Red Bull is well renowned energy drink brand. As of 2006, it holds 21% of the world market in the sports and energy drink industry (Hollensen, 2009). UK is one of the countries where energy drink consumption is remarkably high. As of 2009,£1 billion was consumed on the energy drink (The 2013 UK Soft Drinks Report, 2014). This is expected to increase by£1.5 billion in 2014. Red Bull is said to hold 27% of energy drink market with Lucozade brand having 61% market share in 2012 (Britvic Soft Drinks Review 2014, 2014).
Austrian originated brand Red Bull entered into UK energy drink market in 1992. It was not until 1995, Red Bull became one of the highest selling sports and energy drink brand in the UK (Johnson, 2002). Besides the taste, different factors are responsible for the success of the Red Bull in the UK. Product innovation, market segmentation, channel innovation and marketing are those aspects, which helped Red Bull to get significant share in the UK energy drink market in very short time of 3 years. Marketing objectives of Red Bull UK are: to develop new brand identity of Red Bull energy drinks as healthy product, to increase the sale in next three years by using different marketing promotional approaches, and to increase the market share in UK by high sale growth. Assignment writer UK
This paper presents three years marketing plan for Red Bull UK. It identifies key marketing strategies and opportunities. Through this marketing plan, a broader perspective is drawn through identifying two target market, and proposing marketing mix for each. It determines further how Red Bull can gain more market share in the UK energy drink industry. In this way, paper is divided into three sections, including environmental appraisal analysis, target market, positioning and marketing mix of Red Bull in the UK.
Task 1 of Environmental Appraisal Analysis for ‘Red Bull UK’
In order to conduct environmental appraisal analysis for Red Bull UK, PESTEL analysis framework is chosen. Through PESTEL analysis, political, economic, social, technological, environmental and legal factors will be assessed. According to Bowhill (2008), the tool of PESTEL provides with a framework to identify threats and new opportunities for an organization. It also allows to examine the implications for entering into new market.
Government policies about the health concern has significant impact on the Red Bull sale and profitability. Red Bull was initially launched as safe drink in the market. Later it was recognized with health risk having stimulating effects (Ashurst, 2008). There is increase awareness about health in UK. The emerging facts about energy drinks are leading people to keep from such drinks (Hales, 2008). Due to health driven behavior of people, UK government is also to take certain measure to ensure the health effects of energy drinks.
The consumption of energy drink is significantly high in UK and it is expected to increase. In UK, energy drink manufacturer companies are engaged in aggressive marketing of the products. Schools are one of the promotion and sale points for these companies. Therefore, UK government has banned the marketing and sale of energy drinks in the schools of UK (Su, 2014). Professional dissertation writing services
Due to high health risk associated with the drink, the UK government also intends to increase the tax on the sale of the energy drink (Sugary drinks tax'effective public health measure', 2013). Increase sale tax on the energy drink will lead to remarkable decrease in the sale of Red Bull. After 16 years heart attack incident due to Red Bull energy drink, the UK government also seeks putting age limits on the purchase of the energy drinks (Jackson, 2014). Teenaged individuals are accounted for one of the largest consumer of energy drinks. Individuals between 16 and 22 are likely to consume more energy drinks in a day than adults. Putting age limits on the purchase of energy drink will lead to considerable decline in the sale of the Red Bull. In order to respond the situation, Red Bull has reduced its prices and focuses on the other market.
Over four years, inflation rate in UK has increased. In 2014, the rate of inflation is 1.9% (BBC, 2014). Real disposable income of consumers has significantly decreased as a consequence of inflation. As a result of this, energy drink consumers do not intend to purchase energy drinks (Jones, 2014). High rate of inflation has led to increase the cost of raw materials. In order to sustain the situation, Red Bull is to increase the price of the drinks. As a result of high price, normal sale of the drinks will be decreased leading to decline in the sale and profitability of the Red Bull. In this economic condition, if Red Bull considers getting loan, it will have to pay high rate of interest. However, if the inflation rises, the rate of the interest will get higher.
Additionally, due to economic situation, soft drink companies of UK such as Coca Cola and Nestle have entered into energy drink market (Coca-Cola Might Look To Advance In the Energy Drinks Market, 2014). With aggressive marketing and variation in the product, they are able to attract more customers. To compete the market, they sell the energy drinks in lower prices. This is likely to make the UK energy drink market competitive because prices of Red Bull and Lucozade are higher than their prices. The access to substitute has created tough market competition. Increase tax by the UK government is another critical factor to affect the prices of energy drinks in the country. In this situation, Red Bull has reduced its prices to sustain its hold in the industry. It has also launched aggressive marketing campaign to resume its position. Online essay writing service
In UK, energy drinks are very popular. It is largely associated with the energy and active life. Therefore, it is remarkably famous among sports and gym persons. Children, teens and adults are all found consuming energy drinks and considerably relate it with the healthy lifestyle (The 2013 UK Soft Drinks Report, 2014). However, energy drinks contain stimulating ingredients such as caffeine, taurine and glucuronolactone. Excess consumption of these ingredients lead to severe health consequences. Over last decades, UK society is undergoing essential health awareness. There is increasing awareness among individuals that energy drinks are not sport drinks and it is likely to cause different health risk including insomnia, palpitations, headache, and heart stroke (Krueger, et al., 2011). Due to this, there is significant effect on the lifestyle of individuals, as they are less likely to consume energy drinks. This has resulted in declining the sale of energy drink companies.
Different energy drink related incident has made the situation worse. Recently, a case reported in US, when a basketball player had unexpected death after consuming a can of Red Bull (Cory Terry Died After Drinking Red Bull, $85 Million Wrongful Death Suit Claims, 2014). The incident not only affected the company financial status due to sued amount of $85 million but also damaged its brand image. Following the incident, many of European countries have banned the consumption of energy drink (Kniuipyte, 2014).
On the other hand, due to inflation in UK, people are compelled to do work for long hours. Long working hours not only give them purchasing power but also need for energy. Red Bull, to control the damage, has focused on changing its recipe (Haydon, 2008). In this respect, it has launched its drink ranges having comparatively little sugar and caffeine. It has also replace taurine with different amino acoid. Moreover, it has invested more in its marketing campaigns coming out with different energy drink range.
As the technology rises, its utilization has increased in the manufacturing, marketing, and distribution of energy drinks. In UK, the use of internet is high. Every second person has access to internet facility. It is used for different purposes including social networking, research, and emailing. The revolution of social media and social networking occurred at greater extend in the UK. Amongst all, 31 million individuals in UK use Facebook and 10 million use Twitter (Rose, 2014). The rise in the use of social networking websites provides a great opportunity for Red Bull to market and advertise on social media websites. Marketing and advertising on social media website is also effective because majority of teens and youngsters in UK use social networking websites for the communication. Through advertising on YouTube, Facebook, and Twitter, Red Bull can create significant impact on the marketing campaign (Zarrella, 2009).
Since Red Bull mainly targets young sports people, it has been advertising and marketing its brands at gym, schools and sports event (Mullin, et al., 2014). In this way, it has been widely advertising its brand through sport sponsor in UK. Red Bull, as associates its brand with the energy, sponsors auto racing events. Annually number of auto racing events are organized in UK, which is a great opportunity for Red Bull to market. However, comparing the social media marketing with sports sponsor, Red Bull can reduce its investment in the marketing. Sport sponsor is comparatively costly (Fitch, et al., 2009). On the other hand, social media marketing is extensive and cheap (Anderson, 2010).Thesis writing help
Additionally, Red Bull is merely manufactured in Austria. From there, it is transported to other countries through different transport means. Due to transport cost, the price of the product is comparatively higher than other brands in the market (Johanson, 2010). With availability of advance technology in other countries particularly in UK, Red Bull can have the manufacturing of the drink in the UK, which is more likely to decrease its product price.
Red Bull has been facing critical environmental issue concerning pollution and global warming. Waste management is an important factor of the operational activity of Red Bull. Red Bull has been unable to comply the environmental regulations related to waste recovery and recycling. As of 2009, Red Bull was fined to pay£261,268 to breach the waste recovery and recycling rules and regulations for 8 years during 1999 till 2006 (Murray, 2009). It was further fined£3,755 to failure to register with the Environment Agency London. After this, Red Bull has developed its environmental sustainability policy. Under this new policy, it is not only registered with the Environmental Agency London but also determined to pursue new recyclable policy. Red Bull cans and bottles are recyclable and environmental friendly.
Discussing the legal issues related to Red Bull, certain ingredients of energy drinks are subject to approval of government. Excessive caffeine and taurine present in the Red Bull leads to health associated risk. Government, to restrict the use of these ingredients in the energy drinks, is to increase rate of caffeine and taurine. Red Bull can face significant impact of the legislation because to comply with the regulation Red Bull will have to either bear the high rates of caffeine and taurine or reduce the quantity of these ingredients in the drink.
This paper can be concluded by stating that Red Bull UK has great opportunity to re-launch its energy drinks in the UK market through creating new brand image. It can also grow the profitability of the company by increasing the sale growth. This paper aimed at proposing three years marketing plan for Red Bull UK for two target markets including sports persons and people living in urban areas of UK. Prior to selecting target market, environmental appraisal analysis is conducted for Red Bull UK using PESTEL framework. Coursework writing service
Political environment of UK is found very challenging for Red Bull. Government policies regarding energy drink ingredients are likely to affect the successful sale of the brand. Due to prospective health risk associated with the energy drink, UK government has imposed certain laws leading to negative implication on Red Bull. Economics environment of UK is likely to lead the Red Bull to reconsider its price strategy. Due to inflation, sale of Red Bull has decreased, which compels Red Bull to adopt new market strategy. Technological environment of UK provides great opportunity for Red Bull wherein Red Bull can utilize the social media as important marketing and promotion medium. Socially, there is increase awareness about health among massive and general perception is created that energy drinks are harmful to health.
Two target markets selected for the marketing plan of Red Bull UK are sport persons and people living in urban areas. Market mix plan is prepared for both target market by using 4 P’s. For first target market, it is recommended to change the ingredients of the energy drink. For price range, it is recommended to set the prices in range based on quality and quantity. Place recommended for sport persons is sports centers, gym, sport events and sport stores. It is recommended to do the promotion through offline marketing and online marketing. However, emphasis should be made on offline marketing. For the second target market, it is recommended to brand the product as healthy drink and therefore vitamins and minerals should be included in the drink. Price is recommended to be set equal to competitors and multi locations approach is suggested to adopt. For promotion, multichannel marketing approach is proposed in the line to achieve the marketing objectives.