Red Bull Essay

 CASE #3 – Red Bull

CASE BACKGROUND / OBJECTIVE STATEMENT  

         Red Bull was developed by Dietrich Mateschitz who was inspired by a functional drink called Krating Daeng in Thailand; Mateschitz then modified the ingredients to fit the westerners’ taste and partnered with Chaleo Yoovidhya to introduce Red Bull to the market.[1] With excellent marketing communications, Red Bull was able to establish itself as a brand leader in an entirely new market segment for energy drinks - veering away from the traditional methods of marketing, Red Bull communicated their brand and product through word of mouth and viral marketing tactics. Red Bull was able to build an original brand image that is closely linked with energy and extremism of the youth. Red Bull also sponsors numerous sports teams and events that are in line with the psychographic behaviour of their target consumers which effectively communicated its brand slogan “Red Bull gives you wings!”

       Several marketing issues are identified from Red Bull. Red Bull faces significant competition as more companies like Coca-Cola and Pepsi gain market share in the energy drink category. Also, Red Bull has to face the question of  how to respond to the possible changes and trends emerging from the behaviour due to the maturity of its current market. With these in mind, what should the brand do to sustain its substantial share in the energy drink market?

SITUATION ANALYSIS

1.          Target Market. Red Bull’s original target market are the young consumers, aged 16 to 29, who want to be viewed as unique and rebellious; and are therefore into extreme sports activities. Through Red Bull’s high product visibility in these kinds of events, it was able to create a symbolic image of authenticity and extremity that translated to consumers with cult-like loyalty. But this existing market is maturing in age and Red Bull has to face the possibility of the potential loss of this market due to the changes in current consumers’ behavior from being adventure-seeking to still being active but preferring the less extreme adventures the image of Red Bull portrays. One of the things Red Bull must consider is that their current market’s brand loyalty is rooted on the fact that they see Red Bull’s brand image as a mirror of their own identities and behaviors. If their behavior changes in a way that no longer fits with the image Red Bull is trying to portray, Red Bull would then be faced with a decision of whether to continue focusing its efforts on the adventure-seeking youth or to employ a new marketing strategy to fit their brand image with the behavioral change that their currently maturing market may exhibit in the future.

2.        Competitors. While Red Bull continues to be the global market leader for energy drinks, the industry continues to grow and the threat from competition also grows.[1] Competitor brands vary per country but the most notable ones include Monster, Burn from TCCC, Rockstar from Pepsi Co., and Lucozade. The brand Monster presents the biggest threat to Red Bull as it continuously grows its market share, ranking 2nd to Red Bull in market share.[5]

R          Healthy Lifestyle. The market’s changing focus towards more healthy drinking varieties is something Red Bull must watch out for. In fact, its competitor Monster seems to have already responded to this by introducing a zero-calorie Monster Absolute Zero to the market in 2010 that further boosted the brand’s growth. Aside from being less-adventurous, Red Bull’s current market may also opt for healthier options as they age. The health-consciousness trend presents a threat to Red Bull as they continuously face concerns from various health officials due to the product’s unhealthy ingredients like caffeine and sugar.[2][3] [4] 

         Marketing communications and brand equity.  Even though the threat from Monster, TCCC and Pepsi Co. is continuing to mount, Red Bull’s strong and consistent marketing communication remains to be its main advantage over its competitors. Red Bull’s brand equity is high and it appeals strongly to active individuals, but it is negatively perceived as harmful to their health.  The unconventional marketing is also reflective of an extreme and dangerous lifestyle. This is an issue Red Bull must tackle if they want to maintain their share in the industry.

CONCLUSION / RECOMMENDATIONS

Red Bull’s non-traditional marketing communications has been proven to be effective but it is already slowly facing pressure from its competitors as well as from the dilemma of losing its market to emerging trends in energy-drink-consumers’ behavior. In order to support sustainability, the following recommendations are drawn up with the objective of keeping Red Bull’s  current market while simultaneously catering to other potential consumers:

1.            Product – To respond to competition and to the rising trend of healthier drinks. Red Bull should take advantage and develop a new variation of a functional energy drinks that promises a shot of energy but also contains high concentration of natural ingredients to exhibit revitalizing benefits; or develop new formulations with decreased ingredients that are potentially harmful to the body in the long-run.

P             Price -- Product price of the new product variations should not significantly deviate from the standard Red Bull, and competitors that address the same need.

2.               Place – Event sponsoring has given Red Bull much success. It should be continued but be broadened to include universities, offices and hospitals where other potential consumers of energy drinks are located.

                  Promotions - Red Bull should communicate a new slogan for its brand that can appeal to a broader market. A suggested slogan could be “Stretch your limits!” that encourages consumers to go beyond their own limitations be it work, school or adventure related. They should also place promotional posters or branded vending machines and fridges featuring the new and healthier product variant in the places mentioned above to further expose the new product to the market. Much like how they marketed their original Red Bull, sampling of the new products are also recommended but it should focus on students and workers whom the new product is specifically targeting.