Brittany Augustine Wei-Nien Hsiung Ryan Santacruz Robert Suchan Hsuen Yung Yen Strategic Analysis of Marketing Cases

Red Bull 1. Historical Perspective: Energy drinks emerged as a new market, in the beginning energy drinks were taking away market share from soft drink companies. Red Bull was a pioneer in the energy drink industry and helped establish the energy drink category as a distinct market. a. Short history of the company: The company was founded by Dietrich Mateschitz after he toured Thailand in the early 1980s. The founder based Red Bull on a local Thai energy drink called Krating Daeng. The founder thought that this type of beverage would be good for blue collar workers back home in Austria. b. Corporate culture: The company relies heavily on word-of-mouth and innovative marketing. The company focused on growing product awareness focused on particular cells and branching the product outward when it was successful in a cell. The company utilized sponsorships for diverse extreme events, concerts, and secured celebrity endorsements, to create a hip culture focused on youth. c. Corporate business model: The company wanted to get the product out into consumers hands. According to the founder, once consumers tried the product and determined that it worked, they would become lifetime customers. Red Bull chose a unique approach to advertising, using advertising to reinforce, rather than introduce, its product to the marketplace. In its early days, the company spent as much as 65 percent of sales on marketing and by 2005, continued to spend 30 percent of sales on marketing. d. Antecedent of the decision situation: Red Bull was one of very few companies that was in the energy drink market resulting in a having a very high market share. Red Bull was facing issues entering markets because of the contents of its product and classifications of the drink. In fact, it took 7 years for Red Bull to debut in the founders home country, Austria. e. Decision: How to maintain market share when new competitors are constantly coming into the market. 2. Situation Assessment---External Analysis a. Customer Analysis: Target was the younger generation, particularly taking part in introducing the product to hip night spots. The companys target customers include students, drivers, clubbers, business people, and sports people. b. Competitor Analysis: Competitors were offering similar products with double the volume at the same price. Competitors also included established, companies such as a Coca Cola and Pepsi. Red Bulls competitors charge one-fourth the price per ounce for similar products. c. Market Analysis: The market was predicted to continue to grow, with estimates that the industry in the United States could double to $3.5 to $4 billion by 2009.

d. Environmental Analysis: In the U.K., Red Bull created a new category among sports drinks, before it was either a sport or energy drink. Red Bull classified itself as a functional energy or stimulation drink. 3. Situation Assessment --Internal Analysis: a. Performance Analysis: Red Bull is consistently number one in terms of performance, with a market share of nearly 50%, with the next competitor having just over 13% of the market share. In addition, Red Bull has over 60% share of the total sales for the energy drink market, while the next competitor has less than 10%. b. Determinants of strategic options: In general, Red Bull focused on small cells and expanded outward through word-of-mouth, using a unique marketing approach. In the U.K., Red Bull initially changed its introductory marketing practice to more of a traditional approach focused on increasing product awareness and making the product readily and easily available. In other markets, the company created a sense of exclusivity around the product by limiting the locations that offered the product and expanding based on the excitement created. In addition, the company chose a new slogan for the U.K., which was considered too lengthy and not catchy enough. After weak success in the U.K. under this strategy, the company abandoned this approach and returned to its unique marketing approach, which was more successful. 4. SWOT: Strengths: Opportunities: Product is unique and is proven to work. The company established new markets where there were no previous The company is able to focus on its single competitors. core product. Since the company only has one product, it could expand into other segments. Weaknesses: Threats: The company only has one product. Other companies invading market share. The company is spending more on The products content and government marketing to increase awareness, which stands on ingredients, could limit growth could be more than it could recoup from and availability in certain segments. future sales. 5. Strategic issues the company faces at the time of the decision situation: 1. What markets should the company enter? 2. How should the company classify and market its products in new markets? 3. What steps should the company take to protect its market and industry revenue share? 4. Should the company expand into new product offerings to compete with larger more diversified competitors? Strategic alternatives to address the strategic issues identified in #5: 1. a. Keep existing strategy. b. Expand into new markets with new products globally. c. Expand into select new markets with products tailored to the selected markets needs. 2. a. Keep existing strategy.

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7. 8. 9. a. b. c. d. e.

b. Focus on different demographics depending on the location. c. 3. a. Keep existing strategy. b. c. 4. a. Keep existing strategy. b. c. Evaluate the viability of strategic alternatives to resolve the strategic issues Select your strategy Present a detailed implementation plan. Be specific Remember that Marketing effort costs money! Remember that PEOPLE matter the most in determining the success or failure of any strategy. Allow for contingencies Include some form of a review or evaluation process to assess the effectiveness of strategies