Marketing Essay
Distribution channel
The distribution is often conducted by bottlers (Coca-Cola, PepsiCo, etc.) or through a solely owned distribution entity (Red Bull). From here, the products are sent to retail Outlets for distribution to the end-customers. Channel innovation: The traditional soft drinks manufacturers like Coca Cola and Pepsi have extremely High power over the distribution channels. As a result, they never expected a new Player to take shelf space—they were confident in their ability to squash new comers by developing competing products and flooding the distribution channel. Furthermore, they believed that no new soft drink company would have the cash to buy itself shelf Space via commercials and thus enter their market. This power usage had been the
Only way of entering the soft drinks market, before Red Bull used its innovative channel approach to enter the retail channel. Red Bull started by selling its product in small distribution outlets like bars and health clubs and concentrated their limited cash to promote its products in these Outlets. After enough time had passed and a pull force from the consumers was Generated, Red Bull had the power to persuade the retail distribution channel to put its Products on the shelf. Red Bull thus used a pull method to get its products on the Shelves whereas the industry was used to using a push method in order to achieve the same goal. This enabled Red Bull to catch the incumbents by surprise and gain market share in a market considered impossible to penetrate. Red Bull was initially very selective with their distribution techniques, selecting the areas where the ‘in-crowd’ gathered as the distribution area. By only distributing the product in certain areas, it created a level of mystique and scarcity around the product. This level of scarcity increased demand and made users seek out the product. This created a pull distribution policy; consumers demanded the product and so supermarkets, bars and shops
The distribution is often conducted by bottlers (Coca-Cola, PepsiCo, etc.) or through a solely owned distribution entity (Red Bull). From here, the products are sent to retail Outlets for distribution to the end-customers. Channel innovation: The traditional soft drinks manufacturers like Coca Cola and Pepsi have extremely High power over the distribution channels. As a result, they never expected a new Player to take shelf space—they were confident in their ability to squash new comers by developing competing products and flooding the distribution channel. Furthermore, they believed that no new soft drink company would have the cash to buy itself shelf Space via commercials and thus enter their market. This power usage had been the
Only way of entering the soft drinks market, before Red Bull used its innovative channel approach to enter the retail channel. Red Bull started by selling its product in small distribution outlets like bars and health clubs and concentrated their limited cash to promote its products in these Outlets. After enough time had passed and a pull force from the consumers was Generated, Red Bull had the power to persuade the retail distribution channel to put its Products on the shelf. Red Bull thus used a pull method to get its products on the Shelves whereas the industry was used to using a push method in order to achieve the same goal. This enabled Red Bull to catch the incumbents by surprise and gain market share in a market considered impossible to penetrate. Red Bull was initially very selective with their distribution techniques, selecting the areas where the ‘in-crowd’ gathered as the distribution area. By only distributing the product in certain areas, it created a level of mystique and scarcity around the product. This level of scarcity increased demand and made users seek out the product. This created a pull distribution policy; consumers demanded the product and so supermarkets, bars and shops