Sana Tahir International Business A2

Submitted by: Sana Tahir
Submitted to: Sir Arslan Rafi

Course: International Business
Assignment:
Case Study: Red Bull
Harvard Business School
By: Eric Van Den Steen and Carin-Isabel Knoop
Case Study of Red Bull Summary
Introduction
The case study of Red Bull has provided a clear overview of the current strategic position of the
company in the energy drink market. More than just an energy drink, Red Bull is a global sports
and cultural icon and a way of life. Whether it’s empowering customers, athletes, fans,
colleagues, or business partners, Red Bull employees are innovative, driven, and relentless in
their pursuit of the highest standards of excellence across everything they do.
History
Red bull emerged with a very interesting history. The founder, Dietrich Mateschitz began his
career in sales and marketing and on one of his business trips he met a person named
Yoodvidhya who was experimenting with energy drinks and had launched a popular non-
alcoholic drink called ‘Krating Daeng’. Mateschitz in 1984, acquired rights for this drink outside
Asia and converted it into a brand “Red Bull” with a slogan “Red Bull gives you wings”. Red
Bull was first introduced in Austrian market in 1987 but the sales were slow and the product did
not perform very well in the beginning. Later on Red Bull started getting recognition in the bars
and nightclubs as a mixer to neutralize the alcohol. That is when sales started accelerating and
company broke even in 1990. Red Bull then entered into the Hungarian drinks market which
proved to be a stepping stone for it to advance further beyond the boundaries.
Challenges
As per the case study of Red Bull, the company has been enjoying great success with the help of
the selling non-alcoholic carbonated energy drinks. For the establishment of the worldwide
forerunner of the energy drink category, the company has made great sales of about $4.7 billion
on annual basis. In the year 1987, April 1 it was available for sale in Austria as a test but failed to
meet the amount spent on advertising $1.4 million.
After the year 1988 the sales increased due to Red Bull being used as alcohol mixers. A strategy
that was brought about was using the company's profits into advertising over its competitors. By
1992 it started its sales in Hungary and by 1994 in Germany. From $1.1 million revenue to €70
million. The company, since its introduction in the United States during 1997 has been retaining
the leading position in the carbonated soft drink industry (The Red Bull cans, 2014). Red Bull
conquered the US non-alcoholic beverage market where Coca Cola was already leading with a
43% market share and Pepsi being a second largest competitor of the market with 30% market
share. The US market was already evolving with these two competitors focusing on high-energy
carbonated sodas including the big names like ‘Mountain Dew’ by Pepsi followed by ‘Surge’
from Coca Cola. This was followed by a number of other drinks that kept getting in and out of
the market. Red Bull grew by marketing through giveaways and free sample distribution. The
bars were provided free coolers which greatly enhanced the popularity of Red Bull all across the
US. These beverages were almost with the same name, has been offering the beverages of the
same category at the same prices.
Despite all this competition, Red Bull fought back and won many lawsuits against bars that
broke the contract to only sell Red Bull. The company also invested in creating a videogame and
brought variation in product size. Red Bull also launched a more ‘natural’ version of coke to
fight back against Pepsi and Coca-Cola.
The company has been holding a good market share at the present date.
Red Bull Fights Back
The company responded with increased advertising, product innovation and litigation. It
increased it’s spending on placements in magazines, national radio and cable TV. In 2007 and
2008, the company introduced larger cane sizes, 355-mililitre and a 473-mililitre, same as that of
Monster. Moreover, the company also proposed lawsuits against nightclubs that substituted
cheaper beverages which shows the efforts were not only in terms of marketing for the company
to fight back strongly and vigorously. In 2008, the company attacked Coca Cola and PepsiCo
directly by launching its own Cola. Red Bull Cola had a strong vanilla taste with only natural
ingredients. It also contained coca leaves and kola nut extracts with relatively more caffeine.
Conclusion
Red Bull has seen seemingly indefatigable success of a single product. By taking steps to
simultaneously launch “Solid Fuel”, the result will be the success that is achieved simply by
meeting the already expressed needs and desires of the marketing with a product that is
positioned to leverage the current awareness, recognition, and image of the current product. As
this strategy entails the creation of a category-extension, there is minimal risk of the dilution of
the powerful core brand value and the image that is currently held. Further, to maintain and even
build the markets for these products, Red Bull should move away from the successful cartoon-
type advertisements and focus on the “next thing” for a fickle consumer mass. This advertising
should be of an experiential nature that focuses on situation in which Red Bull [products] can be
utilized for a key benefit while each advertisement “closes” with a central brand reinforcing
image such as the Red Bull logo. In conclusion, Red Bull needs to improve their techniques
without compromising on its image and product quality.

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Submitted by: Sana Tahir

Submitted to: Sir Arslan Rafi

Red Bull Fights Back

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