like Negative publicity and media reports going on its ingredients which is a suspected link to death used could be dangerous for red bull. (BBC News, 2001). Red Bull has No patent for the ingredients it uses and can be copied by anyone. Legal Bans like in France for Red Bull and issues like adverse health implications may cause over Consumer awareness of health and well being affecting the brand even internationally as well and new markets may not welcome it fearing controversies. There exist an Intellectual property infringement issues from other copycat brands which could as well be a problem to Red Bull.

Global Strategy of Red Bull

Competitive strategy of a business organization is concerned with competitive achievements and exploiting advantages in a market. (Johnson et al., 2009). Ever since its launch Red Bull dominated in domestic markets. Due to its innovative marketing and growing competitiveness and considerations like growth, profit and brand empowerment Red bull looked into business expansions into international and emerging markets (Fan, 2008). Emerging markets refers to a country which has undertaken switch in its economic or political systems on its road to economic developments rapidly (Fan, 2008). This can be noticed that By the year 1997 Red bull entered into USA, Germany, UK and other overseas markets (Hein, 2001 & Cooney, 2007) and even plans in Japan, Asia and African areas (Muller, 2009) with more diversified products .According to Red Bull's Kraihamer says that "We do not market the product to the consumer, we let the consumer discover the product first" (Keller 2004, p.119). From its logo design, color of drink , pricing , marketing methodologies like buzz marketing's and sales teams like student representatives used for building the brand Red bull has always differentiated itself and stayed ahead even in most of the international markets . Its cool fashion icon and massive product awareness among the Youths mainly (Cooney, 2007 & Hein, 2001) got them a rapid proliferation even in the Newer markets quickly.

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Thou its strategies were yielding continuous benefits , red bull was on a spree and a switch to a product concept marketing philosophy targeting prospective customers wishing to explore real values of the product (Keller, 2004) . According to Johnson et al. (2006) marketing competencies are found to be efficient and competitive when an organization generates a superior value creation of delivering its customers greater satisfactions than its rivals. To beat with the growing rivals and health implications (Moosa, 2002, p.32) giving value to customers, Red bull as well expanded its products in 2003 to a Sugar free variants and in 2008 with Simple Colas, energy shots (Red Bull, 2008). The greater success to Red Bull's brand power however came internationally from its extreme sports campaign making its marketing strategy as well a cool image. Red Bulls Trendy event driven marketing repositioned and branded them as an undefeatable brand via ventures in sporting sports and advertised campaigns (Carter, 2003) focusing and adding value that it gives an added stamina in athletes. With major acquisitions of Formula 1 cars in 2005 red bull racing achieved its core targets and all these were crucial for its business. Red Bull racing again focused on young drivers clearly again enhancing the image of Red bull as trendy one.

It gave them a better differentiation from its rivals and contributed lot to making Red Bulls making them a very prominent figure even in extreme events sports marketing industry every year since then (Curtis, 2006). They combined the resources with core competenceis to create a sustainable completion and a superior value creation for their core-product. A brand driven global marketing strategy with nurtured consumer loyalties are seen in Red Bull brand

The process of building profitable customer relationships within its loyalty by creating value for customers and capturing value in return . According to (Kotler et al., 2006) a Demand can be regarded as people wants that will satisfy a particular need or want that gives utmost satisfaction . With a proper balance the demands , wants and needs of people were satisfied by Red Bull . To build customer relationships red bull satisfied individual, physical and even social needs. People find different methods to satisfy their needs and Social needs of humans for belonging were satisfied by groups of individuals with similar interests and tastes and red bull associated itself as a symbol of youth culture by sponsorships transforming people automatically to its red bull culture e.g. : extreme sports by meeting social needs . Red Bull also positioned itself as a stimulant to the mind and in inhibiting weariness and fatigue in individuals (Red Bull, 2008). The Wants of individuals were met by promoting the drink to improve reaction speeds , physical endurances and high performances .Much of the company's success accounts to its innovative marketing that spends around 30 % of the total turnovers that is quite higher than any other brand .Based on the facts and figures that Red Bull still holds over 70 % market share (Red Bull ,2010) in energy drink segment states that they are ahead of its rivals and current market strategy is working effectively which made them a very fashionable and popular brand and boosting the revenues in 2008s (Red Bull GmbH , 2009) .Today red bull is acknowledged in the world as a perfect example of a perfect innovative marketing that helped in the transformation of a normal product to a very powerful brand .According to (Koehn ,2001) , Red bull has the most effective branding and global strategy than its rivals in attracting and enhancing customer loyalties . According to Mateschitz (2005)- , he was true when he defined that wherever red bull went it created its market of its own. Based on the facts and figures that Red Bull still holds over 70 % market share (Red Bull 2010) in energy drink segment states that they are ahead of its rivals and current strategy is working effectively. Despite its long history of success since long Red Bull showed a minor slump in the face of recession (Cirillo , 2009 & Red Bull , 2010) due to more competitors being added to market

Further recommendations

Most importantly, an event-driven innovative strategy was seen in Red Bull GmbH which accounted to the success of the global brand. Red Bull® dominated the global market with its strategies like brand empowerments in the energy drink segment, Sporting events, Racing since start , but it's evident today that Red bull faces stiff competition constantly trying to win their market shares back during the recession. It's true that Red Bull is so far successful with the strategies and marketing techniques it adopted keeping them as a marker leader focusing and adding value to its core product.

Source : (Information Resources Inc ,2009)

Brand positioning is extremely important for the success of a product to a global level and Red Bull has given new ideas to marketing and global strategy it used to empower their brand fresh and consistent with market pulse. Brand names and logos indicate distinctive reputation and suggest something about the product or its benefits a company offers . Quotes easy to say, remember and recognizing making it distinctive and unique like "Red Bull gives you wings" reflected an organizations face to the world. Red bull was a perfect example of a normal product being transformed to a major power today mainly due to its strategies in global market, This added to exploit competitive advantages in the market mainly as the initial targets were people based i.e. : Youths to make it a fashionable icon and improve brand popularity . Red Bull is a highly successful company responsible for 70% of sales in the energy drink market to date. Their product is well known by consumers to 'vitalize body and mind' and is generally purchased by most for this purpose although Red Bull has been seen as a global luxury brand even in pubs and resorts today as mixers , But times have changed and it started to lose some of its market share due to the increased competitor brand offering the same product these days. There is a Gap in the red bull category that thou its positioned well for meting demands of a broader range of customers and Its to be noted that majority of The customers of Red Bull are still in The Y category due to its presence in Nightclubs and Bars making bedrock of its image . This brand popularity however may be short-lived as youths are fickle when it comes to new next fashion and trend (Ian, 2009)

Another annoying factor is that energy drinks market accounts to only a small portion of soft drinks market which means that they are more vulnerable to fluctuations in market; Red Bull must diversify as to even other potential drinks sector. Too add to this it seen that Red bull even today doesn't have much products to stay ahead because there are No patents to red bull ingredients and the buzz marketing techniques which they used are followed by competitors today . This could mean easy to copy them and steal away their market. Major soft drinks manufacturers like Pepsi and Coke Did even come out with their own energy drinks and these are organizations with huge spending power and therefore Red Bull might even face huge battles including price rivalry and even extinction continuing with one product category .Red bull brand has been successful today however according to me red bull should be now more concentrated on acquisitions and product diversification as its still focused on its original products. Besides they should even more different markets and by even targeting the older consumers e.g.: Golfing associations like Professional Golfers Associations (Mark, 2004) instead of only investing big for extreme sports. Factors like health consciousness should reflect way of life even in the older generation category i.e. : Sugar free products

Source : (,2010)

Source : ( ,2010)

According to me it's time that Red bull needs to extend its product life cycle should now it's extremely important for Red bull to expand their business models. It has been noticed that Red bull has not been following the traditional advertising methods such as televisions or radios for their marketing .According to (Kate, 2000) Red Bull doesn't use Internet advertising for brand promotion. But Red Bull has a history of very aggressive marketing and they should be able to continue in the trend which would mean staying ahead like Investing more in digital marketing like Gaming Industry Partnerships, Face book Connect (The Nielson Company, 2009) which can even empower lot more of customers to Red Bull and here is where the power of people lies today .

A Strategy to Break Low - Cost Rivals :

Paradise Island 2009) is partnered to add more credible customers to product. The charisma of Red Bull to a greater extend can be magnified by giving more focus to the elder generations may with even more health conscious products and even Vouchers , entertainment passes to their sporting events to old age people (Gschwandtner, 2004) . Greater Associations and Buzz can be provided by even using technologies like MMS, SMS etc. An Austrian Red Bull mobile like venture launched in 2008 could be used in other emerging markets as well focusing old age groups (Financial Times Ltd, 2009). This could mean links to even more prospective shopper crowds. Creating a image like that using an effective strategy may also help in reducing the tensions and health implication regulations it faced in some countries and continue its growth in other markets...Accounting the corporate social responsibly, Creating associations with some authorized chemists can also be a good strategy to sell their products in restricted countries like putting age restrictions like alcohol purchases in UK.


Red Bull has travelled a lot since 1987 to today staying ahead in the category it competed . Even in challenging situations like global recession even thou it faced few dips in sales it managed to stay on top . Today's vulnerable market conditions have paved way for major competitors in the soft drink segment to diversify their products to include even energy drinks.

Innovative marketing used by them made it a way of life. Using effective business strategies

As explained above Red Bull can further enhance it sales as well widen its brand name . Despite the global recession which shook the world Red bull is on a race to lead ahead and its future seems to be bright.