SECTION A IS COMPULSORY

SECTION A - CASE STUDY (COMPULSORY)

RED BULL

Theres no question: Coca-Cola and PepsiCo dominate the global beverage industry. So how does a small company breaking into the beverage business compete with such global powerhouses? The best answer:

It doesnt at least not directly. Instead, it finds a unique market niche and runs where the big dogs dont.

Thats what Red Bull does. When Red Bull first introduced its energy drink in Austria in 1987, few imagined that it would become the 5 billion-dollar-a-year success that it is today. Red Bull found a new beverage niche that the market leaders had overlooked: energy drinks. Although Coca-Cola and PepsiCo have followed Red Bull into the energy drinks market, the company still owns 44 percent of the energy drink category it created. Despite hefty investments, Coca-Cola and PepsiCo are yet to make a dent in the category. This is because Red Bull was first in the market and in defining the new category, but more importantly because of the companys ability to engender and foster a deep customer loyalty. For example, Red Bulls Facebook Fan Page has more than 44 million likes, whereas Coca-Colas Facebook page for its

NOS energy drink only registers 380,000 likes and Pepsis Facebook page for Amp only accounts for 48,000 likes, while the Kickstart brand barely even triggers 1,000 likes.

Red Bull has energized a market niche with a unique product, brand personality, and marketing approach.

Back in 1987, energy drinks simply didnt exist. Red Bull co-founder Dietrich Mateschitz saw an unfilled customer need. He formulated a new beverage containing a hefty dose of caffeine that packed the right punch, producing unique physical-energy and mental clarity benefits. To make the new beverage even more distinctive, Mateschitz gave it a unique name: Red Bull. He packaged it in a slim 8.3-ounce (250 ml) blue-and-silver can with a distinct red-and-yellow logo, and tagged it with a $2-per-can price. Thus, a whole new energy drink category was born, with Red Bull as its only player. The unique Red Bull product demanded equally unique brand positioning and personality, a declaration that this was no ordinary beverage. The brands first and still only slogan Red Bull Gives You Wings communicated the products energy-inducing benefits. More important, it tapped into the forces that moved the brands narrow target niche: customers seeking to live in the adrenalin-stoked fast lane. Red

Bull shunned the big-budget mass media advertising common in the beverage industry at the time. Instead, it relied on grassroots, high-octane sports and event marketing. It sponsored extreme sports events and athletes who were overlooked by big beverage competitors but were spiking in popularity with Red Bulls target customers.

In the years since, Red Bull has turned event marketing into a science. Today, the brand holds hundreds of events each year in dozens of sports around the world. Each event features off-the-grid experiences designed to bring the high-octane world of Red Bull to its narrow but impassioned community of enthusiasts. But its not just about the events; its about creating tactile engagements where people can feel, touch, taste, and live the brand face-to-face rather than simply reading about or watching it. Red Bull doesnt just sponsor an event it is the event. One example of Red Bulls niche marketing genius is the

Red Bull Stratos project, which set records for consumer brand engagement. Felix Baumgartners dive from space fit perfectly with Red Bulls brand message. More than 8 million people watched the event live on 40 TV stations and 130 digital channels. Red Bulls niche marketing engages customers in a way that big-budget traditional marketing by competitors like Coca-Cola or Pepsi cant. For example, within 40 minutes of posting photos of Baumgartners jump, Red Bulls Facebook page gained almost 216,000 likes, 10,000 comments, and over 29,000 shares. On Twitter, half of the worldwide trending topics were related to Red Bull Stratos. By one estimate, 90 million people worldwide followed the campaign on social media, creating 60 million trusted brand impressions. Since its introduction, Red Bull has invested deeply in building the brand, spending around 40 percent of revenue on marketing and promotion. As a comparison, Coca-Cola spends 9 percent. As to its product portfolio, the company had one product to focus on until

2003, when a sugar-free version was added. On March 24, 2008, Red Bull introduced Simply Cola, or Red Bull Cola. In the summer of 2009, the Red Bull Energy Shots were introduced globally. This is a small version of the regular drink. Red Bull also owns and operates a number of lifestyle magazines, covering issues such as motor racing, celebrity gossip, and football. In addition, the company has established a Red Bull Music Academy, the music label Red Bull Records, several Red Bull Music Studios, Red Bull Music Academy Radio, and even mobile phone service operations branded Red Bull

Mobile in a number of nations. In fact, the company can be found in a number of business sectors, from TV broadcasting to youth academies and football clubs. The company has thus diversified into other businesses that have synergy with its brand image.

Red Bull today has become a close-knit brand community that engages customers with both products and absorbing brand content. Beyond its products, Red Bull produces a steady stream of event and social media content that engages and entertains brand fans. During the last few years, for example, Red Bulls Media House unit has filmed movies, signed a deal with NBC for a show called Red Bull Signature Series, developed reality - TV ideas with big-name producers, become one of YouTubes biggest partners in publishing original content, and loaded its own web and mobile sites with unique content features. Werner

Brell, who heads the Red Bull Media House Unit, stated that all of Red Bulls events have been put on film or photographed. The goal is to be able to tell engaging stories. Since its early start, Red Bull has created a business portfolio which best fits the companys strengths and weaknesses to opportunities in the external environment. By focusing on a niche and mainly one product only, the company displays what successful business portfolio management in the form of niche marketing is all about a welldefined brand engaging a focused customer community with meaningful brand relationships that even larger and more resourceful competitors cant crack. Through smart niche and business portfolio management, Red Bull has given its customers and itself new wings and a whole new shot of energy.

QUESTION ONE (Compulsory)

1. It is evident in the Red Bulls success story that, a firms ability to get the right target market marks the beginning of its success. Critically discuss with examples the four major criteria required for a successful market segmentation. (10marks)

2. Red Bulls performance in this highly competitive sector to a large extent can be attributed to its ability in effectively analyzing the competitive environment it operates in and a very well-developed marketing plan. From an intellectual perspective, discuss what factors from the SOSTAC Model may have influenced Red Bulls marketing activities. (10marks)