Market Analysis of Red Bull based on the countries Germany, Switzerland and Austria

Marketing


Term Paper (Advanced seminar), 2014
26 Pages, Grade: 2,0

Excerpt

Table of Contents

Executive summary

List of Figures

Introduction

1 Theoretical approach market analysis and definition
1.1 Marketing definition
1.2 Marketing objectives and strategy
1.3 Market Analysis with limitations and benefits
1.4 Pest Analysis
1.5 SWOT Analysis
1.6 Competition
1.6.1 Opportunities
1.6.2 Behaviour
1.7 Positioning
1.8 Unique selling proposition
1.9 Customer Care concepts

2 Market Analysis of Red Bull
2.1 Introduction of the company
2.2 Marketing objectives and strategy
2.3 SWOT - PEST Analysis
2.3.1 Political
2.3.2 Economic
2.3.3 Social
2.3.4 Technology
2.3.5 Strength
2.3.6 Weaknesses
2.4 Needs for the product
2.5 Competition
2.6 Positioning
2.7 Unique Selling Proposition
2.8 Target Group

3. Conclusion

Bibliography

Appendices

Statement of Authorship

List of Figures

1. Competition Map Red Bull

2. Positioning Map Red Bull

Executive summary

In this assignment named „Market Analysis of Red Bull based on the countries Germany, Switzerland and Austria” the goal is to analyse the market of Red Bull with its competitors, customers and market position.

Red Bull is a company and brand founded in 1987 with its slogan “Red Bull gives you wiiings”. The company launched by Dietrich Mateschitz sold more than 35 billion cans until now and is available in more than 165 countries. The brand is well known because of the large amount of athletes in sports and extreme sports sector they are supporting. They are having their own sport events and additionally teams in such different sectors like e.g. football, formula 1 or flying. The biggest event they were supporting in the last years was the jump up from stratosphere of Felix Baumgartner.

Red Bull had also had some problems in the past not only with new out coming com- petitors. But in some countries are legal requirements to enter the market and health concerns are producing negative publicity because they were warning customers that the drink can harm healthiness. Other points which are influencing the market position are that the price is very high and the competitive prices compared are much cheaper. Posi- tive points to mention are that Red Bull helps it’s customers to overlap working much hours and to support them doing diet or sports more effective. Another important point is that the company is always using newest technology. The disadvantage is that there are many competitors with cheaper prices and Red Bull itself has a small product port- folio (only six different drinks).

All in all it can be said, that they are the market leader with a big growth in other coun- tries and are seen as unique by the consumers. They have an attractive image and they are offering not only a drink but an experience. This is what creates their unique selling proposition in a way with a clear brand personality combined with an emotional binding and a high public interest. Their positioning in the market is very high levelled what is caused by the “old” but also “modern” slogan, that’s a high premium drink and not linked to a specific activity.

But to bear in mind is that it would become more difficult to hold the market leadership and justify premium pricing as well as their production methods.

Introduction

In this assignment we wish to present the brand and product Red Bull. We intend to analyse the Red Bull market and based on that analysis define the market. By doing so, Red Bull’s current market position will become clear.

Due to the wide range and huge variety of the global markets for Red Bull, we will limit ourselves in this assignment to the markets of Red Bull in Germany, Switzerland and Austria.

In analysing a market, a SWOT analysis is carried out and backed up by a PEST analysis. A SWOT analysis can identify the important factors which influence sales and costs and therefore profits.1 After that the market is defined, which means that customers and competitors are researched and identified and their behaviour analysed. This applies particularly to competitors. Based on this analysis and by identifying the unique selling point, a definition of the market is achieved.

In the first chapter we will define marketing and give a general background description and explanation of what steps are to be taken to analyse a market and how these steps are carried out. We will list the advantages and disadvantages of a market analysis and introduce the follow-up PEST and SWOT analysis. Based on this, we will explain in chapter two which steps are to be carried out, and in which way, in order to define the market.

The third chapter will deal with applying the steps for analysing and defining the market (described in chapter two) to Red Bull. By means of a SWOT analysis a matrix will be created and when defining the market, a positioning map will be used to show its market position after analysing the current competitors. After that, the USP of Red Bull will be explained and the target groups described.

To finish off, we will give a summary of the complete work and offer a forecast as well as recommendations. We will also give a short description of the focus of the second assignment which will be based on this work.

1 Theoretical approach market analysis and definition

1.1 Marketing definition

“Marketing is the conceptual, conscious market-oriented corporate management that aligns all business activities to the needs of current and potential customers in order to achieve the corporate goals.”2 This definition shows in a very brief form that marketing is important in every company in order to operate with the philosophy of a market ori- entated business management. With its management function, marketing is not only going to influence but to create business decisions and because of that, fundamental strategy planning is necessary.3

1.2 Marketing objectives and strategy

The issue of marketing objectives and Strategy is very important because here you de- scribe and analyse your own current situation which by doing so becomes very clear. This analysis of the current situation is a key part of the foundation on which to build/develop market planning and strategy. Here, the goals as well as the company and environment situation should be set out as accurately as possible. The more detailed and accurately this work is done, the easier it will be later to base a further analysis on it. With regard to the business goals, a distinction is made between economical goals and psychological goals.4

To analyse a company’s situation, the following seven big points should be considered: general values, company values, company approach, company goals, divisional goals, sectoral goals and instrumental goals. We will explain these in more detail. The general values are the key overall aims, the basic approach or intention and the culture among stakeholders. Vision, company competence and field or scope of activity is the company purpose. The company approach is its leadership style, organisational structure and atti- tude towards innovation. The company’s goals are the result of detailed and systematic analysis and evaluation. Marketing, finance, logistics, research and development and so on can be seen as divisional goals. The sectoral goals are the aims under the divisions for example price or product decisions. The latter are the instrumental goals which are the goals for every sector.5

The best way to formulate the strategy is first of all to clarify a number of key questions in order to get an overview. You have to find out the differences between your product and those of the competition as well as the market characteristics and structure, which means that you must know your competitors and their level of prices. You also have to check the possibility of entering other markets additional to your own. The problems with other markets are that you have to have the right know-how and suitably skilled employees and this could mean having to carry out more training or similar measures. Very important is to have the expected time line with maximum and minimum sales.6

1.3 Market Analysis with limitations and benefits

The key issue in planning and analysing marketing is first of all to follow the steps de- scribed below. The first step is to define the mission of the business and to do a market- ing audit with it. The best way to ascertain this is to carry out a SWOT Analysis with all the internal and external factors which are important and influence the business. After that, the next step is to identify the possibilities of increasing sales and profitability and additionally to develop the marketing objectives to get to know where to place which products. The best way to set the strategic objectives is to use the Boston Matrix. After doing this, the core strategy can be constructed which is to find out what are the target groups and markets are as well as the advantages and disadvantages and how to accom- plish the aims. The best way of doing this is to follow the “four P” Strategy. The four Ps stand for Product, Place, Price and Promotion.7

After determining it, the strategy can be implemented but needs to be monitored and refreshed all the time.8

There are benefits but also limitations in planning a strategy. To start with benefits, it can be said that the strategy is consistent and the change can be monitored and con- trolled. Another advantage is that the focus is on success and competitive edge. Addi- tionally, the strategy is directly reflected to the market and based on a detailed course of action. There are also some disadvantages. It takes time and demands specific capabili- ties to plan the basic strategy because it needs a large amount of circumstantial informa- tion. This cannot be done by just anybody, you need the right people. Additionally, in the short term planning problems can pop up at short notice which can disrupt long term planning. There can also be problems because the correct or complete information is not obtained either for political reasons, for example, or because of the personality of the person doing the research.

In planning strategy, great care must be taken of the dynamic correlation between sup- ply and demand. If either of these changes, the other one will be affected and customer purchase behaviour will change. On the demand side it is important to focus on market boundaries, buyer concentration and the demand prediction. On the supply side the fo- cus must be on the structure of supply i.e. barriers which prevent entry to the market and various others in the market. The structure of costs and the resulting attitude as well as the competition character must also be focussed on. So the overall company environ- ment has to be involved in planning of capital importance as well as customers, suppli- ers and competitors and the potential of changes in macro environment must be consid- ered.9

With this strategic planning it is possible to ascertain where the business is heading in the next few years.

1.4 Pest Analysis

The PEST Analysis examines the external factors which influence the business and also affects the decisions being made. PEST analysis has four components which can be seen as a checklist. The first is the political and legal aspect, where government attitudes are explained as well as the legal system of the market and the political regime (which can differ very much in the variable markets worldwide) as well as trade barriers. The sec- ond component in PEST Analysis is the economic part which describes the market with its infrastructure, phase of economic development and capita per income as well as size of market and economic growth rate. It is also important to mention the level of unem- ployment and the size of households as well as the exchange and interest rates. The third part examines the social attitudes (which are nowadays very important), demographic changes, the issues of communication e.g. the language, values distinctions in culture and so on. The last point of this external analysis is the aspect of technology. Here the level of technology evolution is very important as well as the technical infrastructure or the possibility for the population to get access to these.10

There are also some limitations which must be kept in mind, so it’s not possible to summarize the full range of these external effects and it wouldn’t help to try it. So the important ones must be picked out and these have to be analysed and to find out what impact they have on the costs and sales.

1.5 SWOT Analysis

A SWOT Analysis is the summary of all factors of PEST Analysis as well as the strengths and weaknesses factors which I will describe in the following passage. Strengths and weaknesses are internal factors as opposed to the external-factor analysis which was carried out in PEST research. Each case has to be examined as to how it would affect the company; it can depend on the situation if it’s going to be good or bad.11 This Analysis should be done for the own company to find out the existing com- petences but also the shortfalls so that they can be changed. Therefore, it can be helpful to first identify the resources and then find the strengths and weaknesses and turn them into competences.12 It would be a very good idea to do this analysis also for the differ- ent competitors so that one’s own market position can be ascertained. When doing a strengths and weaknesses analysis the following factors can be analysed: company’s productivity, financial situation like cash flow statements, sales trends or profits, effi- ciency of work, different costs, available facilities and equipment, organisational or management structure, customer satisfaction as well as finding out the know-how level of the staff,etc. It must be decided for every company what the important factors are and these have to be analysed and determined in each case if it is a strength or a weakness for the own company.13 After that, the same should also be done for the competition in order to identify the advantages and disadvantages of the competitors. This is a good occasion to do this because it gives you the opportunity to make a direct comparison between them and one’s own company, but it must be borne in mind that that it is not possible to obtain all the internal information of other companies as easy or as accurate as in the case of your own company.14

1.6 Competition

1.6.1 Opportunities

To find out opportunities different resources can be compared like the tangible ones e.g. financial situation or the intangible ones e.g. technology or culture or human resources like skills.15 The more you know about your competitors, the better you can react and plan your own strategy how to win and hold customers.16 Companies can be divided into four categories depending on the competitive strategy they follow. The first category is “cost leadership”. Here only one company can be the low cost producer in its industry. The second category is “cost differentiation” which means that the high price is justified because the product or company is unique or provides unique services. The other two categories are “cost focus” and “differentiation focus”. In the case of a cost focus strat- egy, the firm offers cost advantages to its target group. “Differentiation focus” means that special buyer needs in the different segments are focussed on by the company.17

1.6.2 Behaviour

It is never possible to enter a market without having to face competition because in every market there are other companies offering similar products to your own. So in every market there will be competitors and therefore it is very important to find out as much as possible about them and to make a potential analysis.18 It is essential to get to know their competitive behaviour because you need to base your own strategy on this. Your products must be such as good as the customer is left no other choice but to buy them. Competition itself means that companies define the price; when yours is too high above it, no one will buy your product and you have to find other ways so that custom- ers will purchase yours.

Competitive behaviour can be separated into five strategies. The first one is “conflict” which means there is an aggressive fight to eliminate the competition. The second strat- egy is “competition” which means doing better than the others. The third one is “co- existence” which means that the competitors are ignored. The fourth is “co-operation” which involves forming alliances and finding new opportunities. The fifth strategy is “collusion” which means that only a few companies share the market between them- selves.19

When analysing the competitive behaviour it is essential to find out where the competition is positioned and where there are similar products that customers could buy instead of one’s own or whether they could switch to other products which are the same as yours. Additionally, the competition can be different in its direct behaviour to customers e.g. services or complaints.20

1.7 Positioning

It is very important for all firms to know their own position in the market, but to get to know that, the market has to be analysed. Consequently, positioning planning is getting to know how to compete. By identifying all market characteristics, internal and external influencing factors and market research through market analysis, the competition can be understood. Bottom-up from that, a competitive analysis can be made by finding out who the competitors are with the same or different approaches and finding out how they act, what their strategy means, as well as their current performance, strengths, weak- nesses and planned strategy.21

Using a positioning map, one’s own position in the market can be shown. Two different characteristics can be chosen which are at a high and low level in the map, and which are important ones for the firm. One’s own position as well as that of the competitors can be shown in the map. As a result a strategy can be deducted.22

1.8 Unique selling proposition

USP is the short form for unique selling proposition and it’s the one and most important advantage the company has compared to competitors.

[...]


1 Nieschlag, R., Dichtl, E., Hörschgen, H.. 2002

2 Runia, P., Wahl, F., Geyer, O., Thewißen, C. 2007

3 Bruhn, M. 2012

4 Bruhn, M. 2012

5 O’Riordan, L. 2013/14

6 O’Riordan, L. 2013/14

7 Bruhn, M. 2012

8 Benkenstein, U., Uhrich, S. 1988

9 O’Riordan, L. 2013/14

10 Schürmann, M. 2011

11 O’Riordan, L. 2013/14

12 Meffert, H., Burmann, C., Kirchgeorg, M. 2008

13 Bruhn, M. 2012

14 Nieschlag, R., Dichtl, E., Hörschgen, H. 2002

15 Runia, P., Wahl, F., Geyer, O., Thewißen, C. 2007

16 Kuß, A., Tomczak, T. 2004

17 O’Riordan, L. 2013/14

18 Berekoven, L., Eckert, W., Ellenrieder, P..2009

19 Runia, P., Wahl, F., Geyer, O., Thewißen, C. 2007

20 Nieschlag, R., Dichtl, E., Hörschgen, H. 2002

21 O’Riordan, L. 2013/14

22 Bruhn, M. 2012

Excerpt out of 26 pages

Details

Title
Market Analysis of Red Bull based on the countries Germany, Switzerland and Austria
Subtitle
Marketing
College
University of Applied Sciences Essen
Grade
2,0
Authors
Year
2014
Pages
26
Catalog Number
V271840
ISBN (eBook)
9783656660453
ISBN (Book)
9783656660477
File size
4343 KB
Language
English
Tags
market, analysis, bull, germany, switzerland, austria, marketing
Quote paper
Julia Teigeler (Author)Ann-Katrin Hahne (Author), 2014, Market Analysis of Red Bull based on the countries Germany, Switzerland and Austria, Munich, GRIN Verlag, https://www.grin.com/document/271840

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