Investigation of the Marketing of the Red Bull Company in Consideration of Cultural Aspects


Seminar Paper, 2003
27 Pages, Grade: 1,0

Excerpt

INDEX

1 Introduction

2 The company and its product
2.1 The history of “Red Bull GmbH”
2.2 The product “Red Bull Energy Drink”
2.2.1 The energy drink and its ingredients
2.2.2 The packaging
2.2.3 The logo and its meaning
2.2.4 Expansion of Red Bull’s product range

3 Red Bull’s market situation
3.1 The industry and rivalry among existing firms
3.2 Potential Entrants
3.3 Substitutes
3.4 Buyers
3.5 Suppliers

4 Red Bull’s marketing mix
4.1 Red Bull’s promotion policy
4.2 Red Bull’s price policy
4.3 Red Bull’s place policy (distribution policy)
4.4 Red Bull’s product policy
4.5 Conclusion

5 Standardization versus Culture: Adaptations and pitfalls made by Red Bull
5.1 Standardisation of Red Bulls Marketing
5.2 Reasons to Red Bull’s success with standardization in all four markets
5.3 General advantages of such a standardized policy
5.4 Ignoring of cultural differences
5.5 Conclusion

References

1 Introduction

This paper looks closer at international marketing with an emphasis on the cultural issues, which are often forgotten in real life. The company Red Bull was chosen as an area of study in order for us to be able to apply and test the theories in our course literature with the way things are done in reality. The choice of Red Bull was an obvious one because of its presence in the global marketplace as well as the group-members home countries. The course literature has been used as a point of reference when it comes to examining whether the company is standardizing or adapting and also regarding international marketing as a whole. Moreover, the paper will focus on the Czech Republic, France, Germany, and Sweden in correlation to the marketing Red Bull adopts in these countries.

2 The company and its product

2.1 The history of “Red Bull GmbH”

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Picture 1:

Dietrich Mateschitz

In the early ‘80s, an Austrian named Dietrich Mateschitz (today a managing partner of Red Bull GmbH), came across several “energy drinks” during business trips to Asia.[1] Essentially, Mateschitz noticed that the Japanese seemed to be particularly predisposed to drinking bottles of 'energy drink' to keep themselves alert. Having tried these drinks himself, and finding that they did indeed help him stay sharp, Mateschitz decided to reformulate the concept for the European market - and Red Bull was born.[2] He spent three years analysing the market, working on the concepts, the design of the can and finally got the registration from Austria's Ministry of Health.[3] In 1987 he launched the now wildly successful “Red Bull” energy drink brand. Nothing like this had ever before been seen in Europe.[4] Red Bull first appeared outside of Austria in 1993, when Slovaks, Hungarians, and Croats started importing it and hawking it to individual stores and nightclubs. Soon West Coast clubs were importing Red Bull to sell as a drink mixer. Big cities such as L.A. and Seattle were the company's first target markets when it kicked off its U.S. distribution in 1997.[5] Red Bull (the product) is currently present in more than 70 countries and has quickly become a well-recognized energy drink,[6] with European sales for 2002 estimated at over 1.3 billion cans – more than all its closest competitors put together.[7] Today the company has reached a minimum market share of 70 %[8] in all the markets it has entered. Red Bull the company now provides work for 1200 employees all over the world (2001).[9]

Red Bull’s corporate strategy is focused on their core competence in marketing. Other activities like production and distribution are outsourced to third parties.[10] Slim management structures and flat hierarchies allow the company to maintain flexibility and their ability to react promptly. On an estimate company’s net value is 10 billions euros, which prove their immense success.[11]

2.2 The product “Red Bull Energy Drink”

2.2.1 The energy drink and its ingredients

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Picture 2:

Red Bull 8.3-ounce can

What is Red Bull? On their webpage the beverage is declared as a functional energy drink and not as thirst quencher.[12] It has not been formulated to deliver re-hydration.

The company’s energy drinks are filled with added synthetics and natural technological ingredients that promise boosts of energy or concentration. For best effects, manufacturers recommend consumption about 30 minutes before the start of a task requiring added concentration or the beginning of a race or competitive sport. 30 minutes is roughly the time it takes for the human body to be affected by Red Bull’s ingredients.[13]

Where does the buzz come from? Red Bull says it’s the result of two natural ingredients, amino-acid taurine and glucuronolacton. It’s their reaction with caffeine that makes the product work, according to the company. Red Bull claims that the end result, Red Bull's maker claims, is an invigorated state of both the body and mind, not to mention a boost in performance and longer endurance.[14]

Each can contain 250 ml of the Red Bull drink that consist of the ingredients mentioned below; most of these are synthetically produced by pharmaceutical companies:[15]

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2.2.2 The packaging

Red Bull is sold in a silver-blue 8.3-ounce aluminium can. “It’s all in the can. Gobé[16] emphasises that the sleek, silver can is Red Bull's "anti-Pepsi statement.” He calls it slim, sexy, and powerful, and says that its diminutive size only bolsters Red Bull's reputation as a concentrated experience.

Koehn[17] agrees with Gobé when he says that "packaging is critical for a product". "Red Bull really looks like a product from the global economy. It doesn't look like a traditional American soft drink – it’s not in a 12-ounce can, it’s not sold in a bottle, and it doesn't have script lettering like Pepsi or Coke. It looks European and that matters for people.”[18]

2.2.3 The logo and its meaning

The brand name conveys the Red Bull logo, consisting of two red bulls charging against each other in front of a yellow spot. The bulls demonstrate the strength that is connected with the logo incurs. The blue and silver parts in the background act as a symbol for the intellect and the red and yellow parts characterize emotion. All in all this creates a good and memorable logo.

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Picture 3:

The Red Bull logo

2.2.4 Expansion of Red Bull’s product range

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Picture 4:

Red Bull Sugarfree

Recently Red Bull launched its first product derivate in certain countries: The “Red Bull Sugarfree”. “The flavour is basically the same as the original one but with artificial sweetener thus not very exciting. In addition, the company used the same packaging as the original which is not very innovative. Overall, it's the same old stuff, but with a different sweetener.”[19] The packaging is not exactly the same but very similar to the “Red Bull Energy Drink”: The dark blue colour on the can has been replaced with a light blue colour and the expression “Energy Drink” has been substituted by the word “Sugarfree”.

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Picture 5:

Red Bull LunAqua

Although this case study concentrates to the most well-known product – the “Red Bull Energy Drink” and its sugar free version another of the Red Bull company’s products will be shortly mentioned. The “LunAqua” a table water which is presented as “pure, natural spring water which is only drawn – from a previously undiscovered Alpine source – after it has reached its highest quality.”[20] “LunAqua” is sold as a quite exclusively table water and at the moment it is only availably in Austria and the Netherlands. The logo is nearly the same as the one on the energy drink: Two red bulls charging against each other in front of the full moon that replaces the big yellow-orange spot in the energy drink’s logo.

3 Red Bull’s market situation

Examples derived from the Czech Republic-, French-, German-, and the Swedish market based on Porter’s five forces model.

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Picture 6:

Analyses of Red Bull’s market situation based on the five forces model of Porter

Competition is a diverse term. Instead of just comparing the market share of Red Bull with that of its competitors we decided to use a broader perspective. According to Porter[21] “competition is rooted in its underlying economics” as a result there exists certain forces that are less visible than the current competitors. Porter defines these forces as the threat of entry and the threat of new substitutes in addition to suppliers and customers having their fair share in determining the future of the industry. The fifth and final force points out that when all the four forces above are accounted for there still is an immense battle for the positions in the industry.[22]

3.1 The industry and rivalry among existing firms

When Red Bull entered the markets of the Czech Republic, Germany or Sweden, there was no other energy drink in same sense as Red Bull’s. A few powder drinks existed but there was no big brand that was even comparable to what the brand “Red bull” is today. There merely were carbonated soft drinks from Coca Cola and Pepsi that could be regarded as weak substitutes on the market. Consequently Red Bull was the first brand within the energy-drink category in these three countries and hence created the category. Although they are only considered to be a niche player in the beverage market. As a whole, big companies such as Coca Cola and Pepsi have become aware of Red Bull. In order to be able to offer a whole range of beverages these companies have started acquiring smaller companies specialized in energy drinks. By doing this they aim to catch up with Red Bull.[23] The strategies used by Pepsi and Coca Cola suggest that Red Bull is facing threats of new entrants.

The special Situation in France: Red Bull’s cans are bought by French consumers outside France and subsequently imported, but can also be purchased via the Internet. Since 2001 Red Bull is sold on www.shopping-monaco.com and can be delivered within 48 hours.

The prohibition issued on selling Red Bull has been enacted by the French government and is mainly due to the great concentration of taurine (1000 mg in each can), a synthetically substance produced by pharmaceutical companies.[24] Indeed the effects of a big consumption of taurine has not been proved on the long term basis, hence there are reasons to be suspicious.

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Picture 6:

The only kind of strong competitors when Red Bull entered the market in early nineties: Coca Cola and Pepsi Cola

3.2 Potential Entrants

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Picture 8:

Two of the strongest competitors of Red Bull: “Gatorade energy drink” from Pepsi-Cola and “burn” from Coca-Cola.

Germany: Currently in Germany Red Bull is still the most well known and most successful energy drink and up to now no other brand has achieved to get a similar market position like Red Bull’s.

Sweden: Many of Red Bulls closest competitors in the other European countries have not yet established themselves in the Swedish market. Therefore the potential entrants are several with well known companies backing them up. Coca Cola has a brand called “Burn” and Pepsi have strong potential contenders such as “SoBe Adrenaline Rush”, “Mountain Dew Amp” and “Gatorade”.[25]

3.3 Substitutes

The energy drink “Red Bull” is quite successful and the brand enjoys widespread name recognition. Because of Red Bulls success many competitors feel that there are good enough reasons to try to repeat this achievement with their own products.

France: The market for energy drinks may be challenged by other nutritional products such as energy bars: nutrition bars, energy / endurance bars, meal replacement bars, diet / weigh loss, functional / nutritional bars, high protein / body building bars.

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Picture 9:

Examples for typical Red Bull substitutes in the German market

Germany: As said above the range of power drinks which can be considered as substitutes to Red Bull is widespread. The brands “Red Horse” (Aldi), “Flying Horse” (Lidl), “Bullit” (Penny) and “Big Puma” (Plus) have become successful because of their low price but they have not reached an equally strong image as Red Bull. When taking a closer look at these contenders it becomes evident that they have similar layouts when it comes to the packaging – all of them are sold in cans – as a consequence it becomes clear that these substitutes are trying to copy the Red Bull concept.

[...]


[1] http://www.thelocalplanet.com/Archives/Authors/Article.asp?ArticleID=3365 (14.10.2003)

[2] http://www.itweb.co.za/office/3Com/9902161139.htm (14.10.2003)

[3] http://www.bangkokpost.net/290803_Business/29Aug2003_biz76.html (14.10.2003)

[4] http://www.thelocalplanet.com/Archives/Authors/Article.asp?ArticleID=3365 (14.10.2003)

[5] http://www.businessweek.com/bwdaily/dnflash/june2000/nf00630b.htm (14.10.2003)

[6] http://www.theproduct.com (14.10.2003)

[7] www.marketingclub-dresden.de/ Kaleidoskop2002Rueckblick.pdf (14.10.2003)

[8] Hansen, Produktpolitik, 2001, Steffen Poeschel

[9] http://www.mc-bielefeld.de/report/2001/cr9.htm (14.10.2003)

[10] http://www.news.at/profil/index.html?/articles/0337/568/64673.shtml (14.10.2003)

[11] Absatzwirtschaft, Sondernummer zum dt. Marketingtag 2001, S. 22 f.

[12] http://www.redbull.com (14.10.2003)

[13] http:// www.theproduct.com (14.10.2003)

[14] http://www.businessweek.com/bwdaily/dnflash/june2000/nf00630b.htm (14.10.2003)

[15] http://www.redbull.com/product/history/index.html (14.10.2003)

[16] Author of Emotional Branding: The New Paradigm for Connecting Brands to People (Allworth Press)

[17] Professor of business administration at Harvard Business School and author of Brand New: How

Entrepreneurs Earned Consumers' Trust from Wedgwood to Dell (Harvard Business School Press)

[18] http://www.fastcompany.com/articles/2001/10/redbull.html (14.10.2003)

[19] http://www.bevnet.com/reviews/redbull/ (14.10.2003)

[20] http://www.lunaqua.com/start_en.html (14.10.2003)

[21] Porter, 1979

[22] Porter, 1979

[23] Noonan & Peraino, 2001

[24] www.redbull.com (14.10.2003)

[25] www.redbull.cz (14.10.2003)

Excerpt out of 27 pages

Details

Title
Investigation of the Marketing of the Red Bull Company in Consideration of Cultural Aspects
College
Lund University  (School of Economics and Management)
Course
International Marketing and Euro-Marketing
Grade
1,0
Author
Year
2003
Pages
27
Catalog Number
V70257
ISBN (eBook)
9783638625067
File size
3412 KB
Language
English
Tags
Investigation, Marketing, Bull, Company, Consideration, Cultural, Aspects, International, Euro-Marketing
Quote paper
Florian Riedel (Author), 2003, Investigation of the Marketing of the Red Bull Company in Consideration of Cultural Aspects, Munich, GRIN Verlag, https://www.grin.com/document/70257

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