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RedBull Analysis


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RedBull Analysis

  1. 1. PESTEL and porter analysis of Czech market for Red Bull GmbH CULS FEM 2015 Marketing management Presentation by: Daniel Jones
  2. 2. P.E.S.T.E.L
  3. 3. POLITICAL FACTORS • Incidents where Red Bull has led to deaths • The energy drinks industry is under scrutiny The shock of rare cases, such as these have caused legislators to react who are now beginning to look at restricting its sale. As most of the political matters that affect Red Bull are based on restrictive legislation, we shall talk about this in the Legal section. Source: Prague Post
  4. 4. ECONOMIC CONDITIONS Energy drinks was one of the fastest- growing soft drinks categories in the Czech Republic in 2014. Total consumption of energy drinks increased by 5% to reach 30 million liters in 2014. The good growth was underpinned by strong marketing support. Source: 0 5 10 15 20 25 30 35 2010 2011 2012 2013 2014 ENERGY DRINKS CONSUMPTION IN MILLION LITERS
  5. 5. SOCIOCULTURAL FORCES • Energy drinks companies are very active on social media sites such as Twitter & Facebook • Socially the energy drinks brands are seen as cool due to the extreme sports image & team sponsorships • Criticism via new digital media such as blogs • Energy drinks companies are also being swept up in the general wellness trend which has existed for the past few years, & has resulted in the release of low carb & sugar free options.
  6. 6. TECNOLOGICAL FACTORS • Technological forces effecting the environment of the energy drinks companies • Innovation in industry tends to come from product segmentation • The most important Technological factor in the Energy Drinks Industry is the Internet
  7. 7. ENVIROMENTAL FACTORES While this could have come under the social section, we decided to keep this separate to highlight its importance to the modern consumer. While there is certain pollutions cause by the manufacturing of energy drinks the Industry is very focused on package recycling. The most common form of packaging is the aluminium can which is 100% recyclable. Some of the cheapest brands do use plastic packaging for their larger products such as 1 litre bottles but these again are recyclable & are a relatively small percentage of sales.
  8. 8. LEGALREGULATORY CONDITIONS • Measures against all unhealthy products such as soft drinks • Prohibition in advertising at children • Legal regulators are looking at idea’s such as sugar taxes to help reduce consumption of these products
  9. 9. PESTEL Conclusion The situation to us seems to be favorable for further expansion in the Czech market. Most at risk are possible changes in legislation, despite the relevant trends, this scenario seems still very unlikely. Positive trends we want to mention the growth consumption in this segment and a supportive social environment, as well as sufficient technological level of development of the region.
  10. 10. Porter’s Five Forces Analses
  11. 11. Industry Competitors and Extent of Rivalry: Low • Red Bull has turned their niche market into a mass market and a regular buy for people around the world. • Its brand familiarity has given them a key source of competitive advantage. • Differentiation by Lucozade (another popular energy drink that is trying to enter the market) is a strategy being used. They are becoming direct competition adding caffeine into their drink making it a stimulation drink. • Red Bull has secured distribution channels that make it hard for competitors to enter the market. • Red Bull has a very loyal customer base, and it’s own research shows that 40% of it’s customers would go to another store to find Red Bull if a store didn’t carry their product.
  12. 12. Threat of New Entrants: Medium • Red Bull equates in the stimulant drink industry to Coca Cola or Pepsi in the soft drink industry. • Supermarket stimulant drinks dominate the budget end of stimulant drinks, but mid range drinks don’t have many suppliers and attempts to compete with Red Bull’s marketing it a huge barrier to entry. • Red Bull’s brand power alone would make it hard for anyone to successfully enter the market.
  13. 13. Threat of Substitutes: Low • Price sensitivity is low within Red Bull’s target segments, and because Red Bull is a spur of the moment purchased commodity, convenience is a standard purchase criteria for the drink. Brand power and customer loyalty have created a low situation for product substitution. • Red Bull’s High prices are linked to their high quality, thus identical substitutes at lower prices don’t really affect the Red Bull market. • Other stimulant substitutes such as coffee, Five Hour energy, or energy smoothies, all have trade offs with stimulation duration, caloric intake, and convenience, giving Red Bull its own niche in the stimulant market.
  14. 14. Bargaining Power of Buyers: Low • Being a small market with strong customer loyalty, it’s possible for the company to have all of the pricing power and for the customers to have very low bargaining power. • There is a pull in the market or a derived demand giving retailers not much bargaining power.
  15. 15. Bargaining Power of Suppliers: Low • Red Bull has a short supply chain meaning high profit at each stage of the chain. • The production process for Red Bull is uncomplicated, leaving the suppliers with not much power because there are low input costs.
  16. 16. Product
  17. 17. Price • Premium pricing • min. 10% above its competitors price • On czech market depending on size (0,25/0,33/0,35/0,47 L) and place price differs from approx. 32-70 Kč • Not often seen on sale
  18. 18. Placement • Red Bull places its product where it is convenient and easy to purchase. This includes not only grocery and convenience stores, but also night clubs, sport events, gas stations or casinos… • Part of Red Bull‘s marketing budget goes to retail stores to place Red Bull on easy to spot places • Visibility is vital aspect for Red Bull‘s marketing plan • As a result Red Bull has 43% market share in energy drinks
  19. 19. Promotion • Athlete endosment • Host major sponsor events • Sampling, environmental promotion • RedBull Media House • Concerts, Clubs, Sport events • Word of Mouth – „The Buzz“ ● 44,5 million “likes” on Facebook ● Simillar pattern on Twitter ● Over 50 million views for their project stratos video. ● Red Bull shares videos of sponsored athletes from around the world in many different sports, with millions of viewers ● Viral marketing ● 5,4 billions can sold in 2014
  20. 20. • 5,39 billion cans sold in 2014 • Sell in 166 countries • Revenues 5,04 € billion in 2014 • Viral marketing, social media, WoM • Sport events (extreme sports) • Focuses on younger generation • Premium price (10%+ more) • 1,9 billion global servings per day • Sell in more then 200 countries • Revenues 46,70 $ billion in 2014 (0,74 $ / € in 2013) • Family, association of Coca-Cola with happy moments • Sport events (traditional sports) Volume Variety Variation Visibility Low High High High High Low Low Low Coca-ColaRedBull
  21. 21. S W O T Strengths • Category leader – Red Bull has established a strong, consistent brand image globally. Red Bull is synonymous with energy drinks in many countries. • Marketing strategy – The promotional activities engaged by Red Bull through extreme sports sponsorships have helped the brand to build a strong identity and to increase consumer awareness/loyalty. • Broad geographic presence – Red Bull has a broad geographic presence, which should ensure positive long- term growth even if certain markets reach maturity. SWOT analysis
  22. 22. S W O T Weaknesses • Category limitations – In overall soft drinks, Red Bull has a limited product portfolio compared to the rising number of competitors bringing many other flavor variants and categories. • Pricing – Red Bull products are above the energy drinks average price. Consumers tend to think twice at the time of purchase. • Controversial – The relatively high caffeine and taurine content of Red Bull makes the brand highly vulnerable to regulatory controls. SWOT analysis
  23. 23. S W O T Opportunities • Emerging markets – Emerging markets represent newer geographies for Red Bull’s expansion. Accelerating the marketing and sponsorships in these markets is a wise move. • New production – Red Bull’s new production facilities in emerging countries are likely to make its retail price more competitive. The brand should also consider building production sites in Asia. • Product line extension – Offering new flavors and formats should help Red Bull to keep/improve its market shares. SWOT analysis
  24. 24. S W O T Threats • Competition – Monster represents the biggest threat as it contains natural ingredients, which seems more desirable than Red Bull for some consumers. Competition is becoming more and more dangerous in term of marketing actions (copying Red Bull). • High marketing costs – Maturity in developed markets makes promotion harder than in the past, inducing higher marketing costs. • Negative publicity – Media worldwide report Red Bull as harmful for health. Parents also state that some components can be dangerous if consumed by their teenagers (who are the product’s target audience). SWOT analysis
  25. 25. Target group, segmentation • Geographic: Czech Republic, big and medium size cities as Prague, Brno, Olomouc, Ostrava, Plzen, Liberec, Pardubice etc. • Demographic: 16 to 30 years, males, “well off” income, students, working professionals, sports enthusiasts, athlete • Psychographic: Lifestyle: Business class, working class executives, students; Personality: ambitious, open to experience; • Behavioral: Occasions: Regular, special; Benefits: Quality; User status: regular user; Usage rate: medium; Loyalty status: medium Loyal; Readiness stage: intending to buy; Attitude toward product: enthusiastic
  26. 26. Primary target group Their main target is people who attracted by extreme sports and who work hard in same time. This could be anyone who has to work hard such as a manager or a street worker or ether to study hard in university. Anyone who wants to get pushed up and would rather like to have a Red Bull than a coffee. They are 16 to 32 years, can also called as working professional. In psychographic segmentation they targeted a2, b1 and b2 socio- economic classes. In behavioral segmentation it was found that they were targeting the first time users and also their regular users. They target super markets, movie halls and even bars and restaurants to improve their visibility.
  27. 27. Secondary target group The Clubber. This category is fairly new, in recent years the people found out that Red Bull can be used as a very good mixer with alcohol. Red Bull sells now 34% of its units on premise. This category typical Red Bull drinker is dynamic and active, the gender does not play any role at all. But it is more likely that more less younger people who really like to go out fall for Red Bull. Research (PHT, 11/97 Smith Kline Beecham Energy & Sports Drinks Report) has shown that 53% of the people who drink energy/ sports drinks are within the age between 14-34 years. Moreover they found out that the main reason for purchasing energy/sports drinks were to quench thirst and give boost.
  28. 28. Communication Mix • Slogan „Red Bull gives you wings“ (European and US markets) or „Drink Red Bull when you feel sleepy or tired“ (Chinese market) in order to address the cultural differences associated with the local consumers • RedBull communication mix focuses on 4 main dimensions: 1. Event Marketing program 2. Opinion leaders program 3. Communication 4. Sampling
  29. 29. Events and experience • Sports, Culture and Art • Controlling all aspects of the event • Reinforcing the brand position • Enhancing brand visibility • Unique events are attracting media coverage
  30. 30. • Air Races • X-Fighters • RedBull Crashed Ice • Red Bull Paper Wings • Art of can • Breakdance events • Ski and snowboarding events • Spacediving • Motorsports • …
  31. 31. Sales promotion • Sponsorship of Athletes, Sport teams and Artists • Athletes use RedBull – creating awareness among audience • Marketing strategy is to search for young talented people and gradually establish long-term sponsorship and cooperation • Enhancing brand visibility
  32. 32. • F1, Rallye, Football , Sailing, Video games… • Every imaginable xtreme sport • Eva Samková and Šárka Pančochová (Snowboarding) • Tomáš Kraus (Skicross) • Jan Kubíček (Biker) • Martin Šonka (AirRace) • Maxim Hrabanec (Skateboarding) 3.4.15
  33. 33. Advertising / PR • Red Bull Media House (Replacment for PR)  Movies  Viral Marketing  Red Bulettin  Red Bull TV  Radio  Mobile app  TV spots  Web page  Social Media • Word of Mouth – creating a „Buzz“
  34. 34. Direct marketing / Personal selling • Targeting places where people need energy boost • Concerts, Parties, Festivals, Sport events, Campuses.. • Red Bull vehicles • Students becoming Red Bull band managers • In the Czech Republic are currently operating 53 students defending silver blue can on campuses.
  35. 35. Online and Social media marketing / Mobile marketing ● 44,5 million “likes” on Facebook ● Simillar pattern on Twitter ● Over 50 million views for their project stratos video. ● Red Bull shares videos of sponsored athletes from around the world in many different sports, with millions of viewers ● Viral marketing
  36. 36. Competition analysis (PRODUCT) 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 around 40czk so it is cheaper than red bull as compared to size as well. 3. Full Throttle has the same taste and ingredients as RB, but it has advantage of quantity and price 4. Big Shock- Formulated with the highest possible amount of caffeine, taurine and vitamins is a series of several years just adds the right amount of energy. Local brand of Czech Republic 5. Fakeer energy drink is made purely from natural ingredients without chemicals and preservatives. Price is similar to red bull but more Quantity 6. Semtex is from Czech Republic with cheaper price than red bull and a different taste than it.
  37. 37. Market share of Energy Drink
  38. 38. Communication message • “Learn with red bull is as well as party with red bull” or “Red Bull. Great from all sides” • Keep stay in the same segment, but cover it a bit wider. • All our promotion campaign will be concentrated around universities and students. • We’d like present our product our company not only as great event maker and synonym of “cool” but also to show students that we are social responsible. And our drink can help to achieve academic results as well as good fun. academic results as well as good fun
  39. 39. Communication tools • Students are perfect segment – they study, sport and drink 1. Social media and Viral marketing – enhancing visibility 2. Organising sport events/trips and contest among students and universities (RedBull student challenge) – using videos from events for promotion 3. Special vending machines for RedBull only at universities 4. Organising concerts and parties at campuses with special offers for RedBull 5. Organising lectures with RedBull managers, offer trips to RedBull facilities 6. Search for promising students from different fields of study and different talents by offering RedBull scholarships (Study + sport) 7. Sponsor student‘s sport teams 8. Create special mobile app – „RedBull student“ with all the features 9. Establish RedBull student magazine / radio, publish RedBull banners among universities