The Energy Drink Industry: Red Bull against Energizer - Essay Example

The Energy Drink Industry: Red Bull against Energizer The future of the energy drinks industry The energy drink industry is one that is very promising. The consumer behaviors that characterize people of all nations determine the success or the failure of these industries. Also the people from all walks of life confirm this too. Red bull in particular according to the ABC news confirms that the brand of the energy drink is sold to more than 140 countries across the globe. Some who have consumed red bull have confessed of red bull’s threat to the human health. This alarm has not been strong enough to deter the potential victims (Porte, 2008, pp. 78-93,137). They will consume it n matter what. Come death or health. The liquor is particularly popular among the young generation. (Harris, 2013) The rate at which consumption of the energy drinks has taken course will never decelerate. The main reason is their addictive nature. Red bull is not an exception. The more there is the presence of an active number of young adults, the more the growth of the energy industries. All the players in the industry include but not limited to: suppliers of the raw materials, suppliers of the labour capital, owners of the energy drink industries and other indirect players. There is really good things to those who take the energy drink industry seriously. This may take place now or even in future. The amount of any returns to any company in this industry is what will never be fixed. The profits will have to be distributed amongst all of them. The smartest companies will market their brands innovatively. They will have to make use of the ME Porters the five competitive forces. The rigid and stubborn companies that are not open to new knowledge and challenges will be wiped away. A very ugly reality will confront these companies. Only the smartest will outlive the rest; their brands will withstand the competitive market forces (Ringold, 2008, pp. 127-141). Energy drinks have faced a lot of opposition and criticism from governments and various organizations. The red bull energy drink, for example, has taken a very good share of criticism and its effects. The brand has been banned in some countries. France, Denmark and Norway have authorized its sale only in the pharmacies. They have found it to be dangerous as to license it as merely an energy drink. There are those who mix the brand with alcohol. According to nutritionist and medics, mixing red bull with alcohol leads to the dehydration of the person taking it in the form of such mixture. In this light Greek government have regulated the manner in which people consume the brand. The Greeks have been very categorical in that red bull should never be mixed with alcohol. It has further commanded that the drink should never be taken after one has engaged himself/herself in very rigorous and strenuous exercises. Canada food inspection agency, has too found one or two things to pick a quarrel with the red bull. They have found it unfit for human consumption. The caffeine chemical in red bull is too much, the Canadian Food Agency asserts. The interesting part is that despite all measures put forward curb the negative effects of the red bull; its consumption is still very high. A Swedish 25 year old Dan Williams tells ABC news that he has all the information surrounding the red bull, but he will still consume it daily. This consumer behavior indicates a lot to as far as the energy drink industry is concerned. Ahead of the energy drink industries lies great returns. These returns will only be disposable to those willing to market their brands innovatively in a competitive world of commerce. At this point one may be excused by putting across very pertinent questions: if the energy industry is such promising and very competitive at the same time what does this imply? If society is still willing to put money in buying products that has been branded as lethal, what then should the energy industry do and avoid in order of gaining the best? This type of behaviour in the energy industry implies a lot. Due to its potential, a very fierce and unhealthy competition is likely to be experienced. The key thing lies in branding and rebranding products. The implications of the most important forces ME Porter’s The Five Competitive forces that Shape Strategy, has painted a very good picture of any strategist need to position himself/herself competitively in any engagement particularly in business. The five forces have been outlined: (1) the threat of the established industries; (2) the threat of the new entrants that are full of potential; (3) the suppliers bargaining power; (4) the products and services substitute threat; and (5) the customers’ bargaining power. The threat of the product and service substitute is very powerful a market force. The potential of new entrants is also very powerful a force. The implication of these forces is that if nothing is done to counter and check their possible effects then red bull as an energy drink brand may lose popularity with the emergence of new entrants. As a strategic marketing consultant of this brand it is my will and desires that all possible threats along the line of business are taken good care of. One thing is very clear, that the damage being done to the brand is very lethal. ABC news, daily monitor, euro monitor and others have so far taken an interest in tarnishing the reputation of red bull as opposed to working in its favor. It is understandable that they too are in the business; working mostly as the watchdog. This implies that some approaches aimed at creating unquestionable guarantee of the goodness of red bull have to take place. The approaches so far adopted are not good and effective enough to withstand the huge criticism from all corners (Wenzler, et al., 2005, pp. 30-44). The strategies to lessen the threat of the new entrants and that of substitute products and services When Porter talked of vertical competition and horizontal competition, he knew how stiff the world of business is. There is a likely hood of similar products to the red bull penetrating the market with a hidden falsehood of being better than the red bull (Surrey & Walker, 1975, pp. 90-115). It is the duty and the responsibility of all those directly and indirectly involved in the marketing of the red bull. Re-branding is one alternative they may choose to counter effect the already damage done by organizations and governments. This may not involve a lot of things. They may think of changing the repackaging the product. This repackaging may involve changing cans. The shape and the size of the can is one that they can think of laying some emphasis (Hoflander, 2011)The name of the brand may change too. Instead of calling it ‘red bull’ they may consider to call it something like ‘energizer’. It is good to note how the word ‘red bull’ registers in the mind of the people whenever it is mentioned.’ Red’ being associated with danger would perhaps be the high time the brand name was changed (Coleman, 2009, p. 400). What I am advising is not that red bull should be wiped away from the market. The assumed ‘lesser dangerous’re brand will perhaps become very popular. Remember too that red bull will still retail alongside the new brand until such a time when people will have almost shifted their tastes and preferences to the new brand. What is good to note here is that the company will be selling the same type of energy drink but under two brand names i.e. ‘red bull’ and ‘energizer’. The question one may want to ask is: will it not be hectic marketing two brand names yet the content is the same and the company is the same? The concern is very genuine (Eckerson, et al., 2012, p. 1). The idea here is to take good care of the competitive advantage. A new entrant in the industry would imply that they make a brand of their own company. The fact that there would be product differentiation is very minimal. In a nut shell therefore, the players in the red bull will be behaving as if they have come with a company within the company. Here the marketing of ‘energizer’ will be very rigorous compared to the marketing of the red bull. What we will be avoiding in the red bull case is a scenario of: “look, you complained about the red bull and for your sake here is energizer.” If we seriously mean business then we cannot naively seek for forgiveness. We should instead seek other less detrimental alternatives. Is the idea not in maximizing profits? The more the returns the brand brings to the finance desk of the company, the better. The end result should justify the means. The good thing is that there is no evidence of anyone having sued red bull in any court of law. It is also very assuring to learn that Norbert Kraihmer, the general manager has been quoted in the company’s website as assuring the public that red bull is not dangerous (Alford, et al., 2001, pp. 139-150). Since red bull is very popular among the young people, it will be good enough to master the psychology of the young people. Red bull in the US alone, contributes about 65% market share of all the energy drinks. And despite the US Food and Drug administration, highlighting its threat to human health, the drink is a one stop shop for youngsters. In the gyms, colleges and hot night clubs, re bull is very popular. Has it been because of advertisement carried on its behalf? Whether ‘Red Bull Gives you Wings’ according one advert, it is good to note that young people are out looking for anything that can give them an identity: positive or negative. Young people are also known for being impatient, and always wanting to be ahead in terms of fashion, trends and gossip. Thinking that these young people will still be interested with the red bull no matter its ability to ‘make you fly’ is very naïve (Rowley, 2003, p. 138). The consumer behavior of young people is characterized by the spirit of adventure. They always want to try other new challenges. If in their event of seeking new challenges then they happen to come across ‘energizer’, the better. This is a very good example of pun with the people’s psychology. (Kurland & Zell, 2010, pp. 316-353) The pricing will be another strategy all the stake holders have to put into consideration in addition to rebranding. Assuming that they have to successfully rebrand red bull into ‘energizer’, the next move will be to be crucial. There will involve the efforts to convey the loyal customers of the red bull into equally loyal customers of the energizer. In addition to this, efforts to reach out to the once loyal customers of the red bull will have to be brought on board by all means. These include all those people are easily influenced by a small threat; people who listened to the negativities associated with the influence of the red bull. The company has to rethink so much and try also to reach out to others those who never even attempted to consume the red bull. These potential strategies if properly implemented will go very far in checking the impact of the fore mentioned force. Strategic Uncertainties in the energy Drinks Industry The political uncertainty Any market today especially in a very changing world requires that people and all the players that involved be very much open to the new challenges that come along. The good and most important part is to foresee a certain future that is full of uncertainties. These uncertainties include but not limited to: political uncertainties, environmental uncertainties, consumer behavior (MacGillivray, et al., 2006, pp. 85-139). If there is something that is hard to predict how it will be and how it will impact on anything, then it is politics. Today, any economy may be celebrating the abundance of peace and tranquility and in the next minute the whole land is full of cries, sufferings and pains of war. This is not something new in most countries. People suffer seriously without discrimination when politics go sour. Apart from war, there is the reality of politics influencing the government’s decision being affected. Whatever the cause for alarm, the reality is that politics is very unpredictable. When other sectors are directly or indirectly affected by politics, the world of business gets a share of the same. Countries are known for amending their constitutions. They are too known for making legislative regulations that either promote or prohibit the activities of national or multinational companies/organizations in the country in question. The corporations that are preferred by the government in question will enjoy some great support in its undertakings. Any company or business will have to either accept the near punitive requirements that will be imposed on it or close down in that region. The latter has always been the trend. There is a likely hood of some stiff reluctance by those countries that have already raised an alarm about the red bull as a product. One can imagine how resistant the Swedish government would be in giving permit and the license to relation energizer brand of an energy drink. Considering that energizer is still owned and distributed by the same group of people that manufactured red bull; an energy drink that the Swedish government has at one time linked with the death of three young men. They would still be reluctant to be as gullible to enter into another ‘life threatening agreement’ (Simpson, et al., 2009, pp. 63-105). Another thing that any political entity can do is to ban and criminalize the consumption of energizer as an energy drink. It may be founded on the wrong notion that a company that manufactures red bull –a lethal drink- is also capable of producing an equally lethal drink in the pretence of the energizer. The implication of this is that those individuals who believe in a company than to the products themselves will be forced to take it while in hiding. The governments are also capable of changing their taxation rules. At first the governments may pretend to be very good to lure investors, only to adopt very unfair treatments to them later. In a situation where such a case is likely to happen, it may be good not to invest heavily. Environmental uncertainty The other strategic uncertainty is in the environmental sector. Earthquakes, floods, storms, drought are some of the issues energizer would have to consider and reconsider if it is to make any meaningful progress. These are some of those factors that one may under value as points of considerations but one which may bring a very devastating effects to an energy drink industry. One that deals with energizer the type of red bull, then it is very vital. Very devastating earthquakes may destroy much of the infrastructural developments that a company may have put into place. Taking into consideration that energy drinks are not basic diet requirement but rather a supplement, and then there can be a danger in when natural catastrophes demand that emphasis must be to only the basic foods and drinks that human beings require to live. Whether red bull or energizer, it would have to be adversely affected. This may be both voluntarily or involuntarily. Any disposable income by the affected population would mean that they spend much of it checking the devastating effects of say the earth quake (housing , clothing, hospital bills, mitigation) .It would be very illogical to come across dozens of people consuming energizer while the spend their nights out in the cold. Only sick people mentally would choose the luxury of an energy drink at the grave expense of life outdoors (Vining, 2011, pp. 63-105). The company may also decide to invest in a country only for it to be hit by drought. Would people go for energizer or for a plate of food? There is no dispute here. Majority of people who do really care about their health would go for food. Does this mean that energizer should not be taken to the very far its presence can without fearing these and other uncertainties? The truth is that the company should never fear to risk. There is a popular statement that if you risk nothing you should consider as being the greatest risk. Things come in the course of work. The pricing should be a great factor to put into consideration. The mentioned environmental issues are very likely to alter the priorities in the bargaining power of the customers. The company may think of changing the capacity of the retail cans to take care of the very poor but a loyal and a very wiling consumer of energizer. If that is going down so low, then the company y can think of engaging in advertisement that rewards only the lucky but loyal customers. These promotions can run for a duration that the company is much willing to be in the said region. The duration may also be structured to only run for a very specific period of time (Lee, et al., 2012, pp. 1785-1795). Environmental uncertainties and the political uncertainties are the major ones in the strategic uncertainties. All in all the change of consumer behavior cannot be underestimated in an industry that is dealing with energy drinks. Assuming that people wake up one morning with a decision never to take energizer since it is a luxury what is to happen next? Addressing this concern will go along to making all the players involved in the marketing of the energizer have sleepless nights. (Lethbridge, 2011, pp. 1-9) Therefore looking at these uncertainties, it is very vital for any company to labor in making a good rapport with the governments, corporations, agencies and political entities in those lands it is willing to register its presence. There is no shortcut to this. If these secondary determinants had been approached, the fierce criticism that red bull could not have been so. France, Denmark, and Norway could perhaps have given Red bull rights and freedoms to extend beyond the pharmacies only. This is what all must appreciate as the power of strategic management (serials, 2001, p. 39). References Alford, C., Cox, H. & Wescott, R., 2001. The effects of red bull energy drink on human performance and mood.. Amino acids, 21(2), pp. 139-150. Coleman, W. F., 2009. ICE Featured Molecules - Molecular Models of Components in Red Bull Energy Drinks. Journal of chemical education, 86(3), p. 400. Eckerson, J. M. et al., 2012. Acute Ingestion of Sugar-free Red Bull Energy Drink has no Effect on Upper Body Strength and Muscular Endurance in Resistance Trained Men. Journal of Strength and Conditioning Research, p. 1. Harris, D., 2013. Red Bull Drink Raises Red Flag. ABC NEWS, july 18. Hoflander, J. G., 2011. 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