Introduction
For any business to perform well in the contemporary, highly competitive economic environment, it is essential to employ a strong and reliable marketing strategy enabling the organization to reach customers in the most efficient way. As a function of business, marketing is a set of methods that allow for organizational performance via customer relations. Indeed, according to Kotler and Armstrong (2021), “the twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction” (p. 29).
Thus, it is imperative for a company striving for maintained success to use and develop a reliable marketing strategy throughout the complex areas of business processes. The company selected for this marketing analysis is Red Bull, which is a brand with a global market presence in the beverage industry. The company’s solid market share despite a relatively limited range of products serves as a rationale for analyzing this particular company. The analysis of marketing is designed to identify strong features in Red Bull’s production, pricing, promotion, distribution, and market segmentation approaches, as well as to detect possible weaknesses and areas for improvement.
Company Overview
Red Bull is a large international energy drink company with headquarters in Austria. The company was founded by Dietrich Mateschitz as a functional drink company for producing and selling energizing beverages. The company is a pioneer in the launching of an energy drink product as a unique product category (“Company,” 2021). Using a meticulous advertising campaign and integrating sports and extreme events into its public image, this energy drink brand has become a well-known company with commonly purchased products available from many stores worldwide. Red Bull’s presence in the market is reflected in the numerical characteristics of its market share and sales.
In particular, as the official website of the organization demonstrates, “in 2020, 7.9 billion cans of Red Bull were sold worldwide” (“Company,” 2021, para. 6). As for the market share, a very distinctive indicator of its consistent and growing success is its dominance in the United States energy beverage market, almost one-quarter of which belonged to Red Bull in 2020 (“Energy drink market share in the US in 2021,” 2021). Thus, the company occupies a leading place among its competitors in the energy beverage industry.
It is through sponsorship that Red Bull achieves a significant market presence and competitive advantage across countries. According to Kunz et al. (2016), “Red Bull has been a pioneer in sport-related communications in general and branded entertainment in particular” with the practice of sports entrepreneurship within the company’s communication strategies (p. 9). Consistent with its strategy toward sports and entertainment as tools for company development, the company’s mission and vision are implemented in performance. In particular, the company has formulated its mission statement as “giving wiiings to people and ideas” (“Company,” 2021, para. 1).
This statement implies that the products that the company offers are aimed at inspiring and boosting people’s energy for better accomplishments and more creative and fulfilling lives. The vision of the organization aligns with its mission statement and holds that the company works on the continuous improvement of the value of its products to enhance consumer experiences and ensure exceptional service quality. The culture, mission, and vision of Red Bull have been developed and implemented through deliberate performance throughout almost four decades of company history.
Company History and Activities
The Red Bull company’s history demonstrates a steady development of the brand and its growth on a global scale. According to the official website of Red Bull, the company was launched on April 1, 1987, by its founder Dietrich Mateschitz presenting a novel marketing concept and a revolutionary category of beverages, which is energy drinks (“Company,” 2021). In 1987, the first energy drinks were sold and the next year, in 1988, the first Red Bull-sponsored sporting event was held, which has become a common strategy for the company’s product promotion (“34 years of giving wiiings,” 2021).
Being originated as an Austrian brand, Red Bull started to expand beyond the borders of its country of origin and has started sales in other countries since 1994, when the first can of this energy drink was sold in Germany (“34 years of giving wiiings,” 2021). Within the next decade, Red Bull was launched in the United Kingdom, France, and many other countries. At present, the company holds multiple sporting events and sells its products globally.
The company operates primarily as an energy drink producer, as well as sponsors sporting events and entertainment industries. According to the statistical data on the company’s market performance, its value is estimated at approximately 12 billion US dollars as per the year 2020 (“Energy drink market share in the US in 2021,” 2021). Importantly, as an outcome of its gradual and consistent development in a newly created niche of products, the brand’s “clever television advertising also helped Red Bull become a household name” (“Energy drink market share in the US in 2021,” 2021, para. 3).
Thus, the company’s operations and successful performance supported by a meticulous and unique marketing strategy are reflected in the company’s activities.
Red Bull engages in several activities within its business processes. Among the marketing offerings, which include products, services, and experiences, Red Bull offers its consumers products and experiences through the sales of energy beverages and arranging sporting events (Kotler & Armstrong, 2021). According to Kunz et al. (2016), Red Bull’s portfolio involves pre-production activities, which are particularly based on sporting events. Indeed, “Red Bull Media House, which started print, television, online and film production in 2007, operates in Europe and the USA” (Kunz et al., 2016, p. 11).
For example, Red Bull owns several teams in extreme sports, as well as continuously sponsors the Formula 1 car racing competitions. Overall, “Red Bull produces multiple media formats related to sport (texts, pictures, audios, broadcasts, videos, films) in order to distribute them across its own and others’ media platforms ⌠to reach consumers (Kunz et al., 2016, p. 10). It has a print magazine, a TV program, extreme sports events, and sponsorship programs within the portfolio of its activities.
Besides the pre-production activities, the production processes at Red Bull include the creation and implementation of energy drink formulas and the actual production of the cans of Red Bull drinks. The production activities are being executed within the range of the designed products, which are limited to different flavors of energy drinks. The post-production activities are aimed at the promotion of the brand for the increased market share and sales of produced items. The overall company performance of Red Bull is highly dependent on the marketing strategies, which are particularly successful due to the targeted nature and access to a broad range of communication channels. The consecutive sections of the report will be devoted to the analysis of the marketing mix of Red Bull.
Red Bull’s Marketing Mix
Marketing strategy plays a significant and even decisive role in the ability of a company to gain a competitive advantage. Moreover, for a company performing at a global level, the choice of marketing strategies predetermines the success of competitive strategies and profit-making in a long-term perspective. Since Red Bull is a large company with international operations that employ a global marketing strategy to expand its opportunities for increased sales of its products.
According to Kotler and Armstrong (2021), “to succeed in today’s competitive marketplace, companies must be customer-centered,” which is true for Red Bull, which puts customer experience at the top priority list among its values (p. 74). Indeed, the company utilizes a customer value-driven marketing strategy, which is based on meticulous market segmentation and targeting of the primary audience.
In order to analyze the company’s marketing strategy and identify its advantages and possible areas for improvement, one might apply a marketing mix model. As stated by Kotler and Armstrong (2021), “the marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market” (p. 78). A 4-Ps marketing mix allows for investigating the performance of the company in four different areas, which are essential for organizational operations. In particular, these four areas include product mix, price mix, promotion mix, and place or distribution mix. Within these four categories, the company’s strategies and decision-making are discussed, analyzed, and evaluated to identify the quality of performance and alignment with the overall mission, vision, and strategy of the business in general.
Product Mix
The product mix is an essential element in a company’s marketing strategy since it constitutes the building blocks of its overall presence in the market. According to Kotler and Armstrong (2021), “product means the goods-and-services combination the company offers to the target market” (p. 78). Since Red Bull is a company that produces beverages, energy drinks in particular, its product mix is rather simple and straightforward. However, it is relevant to note that the company has had a revolutionizing effect on the overall beverage industry by devoting its production efforts to energy drink development.
Red Bull is a “functional drink and is used during sporting events and other activities;” it helps people improve their concentration and alertness when they are stressed or tired” (Gafoor & Monica, 2018, p. 12). Such a positioning of the product allows for claiming its unique qualities as a non-alcoholic vitaminized substance that improves human performance and self-esteem. This idea is reflected in the slogan ‘Red Bull gives you wings,’ which is meant to inspire and promote activity (“Company,” 2021). Thus, the product of Red Bull is a strong constituent of the marketing mix.
The main feature of Red Bull energy drinks is in their vitalizing effect on the human body, which is important for consumers who seek to overcome tiredness. The formula of the energy beverages is based on the ingredients that are capable of providing such a quality to the drinks. In particular, as the official website of the company illustrates, the immediate ingredient of the drinks are caffeine, taurine, B-group vitamins, and water (“Red Bull energy drink products,” 2021).
Caffeine is used for its stimulating effect on the body; taurine is “an amino acid, naturally occurring in the human body and present in the daily diet. It is involved in a wide range of biological processes” (“Red Bull energy drink products,” 2021, para. 3). Vitamins are included to ensure the health benefits of the energy drinks and to address the concerns of the consumers in relation to the possible harm of energy beverage consumption.
Importantly, within the product range, despite the limited amount of products Red Bull offers to its customers, the variety of flavors is aimed at meeting the demands and preferences of a multitude of consumers. The company has its energy drinks with such flavors as kiwi, blueberry, cranberry, tropical fruit, and coconut (“Red Bull energy drink products,” 2021). Among the products available to consumers from the company, there are such different editions as Red Bull Energy Drink, Red Bull Winter Edition, Red Bull Yellow Edition, Red Bull Sugarfree, and others (“Red Bull energy drink products,” 2021).
In addition, the company produces Red Bull Cola, Red Bull Energy Shot, and other particular editions of their main product to address the needs and the variety of taste preferences of consumers (Gafoor & Monica, 2018). Thus, the variety of flavors in a single product allows for reaching different audiences of the target customers through the match to their taste preferences.
Price Mix
Another important element in the marketing mix of a company is the price. According to Kotler and Armstrong (2021), price is the amount of money customers must pay to obtain the product” (p. 78). Within its marketing strategy, the company has to take actions to “adjust prices for the current competitive and economic situations and bring them into line with the buyer’s perception of the car’s value” (Kotler & Armstrong, 2021, p. 78).
In the case of Red Bull, the prices for their products are considered high in comparison to other beverages in the non-energy drink industry (Gafoor & Monica, 2018). Commonly, the prices that prevail in the market depend on the competition between the companies. Lower prices and maintained quality of products help organizations gain a larger customer base.
However, as it has been stated in the company overview, Red Bull is the first company to launch a new category of beverages and start an industry of energy drinks. Moreover, the company sells the largest number of cans of the drink among its competitors (“Company,” 2021; Gafoor & Monica, 2018). Such a unique position as a leader in the market allows Red Bull to set the prices high and ensure that the demand for its products will remain stable. Thus, Red Bull employs a stable pricing strategy of maintaining their products in the premium segment to ensure value and quality based on the brand image and positive reputation.
Promotion Mix
The third P in the marketing mix is represented by the promotion strategies. According to Kotler and Armstrong (2021), promotion “refers to activities that communicate the merits of the product and persuade target customers to buy it” (p. 78). Given the involvement of Red Bull in sporting events, competitions, sponsorship, and media, the promotion strategy is very strong and yields substantial results for the organization’s stable revenue generation.
The brand and its products are being promoted through a variety of communication channels. In particular, the company uses its regular sponsorship of the Formula 1 team, through which it promotes its products and values (Kunz et al., 2016). Moreover, using such viral communication channels as social media pages, advertisements on TV, radio, the Internet, and other media, Red Bull ensures that it reaches its target market in the most efficient way.
Apart from the means of communication available to most of its competitors, Red Bull utilizes a proactive promotional strategy, which is based on the specific events and programs launched by the company. For example, there is a list of promoters for Red Bull, which include Red Bull Racing, Red Bull Stratus, Red Bull Paper Wings, Red Bull X Alps, Red Bull Crashed Ice, and Red Bull X Fighters (Gafoor & Monica, 2018). In addition, Red Bull publishes its Red Bulletin, which is a magazine on sports events, has its application for smartphones, its own TV, and other promotional techniques that help the business grow and strive.
Place/Distribution Mix
The final P in the marketing mix is the place, which implies the distribution strategy. This element in the marketing mix “includes company activities that make the product available to target consumers” (Kotler & Armstrong, 2021, p. 78). This aspect of marketing includes the places where a company distributes its products and their relevance to the target population. The distribution of the product plays an important role in the obtainment of company revenues, reaching consumers, and maintaining a competitive advantage.
In the case of Red Bull, the distribution occurs through conventional means in locations and facilities where the target population would normally consume or consider purchasing energy drinks. Commonly, as “retail distribution of energy drinks and shots continues to expand,” these products are “accessible at nearly any retail outlet from major grocery outlets to soothe shops and dollar stores to sporting goods-stores” (Gafoor & Monica, 2018, p. 5).
Normally, Red Bull has its products displayed in grocery stores, convenience stores, supermarkets, gas stations, and other locations. Importantly, “an increasingly competitive market for “energy-boosting” products” requires competing with the rivals by means of creative advertisement and designs to attract attention (Gafoor & Monica, 2018, p. 5). For that matter, Red Bull usually displays its cans of energy drinks in special Red Bull refrigerators in the stores to differentiate from the competitors.
Red Bull’s Segmentation Strategy
When implementing a marketing strategy to practice, a company strives to integrate the elements in its marketing mix in a manner that serves the needs and meets the values of the target audience of consumers. However, to understand how to apply those elements of the marketing mix in the most effective and appealing way, the organization should identify which category of the population is most likely to purchase its products.
In this case, the process of market segmentation is essential. According to Kotler and Armstrong (2021), Market segmentation implies “dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs” (p. 75). Thus, using an abundance of segmentation techniques based on different factors, a company might obtain several segments of the target market to direct particular promotional techniques to serve their specific needs.
There exist several factors that predetermine the analysis of the population and its segmentation for the purposes of targeted marketing. In particular, Kotler and Armstrong identify “geographic, demographic, psychographic, and behavioral factors” as the most decisive and informative ones (p. 75).
Red Bull uses all these four factors to segment its market and reach them through its advertising campaigns and through the product range. As it is informed by the company’s website statement, “Red Bull Energy Drink is appreciated worldwide by top athletes, busy professionals, university students and travellers on long journeys” (“Red Bull energy drink products,” 2021, para. 1). Given the spectrum of the product variations available to the customers from the brand, Red Bull utilizes a targeted marketing strategy that is based on a well-developed segmentation strategy of its market.
As for the demographic segmentation, Red Bull integrates such factors as gender and age in their market segmentation strategy. In particular, according to Brownbill et al. (2018), “young people aged 12 to 19 are the largest consumers of SSBs8-10, and the marketing of SSBs to this age group is ubiquitous” (p. 354).
Moreover, as the analysis of the promotional and advertising content shows, the theme of masculinity, extreme sports, endurance, and power persists, young men are the target market of Red Bull (Brownbill et al., 2018). This observation aligns with the standard features of segmentation for energy drinks. According to research, “the primary target for the majority of energy drink companies is young people and male teenagers mostly in the 20-s” (Gafoor & Monica, 2018, p. 2). Although this market segment seems small, it actively engages in loyal relations with the brand and constitutes a stable consumer base for the Red Bull Company.
However, despite the dominance of young people in the target market, the company is likely to target adults as well. The marketing specialists predict that the sales in energy drinks will grow based on the increase of consumption by adults in addition to young people (Gafoor & Monica, 2018). The percentage of the consumers is represented as follows: “5 percent of adults consume energy drinks 5 – 7 times per month, and less than 2 percent consume energy drinks ten or more times (Gafoor & Monica, 2018, p. 5). Thus, the demographic segmentation strategy allows for allocating necessary efforts to attract consumers that are likely to use Red Bull’s products.
Geographic segmentation is less relevant to the process of Red Bull’s selection of the target population in comparison to the demographic factor. Indeed, the company enjoys a global presence and has its product placed across multiple countries of the world, which allows for reaching prospective consumers worldwide. Nonetheless, it is reasonable to state that since Red Bull is aimed at delivering products for people leading an active life, sportsmen, and active youth, urban areas are more likely to be pursued within its segmentation strategy.
While geographic and demographic factors played a relatively similar role in segmentation in terms of product differentiation for different categories of consumers, behavioral factor requires more product differentiation. Therefore, using the behavioral factor, including the level of loyalty and the frequency of using the company products, the company differentiates its drinks’ formula to reach the target population. In particular, classic Red Bull is targeted at loyal and frequent consumers, while Red Bull Sugar Free and Red Bull Zero are aimed at new consumers and those who do not drink energy beverages on a regular basis.
Finally, the psychographic factor for segmentation consists of the lifestyle considerations and the socio-economic status of the population. As it has been addressed within the pricing mix discussion, the company positions itself as a premium-priced product, which is why the socio-economic class of its loyal consumers includes middle- and high-income households. Indeed, the primary promotional strategy and the goals of the company are based on meeting the needs of a particular audience. It includes sportsmen and people who travel and enjoy extreme activities (“Company,” 2021).
Thus, the differences between the drinks’ tastes and formulas depend on the lifestyle of the target consumers. In particular, for those individuals who are involved in extreme sports or are workaholics and need a significant boost in energy, a classic Red Bull energy drink is most applicable. As for the individuals with a more considerate and healthy lifestyle, they might prefer sugar-free drinks with a mild impact on health. Thus, the market segmentation strategy used by Red Bull shows that the company’s activities are aimed at reaching this population in a way that meets the consumers’ needs and values and business revenue growth.
Summary of Report and Recommendations
In summation, the report has been compiled on the basis of the analysis of Red Bull’s mission, vision, history, activities, marketing mix, and segmentation strategy. The analysis has shown that the company has been a pioneer and remains a leader in the niche of energy drinks. From the perspective of its strengths, Red Bull has a strong competitive advantage over its rivals, has a global market presence, employs a substantial and diverse promotion strategy, influential pricing approach, and reliable distribution channels.
Moreover, the company has a solid segmentation strategy which allows for identifying the particularities of the target market and employing a strong targeted marketing strategy. However, there are potentially weak elements in the marketing mix, which are primarily based on the product. The identified weakness should be addressed using the recommended approaches listed below.
Given Red Bull’s confident occupation of the niche of energy drinks and its pioneering performance in the industry with a significant competitive advantage, it is relevant for the company to maintain its marketing strategy of market penetration. In particular, the organization should ensure “company growth by increasing sales of current products to current market segments without changing the product” (Kotler & Armstrong, 2021, p. 71).
However, to increase the loyalty of existing customers and expand the target audience by attracting new populations, Red Bull might consider a strategy of product development to grow by “offering modified or new products to current market segments” (Kotler & Armstrong, 2021, p. 71). Indeed, since the product line is limited to mere flavor and sugar content variation, the consumer base is limited. The niche of energy drinks is considered unhealthy, which is why many potential consumers abstain from trying it. Therefore, the company might consider integrating alternative drinks into its portfolio to enhance its sustainable market presence and increase its customer base. In such a manner, the company will be able to maintain its competitive advantage and ensure the continuous growth of its revenues.
References
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