Last Updated 06 Jul 2020

Red Bull Critical Essay

Category Red Bull
Words 4873 (19 pages)
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Table of Context ? ? ? ? ? ? Page 3 – Name of Company, Name/Description of Product, Research Undertaken Page 4-5 – Questionnaire Page 6-15 – Results, Graphs and analysis of data Page 16 – Conclusion of Results Page 17-20 - Are basic customer requirements noticed by the product provider? Page 20-22 – The impact on value chain activities 1 Name of Company Red Bull Name/ description of Product Red Bull Energy Drink The Red Bull Energy Drink is a stimulating, non-alcoholic beverage, designed to increase the consumer’s mental and physical condition, to ‘vitalize body and mind’: - improves performance - increases concentration and reaction speed 2 improves vigilance - stimulates metabolism (Red Bull® Energy Drink (2009) Benefits. Available at: http://www. redbull. co. uk/#page=ProductPage. Benefits (Accessed 28th February 2009) Research Undertaken The purpose of the research was to depict and understand to what extent the targeted consumer ‘values’ the attributes associated with the Red Bull Energy Drink. In order to discover the extent of these perceived values, a questionnaire was created, originally consisting of 14 questions, before a redesign concluded with an additional two health related questions associated with the product.

This questionnaire was presented to 50 random individuals in order to receive a wide range of results, to be able to analyse individual perceptions towards the product and discover to what degree of ‘value’ is apparent with the Red Bull Energy Drink. The key attributes that the product consists of, and that the questionnaire would be focusing on would include the following: -Effect -Taste -Price -Capacity -Appearance -Availability Original Questionnaire

Red Bull Energy Drink Survey Today Red Bull is the largest worldwide supplier for ‘Energy Drinks’ and is 'energising over 140 countries across the globe' with close to three billion cans of Red Bull consumed each year. Despite this, knowing the desired requirements for any consumer is essential, understanding what is perceived as 'value' will predominantly enforce success. 1. Are you...? ? Male ? Female What is your age? ? Under 16 3 2. ? ? ? ? 3. 16-18 19-25 26-35 Over 35 Are you aware of the 'Red Bull' energy drink? ? Yes ?

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No Are you a consumer of energy drinks? ? Yes ? No If no, please specify why ___________________________________________________________________________________ ____________________ On average, how many energy drinks to you consume a week? ? 1-4 ? 5-8 ? 9-12 ? Over 12 What do you believe to be the most popular energy drink? ? Red Bull ? Relentless ? Lucozade ? Red Devil ? Rock Star 4. 5. 6. 7. How would you rate the following attributes of an energy drink in the form of value to the consumer? (1-5, 5 being extremely important) 1 2 3 4 5 ? ? ? ? ?

Effect ? ? ? ? ? Taste ? ? ? ? ? Price ? ? ? ? ? Capacity ? ? ? ? ? Appearance ? ? ? ? ? Availability ? ? ? ? ? In the UK, a single 250ml can of Red Bull Energy Drink retails between ? 1. 15-? 1. 38, do you believe this to be 'value for money'? ? Yes ? No If no, please specify why ___________________________________________________________________________________ ____________________ On average how much would you be willing to spend on an energy drink? ? ? 0. 50p - ? 0. 75p 4 8. 9. ? ? ? 10. ?0. 80p - ? 0. 90p ? 0. 95p - ? 1. 15 Above ? 1. 20

Do you enjoy the taste of the Red Bull energy drink? ? Yes ? No Do you believe Red Bull is easily available to purchase? ? Yes ? No If no, where else would like it to available... ______________________________________________________________________________________ _________________ 11. 12. Do you feel the effects of Red Bull, 'vitalizes body and mind'? ? Yes ? No Does the packaging of the Red Bull energy drink encourage or entice you to purchase the product? ? Yes ? No Who do you believe energy drinks are aimed at? ? Sports Athletes ? Students ?

Adults 13. 14. Post research review After successfully completing the required task, by gaining the primary research into the Red Bull Energy Drink, receiving the views and opinions of the targeted consumers. The concluding results demonstrates both the customer’s values and expectations towards the energy drink, consequently expressing the overall requirements to the product. 1. 5 Gender Series1 27 23 Male Female We can see from the results that the selected individuals who participated in the survey consisted of both similar numbers from each gender.

This was implemented to gain a higher and yet even number of responses, consequently resulting in a more efficient outcome. 2. Age Series1 26 10 6 8 2 Under 16 16-18 19-25 26-35 Over 35 3. 6 Are you aware of the Red Bull Energy Drink? Series1 50 0 Yes No The results from this questionnaire depict the fact that Red Bull is an extremely well known brand within the UK population. The fact that 100% of the individuals asked were aware of this product demonstrates the highly successful marketing strategy implemented by this organisation. 4.

Are you a consumer of energy drinks? Series1 39 11 Yes No From the selected individuals who completed the questionnaire, 78% of them considered themselves as a consumer of energy drinks or such products. This implies that they regularly purchase a form of energy drink, whereas the other 22% may have only consumed a maximum of one. These results demonstrate that there is a high and constant demand for these products. The attributes contained within this product, be it the taste, effect or availability promote the level of success to which this product has received.

However, after analysing the results for this specific question, the 11 individuals who announced that they were not consumers, expressed their reasoning behind their decision, indicating they were ‘aware of the health issues’ associated with the product which had deterred them from consuming such products. 7 In addition, others disliked the taste, implied that they received little or no effect from the drink or expressed their dissatisfaction at the price in relation to the quantity. 5. On average, how many energy drinks do you consume a week? Series1 17 11 9 8 5 0 1-4 Cans 5-8 Cans 9-12 Cans Over 12 Cans . What do you believe to be the most popular energy drink? Series1 37 12 1 Red Bull Relentless Lucozade 0 Red Devil 0 Rock Star This fuels the theory that Red Bull is the most dominant organisation within this specific market. It appears that despite the alternative options available, the competition within the energy drinks sector cannot compete to a similar level. 8 7. Value Value of the Effect Series1 44 0 1 2 0 3 1 4 5 5 This product is designed to provide stimulation for the consumer, due to this it is an attribute that the individuals who participated in the questionnaire value extremely high.

If benefitting from the energy drink, the product is meeting requirements and specification of the consumers. Consumers purchase such products to receive the mental and physical benefits as demonstrated within the results. This portrays a very clear conclusion that the customer values the ‘effect’ of the product extremely high, a clear indication that it is a key attribute of the product. Value of the Taste Series1 18 13 8 11 0 1 2 3 4 5 From the results we see that consumer visualises a direct relation in terms of the taste of the product to the value they gain.

With such a high percentage of the individuals selecting between ‘3 and 5’ on the valuation of the characteristic, it concludes that an essential factor for the product is that it should be appealing through its flavour. 9 Value of the Price Series1 28 14 6 2 0 2 3 4 5 1 From the research, we can conclude that the price of the product has an extremely important influence on the consumer’s interpretation towards the value of the product, therefore influencing the demand. Prior to creating this questionnaire, the back ground research into the Red Bull Energy Drink, resulted in the discovery that a single 250ml unit retails between ? . 15 and? 1. 38, a significant increase with regards to the cheaper alternatives available, most noticeable an energy drink, ‘Emergy’, produced by Bolt Beverages Ltd, whereby a single 250ml unit retails between ? 0. 25-? 0. 30p Despite the market being dominated by Red Bull, with such a high contrast in relation to price, without brand loyalty, it is an aspect that the organisation must study as demonstrated by the findings in Questions 8 and 9. Value of the Capacity/Quanity Series1 22 15 9 4 0 1 2 3 4 5

Typically, Red Bull have been associated with the small and compact 250ml unit can, designed for convenience and ease of storage, however it later released an alternative 355ml product to tackle the changes in demand. 10 From the results gathered, concluding this attribute, we can discover that the consumer values the quantity of the product to which he or she is purchasing. It is arguable to state that a dramatic change in this element could affect the demand and consequently the value to the customer. Value of the Appearance Series1 16 16 8 5 5 1 2 3 4 5

The design and packaging of the Red Bull energy drink relates back to a Thai product that has been available in the Far East for many years and it was not until Red Bull bought these rights that the ‘Blue and Silver’ can was created. However, after studying the results from the survey, it appears that the appearance of the product, within this market, is not as fundamental factor in the decision making process for purchasing this product. Value of the Availability Series1 16 18 15 0 1 1 2 3 4 5 This product is designed to aid in stimulation when required. Due to this spect of the product, being able to regularly purchase an energy drink with ease is essential as demonstrated by the results. As everyone is individual, and if a consumer of this product, then the demand of the product will vary, consequently it must be easily accessible. 11 After studying the results, availability and convince is an attribute extremely valuable to the consumers, therefore if this arguable to state that without ease, people would look elsewhere. 8. Is the retail price 'Value for money? ' Series1 32 18 Yes No The results to this particular question drew an interesting conclusion.

It appeared that despite being such a dominating figure within the market, 64% of those who answered the questionnaire felt that Red Bull was not value for money. After analysing the responses of those who had selected ‘no’, many of their criticisms had fallen in relation between the quantity and price of the product, as demonstrated by one individual who stated that “You pay too much for too little…” It appeared Red Bull tried to tackle this problem by producing the 355ml can, however, due to the increase in quantity, it led to an increase in price. . On average, how much would you be willing to spend on an energy drink? Series1 21 4 ? 0. 50? 0. 75 ? 0. 80? 0. 90 ? 0. 95? 1. 15 16 9 Over ? 1. 20 12 As previously researched, an average price for a single 250ml can of Red Bull retails between ? 1. 15 and? 1. 38. After analysing the results gathered from the questionnaire, it appears that this range seems to exceed that of which many of the UK population would averagely wish to pay between ? 0. 80 -? 0. 90.

Due to this, it is arguable to state that despite consumers valuing the product to the extent of the effects gained, in comparison to the cheaper alternatives regularly entering the market, it could result in the consumption of this selection, a possible long term problem for Red Bull. 10. Do you enjoy the taste of a Red Bull Energy Drink? Series1 39 11 Yes No As previously discovered, the consumers value the taste of this product, making it essential that the targeted audience like this characteristic.

After analysing the results we can discover that Red Bull have created a flavour that is popular within the market, consequently a successful attribute for the product. 11. Is Red Bull easily available to purchase? Series1 47 3 Yes No 13 Due to the nature of this product, it is essential that the organisation to match the demand of their product with a constant supply when it is required. From the results gathered it appears that Red Bull have successfully met this criteria with only 6% expressing their observations, one individual stating that they ‘should be more regularly available in such places as vending machines’. 2 Does a Red Bull Energy Drink 'vitalizes your body and mind' ? Series1 37 13 Yes No The Red Bull Energy Drink is designed to give the consumer stimulation due to its content. As demonstrated from the results, 74% of those who consume this product receive the desired effect, implying that the other 26% either require more than one unit to receive the stimulation or due to the fact that everyone is different, they may not be affected by the levels of caffeine. 13. Does the packaging of the Red Bull Energy Drinks encourage you to purchase the product?

Series1 37 13 Yes No The design process for any organisation in relation to the packaging, is to attract or entice new or current customers to their products, it represents the company. As previously discovered, the design for the Red Bull can was based upon a simple Far Eastern design, however, it appears it is not an aspect the customer’s value, as 74% of the 50 individuals 14 asked stated that the packaging would not encourage them to purchase or repurchase a Red Bull Energy Drink. 14.

Who do you believe Energy Drinks are directed at? Series1 38 11 1 Sports Athletes Students Adults 0 Other Officially, Red Bull has been marketed as a product that is available for all ages evidently shown through the decision to base their marketing campaign on cartoon based adverting. However, after analysing the results, 76% of the individuals believed the stimulation drink was directed at students, evidently shown as only sports athletes received 22% and adult’s only receiving 2% of the votes. 5. Are you aware of the health issues associated with energy drinks? Series1 26 24 Yes No After the addition of ‘health’ related question, a worrying factor discovered from the results is that 52% of the individuals who participated in the questionnaire were unaware of the health risks associated with such a product, implying that these warnings are evidently not stressed enough, an indicator that Red Bull should make public the possible effects of their stimulation products. 15 16.

Would the health issues make you think before purchasing an energy drink? Series1 31 19 Yes No Moreover, the results of this question indicate that if the dangers of consuming vast quantities of these products were make more available, it may deter consumers from re-purchasing. Conclusions drawn from research The results generated from the questionnaire created a number of interesting conclusions in relation to the consumer’s perception of ‘value’ towards this particular stimulation drink.

Despite only focusing on such a small selection of individuals in comparison to the total number of worldwide consumers, it appears that within this market, any competing organisations should focus on attributes such as price, taste, effect and availability in order to meet the desired specifications of the target audience. The aspect of price appears to be an essential characteristic towards the ‘value’ for the consumer in relation to this particular product.

Due to the concluding results gathered from the survey, it is evident to argue that if the price of the product exceeded that of which the target audience are willing to pay, the demand for that particular brand would fall and due to the characteristics of the market, cheaper alternatives will continue to become available. Moreover, due to the fact that the energy drink is characterised as a ‘luxury good’ and not a ‘necessity’, the price is vital to depict the level of consumption of the product.

Currently, it appears that Red Bull have priced themselves above that of which the average consumer is willing to pay, despite their current position in the market. This could become a long term problem for Red Bull, as current consumers may turn to the cheaper alternatives in the future. In addition to the price, another clear ‘value’ attribute for the consumer was the taste of the product. 16 Due to the nature of this product, the taste is essential to the level of success within the market.

The individuals who participated within the survey measured this attribute extremely high, implying it is a value that is highly associated with the energy drink. Due to this, a drawn conclusion would stress the importance for an organisation within this market to develop a ‘taste’ that the consumers will enjoy. It is a characteristic that the consumers clearly seek as value and the results depict this, to which Red Bull should be deemed a success. Red Bull is designed for added stimulation, specifically for those who require it.

Due to the fact that consumption of this product varies on each individual, it has no constant pattern; therefore, the ‘availability’ to cope with the varied demand will portray the success or failure of an organisation in this particular market. The results gathered conclude that consumers associate this characteristic as an overall service, the level of value they gain. This product is designed and distributed to be a convenience, there when required, therefore without this function; the likelihood that consumers would remain loyal to the Red Bull brand is minimal.

Consumers value the ‘ease of use’ in searching and consuming any product, and this energy drink is no exception. Due to this, Red Bull has successfully gained a world wide network of consumers indicating they have successfully mastered the ‘availability’ attribute. Are basic customer requirements noticed by the product provider? Effect Red Bull have designed their energy drink to generate stimulation for the consumer, an attribute clearly valued by the target audience as demonstrated from the primary research received.

Red Bull achieves this effect due to the combination of ingredients within the product, consisting of “Taurine, Glucuronolactone, Carbohydrates, Vitamins, Glucose and Caffeine” (Red Bull® Energy Drink (2009), Ingredients. Available at: http://www. redbull. co. uk/#page=ProductPage. Ingredients, (Accessed 28th February 2009), however, it is “solely from the sugar and caffeine” (Malinauskas, Aeby, Carpenter-Aeby and & Barber-Heidal, K. (2007). A survey of energy drink consumption patterns among college students.

Nutrition Journal, 6(1), 35) that results in the stimulation being produced. The caffeine included within Red Bull causes a chemical in the brain, adenosine, associated with ‘sleep’, to be effected causing an increase of hormones to be released into the body, resulting in an increase in the heart rate and the level of sugar within the bloodstream, consequently causing a supposed physical and mental ‘boost’ of energy. Due to this, it appears that Red Bull have successfully achieved in creating a product that matches the requirements for this specific attribute.

It appears to be a characteristic that consumer’s value and Red Bull have incorporated this into their product design. Taste The research and results gathered from the questionnaire indicates that the overall taste attribute was successfully developed by Red Bull as 84% of the individuals valued this characteristic as an 17 important factor of this product, with a following 78% indicating they enjoyed the taste of the Red Bull Energy Drink.

Despite the drink being designed to reduce fatigue, not to deliver rehydration, due to the fact that it is a product highly associated with individual consumption, developing a taste that consumers will enjoy is essential in depicting the level of success of the product. The product must meet the requirements of the consumer and also appeal in all factors to gain continued success due to the alternatives available, all offering individual ‘tastes’. However, it appears Red Bull have adopted this specific value and created a taste that is popular towards its consumers.

Despite offering the original 250ml unit, equipped with its own unique taste, Red Bull have developed and released the ‘Sugar Free Red Bull’, a reduced calorie and sugar content alternative, with an alternative taste. Both versions appear popular within the market due to the position of Red Bull within the market and as sale figures demonstrate, indicating that the customer’s requirements have been achieved, the research and development into this attribute has been successful.

Availability The demand for energy drinks continues to grow every year, with Red Bull supplying over 130 countries worldwide with its products. Due to this, implementing an efficient supply chain to cope and the meet the level of expectations is essential as the results from the questionnaire conclude that it is an attribute the consumers highly value. Red Bull have adopted the consumers desires within the structure of their organisation with over 1850 individuals employed, of which 200 work within the Red Bull Headquarters to continue to develop and supply the market with energy drink products.

To coincide with Red Bulls desire to match this value from the consumers, to continue to make their products easily and constantly available, Red Bull integrated within OHL (www. ohlogistics. com) to increase the supply of Red Bull around the world, “OHL is Red Bull's single national provider handling more than 16,000 shipments in 2004”. (Ozburn-Hessey Logistics (2009) OHL completes Red Bull North America’s Logistics Network Implantation. Available at http://www. ohl. com/news/archives/2005-news/oh-logistics-red-bull. tm (Accessed: 28th February 2009) It is due to the implementation of such supply chains and the originations ERP (see Figure 1), Red Bull are able to continue to supply its consumers worldwide with a constant level of energy products. Therefore it is evident to argue that Red Bull incorporated this attribute, that of ‘availability’, adding value to the consumer, explaining why the organisation “sold 3. 5 billion cans worldwide” (BBC (2008) Thirst for Red Bull accelerates, Available at http://news. bbc. co. uk/1/hi/business/7254850. stm, (Accessed: 28th February 2009) 18

Figure 1 – Red Bull’s Enterprise resource planning (ERP) diagram Hewlett-Packard Development Company (2008), HP gives Red Bull the needed Stir in its ERP construction, Available at: http://h20195. www2. hp. com/V2/GetPDF. aspx/4AA1-7354EEW. pdf (Accessed: 1st March 2009) Price One aspect that Red Bull failed to incorporate with the consumer’s perception of ‘value’ was that of the price of the product. After analysing the results gathered from the questionnaire, there was evidence to state that the ? 1. 15-1. 38 price range did not match the ? 0. 80-0. 90 average that the consumers wished to pay for the product.

In addition, the results depict how vital this factor is for consumer value as 64% of those asked stated that due to the price in relation to the quantity, the product was not ‘Value for Money’. Consequently, if Red Bull does not address this aspect, they run the risk of losing their consumers and market share, causing possible long-term problems for the organisation. Is customer value considered in product presentation? The design of the Red Bull ‘blue and silver can’ is derived from a Far Eastern Thai design to which the ‘rights’ were purchased and then adapted before being marketed worldwide.

The design of the can has not differed since the original pattern was implemented in 1987 and therefore has not been affected by the values on the consumer, indicated by 74% of the individuals stating that the packaging of this product would not attract or encourage them to repurchase. In addition, the packaging, with specific reference to the quantity of the can was also an aspect that had not taken account the values of the consumer as depicted by the 64% of those who responded that the product was not value for money due to the quantity in relation to the cost. 9 The 250ml can was designed for convenience and easy storage despite the release of the 355ml addition; however, due to the packaging in relation to the price, it appears that Red Bull failed to acknowledge the consumer’s wants. Does the product provider have any mechanism to measure customer satisfaction? Red Bull does not currently have a mechanism to measure customer satisfaction. Sales activities The decisions and actions taken by Red Bull have concluded in extremely positive outcomes within their sale activities, as demonstrated a 7. % increase in worldwide sales in 2008, that after an increase of 13. 2% in 2007. These figures demonstrate the successful decisions implemented by Red Bull to adapt to the changes in the market, be it demand or the quantity of supply. The most evident change was Red Bulls decision to delegate the shipping and supply chain responsibilities to OHL in 2004. The decision to change the sales force resulted in a greater number of units being sold worldwide due to the ability to increase the number of shipments, evidently shown with the increase in sales, consequently benefitting both the consumers and Red Bull.

Accounts, billing and receivables ERP (Figure 1) Due to the yearly increase in sales, evidently demonstrated by the figures in 2007 and 2008, Red Bull has continued to update and improve aspects of their ERP software which consequently support “marketing and sales, field service, product design and development, product and inventory control…” (Slack, Chambers and Johnston, R (2007), Operations Management, 5th edn, Pitman Publishing, page 452) These changes have consequently led to an alteration in the accounting, billing and payments, in the form of a software upgrades.

These changes predominantly made the worldwide purchasing network far more efficient, quicker and easier for both the consumers and Red Bull; it reduced the chances of human error, the merger of databases not only reduced the time delay between order, confirmation and suppliers but due to the ease of ordering, especially online the consumer, be it another organisation or individual receive the products faster.

In addition, the changes consequently improved communication with both consumers and other departments, resulted in faster upgrades and maintenance of the network, resulting in a more efficient service and a more ‘value adding experience’ for the consumer. Customer/materials/information processing operation MRP ‘Material requirement planning’ is an essential process that any organisation must implement to compete, complete, forecast and aid in the production of their products to match consumer demand. 0 Red Bull implements a similar design to increase the efficiency of their organisation, based upon Robert Steere, director of operations at Red Bull, who stated their aim is to “build a network architecture that can bend with customer demands, and stay apprised of personnel and technology fluctuations” (Modern Materials Handling (2005) How Red Bull puts a charge in its supply chain. Available at: http://www. mmh. com/article/CA6289323. tml (Accessed: 1st March 2009) Due to the nature of this product and the inconsistent levels of consumption, Red Bull relies heavily on previous customer and purchase orders to try and forecast demand; consequently the MRP affects both the supply and production chains. By combining these aspects Red Bull are able to match the short-term predictions with the materials to be able to produce both the energy drink and packaging.

Red Bull has to produce enough units to match the varying demand and have the ability to deal with any sudden changes, to be able to alter their processes to complete the new levels of consumption. MRP 2 This extended version the original MRP is evident throughout Red Bulls organisation as demonstrated by the integration with OHL. This decision was implemented to increase the capability and availability of the product and also the efficiency and speed in which the units could be delivered.

Prior to the integration, the difficulties, time delays and human error caused by having to update and maintain the individual databases was not only time consuming, it was not cost effective. The integration not only resolved these problems it increased sales, most noticeable in Europe (+12%), the Far East (+79%) and South America (+26%). Design The design process for any product produced by Red Bull, be it improvements or variations of the previous products, every decision is intended to result in the consumer gaining a more value experience, directed through their supply chain.

Can Red Bull re-designed the original 250ml unit can and created the 355ml version in order to offer a variation to the consumers, but also cope with the changes in demand within the market, available are: ? ? 250ml 355ml Alternatives In addition to the options of quantity, Red Bull created a Sugar Free alternative to the original design to appeal to a wider market, soon to be followed by the Red Bull Cola drink. 21 Bibliography ? ? ? ? ? ? ? Slack, Chambers and Johnston, R (2007), Operations Management, 5th edn, Pitman Publishing Malinauskas, Aeby, Carpenter-Aeby and & Barber-Heidal, K. 2007). A survey of energy drink consumption patterns among college students. Nutrition Journal, 6(1), 35 Reynolds, John European energy drink sets sights on Red Bull in UK Marketing Week (01419285); 1/24/2008, Vol. 31 Issue 4, p9-9, 1/3p 0141-9285 http://www. efbf. org/jobs/Sales/Find-job-Outside-Sales-Representative-Red-Bull435684. htm http://www. mmh. com/article/CA6289323. html http://news. bbc. co. uk/1/hi/business/7254850. stm http://www. redbull. co. uk/#page=ProductPage 22

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