The cola market - Essay Example

I. Introduction In 2008, Red Bull enters the cola market and introduces a new cola under the Red Bull brand This entry in the cola market in the United Kingdom has induced mixed reactions in the market. The Red Bull has been known as a manufacturer of energy drink, as it has differentiated itself by creating a new segment based on the energy-building benefits. Red Bull’s entry in the cola market is a standalone launch from its flagship product, by offering a different promise which delves with the all-natural ingredients and healthy benefits of the new product. This paper aims to explore the marketing strategy of Red Bull for its new product. By looking at the product’s segmentation strategy, as well as its target market and positioning, and comparing it with the brand’s flagship product’s marketing strategy, the paper aims to look for the company’s success in doing this. Issues that are raised by this entry which impact the Red Bull brand are explored in the body of the paper, as well as the good points of the product which match the opportunities in the market. Lastly, this paper concludes that although the company has used the strong Red Bull brand in order to leverage its entry in the cola market, the new product weakens Red Bull brand’s former associations that are created by its original product. This does not guarantee a strong chance of success for the new cola, although its promise supports a trend in the market; and the Red Bull brand’s long-term image is affected. II. Body A. Type of segmentation most likely to be useful 1. Psychographic segmentation As a new entrant in the market, Red Bull’s product for its new cola will only aim to cater and serve certain segments of the market. In order to know the market well, Red Bull has to segment its market carefully in order to assess which market segment should be chosen. The Red Bull brand has been associated with various lifestyles in the functional segment of the beverage market in the UK (Bized.co.uk, 2008). Because of this existing association which is rooted from the lifestyle segment of the market, Red Bull’s new product can also use the lifestyle or psychographic segmentation for the cola market. According to Tom Duncan in his book “Principles of Advertising and IMC”, he defines psychographics as “measures that classify customers in terms of their attitudes, interests, and opinions as well as their lifestyle activities (2008, p.226).” Since the Red Bull brand is positioned using the lifestyle segmentation of the market, the entry of its new product in the cola market can use the lifestyle segmentation as well in order to make its product successful. B. Strategic segments of UK market targeted by Red Bull for the new cola 1. Health-conscious segment According to Bized.co.uk, the segment for the functional beverages has increased over the years due to the aging population of UK, as well as the shift to the more health-conscious products (2008). With this, Red Bull has capitalized on the health-conscious segment of the market which looks for “regenerative and rejuvenating properties (Bized.co.uk).” This strategic segment of the health-conscious group of consumers, according to Mad.co.uk (2008) will be entered by Red Bull with a “head to head on-trade” with Pepsico’s Pepsi Raw. C. Targeting and positioning strategy: Red Bull energy drink versus Red Bull cola 1. Red Bull energy drink a) Target market According to a case study written by Tuckwell (Prenhall 2004, p.3), Red Bull energy drink target market demographics like “most energy drink is targeted at the same customer—young, urban males 16 to 29 years old.” As for Red Bull energy drink’s target market psychographics, according to Tuckwell comprises “males on the edge, or aspires to do so (Prenhall 2004, 3).” b) Positioning Red Bull energy drink positions itself as the energy drink that is mostly associated with “stimulating activities (beverage.foodbev.com, 2008).” The brand is positioned not as a beverage that refuels the body such as Gatorade, but as a drink that increases mental concentration. According to Tuckwell, “Red Bull is sold as an energy drink and is designed to combat mental and physical fatigue.” The major benefit of Red Bull is provided by, according to the case, “the combination of ingredients interacting with each other that provides energy-building benefit.” This positioning is further reinforced by its marketing activities such as its “Red Bull Racing”, sponsorships of F1 racers such as David Coulthard, various sponsorships in sports activities. 2. Red Bull cola a) Target market Red Bull cola is targeted at the health-conscious segment of the market. The psychographics of the target market for the Red Bull cola includes the consumers who are looking for healthier cola/beverages. b) Positioning Red Bull cola’s positioning is its being “strong and natural”—the only cola that has 100% natural ingredients. According to Foodbev.com, Red Bull cola is “the only cola brand to contain real kola nut and cola leaf with no preservation, additives, phosphoric acid, artificial colouring or flavors (2008).” D. Other issues 1. Brand confusion: what Red Bull stands for Red Bull has entered the beverage market as a brand that differentiates itself by offering energy-building benefits to the consumers. By marketing its product as an energy drink, which is initially targeted to “younger males, who want to live at the edge, or aspire to”, the brand has created a strong association with taking risks and stimulating activities. This entry of Red Bull in the cola market, offering 100% natural ingredients as its main differentiating factor in order to cater to the cola market’s health-conscious segment, has created a distortion as to what the brand Red Bull is now about. Prior to entry, the brand has strong associations with extreme sports, and other stimulating activity which is reinforced by the energy-building benefits of the drink that are contained by the interaction of its ingredients. This creates a blurring of what the brand Red Bull stands for. Is it a brand which is associated with risks and stimulating activities—or is it a brand which offers health? The differences of the promises of its product under one brand Red Bull create a distortion as regards the brand image. As the cola does not promise the same energy-building benefits as its energy drink counter part, Red Bull as an umbrella brand does not reconcile the differences in the benefits offered by the two. 2. Brand extension without the Red Bull ‘promise’ According to Julian Mellentin, author and editor of monthly trade journal New Nutrition Business, as mentioned in the article of Foodbev.com, he said “Red Bull cola is a me -too - in fact a me-too to the me-toos. There’s nothing original or innovative about this brand extension. It brings no new benefits to the consumer (2008)”. Mellentin talks about the new cola’s promise as a me-too approach because the cola is not the first in the health-conscious segment of the market. With PepsiCo’s Pepsi Raw already in the market, the new cola’s positioning is weak in order to make a dent in the market. This entry in the cola market is a kind of brand extension for Red Bull. The major issue in this is that the cola is not promoted being a cola version of its energy drink. On the contrary, as according to Marketingweek.co.uk, this is the launch of a new product that is different from the company’s flagship product. The product is promoted without the same benefits the original Red Bull brand, through its energy drink product has been associated with. 3. The cola’s different promise and conflict with perception Its entry in the cola market using the same Red Bull brand forms a gap into the company’s brand image. This is because the energy drink’s energizing ingredients having a perception that is in contrast with the cola’s all-natural ingredients. In order for a brand to gain a strong brand image, it has to be consistent with the promise that it offers. Now that Red Bull has two products with two different promises which aim to satisfy different segments of the beverage market. The differences between the target markets of the two beverages are reflected in the benefits that they offer—one has association with stimulating activities, and the other one has association with health. Althought the two benefits are not necessarily in conflict with each other, in terms of perception, they are not really consistent with one theme. This inconsistency due to the cola’s different promise creates a conflict in terms of perception of Red Bull as a brand. This extension, utilizing the brand name’s strength has not taken enough consideration of the original brand name’s associations. The product’s stand alone launch, as a proof of a different line for the Red Bull brand has created a conflicting perception for the umbrella brand. 4. Cola’s good point: shift to a healthier benefit as product offer Putting aside the branding using the brand extension strategy, the cola’s promise of a shift to an all-natural and healthier cola is one of the good points of the product. This has been a clear opportunity for the company, as the trend to healthier products especially beverage supports the demand and growth within the industry. III. Conclusion With the strong competition that face the market for cola in the United Kingdom, coming up with a new product that is leveraged by a strong brand such as Red Bull does not guarantee the success of the new product. Furthermore, although the new cola supports a trend in the market which is for the healthier beverages, the entry of Red Bull in the cola market only distorts its strong current brand associations. The analysis of this case rests entirely on Red Bull as a brand, not just a product. A brand, as Tom Duncan in his book “Principles of Advertising and IMC” mentions, is a promise to its consumers. With the two promises coming from two products under the same brand, although the promises are not in total conflict with each other, creates confusion and blurring in terms of perception and the brand’s solid associations. These strong associations have been created by the brand’s energy drink product. While the strong associations are for the brand, this supports the brand’s original product’s benefit. The entry of Red Bull in the cola market, leveraging the strong brand but offers healthier choices for an upcoming trend in the market does not guarantee the success of the cola. This is because, while it differentiates itself as a cola that is all-natural, the claim is weakened by the other associations with its previous product. Therefore, it cannot create a strong claim as regards the 100% natural positioning of the cola product. Without this ability to create strong associations due to the conflicting perception of the other product, the new cola will find it harder to compete with the more established brands in the soft drinks market segment in the United Kingdom. Bibliography Duncan, Tom (2005). “Principles of Advertising and IMC.” 2nd ed. New Jersey: McGraw-Hill. Bized.co.uk. (2008). “Where does Red Bull fit in to the UK market?” Bized.co.uk. Date accessed: December 2, 2008 from http://www.bized.co.uk/compfact/redbull/redbull11.htm Parsons, Russel. (2008 March 25). “Red Bull to launch natural cola drink.” Mad.co.uk. Date accessed: December 2, 2008 from http://www.mad.co.uk/BreakingNews/BreakingNews/Articles/30db037cb7e54b84baa6be3bef4c851c/Red-Bull-to-launch-cola-drink.html Foodbev.com. (2008 March 26). “Red Bull to launch Simply Cola” Foodbev.com. Date accessed: December 2, 2008 from http://beverage.foodbev.com/ArticleDetail.aspx?contentld=569 Marketingweek.co.uk. (2008 April 1). “Cola launch puts extra fizz into Red Bull strategy” Marketingweek.co.uk. Date accessed: December 2, 2008 from http://www.marketingweek.co.uk/cgi-bin/item.cgi?id=60219&d=342&h=297&f=3 Tuckwell. (2004). “Red Bull” Prenhall.com. Date accessed: December 2, 2008 from wps.prenhall.com/wps/media/objects/3357/3438371/chapter%20cases/tuckwell_case04.pdf Read More