Red Bull Cola Case Study

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Marketing Strategy Case Study. The introduction of Red Bull Cola into the Irish Market.

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Red Bull Cola Case Study

  1. 1. Red Bull Cola Case Study Marketing Strategy
  2. 2. Case Layout•In Class Group Task•Company Overview•Product Overview•Irish Beverage Market•Competitor Actions•Task Review & Learning Outcomes•Case Study Epilogue
  3. 3. In Class Group Task
  4. 4. Your group has been tasked with co-ordinatingthe launch of Red Bull Cola into the Irish market.You have complete control over thecommunications mix and the strategy for thebrand.You have up to one hour of class to construct aclear business objective, and detail your chosenstrategy as to how best achieve this objective.
  5. 5. YOUR GROUP SHOULD CONSIDER:•target market (who are you selling to)•objectives (what is the purpose of the strategy)•type of product (what is the purpose of the product)•market structure (where does red bull cola fit)•stage of PLC (what strategies suit this intro stage)•distribution channels (where/how will you sell)•positioning (what does red bull cola represent)•resources (how much time/energy/man power will be put into this)•pricing strategy (how much will you charge and why)•segmentation (what are the characteristics of your target)•research (what type of information is important)
  6. 6. CompanyBackground
  7. 7. In 1984, Mateschitz founded Red Bull. He fine-tuned the product, developed a unique marketingconcept and in 1987, started selling Red BullEnergy Drink on the Austrian market . This wasnot only the launch of a completely new product,in fact it was the birth of a totally new productcategory. Today Red Bull is present in over 160countries.
  8. 8. Since 1987, around 30 billion cans of Red Bullhave been consumed, more than 4.2 billionin 2010. The responsibility for the success of theworlds No. 1 energy drink is shared by thecompanys 7,758 employees around the world(compared to 6.900 in 2009). The Red Bullheadquarters are based in Fuschl am See, not farfrom Salzburg, Austria.
  9. 9. While the consumption was doubling year onyear in Austria, Red Bull arrived in its first foreignmarkets, Singapore (1989) and Hungary (1992).The authorization for Germany was granted in1994, the UK followed in 1995 and in 1997, theUS business started in California. Red Bull hasbeen available since 1987.
  10. 10. From 2007-2010 company turnover increased by15.8% from EUR 3.268 billion to EUR 3.785 billion.Sales, revenues, productivity and operating profitnot only matched 2007 levels, they significantlyexceeded them to such an extent that the figuresrecorded were the best in the companys historyso far.
  11. 11. The main reasons for such positive figures includeoutstanding sales in the Red Bull markets inTurkey (+86%), Japan (+80%), Brazil (+32%),Germany (+13%) and the USA (+11%), combinedwith efficient cost management and ongoingbrand investment even in the challengingeconomic climate of recent years.
  12. 12. ProductOverview
  13. 13. After creating and successfully leading theenergy drink category for over 20 years, RedBull is now entering the largest non-alcoholicbeverage category in the world with a colamade of ingredients from 100% naturalsources.
  14. 14. The cola from Red Bull is a unique blend ofingredients, all from 100% natural sources. Inaddition, it is the only cola which containsboth the original Kola nut and the Coca leaf.Therefore, it is a very special recipe.
  15. 15. The result is a natural, not-too-sweet colataste, which comes from using the right plantextracts. Red Bull Cola has initially launchedin Austria, Switzerland, Italy, Great Britain,Ireland, Russia and Las Vegas.
  16. 16. Red Bull Cola contains 45 milligrams of caffeine per 355ml(12-ounce) can, it contains more than Coca-Cola (34 mg) orPepsi-Cola (37.5 mg), but less than Diet Coke (47 mg) orPepsi One (54 mg).The cola contains significantly less caffeine than Red Bullseponymous energy drink (80 mg per 250 mL).The drink also contains sugar and caramel colour, lacking thephosphoric acid, high fructose corn syrup and artificialflavours of most commercial colas.
  17. 17. IrishBeverage Market
  18. 18. IRELANDS sports and energy drinks market grew by 15pclast year, more than double the 7pc growth rate acrossIrelands soft drinks market.New figures to be unveiled by Britvic today show the valueof Irelands soft drinks market now stands at more than£530m.Sports and energy drinks now make up a fifth of thismarket, after their bumper 2007 growth.Meanwhile sales of carbonated drinks grew just 2pcduring the year, amid an increasingly health consciouspublic. Independent.ie 2007
  19. 19. Competitor Actions
  20. 20. Coca Cola will launch Burn Energy into 7000outlets across Ireland in direct response to theRed Bull Cola launchCoca Cola will compete on price in the energymarket, openly intending to undercut Red Bull
  21. 21. TaskReview &LearningOutcomes
  22. 22. Students should consider the branddilution from Red Bull’s core competencyof ENERGY, to a non-energy Cola Product.Red Bull is synonymous with Energy, RedBull Cola confuses this.
  23. 23. Red Bull Cola is ‘strong & natural’ – howdoes this fit with existing Red Bullcustomers?Are they concerned by natural products?Does the ‘strong & natural’ tag creative aunique selling point?
  24. 24. What do you think of Coca Cola’s reactionof introducing their energy drink into theIrish market?Was it naive of Red Bull to compete forCola market share?
  25. 25. Do you think Red Bull needed to, orindeed need to, diversify their productrange?
  26. 26. Given the financial strength of Coca Cola,would it be wise for Red Bull Cola tocompete on price?
  27. 27. Given the greater of cost of a Red Bullversus other cola products, at what pricepoint should Red Bull Cola be introduced?In line with other Red Bull products?In line with other cola products?
  28. 28. MISTAKE 1The parent brand to which they were tying thisproduct could not be more at odds with apositioning based on completely natural and non-artificial ingredients. Even though I’ve never seen abrand equity monitor that includes Red Bull, Iwould be shocked if it included anything other thanvery low scores for image attributes like “natural”and “healthy’. I’m sure that seeing these 2completely contrary positions allied together inone pack was quite confusing for the consumer.
  29. 29. MISTAKE 2The pack itself doesn’t little-to-nothing tocommunicate it’s product USP’s to the targetaudience. It had already been hamstrung by thefact that it had to use the Red Bull color palette(blue and silver as natural appearing colours in theplant world anyone?), but there is hardly anyreference to the make-up of the liquid on the frontof the pack other than the one mention of natural.
  30. 30. MISTAKE 3Finally, the launch of the product. Whilst they did somereally nice stuff (as the sales presenter below attests), it’sfair to say that if you’re going to take on one of thebiggest brands in the world you probably need to throwthe full heavy artillery at it. Unfortunately, I can’t get anymedia spend figures: but I do know that there was no TVadvertising in Ireland or the UK and from what I can tell itseems that there was limited print and outdoor spend onit. It seems strange to take the decision to enter the colacategory and then not back this decision as it needs to be.
  31. 31. It is quite common for business studentsto fixate on one plan, or search for theoptimum solution.As business/marketing strategists, is thebest advice your group can give in thissituation “Do not enter the Irish market!!”Why? Why not?
  32. 32. Case Study Epilogue
  33. 33. Case Study EpilogueRed Bull North America has discontinued production of its cola. Amidst a flurryof rumours last week, the move was not entirely unexpected, though Red Bull’sdecision to pull the plug on the highly touted product is likely to surprise manywithin the beverage industry.Red Bull will “sell through existing inventories of Red Bull Cola, but notproceed with additional production,” and refocus efforts on growth of its corebrand within the rapidly expanding energy drink category, the company said ina statement e-mailed to BevNET.Since its debut in 2008, Red Bull Cola has struggled to excite consumers andretailers in part due to its unique flavour profile and some controversyregarding the company’s use of coca leaves in the beverage. However, it maybe the cola’s premium price point that has been its biggest impediment tosuccess. A 12 oz. can of Red Bull Cola sells for around $1.50 in comparison to$1.00 or less for a similarly sized Coke or Pepsi product.Nevertheless, with a nearly 40 percent share of the energy drink category –pegged by Mintel to grow to nearly to $8 billion by 2015 – Red Bull noted thatthe company has “ambitious plans for growth and is well-positioned to continuethe momentum that has led to the brand’s dominance of dollar share within thecategory.”
  34. 34. case study author: Jeff Tayloremail: jeff@jefftaylor.iewebsite: www.jefftaylor.ielinkedin: http://www.linkedin.com/pub/jeff-taylor/41/993/635contact via email for guest lectures and academic seminarssome facts and figures within the case have been altered for illustrative purposes

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