Red Bull Marketing Audit

Red Bull Marketing Audit

MARKETING AUDIT:
THE CASE FOR RED BULL

Red Bull Marketing Audit

TABLE OF CONTENTS
Title

Page

PART I. MARKETING ENVIRONMENT AUDIT

Macroenvironment
A. Demographic . 2-3
B. Economic 3-4
C. Environmental 4-5
D. Technological . 5-6
E. Political 6-7
F. Cultural 7-8
Task Environment
A. Markets 8-10
B. Customers .. 10-12
C. Competitors 12-13
D. Distribution and Dealers .. 14
E. Suppliers . 15
F. Facilitators and Marketing Firms 15-16
G. Publics . 16
PART II. MARKETING STRATEGY AUDIT
A. Business Mission .. 16-17
B. Marketing Objectives and Goals . 17-18
C. Strategy .. 18
PART III. MARKETING ORGANIZATION AUDIT
A. Formal Structure 18-19
B. Functional Efficiency 19-20
C. Interface Efficiency .. 20
PART IV. MARKETING SYSTEMS AUDIT
A. Marketing Information System .. 21
B. Marketing Planning Systems . 22-23
C. Marketing Control System . 23-24
D. New-Product Development System . 24
PART V. MARKETING PRODUCTIVITY AUDIT
A. Profitability Analysis .... 25-26
B. Cost-Effectiveness Analysis .. 26-27
PART VI. MARKETING FUNCTION AUDIT
A. Products . 27-28
B. Price 28-29
C. Distribution 29-30
D. Advertising, Sales, Promotion, Publicity & Direct Marketing. 30-31
E. Sales Force 31-32
REFERENCES .. 33-37

Red Bull Marketing Audit

RED BULL GmbH MARKETING AUDIT REPORT

PART I. MARKETING ENVIRONMENT AUDIT
Macroenvironment
A. Demographic
The energy drink industry where Red Bull is a major player, like other
beverage industries, is fast developing and expanding driven by a
globalization impetus. Although a relatively young industry when compared to
other mature beverage markets, emerging economies like those in Asia
presents a very lucrative market potential for Red Bull. Diversification of retail
outlets to these nations in order to better market the Red Bull energy drink
product is, therefore, an opportunity for the worlds leading manufacturer of
energy drinks. Additionally, in view of the fact that Red Bull caters to a
younger market whose primary target is male teenagers and people in their
20s (Smith, Gupta & Gupta 2006) coupled with the fact that young people
make up the fastest growing segment of the world population (Youth at a
Glance 2007), the possibilities for business profitability are endless.
However, since people are increasingly concerned and aware of health
issues and well-being, the threat of sustained patronage of the Red Bull
product is looming on the horizon. Energy drinks contain a considerable dose
of sugar and about as much caffeine as one cup of coffee (Cohen 2001), a
recipe that worries nutritionists and doctors alike. Various news on the internet
from reliable sources1 have cited instances wherein Red Bull was involved in
such issues and, to a very damaging extent for the image of the company,
even death from drinking said beverage. In response to said developments
1

See for example: http://news.bbc.co.uk/1/hi/health/1435409.stm;

http://archives.cnn.com/2001/HEALTH/diet.fitness/05/29/energy.drinks.02/;
http://abcnews.go.com/Health/story?id=2759942&page=1.

Red Bull Marketing Audit

and trends, Red Bull has taken measures to ensure the general public that
drinking their product is safe and not harmful for human health. This campaign
was launched specifically in their website2 and various marketing efforts
through the television3 and print media4, coupled with sports and arts
sponsorships5 globally. Their youth-centered marketing efforts have led the
business to concentrate on clubs and bars of the countries in where they
market their product, in addition to the already stated tactics of common
marketing media, although not so visible on the latter tactics.

B. Economic
The general picture of the world economy shows positive growth, in
terms of global output (up by 5 in 2006 and 4.4% in 2005 6) and dominated by
technologically and health-driven industries (CIA World Factbook 2007).
However, in the developing economies where Red Bull targeted to expand its
business operations, the income level over the last five decades has failed to
grow causing an increase in an already high world inequality (World
Economic and Social Survey 2007). Price ranges for the energy drink, on the
other hand, remains stabilized due to the sustained patronization for said
beverage product by the market. In line with such changes, Red Bull
recognized the tendency of people to cut back on energy drink consumption
and focus on more basic needs. Thus, their marketing strategy of giving away
free Red Bull products to the markets where they are most profitable 7,
2

Accessed at http://www.redbull.com/#page=ProductPage.Ingredients
See for example: http://www.tellyads.com/show_movie.php?
filename=TA2610&advertiser=Red%20Bull%60
4
See for example: http://206.145.80.239/zbc/showthread.php?t=011789
5
For more details, access http://sil.mcmaster.ca/Archive/life/041111lifetrend.html
6
From https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html#Econ
7
http://www.psychotactics.com/artnature.htm
3

Red Bull Marketing Audit

particularly students and employees who work at night and need the
necessary energy that Red Bull professes to offer may work in enticing people
to buy their power drinks.

C. Environmental
Various environmental issues have bombarded contemporary business
organizations and Red Bull is no exception to the rule. Brennan (2006) stated
that the energy consumed by the beverage industry in most countries, as well
as the food industry, is a significant portion of the total energy used in
manufacturing industry. Likewise, Hillary (200) noted that said industries are
major producers of carbon dioxide.
Since Red Bull is a privately held company, it is not very much subject
to public scrutiny regarding environmental issues, unlike counterparts in the
beverage industry like Coca-Cola and Pepsi who are publicly held. There is
little or no news on the web regarding environmental issues involving the
energy drink world leader, which may mean two things: that it complies with
global standards for environmental care or issues about it has not received
much publicity.
The firms product is mainly filled and sold in aluminum cans and
smaller share of Red Bull is marketed in single-use glass bottles. As a result,
waste management is a big issue for the leading energy drink manufacturer.
Fulfillment of a part of the companys corporate social responsibility to the
environment is one of the main expectations of shareholders and Red Bull, as
an element of their unique marketing strategies, have set forth ways to
minimize waste and protect the environment by way of appropriate and sound

Red Bull Marketing Audit

waste management initiatives. In line with this vision in mind, the company
sough new technologies that can eliminate, if not totally mitigate, the negative
impact of the companys production and business operation to the
environment and the community (Red Bull National Packing Covenant 2005).
In concrete terms, this has been established by the use of thinner,
substantially reducing the amount of aluminum it used (Red Bull National
Packing Covenant 2005).

D. Technological
One of the main challenges facing the energy drink industry is not only
the need to deliver optimum volume growth and adapt to changing consumer
demands but also to stimulate demand itself through greater product
innovation. This is particularly relevant for Red Bull who has been observed to
have failed in diversifying into other product lines, much less a Red Bull
energy drink variant. Innovation, whether in terms of packaging or product
formulation, has been widespread in the beverage industry over the last few
years. Ashurst (2005) asserted that innovative premium priced energy drinks
have witnessed rapid growth in the mature soft drinks markets of Western
Europe and North America and are also generating substantial gains in the
developing world. Hence, it is proven that innovation could help maintain
momentum for the sector.
The more complex drinks formulations like that of the Red Bull brand
can pose significant analytical challenge for process management (Stratford,
Hofman & Cole 2000). Thirty years ago, there would have been a limited set
of equipment in the quality control laboratory for the majority of beverage

Red Bull Marketing Audit

factories. However, with the move to larger and more efficient factories with
faster bottling lines, it has become critical to ensure that bottling formulation
is correct before the product is packed (Ashurst 2005).
Red Bull, in their attempt to answer to environmental issues while at
the same time reducing company costs, have undertaken research and
development to improve on their product over the years. Dietrich Mateschitz,
founder of the Red Bull company, looked for a manufacturer who can deliver
the quality that his product needs to be able to differentiate itself from other
energy drink products in the market. The Red Bell father also stressed the
focus on lowering aluminium content in their cans. There is currently no
generic energy drink substitute to replace can best rival, more so supersede,
the Red Bull product, which is why sustained profitability is still feasible.
However, there is no room to relax as competitors are always there
aggressively eating away the companys market leadership.

E. Political
In response to the push for a more health-driven society, the
government has begun inspecting the industry starting late 2006 (Kerley
2006). Rosenbloom, Silink & Kida (2003) pointed out that the banning of soft
drink products like Red Bull from schools in several county school districts in
the USA is an important beginning for decreasing the incidence of Type 2
diabetes among children and teenagers. This is bad news for the energy drink
industry in general, not only for Red Bull, because this means decreased
sales in the areas where such regulations are being implemented. And the
problem is that the United States is not the only country to take such actions.

Red Bull Marketing Audit

Also late last year, the worlds first agreement to prohibit direct selling
of full-sugar energy drinks like Red Bull in New Zealand schools have been
signed (World First Agreement on Soft Drinks in Schools 2006). Likewise,
stricter pollution laws, amended equal employment opportunity laws, sterner
price control watch, modified product safety and advertising regulations have
resulted to Red Bull drastically changing their marketing strategies. Most
prominent of this is their introduction of a sugar-free variant of their product in
the market in order to counteract the negative effect on sales with the banning
of full sugar energy drinks on institutions of learning in several countries. Also,
a product safety measure is making Red Bull cans thinner so that there is less
aluminum content in such package, making it more environmental-friendly.

F. Cultural
General public attitude towards the Red Bull product is acceptance and
patronization, although a number of health-conscious groups have started to
campaign on some of the bad effects of the energy drink on human health.
Much of these criticisms to Red Bull, however, do not state that company is
damaging to human health in itself. The product is popular among the clubhopping and athletic youth in Europe and the United States because of its
successful creative approaches to delivering its overall marketing efforts
conveyed through a set of initiatives which are culturally and sports-inclined.
Among these are the Red Bull Music Academy, the Red Bull Acro team, the
Red Bull Yamaha and Junior Teams and the Red Bull Barako Philippine
basketball team (Schmitt 2003).

Red Bull Marketing Audit

The Red Bull Music Academy is particularly interesting because the

company created it for the exploration of music history, technology and
business, and whose purpose is to offer a forum where enthusiasts from all
over the world can share music, ideas and knowledge. These initiatives
particularly reinforce Red Bulls association with culture while creating an ideal
environment for the products consumption.
Like the customers acceptance of the product when it first came into
the market, there is also the possibility that another beverage variant might be
introduced in the market which would significantly decrease the market share
of Red Bull. The recent trend of outsourcing business processes which
requires employees of host countries to keep very late hours to go to work
has likewise affected sales for the leading energy drink manufacturer. Since
these groups of people needs extra energy to be able to stay up in the night to
be able to perform their functions, Red Bull grabbed this market segment by a
marketing strategy that puts their energy drink in the light as an energizer
needed by such people to carry out their work.
Since people have also started becoming health-conscious and more
involved in physical activities like sports, Red Bull launched their sugar-free
variant in 2003 and involved the company in sports sponsorships such as
basketball, motorsport, cliff diving, skiing, skateboarding and BMX. It must be
observed that Red Bull had begun sponsoring mostly extreme sports events,
as they would like to build an image that those who drink their energy drink
lives on the edge of excitement and healthy living- an image that has attracted
more people than Red Bull has dared to imagine.

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Task Environment
A. Markets
Smith, Gupta & Gupta (2006) observed that the major market
segments that Red Bull is catering to are: (1) male teenagers; (2) people in
their 20s; (3) extreme-sports enthusiasts; (4) video-game players; (5)
basketball fans; and (6) hip-hop fans. From the above enumeration, it could
be said that the market segments that Red Bull is targeting is a very young
and outgoing group of consumers, which makes it more difficult for the
company to market their product. The male teenagers who form part of their
market will not be male teenagers for long, they will soon grow up and move
to the early twenties segment of the market, which, fortunately, still belongs to
the market captured by Red Bull. Even though these teenagers and early
twenty consumers may grow up to become adults, Red Bull will not find
scarcity in the said segment, as the continuous growth of the world population
is a source of steady sales for the energy drink producer. These two market
segments are distributed normally in the places where Red Bull sells their
product, so geographical distribution is more or less a controlled factor.
Extreme sports enthusiasts, on the other hand, are geographically
dispersed, and have observed concentration only in developed and some
developing countries where the locations are conducive to extreme sports
activities. Their ages range from early twenties to late forties at the most, and
whose segment size is steadily growing, given the tendency of people
nowadays to look for adventurous and exciting ways to chill out. Video-game
players, as prompted by societys addiction to technology, are likewise a
market segment that patronizes Red Bull, with the latters claim to improve

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reaction times and assist in keeping people up and about for long-standing
periods of time. Obviously, these are what video game addicts need and the
said marketing ploy of the Red Bull firm seem to be working with this
particular market sector.
Basketball fans, on the other hand, are drawn by Red Bulls marketing
strategy with its promises of boosting energy needed to play the exhausting
game. As evidenced in the Philippine scene, the Red Bull Barako team being
one of the strongest basketball teams in the country, and aside from the fact
that basketball is the most-loved and most-watched sport in the islands, the
product is getting really impressive and extensive marketing exposure. This
scenario brings to mind the equally popular Gatorade, whose sponsorship as
the National Basketball Associations (NBA) official sports drink has gained
the PepsiCo product unequalled media coverage.
Lastly, hip-hop fans as a sizeable segment of the Red Bull market has
been brought up by the entry of Pit Bull Energy drink in the market in
November of 2000 (McKenna 2004). Due to the fact that the latter product has
gained considerable market share in the hip hop segment which Red Bull has
neglected until Pit Bulls emergence, the company under analysis significantly
made changes in their marketing efforts to include said segment as part of
their target markets. The Red Bull Music Academy, as part of Red Bulls effort
to capture the hip-hop people, caters largely to hip-hop fans around the globe.

B. Customers
The goal of all businesses, not only those engaged in the energy drink
industry, is to generate revenues and ensure the growth of their enterprises.

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Salespeople understand that there are distinct phases of the customer buying
process, no matter what market segment they may belong. The key,
according to Rosen (2002), is, therefore, providing the information that
customers need to move through each phase of the process so that they
arrive at the decision to make a purchase. These includes: (1) Need
identification; (2) Research; (3) Product Selection; (4) Product Purchase; and
(5) Post Purchase Behavior.
The need identification phase is when a real or apparent need triggers
or inspires someone to be interested in the product (Jacobs & Stone 2001).
The second phase is research wherein alternative solutions are looked for by
the consumer, which could be as simple as reading a label on a product seen
at a grocery store or as complex as hiring a firm to research the issues and
perform an analysis (Sandhusen 2000). The third phase, which is product
selection, involves the consumer choosing on which of the available
alternatives to purchase, which leads to the next buying phase- the actual
purchase of the product (Hisrich 2000). Baker (2001) explained that the last
stage of the buying process, which is post purchase behavior, is mainly dealt
with for purposes of customer retention and gaining their loyalty.
Customers and potential buyers of Red Bull rate the energy drink
industry players based on a number of combined factors: (1) personal
experience; (2) media exposure; (3) market following; (4) immediate
availability in the market; and (5) price range relative to quality (Shachman
2005). Although different market segments follow the same buying process
when deciding to patronize an energy drink, they have different needs that
they want to be individually addressed by the energy drink provider. For

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instance, sports people want the beverage for the second wind that it could
give them, while male teenagers purchase it to be in.
The exponential growth of Red Bull came about not only because of
the unusual ingredients of the drink, but because of focused experiential
platform. Red Bulls experiential positioning is energy in a bottle; its EVP is
strengthening the heart, accelerating the metabolism and fighting stress
(Schmitt 2003). The implementation theme of their marketing efforts is
centered on staying fit for all sorts of social fun activities. For the clubbing
crowd worldwide, drinking Red Bull is like injecting a dose of energy and
stamina that helps them move faster and faster to the escalating beats of
electronic and trance music.

C. Competitors8
The energy drink industry is not dominated by large drink companies,
as witnessed in the soft drink industry, but instead characterized by stiff
competition among a continuously increasing number of smaller companies,
all catering to a very select consumer base (Smith, Gupta & Gupta 2006).
Still, major soft drink companies like PepsiCo and Coca-Cola was not stopped
at producing energy drinks of their own- SoBE Adrenaline Rush and AMP
Energy Drink for PepsiCo and Full Throttle for Coke. An energy drink beer for
Budweiser, called Budweiser B^E (Bud Energy) has also recently started to be
carried by sports bars (Shachman 2005).
Following are some of the better known rivals of Red Bull in the
industry (Red Bull GmbH 2007), coupled with brief descriptions of their
8

Competitor information is from their respective websites and various company researches
done on said firms.

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strategies, strengths (ST), weaknesses (W) and size 9 (S): (1) Lipovitan. ST:
predates Red Bull in the energy drink industry and a major force in Japan. W:
heavily dependent in the Japanese market and inadequate brand strategy. S:
Taisho Pharmaceutical, which is the producer of Lipovitan, has sales of $2.3
billion in 2006 and has 5,191 as of last year; (2) Rockstar. ST: Edgy
advertising campaigns and has a variety of product offerings W: Not very
effective management and features of popular personalities as marketing
tactic is not gaining much exposure as originally expected;
(3) Go Fast! ST: They have other product offerings aside from their
energy drink and their sports orientation is strong. W: Not enough experience
in the industry; (4) Anheuser-Buschs 180. ST: They are prominent in the
United States. W: Their focus is not mainly on energy drink production S:
They currently have 12 breweries in the US; (5) Hansens Red and Monster
Energy Drink. ST: Edgy Packaging and strong sports sponsorship. W: Their
focus is not mainly on energy drink production. S: 290 employees with 348.9
million in 2005 revenues; (6) Chronic 187. ST: Hip-hop concentrated segment
market. W: Not much taste differentiation.
Red Bull genuinely defined and, then, seized the market. As a result,
the company continues to hold the surging and clear advantage. It knows that
the first mover edge is formidable, particularly when it is driven by real
experiences of people identifying with tangible results from the product. Red
Bull has resisted rolling out additional products in ancillary markets such as
apparel and the like, choosing to remain steadfast with one product. The only
exception to this is Red Bulls sugar-free, low-carb version, a smart move, in

If information is available.

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light of the Atkins craze, which shows no sign of abating (Miller & Morey
2004).
To this end, the future trends of the energy drink market will more
probably be initiated by Red Bull, as it has done so many times in the past.
The shift to a substitute product other than energy drinks is not an immediate
threat, as driven by the apparent lack of innovation anywhere near the
industry.

D. Distribution and Dealers

Red Bull has 250 distributors, in stark contrast with their industry
counterparts Go Fast!, who only has 35 (Helm, 2005). When it first came out
of the US market, they were distributing it free to parties, making them
unofficial hosts of said events. Then they invaded the club scene, and
distributed their product for free in clubs and other night spots in the US. Red
Bulls global launch was identified with alternative distribution channels like
local gas stations where their target market tended to hang out, especially in
the European region (Seybold & Lindstrom 2004). They had created and
dominated the energy drink category with marketing savvy, guerilla tactics and
unusual distribution methods.
The firms consistent strategy with distribution has been to open up a
market by securing unusual distribution channels. First piggybacking with
established distributors, then narrowing distribution by contacting smaller
distributors, then setting up warehouses and hiring college students to deliver
its products and finally, hiring hip locals who embody the spirit of Red Bull in
target areas to drive around in a Red Bull logoed car, hand out samples and

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educate consumers about the product (Lamb, McDaniel & Hair 2005). Overall,
this is what was known in business jargon as grassroots marketing 10.
The ability of the Red Bull brand to reach customers in their natural or
everyday environment has very bright future potentials. Since the brand has
more opportunity to offer a more personal interaction with the prospective
customer, customers will be more comfortable with the product and the brand
will have enhanced chances of grabbing more market share.
E. Suppliers
Caffeine and taurine are two of the most controversial ingredients of
the Red Bull energy drink, aside from glucuronolactone, sucrose, glucose,
acesulfame K, aspartame/sucralose and B-Group vitamins 11, all of which are
synthetically produced by pharmaceutical companies. With the power of
science as a potent tool, chemical compounds that form the basic ingredients
of the energy drink under analysis can be very expensive but more profitable
for the company who utilizes it. The pharmaceutical industry is forecasted to
experience an increased number of developments, through integration of
activities at various phases, laboratory automation for method development
and more effective experimental designs (Hara 2003). Thus, the stability of
supply for the Red Bull firm can be guaranteed in the years to come, with
production processes for such synthetically produced ingredients becoming
more and more cost effective, efficient and environmentally friendly.

F. Facilitators and Marketing Firms

10

Siegel, Coffey & Livingston (2004:167) defined the term as the catchall term that describes
methods and communication channels that fall outside traditional channels of paid
advertising, public relations or publicity and promotion.
11
http://www.redbull.com/#page=ProductPage.Ingredients

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Since grassroots marketing is Red Bulls concept of global distribution,

and not the significantly more expensive traditional distribution channels, Red
Bull cuts back on costs for this particular area of marketing. This is balanced
by the huge amount of company resources spent on product research and
development. The outlook for the availability of transportation services,
warehousing facilities and financial resources of the company is pretty
positive, with the abundance of vehicular means of moving goods to and from
nations and vacant local warehouses and the continued profitability of the
firm.

G. Publics
The sports sector and the medical profession present opportunities and
problems for the company, respectively. In the sports sector, because in an
increasingly health-conscious world where people are becoming sportsoriented, Red Bull stands better chances of sustaining market leadership with
this particular market segment. The medical profession has been questioning
the alleged benefits of Red Bull to its drinkers from day one, and they show
no signs of tapering off in the near future.
As for the sports sector, Red Bull has already started marketing their
products to them through a bevy of sports sponsorships. Red Bull is wellknown to sponsor events such as the Formula One racing, extreme sports,
snowboarding, basketball and motocross and has successfully become the
drink of choice for extreme sports fanatics. The medical profession has been
dealt with by Red Bull through a number of grassroots campaign which
educates people about the ingredients of the energy drink and busts myths

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about their taurine content being from bulls testicles and Red Bull causing
death if taken with alcohol.

PART II. MARKETING STRATEGY AUDIT

A. Business Mission
Since they are not publicly-held, Red Bull may have found it
unnecessary to declare a mission statement in their website. However,
various statements from Red Bull officials will lead an individual to believe that
the companys mission is to become the world leader in the provision of
energy drink to all walks of life and to become known as a firm who is
personally involved with its customers in an attempt to reach out to them and
make them more comfortable with the product. With regards to the feasibility
of the implicit business mission, it could be said that given the current
situation in the industry where no major player has yet overtaken Red Bull in
their global market leadership, the business mission is very reasonable.

B. Marketing Objectives and Goals

Lamb, McDaniel & Hair (2005:15) defined marketing objective as a
statement of what is to be accomplished through marketing activities. Again,
the marketing objectives of the company are not stated explicitly in any of the
resources available on the company, although gathering from the accessible
information regarding the leading energy drink manufacturer, marketing goals
and objectives must be stated clearly enough within the confines of the Red
Bull organization (or at the very least, the marketing department of the firm).
This is because marketing performance results show that their efforts at

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marketing the product worldwide are by far very successful and, at the same
time, highly talked about.
Taking from their current marketing activities, implied marketing
objective would be to reach all possible market segments with the use of the
least resources, thus the grassroots marketing approach. Given the
companys current position in the industry, their vast resources, marketing
ingenuity and the opportunities that lay ahead of them coming from the widely
untapped markets of the rest of the world yet unconquered (Japan being the
foremost target), their marketing goals and objectives of Red Bull GmbH are
seemingly quite appropriate.

C. Strategy
The low-key grassroots marketing strategy of Red Bull is evidently wellarticulated for its marketing team, resulting to success in their marketing
efforts. Their spot-on approach, wherein the products are distributed to the
places where the target market frequently hangs out (for example, gas
stations in Europe and clubs in the United States), catered first to a speciallytargeted niche market group rather than starting its brand life within a
community. Since the success of the strategy, they had correctly relied on it to
drive the products success.
Instead of depending on the traditional channels of TV and print media,
Red Bull chose to diversify its message and use direct marketing as its major
tool. This enabled the firm to constantly alter the message to fit the type of
audience with whom they were communicating (Seybold & Lindstrom 2004).
Their strategy is appropriate given that their core market are teens, who would

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obviously not be teens forever, so this ability to constantly alter their message
depending on the generation that they are dealing with is fitting for the energy
drink brand.

PART III. MARKETING ORGANIZATION AUDIT

A. Formal Structure
Jim Bailey is the Vice President of Red Bull Marketing for Canada only,
so this paper supposes that for every region, there is a corresponding key
employee that handles marketing. All marketing people of Red Bull have been
known to exercise good judgment when it comes to the business, as
evidenced by their successful marketing efforts. Therefore, it could be
sufficiently deduced that the top level marketing officials of the company,
would be given enough authority to ensure that customer satisfaction is
achieved every time a customer opens a bottle of Red Bull. Optimal structure
of each of Red Bulls marketing activities is likewise monitored from an
observers point of view, with each functional, product, segment, end-user and
geographical lines strategically placed into position to maximize organizational
profitability and minimize business costs and expenses.

B. Functional Efficiency
Communications and working relations within the Red Bull firm has so
far not been subject to media scrutiny, which potentially spells good
communications and working relations within the business organization. It is
clear in the Red Bulls case that the role of their brand manager which must

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interact very closely with many of the other organizations functions is being
done accordingly. Sensitivity to the hazards of interfering with the functional
efficiency of other departments is no substitute for formal systems to ensure
that the brand management function does not play havoc with existing control
and reporting systems though.
So Red Bull, even though they are an exemplary model of excellent
marketing, must still observe that a number of areas are especially vulnerable
to the enthusiasm of determined brand managers like what the company has
at present. The managers of Red Bull are, in the meantime, planning sales
volume, not profits, showing that they are striving for market leadership, and
not solely profit-oriented (Miller & Morey 2004). Emphasis on functional
efficiency should not make cross-functional collaborations difficult. But, it
should instigate a smooth flow of communication and working relations
between Red Bulls departments around the world.

C. Interface Efficiency
Currently, there are no problems and threats that present themselves in
the way of Red Bulls continued success in the global market. There is general
consensus between marketing, manufacturing, research and development,
purchasing, finance, accounting and the legal departments of the company
that they can continue leading the energy drink category by employing the
same techniques that put them on the map in the first place (Lamb, McDaniel
& Hair 2005).
Sales results have been incredible. In a new market, Red Bull generally
breaks even within the first three months and shows a profit after six months

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(Helm 2005). Sales team, together with marketing people, visit targeted onsite accounts like trendy nightclubs, bars, gas stations, colleges, gyms,
health-food stores and supermarkets and supplies them with a branded cooler
and other point-of-purchase items after an initial purchase of a few cases of
the said establishments.

PART IV. MARKETING SYSTEMS AUDIT

A. Marketing Information System
Sources of information such as personal contacts, feedbacks from
trade and from the sales force, internal store checks and monitoring of
competitors products can be exemplified in the marketing intelligence system
of Red Bull (Jacobs & Stone 2001). Crouch and Housden (2003) pointed out
that market intelligence systems should be designed using these two key
points: (1) the reporting system should be as straightforward as possible and
organized in such a way as to minimize the work involved in reporting; and (2)
the response mechanism to market intelligence must be good and known to
the individuals making reports.
This is what exactly characterizes the market intelligence system of
Red Bull and they additionally use the market reports provided to them by
outsourced firms in order to generate a marketing strategy which successfully
launches and establishes their products the world over (Helm 2005). Red Bull
concentrates on the provision of the data related to the market being targeted,
the result which is a well-placed marketing information system. These are
used to develop databases for the organization providing market data related
to actual and potential customers which, in turn, help management to monitor

Red Bull Marketing Audit

23

market activity and ascertain the organization's performance. Product

characteristics, pricing strategies, promotional approaches, advertising and
the sales effort, as well as the appropriate logistics operations, can be
determined in conjunction with segmentation, positioning and targeting
strategies.

B. Marketing Planning Systems

The marketing planning system of Red Bull is be an integral part of
their business plan, setting out an agenda to achieve business objectives
(Sandhusen 2000). The four processes of marketing planning are: (1)
analyzing the market; (2) setting objectives; (3) determining strategy; and (4)
formulating tactics (Hands, Ingram & Jerrard 2002). These are diligently
followed by the firm during the early stages of the companys existence when
they had to find the right market segment
wherein to sell their energy drinks. Since marketing planning takes place with
the four elements of the marketing mix, Red Bull initially studied these four
factors before venturing into the finalization of the actual marketing planning
process.
The physical distribution activities were then integrated into the
marketing planning and channel management to ensure the provision of the
physical distribution activities needed to support the marketing goals.
Additionally, Red Bull marketing planning systems deal with quality, technical
services, financing, and regulatory affairs, as well as many special needs
depending on the markets. Satisfaction of these needs and wants are all part
of a complete marketing plan. Marketing activities for the leading energy drink

Red Bull Marketing Audit

24

manufacturer has indeed become a modern applied science. They know and
apply it well, while it seems that other firms in the industry hardly realize it has
arrived on the scene. An approach to marketing that includes the whole
marketing channel is, therefore, the ultimate consideration, a lesson which
should be learned by not only rivals in the energy drink industry but other
players in other industries as well. The success of Red Bulls marketing
planning system was dependent on information gathering and analysis. The
employment of information and communication technology innovations are
essential aids in this campaign.

C. Marketing Control System

Commonly, firms do not publish their marketing control procedures and
Red Bull is no exception to the rule. Thus, the absence of any material on the
subject in any online or offline source can be evident. However, from
interviews of various Red Bull employees directly involved in marketing, it has
been found that control procedures are in place and enforceable within the
firm. They may not spend so much on marketing their products due to their
grassroots strategy, but they still are not lax or laid back in making sure that
marketing strategies are being carried out as planned and are serving the
benefit of the business organization. Red Bulls marketing control system
encompasses the marketing audit and the adjustment of objectives and
programs, or both. It includes the availability of information about marketing
situations and the power to alter parts of the marketing program. It also
consists of the adoption of plans, the laying down of standards and guides,

Red Bull Marketing Audit

25

and a review and analysis of performance to assess deviations and rectify

discrepant marketing actions and errors.
The energy drink manufacturers marketing control system further
encompasses the monitoring of marketing activities to see if plans are being
carried out; the analysis of marketing performance in terms of standards and
objectives; authority, force, or coercion to guide marketing to the achievement
of objectives; and constraining and regulating decisions and actions. Their
marketing-control system contains realistic standards against which marketing
performance can be assessed. It also includes marketing intelligence about
current levels of achievement. Present also are an assessment and
evaluation of marketing performance, recommendations for adjustments and
realignments of resources, standards, or both, and the power to institute
recommendations.

D. New-Product Development System

Red Bull has been known to completely not diversify into other product
lines and is likely to stay that way for the rest of its foreseeable business life,
unless the marketing people of Red Bull detects a critical and burning need to
do so. The only time that they diversified was when US schools have banned
their full-sugar energy drink which was the original Red Bull. As a result of
such a move from the state, Red Bull manufactured their sugar-free variant,
thereby, preventing a drastic loss of sales in the US market. Although they are
well-organized to gather, generate and screen new products, they do not take
the initiative to undertake such a venture.

Red Bull Marketing Audit

26

Sufficient resources went into the research and development of the

product itself and its packaging. Red Bulls sleek, silver and blue can shaped
like a bullet have been studied for its impact to consumers, which could be
said as successfully carried out. However, it seemed that Red Bulls
innovative culture had stopped evolving with time. They were now just content
with producing the original and the sugar-free variants and are focused on
expanding consumer base as of the moment. Adequate product and market
testing was carried out prior to Red Bulls global launch, but the same cannot
be said of present conditions, as there are no known products that Red Bull
GmbH will launch in the near future.

PART V. MARKETING PRODUCTIVITY AUDIT

A. Profitability Analysis
If one has to analyze the profitability scheme of Red Bull Energy Drink,
perhaps it can be safely said that it is in a very uncompromising situation. First
and foremost, the stiff competition have paved the way for the emergence of
many small time players (Helm 2005). With every bottled drink that aims to
steal the limelight nowadays, Red Bull should capitalize more on its creativity
and ingenuitythis is of course, in relation to advertising and marketing. The
company should never disregard that Coca Cola and Pepsi are still top
competitors (Helm 2005). More so, even if the two share equally different
components as with Red Bull, still, it is evident that the two continue to
partake into the market share. Meanwhile, the notion that energy drinks offers
no variety in taste is an important marketing aspect that the company should
take into full consideration (Laing 2005). In 2001, Pepsi had already released

Red Bull Marketing Audit

27

AMP Energy Drink (Amp Energy Drink n.d). It is the companys maiden
venture into the energy drink arena. Evidently, AMPs raison d etre is to
capitalize on Mountain Dews established image. The concept would be to
introduce something new, yet very familiar (Amp Energy Drink n.d).
Despite of such threat, Red Bull has not lost its grip in its most precious
territories. In the United States its market share garnered a total of 40%
(Dolan 2005). In UAE, many of its consumers remained loyal to the brand. By
virtue of religious mantras, in which alcohol is strictly prohibited, energy drinks
have found their special place in the heart of the said region (Goldie 2005).
While everything seems to operate smoothly, apparently, the abovementioned calls for a repositioning of the product. There is no doubt that Red
Bull has fully gained its edge when it comes to market distribution. But then
again, it would be better if the image it projects would go beyond being a
sports enthusiast. Continuous response to market changes and anticipation of
trends is, thus, a must.

B. Cost-Effectiveness Analysis
In order to gain more exposure, Red Bull has readily sponsored and
organized extreme sports events (Dolan 2005). The reason behind this is to
promote that Red Bull is really the kind of drink that has the kick in it.
However, the company does not seem to be content with sponsoring sportsrelated activities alone. Recently, it also ventured into buying sports team. The
New York Metro Stars was purchased by Red Bull founder Mr. Mateschitz (Ho
2006). The team soon changed its name to Red Bull. Mateschitz disclosed
that he has been spending around $300 million in sponsorships alone (Ho

Red Bull Marketing Audit

28

2006). This is equivalent to 1/3 of the companys annual expenditures. From

this perspective, it is apparent that too much has been spent on such
activities.
The act of producing sports events alone is very costly. The materials
that would be used are expensive. For example, in skateboarding alone, the
process of building man-made courses eats too much amount. In addition to
that, the company has to exert extra cash in buying protective equipments. In
worst case scenarios, an accident may occur. The responsibility then lies into
the hands of the organizers. In effect, it is still Red Bull who will have to
shoulder the medical expenses. The expenditures even increase since Red
Bull now has teams the world over to support. The uniforms and wages
incurred by coaches and players can add to the financial burden. In such
case, cost-cutting should be readily employed. Since a team has been
established, sponsorships for sports fest should be decreased. The money
that would be used in such activities can be utilized in other purposes that are
more directly productive for the company.

PART VI. MARKETING FUNCTION AUDIT

A. Products
A strategic plan in managing the existing product line of a company is,
perhaps, the most important part of its marketing strategy. In conducting such
an activity, it is necessary to consider the evaluation of the consumers of the
existing products being offered by the company, especially in relation to
competitors. The expected outcomes on sales, profits and market share
should also be considered alongside the actual outcomes on these areas

Red Bull Marketing Audit

29

(Claycamp & Wind 1976). In addition, the objectives surrounding the product
line of the company should be analyzed. The design of product lines is a
problem faced by companies that are trying to introduce a product to both new
and existing markets, as well as by companies that seek to diversify their
product lines. Yet, the product should correspond to what the customers want
(Dobson & Kalish 1988).
It has been established that Red Bull caters to a select market of male
teenagers and young people in their 20s. Red Bull has effectively reached to
this segment of the market through its various advertising campaigns,
featuring extreme sports. However, it appears that there is a need to expand
its product line to develop a product that will cater more to female young
people. Although the development of Red Bull sugar free has, in part,
addressed this concern; there is still an evident need to develop a similar
product that will cater more specifically to the female segment of the market.
This will also have a significant impact on the marketing campaigns of Red
Bull as it would have to feature females who are engaged in active lifestyle
and personally use the product. Offering different versions of the energy drink
can attract various segments of the markets, effectively making Red Bull the
market leader in most segments of the market.

B. Price
The concern of major companies is profitability, which can be
accomplished through the reduction of costs in producing the product and
setting the price such that returns are maximized. However, the traditional
economic theory of price is not always what motivates managers to set the

Red Bull Marketing Audit

30

price of their products. Sometimes, when a company has established its

integrity in the market, the price becomes secondary to customer loyalty and
demand stimulation (Monroe & Dela Bitta 1978). The pricing objective of Red
Bull is two-fold. They are geared toward setting the price that will set the
maximum returns. Management recognizes the need to effectively set the
price of the product. As such, the production costs are being kept at the
lowest reasonable possible level without sacrificing quality. A confounding
factor in setting price, however, is the cost of engaging in product research
and development. This cost is offset, however, by the savings gained in
employing grassroots marketing, instead of relying on more traditional
distribution channels. Through these factors, Red Bull can be offered at a
competitive price at the market.
Although there are energy drink competitors that offer lower prices,
Red Bull combats this action of competitors through effective demand
stimulation and the relentless campaign about the integrity of the product.
Integrity is the source of competitiveness of Red Bull as a product. Apart from
the price considerations, integrity meets the intangible needs of the
consumers such as image and feel (Clark & Fujimoto 1990). Through its
advertising, it communicates to its consumers the intangible benefits of Red
Bull in addition to the benefits to the body. These campaigns were undertaken
because of the recognition of management that the demand for this product is
elastic, which means that given limited resources of consumers, they can
easily forego buying Red Bull in favor of their basic needs.
C. Distribution

Red Bull Marketing Audit

31

Even if marketing strategies are excellent, without effective distribution

channels, consumers will not be able to get hold of the product, thus defeating
the purpose of marketing. Hence, it is necessary to establish an effective and
efficient network of distributors, dealers, agents and retailers. Red Bull has an
impeccable distribution network. In the United States alone, it was able to
capture 60% of the market of energy drinks. This is partly because of an
effective distribution network that includes 250 distributors dispersed from
east to west and north to south. Its major competitor, in contrast, has only
around 14% share, while minor competitors even enjoy lesser distribution.
Ever since its entry to the market, Red Bull has relied on direct distribution to
prospective consumers and promotion of its products in bars, clubs and
venues of extreme sports activities. It has also identified gas stations as a
venue for its distribution during its global launch (Seybold & Lindstrom 2004).
Its distribution strategy has been effective in introducing Red Bull to various
markets. More specifically, non-traditional distribution strategies worked best
in reaching to its target consumers.
This grassroots marketing strategy, however, does not work in the long
run. It would have to be supplemented with regular distribution channels. As
such, the establishment of contacts with retailers, dealers, and agents has
become good supplement to its marketing strategy. The distribution of Red
Bull should keep up with the trends created by globalization. Global
competitiveness can be ensured in implementing a multi-agent distribution
system. This system is characterized by the autonomy, pro-activeness, social
ability and emergence of various channels of distribution. This will ensure the

Red Bull Marketing Audit

32

effective distribution of the product according to the nuances and peculiarities

of the location targeted by the distributors (Kaihara 2001).

D. Advertising, Sales, Promotion, Publicity and Direct Marketing

Red Bull employs several advertising strategies in targeting its
prospective customers and building the image of the energy drink. Red Bulls
advertisements range from television ads such as the No Red Bull, No
Wings advertisement (Red Bull Advertisement 2007); sponsorship of sports
team such as the Red Bull Barako Basketball Team in the Philippines and its
recent investment in controlling the Soccer team Austrian Club SV Salzburg
(Grand Prix 2007). It also sponsors a yearly break-dance competition entitled
Red Bull BC One (2005), not to mention an Air Race (2007). Given these wide
range of promotional mileage that Red Bull is undertaking, it is no wonder that
it has gotten a large segment of the energy drink market. This wide range of
advertising strategies, the objectives of the company can be drawn. That is to
appeal to the youth sector of the society who loves adventure and an extreme
lifestyle. The intention is to present Red Bull as the energy drink of people
who are living on the edgepeople who are not mediocre but who put
passion behind what they do.
The spending on advertisement is huge, especially in the investment
on sports teams. By 2004, the company invested $600 million in advertising.
This constitutes 30% of Red Bulls total revenue (Dolan 2005). By investing in
sports team and extreme sports show, however, a larger segment of the
population is exposed to the product. For example, it would not need to pay a
larger number of television stations to advertise its productthose stations

Red Bull Marketing Audit

33

providing coverage of these sports will automatically advertise Red Bull,

whose brand is imprinted in the uniforms of the players or at the venue of the
sports events. Nonetheless, it is necessary for the company to study the most
effective media of advertisement to use. This way, it can cut back on
advertisement and instead use the savings to finance product research and
development and other similar equally worthy pursuits. This will entail serious
marketing study on the part of the company.

E. Sales Force
From being seen as a market-less product, Red Bull managed to sell
more than one million cans in 1997. By 1998, this number has grown to 300
million cans. The company has reported a sales record of US$1 Billion (Sauer
2001). By 2004, the number of cans sold has increased to 1.9 billion and the
profits reached US$2 Billion (Dolan 2005). When the company was just
starting under the leadership of Mateschitz, there was only one secretary and
six persons who made up its sales force (Dolan 2005). Because of its
marketing strategies, however, the sales force has grown dramatically. The
companys use of guerrilla marketing and direct distribution was so effective
that Red Bull was able to create its own market, despite of the earlier
research that it virtually did not have a market at the onset (Dolan 2005). Its
sales force consists of agents and dealers who coordinate with retail outfits.
There are also those who distribute the product directly to consumers
especially if there are sporting and other events sponsored by Red Bull. Red
Bull has also penetrated a great number of countries in the world today and
has setup its sales force in those countries. The rise of Red Bulls sales and

Red Bull Marketing Audit

34

exposure can be traced to its innovative marketing strategies coupled with an

effective distribution system. These two factors, however, would not have
increased the level of market share and profitability that Red Bull is enjoying if
there were no effective sales force that will complete the sale and deliver the
actual product to consumers. The sales force of Red Bull consists of people
who are also innovative and willing to stake their best in the delivery of the
sales. This also complements the marketing initiatives of the company.

Red Bull Marketing Audit

35

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