Strategic Analysis of Red Bull GmbH

Topics: Red Bull, Marketing, Energy drink Pages: 15 (3887 words) Published: May 16, 2014
Red Bull Gives You Wings
Arguably one of the most entrepreneurial firms of recent times, there is no denying Red Bull GmbH is a powerful force. Founded in the mid 1980’s by Austrian entrepreneur Dietrich Mateschitz created the unique formula providing millions of people with ‘wings’ on a daily basis. Back in 1984, Mateschitz discovered the need for a coffee alternative. Alongside Mr Yoovidhya they developed Red Bull from Krating Daeng – a thai version of Red Bull – turning the beverage into a carbonated, less sweet version they believed would appeal to Western tastes. The production of Red Bull led them to create a new category within the soft drinks market – that of ‘energy’ drinks. 30 years on and their original product is as strong as ever. Due to its private ownership, financial figures on Red Bull are scarce, however it’s reported that over 40billion cans have been sold worldwide, with 2012 figures demonstrating net sales of $4.9billion and 5.2billion cans being sold, representing 15.9% and 12.8% growth respectively over 2011. (Euromonitor International). According to Marketline (2012) Red Bull holds an estimated 43% global market share of the energy drinks market by value, 21.5% by volume giving it dominant market position as its nearest competitor Monster hold 16% by value in comparison. In this case study I aim to outline Red Bulls current strategies and sources of competitive advantage, using the SWOT framework. This helps understand the reasons for the success of Red Bull and also their strategy to go beyond the international expansion with Red Bull’s focus on lifestyle rather than the energy drink in itself. In this context I will discuss Red Bull Media House, launched in 2007, a strategic move away from purely beverage production. I will review this and determine the success of this embryonic business within Red Bull GmbH using Barney’s VRIO framework, finally analysing the strategic leadership during Red Bull’s launch of their Media House, commenting on what makes an effective strategic leader in a continually changing and unstable market. Current Strategy

Red Bulls social media presence is huge. They are amongst the top 10 most ‘liked’ corporations on Facebook, have an extensive Twitter following and often use other social networking apps, such as Instagram in promotion and marketing campaigns. This has created a strong, vibrant online community in their target market (mostly aged 14-34) who are increasingly seeking fun and interactive services, on mobile phones and ‘smart devices’. Red Bull’s publicity stunts gain unparalleled viral attention. The most recent one, Red Bull Stratos, created a media storm, whereby an online audience of 8million watched the live stream of the jump (McNaughton, 2012) – dwarfing previous records for a live YouTube audience. As sponsors, Red Bull demonstrated (once again) their association with extreme events and appetite to take risks, which so effectively reinforces their brand image of lifestyle choice, through word of mouth in their targeted consumer market. Red Bull are pioneers in the extreme sports world, with over 500 events and athletes being sponsored by the organisation. Teressa (2012) explains that many brands expect to sponsor an event and reap immediate rewards but consumers fail to admire those “one-off hits”. Teressa (2012) even goes on to suggest that the recent boom in extreme sports wouldn’t have happened without Red Bull’s influence. In terms of distribution and pricing, Red Bull produces all products at one factory in Austria. This results in consistent taste and also limits its exclusive recipe to one location reducing risk of intellectual property leakage. Red Bull continue to price at a premium compared to competing products because they want to segment the market with a brand that is trendy and edgy, as well as attract consumers whom are more likely to spread the word about the product. The luxury price band of a Red Bull product reflects a...

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