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3041MKT: ENTREPRENEURSHIP AND NEW BUSINESS VENTURING
TUTOR: DR. KELLI BODEY
GROUP BUSINESS PLAN ASSIGNMENT: REDBULL LASER
...
Executive Summary									
The Market Opportunity 1
Company Analysis 2
	
	 Background 2
	 Mission statement
	 Current offe...
w
Competitor Analysis 8
	
Strengths and weaknesses of main competitors 8
	 Competitor marketing 8
	 Market share estimates...
THE BUSINESS CONCEPT:
Our concept is to create an entirely new functional beverage category and associated market, this be...
w
THE MARKET OPPORTUNITY:
Food and beverage manufacturing has been a crucial revenue gainer for Australia’s economy (Austr...
COMPANY ANALYSIS
BACKGROUND:
Red Bull was founded in Austria by Dietrich Mateschitz. Dietrich was inspired by a functional...
Red Bull energy drink is marketed as a high-quality functional beverage and is sold at a premium price
position. The drink...
NOOTROPICS AS THE MAJOR FUNCTIONAL INGREDIENT.
Almost fifty years ago, Piracetam-like Nootropics were discovered and consi...
COMPETITION
A COMPETITIVE EDGE:
Red Bull created a brand new concept that no other competitors have done by substituting c...
CUSTOMER ANALYSIS
TARGET MARKET AND SEGMENTATION ANALYSIS:
DEMOGRAPHIC SEGMENTATION:
Consumers of RedBull Laser will be on...
CUSTOMER ANALYSIS
PRIMARY PURCHASE MOTIVE:
‘FOCUS’ for work, study, play, sport. As a supplement to alcohol, sporting acti...
V (FRUCOR BEVERAGES LTD.) &
MOTHER (COCA-COLA AMATIL LTD.)
STRENGTHS
•	 Large production size and capacity (compare to Red...
According to the statistics from Euromonitor International, in 2010 - 2013 V lead the market in funtional
drink sales with...
Red Bull Australia will ensure that market evaluation is regularly conducted in order to keep up-to-date
with the industry...
RedBull laser will work on the premise in that it influences the brains ability for intense physical and
psychological foc...
MARKETING CONTINUED
RedBull Laser is a completely new product, both in it’s kind and it’s nature. Therefore two natural
ma...
MARKETING CONTINUED
PROMOTIONAL STRATEGY:
The RedBull laser Marketing and Promotional strategy campaign will be split into...
MARKETING CONTINUED
PROMOTIONAL STRATEGY CONTINUED:
Extension of RedBulls’ athlete and sports roster, including the list o...
RedBull use promotional giveaways as a primary means of market penetration. This could be coupled
with the aforementioned ...
OPERATIONAL PLAN CONTINUED
HUMAN RESOURCE MANAGEMENT
ORGANISATIONAL STRUCTURE
Red Bull Australia’s manufacturing and manag...
OPERATIONAL PLAN CONTINUED
KEY MANAGEMENT POSITIONS AND RESPONSIBILITIES:
The management team below demonstrates the key m...
OPERATIONAL PLAN CONTINUED
PROFESSIONAL ADVISORS:
Professional advisors assist RedBull Australia with their expertise in t...
BUSINESS PREMISES PLAN:
LOCATION:
The RedBull Laser division office will be located at 2 Huntley St (Bourke   Rd), Alexand...
OPERATIONAL PLAN CONTINUED
SECURITY
Security refers to the tangible and intangible security of Red Bull Australia, that ca...
EXPENSES FORECAST (12 MONTHS)
Red Bull is a profitable company distributing the largest quantity of energy drinks worldwid...
REFERENCE LIST
Anderson, J.W., Baird, P., Davis, J., Richard, H., Ferreri, S., Knudtson, M., Koraym A., Waters, V.,
and Wi...
EuromonitorInternational.(2014,April03).SportsandEnergyDrinksinAustralia.Retrievedfromhttp://
www.portal.euromonitor.com.l...
REFERENCE LIST CONTINUED
Rogers, P.J. (2007). Caffeine, mood and mental performance in everyday life. Nutrition Bulletin. ...
APPENDIX A
PORTER’S FIVE FORCES MODEL ANALYSIS
BARRIERS TO ENTRY
This section analyses the level of the markets resistance...
POWER OF BUYERS.
Since wholesalers and big retailers are the major buyers of Red Bull products, they have the upmost
power...
APPENDIX B
Red Bull’s current products and ingredients description list:
-	 The classic Red Bull energy drink
Caffeine + T...
ALPINE SPRING WATER
The water used for Red Bull is fresh Alpine water of highest quality, which comes from springs nearby
...
APPENDIX C
29.
APPENDIX D
30.
APPENDIX E
31.
APPENDIX F
32.
APPENDIX G
33.
APPENDIX H
34.
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Redbull Laser - Product Strategy.

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This is a product strategy I designed with some mates for a Uni Entrepreneurship project. It's a gritty representation of my thinking. I didn't have any hand in the finance side.

Needless to say my ideas and communications thereof, are a bit more polished these days. It's always good to look back and learn.

Veröffentlicht in: Business
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Redbull Laser - Product Strategy.

  1. 1. 3041MKT: ENTREPRENEURSHIP AND NEW BUSINESS VENTURING TUTOR: DR. KELLI BODEY GROUP BUSINESS PLAN ASSIGNMENT: REDBULL LASER STUDENTS: TUONG NGUYEN - S2808983, GENG YANG - S2805172, JARED BATTEYE - S2816913, VINCE USHER - S2754766 DUE DATE: 16/05/2014
  2. 2. Executive Summary The Market Opportunity 1 Company Analysis 2 Background 2 Mission statement Current offers and businesses 2 Key Assets and Competencies 3 Unique and dominating products 3 Production and distribution 3 Media assets 3 Product Concept and Opportunity 4 Nootropics as the major functional ingredient 4 Caffeine misnomers, and use of Ritalin as a study aid4 World trends Competition 5 A competitive edge Customer Analysis 6 Target market and segmentation analysis Demographic segmentation Psychographic segmentation Overall psychographic segmentation Socio economic level Cultural Political affinity Values 6 Primary purchase motive 7 Secondary purchase motive 7 Usage style 7 TABLE OF CONTENTS
  3. 3. w Competitor Analysis 8 Strengths and weaknesses of main competitors 8 Competitor marketing 8 Market share estimates 9 Ongoing market research 9 Marketing 10 Marketing evaluation, product, branding strategy 11 Overall marketing goals and objectives 12 Pricing strategy 12 Promotion strategy 13 Distribution 15 Operational Plan 15 Legal structure 15 Backstage process 15 Front stage process 15 Human resource management 16 Organizational culture 16 Key management positions and responsibilities 17 Remuneration plan 17 Professional advisors 18 Business premises plan 19 Location 19 Equipment requirements 19 Insurance and security issues 19 Security 19 Risk and contingency management 19 Financial plan 20 Sources of capital and capital requirements 20 Uses of capital 20 Sales forecast (12 months) 20 Expenses forecast (12 months) 21 Income statement 21 Balance sheet 21 Reference list 22 Appendices 25
  4. 4. THE BUSINESS CONCEPT: Our concept is to create an entirely new functional beverage category and associated market, this being ‘Focus Drinks’. This is a new take on the RedBull energy drink however, this new product will contain less caffeine and have the added major active ingredient of NooTropics (Chemicals that enhance cognitive ability). These drinks will be consumed by an individual and within a matter of minutes, that individual will experience improved cognition, ability to focus, improved memory and enhanced overall performance, both intellectual and physical in nature. MARKET OPPORTUNITY: The functional food and beverage industry is seeing an underswell of tremendous growth. This growth spanning three point five years, 2010 - 2014. The aforementioned coupled with the ability to patent, gain control of suppliers, and take first mover advantage on a completely new product category ‘Focus Drinks’, presents an unbeleivable market opportunity for Red Bull through the introduction of ‘Red Bull Laser’. MARKETING: RedBull have pinpointed various different areas in which they can leverage their media collateral, and branding assets, combined with their influence over price to deliver an inimitable marketing strategy for the launch of RedBull Laser. The strategy presents two main goals, these being, Market Penetration, and Product Adoption/Diffusion. A two phase pricing strategy is proferred, phase one being penetration pricing moving to premium pricing after a period. Traditional Advertising in the form of Print Media and TVC’s will be created using the slogan “The Final Fronteir In Focus” and then Sponsorship of new athletes coupled with the Creation of a Brain Trainer app, to demonstrate product ability will be delivered. FINANCE: RedBull Australia will be investing the entirety of initial investment capital into Red Bull Laser this amount being $9,300,000. This capital to be divided amongst, manufacturing, advertising, office space, equipment, personell and labor costs. It is expected that Red Bull recover this capital reaching a breakeven point of $30,147,391.00 within 10 Months of Product Release, leading to an overall initial one year profit margin of $9,640,859.00 , increasing each year as market share grows, and premium pricing phase 2 is intiated. OPERATIONS: The Red Bull Laser team will be conducting their operations out of Red Bulls Australian Head Quarters in Sydney, under the Laser product division of their Alexandria Offices. The Red Bull Laser Product will be Manufactured in Austria using their patented wall to wall production method, and then imported for distribution within the country. Red Bull Lasers Management structure will be heirachial and shall include an Operations, Marketing, HR, R&D and Finance Manager. Red Bull will call upon important advisors for their knowledge in areas that include, Intellectual Property Law, Finance, Management Consultancy. Finally a risk management and contingency plan will be provided outlining any particular areas of risk Identified with producing Red Bull laser, their likelihoods, level of impact and contingencies. EXECUTIVE SUMMARY:
  5. 5. w THE MARKET OPPORTUNITY: Food and beverage manufacturing has been a crucial revenue gainer for Australia’s economy (Australian Food and Grocery Council, 2014). The industry accounts for $110 billion in annual revenue, which makes up approximately four percent of total GDP. The industry is also responsible for approximately 300,000 employees Australia wide (AFGC). The functional beverage industry has seen tremendous growth over the last five years within australia witnessing an average growth in consumption of energy drinks totalling 15.72 million liters annually (Euromonitor, 2014) This in turn has seen dramatic investment in research, deveopment and product innovation in hopes of discovering new potential revenue streams (“Energy Drinks Industry Report”, 2014). Therefore, when considering entering this industry, it is crucial to analyse the external environment to identify our products’ viability and overall industry attractiveness. Porter’s five forces framework appears to be an ideal method to solve this task, which takes into account five factors: barriers to entry, existing competitive rivalry, and threat from substitutes, power of buyers, and power of suppliers. (refers to figure 1). FIGURE 1. It would appear that due to the Moderate Barriers to Entry, Moderate threat from substitutes, High power of buyers, and high power of Suppliers that overall there is ‘not’ an enticing opportunity for RedBull to enter the Australian Functional Beverages Market with “RedBull Laser”. However, it is our aim to eliminate these threats through, 1. Patent Protecion on Nootropic formulae, 2. Signing exclusivity contracts with Nootropic Suppliers, 3. Gaining first mover advantage and having influence over demand and total market for Nootropic Beverages. 1.
  6. 6. COMPANY ANALYSIS BACKGROUND: Red Bull was founded in Austria by Dietrich Mateschitz. Dietrich was inspired by a functional drink he discovered in Thailand called Krating Daeng. Dietrich developed a unique formula of Red Bull Energy Drink and applied the product to a distinctive marketing approach with the well-known slogan “Red Bull gives you wings”. The current success of Red Bull has been shown by its availability in over 165 countries total consumption amounting over 40 billion cans with 5.387 billion cans sold in 2013. This demonstrated a 3.1 per cent increase in sales volume, which resulted in a total revenue of EUR 5.040 billion. Red Bull is also a large provider of employment, employing almost 10,000 employees as at the end of 2013 (Red Bull Australia, 2014). The RedBull Laser team will be the newest editions to the redbull product division. This will include four new managers and associated staff. These being, Geng Yan, Tuong Nguyen, Vince Usher, Jared Battye. Each of the aforementioned playing specific roles within the department aligned with their expertise, further information about roles is available in the operations section of this report. “We are dedicated to upholding Red Bulls standards, maintaining the position of market leader in the energy drinks category, and delivering superior customer service in a highly efficient and profitable manner” (Yoovidhya, 2009, p.34) MISSION STATEMENT: CURRENT OFFERS AND BUSINESS: Red Bull Australia has extended its product lines with a range of low-joule sugar-free, zero carbohydrate and flavoured editions (for ingredients list and editions see figure 2. and or Appendix B). 1. 2. 3. 4. 5. 6. 1. REDBULL CLASSIC 2. REDBULL SUGARFREE 3. REDBULL ZERO 4. REDBULL - RED EDITION 5. REDBULL - SILVER EDITION 6. REDBULL - BLUE EDITION 7. REDBULL - LASER ? 7. 2.
  7. 7. Red Bull energy drink is marketed as a high-quality functional beverage and is sold at a premium price position. The drink has dominated the energy drink competition globally with its unmatched popularity, marketing audacity and pace of innovation. Red Bull energy drink also includes highly concentrated caffeine, together with taurine and alpine spring water. This allows for maximum effect at half of the competitors’ tin size (Brasel & Gips, 2011). KEY ASSETS & COMPETENCIES: UNIQUE AND DOMINATING PRODUCTS: As a contribution to sustainability, all of Red Bull products’ packages are 100 per cent recyclable and 60 per cent lighter in weight. This helps reduce raw material and product costs. Moreover, Red Bull applies its patented ‘Wall-to-Wall’ production model to its production, which means the cans are created and filled with contents simultaneously. This production method saves in transportation cost and reduces approximately 5,300 tons of CO2 emissions each year. As Red Bull cans are lighter and easier to pack, they are distributed predominantly by train and ship, this method generates significantly less CO2 emissions compared to transit by truck (Red Bull Australia, 2014). RedBull laser will adopt all of these process’. Distribution will be through all major partnered convenience stores, supermarkets, etc. PRODUCTION AND DISTRIBUTION: Apart from the success of its energy drink, Redbull are successful media entrepreneurs. Their enormous media catalogue critically contribute to the growth and strategic advantage that make RedBull dominant over it’s competitors (Forbes, 2012). The sport industry in particular, is an area in which RedBull have been inimitably active. RedBull are sponsors of sporting events all over the world that feature top athletes, and in some cases have even invented their own sports. For instance, Sebastian Vettel F1 Champ, is sponsored by Red Bull, and had his fourth consecutive World championship in Formula One Racing sport under the RedBull banner. (Red Bull Australia, 2014). This all contributes to RedBulls’ brand equity and product experience. MEDIA ASSETS: Redbull have even expanded their media efforts into the music industry. RedBull Music Academy is one amongst the last remaining analog recording studios, at which stars like Justin Timberlake and 50 Cent produce their work. RedBull Music Academy also collaborate with Multiple Award Winning artist Skrillex and iconic DJ Richie Hawtin (Red Bull Australia, 2014). RedBull leverage these stars as endorsers of the product to largely expand it’s market and find new revenue streams making it one of the most agile commpanies in the world (Forbes). RedBull Laser intend to take advantage of all of these opportunities to grow it’s own brand. 3.
  8. 8. NOOTROPICS AS THE MAJOR FUNCTIONAL INGREDIENT. Almost fifty years ago, Piracetam-like Nootropics were discovered and considered a groundbreaking finding in health industry (Gouliaey & Senning, 1994). The piracetam-like nootropics, which have appeared in multiple brain research papers, consist of piracetam, oxiracetam, pramiracetam, and aniracetam. In a research on the relation between the piracetam-like nootropics and psychotic patients, it was found that these ingredients had a positive effect on the stimulation of neurotransmission, which support the cognitive function of the brain (Erban, Hanzlie & Skondia, 1979). Additionally, Mondadori, Ducet & Borkowski (1991) in their research on the memory process, concluded that the piracetam-like nootropics improved the brain’s ability to consolidate the memory up to 8 hours after the initial contact with the objective (Mondadori, Ducet & Borkowski, 1991). Lastly, the piracetam-like nootropics were claimed to boost the level of intensity in general activity, which resulted in relatively enhanced performance (Gouliaev & Senning). PRODUCT CONCEPT AND OPPORTUNITIES Caffeine is known as the most popular legally distributed stimulant in the market contained mostly through coffee, tea and functional drinks, which is largely used by undergraduate students (Bradley & Petree, 1990). After being consumed, caffeine will get into the blood streams to access to the body then force the concentration in blood and brain functions in up to 40 minutes, which is proven to prevent sleepiness and mental fatigue (Rogers, 2007). However, there has been a misconception of caffeine effects on consumer’s performance and enhanced ability to focus. In fact, it was found that when a user withdraw caffeine from daily nutrition intake, mood and performance had a tendency to decline; whereas mood and performance did not exceed the ordinary level when extra caffeine was consumed (Rogers). Moreover, caffeine appears to trigger negative moods towards sensitive individuals in particular (Rogers). The misuse of prescription drugs have been a controversial topic in recent years. Ritalin, of which street names are ‘vitamin R’, ‘R ball’ or ‘cramming drug’, has been among the most abused prescription stimulants consumed by students (Kapner, 2003). Together with coffee, caffeine pills, and energy drinks, Ritalin is used by students to fight sleepiness and achieve an higher ability to focus on exams for several hours and in some extreme cases for consecutive days (Kapner). Ritalin is a prescription medication, therefore, is perceived harmless and is generally accessible to students; whereas its effects are detrimental as much as cocaine and amphetamine. The unwanted outcomes range from nervousness, depressions to mental disorder or death (Kapner). There has been an intense competition between energy beverage companies as cheaper options to an energy boost are widely available on the current market. As a result, it is crucial for energy drink manufacturers to differentiate themselves from other energy-boosting format to avoid the loss of market share by paying attention to selection ingredients carrying health benefits message to consumers (Demme, 2012). It is suggested that energy drink manufacturers are to switch their standing point to a customer-focused platform, together with unique differential benefits to maximize their sales potential (Demme). In addition, ‘natural ingredients’ or ‘non-artificial’ labels on energy drinks were claimed to have a significant impact on consumers’ evaluation and purchase decision (Demme, 2012). It is recommended that, to outperform the competitors, functional beverage manufacturers is to reduce the amount of caffeine as a health promotion attempt and let the consumers aware of it through the product label. CAFFEINE MISNOMERS, AND USE OF RITALIN AS A STUDY AID. WORLD TRENDS: 4.
  9. 9. COMPETITION A COMPETITIVE EDGE: Red Bull created a brand new concept that no other competitors have done by substituting caffeine with nootropics, which intensify physical and psychological focus. Therefore, Red Bull Laser does not have direct competitors. However, with the great amount of overall resources such as capital, technology, market knowledge and high market power, the indirect and substitute competitors have a potential to come out with a similar product. Frucor Beverages and Coca-Cola are the major competitors, with their V and Mother brands. V is a New Zealand owned company, which was introduced into the Australian market in 1999 (Merwick, 2011). In 2013, V remained as the leading energy drink brand with a 36% share of total off-trade sales in the market. The brand has a high market power and it offers a great range of varieties including V Green, V Sugarfree, V Black (doubled taurine with coffee flavor), V Blue (passion-fruit and peach flavor) etc (Euromonitor Internatioanl, 2014). Coca-Cola introduced Mother into Australian and New Zealand markets in late 2006. It was ranked third, with a 22% share of off-trade sales in the Australian market in 2013. Similarly, Mother also offers a good range of varieties. With the recent expansion on its Australian range (“Mother Green Storm”), consumers now have a choice of six, which includes ‘classic’ Mother flavor, Mother Lemon Bite, Mother Surge Orange, Mother Frosty Berry and Mother Sugar Free (Langley, 2013). V and Mother have the similar products, which contain high amounts of caffeine, sugar and are low in fiber. Although they boost consumers’ performance for a short period of time, they do not necessary help the brains focus and efficiency. Both of these competitors have high market shares, powers and resources on producing the ‘typical’ energy drinks, but they have not realized that people desire a higher quality in their products with greater efficiency and added health benefits. 5.
  10. 10. CUSTOMER ANALYSIS TARGET MARKET AND SEGMENTATION ANALYSIS: DEMOGRAPHIC SEGMENTATION: Consumers of RedBull Laser will be on Average Aged between 18- 35 years old, both male and female (Malinauskas, Aeby, Overton, Carpenter-Aeby, Berber Heidel, 2007). Red Bull Laser will be targeted at University Students, Professional and Blue Collar Workers, Athletes, and those that require ‘FOCUS’ in their chosen activities within the aforementioned age ranges. This target represents 31% of the entire Australian Population (ABS, 2013) PSYCHOGRAPHIC SEGMENTATION: Redbull obviously target people whom need energy to perform activities during the day or night. We are going to target similarly, people whom need ‘FOCUS’ to perform activities during the day or night. We see ‘FOCUS’ much like Energy as an indisciminant need. All people, whom all have different ways of thinking, cultural influence, tradition etc. need focus, and as such all will be targeted. This is where segmentation becomes less useful, and as such, one must look at the total RedBull brand landscape, it’s current targets, and it’s media, marketing and advertising’s collateral. This is with regard to whether that collateral will be efficient and effective in targeting particular segments of the market over others. OVERALL PSYCHOGRAPHIC SEGMENTATION. SOCIO ECONOMIC LEVEL: Lower end of Spectrum, Student, Low income, blue collar worker, etc. CULTURAL: 1. Australian/Eurpoean Heritage, White Males, English Speaking (Christian, Atheist) 2. Chinese Heritage, Asian Males, Cantonese/Mandarin Speaking (Buddhist, Taoist, Confucian, Atheist) 3. Lebanese Heritage, Arab Males, Arabic Speaking (Muslim, Atheist) POLITICAL AFFINITY: Traditionally vote for the Labor Party, Greens, or Independants. VALUES: Non conservative in most cases, materialistic, value possessions, value ‘freedom’ and independance, value sport. Very much concerned with self, narcissistic tendancy is at it’s peak. Appeal to image. 6.
  11. 11. CUSTOMER ANALYSIS PRIMARY PURCHASE MOTIVE: ‘FOCUS’ for work, study, play, sport. As a supplement to alcohol, sporting activity, work commitment or academic examination. SECONDARY PURCHASE MOTIVE: Taste. Thirst. Physiological need. Image. Promotional offer with associated meal and or purchase. Price comparitive to competitor offering. USAGE STYLE: We envision this style of beverage to attract daily usage, much the same as other energy drinks within the category, going as far as addiction and chronic use by consumers. Those most attracted to this usage style will be: Students, and Blue Collar Workers. This is because they exhibit many touchpoints through which it will be easy to create a need in which they should fulfil that need with the laser product. Secondary to that, moderate usage between: Professionals, and Athletes. They have been categorised this way because their opportunity for usage is much less than that of a student or an blue collar worker. Their values also, in some cases, make purchase on a chronic continual basis less likely. This is due to an higher education with regard to health, and in some cases financial management. being a barrier. 7.
  12. 12. V (FRUCOR BEVERAGES LTD.) & MOTHER (COCA-COLA AMATIL LTD.) STRENGTHS • Large production size and capacity (compare to Red Bull Laser) • High brand awareness • More favorable distribution channels • Stable internal/external environment (relationship with partners and alliances) • Lower average cost due to greater production (economies of scale) • More rang of varieties WEAKNESSES • Less healthy products • Less innovation ability • High opportunity cost The competitors below share the same strengths because they are similar in terms of company size and products. STRENGTHS AND WEAKNESSES OF MAIN COMPETITORS: COMPETITION CONTINUED The main marketing strategy of Frucor Beverage’s V is committing to partnerships with sports and entertainment entities combined with the use of social media (Facebook, Instagram). In 2013, V launched a promotion along side the feature film ‘The Wolverine’, where entrants purchased any product for a chance to win a trip to LA or a double movie pass. V also focused on varying the range of its energy drinks, such as launching zero sugar and zero calorie varieties of V for health-conscious consumers (Euromonitor International, 2014). Mothers’ marketing strategy mainly focuses on marketing its high potency, claiming its product has “double the energy kick” (Euromonitor International, 2013). Mother also promote themself to the ethical and health- conscious consumer group by expanding their range. They added Mother Green Storm, which contains a natural sourced caffeine and Mother Sugar Free to their product list (Euromonitor International, 2014). COMPETITOR MARKETING: 8.
  13. 13. According to the statistics from Euromonitor International, in 2010 - 2013 V lead the market in funtional drink sales with off-trade values (drinks purchased from retailers by consumers) from 21.8% to 22.4%. Redbull were #2 in market share with 18.3% in 2010 - 20.8% in 2013, Powerade were #3 in market share with 21.1in 2010 dropping to 18.9% in 2013, Mother remained 4th with 12.1% in 2010 to 14.1% in 2013 off-trade value during the same period (Euromonitor International, 2014). V and Mother’s market shares are expected to shrink when Laser enter the market place due to the Penetration pricing impact of Red Bull Laser. MARKET SHARE ESTIMATES: COMPETITION CONTINUED FORECAST BRAND SHARE AT LASER LAUNCH AUSTRALIA - 2015 -2016 FORECAST BRAND SHARE AS LASER MOVES INTO PREMIUM PRICING 2016-2017 Chart below shows estimated Market Share split, when RedBull move to a Premium Pricing Strategy POWERADE 28% 19% MOTHER 13% 32% 18% 26% POWERADE 18% MOTHER 15% 19% 9.
  14. 14. Red Bull Australia will ensure that market evaluation is regularly conducted in order to keep up-to-date with the industry and remain competitive. There are two main aspects that Red Bull will focus on while conducting an on-going market evaluation, which are market analysis and customer preferences. Market analysis collects industry information such as industry condition, and competitiveness of Red Bull’s competitors. It helps Red Bull to remain competitive. Evaluation on customer preferences keeps Red Bull within the industry by conducting surveys, interviews and focus group. ONGOING MARKET RESEARCH: COMPETITION CONTINUED MARKETING RedBull is not simply an energy drink manufacturer, perhaps the drink isn’t even that important. Philosophically you could say that the RedBull company is really a Marketing Machine, and the media and content it produces is the ‘real product’ that it promotes. As a consumer of RedBull you are fulfilling a need to fill the somewhat psychological void between death and ‘life’, life as in living, living as in, ‘pushing the limit of human achievement’. In order to communicate this, RedBull do what no other company is brave enough to do, and that is in sponsoring the most dangerous activities the world has ever seen. Showing extreme events perpetrated by human beings helps with communicating the thin line that separates those that are cognisant of mortality, from those that are somewhat above it. The brand plays on this human condition, it is a concept that permeates society. Even though the participation in these events is undertaken by others, somewhat irrationally the consumer feels as if they have become a stakeholder in that event. The consumer is communicating their value of life, to themselves and others. However not entirely dismissing the product, the drink itself serves to situationally effect and enhance the aforementioned. RedBull works further as a psychological concept, as when it affects a human biologically the pathways through which it works are directly involved with the psychological emotions it evokes in the consumers’ mind. A side effect of caffeine, (a primary chemical in RedBull) is that the consumers’ heart will start beating at a faster rate. It is not beyond a human to be cognisant of this affectation. This is an affectation not dissimilar to that of the release of adrenalin in the body, one that happens situationally when undertaking a risky and or dangerous event. This mimicry of feeling serves as a mental seal of approval for the product. Thus when thinking about the branding and promotion for RedBull laser, it becomes obvious that situational ideas in which mimicry like that of caffeine to adrenaline, can be used to simulate a psychological emotion or feeling that steals the consumers approval of the products’ function and communicates the overall strategy of RedBull Laser. MARKETING EVALUATION, PRODUCT, BRANDING STRATEGY: 10.
  15. 15. RedBull laser will work on the premise in that it influences the brains ability for intense physical and psychological focus. The need for focus is one that truly permeates society today, a society in which distraction is everywhere, and day to day tasks are becoming more complex and intellectual in nature. Cultural phenomena in which the abuse of pharmaceuticals that help with focus, such as Ritalin, Adderall and other Beta Blockers, are witnessing an underswell of activity in western society, specifically within the high pressure realm of University education. RedBull laser has an ability to leverage that phenomena as a market, in providing a product that has the same effect, through use of NoOtropics (Chemicals that help humans to focus) in a completely legal and safe manner. Product design of Redbull Laser will not be dissimilar to that of it’s peers. It should be made available in the same package varieties, and markets as the classic variety. The ways’ in which to communicate the laser brand are varied. A visual representation of a laser beam, ‘one that metaphorically communicates focus’ is seen as the most suitable for use on packaging, promotional material and content. RedBulls’ use of the three primary colours Red, Blue, and Yellow, are easily transferrable to this concept, as in pop culture, historically laserbeams have been communicated as ‘Red’ solid bars of intense light. RedBulls’ current packaging displays blue, red, and yellow, on the facia of a metallic silver background, using the red background with silver line strokes will accentuate the Laser in the mind of it’s consumer. As RedBull have shown with their red, blue and silver edition cans, there is some room for creative license in package motif design, and as such, RedBull should be open to using a custom typeface to brand Laser on the package. MARKETING EVALUATION, PRODUCT, BRANDING STRATEGY CONTINUED: MARKETING CONTINUED PROTOTYPE CAN: 11.
  16. 16. MARKETING CONTINUED RedBull Laser is a completely new product, both in it’s kind and it’s nature. Therefore two natural marketing goals and objectives present themselves. 1.) PRODUCT ADOPTION/DIFFUSION. 2.) MARKET PENETRATION. The strategy is simple, gain as much penetration into the functional beverages market as possible, thus creating diffusion and adoption amongst consumers, than raise prices as the market matures, in line with other RedBull Products. OVERALL MARKETING GOALS AND OBJECTIVES: PRICING STRATEGY: To be explicit as possible is useful when executing a pricing strategy and as such, two goals become a necessity. 1.) MAXIMISE MARKET SHARE AND PENETRATION. 2.) MAXIMISE PROFIT AND SALES TURNOVER. These are somewhat mutually exclusive of eachother, although it is argued that one must eventually lead to the other. It is proffered that to achieve these goals a two phase pricing strategy should be followed. The first phase allowing for penetration pricing, in which Redbull Laser is sold at a lower average price than that of its peer product categories. The cost of offering RedBull Laser at lower than cost price will be instrumental in gaining product diffusion and adoption within the marketplace, maximising market share, acting as a barrier to entry for other substitutes and their inevitable entry, allowing for economy of scale (Tellis, 1986). After these goals are met, RedBull should move into the second phase of its strategy allowing for Premium Pricing. This will help to recover costs associated with the initial penetration pricing phase, while eventually maximising profit and sales turnover as the market develops (Gittings, 2002). 12.
  17. 17. MARKETING CONTINUED PROMOTIONAL STRATEGY: The RedBull laser Marketing and Promotional strategy campaign will be split into three parts, these being, Traditional Advertising, Sponsorship, and Digital Social Creative. The promotional Idea surrounding each strategies’ creative will be a suitable take on the idea that, in whatever activity, Redbull Consumers will be aided by the power of Laser Focus. Each strategy will focus in on consumer touchpoints in which is can comminicate effectively the attributes of Laser. RedBull are revered worldwide for their incredible use of cinematography in advertising. It is the aim to continue this trend, using epic cinema film in order to depict the points in which RedBull athletes, and everyday people need extreme focus. RedBull athletes are often portrayed as somewhat celestial beings in their advertising, and as such, representations of Focus through the metaphors of super closeup shots of pupils dilating, tunnel vision during racing shots, or point of view shots on the slopes of an alpine cliff, are perfect in communicating the almost godly product attributes associated with RedBull Laser and it’s Nootropic formula. These films will be accompanied by epic music tracks, potentially written by composers of film scores’ for example Hans Zimmer, Alan Silvestri, Ennio Morricone. Use of their music will further strengthen the emotional connection with the brand and its associated intense visuals in the eyes of the consumer. Currently we’re on the verge of another space race, this time though, the focus is on consumers (Toor, 2013). With the success of RedBulls’ famous ‘Stratos’ campaign in which Felix Baumgartner broke the highest altitude jump record, the speed/sound barrier, and renewed interest in space travel, an invigorated focus on the final frontier through RedBull laser would be a perfect avenue to sell the product. Thus the slogan “The Final Frontier in Focus” was born. This slogan communicates both the creation/ evolution of a new untouched market and product offering, but also it’s potential to dominate the energy drink as the most popular functional beverage ever. These visual metaphors are easily transferrable to print media and other static applications including digital banners and pictures. TRADITIONAL ADVERTISING: 13.
  18. 18. MARKETING CONTINUED PROMOTIONAL STRATEGY CONTINUED: Extension of RedBulls’ athlete and sports roster, including the list of sports’ RedBull have invented, and development of content surrounding this through RedBull Media Houses’ ‘Focus’ series on Youtube, would be a prime avenue to market the Laser Product. A roster of new athletes whose’ speciality or sport is reliant on focus as a main attribute to their success would be signed. This could include, MMA Fighters, Professional Snooker Players, Yo Yo world Champions, Professional Darts Players, Gamers in South Korea, Arm Wrestlers etc, whom hold a large fan base not yet targeted by Red Bull, but are legitimate enough as athletes to stir interest in the product attributes, and their own stories. These new athletes open new markets, and new revenue stream opportunities for RedBull, the gaming community for instance is a rich source, of social, highly connected individuals whom rely on focus to perform at their chosen activity and are regular consumers of energy drinks. These athletes also provide a platform in which RedBull can develop and on-sell collateral around their success’. SPONSORSHIP: Redbull have seen success in the Digital Social Creative world before, having used gamification as a platform to sell product in many different markets. Thus we propose a similar strategy for RedBull laser. The marketplace for ‘Brain Trainer’ games like lumosity as an SAAS (software as a service) platform in recent years has exploded with popularity (Davis, 2014). This presents a natural opportunity for RedBull laser in that the premise of these games are to Enhance Cognitive Ability. We propose that Redbull develop their own version of these games, thus providing a platform in which users can test the actual effect of RedBull laser, while enhancing the user experience, recall of the brand, and concept of NooTropic formulae. Just as the effect of adrenaline has been enhanced by caffeine, so too will focus be enhanced by NooTropics, creating a real tangible felt experience with the RedBull Laser product. These games will be developed cross platform in order to get maximum market penetration. Allowing users to register on IOS and Android mobile devices, web browsers and others by inputting name and email adress’, personal details and connection to social accounts, RedBull will have the opportunity to mine massive amounts of data. This data can then be converted into consumer insight. These games will influence purchase of the product as that will be a requirement of the app download, and also sharing through social networks delivering the product familiarisation and market penetration goals of the strategy. DIGITAL MARKETING: 14.
  19. 19. RedBull use promotional giveaways as a primary means of market penetration. This could be coupled with the aforementioned Digital strategy in a very powerful way. While handing out free RedBull laser promotional cans, once developed the promotional staff could, promote the use of the aforementioned app. This would allow consumers to get a hands on feel of the app, give exposure to the brand, create word of mouth discussion about Laser, and simulate the experience of the RedBull Laser products through fun targeted games. Cognitive enhancement games even without the RedBull laser product usually show a marked improvement in the users’ score after first attempt. This combined with the messaging communicated through RedBull lasers marketing, the effects of the Nootropics, and pressure at the promotional vehicle will be the perfect way to provide and leverage social proof for the concept (Parvatiyar, 1995). Social Proof is crucial in reducing cognitive dissonance, thus its strength becomes the pillar on which the product, brand, and strategy rely. MARKETING CONTINUED PROMOTIONAL STRATEGY CONTINUED: DISTRIBUTION: Red Bull Australia Pty Ltd is a subsidiary company owned by the Austrian company Red Bull GmbH (Austrian Subsidiaries in Australia, 2013). Red Bull Laser operate as an individual division under RedBull Australia. OPERATIONAL PLAN LEGAL STRUCTURE: Back stage process’ refer to any activities or services that are invisible to the customers’ (Glushko & Tabas, 2009, p. 412). In order to deliver the best final products to the customers, there are several activities that will assist RedBull Laser to achieve that which include: quality control, marketing, efficient cost management, distribution management, and operation management. BACKSTAGE PROCESS’: Any activities that make interaction possible between customers and goods or service providers are considered front stage process (Glushko & Tabas, 2009). There are several activities involved in front stage process including: event management, packaging, brand marketing, customer service, and media channel. FRONT STAGE PROCESS’: 15.
  20. 20. OPERATIONAL PLAN CONTINUED HUMAN RESOURCE MANAGEMENT ORGANISATIONAL STRUCTURE Red Bull Australia’s manufacturing and managerial team work separately in terms of location and responsibilities. The manufacturing site is located in Austria. The head office, is located in Sydney, and has the majority of managerial responsibilities under it’s roof (Euromonitor International, 2013, p. 33). Red Bull Laser will operate under the products department within the Sydney HQ. 16.
  21. 21. OPERATIONAL PLAN CONTINUED KEY MANAGEMENT POSITIONS AND RESPONSIBILITIES: The management team below demonstrates the key management positions for Red Bull Laser division. REMUNERATION PLAN The right remuneration package shows the companies recognition and appreciation of employees, as well as maintaining a positive and coherent working environment (Williams, 2012). In order to attract and obtain talented employees, RedBull Australia offers: • Salary: based on Fair Work Commission Australia Award Rates, which change depending on the role within the organisation. • Superannuation: RedBull Australia offer the standard rate of Superannuation for all employees, according to the Australian Government Taxation Office Requirements. • Health Insurance: RedBull provide comprehensive health insurance for certain positions within organisation. TUONG NGUYEN TUONG NGUYEN 17.
  22. 22. OPERATIONAL PLAN CONTINUED PROFESSIONAL ADVISORS: Professional advisors assist RedBull Australia with their expertise in the area of patent and trademark law, intellectual property law (Laser original formula), accounting and finance. Lawyer Accountant Financial Advisors WRAYS - Sydney Lvl 32 Northpoint 100 Miller St North Sydney, NSW 2060 ER Law IP Law Corporate Law Taxation Law Level 52, 10-29 Martin Place, MLC Centre, Sydney, NSW 2000 P: (02) 9540 3866 F: (02) 9524 9753 Mr. Greg Cook Milsons Landing, Suite 803, 6a Glen Street Milsons Point NSW 2061 P: 1800 621 807 Auditing Taxation Bookkeeping Investment and portfolio management. Risk and investment assurance Company Cashflow / Asset Management Sydney Accountants, and Tax Agents Eureka Financial Group 18.
  23. 23. BUSINESS PREMISES PLAN: LOCATION: The RedBull Laser division office will be located at 2 Huntley St (Bourke Rd), Alexandria NSW, alongside its head office. The property will be leased from commercial real estate agent ‘Knight Frank Property’ where payments will be paid every six months. Given the high cost of transporting Red Bull’s ‘wall to wall’ production and manufacturing system. Laser will not be produced domestically. OPERATIONAL PLAN CONTINUED EQUIPMENT REQUIREMENTS The division office requires essential equipment for daily uses which includes: • Furniture • Computers • Business software • Internet connection • Business telephone system • Printers/copiers • Shredders • Fax machines • Mobile phones • Mailing system • Kitchen equipment (refrigerator, microwave etc.) INSURANCE AND SECURITY ISSUES As a multinational organisation, Red Bull Australia is exposed to many challenges and risks. Buying insurance hedges the risk of uncertain loss. The following are the main insurances that RedBull Australia have purchased cover for: • Corporate Liability/Property Theft • Security and Private Protection • Directors and Officers Liability • Employee Accident and Health • Workers Compensation • Commercial Crime 19.
  24. 24. OPERATIONAL PLAN CONTINUED SECURITY Security refers to the tangible and intangible security of Red Bull Australia, that can be enhanced. These include the following: • Having an certain numbers of surveillance cameras • Keeping security/anti-virus systems up to date • Limit access to the Internet • Maintain and test security system regularly • Knowledge and Information Management • Intellectual Property Security and Classification FINANCIAL PLAN SOURCES OF CAPITAL AND CAPITAL REQUIREMENTS: Red Bull is investing the entirety of the capital required to create the Red Bull Laser product line, approximately $9.3 million. Dave Đại Ka, Geng Yan, Jared Battye and Vince Usher will provide intellectual data and receive employment and bonuses in stocks relative to profit margins (Appendix F). USES OF CAPITAL: Red Bull is a large multinational company that owns manufacturing factories worldwide (Red Bull, n.d), and as such will utilize existing machinery and factories to trial Red Bull Laser Australia wide, minimizing production costs. Other uses of capital include start up costs, advertising expenses (app development $20,000), office space, equipment, (Appendix F) and personnel, labour, and miscellaneous personnel including hiring Red Bull Laser team leaders Tuong Nguyen, Geng Yan, Jared Battye and Vince Usher (Appendix G). SALES FORECAST (12 MONTHS) The Australian sports and energy drink market is a fast growing market with an average growth of 15.72 million liters annually and over 222 million liters sold in 2013. Red Bull had a 12.5% market share in 2013, which translates into just over 27.77 million liters of Red Bull sold in 2013. Being in an industry that shows such high growth, with a company that holds a strong market presence, Red Bull predicts that the product add-on of Red Bull Laser will have a strong entry into the market, with almost $1.5 million in sales in its first month (Euromonitor, 2014). Red Bull Laser will then show steady growth as consumers become more aware and loyal to the product. In the summer months Red Bull laser will experience higher levels of growth, which will then return to steady growth levels in the winter months (Telford, 2014 & Feliciano, 2014). Red Bull Laser will gain sales of approximately $40 million in its first fiscal year, displaying a profitable add-on to Red Bulls portfolio (Appendix E). For risk/contingency planning and management matrix please refer to (appendix H) RISK AND CONTINGENCY MANAGEMENT 20.
  25. 25. EXPENSES FORECAST (12 MONTHS) Red Bull is a profitable company distributing the largest quantity of energy drinks worldwide (Euromonitor, 2014). Due to the company’s substantial resources and numerous manufacturing facilities, set up costs for Red Bull Laser will be low as all manufacturing costs will be shared across the entirety of Red Bulls product lines (Appendix F). As a result, the lower initial expenses will allow for a high profit margin. The Startup Expense report (Appendix F) predicts approximately $9.3 million is needed as a startup, this includes an initial advertising push of approximately 1 million, including development of brain trainer app, promotional giveaways, and media purchasing, a substantial contingency fund and inventory of the first month. The Breakeven Analysis (Appendix G) is calculated by costs based on startup expenses and the yearly production costs. The variable costs are calculated using sale projections and are only an approximation. The Red Bull Laser product-line, sharing expenses with other Red Bull product lines, creates an approximate percentage of machinery and labour costs of $1,423,680 and $3,648,456 respectively. Predicted sales will be in the region of $40 million, with tax being quiet a substantial expense at over 12 million, while this is an approximation, it is requires for an accurate breakeven analysis. If sales advance as predicted the summer influx of sales will produce higher levels of growth which will pass the Breakeven Point of $30,147,391 in early March, producing real profit (Appendix C). INCOME STATEMENT Sales forecast (Appendix E) shows a gross income of $39,788,250 with the breakeven analysis (Appendix B) displaying that to breakeven $30,147,391 is needed before real profit is made. This allows for a predicted net income of $9,640,859. BALANCE SHEET The balance sheet presents the assets, liabilities and equity of Red Bull Laser at the initial product launch and at a 12 month period. The Balance sheet includes an initial investment by Red Bull Australia of $9.3 million, and after expenses are covered a first year of retained earnings of almost $10 million (Appendix D). FINANCIAL PLAN 21.
  26. 26. REFERENCE LIST Anderson, J.W., Baird, P., Davis, J., Richard, H., Ferreri, S., Knudtson, M., Koraym A., Waters, V., and Williams, C.L. (2009). Health benefits of dietary fiber. Nutrition Reviews, 67(4), 188-205. DOI: 10.1111/j.1753-4887.2009.00189.x Australian Bureau of Statistics, (2012). Fruit and Vegetable Consumption in Australia, (Catalogue No. 1301.0). Retrieved 19th April 2014, from http://www.abs.gov.au/ausstats/abs@.nsf/ Lookup/1301.0Main+Features2362012 Australian Food and Grocery Council. (2014). Our Industry. Retrieved 12th April 2014, from: http:// www.afgc.org.au/our-industry.html Australian Trade Commision. (2012). Food and Beverage – Industry Capability Statements. Retrieved 12th April 2014, from: http://www.austrade.gov.au/Buy/Australian-Industry-Capability/Food-and-Beverage/ default.aspx Austrian Subsidiaries in Australia. (2013). Retrieved from http://www.advantageaustria.org/au/ oesterreich-in-australia/netzwerk/OZSubsidiaries30122013.pdf Bradley, J.R., & Petree, A. (1990). Caffeine Consumption, Expectancies of Caffeine-Enhanced Performance, and Caffeinism Symptoms Among University Students. Journal of Drug Education. 20(4), 319-328 Kapner, D.A. (2003). Recreational use of Ritalin on College Campuses. Retrieved 22nd April 2014, from http://www.adhdinfocentre.com/~~~ItemLink~~~/ritalin_2/Recreational%20Use%20of%20Ritalin%20 on%20College%20Campuses.pdf Brasel, S.A., and Gips, J. (2011). Red Bull ‘Gives You Wings’ for better or worse: A double-edged impact of brand exposure on consumer performance. Journal Of Consumer Psychology, 21(1): 57 – 64. “Caffeine Content of Australia and New Zealand Drinks”. (2014). Retrieved 6th May 2014, from http:// www.caffeineinformer.com/caffeine-content-of-australia-and-new-zealand-drinks Davis, M (2014) ‘Mind Games Grow in Popularity as Exercise for the Brain’, [Taken from Web] Address: http://abcnews.go.com/blogs/technology/2014/03/mind-games-grow-in-popularity-as-exercise-for-the- brain/ Demme, L. (2012). Functional Beverages – From Energy to Relaxation. Retrieved 12th April 2014, from: http://www.fona.com/sites/default/files/WhitePaper_FunctionalBeverages_TrendResources_101012. pdf “Energy Drinks Industry Report Now Available from IBISWorld”. (2014). Retrieved 6th May 2014, from: http://www.prweb.com/releases/2011/11/prweb8956928.htm Euromonitor. (2014). Brand Shares (by Global Brand Name) Historic Off-trade Volume% breakdown [Related Analysis]. Retrieved from https://www.library.uq.edu.au/_//filething/files/get/referencing/ apa_6%202.pdf Euromonitor International. (2013, April). Red Bull GmbH in Soft Drinks (World). Retrieved from http:// www.euromonitor.com/medialibrary/PDF/RedBull-Company-Profile-SWOT-Analysis.pdf Euromonitor International. (2014). Red Bull - Australia. Retrieved from Euromonitor Passport GMID database. 22.
  27. 27. EuromonitorInternational.(2014,April03).SportsandEnergyDrinksinAustralia.Retrievedfromhttp:// www.portal.euromonitor.com.libraryproxy.griffith.edu.au/Portal/Pages/Search/SearchResultsList. aspx Euromonitor. (2014, April 3). Sports and Energy Drinks in Australia. Euromonitor. Retrieved from http:// www.portal.euromonitor.com.libraryproxy.griffith.edu.au/Portal/Pages/Search/SearchResultsList. aspx Euromonitor International. (2013, May 02). The Bigger the Can: How Serving Size Grew Coca- Cola’s Mother Energy Drink Share in Australia. Retrieved from http://www.portal.euromonitor.com. libraryproxy.griffith.edu.au/Portal/Pages/Search/SearchResultsList.aspx Feliciano, J. (2014, April 4). Soft Drinks – March 2014 New Product Launches. Euromonitor. Retrieved from http://www.portal.euromonitor.com.libraryproxy.griffith.edu.au/Portal/Pages/Search/ SearchResultsList.aspx Gittings, C. (2002). The Advertising Handbook. New York: Routledge. ISBN 0-415-24391-2. Glushko, R. J., Tabas, L. (2009). Designing Service Systems by Bridging the ‘Front Stage’ and ‘Back Stage’. Inf Syst E-Bus Manage (2009) 7:407–427. doi: 10.1007/s10257-008-0106-0 Gouliaev, A. H., & Senning, A. (1994). Piracetam and other structurally related nootropics. Brain Research Reviews, 19(2), 180-222. doi:10.1016/0165-0173(94)90011-6 Kabes, J., Erban, L., Hanzlie, L. and Skondia, V. (1979). Biological correlates of piracetam clinical effects in psychotic patients. Journal of International Medical Research, 7, 277-284. Langley, S. (2013). Australia and NZ’s ‘unique’ energy drinks markets. Retrieved 6th May 2014, from http://www.ausfoodnews.com.au/2013/05/22/australia-and-nz%E2%80%99s- %E2%80%98unique%E2%80%99-energy-drinks-markets.html Langley, S. (2013). Mother Introduces New Energy Drink Flavour. Retrieved from http://ausfoodnews. com.au/2013/06/03/mother-introduces-new-energy-drink-flavour.html Malinauskas, B. Aeby, V. Overton, R. Carpenter - Aeby, C. Barber - Heidal, K. (2007) A Survey of Energy Drink Consumption Patterns among College Students. Nutrition Journal, 6(35), PP. 2 doi:10.1186/1475-2891-6-35 Merwick, C. (2011). V Energy Drink Branding. Retrieved from http://www.behance.net/ gallery/2134796/V-Energy-Drink-Branding Mondadori, C., Ducret, T. and Borkowski, J. (1991). How long does ‘memory consolidation’ take? New compounds can improve retention performance, even if administered up to 24 hours after the learning experience. Brain Research, 555,107 – 111 Parvatiyar, A. Sheth, J. (1995) Relationship Marketing in Consumer Markets: Antecedents and Consequences. Journal of the Academy of Marketing Science, Vol 23, Issue 4, Pages 255-271 Red Bull Australia. (2014). The Company Behind The Can. Retrieved 12th April 2014, from: http:// energydrink-au.redbull.com/red-bull-owner REFERENCE LIST CONTINUED 23.
  28. 28. REFERENCE LIST CONTINUED Rogers, P.J. (2007). Caffeine, mood and mental performance in everyday life. Nutrition Bulletin. 32(1). Forbes, (2012). The secret behind Red Bull’s action sports success. Retrieved 19th April 2014, from: http:// www.forbes.com/sites/aliciajessop/2012/12/07/the-secret-behind-red-bulls-action-sports-success/ Telford, H. (2014, April 4). When Soft Drinks Freezes Over. Euromonitor. Retrieved from http://www. portal.euromonitor.com.libraryproxy.griffith.edu.au/Portal/Pages/Search/SearchResultsList.aspx Tellis, G. (1986) Beyond the Many Faces of Price: An Integration of Pricing Strategies. Journal of Marketing, Vol 50, Issue 4, PP. 146 – 160. Williams, D. K. (2012). The Right Compensation Plan To Ignite A Business. Retrieved from http://www. forbes.com/sites/davidkwilliams/2012/06/18/the-right-compensation-plan-to-ignite-a-business/ Yoovidhya, C. (2009). The Man Behind The Scene. Bangkok: Amarin. 24.
  29. 29. APPENDIX A PORTER’S FIVE FORCES MODEL ANALYSIS BARRIERS TO ENTRY This section analyses the level of the markets resistance to new entrants. The stronger the barriers to entry, the more difficult it is for new competitors to enter the game, and vice versa. Barriers to entry rely on three variables: brand loyalty, cost advantages, and switching cost for consumers. BRAND LOYALTY Red Bull possess substantial media assets, film, tv and digital collateral aswell as holding sport and music event contracts, athlete endorsement contracts etc. . It is also revered for its world standard of quality products and their ability to innovate. This ensures that the perception of RedBulls Brand is strong in the eyes of the consumer, thus brand loyalty is a section in which RedBull thrive. COST ADVANTAGES RedBull have been the market leader in the overall Energy Drink industry for over 30 years. RedBull have sold to date over 40 billion cans of energy drink (over 5 billion cans in 2013) (Red Bull Australia, 2014), which means Red Bull have experience with mass production and cost control strategy. Although there are various competitors’ products with lower costs. As redbull have an opportunity to patent NooTropic formulae we do not see cost as a threat. SWITCHING COST FOR CONSUMERS Because of the low switching cost in the food and beverage industry, RedBull are threatened by the possibility of consumers jumping to another competitor’s brand or substitute products. More threats are also created if new entrants make their appearance in the industry. However as aforementioned, if RedBull are successful in their application for patent of NooTropic Formulae, and have first mover advantage this is less of a threat. EXISTING COMPETITIVE RIVALRY In terms of the current competitive rivalry, the home-grown brands, V and Mother, despite being unpopular in international markets, possess strong brand following. V, manufactured by Frucor Beverages, owned by Suntory Holdings is responsible for over 30% of total Australian and New Zealand energy drink volume sales, while Mother, a Coca-Cola Amatil subsidiary, is amongst Australia and New Zealands best sellers (Langley, 2013). However, RedBull have been the pioneer and benchmark for many companies in this industry, which have advantages in product quality, brand image, media asset control and production experience. RedBull own 12.5% of the energy drink market in australia (increased by 1.8% compared to 2010) (Euromonitor International, 2014). The competitive rivalry is fierce in the energy drink market, however as aforementioned, if RedBull are successful in their application for patent of NooTropic Formulae, and have first mover advantage this is less of a threat. THREAT FROM SUBSTITUTES Substitute products are amongst the top concern for any manufacturing company in any industry. This situation is even more intense in the Energy Drink context, where the main active ingredient – caffeine can be found in different industries’ products. While there are 80mg of caffeine contained in 1x 250ml can of Red Bull, other products in the coffee and soft drink industries such as Espresso coffee, black tea, Pepsi, Coke provide consumers with 77mg, 42mg, 69mg, 34mg respectively w(“Caffeine content”, 2014), meaning that Red Bull can be replaced by many substitutes. however as aforementioned, if RedBull are successful in their application for patent of NooTropic Formulae, and have first mover advantage this is less of a threat. 25.
  30. 30. POWER OF BUYERS. Since wholesalers and big retailers are the major buyers of Red Bull products, they have the upmost power in distribution and pricing negotiation. After these buyers purchase Red Bull products, they will redistribute them to supermarkets, convenience stores, restaurants through to end users. The reasoning for the buyers’ bargaining power is due to the low switching cost in the beverage industry. This means that these buyers can replace RedBull products with any competitive brand without any problem. The traditional retailers also possess ability to decide where the products are placed in the store, how much shelf space is provided, and this directly effects the ease of catching consumers’ attention. Lastly, consumers themselves are also able to help push the retailers to make a certain product, available in store. This is to say, buyers’ power is a real threat to Red Bull which requires the brand to demonstrate excellent marketing efforts to create awareness of the new product and gain a higher position in the negotiation. RedBull do however own the most powerful brand in the energy drink market and as such, have some leway as far as pricing goes, thus their ability to implement our mentioned two phase pricing strategy. POWER OF SUPPLIERS Red Bull have a list of suppliers, which have different levels of bargaining power. This depends on what type of ingredient or material they request from the suppliers. For example, Red Bull have been purchasing Glucuronolactone from Glaxo Smithkline Company, which has given this company great bargaining power as this ingredient is hardly provided by other companies. However, the smaller suppliers of other parts (i.e. can, spring water...) have lesser impact on Red Bull, because the brand can replace them with other better companies. In conclusion, Red Bull currently have insignificant problems with its sellers/suppliers. However, when considering creating a new product with a new formula, Red Bull will face a real threat if one or more ingredients can only be provided by a small number of companies and they dictate unmanageable prices. APPENDIX A 26.
  31. 31. APPENDIX B Red Bull’s current products and ingredients description list: - The classic Red Bull energy drink Caffeine + Taurine + B-Group Vitamins + Sucrose & Glucose + Alpine Spring Water. - Red Bull Sugarfree is Red Bull Energy Drink without sugar containing only 3 kilojoule per 100ml. Caffeine + Taurine + B-Group Vitamins + Sucralose & Acesulfame K + Alpine Spring Water. - Red Bull Zero is a functional beverage that is carbohydrate-free and sugar-free. Caffeine + Taurine + B-Group Vitamins + Aspartame, Sucralose & Acesulfame K + Alpine Spring Water. The Red Bull Editions are basically Red Bull energy drink flavoured with three tastes: Cranberry Lime Blueberry. Caffeine + Taurine + B-Group Vitamins + Sucrose & Glucose + Alpine Spring Water. INGREDIENT LIST CAFFEINE Caffeine Caffeine is well known for its stimulating effects on the human body and mind. Even ancient civilisations consumed it from natural sources like tea, coffee, cacao beans & cola nuts. To this day caffeine is naturally present in more than 60 plants and contained in many foodstuffs such as coffee, tea and chocolate. One of caffeine’s primary sites of action in the human body is its stimulating effect on cognitive functions. Caffeine helps to improve concentration and increase alertness. One 250ml can of Red Bull Energy Drink contains 80mg of caffeine. TAURINE Taurine is an amino acid, naturally occurring in the human body and present in the daily diet. It is involved in a wide range of biological processes. Taurine is found in high concentrations in muscle, brain, heart and blood. A person weighing 70 kg has approximately 70 g of taurine distributed throughout their body. Put another way, a 70 kg person naturally already has in his body 70 times the amount of taurine contained in one can of Red Bull Energy Drink. Taurine is also contained in different foodstuffs like scallops, fish, poultry and most infant formulas. 27.
  32. 32. ALPINE SPRING WATER The water used for Red Bull is fresh Alpine water of highest quality, which comes from springs nearby the production sites in Austria and Switzerland. This region, the Alps, is known as one of the world’s biggest fresh water reservoirs, where water is available in abundance and constantly replenished. Hence, to ensure consistency of the utmost premium quality around the world, Red Bull is produced in the Austrian and Swiss Alps. SUCRALOSE Sucralose is a non-caloric sweetener made from sugar and therefore, it tastes like sugar. Sucralose is produced synthetically. Sucralose is used in a wide variety of products, including beverages, baked goods, desserts, dairy products, canned fruits and syrups. ACESULFAME K Acesulfame K is a non-caloric sweetener. It is used worldwide in over a thousand different products including foods and drinks like chewing gum, dairy products, baked goods, etc.. ASPARTAME Aspartame is a low-calorie sweetener that is produced synthetically. It is used worldwide in over 5,000 different products (such as soft drinks, yogurts, candy, chewing gum, etc.). Aspartame, Sucralose and Acesulfame K are among the most-tested and most-used sugar substitutes worldwide. All three have an excellent safety profile. Numerous scientific studies demonstrate that these substances are safe for use as sweetening ingredients. The safety of these sweeteners has been evaluated by regulatory bodies all over the world (e.g. FDA in the US). Authorities rely on the safety evaluations of independent scientific advisory bodies such as the European Food Safety Authority (EFSA), the United States Food and Drug Administration (FDA), and the Joint FAO/WHO Expert Committee on Food Additives (JECFA). (Red Bull Australia, 2014) B-GROUP VITAMINS In general, there are two types of vitamins: fat soluble and water soluble. Red Bull contains water-soluble vitamins. Water soluble vitamins include the group of B vitamins, e.g. niacinamide (vitamin B3), pantothenic acid (vitamin B5), vitamin B6 and vitamin B12, which are contained in Red Bull. SUCROSE AND GLUCOSE Sucrose and glucose are different types of sugars, which provide energy to body and mind. Sucrose and glucose are different types of sugars which are also contained in the daily diet. The sugar in Red Bull Energy Drink is produced from sugar beet. 100ml of Red Bull Energy Drink equates to 11g of sucrose and glucose combined. This total amount of sugars is comparable to that of 100ml apple or orange juice. APPENDIX B CONTINUED 28.
  33. 33. APPENDIX C 29.
  34. 34. APPENDIX D 30.
  35. 35. APPENDIX E 31.
  36. 36. APPENDIX F 32.
  37. 37. APPENDIX G 33.
  38. 38. APPENDIX H 34.

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