Success Story Of Red Bull: Micro And Macro Factors Analysis

Micro Factors Analysis

Marketing is all about communication and creating a good impression amongst the general population. The concept is to trigger all the emotions and create brand recognition so that potential customers become actual customers and existing customers become loyal supporters. This is how branding is done where brand loyalty is of the utmost importance. There was a time when red bull meant an actual animal red bull or the bullfighting in Spain. It all changed in 1987 with the Austria-based company which started as an energy drink REDBULL. The infamous tagline “Red Bull gives you wings” along with their transformation of not only serving energy drinks but sponsoring and organizing sports events. Starting from Red Bull extreme sports to sponsoring small tournaments or teams they have done it all. The report will dive deep into the success of the brand and provide a rough idea of the micro and macro factors that affect the company. The report will also produce a SWOT analysis for showing the strengths and weaknesses of the company along with a TOWS analysis that will recommend strategies.

Micro factors that have a positive or negative effect on the brand.

Customers

At any given point in time, the customers are always an important factor when it comes to the factors that affect an organization. The value of the brand grows as the demand for the product generates volumes of the product. They not only cater to normal customers but have a share of 43% in terms of sports energy drinks as of 2020. As of now when it comes to the always growing customer base Red Bull is always positively affected by this factor.

Suppliers

When it comes to their suppliers they have a web connection of suppliers as well as plans for contingency in place. A brand this big has the best supply chain so logistics will never be an issue. The suppliers on becoming exclusive Red Bull suppliers can make a constant profit and growth for them so it benefits them from supplying Red Bull hence both the sides maintain a positive relationship as both will benefit.

Competition

When it comes to energy drinks or sports energy drinks they have a fierce rivalry and the competition is aggressive. Gatorade and Monster are their most fierce competitors and they indeed look for the same sponsorships. However, with the uniqueness of not only being a sports drink Red Bull also has complete events which are funded and organized by theme such as extreme sports (Singer & Chi, 2019). At the same time, many sports such as Formula 1 also has Red Bull sponsored teams hence due to publicity and variation in projects other competitors are lagging hence this factor has a very minimal effect on their business (Miles?Chan et al., 2015).

Since their inception, they have always been the company that always made a difference. Their creative add and constant innovation towards their business venture and constant desire to grow created a good image that expert public relations maintained throughout the period so far. The heritage of the company the culture that allows them to work in harmony has always been a positive factor that helps them grow.

Positive Effects Of Micro Factors

Macro factors have a positive or negative effect on the brand.

Demographic

Demographic factors have no effect on the brand as this is one such product that has no gender, age, or race restrictions their customer base has everyone in hence the product is meant for everyone, however, the age group that can be considered as the youth have relatively more consumption the fact that no demographic factors create restriction will always remain to be a positive factor. However, during the pandemic, the demographic factors had a negative impact as the pandemic affected all age groups and gender the income level of customers or potential customers reduced massively (Arslan). With sickness increasing the supply chain in many areas was broken as people were not willing to take the risk of working outside for long hours and factory workers avoided crowd hence production was affected.

Economical

The economical factor that affects the performance of the company is first and most important sales. As per their official data, they sold 7.9 billion cans approx. in the year 2020 with their annual revenue close to 6.3 billion dollars. And the growth of 4% is a show of economical strength. However at the peak of the pandemic when all outdoor activities especially all kinds of indoor, as well as outdoor sports activities, were stopped they suffered a huge loss from lack of advertising, major events, and sponsorships. Their revenue declined massively.

Natural

When it comes to the environmental factors that affect the business the first aspect that comes to mind is CSR. They have managed to achieve a 76% on the current global ranking and ESG analysis. Their wings for life initiative which is a spinal cord research center has also raised some funds aimed at helping society (Quincey, 2016). Eco-friendly steps have set up a different method of operations to reduce fuel consumption and air pollution to a great degree. They also use 100% aluminum cans which are completely recyclable hence in these criteria they have a positive impact on business.  

Political

When the company has a majority market share and has a majority market share globally they are expected to be affected by the political aspects. One of the political aspects that affect the company and puts a lot of stress is the government policies. They have business in over 171 countries globally all of them have various laws and policies along with guidelines regarding business, labor laws, and all other factors, and all of these are to be followed. So to control and maintain all the legal procedures is a demanding task.

Technological

One of their biggest technological innovation and breakthrough was Formula 1. They have produced plenty of formula 1 cars and recently the RBF1 Aston Martin along with Honda has been successful in competing with Mercedes Benz and Ferrari. Both the brands Red Bull and Honda had a victory and this can be a technological benefit factor. In 2018 in the field of technology they had opened an institute dedicated to innovation and they have promoted females in the tech industry so that they can participate equally and grow this has proven to be an effective factor as this has created a positive brand image.

Negative Effects of Micro Factors

Cultural

When it comes to the cultural factors there is no negative impact as the brand has a strong culture and with a majority of their target audience being the youth of the modern generation who have cultural flexibility this aspect stands as an advantage for the brand. However in terms of social factors some of their executives were seriously passing racist comments about the African nations and middle eastern, the company is extremely strict against racism and they were immediately terminated but the damage had been done and during that period the brand suffered losses temporarily (Ahmad, Musa & Harun, 2016).

Red Bull SWOT analysis table

Market dominance

When it comes to the energy drink sector they are the market leaders with a sale of 7.5 billion cans in a single year showing the world their domination over the market.

Rapid sales

Their sales growth has always been significant and fast. The most notable would be 2019 when the sales increased by 37% in India, 30% in Brazil, a massive 25% in Africa, 12% in Europe, and 9% in the US (GURL, 2017. This led to massive revenue generation that led to top performance on an overall basis.

Intensive marketing

Buzz marketing specialist the brand is always involved in extreme marketing such as social media posts and campaigns with heavy sports sponsorship and being one of the top teams in Formula 1 their marketing is always sharp (Reibstein, 2015).

Global presence

The brand is not only powerful and has a solid recognition in a handful of nations but wherever they operate they have the best and the strongest brand presence.

Icon of the youth

Their entire branding, marketing, and events are always revolving around the youth who at any given point of time are more willing to participate and spend.

Lack of variety

When it comes to the product there is no variation, just one product that is an energy drink.

Unhealthy product

At the end of the day it does contain a massive amount of sugar and other unhealthy stuff hence consumers are moving away from it (Wesnes et al., 2017).

Expensive

They have positioned their product as a premium product meaning they have lost middle class and lower class potential customers which are the majority population.

Focus on emerging markets

They have been dominating in the US and Europe market however they must focus on the new merging markets of Asia, Africa, and Latin America.

Healthy products

By research and development, they can aim to produce healthier products that can capture another segment of customers.

Complete sports involvement

With years of experience and brand build-up, they should commit towards all the areas of sport for example Red Bull formula 1 can be more concentrated to be the best.

They can most certainly extend their product line up further to offer the customers a more wide variety of flavors in their product.

Regulations

Countries aiming at health-conscious society may impose tougher regulations which may prevent many products or practices.

Macro Factors Analysis

Growing health consciousness

Society is becoming more and more health-conscious and the demand for the product may fall in the distant future.

Stiff competition

Other than Monster, Red Bull is facing hard competition from much smaller brands that have managed to capture the market by providing cheaper energy drinks.

Looming global recession

The global economy has taken a dip and therefore expensive items may not be sold as per the brand's expectation and people will prioritize their spending.

Global pandemic

Pandemic has reduced overall productions, sales as well as demand for the product.

Burgeoning costs

The raw materials price has been constantly increasing hence marketing and operations cost has increased as well resulting in heavier expenses.

Weakness threat strategies are to produce more health-conscious products. Lack of variety of products along with the weakness that they produce not so healthy beverage this can be one of their strategies to improve on it. Another threat and weakness can be eliminated by producing cheaper variations. Having a more affordable product would make more sales and overall growth (Brownbill, Miller & Braunack?Mayer, 2018).

The strength of the brand can be used to eliminate or prepare based on the threats. Use their strong brand recognition and advertising to change the perception of the population towards the fact that they are not producing unhealthy stuff (Cornil, Chandon, & Krishna, 2017). They can use every resource that they have to add more diversification to the market.

Creating a more specific development and increased involvement in the sports industry. They can invest more in their Formula 1 department and at the same time, more involvement in other sporting industries is something they can do to expand (Kostelijk & Alsem, 2020). One of their weaknesses is that they do not have any kind of variation in their products that happens to be a threat as well hence adding more variation in their products can eliminate the threat and remove the weakness.

Sports sponsorship can be increased that will increase their marketing and branding will have a positive effect. Their strengths of brand presence and financial capital can be used to expand to more markets that will add diversification to the customer base. They can expand to Africa, the Asian region, and the Middle East.

Conclusion 

It can be concluded that every brand has its fair share of strengths and flaws and the concept is that the appropriate management tools and frameworks are to be used to extract these micro and macro factors that affect the business. Then the brand is to plan and manage strategies that can effectively resolve the challenges. Red Bull has been the perfect company however the time for change is a must and some of the above-mentioned strategies can be the basic skeleton based on which they can execute ideas to improve.

Reference 

Ahmad, N. S., Musa, R., & Harun, M. H. M. (2016). The impact of social media content marketing (SMCM) towards brand health. Procedia Economics and Finance, 37, 331-336.

Arslan, M. Redbull: Dominating The Energy Drink Industry.

Brownbill, A. L., Miller, C. L., & Braunack?Mayer, A. J. (2018). The marketing of sugar?sweetened beverages to young people on Facebook. Australian and New Zealand journal of public health, 42(4), 354-360.

Cornil, Y., Chandon, P., & Krishna, A. (2017). Does Red Bull give wings to vodka? Placebo effects of marketing labels on perceived intoxication and risky attitudes and behaviors. Journal of Consumer Psychology, 27(4), 456-465.

GURL, E. (2017). SWOT analysis: A theoretical review.

Kostelijk, E., & Alsem, K. J. (2020). Brand positioning: Connecting marketing strategy and communications. Routledge.

Miles?Chan, J. L., Charrière, N., Grasser, E. K., Montani, J. P., & Dulloo, A. G. (2015). The blood pressure?elevating effect of the Red Bull energy drink is mimicked by caffeine but through different hemodynamic pathways. Physiological reports, 3(2), e12290.

Quincey, A. J. (2016). Red Bull: The Wiiings Migration.

Reibstein, D. J. (2015). Closing the gap between marketing and finance: The link to driving wise marketing investment. NIM Marketing Intelligence Review, 7(1), 22-27.

Sarsby, A. (2016). SWOT analysis. Lulu. com.

Singer, D., & Chi, J. (2019). The keys to eSports marketing: Don’t get “ganked”. Mckinsey &Co.

Wesnes, K. A., Brooker, H., Watson, A. W., Bal, W., & Okello, E. (2017). Effects of the Red Bull energy drink on cognitive function and mood in healthy young volunteers. Journal of Psychopharmacology, 31(2), 211-221.