Red Bull Company’s Strategic Analysis

Introduction

Red bull is an Austrian company that sells an energy drink called Red Bull. The brand was an inspiration from Krating Daeng an energy drink that existed before Red Bull was introduced in Thailand. Dietrich Mateschitz borrowed that idea and made minor changes so that it could be accepted in the western market. Partnering with Chaleo Yoovidhya, they managed to establish the Red Bull company in Austria. The original name Krating Daeng means red and red-brown (after a beast slightly larger than the bison) in the Thai language. The energy drink is sold in bottles that have different shapes depending on the place of packaging. In Asia, more so in Thailand, the brand appears in wide gold bottles with a label of Krating Daeng or simply Red Bull Classic. It is important to note that red bull classic and Krating Daeng are different brands and are processed separately from Red Bull.

“Red bull gives you wings” is the slogan with which the company identifies. The brands are marketed aggressively through events like Red Bull Crashed Ice and Red Bull Air Race. Team ownerships like Scuderia Torrosso, Red Bull Racing, Red Bull New York, FC Red Bull Salzburg, Red Bull Brazil, etc also endorse and market the drink. Red bull also receives celebrity endorsements as a marketing strategy through labels like Red Bulls records or record label music.

There have been allegations that Red Bull was associated with certain health risks due to its ingredients like guarana and ginseng. This was however cleared by a repeat study by the European Food Safety Authority (EFSA). EFSA confirmed that just like popular soft drinks in the market, the levels taurine and D-glucuronic–gamma-lactone in Red Bull is safe for human consumption.

Strengths of the company

One of the main strengths of the company (Red Bull GmbH) lies in the way it has managed to establish a good relationship with its loyal customers in more than 100 countries around the world. This has made the company’s brand take a leadership position among other energy drinks in the market. As a result of this wider market coverage, the company sells over a billion cans every year in those countries. These loyal customers across the world have even reduced the cost of advertisement because of the availability of a ready market. Furthermore, these loyal customers have made it hard for imitators to penetrate the market because they can easily differentiate an original Red Bull from an imitated brand. Guerrilla marketing in the US has taken Red Bull as a case study aimed at establishing whether Red Bull activates young people to adopt an active outdoor lifestyle and the results were positive.

Another strength of the company lies in the fact that it has managed to penetrate major markets around the world. The company sells its brand in more than a hundred countries around the world. Moreover, in almost all these markets its brands have managed to take leadership positions making it hard for competitors and imitators to take over the market (Allen, 1994).

Furthermore, Red Bull GmbH products like Red Bull is not mere soft drink, it is also rich with energy, a quality many customers look for in a soft drink. Customers have therefore preferred Red Bull to get the extra energy to play, drive for long distances, and do other activities that require a lot of energy.

Moreover, red bull GmbH has managed to bring on board by hiring talented, competent, and qualified staff both at production and marketing. At production, their team has ensured that there continued production to satisfy the large market. They have also ensured that the quality of the product is not compromised and cannot be matched by imitators. By maintaining high-quality standards, they have managed not only to satisfy existing customers but make the drink accepted by new customers. At the marketing level, the team has carried out aggressive marketing through creative and applicable strategies. This has made the drink take up a leadership position in all the markets they have gone.

Weaknesses

Red Bull easily falls victim to disclaimers who create damaging propaganda that ingredients in Red Bull pose a health risk to consumers. Such incorrect information finding itself in areas the brand is properly established does a lot of damage to the company and the product. For example, the allegation that the main ingredients in Red Bull i.e., guarana and ginseng pose a health risk to consumers was very damaging to the company and the brands. It took the intervention of the European Food Safety Authority (EFSA) to clear the rumor out.

In addition, its mode of packaging makes it a little bit expensive for consumers in the lower social class. This means the drink is only a privilege of the middle class and the upper classes of society. In a community where the majority belongs to the lower social class, it becomes hard to sell the drink.

There have been cases when the drink has mistakenly been associated with an alcoholic beverage. This has made it very hard to sell the drink in conservative societies like that with Islamic values where alcohol is banned out. Proper marketing needs to be carried out by educating customers to counter such information in the market (Behar, 2001).

Opportunities

Recently, the drink was found to contain ingredients which when used in smaller quantities improve the cardiovascular functioning of the heart. More research needs to be done to confirm and exploit this feature in the market. Once this is done then it would be very easy to market the drink because the selling point would be the health benefit.

Moreover, there are still more opportunities in markets where the drinks have penetrated. Red Bull can still reestablish itself as a leading brand in markets of Asia, Europe, and Africa. Once Red Bull does this, then they are likely to hold on to the market for a very long time without allowing competing brands to enter the market.

Threats

Most of Red Bull’s threats arise from imitators who keep trying to produce an equivalent brand with the same name. Imitators dump low-quality products in the market with the same name which spoils the reputation of the original brand.

Another threat arises from blackmailers who come up with malicious propaganda to prejudice the product. A good example of such propaganda is the rumor that came out that ingredients in Red Bull like guarana and ginseng after the cardiovascular functioning of the heart. Such information even though is usually countered, impact is usually damaging.

Finally, association with the drink to alcohol makes it very hard to sell the brand in conservative societies of Islam because sell and consumption of alcohol are prohibited.

Evaluations of the SWOT

Considering the SWOT, one can easily say that Red Bull is a company that can sustain itself in the market. The company still has loyal customers all over the world that requires to consume the product and do not pay attention to inaccurate information in circulation. The company can capitalize on these existing customers as more advertisement and education is done to penetrate new markets all over the world.

The larger markets that Red Bull maintains all over the world, need to get accurate information about Red Bull, so that they do not change their attitude about the company. The company can do this by opening branches and deports in areas they already exist and new markets to affirm their presence. The company’s weaknesses can be improved by releasing the right information to customers who are already consuming and those that intend to use the product. Such a move will counter malicious information in circulation (Lauria, 2008).

Opportunities can be taken advantage of by doing more research about the health benefits of Red Bull. This should be done to get accurate information and capitalize on that during processing and marketing.

Conclusion

Red bull is a strong product that can be sold in all markets of the world. What the company needs to do is carry out more research to produce other related products as an alternative to Red Bull. This will be important in a case where Red Bull cannot be sold especially in conservative societies.

Reference

Allen, A. (1994). Germany Kids Are Bullish On A Wonder Drink. Oxford: Associated Press.

Behar, H. (2001). “Running of the Bull” Beverage World. California: Pearson Publishers.

Lauria P. (2008). Pump The Music: Red Bull Eye Starting Branded Music Label. New York: New York University Press.