The Red Bull energy drink was launched in Austrlia in 1987 by Dietrich Mateschitz. Dietrich Mateschitz grew up in a small village in Styria, Austria. After graduating with a degree in world trade he decided to become a “really good marketing man.” Dietrich Mateschitz met up with Chaleo Yoovidhya at the beginning of 1980s and they decided to start an energy drinks together. Realizing that energy drinks product could have good potential in Western markets, Mateschitz obtained the license to manufacture a carbonated version of Krating Daeng from its Thai owners. Obtaining permission to sell Red Bull in Europe was not easy, as it contained several ingredients whose effects on the human body were untested. However, permissions were eventually obtained, and Red Bull became exceptionally successful in all the markets in which it was launched. It was generally acknowledged that Red Bull's success was the product of the company's innovative marketing efforts. This case study discusses the key strategic challenges that the company faces internationally in the functional drink sector using 12C framework. This case also discuss for either changing or retaining Red Bull current product mix and identify and evaluate the company’s mode of market entry in its non-domestic markets. Finally this case will evaluate the company’s approaches to promotion and distribution and assess to what extent these approaches represent sources of sustainable competitive advantages. II. The key strategic challenges that the company faces internationally in the functional drinks sector 1. Choices
- International and external competition:
By 2004, the world wide energy drinks market was worth an estimated of £1.6 billion, red Bull had achieved a clear market leading position with 70% market share. The lure of fast growing profits in this market brought many competitors into the functional foods sector, where health and energy drinks have seen sales doubles every year since their introdution. Many competitors have tried to employ similar marketing strategies and tactics in order to grab sale from the market leader. Of course, not all of them have been successful. The market for energy drinks is characterised by the presence of specialised manufaturer as well as food and beverage giants. Key players in the marketplace include Pepsi, Cocacola, Danone, Hansen Beverage Co., Monarch Beverage Co., Dark Dog, GalaxoSmithKline, Extreme Beverages, Taisho Phamacueticals and Otsuka Phamacueticals. In term of marketshare, Gatorade and Red Bull lead the sports and energy drinks segments, respectively. Most of the soft drink multinationals (like Pepsi, Coca Cola, Danone, Galaxo SmithKline) also cover the functional drinks market. Once of the news of Red Bull’s advancing sales spread in Europe, dozens of copycat competitors came on the market. Red Bull’s initial move into the German market was highly successful. However, after three months of increasing demand, Mateschitz could not get enough aluminium to produce the cans anywhere in Europe and sales of Red Bull dropped fast. A competitors named Flying Horse became the market leader. It took Red Bull four years to reclaim the top spot in the German market. In 1995, Red Bull hit britain, In 1997 the United States starting in california The indirect competitors are those from the glucoze or convetional energy drinks family. The largest distributor of those drink is Lucozade with a wide product range in terms of flavor. Lucozade owns approximately 90% of the marketshare of sport drinks which probably is the result of high media spending and the tradition of the company. 2. The Communication
Many product launches are coupled with large advertising campaigns both in print and TV, taste tests, give away and celebrity endorsements to get the brand and product out in the public. This is not a technique that is used by Red Bull. Red Bull does use traditional advertising to enter a market. Only after the...
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