Red Bull Expansion: A Strategic Marketing Plan for a New Product

This report presents a market research study focused on developing a new product for Red Bull, aiming to understand customer needs and minimize potential risks. The research applies Segmentation, Targeting, and Positioning (STP) tools to define the target customer group, their desires, and brand perception. The marketing mix elements are evaluated to identify key challenges in implementing the new product and establishing a clear market position. The proposed new product, soft gums under the Red Bull Cogito name, targets students and young professionals, offering a faster energy boost than traditional energy drinks. The distribution strategy involves selective distribution through specialized retailers and vending machines, while promotion includes advertising, sales promotions, and personal selling to maximize product awareness and sales. The study concludes that the new product aligns with Red Bull's brand image and effectively addresses customer needs for quick and long-lasting mental performance.

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Table of Contents
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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 Bull started 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 Drinks Business.

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 for those 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

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.

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