Red bull is energy drink that gives you wings. It contains caffeine, turbine, glucuronolactone and vitamin B. Red bull was founded in 1985 by Austrian Dietrich Mateschitz. Red bull achieved remarkable growth considering the product was available is only one stock-keeping unit (SKU). By 1997, Red bull went globally in 25 markets and there was increase sales volume from 1.1 million units to over 200 million units. Currently, red bull employed 8966 people in 165 countries. The expansions are Western Europe and USA. Selling 5.226 billion can, it has increased its turnover to 15.9% instead of high price and currency fluctuation. (Red bull the company-who makes red bull?, 2013)
Red bull energy drink is a functional beverage. Numerous scientific studies shows that it has enhance performance, increases concentration, hence best for sports, driving, office work and studies. Red bull has different marketing strategy and that’s how it differs its brand from others. The huge growing sponsorship and event created by Red bull attracts more than millions of people. In this case analysis, how red bull creates marketing buzz will be analyzed in more detail. The case analysis also includes the major issues that red bull is facing in current market place and recommendation. (Red bull energy drink, 2013)
Red bull has been the brand since created in 1987 sold as a functional beverage for the first time in Austria. Entrepreneur Dietrich Mateschitz took the idea of Krating Daeng pre-existing energy driver in Thailand, modified it invented energy drink- Red Bull. The idea was taken but modified in order to make a taste that suits for westerners.
Coca-cola, with mother and Pepsi with Amp are competitors for Red bull through they are behind Red bull in its category. It was sold for the first time in carbonated form in 1987 in Austria. In 1992, the product expanded to some European countries 1997. U.S via California and Middle East in 2000 (Red Bull -Wikipedia, 2013).
Red bull is one of the most successful event creators in the world. It doesn’t spend much more money in media advertising rather it creates headlines with its own. Felix Baumgartner’s jump was most fantastic event created by Red Bull breaking YouTube records 32 million plus visit and facebook share of 30,000 plus and 216,000 likes. Beside these, Red Bull owns many sporting clubs, racing championships, events and award show. (McGuigan, 2012)
Fig source: http://darkroom.baltimoresun.com/2012/10/felix-baumgartners-record-breaking-skydive/
It hosts many unique events and many people talk about Red bull. This helps in the mouth to mouth marketing which is traditional and most effective way of marketing. Seeing such events encourages adding more new customers.
Brand equity is state of having well known brand name. It is marketing term which determines the market strength of brand, its value, and position in market. Red bull builds brand equity through various marketing strategy as shown in figure.
slide-26-638.jpgFig: sources of brand equity
Red bull has strong market with its loyal customer which has helped it to maintain its brand equity. Following figure shows the energy drinks market share:slide-11-728.jpg
Fig: Share of energy drink
SWOT analysis is situation analysis of the company in which internal strength weakness of an organization and external threats and opportunities are analysis.
Market leader throughout the world
Strong fresh and fashionable brand
Red bull race
Red bull NY loyal customer
Strong brand equity, strong financial position
Limitation of product
Product expansion in emerging market
Unique sports events live
Many saturated market with lower price
Health concern, high caffeine and effects of other products.
Consumer awareness on health.
Red bull is leading energy drink seller in the world. It sales its product in more than 160 countries and has sales revenue more than 4.25 billion Euros.
Red bull has most of the unique and original marketing efforts as compared to any other of its competitor and non competitor as well. It creates event like Felix jumping from the edge of the space has created huge market buzz.
Red bull is strong and fashionable brand with simple sleek design.
It has sponsored many events and sports shows like Red bull air race and also owns sporting clubs like Red bull New York Soccer.
Red bull has got good team and its loyal customers are its main strength.
It has Strong brand equality and strong financial position.
Red bull offers limited product with least choice for people. Competitor may take advantage of this could develop better product than red bull with more range of energy drinks.
Red bull sells in many countries but it has to enter in third world countries in oder to maintain even more high revenue. The market is already mature and its expensive price could be another barrier.
Many new markets are emerging and product expansion in such market could be huge opportunity for red bull.
Unique events like air race, red bull flu tag helps to create more buzz and marketing.
Many saturated market with lower price
Health concern, high caffeine and effects of other products
Consumer awareness on health.
Issues facing the brand in the current marketplace
Red bull is a leading energy drink and a renowned brand in many countries. However in many southern European countries, south east Asia there is dominance of other soft drink like coke, Pepsi. Red bull has successfully completed in many mature market. Hence red bull should also focus on these region as well. Red bull has premium price which is little more expensive than all other drinks, price of small can of red bull costs US $2.5 whereas its competitors monster costs as $2.0. Red bull contains equal amount of caffeine as a cup of coffee which is source energy. Its competitors monster possess small amount of caffeine 8.75mg per ounce as compared to red bull 9.64mg per ounce. (UKessay, 2013)
Red bull is produced and packaged in a slim silver can. It isn’t sold in bottle which enhanced its brand equity. But many competitions are producing their energy drinks which is similar to red bull as they don’t have bottle market and in can others are copying them.
Red bull is way ahead in its promotion campaign. Red bull promotion campaign is smart daring and originals. Red bull market its product with creating events as Felix Beaten jumps from edge of space reaching the speed of 830mph during 9 minutes fall. Whole world watched this red bull event. Red bull also has host beside these red bull hosts many shows, music festival, owns sport clubs like red bull new York soccer club, formula one car. Red bull is simply genius when it comes to marketing. They create buzz in the media with their event and eventually finds many way to connect with their customer.
Red bull is successful in creating buzz everywhere with its events. Red bull also has many negative issues as well. Many believe than it causes severe effect on health like blood clot. Dr. Scott Willoughby believe it’s just can of red bull raise the risk of heart attack or stroke even in young one.
Research conducted to university students drinking 250ml of sugar free red bull shows it increase the blood stickiness, and blood system were abnormal like in cardiovascular disease. The red bull was not sold in France, Denmark and Norway for several years.
Red bull must revise its strategy according to target market and segmentation. It should go for targeting for geographical population like India and earn more profit. In west red bull is facing serious challenge because of its health issue and price.
Red bull is in maturity stage of its product lifecycle. It is mainly focusing young people neglecting huge target population of children, mature adult and old people. Different controversies affect the sales of red bull and it has lost huge revenue due to this and ignoring segment of people. Hence red bull should focus on expanding its product to sustain in mature stage and enter in new mature market.
After analyzing the case study and doing some internet research I have come with some of recommendation for red bull:
1. Red bull should expand in third world developing countries where there is more market to grow. It is leading company in energy drink but also needs to expand in such geographic areas.
2. Red bull has premium price strategy and its one of the success factor but for many markets it could be expensive hence red bull should think of entering with small cans which would be less expensive.
3. Red bull cannot be used again and again like coke in jumbo bottles. Neither it sells in other glass bottles. therefore reusable bottles with air tight lid could be another alternative for those who cannot drink whole 250ml can. They can use it for later.
4. Red bull creates buzz with its marketing events and sporting events whether it be carrying huge can of red bull in classic vehicles or air race event. Red bull can further enhance its marketing activists through social media like facebook and collaborating with other products as well. Or can it create its own snacks to be eaten with red bull drinks.
5. Red bull is in mature stage of product life cycle and it has got limited product. It can extend its product to earn more revenue and revitalizes itself as well.
6. Many are concerned with the health effects of red bull. It was banned in France and allowed to sell only through pharmaceutical. Red bull on the other hand believes that it has no any effect on health. Red bull should spread this message widely since this has been one of the reason for its decline in sell.
Red bull is world renowned energy drink and market leader in its category. It has created separate beverage category as functional beverage in Austria. It gives energy and recommended best for driver, athletes, students, worker and daily user. Red bull has achieved number one position in its category through its marketing activates as well. It knows how to create the buzz in the media and connect with the people. Its brand equity is very strong and has got many loyal customer.
Red bull still needs to spend more on research and development to develop new product as it offers limited flavor whereas competitors are introducing many flavors and gaining high revenue growth each year. Red bull has been in controversy always with its health related issues though it has not been proved anywhere what effects it causes.
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