Red Bull is a leading brand, especially among the functional drink segment faced severe issues since it lost some market shares regionally to the competitors. The company management was by then unsure on the future development, growth, and diversification of Red Bull. The entire administration including the board of directors even tried to maintain the premium brand image and reputation of Red Bull. However, the brand was more diluted, especially in the distribution channel. Therefore, our opinion in this report is that the entire solution of this Red Bull nightmare lies in the hybrids of various marketing strategies. Marketing strategies and management is a concept that has earned a fundamental concern with the nature of the marketing program or else, the mix in concepts of marketing. According to the Journal of Marketing, which was published by Yoram Wind and Thomas S. Robertson, marketing develops a strategy that depends on the analysis of the competitors, consumers, and various environmental forces which are supposed to be combined together with various strategic inputs including the human resource and financial. The primary aim of this combination is to achieve the overall integrated business strategy (Wind, & Robertson, 1983).
The entire product development, market penetration as well as the diversification strategies are capable of paving the way for the Red Bull Company to get competitive benefits over the regional market. According to the Theoretical Aspects of Marketing Strategy, a Journal that was published by Mykolas Romeris University in 2009, it is clear that the selection of marketing strategy does not end at the company. This is because it is an essential concept to monitor and evaluate the selected marketing strategies regularly. Furthermore, in the assessment, evaluation, and active monitoring of the marketing strategies, the journal adds that even well-selected strategy for brand marketing may be ineffective if it does not have several adjustments that are conducted, taking into account assessments, development and monitoring (Mykolas Romeris University., 2016).
Introduction to the Company
Red Bull is an energy drink brand that is locally sold by the Austrian Company called Red Bull GmbH and was developed back in 1987. Being the highest-selling energy drink as well as a famous brand all over the world, Red Bull have gathered enough reputation in the world market. It was founded by Dietrich Mateschitz, who modified a functional tonic he found on his visit to Asia to match the western taste. He did all this since he wanted to establish a drink, which did quench not the only thirst but also had some functional benefits (Red Bull, 2013). It was with the core foundation of this drink that Mateschit developed a company which is now the world-known for producing the best energy drink and worth Billion dollars (Zenith International, 2012). Therefore, Red Bull is a titan of energy drink industry and have managed to establish, grow and dominate into a lucrative new niche in the drinks market right under the traditional sector like Coca-cola.
The company has increasingly targeted the growing and competitive market for energy drink since their market has started to decline (Zmuda, 2014). The drink brand itself is incredibly fascinating and of course, developed upon associating itself with the myriad of teams’ people and events, which makes it more recognized for its value instead of its product. This triggers the need to explore and implement various marketing strategies, a with a primary aim of increasing the entire sales of the brand. Currently, the company has a decision to venture this brand into diversified regional markets, and this report presents various appropriate marketing tools, using the PESTEL and Porters Five Forces. The report will be provided to the board of directors who have to make a concrete strategic decision on the branding to a regional market-segment, regarding the target and positioning.
Analysis of the Situation
The Industry Analysis: The Porter’s Five Forces.
|Forces||Levels of Threat||Explanation|
|Buyers Power||Moderate||Products with low switching costs and experience oriented, minute volume of purchases, tiny size of buyers, irregular purchases, more competition or rival products with low or nor functional distinction.|
|Rivals Threat||High||Developing company with improving the market share for each competitor. Switching costs are very low, with many players in the industry so every industry have smaller share of the pie.|
|Entry Threat||Moderate||Most beginners are discouraged if there is stronger brand in the market e.g Monster or Red Bull. No government or authority restrictions on entrance and product function does not have any patent. The company is growing and profitable, therefore, attracting new investors to the industry.|
|Threat Substitution||High||High price of energy drinks, low switching cost, and health concerns. Also, there is brand loyalty as well as experience that substitute the lack.|
|Supplier Power||Low||Production requires undifferentiated raw materials and we assume that purchase are made in bulk.|
(Mykolas Romeris University., 2016)
As soon as the entire regional market reaches the maturity state or the growth rate reduces, competitiveness among the companies is going to increase. Therefore, if Red Bull can provide alternative products that have the same functional advantages at lower health risks will increase the overall prosperity to substitute out of the energy drinks. Also, with the aim of improving the willingness of the buyer in the region of expansion, to purchase in the current competitive situations, the organization is supposed to offer the experience of their brand in addition to its functional benefits.
Action Plan/Marketing Strategies
In a short period, approximately one to three months in the area of expansion, Red Bull is supposed to provide two sizes of the can, that is, a 16 Oz and 8Oz. We are highly recommending the large 16 Oz. can size, since it has been a sort of the company practice. We have the knowledge that Red Bull wants to maintain its premium image and reputation in the new region. Nevertheless, providing the large can with a little increment in the prices can preserve the existing model and also, give the customers excellent value for their cash. In the medium run of the company branch, approximately 4 to 6 months, it should consider extending their line of product and add more flavors as well as new attractive packaging. Bearing in mind that there are health concerns about energy drinks, it is the responsibility of the company to ensure production of high-quality product via various tests and try as much as possible to provide healthy energy drinks as a part of their line extension. Within a long-term operation, about a year, it would be perfect if Red Bull introduce their energy drinks under the elixir segment like vegetable or fruit drinks with the extension practical benefit both recovery and health wise. With the aim of protecting the brand image, these brands should be under separate branding. For instance, the Herbal Tea, branded as Carpe Diem. Finally, for the Global market, Red Bull should introduce a new version of Canned-Coffee drink, specifically in the Scandinavian Nations, where coffee growth and consumption prospect is significant compared to the United States.
The distribution channel that is available currently for Red Bull drinks is not producing more excellent results. However, according to analysts, they criticize the visibility of the company’s cans everywhere to avoid the destruction of the premium image and reputation of Red Bull. In this report, we agree with the analysts in that aspect. In the same case, to flawlessly execute pull strategy of marketing, we recommend removal of Red Bull from the Mass Merchandisers. The company should have access to convenient stores compared to the Mass Merchandisers. Convenient locations of the shops should be situated near the main road junctions, campuses, and even high ways (In Kessler, 2013). These stores will give the company the required exposure to the broad target market while of course, maintaining the limited availability. In fact, Hansen Natural has tapped into an open store refrigerator. Therefore, such locations will be an excellent source of competitive parity instead of a competitive benefit.
The entire activities for advertising in this company are supposed to focus on generating popularity or publicity as well as advertising the Red Bull’s products. Therefore, Red Bull can have a successful implementation of the pull strategy by developing a sturdy base of opinion leaders such as athlete endorsement or using celebrities. Also, we are supposed to be more involved with the local and regional sports and music scenes, even before we enter the market. Through the local activities support, the company will also be able to generate a specific cult that follows to the young population. For instance, Red Bull may sponsor the local academies training or local UFC athletes. Another way of promotion and advertisement that can make the company generate a buzz and of course, raise the demand for the product is through Internet advertisement. Through money investment on the internet marketing, the brand will attract attention and get ultimate visibility (Ackerman, 2013).
The pricing of the Red Bull products in the region of expansion is supposed to vary from occasions. In places where the demand for such drinks in relatively inelastic, such as in clubs and bars, making the price of a single can of Red Bull at about $3.50 can be sensible, assuming that the large can of drink is sold at $3.0 on other ordinary shops. On the other hand, the small cans should be provided as a value pack. For example, if it is $1.5 for every can, it can be provided in a pack of 16 cans with a price of $24. This strategy can correctly work, especially to those consumers with less purchasing powers and make the company penetrate the markets. The target for the management is to sell an average of 20 cans for every person in the region. The attempt of offering small discounts on the original value packs help in inducing more sales and of course, stimulate the entire purchaser’s behavior. In fact, young adults and teens will positively respond to this discounts and price changes by purchasing more cans. As part of the market penetration strategy, the company, on the other hand, will win back market share.
Distribution Channel Analysis
The Red Bull Company distributes via selective distribution strategies. The process appears at favorite on-premise locations and makes the brand to get more attention and visibility in such regions. It is also great that in the cells that Red Bull distribute, we deal with the individual shops as well as retailers, rather than big chains to significantly reduce cost and time. Red Bull has some distribution channels through blades stores, clubs, bars, underground disco, and pubs. However, the number of such circuits are kept limited as an attempt of the company to induce attention and of course, avoid damages on the premium image (Red Bull, 2013). We recommend certification or licensing of more distribution channels compared to what we have now, especially in the new area of expansion, where many people do not have any knowledge of our product. With a primary aim of increasing the brand exposure and also to make the product available and easily accessible, Red Bull should add several channels and outlets.
In this report, we have discussed various marketing strategy as well as the diversification strategies that will improve the product attention of Red Bull Company and provided multiple actions that should be taken to fulfill the plan. The main thing Red Bull should focus on is gaining their market share in the new area and developing the regional market opportunities. Through this aspect, we recommend the company to follow a combination of product development, penetration of the market, and diversification strategy. The company will apply the product development and market penetration strategies to gain the competitive parity and also attain their market share. Furthermore, the diversification strategy will be used by Red Bull Company in the attempt of sustaining future growth. Note that diversification depends on the entire combination and sharing of resources and also, the core capabilities of the businesses. The set of motivations looks at how the resources of various companies can be suitably connected in the diversification mode and identify the fundamental conditions that can help corporate executives in the formulation of a successful diversification strategy.
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