Red bull final_2

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Red Bull “Red Bull isn’t a drink, it’s a way of life”- Kumar Section 1: Group 9 – Team Awesom David Stempler, Peter Darrow, Alvaro Montemayor, Camilo Velasquez, Zhida Guo, J

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Transcript of Red bull final_2

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Red Bull

“Red Bull isn’t a drink, it’s a way of life”-Kumar

Section 1: Group 9 – Team AwesomeDavid Stempler, Peter Darrow, Alvaro Montemayor, Camilo Velasquez, Zhida Guo, Jon Morgan

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Red Bull Company Profile-Created and are market leaders in the Energy Drink market. -Control 70% of the Worldwide market.-Sell a lifestyle not a drink

“We don't bring the product to the people, we bring people to the product.”

-Dietrich Mateschitz

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• High growth market• 4.1 Billion In sales• Around 25% of revenues targeted at

advertisement• 46% Market Share in the United States

The Business of Energy

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• Very high brand awareness• Sniper advertisement• Pull customers come to us!

Why people buyEnergy Drinks?

• Gives you a needed boost• Allows you to do extraordinary things (remove limitations)• Live a fast-paced lifestyle • Allows you to concentrate• Go clubbing all night• Lets you live your dreams

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CustomersPrimary segment: Males aged 18-35 engaged in…

STUDYINGVIDEO

GAMES

WORKING

CLUBBING EXTREMESPORTS

DRIVING

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http://www.docstoc.com/docs/65155374/Red-Bull-and-the-Energy-drink-marketAdapted from:

Perceived Value

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Perceptual Mapeffective

coolness

Red Bull37.3%

Rock star

10.7%

Monster24.5%

AMP4.2%

5-hour energy13.1%

Total Market Share of Top 5 Firms = 89.8%

Source: Mintel Energy Drinks and Energy Shots-US-June 2012

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Industry Analysis

• Active people• 18 – 34 (67%, 24.4m - US)• Growing CS: Hispanics, professionals

Customer Segment

• Direct: Energy drink variants (Organic & Energy-shots)• Indirect: Soft drinks

Competitors

Company• Selling the dream• Few products• Revolutionary

Collaborators• Channels: Retail & Big box• Ad Companies• Extreme sport events/team

Climate/Context• Social Media• Use of new technology• Health social perception• Regional cultures & rules

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Rivalry (Medium)- Growing Market- Red Bull +70% MS- Competitors Coca Cola / Pepsi

Substitute Threat (High)- Non-Caffeinated energy drinks- Organic energy drinks- Soft drinks

Supplier Power (Low)- Simple ingredients (caffeine, taurine, vitamin-B, sucrose, and glucose)

Buyers Power (Low)- Distribution Channels/ Retail : Pull- Consumer don’t influence Selling Price (Pay Premium)

Threat of Entry (Medium)- Difficult industry to penetrate.- Cheap to enter- Crowded

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SWOT Analysis

Strengths•Category leadership•Financial status quo•Disruptive marketing strategies•Brand identity = Premiums

Opportunities•Product line extension•Diversify PoS (new trends)•Growing market segment (Hispanics & working professionals)

Weaknesses•Controversial taste•Narrow products line•Marketing (expenses, over-segmented, & blinders)

Threats•Intellectual property protection•Health concerns•Shot energy drinks•Shrinking industry (Soft Drink)

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4 Ps of MarketingPrice Premium Pricing Strategy

Product Taste Increase Energy (Taurine, Vitamin B, Caffeine)

Placement Retail Big Box Entertainment

Promotion Initial Push Marketing

through product giveaways Partnerships with Extreme

Sports Increase Brand Awareness

Pull Customers to their brand

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Red Bull creates buzz

Largest Live Stream of All Time!!!

Webs MOST Powerful Branded Video Content! 4th Most Liked CompanyOn Facebook! Over 30 % of WorldwideMarket Share! 4.6 Billion CansSold in 2011!

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Revenue

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Net Income

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Consolidated Income Statement Redbull GmbH (USD) 2012 (Est.) 2011 2010Revenues $6,449,040,000.00 5,512,000,000 5,197,122,000Net Income $425,636,640.00 363,900,000 343,100,000 Estimated Marketing Expenses* $1,100,000,000.00 $964,060,000.00 $908,600,000.00 Incremental Change in Revenue $937,040,000.00 $314,878,000.00 $687,122,000.00 Incremental Change in Net Income $61,736,640.00 $20,800,000.00 $45,400,000.00

Incremental Change in Marketing Expenses $135,940,000.00 $55,460,000.00 $119,770,000.00 ROMI (Revenues) 85.19% 32.66% 75.62%ROMI (Net Income) 5.61% 2.16% 5.00%

* Source: Calculations from PrivCo Private Financial, IBIS World and Market Research.com.

In 2012 and 2010 the ROMI as a function of revenue stream was near 80%, covering almost all the marketing investment. In 2011 the situation was different with a slight increase on revenues that only covered 33% of the marketing expenses incurred in 2011.

Evaluating the ROMI as a function of the net income (profits) stream, Redbull’s incremental change in profits covered almost 5% of the total marketing expenses incurred in 2012 and 2010, but only get to cover approximately 2% of 2011 marketing efforts.

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New Markets-Females

-People 35+-Health conscious

-Growing Latin American and African American

segments

Conclusions

Things we did right-Capitalized on first mover

-High brand awareness-Created market

-Created marketable markets by creating/ promoting smaller extreme sports

-Platforms "events"-Media Creation

-Goodwill

What we have done What we need to doVS.

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Recommendations

1. Maintain extreme advertisingsponsorship of new sports, etc.

2. Continue staying on top of new technology (social media)

3. Promote health benefits4. Expand specialized channels (vending

machines in high traffic buildings)5. Product extension (new flavors/ health)6. Advertise into emerging markets to maintain first-mover mentality