Below is a breakdown of the of Red Bull’s marketing strategy in a SWOT Analysis. This model matches Red Bull’s strengths and weaknesses and external factors to the competitive environment it is in. The SWOT model is a good guidance in developing a sustainable niche in one’s market. In the case of Red Bull, this SWOT analysis gives a good idea of how they measure up to the competition in the energy drink market.
To gather a better idea of the effectiveness of Red Bull’s marketing strategy, one can analyze it through the TOWS model. This model takes the SWOT Analysis a step further by placing it into an implementation plan. The TOWS model is a good way to see how Red Bull can effectively use its strengths to take advantage of opportunities and avoid threats, as well as, offsetting weaknesses to take advantage of opportunities and avoid threats. This model is a step up from the SWOT Analysis since it is providing a way on how to improve the company’s positioning. The TOWS method enables a company to move away from just focusing on the internal environment and to look at ways to use external factors to identify and evaluate the options it can pursue.
The first aspect of the TOWS model looks at how a firm can use its core competencies to gain a sustainable competitive advantage in the market. In the case of Red Bull, they are in a market that is continuing to grow. It is very important for them to effectively use their strengths as a company to gain a lead over the ever growing competition. Currently, Red Bull is the market leader in the energy drink market. It would be beneficial for them use their position in the market to venture into new markets. Red Bull can accomplish these endeavors into new markets by using their successful market entry strategy. There are many small competitors entering into the energy drink market and it is diluting the industry. Red Bull already has strong brand identity, which can be helpful to them in creating stronger barriers to entry for this competition. They have done a good job getting their brand out to the public. In order to keep up brand awareness, Red Bull must continue to capitalize on its sponsorship of extreme sports and events. This will help keep up their “edge” image to their target market. In addition, Red Bull can expand on its marketing by taking advantage of the social media boom which, will help develop a more innovative and effective way of hitting their young target market.
The second aspect to look at when analyzing the TOWS model for Red Bull is to see how they can use their strengths to offset any external threats. With the energy drink market growing, it is creating the threat of decreasing Red Bull’s market share. It is important for them to find ways to keep their share but at the same time not stray away from its marketing strategy. As the highly competitive beverage industry grows, Red Bull should replicate its previous success in Europe when expanding into these new markets. At the same time though there is the threat of government regulation and health concerns in these new markets they are exploring. There are two ways for Red Bull to address this issue: 1.) Continue to work of the “edge” image that is selling their product; 2.) Adapt to the regulations of the country and replace any ingredients that are in question. With this growing competition, it also brings into the chance of other products being offered at lower prices. To avoid any effects from this, Red Bull could rely on promoting its strong quality to set itself apart from the competition.
The third area to consider when breaking down the TOWS model is the ability to minimize weaknesses by taking advantage of opportunities. In regards to Red Bull, the only way they will continue to grow is to minimize any of their weaknesses. To start off, Red Bull currently relies on a very small product line. As new competitors enter into the energy drink market, they are offering consumers a variety of choices. To limit the effect of this Red Bull should consider taking the advantage of opportunity to extend their product line. As part of this issue with their product line is Red Bull’s lack of patent for its recipe. The only way they are going to curb the growth of competition is if they gain control of their product so that no one could come along and copy it. Another factor that Red Bull can turn around is its lack of traditional advertising. They can change that around by following the growing trend of using social media networks to extend its advertising campaign.
The final stage of the TOWS model analyzes the ability of a company to counteract its weaknesses to avoid the effects of any threats in the market. This is a very difficult process to put in place. The only way for Red Bull to make this stage successful, is if they are able to execute the previous steps of the TOWS model. In the case of Red Bull they do not seem to have any foreseeable threat coming in this stage of the model. If by chance Red Bull were to encounter serious affect from the growing competition, they could address this by counteracting any weaknesses they have. Any action taken by Red Bull in this stage is only meant to avoid complete breakdown. However, at this time this is not much of a concern for Red Bull. As a market leader, they must focus retaining their hold on that position in the energy drink market as it grows.
Overall, Red Bull has come a long way since it start back in the early 1980s. They entered into a non-existent market and built it up from the ground up. Red Bull developed its brand name by relying on their unique marketing strategy. It was this strategy that guided them to become the leader in the market. However, as the energy market grows, Red Bull must continue to expand on its marketing strategy to avoid any threats from potential competitors. They must adapt to any changes that are occurring in their target market and be willing to create the necessary change. Currently, as a market leader, Red Bull needs to be focusing on keeping that lead. Ultimately, the best way for any market leader to keep their position they must continue to find ways to raise the barriers to entry to offset the threat from market competition.