Strategic Marketing Plan for Red Bull - Essay Example

?Strategic Marketing Plan for Red Bull Table of Contents Introduction 3 Summary of the task 3 Background 3 Outline 3 Strategic Marketing Plan 4 Marketing Audit 4 Internal analysis 5 Strength 5 Weakness 6 External Analysis 6 Opportunities 6 Threat 7 Competitor analysis 7 SMART Marketing Objectives 8 Strategy 8 Expansion and diversification 9 Marketing initiative 10 Cost Reduction 11 Segmentation, Targeting and Positioning 11 Evaluation of Success 12 Ethical Issues 13 Reference List 14 Appendix 16 Introduction For a successful business a marketing plan plays a major role. It is a part of the bigger business plan. The marketing plan helps the business to focus on the goals and objectives. It varies depending on the type of business and the objective on which it focuses. Before designing the marketing plan the marketing manager needs to accumulate enough information about the competitors and the customers so that they can target the right market segment with appropriate strategy (McKinlay, O'Connor and Ross, 2007; Nijssen and Frambach, 2001). Summary of the task The study aims towards designing a marketing plan for Red Bull. Background Red Bulls is a twenty five years old company that has been selling energy drink. In the year 1980, Dietrich Mateschitz founded Red Bull, inspired by a functional drink originated from Far East. He created the energy drink and promoted it through a unique marketing concept. In its early days it was sold in the home market of Austria but today Red Bull is sold in more than 165 countries. Red Bull is not only a new product but has given birth to a totally new category of product. Today Red Bull has sold more than 35 billion cans (Red Bull GmbH, n.d.). Outline The marketing plan of Red Bull covers the following Product: Non-caffeine drinks for the kids and other people who do not drink for energy purpose. Place: Designing an expansion plan through which the company can operate in other geographical areas. Price: Red Bull will be implementing some cost reduction techniques so that the price of the products can be reduced. Promotion: Red Bull will be promoting their new product through social networking site, public relationship activities etc. At the same time they will also promote their current product as “safe to drink”. Strategic Marketing Plan Marketing Audit Marketing audit is defined as the process of “comprehensive, systematic, independent and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies and activities with a view of determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance” (Avasarikar and Chordiya, 2007, p. 4.15). Marketing audit helps in increasing the profitability of the company (Kotler, 1999). Red Bull deals in energy drinks with various tastes targeted towards young people who are involved into strenuous work starting from athletes and weight lifter to common man working in office. The marketing audit is done through SWOT analysis that highlights on the internal, external and competitor analysis. Based on results the issues are identified. Internal analysis Strength Market leadership: In the year 2012 the company has sold total of 5.226 billion cans all over the world. This figure represented a 12.8% increase in the sales as compared to the figures of 2011. The company is the global leader in energy drinks. The company has a market share of 70% in the world. Even the other drinks offered by other companies are also facing competition in front of Red Bull. Figure 1: Red Bull’s Net Sales and Cans sold in 2010-12. (Source: Euromonitor International, 2013) Millward Brown (2010, cited by Bodner, 2011) stated that Red Bull is positioned at 79th position amongst all the global brands worth 8,154 billion dollar. It is positioned at fourth rank amongst all the popular brands in soft drinks like before Sprite and Fanta but behind Coke (Zero, Lights and Diets), Coca Cola and Pepsi. Coke and Coca Cola are the third largest brands all over the world. Weakness Products: The main weakness of the company is that it deals in only five products like Red Bull energy Drink, Red Bull Sugar free, Red Bull Zero calories, Red Bull Editions and Red Bull Cola. Red Bull Editions is available in three tastes Blueberry, Cranberry and Lime. Though the company has created variation since their products but the company is vulnerable to market fluctuations. This is because of the fact that the sports or energy drink category in which the company operates is smallest part of the overall soft drink market. Cost: Red Bull manufactures its product from its only factory located at Austria. As it supplies the energy drink to the other parts from this factory only, it is susceptible to laws and regulation, high tax and high costs of distribution as compared to the competitors. Ingredients: Red Bull is vulnerable to regulatory control because of its high caffeine content (Euromonitor International, 2013). External Analysis Opportunities Newer geographies for the expansion of the company have opened owning to the emerging market. Red Bull in order to reduce the distribution cost has decided to open new manufacturing unit in Brazil and Asia. This has opened new ways to provide competitive retail price rather than imported product prices. Threat Competition: Monster sets the biggest challenge and threat for Red Bull as it is made up of natural ingredients and looks more desirable to the consumers than the Red Bull. High Cost of marketing: Creating a matured market in the developed countries makes the marketing process much complex and harder than the past. High marketing cost is involved in establishing communication with the customers. Competitor analysis Red Bull has shown strong performance in the recent years but in terms of value the company has been seen to perform far below the other players in the energy drink market. Other players like Monster Beverage Co. Has also entered into the energy drink market. Coca-Cola Co (TCCC) has been marketing its own brand and at the same time it has also entered into distribution alliance with Monster Beverage Co. PepsiCo has an average presence in the energy drink industry with its product Sting (Euromonitor International, 2013). Figure 2: Red Bull vs World Energy drink Market in 2007-12 (Source: Euromonitor International, 2013) SMART Marketing Objectives Specific: The main objective of Red Bull is to maintain high industry standard and leadership position in the market of energy drinks. At the same time the company also aims to provide superior customer service in a highly profitable and efficient manner. Measurable: Red Bulls wants to increase the market share by 6% in three years. This objective goes straight with the mission statement of the company “To spread our wings over the world”, which strongly suggest that the company desires to remain as the market leader and continue to focus on global expansion. Achievable: The objective of Red Bull to increase the market share is achievable since the company has decided to go for expansion and has also opened new manufacturing units. At the same time the company should also aim towards launching some non caffeine products. Realistic: After reviewing the internal, external and competitor analysis, it is clear that if the company aim towards 2% increase in the market share each year then 6% will be achieved in three year. Timescale: The objective of the company will be achieved within 36 months that is three years. Strategy The high sales volume achieved by Red Bulls is largely based upon the well recognised and extensive marketing strategies. Red Bull creates its brand image by implementing unique and highly impacting marketing strategies. While implementing the new or the existing product the company should look into same marketing strategy to reach the customers. Expansion and diversification The company should look for expansion into other countries apart from where they are operating presently. Apart from opening their business into new countries they should also look for diversification of their product. Keeping the energy drink based product as their core products they can also launch some other new products in the market. Justification The high caffeine content in their product is raising protest in many countries. Like for instance in countries like France, Denmark and Norway has restricted the selling of Red Bulls only to the pharmacies. Red Bull is recommended not to use after strenuous exercise or after mixing with alcohol. This has impacted the sales of the product. Impact These initiatives will eventually lead to the increase in market share and customer base. Launching of new product will also lead to diversification. Figure 3: Red Bull Off-trade volume sales in 2012 (Source: Euromonitor International, 2013) Marketing initiative Proper marketing initiatives should be designed by the company while entering into new country or introducing any new product. The company should launch its existing energy drink product as safe to drink and should erase the unnecessary fear from the mind of the consumers. The company can use the social networking site and sponsor various activities that are taking place in the cities of that country. Red Bull has sponsored many publicity stunts and those have gained huge unparallel publicity. These publicity stunts have created a separate brand image for the organization. The videos of these stunts can be circulated through YouTube so that a wider consumer base can be covered. They can also engage into tie up with gyms for promoting their energy drinks. For their non caffeine products the company may aim towards the retail outlets and the social networking sites. The company should public relation activities in the shopping mall to make the customers aware of their product. Justification Red Bull already has its accounts in Facebook and that account suggests that the company currently has 36 million fans. The company also has many other pages in Facebook that focuses on the initiates launched by the company. Red Bull also posted the images and videos of the sport events and athletes that are sponsored by the company (Moth, 2013). The same can be done for the new country in which the company wants to enter. The company can use other social networking sites like Twitter, Pinterest and Google+. Impact The company while entering into other potential countries can follow the same marketing approach of sponsorship via publicity stunts and promoting the products through the social networking sites. This will help the company to make people convince that Red Bull’s drink are safe to drink and erase the unnecessary fear from the mind of the consumers Cost Reduction The company should also look for opening some more manufacturing units in order to cater to the new emerging markets. Apart from this the marketing cost that the company is assigning should be allocated strategically so that the cost is utilised optimally. Justification Cost is an important issue about which the company is concerned. Previously the company had only one manufacturing unit that was catering to the supplies of the cans all over the world. This increased the cost of distribution for the company. In order to reduce this cost the company had decided to open other manufacturing units in Brazil and Asia (Costley, n.d.; Euromonitor International, 2007). Impact This initiative would help in reducing the cost of manufacturing and leads to the increase in the profitability. This in turn will also help in reducing the price of the product. Segmentation, Targeting and Positioning Segmentation The market for Red Bull has been segregated into two segments the people who are engaged in high physical activities like athletes, working people etc. The other segment comprises of people who are engaged in low or absolutely no physical activities like the kids and common people who are not engaged in any type of workout. Targeting Red Bull was targeting the people who are engaged in heavy physical activities. However for the non caffeine drinks, Red Bull can be targeting to other segment of consumers like the kids and other people who do not drink for energy. Positioning Red Bull will be positioning the new non-caffeine product for the kids and others. It will be placed to remove the fear of caffeine content, which is considered to be harmful. This product will not only provide an opportunity of increasing the customer base but also expanding the product line of Red Bull. The promotion of this product will be done through the social networking site and public relation activities. Evaluation of Success There are various dimensions of success like productivity, profitability and growth. Growth can be measured in terms of market share of the company. If there is growth in the market share of the company, this indicates the company is growing as compared to the competitors. A firm only gaining market share does not indicates that the company is doing well until and unless they are productive and profitable. The productivity of a firm is measured in terms of “sales per employees and sales per dollar of assets” (Baldwin and Gellatly, 2003, p. 117). Profitability can be measured as ratio of profit to sales or ratio of profit to equity or ratio of profit to assets. In this case Red Bull should evaluate their performance every year with the forecasted outcome and objective that they want to achieve. Behind the marketing plan the company has to do significant amount of investment. Thus the company has to measure the return on this investment in order to see whether the investment is generating expected income. At the same time the company should also measure whether their market share is increasing as compared to the market share of the competitors. The company should evaluate their performance at regular interval and change their strategies if the expected result is not achieved. Ethical Issues After the death of three Swedish people, who were claimed to have consumed Red Bull energy drink, the ingredients used in manufacturing the drink is under investigation. These three deaths were followed by deaths in America and Europe. Owning to these incidents the energy drink of Red Bull has been banned in France, available only at pharmacies in Japan and categorised as medicines in Norway. The energy drink of Red Bull is created from a mixture of taurine, carbohydrates, vitamin and caffeine. It contains amino acid that kick starts the metabolism soon after the consumption (BBC News, 2001a; BBC News, 2001b; Rawstorne, 2008). On this issue the company claimed the product to be safe. They said that the level of taurine and caffeine involved in producing the amino acid makes the drink as safe as having a cup of coffee. The general manger of Red Bull, Norbert Kraihmer argued that it is safe and it has been selling in more than 50 countries for so many years and was never claimed to have any adverse effect on the health of a person. No complaints have been received by the Food and Drug Administration of US but nutritionist have raised warning against mixing of Red Bull with alcoholic drinks since it caused dehydration, kidney and heart problems. They have alerted people of drinking in larger volumes (Abc News, n.d.). Reference List Abc News, n.d. Red Bull drink raises red flag [online] Available at < http://abcnews.go.com/WNT/story?id=130751&page=1#.Uc1q5jtHLfJ> [Accessed 28 June 2013]. Avasarikar, D.P. and Chordiya, S.B., 2007. Marketing research. Pune: Nirali Prakashan. Baldwin, J.R. and Gellatly, G., 2003. Innovation strategies and performance in small firms. Massachusetts: Edward Elgar Publishing. BBC News, 2001a. Red Bull: Raging success [online] Available at < http://news.bbc.co.uk/2/hi/uk_news/1437154.stm> [Accessed 28 June 2013]. BBC News, 2001b. Energy drink claims rejected [online] Available at < http://news.bbc.co.uk/2/hi/health/1133348.stm> [Accessed 28 June 2013]. Bodner, B., 2011. Company analysis of Red Bull. Munich: GRIN Verlag. Costley, M., Ruiz, R.F., Shi, H., Wong, M. And Huynh, K., n.d. Red Bull’s company synopsis [pdf] Available at < http://www.sfu.ca/~sheppard/478/syn/Group_4.pdf> [Accessed 28 June 2013]. Euromonitor International, 2007. Red Bull plans Asian expansion: prospects and problems [online] Available at < http://blog.euromonitor.com/2007/04/red-bull-plans-asian-expansion-prospects-and-problems.html> [Accessed 28 June 2013]. Euromonitor International, 2013. Passport: Red Bull GMBH in Soft Drinks [pdf] Available at < http://www.euromonitor.com//medialibrary/PDF/RedBull-Company-Profile-SWOT-Analysis.pdf> [Accessed 28 June 2013]. Kotler, P., 1999. Kotler on marketing: How to create, win, and dominate markets. New York: Simon and Schuster. McKinlay, M., O'Connor, M. And Ross, S., 2007. FCS marketing L2. Cape Town: Pearson South Africa. Moth, D., 2013. How Red Bull uses Facebook, Twitter, Pinterest and Google+ [online] Available at [Accessed 28 June 2013]. Nijssen, E.J. and Frambach, R.T., 2001. Creating customer value through strategic marketing planning: A management approach. Berlin: Springer. Rawstorne, T., 2008. Cynically marketed, toxic and disturbing: Why Red Bull is Britain's real drink problem. mailOnline [online] Available at < http://www.dailymail.co.uk/femail/article-1027304/Cynically-marketed-toxic-disturbing-Why-Red-Bull-Britains-real-drink-problem.html> [Accessed 28 June 2013]. Red Bull GmbH, n.d. The company behind the can [online] Available at < http://energydrink.redbull.com/company> [Accessed 28 June 2013]. Appendix I: SWOT Analysis STRENGTH WEAKNESS OPPORTUNITIES THREAT Market Leadership Brand name Product Cost Ingredients Newer geographies Manufacturing unit in Asia and brazil Competition High cost of marketing Read More