Giving Wings to the Red Bull Market
Table of Contents
Table of Contents 2
Executive Summary 3
Issues in the Case 4
Rise of New Competitors 4
Lingering in New Product Development 5
Attracting Only New Youngsters 7
Data Analysis 7
Alternative Data Analysis 11
Action and Implementation Plan 13
Giving Wings to the Red Bull Market
Red Bull has become a long-term leader in the energy drinks market. It has achieved a worldwide expansion, being part of the top brands in the sports and energy drinks industry. Moreover, its brand is one of the most recognized in the world. Consumers immediately relate their logo and ...view middle of the document...
Issues in the Case
Red Bull was an energy drink pioneer that started its business in Austria in 1987. Since then, it has remained as one of the leaders in the market. With its famous slogan “Red Bull gives you wings”, it has created a marketing strategy that targets the young population with a passion for extreme sports or adrenaline-filled activities, for music, and other trendy cultural events. Red Bull has engaged in activities associated with energy, adrenaline, danger, and youth, sponsoring major events and, even more, organizing their own events. They even give out cans to people that can promote their brand by being trendsetters. Another strategy has been enforcing the myths that Red Bull has properties that stimulate ecstasy or gives you the feeling of living on the edge of life. These marketing strategies have been successful for the company. Indeed, Forbes (2015) has listed it as the 76th most valuable brand in the world. However, the company has had several issues in assessing the changes in consumer behaviors.
Rise of New Competitors
Red Bull, for a long period of time, was nearly the only energy drink sold in its countries of operations, mostly in Europe and the United States. Used to control nearly 100% of the market share, Red Bull failed to forecast future competitors. In 2000, the United Kingdom market experienced 23 new energy drinks brands, lowering their market share to 86% (Kumar et al., 2005). Even though their market share remained high, it was alarming for the company. Soon, many other beverage industry giants began to copy the Red Bull idea. Coca-Cola began producing two types of energy drinks, Burn and KMX, and additionally launched a sports drink, PowerAde, targeting the sporty consumers. Similarly, Pepsi also entered the market with its Amp energy drink and its Gatorade sports drink.
In 2002, Monster Energy penetrated the US market. After nine years, its parent company, Hansen’s Natural jumped from $50 million in 2003 to $1.7 billion in profits due to the revenues provided by Monster Energy (DuBois, 2012). Today, the company has surpassed Red Bull in the US market (See Figure 4). Additionally, other small brands have also jumped into the world’s energy drinks market, i.e. Red Rhino, Bomba, Battery, and Venom (Kumar et al., 2005). Red Bull risks losing its worldwide market share if they do not invest in researching international consumer behavior towards energy drinks and extreme sports and activities.
Lingering in New Product Development
As consumer trends have been changing through the years, Red Bull has failed to change rapidly with them. For instance, in the last years, consumers have been more aware about ingesting large amounts of sugar and caffeine. As a result, most of the participants in the food and beverage industry began producing their products with slight modifications to target these consumers. For instance, Coca-Cola introduced its sugar and calorie-free Coca-Cola light in 1982. In...