Red Bull Case Analysis
I have been asked to evaluate the marketing strategy for Red Bull. More specifically, I have been asked to identify new ways that Red Bull could maintain its leadership position in a maturing category. Although Red Bull did create this market and is a top seller for energy drinks, it is now vulnerable to other competitors who have the resources and brand recognition to aggressively compete, such as Coca-Cola, PepsiCo, and Hansen, to name a few. The Answer:
Red Bull’s founder, Dietrich Mateschitz, knew from the beginning that there was a need for a unique marketing strategy because it was designed for so many occasions and a wide range of target consumers. He wanted this product to be used by students, clubbers, business people, and athletes. The best way to reach them was to find out where they shop and when do they use Red Bull. Then, use that opportunity to convince them that the product works. Word-of-mouth and “seeding” were the two main strategies used for market entry. Red Bull bought its traditional advertising last, planning only to use media push when the market had matured. So rather than introducing a product with a commercial, it reinforced that product with a commercial. They did not use this method in the UK market, and the marketing strategy failed miserably. Red Bull had a new management team come in an replace the old, and had them use the marketing strategies they had found to be successful in Austria. This immediately turned the product around and made it successful in the UK. By 2005, the market for energy drinks had dramatically changed. Red Bull’s overall market share had dropped from 75% in 1998 to 47% in 2005. Several competitors had been successful in growing their distribution networks and appealing to customers through innovative communication, like Red Bull had used from the start. Now competitors like Rockstar, Monster, SoBe Adrenaline Push, Amp, SoBe No Fear, Hansen, and KMX are gaining market share, Red Bull needs to find new innovative ways to compete and differentiate its product. Currently, it seems very focused on the 8 ounces cans, while others are focusing on 16 ounces cans for the same price as Red Bull’s 8 ounces. Also, Red Bull has completely oversaturated the market by putting its cans everywhere you go. This has the potential to remove the exclusivity and “premium” aspect of this product. There is also the fact that Red Bull has such a limited product line, while competitors are constantly coming up with new flavors, sizes, and overall variety for consumers. Mateschitz does not see these problems. He feels that since they have created this market, consumers are going to want the original Red Bull, not an imitation. The brand’s future relies heavily on Red Bull’s willingness to consider others as competitors, not just “haters”, who have the ability to take market share and potentially become more successful than Red Bull.
Power in the energy drink market: Although Red Bull’s market share fell from 1998 to 2005, it is still the industry leader. This product has significant brand recognition, which gives consumers more incline to trust and use this product over competitors. All-natural product: Red Bull has the ability to market as an all-natural product, something that many of its competitors cannot do. The fact that this product has a specific combination of natural ingredients that form a product that can increase physical endurance, improve reaction speed and concentration, increased mental alertness, improve overall feeling of well-being, and stimulated metabolism and increased stamina gives them a significant advantage over those who do not. Mix-ability with alcoholic beverages: Red Bull also has a commanding lead because its mix-ability factor. It can be mixed with alcoholic beverages such as vodka, champagne, gin, whiskey or beer. This occurs...
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