A Global Strategic Marketing Analysis of Red Bull The Energy Drinks Industry

Global
Strategic
Marketing:
An Analysis of Red Bull
By:
Sam Deegan
(20041091)
Assignment
Global Strategic Marketing
Red Bull
Declaration
I certify that this assignment is all my own work and contains no Plagiarism. By
submitting this assignment, I agree to the following terms:
Any text, diagrams or other material copied from other sources (including, but
not limited to, books, journals and the internet) have been clearly acknowledged
and referenced as such in the text. These details are then confirmed by a fuller
reference in the bibliography.
I have read the sections on referencing and plagiarism in the handbook or in the
WIT Plagiarism policy and I understand that only assignments which are free of
plagiarism will be awarded marks. I further understand that WIT has a plagiarism
policy which can lead to the suspension or permanent expulsion of students in
serious cases.
Signed ___________________________
______________
Date
Assignment
Red Bull
Contents
Declaration............................................................................................................ 1
Table of Figures...................................................................................................... 4
1.
Introduction..................................................................................................... 5
2.
Analysis of the Energy Drinks Industry............................................................6

2.1.
Background............................................................................................... 6
2.2.
Industry Size, Growth & Profitability..........................................................6
2.3.
Competitive Scope.................................................................................... 7
2.4.
Market Leaders.......................................................................................... 7
2.5.
Sales Model & USP.................................................................................... 8
2.5.1.
Market Segmentation..........................................................................8
2.5.2.
An Evolving Unique Selling Point.........................................................8
2.5.3.
Sales................................................................................................... 9
2.6.
3.
4.
Key Drivers in the Energy Drinks Market.................................................10
Company Analysis of Red Bull.......................................................................10

3.1.
An Introduction to Red Bull......................................................................10
3.2.
The Aims, Objectives & Values................................................................11
3.3.
Company Milestones............................................................................... 11
3.4.
Red Bulls Product Range.........................................................................13
3.4.1.
Products............................................................................................ 13
3.4.2.
Product Positioning...........................................................................13
3.4.3.
Target Market.................................................................................... 13
3.4.4.
Competitors/Substitutes...................................................................14
3.4.5.
Marketing Methods...........................................................................14
Conclusion..................................................................................................... 16
4.1.
Industry Analysis..................................................................................... 16
4.2.
Company Analysis................................................................................... 16
Bibliography......................................................................................................... 17
Appendices.......................................................................................................... 20
Appendix I P.E.S.T.E.L of the Energy Drinks Market........................................20
Political.......................................................................................................... 20
Economic....................................................................................................... 20
Social............................................................................................................. 20
Assignment
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Technological................................................................................................. 20
Environmental............................................................................................... 21
Legal.............................................................................................................. 21
Appendix II S.W.O.T........................................................................................ 21
Strengths....................................................................................................... 21
Weaknesses................................................................................................... 21
Opportunities................................................................................................. 22
Threats.......................................................................................................... 22
Assignment
Red Bull
Table of Figure
Figure
Figure
Figure
Figure
1 - Functional Sales Performance Overview................................................6

2- Largest Energy Drinks Manufacturers Revenues....................................7
3 - Energy Drinks Sales Breakdown.............................................................9
4 - Company Milestones............................................................................12
Assignment
Red Bull
1. Introduction
This Report has been undertaken as part of the continuous assessment for the
Global Strategic Marketing module. The report consists of two individual sections,
the first section examines our chosen industry, the energy drinks industry and
analysis it in terms of its size, scope& sales model. In the second section we take
a look at our chosen company operating within the industry, for this we have
chosen Red Bull. In this section we shall take an in-depth look at how the
company positions itself within the market, how it differentiates itself from
competitors, what market segment it targets & how it reaches them.
Assignment
Red Bull
2. Analysis of the Energy Drinks Industry

2.1. Background
To analyse the scale & scope of the energy drinks Industry we must first define
what an energy drink is, according to(Merrieam-Webster Dictionary, 2014)an
energy drink is:
usually a carbonated beverage that typically contains caffeine &
other ingredients (such as Taurine & Ginseng) which are intended to
increase the drinkers energy levels
The first recorded mass produced energy drink was produced in 1904. This
energy drink is now one of the most famous brands on the planet, Coca Cola.
Coca Cola was the first drink ever marketed as an energy booster & contained
cocaine at the time of release. Prior to this the only stimulant drinks available
were natural ones such as Tea & Coffee. Over time the landscape of the energy
drinks market has changed, the first modern energy drink was sold in 1987 and
its maker remains the dominant player in the market to this day, which is Red
Bullwhich we look further into in the company analysis.
2.2. Industry Size, Growth & Profitability
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Red Bull
The energy drinks market has boomed in recent years, according to (King,
2013)energy drink
Consumption has
grown on average
10% since 2007
bringing
consumption
up
1.5 Billion Litres
to
4.5
Billion
Litres in the space
of just fourshort
years. Considering
these figures the
energy
drinks
industry is clearly
a Bull market,
which is in a
phase of rapid
expansion
as
corroborated
by
Figure 1 to the
Figure 1 - Functional Sales Performance Overview
right. This growth
should not stifle in the near future due to the burgeoning B.R.I.C.S economies
which will represent new growth regions as the present markets such as North
America mature. A trustworthy Industry wide sales figure is hard to obtain in
relation to the energy drinks market, though (Zenith International, 2012)
estimates the market to be worth approximately $37 Billion, to put this in
perspective (Smirke, 2013) placed the total revenue of the global recorded music
industry at $16.5 Billion, which demonstrates the growth that energy drinks
industry has undergone.
2.3. Competitive Scope

Competitive scope is a concept developed by Michael E. Porter. Competitive
scope can be Wide, meaning the target market consists of many smaller
market segments or Narrow, meaning it is focused on a specific Niche(Porter,
1985). The Energy Drinks Industry itself focuses on a niche age group of 18-34
year old males (Ackerman, 2013), though various companies are attempting to
widen their age appeal due to the increasingly more crowded market & entice a
larger female consumer base. This means that the once narrow focus is slowly
widening, in part due to the existing aging customer base, and also due to more
mainstream sponsorships such as Formula 1.
Assignment
Red Bull
2.4. Market Leaders

The energy drinks market operates on an international scale. The International
market is an oligopoly which is dominated by a small number large players, this
is demonstrated below in (Figure 2). It is however clear that Red Bull & Monster
Energy are by far the biggest players. These companies are increasingly
obtaining new customers at the expense of soft drink manufacturers such as
Coca-Cola & Pepsi.
Largest Energy Drinks Revenue's ($ Millions)

5 Hour Energy
Full Throttle
AMP
NOS
Rockstar
Monster
Red Bull
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Largest Energy Drinks Revenue's ($ Millions)
Figure 2- Largest Energy Drinks Manufacturers Revenues
As a result we are seeing companies such as these exploiting their extensive

distribution channels to undercut many of the existing energy drinks makers,
examples of this include Coca-Colas Burn brand which is 40% cheaper than
current market leader Red Bull(Trefis, 2014), but is yet to develop its market due
to its relative infancy compared to the other brands.
2.5. Sales Model & USP

2.5.1.Market Segmentation
All the energy drink brands have tried to emulate the success of Red Bull& target
the same segment of 18-34 year old males (Ackerman, 2013). The methods used
to reach this audience usually include associations with various extreme sports
like Snowboarding, Skateboarding, F1and WorldRally Championship. Differences
between products are generally confined to price, can size & flavour, though
there is an expanding market for more concentrated shot versions. In terms of
price, energy drinks are generally far more expensive than other soft drinks,
Assignment
Red Bull
ofwhich Red Bull is far & away the most expensive brand, newcomers tend to try
undercut Red Bull to try achieve a greater market share.
Energy drink can sizes are steadily becoming larger as competitors attempt to
differentiate themselves. Using larger cans portrays an image of improved
value&highlights attempts to increase per capita consumption rates which are
generally quite low versus soft drinks(PR Newswire, 2013), this has been very
successful as this consumption figure has doubled since 2006. There is also a
growing segmented demand for new flavours, though the original energy drink
flavourstill holds 68% of the market share according to (Canadean, 2013), it has
shrunk from over 80% of the market share in 2004. This is where brands such as
Monster have traditionally had the most success in attracting customers from
Red Bull due to their limited range of flavours.
The newest threat to the traditional energy drinks brands is the emergence of
energy shots such as 5 Hour Energy. These energy shots aim to provide the same
benefits as the traditional energy drinks such as Red Bull & Monster, but in a
smaller package with fewer calories & sugar. The branding though is somewhat
more distinctive,5-Hour Energy positions itself as more of an energy supplement
than a beverage. Many of the players such as Red Bull & Monster have released
concentrated versions of their products to compete with these but as of yet have
not gained the same traction as 5 Hour Energy.
2.5.2.An Evolving Unique Selling Point

Energy drinks have underwent to some extent a perception change over the last
decade, originally they were seen as a functional short term energy fix, or a pick
me up to keep you alert for a short while, e.g. a late drive home. This functional
perception has dramatically changed & with it the unique selling point of these
energy drinks, to quote who is essentially the founder of the Industry, Dietrich
Mateschitz the Red Bull CEO, the U.S.P is now somewhat more philosophical:
What Red Bull stands for is that it gives you wings, which
means that it provides skills, abilities, power etc. to achieve
whatever you want to. It is an invitation as well as a request to be
active, performance-oriented, alert, and to take challenges. When
you work or study, do your very best. When you do sports, go for
your limits. When you have fun or just relax, be aware of it and
appreciate it.(Iezzi, 2012)
This is clearly far from its functional origins & aims to sell an extreme lifestyle,
hence the prevalence of extreme sports in the various brands advertising
portfolios. The brands no longer aim to sell you a liquid energy boost, but a piece
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of this wild & extreme lifestyle. This is why the various brands all try to outdo
each other in extreme sports sponsorships, because they must constantly push
this extreme image to stick out from the competition e.g. the Red Bull Stratos
spacejump.
2.5.3.Sales
As you can see from the figure below, the figures acquired from (PR Newswire,
2013) clearly show that the vast majority of sales come from purchases in local
shops. There is also significant amounts of energy drinks purchased from mass
merchandisers & warehouses, while not stipulated we believe that many of these
sales are to bars & nightclubs. This is due to the growing trend of mixing energy
drinks with spirits which is coming increasingly under scrutiny, due to a number
of high profile incidents(University of Michigan, 2013).
Energy Drink Sales Breakdown

5
10
Convenience Stores
Other
Mass Merchandisers
Drug Stores
13
Supermarkets
Club Stores/Warehouses
59
11
Figure 3 - Energy Drinks Sales Breakdown
2.6. Key Drivers in the Energy Drinks Market

There are a few key elements that can be drawn from a P.E.S.T.E.L Analysis (in
Appendix II), firstly the energy drink industry seems to have been very resistant
to the financial downturn of 2008, as its growth while slowed has continued
strongly. New growth is expected to come from the BRICS, the Middle East &
Latin America in the medium term. There is growing Identity crises within the
industry as all the competitors have merely replicated Red Bulls extreme sports
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Assignment
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image & accentuated it. This is making it increasingly more difficult to create an
individual brand.
Politically &socially the industry is receiving negative media attention due to the
high profile cases where energy drinks have been linked to coronary deaths. This
is resulting in political pressure to limit the places where these drinks are
available, placing sugar taxes to reduce their consumption & protecting younger
consumers from energy drink advertising. As a result of this & new healthy living
trends amongst consumers many energy drinks companies have released sugarfree & low-carb options. As a result the two main environmental pressures
appear to be Social & Legal, the industry itself for the time being is such a bull
market it ignores the current economic environment. Socially it is a rather mixed
bag generating both opportunity in demand for new segmented health conscious
products, while then negatively affecting the industry with public criticism of its
effects on coronary issues. Technologically & environmentally speaking there
seems to be little more pressure than any other industry to be a large cause for
concern.
3. Company Analysis of Red Bull

3.1. An Introduction to Red Bull
Red Bull was founded in Austria in the mid-80s by Dietrich Mateschitz, Dietrich
modified a functional tonic he found on his travels in Asia to suit western tastes.
Dietrich did this because he wanted to create a drink, which not just quenched
thirst but also had a functional benefit(Red Bull, 2013). It was with the foundation
of Red Bull that Mateschitz not only created a company which now has a
turnover $4,235 million a year, but a whole new industry which is now worth $37
Billion(Zenith International, 2012).Red Bull is a titan of the energy drink industry,
one which it has managed to create, dominate & grow intoa lucrative new niche
in the mineral drinks market right under the nose of traditional industry powers
such as Pepsi Co & Coca-Cola.
These companies have increasingly targeted the growing energy drinks market
as their own markets have begun to decline (Zmuda, 2014). The Red Bull brand
itself is incredibly fascinating &is built upon associating itself with a myriad of
teams events & people, probably to the point that it is now more recognised for
its values than it is for its product.It is ranked the 49 th most valuable brand in the
world according to(Eurobrand, 2014) ahead of other International brands such as
Facebook, Tesco & IKEA.This reflects the effort Red Bull put into brand building as
it reinvests 30-40% of sales in marketing(Passport, 2013). This brand has not
been built upon traditional marketing techniques, but by embracing modern
marketing techniques such as Ambush Marketing, Digital Marketing & closely
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Assignment
Red Bull
linked Team & Event Sponsorship from its very beginning. This makes Red Bull a
common topic of discussion by marketers & consumers alike.
3.2. The Aims, Objectives & Values

This section attempts to uncover the message that Red Bull conveys when
marketing itself to the masses, or more specifically to males aged 18-34. As
previously quoted in the Industry Analysis, Dietrich Mateschitz stated:
What Red Bull stands for is that it gives you wings, which
means that it provides skills, abilities, power etc. to achieve
whatever you want to. It is an invitation as well as a request to be
active, performance-oriented, alert, and to take challenges. When
you work or study, do your very best. When you do sports, go for
your limits. When you have fun or just relax, be aware of it and
appreciate it.(Iezzi, 2012)
From this statement we can draw the following conclusions, Red Bull associates
itself with the idea of Self-Actualisation that you must be all you can be & by
consuming Red Bull you are one step closer to this. Red Bull positions itself as
the tool to help you scale mountains, it for this reason that they associate
themselves with people who treat these mountains or other extreme
environments as their playground, or bend the environment to their will. The
company slogan reinforces this, Red Bull gives you (the) wings, & so all you
have to do is fly. It is clear form this that Red Bull values are based on:
Awareness
Mind Over Matter
Risk
Self-Actualisation
Self-Motivation
Success
3.3. Company Milestones

As you can see from the below milestones, which were taken from the official
site(Red Bull , 2014), there is an increasing focus on building the brand through
more mainstream sports such as F1 & football, as opposed to the extreme sports
Red Bull has traditionally associated with in the past. This highlights a growing
need to broaden the appeal of the product due to the number of competitors.
Also noticeable is the increasing use of success to mark milestones in the most
recent milestones, where in the past the company milestones were more focused
on participation or event creation.
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Assignment
Red Bull
Year
1987
1988
1989
1992
1994
Red Bull was Founded

The company began its association with extreme sports, holding an
extreme sports marathon relay race, which combined mountain
running, paragliding, kayaking & mountain biking
Red Bull began associating itself with athletes, the first being F1 driver
Gerhard Berger
The widely known Red Bull gives you wings cartoons begin, the first
featured Leonardo da Vinci creating the masterpiece known as Red
Bull
Red Bull began its Flugtag event, which involves everyday people
designing homemade gliders which are then demonstrated to the
public & judged on creativity, showmanship & the distance flown
This was the first year that Red Bull began to sponsor international
athletes in the form of top windsurfers Bjorn Dunkerbeck & Robby
Naish
Red Bull began to air its advertisements outside Austria
1995
Red Bull purchased a majority share in the F1 Sauber team & began a
10 year partnership
1999
Felix Baumgartner began his long relationship with Red Bull by

completing the highest recorded base jump off Petronas tower
2000
Red Bull is launched in the Middle-East
2001
The Red Bull Junior team was established, which has since produced
world champions such as Sebastian Vettel
2003
The Red Bull Air Races began
2005
Red Bull Racing was established after Red Bull purchased the Jaguar F1
team
2006
Red Bull Nascar established
2007
EC Red Bull Salzburg declared Hockey League champions

FC Red Bull Salzburg win the Austrian Football League
Red Bull Records established
2010
2012
Red Bull New York FC moved into their new Stadium the Red Bull Arena
Red Bull Racing driver Sebastian Vettel wins his first World
Championship
Felix Baumgartner jumps form the edge of space, breaking multiple
records including the first supersonic free-fall, the longest ever free-fall
& the highest ever jump
Sebastian Loeb wins his 9th consecutive WRC
2013
Sebastian Vettel & Red Bull Racing win their 4 th consecutive titles
Cyril Despres wins his 5th Dakar Rally
Figure 4 - Company Milestones
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3.4. Red Bulls Product Range

3.4.1.Products
Red Bull has a very limited product range especially in relation to its competitors.
This is a very serious problem due to the falling market share of original flavour
energy drinks in the market. As a result Red Bull released a limited edition range
in the U.S this comprises of three new flavours(Passport, 2013):
Red: Cranberry
Silver: Lime
Blue:Blueberry
These new products are still too new to be assessed for success though new
product launches for Red Bull have not went well in the past, such as the Red
Bull Cola brand which was discontinued.Red Bulls latest product, Red Bull Zero
Calories, was first launched on to the market in France in 2013 and is set to
reach the U.K market in summer 2014(Morton, 2014). This product is aimed at
the more health conscious consumers by offering an energy drink with no
calories or sugar. This is Red Bulls second health conscious version after the
launch of their sugar free product a decade ago. This new product range helps
Red Bull compete with main rivals Monster who also have introduced health
conscious options such as their lo-carb product.
Red Bull traditionally have used a slim-line 250 ml can size. However they have
recentlyintroduced a new supersized 473ml can in an attempt to raise per capita
consumption, which is low compared to other caffeine drinks, the introduction
also
represents
direct
competition
to
its
rivals
Monster
Energy
whosestandardscanis 500 ml(Anon., 2014). Red Bull have come under criticism
for the volume of sugar contained within these supersized cans as they contain
an excessive 13 teaspoons in each can(Webb, 2012).
3.4.2.Product Positioning
Red Bulls is considered the premium product on the energy drinks market & is
priced accordingly. The company uses the pricing to a psychological effect, which
creates a belief in consumers that the product is superior to its
competitors(Magloff, 2014). It is for this reason partly, despite comparable sales
between Monster Energy & Red Bull, Red Bull has far superior revenues. This
positioning has been supported due to Red Bulls First Mover Advantage(FMA),
being the founder of the market Red Bull has built up thebrand loyalty to
maintain this pricing, even in the face of far cheaper competition, an example of
which we highlighted earlier is Coca-Colas Burn brand which is 40% cheaper.
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3.4.3.Target Market
Red Bull targets an 18-34 year old male segment of the market (Ackerman,
2013), they do attempt to reach this market through the various extreme sports
associations, the Red Bull Air Race, Cliff Diving etc. However this market is
incredibly saturated as all of the major brands target this segment using the
same approach. As a results we see Red Bull more so than the other brands
attempting to broaden its appeal. They attempt to do this in a number of ways,
firstly the younger generation are more health conscious & are concerned with
the health effects of energy drinks than the previous generation(Radcliffe, n.d.).
Secondly there is low consumption of energy drinks amongst women, many of
whom are more health conscious than men.
This has seen the introduction of sugar-free & zero calorie editions, this
represents a rapidly growing share of the market. It has also seen an increased
effort to endorse role models to get around legislation to reach minors before
spending habits are set, though the company denies this, its a constantly levied
criticism(Montague-Jones, 2011). In an effort to strengthen its appeal to women
Red Bull has associated itself with a number of high profile sportspeople such as
professional golfer Alexis Thompson & Skier Lindsey Vonn.
3.4.4.Competitors/Substitutes
Red Bulls largest competitor has been stated throughout this document many
times, Monster Energy & Red Bull represent the lion share of the energy drinks
market with approximately 80% market share(Caffeine Informer, 2013). Monster
Energy has a much more diversified product line than Red Bull with a larger
variety of flavours. Monster also offer a much larger can for the same price as
Red Bull in an attempt to represent a better value. While Red bull is trying to
widen its scope to attract new customers, Monster Energy however has an
extremely narrow focus aggressively targeting Red Bulls traditional market of 1834 year old men, this is reflected in Monster Energys far more masculine image.
This strategy to their credit has worked incredibly well, as it only took 5 years for
Monster Energy to overtake Red Bull as the market leader In the U.S.(Bouckley,
2014).
3.4.5.Marketing Methods
As weve stated Red Bull has an innovative marketing strategy which does have
elements of traditional (passive) marketing such as print & television
advertisements, this is usually managed by Red Bull House which amongst other
responsibilities Issues the monthly Red Bulletin magazine. However the majority
of advertising involves modern (active) marketing techniques such as:
Digital Marketing
o Blogs
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o Viral Advertisements
o Social Media
Team Ownership
Event Organisation
Ambush Marketing
Red Bull is a prime example of Ambush Marketing. Ambush marketing involves

the investment of time, energy, knowledge & creativity rather than money to
achieve its aims(Entrepreneur, 2013). This is something Red Bull have done
fantastically in the past, quite early on they aimed to create brand buzz on the
club scene, they did this by making sure local DJs were seen with the product &
as a result Red Bull becamequite popular amongst clubbers, this technique is
now known as seeding(FDS, 2013).The company is very active social media&
strives to use it to its full potential,in fact it is so active on twitter that 49.3% of
all energy drink related tweets mention Red Bull (News Reputation, 2012).
Where Red Bull really excels is in team ownership & event organisation. But why
are we using the terms team ownership & event organisation instead of
sponsorship, because Red Bull doesnt do plain sponsorship very often.
Traditionally sponsors will pay to have their logo associated with a team to derive
marketing value by association e.g. Adidas sponsoring the Olympics, this
however can be undermined by competitors ambush marketing campaigns such
as Nike did in the 1996 Olympics. In Red Bulls case they integrate the team or
event into the company and intrinsically link their values & branding so tightly
they cannot be ambushed, for example the Red Bull Racing F1 is wholly owned
by Red Bull, it is called Red Bull in short, and the car bares its colours & logo. So
if Monster Energy want to associate themselves with the team it is near
impossible because the branding is so identifiable with the team.
This trend continues to their other teams EC Red Bull Salzburg, New York Red
Bulls FC etc. Competitors cannot even ambush the stadium as they are
generally Renamed the Red Bull Arena or some variation & decked out in the Red
Bull logo & colours. The interesting aspect of these ventures is that while in the
short term Red Bull makes a significant investment, they also run these teams
like a business & turn over a profit relatively quickly. The same goes for Red Bull
events, you see the same re-occurring theme with Red Bull Flugtag, Cliff Diving
etc. These events are all intrinsically linked to the brand & prevent ambushing.
Most of these events are re-occurring, & therefore enable annual brand
interaction with potential customers.
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4. Conclusion
4.1. Industry Analysis
In conclusion the Energy Drink industry is clearly a profitable one. The success of
Red Bull has ultimately attracted many envious eyes, which have now entered
the market looking for their share. Especially those who have made significant
profits from the now declining soft drink industry who are looking to compensate
for loses. The level of competition has increased risk for those in the market with
the largest share as they have the most to lose, this is due to the high
substitutability of products available.
The market is frequently becoming more & more segmented in terms of flavours,
various sugar-free& low-carb options. Companies are finding it difficult to create
an individual image that can separate them from their competitors. This is likely
to change so companies can position themselves to target groups such as
women, who currently have a very low consumption rates in comparison to men.
Overall the industry should continue to grow sales due to very high sales growth
from emerging economies.
4.2. Company Analysis

In being the first mover Red Bull has a distinct advantage, over the years it has
developed strong brand recognition & loyalty. It is however becoming a victim of
its own success. The product is positioned at a premium price & is easily
substitutable, as a result there is a growing number of competitors entering the
market & undercutting Red Bull. This is leading to a slow erosion of its market
share, especially from Monster Energy who is now the market leader U.S. In the
past the Red Bull branding has always been distinctive due to its association with
extreme sports such as snowboarding &motocross, it is however losing this
distinctive image as all the new entrants are emulating this approach.
Whereas in the past Red Bulls appeal has always been to the 18-34 male
segment, it now has to look elsewhere due to the level of competition. This is
where Red Bull can carve out a new competitive advantage. In an effort to steal
a slice of Red Bulls market share competitors are entering with increasingly more
masculine extreme images. As a result Red Bulls image is now quite soft in
comparison to its competitors. As a result of its competitors narrow focus Red
Bull has the most potential to widen its focus outside of this segment, while still
being capable of competing in its current market.
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Appendices
Appendix I P.E.S.T.E.L of the Energy Drinks Market
Political
Politically the energy drinks industry isunder scrutiny due to incidents where Red
Bull or other energy drink consumption has led to deaths usually in conjunction
with alcohol consumption. While these deaths are few & far between, they have
still received significant media attention. By extension, the shock of rare cases,
such as these have caused many legislators to react who are now beginning to
look at restricting its sale (Nestle, 2013). As most of the political matters that
affect Red Bull are based on restrictive legislation, we shall talk about this in the
Legal section.
Economic
Economically the energy drinks industry has continued expanding at a double
figure rate for the last decade, this growth has largely been unaffected by the
downturn & has outperformed other comparable industries. This is quite a
testament to the growing popularity of energy drinks especially as they tend to
be far more expensive than substitutes such as coffee & mineral. The interesting
thing is you would expect the opposite to be true due to declining personal
expenditure worldwide due to the 2008 financial crash. The fact is worldwide
figures are masking the slowing down of sales in mature economies which are
now below the 10% mark, though these growth figures are still quite high the
true growth now lies in the BRICS(especially in South Africa)& the Middle-east.
Social
Energy drinks companies are very active on social media sites such as Twitter &
Facebook, Red Bull in particular as it is mentioned in nearly half of all energy
drink related tweets. Socially the energy drinks brands are seen as cool due to
the extreme sports image &team sponsorships. This cool image has helped
companies such as Red Bull become quite popular with clubbers, students &
drivers. Energy drinks however receive a lot of criticism via new digital media
such as blogs, especially in relation to deaths that were caused by excessive
energy drink consumption in combination with spirits. Consumption of alcohol
together with energy drinks is quite popular amongst students & clubbers due to
the energy boost, as a result this has a double edged sword for energy drinks
companies. Energy drinks companies are also being swept up in the general
wellness trend which has existed for the past few years, & has resulted in the
release of low carb & sugar free options.
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Technological
In terms of technological forces effecting the environment these are mainly
limited to improved manufacturing & transport capability. Innovation in this
industry tends to come from product segmentation. The most important
Technological factor in the Energy Drinks Industry is the Internet. This invention
has allowed people across the world interact with the brands from the comfort of
their home, whether it is viral advertisements to create buzz such as the Red Bull
Stratus event which had the largest live audience on YouTube ever or merely
interacting with their social media page.
Environmental
While this could have come under the social section, we decided to keep this
separate to highlight its importance to the modern consumer. While there is
certain pollutions cause by the manufacturing of energy drinks the Industry is
very focused on package recycling. The most common form of packaging is the
aluminium can which is 100% recyclable. Some of the cheapest brands do use
plastic packaging for their larger products such as 1 litre bottles but these again
are recyclable & are a relatively small percentage of sales.
Legal
Legally we are seeing increasing measures being taken against all unhealthy
products such as soft drinks, especially in relation to advertising at children.
Energy drinks in particular are taking a lot of flak from political establishments
which are looking to limit their point of sale. This is down to two reasons rising
obesity amongst children & adults, & also the high profile deaths linked with
energy drink consumption. While not illegal regulators are looking at ideas such
as sugar taxes to help reduce consumption of these products. There is also
restrictions being placed on advertising at children, who are a prime target for
companies looking to become recognised by consumers before spending habits
are set.
Appendix II S.W.O.T
Strengths
Market Leader
As market leader Red Bull has a strong brand image & the word Red Bull has
become interchangeable with energy drinks in some countries much like Hoover
did with Vacuum Cleaners. This highlights how powerful the brand is.
Broad Market Presence

Red Bull, as previously stated is available in over 166 countries worldwide this
will provide stable growth into the future even as current markets mature.
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First Mover Advantage

As the first entrant into the market Red Bull has built up very strong brand
loyalty as a result.
Weaknesses
Limited Range
Red Bull has moved to rectify this buy releasing its limited Red, Silver & Blue
flavours in 2013 but its success remains to be seen if it performs in relation to its
competitors multi-flavoured lines.
Social Stigma
As Red Bull as a word is used interchangeably with energy drinks, when negative
reports arise in relation to energy drinks, Red Bull itself tends to take most of the
media flak rather than competitors.
Opportunities
Emerging Markets
Red Bulls wide market presence represents major opportunities in growing
economies such as the BRICS, but also regionally such as the Middle-East & Latin
America where sales growth is exceptionally high despite its premium pricing in
non-high-income countries
New Production Facilities

Red Bull has positioned new manufacturing facilities across the world to meet
regional demand with this investment in place, Red Bull clearly has an advantage
over its competitors.
Less Masculine Image

As we talked about in the main body of the report Red Bull has a somewhat less
masculine image than its competitors, this may enable Red Bull to make inward
progress into the female market segment where energy drinks have traditionally
not fared well with relatively little competition.
Low Consumption Rates

Red Bull is most famous for its slim-line can, but there is a growing trend towards
larger cans to take advantage of the low per capita consumption rate of energy
drink consumers, versus that of soft drinks or coffee. This represents a strong
potential area of growth as users are already familiar with the brand.
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Threats
Competition
As Stated there is major growth potential in the BRICS, though Red Bulls
premium product will face stiff competition in these new markets from low cost
brands such as Coca-Colas Burn. Especially as it may utilise Coca-Colas existing
distribution network.
Large marketing costs

As we discussed earlier Red Bull reinvests 30-40% of its sales back into
marketing, this is an extremely large percentage of Revenue. But this may come
down as it enters weaker economies as High OECD economies usually have far
higher marketing costs than those outside. It also demonstrates the level of
competition for brand recognition to warrant such expenditure.
Image Replication
As we discussed earlier all new entrants tend to enter the energy drinks market
with a more exaggerated Red Bull extreme sports image, this in turn is making it
increasingly harder to distinguish between the various brand messages.
24

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Global

Global Strategic Marketing

Global Strategic Marketing

Analysis of the Energy Drinks Industry............................................................6

Industry Size, Growth & Profitability..........................................................6

Sales Model & USP.................................................................................... 8

An Evolving Unique Selling Point.........................................................8

Key Drivers in the Energy Drinks Market.................................................10

Company Analysis of Red Bull.......................................................................10

An Introduction to Red Bull......................................................................10

The Aims, Objectives & Values................................................................11

Red Bulls Product Range.........................................................................13

Global Strategic Marketing

Global Strategic Marketing

1 - Functional Sales Performance Overview................................................6

Global Strategic Marketing

Global Strategic Marketing

2. Analysis of the Energy Drinks Industry

2.2. Industry Size, Growth & Profitability

Global Strategic Marketing

2.3. Competitive Scope

Global Strategic Marketing

2.4. Market Leaders

Largest Energy Drinks Revenue's ($ Millions)

Largest Energy Drinks Revenue's ($ Millions)

Figure 2- Largest Energy Drinks Manufacturers Revenues

As a result we are seeing companies such as these exploiting their extensive

2.5. Sales Model & USP

Global Strategic Marketing

2.5.2.An Evolving Unique Selling Point

Global Strategic Marketing

Energy Drink Sales Breakdown

Figure 3 - Energy Drinks Sales Breakdown

2.6. Key Drivers in the Energy Drinks Market

Global Strategic Marketing

3. Company Analysis of Red Bull

Global Strategic Marketing

3.2. The Aims, Objectives & Values

3.3. Company Milestones

Global Strategic Marketing

Red Bull was Founded

Felix Baumgartner began his long relationship with Red Bull by

Red Bull is launched in the Middle-East

The Red Bull Air Races began

Red Bull Nascar established

EC Red Bull Salzburg declared Hockey League champions

Global Strategic Marketing

3.4. Red Bulls Product Range

Global Strategic Marketing

Global Strategic Marketing

Red Bull is a prime example of Ambush Marketing. Ambush marketing involves

Global Strategic Marketing

4.2. Company Analysis

Global Strategic Marketing

Global Strategic Marketing

Magloff, L., 2014. Small Business. [Online]

Global Strategic Marketing

Red Bull, 2013. Company: Red Bull. [Online]

Global Strategic Marketing

Global Strategic Marketing

Broad Market Presence

Global Strategic Marketing

First Mover Advantage