Red Bull Marketing Strategy

1. Executive summary

Red Bull is most popular energy drink of the world. They sold more than 5 billion cans in 164 countries all over the world in 2013. The brand has a very good image and is category leader. Red Bull is following a high price/quality premium product strategy, but there are a lot of competitors with lower prices liker Monster or Rockstar. The marketing strategy includes a lot of promotion and well-targeted sponsorship, especially with extreme sports. The aim target markets are young urban males ranging from 15 to 30 years old.

2. Introduction to the project

¹ ”Red Bull is an energy drink sold by Austrian company Red Bull GmbH, created in 1987. In terms of market share, Red Bull is the most popular energy drink in the world, with 5.387 billion cans in 2013.” ¹ http://en.wikipedia.org/wiki/Red_Bull

04/10/2014

History
The idea for drinks enriched with taurine come from japan. Dietrich Mateschitz the inventor of Red Bull imports the idea from Thailand to Europe. During a visit in Thailand he realizes that it was easier to get over the jetlag with an energy drink.

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He took this idea and the marketing concept, modified the ingredients to suit the tastes of westerners and founded Red Bull GmbH in 1987 in Austria. Based on the good marketing strategy with alternative scenes like techno music, mountainbiking or snowboarding Red Bull got very successful.

Product details
Red Bull is a lightly carbonated drink that enhances mental and physical activity. The standard serving size of Red Bull is 8 ounces, the serving contains 110 calories, 27 grams of sugar and 80mg of caffeine.

Objectives of the paper
The following paper is about the situational analysis and recommendation of the marketing plan of Red Bull. It describes the marketing plan that includes the Business Mission Statement, Situation Analysis, SWOT Analysis, Objectives and the target market. Next chapter is about Positioning which explains the process that influences potential customer´s overall perception of a brand, product line, or an organization general. Furthermore the paper is about the four P´s that are known as the Marketing Mix: Product, Pricing, Place, Promotion. Last chapter is a little conclusion with recommendations of Red Bull.

3. Marketing Plan

3.1 Business Mission Statement
→ The foundation of the marketing plan is the mission statement, which answers the question “What business are we in?” ² “We are dedicated to upholding Red Bull standards, while maintaining the leadership position in the energy drinks category when delivering superior customer service in a highly efficient and profitable manner. We create a culture where employees share best practices dedicated to coaching and developing our organization as an employer of choice.” ²http://joseph-ramos.blogspot.com/2012/09/chapter-1-history-and-mission-statement.html 04/10/2014

Red Bull maintains over 40% of the market share for non-alcoholic energy beverages and has proven to be a strong competitor against soft drink goliaths Coke and Pepsi. The key markets include the United States, Germany, Brazil, Japan, Turkey and Scandinavia. Red Bull is targeting the Western Europe and the USA markets, as well as the growth markets of Brazil, Japan, India and China.

3.2 Situation Analysis

→ Marketers must understand the current and potential environment in which the product or service will be marketed. Red Bull is present in more than 164 countries throughout the world. That´s a big challenge for planning, logistic, and cultural receptivity varies from place to place. The products are available all over North America, South America (except Uruguay) and much of Europe. But there is still room to expand to countries in Africa and the southern pacific regions. Focus should be placed on the areas where event tour stops will take place for marketing campaigns. Because event marketing like sponsoring extreme sporting events is an important factor of the marketing strategy. Especially regions which are inherently suited for extreme sporting events should been focused.

Sales development graph Red Bull
The graph shows the sales development in percent from 2000 to 2012 compared to the previous year. The x-axis indicates the year and the y-axis the sales development. ³
³ http://de.statista.com/statistik/daten/studie/257247/umfrage/umsatzentwicklung-von-red-bull/ 04/10/2014
3.3 SWOT Analysis

→ Identifying internal strengths and weaknesses and also examining external opportunities and threat

S ⇾ Strengths
W ⇾ Weaknesses
O ⇾ Opportunities
T ⇾ Threats

Strengths
Brand Name: Red Bull is the world´s most popular energy drink and with effective marketing tools product has created a brand image. The company sponsors extreme sport events, for example Audi Sportsline for the DTM or KTM road and Dakar rally bikes. They also have some team ownerships like New York Red Bulls or FC Red Bull Salzburg (both soccer teams). But the most effective marketing campaign was the foundation from own Red Bull events. A lot of them are very famous; some examples are Red Bull crashed ice, Red Bull cliff diving world-series, Red Bull x-fighters.

Category leader: Red Bull has established a strong consistent brand image globally. They created a new product category in the US market and have 40% of market share currently. It is synonymous with energy drinks in many countries. Red Bull is the global market leader within the energy drink industry with the largest sale and market share. Brand quality: Red Bull did not achieve the success and gained maximum market share only because of marketing tactics, because product quality has also shared in this success of the brand. The strong and fresh taste has become a brand identity.

Marketing strategy: The company has been employing a lot of promotions and well-targeted campaigns/sponsorship which have greatly helped the brand on past to expand and increase consumer brand awareness. Broad geographic presence: Red Bull has a broad geographic presence, which should ensure positive long-term growth. Recognizable symbol: Red Bull has a strong long-term brand image with strong customer loyalty.

Weaknesses
High Price: The products are above the average price of energy drinks. Consumers tend to think twice at the time of purchase. Compared to the competitors Red Bull is nearly twice expensive as Monster or Rockstar. Red Bull8.3 fl oz1,99 – 2,25 $

Monster16 fl ozapp. 2,50 $
Rockstar16 fl ozapp. 3,00 $
Category limitations: Compared with other soft drinks companies Red Bull has the smallest product category. The competitors have many other flavor varients and categories. Red Bull is the only brand in the market with limited flavors and offers no variety in the product. Being one brand product, it is difficult to capture the market. For example Monster has 13 different Energy Drinks and 7 Java Drinks. These category is new and is a mixture out if coffee and energy. Lack of Innovation and Unique Selling Position: Within the industry there are number of competitors who are utilizing innovation in product and unique selling product. Red Bull, on the other hand, is less innovative and does not use unique selling position. Copy problematic: Red Bull´s recipe is subject to copy because of a lack of patent. Demographic development: Most of the Red Bull consumers are under 30, that could be a problem in the future because the demographic development is getting older. Controversial: The relatively high caffeine and taurine contents makes the brand highly vulnerable to regulatory controls.

Opportunities
Extension of Product: Red Bull is a single product on the market, there is an opportunity for it to extend its products line by developing more innovative products. Offering new flavors and format could help to improve the market shares. Broaden target group: Because of the demographic development it could be a possibility to broaden the target group to include older demographics by overcoming negative attitudes. For example with healthier products or another style of advertising to response older people. Expansion into more countries: Emerging markets represent newer geographic for Red Bull´s expansion. The market share in Brazil, Japan, India and China is very low. Red Bull could improve the sales with more advertise in these countries.

New advertise campaigns: Red Bull could use non-traditional opportunities in grocery stores and other points of purchase to get more consumers. Or sponsoring other kinds of sport events. New platforms: In-house media production like Red Bull Media House could continue creating Red Bull original content to maximize control. ⁴ Red Bull Media House is a multi-platform media company with a focus on sports, culture, and lifestyle. As an umbrella brand, we offer a wide range of premium media products and compelling content across media channels as diverse as TV, mobile, digital, audio, and print, with core media offerings that appeal to a global audience. ⁴ http://www.redbullmediahouse.com/company.html

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New production: To make the retail price more competitive Red Bull could build new production facilities in emerging countries. For example Asia or Western Europe could be countries for a cheaper production. Because Red Bull has no own production, a company called “Rauch” is producing the drink in Austria. Even for exporting Red Bull is not producing a concentrate, instead of they shipping it finished in the cans. This generates high costs for the production and shipping.

Threats
Giant competitors: The presence of large and giant competitors can affect the market position of Red Bull. Monster represents the biggest threat as it contains natural ingredients, which seems more desirable than Red Bull for some consumers. Consumer awareness of health: In case of consumer awareness related to health, it could be possible that consumer give up to drink Red Bull. Maybe consumers rather drink healthier natural drinks than Red Bull in the future. The market for healthy drinks is getting bigger and more and more people prefer to drink healthy. Aging demographics: The aging target demographic could leave brand with less share in upcoming generations. Negative publicity: The worldwide media reports about Red Bull as harmful for health.

Red Bull has high caffeine content in the drink, which if used in excess can be harmful. Moreover in many countries there are strict rules on the products that contains caffeine. Parents also state that some components can be dangerous if consumed by their teenagers. For example Red Bull had been banned in Norway for a couple of years because of the high caffeine content. High marketing costs: Maturity in developed markets makes promotion harder than in the past, including higher marketing cost. Red Bull spends more then one 1,3billion $ in marketing per year.

3.4 Objectives

Red Bull has launched a range of products including Red Bull Cola in 2008 and Red Bull Energy Shots in 2009 to reach more customers. Today Red Bull has annual sales of around 4 billion cans in more than 160 countries. Red Bull has a distinctive marketing strategy. This type aims constantly evolve and develop the brand. The company tries to engage with consumers using new and exciting channels of communication. In recent years social media has become a vital marketing tool and it´s going to be more important in the future. It´s increasing popularity, predominantly with young audiences has had a huge impact on modern marketing techniques.

Negative publicity
⁵ Various media worldwide have reported that Red Bull is harmful for one´s health. The French Health Authority has gone one step further by not approving the Red Bull product sale in France, believing it is not in compliance with the country´s health and food regulations. Other media reports have ben targeted towards parents stating the caffeine levels in Red Bull can be dangerous if consumed by children/teenagers, who are exactly the products target audience. Red Bull has gone to the extremes of seeking scientific proof that its product is safe for consumption and released numerous statements to curb the negative attention. ⁵ http://gives-u-wings.blogspot.com/2012/01/swot-analysis.html 04/10/2014

Inability to move forward with the product
Red Bull is known for its innovative advertising. The aim of attracting 15 – 30 year olds is working, but for how long? Combine this with their large investment in extreme sport events the question is what will be their next stop keep on being innovating and attracting.

3.5 Target Markets

Red Bull markets to young urban males ranging in age from 15 to 30 years old. These males live in a constantly exciting and adventurous lifestyle. They “ life on the edge” or try and they are usually average build. Red Bull males participate in competitive and extreme sports or any other kind of adventurous and recreational activities. Competitive games in the video game industry are also gravitating towards the products to keep them alert during tournaments. Red Bull defines the whole of these consumers as Generation Y because they are not only active males but also active students who need the energy to study all night long. Red Bull also have a secondary target market of older consumers in general ranging from 25 to 45 years old.

Whether this may be a business executive finishing an annual project or a truck driver. These male came from all walks of life and financial status. They live in suburban and rural areas and have different levels of education. They all share physical and mental exertion in common and getting their adrenaline pumping. There is also fairly new category, it´s called the clubber. The people find out that Red Bull can be used as a very good with alcohol. In my opinion it is almost impossible to find the right target group, the reason for that is because of the various applications of Red Bull. A typical Red Bull drinker is dynamic and active and most of them are males.

4. Positioning

→ The development of any marketing mix depends on positioning, a process that influences potential customer´s overall perception of a brand, product line, or a organization general Red Bull represents a new category of drinks, the energy drinks. The company positioned as a premium/high margin brand. The price is much higher than the products from the competitors, it´s a premium price product. It is a unique functional drink. Promising and delivering benefits that no other drink can offer. Compared to the competitors Red Bull is nearly twice expensive as Monster or Rockstar. The price expresses superiority od Red Bull and further on it proves that there is no substitute. The positioning policy of Red Bull is: premium product, premium price and premium profitability.

5. Marketing Mix

5.1 Product

The normal Red Bull is served in 8 ounces aluminum can. But now their also
offer different sizes and flavours. The can has a special form compared to a normal can, it´s thinner and longer (everybody knows the form). The package design resembles a silver and blue racing flag with two bulls facing each other in the center while the Red Bull title treatment sits beneath. Red Bull used the new can as an innovation for new and attractive packaging. The can is different and unique from other brands in the market. Red Bull is made to improve performance, concentration, reaction speed and vigilance. It contains taurine, glucuronolactone, naturally occurring antioxidants and carbohydrates respectively, that help to detoxify the body. The beverage also helps to revitalize the body through the use of caffeine and B-group vitamins which help to boost energy levels and metabolism. Some people say Red Bull tastes like gummy bear cough syrup, it´s definitely an acquired taste. The founder Mateschitz says: “ Red Bull isn´t a drink, it´s a way of life.

5.2 Pricing

The average price for a 8 ounces can is about 1,99 – 2,25 $ in the United States. In other countries the price could be a bit different. Red Bull has always followed high pricing policy. It´s twice expensive compared to the competitors. But they are selling well that Red Bull does not participate in the price-off regularly seen in different flooded beverage industry.

5.3 Place

Red Bull is distributed in almost every supermarket over the world in more than 160 countries. It also has a lot of sponsoring deals with nightclubs, sport clubs, bars and companies. The aim is finding consumers at the right time at the right place in the right situation. They focus on areas where an energy boost is needed. Red Bull believes consumption is driven by situations, not sociodemographics. The entry strategy is based on exclusivity, an offspring if Maslow´s hierarchy if needs. For example when Red Bull came to the U.S. it focused its pre-seeding efforts in New York City, where the brand was already hyped by the large European influence. Red Bull was well stocked in clubs, where it became the drink of choice.

5.4 Promotion

Red Bull is the biggest brand in the energy drink market. They use an aggressive strategy to promote their products. Their two main tools to promote the Red Bull products are sponsoring and free sampling. Red Bull often gives free drinks to attract new costumers. For example at universities or sport events because there are most of the people from the target group. Red Bull send out their sampling girls and boys to deliver free Red Bull. They drive in the famous Red Bull cars und are using the Red Bull fridges. Red Bull also provides sponsorship for numerous parties, social events and especially sport events where they supply free and discounted Red Bull as a quick energy revitalizer and smooth chaser for alcoholic drinks.

6. Conclusions and Recommendation

The marketing strategy of Red Bull can be considered as one of the most successful one over the years. The central component in all marketing activities of Red Bull was sponsoring leading athletes of extreme sports and branding refrigerated sales units to complete their marketing strategy. However, in my opinion Red Bull has to change or extend the marketing strategy to compete with other energy drink brands. In the current harsh competition market there are a lot of different energy drinks available. It´s going to be hard for Red Bull to stay as the first choice energy drink for the costumers. Therefore I think it is time to advertise more in general public to response a bigger target group. They also could use tools like billboards, banner ads or posters to maximize the contact with costumers. I know they are still doing it, but mostly on sport events. Furthermore Red Bull can increase advertises on the Internet. Nowadays most of the people are using the Internet every day and they are spending lots of hours for surfing in the world wide web. Red Bull could create some extreme sport online games and advertise on appropriate websites that are quite familiar with students and business people in different countries. To sum up Red Bull has a lot of opportunities to improve their marketing strategy.

10.Bibliography

1. Marketing Strategies, Tactic, and Techniques
A Handbook for Practitioners
Stuant C. Rogers
ISBN: 1-56720-411-2
Published in 2001

2. Wikipedia
http://de.wikipedia.org/wiki/Red_Bull
04/10/2014
http://en.wikipedia.org/wiki/Red_Bull
04/10/2014

3. Red Bull Media House
http://www.redbullmediahouse.com
04/10/2014

4. Tagesanzeiger
http://www.tagesanzeiger.ch/wirtschaft/Die_Marketingmaschine_Red_Bull/story/22743400 04/10/2014

5. Red Bull
http://www.redbull.com/us/en
04/10/2014

6. Gives u Wings
http://gives-u-wings.blogspot.com/2012/01/financial-report.html 04/10/2014

7. Monster Energy
http://www.monsterenergy.com
04/10/2014

8. UK Essays
http://www.ukessays.com/essays/business/analaysing-current-market-strategy-for-red-bull-and-future-strategies-business-essay.php 04/10/2014

9. Red Bull Marketing Campaign
http://www.slideshare.net/CreativeDunning/red-bull-marketing-campaign 04/10/2014

10. Red Bull Situation Analysis
http://www.studymode.com/essays/Red-Bull-Situation-Analysis-820871.html 04/10/2014

11. Joseph Ramos
http://joseph-ramos.blogspot.com/2012/09/chapter-1-history-and-mission-statement.html 04/10/2014

12. Statista
http://de.statista.com/statistik/daten/studie/257247/umfrage/umsatzentwicklung-von-red.bull/ 04/10/2014

13. All of the explanations after “→” are from the book MKTG
Student Edition
Lamb/Hair/McDaniel
ISBN: 978-1-285-09186-0
Published in 2013