Jos Pablo Portillo Martnez Intermediate Microeconomics 2012/2013

- Index.

- Whats Red Bull Company?

- Red Bull and its consumers

- Red Bull and their prices

- Red Bull and the competitive in the sector of energy drink

- Red Bull and the social responsibility actions

- Bibliography

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Jos Pablo Portillo Martnez / Red Bull GmBH

- Whats Red Bull Company?

The real name of Red Bull Company is Red Bull GmBH. In 1982, Austrian entrepreneur Dietrich Mateschitz was inspired by a pre-existing energy drink named Krating, which was first invented and sold in Thailand. In 1984, Mateschitz founded Red Bull. He took this idea, modified the ingredients to suit the tastes of Westerners, and, in Partnership with Chaleo Yoovidhya, founded Red Bull GmBH in Austria in 1987. It was not only the launch of a completely new product, in fact it was the birth of a type of product never seen. And now Red Bull is present in about 160 countries. Red Bull vitalizes body and mind. The formula of Red Bull Energy Drink contains a unique combination of high quality ingredients: Caffeine, it is known for its stimulating effects on cognitive functions; B-group vitamins, they are important for energy metabolism and neurological functions; sucrose and glucose, they are different types of sugars, which provide energy to body and mind; taurine; it is an amino acid, naturally occurring in the human body and present in the daily diet. It is involved in a wide range of biological processes; alpine and spring water, naturally, water is a key ingredient of Red Bull. Red Bull Energy Drink is a functional beverage providing various benefits, especially in times of increased performance:

Jos Pablo Portillo Martnez / Red Bull GmBH

- Helps to improve (CONCENTRATION): Next to B-complex vitamins, taurine and sucrose & glucose, Red Bull Energy Drink contains caffeine (80mg per 250ml can). It was scientifically proven that caffeine helps to improve concentration. This has also been concluded by the European Food Safety Authority in their scientific opinion: See EFSA Journal (2011): No. 2054. - Helps to increase ALERTNESS: Red Bull Energy Drink contains caffeine, taurine, Bcomplex vitamins, sucrose & glucose. Scientific evidence proves that caffeine (80mg per 250ml can) helps to increase alertness. This was also confirmed by the European Food Safety Authority in their scientific opinion: See EFSA Journal (2011): No. 2054. - Contributes to MENTAL PERFORMANCE: Next to caffeine, taurine, sucrose & glucose, Red Bull Energy Drink contains B-complex vitamins (vitamin B3 (Niacin), vitamin B5 (Pantothenic acid), vitamin B6, vitamin B12). It was scientifically proven that vitamin B5 (Pantothenic acid) contributes to mental performance. This has also been concluded by the European Food Safety Authority in their scientific opinion: See EFSA Journal (2009): No. 1218. - Contributes to the REDUCTION OF TIREDNESS AND FATIGUE: It was scientifically substantiated that the B-Complex vitamins (Vitamin B3 (Niacin), Vitamin B5 (Pantothenic acid), Vitamin B6, Vitamin B12), contained in Red Bull Energy Drink, contribute to the reduction of tiredness and fatigue. This was also confirmed by the European Food Safety Authority in their scientific opinion: See EFSA Journal (2010): No. 1756, No. 1757, No. 1758 and No. 1759. Naturally, Red Bulls production and global distribution needs energy and thus causes an environmental impact. Red Bull is very aware of its environmental responsibility and is constantly striving for improvement. Today is available in over 160 countries and sells about 4,000 million times a year. This means that a lot of used aluminum cans to serve the product to locations around the world

Jos Pablo Portillo Martnez / Red Bull GmBH

with the highest quality. Naturally, Red Bulls production and global distribution needs energy and thus causes an environmental impact. Red Bull is very aware of its environmental responsibility and is constantly striving for improvement. All steps in the life cycle of a can of Red Bull have their carbon footprint. In the company they keep track of all emissions from the production of the can and drink as well as transport and refrigerated. The resulting value is what is known as a footprint. Red Bull works tirelessly to reduce it, now and in the future, through a package of measures to save energy and resources. As of the end of 2011, Red Bull employed 8,294 people in 164 countries. Compared to the end of 2010 when they had only 7,758 employees in 161 countries this is a great improvement. It is their goal to continue creating career opportunities around the world. The company slogan is "Red Bull Gives you wings" and the product is marketed through advertising, events (Red Bull Air Race, Red Bull Crashed Ice), sports team ownerships (Red Bull Racing, Scuderia Toro Rosso, EC Red Bull Salzburg, FC Red Bull Salzburg, Red Bull New York, RB Leipzig, Red Bull Brasil), celebrity endorsements, and music, through its record label Red Bull Records.

- Red Bull and its consumers

They target mainly young adults (18-30 years old). This is shown by the strong promotion of the product on the Universities. With the mindset on social integration, rather than set up their own factory and distribution, Red Bull simply utilizes an already established local company to do their marketing and distribution. They aim at finding consumers at the right time at the right place and in the right situation. They achieve this by a three step method: 1. Awareness (know the brand)

Jos Pablo Portillo Martnez / Red Bull GmBH

2. Trial (experience it) 3. Credibility (believe in it) They focused heavily on sampling especially areas where an energy boost is needed. They don't necessarily go for volume, but seek out the like of parties, large corporation's family days and university campuses where people are in need of a real (legal) boost. Red Bull believes consumption is driven by situations, not socio-demographics. Their target focus is different situations such as sports, driving, studying and preparation to all night boys. Red Bull's strongest asset is its cult-like following by its consumers, bar staff and other stakeholders by participative marketing. Initially by simply not having the investment to spend heavily in marketing they let their market participate in its marketing. One major seduction tactic they employ is exclusivity. When Red Bull went to new countries they selected a handful of outlets that can sell the brand as oppose to price-offs, flooding aggressively and the ubiquity so often practiced in the beverage industry. Also Red Bull only gives out merchandising (like wearable) to their sponsored athletes who are more or less considered opinion leaders. They believe branded merchandising does not mean anything if you just give it away to the masses. Their entry strategy is more based on exclusivity, an offspring of Maslow's hierarchy of needs. For example, when Red Bull initially came to the U.S. it focused its pre-seeding efforts on New York City, where the brand was already hyped by the city's large European influence. Initially the company made the product available to bar staff of hip on-premise accounts. They let them experience the energy boost on the job and basically treated them preferably to consumers. The product was notably launched just as all-night raves were entering mainstream awareness. Red Bull was well stocked in clubs, where it became the drink of

Jos Pablo Portillo Martnez / Red Bull GmBH

choice for ravers' looking for non-alcoholic fuel. The company's marketers even went as far as tossing empty Red Bull cans onto the floors of club bathrooms.

- Red Bull and theirs prices

Red Bull in an effort to continue to lead the industry and to reach as many people have a range of energy drinks: - Red Bull Energy Drink: Red Bull Energy Drink is a functional beverage providing various benefits, especially in times of increased performance. - Red Bull Sugar Free: Red Bull Sugar Free is a functional beverage without sugar and only 3 calories per 100 ml. Like Red Bull Energy Drink, Red Bull Sugar Free contains the same functional ingredients (80mg caffeine/250ml and vitamins), which help to improve concentration, increase alertness, contribute to mental performance and the reduction of tiredness and fatigue. - Red Bull Zero Calories: Red Bull Zero Calories doesnt contain carbohydrates or sugars but it does provide you with the same benefits as a Red Bull Energy Drink because they both have the same functional key ingredients. - Red Bull Editions: Same effect - Different taste. The Red Bull Editions combine the functionality of Red Bull Energy Drink with three specific flavors: Cranberry, Lime & Blueberry. - Red Bull Energy Shot: Red Bull Energy Shot is a concentrated energy drink Red Bull without gas that does not need cooling. The 60 milliliters of each bottle containing only 27 calories and functional ingredients thereof a Red Bull. Red Bull Energy Shot has been designed for all those times when you want to revitalize your body and mind. Slips easily into your pocket, in your bag or in your jacket or glove, and does not need cold as you can take it anytime, anywhere.

Jos Pablo Portillo Martnez / Red Bull GmBH

Red Bull represented a new category of drinks, the energy drinks. In this market sector Red Bull is perceived as a premium-high margin brand product. Pricewise Red Bull is in position in which it can command a premium price because there simply nothing to compare it with. It is a unique functional drink, promising and delivering benefits that no other drink can offer. For example, in the UK the average price of a Red Bull can is 1.05 which is clearly above its competitors average price of 1.03. The price expresses superiority of Red Bull and further on it proves that there is no substitute. The same treatment is given in other countries. The positioning policy of the company is: premium product, premium price and premium profitability.

- Red Bull and the competitive in the sector of energy drinks

Red Bull can be copied easily because their ingredients are printed on the can and drink is not patented. Still in taste tests did not go well for Red Bull, was the marketing strategy that made successful Red Bull. At late 80's at the same time that Red Bull was spreading across Europe, Americans drank Jolt Cola, which is advertised as having "all the sugar and twice the caffeine of Coke". Can be said to Red Bull was the first energy drink to compete with soft drinks but I also think the energizing beverage category in the market. After Red Bull forcefully entered the market in late 90's to the present, many companies tried to enter the market of energy drinks such as Hansen Company that produced natural soft drinks, which created its Monster Energy product. Red Bull has about 100 major competitors, such as 5 Hour Energy Drink and Rock Star Energy Drink. In addition to these competing soft drink companies have entered the direct jurisdiction of Red Bull, such as Coca-Cola (Full Throttle & Monster), Pepsi (AMP Energy Drink)

Jos Pablo Portillo Martnez / Red Bull GmBH

and Gatorade (Rebranded as G and G2). Many celebrities have also taken on the role of putting their faces for a brand of energy drink, such as Ice-T created a drink called Liquid Ice, Nelly's Pimp Juice and Lil 'John's, Crunk Juice. However, in the end no other energy drink has been able to take 70-90% of the market share that Red Bull has in more than 100 countries worldwide, despite all these competitors. In figures for business volume, in 2006 were consumed 3.038 million cans of Red Bull worldwide. The company increased its sales by 22.9%, from 2,149 million euros to 2.641 million euros. These positive data mainly respond to the impressive development of Red Bull markets such as Eastern Europe (+ 53%), Italy (+48%), Australia (+39%), South America (+31%) and the U.S. (+27%). The company increased its sales in 2007 by 16.6% to EUR 3.079 million and 3.549 million cans sold all over the world. Red Bull also emphasized improving productivity and profits for that year, to achieve "the highest levels in the history of the company" for the "exceptional" progress in Europe (+25%) and in Africa (+59%), South America (+48%) and Australia (+44%). In 2008 sales reached 3.32 billion euros (4.28 billion dollars), up 7.9 per cent, less than half the previous year's 16.6 per cent rise. At 79 per cent, sales growth was especially strong in the Far East, with the Middle East (31 per cent) and South America (26 per cent) also boosting revenue. The number of cans sold worldwide grew 13.2%, to 4.016 million cans. In 2009, the Company revenue sank by 1.7 per cent. Citing 'difficulties presented by the global economic climate,' Red Bull reported sales worth 3.27 billion euros (4.43 billion dollars). The privately owned firm did not publish other annual figures but said there was a significant increase in productivity and profit. Red Bull boosted sales in the Far East by 43 per cent last year and reported strong growth also in the French, Brazilian and German markets.

Jos Pablo Portillo Martnez / Red Bull GmBH

The Salzburg-based company sold in 2010 4.204 million beverage cans, 7.6% more than in 2009, reported the news agency APA. Due to the increase in the price of their drinks and the advantageous effects of the exchange rate with other currencies, sales rose by 15.8% to 3.785 million euros, the company said. The success of the company was again due to the excellent performance of the brand in markets such as Turkey (with a rise of 86%), Japan (up 80%), Brazil (32%), Germany (13%) and the United States (11%). A total of 4.631 million cans of Red Bull were sold all over the world in 2011, representing an increase of 11.4% in volume compared to 2010. The turnover of the company increased by 12.4%, from 3.785 million to 4.253 million euros. Sales, revenues and profits from the exploitation reached record highs for the company. The figures were the best in the business so far. These positive figures are explained as, inter alia, by the spectacular starring sales in markets such as the United States (+11%) and Germany (+10%), even in other markets of countries like Turkey (+86%), Japan (+62%) and Scandinavia (+34%).

Red bull and the social responsibility actions

The corporate social responsibility of a company is the commitment social, economic and ecological that has the company. Regarding economic and ecological aspect, already mentioned above how to treat using cans through the carbon footprint. This production of cans, which is the system "wall to wall", is just one of the ways that Red Bull to reduce their environmental impact. This type of production considerably shortens transport distances, thus reducing CO2 emissions, among other things. Increasing the recycling rate of cans not only reduces the use of precious raw materials, but also saves the energy that would be needed to process them. The weight

Jos Pablo Portillo Martnez / Red Bull GmBH

reduction can also mark the difference: if they use less aluminum to produce the can at first, the carbon footprint will be lower. Increase production application "wall to wall" or optimize the supply chain are two of the ambitious goals that Red Bull has set itself to further reduce their environmental impact and energy use. For example, the number of cans that are transported by ship and by rail is increasing steadily to replace the road as far as possible. Moreover, the use of refrigerators and refrigerants that are environmentally efficient is a very valid way of reducing greenhouse gases. Red Bull already uses 180,000 ecological refrigerators, and the idea is that from now on all that are acquired by the company are also ecological. As for social action, this is based entirely on the sport, in all types of sports, especially in extreme sports, which capture the largest market share. Furthermore, since its inception, Red Bull has been a company that has not complied with associated with the sport. They want to be the center. Participate fully in the management of the entities which participate. They pick teams and unlike more traditional sponsorships, are involved in the day-to-day investment. Mateschitz (its founder) has never been considered a sponsor, he says Sponsors spend money, have little to say and when money is spent disappears. When we bought the team from Ford Formula 1 6 years ago, it was a disaster. This year it has become world champion. Red Bull spends over $ 500 million in sport. Only Nike, Adidas and Coca-Cola spend more. But the company does not want to simply use their association with the sport. Red Bull wants to create success and be noticed. Today, the brand is involved in more than 100 sports and 456 athletes by sponsoring the world including beach volleyball players, motocross, snowboarding, professionals of paragliding and ice hockey and football teams.

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Jos Pablo Portillo Martnez / Red Bull GmBH

But his involvement is not limited to sports consolidated. Red Bull also creates and invents sports formats. Red Bull Air Racing has invented (some races where pilots fly for air circuit), acrobatic jumps off cliffs and racing cars crazy. Everyone has to show a bold attitude. The goal is to create stunning images. In early 2006 Red Bull bought the New York MetroStars, a football club completely overshadowed by the Yankees (baseball), Rangers (hockey), Giants (football) and Knicks (basketball). Red Bull has identified an opportunity in the U.S. Football League. For many years it has suffered image problems. The matches were played in football stadiums with 10,000 spectators when the venue was for 80,000. The brand has focused its efforts on boost the sport taking advantage of his popularity among immigrants. In Germany, where it is forbidden for a football club takes the name of a brand, Red Bull bought a fifth division team. The company renamed the team Rasenballsport Leipzig abbreviated to RB. Thanks to a huge investment by the company is poised to climb to the Bundesliga (the German first division). The plan is to invest 100 million euros in the next decade. So, we can say that Red Bull Energy Drink Company has built up its very own sporting empire.

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Jos Pablo Portillo Martnez / Red Bull GmBH

- Bibliography
- Redbull.es - Redbull.com - Redbullcaribbean.com - Cincodias.com - Eleconomista.com - Marketingnews.com - Spiegel.de

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