Red Bull strategy

Red Bull is one of the biggest soft drink successes over the past the years. The slim blue silver can has developed a following among those who claim that it helps them with virtually everything to work better and play better. Yet Red Bull has a 70 to 90 percent market share in over 100 countries worldwide. During the past 15 years, the drink has been copied by more than 100 competitors, but such companies as Coca-Cola and Anheuser-Busch have been unable to take market share away from Red Bull. [Selling Power (September, 2004)]

In 1982, Dietrich Mateschitz, the founder of Red Bull became aware of products called “tonic drinks” which enjoyed wide popularity in Asia. Energy drinks containing taurine, glucuronolactone, caffeine and important vitamins and carbohydrates are claimed to help with physical endurance, improved reaction, speed and concentration and a feeling of well being. We can see that in the present days more than a billion cans of Red Bull are consumed each year around the world. Red Bull was launched in the UK in the mid-1990s of Austrian parentage.

According to a Zenith International 2001 survey that, in 2001, it was the UK’s third biggest soft drink by value, behind Coca-Cola and Pepsi Cola. In the energy and sport drink sector, estimated to be worth £750mn, it had an 86 per cent brand share by 2000, more than double the combined sales of Lucozade’s energy and sports brands. The advertising slogan of the Red Bull is “The Drink That Gives You Wings” and focuses on the stimulant properties of the drink.

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The functional sector concentrated on energy drinks, with brands such as Red Bull dominated. Meanwhile, the focus for sports drinks is replenishing carbohydrates and electrolytes quickly, and rehydrating the body after exercise. This subsector is still dominated by Lucozade Sport with £34 mm in sales in 2000, but Coca-Cola intends to prelaunch its Powerade brand to capture a significant share, using “Get Up, Stay Up” as its campaign theme. Lucozade Sport in creating a new sector that is in tune with changes in lifestyles and reflects the development of sport & physical activity. [Hawkes (1997), Johnson (2001), Newnham (2001)]             

Analysis of the external and internal environments of an organization influence strategic choices and compare the marketing proposition that, The UK total cold drinks market is large and competitive area in which, many powerful and famous brands with large marketing budgets competing for share.

In the cold drinks market, increases in the soft drinks category have been slowing. However, growth has been driven considerably by the energy drink sector, which was worth an estimated £940 million in 2003 and more than £392 million in 2004 and still has grown 26% since 2003. (ACNielsen) The Energy drink category continues to grow at pace with brand extensions and new entrants to the market emerging every year. This represents both a challenge and an opportunity for the category’s leading brands. [Mintel Energy & Stimulant drinks Market Report August 2006].

The Product

Red Bull improves emotional status and vigilance, increases performance, reaction speed and concentration. Customers drink Red Bull for such benefits as these.  In times of long school hours, stressful work, and very tiring days, customers look to a product that vitalizes body and mind. Red Bull does just that!  Red Bull even supplies a sugar free version for the average health-concerned user. 

The Target Audience (Market)

At this point, the concept of market segmentation, targeting and positioning are key to the success of firms marketing efforts. Red Bull targets an active audience, especially those between the ages of 17 and 23, male and female.  Characteristically, 17- to 23-year-olds are either thinking about college, in college, or just recently graduated from college.  It is currently in a consumer’s life that dramatic schedule changes are happening.  High school atmospheres are considerably slower than the pace of college atmospheres. Sports, education, clubs and part-time jobs are far more challenging in a college setting.  Red Bull is targeting customers across the world that it is at the turning point in their lives when energy is a necessary component to successfully make it through any given day.  Red Bull is a perfect solution for 17- to 23-year-olds who live fast-paced, hectic lifestyles while hardly making it through long days and nights of classes and studying.

Segmentation is also important because firms cannot appeal to all customers at once, especially not with the same offering.  Rather, firms need to design products and services that fit with particular groups of individuals. Firms can segment their market in a number of ways, including geographical which is mainly people who are situated in the city, as they are likely to be really busy and tired. Red Bull seems to have a cooler in most bars and clubs in the city as well as in convenient stores.Demographic, mainly concentrate on men and women of all ages but focusing on people aged 16-29. Psychographic for example, the people who are tired or stressed and want to relax and have fun and finally behavioural segmentation especially students and young professionals to boost energy during work long day at work.

The type of marketing strategy that should be employed will vary on the target market. Choosing an appropriate target-marketing strategy will depend on a number of factors. Once a firm has selected the segment within which it wishes to compete, it must then choose a specific position within said segment where it will distinguish itself [Kotler and Keller, 2006; Kotler, 1980, 1985]. The requirement of market positioning refers more broadly to the notion of competitive advantage.

The Proposition

Red Bull is “The Drink That Gives You Wings”. This is Red Bull’s international slogan for its energy drink. Red Bull is a popular drink amongst men in particular, with its largest consumers consisting of athletes, students, and night-clubbers in need of a late night lift.  However, the brand is marketed to ‘opinion leaders and hard-working people with active lifestyles’, as the company’s website claims.

Red Bull succeeds by remaining exactly the same. Consumers can choose with sugar or without. There is no other choice. As founder Dietrich Mateschitz says “We don’t bring the product to the people, we bring people to the product.” Red Bull marketing maintains a sense of product mystique that makes consumers feel special. Customers can relate to the experience they were having when they encountered the drink and they adjust their values to the attributes of the product.

The Competition

Red Bull is competing with major competitor Lucozade in the soft drink market and they are the driving forces in the rapidly increasing energy drink market. A close assessment of their websites reveals that they have a similar focus in their messages, so they seem to be competing for the same customers. However, the message delivery is very different. This would seem to indicate that they are not concentrating their strategic objectives on stealing market share or overall market share growth. Instead they recognize that the whole market share pie is rising. For that reason it seems logical that each company would be concentrating on bringing in a greater number of the consumers new to the energy drink market. Red Bull is also competing with some companies such as show below;

Vault

-Markets product as a hybrid: “Drinks as a Soda, Kicks like an Energy Drink”

“The Taste. The Quench. The Kick.”

-A Coca-Cola product

-Product Variations: Vault Zero (diet version)

-Commercial advertisements display men doing extraordinary things while drinking Vault.

Monster

-Tagline: “Unleash the Beast”

-Green and black themed product and website

-Product variations: Lo-Carb, Assault(soda drink), Khaos(juice drink)

-Khoas slogan: “70% Juice, 100% Monster”

-Promote Supercross racing events

-Promote mixing Monster with alcoholic beverages, website provides mixed drink recipes.

Rock Star

-Edgy tone

-Rock music plays on the website; Rod Stewart, Fernando Vargas and Snoop Dogg are pictured on the homepage of the site, “Party Like A RockStar”

-Product variations:  Diet RockStar, RockStar Energy Cola, Get Juiced

-Get Juiced slogan- “70% Real Juice, 100% Energy”

-Website sells merchandise: t-shirts, hats, wristbands, etc.

-Youthfully imaged founder & CEO

Advertising Objectives

Red Bull campaign strategy is to redirect the advertising from the former extreme sport athlete audience to a demographically larger target audience – college students. 

What will Red Bull campaign do for the target?

Red Bull campaign will hit a soft spot and plant their product deep in to the minds of the target audience by using a childhood cartoon character for instance, Popeye the Sailor Man who has recently been missing in action on current television.  Their focus group study revealed that the targeted college student audience often wishes they could turn back the hands of time and relive their childhood when life was easy and they had all the energy in the world to laugh and play.  The goal is to reach their target’s soft spot by using a childhood cartoon character – pleasant childhood memories. 

The Ad Pyramid (AIDA)

Attracting Attention:

Using a cartoon character, which the target market has not seen since childhood, to promote Red Bull will grab the attention of the 17- to 23-year-old audience. 

Holding Interest: 

The tagline, “Tastes Better Than Spinach,” pokes fun at the taste of Red Bull, using the technique of humour to keep the consumers interested in the product. 

Sparking Desire: 

The target market will also long for the desired energy results of Red Bull who long to return to the days of childhood. 

Influencing Action:

The interest in and the desire to drink Red Bull will add enough fuel to the consumers’ flame to make the target need and/or want to go out and purchase their product.

Overall goal of Advertising Campaign:

Red Bull wants to have at least 75-80% of all college students in the country drinking or highly aware of their drink.  

The Media and Creative Requirements

Creative Brief/Copy Platform

Red Bull will reach out to the college student market by using humoured advertising, along with product benefits to prominently put Red Bull on the college campus map.  Our strategy is to implement pulse advertising to stress Red Bull’s importance through midterm and final times by way of the following media:  MTV’s the 10-Spot, People Magazine, and college radio stations nationwide.

Red Bull is bringing Popeye back into the spotlight!  Popeye and his infamous love, Olive Oyl, will use their persuasion skills to remind the target market of sweet childhood memories, as a result, aiding in the desire to drink Red Bull for strength and energy.  What is Popeye’s message, you ask?  “Tastes Better Than Spinach” is the hot button tagline we will use to reach the target market.  In the print and broadcast advertisements, Popeye’s character will appear in various college settings, while studying and drinking Red Bull to gain energy, instead of eating what he is famous for, cans of spinach. 

The Red Bull cans and website promote the specific product benefits – increasing performance, concentration and reaction speed, improving vigilance and emotional status, and stimulating the metabolism.  We plan to stick with the effective strategy of humoured animation advertising to sell Red Bull Energy Drink across the United States.   

Production requires the hiring of animators, scheduling studio time for voiceovers, hiring actors for the voiceovers, and obtaining the rights to use Popeye and Olive Oyl in advertisements.  Final edits are expected within the production elements. Popeye’s strength and energy will flow into the college students of America. The result:  sky-rocketed Red Bull sales!

Media Rationale

People Magazine

Many young adults within our target market read this weekly magazine.  People Magazine, constantly available for reading, is our chosen media outlet that can reach our target at nearly any time of the day.  People Magazine often sits in the lobby or waiting area of schools and businesses, giving us the opportunity to reach out to the consumers in many places and at many times of the day.  The creative vision of having the popular cartoon character, Popeye, drinking Red Bull in college settings will scream to our target that Red Bull Energy Drink is a necessity for the average college student. 

MTV’s the 10-Spot

College students, far and wide, take a break from studying to tune in to the popular MTV 10-Spot.  Red Bull commercial advertisements during the highly rated “Real World/Road Rules Challenge” will clearly remind our audience of the energy they crave to make it through many hours of homework after their much needed break is over.  A constant reminder with three commercial slots during this half hour television show will have the target market running out to the nearest venue to buy Red Bull Energy Drink.   

College Radio Stations

What better way to reach our target audience than by pouring our product advertisement right into the heart of their school’s media – college radio stations!  Students are exposed to the sound of college radio in general public campus areas, such as cafes, restaurants, hallways and lounges.  Advertisements are to run between the times of 6:00 p.m. and 9:00 p.m.  Surveys reveal that the target market prefers to drink Red Bull in the evening.  The evening targeting strategy will reach students after dinner hours when they are getting ready for gruelling night classes and/or long nights of studying. 

Conclusion

I can say that, advertising is any paid form of non personal presentation and promotion of ideas, goods, and services by an identified sponsor to a targeted audience and delivered primarily through the mass media. Advertising has much strength. It can reach a large mass audience to intensify broad-based demand for a product, build brand awareness, create long-term brand images and brand positions, and increase brand knowledge effectively. On the hand advertising has several weaknesses also. It is perceived as intrusive and as cluttering the environment. It is also wastes many impressions, so it may not be cost-effective, especially if the business is targeting a niche market.  

If I want to critically evaluate how analysis of the external and internal environments of an organisation influence strategic choices and compare the marketing propositions of Red Bull this assessment show that, the energy drink market is competitive and rapidly increasing in the existing market sector. Therefore, selection of advertising media for Red Bull is one of the most important and complicated of all marketing communications decisions. Media planning must be coordinated with marketing strategy and with other aspects of advertising strategy.

Bibliography

• Burnet, J. and Moriarty, S. (1998) Introduction to Marketing Communications: An Integrated Approach, by Prentice Hall, Inc., Upper Saddle River, New Jersey.
• Geld, B. D., Hong, J. W. and Zinkhan, G. M. (1985) “Communications Effects of Specific Advertising Elements: An Update “in Current Issues and Research in Advertising, vol 11, ed. James H. Leigh and Claude R. Martin, Jr. (Ann Arbor, Mich: University of Michigan. 
• Kotler, P. and Armstrong, G. (2004) Principles of Marketing, (10th edition), Upper Saddle River, NJ: Pearson Education
• Kotler, P. and Keller, K.L. (2006) Marketing Management, (12th edition), Upper Saddle River, NJ: Pearson Education
• Mintzberg, H. and Lampel, J. and Kim, J.B. and Ghoshal, S. (2003) The Strategy Process: Concept Contexts Cases (4th edition), published by Pearson Education Inc. Upper Saddle River, New Jersey
• Porter, M.E. (1980). Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press
• Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
• Shimp, T. A. (2000) Advertising Promotion: Supplemental Aspects of Integrated Marketing Communications, 5th edn,by Harcourt, Inc.

Electronic sources:

• Superbrands Book 2004
• www.red-bull.com
• www.redbullrampage.com
• www.bevnet.com/reviews/redbull
• www.hoovers.com/red-bull
• www.brandchannel.com
• www.lanceandeskimo.com/chefelf/bev_lucozade.shtml
• www.business2000.ie/cases/cases/case4.htm
• www.begleys.com/stats.html
• www.thelocalshop.com/default
• Selling power sep 2004

REFERENCES

• Kotler, P. and Armstrong, G. (2004) Principles of Marketing, 10th edition. Upper Saddle River, NJ: Pearson Education
• Kotler, P. and Keller, K.L. (2006) Marketing Management, 12th edition. Upper Saddle River, NJ: Pearson Education
• Porter, M.E. (1980). Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press
• Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
• Superbrands Book 2004
• Hawkes (1997), Johnson (2001), Newnham (2001)
• Mintel Energy & Stimulant drinks Market Report August 2006
• Selling power sep 2004

APPENDIX

1. FIGURE 1: 

[Source: Nielsen value share data, MAT to December 27th 2006].

2. FIGURE: Typical off-trade retail prices of energy and stimulant drinks and pack sizes, (2006).

According to figure 1, Lucozade has been the market leader in the energy drink category with just under 60% value share of the category since its launch. The biggest competitors such as, Red Bull with 27% market share and PowerAde 4.5% market share respectively. In 2003 has also witnessed the introduction of several private label sport and energy drink launches from the major grocers. The rest of the market is made up with a plethora of smaller brands, predominantly operating in the stimulant drinks sector, and distributed via the impulse channel and the on-trade environment. [See figure 2: Typical off-trade retail prices of energy and stimulant drinks and pack sizes, 200

Appendix 2 – Posters

The Drink That Gives You Wings

Even If you are a HERO!!!

“Tastes Better Than Spinach”