Marketing - Industry Market - Growth- Primary And Secondary Target Markets -Assessment Answer

Marketing Assignment

Assignment Task

The next stage of the marketing audit is for you to consider the market for your organisation and evaluate the opportunities and threats that exist for your chosen organisation. NB: if you have a number of markets it is a good idea to focus on just one.

Incorporating theoretical concepts into your discussion from chapters 2, 4, 5 and 6 (are these in relation to the new or the old version of the book) of the text, and with the use of other theoretical sources and secondary research, please discuss the following:

1. Briefly describe the industry market for your organisation and evaluate current trends in:

a. Growth

b. Profitability

c. Macro environment ( PESTLE factor)

2. Outline and examine the major market segments for your organisation and identify your primary and secondary target markets.

3. Discuss the level of involvement your primary segment is likely to have towards your organisation in terms of the decision making .

4. Describe the nature of competition in your industry. Explain and analyse your organisation’s place in the market by comparing and contrasting its strengths and weaknesses to your main competitor.

5. Taking into consideration the primary segment, their level of involvement and the competition, create a positioning map for the market place.

Introduction

According to McDonald & Dunbar (2013) marketing refers to "the communication between a company and the customers with the aim of selling its products." The company whose marketing is discussed is Red Bull Company which is an Australian company dealing with the production of energy drink. As such, this paper will focus on the effects of the macro-environments in which Red Bull works. Further, the Porter’s Five Forces are evaluated while establishing how good the market on energy drinks is. The Red Bull Company is one of the most popular energy drink provider globally. The company is privately owned, and is involved in the international market due to its distribution activities. The marketing of Red Bull was started in 1989, where the company was involved with the sponsorship of the racing called Formula One(Wedel, & Kamakura, 2000). This was the major marketing strategy for the company until the late 1990s when the company started getting involved in action sports, where it still takes part up to date. Some of the sports the company is involved with where it undertakes promotion activities include biking, cliff driving, BMX dirt jumping, as well as aerobatic racing. The organization, therefore, has an effective marketing strategy and is doing well as it is the leading organization in the industry.

• Red Bull Industry Market

Red Bull has continued to dominate in the chart showing the top brands in the market, with a market share of over 40%. The product was established in 1984, and was started in India in 2003(Wit, & Meyer, 2005). It has, however, been doing business on a lower level as compared to the Cola majors. It has, however, established various energy drinks into the Indian market. The industry is crowded by many other companies producing different types of energy drinks, but Red Bull is the leading brand, followed closely by Monster. As a result of the reduction in the demand of soda, energy drinks are an alternative to consumers, and the demand for it has considerably gone up. Red Bull enjoys a market share of 47% in the US and 50% in Germany (Roll, 2006). The product is seen to be doing extremely well in the industry, putting into consideration the fact that it is an Australian company.

Growth: Red Bull was introduced in the market in 1984, but has seen growth in an international level since. Red Bull was established into the US market in 1997, targeting the Americans as an alternative to both Coca Cola and Pepsi. The brand grew internationally due to the tired white collar employees appeal effect it had. This is due to the fact that most young employees were tired after working the entire week, and were looking for some enjoyment at night. The brand was identified for its glow to the night light in clubs, and the consumers would mix it with Vodka had gone to 300 million cans, and by the end of the following year, the brand has been sold in over 50 countries. By this time, the global sales had sored even higher, ranging between 600 million and one billion of cans. The 2000s saw Red Bull lead in the energy drink sector both in the US and in the United Kingdom(Wit, & Meyer, 2005). The brand, which is an import of Australia has grown into the United States market, and is available in all bars, convenience stores, as well as in nightclubs. The consumers of the product consider it effective as it assists them work better, play better, and it is also said to assist them in improving performance in the bedroom. Red Bull is now a product which is available in the global market, and is predicted to do well even in the future.

Profitability: In 2015, "Red Bull sold a total of 5.96 billion cans in the 169 countries in which it operates, this being an increase of 6% from the previous year" (Gerritsen et al., 2014). Turkey, South Africa, India, Germany and Poland were some of the countries where the market of the product was high. The energy drink market in Australia is competitive, and the company has been experiencing some problems in the past four years. It has, however, improved, seeing a profit of $1.2 billion, which is a major performance in the midst of the competitors including Coca Cola, which is currently stepping up. Red Bull has changed the profit trend that was taking a downward slide in the local market in 2015, and sales are predicted to rise in 2016(Roll, 2006). The improved performance called for a share of dividend in Australia of $11.5 million which is a rise from the dividends which were shared in the previous year of $1 million. As such, the profitability is estimated to improve in the coming years as the trend is estimated to continue.

Macro-environment (PESTLE factor): The macro-trend analysis of Red Bull can be considered by looking at different factors using PESTLE. These are:

• Demographic environment: The energy drink has been known to target the age group in the range of 18 to 34 years(Percy, 2016). The younger demographic has been identified as the one which opt for the sugar added flavor rather than the flavors which are bitter such as the coffee ones. As such, a huge number of the individuals in this age group consume the drink on a daily basis. Other than the young generation, the male population is known to prefer the energy drink to other drinks such as coffee. According to studies, the consumption of energy drinks is associated with masculinity, explaining why most of the consumers are male. The consumption of Red Bull, therefore, is similar to the population who consume alcoholic beverages (Gerritsen et al., 2014).
• Sociocultural Environment: The sociocultural environment calls for the consumption of products that have nutritional benefits. As such, this is a threat to the consumption of the energy drink. According to the Institute of Food Studies, nutrition is rated to be better than physical exercise. As such, eating healthy is preferred by some people as this is believed to have better results as compared to the consumption of energy drinks (Percy, 2016).
• Economic Environment: The energy drink economic environment has been improving since the Red Bull inception. Little activity was observed in the first years, but improvement was observed much later. In the late 2000s, however, the sales of the energy drinks declined particularly amongst the groups which were not doing well economically. The situation, however, changed as many people now view the energy drinks as a source that helps them maintain energy. This is especially the case for athletes, as well as other sports professionals. Further, individuals working in laboratories industries need the caffeinated boost which is important for energy boost after the long days at work.
• Regulatory Environment: Initially, the energy drinks were considered as beverages. Further, some manufacturers of the energy drinks labeled their products as convention foods, as well dietary supplements(McLoughlin, & Aaker, 2010).This was so as to avoid some of the regulations that were placed on the beverages by the administration on Foods and Drugs. This has since changed, as the federation is placing some regulations on the energy drinks, which is a challenge to the company. Additionally, the ingredients that are used in making the energy drinks will be regulated in the future.
• Technological Environment: The energy drink production is getting some constraints due to the patents that are supposed to protect information from both the competitors and the public. There is, however, a lot of information on the technological procedures which are used while producing the aluminum cans. In spite of aluminum being available, a lot of procedures are required to convert it to the end product. Further, the energy companies have to work more on the aluminum cans to make them into the favorable product.
• Natural environment: The beverage market is filled with companies that use aluminum in making the cans. On the global level, more than 100 billion cans are consumed. Aluminum is readily available and can also be recycled, but it is estimated that only 40% of the aluminum used in making cans can be recycled. Further, its continued use may result to the depletion of this material. The manufacturers of the beverages, therefore, establish that there are environmental factors which are related with the use of the material. The recycling process is not common among the companies as the benefits associated with the process are limited. As such, they do not concern themselves with the significance of recycling.

Red Bull major market segments and primary and secondary target markets

Since its inception, Red Bull has targeted a market segment of individuals between the ages of 18 and 34(McDonald, & Dunbar, 2013). Although all people are likely to be exhausted after work, only the young population is seen to be more vulnerable to the exhaustion that takes place on a daily basis. The population is mainly men, and particularly those that have interests of staying indoors, as well as the ones that love having fun and taking risks. The company was involved with sponsoring sport activities and hence selecting audiences who fit the target audience. This is evident from the type of advertisements that the company uses. These include the young, cool, as well as self-confident brand awareness done by the company. The extreme lifestyles of the target market are shown by the logo created on the exposure to these sports, and the extreme sports used. The brand also targets the working people due to the relaxation tendencies during the weekends, as well as in the evenings after work. These are mostly bachelors who do not stay at home, as well as newly married couples, and single people who do not stay at home. The primary market, however, includes the males, as well as the people involved in sports. Other than this group of people, the energy drink also targets the young females who also work and opt to use this drink rather than taking alcoholic beverages. This makes up part of the secondary segment of the market targeted by the company.

Involvement of the primary segment on organization in terms of the decision making

The primary segment affects the decision making of the company in various ways. In this case, the primary segment of Red Bull Company includes young males, as well as the athletes and the sports people (Koen, 2008). As such, one way the decision-making process is affected in the way the marketing techniques of the company are carried out. In this case, the marketing strategies must ensure that the primary segment is reached. As such, the decisions made on the promotional and advertising techniques must ensure that the young people are involved. In this case, the organization may be forced to use means such as the internet to reach these individuals. While deciding on the same, they have to put into consideration this factor. Additionally, the company has to target the athletes and the sports people. This is the reason why the promotion technique involves the use of sporting activities. As such, changing or advancing such systems will require that the primary market is considered. It is, therefore, important to consider the primary market segment before making decisions concerning the matters affecting them. This applies not only in promotion, but in other sectors such as introduction of new products, as well as the advancement of the product (Gerritsen et al., 2014). This is important as the needs of the primary market, as well as their interests have to be considered so as to ensure this segment is maintained.

The nature of competition in the industry

The energy drink market is an industry which has a lot of well-established rival companies. Unlike the Coca Cola and Pepsi rivalry, this industry is more established. This can be attributed to styles, formulas, as well as tastes that are many and different between different companies. The competitors of Red Bull include Monster Energy and Rockstar Inc. Monster Energy is, however, the major competitor of Red Bull, their slogan “unleash the monster” being an understatement of how powerful their products are. In spite of the Red Bull Company being the leader in the energy drink industry, the Monster follows closely, producing 34 different flavors of the energy drinks. The products are also sold in over 53 countries, and all of which are doing well in the business. Additionally, the products that are produced by Monster contain more sugar, hence appealing even to the older generation. However, in spite of all the benefits that are brought by the Monster, Red Bull is still the leader in the industry. This is due to the competitive advantage on its part. These include the fact that Red Bull already enjoys most of the target market since in addition to the drink being unique and having high value; the pricing is similar to that of the competitors. As such, the company offers high energy products at affordable prices. Red Bull is also doing better than the Monster due to the fact that the brand is already established in the market. As such, the consumers are more versed with the products.

Positioning map for the market place

A positioning map in the energy drink industry establishes the high percentage of the first two firms, being Red Bull and Monster Company(Gerritsen et al., 2014). These companies are then followed by far by the 5-hour energy, Rockstar, and AMP which are the third, fourth and the fifth in the level of market share respectively. Below is the map which shows the part of the market which is run by each respective company in the energy drink industry. The map shows the positioning of the top five firms.