Red Bull Research | A Multinational Company

Executive Summary

Red Bull has turned itself into a multinational company that offers a product that enhances your brain and your body. Their method of managing their inside and exterior situation and circumstances is becoming an interesting topic for most. Thus we conducted some examination to check out Red Bull's strategies, and especially the international strategies. The exterior analysis was a mix of positive and negative observations, for example they may have the good thing about the customer commitment and the production cost, and however, they are in the territory of major players in the beverage industry which put them at risk. Nevertheless, the industry analysis and peer review helped to shed some light on Red Bull's exterior statement, where we can see a substantial progress in the industry and Red Bull headship in the power drink market.

Through the inner analysis we witnessed that Red Bull leads a proactive strategy towards their business by adopting conventional and unconventional solutions to develop their horizons. Through the worthiness chain model, we seen that Red Bull's inner marketing and sales strategies show cutting edge success on international range. In addition, the HR has completed to appeal to the right individuals to achieve the required goals, simple because they're young and know the young marketplace exactly. The common strategy research of Red Bull has provided Red Bull a differentiated product within its market and a focused-differentiated product within the beverages industry. The norm is that any kind of differentiated products target few determined customers, however, Red Bull did become selective but became massively popular amonst the youth, and therefore, they produce over 1 billion cans each year.

The SWOT evaluation they was conducted on Red Bull has crystallized some Weaknesses and risks. However, the Talents and Opportunities outweigh the downside of Red Bull; moreover, the Weaknesses and Risks that Red Bull encounters can certainly be handled and set by Red Bull.

We can properly conclude that Red Bull has implemented the right target market and the right solution to communicate with the mark market. More interestingly, we can see that Red Bull has used something and especially a marketing strategy that may easily be copied to different counties and culture. In other words, they have spoken the words of the youth.

History

A red cape is not necessarily necessary to get a bull towards you; nowadays it has become available in a can in the hypermarket, supermarket, grocery and the golf club in your area. This all has become possible because of a visionary man called Dietrich Mateschitz, who is the discoverer, modifier, and introducer of the internationally famous drink, Red Bull. Everything were only available in Hong Kong, in 1982, when Mateschitz was at the hotel bar sipping a famous local health tonic. While he was enjoying he previously a eyesight of marketing an Asian drink in the european countries. About two years from the eyesight, the Austrian Mateschitz teamed up with a Thai business man called Chaleo Yoovidhya to create this product. Collectively they fiddled with the merchandise, to take out the syrup aspect of the merchandise and make it fizzy. Canned in a sterling silver and blue container, with a brandname the shows two red bulls heading head-to-head against each other, hence the brand was called Red Bull. ("Red Bull Creator Rides Wave of Success")

In 1987, the merchandise was then taken up to Austria where it had its first groundbreaking success in no time. In started heading international in 1992, when they moved into Hungary. Red Bull is currently energetic in over 100 countries, energizing the population and creating competition as each goes along. One source brought up that we now have over 150 "energy drink" brands, however, all inferior compared to the mighty Red Bull ("A Rejuvenated CREW IS AN EFFECTIVE CREW"). With over 1 billion cans sold each year, Red Bull manages 70% of the world's market show of energy drinks.

Background

Red Bull became strong when they created a superior quality drink that is merely made in Austria. Furthermore, all of its ingredients are synthetically manufactured in pharmaceutical companies to grantee high quality and basic safety. Moreover, due to the ingredients of the merchandise, it is stated that Red bull ("Red Bull FAQ"):

  • Improves performance
  • Improves awareness and reaction speed
  • Improves vigilance
  • Improves psychological status
  • Stimulates metabolism

However, the key reason for the success of Red Bull is within its advertising style. Red Bull tends to spend very little on classic or traditional marketing tools, like Television and Print advertisings. Their marketing strategy is usually from the box and creative. Red Bull is commonly more vigorous in sponsoring extreme spots and offering samples in local events. Due to the fact that Mateschitz has been involved in Formula One racing for more than a 10 years, he used the occasions to draw attention to his brand. Furthermore, he sponsored the entire world Stunt Accolades, an gross annual fund-raiser to help hurt stunt personnel ("Red Bull Founder Rides Wave of Success"). In addition, some observers say that Red Bull uses the 'anti-branding' method of advertising, where they broke the most common method of marketing and branding. Actually what they performed was use the "buzz marketing" strategy or better known as word of mouth. With this plan, they associated their brand with the young ones culture and extreme and adventure-related sports, such as motor unit sports, hill biking, snowboarding and dance music. Thus they targeted their brand directly to people from Technology Y, the so-called 'millennials': people delivered after 1981 who had been believed to be cynical of traditional marketing strategies ("A glance at an integral Feature of Red Bull's Business").

The Buzz over Red Bull one of the young ones and their underground frame of mind has generated Red Bull's reputation as 'the drink' within that community. That's the reason Red Bull is constantly on the use 'Viral' marketing internationally, where the company would prefer to restrict the supply of Red Bull rather than advertise it, wanting that growing amounts of concentrate on consumers to 'catch the bug' and its own reputation would spreads. Through this strategy, Red Bull has efficiently captured 70% of the 1. 6 billion market ("A glance at an integral Feature of Red Bull's Business").

External Analysis

Porter Five Pressure Analysis

The external research is one of the main steps a company should take to achieve to its goals and aims. Moreover, when planning on taking this step we ought to be aware of the essence of formulating competitive strategy which relates to company and its external environment. Also, we realize that the relevant environment is very wide; encompassing interpersonal as well as financial forces, the main element aspect of the firm's environment is the industry or market sectors where it competes. In addition, caring for industry structure which has a strong impact in identifying the competitive guidelines is very important because it includes the game as well as the strategies possibly available to the firm. Makes beyond your industry are significant mainly in a relative sense; since outside the house forces usually affect all firms on the market, the key is situated in the differing skills of firms to deal with them. Michael porter has offered a unique framework for make an easy way to investigate. Michael Porter's construction for industry examination is identified in his book Competitive Strategy (1980). In this particular book Porter remarks that we now have essentially five makes which determine the fundamental structure of an industry.

Rivalry among existing opponents, purchasers, suppliers, potential entrants in to the business and Risk of alternative products are those five forces which can have positive or negative effects on industry framework by causing the industry pretty much competitive.

Potential Entrants

In this case the potential opponents of red bull are soft drinks companies, which can produce energy drink with out adding bubbles. When the barriers of access are high, it is problematic for potential opponents to enter the market. Three main sources of barriers to new entry: brand commitment, definite cost advantages, and economies of range.

Brand loyalty

Due to the done research, creativity in creating new energy beverages, proper and job advertisement, holding many special events and sponsorships, and having high quality because of its products makes Red Bull as well known brand with a solid brand loyalty which really is a barrier for any new entrant to enter into the power drink industry to compete with it.

Cost advantage

According to the Michael Porter, normally cost downside is a huge hurdle for companies to enter an industry as new entrants since it can be cost advantage for existing companies in that industry. Also, companies by making use of cost advantages can compete and beat their competitors quickly because usually it is difficult for new entrants to match their companies with the low cost composition. Therefore, Red Bull because of Red Bull's superior creation and operation operations, and their experience in the drink industry, and control of its inputs corresponding with their experience in producing red bull drinks, benefit the price advantages with keeping its quality in the high level. Although there a wide range of energy beverages existing on the market with the low price alternatively than Red Bull, as quality aspect they have got not cost advantages both in quality and price, so Red Bull is steps forward from its competitors in cases like this.

Customer switching cost

In food and beverage industry there is absolutely no switching cost for costumers with taking into consideration the quality level, therefore it can be viewed as as menace for existing companies in this industry. In this case, Red Bull is not exceptional, so they need to keep their quality at the same level never to loosing their market show by arriving new entrants since it is real risk to them.

Government regulations

One of big issues and always concerns for companies which like to go internationally is government regulation, also, in cases like this some European countries countries have problem with selling Red Bull and have tried out to ban it. They declare that Red Bull was the cause of death of people in those countries. France, Belgium, and Sweden ban using the mixture of Red Bull and alcoholic beverages. So, it's rather a threat to them in taking the marketplace share and developing a bad image for their brand. . ("French Ban on Red Bull (drink) Upheld By Western Court")

Intensity of Rivalry

Rivalry in a few industries is characterized by such phrases as "warlike, " "bitter, " or "cutthroat, " whereas in other market sectors it is termed "polite" or "gentlemanly. " Energy drink industry has an intense rivalry due to a volume of interacting structural factors:

Industry competitive structure

Due to the competition in the power drink market, Red Bull focuses on non-price competitive tool like offering exhilarating happenings, high quality products and sponsorship. In contrast with other rivals Red Bull attract more costumers to its company by growing in 45%marketshare. Consequently Red Bull has a significant affect on its competitor's performance on the market because Red Bull is one of the pioneers in energy drink industry and many companies try to follow and consider Red Bull as benchmark.

Industry demand

In the energy drink industry, as a result of various proper adverts to encourage people to use and drink energy beverages (giving the image that individuals can take a flight) the demand for drinks is increasing. Thus, this is an excellent point for the business because there are lots of opportunities for each company to complete the current demand and rivalry have a tendency to reduce on the market, also there is space for everyone to leap in enter the industry (growing level), and the profit of the business will increase which is a goal that each company is seeking it.

Buyers

Having strong and stable costumers are suppliers and makers concerns, producers prefer to have costumers with large quantity level of purchasing and stable financial status basically in energy drink industry especially Red Bull costumers (purchasers) are wholesalers and big retailers. These buyers choose the energy drinks through the business or its staff, and resell those to supermarket, bars, restaurants and end users. Red Bull faces buyers with higher level of bargaining power, and it is real risk for Red Bull. Significant reasons because of this high bargaining vitality of buyers in this case are; the transitioning costs in the energy drink industry are incredibly low. So, Red Bull purchasers can turn from Red Bull to other energy drink companies which produce it with lower prices without any difficulty. Also, in most cases energy drink customers (merchants and wholesalers) purchase products in large quantities, which is obvious that the more buying in volume, the greater bargaining power the customer has. So they can use their power to reduce the expense of energy beverages.

Suppliers

The bargaining power of suppliers is the same storyline like bargaining ability of buyers but from other side. Red Bull company has both kind of suppliers as bargaining electric power, some very strong and others vulnerable, so they can balance between them. For instance, the distributor of Glucuronolactone is Glaxo Smithkline Company. Red Bull energy drink buys their Glucurnopolacton inputs from this company. So the bargaining power of this supplier is high on Red Bull. However the other substances are set up from several small suppliers, and Red Bull has the bargaining power with them. Also, Red Bull has many stations and substitutes suppliers for its normal raw materials, to allow them to turn from any dealer to cheaper and even more adaptable one.

Substitutes

All makers always bring the concern of replacement products for his or her products and always looking for ways to protect and make it through themselves from this trend. Energy drink industry isn't an exception, so players in this industry always make an effort to keep level of quality high, convenience price and other thing which may make costumers more satisfy. Coffee industry can be a threat for energy drinks due to existing caffeine containing drinks in coffee and it can be a powerful potential product replacement for energy drink. Therefore, Red bull must manage its pricing strategy and product quality to keep its costumers and satisfy them more day by day that they were successful credited to reports not only Red Bull could protect its products against other substitutes but also, they have increased in their market show in US market by 45%.

Industry Analysis and Peer Review

Industry Characteristics

Beverage industry is divided into many categories such as alcoholic vs. non alcoholic, (hard vs. carbonated drinks) and within soft drinks still there may be other segmentation such as carbonated soft drink (CSD) and non carbonated soft drink. "Carbonated Energy Drinks account for not even half of the total volume. This body is closely skewed however by the popularity of still brands in Asia "(Canadean Press release)

According to Beverage Break down, "in 2004 the U. S. non-alcoholic refreshment market totaled 14 billion conditions (192-oz). Carbonated carbonated drinks made 73. 1% of the full total with non-carbonated products composed of 13. 7% and packed water in bottles accounting for 13. 2%. People in the usa spent roughly $92. 9 billion on a yearly basis on refreshment beverages".

Energy drink is a comparatively new product launched in 80's and has been growing noticeably "with the marketplace more than doubling in size since 1998" (Canadean Press release). The next chart is proof this inevitable progress and the attraction of this progress for drink maker. The industry has been experiencing a substantial growth but still growing at the quickness that draws the big players in soft like Coca Cola drink to enter to the high margin business.

Food and beverage market are critical enough that out of 100 new product development 90 NPD fails. The inability results from a poor interpretation of consumer's style and translation of those to opportunities. Austrian company, Red Bull, as a pioneer style settler has made its lot of money from their unique strategies in advertising, marketing and other product's characteristics such as Packaging, Taste, color and Product say.

Global consumption

According to Beverage digest report, Asia is the most significant leading market in ingestion of energy beverages followed by Western Europe and North America as the next and third market segments.

Asia has been loosing some of 20% of its market share is past 6 years. However, this decline has been offset by the second and third market mainly due to the steady growth in market of carbonated E. D in THE UNITED STATES. "UNITED STATES market is currently almost 40 times greater than it was in 1998"

Peer Review

In North America today more than 200 energy beverages existed in US. Regarding to bevNET. com, after a rigorous marketing research the best energy beverages are "AMP by Pepsi Cola, KMX Red by Coca-Cola Company Red Bull by Red Bull North America".

"Red Bull's market dominance seems guaranteed. No other competitors have either the distribution channels or, moreover, the good posture of rebellious infamy to be looked at real threats".

Year 2001, in UK energy beverages market "21 new refreshments" have been created that could have power the red bull into a competition. However, red bull can still enjoy being truly a market head.

In the next stand there are representations of top 14 non- alcoholic markets where some of them are in the specific market of the energy beverages.

Coca-Cola(Juice, Soft Drinks, Normal water) ($21bn)

Suntory(Water, CARBONATED DRINKS) ($4. 4bn)

Nestle(Coffee, Soft Drinks, Water) ($19bn)

Starbucks(Caffeine) ($4. 0bn)

PepsiCo(Juice, CARBONATED DRINKS, Drinking water) ($10bn)

Sara Lee(Coffee) ($2. 7bn)

Kraft Foods(Caffeine, Powdered Refreshments) ($4. 6bn)

Tchibo(Coffee) ($2. 7bn)

Unilever(Tea ) ($4. 5bn)

Red Bull(ENERGY BEVERAGES) ($1. 6bn)

Cadbury Schweppes(Soft Drinks) ($4. 5bn)

Cott Corp(Drink, CARBONATED DRINKS) ($1. 4bn)

Danone(CARBONATED DRINKS, Normal water) ($4. 5bn)

Ocean Spray

Source: http://www. mind-advertising. com/sectors/sector_softdrinks. htm

Industry Life Cycle

Energy refreshments were at first pioneered by Asian companies, however they became popular in European countries the later 80's with the arrival of Red Bull. You can find more than 200 energy drinks been around in US market only and this shape is increasing due to the high margin of the business.

In 2004, carbonated soft drinks posted the growth of 1% which is unlike its usual trend, case of growing 2% to 4%. Noticeably, this unavoidable growth was influenced by Diet and Energy beverages. While other carbonated drinks posted volume change of 1 Digit, brands like Red Bull and Hansen Natural reported the 45% and 56% of positive amount change in 2004.

The market, now approximated to be worthwhile $10 million, has been expected to increase to $300 million or even as much as $2 billion within the next few years. Two times digit growth on the market is the primary factor contributing to Energy drinks life cycle in its embryonic stage (development).

Since the marketplace is not old enough, the amount of players are increasing and even the Coca Cola and Pepsi will be the new entrant which add to the well-built assumption of embryonic period.

Brand devotion and high anticipations are still doubtful in this stage and it's because the individuals are still revealing to new products and new boasts. Thus, players are fighting for product feature expansion such as low-carbs and sugar free plus new product's says such as "improve amount, effect time and stamina. "

After introduction of Red Bull in past due 80's, industry went to an introduction period. By 1998, the size of the industry doubled and still growing with an easy pace following highlighted area in the graph is an approximate level of the life cycle at as soon as.

Internal Analysis

Value Chain

Logistical issues at Red Bull in of high importance. Because of the fact that all ingredients in the Red Bull drink is synthetically created by pharmaceutical companies, they ensure that their products are carefully dealt with to maintain the coffee quality and avoid pointless costs. Red Bull always makes sure that they align with high quality logistics provider to attain their proper goals. Red Bull is designed to have web-based visibility on their source chain, thus they starting their logistical activities or selection on:

  • Flexible warehouse network
  • Transportation management capabilities
  • Strong information technology offering

With 1, 600 employees doing work for Red Bull world wide ("Gulf Reports, Red Bull plans to set up Dubai plant"), Red Bull required those requirements as they are experiencing year-after-year of high progress, which make the inventory forecasting and management challenging. That's the reason logistical issues have become progressively important, and that is why they choose to outsource the logistics to companies that can comply with their network of multi-client warehouses needs ("Red Bull & OH Logistics"). Interestingly, Red Bull uses small distributors in small local market segments, if those small vendors don't perform up to Red Bulls specifications they establish a warehouse and force teenagers to files their vans with Red Bull's product and deliver it every where. This way, the small distributors generally break even within three months and are profitable within six ("A Bull's Market - The marketing of Red Bull Energy Drink").

Primary Activity: Operations

There is little information about the procedures process of Red Bull. However we will enlighten you with the contents and brief information about the presentation company that Red Bull handles.

The great product which is provided by Red Bull one of its main components of success. Known for increasing performance, improving focus and reaction rate, improving vigilance, increasing emotional position and stimulating metabolism, Red Bull's magic formula is within its substances. The substances in each Red Bull drink (250ml) contain:

  • Taurine (1000mg)
  • Glucuronolacton (600mg)
  • Caffeine (80mg)
  • Niacin (20mg)
  • Vitamin B6 (5mg)
  • Pantothenic Acid (5mg)
  • Vitamin B12 (0. 005mg)

According to Red Bull, It is a combination of all ingredients collectively, which bring about Red Bull's benefits ("Red Bull, Ingredients"). .

The packaging process of Red Bull is completely done in Austria. As well as the company of Red Bull's cans is Rexam, and they are regarded as the world's largest provider of drink cans. Rexam manufactures different types of cans for different sectors, however almost half of their revenues result from Coca-Cola and Pepsi Cola. Additionally, industry estimates present that Rexam gained about $22 million from the sales of Red Bull cans ("How Does Red Bull Package Its Product?").

Primary Activity: Marketing and Sales:

With the control of 70% of the 1. 6 billion market (about 1. 12 billion), Red Bull has achieved all of this through intensive unconventional marketing strategies. Concentrating on young people, mainly the Y-generation, Red Bull has implemented eccentric marketing tools that has very efficient on the prospective market. The strategy of sponsoring local pursuits like the Red Bull music academy in the USA, parachuting in South Africa, Go-Karts in Kuwait, and so many more in various countries has achieved its target of attracting its target market which gets fired up when viewing such sports. A number of the strategies used for marketing Red Bull include:

  • Using pick-up trucks as mobile exhibits, painted blue and gold with a huge can of the drink attached on top of the vehicle.
  • Designed to be eye-catching, these devices were targeted at promoting the red bull brand as more youthful and somewhat 'off-the-wall'.
  • Cans of the drink were also given out absolve to people on the road who was simply identified as being in need of energy.
  • Red Bull was presented with to golf club DJs, unfilled cans would also be remaining on furniture in hot places such as trendy bars, clubs and pubs.

Secondary Activity: Technology

The information about the technology that Red Bull uses was quite scares. However we could securely say that Red Bull little activity done on their R&D aspect because Red Bull does enjoy any sort of economies of level. Red Bull has only 1 main product, which is the Red Bull energy drink and recently they created the new Red Bull energy drink 'sugar-free'. Hence, the key difference between the original Red Bull drink and the sugar-free drink is the fact it offers 0g of sucrose and 0g of sugar, where in fact the original product has 21. 5g of sucrose and 5. 25g of sugar. Furthermore, each 'sugar-free' drink has only 8 calories from fat (European union)/ 10 energy (USA), yet it does not loose some of its energetic results ("Red Bull, Ingredients").

Secondary Activity: Human Recourse

Red Bull is famous for practicing what they preach, especially when it comes to recruitment. Due to the fact that Red Bull stimulates their product as a Hip and young product, they be sure to recruit staffs that are young, in touch with youth culture, vibrant and innovative. For example, they make that happen by recruiting university or college students as 'scholar brand professionals' to market its product among young university student groups ("What Sort of People HELP Red Bull?"). However their recruiting will not happen by Red Bull themselves, but they makes sure that it is implemented by every one of the outsourced activities. However, it is well known that almost all of Red Bull's 1, 600 employees are marketing experts and are the real movers of the Red Bull drink ("Marketing Eyeball, Red Bull Car").

Group Customers and Market Segmentation

As it is known any successful company must have a certain customer group. The customers which were targeted by Red Bull were the ones that were looking for pleasure, alertness, and focus depending on age, status, and lifestyle. Four consumer categories were Red Bull's goal under age 16-30: students, team people, sport people, and employees.

College students were the main target of Red Bull. Since university students look for something that could enhance their focus on doing their assignments and tasks, and staying right away for studying for exams then Red Bull is the best answer for them. It would improve their concentration in their mastering Additionally; Red Bull has used this group to enhance their promotion. Relating to Biz/ed, chuck get-togethers those students were emboldened to advertise the merchandise in the campuses of the colleges as what they call them "student brand managers". Those students collect the info and make a report of a market data research to the company. Based on that strategy and the youngsters generation (high school and colleges students), Red Bull could disperse the reputation and the level of popularity of the drink and concentrating on supplying the product rather than making use of the original marketing ways of promotion ("A Look at an integral Feature of Red Bull's Business").

The second category of Red Bull customers are the night golf club people, because the drink has some chemicals that would boost the person's emotional position. In addition, Red Bull emerges in the nightclubs with regards to the cultural background. For example, nightclubs in Dubai offer Red Bull for people who do not drink alcohol like the Muslims, which made it a major replacement for alcohol compared to that group. However, Red Bull is still individually mixed with alcohol to set-up both Red Bull highness and the alcohol discomfort. Furthermore, Red Bull in addition has made music situations for those sets of customers like the "Red Bull Music Academy in 2005" in Seattle, Washington in the United States. ("Red Bull Music Academy 2005")

For the exercise that the drink offers, Red Bull in addition has promoted the product for the sport people. Among those people, there are the athletes, the sporting individuals, the airborne-sport people, water-sport people, the bikers, the skateboarders, and the skiers. Red Bull highly endorsed this group numerous sport celebrations, and one of the famous one among those is the "Red Bull Dolomite Man" that occurred in Austria in 2005. ("Red Bull Dolomite Man")

Red Bull's minor groups will be the white-collar and the blue-collar personnel. Red Bull can support white-collar workers to focus more face to face to improve their performance, and it could also help them stay right away if she or he needed. The drink would also permit the blue-collar staff to work extra time with out the sensation of exhaustions for the exercise that the drink provides. However, Red Bull didn't focus on this group, so there were no special initiatives aimed towards them.

Within the four groups, there a considerable amount of customers who look for diet product. To the category, Red Bull produced the sugar-free Red Bull to incorporate the dietary plan customers with rest of the customers that are within the four teams.

Business Level and Universal Strategy

In the universal strategy Red Bull there are two views, there's a general strategy from energy drink market point of view, and there is a common strategy from soft drink market perspective. From energy drink market point of view, since Red Bull has few economies of scope, the strategy adopted by Red Bull to follow is differentiation. The price tag on the drink is about 5Dhs in the UAE, which shows the clear differentiation of the product, especially in a market where everyone is competing on a single customer segment. Corresponding to Biz/ed, Red Bull was able to build a strong brand image through: using Red Bull vehicles that acquired big cans about them, presenting free cans to people, and providing Red Bull cans to golf club DJs ("A Look at a Key Feature of Red Bull's Business"). This plan made Red Bull to be the market leader of 70% market in the power drink market.

From the soft drink market industry vast point of view Red Bull applies the Focused-differentiation common strategy. Red Bull has a very good brand image in terms of carbonated drinks industry. The drink can only maintain this image through focus-differentiating the merchandise by separating their customers according to the demography (time, lifestyle, culture) and the geography, because the industry has many aggressive competitors with a robust brand image like Coca Cola and Pepsi.

SWOT

Strengths

Industry leadership

Throughout the globe, Red bull is the leader in the energy beverages market with total annual sales of billion us dollars. Based on the statistics, in season 2003 red bull achieved 80% brand share of the energy drinks market in the united kingdom. Also in the European countries, they produce two-thirds of overall amount in your community. Additionally, Red bull is rivalling in 13 Western European countries and it is the main head in 12 of these and other top 20 brands are having only 17% of talk about. Since year 2000 (compare to 1990s), it's been a definite shakeout, and fewer new brands are releasing new products to the market. Furthermore many products provided by leading drink manufacturers cannot contend with Red bull on the market, such as Coca-Cola's Melt away. ("Red Bull SWOT Analysis")

Marketing capabilities

The successful marketing strategies and consumer awareness of Red bull presented stimulation beverages to the traditional western market and has resulted efficient drinks progress throughout these years. Red bull is increasing its consumer brand consciousness by employing targeted marketing promotions that targets 18-25 age groups. Also the business has been differentiating its product by sponsoring dangerous sports such as Solution 1 traveling; free winter sports; BMX biking etc. Furthermore, Red bull strongly stimulates itself by using its slogan: "Red bull gives you wings". ("Red Bull SWOT Analysis")

Alliance with major distributors

Red bull has extended its brand's marketing distribution by establishing an association with Cadbury Schweppes in Australia. This relationship allows consumers to get access to Red bull over the nation. Because of this collaboration, sales of Red bull are 40% higher compared to this past year and looking to surge significantly year-by-year. Furthermore, this partnership can reduce competitive risks from Red bull's competitors and broaden its sales opportunities due to the fact that Cadbury Schweppes can make it to reach stations such as vending machines, food courts, colleges, sports a travel facilities, clinics etc. Another relationship that Red Bull North America performed was with Ozburn-Hessey Logistics, where Red Bull noticed its supply chain get boosted this past year. OH Logistics, Red Bull's single national provider, managed more than 16, 000 shipments of the drink during 2004 and exposed five locations in five state governments in the first 3 months of procedure. ("Red Bull & OH Logistics") ("Red Bull SWOT Analysis")

Weaknesses

Lack of innovation

In time 2004 some new energy drinks have been got into into the market. One of these is called Raw Energy Fuel Cell, which is Canadian vitamin supplements and glucose drink and it is certified by World Wrestling Entertainment. This product has quiet the same effects that Red bull has except that it does not contain Taurine and has less levels of caffeine compared to other energy drinks. Furthermore it will come in 330ml PET containers, which makes it look different in comparison to Red bull (250ml cans) and other competitors. However Red bull only made little changes to its product format throughout these years and has been left behind in comparison to other opponents. ("Red Bull SWOT Analysis")

Reliant on small product base

Red Bull Company only offers energy drinks along with a sweets free variety, which is tranquil at risk because of the market fluctuations. What makes it riskier is the fact energy and sports drink is the smallest sector of the overall soft drinks market. These days, consumers' hobbies are changing toward healthier alternatives such as no carbonated, decaffeinated, fresher beverages. Therefore Red bull will definitely benefits from launching healthier and more lucrative drinks into the market. ("Red Bull SWOT Analysis")

Marketing expense

In order for the Red bull to improve sales, it requires to spend a lot money on advertising. The Energy drinks have strongly connected to fashion and children trends, so the company has to plan itself as in line with this when confronted with huge opponents such as PepsiCo. The competition is so strong that even though Red bull is spending large sums on promotional initiatives, other rivals are also trading a whole lot money for promoting their products. This in turn results in a smaller return for Red bull. ("Red Bull SWOT Analysis")

Opportunities

Diversification of retail outlets

In order to increase sales, Red bull recently is using trade as a fresh route to increase sales. Vending machines work advertising tool and sales tools, because of the constant exposure that can create. Companies such as Coca-Cola and Pepsi have been using this route for so very long and companies such as Glaxo Smithkline and out period have also inserted the market. Red bull is also launching vending machines, which shows that it's focused on diversification of its syndication network and confronted industry fads. ("Red Bull SWOT Analysis")

Extension of product line

Because of extensive marketing and advertising budgets that are needed to introduce a fresh product from a new entrant to the marketplace, the likelihood of new opponents entry into the market is suprisingly low. It's more likely a new product as an extension of an existing brand will be successful best in the non-cola carbonates sector of the market. By introducing a new product, Red bull can use its strong brand recognition to advertise its new product or in the other words, it can capitalize on its strong consumer knowing of its brand. ("Red Bull SWOT Analysis")

Geographical expansion

Red bull has a broad physical reach, which is because of its sales to more than 100 countries. Red bull is now entering the developing marketplaces such as India. It also has a strong distribution package with Mount Shivalik and Narang Hospitality Services to be able to manage and distribute its logistics of the drink. Now Red bull has started with North, East and Central India, but in the long-term they need to expand into other countries. ("Red Bull SWOT Analysis")

Threats

Public health concerns

Red bull is considered a hazardous drink in some countries. For instance, France restricted Red bull due to its high caffeine containing drinks content plus some experts think it might be deadly in a few situations. Also EU's high court docket declared that unnecessary use of Red bull is a genuine risk to open public health. Denmark also suspended its use. Furthermore, Turkey, Ireland and U. S are worried about its use. In Norway Red bull is being used as a medication and in Japan it used to be bought from pharmacies. These issues can mess up the reputation and image of Red bull. ("Red Bull SWOT Analysis")

Maturing market

The marketplace that Red Bull intensely depends is growing and becoming older, hence there is a belief that the prospective market is proclaiming physically, emotionally and psychologically to improve. Red Bull's target, generation Y, is becoming older, and maybe their change my make Red Bull's marketing attempts ineffective. ("Red Bull SWOT Analysis")

Consumer knowing of health insurance and well being

The increasing expansion of water in bottles sales is a sign that people are becoming health conscious. Two decades ago the per capita consumption of bottled water was 1 liter, whereas now they have increased to 35 liters. Despite the fact that Red bull has launched its sugars free version but nonetheless the high amount of caffeine is a concern for consumers. ("Red Bull SWOT Analysis")

Recommendation

After looking at the actions and procedures of Red Bull, and learned that they have so far achieved success in their section of the industry. However, some loopholes have been learned that has to be considered by Red Bull. The main menace that is suspending over Red Bull is the lack of variety. Red Bull focuses mainly using one product, which creates a kind of risk that other major companies like Coca-Cola and Pepsi-Cola could come along with a better product and more robust advertisement. Despite the fact that Red Bull varied insurance firms a sugar-free energy drink, it is considered to be not enough to prevent more robust companies come and eat out of these energy drink market show. Thus, we strongly advise Red Bull to focus on horizontal and unrelated diversification to extend their product profile and reduce their risk. Another advice is to extend their marketplace to increasing the marketplace size, hence adopt a forwards diversification form. The existing target market gets elderly and changing, which will be the student, players, and clubbers from generation Y. This change could make the current marketing initiatives less-effective, hence ether the marketing styles must change, or they must expand their target market.

Conclusion

Through our observation of Red Bull's company we figured Red Bull mainly implements that same strategy globally. The marketing strategy, for example, focuses on the same marketplace, like the students and players. Moreover they sponsor local happenings in most of the countries that they are active in. Quite simply, Red Bull's strategies have successfully proven themselves to be generic, where they could be cloned in different countries. Hence, their activities have grown to be pretty much general. However, their strong position must not keep them from the fact someday a solid competitor will come in and motivate them out of the market. Thus, they have to reconsider their diversification to maintain or even develop their current position.

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