Brand Audit Report Essay Example
Brand Audit Report Essay Example

Brand Audit Report Essay Example

Available Only on StudyHippo
  • Pages: 10 (2593 words)
  • Published: August 29, 2016
  • Type: Case Study
View Entire Sample
Text preview

Red Bull's success is attributed to its focus on the Red Bull drink and its sugar-free variant. The company's strategy involves building a strong brand image through sponsorship of major events and emphasizing its core strengths. Leveraging its powerful international brand, Red Bull products gain significant recognition even before entering new global markets. The brand has established a natural connection with young people nationwide who appreciate the product's key benefits. In addition, careful selection of appropriate distribution channels and creating a brand image centered around extreme events and high-profile sports have played a crucial role in swiftly securing a leading market position.

The market for non-alcoholic drinks in the energy and stimulant category has experienced significant growth and increased competition. However, prices for these beverages remain high as consumers are willing to pay a premium for th

...

e convenience of single-serve options. This sector is highly profitable due to individuals who have limited time but disposable income, making functionality crucial. To maintain their dominance, Red Bull and GSK (Lucozade), market leaders, have introduced new flavors, sugar-free choices, and unique bottle designs. As a result, these companies have established barriers to entry that restrict competition from other firms in the energy market.

Both the Energy drink market and the non-alcoholic beverage market are competitors because consumers use energy drinks for different purposes, such as sports and other activities. The demand for this market is affected by external factors like the increasing popularity of fitness lifestyles and gym membership.

There are many potential future options for the brand's growth, such as diversifying products, changing flavors, making special editions, and offering variations with different level

View entire sample
Join StudyHippo to see entire essay

of caffeine. Additionally, targeting older adults and individuals looking for rejuvenation and stimulation from a drink could be a profitable strategy. However, this would require adjusting advertising strategies as most energy drinks currently focus on the 18-25 age group.

1.0 Introduction

My research will primarily focus on the UK sports and energy drinks market. However, it is important to consider the broader soft drinks market as these beverages now face competition from other types of drinks. Additionally, sports and energy drinks are no longer exclusively used for sports but have become popular mixers for alcoholic beverages and are also consumed as regular soft drinks.

The report will concentrate on Red Bull, the market leader in stimulant drinks, and will analyze its microenvironment using Porters 5 forces theory.

Red Bull is a part of the functional drinks market in the UK, which includes sparkling, still, and dilutable non-alcoholic soft drinks. These beverages are specifically designed to aid three main factors.

The industry analysis is 2.0.

2.1 Market Analysis

Sports and energy drinks are facing competition from bottled water and advanced sports nutrition products, which are both targeting consumers who engage in regular exercise.

* Alcoholic mixers face competition from other mixers, including widely used energy and stimulant drinks.

Both sports and energy drinks aim to compete in the broader market of soft drinks, encompassing fruit juices, carbonated still drinks, and soft drinks.

Despite the limitations of word count, my focus will be on the market for energy and stimulant drinks. This topic holds my interest due to being an avid athlete who regularly consumes

energy drinks, which has piqued my curiosity.

In 2005, the sales of Energy, Sports, and Stimulation Drinks reached ?1,186 million, accounting for 10.2% of the overall market.

The diagram illustrates that Energy, Sports, and Stimulation drinks have a small portion of the total soft drink industry. They face competition not only from other energy drink manufacturers but also from various products within the soft drink category. This is because consumers prioritize convenience when making purchases. As a result, potential rivals include popular brands such as Coca Cola, Pepsi, and Ribena.

The Market's size is shown in the graph above, with the younger segment being larger and the primary target. However, it is important for energy drink positioning to also consider the 35-54 age group as they are a significant demographic with higher incomes and greater spending power.
Lucozade has recently introduced a new energy drink packaged in a glass bottle specifically aimed at students, particularly those who frequent university bars. These customers have a preference for premium packaging and desire a wider selection of soft drinks. According to a survey conducted by the National Union of Students in 2004, changes in lifestyle have resulted in students consuming fewer drinks. Furthermore, during term time, approximately 60% of students have part-time employment and almost 20% spend 2-4 hours traveling per day.

Due to the increase in ethnic and foreign students, there is a higher percentage of students who choose not to drink alcohol. As a result, soft drinks have become more important in student bars. When I go to the students union, I usually choose a healthy fruit drink or an energy drink

if it's daytime. Energy drink manufacturers strive to cater to the needs of students' 24/7 lifestyle by offering durable cans or reusable bottles that meet the demand for high-quality packaging in a bar setting.

2.2 Growth

Red Bull continues to dominate the Stimulant segment, but it has seen some loss in market share. Other brands and supermarket own labels have emerged and established their own niche in the market.

The diagram depicts the notable increase in demand for the top stimulant drink in the market, indicating the emergence of a previously non-existent market. The period from 1997 to 2000 demonstrates the shift from stimulant drinks being a niche market to becoming a permanent fixture.

According to the estimates for 2006, the Energy, Sport and Stimulant market is projected to experience a sales increase of ?89 Million compared to 2005, reaching a total of ?1275m. This constitutes a significant growth when compared to the sales figure of ?654 million recorded in 2000.

The UK has the longest working hours in the EU, resulting in fatigue and a need for energy-boosting products. Consumers are increasingly looking for these products to enhance productivity. Expansion of the market is driven by effective marketing strategies, wider distribution channels, and competition from new brands. While hot beverage consumption has decreased, there is a growing demand for bottled water, juices, and carbonated drinks among individuals under 30 years old. A national survey on diet and nutrition revealed that 92% of men aged 19 to 24 consumed carbonated soft drinks within a week.

An aging population can have a positive impact on the

market as it consists of a larger number of middle-aged and elderly individuals who are interested in products with regenerative or rejuvenating properties. Conversely, younger consumers are attracted to products that provide legal highs. Furthermore, the prohibition of certain products like Red Bull in certain EU countries makes them more appealing to younger consumers. Some societies receive sponsorship from energy drink manufacturers and utilize social media platforms such as Facebook and MySpace to promote consumption among young people. This marketing strategy is significant given the current 55 million active users on Facebook. With the increasing influence of celebrity culture, younger individuals prioritize their physical appearance and aspire to look attractive.

Various factors can potentially hinder the growth of the stimulant market. The main and widely discussed factor is the ingredients of the drinks, which can result in a decrease in market share. Additionally, the use of stimulant drinks as mixers with alcohol contributes to this decline. Media coverage has highlighted these concerns extensively. For instance, an article titled 'college students looking for a boost putting them at risk' specifically addresses the consumption of stimulant drinks and the associated dangers, such as caffeine overdose from consuming more than 300-400mg, equivalent to just two cans.

The 'Economist Online' states that the UK market offers many growth opportunities. In 2002, Ireland had the highest consumption rate of Red Bull at 11 cans per person. However, the UK has a lower consumption rate, making it a realistic target for stimulant drink manufacturers. If they can achieve similar or higher usage rates, this market has potential to generate more sales.

A survey by Ciao/Mintel reveals that most

people aged 16 and above (59%) do not consume energy or sports drinks. This indicates that manufacturers should prioritize reaching out to non-users.

2.3 The following figure demonstrates the manufacturers and brands in the Sports, Energy, and Stimulant Drink industry (Source: Mintel).

The text below discusses the 2.4 PEST Analysis.

Political

EU countries should implement a ban on energy drinks due to the absence of labeling regulations. Moreover, age restrictions should be enforced to control the purchase of these beverages. The health hazards linked with energy drinks can lead to escalated expenses for the NHS and potentially necessitate higher taxation.

Economic

* PDI and Consumer Expenditure * The sports and energy drink market has attracted major soft drink manufacturers due to the high prices that these products currently command, which in turn is fueled by rising disposable incomes.

Social

Negative health concerns and global warming are causing longer working hours, more traffic on the roads, and a greater demand for energy. Furthermore, there is a growing consumer worry regarding diet and personal health.

Technological advancements have greatly influenced various aspects of society.

Lower prices may be achieved through improved manufacturing techniques and processes. Furthermore, the market is experiencing innovation with the introduction of new products that specifically focus on finding the ultimate hangover cure.

The Sports and Energy Drinks market has both strengths and weaknesses.

The market focus of Red Bull is 3.0.

Red Bulls Strategy is 3.1.

The Red Bull can is distinctive because it comes in only one size, color, and taste. Despite the rise of

energy drinks and new competitors entering the market, Red Bull remains a strong brand. Although they rank high in soft drink sales figures, their sales volume is lower compared to others. This can be attributed to their smaller 250ml cans, which are sold at a higher price than their rivals. Red Bull has an elaborate sales strategy that centers around popular bars and clubs to boost brand visibility.

Porter’s Five Forces, 3.2.

The market has low industry competition and a dominant presence of Red Bull and GSK owned Lucozade. These two major players have successfully saturated the previously niche market, making their products a regular buy for consumers. Brand familiarity is the main competitive advantage in this market, favoring multinational companies.
Differentiation is also observed as a strategy in this market, with Lucozade introducing a caffeinated version of their drink to compete in the stimulant drink segment. A new competitor called Taut has recently entered the market, positioning itself as a healthier alternative to Red Bull by claiming to be the first "clean" sports drink.

To compete and gain market share against Red Bull, companies must innovate. While there is competition among brands, hostile relationships have not emerged. However, the market demands a complete dedication to brand and product development. The most fiercely competitive aspect of the industry lies in establishing distribution channels, where Red Bull maintains dominance while other competitors struggle. The growth of energy drinks has attracted numerous new rivals who seek to replicate Red Bull's powerful brand image due to the lucrative industry margins for big corporations. Despite claiming a loyal customer base, Red Bull's own research reveals that 40%

of their consumers would switch to another brand if their product was unavailable in stores.

The level of threat from new competitors in the stimulant market is considered moderate. Coca Cola's latest product, 'Relentless', poses significant competition to Red Bull by offering larger cans at a lower price. However, as the market matures, the advantage of being the first mover has diminished. Red Bull dominates the stimulant drink industry alongside Coca Cola and Pepsi in the cola market. Red Bull's economies of scale enable them to be highly competitive on pricing if necessary. Nevertheless, consumers find their substantial profit margins acceptable, as seen from their spending habits (see picture below).

While the lower-priced stimulant drink market is restricted by Red Bull's dominance, there is a shortage of suppliers in the mid-range segment. The primary obstacle for new competitors would be matching Red Bull's marketing endeavors. Despite rivalry from Coca Cola, Red Bull's formidable brand strength allows them to demand higher prices.

The threat from substitutes is low. Stimulant drinks are classified as Fast Moving Consumer Goods (FMCG) or commodities and typically rely on impulsive or spur-of-the-moment purchases. While price sensitivity is generally low among target segments, convenience is the main consideration for purchase. However, Red Bull has managed to minimize cross-product substitution by leveraging its strong brand power and customer loyalty.

Red bull, as the market leader, has no intention of reducing prices because they want to associate high prices with high quality. However, it is important to mention that own brands provide almost identical substitutes for Red bull at a significantly lower price.

Rather than depending on caffeine drinks,

there are other options available to boost your energy levels. Consuming power smoothies with a reduced sugar content and a well-balanced mix of complex carbohydrates and protein can result in a more significant increase in energy. Additionally, it is advantageous to stay hydrated by consuming an adequate amount of fluids like water and herbal teas. By choosing these alternatives, you can avoid spending money on energy drinks that only provide a momentary surge of energy.

The Bargaining Power of Buyers is considered to be low. To determine the market form of the industry, I will calculate the concentration ratio of the energy and stimulant drinks brands. This ratio helps determine the relative size of firms in relation to the industry as a whole. I will specifically use the four-firm concentration ratio, which measures the market share of the four largest firms in the industry. The data obtained from Mintel shows that the four-firm concentration ratio is 89%, indicating a high concentration and suggesting that the industry is bordering between oligopoly and monopoly.

In a concentrated market like this one, Red Bull and Lucozade can charge high prices because customers have limited bargaining power. These companies have developed strong brand loyalty through extensive advertising, resulting in few alternative products available. Customers in this market prioritize higher-end consumers who consider these drinks essential for post-workday performance over price sensitivity. Over time, manufacturers have gained more power in their relationships with retailers due to the popularity of energy drinks creating strong demand, leaving little room for negotiation.

The level of bargaining power varies depending on the distribution channel. Retail multiples like Tesco and Asda

have large numbers of customers and can offer significant market exposure, giving them more bargaining power.

The bargaining power of suppliers is low due to the relatively simple production process. Additionally, the short supply chain and value added at each stage result in significant profits. However, suppliers can only access this attractive market through a brand-owner, giving the brand-owner more power. Input costs are low.

Red Bull can exert power over suppliers as they become heavily reliant on the company, which puts them in a vulnerable position and subject to the demands of larger corporations.

4.0 In conclusion, we provide recommendations.

Red Bull may need to change its target audience from 16-24-year-olds to individuals in their mid-20s to 30s in order to maintain its popularity and attract a wider range of customers. The success of Red Bull's efforts to expand its consumer base is currently uncertain. However, it is important to note that vodka and Red Bull remains a popular alcoholic beverage among young people. Despite having a limited product range, Red Bull appears to be effectively addressing this challenge by leveraging their core strengths, which has enabled them to establish themselves as a dominant brand and market leader.

Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New