What are Red Bull’s greatest strengths and risks as more companies enter the energy drink category and gain market share?
Established in 1987, Red Bull is an established beverage company. Red Bull, who specialized in energy drinks, greatest strength is its unique marketing strategy and alignment with distributers. Its dominance can be attributed to the organization’s capacity to focus on its strengths while compensating for weaknesses. By having an awareness its strengths as well as shortcomings, Red Bull can keep up its present position of dominance in the energy drink market. A quality Red Bull has over its closest competitors is that they are well established in the caffeinated drink market and hold a 70 percent share of it. Furthermore, their product line which is entirely caffeinated drinks, strengthens their position. By focusing on one segment of the market, caffeinated drinks, Red Bull has created a strong hold on their market that competitors are struggling to imitate. The companies unique marketing strategies have enabled the company establish itself as the best energy drink producer in the world (Donovan & Henley, 2010). Following Red Bull’s success soft drink giants such as Coca-Cola, Pepsi and Monster have launched their own energy drinks. This development will surely diminish Red Bull’s market share. Per Kotler & Keller (2012), this development will affect the company’s profitability because in addition to the lost market share, the company must devote more resources in marketing its products.
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Red Bull has a method of marketing that is unique to its organization, setting them apart from the competition in the business. Kotler and Keller (2012) discussed the various methods utilized noting that rather than maintaining standard advertising strategies, the company has chosen to focus on an informal exchange via non-traditional means. They also feature celebrities and engage potential consumers at sports events by providing free samples in efforts to generate increased interest in their products. Free Red Bull products are provided in areas including sporting events and high profile parties to reinforce the brand image among the target market in addition to their promotions (Kotler & Keller, 2012). Other marketing efforts that attributes to Red Bull’s strengths are their sponsorships and campaigns. These unconventional advertising methods help to expand the Red Bull trademark, but they also increases brand awareness.
Despite its significant strengths, Red Bull also has numerous weaknesses that it must address to remain dominant in the highly-competitive energy drink industry. Red Bull’s small product selection, extremely elevated amounts of sugar and caffeine, and cost offer chances for other manufacturers to acquire market share.
Should Red Bull do more traditional advertising?
Traditional means of advertising, print, television, and radio ads, have not been utilized by Red Bull to market their brand although the company may consider expansion to more traditional advertising strategies to reinforce their image in more mature markets. Kotler & Keller (2012) states, Red Bull employs traditional advertising techniques to reinforce the brand to mature markets, but they do not use it to establish the market. The company has been very successful following its unique marketing strategy. Rather than depending entirely on television and print advertisements, Red Bull’s unique guerrilla advertising methodology is at the heart of Red Bull’s marketing and advertising strategy. If Red Bull adopts a traditional marketing strategy like its competitors, it will lose this uniqueness. The use of sponsored events and buzz-marketing has helped the company’s product stand apart. As such, the company should not use traditional advertising strategies particularly to establish markets; they should stick to their current “buzz-marketing” and sponsored events strategy (Donovan & Henley, 2010).
Traditional advertising should be used only to reinforce the company’s brands in mature markets. Although sponsoring extreme events is expensive, it brings a special kind of brand awareness particularly to the younger adult demographic, which is the main market of the Red Bull’s products. This group of consumers has little time with traditional marketing strategies; they go with the cool trends in the market (Cornwell, 2014). Extreme events attract young people and thus present Red Bull a great opportunity to reach out to them. Therefore, I would suggest Red Bull to maintain their non-traditional marketing strategy. Donovan & Henley (2010) point out that the current strategies are unique and consistent with Red Bull’s brand image; adopting traditional methods will water down the company’s unique proposition.
Effectiveness of Red Bull’s sponsorships
Red Bull excels at sponsoring events. The company’s sponsorship programs are spread over a wide range of extreme sports, artists and athletes. The events the company sponsors range from dancing, motorsports to extreme sailing. These sponsorship programs have attracted many of the current and potential consumers of the company’s products (Cornwell, 2014).
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Per Kotler & Keller (2012), sponsoring events is a form of advertising for the company where attendees, usually teenagers and young adults get to experience the company’s products, sometimes for free or for subsidized prices. From here, these people spread the word about the company’s products, thus becoming Red Bull’s brand ambassadors. These marketing strategies though unusual have proved to be very effective for the company. Bull Stratos is one example of the success the company achieves with these sponsorship programs. This program for example provided young people with a dream to look forward to. Cornwell (2014) argues that such events tap into the critical part of young people minds showing them that they can achieve what their dreams. As such, when the Bull Stratos made a safe landing, it provided a sign to these young people that anything is possible. Thus, many young people associate Red Bull with those people who do the impossible. Therefore, I think these sponsorship programs are a good use of the Red Bull’s marketing budget and they should continue carrying them out.
It is however important for Red Bull to regularly evaluate its marketing programs to ensure they are effective and relevant. The company needs to draw the line when the strategies become ineffective. When this happens, the company needs to be ready to change its marketing approach to remain competitive in the market. Thus, the company should monitor the market continuously for emerging trends to help it change quickly when need be (Cornwell, 2014).
Cornwell, T. B. (2014). Sponsorship in marketing: Effective communication through sports, arts, and events. Routledge.
Donovan, R., & Henley, N. (2010). Principles and practice of social marketing: an international perspective. Cambridge University Press.
Kotler, P., & Keller, K. L. (2012). Marketing management. New Jersey, US: Pearson Education.
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