...BUS 470 Case 5 – Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Porter’s five-forces model reveals that the overall alternative beverage industry attractiveness is high. Some beverage companies, such as PepsiCo and Coca-Cola, have mastered the art of brand building in the alternative beverage market and have been rewarded with rapid growth rates. The rising population of health conscious consumers is increasingly leaning towards alternative beverages that are believed to offer greater health benefits. The strongest competitive force, or most important to strategy formulation, is the threat of entry of new competitors. Competitive pressure from rival sellers is high in the alternative beverage industry. The number of brands competing in sports drinks, energy drinks, and vitamin-enhanced beverage segments of the alternative beverage industry continue to grow each year. Both large and small vendors are launching new products and fighting for minimal retail shelf space. More and more consumers are moving away from traditional soft drinks to healthier alternative drinks. Demand is expected to grow worldwide as consumer purchasing power increases. Another strong competitive force is buyer bargaining power. Convenience stores and grocery stores have substantial leverage in negotiating pricing and slotting fees with alternative beverage producers due to the large quantity of their purchase. Newer brands are very vulnerable to buyer power because...
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...Case Discussion: Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Assignment Questions: 1. What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain. Global beverages companies like Coca Cola had relied on those beverages to sustain volume growth in mature markets where consumers were reducing their consumption of soft drinks. These companies wanted to expand the market for alternative beverages by introducing new drinks into emerging markets. Beverage producers made numerous attempts to increase the size of the market for those types of beverages by growing product lines and increasing sales and market share. They were faced with criticism of alternative beverages as presenting health risks or not yielding the advertised results. Rapid growth in the market and premium prices/high margins made the alternative beverage market an important part of beverage company strategy. The economic characteristic of the alternative beverage segment if the industry is differ from that of other beverage categories. Alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juices. The market started out with low competition, however that is rapidly changing as many new product lines enter and profit...
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...Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Case Discussion: Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages Assignment Questions: 1. What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain. Global beverages companies like Coca Cola had relied on those beverages to sustain volume growth in mature markets where consumers were reducing their consumption of soft drinks. These companies wanted to expand the market for alternative beverages by introducing new drinks into emerging markets. Beverage producers made numerous attempts to increase the size of the market for those types of beverages by growing product lines and increasing sales and market share. They were faced with criticism of alternative beverages as presenting health risks or not yielding the advertised results. Rapid growth in the market and premium prices/high margins made the alternative beverage market an important part of beverage company strategy. The economic characteristic of the alternative beverage segment if the industry is differ from that of other beverage categories. Alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juices. The market started out with low competition...
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...Some beverage companies, such as PepsiCo and Coca-Cola, have mastered the art of brand building in the alternative beverage market and have been rewarded with rapid growth rates. The rising population of health conscious consumers is increasingly leaning towards alternative beverages that are believed to offer greater health benefits. The strongest competitive force, or most important to strategy formulation, is the threat of entry of new competitors. Competitive pressure from rival sellers is high in the alternative beverage industry. The number of brands competing in sports drinks, energy drinks, and vitamin-enhanced beverage segments of the alternative beverage industry continue to grow each year. Both large and small vendors are launching new products and fighting for minimal retail shelf space. More and more consumers are moving away from traditional soft drinks to healthier alternative drinks. Demand is expected to grow worldwide as consumer purchasing power increases. Another strong competitive force is buyer bargaining power. Convenience stores and grocery stores have substantial leverage in negotiating pricing and slotting fees with alternative beverage producers due to the large quantity of their purchase. Newer brands are very vulnerable to buyer power because of limited space on store shelves. Top brands like Red Bull are almost always guaranteed space. This competitive force does not affect Coca-Cola or PepsiCo as much due to the variety of beverages the...
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...Chapter 9 Quiz | Question 1 | | 1 / 1 point | Integrative social contracts theory maintains that Question options: | there is no such thing as "moral free space"�all ethical standards are determined by societal norms, and individuals have an implied social contract to live up to these standards. | | few nations or cultures have common moral agreement on what is ethically right and wrong. | | there should be no absolute limits put on what actions and behaviors fall inside the boundaries of what is ethically or morally right and which actions/behaviors fall outside. | | "first-order" universal ethical norms take precedence over "second-order" local ethical norms. | | each country/culture/society has commonly held views about what constitutes ethically appropriate actions/behaviors; these common standards of what is ethical and what is not combine to form a "social contract" that all individuals in that country/culture/society are obligated to observe. | Question 2 | | 1 / 1 point | Which one of the following is not a part of the business case for why companies should act in a socially responsible manner? Question options: | Every business has a moral duty to be a good corporate citizen. | | Acting in a socially responsible manner reduces the risk of reputation-damaging incidents. | | Acting in a socially responsible manner is in the overall best interest of shareholders. | | To the extent that a company's socially responsible behavior wins...
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...Rajarjun Reddy Gummi Project Proposal Prepared for: International Marketing ENERGY DRINK ENERGY DRINK Prepared by: Rajarjun Reddy Gummi DATE \@ "d MMMM y" 10 June 2015 Student ID: S00900869 EXECUTIVE SUMMARY Objective To launch the newly introduced energy drink into the massive market of United Kingdom. Goals To capture maximum market share in the energy drink category in the least given time and earn customer loyalty with a repetitive positive brand re-call value. Solution Launch the product nation wide with a huge marketing strategy but at the same time keeping the values of budget and establishing a brand re-call value. Project Outline The following document has been prepared for the International Marketing course. It focuses on introducing a new product into the market of the United Kingdom. The product is the GRAVITY energy drink. This drink directly competes with RedBull and Lucozade. In the very beginning, I have mentioned both the vision and the mission statement. The product will be introduced into the market soon and the marketing strategies have been prepared for it to penetrate into this massively established market with established players. The document isGRAVITY ENERGY DRINK GRAVITY ENERGY DRINK divided into various parts as it explains about the product and the market respective to the present scenario. It focuses on the marketing mix, the strengths and the weakness, the entry mode, the distribution channel, marketing strategy, product positioning...
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...Case Study 11.1 Red Bull: The global market leader in energy drinks is considering further market expansion November 16th, 2015 Executive Summary Red Bull, an original in the energy drink market, was founded in 1984 by marketing guru Dietrich Mateschitz and formula developer Chaleo Yoovidhya. The product is often used for boosting energy, increasing focus, and as a mixer for alcoholic drinks. Red Bull is well recognised for its extreme marketing strategies. For example, Red Bull has a “Mobile Energy Team,” which is largely made up of university students. The Mobile Energy Team regularly travels from University to University to promote Red Bull and provide samples of the product. A second example of Red Bull’s marketing strategy is their support for extreme sporting events, for example; Nascar driving. However, with the increase of new entrants in the functional drink market, Red Bull’s market share has decreased. This decrease leads straight into the problem statement; What strategy(ies) can Red Bull, the global market leader, use to further expand into current and emerging markets within the next three years in order to increase market share and sales? Several symptoms from the case where used to create an Industry Competitive analysis, a Fishbone analysis, and a SWOT analysis. Ultimately, after evaluating the Industry Competitive analysis, the Fishbone analysis, and the SWOT analysis, three alternatives were chosen to be further explored. These three alternatives...
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...Environmental Analysis Who hasn’t heard of the energy drink known as Red Bull? I’m sure just about everyone who goes to Valdosta State University sure has! Red Bull is a type of energy drink aimed to give individuals that extra boost of energy that they are lacking. Taking a closer look into this product, there are quite a few environmental forces that add up together to make this product a huge success. The first of these is the sociocultural forces, these forces focus on people’s demographic characteristics, cultural values, and consumerism. Red Bull’s marketing scheme is aimed at appealing to the extreme sports athletes, adrenaline junkies, and fast-paced individuals in today’s society. This drink is loaded with energy boosting caffeine to make anyone’s day go from boring to booming. Although Red Bull is mainly aimed towards marketing to the healthier individuals, it is actually full of sugar and/or chemicals depending on the type of Red Bull that is consumed. To put this into perspective a regular can of Red Bull has 27 grams of sugar which is about equal to six teaspoons of sugar in just one can (Healthy, 2010)! Looking at the political, legal, and regulatory aspects of this environmental analysis on Red Bull, we was discovered that throughout the past couple decades many countries and legislators have actually tried (and some have been successful) to ban not only Red Bull, but also energy drinks in general due to the adverse side effects, high amounts of caffeine...
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...Mateschitz discovered that a drink called Krating Daeng helped cure his jet lag. After some research, he contacted the owner ChaleoYoovidhya, a self-made Thai billionaire who introduced Krating Daeng to the world in 1976 to strike a business deal to sell the drink in Europe. Krating Daeng, which means “Red Bull” in English, was inspired by the tonic drink Lipovitan of Japan, with prime ingredient as Taurine, and was popular among Thai truck drivers and labourers. After agreeing to the terms, Red Bull GmbH was founded by each partner investing $500,000 of savings and taking a stake in the new company. Chaleo and Dietrich each held a 49% share of the new company and gave the remaining 2% to Chaleo's son Chalerm, but it was agreed that Mateschitz would run the company. The product was initially launched in 1987 in Austria as a carbonated version. Today, Red Bull is the most popular energy drink in the world in terms of market share selling over 5.2 Billion cans worldwide in 2012. 2. Red Bull in India The Red Bull brand came to India in 2003 and has been a pioneer in the energy drinks segment in the country. Traditionally, energy drinks have not been very popular in India. Products such as Glucose powders (Glucon-D) were the closest products to energy drink that the Indian consumers came to during the 80’s and 90’s. However, Red Bull has created its space in the market as Indian consumers have gradually acquired the taste and concept of energy drinks. The brand has evolved over...
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...Chaleo Yoovidhy. 2) In 1982, Dietrich Mateschitz and Yoovidhya decided to start an energy drink company together. Each contributed approximate $500,000 capital 3) Johannes Kastner (who was Mateschitz friend) came up with the slogan "Red Bull- gives you wings" 4) Roman Rauch, the leading soft drink bottler in Austria, agreed to produce the drink. All production is currently done in Austria 5) Mateschitz founded everything with outside capital 6) When it expended to Germany, Mateschitz could not get enough aluminum to produce the cans and sales dropped fast. 7) Red Bull's first marketing trials failed miserably. 8) In 1995 Red Bull hit Britain. In 1997 it expanded to USA, starting in California. They hired students to drive around in liveried Minis with a Red Bull can on top 9) In most country and regions, Red Bull was the first energy drinks brand and, as a result, is the leading brand in almost all regions where it is sold. 10) In 2010, 4.2 billion cans sold worldwide 11) Outstanding markets include: Turkey, Japan, Brazil, Germany, and USA 12) Employed 758 people in 161 countries 13) Subsidiaries: Europe: Germany, Switzerland, Ireland, Italy, and Netherlands Outside Europe: Australia, NZ, and UAE 14) Red Bulll targets young adults (16-29), young urban professionals, post secondary students, and club goers. The target market also includes truck drivers since they need an energy boost before or while hitting the road. 15) Red Bull threw the traditional marketing...
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...The Competitive World of Energy Drinks Teaching about competition and everything competition stands for is different from what the teaching of the Bible. Competition is mostly about two or more people going against each other; just to see who is better. People going against each other are not the right thing to do. God wants people to love each other; not go against one another. Force of change and critical success factors are all included in industries. Competitors are one of the main things industries have to keep an eye one. Industries must also know how to have an advantage over their competitor. Industries should know weather- seller buyer relationships correspond a small or significant competitive factors which depends on (1) whether some of many buyers haves sufficient bargaining leverage to obtain price concessions and other favorable terms, and (2) the extent to which buyers are price sensitive (Gamble,J., and Thompson,2011,p.42). Companies in one industry are vulnerable to competitive pressure from the actions of companies in another industry whenever buyers view the products of the two industries as good substitutes. (Gamble,J., and Thompson, 2011, p.44).Industries have to know whether the suppliers of industry members represent a weak or strong competitive force depend on the degree to which suppliers have sufficient bargaining power to influence the terms and conditions of supply in their favor (Gamble,J., and Thompson, 2011, p.44, p. 46). It can be...
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...Patrick Davis Red Bull 11/1/2012 Executive Summary Red Bull makes a premium energy drink for students, drivers, clubbers, business people, and athletes around the world to revitalize their bodies and minds. Problem: Red Bull, the leader in the energy drink sector of the soft drinks market, has seen its market share drop from 75% in 1998 to 47% in 2005. For the first time in the young energy drink sector, competitors have developed a legitimate share of the market: Hansen Natural’s Monster with an18% share and Rock Star with a 16% share. What actions need to be taken in order for Red Bull to solidify its market leader position? Answer: Red Bull should create a line extension offering either a diet drink to appeal to the recent trend of health conscious consumers or a new flavor while also changing their price point to be more sensitive to the consumer. By doing this, it will allow Red Bull to fight its competition in a very similar fashion to how they began to lose their market share (competitive pricing and a variety of options). Rationale: Red Bull has the strongest brand awareness in the energy drink segment which provides instant credibility to any line extension they may come out with. Red Bull has the extensive distribution network to make sure the product reaches the consumer no matter where they are. Market trends are currently in Red Bull’s favor as they show the customer wants options; giving Red Bull the perfect opportunity to develop a new product. Red...
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...Red Bull is an Austria-based company started in 1987 by Dietrich Mateschitz that sells one product: an energy drink containing taurine (an amino acid) that’s sold in a slim, silver-colored 8.3-ounce can. The drink has been an enormous hit with the company’s target youth segment around the globe. For the year 2001, Red Bull boasted sales of $51 million in the United States alone and captured 70% of the energy-drink market worldwide. From Stanford University in California to the beaches of Australia and Thailand, Red Bull has managed to maintain its hip, cool image, with virtually no mass-market advertising. However, today, due to certain health issues and the growth in competitors in the market, several doubts and issues have come across for Red Bull such as Whether Red Bull is able to maintain its lead and its point of differences or the brand may simply lost its edge and become “slate”, Whether the concern of health and bloggers might have a huge negative impact on Red Bull, Whether Red Bull’s target audience move on as it ages is an issue due to its limited product line, and so on. The matter of maintain a company lead in the market is always present as same as for its point of differences in products. In the case of Red Bull, according to recent records of energy drinks product companies in 2015, Red Bull owned 60% to 70% market shares which means globally Red Bull is one of top brands, establishing over 167 countries with approximately 5 million cans selling per year in...
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...their consumption of carbonated soft drinks. • Coca-Cola, PepsiCo, and other beverage companies were intent on expanding the market for alternative beverages by introducing energy drinks, sports drinks, and vitamin drinks in more and more emerging international markets. • Beverage producers had made various attempts at increasing the size of the market for alternative beverages by extending existing product lines and developing altogether new products. • Expanding the market for alternatives beverages and increasing sales and market share, beverage producers also were forced to content with criticism from some that energy drinks, energy shots, and relaxation drinks presented health risks for consumers and that some producers’ strategies promoted reckless behavior, the primary concern of most producers of energy drinks, sports drinks, and vitamin-enhanced beverages was how to best improve their competitive standing in the market place. • Rapid growth in the category, coupled with premium prices and high profit margins made alternative beverages an important part of beverage companies’ lineup of brands. (b) How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain. The alternative beverage segment help companies to sustain volume growth in mature markets where consumers were reducing their consumption of carbonated soft drinks. Also the alternative beverage industry...
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...market share belonged to carbonated soft drinks, 29,2% to bottled water, 12,4% to fruit beverages, and the rest to alternative beverages. * Consumers were reducing their consumption of carbonated soft drinks, with a growth of – 2,3% in 2009. Consumer preferences have shifted. * The global growth of alternative beverages grew from 2005 to 2009 from $ 27,7 billion to $ 40,2 billion, with a projected value of $ 53,3 in 2014. * The $ value global market growth for alternative beverages grew at a 9,8 % annually between 2005 and 2009, and has a forecasted growth rate of 6,7 % between 2010 and 2014. * Of the alternative beverages market, the USA has 42,3 % of the share, Asia- Pacific has 31,5 %, and Europe has 22,2 % of the share. * In the US, sports drinks accounted for almost 60 % of alternative beverages sales, while vitamin- enriched drinks and energy drinks accounted for about 23 % and 18 % of 2009 alternative beverage sales. * Saturation rate for all types of beverages was high in developed countries. * Market maturity and poor economic conditions caused the US beverage industry to decline by 2,3 % in 2008 and by 3,1 % in 2009. * The entering of new geographic areas, the steady growth of the purchasing power of consumers in developing countries, and the development of new types of beverages continue to create a demand for beverages. * Industry analysts believe that carbonated soft drinks will continue to remain the most consumed...
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