Red Bull Situational Analysis Essay
Red Bull Situational Analysis
Red Bull is a privately owned company, producing and distributing the Red Bull energy drink to more than 165 countries worldwide. The company was founded by Dietrich Mateschitz in Austria in 1984 and launched Red Bull onto the Austrian market in 1987. Since then more than 35 billion cans of Red Bull have been consumed. Red Bull employs over 8,900 people throughout the world, its corporate headquarters are located in Fuschi am See, Austria. (N/A, 2012).
This report focuses specifically on the New Zealand distribution and marketing of this product.
Red Bull New Zealand Ltd. is the local unit of the international giant that is Red Bull. In 2010 Kiwi’s bought $30.3 million of Red Bull, this was up 7.5% from the previous year. In the same year the company claimed 20% of the country’s energy drink market share, its main competitor was ‘V’ who held 60% of the market share. (Underhill, 2011).
The drinks are marketed to generation Y (15-30 year olds) through association with extreme sports and music. Red Bull is stronger in the ‘night-time’ market, where it is a popular mixer for alcoholic drinks, while V targets what Bergstrom calls the daytime market. (Underhill, 2011). This is a very easy target market to manipulate with marketing strategies as teenagers are often very concerned about being socially accepted whether it is through what sports they play, music they listen too, or going to nightclubs and partying, all of which Red Bull can be found very easily.
Red Bull was arguably the creator of the ‘energy drink market’ as it was one of the first energy drinks to be made and certainly the most popular in history. Since the launch of Red Bull there have been many companies trying to create their own products that can compete with it. Globally, nothing comes close to competing with its 70% market share. However in New Zealand, Red Bull competes with V, the energy drink sold by Frucor, which claims 60 per cent market share and boasts ingredients including taurine and guarana, a potent source of caffeine.
While Frucor does not separately disclose sales for V, it is selling about $90m of the drink a year, based on results of Red Bull, which has 20 per cent of the market, selling $30.3 million. (Underhill, 2011). Red Bull as a product has many strengths, which increase buyer demand. Buyers feel the physical need to buy Red Bull such as when they are feeling sleepy behind the wheel of a car. Socially people feel the need buy Red Bull because of the many extreme sports red bull associates itself with.
Red Bull receives a lot of publicity throughout the media, mainly to do with health issues. This causes controversy over the drink, and is considered a weakness. The media often report that Red Bull is unhealthy and damages your body. The media often targets parents, telling them that it is harmful for teenagers and children. This being Red Bulls target market has a very negative impact on the company.
Potentially there are some future threats for Red Bull. Generation Y, their target market will before long grow older. This raises some concerning questions. Will generation Y still buy Red Bull when they have out grown Red Bulls target market? Will Red Bull be able to develop marketing strategies that will persuade the upcoming generation? Or will they find something else? Another threat is that Red Bull focuses all their time and energy into the one product, whereas their main competitors (Coca Cola etc.) have many products. At present this strategy is a major part of Red Bull’s success, but if in the future Red Bull’s market share suddenly decreased, they will have nothing to fall back on.
There are many opportunities for Red Bull. There are thousands of sports out there for them to sponsor and therefore further their advertising and marketing. Not to mention that there is certainly more extreme sports to be created in the future. They can and will continue to expand their product on a diverse scale. Perhaps they could develop another product, to expand their company.
I believe Red Bull has a very unique marketing strategy that works perfectly for the product they sell. That being said, who know what will happen in the future. My recommendation would be that they begin development on another, or many more, products in order to safeguard the company from a situation where Red Bull loses their strong market share.