1. Who are their main 3 competitors in the US market and what differences does each of them have in their
a. customer value proposition- analysis all 4 of them
b and what main USP do each of them have
The three main challengers of Red Bull in the market share are Monster, Rockstar and Amp. Although Red Bull has experienced tremendous growth for the last two decades, it cannot afford complacency. Change in dynamics of the energy drinks industry coupled by fierce competition from rival firms, means that the company needs to strategize and come up with the mechanisms of consolidating its market base, which has been eroding in recent years. This can be attributed to myriad of things including competitor’s strategies, rigidity of the company products, health concerns, and increased marketing costs. It is therefore important that the company invest in research in order to remain the world largest energy drinks. If they do not, then the company might be toppled as world leader in the energy drink sector.
Red Bull is the pioneer in the energy drink market, which gave the company a substantial advantage, because it did not face any competition. The company utilized its monopoly status to penetrate into the American market around fifteen years ago. Although other firms that entered the market did not affect Red Bull initially, they have started encroaching Red Bulls market base with great effects. This can be attributed to their effective marketing strategies. At the moment the company is barely leading in terms of sales with Monster closely behind; despite other companies being relatively behind, they have a substantial market share that keeps on rising.
Monster has significantly changed the market dynamics of the energy drink industry. They have introduced a variety in the market, which target different segmentations of consumers. Their drinks have different tastes and flavors; they also range in the amount of caffeine and sugar levels and come in different sizes. The implication is that they have a drink for everybody. The advertisement strategy has also led to most consumers identifying themselves with monsters drinks. This is because they have covered the market gaps, which have in recent years, been left by Red Bull. Red Bull has for a long time been suffering from rigidity in terms of catering for various consumers hence most turning away from their products because of tastes despite their well-established brand. Rockstar also brings uniqueness with their products, which are generally a combination of herbs and vitamins. Amp Energy has also revamped recently as they abandoned most of their products in order to come up with lean and effective products, which are appealing to consumers.
These rivals have very competitive prices and vigorous marketing strategies. They have used sports and concerts to promote their products at the same time having endorsements of sports celebrities. This is coupled with a variety, which makes them have a slight edge on Red Bull. The ability of rivals to compete in every aspect of markets dynamics has led to tremendous pressure on Red Bull in terms of marinating their market share.
Red Bull unique selling proposition is the ability to bring out their main themes associated with the energy drink. Their energy drink brings out emotions associated with speed, adventure, dare, and power. These emotions are further enhanced by their marketing strategy of promoting sports like extremes, racing cars, and sky-diving. This helped the company to embark on vigorous advertisement winning millions of young people who easily identify with those qualities. Secondly, Monsters uniqueness is its ability to have different drinks for different occasions; for example, Monster Rehab is generally for calmer mood situations, and Monster Energy for vigorous situations. There uniqueness is therefore their ability to appeal to wide range of consumers.
Thirdly, Rockstar advocates for nutritional benefits and physical development and not merely provision of energy. They therefore portray their drink not only in terms of providing energy but also give other biological benefits like synthesizing of proteins. Their nutrient campaign is also supported by drinks, which are appealing to children in terms of taste such as vanilla flavored. Finally, Amp Energy was introduced as more soft drink with the aim to appeal to everyone in the market. The company depicts the energy drink that caters for every consumer irrespective of their activities. This means that their appeal is not restricted to sports or vigorous physical exercise, but it stretches to provide basic energy levels in the body.
2.Eventhough we should segment the market in all 4 ways, take the most relevant 2 variables and suggest why they are mainly targeting this segment. 4 ways to segment :
Red Bull has concentrated on segmentation marketing for products to make sure they fully exploit their potential. The energy drinks companies have strategies is mainly focused on demographic and behavioral markets segments, which in essence focuses on the people who are likely to use their products. These products are mostly used by young people and aspiring athletes. The energy drinks are also very popular in urban centers especially in colleges where they are mainly associated with coolness. However, in recent times they have been expanding their market base by introducing a variety of products. This approach involves creation of products, which suits certain people like drinks with low sugar level for diabetic people.
The reasons they have adopted these strategies can be attributed to various factors. The usage strategy has been adopted mainly due to the fact that energy drinks are very popular with young people. In order to maximize on this market, Red Bull has responded by looking for sponsorships deals of various sports, which are popular among young people. They have also used sport personalities who are generally idolized by this generation in order to boost their products’ popularity. On the other hand, regarding the issue of consumers’ needs segmentation, they have responded by introducing a variety of their drinks into the market. The primary aim is to boost their chances of competing with their rivals whose products have become popular due to their variations. Secondly, this is to give their consumers a chance to choose flavors that suit them. Finally, this is aimed to recapture consumers who would have wanted to use their products but backed away, because they did not like the taste.
The strategy of catering for different consumers need is very effective in terms of widening the market base of a company. It is therefore paramount to have a variety of products in the market. For example, Monster ability to have over twenty products in the market has helped the company to achieve substantial growth in the last ten years. This strategy is something which can be sustained because varieties widening the market base which is an ingredient for growth.
4. Does Red Bull (RB) pursue all 4 growth strategies, if yes, which ones when, where and how
Red Bull has pursued around three development strategies, namely: product development, market development and market penetration. The company started in Austria and ventured in to Slovakia and other countries and this market development strategy one of their greatest achievements. Secondly, they have made commendable market developments by introducing new products in terms of flavors in the market hence expanding their sales. Thirdly, regarding the product developments, they have developed products with low sugars and of different sizes in order to woo different types of consumers. However, they also run other franchise like sport teams such as New York Red Bull with the club primary role to the company being an advertisement avenue.
5. Which functional strategies is RB applying successfully?
Market penetration is one of their greatest successes in terms of marketing their product. The company initially introduced Red Bull drink to Austria and Slovenia before spreading it across the world. There uniqueness in promotion and vigorous marketing includes sports sponsorship. This has deviated from the norm where companies concentrate on celebrity endorsements as their primary strategy. The implication is that most people especially those who love sports can easily identify themselves with Red Bull Brand. This has made Red Bull to spread to unprecedented 164 countries in a period of barely twenty years. They have also become the largest energy drink seller with a turnover of billions of cans sold every year across the globe. Their strategy of market penetration has therefore been a success in terms of market share and growth of the company as a whole.
6. a. Why are they introducing new flavours
b. do you think their promotional campaign is good
Their primary aim of introducing new flavors is to acquire competitive advantage, which they had been lacking for several years. Their competitors introduced different flavors with incredible gains in term of market share. In fact, some companies like Monster, which entered the market a decade ago, are on the verge of overtaking Red Bull in terms of sales in the United States, and they do not lag behind in the international markets. So, this has been a necessity for business survival in the long term as they try to consolidate their market amidst fierce competition. Their promotional strategy of using celebrities and endorsements of sports events is a wise move. This can be attributed to the fact that their most important market is composed of young people. Young people are always interested in sports events, and they easily identify with their sports heroes. They also use sampling methods especially in colleges. Students are given free samples in order to try if they like the flavors; this strategy has proven very effective.
In summary, we can conclude that the market today is very different from the way it was twenty-five years ago. With the increased awareness of health issues, new products in the market and Internet, it takes only several days for a company to win or lose consumers. Energy drink firms need to do research in order to produce drinks, which are healthier and come in varieties if they want to continue experiencing growth, which is on the rise. Companies like Rockstar strategy of introducing vitamins in to their energy drinks will have great impacts.