1) Political – Description Of The System

Current political structure in the United Kingdom might favour the success of Red Bull. There
are serious political considerations that need to be addressed before any crucial step is taken to
impede the marketing of Red Bull as an energy drink in the United Kingdom (Datamonitor
2009). The United Kingdom government would not want to have strained relationships with
the government of Austria since the latter banned the sale of Red Bull on its territory. Thus, the
former will have to tread carefully in terms of political decisions.
Furthermore, over the past couple of years, despite fierce political battle between members of
the Labour and Conservative Party, the government of the United Kingdom has been
characterised by stability. This has made the country governable; hence, adding to its stability.
Therefore, the United Kingdom is a conducive environment to market Red Bull.
On the other hand, the government might decide to take a crucial step that may obstruct efforts
to market the product in the United Kingdom. For example, it may enact new health regulations
that restrict the use of certain elements in drinks. In such case, it may blacklist one of the
elements used in Red Bull; hence, hamper the marketing efforts.
2) Economic Statistics And Descriptions
The current economic situation in the United Kingdom may have a critical impact on the
success of a business. Even though, London is the financial capital of the world, it is still
recovering from the financial depression that rocked many countries in 2009. This resulted to
slumps of economic activity that affected spending behaviours of consumers. However, more
people are now becoming economically empowered; thus, can spend money on luxuries. (Red
Bull 2012).
Various aspects of the economy have considerably increased over the past couple of years.
These include personal income per capita, average family income and distribution of income.
This has been reflected by the improved economic status of many people. Thus, they have more
disposable income to use for purchasing desired products. As such, the disposable income can
be spent on purchasing several cans of Red Bull for family and friends. In addition, the current
inflation rate is relatively low; hence, the prices on drinks would not be affected. Besides, this
means that the disposable income of consumers will considerably increase due to moderate
inflation levels. This will favour the sale of Red Bull in the United Kingdom as many consumers
will have sufficient disposable income to buy their favourite energy drink.
3) Social-Cultural
Various types of religions such as Christianity, Islam or atheism are represented in the United
Kingdom. Nonetheless, the most important factor is that none of these prominent religions
prohibits consumption of energy drinks owing to the fact that energy drinks do not contain
alcohol, which is prohibited in religious teachings. Therefore, it would become easy to market
Red Bull to people of different religious backgrounds without being censured. In addition, the
main official language in the United Kingdom is English. Thus, the Red Bull company would
have to use English language on its labels in order to increase the sales. If it uses another
language, there is a high probability, many people will ignore the product and not purchase it.
This will, certainly, affect the sales targets of the company.
Current economic situation in the country allow its citizens enjoy paid yearly holidays. It is
likely that during his holiday one would enjoy the fruits of his/her labour. This includes
purchasing various goods, foodstuffs and drinks. Hence, positioning Red Bull as a drink for
enjoyment will definitely boost sales of the product (Garden-Robinson and Medenwald 2009).
4) Technology
The existing technological factors in the United Kingdom can have a positive impact on success
of Red Bull. United Kingdom is one of the countries that has recorded increased Internet usage.
Nearly 95% of the population receives the latest updates on current trends via the Internet. This
resents another opportunity for advertising Red Bull via the internet. Therefore, when one is
viewing his or her favourite blog or news website, he or she will often come across a Red Bull
advert, which entices the customer to purchase the product. For example, if the product is
promoted in a popular and trustworthy blog, consumers will treat the product as a must-have;
hence, purchase it straightaway (Peterson 2007).
5) Demographic
The United Kingdom has a population of more than 65 million people. Out of this population,
the highest number of people is between the age of 15 and 49. This should be the target market
for Red Bull. Currently, the 15-19 age group is the most attractive target market for the product
as people in this age are known to be hyperactive. (Brassignton and Pettitt 2003). Most
teenagers would like to involve themselves in activities they were not able to when they were
toddlers. In other terms this age group is often referred to as “revelation” age group, since
teenagers come to realization of their potential and try themselves in different fields of activities
which often require a lot of energy, such as sports.
6) Natural Environment
Currently, the company does not experience any shortage of raw materials. Most of the raw
materials it uses come from the environment; hence, easy to access them. For example, the
company use aluminum cans, which it recycles to save pressure on destructing the environment.
Furthermore, the company enjoys low energy costs since it has focused on increasing efficiency
of all its operations. This helps Red Bull to save on energy and conserve the environment. In
addition, the company has formulated an internal policy which advocates for conservation of
the environment. Primarily, this is informed by the need to reduce pollution of the environment
in the United Kingdom.
7) Legal Environment
Favourable business regulations in the United Kingdom are set up in order to attract foreign
businesses into the U.K market (Hundekar 2010).; thus, the entry of Red Bull into the United
Kingdom cannot be hindered. No ingredient used in Red Bull is banned by the existing rules
and regulations; thus, making it easier to market the product to various groups of population.
Compliance of Red Bull with all existing product regulations enhances the chances to success
of the product in this target market.

Micro Environment

1) CUSTOMERS’ PROFILE
Consumer behaviour in the United Kingdom can be described as a spendthrifting. Sound
economic status of the country adds to such behaviour. Most citizens normally shop during the
evenings and on Saturday mornings. Notably, consumers in the United Kingdom are not mainly
focused on the prices, but on the quality of products sold. Thus, in order to appeal to most
consumers, it is vital to consider the features and characteristics of the product being offered to
them (Cant 2006).
According to Sheehan (2011), the most common promotion techniques used in the United
Kingdom include sales promotion, media advertisement and the use of coupons. These
techniques have been established to entice consumers into buying particular products. For
instance, Red Bull has perfected the use of sports marketing and event marketing in increasing
awareness of its product. Essentially, the sport personalities use captivating and amusing quotes
to entice their fans to purchase Red Bull. By engaging these sport personalities, the product has
been able to record increased sales over the last couple of years.

2) COMPETITION
Competition poses a critical challenge to many businesses (Kurtz and Boonie 2006). In the case
of Red Bull, it faces tough competition from companies that have already established
themselves in the United Kingdom such as Coca Cola and Pepsi. However, there is a distinct
difference between Red Bull as a product and products of other companies. The drink is
packaged in cans which consumers can easily hold while performing different physical
activities such as walking. Vitally, the advertising methods used by Red Bull are quite unique
as they focus on using sports marketing to increase awareness of the product. On the other hand,
the company key competitors in the United Kingdom are focused on advertising in the
mainstream media. In addition, Red Bull may not have any barriers to enter the UK market as
it has already established itself in other countries all over the world. It enjoys economies of
scale and worldwide brand equity. Unlike its competitors, it does not depend on other
companies to carry out its key operations. Thus, none of its activities will be affected, if another
company decides to terminate its activities.

3) SUPPLIERS
Red bull has a distinct selection criteria for supply of its raw materials. Primarily, it only relates
with suppliers who enable it to enjoy economies of scale. Some of its suppliers can be said to
be strong while others are weak. One of the strong suppliers of Red bull is Glaxo Smith Kline
Company, which supplies Glucuronolactone, one of the key ingredients of Red bull energy
drink. Its arrangements with the suppliers have enabled Red Bull to gain a competitive
advantage. For example, they can bargain for reduced costs of its raw materials.

4) INTERMEDIARIES AND CHANNELS

The distribution of Red Bull products is quite a complex process. The company typically
supplies to wholesalers and supermarkets which deal directly with the consumers. Notably, they
have to purchase in bulk from the company; hence, save on distribution costs. Currently, the
company does not have any small retailers as most consumers have accustomed themselves to
purchasing from the supermarkets. Clearly, its definite distribution channel is from the company
to the wholesaler/supermarket.
Assignment Global Strategic Marketing Red Bull10
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), firstlythe energy drink industry seems to have been very resistant to the financial
downturn of 2008, as itsgrowth while slowed has continued strongly. New growth is expected
to come from the BRICS, theMiddle East & Latin America in the medium term. There is
growing Identity crises within the industryas all the competitors have merely replicated Red
Bulls extreme sports image & accentuated it. Thisis making it increasingly more difficult to
create an individual brand.Politically & socially the industry is receiving negative media
attention due to the high profile caseswhere energy drinks have been linked to coronary
deaths. This is resulting in political pressure tolimit 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 livingtrends amongst
consumers many energy drinks companies have released sugar-free & low-carboptions. As a
result the two main environmental pressures appear to be Social & Legal, the industryitself for
the time being is such a bull market it ignores the current economic environment. Socially itis
a rather mixed bag generating both opportunity in demand for new segmented health
consciousproducts, while then negatively affecting the industry with public criticism of its
effects on coronaryissues. Technologically & environmentally speaking there seems to be
little more pressure than anyother 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-
80’s by Dietrich Mateschitz, Dietrich modified a
functional tonic he found on his travels in Asia to suit western tastes. Dietrich did this because
hewanted 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 nowhas 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 hasmanaged to create, dominate & grow into a lucrative new niche in
the mineral drinks market rightunder 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 marketshave begun to decline (Zmuda, 2014). The Red Bull brand itself is
incredibly fascinating & is builtupon associating itself with a myriad of
teams’
events & people, probably to the point that it is nowmore recognised for its values than it is
for its product. It is ranked the 49
th
most valuable brand inthe 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 linked Team & Event
Sponsorship from its very beginning. This makes Red Bull a common topic of discussion by
marketers & consumers alike.

3.4.4.

Competitors/Substitutes
Red Bull’s 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 linethan Red Bull with a larger variety of flavours. Monster also offer a much larger
can for the sameprice as Red Bull in an attempt to represent a better value. While Red bull
is trying to widen its scopeto attract new customers, Monster Energy however has an
extremely narrow focus aggressivelytargeting Red Bulls traditional market of 18-34 year old
men, this is reflected in Monster Energy’s far
more masculine image. This strategy to their credit has worked incredibly well, as it only took
5 yearsfor Monster Energy to overtake Red Bull as the market leader In the U.S. (Bouckley,
2014).

4.2.

Company Analysis
In being the first mover Red Bull has a distinct advantage, over the years it has developed
strongbrand recognition & loyalty. It is however becoming a victim of its own success. The
product ispositioned at a premium price & is easily substitutable, as a result there is a growing
number ofcompetitors entering the market & undercutting Red Bull. This is leading to a slow
erosion of itsmarket share, especially from Monster Energy who is now the market leader
U.S. In the past the RedBull branding has always been distinctive due to its association with
extreme sports such assnowboarding & motocross, it is however losing this distinctive image
as all the new entrants areemulating this approach.Whereas in the past
Red Bull’s appeal has always been to the 18
-34 male segment, it now has tolook elsewhere due to the level of competition. This is where
Red Bull can carve out a newcompetitive advantage. In an effort to steal a slice of Red Bulls market share
competitors areentering with
increasingly more masculine extreme images. As a result Red Bull’s image is now quite
“soft”
in comparison to its competitors. As a result of its competitors narrow focus Red Bull has
themost potential to widen its focus outside of this segment, while still being capable of
competing inits current market.
The PESTEl analysis is one of the useful techniques used in the analysisof the Macro
environment. The PESTEL analysis comprises economic,political, technological and social
factors. Explain each.
Politic :– Government restrictions due to the use of ca eine, taurine,guarana in the
components. (It is the case for example in Australiaor even in France. he age of the
consumer, the amount of ca einein the can, all those issues are !eing discussed and
regulatedaround the "orld.#$conom% :– Glo!al increase in purchasing po"er (from the catch&up
ofdeveloping countries#– 'aturit% of the car!onated drin mar et– )igh industr% margins–
Glo!al economic gro"th recover% planned for *+ - ocial :– /evelopment of health% and
green !ehaviours and !everages (eg.sports !everages, vitamin "aters0#– /evelopment of
a societ% "here stress and tiredness is high– 1egative health concerns a!out ca eine,
taurine impact echnolog% :– /evelopment of e&commerce– Innovative alternative products
(car!onated drin s, energ%products0#
1.2.1.1.
Political
factors that, if Government imposes health and safetyrestrictions on the amount of energy
drinks that should be consumed, itwould affect the amount of energy drinks that are bought
and alsointroduces import and export charges on the energy drinks market, it mayincrease or
decrease the amount of energy drinks that are imported andexported.
POLITICAL
he compan% has man% di erent departments "ithin theirorgani2ation that speciali2e in
certain aspects, com!ined, theire orts eep the !usiness running smoothl%. o avoid
complexities,each department "ill ensure the% are carr%ing out theiro"n procedures legall%,

for example the 3nance department need to ensure all sta are paid"hat the% are o"ed and
that all taxes are paid.
ENVIRONMENTAL
here is a environmental factor that can a ect theimage of 4ed 5ull, "hich is pollution.In *++6,
there"as an environmentalagenc% pu!lished a list "hicha!out the top ten of companies a"arded the !iggest3nes
for "aste activit% and 4ed 5ull "as one ofthem. 4ed 5ull "as a"arded 3ne of 7*8+,+++ due tothe rec%cling
pro!lem. 4ed 5ull reali2ed theirresponsi!ilit% and improved their rec%cling s%stem inrecent %ears.
1.2.1.2.
Economical
factors that, inflation would increase the price ofdrinks and at the same time, consumer's real
disposable income willreduce. For that reason, consumers are likely to buy less energy drinks,
asthey are not necessities.
ECONOMIC
he 3rst economic pro!lem is in9ation "ill !ehappening "hen there is too high suppl% of mone% inthe
econom%, and it is not appeared !% the goods andservices. As a result of in9ation, 4ed 5ull mightincrease the
price to sustain the !usiness, also thecosts of ra" materials "hich for production "ill !eincreased as "ell. he
interest rates that are provided!% !an s "ill a ect 4ed 5ull s loans should the% needone. hould the current
economic situation continue toget "orse, interest rates "ill rise.(Gordon#
1.2.1.3.
Social factors
that, if Red Bull decides to launch its product in anew country, its costs may rise, as it will
have to produce differentlanguage labels. Another big issue for the social factors that, as
thepopulation of youth's increase, energy drinks companies may see anincrease in the amount
of drinks sold.
 he drin itself has !een ;uestioned recentl% inAmerica, "ith 4ed 5ull !eing !lamed for a case
ofunexpected death !% heart ache after a !as et!allpla%er consumed one of the cans, "hich has led to4ed 5ull
!eing sued for <=>million. It has !een "elldocumented that the energ% drin is high in ca eine,"ith man%
critics suggesting it shouldn t !econsumed, something that France, 1or"a% and/enmar have all ta en into
consideration and acted!% !anning the product. he social implications of thisare o!vious, giving the
compan% a !ad name forcontinuing to produce their drin "ith the given recipe.4elated articles o ensure
the% are reaching out to a"ider mar et, 4ed 5ull produced the sugar freeversion of their energ% drin . his
"ould appeal topeople that are more conscious of the health issues,"hich is something that 4ed 5ull recognised
and actedon to prevent the loss of custom. he taste in thisproduct, as "ell as the original, is another
importantsocial factor that 4ed 5ull need to control.
1.2.1.4.
Technological
factors are also important for the company's aswell. Red Bull can use the Internet to help
advertise and promote itsproducts. It can also sell large quantities of its product direct to
itsconsumers. It is a new way to communicate with consumers that is cheapand efficient
market research method. More hi-tech technology mayenable companies to produce more
drinks at a cheaper cost and at thesame time improving the quality of the packaging.
TECHNOLOGY
?ith 4ed 5ulls mar eting techni;ues !eing recognisedas highl% controversial and uni;ue, the% are re;uiredto
pa% out large amounts of mone% to their stuntmen@"omen due to the dangers the% face. his !eingthe case,
the internet is something that 4ed 5ullheavil% rel% on in order to promote their product.?e!sites such
as ou u!e, as "ell as social net"or ingsites such as Face!oo and "itter "ill pla% an

important role in helping their adverts !ecomerecognised. 1ot onl% is this a free "a% of advertising, itis also
perfect for their target audience of active sportspersons !et"een >&B+, something that matchesFace!oo s
target mar et of active mo!ile phoneusers.

LEGAL
o ensure their product can !e sold in stores, the 4ed5ull energ% drin "ill need to meet legal
re;uirementsapplica!le to the countries the product is availa!le in,in order for trading to commence. he drin
needs to!e safe for humans to consume, meaning thecustomer doesn t receive an% adverse side e ects,
i.e.vomiting. In conCunction "ith this, the ingredients,along "ith the ;uantities the% use, need to !e clearl%stated
on each can or pac . his is a legal re;uirementto avoid consumers having a reaction,potentiall% leading to
them 3ling a la" suit generating!ad press.
Micro Factors
The micro environment is the factors in a company immediate environment that affect its
capabilities to operate effectively.
Customers – Customers should be the main priority of a business, they should aim to
keep customers happy and satisfied. Lucozade can do this by continuing to produce high
quality drinks that there customers already love as well as bringing out new products to
keep it fresh, new and exciting for existing and new customers.

Suppliers – It is important that Lucozade have a good quality supplier and have a good
relationship with them, it is also important that they are reliable. If the suppliers deliver
materials or ingredients late then this can effect the production of the product.

Competitors – There are many competitors within the sports drink industry, such as
Powerade, Gatorade and Red Bull. The key to marketing is differentiation this helps the
product stand out from others. Lucozade compared to other sports drinks offer a wider
range of drinks and flavors. They also have a unique bottle design and branding.

Media – one way that Lucozade get there brand name out there is through the use of the
media and advertising. Such as TV adverts, Newspaper/Magazines and Billboards.
Lucozade also use sporting celebrities for there ad campaigns this increases there brand
and attracts new customers as well as giving them a good reputation.

POLITICAL AND LEGAL FACTORS:

Pakistan is a politically stable economy; foreign investors are attracted to Pakistan. The Pakistani
government is improving business with trade and investment.

1. Political Stability: Whenever the government is considered to be stable, the business will
flourish. If there is political stability in the country the policies and strategies made by Pepsi can
be consistent to be implemented. Foreign companies are also keen to invest in those countries
which are politically stable where they have no fear of decline in their market share or shut down
due to sudden change of government.

2. Mixed Economy In mixed economy government and private sector both plays their role in
developing the economy of the country. Investment by foreign companies like Pepsi is more likely
to flourish in mixed economy.

3. Laws Formulation Government has given copy rights to Pepsi so that another company cannot
sell their product by the name of Pepsi. The countries where laws are formulated, the strategies
and activities of the company are different.
ECONOMIC FACTORS:
Following are the economic factors are also affect the product and market:
1. Income and Income per Capita:
If the income level or per capita income of the people increases, it will have a positive
effect on the consumption of Pepsi.
2. Inflation:
If the country faces inflationary trend in the market, the price of the Pepsi will ultimately
increase which will lower its demand.
3. Consumption Behavior
Pakistan is consumption oriented society. Due to demonstration effect the people are
more attract towards consumption than saving. So the people of Pakistan spent heavily
on food items. Hence Pepsi has a good market share in the present circumstances.
4. Income Distribution:
In Pakistan 10% rich people possess 93% of wealth and 90% people possess 7% of
wealth. If there is balanced distribution of income in the country, the consumption of the
people will increase hence increasing the sales of beverages as well.
6. Payment Mod:
As the use of plastic money is increasing the consumption pattern of the people are
increasing. Although it will have a low effect on the consumption of Pepsi.
7. Employment Opportunities:
As employment opportunities increase the living standard of the people increase and the
people consume more.
8. Aggregate Demand:
In case of Pepsi, demand of the product increases in the season of summer as the hot
weather makes the consumers want to drink more.
9. Aggregate Supply:
In summer season to cope up with the increasing demand they have to increase the
aggregate supply of their product.
10. Economic Policies:
Some of the economic policies which can affect the market of Pepsi are discussed below.
11. Fiscal Policy:
It is the policy of taxes. If heavy tax is levied on Pepsi then its price will rise having
negative affect on its consumption. 1
2. Monetary Policy:
Monetary policy is made to restrict or increase the supply of money in the market. If
policies are made to restrict the flow of money in the market, inflation can be controlled
hence increasing the real income of the people which will ultimately affect the
consumption of Pepsi.
13. Price Policy:
If price of Pepsi is increased its demand will decrease and vice versa.
14.Income Policy:
If income of the people will increase their purchasing power will increase and hence
increasing the market share of Pepsi.
1. SOCIAL AND CULTURAL FACTORS:

Following are the cultural and social factors are also affect the product and market:

1. Psychographic

It is a combination of demographic and psychological factors. Psychological attributes mean how

you perceive things. The company will focus on the behavior of consumers and make different
changes in their product quantity or quality and in promoting their product so that they can attract
the customers. Keeping in view that the behavior of different consumers is not alike they have to
make their marketing strategies in accordance with their requirements so that they are convinced
to buy the product.

2. Religious:

Due to Islamic cultural values customer of Pakistan prefer to use Halal products.

3. And Religious factors can influence the market sales of Pepsi as it happened in 2003 when the
U.S-led attack on Iraq, wide sections of society in Pakistan has banned American multinationals
Coke and Pepsi.

4. Social Status:

Pepsi is a well renowned brand. People who are brand conscious will not drink beverages of
lesser known brands such as Amrat cola. They will try to show their status by drinking Pepsi
which is known to all as a quality drink.

5. Media:

It is a very important factor for marketing. Media these days is a very effective way of inspiring
people to buy a specific product. A good promotion can boast up sales to a great extent.