Marketing Strategies for Red Bull Company - Essay Example

? Marketing Plan: Red Bull Company Market Plan: Red Bull Executive Summary Dietrich Mateschitz found RedBull in the mid 1980’s. Mateschitz developed the marketing idea for Red Bull, and he created the formula for Red Bull. His inspiration came from Krating Daeng, an energy drink sold in Thailand. The first sale of this energy drink was in its home market of Austria in the beginning of April 1987. This step was crucial because he was launching a very new product. Later on, Red Bull spread all around the world and is available in over 165 countries. Cumulatively, the company sold over 35 billion cans worldwide to date. Red Bull is the brand name used by the Red Bull Company from Austriai. This energy drink contains several ingredients, which make it a super energy drink. These include glucose, glucoronolactone, caffeine, sucrose, taurine, and B-group vitamins (Red Bull GmbH, n.d.). This drink trades in two major brands i.e. R-B Energy Drink and R-B Sugar Free. The later is similar to the former, only that it lacks sugars. Aspartame and acesulfame K sweeteners replace this glucose and sucrose. Red Bull enjoys worldwide market coverage as well as global competition from established soft drinks players. Emerging markets for soft drinks and health concerns of consumers are some of the issues affecting the market growth and expansion of the drink. Obesity is also becoming a major threat in the soft drinks market due to the sugars they contain. This is even more challenging to this industry owing to the fact that most of its target market ranges among children and the youth who are most vulnerable to obesity. However, Red Bull managed to maneuver though all these challenges to sit comfortably at the top of preferred energy drinks around the globeii. Current Marketing Situation For any firm that seeks to succeed, it is important to define a company product's position, target and segmentation. In terms of its position, Red Bull is an energy drink that increases concentration, reaction speed, and performance as well as improves people's emotional state. Consumers can find all these benefits when drinking Red Bull. During tiring days, long school days, and stressful work, people want to get a product that helps them to relax their bodies and minds. Moreover, Red Bull provides not only its regular style of beverage but also a sugar-free version for people who are concerned about their health. Red Bull's target market is active males and females between ages of 17 to 35. For this reason, Red Bull targets people in college, recent college graduates, and workers who also study. These types of people have active and busy lifestyles that make it hard for them to endure long days and nights. Especially for the workers who study, it is challenging to balance sports, education, clubs and jobs. Red Bull is the solution for people at the turning point in their lives because energy is important component that keeps individuals active to achieve their goals Objectives and Issues Marketing Strategy It is important for the company to have segmentation in order to market its product and have costumers. Red Bull segments its product by demographic, geographic and psychographic components. The main demographic of Red Bull is young males and females between 17 and 35 years old. The geographic component focuses on people who study at places where life is busy and rushed. Bars and clubs near or on these places are also a geographic segment, in which Red Bull concentrates. The psychographic segment includes young students and professionals who have long days filled with study and work, so they get tired and stressed. They want to relax and have fun at night, enjoy the rest of the day and remain active by having energy drinkiii Distribution of Red Bull energy drink is through most gas stations, convenience stores and grocery stores in the U.S. Some of the stores include Safeway, Quick Trip, Conoco, SuperSaver, and 7-Eleven. The product is also available in supercenter stores such as Walmart and Target. The Red Bull is still growing through more distribution, and the drink was available in all 50 states in 2002 (Todd, Heather). The recent review of distribution evaluates that most of the sale trends for Red Bull energy drink base mostly on gas stations and convenience stores. People purchase their energy drink usually during the day when they are in a rush. They go to the easiest and quickest place regardless of price. Even though the price of regular size of a can is $1.99, it may vary depending on the distributor. Therefore, in most convenience and grocery stores, Red Bull can prices will be higher than $1.99iv There are some factors in the marketing environment that may affect customer purchases. Red Bull has the ingredients listed on their cans because Red Bull is not a patented drink. Therefore, it is easy for any company to copy Red Bull's product and compete against Red Bull. Moreover, a lot of research from medical standpoint has given negative reviews and ratings for the product based on the high level of caffeine and sugar. These two ingredients negatively affect human body, especially the heart rate and blood pressure (Burgundy, 2007). The high levels of caffeine in a Red Bull beverage can be dangerous if children and teenagers consume it. The taste of the drink was not very popular in taste tests; however, Red Bull is a successful company because of the marketing strategy that the company follows (Gschwandtner, Gerhard). Red Bull creates the new energy drink type over most markets. In addition, this is the first energy beverage successfully competed with different kinds of soft drinks. In the late 80’s, Red Bull was spreading and available in Europe. Americans were drinking Jolt Colas that contained sugar and twice the caffeine as Coke. In the late 90’s, Red Bull successfully hit the market after huge amount of effort, which led to an increase in the number of other companies that tried to copy the product. Energy drinks such as Monster Energy, Rock Star and 5-Hour energy are all significant competitors to Red Bull. Moreover, sports drinks and soft drinks are also on the major competitors’ list, including Gatorade (rebranded as G and G2), Coca?Cola (Full Throttle) and Pepsi (AMP Energy Drink). Nevertheless, none of these energy drink competitors managed to reach Red Bull's 70% - 90% market share in more than 100 countries around the world (Rodgers, 2001). Threats and Opportunities Analysis Opportunities Red Bull Company has great opportunities, and the drink is one of the most popular drinks in the world. The company has its own strategies that used in the marketing place to attract its audiences by following their needs. The company relies on using non-traditional marketing strategies and a traditional marketing strategy that has significantly helped them achieve their dominance in the market of energy beverages. These strategies also assist them in building and strengthening the relationship between the company and its target audiences. This strong relationship keeps Red Bull customers loyal to Red Bull drink products. Consumers buy these beverages whenever they need high-level energy for sporting events, to work out, and for a long day, that involves a huge amount of energy. Moreover, Red Bull has the chance to expand its target market by producing different type of drinks. The company is able to create three different kinds of drinks, including regular, sugar free, and zero calorie drinks. The beverages come in three sizes to meet customers’ needs (RBSA, 2012). Threats On the other hand, Red Bull Company faces some threats because of external factors. Competition is one of the major threats, and the biggest competitors are Coca-Cola and Pepsi. Trying to regain their market share from Red Bull, Coca-Cola and Pepsi began producing their own energy drinks. Furthermore, negative publicity is another factor that threatens Red Bull Company. A good number of research and media coverage worldwide reports print the negative effects of Red Bull drinks on the health of individuals. The French Health Authority banned Red Bull products in the France markets because they considered it as unhealthy drinks. In addition, Red Bull products may not gain entry into a new market that already has a consumer awareness of health. As time goes by, people may switch to other healthier drinks such as organic drinks instead of Red Bull (RBSA, 2012). The company's marketing objective and strategy is to attract and maintain the attention of young people by setting up display booths at special sports and music events. Red Bull's strategy is to sponsor sports teams, athletes, and events as well as music and entertainment Marketing Strategy As the leader and the pioneer of the global functional beverage area, Red Bull almost never met any powerful competitors in its market many years ago. Around recent years, although it has good reputation and comparative stable consumer group, its development pace was unusually slow. Monotonous products, never changed advertising and imbalance of regional sales always restrict Red Bull’s progress. Therefore, with the rise of other functional beverage brands, Red Bull looks like a falling nobleman and its status in functional beverages would receive severe challenges In the past decade, Red Bull always stress on its functions, like how does its beverage help people recover from exhaustion and drowsiness, meanwhile, it explained the distinctions from other soft drinks for many times as well. In this sense, Red Bull did not accurately pass the quality connotation and the lifestyle Red Bull represents to the consumers. Thus, Red Bull decides to defuse the most critical component of this bottleneck spreading. Red Bull needs to inject a new concept about a new lifestyle about fashionable, avant-garde and challenging internationalized high grade of life, and these are precisely consistent with the spirit of the enterprise and development concept. Red Bull started its strategic marketing transformation, which involved three major upgradesv -Functional Position Upgrade “Tired? Drink a Red Bull!” and “Red Bull, refresh your brain and supplement energy” are two ads several years ago in China and lasted for 8 years long. That passed a kind of error or incomplete information that people only drink Red Bull when tired or sleepy because the ads overemphasized the functions of the product so that people never bought Red Bull when they were not in exhaustion and lost many potential consumers. Since 2003, Red Bull’s advertising slogan began to change such like “My energy, my dream”, “Time for Red Bull”, “No one can stop you” and etc. These all show the Red Bull’s determination for its brand repositioning. This action seemed as a transformation from functional position to emotional position. The new slogans focus on consumers’ psychological needs like courage and strength rather than only struggling on physiological needs. The ads transferred from specific “tired” to a wide “supplementation of energy and spirit” so that lead the consumer group from niche market into mass market. White collars have sufficient buying power and they are easily to accept this change. On spreading, the company gave up the old saying about its functions. Nevertheless, it continues to be an inspiration for young generations to chase their dreams by emotional appeals -Propaganda Strategy Upgrade Propaganda strategy upgrade namely is to implement all aspects of effective advertising media system. All these propagandas base on the premise of effective dissemination. The company cannot develop too fast without the support from big famous mass media. In the past, Red Bull never co-operated with mainstream media, just relied on TV ads and event sponsorship -Promotion Upgrade Combine sponsorship with promotion and shorten the distance between business and consumer group. Red Bull bonded with powerful and influential media SOHU to co-operate for disseminating music and abandon the way they fight alone previously. Red Bull invented new ideas through establishing original music collection platform with famous music channel to build a strategic partnership. The music action program reflects the Red Bull’s comprehension to original music and support for folk musicians and marked Red Bull’s determination for enterprise image transformation in the new marketing plan. The company launched a new slogan- “Infinite Energy” which reduces the product appeals (functionality) a lot, but turns the main point to the brand connotation and new lifestyle. The new marketing idea, which compared with previous simple sponsorship and humble ground promotion, was much more attractive to consumers and good for accurately expressing the concept of Red Bull’s branding that Red Bull loves to be your best friend during the journey you pursuit dreams. Red Bull finally put the noble mask down and stays close with consumer groupvi Action Programs Marketing Action Program: Red Bull New Energy Music Plan & Red Bull Unplugged Concert (the outcome after three main upgrades) Under the recession of Chinese music circle context, Red Bull New Energy Music Plan and Unplugged Concert attempted to discover outstanding musician and great original music to improve the development of Chinese music industry. Red Bull successfully squeezed into Chinese music scene and became an indispensable part of it through this action program. Red Bull maximally promoted and propagated the compositions by recording and publishing to present fully a picture about the rise of Chinese new music power. Besides, Red Bull invited five senior musicians as the people in charge of this project for offering evaluation and guidance New energy music plan intended to create a zero-threshold music contest for grass-root musicians and established high quality original music collection platform; moreover, it is a good way to disseminate to win the enhancement of brand awareness and brand recognition from netizens and televiewers. Then, target audience would pay more attention on the brand of Red Bull via music websites and sponsor advertising so that to form a great atmosphere to encourage consumers’ actual purchasing behaviors based on a favorable impression to the brand. Red Bull New Energy Music Plan aroused widespread public concern and active involvement and help the company increase the brand recognition and market reputation Budgets Marketing Budget and Control Control -Marketing Budget for Red Bull New Energy Music Plan Table shows the Marketing Budget for Red Bull New Energy Music Plan in the second year. Budget (RMB in millions) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales 12 16 20 15 Variable Cost: Materials Labor Maintenance & Supplies 3.5 2 0.5 6 2 0.6 7 2.5 0.4 6.5 2.5 0.6 Total Variable Cost 6 8.6 9.9 9.6 Fixed Cost: Depreciation Insurance Supervision & Inspection 0.5 0.75 1 0.5 0.75 1 0.5 0.75 1 0.5 0.75 1 Total Fixed Cost 2.25 2.25 2.25 2.25 Total Cost 8.25 10.85 12.15 11.85 Table 1: Marketing Budget for New Energy Music Plan Funding Obtained: Table 2 shows there are three main ways to obtain funding- from government, partners (other business) and company investment. Table 2. Funding obtained from Government, Partners and Company Investment Figure 1: PV (Page View) Analysis, Monitoring for Marketing (Million) Control - Monitoring, Evaluation & Control (KPI) In order to monitor, evaluate and control to execution of marketing plan efficiently the company has to adopt Key Performance Indicators (KPI). The company uses two KPIs are used through the whole plan, and they are Monitoring KPI for marketing and Evaluation KPI for employees. Figure one shows that three of the key performance indicators that can undergo valuation by numbers have respective curves. For example, New Energy Music Plan seems not doing well on July since the curve bottom of PV of Music and Entertainment Channel occur on July. Therefore, we should figure out the reasons and make improvement for next money. Table 3 shows the evaluation of KPI for employees in the action program to implement internal management as an incentive mechanism vii Name Employee ID Department KPIs Marks Self Comments Manager Comments Shared Values Contribution Completion rates Attendance Total Self willing of Next Quarter Table 3: Evaluation of KPI for employees Notes Read More