Red Bull

1.

The Product/ Competitors/Industry

1.1

Product

Red Bull is a sweet, caffeinated drink aimed to give consumers the high energy kick. Available only in rather expensive 250ml cans, 350ml bottles, with 4 packs and only two flavours (original or sugar-free). It contains caffeine, taurine, glucuronolactone, and B vitamins. Founded in 1984 by Austrian businessman Dietrich Mateschitz, Red Bull has become the worlds leading energy drink, a staple in many young, and active peoples lives.

1.2

Competitors

Big global companies such as Coca Cola and Pepsi have introduced their own energy drink versions to their product base. Mother (by Coca Cola), Amp (Pepsi), V, Battery, 180, RedEye and Bennu being just some in the ever-growing energy drink market.

Competition also presents itself in original sports drinks, such as Gatorade (Pepsi) and Powerade(Coca Cola). Furthermore, premixed alcoholic drinks like the Smirnoff range form part of the competition.

1.3

Industry

Red Bull has becoming hugely successful and operates within the global soft drink marketplace. Within the soft drink industry its niche is the energy drink market, of which Mateschitz was largely responsible for creating. Red Bull currently is the leading energy drink across the entire globe. It holds 70% of the market worldwide (Gschwandtner, 2004). Once the drink was passed by health ministries, Red Bull entered the Austrian market, soon thereafter then moved into Germany, United Kingdom and the USA by 1997.

2.

Needs, Wants and Demands satisfied by Red Bull

2.1

Needs

There are three basic human needs that Red Bull satisfies, physical, social and individual needs. Human needs are states of felt deprivation marketers do not invent these needs; they are a basic part of human makeupPeople in industrial societies might try to find or develop objects that will satisfy their needs. (Kotler et al. 2006)

Firstly, a physical need is when tired drivers are feeling the need to fall asleep due to fatigue; and this can compromise their safety. A driver needs to stay awake and alert when driving to avert danger and this need is satisfied by Red Bull. In fact it has become a hot item amongst tired drivers stopping at gas stations. (Gscwandtner 2004).

A social need for example is where humans have a social need for belonging (Kotler. 2004) and this need is satisfied by belonging to a group. A group could be people with the same interests eg extreme sports. Red Bull associates itself with energy, danger and youth culture, and markets its product through its sponsorship of youth culture and extreme sports events. Consumers who drink Red Bull are automatically introduced to the Red Bull culture, and their social need is then satisfied.

The final need is individual. An individual may have a need for concentration or selfexpression and this could be inhibited by fatigue or weariness. Red Bull realised that it could satisfy this need by energising and stimulating the mind (Red Bull 2008). For example, if they are fatigued, a university student may experience an inability to retain knowledge and therefore show an inability to express themselves.

2.2

Wants

A want can be defined as the form taken by human needs as they are shaped by culture and individual personality (Kotler et al. 2006)

Extreme athletes want to accelerate their performance and to revive themselves quickly after each event and this want is satisfied by Red Bull. Red Bull promotes its consumption to increase physical endurance, improve concentration and reaction speed, improve vigilance and stimulate metabolism. (Red Bull, 2008).

2.3

Demands

Demands are human wants backed up by buying power and given their resources, people demand products with benefits that add up to the most satisfaction. (Kotler et al. 2006). Another way of putting it is that demand for a productis both a willingness and an ability to pay for the product that will satisfy a particular want. (McColl et al. 1998)

Red Bull is arguably one of the most expensive soft drinks on the market, a can of Coke generally costs around $2.50 for 375ml whereas a smaller 250ml can of Red Bull is sold at $3.75. Consumers are willing to pay the higher price for Red Bull because it satisfies their

needs and wants, it also delivers on its promise to Vitalize Body and Mind. So regardless of size of the can or price, consumers are willing to pay for Red Bulls product.

3.

The Marketing Management Philosophy

In our opinion, Red Bull fits into three of the marketing management philosophies. When it first entered the market it could be viewed in the selling concept phase. Founder Dietrich Mateschitz even stated. If we dont create the market, it doesnt exist. (Gschwandtner 2004). Mateschitz used buzz marketing to promote the product by giving consumers free samples.

Once Red Bull established itself it then moved into the product concept philosophy. It seems that many consumers buy the Red Bull product wholly based on what benefits it can give them, i.e. increased wellbeing and energy. Red Bull cans are branded with the tagline Vitalises body and mind and it is well known by consumers that drinking Red Bull can alleviate tiredness.

The final philosophy the product fits into is the marketing concept. This is where an organisation delivers target market satisfactions more effectively and efficiently than competitors. (Kotler et al. 2006). This can be done by researching its target audience and the company has shown this by the fact that Red Bull has a 70 to 90 percent market share in over 100 countries worldwide. (Gschwandtner 2004). This clearly indicates that Red Bulls current marketing strategy is working well and they are ahead of their competitors in the market place.

4.

The Marketing Challenges

4.1

Competition

This is probably one of the biggest threats to Red Bull to date. Major competitors such as Coca Cola and Pepsi are continually seeking to regain market share off Red Bull. Coca Cola and Pepsi have launched their own energy drink versions to compete directly with Red Bulls product, yet with no real impact on the market, examples of this are Think V Energy Drink and Cokes version Mother.

4.2

Negative Publicity

Various media worldwide have reported that Red Bull is harmful for ones health. The French Health Authority has gone one step further by not approving the Red Bull product for

sale in France believing it is not in compliance with the countrys health and food regulations. Other media reports have been targeted towards parents stating the caffeine levels in Red Bull can be dangerous if consumed by children/teenagers, which coincidentally is exactly who is in the product target market.

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 media attention and reiterate that their product is safe for consumption by all (Red Bull, 2008).

4.3

Inability to move forward with the product

Red Bull is well known for its innovative advertising however the product could be in danger of becoming stale. By shunning conventional advertising methods and opting for online advertising and Generation Y cartoon adverts, the aim of attracting 15 30 year olds is working, but for how long? Combine this with their large investment in extreme sport events ie Red Bull Air Race and athlete sponsorship, it has to be asked what do they do next? Has it already been done?

4.4

Ability to gain new customers and retain current customer loyalty

With Red Bulls target market currently aimed at the Generation Ys (15 30 year olds) there is the question of whether this generation will continue to drink Red Bull as they grow older. And will the next upcoming generation accept this product as their own.

4.5

Health and Social Implications

Due to growing pressure on organisations in society, Red Bull now promotes their product with current societal and health issues in mind. Childhood obesity and type 2-onset diabetes has become a major issue across western developed nations. By introducing sugar free Red Bull this has opened up a new opportunity to the health conscious and diabetics. Managing this issue will be a constant process and Red Bull must be seen to be adjusting their product to suit society.

4.6

Only having one product

One particular issue Red Bull has to consider is their limited product range. Unlike their major competitors such as Coca Cola and Pepsi, who have various different products in different beverage classes (water, soft drinks, electrolytes) Red Bull does not. Only having one product can be a positive however, for example Red Bull can concentrate 100% effort on their product while not being distracted by other influences, however the downside is that should the market share of that product decrease in the future, Red Bull has no back up product to cover the loss.

5.

Being customer orientated/market driven

5.1

The Consumer

Customers are more sophisticated and educated in the market place today; they can now research products before making a purchase. For example there are specialist magazines to assist in the decision on (the) brandbut more likely (consumers) turn to the internet for information on what might be described as a complex product (Kotler et al. 1998). Another reason could be that competitors are more innovative than ever with advertising and marketing campaigns. Kevin Rudd for example achieved this when he used the MySpace website as a medium to mount his prime ministerial marketing campaign.

5.2

Point of Difference

Further to this notion marketing organizations need to create a point of difference (POD) in the market place. In such a saturated market consumers look for a POD, when opening a coffee shop a businessperson would find themselves up against competition. So how do they differentiate themselves from another caf? How can they become top of mind to their target market?

Gloria Jeans Coffee is a good example, when they entered the market they provided not only a service but also an experience. They designed their coffee shops like lounge rooms, with big couches to create a homely feel. They also offered wireless internet (WiFi) services to attract the businessmen and women who wanted to work online while having a coffee.

5.3

Competition

Competition is becoming more intense in any industry. For example supermarket giants like Coles and Woolworths are flooding their stores with self-branded products, which is often pushing independent brands off the supermarket shelf and driving small businesses out of the market. These giants have bulk buying power which means they have the ability to pass savings to their customers. Self-branded products are marginalising the smaller independent brands.

6.

Conclusion

Red Bull is a highly successful company responsible for 70% of sales in the energy drink market to date. Their product is well known by consumers to vitalize body and mind and is generally purchased by most for this purpose.

Red Bull have strong competitors who are constantly trying to gain market share off Red Bull, however, it is evident that Red Bulls current marketing philosophies are working in keeping them a market leader. Red Bull is aware of their marketing challenges and they are constantly adjusting and developing their marketing approach to overcome or even avoid future concerns.

Baxter, Emma. "A Load of Red Bull." Spiked. 23 July 2001. [Online]. 30 May 2006. < http://www.spiked-online.com/Articles/00000002D1AF.htm> Gschwandtner, Gerhard. "The Powerful Sales Strategy behind Red Bull." Selling Power. February 2004. [Online] 30 May 2006 < http://www.sellingpower.com/article/display.asp?aid=SP2229597> "Red Bull." Everything 2. 18 Feb. 2001. [Online] 30 May 2006. < http://everything2.com/index.pl?node_id=61783> Red Bull. [Online]. 30 May 2006. "Red Bull." Wikipedia The Free Encyclopedia. 28 May 2006. [Online]. 30 May 2006. < http://en.wikipedia.org/wiki/Red_Bull> Rodgers, Anni L. "It's a (Red) Bull Market After All". Fast Company. 16 June 2003. [Online] 30 May 2006. < http://www.fastcompany.com/articles/2001/10/redbull.html> Red Bull