Strategy and Globalization of Red Bull Essay Paper

Strategy and Globalization of Red Bull

Red Bull is a global leader in an energy drink and operating in more than 167 countries. The company has been able to dominate the energy drink markets because it focuses on the emerging markets. Over the years, Red Bull has taken the advantages of rapid economic growth of emerging markets in Asia and Latin America to promote its brands and reap the superior market shares. The sporting events have been the major strategy that the company has employed to enjoy market advantages globally. For example, Red Bull uses unconventional marketing techniques that include guerilla marketing, stunt events, Street Luge Racing, Mountainbike competition, and Motocross Freestyle to promote its brand globally.

Introduction

Red Bull is an Austria multinational energy drink producing company operating in 167 countries. In 2014, the Energy Bull sold over 5.6 billion cans and employs more than 10,410 employees compared to 9,694 in 2013. Between 2013 and 2014, Red Bull increased the sales by 4.2% with the turnover from $5.5 billion to $5.6 billion. The internationalization strategy contributes to the market success of Red Bull in Turkey, India, South Africa, Japan, and Russia along with ongoing brand investment and efficient cost management. Typically, Red Bull has pioneered its brand globally, which has successfully made Red Bull brand to become synonymous to an energy drink. An on-going market success of Red Bull over the years has influenced other multinational soft drink companies such as Coca-Cola and Pepsi-Cola to launch their brand of energy drinks. Despite a rising competition from other companies, Red Bull remains ambitious and bullish in its corporate brand because the competitors are unable to take away market shares from Red Bull. Apart from energy drink business, Red Bull also manages and owns other businesses that include TV broadcasting, youth academies, online clothing, and construction business.

The objective of this report is to explore the globalization strategy of Red Bull.

Main Body

The financial success of Red Bull over the years has made the company to face intense competition from other national and international energy producing drink companies. Typically, Monster Energy represents a biggest and dynamic threat to Red Bull because Monster’s drink contains more natural ingredients that many customers consider desirable in taste. However, Red Bull has been able to maintain its leading position because of its unconventional global marketing strategies and guerilla marketing technique. The guerilla marketing is the technique of promoting the brand using events and stunts techniques related to sport (X-games), music, adventure, and parties. For example, the company has implemented different promotional events to enhance its market strategy and brand advantages in different countries. In Nepal, the company uses guerrilla marketing strategy to promote its brand. Moreover, Red Bull organized footballing competition globally and was one of the major sponsors of World Cup in South Africa. In the United States, Red Bull promotes two football team with the goal to promote its brands among soccer loving people across the United States.

The internationalization is another strategy that Red Bull has employed to achieve comparative market advantages. (McDonald, 2007).Typically, Red Bull has developed a broad geographic present in the emerging market to achieve a long-term growth. Fan (2008) defines an emerging market as a country that is rapid experiencing transition in the economic and political development. Thus, Red Bull takes advantages of a rapid economic growth in the emerging markets to launch its product in Asia, Latin American and Africa. Kotler & Keller (2009) point out that an emerging market represents a great opportunity for Red Bull. Between 1987 and 2010, the company has expanded into 160 countries, and Red Bull focuses in the emerging markets because the company faces a stiff competition in the European and North American Market. Moreover, the stringent legal and political restrictions in Europe have been the major factors that make Red Bull to focus on the emerging markets. For example, France, UK, and other European countries banned Red Bull from selling its product in their countries. It was in 2015 that France lifted the ban. However, Norway and Denmark are still not authorizing Red Bull to sell its products in their countries.

By strengthening its international expansion in Asia and other emerging markets, the company enjoying an incredible sales growth in this region. In 2012, the company recorded 12% of its global sales value from Latin America. However, the Asia-Pacific represents 8% of the company global sales. Moreover, Red Bull remains number one in both Latin America and Asia Pacific markets. The company also dominates 49.7% of energy drink in Latin America compared to a 5% and 5.1% modest growth in Eastern and Western Europe respectively. By launching in the emerging market, the company was able to achieve 43% of the global market shares in 2012.

(Market Line, 2012). The statistics are impressive when compared Red Bull’s market shares with its competitors. For example, Monster Energy can only boast of 16% global market shares. The brand recognition and a spectacular market allow Red Bull to overtake larger beverage companies such as PepsiCo and Coca-Cola globally in an energy drink.

Moreover, Red Bull uses different sporting events and sponsorships to promote its brand in emerging market and across the globe. The sponsorship campaigns are based on organizing sporting events associated to the company brand. The events include parties, unconventional sports, exhibitions and student-based events. For example, Red Bull organized Free Style footballing and sports competition globally to attract youngsters. A recent campaign organized by the company was the world tour organized across emerging countries. Moreover, Red Bull organized stunt events at different colleges, schools and universities to build an impression that Red Bull is a unique brand. (Euromonitor International, 2013).

The Red Bull also uses the unique and convention marketing strategies to make people talk about its brand. A report carried out by Canadean (2014) shows that Red Bull organizes the sporting activities to increase the brand image. “The company sponsors sportsmen, athletes and various bike sports, motorsports, skate sports, water sports, winter sports, adventure sports, aerial sports and ball sports. It also purchases and rebrands various sports teams.” (Canadean, 2014 p 13). Asiedu (2016) supports the argument of the previous author by pointing out that Red Bull marketing strategy involves organizing events that include Driving World Series, Sports Team Ownership, and celebrity endorsements with the goal of raising the company image and brand. Sports sponsorship and events have been the key elements of Red Bull marketing strategy used to promote its brand globally making the company achieve between 30 and 40% global sales in energy drinks. More importantly, Red Bull refuses to use the traditional promotional strategy rather the company uses the unconventional marketing strategy to build its brand. For example, Red Bull uses event-based marketing, buzz-generating tactics, hiring brand ambassadors, and free sampling as the unconventional promotional tactics. The company also use a conventional promotional model that include banner advertisement billboards, and taxicab holograms.

Conclusion

Red Bull is a global leader in energy drink operating in different countries. The company has been able to achieve superior market advantages because it focuses in the emerging markets to take advantages of the rapid economic growth in the countries. Moreover, the company uses unconventional marketing strategies that include sporting events and guerilla marketing to promote its brand and achieve global market advantages.

Reference

Asiedu, E. (2016). How to Create and Sustain a Strategic Marketing Plan through the 4p’s of Innovation: With reference to Red Bull Energy Drink Company.

Canadean (2014). Red Bull GmbH: Consumer Packaged Goods – Company Profile & SWOT Report. Canadean Company Reports.

Euromonitor International (2013). Passport: Red Bull GMBH in Soft Drinks [pdf].

International Journal of Commerce and Management Research. 2(1): 28-30.

Fan Y, (2008), The rise of emerging market multinationals and its impact on marketing. BURA publication.

McDonald, M. (2007).Marketing Plans: How to Prepare; How to Use Them. (6th Ed.). Elsevier Ltd.

Market Line, (2012). Red Bull: A Trailblazer In Marketing Strategy. Market Publisher.

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