A DETAILED STUDY ON RED BULLENERGY DRINK

APPLIED MANAGEMENT PROJECT

SUBMITTED BY:Naagesh 11/FIP/BBA (G) IB/435TH SEMESTER

ACKNOWLEDGEMENTI hereby take the opportunity to express my profound sense of gratitude and reverence to all those who have helped and encouraged me towards successful completion of the project. I would like to express my deepest sense of gratitude to Miss Kanupriya Shekhar for having provided me an opportunity of doing a project of interest, thereby creating a pool of experience which shall be beneficial in my future endeavors.

I I would like to thank all those who have spared time for providing me with required information

CONTENT PAGESR. NOTOPICPAGE NO.

1EXECUTIVE SUMMARY4-7

2COMPANY PROFILE8-16

3ENVIRONMENTAL SCANNING17-23

4MARKETING24-32

5RESEARCH METHODOLOGY33-35

6QUESTIONNAIRE / DATA ANALYSIS35-44

7OPERATIONS45-48

8CONCLUSION & RECOMMENDATION49-52

9BIBLIOGRAPHY53

10ANNEXURE54-56

EXECUTIVE SUMMARY

The primary aim of this project is to get the full information on red bull and what are their efforts to gain customer loyalty, to maintain their market leadership. This is also to find the preferences of customer and there market knowledge and product information, information about the presence of the rivals of red bull and all the other options they have in the market. Red Bull is an energy drink that was launched in Austria in 1987 by an entrepreneur, Dieter Matteschitz. He built the company up to annual sales now worth 1.5 billion. Red Bulls success story is remarkable as the soft drink industry is one with high barriers to entry and soft drink companies have to deal with high buyer power of distribution and retailers. This is all due to the dominant brands like Coca Cola and Pepsi having a tight grip on the retailers and their shelf space. Nonetheless, Red Bull has been able to enter this market successfully by innovating in a variety of ways: - Product innovation: Red Bull created a product that fills the gap in consumer needs for a cold drink that gives mental energy. - Market segmentation innovation: Red Bull used a very targeted approach compared to the mass marketing approach of the incumbents. - Channel innovation: Red Bull used a pull strategy in order to gain shelf space in the retail channel. Pull is created by gaining popularity among the consumers by offering products in alternative channels, for example bars and health clubs. - Marketing innovation: Red Bull has used creative onsite promotions instead of mass marketing approach of the incumbents. Red Bulls market entry was clever in several ways. Their focused segmentation and marketing efforts helped the company cross the chasm. Since the initial target customers extreme sports enthusiasts and clubberswere influential opinion leaders, the mass market quickly reacted to consume Red Bull. Furthermore, the segmented approach enabled Red Bull to offer its product at a higher price as the willingness to pay of their target segment was higher than the mass market. Although Red Bull now challenges and objectives

Red Bull stands up to health regulators

While health officials continue to voice concerns over energy drinks and the category remains under threat from stronger regulation, energy drinks has seen relatively little impact in terms of sales. To some extent this has added to the categorys edginess attracting young consumers and generating consumer interest. There is little risk of Red Bull reformulating its product to cater to health concerns and instead the company insists that its products do not pose a health risk.

It is not easy at the top

Red Bulls success has attracted considerable interest from soft drinks multinationals, TCCC and PepsiCo. TCCC in particular has been successful at leveraging its distribution network to launch Burn across many markets and to back Monster. Burn is a major threat to Red Bull in Brazil while in the US Monster has overtaken Red Bull in off-trade volume sales terms. Red Bull will need to find ways to hold onto its number one ranking globally in energy drinks and stave off this competition.

Will premium work in emerging markets?

Red Bull has consistently maintained its premium positioning from its slimline metal cans to its price differential versus brands such as Monster. While this strategy has reaped dividends in the mature markets, it remains to be seen if it will sustain growth in the emerging markets. Brazil with its large population of lower-income consumers may pose a challenge giving cheaper brands such as TCCCs Burn a competitive advantage

Red Bull breaks with tradition in 2013

In 2013, Red Bull, for the first time in 15 years added new products to its energy drinks range. Edition is a range of three new flavours and thus far available only in the US market. The likelihood however is that this range will be rolled out to other markets. The move is a response to growing competition. Success for this launch will be crucial to the companys growth prospects in the mature market

Red Bull is a utility drink to be taken against mental or physical weariness or exhaustion. Red Bull combines two natural substances and important metabolic transmitters - the amino acid taurine and the glucuronolactone - with stimulating caffeine, vitamins and the energy provided by carbohydrates. The leader in the energy drinks category.

ENVIRONMENTAL SCANNING

SWOT ANALYSIS

SWOT: Red Bull GmbH

STRENGTH

Category leader

Red Bull has established a strong, consistent brand image (an independent, edgy brand) globally. Red Bull is synonymous with energy drinks in many countries.

Broad geographic presence

Red Bull has a broad geographic presence, which should ensure positive long-term growth even if certain markets reach maturity

WEAKNESSES

Category limitations

In overall soft drinks, Red Bull has a limited product portfolio compared to the rising number of rivals with a plethora of flavour variants and categories.

Controversial

The relatively high caffeine content of Red Bull makes the brand highly vulnerable to regulatory control

OPPORTUNITIES

Emerging markets

Emerging markets represent newer geographies for Red Bulls expansion. Accelerating the marketing and sponsorships in these markets is a wise move.

New production

Red Bull is building a new production facility in Brazil which is likely to make its retail price more competitive than imported product prices. Building a site in Asia should also be considered.

THREATS

Competition

Monster represents the biggest threat to Red Bull as it contains natural ingredients, which seem more desirable than Red Bull for some consumers

High marketing costs

Market maturity in developed markets will make marketing to its core consumers harder than in the past. Constant communication with consumers means high marketing costs

PEST ANALYSISPolitical Bans from EU countries No regulation on labeling of such drinks Age limits should be set on purchasing Health risks associated with Red BullEconomic Rising disposable incomes encourage premium purchases Major soft drink manufacturers have been attracted to the sports and energy drink market partly by the premium prices that currently exist for these market products.I. Social Negative health concerns Longer working hours, increased road traffic, more need for energy boost Increasing consumer concern around diet and personal healthII. Technological Improved manufacturing techniques and processes could lead to lower prices Innovation within the marketnew productslooking for ultimate hangover cure

PORTERS FIVE FORCESHere we are conducting the Porters five forces model to analyze theindustry. The purpose is to arrive at some strategies that Hindustan Unilever can adopt in order to be in a better competitive position.Rivalry among Competing FirmsIn the industry, rivalry among competitors is very fierce. There are scarce customers because the industry is highly saturated and the competitors try to snatch their share of market. They use all sorts of tactics from intensive advertisement campaigns to promotional stuff and price wars etc. so overall the intensity of rivalry is very high.Potential Entry of New Competitors The industry does not have any measures with which it can control the entry of new firms. The resistance is very low and the structure of the industry is so complex that new firms can easily enter and also offer tough competition due to cost effectiveness. Thus, potential entry of new firms is highly viable. But there is high R & D cost. Market exit barriers are also not so high.Pressure from Substitute Products There are complex consumer needs and no firm can satisfy all sorts of needs alone. There are not so much of substitute goods available in the market that can be replaced if consumers are not satisfied with one. Theranges of choices available are packaged drinking water, ground water/municipal supplies, boiled water etc.Bargaining Power of Suppliers The bargaining power of suppliers of raw materials and intermediate goods is high.There are few of substitute suppliers available. There is a little bit of monopoly situation in the supplier side.

Bargaining Power of ConsumersBargaining power of consumers is also high. The customers are price-sensitive Customers are never reluctant to buy or try new things off the shelf.the switching costs of most of the goods is medium and there is no threat of buying one product over other.

MARKETING

Red Bull is a utility drink to be taken against mental or physical weariness or exhaustion. Red Bull combines two natural substances and important metabolic transmitters - the amino acid taurine and the glucuronolactone - with stimulating caffeine, vitamins and the energy provided by carbohydrates. The leader in the energy drinks category.

Ingredients Red Bull containscaffeine,taurine,glucuronolactone, B-group vitamins,sucrose, andglucose.[19]Red Bull Sugar Free is like Red Bull Energy Drink, but without sugar. The sugars sucrose and glucose have been replaced by the sweetenersacesulfame Kandaspartame/sucralose

ProductRed Bull is characterized by two elements in its formulacaffeine and energy enhancing ingredientswhich the company claims to make it the perfect drink to energize the body before strenuous activities such as extreme sports and all-nigh clubbing. Red Bull contains 80 mg of caffeine, which is almost twice that of a can of Coca Cola or Pepsi, or an equivalent to a cup of filtered coffee. Energy-enhancing ingredients include Taurine (amino acid), Glucuronolactone (carbohydrate), and several other sugars and vitamins. The drink is available only in a 250mL can. In 2003, another product line Red Bull Sugar Free, was added to the portfolio5PromotionRed Bull's slogan is "it gives you wings". Red Bull's international marketing campaign targets young men mostly withextreme sports. These range from mountain biking, BMX, motocross, windsurfing, snowboarding, skateboarding, kayaking, wakeboarding, cliff-diving, surfing, skating, freestyle motocross, rally, Formula1 racing, to breakdancing. Red Bull uses music and videogames, and has enlisted celebrities, such asEminem(sponsoring the Red Bull "EmSee Battle Rap championships"). It hosts events like art shows and the "Red Bull Flugtag" (German for "flight day" or "flying day"). Red Bull owns association football teams, with clubs inAustria, Germany, the United States andBrazilfeaturing the Red Bull trademark in their names. By associating the drink's image with these activities, the company seeks to promote a "cool" public image and raise brand power. The energy drink has created a market for over 150 related types of merchandise,[38]likeRed RoosterandBlue Lightning.In thePlayStation 3's social gaming platform,PlayStation Home, Red Bull developed its ownin-game island, specifically advertising its energy drink and theRed Bull Air Raceevent (for which the space is named) released in January2009. In late November2009, Red Bull produced two new spaces, theRed Bull Illumespace, and the Red Bull Beach space featuring theRed Bull Flugtag, both released on the same day. In January2012, Red Bull released its first personal space called the "Red Bull House of Skate" featuring an indoor skate park.In the video gameWorms3D, Red Bull allows worms to move more quickly than normal. Red Bull is displayed on virtual track-side billboards during game play and in the opening cinematic in the video gameWipeout2097.

BackgroundRed Bull has taken sponsorship to new heights with the Red Bull Stratos event. Its being heralded as the companys greatest marketing stunt and perhaps one of the greatest marketing stunts of all time.DetailsA record 8 million people watched YouTube's live stream on Sunday 14th October, as Felix Baumgartner became the first person to break the sound barrier with a free fall jump 128,000 feet above the Earth that reached a speed of 833.9 miles per hour. Besides YouTube, the jump was also broadcast on more than 40 TV stations across 50 countries and 130 digital outlets. Red Bull's Facebook post-jump photo of Baumgartner gained almost 216,000 likes, 10,000 comments and over 29,000 shares within 40 minutes, and half the worldwide trending topics on Twitter were related to Red Bull Stratos. The video has since been watched over 10 million times on YouTube and the event has been front page news worldwide.The estimated value generated for Red Bull is in the tens of millions of $ and Red Bull Stratos will continue to be talked about and distributed socially for a very long time. With a full length documentary coming out later this year and its YouTube channel now topping 400million views and 800,000 subscribers, Red Bul

Distribution Channel Analysis:Red Bull distributes through selective distribution strategy. It appears at trendy on-promise locations or cells. The product gets much visibility and attention in those locations. In those cells, Red Bull deals with individual retailers/shops instead of the big chains to reduce time and cost. Red Bull also channels through clubs, blades store, underground disco, bars and pubs. The numbers are kept limited to induce attention and premium A. india prices:8.4 ounce can 95B. Pricing Objectives Red Bull has a strict policy of keeping prices relatively similar and high compared to the rest of the beverage industry. Compared to can of Coca Cola, Red Bull is around 3-6 times more expensive. This is to always maintain the image of a premium, quality product.C. Pricing Strategy There are two separate sectors of pricing strategy based on the location of the point of sale[footnoteRef:2]: [2: ]

ON sector: Any place where product is consumed at location. Examples: nightclubs, restaurants, cafes Regional managers set this price at a constant level. Very little to no deviation of price. OFF sector: Any location where the product is consumed at a later time. Examples: grocery stores, gas stations Pricing is still dictated by a regional manager, but more deviation and the possibility of sales exists. D. Possible Disadvantages Due to the high price, the product may simply be too expensive for lower income demographics. Sampling Red Bull for the first time is much more expensive than other beverages thus possibly deterring the first purchase. E. Possible Advantages Customers often associate a high price with high quality[footnoteRef:3]. [3: ]

As a premium product with substantially high market share, Red Bull is able to charge such a high price without loosing many customers.

competitorred Bull continues todominateThe Top Brands chart with over40% of the market share. There are hundreds of other energy drinks introduced to the world, but Red Bull remains to be the top with Monster as the runner-up. These days people are drinking energy drinks like water and coke. As the demand for sodas decreased, the interest and need for energy drinks

RESEARCH MENTHODOLOGY

The Data for this project was collected through Primary and Secondary sources.PRIMARY DATA: It is essential to collect PRIMARY DATA to make sample survey. A successful and the most popular technique of data collection is through a questionnaire, thus a questionnaire was framed and distributed electronically among different people who are residing in the New Delhi region.SECONDARY DATA: This Report is dedicated to Secondary information about company profile and various decisions taken by the company regarding product line expansion, product line pruning and various other matters related to product line. I have collected this information with the help of internet and journals. This report gives you relevant information about various activities taken by Hindustan Unilever limited.DATA COLLECTION TOOL: I have collected all the information with the help of Internet, Journals and Secondary sources. SAMPLE PLAN Units- People residing in the New Delhi region Size- 30 respondentsANALYSIS OF DATAThree preliminaries should be followed for analyzing the data are Editing, Classifying and Coding.The contents of data obtained in the study were carefully checked for any possible inconsistencies or incompleteness. And then finally the data was interpreted to reach a final conclusion.

QUESTIONNAIRE / DATA ANALYSIS

What Brand Do You Think Is Red Bull's Nearest Competitor/Rival?RESULTS

respondentsbrands

20monster

5Ks

4getorade

1Tzinga

Interpretation: monster is the closet rival of red bull

2.I Feel That Red Bull's Strengths Lie In There:A}sloganB} Can DesignC} Product TasteD} Marketing

TABLE NO. 2RESULTS

OptionsRespondents

A10

B1

C1

D18

Interpretation: Most of the people belives that red bull strengths lies in its marketing and slogan3)What Red Bull Slogan Do You Associate With The Brand?A} Stimulation for body and mindB}Brain and body energyC}Gives you wingsD} Your sport, our science

TABLE NO. 3RESULTS

OptionsRespondents

A0

B0

C30

D0

Interpretation: Gives you wings is clearly the most famous slogan associated with redbull

4)4Did You Watch When Felix Baumgartner Did His Space Dive?

A)YesB)No

TABLE NO. 4RESULTS

OptionsRespondents

A28

B2

Interpretation: Majority of the people have watched felix Baumgartner performing his space dive5)I Feel Red Bull As A Brand Is Growing In Popularity:A)strongly agreeB)agreeC}disagreeRESULTS

OptionsRespondents

A20

B7

C3

Interpretation most of people think tht redbull is still growing in popularity

6I Feel Red Bull As A Brand Is Considered To Be The First With Innovative Advances In Products/Services A} strongly agreeB}agreeC}disagreeTABLE NO. 6RESULTS

OptionsRespondents

A12

B8

C10

Interpretation: Majority of the people believe Red Bull As A Brand Is Considered To Be The First With Innovative Advances In Products/Services7 I Feel Red Bull Provides Good Value For MoneyA} strongly agreeB}agreeC}disagree

TABLE NO. 7RESULTS

OptionsRespondents

A7

B12

C11

Interpretation: 60% of people thinks that redbull provide value fr money but 40 % still elives that its little heavy on price

8I Believe There Are Reasons To Buy This Brand Over Competitors0?A} strongly agreeB}agreeC}disagree

TABLE NO. 8RESULTS

OptionsRespondents

A20

B5

C5

Interpretation: Majority of the people believe that red bull is heavy on other brands

9I Think Red Bull As A Company Is Interesting:A} agreeB}disagree

TABLE NO. 9RESULTS

OptionsRespondents

A30

B0

Interpretation: redbull is clear winner when its come to brand repo

10)What rating will you give it to red bull from 1 to 5? (Where 1=excellent, 2=very good, 3=good, 4=satisfactory and 5=poor) A)1B)2C)3D)4E)5

TABLE NO. 10RESULTS

OptionsRespondents

A20

B5

C2

D3

E0

Interpretation: most of the people rate red bull excelleht

LIMITATIONS OF THE QUESTIONNAIREIn attempt to make this project authentic and reliable,0 every possible aspect of the topic was kept in mind. Nevertheless, despite of fact constraints were at play during the formulation of this project. The main limitations are as follows: Due to limitation of time only few people were selected for the study. So the sample of consumers was not enough to generalize the findings of the study. People were hesitant to disclose the true facts. The chance of biased response cant be eliminated though all necessary steps were taken to avoid the same.

OPERATION

Red Bull expands production outside Austria for first time

Red Bull received approval from the Brazilian government to build its first production facility in the country in early 2010. The company's initial investment in the project is expected to be around US$111 million. This will also be the company's first production facility outside its home market, indicating a shift from a single production site and the importance of the Latin American market to Red Bull. The sustainability of its growth and strong position is questionable as the competitive environment changes. While its products are present in more than 160 countries, most of its soft drinks sold around the world come from one single site. The company is known for combining the production of the can packaging material and filling at one site in order to save on transportation time and costs. The key advantages of one single site include consolidated management, an up-to-date inventory and energy savings. The main downside of a single production site is perhaps the extra distance needed to ship all its finished goods to different parts of the world. Being unable to produce locally to supply regional markets can make retail prices less competitive than those of local products. In Brazil, Red Bull's retail price is 40% higher than that of Burn. In 2011, the rumour that TCCC may look to fully acquire or partially acquire Monster surprised analysts and should have alarmed Red Bull. If Monster were to be under TCCC's full control, their combined volume sales would be very close to those of Red Bull and would certainly pose a threat to Red Bull's global leadership. Although TCCC did not acquire Monster at that time, the possibility of an acquisition has not been ruled out and the company was the subject of more takeover rumours in early 2013. As Red Bull entered China in 2011, the company could also consider building a facility there to serve the Asian market over the medium term. There are strong arguments for combining forces with sister company TC Pharmaceutical to better penetrate Asia Pacific markets.

Red Bull looks to diversification

Red Bull is diversifying into other businesses, rather than limiting itself to energy drinks. In recent years, it has been branching out and became a media company in its own right. The participation in sports sponsorships and events connects the company with a global brand that has passion and excitement associated with it. The company is also present in RTD tea and bottled water with the Carpe Diem brand which it launched to target the health and wellness trend in soft drinks. Carpe Diem Kombucha is a premium RTD tea sold in Western Europe. The brand is also in bottled water in Switzerland and Austria using plant extracts and slight carbonation to offer a healthy alternative to carbonates. The company owns two Formula One teams (Red Bull Racing, Scuderia Toro Rosso), a NASCAR racing team as well as several football teams in Brazil, the US and Germany. In South Africa, the company is partnering with Cell C to offer voice and broadband services as a mobile virtual network operator (MVNO), ie a company that provides a mobile phone service but does not have its own licensed frequency. Red Bull Mobile will be the second MVNO in the country, after Virgin Mobile. It also sponsors many events - from cliff diving to air races - and subscribing to Red Bull Mobile is a way for people who like the brand to access further benefits when they attend these events. These kinds of partnerships between operators and consumer brands are common in Europe. In Germany, for example, one operator, E-Plus, has 19 such partnerships. It is a way for these brands to get closer to their target group. The Group also includes Austrian TV station ServusTV, lifestyle and fashion magazines and a construction company called Bull Bau. Red Bull had 8,966 employees in 165 countries as of 2012. The company, which is not listed, traditionally finances its investments from its cash flow.

CONCLUSION& RECOMMENDATION

CONCLUSION:Red Bull is considered a miracle within the soft drink industry. What began as one mans idea in a bar metamorphised into a respectable venture with sale of over 5 billion cans in 2012 only it is quite impressive for a company with only one product. Although Red Bull was not a case of pure product innovation, its success was crafted through extremely innovative and canny marketing efforts. Red Bullthe mystical energy drink from Asiawas adapted to the European tastes to make it the perfect drink not only for extreme sports enthusiasts, but also night crawlers at bars and clubs. This made Red Bull into a hip drink among young and active crowd of Europe, which pushed Red Bull to become one of the most sought-after drinks. However, Red Bull was careful and did not rush its expansion. It started out small in Austria to create a solid winningmarketing formula before expanding into global markets.

RECOMMENDATIONSAs per the survey done, following were the recommendations: 1. PRICING: As a rapid growing industry more and more competitors are trying to penitrate market with products priced at much lower price tag despite of humble following not evry one can buy a 95 rupee can when some enrgy drinks are avalaible for as low as 15 rupees red bull shoud bring more variants with lesser price tag to reach more consumers2. variantsearlier red bull added some new editions to portfolio known as red bull editions red blue and silver these are flavored red bull energy drink this is a great addition but has limitation as it is only available in Austria redbull should launch these editions in others market it will sure provide a worthy hike in sales

BIBLIOGRAPHY

In order to make this project I have taken the help of the following websites & books:

www.wikipedia.orgwww.google.comhttp://energydrink.redbull.com/

AUTHORS NAME BOOKS

Philip Kotler and Gerry ArmstrongPrinciples of Marketing

ANNEXURE

What Brand Do You Think Is Red Bull's Nearest Competitor/Rival?

2.I Feel That Red Bull's Strengths Lie In There:A}sloganB} Can DesignC} Product TasteD} Marketing

3)What Red Bull Slogan Do You Associate With The Brand?A} Stimulation for body and mindB}Brain and body energyC}Gives you wingsD} Your sport, our science

4)4Did You Watch When Felix Baumgartner Did His Space Dive?

A)YesB)No

5)I Feel Red Bull As A Brand Is Growing In Popularity:A)strongly agreeB)agreeC}disagree

6I Feel Red Bull As A Brand Is Considered To Be The First With Innovative Advances In Products/Services A} strongly agreeB}agreeC}disagree7 I Feel Red Bull Provides Good Value For MoneyA} strongly agreeB}agreeC}disagree

8I Believe There Are Reasons To Buy This Brand Over Competitors0?A} strongly agreeB}agreeC}disagree9I Think Red Bull As A Company Is Interesting:A} agreeB}disagree

10)What rating will you give it to red bull from 1 to 5? (Where 1=excellent, 2=very good, 3=good, 4=satisfactory and 5=poor) A)1B)2C)3D)4