Marketing management systems at red bull

Red Bull is an energy drink. Red Bull is an adaptation of the Thai energy drink Krating Daeng, which translates as “Red Bull”. Based on market share, it is the most popular energy drink in the world.[1] The company was founded by Thai national Chaleo Yoovidhya and Austrian national Dietrich Mateschitz. Together with his son, Chaleo owns a controlling 51 percent interest in the company; however, Mateschitz is responsible for the company’s operations through the Austrian company Red Bull GmbH.[2] 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[3]. In 2009 it was discovered that Red Bull Cola exported from Austria contained trace amounts of cocaine.[4]HYPERLINK “#cite_note-newsmeat_com-meat_php_articleId_51718664_channelId_2951_buyerId_newsmeatcom_buid_3281-4″[5]HYPERLINK “#cite_note-enuws_com-5″[6]HYPERLINK “#cite_note-abc_net_au-2585388-6″[7]HYPERLINK “#cite_note-patrickhenrypress_info-_p_669258-7″[8] Red Bull has also been the target of criticism concerning the possible health risks associated with the drink

Red Bull contains taurine, glucuronolactone, caffeine, B vitamins, sucrose and glucose. Red Bull sugar-free also contains phenylalanine in place of sucrose and glucose

Red Bull’s claims

Red Bullclaims to:

Increase performance

Increase concentration and reaction speed

Improve vigilance

Improve emotional status

Stimulate metabolism

Give you wings

Caffeine content

Red Bull’s invigorating effects are attributed to its high caffeine content. A single can of Red Bull contains 80 mg/250 ml of caffeine[27]HYPERLINK “#cite_note-27″[28]. This is about the same as one cup of normal coffee, or slightly less depending on the brewing method [29] The actual caffeine level in Red Bull can vary depending on country, as some countries have legal restrictions on how much caffeine is allowed in drinks.

Red Bull drinkers may experience adverse effects as a result of caffeine.

Legal status

Red Bull has been subject to bans in France, Denmark and Norway. The ban has been lifted in Norway and Denmark.[30] The French ban was challenged by the European Commission and (partially) upheld by the European Court of Justice in 2004.

Red Bull has an aggressive international marketing campaign. The numerous sponsored activities range from extreme sports like windsurfing, snowboarding, skateboarding, kayaking, wakeboarding, cliff-diving, surfing, skating, freestyle motocross, rally, Formula 1 racing, and breakdancing to art shows, music, and video games. In keeping with their target market of young males, Red Bull has also enlisted help from celebrities, such as Eminem that would appeal to this group (sponsoring the Red Bull “EmSee Battle Rap championships”). It also hosts events like the “Red Bull Flugtag” (German for “flight day” or “flying day”) and other such contests. Red Bull also sponsors soccer teams, with clubs in Austria, Germany, the United States and Brazil featuring the Red Bull trademark in their names. By associating the drink’s image with these activities, the company seeks to promote a “cool” public image and raise brand power. In addition, the slender container is used to suggest a “sexier” image than some other cola counterparts. Hence, this one energy drink has helped create a market for over 150 related types of merchandise,[31] like Red Rooster and Blue Lightning.

Red Bull’s slogan, “it gives you wings”, is widely used in these marketing activities. Claims about the drink’s effects and performance have been challenged on various occasions, with the UK’s Advertising Standards Authority imposing advertising restrictions in 2001 in response to complaints first recorded as early as 1997.[32] Even with all of the concerns regarding Red Bull, in 2000 the corporation earned around $1 billion in worldwide sales and Red Bull held 65% of the market share.[33] In Malaysia, however, Red Bull does not use its “Gives you wings” slogan, but instead a single one-word slogan, Bullleh!, a word play on the Malay word Boleh (lit: Can be done) and the word Bull.

In the PlayStation 3’s new social app, PlayStation Home, Red Bull has developed its own in-game island, specifically advertising its energy drink and the Red Bull Air Race event. In late November 2009, Red Bull brought out two new spaces, the Red Bull Illume space, and the Red Bull Beach space featuring the Red Bull Flugtag, both released on the same day.

In the video game Worms 3D, Red Bull could be drunk by the worms, giving them the effect of faster movement.

Red Bull is displayed on virtual track-side billboards during gameplay and in the opening cinematic in the video game Wipeout XL.

Team ownerships

Red Bull Brasil – a football (soccer) team currently playing in the Brazilian Campeonato Paulista Série A2.

RB Leipzig – a football (soccer) team currently playing in the German Regionalliga Nord

Red Bull New York – a soccer franchise competing in the United States’ Major League Soccer

Red Bull Racing, one of two Red Bull Formula One teams, this one based in Milton Keynes, England

Scuderia Toro Rosso (Italian translation of Team Red Bull), the other Red Bull Formula One team based in Faenza, Italy.

Team Red Bull, a racing team competing in the US based stock car racing competition NASCAR.

FC Red Bull Salzburg, an Austrian football (soccer) club based in Salzburg and competing in the Austrian Bundesliga

EC Red Bull Salzburg, a member of the Austrian Hockey League based in Salzburg, Austria

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.

6.

Conclusion

Red Bull is a highly successful company responsible for 70% of sales in the energy drink

market to date. Their product is well known by consumers to ‘vitalize body and mind’ and is

generally purchased by most for this purpose.

Red Bull have strong competitors who are constantly trying to gain market share off Red Bull,

however, it is evident that Red Bull’s current marketing philosophies are working in keeping

them a market leader. Red Bull is aware of their marketing challenges and they are constantly

adjusting and developing their marketing approach to overcome or even avoid future

concerns.