The Unique Nature of Red Bulls Flavor and Packaging - Essay Example

RED BULL The unusual or unique nature of Red Bull’s flavor and packaging may be a competitive advantage, but it is not sustainable. Therefore, tofocus on sustainable advantages, Red Bull needs to focus on price and promotion: it still has outsider status compared to more giant competitors such as Coca-Cola or Snapple. The core competence of the company appears to be grass-roots marketing, judging by the case. Coming from this initial perspective of core competency, one can also assess the strategy of possessing first mover advantage. First mover advantage is also about centralizing competitiveness and becoming more diverse as a growth strategy. “Diversified companies have broader missions and business definitions than single-business enterprises. The entrepreneurial challenge in developing a strategic vision is to think creatively about how to prepare a company for the future” (Manage, 2003). This preparation for the future, above all, needs to be based on realities rather than just dreaming. #2 Red Bull has not bought out any other successful products, other than Red Bull and its diet incarnation. In terms of explaining why not, one can look to the case’s presentation of the discovery (much the same way America was so-called discovered, with other people living there) of Red Bull’s unique flavor. “Mateschitz, international marketing director for Blendax, a German toothpaste producer, encountered Krating Daeng, a tonic syrup that Red Bull Beverage Company had been marketing in Thailand for years” (Red, 2009). This was one, rather than a group, of tasty Thai tonic syrups; as a result, Red Bull has one beverage which has been strikingly successful; the company does not presently even need a more diverse product base, although it certainly will in the future. #3 In terms of the reasons for a high degree of customer loyalty at Red Bull, one can go through the Marketing Mix of price, product, promotion, and placement. Internally, some companies have strict and transparent controls, while others may not. While the focus in general is on the effectiveness of internal controls, the specific components of internal control are by no means consistent across all energy drink companies. Pricing can be differentiated to segments, with premium pricing being established for Red Bull. Placement has been mentioned in the case, in terms of grass-roots marketing as well as other channels. Ultimately, the company employs product positioning along lines of customer segmentation to reach groups who are likely to spend money on energy drinks. “Business strategy concerns the actions and the approaches crafted by management to produce successful performance in one specific line of business; the central business strategy issue is how to build a stronger long-term competitive position.” (Strategic, 2008). So far, Red Bull’s strategy has resulted in a very strong competitive position; the challenge is making it long-term. Pricing can be differentiated to segments, with premium pricing available. Placement has been mentioned in the case, in terms of vending machines as well as other channels. Placement needs to be done in terms of two segments for target marketing, individual buyers and representative buyers. The next step in product positioning is to determine how to convince these segments that they will be making a wise decision in buying this particular kind of energy drink, which is better than the competitors’ choices, and that they can rely on the company to meet their needs. To do this, one needs to keep in mind that in terms of the Marketing Mix, there must be a balance of customer segmentation and product segmentation. And in terms of promotion, as mentioned in most marketing circles, children and young adults are an important target market. The promotion strategy focuses on grass-roots advertising almost exclusively, since personal selling is less of an option and sales promotion is limited to the purchaser. The advertising is visible mainly in the form of sponsorships aimed at the consumer, preferably of popular events. #4 As a category, energy drinks are in the early growth phase of the product life cycle (PLC). To competitors, this means that Red Bull is showing strong growth, but also that it is the new kid on the block, when compared with competitive beverages that have been along for decades or even centuries. Marketing efforts must also include the assumption that this is a dynamic business environment and can be very stifling to competition. Both large and small energy drink makers in the early stages of the PLC need to be closely aligned to consumer needs as well as being aligned to the concept of not being a reactionary to industry change, but rather an agent of industry change. This may be difficult for many larger, cost-effective and stable companies to achieve, because in the past they have based performance initiatives on the perception of dealing with change in the external environment while still maintaining a cost-effective internal structure. It may be more tenable for these entities to take a more hands-on approach to change in the external environment. “Mateschitz knows that it will take more than just moon power to stay ahead of the competition in the energy drink market. You can bet he will be up all night, sipping Red Bull and developing new product ideas” (Red, 2009). #5 Customer segmentation is important to Red Bull because it needs to know its target market, which is a youth market. Product segmentation is also important, because placing the product is key. There are two basic Red Bull product lines, each with individual characteristics that will appeal to the given customer segment (diet or non diet). Customers must be grouped in a way that is meaningful to the future profits and growth of the company, in terms of its ability to find out what the different segments want and provide it. Market segmentation is also important, though not as much so. Therefore, this product line should be aimed at the consumer, but should have the trappings of sense and value so that a parent does not mind buying it for their teenager. “It has also found that young people in local hotspots are open to trying new things and help generate a buzz about Red Bull. However, the company does not endorse all the new things people try, like mixing the product with vodka or tequila” (Red, 2009). For Red Bull, marketing will be reflected mainly in packaging and product segmentation that highlights, at the same time, the healthy attractiveness of the energy drink to the adult, and the fun factor to the young adult. From this perspective, there is no new or old segmentation strategy in the face of competitive threats represented by other energy drink companies: there is just the bottom line. Traditions are also financial, which can potentially mean less dynamism when a structure is dividing marketing into advertising and promotion segments with different short- and long-term agendas for each function, in terms of profit. #6 If we want to take Burn to the next level, we need an offence strategy that will position and differentiate our product, and take away from some of the extreme amount of attention that our competitor Red Bull is getting. To do this, we are going to have to do something that Red Bull has already done: effectively take our energy drink and sell it to a global market at premium prices. Whether or not an expansion like this is party to the rules of success and failure on a pattern of individualized risk or whether it is a matter of core competency issues is a question that has polarized many thinkers into two oppositional camps; a balance can be sought between the two extremes by recognizing that there are many different situations in which a business can succeed or fail that are circumstantial and would be unchanged no matter what the planning structure. There are many businesses, such as Burn, that have had core competency but have not been able to expand internationally successfully like their competitors. Other businesses like Red Bull are more able to expand. What seems to be the crucial issue is one of the planning stage that follows the establishment of core competency. Having to choose a most important strategy for positioning and differentiation at Burn, I would posit that the planning stage would be most correct, and therefore that businesses should look to the leveraging of core competencies to guide them in international expansion moves. Businesses are moving more and more quickly to take advantage of key situations after establishing this core competency, but they still face many risks. “At the same time, developed markets have experienced growing competition as well-funded corporations enter the market with extensive resources, allowing them to rapidly gain market share with new, better quality production, massive marketing campaigns and aggressive acquisitions” (Manage, 2003). These opportunities are mixed with the risks that are inherent in a business that does not adequately prepare and plan for an international move through careful strategic steps, after establishing competency. REFERENCE “Red Bull—Mini case.” “Manage Threats.” IMS, 2003. 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