Red Bull – International Marketing

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Table of Contents

Introduction................................................................................................................................ 3
Need For Internationalization.................................................................................................... 4
Mode of Entry............................................................................................................................ 4
Marketing Mix Strategy adopted by Red Bull........................................................................... 5
Positioning and Advertising Strategy of Red Bull.................................................................... 6
Red Bull`s competitor Analysis in the United States of America.............................................. 7
Impact of Social and Cultural Factors....................................................................................... 7
Factors to consider while deciding about international distribution channels........................... 8
Conclusion and Findings........................................................................................................... 9
References.................................................................................................................................10

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Introduction

Red Bull is the highest selling energy drink in the world sold by an Austrian Company, Red Bull
GmBh. Red Bull was founded in 1980 by Dietrich Mateschitz. There was a Thai energy drink
named Krating Daeng and Dietrich Mateschitz was greatly inspired by this drink. So he took the
ingredients of this drink and did some modifications according to the Western taste and
preferences. Then he officially came up with a new energy drink in 1987, Red Bull. It was
greatly appreciated in the European Countries since its inception.

In the 27 years of its business operations, Red Bull has become the World`s largest selling and
most popular energy drink. According to Red Bull Official Website
(http://energydrink.redbull.com/company), they are selling Red Bull in 167 countries and their
sales figures are increasing significantly year by year. For Example, their sales in 2013 were
5.387 Billion Cans and in 2014 this figure escalated to 5.612 Billion Cans in 2014, with a net
increase of 4.12%. According to them, they have been able to sell around 50 Billion Cans in the
world till today. They have 10410 employees working all over the world. Company is planning
to grab more market share in the existing countries and expand its business in the Far East
Countries. Red Bull has been alleged of having ingredients that are bad for the human health but
according to European Food Safety Authority (EFSA), Ingredients used by Red Bull are
completely safe to consume.

Talking about the products, Red Bull has following products and variations:

 Red Bull Original

 Sugar free Red Bull
 Zero Calories Red Bull
 Total Zero Red Bull
 Orange Zero Edition Red Bull
 Cherry Zero Edition Red Bull
 Red Bull Shot (Concentrated)
 Red Edition (Cranberry)
 Blue Edition (Blueberry)
 Lime Edition (Lime)

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  Yellow Edition (Tropical fruit)

Need For Internationalization

Internationalization is the process of taking the products of accompany from its home country to
different other countries or to sell in other countries as well. Red Bull was primarily launched in
its home country as well in the beginning i.e. Austria. In order to grow the business and to earn
more revenues and profits, company needed to expand its area served. Moreover they needed to
turn the company into a global brand and serving more international markets was the only
method of doing that. Being a global brand, Red Bull not only would be able to sell in more
countries but it would certainly help them in selling more units in the existing countries because
of the bigger Brand Name. That is why it decided to launch Red Bull in many countries
(Mühlbacher H., Dahringer L. and Leihs H., 1999). Till Date, Red Bull has successfully
established its operations and selling in 167 countries all over the globe. When Red Bull started
to expand its business in Europe, many new competitors arrived in the European Market as well.
When, Red Bull was started selling in Germany, company felt the shortage of Aluminum to
produce cans, and that point, company experienced in the sales but later on, it was back on track.
Its journey in England was much more challenging as they could not use the label “Energy
Drink”, as it was used by another pharmaceutical company. They, however, used the name
‘simulation’ for the marketing purpose, but they experienced many difficulties in selling more
cans. Therefore, Red Bull came up with a new strategy called Buzz Marketing. They target
mainly the night clubs and the students. Red Bull hired students that used to drive cars covered
with the Red Bull Brand and they were providing free red bull samples in the students` parties. It
helped Red Bull in escalating sales in England.

Mode of Entry

At first in 1987, Red Bull was serving only Austrian Market so they were not able to sell more
units because of the fact of Austria being a small country by the means of population. They had
to enter new markets and by 1992, they covered North America, Africa, Western Europe and
Middle East. When companies enter new markets, the biggest decision to make is to either
export the product in the new countries or to manufacture in the new markets. Many companies

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prefer manufacturing in the host countries but Red Bull has not established any manufacturing
plant in any other country and they are only exporting the product in the international markets.

Red Bull uses both indirect and direct export in international markets. It has undergone a
strategic alliance with an Australian Firm, Cadbury Schweppes which distributes the products for
Red Bull not only by the traditional channels but also through digital channels such as vending
machines. Red Bull uses world of mouth marketing in many countries. In this strategy, Red bull
pays the portion of the sales revenue to those, who are recommending its products in the new
markets. According to Gschwandtner (2004), Red Bull has appointed many students as their
brand executives those market their products in some of the most crowded target areas for Red
bull.

Marketing Mix Strategy adopted by Red Bull

Product

Red Bull GmbH`s products are energy drinks that are most popular in many countries because of
the western touch In its taste. It contains caffeine, taurine, Glucuronolactone, B-group vitamins,
sucrose, and Glucose. As of 2014, Red Bull is not using Glucuronolactone as an ingredient in the
energy drink. It is not only the energy drink which is being sold in a high volume all over the
world, but company`s association with some most enjoyable adventurous sports, “Extreme
sports” has given it a great brand name associated with thrills and challenges. Due to the rich
taste and association with adventurous sports, Red Bull is most popular in the age group of 18-
35.

Price

Red Bull Pricing is generally higher than the other energy drinks. They use premium pricing
strategy and it helps them in targeting premium or high income customers. According to Red
Bull, There most revenue comes from this segment only and that is why their pricing has to
reflect the segment. But, with increase in the number of substitutes and lower price of these
drinks can be a threat to Red Bull in the Future.

Place

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Red Bull sells its products where it is easier to reach to the target segment. They use supermarket
and Grocery stores and in the addition Red bull is made available in the Night Clubs, Colleges,
and Universities where students can buy it easily. It is a right strategy for Red Bull as they are
targeting the Youth more.

Promotion

Red Bull uses an interesting and unique promotion strategy. They use a slogan “Red Bull Gives
You Wings” that speaks for itself. It means that the boost in the Red Bull will take the consumers
to a different state of energy. Moreover, Red Bulls` Extreme Sports is associated with many
thrilling sports such as mountain bikes, BMX, windsurfing, Snow-Boarding, Skate-Boarding,
cliff-diving, skating, surfing and F1 racing etc. Red Bull organizes many sporting events each
year for the promotion. Furthermore, there magazine, Extreme Sporters is also a great way of
promoting the products to the target audience.

Positioning and Advertising Strategy of Red Bull

Positioning is the image of a brand in the mind of the consumers. Humans see and hear a lot of
things everyday but they are capable of remembering only the few. Therefore, they ignore some
brands, for some brands, they store a little information and there are some brands which they
love and influenced by that. Now it is up to the companies to be remembered in the minds of
their target audience and most importantly, the message perceived with the brand matters the
most. Red Bull positions itself as a premium energy drink associated with thrill and adventure.
Their main target is the younger segment of the market. To position its brand to the segment,
they use extreme sports promotional strategy and strike as a high value energy drink that is richer
in taste as well. Moreover their packaging also helps them positioning the product to the
premium target segment. The 250 ml cans of Red Bull gives it a premium look.

According to Mateschitz, “We don’t bring the product to the consumer, we bring consumers to
the product.” For the advertising purpose, Red Bull organizes many sports event in different
countries according to the popularity of the products. They have also been successful in using the
Word of Mouth Marketing strategy. They pay some portion of the sales to the hired brand
promoters those market their products in the new markets. Red Bull GmbH states that with the

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help of extreme sports, we have been able to get more loyal customers. Moreover, Red Bull has
successfully been using Buzz Marketing and Viral Marketing to advertise its products.

Red Bull`s competitor Analysis in the United States of America

It is beyond doubt that Red Bull has created a dominant place for itself in the Energy Drinks
industry, but it is no longer the only big player. For instance, in the United States, there are three
main and direct competitors to Red Bull; Monster, Full Throttle and Rockstar.

Monster is known as the biggest competition threat to Red Bull. Monster has been made an
almost identical product to Red Bull and is ready to gain the advantage of the lower price.
Although the cost for both the cans of Red bull and Monster is same in the U.S, yet the quantity
offered by Monster is almost double to the quantity offered by Red Bull.

Rockstar, with a slogan “Party like a Rockstar”, is also targeting the younger segment of the
market like Red Bull. It is made for the youngsters those like to gain energy by consuming the
energy drink. It comes in different flavors such as Juice and cola. Its cola version is preferred for
a better taste whereas juiced version claims to be containing 70% real fruit juice. It also comes in
a larger can size as Monster.

Full Throttle was launched in 2005 in the United States. It comes under the product hood of Coca
Cola. It contains a larger amount of caffeine and is rich in energy. Due to the brand name of coca
cola that is a much larger player in the Beverage industry when compared with other energy
drinks brands, can possess some serious threats to Red Bull.

There is also a threat of indirect competition to Red Bull and the whole Energy Drink Industry.
Energy Drinks are found to be bad for health by many researchers and due to this fact a lot of
consumers are switching to healthier drinks such as Packaged Fruit juice, Flavored Milk,
Flavored Water with Minerals and Soya Drinks. As people in the United States and other parts of
the world are becoming more health conscious, these drinks possess some serious threats to the
whole Energy Drinks Industry.

Impact of Social and Cultural Factors

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Social and Cultural factors, jointly called as socio-cultural factors have a significant impact on
the success or failure of an organization in different new markets. Each person`s buying behavior
is related with the society and the culture he/she lives in. It is influenced by the reference groups
they are part of, family and workplaces etc. When a company decides to enter new market, it has
to consider socio-cultural factors very seriously. They must know which type of product is
acceptable in different market and which ingredients are non-acceptable. Social and Cultural
Factors decides that whether people of a country would welcome their products or not. For
example, in India, there are more vegetarian people than any other country. Therefore companies
like McDonalds when entered in India, they had a larger range of vegetarian products.

As far as Red Bull is concerned, its products are highly appreciated in the new markets. It is due
to the significant change in the lifestyle of the consumers. Nowadays, even eastern countries
have developed a modern lifestyle. They like Red Bull because it reflects their personality.
Instead of consuming a water bottle, now consumers like to buy an energy drink as it will give
them energy and satisfy their need.

Although there are some health concerns associated with the Red Bull and other Energy Drinks,
yet its popularity is increasing day by day. In the 1980s, this scenario was different. Sales of the
energy drinks were less because people used to be afraid of the ingredients. But with time, there
has been some significant developments in the products as well. Companies are no longer using
ingredients that possesses serious health concerns. Moreover, people those are aged more than 35
are more concerned about the health rather than the young population. That`s why older segment
likes to consume healthy drinks in place of energy drinks. But, as we all know that most of the
energy drinks companies including Red Bull are primarily targeting the age group of 18-35,
health concern don`t seriously matter to the companies.

Factors to consider while deciding about international distribution channels

Deciding about the distribution channel is an important decision to make and there are endless
number of factors that influences the decision or must be considered before making a decision.
However, some of these are mentioned below.

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Value: First factor to consider is no doubt the value of the product. If the cost of product is high,
then companies use a selective distribution network or if the product is cheap, firms will have to
concentrate on mass selling and thus, they use extensive distribution making the product
available at maximum possible locations.

Convenience: While entering new markets, companies understand their target audience and their
lifestyle in that particular country. According to that, product is placed at the places where
consumers can easily buy the product.

Competition study: Companies must study their competition in the new markets, if any.
Companies must consider the distribution channels used by the competitors so that they can go
head to head with the competition or making the product available at the places where
competitors are already selling their products.

Brand Reputation: There is always some sort of reputation associated with each brand. Brands
should consider that and continue with that brand image only, even in the new markets. For
Example, Red Bull is a premium energy drink brand and its price is higher than its competitors.
So it does not sell at ordinary locations as it does not reflect their brand reputation.

Buying Behavior of consumers: Buying behavior is a vast topic to study, but companies must
understand the basic things about the buying behaviors of the consumers in the new markets.
Things like, where they shop, how they pay, social influence and cultural influence etc. can be
beneficial to know about the new target market.

Conclusion and Findings

In this report, we were able to understand many important things about Red Bull and Beverage
Industry. Also we had a quick look at some of the marketing concepts. In a nutshell, we may
conclude that Red Bull is doing great internationally or in the different markets. It has the largest
global market share in the energy drinks industry. Its rich looking small packaging can gives it a
premium look. Its taste is matched with the western taste and for this reason it is not only popular
in the Western countries but also it helps Red Bull in selling more quantities in other parts of the

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world as Western culture is being followed everywhere. Moreover, its unique advertising and
marketing campaigns and association with the extreme sports reflect its Brand image.

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