Red Bull — Research/Marketing Strategy
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Company Overview
Red Bull, founded in 1984 by Deitrich Mateschitz and Chaleo Yoovidhya, is headquartered in Austria. In 2006, Red Bull generated over Ђ2,6 billion (euros) in 2006 throughout the world with the help of its 3,903 employees.
The origin of Red Bull dates back to 1962 where the original formula was developed by Chaleo Yoovidhya, a Thai businessman, and sold under the name Krating Daeng by a local pharmaceutical company to treat jetlag and boost energy for truck drivers. The Thai product was transformed into a global brand by Dietrich Mateschitz, an Austrian entrepreneur. Both Mateschitz and Yoovidhya invested $500,000 of savings and launched the “Austrian version” in 1997 in the U.S. markets. It is this “Austrian version” that has taken almost half of the U.S. market for energy drinks and 80% of market in other countries by storm.
Red Bull is sold as an energy drink to combat mental and physical fatigue. A sugar-free version has been available since the beginning of 2003. The drink tastes of citrus and herbs, and is commonly used as a mixer in alcoholic drinks such as Raspberry Stoli Vodka or base ingredient in the famous Jagerbomb. It has become extremely popular over the recent years with almost 1 billion 250ml cans sold in 2000 to more than 3 billion cans sold in 2006 in over 130 countries.
Active ingredients include, but not limited to, 27g of sugar, 1000mg of taurine, B-complex vitamins, and 80mg of caffeine – which is a little less than the amount of caffeine found in an average cup of coffee and about two times as much caffeine as many leading cola drinks.
Core Competency and Market
Red Bull specializes in energy drinks. The Red Bull Company also distributes and markets a number of other drinks in the United Kingdom including the Carpe Diem range of herbal soft beverages and the Sabai Wine Spritzer. The original Thai Krafting Daeng is often available in many Asian grocery stores in New Zealand, Australia, and Canada. Its usually cheaper than the domestic (mainstream Red Bull) variety.
Energy Drink market is a new age market segment began producing wide category of functional beverages with exotic ingredients like Ginseng, Biloba, and Echinacea. Due to overwhelming response from the young, energetic consumers, these “Energy Drink” beverages become part of mainstream market. Because of the growing craze over energy drinks, the number of energy drink brands has been increasing steadily as everyone wants to take advantage of the expanding market. The demand for energy drinks could be a direct result of peoples lives becoming busier. Although this market segment is small compared to other drinks segments such as soft drinks and alcohols, this is the fastest market category.
According to an article published on Beverage Daily, the market is expected to reach a sale of about $17 billion in 2007 alone and could reach $39.2 billion by 2010. The article further states that the Western hemisphere and Japan, leaders of the consumption of energy drinks, make up to 88% of the total global consumption . Although the energy drink is unlike many of the other successful beverage industries, Red Bulls innovation and timely product development continue to develop it into a profitable industry with great potential.
Red Bull blazed the U.S. energy trail when it set up shop in Santa Monica, California in 1997 and has remained the segment leader ever since. Red Bull enjoyed 10 years of success in the European market before bringing the product to the US. Red Bull takes pride for bringing energy drink market into Western World, “At the time, nobody thought that a functional (energy) drink previously unknown in the Western world would ever stand a chance . Red Bull managed to obtain over 42.6% market share in contrast to its direct competitors like Coca-Cola with 24.9%, Pepsi with 13%, and Rockstar with 11.4%.
Add chart signifying market share
Other Competitors
Red Bull, despite being widely known as an energy drink, has other uses such as a coffee, tea, and soda substitute; vitamin/energy supplement; and mixer for alcohol. Quite surprisingly, some use Red Bull as a substitute to illegal drugs such as Ecstasy, Cocaine, and Speed according to “German Moms United”. Although Red Bull is not actively marketing in these indirect competing markets as in the original intended markets, its perceived by consumers to be a competitive product.
The majority of consumers are using Red Bull as a vitamin supplement or energy stimulant in place of preferred stimulants such as ginseng, no doze pills, energy bars, and Ma Huang. Red Bull, with its liquid B-vitamin supplement, competes in the niche market for vitamins and is competing with the larger pharmaceutical companies.
Red Bull is also competing indirectly with various drink mixers such juice, sour mix, and tonic. The most infamous drink mixer use is the Jagarbomb. Red Bull initially marketed its energy drinks to the average club-goers. However, due to various health concerns and fatal incidents associated with Red Bull when mixed with alcohol, explicit warnings have been placed on product labels discouraging improper use.
Marketing Orientation
Red Bull devised an innovative marketing approach to mainly target the young adult and consumers seeking an energy boost. As with any successful business, Red Bull is truly committed to creating superior value to the customers in its market orientation. Red Bull, being first to exploit the energy drinks market, pursues a mix of product oriented and consumer pre-occupied market oriented market strategy.
Red Bull targets young adult consumer ages 16 – 29, young urban professionals, and post secondary school students. Red Bull created strategic program to attract post-secondary students by providing them free cases of drink and convincing them to throw party and also, targeting club goers by stocking Red Bull at the clubs. This viral campaign created a noticeable effect by boasting sales. Supported by sleek advertising, it came out with small silver blue can to attract young urban professionals who prefer stylish life, providing another reason to drink Red Bull, the style, as suggested by the advertisement slogan, “Red Bull Gives You Wings”.
The company also set about promoting the Red