Competition and Market Analysis for Red Bull
|✅ Paper Type: Free Essay||✅ Subject: Business|
|✅ Wordcount: 5150 words||✅ Published: 1st Jan 2015|
This paper investigates the competition analysis of Red Bull energy drink in the market and deciding about its competitive advantage if there is any. Some information about the energy drink market in general is presented. This is followed by product, company background and history is presented. Then we analyzed Red Bull’s brand positioning and direct competitors. Afterward, analyze and classify the features of Red Bull through macro and micro factors to determine the strength of competition. This followed by looking at Red Bull’s marketing mix. We will identify the problems and opportunities of Red Bull. For that part we are going to search for data about market segments and market share of Red Bull and its competitors. To support all this we are going to make a local market quantitative survey in the city of Abu Dhabi using a questionnaire targeting youth aged 18-34.
When looking into Energy drinks market, we can notice a doubling increase since they were first introduced into the United States and Europe. The current U.S. domestic market may be around $4 billion and is expected to reach an estimated US $15 billion by 2011.
The reasons for the increasing demand for energy drinks are attributed to consumers’ concerns about time stress to keep balance between work-life and private life. Consequently the market is bombarded with many new energy drinks, with strange names and claims of a higher energy increase compared to the prior brands to find their way in the market. There are, however, a few major energy drinks that control most of the market and do not have too much amounts of caffeine.
In addition to caffeine, a range of other energetic ingredients as taurin, Guarana, and B vitamins are added into energy drinks to make them more effective. New probable developments are geared toward increasing the health functionality of energy drinks which will increase market approval due to a growing society obsessed by health.
The Energy drink market is not only limited to products or brands competing with each other but it also includes the whole non alcoholic drink market. Many outside factors have influenced the demand for this market such as the increasing attractiveness of health lifestyles and sports club membership.
-Company and Product Review
Red Bull is classified as a soft drink. It is a non alcoholic stimulus drink with an absolutely exclusive formulation consisting of two natural substances and important metabolic transmitters such as, amino acid, taurin and glucuronolacton in addition to stimulating caffeine, vitamins and carbohydrates. It gives stimulation and revitalizes the body after effort and activates the human performance both mentally and physically. The industry is capital-intensive: average annual profits per production worker are about $700,000.
History of Red Bull market expansion
In 1982, Dietrich Mateschitz, originator of Red Bull and Chalerm Yoovidhya, decided to enter the market of energy drink which was controlled by Japan and Thailand at that time.
In 1987, the product was first introduced to Austria which was a difficult market for Red Bull to carry on. Shortly Mateschitz developed a marketing strategy and as a result the product became well known in Austria and extended into Hungry and the rest of Germany. After that Red Bull has been successfully recognized world-wide and has reached a market leader position in 20 countries- in Europe, Asia and the USA. By 1997, Red Bull’s buzz marketing strategy proved successful in the U.S. The following timeline shows the expansion of Red Bull in the market. 
Austria 3.5. (not mature market)
UK, Germany and Eastern Europe 3.6.
US and South Africa 3.5. 3.6.
Japan 3.7. (very mature market)
When Mateschitz realized that a great sporting event could be useful, Red Bull started sponsoring about 500 extreme sports athletes and hosting stylish parties. Events are now hosted by Red Bull throughout the world such as the Xgames and the Red Bull Air Races and thus their tagline, “gives you wings” is known worldwide.
The following table sums up the product review 
Cost Per Ounce
Active Red Bull Ingredients
Caffeine, Taurine, B-Vitamins, Sugar
Final Judgment Rating:
9 – It’s the original energy drink!
Red Bull’s mission is to stretch their wings over the world. It is a short phrase that communicates vivid information about the brand. This slogan which is used in all Red Bull campaigns worldwide is creating strong brand awareness of the product and is connecting between the brand and the product type. They are expanding rapidly into global market. They are keen on keeping Red Bull values, while maintaining the control position in the energy drinks category by delivering better-quality customer service in a highly experienced and commercial manner.
Although Red Bull still maintains a dominant position in many significant markets, it is no longer the only player. The major challenge to Red Bull’s leading position has come from US-based imitators: Monster, Rockstar and Full Throttle which have introduced price competition to the segment and this is possible to have become more and more important during the depression periods.
If you need assistance with writing your essay, our professional essay writing service is here to help!Essay Writing Service
Monster energy drink does its best to be like Red Bull. The taste is similar, the ingredients are identical, and they target the male/18-25 demographic. Though, they do have one different advantage over Red Bull–quantity. The Monster energy drink comes in a 16 oz. can, whereas Red Bull only offers 8.3 oz cans. So, you’re essentially getting twice the product at the same price ($2 per can)
Rockstar competitive energy drink whose motto is “party like a Rockstar”, targeted at the younger consumers who want to be “wild and crazy” and spend all night dancing. There are a number of flavors of Rockstar – cola, energy drink, and juiced. The energy drink is similar in taste to all the others, whereas the cola product has the best taste. The juiced version is said to be 70% real fruit juice and 100% energy. They were the first to use the 16oz larger size, and this has fixed and become the standard. Only Red Bull continues to market the smaller cans, which is part of their image.
Full Throttle is manufactured and owned by Coca Cola, just like their Coke Blak mixture of coffee/cola drink. Full Throttle energy drink is marketed as a rebellious drink, with erupting flames on the can. An 8 oz. serving has 110 calories (comes in a 16 oz can) and 29g of sugar. It also includes things like ginseng extract and plenty of caffeine. Full Throttle comes with a citrus taste and a red can. Full Throttle was first introduced to the market in 2005. It is targeted at 20-30 year old men, and contains Taurine like Red Bull.
From the above stated information we can find that:
1-Monster is similar to Red bull in taste, but only targets males. It has two advantages over RB in price and quantity which is double size of RB.
2- Rockstar is double the size and Price as it is 1.99$ so it is cheaper than RB.
3-Full Throttle has the same taste and ingredients as RB, but it has advantage of quantity and price
There are also other industries where Red Bull GmbH competes such as sports, leisure and recreation.
The Brand Positioning
In spite of the competition, Red Bull resembles a new type of drinks called the energy drinks. In this new market sector Red Bull has a branding as a top border brand product. The brand positioning of Red Bull comes from the benefits of the product and the brand image. The positioning message of Red Bull is ‘Red Bull vitalizes Body and Mind’. This positioning idea has become the unique brand personality of Red Bull, which can be explained below.
It can be assumed that the positioning idea of Red Bull has created the best energy drink status among the target market. It is also clear that customers appear to be attracted to the general appearance and brand of Red Bull.
The positioning strategy of Red Bull aims at best product, top price and top profitability. As for the price, Red Bull has a position in which it can command a best price because there is nothing to compare it with. It is an exclusive useful drink, promising and offering benefits that cannot be offered by any other drink.
Threats of new entrants
The most significant development in the market of energy drinks and the main direct competitor to Red Bull is the new product from Coca Cola, ‘Relentless’. It is also cheaper because it is sold in can double the size of Red Bull but the same price.
-First-mover advantage has disappeared as the market has matured. Red Bull is the giant of the stimulant drink industry, in comparison to Coca Cola and Pepsi in the cola market.
– Red bull has achieved economic level which would allow them to be the most competitive price in the market.
– Although there is a price gap between Red Bull and other cheaper energy drinks, it seems that Red Bull has surmounted the position segment of the market due to its marketing strategy which is considered a huge barrier to entry.
– Red bull has a strong brand power that impresses loyal customers and consequently they can charge high prices even when competition comes from Coca Cola.
Analysis of Macro and Micro factors affecting the attractiveness of “Red Bull” in the market
– Macro factors
Political and Legal Forces
When Red Bull was first introduced into the market as a new non-alcoholic drink labeled with a new idea as an energy drink, the Health Organisation was doubtful that Red Bull could be an appetizer medicine. Rumors saying that Red Bull contains ingredients like bull’s galls, added to their doubts. But confidence in the product increased due to the fact that Red Bull has been used in the Australian market for 9 years and in the Asian market for 30 years without any registered complaints. Moreover a study conducted by an independent institute (ISME) in 1998 proved that although Red Bull has stimulating effects like caffeine, it does not lead to addiction.
On the other hand Red Bull still needs approval from each country to be sold. This procedure is time consuming and consequently costly.
Some countries still have suspicions about Red Bull. According to msnbc.com in May, 2009, Six German states have asked retailers to stop selling Red Bull Cola energy drinks after a test found a trace amount of cocaine. However authorities say the drug level was too low to cause a health risk. Countries such as Denmark, Norway, and France have banned the sale of Red Bull.
This means that legal factors have a high negative effect on RB
Red Bull is hardly affected by economic periods of expansion and contraction because it is a particular drink, serving a niche market. Red Bull target market includes sportsmen/women as well as hard working people. The main consumers of the product are Athletes, night clubbers, shift workers, executives and long-distance drivers. Despite the availability of few substitutes, the sales of Red Bull are increasing through their well positioned advertisements. This factor has low influence on RB.
When the product was first introduced people had doubts about the product and nobody wanted to try it. But now due to change of people’s lifestyle, people are now much more open for new experiences. In addition they are confident to try it, because any health concerns were cleared by organisations like the ISME. The consumers are male and females regardless of age who are very sporty or work very hard. Longer working hours as well as increased road traffic led to more need for energy boost. Nowadays Red Bull has a very stylish image and is sold in a lot of supermarkets and clubs (See the graph which illustrates the categories of males and females consumers) 
Red Bull is totally manufactured in Austria where it is exported to 28 countries. There are two reasons why it is not manufactured in any other country; first, to guarantee taste reliability and to make sure that Red Bull tastes the same all over the world. Secondly in that way the formula will be kept securely in one place.
Red Bull is normally produced in 250ml cans, but glass bottles are an alternative jus in case they do not have enough cans as it once happened. Energy drink Red Bull, uses electronic points of sale (EPOS) data. This system allows customers’ research team to check the distribution of Red Bull. This system points out the gaps that can be returned to the retailers.
Red bull’s cans are environmentally friendly because they are made of recyclable aluminum. Glass bottles can also be recycled and therefore do not damage the environment either. This might give the product a competitive advantage when rules become stricter and more equal throughout Europe as well as in the rest of the world.
6.1 Bargaining Power of Buyers:
Top 4 Energy Drinks by 2010 Market Share
By working out the concentration ratio of the 4 top energy drinks brands as seen in the above table it will be possible to come to the relative size of the products in relation to the industry as a whole and to determine the market form of the industry. By using the four-firm concentration ratio we find that it is 75.3% which is high, and is bordering between oligopoly and monopoly,
In this concentrated market the customers don’t have high bargaining power which enables Red Bull to position high prices. Moreover, other products may find it difficult to compete with the brand loyalty due to the huge advertising spending of Red Bull.
Consumers in energy drink market are not actually aware of price because they are Consumer with high income and buy it when it is required to regenerate their energy after a long day of hard work.
The relationship between the manufacturer and retailer has developed along the market lifecycle resulting in swing of power. The fame of energy drinks has created a market pull where retailers have no real bargaining place.
The extent of bargaining power differs according to the distribution channel.
Bargaining Power of Suppliers:
Red Bull production process is to some extent simple therefore the power of the suppliers is apparently rather low. The added value at each stage leads to large profits. Suppliers can only enter energy drink market through the brand-owner, thus the balance of power is in the favour of the brand owner.
-Threats of substitute products
Red Bull is a fast moving consumer product and, consequently, it mainly depends on desire purchasing. Although price sensitivity is a low factor inside the target segments, handiness is the average purchase criteria. Red Bull has successfully created a position where product substitution threats are low due to the brand power and customer loyalty. On the other hand, there are other products substituting the need for caffeinated drinks with less sugar and a better blend of carbohydrates and protein that give a greater energy enhancement. Also drinking plenty of fluids, such as water and herbal tea are useful. The market is full of better alternatives than relying on expensive energy drinks that only give you a momentary feeling of energy.
The Marketing Mix Strategy
Red Bull has its own marketing which is different from the Marketing Mix Theory based on the 4 P´s. Red Bull’s own Marketing Mix Strategy is consisting of [ 1] the mediaadvertising category,  sports-and event sponsoring and  sampling. In 2008, Red Bull spent on marketing approximately more than 1 million$ which equals 30% of its revenue.
Red Bull uses all the available media channels such as cinema, TV, radio, press and the internet in order to reach its main target market-young people.
Thus they successfully advertise in TV shows like T.F.I. Friday and in magazines like Time Out and men’s health. By doing so, they let the consumers understand the product and decide about the moments they can use it themselves. Red Bull realizes this by an amusing and humorous cartoon campaign, through which they easily send the message that this energy drink helps you to escape by “giving you wings”. The idea of communicating with the consumer in the form of a simple cartoon makes the people enjoy the campaigns and at the same time remember the brand’s name and the message it delivers.
The company also uses sponsoring in their marketing mix strategy. Red Bull does event sponsoring either by creating its own events (i.e. Red Bull Music Academy …….) or by promoting other events (i.e. Speed Ski World Championship). This strategy means that Red Bull brand appears in the form of logos and stickers and that the product ´s target market is accurately defined.
The image, the reliability and the visibility of the product are supported by sponsoring specific events where the people’s attention is drawn to the product.
Red Bull sponsors the athlete target market where Red Bull is always needed in extreme sports such as free climbing and motorsports and fun sports as well.
Sampling is another very important part of their three component -marketing system. The methods used are well tested and proven in other markets. The main purpose of Red Bull is to boost the company samples at the right place and at the right time by finding its precise target market such as driving, studying, working night shifts and sports. Sampling is conducted in a charming way by extremely motivated and cultured employees of Red Bull.
All their equipment is the product, a free range of clothes and a small, but very attractive sampling car. Red Bull is following the basic sampling rules consisting of:
never force the product
always explain the benefits of the product
drink always a full can ( 250 ml)
It must always be cooled
being cautious about whom are sampling the product
Surveying the local market
To have some information about Red Bull’s brand image and how the people see it, we made a questionnaire of 3 sections including 13questions. The survey targeted males and females whose age is between 18-34 living in or near Abu Dhabi. 22 % of the respondents are females, whereas 78 % are males. We used Emails to send and collect back the questionnaires.
The energy drinks’ market proposes the following drinks: Red Bull, on top then come power Horse, and Monster, The best known beverage is in the city of Abu Dhabi and avenues, is Red Bull as 88 % of the respondents have tasted it and the majority of these people find it good (41 %). The other data have no significance.
The most common consumption rate for energy drinks is occasional: 80 % drink occasionally drink and 20 % frequently.
With relation to Red Bull, which of the following is important to your purchase?
For 58 % of the people, find the physical boost is important. 36.4 % of the total respondents are influenced to buy Red Bull because it is sponsored by athletes and some related it to formula 1.the taste of the beverage is an extremely important criterion. The smell and the energizing properties are very important (with respectively 45 % and 42 %). The design of the can does not influence so many consumers: 9.1% buy the drink because of the design.
Where do you buy Red Bull?
80% present of the respondents buy it from supermarkets whereas 20% buy it from fending machines at petrol stations.
What is the first word that springs to mind when you hear the words ‘Red Bull’?
60% said superman, 30% wrote formula1, and 10% said flying in the air
Which tag line, if any, do you most associate with Red Bull?
70% chose ” Brain and body energy”, whereas 30%chose” Gives you wings”
Which sports do you most associate with Red Bull?
55% Formula1 and 25 % said motorbikes, 10%responded Golf and 10% chose Athletic
90% described Red Bull as the best energy drink in the market and 10% finds it suitable for their lifestyle
People don’t buy Energy drinks because they really need it but because this need is created by the manufacturer. It is the big advertising campaign which has convinced people to accept this product. Red Bull has been the first energy drink in the market. Red Bull’s target is people who need energy and concentration such as sportsmen and students. For that reason, the company sponsors numerous sports events: Formula 1, Xtreme competition. “Red bull gives you wings”. It is the famous slogan that makes consumers think that Red Bull gives more energy than usual. The result is that the Red Bull has quickly got success by young people. Red Bull keeps on marketing by this young generation.
When Red Bull was first introduced, it was easily imitated because the ingredients were printed on the can and the product was not patented. Although the taste of Red Bull did not do well in taste tests, it succeeded due to the marketing strategy.
It can be said that Red Bull was not only the first energy drink to be in competition with soft drinks but also created the new energy drink type in the majority of markets. After Red Bull hit the market in the late 90s till the present, many other companies entered the energy drink market but unable to compete with it.
Red Bulls has approximately 100 major competitors and the main competitors are Monster, Rock Star and Full Throttle.
Many substitute products have been introduced and categorized as energy drinks such as Iceâ€T creating an energy drink called Liquid Ice, Nelly’s Pimp Juice and Lil’ John’s, Crunk Juice.
Although these competitors are present in the market no other energy drink could maintain Red Bull’s 70â€ 90% of the market share it has in over 100 countries all over the world.
Problems and Opportunities:
Problems: Red Bull is not a patented drink product, therefore anyone is able to choose a can, read the ingredients on the label and start their own business. That is why the market is flooded by competition. In addition, Red Bull as well as all other energy drinks and supplements, have received negative reports from a medical point of view. Elevated amounts of caffeine and sugar can lead to adverse effects on heart and blood pressure.
Opportunities: Red Bull is one of the most popular energy drinks in the world. They earned this position by intelligent, consistent marketing strategy. Red Bull has the opportunity to maintain their position and develop a continuing pace to aim their niche target consumers by seriously using untraditional and traditional marketing strategies.
– Red Bull has a competitive advantage over its competitors
– As we have seen Red Bull is an international energy drink that is sold by Red Bull GmbH. In 2006, more than 3 billion cans were sold in more than 130 countries.
-Red Bull has a continual international marketing strategy by sponsoring a variety of great sports to promote a “cool” public image and enhance brand power.
-The product has remained the top energy drink throughout its growth due its effective marketing strategy.
The product speaks for itself and its consumers do not report any complaints despite of negative publicity
– Red Bull has developed a sugar free option.
-Red bull has this competitive advantage not only because other drinks that follow it are not as appealing in packaging, marketing, but also because Red Bull is aware of their marketing challenges and they are continually changing and developing their marketing philosophy to overcome and avoid possible competitors.
Red Bull Consumer Questionnaire
This questionnaire is all about Red Bull’s consumers and targets males and females between 18 and 34 years old and based in the Abu Dhabi.
Please specify your age group by putting an ‘x’ in the box that applies to you.
Where do you live?
Please specify closest town/city.
What is your gender?
Section 2( Loyalty)
Are you familiar with the Red Bull brand?
Please enter in the box.
If your answer is no then please do not go past question 3 of this section and I thank you for your time.
Which of these drinks are you most aware of?
Please rank your top three – 1 being you’re most aware and put an ‘x’ beside any others you are aware of.
Others – please state
Which of these drinks would you buy, if applicable?
Please rank your top three – 1 being your first choice
Others – please state
4- With relation to Red Bull, which of the following is important to your purchase?
Please rank each option by putting a circle around the appropriate number.
Can shape, colours and size
Association with Extreme Sports
Others please stateâ€¦ and rank
Where do you buy Red Bull?
Please underline all that apply.
Other – please state :
Section 3 Brand Image
What is the first word that springs to mind when you hear the words ‘Red Bull’?
Please specify your word in the box.
Which tag line, if any, do you most associate with Red Bull?
Please choose a tag line by underlining it
Stimulation for body and mind
Brain and body energy
Gives you wings
Your sport, our science
Which sports do you most associate with Red Bull?
Please rank the sports 1-5 with which you most associate Red Bull. 1 being the highest
Please also put an ‘x’ beside any other sports you associate with Red Bull.
Obscure Extreme Sports
Which sports do you partake in regularly?
Please list in the box provided.
Does any Red Bull advert stand out in your mind?
If so please describe the advert in the box provided.
Please try to describe Red Bull’s packaging.
Please describe any colours and/or emblems in the box provided.
How would you rate Red Bull’s image?
Please rank your option by circling the appropriate number.
Which of the following statements – if applicable – best describes why you buy Red Bull?
Please make your selection by underlining the appropriate statement.
a) Red Bull fits my lifestyle choice.
b) Red Bull has an image I’d like to be associated with.
It provides me with a welcome energy boost.
c) It gets my mind in gear.
d) It provides good value against the competition.
e) It’s the best energy drink on the market.
f) It tastes good on its own or as a mixer.
Cite This Work
To export a reference to this article please select a referencing stye below:
Related ServicesView all
DMCA / Removal Request
If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: