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MKT3130

Final Report “Red Bull” Principles of Marketing (MKT3130) Course Instructor: Dr. Martin Yong Ho Hyun

Artur Tatarov (20180058)

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Table of Contents 1. Executive Summary ………………………………………………………………3p. 2. Introduction ………………………………………………………………….……4p. 3. Marketing Plan ……………………………………………………………………6p. 4. Recommendations …………………………………………………………….…15p. 5. Conclusion ……………………………………………………………….………17p. 6. References ……………………………………………………………………….18p 7. Appendices……………………………………………………………………….20p.

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1. Executive Summary Red Bull, the market leader in the energy drinks segment, is currently a growing beverage market. In this company, we want to identify the main problem and find a solution, give the right recommendations. The drink is mainly aimed at young people on average from 18-30 years. It is produced in Austria and then distributed worldwide through a network of local subsidiaries and external importers and distributors. Red Bull is a company that is known for its unique approach to marketing. Red Bull makes an energy drink for students in educational institutions, drivers for long trips, athletes and busy people to add energy to their bodies and minds. Problem: Many people believe that an energy drink is harmful to human health . One of the main questions is: what actions should the company take in order for Red Bull to strengthen its position as a market leader? Red Bull should start working with “Channel 1” one of the most popular channels to promote Red Bull through advertising on this channel. This will allow Millennials to become more aware of the different abilities and varieties of the product, adapt to all the different functions of this drink, and show the positive impact of Red Bull. Advertising on the channel will expand the audience, as well as in social networks. “Channel 1” had a similar partnership with Coca-Cola, which achieved brilliant consumer comments, and also created further plans for “Channel 1” with future advertising campaigns due to the success. Goals: to raise awareness of various types, new tastes and types of Red Bull . The target audience encourages a new social media platform, for example: creating a new hashtag "Why Red Bull is better than any other energy drink" to show why this drink has a positive impact and fighting alcohol also expands the target audience. In addition, increased advertising campaigns in the media will just let them grow as a company. Red Bulls is recommended to increase product availability in proportion to the

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increase in advertising campaigns in social networks and media in order to achieve solutions to current problems. Advertising and good recommendations can help a company achieve its goals. Red Bull will also be able to stay up to date with the changing trends of the current market and be mobile to any situation. 2. Introduction Nowadays, every young person, at least once, heard the name of the “Red Bull” drink. But how did it start? Dietrich Mateschitz was born on May 20, 1944 in Styrian Austria in the ordinary poor family of a schoolteacher and a prisoner of war. Dietrich wasn’t an innocent student- it took him decade to graduate from Trade University of Vienna. But after graduation, Mateschitz decided to change his life and become a superior specialist in marketing. After college, he worked in Unilever, where he was responsible for promoting different brands of detergents. In a little while, Dietrich planted himself a head of international marketing in the German Blendax (manufacturer of toothpaste and cosmetics). After spending years traveling and selling company productions wherever possible, he got the idea of starting his own business. Soon destiny gave him this opportunity. In 1982, during a business trip to Thailand, future billionaire became interested in the energy drinks, which were popular here. Mateschitz met here with Chaleo Yoovidhya (the founder of the company “Taisho Pharmaceuticals”, which were producing “Krating Daeng”- famous local energy drinks brand in Thailand (translated from Thai as “red bull”)) and suggested him to found a company, whose target will to spread energy drinks everywhere. Both partners will invest about 500 thousands dollar in company capital. In a little while, after this turning point, Mateschitz left work and made a request for a license to trade in energy drinks in Austria. To obtain a license for the sale activity, businessmen needed to run around government offices for three years. While he was waiting, he asked his old friend to work out a design for the

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future beverage can. Mateschitz fell in love with design containing bulls . Soon the product gained a product slogan- “Red Bull inspires” , which became one of the most recognizable and associated. In homeland, he agreed with the largest producers of soft drinks “Roman Rauch” and the first “Red Bull” cans were produced in their factory. In the first two years, Red Bull suffered two million losses. But three years later, the company began to make a profit, monopolized Austria and then spread to other countries around the world. Now the drink is sold in 160 countries, and still continues to expand. But energy tonic’s is a changeable market and year after year there are new trends. Few of them are diet energy drinks and flavor innovations. Despite diet drinks being a small market segment,they are leading growth in energy drinks. According to “The Grocer” journal, In the past year, they went up 16% in value – accounting for £9.3m of the £11.8m growth in the overall energy drink market. Innovation from leading brands (Red Bullone of them)has helped boost that trend.“We’re seeing increasing concern about sugar content among consumers, leading energy brands to put more focus on their diet analogs and products,” said Kantar analyst Helen Sale. “As a result, lowsugar energy drinks have continued to extend borders.” There is no less in flavor innovation of energy drinks. Over the past year, such a count was released in new flavors about which infinity can be said is not the limit. AG Barr, which is the owner of Rockstar energy drinks, says there is a logical reason due to this activity. “Flavored energy drinks are contributing for growth in the market and I have been the fastest growing energy drink segment for many years,” says AG Barr marketing director Adrian Troy.

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As you can see on table above there are two main competitors for Red Bull: Monster and Rockstar Inc., which are today worth a combined £962m. Their dominance shows no sign of waning. Over the past year, they have drummed up a whopping £94m of growth. 3. Marketing Plan 3.1. PEST analysis Red Bull has a strong distribution network that ensures timely availability of its products to a large number of customers. However, the company takes into account a number of factors that affect its business environment. PEST is a variant of PESTEL analysis that will consider four factors: political, economical, social and technological. This will help Red Bull analyze the overall competitive environment and risks related to the situation in different countries. Table 1: PEST Analysis of Red Bull

Political

● Level of political stability ● High level of taxation: reduction of maximum profit. ● Restriction of sale in some countries. ● Protection of the company's intellectual property. ● Trade barriers with potential trading partners can harm

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companies by preventing potential exports. Economical

● An economic system is a monopoly, oligopoly, or something similar to an economic system with perfect competition. ● The country's GDP growth rate will influence Red Bull's growth rate in the near future. ● Increase in oil price-transportation. ● The country's exchange rate will affect Red Bull's profitability, especially if Red Bull is involved in international trade.

Social

● Increasing health concerns. ● The demographics of population: age and gender. ● Differences in educational level between marketers and the target market-creating effective communication with the target market and its involvement. ● Awareness of the company: the level of health standards, responses to harassment, and the importance of protecting the environment

Technological

● The improvement of new technologies-search for an innovative alternative. ● Recent technological developments and breakthroughs made by competitors. ● Packing: space saving and less weight

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3.2. SWOT analysis The SWOT analysis matrix contains data on internal strengths and weaknesses (W) followed by identifying opportunities (O) and threats (T) that it faces in its vast business environment. Table 2: SWOT Matrix of Red Bull

Positive

Negative

Strength

Weaknesses

I n 1. A strong distribution network

1.

Low research and

with a large number of outlets.

development costs compared to

2. The advantage is cheap structure

competitors.

in front of the competitors.

2.

3. Strong asset base and strong

low motivation and working mood.

financial

3.

t e r High level of staff turnover,

n a position

with

positive

Liquidity problems with a low

l earnings over the past few years.

quick liquidity ratio.

4. A skilled workforce.

4.

5. Exclusive rights in relation to its

less than current liabilities.

products, and competitors cannot copy or reconstruct them.

The level of current assets is

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E Threats

Opportunities x 1.

Growing number of Internet

1.

The emergence of new

t users. Use social networks to

market participants.

promote your products and interact

2.

with customers.

devalued.

2.

3.

e The exchange rate was

r n E-Commerce is growing along

The expensive production

a with the number of Internet users that

costs of production fuel.

increases purchases through online.

4.

3.

industry is growing.

l Red Bull's advantageous

Competition within the

location provides a price advantage

5.

in customer service compared to

substitute products.

competitors. 4.

Lower interest rates make it

possible to implement expansion projects funded by loans at a lower interest rate 5.

Growth of environmentally

friendly products and services. The government offers subsidies for them.

Strengths-Opportunities Strategies (SO):

Greater availability of

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1. Develop environmentally friendly products through innovation at a low price and sell at a low price (S1, S3, O3) 2. Red Bull can earn revenue by opening online stores and making sales through them (S1, O2). 3. Use the website to promote your products, interact with customers, and collect feedback from them (S1, O1). 4. Set low prices for products and offer discounts. This will help increase sales and is feasible due to low inflation and costs (S2, O4). Weaknesses-Opportunities Strategies (WO): 1. Financing property ownership through a low interest rate to increase the share of owned property in leased property (W1, O5). 2. Increase wages, provide incentive packages and benefits for employees to motivate or reduce employee turnover (W4, O5). Strengths-Threats Strategies (ST): 1. Use a strong distribution network to connect with customers and fight new entrants (S1, T1). 2. Use your strong financial position to invest in intellectual property rights to compete in the market (S3, S5, T4). 3. Create a group to develop cheaper fuel alternatives so that they can be used, thereby reducing costs (S4, O4). Weaknesses-Threats Strategies (WT): 1. Increase spending on research and development of products for competitiveness (W2, T4).

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2. Provide incentives for employees, increase engagement, or provide a better work environment to retain talent (W3, T2, T3). 3.3. STP analysis To begin with, Red Bull GmbH company was created by Dietrich Mateschitz who made this product as a prototype of “Krating Daeng” which is an original version of a famous Red Bull energy drink (Red Bull GmbH, n.d.). As an original drink, Krating Daeng had an effect of solving jet-lag problems which was seen by Dietrich Mateschitz and recreated as an energy drink Red Bull (Red Bull GmbH, n.d.). To continue with, Red Bull GmbH company acts as a sponsor of competitions as Rally Racing, Formula 1 Racing, NASCAR Racing, etc. which makes this company a huge supporter of sports. As well as its tagline “Red Bull Gives You Wings” which makes it seem modern and stylish. Hence, taking in account all these factors it is seen that the first target is sportspeople because of its sponsorship, which first started in 1989 with Formula 1 racing driver Gerhard Berger, and continues till now with many dozens of sports competitions which was mentioned earlier (Spurgeon, 2013). As already known Red Bull does not have any bad signs to health, except people with heart problems, and has a variety of types as sugar free and so on which means it can be used by sportspeople without a doubt (Nordqvist, 2008). However, Red Bull energy drink is not recommended for people under 18 years. Therefore, the second segment will be the college students which are the major segment of this product because students mainly have a lot of stress during their studies and usually have a lot of tasks to do. Hence, the tagline “Red Bull Gives You Wings” plays a huge role in attracting them and also a great value for money. Also they started to advertise their product in clubs and universities which makes it even more suitable for students.

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All in all, the Red Bull energy drink target market are sportspeople who recognize them by their sponsorship and active actions in sport. As well the students who knew them because of their exhibitions and challenges that they make every year in many countries. Therefore, these two segments are the target market of the Red Bull GmbH company. Even in their official site they state that “Red Bull Energy Drink is appreciated worldwide by top athletes, busy professionals, university students and travellers on long journeys” (Red Bull, n.d.). 3.4. Marketing objectives and issues Red Bull's goals include retaining its industry leader position and maintaining a positive image with the general public, but not viewed as overdose caffeinated drinks. Red Bull's rivals like Pepsi have clear advantages on the market in developing countries, as they have well-established distribution network and retail spots, where sales of energy drinks can easily expand. Secondly, Red Bull seeks to increase visibility among more customers of the drink as a "powerful and trendy," particularly for males and females in the 35-65 age groups; thirdly, seek new business markets such as being considered an alternative to coffee. Recently, Red Bull faces the issue of decreasing the understanding of the importance of its goods, exacerbated by the uproar over the adverse health effects of the product. It has been banned from consumers in Uruguay, Norway, Denmark, France and Iceland, due to the high amount of taurine and caffeine contained in the product. Furthermore, Red Bull is not popular with women, seniors and tannages, because these user segments are unable to pay for expensive drinks with higher quality and lack of creativity for their lives. 3.5. Marketing mix strategies

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Red Bull Marketing Mix analyzes the brand / company covering 4Ps (Product, Price, Place, Promotion), and describes the marketing strategy of Red Bull. Red Bull pays half the commercial budget on outlets such as cable, cinema, and radio. The business uses cartoon ads for TV and the theater that ranges from children to adults. Red Bull's plan to place Red Bull Energy Drink picture in any early age mind, and the first picture of energy drink in their minds when a kid becomes a teenager is Red Bull. As described in the article, "Red Bull implements a strategy clearly excluding and printing ads because it is seen as an inflexible medium leading to competitive ads" (Joseph Madhimba 2010). Red Bull Product Strategy: Considering that Red Bull is a commodity which customers buy for its influence, sampling is essential to the marketing strategy of Red Bull. Energy drinks market is large but target specific target groups that are active lifestyle individuals between the ages of 18-35. Sampling offers Red Bull the ability to market itself, as well as demonstrating its results and flavor against rivals. The significant advantage of sampling is that Red Bull would be able to achieve customer feedback with the commodity as the primary results. Red Bull Place & Distribution Strategy: Thanks to its large distribution network worldwide, Red Bull succeeded in distributing 5.9 billion cans worldwide during 2015. Red Bull can be sold in accessible locations such as a pharmacy, convenience store, discount warehouse or even night clubs, pubs, and casinos. This means purchasing the commodity is really convenient for a buyer. Some people like to pair this cocktail with it at night clubs and bars. The biggest reason for selling this drink in night clubs and bars is that customers want to pair it with another cocktail to add some more flavour, or even even to let them stay up late and party with friends. Red Bull is most often kept in special Red Bull refrigerators, which draw consumers to purchase

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an energy drink while they go shopping at food stores or to a restaurant. Red Bull is also sold online in bulk or single packs making it easy for consumers to buy it in bulk. These are put alongside other popular items at supermarkets and grocery stores, offering the buyer a preference about which one to buy. They are put alongside other affordable items at supermarkets and grocery stores offering the consumer a preference from which to purchase. Red Bull Price/Pricing Strategy: Below is Red Bull's business plan for pricing: Red Bull has a range of rivals in the energy drinks industry but they are the market leaders yet. The pricing policy is also that of a business leader but focused on the level of the rivals. We will actually charge a price for their goods being on top and consumers will also purchase them because of their efficiency. Red Bull was the first in the segment and it will always be the number one consumer preference so the market will never decline. Red Bull has a range of rivals in the energy drinks business (such as Rockstar, Tzinga, Cloud 9, Gatorade, Giant, and KS) but red bull is the market leaders yet. Red Bull pays a higher price for its goods, owing to its high quality and dominant market position. Huge market recognition, high quality, quick customer access are only a few reasons that make Red Bull follow a premium price approach for their goods. Promotion: Red Bull sponsors specific extreme sports and individual athletes such as mountain biking, Dakar rally, Moto GP, World Rally Championship, World Touring Car Championship, Nascar Sprint Car Series. As you can see, all sponsorships are continually recognised sporting activities and their fan groups from different ages and regions. This offers Red Bull a perfect chance to bring them all out just like it is sponsoring Australian pro surfer Mick Fanning to bring out to Australian people.

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In addition to athletics, they do have a Red Bull House of Art where artists are invited to show their work at their exhibits over a span of 3 months. People have Red Bull T.V available on smartphones, Ipads, mobiles, game consoles and t...