Company analysis
Red bull soft drink is one of the multinational corporations operating in many countries around the globe. In the Middle East, the corporation is present in many countries particularly in Saudi Arabia where it has based its manufacturing headquarters. The company specializes in the manufacture of high-energy content soft drinks providing various benefits to the users particularly those involved in high performances such as sports (McNaughton 3).
The products of the company are currently being sold in over 160 countries around the globe. In addition, the growth of the company in the market share has been remarkable. Over the past year, the company’s global market share was approximated to have grown by over 15% with Saudi Arabian subsidiary contributing around 30%. The expansion in the market share has been exacerbated by the increasing growth in the returns on investments approximated to be over 39% in the last financial year.
The company focus is to sustain the highest industrial values at the same time positioning itself as the energy soft drink leader in the market (McNaughton 3). In addition, the company is focusing on delivering superior customer value in a more efficient and cost effective process.
Moreover, the company aims to increase its presence in the world soft drinks market particularly in the fast growing and developing Asian markets. The aggressive global expansion strategies have enabled the company to establish itself in many countries around the globe. The company plans to apply similar strategy to enter into the Asian market particularly in the Far East countries.
Environmental analysis
The environmental analysis tool will be applied to analyze the macro-environment that affects the company operations as well as the external factors that may affect its products. The macro-environmental factors include the political, economical, social technological, and legal. The external factors are critical considerations in the company’s internationalization strategies.
Political factors
Red bull soft drink is a multinational company operating in many countries especially in North America, Europe and Asia. As such, its products are sold in a wide spectrum of political environments. Moreover, Red bull soft drink consumers are spread across the political divide found in all parts of the world. Therefore, political consideration is very important factor for the company especially when introducing a particular product in the new international market.
For instance, the company is manufacturing and distributing most of its products into the Asian market from one central position found in Australia. Such operation has exposed the company to political tussles with the government threatening to close its operations. In addition, the nature of the products of the company has been questionable in some countries particularly in the Middle East where alcohol content is highly strict.
In some countries, the products of the company have been burned due to the ingredients that have been used. The political factors have disadvantaged the company particularly in competitive energy drinks’ market. These political conditions have seriously influenced the company’s sales particularly products with high caffeine levels.
Economic factors
The current economic situation around the world has a profound effect not only on the company’s products but also on the general production capacity. The recent economic downturn experienced in America and Europe has a considerable consequence on the domestic market. Sales for the high-energy content soft drinks have reduced as majority of consumers switched to other competitive products as their income reduced.
Reduction in sales was also experienced in many parts of Europe as well as in many countries in Asia where the company operates. However, this presented an opportunity for the company to introduce cheaper high-energy soft drinks in the market. Moreover, in such an economic environment, the company must increase its capital flow in order to avoid negative effects of the economic shocks.
However, as the parts of the world are experiencing the effects of the economic downturns, China, the biggest target market was experiencing an economic boom. In the last two years, China has experienced rapid economic growth with increased consumer spending. In addition, the Chinese government has encouraged its nationals to buy products and services that offer increased value.
The economic situation major Asian markets have presented the greatest opportunity for the company to introduce and sell its products. In addition, the Chinese population consists majorly of the younger generation who are the target market for the company products. The economic factors in the developing Asian markets are favorable for the company internationalization strategy.
Social and cultural factors
The company products are sold in open cultural events particularly in sporting events. Moreover, its target market of younger generation pursues vogue and vigorous activities such as sports. The lifestyles are similar in almost all parts of the world. In addition, the company products ingredients are simplified to meet the energy needs of such kind of activities.
The ingredients of the products have high calories contents with improved energetic elements a characteristic that is praised highly by many sports participants. In essence, all the soft drink products that the company has launched into the market have been popular among the younger generation and the high performers. The company has portrayed its products as having revolutionized the sports fraternity.
Moreover, the company has been keen to focus on the needs and wants of the target market. In general, younger generations as well as those in high performance sports need drinks with high-energy content. Indeed, almost all the products of the company have achieved that objective.
Legal environment
As indicated before, the company is operating in many countries around the world with various legal regulations. Moreover, these countries have their own domestic companies that produce similar competing products. Commercial regulations are varied ranging from preferential regulations to corporate laws.
The company is facing many challenges and including corporate tax regulations, tariffs as well as increased costs in terms of distribution since its manufacturing is centrally placed. Such legal obligations have increased the risks for the company.
Besides, most of the products take long time before being introduced in the market because of legalities relating to distribution channels. The legal challenges have contributed negatively to the growth of the company’s international market share.
Marketing mix
The company will be using various marketing strategies to position its products into the worldwide soft drink market. Included in the market skimming strategies are product and pricing strategies, placing strategies, and promotional strategies.
Product and Pricing strategies
There are varieties of soft drink brands that the company produces. The innovative capabilities of the firm will ensure the development and production of products offering varied choices for customers. Moreover, the company has recently launched another product into the market. The product will be improved to suit the customer needs and bring convenience, a mixture of value and quality.
As expected, the quality and value addition attract high prices. Most of the company soft drinks are middle-high particularly non-carbonated water. However, most of the company products are targeting high-end customers. The high-quality high-prices strategy will be applied particularly to outperform the competitors.
In addition, the product and pricing strategy will aim at widening the spectrum of customers the company is targeting. In fact, the company has been targeting customers at high-income level. Nevertheless, with the entry of more competitors, the company will be forced to widen its scope and capture middle and low-income clientele.
Placing strategies
The company will adopt the business to customer distribution channel in order to directly deal with its customers. Direct interaction with the customers will lead to the development of the products that suit the customer needs. Moreover, the direct sales of its products will lead to the expanded market share. However, the company stores around the world are still limited given the fact that the company manufacturing is centrally placed. Therefore, the company should expand its distribution stores to reach all manner of customers.
The promotion strategies
The promotion strategies will include advertising, public relations, and sales promotions. The company will be using innovative advertising to attract and inform its customers about the company products both in mass and digital media. Besides, the company will utilize its products association with sports to appeal to many people as well as a method of maintaining its public relations.
The success of the company on public relations will improve the company goodwill and attracts the public attention. Further, the company will provide special offers to associated sports people as a good way to stimulate and retain its customer’s loyalty.
Strategic planning
The company will take advantage of its current leadership in the energy soft drink to position itself in the new markets. Even though the latest statistics indicate global slump in the company growth in market share, the growth of Red bull in terms of market share is still increasing and approximated to be over 21% in the last financial year.
The growth indicates the strength of the company brand and reputation as well as the confidence the consumers have on the company brands (Russell 6). The firm will utilize the advantages gained from the current position in the world energy soft drink to expand into the new and potential markets.
The company will also use competitive prices to position itself into the new market such as Indonesia where prices are considered very sensitive. The prices of the soft drink will be lowered targeting the middle-end markets particularly the younger generations. Moreover, the company will utilize its resources to develop superior products with additional flavors considered special by the locals.
In addition, the company will break away from its traditional high-end prices and offer competitive prices for its new products. In other words, the company will lower prices of most of its products to customer with low income. In essence, the company will reduce the price differentiation between the products. In other words, the company products will continue to be the premium products in terms of prices (Moth 7).
However, to gain popularity among the younger generation customers and wide demographic accessibility the company will reduce the prices and increase the volume of growth in the targeted markets. The company will also utilize its brand image to position its products into the new markets.
For instance, the company association with sporting events will be utilized to market the products into the new markets. The company will sponsor events and manage a wide range of extreme sporting events, which will be associated with the company products. The association with such sporting events will be additional competitive advantage as the knowledge of the company products will increase particularly among the lovers of sporting events.
Through purchasing relevant facilities, teams and sponsoring live events, Red bull aim to succeed in the future through sustaining a larger mainstream audience and loyal customers (Russell 9). In essence, the company will utilize its competitive advantages to develop and sustain its market growth in the internationalization strategy.
Timing and mode of entry
Entering into the international market requires advanced knowledge of the market in terms of the competitors. To enter into the new markets, Red bull soft drink has to utilize the market entries that will increase its competitive advantage. The market entry available to the firm includes franchising, joint ventures and utterly held subsidiaries.
Franchising
The company will utilize the business knowledge of other local soft drink companies acting as a franchisee in host countries to expand the company’s business activities. Red bull soft drink will utilize the market leadership in energy soft drink market to provide capital, technical skills, and business expertise (Moth 7).
The firm will also use this mode of entry in China where there is uncertainty in political and economic conditions. The uncertainty in the Chinese market makes this mode of entry more suitable. The major advantage of this mode is that the company will not need to bear the costs and risks related to development and entry into the new market.
The cutback in overheads and threats allied to charters enlarges the corporation’s efficacy in searching for the fresh bazaars. However, the corporations will hardly have any power over the trade dealings mostly where the bylaws call for the businesses to observe the eminence ideals.
Joint ventures
Red bull also has the option of utilizing the most commonly used entry mode by firms all over the world. Using this entry mode, Red bull soft drink will form an alliance with similar firm in the new market in order to attain the greater position. In most cases, the joint venture will require that the company have equal share in terms of costs benefits (McNaughton 6).
Nevertheless, the equal sharing arrangement will take away the control of some operations of the firm. In order to achieve stringent direction and have superior allocation entitlements, Red bull must devote additional finance to the mutual schemes. The advantage with this entry mode is that risks and costs associated with operating into the new market will be shared.
In addition, Red bull will gain market knowledge from the joint venture firm as well as be capable of exploring new market. With little regard to the conflicts that might arise from the joint venture, the firm will take advantage of the local firm’s capability of influencing the local government to allow the company to enter, establish, and dominate global markets.
Utterly held auxiliaries
Utterly held subsidiaries imply that Red bull will have to cuddle a hundred percent allotment of the far-off units. For the firm to own a subsidiary in these new markets, Red bull must establish a new entity with full operations or fully acquire an existing firm. The acquired firm must be well built within the industry. Red bull stand to gain a lot from this mode as the company will easily promote its products (McNaughton 7).
The reason is that the firm will have tight control over business operations because of full ownership. In addition, compared with other modes, the firm will implement its own strategic plans and does not risk losing the competitive advantage as well as technical skills to other firms. Apart from full control and reduced risks, the firm will enjoy full benefits of expanding into the new market.
Managing, measuring and controlling the marketing effort
The company will utilize its financial management capabilities developed over the years to manage its marketing efforts and internationalization programs. In particular, the company will direct its financial resources into the marketing activities that have high capabilities of adding more value to the firm.
In other words, the company will spend more into marketing activities likely to contribute to increased returns in terms of market growth and expansion. The marketing activities will be measured in terms of sales volumes generated, the popularity of the brand as well as in terms of growth in investments to the company over a specified period.
In addition, the company will streamline marketing activities to only those considered beneficial. Moreover, marketing efforts will be directed to specific areas where the company hopes to introduce its brands or in places where the performance of the company brands against those of the competitors are waning.
Works Cited
McNaughton, Marissa 2012, How Social Was The Red Bull Stratos Live Jump Publicity Stunt? PDF file. Web.
Moth, David 2013, How Red Bull uses Facebook, Twitter, Pinterest and Google+. PDF file. Web.
Russell, Michael 2012, BRAZIL: Red Bull gets green light for Brazil facility. PDF file. Web.