Red Bull&Alcohol


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New Product Development Project
for Lifestyles and New Product Development class at Warsaw School of Economics by Aleksey Narko

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Red Bull&Alcohol

  1. 1. Aleksey Narko Lifestyles and New Product Development: NPD project Music Industry: Stars, starlets and celebrities. Introduction and products inspired by the category
  2. 2. Celebrities are special people. They don’t want to be as others, as they are the ones who are expected to set the standards. They want to seem strange, crazy and special for their fans. Music celebrities, stars and starlets are not the exception. Their fans not only like them because of their music, but also because of their look, feel and being able to set fashion and trends in the society. That is why many companies use the technique called celebrity endorsement for promotion of their brands among the potential customers. But what do celebrities really need, what are the products without which they can’t live? “Shine bright like a diamond”-these are the lyrics of Rihanna’s recent song, which proves the fact that celebrities need to stay out of the crows and shine not only at the stage. Moreover celebrities should be always in time for the meetings, recordings and concerts. Therefore the first product that was inspired by the music industry stars is Swarovski Company with its luxury jewelry products. Recently they have started producing watches and their D: LightL.E. watch worth 63000 PLN1is one of the most luxury products in a line. With its unique look, made of crystals, that are showing time and a strap of 18 carat gold, they will make any female music celebrity look brilliant! Another product connected with music industry, where starlets live an active lifestyle and travel a lot from concert to concert, sometimes even internationally, visiting several countries in a week is a suitcase. Hermes Orion luggage is a bulletproof piece of Kevlar, carbon and aluminum, which costs 13000$2, will help the star move his or her most personal belongings. Offering 1 2 Swarovski online shop Traveling Fashionista, Amazing Luggage at Ridiculous Prices– Hermès Orion for $13,000
  3. 3. exceptional functional and aesthetic feel this is a perfect offer for a person which looks for exclusivity and safety at the same time. Another product which is in high demand among music celebrities is sunglasses. When you are a star there are lots of paparazzi around with their flash lights, bright concerts with powerful illumination and finally sandy beaches and parties where celebrities can finally relax after their hard work. All the time stars should look cool and keep their eyes protected. Ray Ban Wayfarer sunglasses have become a history since 1950s. They were worn by John F. Kennedy, Audrey Hepburn and many other famous stars. Recently modified versions of RayBan Wayfarer are worn by Justin Timberlake, Katy Perry and many other music industry starlets. They keep the stars look always trendy, offering a simple design and great quality. The fans of Rock know what name “Gibson” means in the guitar music industry niche. These are guitars dating back originating from the beginning of the 20th century and being used for music creation by the major names in the history of music such as Eric Clapton, Bob Dylan, Jimi Hendrix, John Lennon3 and many others. The new Les Paul 2013 line of guitars is as magnificent, as its ancestors. This guitar was specially created for thick, snarling tone and fire-breathing output. The Gibson Les Paul Studio 2013 electric guitar is definitely one of the major choices for music celebrities associated with Rock! When celebrities are at the concert stage they should look nice, fresh and energetic. Most of the famous stars and starlets demand food and drinks to the backstage. Usually this are chips and crisps, sandwiches, different varieties of alcohol, fruits and energy drinks. Moreover one of the most popular energy drinks among stars is Red Bull. They drink it to get the necessary energy before, during and after the concert and usually mix it with alcohol, which makes them feel good, happier and less shy in front of the public4. Red Bull is in the backstage product list of Eminem, Lady 3 List of Gibson Players on Wikipedia J.Hope,MailOnline,Cheers!Drinking DOES release the feelgood factor in our brains 4
  4. 4. Gaga and many other music industry stars5. Moreover Energy Drinks are becoming more and more popular, especially among young music artists. NPD Red Bull with alcohol Red Bull with alcohol inside is the product, which I would analyze according to the new product development process by Roger A. Kerin, comprehended by Philip Kotler’s methodology. From one side, the similar products already existed at the market, such as Joose, Liquid Charge, CORE and others, however for Red Bull it will be an improvement of the existing product, adding extra features. Strategy Formulation. The strategic role of the new product will be defending the market share of Red Bull in the energetic drinks which contain alcohol market and providing cash generator for the producer. Despite the fact that most competitors of new red bull formula are not existing anymore or have changed their formula, those drinks are still very popular in USA, despite the warning letters from Food and Drug Administration in US . Despite this fact the niche still exists and Red Bull should find a way to go through the restrictions and find the best safe formula. Coming to the internally driven strategy factors Red Bull won’t be an innovator in the niche, however playing fair with the FDA rules it can get a product which will generate a lot of cash and used as a celebrity endorsement technique to increase sales among other customers. The product will be very unique and its target market at the very beginning would be musical elite and later, if the idea works fine, the normal product of alcoenergetic drink will be available for other customers. The product will be positioned as a custom-based drink at the very beginning, sold only to famous music celebrities with a price of 20$ per 0,33 can. The emphasis will be put on the exclusivity of a product. Although, at the very beginning, the company won’t be able to get visible increase in profits, as the campaign will be mostly focused on quality and exclusivity of a product, I a longer run, after being promoted by the stars, the mass edition will be a great success among the public, such as fans and usual red bull buyers. Coming to idea generation, I was looking at the potential customer needs. In my case these are musical artists, which need lots of energy during the concerts, repetitions and recordings and at the same time feel good. They prefer custom products to regular ones, those that nobody else has. The product concept will be as follows: the aluminum can of red bull, customized according to the celebrity needs and wants. The last statement means that it will be a limited edition of energy drinks with alcohol for celebrities with their pictures, featuring 5 Business Insider. Here Are The Ridiculous Things Celebrities Demand Backstage.
  5. 5. their names and red bull logo. By doing this the company can increase the loyalty of the music stars and therefore increase the interest among the usual customers. The idea screening process is an inevitable step of checking if it is real to put the product into the market of unique and elite goods or it will just stay as a concept without realization. Coming to the idea of customized energy drink with alcohol, which is only available to music celebrities, the product is representing something completely new at the market. The idea of such a product is unique and hasn’t been implemented before. The Red Bull new product idea offers two features that differentiate it from competition. The first one is that the drink contains alcohol and the second one is that the product will be customized depending on the client. Therefore, from my point of view the idea will be successful. Coming to the business analysis stage, the most important factors to be considered are demand, cost, sales and profitability. The new Red Bull drink is expected to be in high demand among the music stars who seek custom based goods and feeling of happiness and energy during the concerts, when they are in front of several hundred or thousand people. Due to the fact that Red Bull is a very popular drink among music stars the sales among this niche customers is projected to boom since the launch of the new drink. Cost of one can, as mentioned above will be 20$ for a small can of 0,33l and 25$ for 0,5l. At the very beginning, while the product is launched as a custom-based good only for music celebrities the profitability will be low, as there will be no possibility of economies of scale as the number of celebrity customers would be still very limited, however after being promoted by the stars during their public appeals people would have a great interest in the new drink, and a new line of products for the major public will be sold and is expected to bring enormous profits, leading to satisfying the company’s objective, being a cash generator, in the longer run. After business analysis goes the process of actual development. During this stage the new product of Red Bull will be tested. The safety tests will consider the amounts of caffeine that are safe to be mixed with alcohol without causing problems to health. The existing Red Bull drinks contain around 80 mg of caffeine, which is less than a cup of coffee (100mg)6, however mixing with alcohol, which can increase the effect, can bring different results and can show a different outcome. During this stage it will be researched if the planned strategy of marketing the product through particular celebrities (Eminem and Lady Gaga) and later on starting selling the product to the other groups of celebrities would bring success, big enough to sell the product to the mass market later on. We will also survey the people representing the mass market to get the view of what they think the new product should taste and look like 6 According to Consumer Reports. Available from:
  6. 6. and what is their expected price for this type of new drink. Based on this information we will set the goals for sales and profits of the Red Bull with alcohol. The last and the most important stage of actual product development will be getting the government and food organizations’ approval for production, which, according to US and EU market observations will be a hard task. In some of the US states and in some parts of Europe energy drinks with alcohol are prohibited7, however there is always space to move for Red Bull and look at the holes in law and upgrading the product to make it according to the standards. The next stage of New Product Development is the process of market testing when Red Bull drink will be implemented into the real life scenario. First stage of the process will be spreading the word around the music celebrity group that the new product is coming. Later on several ambassadors among the most famous and active music celebrities will be found to taste the samples of the new drink. The cans will be designed according to their tastes and the first samples will be given to try to Lady Gaga and Eminem. We will try to get their feedback about the new product and use their ideas and taste preferences in developing the optimal product with optimal percentage of alcohol, sugar and caffeine. Later on, based on the product trials of our stars we will spread the product to other celebrities, constantly upgrading the taste and design of the can to reach equilibrium. At the first stage the product will be given for free to a limited number of celebrities in exchange for their feedback.Hopefully it will also create a feeling of “process control”, while the celebrities will feel that they are developing the totally new product by themselves, which may lead to even bigger interest among the niche customers. Later the product will start to be sold to other music celebrities. Depending on this stage the company will figure out, whether to develop the product further and start selling it to the mass customer or not. The last stage of NPD process for Red Bull also will be commercialization. During this stage Red Bull will finally launch a product. It will be done at the beginning of summer, when there is a strong increase in sales and demand after winter season. During this stage the product will be spread at the major celebrity meeting places, such as clubs, music award ceremonies and other places, often visited by the stars. During this stage further feedback from the stars will be collected in order to develop the product and make it as well as it can be appealing to the tastes of the artists. It will be a late entry, as we have already observed the performance of the competitors that are or were at the market and disappeared or changed the formulas due to strict regulations. This stage is very important to plan the future of the new Red Bull drink as well as checking the performance of marketing and research results in 7 Newcastle Herald. Call for energy drinks ban. Available from:
  7. 7. order to improve revenues in the mass market.