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					Identify the competitive and environmental threats to Red bulls business and discuss the marketing
strategies adopted by red bull in order to counteract these threats and continue to attract and
reatain customers.




Red Bull faced competitive and environmental threats in the following areas

Licensing and regulatory laws for their product areas and even complete ban of their products in
some countries

Parents campaigning against the product in some countries

The energy drink industry was very attractive because of it’s high profit margin, so as soon as Red
bull successfully crossed the licensing barrier in Australia and Europe there was always a imminent
danger of competitors entring the market with copycat products and that was exactly what
happened.

I will be analysing completion using porters five forces.

Threat of new entry

The energy drink industry was very attractive because of it’s high profit margin, so as soon as Red
bull successfully crossed the licensing barrier in Australia and Europe there was always an imminent
danger of competitors entering the market with copycat products and that was exactly what
happened. Rd bull had scaled the major barrier to entry for others to copy. The switching cost is
almost next to nothing for consumers apart from emotional attachment. Capital requirement and
access to distribution channels was quite easy for the big players that already had established
brands. Red bull could not do much in terms of preventing copy cat brands but did tae legal action
whenever it deemed necessary to protect its brand image e.g. Red rhino case.

Red Bull controlled it’s distribution by using dedicated marketing teams and most importantly
created an emotional bond with it’s consumers via sponsored activities to prevent switching

Threat of substitute

There was a real threat of substitutes like sports drinks, introduction of electrolytes instead of
caffeine in some energy drinks, diet energy drinks and flavoured enrgy drinks. Red bull was very slow
in reactin to these threats and focused primarily on its trade mark drink.



The bargaining power of suppliers

No major threat was identified on the part of suppliers and the high profit margin shows that Red
bull has enough allowance to adjust to price shifts.
The bargaining power of buyers

Red bull has very much regulated the distribution of it’s products by intergrating forward where
necessary. Red bull uses local teams and scarcity measures to control distribution and create
exclusivity. Where Red bull cannot find buyers that conform they create their own ware house for
distributing their own products.

Some big retailers have responded by creating their own brand but the fact that Red bull still has
over 80% of the entire market shows that Red bull has established itself in the mind of its
consumers.

The rivalry between existing competitions




Red bull’s major strategy has been focussd on differenciation and it’s summed up in the words of
their chief exec, “the market is not there if we do not create it”. They have created a uniquie
differential advantage using the markig mix



Product- their product is unique and it does what it says on the tin.

Distribution – they have maintained exclusivity by controlling distribution. Red bull has also gone the
extra mile to create high energy related activities for its consumers to participate in and they have
also marketed extensively on the party scene.

Promotion – superior brand personality and using well trained sales force with powers to create
activities with unique local content



Price – Red bull has chosen not to compete on price but to maintain its quality and increase the
quality of it’s involvemet with its consumers.



Red bull has maintained it’s differential advantage by building a close relationship with its customers
and building a strong brand personality.

				
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posted:5/30/2012
language:English
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