Red Bull Marketing

Global Strategic Marketing

Assessment 1

By: Sam Deegan

Keith Hogan

John Keating

Stephen Walsh

Assignment Global Strategic Marketing Red Bull

DeclarationI certify that this assignment is all my own work and contains no Plagiarism. By submitting this assignment, I agree to the following terms:

Any text, diagrams or other material copied from other sources (including, but not limited to, books, journals and the internet) have been clearly acknowledged and referenced as such in the text. These details are then confirmed by a fuller reference in the bibliography.

I have read the sections on referencing and plagiarism in the handbook or in the WIT Plagiarism policy and I understand that only assignments which are free of plagiarism will be awarded marks. I further understand that WIT has a plagiarism policy which can lead to the suspension or permanent expulsion of students in serious cases.

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ContentsDeclaration............................................................................................................................................1

Table of Figures.....................................................................................................................................4

1. Introduction...................................................................................................................................5

2. Analysis of the Energy Drinks Industry...........................................................................................6

2.1. Background............................................................................................................................6

2.2. Industry Size, Growth & Profitability.....................................................................................6

2.3. Competitive Scope.................................................................................................................7

2.4. Market Leaders......................................................................................................................7

2.5. Sales Model & USP.................................................................................................................8

2.5.1. Market Segmentation....................................................................................................8

2.5.2. An Evolving Unique Selling Point...................................................................................8

2.5.3. Sales...............................................................................................................................9

2.6. Key Drivers in the Energy Drinks Market.............................................................................10

3. Company Analysis of Red Bull......................................................................................................10

3.1. An Introduction to Red Bull.................................................................................................10

3.2. The Aims, Objectives & Values.............................................................................................11

3.3. Company Milestones...........................................................................................................11

3.4. Red Bulls Product Range......................................................................................................13

3.4.1. Products.......................................................................................................................13

3.4.2. Product Positioning......................................................................................................13

3.4.3. Target Market..............................................................................................................13

3.4.4. Competitors/Substitutes..............................................................................................14

3.4.5. Marketing Methods.....................................................................................................14

4. Conclusion...................................................................................................................................16

4.1. Industry Analysis..................................................................................................................16

4.2. Company Analysis................................................................................................................16

Bibliography.........................................................................................................................................17

Appendices..........................................................................................................................................20

Appendix I – P.E.S.T.E.L of the Energy Drinks Market......................................................................20

Political........................................................................................................................................20

Economic.....................................................................................................................................20

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Social...........................................................................................................................................20

Technological...............................................................................................................................20

Environmental.............................................................................................................................21

Legal............................................................................................................................................21

Appendix II – S.W.O.T......................................................................................................................21

Strengths.....................................................................................................................................21

Weaknesses.................................................................................................................................21

Opportunities..............................................................................................................................22

Threats.........................................................................................................................................22

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Table of FiguresFigure 1 - Functional Sales Performance Overview...............................................................................6Figure 2- Largest Energy Drinks Manufacturers Revenue’s...................................................................7Figure 3 - Energy Drinks Sales Breakdown.............................................................................................9Figure 4 - Company Milestones...........................................................................................................12

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C:\\Users\\Sam\\Documents\\BBus 4 Semester 2\\Red Bull Marketing.docx#_Toc386206439


1. IntroductionThis Report has been undertaken as part of the continuous assessment for the Global Strategic Marketing module. The report consists of two individual sections, the first section examines our chosen industry, the energy drinks industry and analysis it in terms of its size, scope & sales model. In the second section we take a look at our chosen company operating within the industry, for this we have chosen Red Bull. In this section we shall take an in-depth look at how the company positions itself within the market, how it differentiates itself from competitors, what market segment it targets & how it reaches them.

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2. Analysis of the Energy Drinks Industry

2.1. BackgroundTo analyse the scale & scope of the energy drinks Industry we must first define what an energy drink is, according to (Merrieam-Webster Dictionary, 2014) an energy drink is:

“…usually a carbonated beverage that typically contains caffeine & other ingredients (such as Taurine & Ginseng) which are intended to increase the drinkers energy levels”

The first recorded mass produced energy drink was produced in 1904. This energy drink is now one of the most famous brands on the planet, Coca Cola. Coca Cola was the first drink ever marketed as an energy booster & contained cocaine at the time of release. Prior to this the only stimulant drinks available were natural ones such as Tea & Coffee. Over time the landscape of the energy drinks market has changed, the first modern energy drink was sold in 1987 and its maker remains the dominant player in the market to this day, which is Red Bull which we look further into in the company analysis.

2.2. Industry Size, Growth & ProfitabilityThe energy drinks market has boomed in recent years, according to (King, 2013) energy drink Consumption has grown on average 10% since 2007 bringing consumption up 1.5 Billion Litres to 4.5 Billion Litres in the space of just four short years. Considering these figures the energy drinks industry is clearly a Bull market, which is in a phase of rapid expansion as

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Figure 1 - Functional Sales Performance Overview


corroborated by Figure – 1 to the right. This growth should not stifle in the near future due to the burgeoning B.R.I.C.S economies which will represent new growth regions as the present markets such as North America mature. A trustworthy Industry wide sales figure is hard to obtain in relation to the energy drinks market, though (Zenith International, 2012) estimates the market to be worth approximately $37 Billion, to put this in perspective (Smirke, 2013) placed the total revenue of the global recorded music industry at $16.5 Billion, which demonstrates the growth that energy drinks industry has undergone.

2.3. Competitive ScopeCompetitive scope is a concept developed by Michael E. Porter. Competitive scope can be “Wide”, meaning the target market consists of many smaller market segments or “Narrow”, meaning it is focused on a specific Niche (Porter, 1985). The Energy Drinks Industry itself focuses on a niche age group of 18-34 year old males (Ackerman, 2013), though various companies are attempting to widen their age appeal due to the increasingly more crowded market & entice a larger female consumer base. This means that the once narrow focus is slowly widening, in part due to the existing aging customer base, and also due to more mainstream sponsorships such as Formula 1.

2.4. Market LeadersThe energy drinks market operates on an international scale. The International market is an oligopoly which is dominated by a small number large players, this is demonstrated below in (Figure – 2). It is however clear that Red Bull & Monster Energy are by far the biggest players. These companies are increasingly obtaining new customers at the expense of soft drink manufacturers such as Coca-Cola & Pepsi.

Red Bull

Monster

Rockstar

NOS

AMP

Full Throttle

5 Hour Energy

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Largest Energy Drinks Revenue's ($ Millions)

Largest Energy Drinks Revenue's ($ Millions)

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Figure 2- Largest Energy Drinks Manufacturers Revenue’s


As a result we are seeing companies such as these exploiting their extensive distribution channels to undercut many of the existing energy drinks makers, examples of this include Coca-Cola’s Burn brand which is 40% cheaper than current market leader Red Bull (Trefis, 2014), but is yet to develop its market due to its relative infancy compared to the other brands.

2.5. Sales Model & USP

2.5.1.Market SegmentationAll the energy drink brands have tried to emulate the success of Red Bull & target the same segment of 18-34 year old males (Ackerman, 2013). The methods used to reach this audience usually include associations with various extreme sports like Snowboarding, Skateboarding, F1 and World Rally Championship. Differences between products are generally confined to price, can size & flavour, though there is an expanding market for more concentrated “shot” versions. In terms of price, energy drinks are generally far more expensive than other soft drinks, of which Red Bull is far & away the most expensive brand, newcomers tend to try undercut Red Bull to try achieve a greater market share.

Energy drink can sizes are steadily becoming larger as competitors attempt to differentiate themselves. Using larger cans portrays an image of improved value & highlights attempts to increase per capita consumption rates which are generally quite low versus soft drinks (PR Newswire, 2013), this has been very successful as this consumption figure has doubled since 2006. There is also a growing segmented demand for new flavours, though the ”original energy drink flavour” still holds 68% of the market share according to (Canadean, 2013), it has shrunk from over 80% of the market share in 2004. This is where brands such as Monster have traditionally had the most success in attracting customers from Red Bull due to their limited range of flavours.

The newest threat to the traditional energy drinks brands is the emergence of energy shots such as 5 Hour Energy. These energy shots aim to provide the same benefits as the traditional energy drinks such as Red Bull & Monster, but in a smaller package with fewer calories & sugar. The branding though is somewhat more distinctive, 5-Hour Energy positions itself as more of an energy supplement than a beverage. Many of the players such as Red Bull & Monster have released concentrated versions of their products to compete with these but as of yet have not gained the same traction as 5 Hour Energy.

2.5.2.An Evolving Unique Selling PointEnergy drinks have underwent to some extent a perception change over the last decade, originally they were seen as a functional short term energy fix, or a pick me up to keep you alert for a short while, e.g. a late drive home. This functional perception has dramatically changed & with it the

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unique selling point of these energy drinks, to quote who is essentially the founder of the Industry, Dietrich Mateschitz the Red Bull CEO, the U.S.P is now somewhat more philosophical:

“What Red Bull stands for is that it “gives you wings…,” which means that it provides skills, abilities, power etc. to achieve whatever you want to. It is an invitation as well as a request to be active, performance-oriented, alert, and to take challenges. When you work or study, do your very best. When you do sports, go for your limits. When you have fun or just relax, be aware of it and appreciate it.” (Iezzi, 2012)

This is clearly far from its functional origins & aims to sell an extreme lifestyle, hence the prevalence of extreme sports in the various brands advertising portfolios. The brands no longer aim to sell you a liquid energy boost, but a piece of this wild & extreme lifestyle. This is why the various brands all try to outdo each other in extreme sports sponsorships, because they must constantly push this extreme image to stick out from the competition e.g. the Red Bull Stratos space jump.

2.5.3.SalesAs you can see from the figure below, the figures acquired from (PR Newswire, 2013) clearly show that the vast majority of sales come from purchases in local shops. There is also significant amounts of energy drinks purchased from mass merchandisers & warehouses, while not stipulated we believe that many of these sales are to bars & nightclubs. This is due to the growing trend of mixing energy drinks with spirits which is coming increasingly under scrutiny, due to a number of high profile incidents (University of Michigan, 2013).

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2

10

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Energy Drink Sales Breakdown

Convenience StoresOtherMass MerchandisersDrug StoresSupermarketsClub Stores/Warehouses

Figure 3 - Energy Drinks Sales Breakdown

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2.6. Key Drivers in the Energy Drinks MarketThere are a few key elements that can be drawn from a P.E.S.T.E.L Analysis (in Appendix – II), firstly the energy drink industry seems to have been very resistant to the financial downturn of 2008, as its growth while slowed has continued strongly. New growth is expected to come from the BRICS, the Middle East & Latin America in the medium term. There is growing Identity crises within the industry as all the competitors have merely replicated Red Bulls extreme sports image & accentuated it. This is making it increasingly more difficult to create an individual brand.

Politically & socially the industry is receiving negative media attention due to the high profile cases where energy drinks have been linked to coronary deaths. This is resulting in political pressure to limit the places where these drinks are available, placing sugar taxes to reduce their consumption & protecting younger consumers from energy drink advertising. As a result of this & new healthy living trends amongst consumers many energy drinks companies have released sugar-free & low-carb options. As a result the two main environmental pressures appear to be Social & Legal, the industry itself for the time being is such a bull market it ignores the current economic environment. Socially it is a rather mixed bag generating both opportunity in demand for new segmented health conscious products, while then negatively affecting the industry with public criticism of its effects on coronary issues. Technologically & environmentally speaking there seems to be little more pressure than any other industry to be a large cause for concern.

3. Company Analysis of Red Bull

3.1. An Introduction to Red BullRed Bull was founded in Austria in the mid-80’s by Dietrich Mateschitz, Dietrich modified a functional tonic he found on his travels in Asia to suit western tastes. Dietrich did this because he wanted to create a drink, which not just quenched thirst but also had a functional benefit (Red Bull,2013). It was with the foundation of Red Bull that Mateschitz not only created a company which now has a turnover $4,235 million a year, but a whole new industry which is now worth $37 Billion(Zenith International, 2012).Red Bull is a titan of the energy drink industry, one which it has managed to create, dominate & grow into a lucrative new niche in the mineral drinks market right under the nose of traditional industry powers such as Pepsi Co & Coca-Cola.

These companies have increasingly targeted the growing energy drinks market as their own markets have begun to decline (Zmuda, 2014). The Red Bull brand itself is incredibly fascinating & is built upon associating itself with a myriad of teams’ events & people, probably to the point that it is now more recognised for its values than it is for its product. It is ranked the 49 th most valuable brand in the world according to (Eurobrand, 2014) ahead of other International brands such as Facebook, Tesco & IKEA. This reflects the effort Red Bull put into brand building as it reinvests 30-40% of sales

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in marketing (Passport, 2013). This brand has not been built upon traditional marketing techniques, but by embracing modern marketing techniques such as Ambush Marketing, Digital Marketing & closely linked Team & Event Sponsorship from its very beginning. This makes Red Bull a common topic of discussion by marketers & consumers alike.

3.2. The Aims, Objectives & ValuesThis section attempts to uncover the message that Red Bull conveys when marketing itself to the masses, or more specifically to males aged 18-34. As previously quoted in the Industry Analysis, Dietrich Mateschitz stated:

“What Red Bull stands for is that it “gives you wings…,” which means that it provides skills, abilities, power etc. to achieve whatever you want to. It is an invitation as well as a request to be active, performance-oriented, alert, and to take challenges. When you work or study, do your very best. When you do sports, go for your limits. When you have fun or just relax, be aware of it and appreciate it.” (Iezzi, 2012)

From this statement we can draw the following conclusions, Red Bull associates itself with the idea of Self-Actualisation that “you must be all you can be” & by consuming Red Bull you are one step closer to this. Red Bull positions itself as the tool to help you scale mountains, it for this reason that they associate themselves with people who treat these mountains or other extreme environments as their playground, or bend the environment to their will. The company slogan reinforces this, Red Bull “gives you (the) wings”, & so all you have to do is fly. It is clear form this that Red Bull values are based on:

Awareness Mind Over Matter Risk Self-Actualisation Self-Motivation Success

3.3. Company MilestonesAs you can see from the below milestones, which were taken from the official site (Red Bull , 2014), there is an increasing focus on building the brand through more mainstream sports such as F1 & football, as opposed to the extreme sports Red Bull has traditionally associated with in the past. This highlights a growing need to broaden the appeal of the product due to the number of competitors. Also noticeable is the increasing use of success to mark milestones in the most recent milestones, where in the past the company milestones were more focused on participation or event creation.

Year

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1987 Red Bull was Founded

1988The company began its association with extreme sports, holding an extreme sports marathon relay race, which combined mountain running, paragliding, kayaking & mountain biking

1989 Red Bull began associating itself with athletes, the first being F1 driver Gerhard Berger

1992 The widely known Red Bull “gives you wings” cartoons begin, the first featured Leonardo da Vinci creating the “masterpiece” known as Red Bull

Red Bull began its Flugtag event, which involves everyday people designing homemade gliders which are then demonstrated to the public & judged on creativity, showmanship & the distance flown

1994 This was the first year that Red Bull began to sponsor international athletes in the form of top windsurfers Bjorn Dunkerbeck & Robby Naish

Red Bull began to air its advertisements outside Austria

1995 Red Bull purchased a majority share in the F1 Sauber team & began a 10 year partnership

1999 Felix Baumgartner began his long relationship with Red Bull by completing the highest recorded base jump off Petronas tower

2000 Red Bull is launched in the Middle-East

2001 The Red Bull Junior team was established, which has since produced world champions such as Sebastian Vettel

2003 The Red Bull Air Race’s began

2005 Red Bull Racing was established after Red Bull purchased the Jaguar F1 team

2006 Red Bull Nascar established

2007 EC Red Bull Salzburg declared Hockey League champions

FC Red Bull Salzburg win the Austrian Football League

Red Bull Records established

2010 Red Bull New York FC moved into their new Stadium the Red Bull Arena

Red Bull Racing driver Sebastian Vettel wins his first World Championship

2012 Felix Baumgartner jumps form the edge of space, breaking multiple records including the first supersonic free-fall, the longest ever free-fall & the highest ever jump

Sebastian Loeb wins his 9th consecutive WRC

2013 Sebastian Vettel & Red Bull Racing win their 4th consecutive titles

Cyril Despres wins his 5th Dakar RallyFigure 4 - Company Milestones

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3.4. Red Bulls Product Range

3.4.1.ProductsRed Bull has a very limited product range especially in relation to its competitors. This is a very serious problem due to the falling market share of original flavour energy drinks in the market. As a result Red Bull released a limited edition range in the U.S this comprises of three new flavours(Passport, 2013):

Red: Cranberry Silver: Lime Blue: Blueberry

These new products are still too new to be assessed for success though new product launches for Red Bull have not went well in the past, such as the Red Bull Cola brand which was discontinued. Red Bulls latest product, Red Bull Zero Calories, was first launched on to the market in France in 2013 and is set to reach the U.K market in summer 2014 (Morton, 2014). This product is aimed at the more health conscious consumers by offering an energy drink with no calories or sugar. This is Red Bull’s second health conscious version after the launch of their sugar free product a decade ago. This new product range helps Red Bull compete with main rivals Monster who also have introduced health conscious options such as their “lo-carb” product.

Red Bull traditionally have used a slim-line 250 ml can size. However they have recently introduced a new supersized 473ml can in an attempt to raise per capita consumption, which is low compared to other caffeine drinks, the introduction also represents direct competition to its rivals Monster Energy whose standards can is 500 ml (Anon., 2014). Red Bull have come under criticism for the volume of sugar contained within these supersized cans as they contain an excessive 13 teaspoons in each can (Webb, 2012).

3.4.2.Product PositioningRed Bull’s is considered the premium product on the energy drinks market & is priced accordingly. The company uses the pricing to a psychological effect, which creates a belief in consumers that the product is superior to its competitors (Magloff, 2014). It is for this reason partly, despite comparable sales between Monster Energy & Red Bull, Red Bull has far superior revenue’s. This positioning has been supported due to Red Bull’s First Mover Advantage (FMA), being the founder of the market Red Bull has built up the brand loyalty to maintain this pricing, even in the face of far cheaper competition, an example of which we highlighted earlier is Coca-Cola’s Burn brand which is 40% cheaper.

3.4.3.Target Market Red Bull targets an 18-34 year old male segment of the market (Ackerman, 2013), they do attempt to reach this market through the various extreme sports associations, the Red Bull Air Race, Cliff Diving etc. However this market is incredibly saturated as all of the major brands target this segment

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using the same approach. As a results we see Red Bull more so than the other brands attempting to broaden its appeal. They attempt to do this in a number of ways, firstly the younger generation are more health conscious & are concerned with the health effects of energy drinks than the previous generation (Radcliffe, n.d.). Secondly there is low consumption of energy drinks amongst women, many of whom are more health conscious than men.

This has seen the introduction of sugar-free & zero calorie editions, this represents a rapidly growing share of the market. It has also seen an increased effort to endorse role models to get around legislation to reach minors before spending habits are set, though the company denies this, it’s a constantly levied criticism (Montague-Jones, 2011). In an effort to strengthen its appeal to women Red Bull has associated itself with a number of high profile sportspeople such as professional golfer Alexis Thompson & Skier Lindsey Vonn.

3.4.4.Competitors/SubstitutesRed Bull’s largest competitor has been stated throughout this document many times, Monster Energy & Red Bull represent the lion share of the energy drinks market with approximately 80% market share (Caffeine Informer, 2013). Monster Energy has a much more diversified product line than Red Bull with a larger variety of flavours. Monster also offer a much larger can for the same price as Red Bull in an attempt to represent a better value. While Red bull is trying to widen its scope to attract new customers, Monster Energy however has an extremely narrow focus aggressively targeting Red Bulls traditional market of 18-34 year old men, this is reflected in Monster Energy’s far more masculine image. This strategy to their credit has worked incredibly well, as it only took 5 years for Monster Energy to overtake Red Bull as the market leader In the U.S. (Bouckley, 2014).

3.4.5.Marketing MethodsAs we’ve stated Red Bull has an innovative marketing strategy which does have elements of traditional (passive) marketing such as print & television advertisements, this is usually managed by Red Bull House which amongst other responsibilities Issue’s the monthly Red Bulletin magazine. However the majority of advertising involves modern (active) marketing techniques such as:

Digital Marketingo Blogso Viral Advertisementso Social Media

Team Ownership Event Organisation Ambush Marketing

Red Bull is a prime example of Ambush Marketing. Ambush marketing involves the investment of time, energy, knowledge & creativity rather than money to achieve its aims (Entrepreneur, 2013). This is something Red Bull have done fantastically in the past, quite early on they aimed to create

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brand buzz on the club scene, they did this by making sure local DJ’s were seen with the product & as a result Red Bull became quite popular amongst clubbers, this technique is now known as “seeding” (FDS, 2013). The company is very active social media & strives to use it to its full potential, in fact it is so active on twitter that 49.3% of all energy drink related tweets mention Red Bull (NewsReputation, 2012).

Where Red Bull really excels is in team ownership & event organisation. But why are we using the terms team ownership & event organisation instead of sponsorship, because Red Bull doesn’t do plain sponsorship very often. Traditionally sponsors will pay to have their logo associated with a team to derive marketing value by association e.g. Adidas sponsoring the Olympics, this however can be undermined by competitors ambush marketing campaigns such as Nike did in the 1996 Olympics. In Red Bulls case they integrate the team or event into the company and intrinsically link their values & branding so tightly they cannot be ambushed, for example the Red Bull Racing F1 is wholly owned by Red Bull, it is called Red Bull in short, and the car bares its colours & logo. So if Monster Energy want to associate themselves with the team it is near impossible because the branding is so identifiable with the team.

This trend continues to their other teams EC Red Bull Salzburg, New York Red Bull’s FC etc. Competitors cannot even ambush the stadium as they are generally Renamed the Red Bull Arena or some variation & decked out in the Red Bull logo & colours. The interesting aspect of these ventures is that while in the short term Red Bull makes a significant investment, they also run these teams like a business & turn over a profit relatively quickly. The same goes for Red Bull events, you see the same re-occurring theme with Red Bull Flugtag, Cliff Diving etc. These events are all intrinsically linked to the brand & prevent ambushing. Most of these events are re-occurring, & therefore enable annual brand interaction with potential customers.

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4. Conclusion

4.1. Industry AnalysisIn conclusion the Energy Drink industry is clearly a profitable one. The success of Red Bull has ultimately attracted many envious eyes, which have now entered the market looking for their share. Especially those who have made significant profits from the now declining soft drink industry who are looking to compensate for loses. The level of competition has increased risk for those in the market with the largest share as they have the most to lose, this is due to the high substitutability of products available.

The market is frequently becoming more & more segmented in terms of flavours, various sugar-free & low-carb options. Companies are finding it difficult to create an individual image that can separate them from their competitors. This is likely to change so companies can position themselves to target groups such as women, who currently have a very low consumption rates in comparison to men. Overall the industry should continue to grow sales due to very high sales growth from emerging economies.

4.2. Company AnalysisIn being the first mover Red Bull has a distinct advantage, over the years it has developed strong brand recognition & loyalty. It is however becoming a victim of its own success. The product is positioned at a premium price & is easily substitutable, as a result there is a growing number of competitors entering the market & undercutting Red Bull. This is leading to a slow erosion of its market share, especially from Monster Energy who is now the market leader U.S. In the past the Red Bull branding has always been distinctive due to its association with extreme sports such as snowboarding & motocross, it is however losing this distinctive image as all the new entrants are emulating this approach.

Whereas in the past Red Bull’s appeal has always been to the 18-34 male segment, it now has to look elsewhere due to the level of competition. This is where Red Bull can carve out a new competitive advantage. In an effort to steal a slice of Red Bulls market share competitors are entering with increasingly more masculine extreme images. As a result Red Bull’s image is now quite “soft” in comparison to its competitors. As a result of its competitors narrow focus Red Bull has the most potential to widen its focus outside of this segment, while still being capable of competing in its current market.

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Appendices

Appendix I – P.E.S.T.E.L of the Energy Drinks Market

Political Politically the energy drinks industry is under scrutiny due to incidents where Red Bull or other energy drink consumption has led to deaths usually in conjunction with alcohol consumption. While these deaths are few & far between, they have still received significant media attention. By extension, the shock of rare cases, such as these have caused many legislators to react who are now beginning to look at restricting its sale (Nestle, 2013). As most of the political matters that affect Red Bull are based on restrictive legislation, we shall talk about this in the Legal section.

EconomicEconomically the energy drinks industry has continued expanding at a double figure rate for the last decade, this growth has largely been unaffected by the downturn & has outperformed other comparable industries. This is quite a testament to the growing popularity of energy drinks especially as they tend to be far more expensive than substitutes such as coffee & mineral. The interesting thing is you would expect the opposite to be true due to declining personal expenditure worldwide due to the 2008 financial crash. The fact is worldwide figures are masking the slowing down of sales in mature economies which are now below the 10% mark, though these growth figures are still quite high the true growth now lies in the BRICS(especially in South Africa) & the Middle-east.

SocialEnergy drinks companies are very active on social media sites such as Twitter & Facebook, Red Bull in particular as it is mentioned in nearly half of all energy drink related tweets. Socially the energy drinks brands are seen as cool due to the extreme sports image & team sponsorships. This cool image has helped companies such as Red Bull become quite popular with clubbers, students & drivers. Energy drinks however receive a lot of criticism via new digital media such as blogs, especially in relation to deaths that were caused by excessive energy drink consumption in combination with spirits. Consumption of alcohol together with energy drinks is quite popular amongst students & clubbers due to the energy boost, as a result this has a double edged sword for energy drinks companies. Energy drinks companies are also being swept up in the general wellness trend which has existed for the past few years, & has resulted in the release of low carb & sugar free options.

TechnologicalIn terms of technological forces effecting the environment these are mainly limited to improved manufacturing & transport capability. Innovation in this industry tends to come from product segmentation. The most important Technological factor in the Energy Drinks Industry is the Internet. This invention has allowed people across the world interact with the brands from the comfort of

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their home, whether it is viral advertisements to create buzz such as the Red Bull Stratus event which had the largest live audience on YouTube ever or merely interacting with their social media page.

EnvironmentalWhile this could have come under the social section, we decided to keep this separate to highlight its importance to the modern consumer. While there is certain pollutions cause by the manufacturing of energy drinks the Industry is very focused on package recycling. The most common form of packaging is the aluminium can which is 100% recyclable. Some of the cheapest brands do use plastic packaging for their larger products such as 1 litre bottles but these again are recyclable & are a relatively small percentage of sales.

LegalLegally we are seeing increasing measures being taken against all unhealthy products such as soft drinks, especially in relation to advertising at children. Energy drinks in particular are taking a lot of flak from political establishments which are looking to limit their point of sale. This is down to two reasons rising obesity amongst children & adults, & also the high profile deaths linked with energy drink consumption. While not illegal regulators are looking at idea’s such as sugar taxes to help reduce consumption of these products. There is also restrictions being placed on advertising at children, who are a prime target for companies looking to become recognised by consumers before spending habits are set.

Appendix II – S.W.O.T

StrengthsMarket Leader

As market leader Red Bull has a strong brand image & the word Red Bull has become interchangeable with energy drinks in some countries much like Hoover did with Vacuum Cleaners. This highlights how powerful the brand is.

Broad Market PresenceRed Bull, as previously stated is available in over 166 countries worldwide this will provide stable growth into the future even as current markets mature.

First Mover AdvantageAs the first entrant into the market Red Bull has built up very strong brand loyalty as a result.

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WeaknessesLimited Range

Red Bull has moved to rectify this buy releasing its limited Red, Silver & Blue flavours in 2013 but its success remains to be seen if it performs in relation to its competitors multi-flavoured lines.

Social StigmaAs Red Bull as a word is used interchangeably with energy drinks, when negative reports arise in relation to energy drinks, Red Bull itself tends to take most of the media flak rather than competitors.

Opportunities Emerging Markets

Red Bull’s wide market presence represents major opportunities in growing economies such as the BRICS, but also regionally such as the Middle-East & Latin America where sales growth is exceptionally high despite its premium pricing in non-high-income countries

New Production FacilitiesRed Bull has positioned new manufacturing facilities across the world to meet regional demand with this investment in place, Red Bull clearly has an advantage over its competitors.

Less Masculine ImageAs we talked about in the main body of the report Red Bull has a somewhat less masculine image than its competitors, this may enable Red Bull to make inward progress into the female market segment where energy drinks have traditionally not fared well with relatively little competition.

Low Consumption RatesRed Bull is most famous for its slim-line can, but there is a growing trend towards larger cans to take advantage of the low per capita consumption rate of energy drink consumers, versus that of soft drinks or coffee. This represents a strong potential area of growth as users are already familiar with the brand.

ThreatsCompetition

As Stated there is major growth potential in the BRICS, though Red Bull’s premium product will face stiff competition in these new markets from low cost brands such as Coca-Cola’s Burn. Especially as it may utilise Coca-Cola’s existing distribution network.

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Large marketing costsAs we discussed earlier Red Bull reinvests 30-40% of its sales back into marketing, this is an extremely large percentage of Revenue. But this may come down as it enters weaker economies as High OECD economies usually have far higher marketing costs than those outside. It also demonstrates the level of competition for brand recognition to warrant such expenditure.

Image ReplicationAs we discussed earlier all new entrants tend to enter the energy drinks market with a more exaggerated Red Bull extreme sports image, this in turn is making it increasingly harder to distinguish between the various brand messages.

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