Marketing Strategy Case Study. The introduction of Red Bull Cola into the Irish Market.

1. Red Bull Cola Case Study
Marketing Strategy

2. Case Layout
•In Class Group Task
•Company Overview
•Product Overview
•Irish Beverage Market
•Competitor Actions
•Task Review & Learning Outcomes
•Case Study Epilogue

3. In Class
Group
Task

4. Your group has been tasked with co-ordinating
the launch of Red Bull Cola into the Irish market.
You have complete control over the
communications mix and the strategy for the
brand.
You have up to one hour of class to construct a
clear business objective, and detail your chosen
strategy as to how best achieve this objective.

5. YOUR GROUP SHOULD CONSIDER:
•target market (who are you selling to)
•objectives (what is the purpose of the strategy)
•type of product (what is the purpose of the product)
•market structure (where does red bull cola fit)
•stage of PLC (what strategies suit this intro stage)
•distribution channels (where/how will you sell)
•positioning (what does red bull cola represent)
•resources (how much time/energy/man power will be
put into this)
•pricing strategy (how much will you charge and why)
•segmentation (what are the characteristics of your target)
•research (what type of information is important)

6. Company
Background

8. In 1984, Mateschitz founded Red Bull. He fine-
tuned the product, developed a unique marketing
concept and in 1987, started selling Red Bull
Energy Drink on the Austrian market . This was
not only the launch of a completely new product,
in fact it was the birth of a totally new product
category. Today Red Bull is present in over 160
countries.

9. Since 1987, around 30 billion cans of Red Bull
have been consumed, more than 4.2 billion
in 2010. The responsibility for the success of the
world's No. 1 energy drink is shared by the
company's 7,758 employees around the world
(compared to 6.900 in 2009). The Red Bull
headquarters are based in Fuschl am See, not far
from Salzburg, Austria.

10. While the consumption was doubling year on
year in Austria, Red Bull arrived in its first foreign
markets, Singapore (1989) and Hungary (1992).
The authorization for Germany was granted in
1994, the UK followed in 1995 and in 1997, the
US business started in California. Red Bull has
been available since 1987.

11. From 2007-2010 company turnover increased by
15.8% from EUR 3.268 billion to EUR 3.785 billion.
Sales, revenues, productivity and operating profit
not only matched 2007 levels, they significantly
exceeded them to such an extent that the figures
recorded were the best in the company's history
so far.

12. The main reasons for such positive figures include
outstanding sales in the Red Bull markets in
Turkey (+86%), Japan (+80%), Brazil (+32%),
Germany (+13%) and the USA (+11%), combined
with efficient cost management and ongoing
brand investment even in the challenging
economic climate of recent years.

13. Product
Overview

15. After creating and successfully leading the
energy drink category for over 20 years, Red
Bull is now entering the largest non-alcoholic
beverage category in the world with a cola
made of ingredients from 100% natural
sources.

16. The cola from Red Bull is a unique blend of
ingredients, all from 100% natural sources. In
addition, it is the only cola which contains
both the original Kola nut and the Coca leaf.
Therefore, it is a very special recipe.

17. The result is a natural, not-too-sweet cola
taste, which comes from using the right plant
extracts. Red Bull Cola has initially launched
in Austria, Switzerland, Italy, Great Britain,
Ireland, Russia and Las Vegas.

18. Red Bull Cola contains 45 milligrams of caffeine per 355ml
(12-ounce) can, it contains more than Coca-Cola (34 mg) or
Pepsi-Cola (37.5 mg), but less than Diet Coke (47 mg) or
Pepsi One (54 mg).
The cola contains significantly less caffeine than Red Bull's
eponymous energy drink (80 mg per 250 mL).
The drink also contains sugar and caramel colour, lacking the
phosphoric acid, high fructose corn syrup and artificial
flavours of most commercial colas.

19. Irish
Beverage
Market

24. IRELAND'S sports and energy drinks market grew by 15pc
last year, more than double the 7pc growth rate across
Ireland's soft drinks market.
New figures to be unveiled by Britvic today show the value
of Ireland's soft drinks' market now stands at more than
£530m.
Sports and energy drinks now make up a fifth of this
market, after their bumper 2007 growth.
Meanwhile sales of carbonated drinks grew just 2pc
during the year, amid an increasingly health conscious
public. Independent.ie 2007

27. Competitor
Actions

29. Coca Cola will launch Burn Energy into 7000
outlets across Ireland in direct response to the
Red Bull Cola launch
Coca Cola will compete on price in the energy
market, openly intending to undercut Red Bull

30. Task
Review &
Learning
Outcomes

31. Students should consider the brand
dilution from Red Bull’s core competency
of ENERGY, to a non-energy Cola Product.
Red Bull is synonymous with Energy, Red
Bull Cola confuses this.

32. Red Bull Cola is ‘strong & natural’ – how
does this fit with existing Red Bull
customers?
Are they concerned by natural products?
Does the ‘strong & natural’ tag creative a
unique selling point?

33. What do you think of Coca Cola’s reaction
of introducing their energy drink into the
Irish market?
Was it naive of Red Bull to compete for
Cola market share?

34. Do you think Red Bull needed to, or
indeed need to, diversify their product
range?

35. Given the financial strength of Coca Cola,
would it be wise for Red Bull Cola to
compete on price?

36. Given the greater of cost of a Red Bull
versus other cola products, at what price
point should Red Bull Cola be introduced?
In line with other Red Bull products?
In line with other cola products?

37. MISTAKE 1
The parent brand to which they were tying this
product could not be more at odds with a
positioning based on completely natural and non-
artificial ingredients. Even though I’ve never seen a
brand equity monitor that includes Red Bull, I
would be shocked if it included anything other than
very low scores for image attributes like “natural”
and “healthy’. I’m sure that seeing these 2
completely contrary positions allied together in
one pack was quite confusing for the consumer.

38. MISTAKE 2
The pack itself doesn’t little-to-nothing to
communicate it’s product USP’s to the target
audience. It had already been hamstrung by the
fact that it had to use the Red Bull color palette
(blue and silver as natural appearing colours in the
plant world anyone?), but there is hardly any
reference to the make-up of the liquid on the front
of the pack other than the one mention of natural.

39. MISTAKE 3
Finally, the launch of the product. Whilst they did some
really nice stuff (as the sales presenter below attests), it’s
fair to say that if you’re going to take on one of the
biggest brands in the world you probably need to throw
the full heavy artillery at it. Unfortunately, I can’t get any
media spend figures: but I do know that there was no TV
advertising in Ireland or the UK and from what I can tell it
seems that there was limited print and outdoor spend on
it. It seems strange to take the decision to enter the cola
category and then not back this decision as it needs to be.

40. It is quite common for business students
to fixate on one plan, or search for the
optimum solution.
As business/marketing strategists, is the
best advice your group can give in this
situation “Do not enter the Irish market!!”
Why? Why not?

41. Case Study
Epilogue

42. Case Study Epilogue
Red Bull North America has discontinued production of its cola. Amidst a flurry
of rumours last week, the move was not entirely unexpected, though Red Bull’s
decision to pull the plug on the highly touted product is likely to surprise many
within the beverage industry.
Red Bull will “sell through existing inventories of Red Bull Cola, but not
proceed with additional production,” and refocus efforts on growth of its core
brand within the rapidly expanding energy drink category, the company said in
a statement e-mailed to BevNET.
Since its debut in 2008, Red Bull Cola has struggled to excite consumers and
retailers in part due to its unique flavour profile and some controversy
regarding the company’s use of coca leaves in the beverage. However, it may
be the cola’s premium price point that has been its biggest impediment to
success. A 12 oz. can of Red Bull Cola sells for around $1.50 in comparison to
$1.00 or less for a similarly sized Coke or Pepsi product.
Nevertheless, with a nearly 40 percent share of the energy drink category –
pegged by Mintel to grow to nearly to $8 billion by 2015 – Red Bull noted that
the company has “ambitious plans for growth and is well-positioned to continue
the momentum that has led to the brand’s dominance of dollar share within the
category.”

43. case study author: Jeff Taylor
email: jeff@jefftaylor.ie
website: www.jefftaylor.ie
linkedin: http://www.linkedin.com/pub/jeff-taylor/41/993/635
contact via email for guest lectures and academic seminars
some facts and figures within the case have been altered for illustrative purposes