Positioning of the Red Bull brand in the future markets of South Africa
Thesis (MBA)--Stellenbosch University, 2012.
ENGLISH ABSTRACT: The Red Bull brand has been in the international market since 1992 and entered the South African market in 1997. The company has seen phenomenal growth in the South African market, selling in excess of 39 million cans in South Africa during 2010. The brand created the energy drink category for the Western world. Red Bull grew the energy drink category in South Africa (SA) and with growth in profits and turnover, competitors entered the energy drink category. According to the brand strategy, the positioning of the Red Bull brand has always been premium. However, the economy and the fierce competitive environment in the energy drink category have become challenging for the brand both in terms of market share and value share. This begs the question: Is the Red Bull brand in South Africa sustainable? The brand remained premium in difficult economic times and during a time when many new brands entered the energy drink category. Hence, Red Bull’s loss of value and volume share in the energy drink category is the motivation for this study. The approach to the research includes conducting focus-group interviews with consumers and administering questionnaires. The research consists of three parts, namely Project Toro, Project Rojo and Project Matador, and was conducted by TNS Research SA for Red Bull. The research indicated that the brand is challenged in the area of pricing. Price remains the barrier of entry for new consumers purchasing Red Bull. Consumers agree that the brand must remain a premium brand. However, at some stage premium can become too premium. The price of Red Bull products will have to decrease to help ensure sustainability of the brand in South Africa. However, consumers did note that the brand must not decrease its prices too much because it will take away the status of the brand. The Red Bull brand is also challenged by the value proposition component. Competitor brands have larger cans which offer consumers value for money while Red Bull is known as the “small can” brand. As based on Red Bull’s international strategy, the efficacy and re-energising functional value of the brand are the main reasons why people still consume Red Bull. The focus that Red Bull once had on the entry-level consumer market that ensures sustainability of the brand has also been challenged by new brands in the category. Competitors have seen the opportunity created by investing in the entry-level consumer market. Red Bull SA has not been keeping up with international energy trends, which created an opportunity for competitors to launch bigger pack sizes and to be first-to-market. This has taken away value and volume share from the most valuable energy drink brand in South Africa. Renewed focus on the main findings of the research can give Red Bull the opportunity to once again be the leading brand in terms of value and volume.