This report contains the research conducted on developing new product for Red Bull company. Applying Segmentation, Targeting and Positioning tools helps to specify target group of customers, their desires and brand perception.
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Front-page MK4002 Students numbers:______________________________________________________ Marking CriteriaCommentsMark Strong and Informative Background information. Demonstration of engagement with the relevant and reliable sources. /10 Evaluation of Marketing Mix and STP theories. Demonstration of understanding of the key theoretical concepts. Quality of justification of the provided ideas. /50 Informative summary and quality of referencing style. /10 On the day of the presentation: Creativity of the ideas, material and poster. Ability to work as a team and answer the questions. Professional appearance. /30 Overall mark/comments/100
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Introduction This report contains the research conducted on developing new product for Red Bull company. In order to understand customers’ needs but, also to minimise risk of failure market research has been concluded. Applying Segmentation, Targeting and Positioning tools helps to specify target group of customers, their desires and brand perception. Marketing Mix have provided the evidences to define key issues which company is facing when implementing new product then create clear position in the market. Company background The Red Bullstarted in 1987, with their core message “Red Bull gives you wings” have triggers people dreams and goals.The founder of this renowned company Dietrich Mateschitz is from Austria. The most famous product that this company created is Red Bull Energy Drink. At present Red Bull is being sold in 171 countries all around the world. Research has shown that more than 75 billion of the Red Bull cans have been consumed so far and every year the number of cans consumed is higher than the previous year. Red Bull energy drink is wide famous all over the world and people of almost all ages consume this product throughout the day. Red Bull is also well known as main sponsor for extreme sports events and athletes. Moreover, the company have created own brand events like famous Red Bull Soapbox which attracts young people from all around the world. (Red Bull,2019). Red Bull is a quite infamous brand known around the world that is why it has been chosen as the brand of this unique new product. Being a renowned company, Red Bull has many competitors like: Coca Cola, Nestle`, PepsiCo, Monster etc. (Pratap, 2019). After 31 years in the market Red Bull remains strong with 45% market share, however there is growing competition from other brands like Monster which manage to gain 40% of market share.(Maharaj,2016). The chart below shows how the global market for energy drinks have divided.
Graphics by Insight Survey Despite growing competition Red Bull remain favourite energy drink in well- developed countries with USA leading in consumption.(The Drink Business,2013). Graphics by The DrinksBusiness.
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Segmentation Segmentation for new soft gums will be mainly divided by geographical, demographic and psychographic factors. According to Red Bull GmbH Report(2016), this particular brand appeal mainly to young ,single and professional people living independently in big cities on high income. While young professional and childless couples aim for flavours and sugar free edition of this popular drink, students seem to pay attention to effectiveness and stick with classic version of Red Bull. Common denominator forthose individuals is very active personal and private lifestyle but also interest in extreme sports. The age range of Red Bull consumers vary between 16 – 40 years old with high degree of loyalty to the brand.(Dudovskiy,2016). Targeting Significantly majority of groups mentioned in Red Bull GmbH Report are students and people connected with higher education therefore main target group for new soft gums. For many young people going into college is the turning point in their live. In this challenging environment they more likely to look for products that will help them to keep up their energy levels during long day. Most of the students and young professional are situated in the campuses and cities where their life style is set around tight schedules and deadlines. Offering them product which works eight time faster than typical high energy drink will set new trend. As well these particular customers are open to new, innovate products which come from world famous brand they trust. Consequently, it seems that targeting students and young professional to be the best choice. Positioning A product position depends on how consumers perceives brand while comparing with competitors.(Kotler,Armstrong,2018). The positioning strategy for new product will be mostly based on its image and product differentiation. This unconventional strategy was successfully adopted by Red Bull brand in the past when market for high energy drinks didn’t exist and advertising was expensive.(Phelan,2018). New soft gums bring the promise of extreme performance and reliability. Unique and innovative Red Bull Cogito are the only alternative for canned energy drinks offered on campuses. Consider their pocket style and super-fast activation time soft gums are most likely to gain competitive advantage in the market in short time.
Product “New products are the lifeblood of a company” therefore, for every business developing new products is essential to keep company growth and provide customers with variety. Every new product will go through life cycle(PLC) which usually have five different stages. When some inventions decline quickly others remain in mature stage for long time due to efficient management over their life cycle. (Kotler,Armstrong,2018). Soft gums are new alternative in Red Bull products range and their main advantage is the time of activation. While energy drinks and capsules start to work in around 45 minutes the new soft gums activate in just 5 minutes.(Kallmyer,2018). Ultrafast penetration and efficiency come from ingredients glycerol and high caffeine concentration. Just two soft gums provide 100mg caffeine while average 250ml energy drinks contains around 80 mg caffeine.(DeNoon,2012). Also, the form of new product is design for the accurate dosing without side effects. Soft gums are packed in pocket style blisters which is much more convenient then carrying cans of drinks. Taking into account different customers tastes soft gums will come in three flavours: Mint, Tutti - Frutti and Cranberry. Red Bull brand its well know around the world and people associate the name with high energy drinks and extreme sports, therefore choosing name for new invention its critical. Soft gums are brand extension and develop under new product category as Captagels Soft Gums Technology. Operating under Redbull Cogito name gives this new product advantaged of instant recognition and quicker acceptance among its customers.(Claessens,2015). Price
Place The distribution channels that currently used by Redbull to deliver the current products line (energy drinks) may not seem appropriate for new product for several reasons; Firstly, the product category’s is different, new product is classified as supplements product, which is subject to certain restrictions like age restriction and other legal restrictions this will directly influences the distribution channel selection. Secondly the age of product, reasonable to expect that existing product lines are more likely than the new products to flows easily through the existing distribution channels because the older product are more established and well known (Anderson, Coughlan1987). These factors have a direct impact on the distribution strategy, considering all these factors its recommend the following strategies to be applied: Adopting the selective distribution strategy by using a mid-range of sales outlets to deliver the product to the targeted audience. Vending machine in gyms, sport centres, and student communities are strongly recommended for soft gums. Based on the fact that proposed product needs sort of control from the producer we suggest that the distribution channels must be multichannel functions so the control can be shared between the Redbull and its intermediaries. We expect retailers to play a major role as intermediary to deliver the product to the end-users but have to keep in mind which types of retailers fit the nature of product, the type of retailer that is proposed to be part of the distribution operation needs to be specialized in supplements products such as Holland Barrett, Boots, and Lloyds pharmacy. Frazier and Lassar, (1996) stated before the rise of the Internet most companies would market their products use indirect channels using independent intermediaries such as wholesalers, distributors, and retailers. These days, marketing channel structure become rather direct channel or multichannel functions where the control of the channel is shared between the organisation and its intermediaries. The figure below shows the main features of the distribution channel of the new product
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Figure 1 Redbull new product distribution channel structure Promotion Promotion within an organisation is a very crucial aspect in the growth and development of a product. This is mainly done in marketing to enlarge or expand the awareness of a product or services and also to create brand loyalty. Promotion for a brand such as Red Bull is very important as this will help generate sales and create more interest for then organisation. Soft Gum is new product which the brand Red Bull is in the process of launching. In order for Red Bull to promote this new product the first aspect they need to consider is the media platform in which they can easily reach their target market. The company can apply three basic type of promotion, which through research has proven to be very pre-eminent and very efficient. Red bull has applied all the three- basic type of promotion in the past for most of their new products and this method has brought out positive result. The first promotional tools the company can use is advertisement. Red bull can advertise their products on different electronic media
such as television, radio station, telephones YouTube, Facebook, emails etc. Electronic media has a great and positive impact on promotion, this is because the usage of this platforms is very often, and messages can reach the customers rapidly and furthermore social media stimulate online communication between the business and the customers. The second tool the company can apply is sales promotion. This can be applied by the brand in using the slotting allowance method. This means the brand can pay a premium cash which can be agreed between the brand and other retailers for the cost involved in placing the new products in their stores. The premium payment also covers other charges such a penalties in case the new product is very slow with sales. The company can also consider personal selling. This method of promotion is very effective and adequate, this is because it is done face to face and the salesperson of the brand has the opportunity to give adequate information about the product and also convince the customers in buying the products. This approach of promotion is very vital as not only it boost sales it also creates product awareness to the customers. Additionally, the brand could also put in consideration and organise networking and community involvement. This means the brand can put in a networking event place within different community environment. By doing so the prospective customers can take part in different and various activities and also learn about the product which in return can be in their interest and this can maximise the sales for the new product. Conclusion This study has show that selecting Red Bull as brand for the new product will be beneficial for the business and attract more customs. The market research based on STP have identify students and young professionals as target customers, therefore further analysis is based on that. Soft gums are well advanced technologically and effectively provides for customers needs of quick and long-standing mental performance. The price of the new product is competitive and attractive compare to cost of the energy drinks. What more the value of soft gums it’s much more attractive for the customers when comparing with classic energy drinks.
References Anderson, E. and Coughlan, A. (1987) International Market Entry and Expansion Via Independent or Integrated Channels of Distribution.Journal of Marketing, [Online] 51(1), pp. 71-82. Available at: https://www.kellogg.northwestern.edu/faculty/coughlan/htm/personalpage_files/ Papers/1987%20Intl%20Mkt%20Entry%20JM%20w%20Erin.pdf (Accessed:09/03/19). Claessens, M./ Marketing – Insider (2015)BRANDING DECISIONS – 4 BRAND STRATEGY DECISIONS TO BUILD STRONG BRANDS. Available at: https://marketing-insider.eu/branding-decisions/(Accessed:03/03/19). DeNoon, D./ WebMD (2012)How Much Caffeine Is in Your Energy Drink?Available at:https://www.webmd.com/food-recipes/news/20121025/how-much-caffeine- energy-drink#1(Accessed:01/03/19). Dudovskiy, J./ Research Methodology (2016)Red Bull Segmentation, Targeting and Positioning.Available at:https://research-methodology.net/red-bull-segmentation- targeting-positioning/(Accessed:01/03/19). Fabian,/The Drinks Business (2013)Red BullAvailable at: https://www.thedrinksbusiness.com/2013/04/red-bull-energy-to-spare/ (Accessed:14/03/19). Frazier, G.L. and Lassar, W.M., (1996). Determinants of distribution intensity.Journal of Marketing,[Online] Available at: https://journals.sagepub.com/doi/abs/10.1177/002224299606000405 (Accessed:05/03/19). Infoentrepreneurs.org. (2019).Ways to promote your product or service. [online] Available at:https://www.infoentrepreneurs.org/en/ways-to-promote-your-product-or- service/(Accessed: 06/03/19).
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Kallmyer, T./ Caffeine Informer (2018)Caffeine Metabolism.Available at: https://www.caffeineinformer.com/caffeine-metabolism(Accessed:01/03/19). Kotler, P. and Armstrong, G. (2018).Principles of Marketing. 17th ed. Harlow: Pearson, p.228,280,288-297, Maharaj, Y./ Insight Survey B2B Market Research (2016)Does the sports and energy drink market have a ‘spring’ in its step?Available at: https://www.insightsurvey.co.za/blog/sports-energy-drink-market-spring-step (Accessed:14/03/19). Phelan, J./Spoon (2018)Best practice: how Red Bull became a marketing powerhouse.Available at:https://www.hellosoutherly.com/red-bull-marketing- powerhouse/(Accessed:07/03/19). Red Bull (2019)The company behind the can.Available at:https://energydrink- uk.redbull.com/company-profile(Accessed: 05/03/19).