The primary stated need that Red Bull is looking to cater to is that of providing energy to consumers when they are out of it.
Unstated Needs
The consumer is also trying to ensure that whatever product he buys is safe and healthy. Thus, the makers of Red Bull should clearly indicate that there is no undesired side-effect or impact on health caused on drinking Red Bull.
Real Needs
When customers are involved in activity and seem to run out of energy to complete it in the face of an impending deadline, they are looking for a product which will keep them going till the goal is reached. Thus, Red Bull is marketed as this product which gives them the extra push (“wings”) for this purpose.
Delight Need
The customers are also trying to portray themselves as someone who is stylish and making a statement about the same through the consumption of Red Bull.
Secret Need
The product that they are buying for the purpose of providing energy and making a style statement should not be very heavy on his/her purse.
2.2. Laddering of Needs and Goals
We believe that there are 2 kinds of consumers who drink Red Bull, one segment being those who drink it for the basic need for which it is designed i.e. to provide energy and the other being
those who are trying to make a style statement by drinking Red Bull.
Fig.2.1. Ladder (i)
Fig.2.2. Ladder (ii)
2.3. Customer Value Analysis
The purchase of an energy drink falls into the “Habitual buying” segment. For, even though there are many products in the market, a consumer doesn’t follow a complex decision making model before purchasing it and continues buying one brand if he/she likes its taste and is attracted to it. We believe that there is some amount of brand loyalty involved in the decision making process in buying an energy drink.
Customer Survey:
We conducted a survey to find out the perception of people towards energy drinks and the product Red Bull in particular. The people surveyed were in the age group 18-35, both students and working professionals. Most of them were people living in metro cities and belonged from middle to high income level. We had around 84 respondents. These were the conclusions that were drawn regarding the importance of attributes and the value that they derive from Red Bull from the same.
When asked to rate Red Bull on the same attributes, this was their response.
From the responses we can safely conclude that the most important aspect before the buy is done with regard to the impact it has on health. Here, the customer is satisfied, but there is scope for conveying clearly that there are no side-effects of using Red Bull. But the most significant results come in the attributes taste and cost, where customers are not very satisfied with the product and enough scope to push the product through changing the cost of the product. The customer seems to be satisfied with the energy content and packaging. Red Bull is also readily available as they are sold in most retail supermarkets.
COMPETITION ANALYSIS
Red Bull is operating in energy drink segment of soft drink market. It is differentiating itself with the energy content that it is providing to consumers. This is responding to customer’s interest on well being and performance. If we divide the soft drinks market, here are some basic categories.
- Carbonated Drinks
- Diet Drinks
- Sports Drinks
- Energy Drinks
Red Bull falls in energy drink category. Red Bull competes with other three categories indirectly. To identify the strength and weakness of competitor’s top selling brand from each category is analyzed.
- Carbonated Drinks:
- Diet Drinks:
- Sports Drinks:
- Energy Drinks:
Pepsi (KMX) and Coke (Adrenaline Rush) are the global energy drinks which have not yet made their entry in Indian market. These potential competitors have huge parental advantage. Coke and Pepsi both have excellent distribution network. Apart from distribution networks their spending on advertisement is huge which may directly affect Red Bull in future.
There is an additional advantage with Red Bull with competitors. The energy segment is largely unknown in India at this point of time. The competitors spending on advertisement will create a new market for energy drink which will increase the size of market as a whole. During initial years with competitors it is more likely that the sales of each participant increases.
Apart from all these categories, there are some indirect competitors which threaten the Energy Drink market. Tea, Coffee, Ready to Drink Juices, canned coffee products (Amul Café), Ready to drink milk also are indirect competitors of Red Bull. Since they also serve the purpose of keeping one awake for some time, these products are used by people because of their easy availability, low prices and ease to make at home. These are the proxy products which eat into the market, but Red Bull is not directly competing with in the market.
COLLABORATOR
The following channels can be considered as collaborators for Red Bull Energy Drink:
Colleges
As the major target market for Red Bull is youth, it is essential for it to target colleges for promotion and sales. Red Bull has been doing this in an effective manner. Red Bull has been the sponsors for various college festivals. They use this as an opportunity for creating awareness by distributing Red Bull cans. The all famous Red Bull van, with a huge Red Bull can at the back is a very common sight in colleges. Red Bull distribution girls can be seen in Delhi University Campus almost every day distributing free cans. Further Red Bull should also form alliances with colleges to sell Red Bull in their messes. Red Bull is currently being sold in our mess at IIM Bangalore.
Clubs
An important collaborator of Red Bull is Clubs. Clubs sell Red Bull for non alcoholic customers. They now cherish the idea of drinking a drink like Red Bull over Fresh Lime soda. Red Bull is considered as a club drink.
Also the mix of Red Bull with vodka, popurlarly known as “Birch” is considered to be a very good combination and has become very famous. As such cocktails are sold mostly in clubs and pubs, Clubs are very important collaborators of Red Bull.
Sports and adventure
Red Bull has collaborated with many Go Karting Circuits in India to promote its drink. In USA, Red Bull has associated itself with the extreme adventure sports. It has not done so in India maybe due to a lack of such activities in the country. Red Bull can collaborate with such events which is very common in Goa. One thing Red Bull has failed to do so far is associate it with cricket which might be a very important avenue to look for.
Supermarkets
This is probably the biggest collaborator in terms of volumes. Red Bull should focus on how to push sales through this.
CONTEXT
5.1. Economic Aspect
The cost of a Red Bull is above the purchasing power of an average Indian consumer. This makes the sale restricted to a select segment in the market. From what we understand, even though the volume of sales is low, the margins of profit involved for the product are very high. Since an Indian consumer is markedly different from those abroad and considers price as a very significant factor before making the purchase, it would pay results if the company looks back at its pricing strategy.
5.2. Socio- Cultural Aspect
An Indian consumer is not used to a product such as Red Bull, a high-priced non-alcoholic drink that gives him energy to finish his activities. There is a tendency for him/her to associate Red Bull to an alcoholic drink and hence the natural aversion to alcohol and spirits in the culture keeps him away from purchasing it. Another factor that plays a crucial role is that of taste. The purchase of any beverage outside of home is heavily decided by the taste of it. The taste of Red Bull is not naturally liked by the Indian consumer. The high level of caffeine in Red Bull is also a worrying factor for the consumer who has fears of getting addicted and hence becoming a regular user of Red Bull.
CONCLUSION
Based on our understanding of the 5Cs, we conclude the if Red Bull targets the right market, it has an immense potential in India. To increase the profits, we think that Red Bull should capitalize on Volumes and compromise on its price. The huge margin it has right now will make that possible without inculcating many changes in the production process and go ahead with an expensive marketing strategy. Red Bull has the advantage of being the market leader, but it also has to keep in mind that there is huge scope of competitors entering the market. These potential competitors viz products of Pepsi and Coke, already have an established supply chain in India and hence will take advantage of that in the pricing. Red Bull has to focus towards establishing a low cost supply channel. The company also has to make sure it lobbies with the Government officials well to make sure any litigation against the drink is kept in check. Overall, we believe that with the right strategy in mind, Red Bull can become a very profitable and successful brand in India.
Red Bull: Marketing Management
