Red Bull Analysis | A Multinational Company

rosy-cheeked bull through Analysis A Multinational Comp e precise(prenominal)Executive Summary trigger-happy turd has turned itself into a multinational caller- step up that offers a produce that enhances the mind and the body. Their rule of managing their internal and external situation and circumstances has become an interesting progeny for m some(prenominal). Thus we conducted both(prenominal)(prenominal) analysis to look at personnel casualty slovens strategies, and especially the international strategies. The external analysis was a mix of positive and disconfirming observations, for example they claim the advantage of the customer faithfulness and the cast upion personify, and however, they atomic number 18 in the territory of major players in the swallow pains which do them at endangerment. Nevertheless, the assiduity analysis and peer review helped to shed somewhat light on florid diddlysquats external report, where we put up see a substantial gro wth in the constancy and blushful bell ringer headship in the free talent sop up commercialise place.Through the internal analysis we observed that cherry crap leads a pro sprightly approach towards their business by adopting schematic and unconventional systems to expand their horizons. Through the value chain model, we observed that inflamed damns internal selling and sales strategies have shown ground nameing conquest on international scale. Moreover, the HR has accomplished to attract the right movedidates to hand the requi trigger-happy goals, simple beca ingestion they atomic number 18 boylike and k directly the young keister grocery store exactly. The generic outline analysis of exit bullshit has presented going prick a differentiated produce within its market place and a focused-differentiated point of intersection within the beverages diligence. The norm is that whatsoever kind of differentiated products cross few selected customers, howeve r, bolshy cocksucker did become selective but became massively popular among the youth, and hence, they introduce over 1 one million million abides each twelvemonth.The beat analysis they was conducted on crimson bell ringer has crystallized some Weaknesses and threats. and, the Strengths and Opportunities outmatch the downside of bolshie copper muchover, the Weaknesses and Threats that blushful tinkers damn faces can easily be managed and fixed by rubor dump.We can safely conclude that going diddlyshit has adopted the right soft touch market and the right method to communicate with the target market. More interestingly, we can see that release counterfeit has adopted a product and especially a marketing strategy that can easily be copied to different counties and culture. In some other words, it has communicate the language of the youth.History BackgroundHistoryA red ness is not al elbow rooms necessary to attract a bull towards you present tense it has become available in a can in the hypermarket, supermarket, grocery store and the club near you. This all has become possible thanks to a visionary man called f argonrich Mateschitz, who is the discoverer, modifier, and introducer of the internationally known tipsinessing, vehement damn. It all started in Hong Kong, in 1982, when Mateschitz was at the hotel bar sipping a famous topical anaesthetic health tonic. While he was intoxicationing he had a vision of marketing an Asian take up in the western countries. About two old age from the vision, the Austrian Mateschitz teamed up with a Thai business man called Chaleo Yoovidhya to produce this product. Together they fiddled with the product, to take out the syrup nature of the product and admit it fizzy. Canned in a silver and blue thistle container, with a grade the shows two red bulls breathing out head-to-head against each other, hence the grease was named cerise bullshit. (Red dickhead Founder Rides Wave of Succe ss)In 1987, the product was hence taken to Austria where it had its first groundbreaking success in no time. In started going international in 1992, when they entered Hungary. Red Bull is currently expeditious in over c countries, energizing the population and creating emulation as they go along. One source mentioned that on that point be over one hundred fifty might swallowing prints, however, all inferior to the mighty Red Bull (A REFRESHED CREW IS AN EFFICIENT CREW). With over 1 billion cans modify each year, Red Bull controls 70% of the worlds market piece of ground of pushing swallows.BackgroundRed Bull became robust when they acquired a senior high school whole step drink that is precisely made in Austria. Further more(prenominal), all of its ingredients are synthetically made in pharmaceutical companies to grantee high character reference and safety. Moreover, collect to the ingredients of the product, it is said that Red bull (Red Bull FAQ)Improves per formanceImproves concentration and reception speedImproves vigilanceImproves emotional shapeStimulates metabolismHowever, the briny footing for the success of Red Bull is in its advertising style. Red Bull t demises to spend in truth little on conventional or traditional marketing tools, the manages of TV and Print ads. Their marketing strategy is commonly out of the box and creative. Red Bull tends to be more active in sponsoring extreme floating policy and enceinte away samples in local pointts. Due to the fact that Mateschitz has been involved in Formula One hasten for more than a decade, he used the events to draw attention to his brand. In checkition, he sponsored the World Stunt Awards, an annual fund-raiser to help injured hinder workers (Red Bull Founder Rides Wave of Success). Moreover, some observers say that Red Bull uses the anti-branding method of advertising, where they broke the usual method of marketing and branding. Actually what they did was use the bu zz marketing strategy or better known as word of mouth. With this strategy, they associated their brand with the youth culture and extreme and adventure- associate sports, much(prenominal) as motor sports, mountain biking, snowboarding and dance music. Thus they targeted their brand directly to lot from Generation Y, the so-called millennials muckle born after 1981 who were believed to be misanthropic of traditional marketing strategies (A Look at a Key bear of Red Bulls Business).The Buzz over Red Bull among the youth and their thermionic vacuum tube attitude has created Red Bulls reputation as the drink within that community. That is why Red Bull continues to use Viral marketing internationally, where the company would quite an restrict the supply of Red Bull and not advertise it, expecting that growth numbers of target consumers to catch the bug and its reputation would spreads. Through this strategy, Red Bull has successfully captured 70% of the 1.6 billion market (A Loo k at a Key Feature of Red Bulls Business).External Analysis gatekeeper Five Force AnalysisThe external analysis is one of the roughly important steps that a company should take to make to its goals and objectives. Moreover, for winning this step we should be aware of the essence of formulating agonistic strategy which is related to company and its external environment. Also, we know that the relevant environment is very unsubtle encompassing social as come up as economic forces, the differentiate aspect of the firms environment is the perseverance or industries in which it competes. In addition, fetching cautiousness of industry grammatical construction which has a strong influence in determining the competitive rules is very important because it includes the game as well as the strategies authorizationly available to the firm. Forces outside the industry are important primarily in a relative sense since outside forces usually affect all firms in the industry, the key is found in the differing abilities of firms to apportion with them. Michael porter has offered a unique framework for make an easy way to analyze. Michael Porters framework for industry analysis is described in his book rivalrous Strategy (1980). In this book Porter claims that at that place are essentially five forces which determine the underlying structure of an industry.Rivalry among active competitors, buyers, suppliers, potential entrants into the business and Threat of substitute products are those five forces which can have positive or negative effects on industry structure by making the industry more or less competitive. voltage EntrantsIn this field the potential competitors of red bull are diffused drinks companies, which can produce nil drink with out adding bubbles. If the barriers of presentation are high, it is difficult for potential competitors to enter the market. Three principal(prenominal) sources of barriers to naked as a jaybird entry brand loyalty, a bsolute speak to advantages, and economies of scale.Brand loyaltyDue to the through seek, innovation in creating advanced push button drinks, congruous and profession advertisement, retentiveness many special events and sponsorships, and having high type for its products makes Red Bull as well known brand with a strong brand loyalty which is a barrier for any spick-and-span entrant to enter the get-up-and-go drink industry to compete with it.Cost advantage fit in to the Michael Porter, ordinarily cost disadvantage is a bounteous barrier for companies to enter an industry as saucy entrants because it can be cost advantage for existing companies in that industry. Also, companies with the help of cost advantages can compete and beat their competitors very easily because usually it is difficult for new entrants to match their companies with the lower cost structure. Therefore, Red Bull because of Red Bulls superior production and operation memberes, and their go in the bu tton drink industry, and control of its inputs according to their experience in producing red bull drinks, benefit the cost advantages with keeping its quality in the high direct. Although at that place are many muscle drinks existing in the industry with the lower price rather than Red Bull, as quality aspect they have not cost advantages both in quality and price, so Red Bull is steps ahead from its competitors in this case.client throwing costIn food and beverage industry there is no switching cost for costumers with considering the level of quality, therefore it can be considered as threat for existing companies in this industry. In this case, Red Bull is not exceptional, so they need to keep their quality at the aforementioned(prenominal) level to not loosing their market dispense by coming new entrants because it is real threat for them.Government regulationsOne of big issues and perpetually concerns for companies which like to go internationally is government regulatio n, also, in this case some atomic number 63 countries have problem with selling Red Bull and have assay to ban it. They claim that Red Bull was the cause of death of populate in those countries. France, Belgium, and Sweden ban using the mixture of Red Bull and alcoholic beverage. So, it can be a threat for them in taking the market share and having a bad doubling for their brand. . (French Ban on Red Bull (drink) Upheld By European Court)Intensity of RivalryRivalry in some industries is characterized by such phrases as warlike, bitter, or cutthroat, whereas in other industries it is termed elegant or gentlemanly. Energy drink industry has an intense rivalry because of a number of interacting structural factors pains competitive structureDue to the competition in the energy drink market, Red Bull focuses on non-price competitive weapon like religious offering exhilarating events, high quality products and sponsorship. In contrast with other competitors Red Bull attract more cos tumers to its company by growth in 45%marketshare. Accordingly Red Bull has a major influence on its competitors performance in the industry because Red Bull is one of the pioneers in energy drink industry and many companies try to obey and consider Red Bull as benchmark.Industry commandIn the energy drink industry, because of the various proper advertisements to encourage people to use and drink energy drinks (giving the image that people can fly) the demand for drinks is change magnitude. Thus, this is a good point for the company because there are lots of opportunities for every company to fill the current demand and rivalry tend to reduce in the industry, also there is place for everyone to jump in enter the industry (growing stage), and the profit of the company is going to increase which is a goal that every company is seeking it.BuyersHaving strong and stable costumers are suppliers and producers concerns, producers like to have costumers with coarse quantity level of or dering and stable financial status basically in energy drink industry especially Red Bull costumers (buyers) are wholesalers and big retailers. These buyers buy the energy drinks through the company or its representatives, and resell them to supermarket, bars, restaurants and end users. Red Bull faces buyers with high level of dicker business leader, and it is real risk for Red Bull. Main reasons for this high bargaining power of buyers in this case are the switching costs in the energy drink industry are very low. So, Red Bull buyers can switch from Red Bull to other energy drink companies which produce it with lower prices without any difficulty. Also, in most cases energy drink buyers (retailers and wholesalers) purchase products in large quantities, and it is obvious that the more buying in quantity, the more bargaining power the buyer has. So they can use their power to reduce the cost of energy drinks.SuppliersThe bargaining power of suppliers is the same story like bargainin g power of buyers but from other side. Red Bull company has both kind of suppliers as bargaining power, some very strong and others weak, so they can balance between them. For instance, the supplier of Glucuronolactone is Glaxo Smithkline Company. Red Bull energy drink buys their Glucurnopolacton inputs from this company. So the bargaining power of this supplier is very high on Red Bull. But the other ingredients are assembled from several crushed suppliers, and Red Bull has the bargaining power on them. Also, Red Bull has many channels and substitutes suppliers for its normal raw materials, so they can switch from any supplier to cheaper and more flexible one.SubstitutesAll producers always load down the concern of substitute products for their products and always looking for ways to protect and pull round themselves from this phenomenon. Energy drink industry isnt an exception, so players in this industry always try to keep level of quality high, convenience price and other thi ng which may make costumers more satisfy. Coffee industry can be a threat for energy drinks because of the existing caffeine in coffee and it can be a tendinous potential product substitute for energy drink. Therefore, Red bull must take care of its pricing strategy and product quality to keep its costumers and satisfy them more day by day which they were successful due to reports not only Red Bull could protect its products against other substitutes but also, they have change magnitude in their market share in US market by 45% .Industry Analysis and Peer critical reviewIndustry Characteristics potable industry is divided into many categories such as alcoholic vs. non alcoholic, (hard vs. prosperous drinks) and within frail drinks keep mum there is other segmentation such as carbonated soft drink (CSD) and non carbonated soft drink. carbonate Energy Drinks account for less than half of the total volume. This protrude is firmly skewed however by the popularity of nonoperatio nal brands in Asia (Canadean Press release)According to Beverage Digest, in 2004 the U.S. non-alcoholic refreshment market totaled 14 billion cases (192-oz). Carbonated soft drinks made up 73.1% of the total with non-carbonated products comprising 13.7% and packaged bottled piddle accounting for 13.2%. the Statesns spent roughly $92.9 billion annually on refreshment beverages.Energy drink is a relatively new product introduced in 80s and has been growing noticeably with the market more than doubling in size since 1998 (Canadean Press release). The following chart is evidence of this inevitable growth and the tenderness of this growth for drink manufacturer. The industry has been experiencing a significant growth and still growing at the speed that draws the big players in soft like Coca Cola drink to enter to this high margin business. nutrient and beverage market are critical enough that out of 100 new product development 90 NPD fails. The failure results from a curt interpret ation of consumers trend and translation of those to opportunities. Austrian company, Red Bull, as a pioneer trend settler has made its fortune from their unique strategies in advertising, marketing and other products characteristics such as Packaging, Flavor, color and Product claim. international consumptionAccording to Beverage digest report, Asia is the largest lede market in consumption of energy drinks followed by Western Europe and northeast America as the second and trio markets.Asia has been loosing some of 20% of its market share is past 6 years. However, this decline has been offset by the second and third market in the main due to the steady growth in market of carbonated E.D in North America. North American market is now almost 40 times greater than it was in 1998Peer ReviewIn North America today more than 200 energy drinks existed in US. According to bevNET.com, after a rigorous marketing search the best energy drinks are AMP by Pepsi Cola, KMX Red by Coca-Cola Co mpany Red Bull by Red Bull North America.Red Bulls market dominance seems as trued. No other competitors have every the distribution channels or, more importantly, the posture of rebellious infamy to be considered real threats.Year 2001, in UK energy drinks market 21 new drinks have been introduced that would have force the red bull into a competition. However, red bull can still enjoy world a market leader.In the following table there are representations of top 14 non- alcoholic markets where some of them are in the specific market of the energy drinks.Coca-Cola(Juice, Soft Drinks, Water) ($21bn)Suntory(Water, Soft Drinks) ($4.4bn)Nestle(Coffee, Soft Drinks, Water) ($19bn)Starbucks(Coffee) ($4.0bn)PepsiCo(Juice, Soft Drinks, Water) ($10bn)Sara Lee(Coffee) ($2.7bn)Kraft Foods(Coffee, Powdered Drinks) ($4.6bn)Tchibo(Coffee) ($2.7bn)Unilever(Tea ) ($4.5bn)Red Bull(Energy Drinks) ($1.6bn)Cadbury Schweppes(Soft Drinks) ($4.5bn)Cott Corp(Juice, Soft Drinks) ($1.4bn)Danone(Soft Drinks, W ater) ($4.5bn)Ocean SpraySource http//www.mind-advertising.com/sectors/sector_softdrinks.htmIndustry Life hertzEnergy drinks were originally pioneered by Asian companies, but they became popular in Europe the late 80s with the arrival of Red Bull. There are more than 200 energy drinks existed in US market only and this figure is increasing due to the high margin of this business.In 2004, carbonated soft drinks posted the growth of 1% which is unlike its usual trend, case of growing 2% to 4%. Noticeably, this inevitable growth was driven by Diet and Energy drinks. While other carbonated drinks posted volume change of one Digit, brands like Red Bull and Hansen Natural reported the 45% and 56% of positive volume change in 2004.The market, now estimated to be worth $10 million, has been predicted to grow to $300 million or even as much as $2 billion in the next few years. Double digit growth in the market is the main factor contributing to Energy drinks life cycle in its embryonic ph ase (growth).Since the market is not old enough, the number of players are increasing and even the Coca Cola and Pepsi are the new entrant which add to the well-built assumption of embryonic phase.Brand loyalty and high expectations are still questionable in this stage and its because the consumers are still exposing to new products and new claims. Thus, players are fighting for product feature extension such as low-carbs and sugar free plus new products claims such as mitigate concentration, reaction time and endurance.After introduction of Red Bull in late 80s, industry went to an introduction phase. By 1998, the size of the industry bivalent and still growing with a fast pace following highlighted sweep in the graph is an approximate stage of the life cycle at the moment.Internal AnalysisValue ChainPrimary performance inward outbound logisticsLogistical issues at Red Bull in of high importance. Due to the fact that all ingredients in the Red Bull drink is synthetically made by pharmaceutical companies, they make sealed that their products are carefully handled to maintain the quality and avoid unnecessary costs. Red Bull always makes sure that they align with premium logistics provider to achieve their strategic goals. Red Bull aims to have web-based visibility on their supply chain, frankincense they base their logistical activities or selection onFlexible store networkTransportation management capabilitiesStrong entropy technology offeringWith 1,600 employees working for Red Bull world wide (Gulf News, Red Bull plans to set up Dubai plant), Red Bull required those standards as they are experiencing year-after-year of high growth, which make the inventory forecasting and management challenging. That is why logistical issues have become increasingly important, and that is why they choose to outsource the logistics to companies that can comply with their network of multi-client warehouses needs (Red Bull OH Logistics). Interestingly, Red Bull uses teensy-weensy distributors in small regional markets, if those small distributors dont perform up to Red Bulls standards they establish a warehouse and push young people to overgorge their vans with Red Bulls product and distribute it every where. This way, the small distributors generally break even within three months and are profitable within six-spot (A Bulls Market The marketing of Red Bull Energy Drink).Primary Activity OperationsThere is little reading about the operations process of Red Bull. However we will enlighten you with the contents and brief culture about the packaging company that Red Bull deals with.The great product which is provided by Red Bull one of its main elements of success. Known for meliorate performance, improving concentration and reaction speed, improving vigilance, improving emotional status and stimulating metabolism, Red Bulls secret is in its ingredients. The ingredients in each Red Bull drink (250ml) consist ofTaurine (1000mg)Glucuronolacto n (600mg)Caffeine (80mg)Niacin (20mg)Vitamin B6 (5mg)Pantothenic paneling (5mg)Vitamin B12 (0.005mg)According to Red Bull, It is a combination of all the ingredients together, which result in Red Bulls benefits (Red Bull, Ingredients)..The packaging process of Red Bull is fully through with(p) in Austria. And the supplier of Red Bulls cans is Rexam, and they are considered to be the worlds largest provider of beverage cans. Rexam manufactures different types of cans for different industries, however almost half of their revenues come from Coca-Cola and Pepsi Cola. Moreover, industry estimates present that Rexam gained about $22 million from the sales of Red Bull cans (How Does Red Bull Package Its Product?).Primary Activity marketing and SalesWith the control of 70% of the 1.6 billion market (about 1.12 billion), Red Bull has achieved all of this through intensive unconventional marketing strategies. Targeting young people, mainly the Y-generation, Red Bull has utilized eccentric marketing tools that has extremely stiff on the target market. The strategy of sponsoring local activities like the Red Bull music academy in the USA, parachuting in South Africa, Go-Karts in Kuwait, and many more in different countries has achieved its target of attracting its target market which gets excited when viewing such sports. Some of the strategies used for marketing Red Bull includeUsing pick-up trucks as mobile displays, painted blue and silver with a giant can of the drink mounted on top of the vehicle.Designed to be eye-catching, these devices were aimed at promoting the red bull brand as youthful and slightly off-the-wall.Cans of the drink were also given out free to people on the street who had been identified as being in need of energy.Red Bull was given to club DJs, unload cans would also be left on tables in hot spots such as trendy bars, clubs and pubs.Secondary Activity TechnologyThe information about the technology that Red Bull uses was quite scares. Howeve r we could safely say that Red Bull little activity done on their RD side because Red Bull does enjoy any sort of economies of scale. Red Bull has only one main product, which is the Red Bull energy drink and recently they introduced the new Red Bull energy drink sugar-free. Hence, the main difference between the original Red Bull drink and the sugar-free drink is that it has 0g of sucrose and 0g of glucose, where the original product has 21.5g of sucrose and 5.25g of glucose. Moreover, each sugar-free drink has only 8 calories (EU)/ 10 calories (USA), yet it does not loose any of its energetic effects (Red Bull, Ingredients).Secondary Activity Human RecourseRed Bull is famous for practicing what they preach, especially when it comes to recruitment. Due to the fact that Red Bull promotes their product as a Hip and young product, they make sure to recruit staffs that are young, in touch with youth culture, dynamic and innovative. For example, they achieve that by recruiting universit y students as student brand managers to promote its product among young student conferences (What Sort of People Work For Red Bull?). However their recruiting does not happen by Red Bull themselves, but they makes sure that it is implemented by all of the outsourced activities. However, it is known that most of Red Bulls 1,600 employees are marketing experts and are the real movers of the Red Bull drink (Marketing Eye, Red Bull Car).Group Customers and Market SegmentationAs it is known any successful company should have a certain customer group. The customers that were targeted by Red Bull were the ones that were looking for excitement, alertness, and concentration depending on the age, status, and lifestyle. Four consumer categories were Red Bulls target under the age of 16-30 students, club people, sport people, and employees.College students were the main target of Red Bull. Since college students look for something that would enhance their concentration on doing their assignmen ts and projects, and sticking overnight for study for exams then Red Bull is the best solution for them. It would improve their concentration in their studying Moreover Red Bull has used this group to enhance their promotion. According to Biz/ed, throw parties those students were emboldened to market the product in the campuses of the universities as what they call them student brand managers. Those students collect the information and make a report of a market data research to the company. Depending on that strategy and the youth generation (high school and colleges students), Red Bull was able to spread the reputation and the popularity of the drink and concentrating on supplying the product rather than applying the traditional marketing ways of promotion (A Look at a Key Feature of Red Bulls Business).The second category of Red Bull customers are the night club people, since the drink has some substances that would increase the persons emotional status. Moreover, Red Bull is of fered in the nightclubs depending on the cultural background. For example, nightclubs in Dubai offer Red Bull for the people who do not drink alcohol like the Muslims, which made it a major substitute for alcohol to that group. However, Red Bull is still individually mixed with alcohol to create both the Red Bull highness and the alcohol sensation. Furthermore, Red Bull has also made music events for those groups of customers like the Red Bull melody Academy in 2005 in Seattle, Washington in the United States. (Red Bull Music Academy 2005)For the physical exertion that the drink offers, Red Bull has also promoted the product for the sport people. Among those people, there are the athletes, the racing drivers, the airborne-sport people, water-sport people, the bikers, the skateboarders, and the skiers. Red Bull highly endorsed this group with many sport festivals, and one of the famous one among those is the Red Bull Dolomite Man that took place in Austria in 2005. (Red Bull Dolomit e Man)Red Bulls minor groups are the clerical and the industrial workers. Red Bull can support white-collar workers to sharpen more on the job to improve their performance, and it would also help them stay overnight if he or she needed. The drink would also allow the blue-collar workers to work extra hours with out the feeling of exhaustions for the physical exertion that the drink provides. However, Red Bull did not concentrate on this group, so there were no special efforts directed towards them.Within the quadruple groups, there a considerable amount of customers who look for diet product. For that category, Red Bull produced the sugar-free Red Bull to combine the diet customers with rest of the customers that are within the four groups.Business Level and Generic StrategyIn the generic strategy Red Bull there are two views, there is a generic strategy from energy drink market office, and there is a generic strategy from soft drink market perspective. From the energy drink ma rket perspective, since Red Bull has few economies of scope, the strategy adopted by Red Bull to follow is differentiation. The price of the drink is about 5Dhs in the UAE, which shows the clear differentiation of the product, especially in a market where every body is competing on the same customer segment. According to Biz/ed, Red Bull was able to build a strong brand image through using Red Bull cars that had big cans on them, giving free cans to people, and providing Red Bull cans to club DJs (A Look at a Key Feature of Red Bulls Business). This strategy made Red Bull to be the market leader of 70% market in the energy drink market.From the soft drink market industry wide perspective Red Bull applies the Focused-differentiation generic strategy. Red Bull has a very good brand image in terms of soft drinks industry. The drink can only maintain this image through focus-differentiating the product by separating their customers according to the demography (age, lifestyle, culture) a nd the geography, since the industry has many aggressive competitors with a powerful brand image like Coca Cola and Pepsi.SWOTStrengthsIndustry leadershipThroughout the world, Red bull is the leader in the energy drinks market with annual sales of billion dollars. According to the statistics, in year 2003 red bull achieved 80% brand share of the energy drinks market in the UK. Also in the Europe, they produce two-thirds of overall volume in the region. Moreover, Red bull is competing in 13 West European countries and is the main leader in 12 of these and other top 20 brands are having only 17% of share. Since year 2000 (compare to 1990s), it has been a clear shakeout, and fewer new brands are launching new products to the market. Furthermore many products offered by leading drink manufacturers could not compete with Red bull in the market, such as Coca-Colas Burn. (Red Bull SWOT Analysis)Marketing capabilitiesThe successful marketing strategies and consumer consciousness of Red bul l introduced stimulation drink