Red Bull Company Analysis

Executive Summary

Red Bull counts to the category of soft drinks. It is a non alcoholic stimulation drink with a totally unique formulation and effect. It gives stimulation and revitalises the body after exertion and enhances mental and physical performance. Red Bull is to be used and not drunk.

Red bull consists of two natural substances and important metabolic transmitters- the amino acid taurin and the glucuronolacton - with stimulating caffeine, vitamins and the energy provided by carbon hydrates.

So when and how was Red Bull Ltd. launched?

In the early 1970s, Dietrich Mateschitz, today's managing partner of Red Bull Ltd. got to know a so called energy drink in Asia, which Asian managers drank before meetings in order to be able to stay awake and concentrated. He brought this effective product to Austria , developed a marketing strategy and named the drink `Red Bull '. In 1987 the product was introduced in Austria . After that it has been established in 20 countries- in Europe, Asia and the USA . Red Bull has been established world-wide successfully and has reached a market leader position.

This report shall work out, how this relatively new product has been established so fast, and how Red Bull manages to stay in the position of the market leader. Analysing the target market, the marketing strategy and the positioning, this report as well shall have a look into potential future opportunities for the company.

1. Market Segmentation

1.1 Introduction

Red Bull is a non-alcoholic energy drink and therefore falls under the category of soft drinks. Soft drinks can be divided into sub-segments and one of these segments is energy and sports drinks. These can be divided again into three different categories:

* Glucose energy drinks

* Sport drinks

* High energy stimulation drinks

Since 1996 the market of soft drinks has grown by 5% and by 1997 it reached a total amount of £6.896bn, which is an equivalent of 10bn liters. Moreover we can say that the segment of energy and sports drinks represents 2.6% or £177m of the overall soft drink market. Since 1992 an increase of 64% in volume sales can be found within this very young market of energy and sports drinks.

The main differences of the three above mentioned sub-segments of soft drinks are as followed:

1.2 Glucose Energy Drinks

These drinks provide physical energy through glucose or a mixture of sugars. Originated from the Lucozade brand. These drinks do not contain any other substantial ingredients such as Lucozade Energy, Lucozade NRJ or Red Card. In 1927 they were originally positioned as a convalescence drink.

1.3 Sports drinks

Also known as isotonic drinks, replaces body fluids after sport activities or exercises. Sport drinks help to re-energize and re-hydrate the body and can be taken before, during or after exercises. That's because you should drink it in great amounts and fairly quickly, they are usually still or low carbonated. Examples for this kind of drinks are Gatorade, Isostar and Dexters.

1.4 High-energy Stimulation Drinks

These drinks have ingredients such as caffeine and taurin, which help to increase concentration, endurance, alertness and reactions. This kind of drink is not only designed for sports men, it can be used nearly from everyone who wants to get stimulate and energize mind and body. Red Bull, Flying Horse and Virgin Hi Energy belong to the category of high-energy stimulation drinks.

Red Bull created this kind of sector in 1987 and the later segment makes up £14m or 8% of the value sales of the energy and sport drink market. Glucose energy drinks represent the majority of the volume sales with £126m or 70%. Sports drinks represent £39m or 22%.

2. The Target Market

2.1 Introduction

Red Bull, who is originally from Austria where it is still produced, distributed their energy drink in over twenty countries. Countries like USA , New Zealand , South Africa , Eastern and Western Europe . So it would be not very useful to restrict the target market to the geographic areas as well as the psychographic segmentation for the targeted consumer that's because for a product like Red Bull it would be far to narrow as it cuts across lifestyles, demographics and socio-economic boundaries. So the best solution would be to set the target market as a behavioural segmentation. The reason for that decision is because in a behavioural segmentation the individual's relationship with the product and the use and benefit sought from the product. Red Bull is not just an energy drink it is primarily a utility drink to be taken against mental or physical weariness or exhaustion. It's use helps to increase endurance and heighten alertness as well as reactions and generally spoken the use of Red Bull helps to cope with the challenges of every day life, which includes work, leisure and sports. Three main stereotyped uses can be identified.

2.2 The Athlete

It is usually a person who takes his sport very serious, what means he wants to get the best out of his body. Therefore you can say that Red Bull is part of his diet and sport life. So in this case Red Bull is for him a very good and easy way to improve his endurance or speed.

2.3 The Worker

This could be anyone who has to work hard such as a manager or a street worker. Anyone who wants to get pushed up and would rather like to have a Red Bull than a coffee.

2.4 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. It is almost impossible to find the right target group, the reason for that is because of the various applications of Red Bull. Hence a clear cut categorization in age groups and socio-economics groupings is not feasible. But what we can be shore of is that the 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