Strategic Recommendations for Red Bull

Strategic Recommendations for exit hairKeeping the red-faced Bull Flying-Strategic Recommendations to Buildthe Brand and Drive tax income GrowthSince its launch in 1995 in Austria, rubicund Bull has, in essence, created the hip and fashionable home of functional energy drinks. Its marketing program has been the range of buzz marketing in which pull strategies are utilized to expand product distribution methodically on a global scale. The promotion of Red Bull has been pure and focused on the elements of the product the distinctive silver and blue 250mL can buoy, the remarkable marketplace offering, the unique logo and underlying mantra Energy make happy followed by a campaign of selective introduction to the particularly cool consumers via sampling and endorsement by personalities synonymous with the brand personality of the product.Judging by results alone, the remarkably consistent (albeit with the notable inconsistency of the United Kingdom product introduction) marketin g plan has been a tremendous success as evidenced by the entrance of so many me-too products. patronage the entry of the big dogs (i.e., Coca-Cola, Pepsi, et al), Red Bull had managed to achieve sales of near $1billion by the end of 2001. The success of the bran is to a fault evident by the exorbitant price premium that consumer are willing to pay ($1.99 $3.00) for just 8.3 fluid ounces of product that was until recently, only available in a single serving (initial offering of 4- packs retained the pricing per ounce of the single serving size).The targeted audience for this product is, anyone who is fatigued mentally or physically. Despite this shotgun approach, penetration is far deeper in younger demographics, especially the 14-19 groups (65% in Austria, 28% in the UK). A large part of the products continuing success is the homogeneous consistency of the brand image as it is positioned in each market. Competing on the basis of a premium product consumable by anyone with the univ ersal read to reduce fatigue, the product has taken first-mover advantage and remained on top by the maintenance of a premium product that fulfills a commoditized-niche need of the consumer.In equipment casualty of the Red Bulls competitive position, the emergence of the category and the success of Red Bull has created a highly competitive field of me-too and novel products. Despite this competition, Red Bull remains a large but niche product that has become a powerful original brand. Threats to their market position complicate the wake of new and real products from companies with deep pockets, extensive distribution networks and substantial marketing prowess some of the 75% (in the UK) market share will be lost (Choeke 2005, p.3 Clark 2005 Euromonitor 2005, p. 3). The opportunities that Red Bull has are a direct result of their weaknesses a single product made in a single location. This is the simulacrum of the clich that warns against putting all ones eggs into a single bask et. As a consequence, Red Bull places a strong emphasis on conservative inventory strategies by having 45 60 days of products at distribution centers (in the US) ( youthful Materials Handling 2005), p. 11). While the emphasis on being at the ledge is admirable, this represents a significant (up to almost 17%) of ones annual volume sitting around 17% of ones annual revenue tied up in accounts receivables.To continue to build upon this success, it is recommended that Red Bull consider a two-fold strategy. First, in that location is considerable equity in the brand and the beverage that can be leveraged significantly in a brand credit of a product much(prenominal) as an energy bar. The key risk of this strategy is that the pure, singular product offering of today will be diluted. Despite this risk, the extension of what Red Bull actually represents does not necessarily dilute but can likely reinforce the idea that the brand of Red Bull represents, what you consume not just drink w hen you are fatigued versus the more restricted drink cateogory. By redefining the frame-of-reference, the category can be effectively extended and a like-brand product such as Red Bull Solid Fuel can effectively reserve money left on the table while presenting minimal risks for damaging the current substantial brand equity of the beverage product alone. This brand extension is compatible with the spirit of the current product, a key factor in the likelihood of consumers accepting and even embracing an extra product (Yeung Wyer 2005, p. 495).An alternative to SolidFuel is an additional beverage such as a sports drink. While this is a legitimate possibility, the risk of brand dilution is with child(p)er as both products are beverages though mean for different consumers. SolidFuel is a different but related category that seeks to gain a larger share of wallet though not necessarily expanding the existing customer base. This product will complement rather than potentially compete with the original Red Bull product and utilize the paradigm of a branded house rather than a house of potentially competing brands (Aaker Joachimsthaler 2000, p. 9),In addition to efforts to grow revenues through brand extensions, an additional recommendation alluded to earlier, it that Red Bull should expand action from solely Austrailia to a site in Europe and North America. By having a single facility to product product for a globe, unnecessary be are being built into the supply chain. In addition to being forced to produce, manage, move and store massive quantities of material, there is the presence of a great deal of risk if something should happen. With but a few additional sites, risk can be virtually eliminated and distribution and holding costs significantly reduced.To speak the concern of the fact that Red Bull is perceived to be a niche product, it is recommended that a action be taken to build brand consciousness and specifically to penetrate both deeper and in addi tional demographic segments, it is recommended that Red Bull develop mass media advertisements such as television spots. These clips should gasconade a key fatigue driver. By this, it is meant that activities besides extreme physical exertion should be utilized such asA long road-trip This should feature a middle-aged, yet well-groomed commercial truck driver that focuses on a route map. This map should prominently feature a long line which traverses some(prenominal) states. Further, this individual should eschew coffee, instead, he should be shown enthusiastically consuming a Red Bull .A series of relentless showdowns This clip should show a clock indicating an early hour and a business meeting in progress that, according to the clock, keeps going. Similar to the higher up example, the shot should demonstrate that Red Bull is an attractive alternive or substitute for coffee and could similarly play upon the feature s of consistent quality of Red Bull (versus the variance of a monuments coffee making skill).A grueling school assignment The obvious shot would include a study group at a late hour just beginning to study for a major test of solve a lengthy problem. Of course, Red Bull is there.Each of the above scenarios are representative of mental or physical fatigue and the break-through that can be attained by the key benefits and attribute of the Red Bull product. These also particularly lend themselves both to brand extension and extensions of the current most likely to use demographic segment.In summary, Red Bull has seen seemingly unwearying success of a single product. By taking steps to simultaneously launch SolidFuel, the result will be the success that is achieved simply by meeting the already expressed needs and desires of the marketing with a product that is positioned to leverage the current awareness, recognition, and image of the current product. As this strategy entails the creation of a category-extension, there is minimal risk of the dilution of the powerful core brand value and the image that is currently held. Further, to maintain and even build the markets for these products, Red Bull should move remote from the successful cartoon-type advertisements and focus on the next thing for a fickle consumer mass. This advertising should be of an experiential nature that focuses on situation in which Red Bull products can be utilized for a key benefit while each advertisement closes with a central brand reinforcing image such as the Red Bull logo.Works ConsultedAaker, D., and Joachimsthaler, E. (2000, Summer). The Brand Relationship Spectrum The Key to the Brand Architecture Challenge. California Management Review, (42)4, pp. 8-23.Choeke, M. (2005, October 11). Coke Eyes Red Bull with Launch of Still Energy Drink. Marketing Week. October 11, 2005 edition.Clark, N. (2005, December). Coca-Cola adds Taurine to Product. Marketing, December 14, 2005 edition.Euromonitor. (2005, December). UK Market for Functional Drinks. Euromonitor Market Research Monitor. Accessed online March 9, 2006.Modern Materials Handling. (2005, December). How Red Bull Puts a Charge in Its Supply Chain. Modern Materials Handling, p. 11.Yeung, C., and Wyers, R. (2005, November). Does Loving a Product Mean Loving Its Products? The federal agency of Brand-Elicited Affect in Brand Extension Evaluations. Journal of Marketing Research (42), pp. 495-506.