Nottingham University Business School

MBA 2010

RED BULL: the Long term Business Sustainable Plan

Tas Dhanasarnsombati

ID: 4149663

(Words count: 15,119)

Abstract

According to number of studies shows that food and beverage market is one of the most sustainable markets of them all. As majority of super-power supermarkets continue to increase their profits, proven that despite either the up or down-turn of the economic situations, food and beverage always will be the basic need to everyone. However with the food and beverage products keep emerging though out rapidly into the market, leaving consumers with numbers of choices to choose to purchase. In the fearsome and crowned markets as food and beverage market, it seems that all the business strategies, marketing plan, and pricing, are the key factors to indicate whether the products will be success or not. Furthermore even though the majority of food and beverage products are ‘necessary’ for human life, but some food and beverage products are exempted as ‘necessary products’ for some consumers. This paper will attempt to investigate the not so ‘necessary’ beverage market such as ‘Energy drink’. The focus case example chosen is ‘Red Bull’ which will include the analysis on future of ‘Red Bull’ business and lastly the recommendations of possibility expanding its product lines.

TABLE OF CONTENTS

Introduction 1

Aims and Objectives 1

I. Energy Drinks 2

(a) Energy Drinks Market 3

(b) The consumers target group 6

II. History and current position of Red Bull 7

III. Reasons behind the success of Red Bull 10

(a) Innovative products 10(b) Marketing strategy and Positioning 12

IV. Red Bull’s competitors 16

(a) Monster 18(b) Relentless 20(c) Rockstar 22

V. Future Challenges for Red Bull 26

(a) Health concerns 26

(b) Declining sales 28

VIII. Research methodology 31

IX. Data analysis 36

X. Recommendations and conclusion 41

References 45

Bibliography 50

List of figures 51

Appendices 53

Introduction

Energy drinks which is one of the major market in Food and Beverage market is one of the fast growing beverage business in the world. According to the report from IMAP in 2010 shows that the global food and beverage sector in 2008 was valued at $5.7 trillion USD. And the industry is one of the major contributors to growth of all economies as well as historically witnessed with the consistent growth. The industry itself expected to consistency growing by 3.5 percent and estimated to worth $7 trillion USD by 2014 (An IMAP, 2010). As well as the support evidences from Datamonitor shows as well that food and beverage sector already grown by 15.1 percent from 2005 to 2010 (Datamonitor, 2006) which even more substantial fact of how fast this business factor grow.

The energy drinks is one of the sector contribute to the substantial growth on beverage sector. BBC News report in 2005 and the forecast and analysis from Mintel shown that Energy drinks accounted for £1 in every £5 spent on soft drinks in the UK, as well as the substantial increase in demand of over 75 percent since 2000 (BBC News, 2005), therefore make this beverage sector now one of the most competitive business at the moment.

The beverage industries always dominated by the super-power brands such as Coca Cola, Pepsi Nestle and so on, similarity with the energy drinks. However in the past decade Red Bull had enjoyed its success by become one of the household brands in the energy drink market; via achieve the strong brand recognition from its innovation products concept and the phenomenal success of its marketing strategies, not to mention the great positioning of the brand ‘Red Bull’ (Kastner & Partners, 2005). However despite many of Red Bull strong business aspects marketing such as create a ‘Buzz’ or associated with the innovate business theme or involve in extreme and exotic sports (Dolan, 2005), all of those marketing activities came a cost. And with all those Red Bull marketing plan and its business strategies had been studies worldwide. The success of Red Bull can be duplicated by its competitors. As the numerous super-power brands are eager to take their share in energy drinks sector, therefore the long-term sustainability of the Red Bull needed to be questioned.

Aims and Objectives

The aims of this dissertation are to identify the growing or decreasing global demand on energy drink market in current economic situation and in long term future. With the concentration of analysis on the current position of Red Bull on energy drink market in term of its performance and he reason behind its successes. The objective of this dissertation is to provide the in dept

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information on the fundamental reasons behind the successfully factors of Red Bull. Especially the intensive analysis on Red Bull core competencies in comparison with its competitors as well as gather possible expanding of other Red Bull related products in the future in dept details. The author will also carry out questionnaire survey in questions and further researches, which in additional provides the understanding and analysis overall Red Bull’s product image and its performance as well as provides readers with the overall consumers’ opinions toward energy drinks.

This dissertation will be structured as follows. First, the author will be explore the energy drinks market in business prospective in general, with the analysis of the reasons behind the success and the obstacles and negative image on Red Bull energy drinks, with additional the study on Red Bull competitors to compare and provide the better understanding and into luxury brands global industry of the energy drinks business. Secondly, the author will be looking into the fundamental business aspects, which will be include the new or innovative business strategies which now mostly been adapted among the major energy drinks brands, such as media marketing, positioning and pricing. Thirdly, a future analysis via questionnaires into the perception toward Red Bull energy drinks especially focused on the consumers’ opinions on alternative energy drinks. Forth, the author will undertake the data analysis from the questionnaire results providing with graphs and data formats, primary researches and at later stage compare with secondary researches. Lastly the author will conclude and discuss implications for the future.

I. Energy Drinks

‘Energy drinks’ can be referred to ‘non- alcohol’ beverage drinks which are intended to provide an immediate burst of energy for the consumer. The energy drinks contain general caffeine calories, in various combinations with other energy enhancing ingredients such as Vitamins B, artificial sugar, taurine, hebal extracts and some contains artificial flavors (ResearchWikis, 2008).

Product SpecificationProduct name Lipovitan DSuggested retail price ¥153 (per drink; including tax) Ingredients    (per 100mL)

Taurine 1000mgInositol 50mgNicotinamide 20mgVitamin B1 nitrate 5mgVitamin B2 phosphate 5mg

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Vitamin B6 5mgAnhydrous caffeine 50mg

Indications For use as a nutritional supplement: when tired or sick; for anorexia and other nutritional ailments; for fevers and exhaustion; and for women who are pregnant or nursing.

Dosage Adults (aged 15 or over) one bottle (100mL) per day.

Figure 1.0 Lipovitan D ingredients example

Energy drinks wee first appeared in Asia in 1960s as responding to the demands on dietary supplement which believed the energy drinks as increasing in physical energy. A Japanese company ‘Lipovitan D’ founded by Taisho Pharmaceuticals was the first generation of the energy drinks, it was introduce first in 1962 (Taisho, 2004). It was an instant success in Japan and all around Asia market as believed to not enhance the physical strange but also reduce mental and physical fatigue as well. Energy drinks was also proved to be success in Thailand soon after which consumers in both countries considered the energy drinks as the alternative refreshing drinks over westernize ‘coffee’ (Heckman, 2009).

The energy drinks have expended to the rest of the world from the first launched of Red Bull into the US market back in 1997 (Griffiths, 2009). Back in the US on 1960 actually the US consumers had already experienced the energy drinks but which different purpose with the energy drinks we known today. In the 1960 ‘Lucozade’ was sold in UK as the medicine for the aid recovery and ‘Gatorade’ was served to a University of Florida football team as aimed to improve the athlete performances which was claimed with specially formulated without the dangers or drawbacks of energy drinks (Rouse, 2009). But later the world have witnessed the phenomenal successes of the energy drinks with the twists of the drinks purpose and the changes in consumers market which was the born of energy drinks that more than just medical believes (Mupsip, 2009).

(a) Energy Drinks Market

From the research of Companies & Markets, a market research company based in London reported in 2010 the global energy food and drinks market was worth $30.4 billion and during 2009 to 2010 the compound annual growth rate of 6.8% (Agrawal, 2011), as well as the prediction on the global consumption of the energy beverage drinks will continuing to grow by 25% from 2010 to 2013 alone and will gradually will hit $49.9 billion by 2014 which account for 10.3% of the total global soft drinks market (Knowledge@Wharton, 2009). The report from

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British soft drinks association reported growing consumption on energy drinks market from 8.2 litres per person to 8.6 litres per person from 2008 and 2009 and predicted that the energy drinks market which represented 74% of the combined sports, is likely to continue growing for decade to come despite the global economic difficulty period. The energy drinks market had indeed grow by 67% worldwide (Likemindedoq, 2010). The energy drinks market was estimated worth over $32 billion in 2010 which can be indicated the increase sales of 33.7% in the US and 18% increased in Europe (Merett, 2007). One of the major reason of continuing growth of the energy drinks was due to the various numbers of emerging new energy drinks brands and as well as more diversify of the products such as the ‘energy shot’ (Powerbrands, 2010). According to various independent reports the beverage market follow the great success of energy drinks growth had been doubling even since 1990s. Which resulted as in the recent years saw the new emerging energy brands around the globe. With the beverage industry giants such as ‘Coca Cola’, ‘Pepsi’ and Hansen continue to diversify their energy drinks for example ‘Monster’, ‘Sobe’ (ResearchWikis, 2008).

Despite the growing number of new competitors, Red Bull is still one of the best well-known and the best energy drinks sold in the world. According to Red Bull’s company figures shown that in 2010 the total of over 4 billion cans was sold worldwide in 2010 represents the increase of 7.6% against 2009, as well as 15.8% increased of company’s turnover from EUR 3.2 billion to EUR 3.7 billion. The sales, revenues and operation profit matched the highest company’s record sales in 2010. The substantial increased in sales for Red Bull is not just from US and Europe market. The fast growing sales also arrived from the other continents such as over 80% increase in Japan market and over 32% increase from Brazil, all contributed to such a highest sales in 2010. With additional statement from Red Bull aimed to recruit over 5000 new student employees this year (Red Bull, 2011) to compliment its marketing and business strategy plan, this shown the confidence of the fast growing in the energy drinks sector from Red Bull.

Other main competitors of Red Bull such as Monster which relatively new comer brand have become top seller in the US energy drinks market outsold Red Bull (Powerbrands, 2010). Monster energy drinks from Hansen beverage Ltd have sold worth over $484 million in 2010 which accounted for 28% increase over the previous year (Rexrode, 2011). Alongside with already a very intense and crowned beverage market the new player around the globe Relentless Rockstar NOS, AMP and Full Throttle also took their chances and took part in sharing sales from this market sector too (Healthvotes, 2011).

Furthermore this growing opportunity had also attracted the various competitors from outside the beverage industries, ‘Supermarket’ giants created their owned energy drinks brands such as ‘KX’ from Tesco (KX,2011) and ‘Blue Bolt’ from Sainsbury (Riley, 2008) which aimed to compete the lower or bargain price with the well-established brands in package price sales. Other example of the diversify energy drinks competitor including Go-girl and Diabolo Loco which have aimed for totally difference consumer audiences from the rest of the major energy drinks brands which

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offering the males and sports images and names (Energy drinks review, 2011). In contrast Go-girl and Diabolo Loco aimed to capture majority of the female consumers who mainly concern with flavors and tastes of the energy drinks. Go-girl and Diabolo Loco have instead introduced the variety of flavors such as ‘blueberry lemonade’, ‘dragon fruit plum’, ‘peach tea’ and ‘lemon drop’ etc (GoGirl, 2011). Both of these brands also offered more satisfaction of the taste, lower caffeine and more vitamins and minerals to their drinks. Again both Go-girl and Diabolo Loco gained the success and received great feedbacks from consumers in US because their combination of taste and the ‘kick’ effect that energy dinks promises.

Figure 1.1 Go-Girl energy drinks Figure 1.2 Diabolo Loco fruity energy drinks

However despite the rapid growth in beverage sector sport and health drinks can be damaging in the long-term if the continuing of economic recession and the premium costs. Various criticisms and questions on whether the consumer will continuing to purchase the energy drinks which is one of the most expensive and premium beverage per litre. And the important question is that who the consumers willing to pay that premium price between $2 and $2.50 for a can of energy drinks raise uncomfortable decision for consumers during this economic downturn (Knowledge@Wharton, 2009). But at the moment the energy drinks market continuing to grow due to the ability of gaining wider range of consumers which majority led by the young professionals (Agrawal, 2011).

(b) the consumers target group

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In the beginning of the energy drinks was originated from Asia. The main purpose of the energy drinks in those days for example Lipovitan D and Red Bull was to serve the extra energy for physical improving strength for the Blue collars and Asian truckers who needed to keep awake while driving through the night (Knowledge@Wharton, 2009). But soon after the worldwide expanding of the energy drinks to US and Europe in during 1980s and 1990s where the sport drinks already existed on sales market such as Lucozade and Gatorade which aim and purpose is only focus on the serious physical or traditional sports such as athletes sports, American football etc. This was the second generation of the sports drinks which throughout their campaigns and advertising were closely related to great sports events, Olympic and NFL American football league (Rouse, 2010). The worldwide launched of Red Bull led by the Austrian marketing genius ‘Dietrich Mateschitz’ who decided to twist the traditional image of ‘energy drinks’ to the new and exciting associated with prestigious and extreme sports instead (Dolan, 2005). This was the start of the revolution and uniqueness personality of energy drinks we known today (Kastner & Partners, 2005). This allowed energy drinks are experiencing the rapid growth due to the increasing in popularity (Factexpert, 2011).

Today the majority of energy drinks industries are targeted at consumer’s age under 35. The recent studies shows 65% of the energy drinks market consists of male consumers (ResearchWikis, 2008) and targeted to teenagers to young professionals ages from 18 o 34 and 34% are age between 18 to 24 which the generation of ‘on the go’ lifestyle. And according to various studies shows that about 50% of college and university students consumed at least 1 energy drink per month in the hope of helping to compensate for a lack of sleep and even consume to mix with alcohol

despite knowing the possible danger side effects (Richardson, 2008).

Figure 1.3 Teenage consumers Therefore in order to continue gaining more popularity the majority of the energy drinks brands have now advertising and set campaigns accordingly to these specific consumers and in some cases created their brands to gain the attentions from these group of consumers all together some examples being Full Throttle, Ammo, Havoc, Hydrive, and Morning Spark (Energy Fiend, 2009 ). There are so many diversify energy drinks products due the growth of the market, even so such as some energy drinks have now expanding all across every age, sex, and taste of consumers, so much so that in 2007, ‘Bloom Energy’ was the first to introduce the energy drinks that devoted the whole of its brands taste and concepts to females only.

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And other household sport drinks brands, ‘Lucozade and Gatorade’ are keen to take part of this market via advertised their products’ ability of increase physical performance and reduce fatigue in high-endurance sports. Other new emerging energy drinks brands also find their niche and more alternative choices for consumers such as being all natural, organic, or as well as diabetic- or vegetarian-friendly or even go on other totally opposite route as some even attempted as far to create energy drinks combination with alcohol despite the health concern reports (Heckman, 2010). In the next chapter the author will present with the background and other business fundamental aspect of why Red Bull had become one of

the most well-recognized energy drink brand in the world.

Figure 1.4 Energy drinks-market shares in 2005

II. History and Current position of Red Bull

The history of this phenomenal success of ‘Red Bull’ was started in 1962. The original Red Bull was developed in Bangkok based, Thailand: ‘TC Pharmaceutical Industry Company Ltd.’. Their original drinks called ‘Krating Dang’ which means ‘Red Bull’ in Thai (U21 Global, 2009). The original ‘Krating Dang’ was first sold as a cheap tonic in small ready to drink in brown glass bottle, was very popular among Thai factory workers and especially to blue-collars and truck-drivers. This was due to the cheap price of 150ml glass bottle is US$0.30, in comparison, a 250ml can of Red Bull retails in the US for around US$2 and in Europe, and the ability of the beverage like no other with its increase physical endurance, improve concentration and reaction speed abilities, ‘Krating Dang’ become one of the best beverage seller in Thailand and the neighbor countries surround to it ((London Business School 2005).

In 1982, Dietrich Mateschitz, a toothpaste salesman and the Austrian marketing genius, came to aware the mass-fat growing energy drinks market when the trip to Thailand. He brought back

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many of the energy drinks example. Later he was sold on the ‘Krating Dang’ brand as it took away his ‘jet lack’ (Funding Universe, 2002). Later Dietrich Mateschitz proposed his idea of expanding ‘Red Bull’ the global brand energy drinks. He then form Red Bull GmbH, with the former founder of Krating Dang, Chaleo Yoovidhya, and his son with each taking 49% stake and Chaleo’s son taking the remain 2% (BBC Secrets of the Superbrands, 2011).

Dietrich Mateschitz was keen to introduce ‘Red Bull’ brand around the globe. As he realized that the first or traditional energy drinks market in Thailand and the countries around it still continue going to grow with various local competitors, but he soon recognized the whole new type of the modern energy drinks, for the worldwide consumers such as in the US and Europe. However despite the no existing new generation of ‘energy drinks’ worldwide, as the quote of his statement that ‘even though no such market existing, but we will create one’ (U21 Global, 2009).

The contract was TC Pharmaceutical Industry Company Ltd will provided with the drinks formula with the twist (not as concentrated as original Krating Dang) with less syrupy, gave it more fizzy, later then adopt the packaging from traditional glass bottle to 250ml Blue and Silver can, which indeed became its signature colors and theme for Red Bull image. After Red Bull introduce to the worldwide market in the US and Europe, a market research was hired to test the market for energy drinks. Despite the results from research as neither like the taste nor taste, but choose to ignore, as Mateschitz saw from the research surveys that 50% of those respondent was totally went crazy about Red Bull. Red Bull brand was launched with the slogan ‘Red Bull gives you wings’ which became the theme of Red Bull’s promotional campaigns (D, Jobber and J, Fahy, 2009).

However the major obstacle for Red Bull was concerned with health regulatory approval in some countries. This was due to the unfamiliar ingredients known in Europe, had taken Red Bull three years to analyze and create a new formula before it was finally got approval from Austria’s ministry of health. Red Bull GmbH was first granted the establishment in 1987 in Salzburg, Austria. After the successful result in Austria, Red Bull has expanded its sales in near-by European countries with Hungary, UK, Slovenia, Germany and Switzerland in the early 1990s then gradually throughout the rest in European countries. Other obstacle for the Red Bull in that time was still the issues of ‘Taste’. However with the new emerging of new wave of sports and the increasing of young urban professionals, who often work long-hour, Red Bull had adopt its positioning and concentrate its products on those new comers, have brought it to become the instant hits and had received very positive response from the overall beverage market. (Upgrade reality, 2009).

Red Bull claimed of its unique combination of high quality ingredients in Red Bull energy drink and the benefits of drinking its products such as: increase in performance, increase concentration and reacting with speed, improve vigilance, makes you feel more energetic and thus improve overall well-being, and lastly its slogan related ‘stimulation’ ability (Red Bull: Products, 2011).

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Red Bull enjoys the ‘number one’ energy drinks ‘top seller’ in value. It sold over 4 billion cans of Red Bull in 2010 and has operated sales over 160 countries across the globe. And despite the economic downturn still very much exist, Red Bull have confidently announced its plans for growth and previous plan for investment in 2011 remain just as ambitious as well as envisage a continued upward trend (Red Bull: Company Figures, 2011).

The fundamentals aspects behind Red Bull’s phenomenal success can be pointed out in three of its capabilities and strategies.

Innovative products Marketing Strategy Positioning

The successful story of Red Bull as shown above that, it could not have started from only the great product on its own from the start. The successful story of Red Bull is highly relevant to other innovative factors and vast amount of funds spent on its products campaigns and promotions that separate Red Bull from the traditional energy drinks, or even the household brand recognized in energy drinks to date despite notorious giant beverage competitors. One of the examples of its success was the early opportunity of Red Bull to establish its brands that different than other competitors, the ability of Red Bull brand to generate positive ‘word of mouth’ thorough its target consumers (Cheryl, 2011). In the later part will show in details of what and how Red Bull has adopted those aspects to the success.

Figure 2.0 Original Red Bull in Thailand

III. Reasons behind the success of Red Bull (a) Innovative products

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One of success reason of Red Bull was down to its innovative products from the beginning of Red Bull compared with its original Krating Dang recipe which was non-fizzy drinks. Red Bull formula with fizzy and added vitamins, those innovated ingredients allowed Red Bull more appeal to wider range of consumer groups (Lloyd, 2011). All of it products basically contain the same basic ingredients: Taurine, Glucurolactone, Caffeine, B group vitamins, Sucrose and Glucose, which help to stimulate physical strength and enhance mentality reactions. Basically there are two types of Red Bull products which are its original and sugar free drinks in four of its different products: Red Bull original energy drink, Red Bull sugar-free, Red Bull Cola, and its new comer- ‘Red Bull energy shots’ (Red Bull: Red Bull energy drinks, 2011).

Red Bull is well known of being exciting and innovate company, the launch of such a revolution product such as ‘sugar-free’ version which Red Bull is one of the first to introduce this to energy drink market in 2003 and ‘energy shots’ in 2009 saw the phenomenal success and great feedback from consumers. Red Bull have introduced the enhanced and more concentrated formula in to smaller package again with same blue and grey color theme, called ‘energy shot’ (Brown, 2009), which contain with 60ml with 80mgs of caffeine (Red Bull: products, 2011). And according from many reports that energy drinks was expected to worth around $560 million in 2008 and reported the average growth of 9% in the US since launched (Powerbrands, 2010), which majority of sales generated from drugs stores and truck shops.

Figure 3.0 Red Bull’s main products

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Figure 3.1 Red Bull Energy shot

This concept of energy shots has become so successful that in 2009 over 70 brands were introduced their own energy shots to the market (Nutrition Business Journal, 2009). The energy drinks concept was commonly compared with coffee drinks concepts, the

variety of drinks can be categorized with diverse of target consumers. The energy shot shots appealed to slightly different type of consumer from original energy drinks consumers. However with the ability to satisfy other type of consumers, in additional supermarkets and retailers favored energy shots as they not required to be shelved on the retailers’ cooler space along with traditional energy drinks. The energy shots main consumer targets are truck drivers and yuppies alike. They were so diverse even trick the air-travelling flight regulation that passengers able to bring them on board and yet still as effective on stimulate promise ability. And finally energy shots gain the production advantage of reducing production cost on smaller quantity of liquid amount in each package (Klineman, 2008).

According to the report from ‘New nutrition business’ that one of the fundamental factors of become successful of energy drinks brand is crucial that company should be able to create ‘new category’ of the related products, however rarely only few beverage/energy drinks are able to achieve that. Red Bull managed to tap into some of energy drinks diverse market. However Red Bull is still less successful on creating other related channels or keeping innovative products compare to its peers. Many Red Bull competitors managed to create and introduce ‘niches’ products, Diabolo Loco and Ocean spray are few of examples of niches energy drinks products and aimed to capitalized on this sector. This new type of energy drinks are heavily relied on the preference of ‘taste’ and ‘organic’ presenting the more alternative healthier theme to energy drinks which able them to gain totally different type of consumers (New nutrition business, 2008).

Despite Red Bull is one of the first brands to introduced Sugar-free energy drinks, however received not so substantial success and was banned in France and Denmark due to Red Bull was lack of research on the impact of its ingredients. The most difficult struggle of launching innovated products from Red Bull was ‘Red Bull Cola’ which received huge negative banned and feedback from Germany where in 2009 Authorities in the states of Hesse and North-Rhine Westphalia ordered retailers to stop Red Bull Cola after found traces of cocaine,' said Bernhard Kuehnle, head of the food safety department at the federal ministry for consumer protection

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(Hall, 2009). These un-careful plans from Red Bull have created such a negative impacts on its brands and products image and as well as Red Bull lacking the ability to expanding more diversify products, Red Bull are likely to have an difficulty and the uncertainty future laid ahead.

(b) Marketing strategy and Positioning

Red Bull’s success was unendingly due to its genius marketing strategy, so much so that the company was enclosed its strategy plan from expose to the public as much as possible. And so much so that Red Bull was described to achieve the brands recognized as ‘family members’ which in the ‘BBC Secrets of the Superbrands’ in 2011 programmed was investigate into the famous brands such as Coca Cola, Heinz, McDonald and Red Bull are among one of the most well-known and well-aware brands ever.

The reasons of these achievements were from heavily marketing strategies which tied consumers to involve and anticipate with their brands. According to the report from BBC, Red Bull is one of the biggest spenders in advertising, pushing its brand to as much the audience receivers of Red Bull brands as possible. Red Bull UK ex-president told that the company will spend around 25% of its revenue on marketing and advertising alone.

The revolution of advertising products was first experience by Red Bull back in 1987, with the slogan ‘Red Bull gives you wings’, back then the fund was fed by 90% from two co-owners and 10%bank loan. The slogan and its ‘cartoon’ advertising campaign were intended to reinforce brand identity rather than create brand awareness (London Business School, 2005). Ambitious Mateschitz realised the only market in Austria was too small in scale of sales, the only success for Red Bull have to be only expended to European countries nearby an creating the total change of perception towards Red Bull brand instead. The new marketing strategy was introduced in the beginning of 1990s. The plan was now started by allowed consumers to experienced Red Bull energy drinks as many consumers as possible. The positive feedbacks of its image seen as ‘cool’ and ‘young’, ‘hip’ which majority well-feedbacks from those in male teenagers consumers. Red Bull realized that by having an effective ‘Buzz’ (Helm, 2005), or generated the ‘word of mouth’ among the consumers will be the best way for its revolution marketing strategy ever (Dolan, 2005).

Red Bull started recruiting ‘young sale teams’ provided with free cases of Red Bull energy drinks to an influential such as, trend-setting collage students, what Red Bull sale team founded out the behaviors of these collages and university students was that majority of them had highly nightlife socials. And by throw parties or their classmates and friends allowed Red Bull products to be tried out among its target groups (D, Jobber & J, Fahy, 2009).

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One of the business and marketing strategies of Red Bull was to create the purchasing power from the target consumers. Red Bull understood the ‘basic needs’ of the consumers, the needs of consumers to purchase energy drinks products were led from the fundamental benefits when consumers get from drinking energy drinks, such as enhance mentally ability and general stimulate ability. Those were the known benefits that consumer already aware. However by understanding its consumers target groups, in term of what make its they different from the rest of consumers, where Red Bull able to generate more than just ‘basic needs’ that is ‘wants’ aspect of purchasing. ‘Wants’ is the form that taken by ‘human basic needs’ as taking shaped by culture and individual personality (Scribd, 2006).

Therefore Red Bull was aiming to set up its own ‘individual brand image’ to separate its brand image from the rest of energy drinks competitors. The majority of Red Bull consumers are among the age between 18 to 29 year olds, or known as ‘Generation Y’ who have highly socialize lifestyle (London Business School, 2005).

The completion for segment is vital according to Palmer, 2009. It was always happen that the more potential and more profitability of business segment always attracted more and more competitors, and various companies were ending up copying same strategies and doing exactly the same business activities of each other. Soon highly attractive segment can easily consider to as a ‘non-attractive’ segment.

Red Bull have certainly achieve of creating distinctive brand, the brand logo and name are one of the most influential aspects as once the brand was formed then it is very much difficult to change it again, and the great branding always help your products distinguish and stand out from the crown. The brand image, name and logo should consistency with the products’ descriptions and their product ranges (Palmer, 2009). Red Bull’s logo with two thick-necked crimson bulls in opposing charge against a yellow sun was certainly the epitome of kinetic virility and pugnacity, as well as the ‘Red Bull’ sound as itself most fitted for the energy drinks market (London Business School, 2005).

As the research from ResearchWikis in 2008 shows approximately 65% of the energy drinks consumers are males, and 34% of overall consumers were male teenagers and young professionals. Red Bull has adopted its marketing strategy accordingly to that consumer target and carefully detailed for exploit its marketing strategy plan as precise as possible. Even the plan on recruiting sales-teams only offered to the appropriate ages (young professionals), but also emphasize on ensuing those Red Bull brand ambassadors were athletic and stylish also, therefore they can carried out the correct brand images to the consumer audiences wherever they go (D, Jobber & J, Fahy, 2009). The recruiting those young professionals have continued till date (Red Bull: The company, 2011). The plan f recruiting ‘Student brand manager’ as well as other position in Red Bull organization, Red Bull lunched a programme at various university campuses across UK and the US. The employed university students then reported back the feedbacks on

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those Red Bull target consumers with market research information, with additional benefits as non-sales pitch image of those student employees attached to the scheme.

With the understood Red Bull concepts and consumers behavior analysts, Red Bull also aimed to created he DJ culture where Red Bull planned to set it image and ‘positioning’ evolving in those target consumer cultures. Offering the free cases of Red Bull to a ‘cool’ personality such as DJs , trendy bars and pubs as well as in garbage cans outside selected nightclubs, with the aimed theme of the ‘on the edge’, ‘partying’ and ‘enjoying’ to achieve the dynamic amongst the music industry and built something that was generally respected. In middle of 2000s Red Bull marketing strategy have gone further un-imaginable length, Red Bull hired consumer education teams to drive ‘fancy’, ‘in-trend’ vehicles painted with it signature blue and grey, logos and the giant size of duplicated

Red Bull an mounted on them. Red Bull education teams hit the streets all over many countries, where offering free cans of Red Bull to ‘those who in need of energy’ commonly around ‘truck stops’, ‘office buildings’, ‘gyms’ and ‘construction sites’ (London Business School, 2005).

Figure 3.2 Red Bull marketing strategy

However to become the ultimate energy drinks of all, Red Bull have tried to achieve its products to ‘suit for everyone’ (Helm, 2005). Due to its premium prices various range from $0.96 to $1.90, Red Bull drinks were positioning on the premium energy drinks in its market sector (ResearchWikis, 2008).

To be able to captured other consumer target, those who able to afford the premium asking prices, Red Bull have applied it product positioning to align with its asking price by a mass amounts of investment into buy-out two of its own racing teams in prestigious sport of Formula 1 and Red bull owned football team of Salzburg, and due to its continuing funds and its contributions to the sports, Red Bull racing formula 1 teams able to secure many wins in last few years. The determination and passions of sports from Red Bull are visible clear as the interview from ex-president of Red Bull UK stated that unlike other giant companies such as: Coca Cola, Pepsi etc who only invested into sports as a ‘sponsors’, and only contribute in term of investment funds to secure the brand visibilities to consumers, Red Bull on the other hand had bought out teams and took total control the whole operation, in productions and sport strategies and

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trainings themselves, shown how serious Red Bull and its passionate into sports (Upgrade reality, 2009).

Figure 3.3 Red Bull Formula 1 team

Figure 3.4 Red Bull Air Race

Figure 3.5 Red Bull Extreme sports

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Figure 3.6 Red Bull Salzburg Football Club

However Red Bull also not shown how important its existing ‘Generation Y’ via sponsored various types of ‘Extreme sports’ such as ‘Red Bull Air racing’, ‘BMXing’ and ‘Red Bull-cliff diving’ (Healthvotes, 2011). Red Bull spent over $80 millions into extreme sports each year, sponsors over 500 different types of athletes and along with motor racing academy, number of ‘sports museums’, its own television programme, certainly help promoted Red Bull brand and image seen by worldwide audiences and winning the ‘cool’ image from its consumers.

However despite those successful marketing strategies and its welled products positioning, Red Bull business strategies can be biggest treats by its major competitors. Some of Red Bull giant competitors such as ‘Coca Cola’ and ‘Pepsi’ who now the fearsome players in energy drinks market themselves, are capable funds available and able them to copy Red Bull’s business strategies such as: the huge amounts of funds and sponsors (Scribd, 2006). In the later part of this dissertation will have the discussions into Red Bull competitors and future threats in dept details and analysis.

IV. Red Bull’s competitors

It is normal that the more attractive market is the more companies will seeking for come and try to take their hands in that market share (D, Jobber & J, Fahy, 2009). With the increase sales over 75% since 2000 (BBC News, 2005) making energy drinks sector is one of the fastest growing sector in beverage market. The research from Mintel shown that 1 or every 5 GBP spends in beverage market were from energy drinks sector, and by 2010 the energy drinks market

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estimated worth over $32 billion which can be indicated the increase sales of 33.7% in the US and 18% increased in Europe (Merett, 2007).

The potentially success in this market sector led to an onslaught of new competitors, in 2003 there were 23 new energy drinks were introduced to UK, and some reports shown that in 2009 there were more than 300 varieties of energy drinks representing more than 200 brands in the United States alone (Heckman, 2009). Many researches shown various ranks on the top energy drinks seller in 2010 and 2011, however Red Bull always in the top five best sellers. According to BevWire, 2011, ‘Red Bull’ and its closest competitor ‘Monster’ was number one and two on the best seller energy drinks in 2011. However in 2010 Red Bull is still the leader in energy drinks market in term of dollar sales only due to its premium retail prices (Powerbrands, 2010).

Due to this market sector was so profitable in the last decade, therefore have brought the attention from giants beverage marketer such as Coca Cola Co, and Pepsi Co joined energy drinks sector (Funding Universe, 2002). The increasing in number of competitors has causing the sales of Red Bull come to a substantial decrease. The Red Bull’s share of sales energy drinks market in 2000 was accounted for 86% (London Business School, 2005). As seen in Figure 4.0 from Energy Fiend, 2009 that Red Bull shares in energy drinks sector have continued to decrease.

Drink

Share of Energy Drink Market

(% dollar sales)

2006

Drink

Share of Energy Drink Market

(% dollar sales)

2007

Red Bull 42.6 Red Bull 35.2

Monster 14.4 Monster 27.3

Rockstar 11.4 Rockstar 11.1

Full Throttle 6.9 Full Throttle 6.6

Sobe No Fear 5.4 Amp 5.1

Amp 3.6 No Fear 2.7

Sobe Adrenaline Rush 2.9 NOS 2.1

Tab Energy 2.3 Adrenaline 2.1

Monster XXL 0.9 Sobe 0.6

Private Label 0.9 BOOKOO 0.6

Rip It 0.8 Arizona 0.5

Sobe Lean 0.7 Lost 0.5

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BooKoo 0.5 Rip It 0.5

Sobe Superman 0.4 Vitamin Energy 0.5

Von Dutch 0.4 Jeff Gordon 24 0.5

Drink

Share of Energy Drink Market

(% dollar sales)

2008

Drink

Coming soon

Share of Energy Drink Market

(% dollar sales)

2009

Red Bull 40

Monster 23

Rockstar 12.3

AMP 8

Full Throttle 4

Doubleshot 2

NOS 1.5

No Fear 1.4

Private Label 1

SOBE Adrenaline 0.7

Vitamin Energy 0.5

SOBE Lean 0.5

Venom 0.44

Jolt 0.4

Go Girl 0.4

Figure 4.0 Top 15 Energy drinks in 2007

With hundreds of competitors among this market, the treats to Red Bull seems as will be continue. In this chapter will investigate into some of the Red Bull’s competitors. The author chose these three of Red Bull’s closest competitors who were almost identical in business plans and strategies, etc. to Red Bull.

(a) Monster

Monster energy drinks was first introduced back in 2002, and it a part of one of the top three giant marketers in beverage sector. Monster energy drinks is one of the sub-brands owned by A Californian, American beverage giant ‘Hansen Natural Corporation’ (Energy drinks review,

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2011). Hansen Corporation produces numbers of variety of RTD (ready to drinks) products such as natural sodas, fruit juices and juice drinks, several of energy drinks and energy sports drinks, fruit juice smoothies and functional drinks, non-carbonated ready-to-drink iced teas and children’s multi-vitamin juice drinks. Previously the acquired with California Co Packers Corporation back in 2000, formed ‘Hansen Natural Crop’ allow company to increase their production capacities and well as allowed them to launch numbers of RTD products, the financial record of Hansen Crop was listed in Forbes top list of 200 best companies in USA. The company now owned several distribution factories across the US as well as Europe and Asia (Reuters, 2011).

Monster energy have followed the business principle of Red Bull, by creating its own identity in visually with its large black 16oz can (rather than 12oz from Red Bull) with distinctive  elixir with the neon ‘M’ logo. The fundamental rules of energy drinks was also down to the image and sound of ‘brand’, ‘Monster’ and ‘Red Bull’ and its slogan ‘unleash the beast’ which sound as they are born for males and sports personalities (Rexrode, 2011). After the launch of Monster drinks back in 2002 the brand made double on sales every year since, that sales figures help Hansen earned No. 26 spot on Businessweek’s annual ranking of ‘hot growing business’. However first attempt from Hansen back in 1997, when Red Bull launched in Europe and US, Hansen have been observed the amazing growth of Red Bull sales and decided to take on Red Bull by launching its own brand ‘Hansen's Energy’. The financial sales of Hansen were rather devastated compared to Red Bull’s. Unlike Red Bull where spotted the opportunities to sponsor the sport events, Hansen's Energy failed to strike a chord with core energy-drink consumers, such as college students and action sports fans. The re-lunches of its new energy drinks as ‘Monster’ label in large 16oz can nearly twice the size of Red Bull, roughly is the same prices but twice the quantities (Bloomberg, 2005).

Figure 4.1 Monster energy drinks

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Hansen Monster energy drink is currently No. 2 behind the Red Bull in the $5.7 billion energy-drink category. Currently there are 24 variety types under name of ‘Monster energy drinks’, various from Original energy drink, sugar-free version, several of natural flavors added, to ‘Coffee energy drinks’ (Monster Energy, 2011). After the first attempt from Hansen on introduced the energy drinks was failed, Monster have leant and adapted its strategies almost identical to Red Bull’s. Monster energy had the marketing and business strategy campaign to suit ‘young and edgy’ type of consumers. Monster have numbers of sponsors into extreme sports, such as ‘rally motor sports’

‘mountain bikes extreme sport’ as well as sponsors well know celebrities sport persons such as ‘Ken Block’.

Figure 4.2 Monster energy drinks’ Motorsports sponsors

All of Monster’s sponsor and campaigns allowed the same ability of advertised its brand across the worldwide consumer audiences (Boyle, 2006). At the results of this massive marketing campaigns and sponsors, now Monster is one of the most recognizable energy drinks in Europe and US. The financial report from Forbes show the sales revenue on the third quarter of Monster energy had well exceeded over $484 million out sold Red Bull and many of its major rivals, in additional by owned numbers of distribution centers, Monster is considering to be the priority competitor that Red Bull should indeed concern.

(b) Relentless

Relentless energy drink was relatively new player in energy drinks market, introduced in 2006. Created by Coca-Cola Company, Relentless energy drink had a distinctive taste of ‘sweet’ compare to other energy drinks, the distinctive large bottle (500ml), extremely large proportion compared to its viral. The reason behind the large proportion is aimed for those consumers with a need of strong stimulation (Coca-Cola: Great Britain, 2011). Once again the distinctive brands and slogans proved especially pivotal in this sector. The edgy and catchy name like ‘Red Bull’, ‘Monster’ and ‘Relentless’ made these brands certainly attractive to ‘Generation Y’, male consumer (Gosling, 2011).

Like ‘Monster’, Relentless also offered variety of energy drink products, as well as the original energy drinks, sugar-free version, energy shots, also with added mixed soda, added flavors, or even some drinks contained 50% juice (Relentless, 2011).

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Figure 4.3 Relentless energy drinks

With the well-experienced controlled by the largest beverage marketer: Coca-Cola, Coca-Cola also saw other important aspects in introducing the new products to the market and how to create ad great advertising campaigns. The attentions in details can be seen from their aimed to create an eye-catching insignia over a single side of the pack opposite the original logo which said Coca-Cola that would provide striking stand out for the range as a retail display (Goldstein, 2011).

Figure 4.4 Relentless energy drinks extreme sports sponsor

Figure 4.5 Relentless music festivals

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As well as some familiar marketing strategy with the rest of energy drinks competitors, relentless also heavily sponsored various extreme sports, such as recently sponsors of the North West 200 international road races (BBC sports, 2010) and other extreme sports, BMX street contest, world cup skate contest etc, as well as promoted and sponsored major music festival, become the host for the well known ‘Glastonbury’ named ‘Relentless energy drink NASS festival’ (Blanco, 2011). Again after the much invest into marketing and advertising campaigns Relentless continues sales growth, Relentless currently estimated to be worth more than £52 million. Coca-Cola aimed to expand other additional drinks under Relentless brands in the future (Coca-Cola enterprise ltd, 2011).

(C) Rockstar

Rockstar energy drink based in USA and was introduced in 2001. Due to the opportunity of fast growing energy drinks market in USA. From the beginning of it launch the energy drinks market which by that time already crowned with hundreds of products. Rockstar marketed itself in such a way to differentiate its products as much as possible. By offered a better value than its main rival (Red Bull), twice the size but similar sale price, as well as the first of the energy drink brand to offered variety of flavors added. At the moment Rockstar have many diverse products similar with Relentless and Monster with additional coffee versions and other healthy energy drinks with natural juices added. Rockstar had great growing since launched in 2001 and in 2009 Rockstar sold over 20 countries worldwide (Hein, 2009).

Figure 4.6 Rockstar energy drinks

However with its rapid expansion generated the disrupt problem with its distribution capabilities. In summer 2009 Rockstar switched its distribution license from Coca-Cola to Pepsi, due to Coca-Cola in favor over the license from Monster energy drinks instead. Since join Pepsi, who already owned numbers of energy drinks under its corporate such as: ‘SoBe’, ‘Mountain Dew’

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and ‘AMP’ (Gorge, 2009). In 2009 after Rockstar licensed its distribution to Pepsi, led to the merging between tow companies saving cost of productions as well as regain the brand power for Pepsi Co (MacMillan. R., 2010).

Figure 4.7 Rockstar’s sports and games sponsors

Like its competitors Red Bull, Monster etc, Rockstar had also invested mass amount of its funds through sports sponsors, numbers of music tours and sponsors digital gaming to attract Generation Y consumers as well as younger generation due to the its lower prices.

Other competitors

Due to some forecast on the growth of energy drinks market can be worth $9 billion in 2011 which accounted for approximately 440 % increase since 2002 (Nacs online, 2007). It was no wonder Red Bull which was one of the earliest energy drink brand faced hundreds of competitors. Apart from the main competitors which among them owned various numbers of energy drinks, AMP, Mountain Dew, Gatorade, SoBe, etc (PepsiCo, 2011), were all almost identical in their business strategies, business plans, brand images, and pricing. Other energy

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drinks in contrast focused on totally different consumers all together. According to the forecast trend of the energy drinks market from ‘new nutrition business, 2008’ analyst that the trend of future energy drinks will certainly be more diverse, majority of existing brands and emerging brands will seek their ‘niche’ sectors such as ‘natural energy’ or ‘females energy drinks’. Some relatively new brands such as ‘Go-Girl’ and ‘Diabolo Loco (advertised itself as the energy drinks that concern of educate consumers with its healthy energy drinks) (Energy drinks review, 2011), as well as giant competitors such as Relentless and Rockstar have now created their niche sector by focused on female consumers.

Figure 4.8 ‘Go-Girl’ female consumers

Other energy drink brands have gone one step further to re-create energy drink added with alcohol such as Anheuser-Busch’s new drink 180. One of the reasons that many energy drink companies tried create niche market sector not only driven by the sales shares from energy drink market, but also the fact that majority of energy drink no matter which brands are vertically similarly the same in ‘taste’ some have more sweetening, some offered more variety of flavors (Fact Expert, 2011) furthermore most brands contained fundamental ingredients and promised the identical their drinks effects and abilities to boost energy (Consumer research, 2009).

Other than those main competitors from giant beverage and other experienced beverage energy competitors, in recent years the market have witness the growing power of the supermarkets. Supermarkets and Retailers were automatically having the advantage of limited the shelves’ spaces, gaining on the bargaining power for products that sold via them. Recently most of the supermarket giants such as Tesco, Asda, Sainsbury, etc launched their own energy drinks brands, such as KX and Kick from Tesco, Blue charge from Asda and Blue volt from Sainsbury. The

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bargaining advantages from being giant retailer themselves resulted of their own products at the much lower price than other independent brands (Healthvotes, 2011). In contrast with the majority of energy drinks such as Red Bull, Monster and Rockstar which priced in retails and supermarkets at approximately nearly £2 per can but the supermarket own energy drinks priced at less than 3 times at those household brands, at less than 50 pence per can (Energypirates, 2010).

These own branded products from Supermarket are well considered to be a long term battle for those established energy drinks like Red Bull, Monster and even some beverage giants. So did Red Bull feel threatened? In many cases Red Bull have challenged to the extreme length from its competitors even via replicate the similar names which can lead to confusion such as ‘Red Rhino’, however Red Bull legally won the challenges over trademark infringements. Mateschitz stressed not much worry of the question on the threats from Red Bull competitors, said the market is not generic; it does not exist if we do not create it. It is a branded market (London Business School, 2005). However even in the recent years with hundreds of newly emerge competitors every year. Red Bull financial performance have shown decline in the last few years, he author will analyst further issues of what else have threaten Red Bull’s future.

Figure 4.9 Tesco’s energy drink (KX) and Asda’s energy drinks (Blue Charge)

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V. Future challenges for Red Bull

Apart from growing number of competitors in energy drink market which already threats the lower sales for each of energy drink companies. Yet other long standing issue against energy drink always related to the negative impacts of the side effects from consuming these energy drinks.

(a) Health concerns

There have been numbers of researches by the government institutions, universities and private investigators which mostly shown much of the negative rather than the majority of energy drink companies claimed to delivered as the positive impacts. The energy drinks ingredients are commonly consisted of high level of Caffeine and Sugar, the ingredients themselves already been much of the negative images of the consumer products. The positive promises from energy drinks are meant to enhance mental and physical stimulation for a set period of time and are mainly used during the time of strenuous physical activity and to satiate thirst. However, majority of energy drinks do not hydrate the body instead they often lead to dehydration (Freeman, 2009).

The confusion among the suitable consumers who should be aware of the danger of energy drinks is various. As if the prolonged consumption of energy drinks can also lead consumers to the habit of addiction, majority of energy drinks on sales today are primarily suitable for the consumer target who interacting with only ‘extreme sports’, who needed a quick burst to enhance their abilities in the short term periods. However most of the researches pointed out the possible long term effect on consuming energy drinks. The concerns were raised due to the majority of energy drinks consumers are the aged between 18 to 30 years old or known as Generation Y, considering as the youth consumers who according to many government institutions and university researches strongly advices and encourages these young consumers to aware of the negative side effects in the long term health problems (Parker, 2011).

As the energy drinks are commonly consumed worldwide, according to David Ellis, a sports nutrition expert and registered dietitian who train both collegiate and professional football players had expressed this concern about the attitude athletes take toward energy drinks. Ellis mentioned that there is no get away from these energy drinks, as they appeared in every locker room. It is true that energy drinks delivered what they promised of their benefits, but only to who that needed, for example the extreme sport persons, a footballers and other athletes are the most obvious of the energy drink products. However while consuming much amount of energy drink in the daily basis in such case of Steve Bechler, a 23-year-old pitcher with the Baltimore Orioles in 2003 collapsed during his work out sessions, after have been reported from local hospital confirmed that the energy drinks ingredients in this case contributed to his risk of heatstroke. In this case was in fact led to other non-direct related negatives effects of the energy drinks, from

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the interviews among many athletes found out that the energy drinks sometime kept stimulating through the early morning time, 1 or 2 am in fact, the questions asked what then these athletes did when unable to sleep at nights occurs, the solution was to winded down with alcohol drinks which eventually help them falling asleep, these also led them to other health problems (Severson, 2006). In some other reported was raised concern from Johns Hopkins University that one of the 28 years old male had cardiac arrest due to consumption of caffeine and taurine containing in energy drinks, plus arduous physical activity has contributed to his fatal heart attack in 2007. Some of these incidents caused by the lack of control from some government institutions or the loop hole in consumer law, for example in the US, not every energy drinks have to be approved by the U.S. Food and Drug Administration (Farley, 2009).

Red Bull is one of the most focused among the negative health effects among the rest of energy drinks on the market. This could possibly be because of it ‘icon’ of worldwide energy drinks. Not surprisingly Red Bull has been reported far worse than some of its competitors, for instant, Red Bull have been banned from selling via many European countries. Red Bull came to the health concerns spotlight since in early 2000; Red Bull was struggling on receiving approvals from numbers of European countries. The major accuses of banning Red Bull or other energy drinks were always concerns with the number of death rates that potentially caused by consuming energy rinks (B5Media, 2008). In 2004, French ban Red Bull drinks as discovered Red Bull drinks might have been related to the contribution on causing several deaths, however the European court of Justice had challenged French government that had no right to upheld or ban Red Bull from selling but have adjust the energy drinks effects via forced Red Bull to carry 'high caffeine content' warnings, however this incident was one of the first negative image of the ingredients contains in Red Bull (Medical news today, 2004). In 2009, once again Red Bull had received the negative feedback ban from Germany of its relatively new ‘Red Bull Cola’ drink, after traces of cocaine were found. The German consumer ministries had a direct ban in two of its states, the German consumer ministries confirmed that despite the non-direct health threats but the trace of cocaine were definitely not permitted in German food protection. Again Red Bull protested its health and safety issues that the trace of the cocaine was distracted from the ‘coca leaf’ used worldwide in foods as a natural flavoring. Later Red Bull appeals certainly in European court and also in the US, later been approved by both institutions, however the contradictions on the loop hole of the energy drinks were still very much concerns to date, from this cases, Red Bull and other ban of various energy drinks has raised the awareness the dangers of energy drinks (Hall, 2009).

However as the main energy drink consumer target group is Generation Y, which having the frequent hobbies of Social, on the edge lifestyles, eventually much of the energy drinks were end up mixed with alcohol in social events. One of the most criticism brands was Anheuser-Busch’s new drink 180, with its concept of energy drink mixed ready alcohol, and also to those individuals can still mixed highly caffeine energy drinks with alcohol on their own. The immediate concern was raised by Journal of the American Medical Association (JAMA) as the

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concern that energy drinks had become subculture of partying and has been linked frequently to drinking high volumes of alcohol the harmful from serious alcohol-related consequences such as sexual assault, drink and driving while intoxicated (Science Daily, 2011).

Due to these countless negative reports and researches many institutions have demand the contribution from energy drink companies to provide the better understanding and communicate the health awareness to their consumers. Researchers understood the consumers’ current behaviors of ‘work hard, play hard’ culture, and consumers will drinks energy drinks despite knowing the negative side effects of them (Farley, 2009). Some of the major player such as PepsiCo who produced AMP, Mountain dew, etc argued that the company aimed to satisfy consumers with their products with responsibly (Parker, 2011), this was the example of the raise concern of lacking supports from the energy drink companies themselves to create awareness. From the negative incidents, some fatal, still some of energy drink companies refused to cooperate with authorities. It is necessary important that the awareness on the public health regarding the high level of caffeine consumption from no matter which beverage sources.

(b) Declining sales

There were numbers of the sales forecasting and financial reports show the possibility of the declining market in the energy drink industry, which was the expected cause from the global economy recession. However for over a decade Red Bull with its cleaver marketing teams and the slogan ‘gives you wings’ was both simple and memorable, summing up the unique USP of its energy drinks in one sentence, so there for Red Bull had always achieved the top ten spots of consumer satisfaction and top ten best selling in energy drinks market sectors. However due to the growing sales in energy drinks sectors, the question was that energy drink market are too crowned? With the best afford from Red Bull as they even produced their own Cola version, but however there was no get away for long along came the beverage giants Coca-Cola and PepsiCo to start their own energy drinks, not including hundreds of independent competitors in the past decade, and recently supermarket own brands, which tense for Red Bull to sharing their shelf spaces among these competitors (Health votes, 2011).

Some researchers had criticized the success of Red Bull and other well known energy drink brands were only down to each company’s budget on marketing and advertising themselves. So if these the only the fundamental aspect of making the success of energy drinks what the future of Red Bull will be against the fearsome super-power competitors which are desperately to expand their business portfolios in licensing the independent brands as well as introducing own sub-brands every now and then (Weston, 2010). The threats from growing number of competitors as report from Mintel suggested from 169 to 306 competitors during 2007-2008. Even though from the early to the middle of 2000, the energy drink market have increase phenomenally, the in the attractive market condition had already pointed out the dangers of new competitors existing on the market, In 2008, Coca-Cola began distributing Monster Energy, currently the second best selling brand behind Red Bull, with a 20.6% market share. In 2009,

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PepsiCo signed a distribution deal with Rockstar Energy, the third best selling energy drinks, with 12.9% of sales. According from Mintel reports, Coca-Cola and PepsiCo aimed to continue expands their portfolio in energy drink market (Powerbrands, 2010) and at the same time aim to keep their low profiles in this sector via choosing to distribute independent brands rather than buy them outright. And there was no sign of Pepsi trademark anywhere on those brands. Their strategies was to separate them under a different identity. As well as the question on the recent economic down turn, which beg the question of who are willing to pay their top dollars for a can of energy drinks? The obstacles of advertising the goodness of energy drinks was quite difficult enough due to the negative images that energy drinks received in the past, some have even arguing for majority of consumers in this recession period, consumers would be better off with the pure or mineral bottle of water which half the price compared with most of energy drinks. (Knowledge@Wharton, 2009).

Continuing with the global economic down turn the reports from a food and drink consultancy Zenith International, shown 2% increased in 2008 almost double sales figures compared back in 2003, but worryingly in the post five years before 2008 the average increasing was 14% each year. So this might have signaled the slower demand on what considered as the premium products like energy drinks. The most best selling continents of energy drinks was also been badly affected by the global recession. North America is the leading region with approximately 37% global volume, followed by Asia Pacific with 30% and West Europe with 15% and East Europe with 6% shares. The Asia Pacific was one of the worst experienced the economic affects and saw the consumption declined falling by 18%. The sales of energy drinks in Thailand were dropped suddenly by over 40% in 2008 alone, mainly from the number of workers made redundant during that period. The United States is the largest consumers of energy drinks, flowed by Thailand, Indonesia, China and UK. Therefore the sudden declining sales from these regions or countries would negatively pivotal for any energy drinks sale performances (FoodBev, 2009).

Red bull has announced a drop in revenues for 2009 which due to the global economic slowdown. For the year the company's net sales came in at EUR3.27bn, down 1.5% on the previous 12 months. Business monitor international agreed the decline sales might well be the affected from the economic situation but in fact Red Bull was also likely to have been hit by an increase in competition. Back then in 1997 the first Red Bull entered the US market and one of the first energy brand single handed worldwide had controlled over 70% of the worldwide energy drink market. However due to Red Bull main competitors from Monster, Relentless etc which contained exactly the same ingredients, aimed at the same consumer targets and produced the well known beverage giants, yet can be up to 50% cheaper than Red Bull. The worried that those competitors have the abilities to produce the drinks of such a lower production costs. Coca-Cola and PepsiCo had hundreds distribution centre between them, the ability to achieve the low production cost per can/bottle have phenomenally threaten Red Bull of its sky high retail prices (Business Monitor International, 2010).

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What else with the text book theories of breaking through the success in energy drinks market apart from having the clear massages, image of the brands that should be pure and simple and the most important of all, ‘aspiration marketing’ (Knowledge@Wharton, 2009). Red Bull have certainly achieved in that respect with it success in positioning is brand image, the marketing strategies; however these activities came as the costs. Via continuing its brands awareness for the worldwide consumers meant the mass amounts of investments was required. In order to achieve those brand awareness across the globe, in the past five years, Red Bull had insanely bought out numbers of motor-sport teams, football teams, sponsors extreme sports, etc (BBC Secrets of the Superbrands, 2011). Yet these strategies had soon followed by Monster, Relentless as they were followed the way to success and their virtually unlimited funds on promoting their brands. With this real case scenarios, the threaten powers from number of competitors, BMI (Business Monitor International) raised the possible long-term affect that will created the further declining in sales to Red Bull.

Other threats from if Red Bull keeping decline in its sale performance needed to be also considered. During the fast emerging competitors to the business sector, the markets shares were mostly reduced. The existing organizations or companies should analyst it abilities and performances. The weak performances the trend of declining sales, therefore the suppliers and the retailers will turn their contacts, licenses, etc to enhance the competitors that have more potential to be long-term success (Palmer, 2009), not to mentioned the direct competitors from Supermarket themselves.

One of the solutions to increasing financial performance in beverage sector is to create the diverse or innovative products, Monster, Rockstar and Relentless have been well succeed in expanding their products line. One of the success innovative energy drink product such as ‘energy shot’ from Red Bull was proven success, so success in fact that over 70 energy drink brands have adopt this concept to their product lines (Nutrition Business Journal, 2009). Meanwhile some studies found the difficult possibility of introducing the alternative or innovation products to create niche sector in energy drink sector. JuicePoP had tried to launch its innovative energy drink product, by the combination of fruit juices and sparkling water based on the new technology that allows using juice without preservatives. The research showed the near impossible chance to be success in this increasingly crowded market and there are many entrepreneurs who had the positive determination of their energy drink products, yet little understanding on the fundamental the marketing strategies to establish a new success energy drink (Knowledge@Wharton, 2009).

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VI. Research Methodology

This chapter outlines the primary research objectives of the dissertation and how it is aimed to satisfy the dissertation objective. The outline of this chapter closely matches the stages outlined in Kotler and Keller (2006) research model process. The chapter begins with a short discussion of the research process, followed by brief outline of the data sources and data collection methods available to the project. The aim of this chapter is to explain the main research decisions in collecting information to satisfy the set research objectives.

The objective of this dissertation on the overall energy drinks market and how to strengthen Red Bull on its future performance furthermore the potential future market for Red Bull in other area apart from energy drinks market. To finding supported evidences, methodology will help to underpin as well as to clarify this research to analysis in depth on energy drinks market.

Research Design

According to Aaker (1998), Kumar (1998) and Day (1998), the research design is the detailed blueprint used to guide a research study towards its objectives. The research design incorporates the key elements of the research process, including the establishment of research objectives, the analysis of available data sources and suitable data collection procedures. Furthermore the research design includes information on sampling issues, data processing, and data analysis. The methodology will be illustrated by using sufficient research strategies to reach the research aims and objectives. This section justifies the choice of a descriptive research design for the stage-two quantitative research, which is the major phase of this study. A research design is a plan of the research project to investigate and obtain answers to research questions (Cooper & Schindler 2001; Davis & Cosenza 1988). There are 5 types of research designs identified from the literature: Experimental, Cross-sectional, Longitudinal, Case study and Comparative designs (Bryman, 2004).

This dissertation focused on Cross-sectional design, known as a survey design. Survey research comprises a cross-sectional design in relation to which data are collected mainly by questionnaire or by structured interview on more than one case and at a single point in time in order to collect a body of quantitative or quantifiable data. The cross-sectional research makes a great deal of use of research instruments, such as self-completion questionnaires and structured observation schedules.

Data collection Methods

Kinnear and Taylor (2007) recognise this stage of the research process to be the point where the design of the formal project is established and appropriate sources of data for the study

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identified. In considering this task, the dissertation will firstly, discuss the different sources of data available for research and secondly, outline the different types of data available to the dissertation, before finally establishing the initial design of the research project.In order to meet the information needs of research objectives, the researcher can gather secondary data, primary data, or both (Saunders et al, 2009). Secondary data provide a good starting point for research and often help to define problems and research objectives. In most cases, however, secondary sources cannot provide all the needed information therefore the researcher must also collect primary data. According to Joseph Gibaldi (2003) said that “Primary research is the study of a subject through firsthand observation and investigation, such as analysing a literary or historical text, conducting a survey, or carrying out a laboratory experiment. Primary sources include statistical data, historical documents, and works of literature and art”. To achieve the project, the methodology will be divided into 2 parts: primary research and secondary research. Primary research will provide 2 methodologies which are:

Primary research

This research technique allows us to gather a sufficient of information from respondents in order to analyse an attitude by using quantitative method. Within the research, online self-administered survey will be used to collect data because the method is widely used by many researchers as an appropriate method to collect data from Internet users and reduce costs, time in surveying (Dillman, 2000; Grossnickle & Raskin 2001; Churchill 1987). Although data from an online survey may not be as precise as behavioral observation, it is a reliable method for researching respondents’ attitudes. The key strengths of an online self-administered survey are mainly cost and accuracy (Aaker, Kumar & Day 1998). Respondents can answer the questionnaire at their convenience.

Questionnaires

It is a curtail method of collecting a wide range of information from a large number of respondents. To understand the perception of consumers and consumer behavior which is related to the scope of this project, questionnaires will be a type of open and close questions and will be dividing various aspects which are Red Bull brand image, perception of energy drinks, etc. The questionnaires will be arranged via internet, through e-mail and social networks as well as engage by consumers in the street.

A survey will also be conducted in UK market. The questions will be printed on papers and will be aiming on UK/local respondents of every age. The author aims to collect 100 respondents, from UK.

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Questionnaire Design

Customers’ responding rate relies more on an attractive layout of the questionnaire (Dillman, 2009). Owing the major issue of postal questionnaires has a low response rate; the design of a questionnaire would tend to be as simple as possible.

By doing so can encourage interviewees to fill the questionnaires. Thus, the questionnaire is to be published online (www.monkeysurvey.com) and (Facebook.com) and is therefore trying to reach more interviewees. The expected number of interviewees is 100 people. This is in order to obtain an objective and measurable result. The questionnaire will design to examine the perception of consumers toward luxury brands and consumer’s spending power which can be divided into two main parts: First part of a question is demographic question (Age, gender, ethnic, income) about the respondents. To measure variables related to characteristics of consumers by using checklist. In the second part, is a composed of opened-end questions asking the respondents to measure their spending behaviors and perceptions.

Sampling

The basic principle of sampling is that it is possible to produce accurate findings without the need to collect data from each and every member of a survey ‘population’ (Denscombe, 2010).

In sampling method, it has been decided to use Non-Probability sampling which is an easier method to conduct (Ghauri and Gronhaug, 2002) and Quota control the most common ‘non-random’ sampling which involve in various characteristics of the population are considered as vital for the purpose of the survey contained the questions with ‘gender’, ‘age’, ‘occupation’, ‘income’ and so on (Curwin & Slater, 2008). The author aimed the sampling size of 100 questionnaires, Sue and Ritter (2007) recommend that piloting survey might involve a pre-test conducted with a small scale of respondent to validity of content and reliability of the question before distribution. This approach also eliminates unnecessary or inappropriate question that may cause misunderstanding and confusion.

Secondary research

Secondary data can be collected internally or externally. Kotler (2001) recognise that ‘researchers usually start by gathering secondary data’ to provide a background to subsequent primary research. For the purpose of the dissertation, secondary sources were collected from a range of sources. Relevant sources of data for the research project in hand were obtained from academic journals, textbooks, newspapers, published source, in which arguably the most important secondary sources this included some data from the official bodies i.e.: The British Soft Drinks Association, as well as other commercial interested data such as ‘Data monitor’ and

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other related data was published from ‘Mintel’. And finally from the variety of business electronic sources which is essential of the collection of networks sharing the exchange and communication with diverse with non-regulated data (Curwin & Slater, 2008), opinion and articles listed materials the author chosen the most appropriate internet sources such as the articles from trusted business website such as BBC news to provide the most accurate possible and brought to the best analysis secondary research support for this dissertation.

The secondary research will be completed by looking at 3 major sources which are:

Energy drinks business, Drinks marketing and consumer behavior in this sector Business and marketing journals Online sources such as e-books, e-journals, business news, business blogs, etc.

The information and data from primary and secondary researches will be applied to analyst into energy drinks business in details, and the intention to achieve the solid information to implement and conceivably for those newly entered brands around the globe.

Data Collection

A summary of primary data collection method for the research project is illustrated below:

Method

Data type Quantitative

Data collection procedure

Questionnaires

Sample Sample of 100 respondents consisting both males and females.

One of the key elements of success to the collection of data is the design of the questionnaire. A questionnaire is a data collection instrument that can be used to measure (1) past behaviour, (2) attitudes, and (3) respondent characteristics (Kinnear & Taylor, 1983).

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Data Processing and Data Analysis

In this research, Microsoft Excel statistic program will be used to analyzing and understanding the data that collected from the questionnaires. The data will be collected through a quantitative research method, and the ‘Bar chart’ though ‘Microsoft excel statistic programmed’ which will formulate the data as statistic and numerical term. The statistical data will be consequently demonstrated and evaluated in form of tables and graphs. The analysis will explain the relationships between each variable and means.

The challenges and difficulties

One of the market research methods for the primary research was aimed to interview with Re Bull’s employees. The challenge came before the start of this dissertation. The author had contact with number of Red Bull offices around the world this include UK, Austria and Thailand. The aim was to arrange the interview via telephone. As the email had been exchanges from both parties, the arrangement of the interview time and the availability of the interview proved impossible. In some case, Red Bull Thailand was totally reluctant even on the email responds. The questions on the interviews were to investigate into its marketing plan, and other general business aspect including the future plan of how to sustain its business all of which should have been very valuable for the author’s research. As Red Bull have strict rules of exposing its marketing strategy. The respond via email which attached along with their general backgrounds and some marketing information are shown in appendix 2. However the survey research has been carried out as normal and should provide with best effort on analyzing other general opinion from consumers.

Conclusion

It is vital for any research projects should able to undertake the feasible and most appropriate methodology in order to achieve the best possible information for the foundation resources and the effective guideline for achieving ‘good research’. This chapter has demonstrated the methodology of the research project. The consideration has been made to the suitability of different research methods available to the researcher. The chosen methodology has been defined and the justification for decisions presented. The next part of the dissertation is to present the findings of the survey data which allow the better understanding in those consumer’s aspects and opinions. And finally with the conclusion of the data analysis where some recommendations will include of what Red Bull should do in the future of its business.

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IX. Data analysis

The data from survey questionnaires can be vital information to support the secondary researches from the earlier stages. The author has gathered the total of 100 questionnaire examples from various electronic sources such as ‘Monkey Surveys’ and ‘Facebook’. The author aimed to make this survey as general random through various ages, sexes, and backgrounds as much as possible, therefore through these questionnaires submission via independent electronic sources would be the most appropriate for the intention of this survey. The surveys design (please refer to Appendix 1), is to gather the information from general consumer of their perceptions towards energy drink, and especially focused on their perception of Red Bull as the energy drink products.

Male Female0

10

20

30

40

50

60

70

Sex

White Asian American Indin

African Other0

5

10

15

20

25

30

35

Ethnic

39

15-19 years old 20-29 years old 30-39 years old 40-49 years old 50 yeard old or above

0

5

10

15

20

25

30

35

40

Age

Age

From the beginning for the survey with generally gathered the information of the interviewees’ backgrounds. The first four question which include sexes, ages, ethnics, and education backgrounds. Majority of the respondents were males with 58% and females in 42%. The actual aimed from the question 2 in the ages of the respondents the author got were much satisfy as the majority of energy drink consumers were among Generation Y. Therefore by have the majority of respondents in age group of 20-29 years old will provide the realistic feedback from this important consumer target.

The majority of the respondents were having the education backgrounds ranged from Collage students to higher education in masters degree or above, which meant ranged from students to young professionals.

High School College Bachelors degree Masters degree or higher

05

10152025303540

Education

Education

40

In the later of the first part of the survey aimed to gather how frequently of the consumption from respondents. The data shows that majority of respondents have purchase energy drinks most in ‘every week’ followed by ‘everyday’. Only few respondents have never consumed any kind of energy drink products. In the question that asked on the frequently of the respondents of purchasing Red Bull prove positively. From question 6 (and later in question 90 have shown the prospective of purchasing Red Bull majority of every week and everyday despite Red Bull premium retail prices, which also can indicate the positive consumers awareness of Red Bull in an energy drink market.

Surprisingly even though the mere 5% of the respondents have consumed energy drinks over twice a day, which actually over the recommended from health authorities and the energy drink companies. In dept details those 5% that consumed over twice a day were majority from the respondents’ age of 15 to 29 years old group. This data will indeed support the theories of the new ‘culture’ of edgy ad work hard play hard on current trend of partying etc from these consumer groups.

Over twice a day

Twice a day Everyday Every week Every month

Never05

10152025303540

How often you consume energy drinks?

How often you consume energy drinks?

Over twice a day

Twice a day Everyday Every week Every month

Never 0

5

10

15

20

25

30

35

How often you consume 'Red Bull'?

How often you consume 'Red Bull'?

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Genera

l tired

ness

After/Befo

re sp

ort activiti

es

The li

keab

le tast

e of p

roducts

Socia

l activiti

es (N

ightcl

ubbing etc)

Other 0

5

10

15

20

25

30

35

40

45

What is the reason likely for you have Energy drinks

What is the reason likely for you have Energy drinks

Red Bull

Monster

Rockstar

Relentle

ss

Other (Su

permark

et own bran

ds, etc)

05

101520253035

What is your preferable Energy drink brands?

What is your preferable Energy drink brands?

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In part 2 the questions aimed to identify the consumers spending on energy drink products in US dollars (due to the random environment of surveys). What the most recognize energy drink brands in respondents’ opinions. And finally aimed to gather data on what consumer trends are and what they think of the future of Red Bull they prefer to see. From question 7 the average spending on energy drinks in a weekly basis was around 10-12 US dollars, that roughly approx of merely once a day.

The data shows that the majority of the reasons behind purchasing energy drinks were mostly because of ‘general tiredness’ and closely followed by the consumption at ‘social activities, such as partying etc. There were surprisingly low percentage of the reason of consuming energy drinks in the traditional period that to enhance the ability before and after the sports activities. This data have strongly indicated the support theories of consumers’ new perceptions toward energy drinks today.

From the responding data in question 9, could show that ‘Red Bull’ is still one of the most recognizable energy drink brands today. The question of why consumers prefer Red Bull energy drinks were strongly related to Red Bull as an iconic of the energy drinks. There is hardly any respondents stated the reason of likeable of its taste. However regarding the respondents that chose other brands such as supermarket own brands were respondents who in average weekly spending on energy drinks lower than 10 US dollars.

Yes No0

10

20

30

40

50

60

70

80

90

Would you want to Red Bull to produce other sector of beverage drinks?

Would you want to Red Bull to produce other sector of bev-erage drinks?

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Healthy/Organic sec-tor

Alcohol related drinks

Other0

10

20

30

40

50

60

70

What would you prefer Red Bull to expand its product into which sector?

What would you prefer Red Bull to expand its product into which sector?

In the final part of questionnaires aimed to gather the preferable of the Red Bull products in the future. Majority of respondents would want to see the expanding of Red Bull product lines. From respondent opinions indicated the healthy issues are important, over 60% of the respondents would prefer Red Bull to expand their products in healthier type of energy drinks. However nearly 30% had totally preferred Rd Bull to expanding its energy drinks which related to alcohol products, and other 10% would prefer Red Bull to have more diversify energy drinks i.e.: added flavors, energy drinks for females etc.

From this questionnaire data can conclude that Red Bull is still one of the household brands in energy drinks market. The demands of energy drinks seemed stable as frequently purchases on weekly basis. However with various varieties of choices in energy drinks nowadays. The future of Red Bull would certainly need to diverse its energy drinks products to suits every consumer groups.

X. Conclusion and Recommendations

This dissertation aimed to analyst the future of Red Bull. From both secondary and primary researches shows that the energy drink market is likely to continue to grow and will be worth billions of dollars in years to come. Red Bull is one of the first to capture the ‘energy drinks’ we known today. There is no question about the Red Bull success in the past decade. Red Bull is one of the most recognise brands in energy drink market today. Hundreds of competitors in energy drink market today, which majority of them have the diverse their energy drink product portfolios. Among hundreds of competitors, the biggest threats were from the giant beverage

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rivals, Coca-Cola and PepsiCo that would eager to overtake the leader in energy drink sector from Red Bull. he advantages of Coca-Cola and PepsiCo are their numbers of distribution centres which provided them with lower costs of production, in which Red Bull is unable to compete on its retail prices. Among these two giants alone consists of many energy drinks sub-brands which not only are the second and third best selling energy drinks at the moment but also, having the advantages of their abilities to diverse their energy drink products as they also owned other fizzy drinks.

Worryingly the success story of Rd Bull was always because of its marketing strategy, which successfully captured its consumer target group. However Red Bull heavily relied on its expensive marketing campaigns alone. The costs of keeping Red Bull brand seen worldwide took away 25% of Red Bull sales revenues alone. And unfortunately these marketing strategies were easily duplicated by those giant competitors, as Monster, Relentless and Rockstar were basically copying Red Bull marketing plans as their availability of funding. In additional to these giant competitors, Red Bull also had the direct competitors from its retailers. The supermarket which have now create their own energy drinks, having their own shelf spaces, able them to sold their products at much lower prices, Red Bull was facing all rounded competitors from every environments. So what Red Bull should do in the future to keep its status in energy drink market sustainable in the long-term?

The statement from Mateschitz the co-founder of Red Bull in 2004 realised these threats of losing battle with its rivals. He stated that Red Bull have to go for diversification and possibly even acquisitions. He also stated that Red Bull had now heavily invested in R&D for the stability of Red Bull brand in the next five years. Yet now after 7 years of his statement, Red Bull products barely diversify, since then only the ‘energy shot’ was create as its new line of products. It certainly not easy tasks of successfully of expanding or introducing new products to the market, in 2004 Red Bull introduced its caffeine bottling water called ‘LunAqua’ in the full-moon parties, was the only product that carried Red Bull logo apart from its main energy drink products, yet failed to excepted from consumers (London Business School, 2005).

Recommendations

For Red Bull to be sustainable in the long term future, it is necessary For Red Bull to expand its product lines, to capture various energy drinks market shares. It is certainly feasible for Red Bull to expanding its related products as the brand ‘Red Bull’ is already and iconic and well established to worldwide market. The ability of Red Bull to consider ‘brand extension’ is one of the positive ways forward for Red Bull. Due to Red Bull in the past decade had heavily invested brand promoted/awareness already, as well as its positive feedbacks of Red Bull brand among consumers. Therefore rather than started all over again with the ‘new name’ was unnecessary (Palmer, 2009). However as the Red Bull brand was attached with the images of edgy and

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innovative, to extend their non-related products can also damage the existing brand images at the same time.

However there is no denying the difficulties to be success introducing the new products to the market or create a niche market segment. It is important for any companies to ‘evaluate its market segment’, companies should carefully choose the market segment that worth to invest, and always weight out the attractiveness opportunity in consideration with their capabilities. As well as knowing the size of the market, every company should be sufficient size that they can serve or deliver the products/services economically, for example selling the low-cost holiday packages ‘only to the popular destination’ able to operate economically within 100,000s customers, but in contrast with high-end holiday packages which would more feasible to operate with the thousands of customers scales which suits their demand.

In order to expanding product line the energy drink market which already over crowned, however the high potential of profitability segment, attracted more and more competitors, therefore Red Bull need to considered the related products expansion. The report from F1 times, shown the close relationship between Red Bull and its new sponsor of Red Bull F1 team ‘Singha beer’, both companies have started from Thailand and their both founders were among the best relationship of each companies (F1 times, 2011). Yet the author sees this opportunity of co-ordinate from both companies to create the innovative beverage products in the future, but however the criticisms of the energy drinks and alcohol beverage products would not be the best solution of Red Bull’s future. From the negatives reports in secondary research as well as the questionnaire feedbacks which indicated the way forward of Red Bull have to be with the health concerns.

The diversify products from Red Bull also important to fit with the company objectives, to maintain the premium images/values of the brand and also need to meet the core competency of Red Bull brand. For example of BMW to expand its brand to cheaper version of sub-brands will not suited the brand’s competency of ‘luxury’ vehicles. And it is pivotal for any company to spot the right demand of the potential profitable market that fit to the company objectives. But however some success example from ‘Amstrad’ which launched according to the demand of low-cost household electronic items and boom demand of low-cost desktop computers, have led Amstrad to the great success of spotted the demand opportunities which applied to its strengths and core competencies. And similar case studies from ‘Easyjet airline’ take on the demand of low-cost air travel and ‘Carphone warehouse’ on the spotting the increase demand of private owned mobiles phones (Palmer, 2009).

Other options for Red Bull to expand its product lines are via merging or alliances with other beverage companies. Although this option may have the disadvantage of risk of helping nuture competitors, such as the case example of Rolls Royce and GE had outrun each other by only leant tricks and gain core values from each other rather than resolve problem issues and enhance

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both companies’ goals. But for Red Bull to choose the equity-based alliances which both Red Bull and its partners invest one another to reducing risk of financial issues, improve poor performance, sharing resources and expertises and enhance the speed of delivery new products to the market (J. G, Frynas & K, Mellahi, 2010). Many successful examples via alliance to one another such as ‘Star alliance’ which were formed by numbers of airline to reducing costs, i.e.: able them to share R&D costs, sharing information and benefits each other via reducing the problematic situations of flight delaying and transferring of airline passengers (Pang, 2009).

In conclusion, Red Bull which already well-established energy drink brand, yet now still the leader in energy drink market for over a decade. The attractiveness of this highly profitable market can also become non-attractive. The advantage of Red Bull that well-recognized by worldwide consumers needed to be enhancing by creative products from Red Bull, after all that was one of the core competencies’ images of Red Bull. The threats from its competitors’ advantages of having lower cost of productions and the abilities to diversify product lines cannot be overlooked. Although there are the risks for Red Bull to expanding its product lines, the possibilities to damage its brand image, by giving away its core values etc. But the risk of not expanding is far greater than not attempting. The evidences of the gaining of its competitors’ sale performance caused Red Bull on declining in its sales. For Red Bull to keep the leading position in energy drink market is not easy, clearly there are many opportunities and many business strategies needed to adapt to compete with its competitors, but with the correct and careful business plans and its long experiences in this market sector, Red Bull will surely should be able to continue its success story for decades to come.

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List of figures

Figure 1.0 Lipovitan D ingredients examplehttp://www.taisho.co.jp/en/company/release/2004/04_0614-e.htm

Figure 1.1 Go-Girl energy drinkshttps://beautifulenergy.wordpress.com/tag/go-girl-energy-drink/

Figure 1.2 Diabolo Loco fruity energy drinks http://www.drinkdiabolo.com/

Figure 1.3 Teenage consumershttp://www.youthnoise.com/user/tollieschmidt/blog/view/14943

Figure 1.4 Energy drinks-the market shares in 2005http://researchwikis.com/Energy_Drinks_Market

Figure 2.0 Original Red Bull in Thailandhttp://www.slxs.co.za/2011/04/10/krating-daeng-the-original-red-bull/

Figure 3.0 Red Bull’s main productshttp://www.thebeverageworks.com/red-bull-products-new-york-jersey.php

Figure 3.1 Red Bull Energy shothttp://www.highsnobiety.com/news/2009/01/17/red-bull-introduces-energy-shots/

Figure 3.2 Red Bull marketing strategy http://www.insurance-matters.net/news/03/show-your-service247/attachment/redbull_mini_vinyl_car_wraps_jpeg-2/

Figure 3.3 Red Bull formula 1 team http://iphonetunes.net/index.php/full_article/comments/artificial_life_signs_f1_red_bull_racing_and_gives_f1_bmw_goodies_from_the_/

Figure 3.4 Red Bull Air Racehttp://www.countryandfolk.com/2008/08/fantastic-invitation-red-bull-air-race.html

Figure 3.5 Red Bull Extreme sports http://gizmodo.com/5644779/when-extreme-sports-meets-awesome-projected-art

Figure 3.6 Red Bull Salzburg Football Clubhttp://www.redbull.com/cs/Satellite/en_INT/Article/Aiming-for-a-double-021242789471583

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Figure 4.0 Top 15 Energy drinks in 2007http://www.energyfiend.com/the-15-top-energy-drink-brands

Figure 4.1 Monster Energy drinks http://mw2monsterarmy.webs.com/apps/photos/photo?photoid=78568426

Figure 4.2 Monster energy drinks’ Motorsports sponsorshttp://motorsportsnewswire.wordpress.com/tag/monster-energy-drink/

Figure 4.3 Relentless energy drinks http://swiftor.com/f15/favorite-energy-drink-955/

Figure 4.4 Relentless energy drinks extreme sports sponsor http://lillylovelett.com/blog/2011/06/10/nass-festival/

Figure 4.5 Relentless music festival http://www.gigwise.com/festivals/55494/Relentless-NASS-Festival

Figure 4.6 Rockstar energy drinks http://www.rockstar69.com/

Figure 4.7 Rockstar’s sports and games sponsors http://www.speedjunkie.ca/forum/viewtopic.php?f=14&t=14257

Figure 4.8 ‘Go-Girl’ female consumers http://www.gogirlenergy.com/?navid=15

Figure 4.9 Tesco’s energy drink (KX) and Asda’s energy drinks (Blue Charge) http://energypirates.blogspot.com/2010_05_01_archive.html

Appendices

Appendix 1: Questionnaire

Part 1: Please tick the option that you find most suitable:

1. What is your gender?

Male Female

2. What is your ethnic?

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White Asian African American Indian Other

3. What is your age?

15-19 years old 20-29 years old 30-39 years old 40-49 years old 50 years old and above

4. What is your highest level of education?

High School College Bachelors degree Masters degree or higher

5. How often you consume energy drinks?

Over Twice a day Twice a day Everyday Every week Every month Never

6. How often you consume ‘Red Bull’?

Over Twice a day Twice a day

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Everyday Every week Every month Never

Part 2: The following section will just ask you about your purchasing behavior. Please answer question in US Dollar and select one answer most suitable.

7. How much you spend on Energy drinks on the weekly/monthly basis? $_______________

8. What is the reason likely for you have Energy drinks?

General tiredness After/Before sport activities The likeable taste of products Social activities (Nightclubbing etc) Other (Please state the reason)

_______________________________________________________________

9. What is your preferable Energy drink brand?

Red Bull (Please refer to question 10) Monster Rockstar Relentless Other (Supermarket own brands, etc.)

_______________________________________________________________

10. Why you prefer Red Bull? _______________________________________________________________

11. Would you want to Red Bull to produce other sector of beverage drinks?

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Yes (Please refer to question 12) No

12. What would you prefer Red Bull to expand its product into which sector?

Healthy/Organic sector Alcohol related drinks Other (Please state what)

________________________________________________________________

Appendix 2: Red Bull SWOT analysis (Datamonitor 2004)

Strengths

Market leadership

Within the energy drinks market Red Bull is the industry leader throughout the world. It has annual sales of a billion cans, with a significant presence in Europe and the US. In 2003 it achieved an 80% brand share of the UK energy drinks market. In Europe the company produces two-thirds of overall volume in the region. The brand is present in 13 West European countries and holds the lead in 12 of these. The rest of the top 20 brands take a combined 17% share. In terms of market trends, fewer new brands are being launched compared with the 1990s, and there has been a clear shakeout since 2000. Even the products offered by leading drinks manufacturers are failing to make major headway against Red Bull, with products such as Coca-Cola’s Burn absent from the top five.

Marketing efforts

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The heavyweight promotion and expansion of the Red Bull brand, which brought the concept of stimulation drinks to the western market, has driven functional drinks growth over the years. The company employs well targeted marketing campaigns that appeal to the core 18-25 age group. It has promoted its product using its ’Red Bull gives you wings’ slogan and sponsoring Formula 1 driving; free skiing; BMX biking and other dangerous sports. This has significantly increased consumer brand awareness of the product, and differentiated it from its competitors.

Cadbury Schweppes alliance

Red Bull has established an alliance with Cadbury Schweppes in Australia. The alliance has helped expand the brand’s marketing distribution, allowing more customers to have access to Red Bull across the nation. Sales, which are already 40% up compared to the same time last year, are set to rise dramatically as a result of the pending partnership. Red Bull believes Cadbury Schweppes can help it reach new channels such as food courts, vending machines, hospitals, colleges and sports and travel facilities, ensuring an increased customer base. Such partnerships allow the company to reduce competitive threats from its rivals and extend its sales opportunities.

Weaknesses

Lack of innovation

A number of new energy drinks have been launched in 2004. Raw Energy Fuel Cell is a Canadian vitamin and glucose drink, which is endorsed by World Wrestling Entertainment. This product contains no taurine and has less caffeine than rival offerings. It also comes in 330ml PET bottles as opposed to Red Bull’s 250ml cans.

Other firms are also making headway in the market by introducing sports drink packaging and other initiatives. With little change in its product format, Red Bull is being left behind from the majority of its competitors.

Reliant on small product base

The company only markets one branded product, Red Bull Energy Drink (along with a sugarfree variety). It is therefore vulnerable to market fluctuations, especially as the energy and sports drink category in which it operates is the smallest sector of the overall soft drinks market. With consumer interest turning away from Red Bull’s major strength of carbonates towards healthier alternatives, the firm is finding itself as less of a giant in the playing field. The company would therefore benefit from introducing drinks into other, more successful drinks categories.

Marketing expense

Extensive marketing efforts are required for Red Bull to boost product sales. The energy drinks have high association with fashion and youth trends, and the company must project itself as in

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line with this in the face of giant rivals such as PepsiCo.

Despite the massive costs Red Bull’s marketing campaigns, its rivals also investing huge amounts, resulting in Red Bull gaining smaller returns from these investments.

Opportunities

Diversification of retail outlets

Red Bull has recently detailed an initiative to use vending as a new route to increase sales. Vending is increasingly acting as an important advertising vehicle and the company is exploiting this avenue in order to stimulate growth. The manufacturers of Coca-Cola and Pepsi have long used this route, and firms such as GlaxoSmithKline and Outspan have also entered the market. Red Bull’s decision to introduce vending illustrates its commitment to diversify its distribution network and keep up with industry trends.

Extension of product line

New entrants into the market are unlikely, as extensive marketing and promotion are required to retain market share, needing large financial resources. Datamonitor expects the most successful new product in the market is likely to be an extension of an existing brand, and will succeed best in the non-cola carbonates sector of the market. Marketing products as functional drinks the company may be able to extend its product line, capitalizing on strong consumer awareness of its brand.

Geographical expansion

With sales derived from 100 countries, Red Bull has an extensive geographical reach. The company is building upon this by making inroads into developing markets such as India. With a distribution deal secured with Mount Shivalik and Narang Hospitality Services, these firms will market distribute and manage the logistics of the drink. Red Bull will initially be promoted in North, East and Central India, with a view of rolling out the product to further regions in the long-term. The Asia Pacific region holds a good opportunity for growth for Red bull as in 2003 it accounted for 50.9% of the global market share of the Functional drinks market (40% of which is energy drinks). The market is also predicted to grow at CAGR 5.2% in the next five years reaching a market value of around $16.1 billion by 2008.

Treats

Public health concerns

Red Bull’s energy drink has been banned in France due to concerns over its high caffeine content. Experts fear that the drink could be potentially deadly when combined with alcohol or when drunk after strenuous exercise. The move has been backed by the EU’s high court, asserting that the drink is a real risk to public health if consumed in excess. Denmark is the only

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other country to ban Red Bull, although authorities in Ireland, Turkey and the US have expressed concerns about it. The drink is classified as a medicine in Norway and until recent years was only available in pharmacies in Japan. These issues are creating significant adverse press for the company.

Maturing market

The energy drinks market has witnessed slowing growth in recent years. In 2003, the US carbonated soft drink industry posted volume growth of only +0.6% overall. That growth rate represents a slight decrease from the 2002 growth rate of +0.8%. It is far below the industry’s annual 2%-4% growth rate range seen throughout most of the 1990s. This slowdown in growth may inhibit the company’s revenue expansion potential going forward.

Consumer awareness of health and well being

Drinks retailers are becoming increasingly aware of the potential growth in bottled water sales. Per capita consumption of bottled water has now risen to 35 liters, in comparison to one liter 20 years ago. Consumers are becoming increasingly aware of their health, and bottled water is associated with health and well being. Although Red Bull has recently launched Red Bull Sugarfree, the drink’s high caffeine content may remain a concern for the health conscious.

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