anjalicutek
Anjali Khurana
Red Bull is an energy drink sold by the Austrian Red Bull GmbH. It was created as an adaptation of the Thai energy drink Krating Daeng (which translates as "Red Bull") and introduced in 1987. Based on market share, it is the most popular energy drink in the world.[1]
Red Bull's slogan is "it gives you wings" and the product is aggressively marketed through advertising, tournament sponsorship (Red Bull Air Race, Red Bull Crashed Ice), sports team ownerships (Red Bull Racing, Scuderia Toro Rosso, EC Red Bull Salzburg, FC Red Bull Salzburg, Red Bull New York, RB Leipzig), celebrity endorsements, and with its record label, Red Bull Records, music[2]. In 2009 it was discovered that Red Bull Cola exported from Austria contained trace amounts of cocaine.Red Bull has also been the target of criticism concerning the possible health risks associated with the drink.
Red Bull took many marketing and ingredient ideas from an energy drink in Thailand called Krating Daeng. Dietrich Mateschitz, an Austrian entrepreneur, developed the Red Bull Energy Drink brand. Mateschitz was the international marketing director for Blendax, a toothpaste company, when he visited Thailand in 1982 and discovered that Krating Daeng helped to cure his jet lag.[9] Between 1984 and 1987, Mateschitz worked with TCBG Pharmaceutical (a Blendax licensee) to adapt Krating Daeng for the European market.
At the same time Mateschitz and Chaleo Yoovidhya founded Red Bull GmbH; each investing $500,000 of savings and taking a stake in the new company. Chaleo and Dietrich each held a 49% share of the new company. They gave the remaining 2% to Chaleo's son Chalerm, but it was agreed that Mateschitz would run the company.[10] The product was launched in 1987 in Austria, in a carbonated format.
In the 1989, the product was expanded to its first international markets, Hungary and Slovenia.[11] It entered the United States market (via California) in 1997[11] and the Middle East in 2000.[12] In 2008, Forbes magazine listed both Chaleo and Mateschitz as being the 260th richest persons in the world with an estimated net worth of $4.0 billion.
Red Bull
1.
The Product/ Competitors/Industry
1.1
Product
Red Bull is a sweet, caffeinated drink aimed to give consumers the high energy kick.
Available only in rather expensive 250ml cans, 350ml bottles, with 4 packs and only two
‘flavours’ (original or sugar-free). It contains caffeine, taurine, glucuronolactone, and B
vitamins. Founded in 1984 by Austrian businessman Dietrich Mateschitz, Red Bull has
become the worlds leading energy drink, a staple in many young, and active people’s lives.
1.2
Competitors
Big global companies such as Coca Cola and Pepsi have introduced their own energy drink
versions to their product base. Mother (by Coca Cola), Amp (Pepsi), V, Battery, 180, RedEye
and Bennu being just some in the ever-growing energy drink market.
Competition also presents itself in original sports drinks, such as Gatorade (Pepsi) and
Powerade(Coca Cola). Furthermore, premixed alcoholic drinks like the Smirnoff range form
part of the competition.
1.3
Industry
Red Bull has becoming hugely successful and operates within the global soft drink
marketplace. Within the soft drink industry its niche is the ‘energy drink’ market, of which
Mateschitz was largely responsible for creating. Red Bull currently is the leading energy drink
across the entire globe. It holds 70% of the market worldwide (Gschwandtner, 2004). Once
the drink was passed by health ministries, Red Bull entered the Austrian market, soon
thereafter then moved into Germany, United Kingdom and the USA by 1997.
2.
Needs, Wants and Demands satisfied by Red Bull
2.1
Needs
There are three basic human needs that Red Bull satisfies, physical, social and individual
needs. ‘Human needs are states of felt deprivation… marketers do not invent these needs; they
are a basic part of human makeup…People in industrial societies might try to find or develop
objects that will satisfy their needs.’ (Kotler et al. 2006)
Firstly, a physical need is when tired drivers are feeling the need to fall asleep due to fatigue; and this can compromise their safety. A driver needs to stay awake and alert when driving to avert danger and this need is satisfied by Red Bull. In fact it has become a ‘hot item amongst tired drivers stopping at gas stations.’ (Gscwandtner 2004).
A social need for example is where ‘humans have a social need for belonging’ (Kotler. 2004)
and this need is satisfied by belonging to a group. A group could be people with the same
interests eg extreme sports. Red Bull associates itself with energy, danger and youth culture,
and markets its product through its sponsorship of youth culture and extreme sports events.
Consumers who drink Red Bull are ‘automatically’ introduced to the Red Bull culture, and
their social need is then satisfied.
The final need is individual. An individual may have a need for concentration or self-
expression and this could be inhibited by fatigue or weariness. Red Bull realised that it could
satisfy this need by ‘energising and stimulating the mind’ (Red Bull 2008). For example, if
they are fatigued, a university student may experience an inability to retain knowledge and
therefore show an inability to express themselves.
2.2
Wants
A want can be defined as ‘the form taken by human needs as they are shaped by culture and
individual personality’ (Kotler et al. 2006)
Extreme athletes want to accelerate their performance and to revive themselves quickly after
each event and this want is satisfied by Red Bull. Red Bull promotes its consumption ‘to
increase physical endurance, improve concentration and reaction speed, improve vigilance
and stimulate metabolism.’ (Red Bull, 2008).
2.3
Demands
‘Demands are human wants backed up by buying power and given their resources, people
demand products with benefits that add up to the most satisfaction.’ (Kotler et al. 2006).
Another way of putting it is that ‘demand for a product…is both a willingness and an ability
to pay for the product that will satisfy a particular want’. (McColl et al. 1998)
Red Bull is arguably one of the most expensive soft drinks on the market, a can of Coke
generally costs around $2.50 for 375ml whereas a smaller 250ml can of Red Bull is sold at
$3.75. Consumers are willing to pay the higher price for Red Bull because it satisfies their
needs and wants, it also delivers on its promise to ‘Vitalize Body and Mind. So regardless of
size of the can or price, consumers are willing to pay for Red Bull’s product.
3.
The Marketing Management Philosophy
In our opinion, Red Bull fits into three of the marketing management philosophies.
When it first entered the market it could be viewed in the selling concept phase. Founder
Dietrich Mateschitz even stated. “If we don’t create the market, it doesn’t exist.”
(Gschwandtner 2004). Mateschitz used buzz marketing to promote the product by giving
consumers free samples.
Once Red Bull established itself it then moved into the product concept philosophy. It
seems that many consumers buy the Red Bull product wholly based on what benefits it can
give them, i.e. increased wellbeing and energy. Red Bull cans are branded with the tagline
‘Vitalises body and mind’ and it is well known by consumers that drinking Red Bull can
alleviate tiredness.
The final philosophy the product fits into is the marketing concept. ‘This is where an
organisation delivers target market satisfactions more effectively and efficiently than
competitors.’ (Kotler et al. 2006). This can be done by researching its target audience and the
company has shown this by the fact that ‘Red Bull has a 70 to 90 percent market share in over
100 countries worldwide’. (Gschwandtner 2004). This clearly indicates that Red Bull’s
current marketing strategy is working well and they are ahead of their competitors in the
market place.
4.
The Marketing Challenges
4.1
Competition
This is probably one of the biggest threats to Red Bull to date. Major competitors such
as Coca Cola and Pepsi are continually seeking to regain market share off Red Bull. Coca
Cola and Pepsi have launched their own energy drink versions to compete directly with Red
Bull’s product, yet with no real impact on the market, examples of this are Think ‘V’ Energy
Drink and Coke’s version ‘Mother’.
4.2
Negative Publicity
Various media worldwide have reported that Red Bull is harmful for one’s health. The
French Health Authority has gone one step further by not approving the Red Bull product for
sale in France believing it is not in compliance with the country’s health and food regulations. Other media reports have been targeted towards parents stating the caffeine levels in Red Bull can be dangerous if consumed by children/teenagers, which coincidentally is exactly who is in the product target market.
Red Bull has gone to the extremes of seeking scientific proof that its product is safe for consumption and released numerous statements to curb the negative media attention and reiterate that their product is safe for consumption by all (Red Bull, 2008).
4.3
Inability to move forward with the product
Red Bull is well known for its innovative advertising however the product could be in
danger of becoming stale. By shunning conventional advertising methods and opting for
online advertising and Generation Y cartoon adverts, the aim of attracting 15 – 30 year olds is
working, but for how long? Combine this with their large investment in extreme sport events
ie Red Bull Air Race and athlete sponsorship, it has to be asked what do they do next? Has it
already been done?
4.4
Ability to gain new customers and retain current customer loyalty
With Red Bull’s target market currently aimed at the Generation Y’s (15 – 30 year
olds) there is the question of whether this generation will continue to drink Red Bull as they
grow older. And will the next upcoming generation accept this product as their own.
4.5
Health and Social Implications
Due to growing pressure on organisations in society, Red Bull now promotes their
product with current societal and health issues in mind. Childhood obesity and type 2-onset
diabetes has become a major issue across western developed nations. By introducing ‘sugar
free’ Red Bull this has opened up a new opportunity to the ‘health conscious’ and diabetics.
Managing this issue will be a constant process and Red Bull must be seen to be adjusting their
product to suit society.
4.6
Only having one product
One particular issue Red Bull has to consider is their limited product range. Unlike
their major competitors such as Coca Cola and Pepsi, who have various different products in
different beverage classes (water, soft drinks, electrolytes) Red Bull does not. Only having
one product can be a positive however, for example Red Bull can concentrate 100% effort on
their product while not being distracted by other influences, however the downside is that
should the market share of that product decrease in the future, Red Bull has no back up
product to cover the loss.
5.
Being customer orientated/market driven
5.1
The Consumer
Customers are more sophisticated and educated in the market place today; they can
now research products before making a purchase. For example there are specialist magazines
to ‘assist in the decision on (the) brand…but more likely (consumers) turn to the internet for
information on what might be described as a complex product’ (Kotler et al. 1998). Another
reason could be that competitors are more innovative than ever with advertising and
marketing campaigns. Kevin Rudd for example achieved this when he used the ‘MySpace’
website as a medium to mount his prime ministerial marketing campaign.
5.2
Point of Difference
Further to this notion marketing organizations need to create a point of difference
(POD) in the market place. In such a saturated market consumers look for a POD, when
opening a coffee shop a businessperson would find themselves up against competition. So
how do they differentiate themselves from another café? How can they become ‘top of mind’
to their target market?
Gloria Jeans Coffee is a good example, when they entered the market they provided
not only a service but also an experience. They designed their coffee shops like lounge rooms,
with big couches to create a homely feel. They also offered wireless internet (WiFi) services
to attract the businessmen and women who wanted to work online while having a coffee.
5.3
Competition
Competition is becoming more intense in any industry. For example supermarket
giants like Coles and Woolworth’s are flooding their stores with self-branded products, which
is often pushing independent brands off the supermarket shelf and driving small businesses
out of the market. These giants have bulk buying power which means they have the ability to
pass savings to their customers. Self-branded products are marginalising the smaller
independent brands.
Red Bull's slogan is "it gives you wings" and the product is aggressively marketed through advertising, tournament sponsorship (Red Bull Air Race, Red Bull Crashed Ice), sports team ownerships (Red Bull Racing, Scuderia Toro Rosso, EC Red Bull Salzburg, FC Red Bull Salzburg, Red Bull New York, RB Leipzig), celebrity endorsements, and with its record label, Red Bull Records, music[2]. In 2009 it was discovered that Red Bull Cola exported from Austria contained trace amounts of cocaine.Red Bull has also been the target of criticism concerning the possible health risks associated with the drink.
Red Bull took many marketing and ingredient ideas from an energy drink in Thailand called Krating Daeng. Dietrich Mateschitz, an Austrian entrepreneur, developed the Red Bull Energy Drink brand. Mateschitz was the international marketing director for Blendax, a toothpaste company, when he visited Thailand in 1982 and discovered that Krating Daeng helped to cure his jet lag.[9] Between 1984 and 1987, Mateschitz worked with TCBG Pharmaceutical (a Blendax licensee) to adapt Krating Daeng for the European market.
At the same time Mateschitz and Chaleo Yoovidhya founded Red Bull GmbH; each investing $500,000 of savings and taking a stake in the new company. Chaleo and Dietrich each held a 49% share of the new company. They gave the remaining 2% to Chaleo's son Chalerm, but it was agreed that Mateschitz would run the company.[10] The product was launched in 1987 in Austria, in a carbonated format.
In the 1989, the product was expanded to its first international markets, Hungary and Slovenia.[11] It entered the United States market (via California) in 1997[11] and the Middle East in 2000.[12] In 2008, Forbes magazine listed both Chaleo and Mateschitz as being the 260th richest persons in the world with an estimated net worth of $4.0 billion.
Red Bull
1.
The Product/ Competitors/Industry
1.1
Product
Red Bull is a sweet, caffeinated drink aimed to give consumers the high energy kick.
Available only in rather expensive 250ml cans, 350ml bottles, with 4 packs and only two
‘flavours’ (original or sugar-free). It contains caffeine, taurine, glucuronolactone, and B
vitamins. Founded in 1984 by Austrian businessman Dietrich Mateschitz, Red Bull has
become the worlds leading energy drink, a staple in many young, and active people’s lives.
1.2
Competitors
Big global companies such as Coca Cola and Pepsi have introduced their own energy drink
versions to their product base. Mother (by Coca Cola), Amp (Pepsi), V, Battery, 180, RedEye
and Bennu being just some in the ever-growing energy drink market.
Competition also presents itself in original sports drinks, such as Gatorade (Pepsi) and
Powerade(Coca Cola). Furthermore, premixed alcoholic drinks like the Smirnoff range form
part of the competition.
1.3
Industry
Red Bull has becoming hugely successful and operates within the global soft drink
marketplace. Within the soft drink industry its niche is the ‘energy drink’ market, of which
Mateschitz was largely responsible for creating. Red Bull currently is the leading energy drink
across the entire globe. It holds 70% of the market worldwide (Gschwandtner, 2004). Once
the drink was passed by health ministries, Red Bull entered the Austrian market, soon
thereafter then moved into Germany, United Kingdom and the USA by 1997.
2.
Needs, Wants and Demands satisfied by Red Bull
2.1
Needs
There are three basic human needs that Red Bull satisfies, physical, social and individual
needs. ‘Human needs are states of felt deprivation… marketers do not invent these needs; they
are a basic part of human makeup…People in industrial societies might try to find or develop
objects that will satisfy their needs.’ (Kotler et al. 2006)
Firstly, a physical need is when tired drivers are feeling the need to fall asleep due to fatigue; and this can compromise their safety. A driver needs to stay awake and alert when driving to avert danger and this need is satisfied by Red Bull. In fact it has become a ‘hot item amongst tired drivers stopping at gas stations.’ (Gscwandtner 2004).
A social need for example is where ‘humans have a social need for belonging’ (Kotler. 2004)
and this need is satisfied by belonging to a group. A group could be people with the same
interests eg extreme sports. Red Bull associates itself with energy, danger and youth culture,
and markets its product through its sponsorship of youth culture and extreme sports events.
Consumers who drink Red Bull are ‘automatically’ introduced to the Red Bull culture, and
their social need is then satisfied.
The final need is individual. An individual may have a need for concentration or self-
expression and this could be inhibited by fatigue or weariness. Red Bull realised that it could
satisfy this need by ‘energising and stimulating the mind’ (Red Bull 2008). For example, if
they are fatigued, a university student may experience an inability to retain knowledge and
therefore show an inability to express themselves.
2.2
Wants
A want can be defined as ‘the form taken by human needs as they are shaped by culture and
individual personality’ (Kotler et al. 2006)
Extreme athletes want to accelerate their performance and to revive themselves quickly after
each event and this want is satisfied by Red Bull. Red Bull promotes its consumption ‘to
increase physical endurance, improve concentration and reaction speed, improve vigilance
and stimulate metabolism.’ (Red Bull, 2008).
2.3
Demands
‘Demands are human wants backed up by buying power and given their resources, people
demand products with benefits that add up to the most satisfaction.’ (Kotler et al. 2006).
Another way of putting it is that ‘demand for a product…is both a willingness and an ability
to pay for the product that will satisfy a particular want’. (McColl et al. 1998)
Red Bull is arguably one of the most expensive soft drinks on the market, a can of Coke
generally costs around $2.50 for 375ml whereas a smaller 250ml can of Red Bull is sold at
$3.75. Consumers are willing to pay the higher price for Red Bull because it satisfies their
needs and wants, it also delivers on its promise to ‘Vitalize Body and Mind. So regardless of
size of the can or price, consumers are willing to pay for Red Bull’s product.
3.
The Marketing Management Philosophy
In our opinion, Red Bull fits into three of the marketing management philosophies.
When it first entered the market it could be viewed in the selling concept phase. Founder
Dietrich Mateschitz even stated. “If we don’t create the market, it doesn’t exist.”
(Gschwandtner 2004). Mateschitz used buzz marketing to promote the product by giving
consumers free samples.
Once Red Bull established itself it then moved into the product concept philosophy. It
seems that many consumers buy the Red Bull product wholly based on what benefits it can
give them, i.e. increased wellbeing and energy. Red Bull cans are branded with the tagline
‘Vitalises body and mind’ and it is well known by consumers that drinking Red Bull can
alleviate tiredness.
The final philosophy the product fits into is the marketing concept. ‘This is where an
organisation delivers target market satisfactions more effectively and efficiently than
competitors.’ (Kotler et al. 2006). This can be done by researching its target audience and the
company has shown this by the fact that ‘Red Bull has a 70 to 90 percent market share in over
100 countries worldwide’. (Gschwandtner 2004). This clearly indicates that Red Bull’s
current marketing strategy is working well and they are ahead of their competitors in the
market place.
4.
The Marketing Challenges
4.1
Competition
This is probably one of the biggest threats to Red Bull to date. Major competitors such
as Coca Cola and Pepsi are continually seeking to regain market share off Red Bull. Coca
Cola and Pepsi have launched their own energy drink versions to compete directly with Red
Bull’s product, yet with no real impact on the market, examples of this are Think ‘V’ Energy
Drink and Coke’s version ‘Mother’.
4.2
Negative Publicity
Various media worldwide have reported that Red Bull is harmful for one’s health. The
French Health Authority has gone one step further by not approving the Red Bull product for
sale in France believing it is not in compliance with the country’s health and food regulations. Other media reports have been targeted towards parents stating the caffeine levels in Red Bull can be dangerous if consumed by children/teenagers, which coincidentally is exactly who is in the product target market.
Red Bull has gone to the extremes of seeking scientific proof that its product is safe for consumption and released numerous statements to curb the negative media attention and reiterate that their product is safe for consumption by all (Red Bull, 2008).
4.3
Inability to move forward with the product
Red Bull is well known for its innovative advertising however the product could be in
danger of becoming stale. By shunning conventional advertising methods and opting for
online advertising and Generation Y cartoon adverts, the aim of attracting 15 – 30 year olds is
working, but for how long? Combine this with their large investment in extreme sport events
ie Red Bull Air Race and athlete sponsorship, it has to be asked what do they do next? Has it
already been done?
4.4
Ability to gain new customers and retain current customer loyalty
With Red Bull’s target market currently aimed at the Generation Y’s (15 – 30 year
olds) there is the question of whether this generation will continue to drink Red Bull as they
grow older. And will the next upcoming generation accept this product as their own.
4.5
Health and Social Implications
Due to growing pressure on organisations in society, Red Bull now promotes their
product with current societal and health issues in mind. Childhood obesity and type 2-onset
diabetes has become a major issue across western developed nations. By introducing ‘sugar
free’ Red Bull this has opened up a new opportunity to the ‘health conscious’ and diabetics.
Managing this issue will be a constant process and Red Bull must be seen to be adjusting their
product to suit society.
4.6
Only having one product
One particular issue Red Bull has to consider is their limited product range. Unlike
their major competitors such as Coca Cola and Pepsi, who have various different products in
different beverage classes (water, soft drinks, electrolytes) Red Bull does not. Only having
one product can be a positive however, for example Red Bull can concentrate 100% effort on
their product while not being distracted by other influences, however the downside is that
should the market share of that product decrease in the future, Red Bull has no back up
product to cover the loss.
5.
Being customer orientated/market driven
5.1
The Consumer
Customers are more sophisticated and educated in the market place today; they can
now research products before making a purchase. For example there are specialist magazines
to ‘assist in the decision on (the) brand…but more likely (consumers) turn to the internet for
information on what might be described as a complex product’ (Kotler et al. 1998). Another
reason could be that competitors are more innovative than ever with advertising and
marketing campaigns. Kevin Rudd for example achieved this when he used the ‘MySpace’
website as a medium to mount his prime ministerial marketing campaign.
5.2
Point of Difference
Further to this notion marketing organizations need to create a point of difference
(POD) in the market place. In such a saturated market consumers look for a POD, when
opening a coffee shop a businessperson would find themselves up against competition. So
how do they differentiate themselves from another café? How can they become ‘top of mind’
to their target market?
Gloria Jeans Coffee is a good example, when they entered the market they provided
not only a service but also an experience. They designed their coffee shops like lounge rooms,
with big couches to create a homely feel. They also offered wireless internet (WiFi) services
to attract the businessmen and women who wanted to work online while having a coffee.
5.3
Competition
Competition is becoming more intense in any industry. For example supermarket
giants like Coles and Woolworth’s are flooding their stores with self-branded products, which
is often pushing independent brands off the supermarket shelf and driving small businesses
out of the market. These giants have bulk buying power which means they have the ability to
pass savings to their customers. Self-branded products are marginalising the smaller
independent brands.