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SWOT

STRENGTHS
Category leader
Red Bull has established a strong, consistent brand image (an independent,
edgy brand) globally. Red Bull is synonymous with energy drinks in many
countries.
Broad geographic presence
Red Bull has a broad geographic presence, which should ensure positive long-
term growth even if certain markets reach maturity.

WEAKNESSES
Category limitations
In overall soft drinks, Red Bull has a limited product portfolio compared to the
rising number of rivals with a plethora of flavour variants and categories.
Controversial
The relatively high caffeine content of Red Bull makes the brand highly
vulnerable to regulatory control.

OPPORTUNITIES
Emerging markets
Emerging markets represent newer geographies for Red Bulls expansion.
Accelerating the marketing and sponsorships in these markets is a wise move.
New production
Red Bull is building a new production facility in Brazil which is likely to make
its retail price more competitive than imported product prices. Building a site in
Asia should also be considered.

THREATS
Competition
Monster represents the biggest threat to Red Bull as it contains natural
ingredients, which seem more desirable than Red Bull for some consumers.
High marketing costs
Market maturity in developed markets will make marketing to its core
consumers harder than in the past. Constant communication with consumers
means high marketing costs.
PESTLE
Political

Economic

The financial performance of Red Bull is a subject to a number of economic factors. Macroeconomic
stability is one of the main economic factors affecting businesses in general and businesses operating in
premium segment such as Red Bull GmbH in particular. For example, as a direct impact of the global
economic crisis in 2009, Red Bulls net sales came in at EUR3.27bn, down 1.5% on the previous 12
months.

The exchange rate between EURO and other currencies is another major factor with direct implications on
Red Bull revenues. Specifically, a weak EURO throughout 2015 played a major role an increase in
revenues by 15 per cent during the year, from EUR 5.110 billion to EUR 5.903 billion. Moreover,
additional economic factors that can affect Red Bull include inflation and tax rates, rate of unemployment,
cost of labour and others

Red Bull has consistently maintained its premium positioning from its slimline metal cans to its price
differential versus brands such as Monster. While this strategy has reaped dividends in the mature markets,
it remains to be seen if it will sustain growth in the emerging markets. Brazil with its large population of
lower-income consumers may pose a challenge giving cheaper brands such as TCCCs Burn a competitive
advantage.
TCCC in particular has been successful at leveraging its distribution network to launch Burn across many
markets and to back Monster. Burn is a major threat to Red Bull in Brazil while in the US Monster has
overtaken Red Bull in off-trade volume sales terms.

Social
Unemployment (workplace is one of the most important place where people
consume energy drinks)
Demography : ageing population in Europe
Health concerns of consumers: they have doubts about the health dimension of
energy drinks
Reports from the Institute of European Food Studies disclosed that nutrition
ranked much higher than the involvement of physical activity. Healthy conscious
choices are at the forefront of the worlds population when it comes to fueling
our bodies. Many of these choices include the preference of nutritional eating
habits, reduced stress levels, and not smoking as the most important aspects of
living a healthy lifestyle (EUFIC, 1999).
The fashionable dimension of energy drinks

Technological
Internet, social media era
Technological development can impact the production and distribution
The current technological innovations are not important enough to impact the
energy drinks industry. However, this sector requires that the brands have a real
presence in social media because of the youngness of the consumers: this is a
must-have in this market

Legal

Indias Food Safety and Drugs Administration (FSDA) declared energy drink Red Bull, unsafe for
consumption.

A sample seized from Meerut based Best Price Store, owned by Walmart India was sent to laboratory for
testing six months ago.

The sample was found to be misbranded and misleading by the Lucknow laboratory.

Red Bull challenged this report upon which the sample for sent for a second tests at a referral laboratory in
Kolkata.

The report arrived on Tuesday which concludes that besides misbranding and misleading, the product is
unsafe for consumption due to high levels of caffeine which are beyond permissible limit.
"We had collected a sample of Red Bull from Best Price shop in Meerut six months ago and sent it to the
Lucknow laboratory for checking, where it was found 'misbranded' and 'misleading'. The report was
challenged by Red Bull and samples were further sent to the Kolkata laboratory - the referral lab. The
report that arrived on Tuesday from Kolkata found that besides 'misbranding' and 'misleading', the caffeine
levels in the drink were higher than the permissible limits and was thus declared as 'unsafe'," said JP Singh,
chief food safety officer was quoted saying.

According to The Times of India, The Food Safety and Standards (Food Products and Food Additive)
Regulations, 2011, allows a limit of 145 parts per million (ppm) of caffeine in carbonated beverages, but
'energy' drink manufacturers have a cap of 320 ppm. The lab test of Red Bull samples found 382 ppm
caffeine in the drink.

The FSDA team has seized the entire stock of Red Bull from the Best Price Store following the report
outcome.

Ecological
Within the beverage market there are several producers that deliver their
products through the use of aluminum cans. Over 200 billion products contained
in aluminum cans are consumed worldwide. In the U.S. alone, 100 billion canned
beverages are consumed. However, the production of a bottle calls for more
aluminum material to be used to create its unique shape. Aluminum is a product
that is readily available and 100 percent recyclable. However, only about 3050
percent of manufactured aluminum sheets used for canning contains recycled
materials.
The distribution process strives on being as eco-friendly as possible in order to
reduce its carbon footprint, Red Bull uses a method called Wall-to-Wall
production at their production sites. This means that their cans are manufactured
and filled at the same sites helping save many miles of transport while saving
resources through short distances. An advantage that Red Bull has for
transportation is the fact that the can itself is compact in shape and light in
weight, which makes it a more efficient transport packaging than PEI or glass
bottles.

4 Ps
PRODUCT
Red Bull was founded by Austrian native Dietrich Mateschitz and Chaleo
Yoovidhya. Yoovidhya had created a drink in Thailand that helped cure
Mateschitz's jet lag when he came to visit the country. Mateschitz took the drink
and modified the ingredients to fit the taste of consumers worldwide and the two
partnered together to create the company Red Bull.
Red Bull is a carbonated, berry energy drink with benefits of increased
endurance, concentration, memory, vigilance and speed. Red Bulls beverage
product line includes Red Bull, Red Bull Cola (100% natural), Red Bull Sugar Free,
Red Bull Zero Calorie and Red Bull Editions (Red, Blue, and Silver; featuring
different flavours cranberry, blueberry and lime). With the variety of product
options, it is no surprise that Red Bull has currently sold over 40 billion cans in
over 166 countries.

Red Bull cans have a unique logo and distinctive shape and size. The cans
original iconic colours are blue and silver, however the cans colours and patterns
are modified for each flavour with the same logo of two gaurs charging towards
each other in front of a yellow sun. The sweet, caffeinated drink became an
instant success in Europe creating a demand to further expand global
distribution and develop the brands philosophy, The World of Red Bull.

The World of Red Bull has built a product beyond its competitors, altering
branding as a good and service. There are no limitations for Red Bull as a product
as it surpasses a refreshing drink and has become a major provider of content
and entertainment. They established Red Bull Media House, which produces
reality television programs, full-length films, home entertainment channels, web
videos and magazines. They have dipped into the music market with Red Bull
Music Academy, an online radio station and record label. Red Bull has a mobile
application and an interactive website with detailed information on all events
taking place, past, present and future. Their event list is massive, diverse and
ultimately extreme in nature with events such as Red Bull Cliff Diving, Red Bull
X-Fighters, Red Bull World Series, and Red Bull Crashed Ice to name a few. Red
Bull, thus produces goods and services in an unconventional way, further proving
their authenticity as a brand.
PROMOTION
Red Bull uses a large range of innovative promotional techniques to improve the
process of communication and drive consumer engagement and loyalty. Red Bull
embraces innovation within its promotional mix and as such is able to create
lasting impressions within its targeted consumer groups. The concept behind Red
Bulls promotional activities is to give people Wings, which in turn translates as
pushing the boundaries of what is possible and enriching peoples talents so they
can achieve their dreams and goals. As a company, Red Bull prides itself on
using content marketing to promote its product to their target audience. The
principle idea behind content marketing is that the brand creates storytelling
material that attracts readers, viewers and listeners. The essence of this
marketing strategy is to promote a positive association with the product and to
engage with the consumers.
The Promotion of the Red Bull drink and brand is probably the most interesting
part of Red Bull's marketing. With their well-known slogan "Red Bull gives you
wings" they take their connection with their consumers to a whole new level by
being a part of their target consumers lives from hosting a list of extreme sports
events, to creating a magazine for "extreme sporters", to even opening a record
label which pushes the boundaries of what's possible and helping them achieve
their goals and nurture their talent.
PRICING
Red Bull energy drink is one of the most expensive non-alcoholic drinks in
todays market. Their prices are higher than their competitors and the reason for
this is to maintain their image of being a premium, high quality product. Red Bull
uses two different sectors of pricing strategy that are determined by the location
of the sale. The first sector is called the On sector and this is anywhere the
product is consumed at a location, including nightclubs and restaurants. The
second sector is called the Off sector and it is locations such as grocery stores
and gas stations, where the product is purchased and then consumed at a later
time. The regional managers set the pricing in both sectors; however, there is
more fluctuation of price in Off sector compared to On sector.
PLACE
Red Bulls placement strategy focuses on mass distribution into several different
sectors of the market. The retail channel is the main contact-point of the
product and the end-consumers. Red Bull is available in almost all channels of
the retail market such as bars, night clubs, convenience stores, gas stations and
campus corners, to name a few. Although Red Bull uses the retail channel as its
main point of distribution it also uses other methods such as online and Point of
Sale at events. As a matter of fact, Red Bull has its own online store called Red
Bull Shop which allows consumers to purchase a wide array of products and
merchandise from events, team jerseys, and event media such as live footage
and games.

Porters 5 forces
Threat of substitute products or services is immense.
Coffee is an obvious and cheaper substitute for energy drinks. Carbonated soft
drinks, tea, water and juices represent additional substitute products. It is
important to stress that buyers propensity to choose certain substitute products
such as tea, water and juices may increase in the foreseeable future due to due
to their increasing health-considerations fuelled by the media. There are no
switching costs for customers to consume substitute products instead of energy
drinks and this fact further increases the threat of substitute products. Indirect
substitutions for energy drinks include getting enough sleep and leading a
balanced life and this comes free of charge for the majority of customers.
Rivalry among existing firms in energy drink industry is very intense.
There are many energy drink brands and the rate of the growth of the industry is
impressive. It has to be noted that diversity of competitors is not significant and
brand equity plays a major role on the level of popularity of a specific energy
drinks manufacturer. Major market players in energy drinks sector include Red
Bull, Monster, NOS, Rockstar, 5-hour energy, AMP, Redline, Lucozade and others.
As it is illustrated in Figure 2 below, although Red Bull is a clear market leader in
energy drink segment in the US, its share in the global soft drinks and energy
drinks sector is only 6.7 per cent
Threat of new entrants into energy drinks industry is moderate.
It is overly difficult for new market players entering energy drinks industry to
succeed unless they product concept is based on an innovative idea. This is
because the competition is already intense and an access to distribution
channels is a significant barrier. Moreover, there is a need for massive capital
investment to start energy drinks manufacturing operations and new entrants
should expect retaliation from existing businesses. The presence of legal and
regulatory barriers are additional factors reducing the threat of new market
entrants.
Power of suppliers
Aluminum suppliers are not in the best position to negotiate with the beverage
industry or the canning industry which is frequently used by beverage
companies. With the vast abundance of aluminum available throughout the
world, aluminum suppliers can expect to have a high level of rivalry among
competitors within the business. Large number of suppliers: ingredient makers,
manufacturers of cans, packaging suppliers. Because they are numerous on this
market, suppliers dont have power on the energy drinks industry.
Power of buyers
Decrease in purchasing power
Customers have a high power on the energy drinks market because they can
choose to switch from a product to another one, particularly for economical
reasons.
When there are large numbers of customers, no one customer tends to have
bargaining leverage. Limited bargaining leverage helps Red Bull.

Growth n penetration
Off Trade Volume Sales
Danones volume share is significantly higher than its value share, due to its
large volume sales of low-priced bottled water in emerging markets, notably
Aqua (Asia Pacific) and Bonafont (Latin America). Meanwhile, Mondelez does not
rank among the top 10 in value terms due to its reliance on the low-priced
concentrates category in RTD volume terms.
Red Bull GmbH however with its relatively premium but small serving size Red
Bull brand ranks seventh in 2012. The companys narrow focus in soft drinks,
being almost exclusively based on energy drinks, continues to keep the company
out of the top five in soft drinks.
TCCC and PepsiCo capture a stronger share in value than in volume terms
chiefly due to their products, particularly carbonates, being priced higher than
local brands and private label, benefiting from strong brand equity and extensive

North America will continue to lead energy drinks in absolute volume


growth terms over the forecast period. However, its CAGR of 8.1% over
2012-2017 represents a moderation from the 11.4% CAGR seen over 2007-
2012. The Monster brand has led the market in the US over the review period in
terms of absolute volume growth. Rockstar, due in large part to its alliance with
PepsiCo, has also seen strong growth in this market.

In value terms, both Latin America and Asia Pacific gained in
importance for Red Bull over the review period. Latin American sales
represented 12% of global value sales in 2012 while Asia Pacific made up
8%. In terms of growth prospects, the strongest growth will take place in North
America where the market for energy drinks will expand by US$4.1 billion over
2012-2017. In CAGR terms however, the strongest performance will take place
in Latin America which will see a 20% CAGR.

Growth in both Eastern and Western Europe will be a comparatively


modest at 5% and 5.1% CAGRs, respectively. However, these exceed the
CAGRs for soft drinks overall in these regions, which will be only 2.7% and
0.5%, respectively.

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