Introduction
The objective of the present study is to investigate the relationship between Red Bull’s sales promotion and sales volume. Red Bull is a renowned multinational currently leading the energy drink market by a significant margin. The entity is also the industry’s pioneer after being the first maker of such brands. A unique aspect concerning Red Bull touches on its unique top-notch marketing campaigns involving breath-taking stunts. The company’s marketing strategy is costly, necessitating the need to check whether the promotions cause real effects on sales volume, which directly affects profitability. Marketing activities basically motivate people to consume a brand’s items through awareness creation that leads to consumers’ favorable conduct towards the advertised organization. Thus, promotions that do not cause sales increment lead to resource wastage and losses. Investigating the link between sales promotion operations and sales volume provides a fundamental procedure for verifying the endeavors’ effectiveness, though many businesses neglect the process.
This study uses empirical data gathered from a precisely selected population to accomplish its mission. The work shows the association between Red Bull’s marketing operations and sales size. The researcher uses self-administered questionnaires to gather information from 260 respondents involved in the targeted company’s distribution channels. The specific fellows include employees, energy drink wholesalers and retailers, and consumers. The study further employs regression and correlation analysis to scan the link between the two variables under study. Equally, the inclusion of qualitative and quantitative data in the research work makes the mixed approach appropriate for the work. The study’s findings reveal a significant positive correlation between sales promotion activities and the volume of sales for the examined firm. The investigation follows two hypotheses, all of which become highly supported by the end of the investigations. Data tables and percentages play a major role in the analysis section, with the results obtained revealing the genuine connection between Red Bull’s promotion messages and sales size. Therefore, the questioned merchants confirm that they sell more Red Bull energy drinks during every new marketing episode.
Background Information
Red Bull is a substantially unique firm based on its successful operations in the U.S. and many other parts of the world. The multinational is headquartered in Austria, Europe, where many expect the firm to dominate, as opposed to the global market (Hardy, 2021). However, Red Bull proves itself peculiar by ruling even the American market, despite the prevailing ‘buy America, build America’ mentality among many U.S. citizens. According to Bayighomog et al. (2020), at least two aspects allow businesses to succeed in economies away from the home market. These factors include the provision of superior products that local investors cannot produce or inimitable marketing strategies. Accordingly, Red Bull’s general formulation and the fact that many other firms already produce similar products make the former reason behind market dominance nonexistent in Red Bull’s case. That way, there is a high possibility that the global energy drink giant acquires its brand superiority from marketing activities. The same aspect explains the organization’s success in the U.S. As a foreign firm, many people expect the likes of Coca-Cola, a home beverage company, to lead Red Bull in the U.S. economy, which is not the case.
Red Bull now controls below half of the energy drink market, with competition threatening a further decline in market share. As the industry’s pioneer, the business once dominated the sector 100%. However, data regarding the industry’s performance shows Red Bull controlling about 30% of what its owners created. Yoovidhya and Mateschitz initially wondered. Significantly about whom to sell the product to due to its newness, according to Hardy (2021). The investors thus introduced the drink to college students, long-distance drivers, and clubbers to make sales. Therefore, all the other players in the segment enjoy the two innovators’ creations, suggesting Red Bull’s supremacy. Nonetheless, the market control’s decline to about 30% says a lot about Red Bull’s future. It is necessary that the investment looks into the various factors that drive its sales and preferences among consumers to intensify them. Speculations already link intensive marketing operations to the industry’s growth and competitiveness, but the specific players must prove the truth behind such speculations. Particularly, knowing that Red Bull’s sales size and profitability depend on its marketing campaigns can inform the firm’s future endeavors to maintain market dominance.
One of Red Bull’s directors, in charge of marketing, is no longer suggesting potential issues to the promotion aspect of the organization. The entity’s history and structure place the two partners in charge of the brand’s creation in different roles (Hardy, 2021). Yoovidhya, the pharmacist, mainly takes control of the research and development facet, while Mateschitz informs the business’s marketing endeavors (Hardy, 2021). The role specialization elements allow the director to exploit their potential to make Red Bull a great brand. However, Mateschitz’s death in 2019 affected the multinational adversely (Hardy, 2021). Therefore, the matter reiterates the essence of determining the link between product promotion activities and sales volume. Ireland et al.’s (2019) analysis of the energy drink market reveals rivalry, consumers’ bargaining power, and new entrants’ influence significantly high. The three elements explain the pioneers’ loss of market to competitors and the need to inspect what works. Therefore, almost everyone in the energy drink market expects Red Bull’s remaining director to adopt game-changing tactics to remain on top, which includes determining the role of marketing campaigns on sales and profitability to make the necessary, correct decision in that line.
Red Bull needs to investigate the need for continued marketing endeavors and whether the organization can relax to enjoy the already realized marketing mileage. Serumaga-Zake and van der Poll (2021) note that product promotion costs organizations real money, with firms realizing hard-to-copy products enjoying the ability to operate with minimal marketing expenses. Examples of such investments include Apple and other luxury goods producers whose items attract unique value among consumers. Proving that Red Bull’s sales volume and profitability remain constant, whether the multinational runs new ads or not, will inform the entity’s diversion of promotional resources to other essential operations. Appreciating this basic facet is only possible through the inspection of the link between marketing and sales volume. Red Bull already adopts the premium pricing strategy after realizing a nitch (Hardy, 2021). The matter means that ascertaining sales volume guarantees returns. Equally, energy drink firms worldwide battle promotion confrontations leading to the utilization of billions of dollars. Therefore, noticing how marketing dollars affect returns will influence organizations to make the necessary decisions, reiterating the essence of the current study.
Research Question and Hypothesis
Question: Does sales promotion endeavors undertaken by Red Bull affect the organization’s sales volume of energy drinks in the U.S.?
Hypothesis:
- H0: Red Bull’s product promotion activities and sales volume are not positively and meaningfully connected.
- H1: Red Bull’s product promotion activities and sales volume are positively and meaningfully connected.
Research Objective
The present marketing study’s objective is to investigate the influence of Red Bull’s product promotion on sales volume within the U.S.
Need for the Research
Several factors concerning Red Bull and the energy drink industry necessitate the present research. However, the stiff competition in the sector and players’ excessive expenditure on marketing endeavors form one of the central causes of this scholarly examination. According to Houghtaling et al. (2021), firms in the American beverage segment spend trillions of dollars every year seeking consumers’ preferences towards their items. The involvement of financially stable firms in the industry means excessive spending on the matter (Houghtaling et al., 2021). For example, Coca-Cola and Pepsi channel a significant amount of their revenues to the promotion facet. The two organizations dominate the American soft drink industry and undertake every operation possible to extend their dominance.
Moreover, Red Bull’s entrance into the American market in 1997 led to substantial changes in the industry. The firm’s direct targeting of youths and persons with stable finances amounted to real sectoral disruption. Hardy (2021) says that Red Bull exists as a media organization more than a manufacturing firm. The entity’s sponsorship of crazy sporting activities under the “Red Bull Gives You Wings” campaign leads to massive traffic on its promotion channels. The undertakings are costly, meaning that Red Bull spends a significant amount of money on them. The matter motivates several other competitors, including Monster Energy, who use lots of money to remain relevant. Unfortunately, the competition to sponsor expensive promotional activities is blind. Virtually no one cares to know the connection between marketing operations and sales volume or profitability in the industry. The situation reveals utter ignorance among the players, with the consequences threatening to be severe, in case the many dollars spent on promotion do not relate significantly to profitability.
Choosing Red Bull as the investigation’s case comes from several grounds, including the fact that the entity is the industry’s pioneer. Red Bull GmbH created the first energy drink in 1987, a time when no one but the producers knew the role of energy drinks (Hardy, 2021). Sensing the lack of a market pushed Red Bull’s owners to undertake intensive marketing campaigns involving youths and other professionals until a time when almost everybody appreciated the product. Today, the company controls approximately 30% of the market, a significant drop from 100% controlled in the 1980s. Furthermore, Red Bull presently sponsors numerous costly nerve-stracking stunts to attract customers to the product.
The idea behind Red Bull’s costly marketing endeavors is to associate the product’s consumption with possessing wings and power to perform unordinary activities and goals. The Stratos Jump and Red Bull Air Force drives constitute some of the craziest marketing performances meant to win people’s preference for their products (Frings, 2020). Other critical aspects influencing the investigation include the death of Red Bull’s crazy marketer and the entity’s survival under the R&D-oriented directors who may need reliable, evidence-based information to decide whether to progress the intensive marketing campaigns or not. Accordingly, Red Bull remains a highly essential firm in the investigation regarding product promotion’s effectiveness in supporting business profitability by promoting sales volume. The point that virtually no other firm spends more money on promotions, coupled with the other outlined factors, justifies the need for current investigations.
Prior Research on the Subject
Significantly limited research exists on the subject concerning sales promotion’s effects on sales volume. A search of the same topic on several academic databases, including ProQuest, EBSCOHost, Google Scholar, and numerous other websites, returns a substantially low number of results without any covering this specific aspect. Specifying the search period to be the previous five years worsens the situation. Fonkeng (2021) covers the impact of sales campaigns on sales capacity while using Guinness Cameroon as the case for the study. According to the scholar, Guinness is an Irish brewery firm that survives in the Cameroonian market due to targeted product promotion. The beer finds its way to the African nation through shipping operations and other logistics that significantly increase its cost. The situation makes the Cameroonian Guinness costlier relative to the local brews. However, intensive promotional operations by the foreign brand cancel the domestic brands’ home advantage. Based on Fonkeng’s (2021) account, Guinness succeeds by employing multiple promotion methods, including price reductions, premiums, and charming online campaigns, among others. Thus, the results of this study confirm that Guinness Cameroon’s sales promotion practices warrant incessant sales volume and profitability.
Promotion campaigns’ concentration affects sales size significantly among large retailers. Zeybek and Ülengin (2021) say that firms operating in highly competitive sectors can realize a competitive edge by intensifying their advertisements. As per the scholars, many businesses offer similar products, with differentiation operations setting each apart. However, every player must try hard to beat the others in connecting to the consumers. That is because virtually everyone in business today can provide quality items to buyers. The corporation with the ability to continuously remind consumers about their products’ availability, utilization, and benefits thus stands to benefit more. The effect comes mainly from the concentration of promotion campaigns, according to Zeybek and Ülengin (2021). Therefore, the researchers encourage investors to spend whatever reasonable and manageable amount of money to support continuous marketing strategy growth in sales volume and profitability. Additionally, large retailers with multiple product lines are advised by Zeybek and Ülengin (2021) to separate each merchandise’s promotion campaign, if possible. The plan makes the awareness facet specific while supporting every item’s sale growth with marketing the activities. Thus, the study reveals a significant connection between product promotion and sales volume.
Sales promotion works by inducing a behavior or action towards a product or service among consumers. Producers and marketers in the beverage sector now use advertising undertaking to encourage buyers to consume more (Wood et al., 2021). The fellows use varied strategies, including the adoption of safe production methods, appealing packaging designs, and sponsorship arrangements. Other schemes utilized for the promotion mission comprise environmentally friendly distribution operations and product communication, all of which feature designs meant to appeal to and stimulate people’s decisions about the specific product. Amalgamating the promotion techniques allows firms to meet the interests of a wider range of individuals. The matter means that more people develop a liking towards the promoted items, leading to increased purchases and profitability. Mawuvi and Sumbo’s (2020) article provides a significantly new but essential aspect regarding sales promotion’s association with sales size. Accordingly, the source backs organizations’ employment of multiple preference-boosting channels, including communication, packaging, and production methods. Therefore, the article reveals the substantial link between promotion, sales, and profitability.
Investigating product promotion cost’s association with sales equally helps determine the two facets’ linkage. Igo1 and Rizal’s (2019) work investigates this aspect by covering a specific consumer good’s brand, PT. Hasjrat Abadi Perwakilan Unaaha. The study features two objectives, including the determination of various promotional blends utilized at the company and their effectiveness. The scholars’ findings indicate that PT. Hasjrat’s reduction in promotional costs by 1.5% in 2016 led to about 1% fall in the year’s sales volume (Igo1 & Rizal, 2019). Moreover, every 1.1 percent increment in the entity’s promotion costs in the following year, 2017, boosted sales amount by approximately 1% (Igo1 & Rizal, 2019). The quantitative figures relating the two facets under examination imply the positive relationship between promotion activities or costs and sales size. Therefore, the investigation suggests that the firm under review, PT. Hasjrat Abadi Unaaha, continues its promotional activities to keep realizing sales growth benefits despite the severe competition in the market.
Lastly, effective sales promotion has the potential to cancel a hurting selling price’s effect and render a firm significantly high returns through increased sales volume. The argument is confirmed by Paper (2019), whose study inspects Sony’s brand trends in the market. The researcher selects the firm’s home theater brand as the item to use for scholarly scrutiny. Thus, Paper (2019) notes that both favorable prices and effective marketing processes boost the organization’s sale of home theater products. Additionally, the scholar finds the effect caused by the two factors superior to when one works independently. Hadi and Hafnidar (2019) insist that promotional undertakings boost people’s favorable behavior and actions toward a brand, with favorable prices promoting deal closure among buyers and the firm’s representatives. Therefore, this article provides noteworthy backing for the current investigations involving Red Bull, the ultimate sales promotion pundit employing inimitable campaigns to glue youths and sports enthusiasts to the brand.
Research Design
The present work adopts the explanatory research design to meet its purpose. Andrew et al. (2019) cheer the technique as the best approach to establishing a causal connection among variables. Investigating a condition or issues to elucidate the associations between variables forms the highlight in this work, with the primary objective being to quantity the influence of sales promotion undertakings on sales volume concerning Red Bull’s case. Unlike the explanatory investigation model, descriptive exploration is suitable for a clearly controlled problem, where the investigator aims to seek relationships concerning causes and indicators (Andrew et al., 2019). The aspect makes the explanatory technique most appropriate in the current work, thus the design’s adoption. Equally, the researcher employs an explanatory scheme of study on a cross-sectional foundation, exploiting the survey technique to gather primary data and the revision of allied literature to develop a secondary basis for data gathering. A cross-sectional field survey method is also used to ration independent and dependent elements at the same time with a distinct questionnaire. The design led to the gathering of quality data for the analysis section that produced the findings leading to the conclusions.
Research Sample
A research sample comes from the selected target population with a connection to the subject under investigation. Accordingly, Red Bull’s California employees and distribution channel members, including agents, retailers, and wholesalers, constitute the study’s population. The point that the California system involved in Red Bull’s delivery line comprises thousands of individuals necessitates the selection of a manageable group with the required information forming the research sample. Thus, the investigator uses both the probability and non-probability specimen selection approach because of their ability to give a reliable depiction of the entire population when combined. Probability sampling uses random assortment, with each component exhibiting a known nonzero opportunity of being selected. Stratified sampling, simple random sampling, cluster sampling, and multi-stage sampling are examples of probability sampling considered for the current work.
On the other hand, non-probability sampling relies on idiosyncratic judgment. Putting a study’s population into sequences of pertinent strata promotes the sample’s representativeness by ensuring each stratum is illustrative, as per Grønmo (2020). Therefore, the investigators use stratified and convenience sampling methods to gather a meaningful collection of Red Bull agents, employees, distributors, and retailers. The adopted approach helps significantly in ensuring that the study exhibits adequate cases from the targeted groups to make an evocative deduction. However, going for the study blindly without determining the right sample size means handling a finite number of respondents. The investigator uses Yamane’s simplified formula to identify about 260 respondents as the best squad to acquire the anticipated information. Appendix 1 provides a summary of each group’s size from the determined total respondents.
Data Collection
The study uses both primary and secondary data to investigate its hypotheses. The primary data comes from Red Bull’s California employees, the energy drink brand’s resellers, agents, wholesalers, and retailers. The secondary data comes from the organization’s archived records available online. The two data sets’ collection proceeds in a manner that makes covering every feature of the research possible. The primary data relates to the employees’ and dealers’ conduct and reactions. Moreover, the (primary) data is original and openly connected to the subject under investigation, making it significantly commanding. The information comes from questionnaires and interviews conducted by the researcher on the study population. The secondary data comes from printed material concerning the entity. The sources include websites, books, and other research articles featuring Red Bull’s performance and marketing information. Closed-ended inquiries are offered on a Likert-type gauge. The researcher applies the commonly utilized business-related Likert scale form due to its ability to allow respondents to offer views in terms of direction and intensity. The intensity scale ratings range from 1 (least agree) to 5 (highly agree).
Data Analysis
Data gathered during the study using various tactics was structured and organized appropriately for analysis. The analysis part uses the statistical package for social scientists (SPSS), version 19 software for descriptive and inferential data examination. In descriptive statistics, the collected data is abridged using tables, percentages, and frequency distribution to scrutinize the respondents’ demographic characteristics. Moreover, a mean score and standard deviation are employed to offer condensed data to test the link between perceived and expected sales volume with changing promotion levels.
Demographic Profile of Respondents
Appendix 2 shows the demographic data of the respondents, where the population comprised mostly of males, at 52.9%, compared to females, who constitute 47.1%. Thus, the male respondents contributed more, according to the data, compared to the females. The group further falls into four distinct percentile clusters, according to their ages. The largest percentage belongs to respondents between 25 and 35 years, followed by that between 36 and 45 years, the two making about 79.2% of the entire sample. Respondents within the 20 to 24 age bracket are 11.0%, while the lowest fraction is for persons belonging to the age above 46 years, constituting 9.8%. Consequently, the conclusion from this analysis is that most of the persons taking part in the study are middle-aged.
Occupation of Respondents
Appendix 1 further shows the various respondents’ occupations and dealings along Red Bull’s distribution line. Based on the data, the fellows belong to four groups, including retailers, suppliers, wholesalers, and general distributors. Accordingly, retailers make up the largest team of respondents, with 65.4%. Agents occupy the second slot, making 15.4%. Distributors come in the third position and constitute 11.5%, while employees form 7.7% correspondingly.
Perception toward Sales Promotion
Appendix 3 shows the study population’s views towards the association between Red Bull’s product promotion campaigns and sales volume. Based on the gathered data, candidates with a mean score of 8.22 approved that every Red Bull’s marketing stunt causes a significant instantaneous rise in the brand’s sales volume, leading to the sale of more cans and liters of energy drink. The data implies a meaningful connection between the firm’s promotional undertakings and the volume of the product consumed by consumers. Thus, buyers’ desire to associate with the new powerful show or statement depicted by Red Bull’s powerful marketing campaigns leads to increased product preference and consumption.
Correlation Analysis
The correlation coefficient summarizes the connection between two variables using a distinct numeral that is between -1 and +1. The current work undertakes a correlation analysis, with Pearson’s correlation coefficient, on the independent and dependent parameters to search the existing connection. Shekar (2020) provides specific guidelines for finding the correlation between variables using this approach. The scholar notes that a correlation factor (r) between 0.1 and 0.29 implies a weak connection, while that between 0.3 and 0.49 is moderate (Shekar, 2020, n.p). Furthermore, the link between parameters is strong if the correlation constant exists between 0.5 and 0.9, while such is very strong when the figure falls between 0.9 and 1.0 (Shekar, 2020, n.p). Thus, with a coefficient constant of 0.91, the study finds Red Bull’s sales promotion operation’s influence on sales volume very strong, appendix 6.
Multiple Regression Analysis
Regression analysis predicts a numerical value of a given parameter based on the size of another factor under the experimenter’s control. Multiple regression analysis displays the impact on sales volume by identifying the degree and course of the association between the two study parameters. The investigation conducts the analysis at a 95% confidence level. The investigator conducted normality, homoscedasticity, and collinearity checks before the regression analysis to check and eliminate errors.
Regression Analysis between Independent and Dependent Variables
Appendix 4 provides summary results for the regression analysis between the study’s independent and dependent parameters. The “R” section represents the multiple correlation coefficient value, R (Shekar, 2020). The constant (R) is an important measure of the prediction superiority for the dependent variable, sales volume. The acquired R-value, 0.842, designates an excellent degree of forecast among the variables. Moreover, the “R Square” segment is the coefficient of determination figure, which is the amount of change in the reliant parameter explainable by the independent variable. Appendix 4 returns 0.709 for R Square, meaning that Red Bull’s product promotion illuminates 70.9% variation in sales volume. The findings thus imply that the other variables affecting Red Bull’s sales in California, but for marketing activities, influence a small portion of about 10.9%. Further investigation is necessary to examine which specific marketing element causes the most impact for the organization to fine-tune its promotion endeavors.
Hypothesis Analysis
Appendix 5 shows the results of the hypotheses regression analysis for the work. The predictor variables coefficient is statistically substantial at less than 5%; thus, the alternative hypothesis concerning product promotion is sustained. From the regression analysis, sales promotion exhibits a positive and weighty influence on sales volume, with a beta value of 0.864 and a p-value of 0.000 (p<0.05). Consequently, the study approved the proposition that Red Bull’s rigorous product promotion and sales size in California are positively and meaningfully linked.
Conclusions
The study aimed to identify the impact of sales promotion on Red Bull’s sales volume. The quantitative research approach is applied to examine the effect connection between the two factors. The study population involves 260 dealers in the Red Bull distribution line within California. The sample selection process for the work involved a stratified random sampling technique, with structured questionnaires employed for data collection. Tables are utilized to present data acquired from the investigations. The experimenter uses SPSS -19 software to analyze data. Results from the analysis phase return a positive association between Red Bull’s sales promotion and sales volume, with r = 0.91. In conclusion, Red Bull spends substantial money on sales promotion, and the organization reaps significantly from the investment. The remaining director should purpose to progress the company’s intensive marketing operations to maintain market dominance. That is because competitors already produce rival products with identical formulations, with others even offering them at lower prices. The beta value of 0.864 and a p-value of 0.000 (p<0.05), make the alternative hypothesis that ‘Red Bull’s product promotion undertakings and sales size are certainly and evocatively connected’ correct. Thus, Red Bull’s massive sales size over the years is pegged on the nerve-taking continuous marketing initiatives, which must continue for the firm to keep enjoying. The firm should continue undertaking similar studies over time to determine whether the trend will persist in the long run.
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