Idea Transcript
Energy revisited in 62 billion cans Origins As a student in Vienna, Dietrich studied world trade and commerce. After graduating, he worked for Unilever, then Blendax, a German manufacturer of toothpaste. This position involved much global travel. In 1982, Mateschitz visited Thailand and brought home with him a number of energy drinks he sampled there. According to The Economist, Mateschitz was sold on a product called Krating Daeng after it took away his jet lag. He later claimed to consume up to eight of the drinks a day. Krating Daeng, which is Thai for "Red Bull," was a drink popular among cab drivers and other blue collar workers. It had been produced since the early 1970s by the T.C. Pharmaceutical Co., founded in Thailand in 1962 by Chaleo Yoovidhya, a Blendax licensee. (T.C. Pharmaceutical eventually formed the subsidiary Red Bull Beverage Co. Ltd.) Mateschitz founded Red Bull GmbH in Austria in 1984 as a 49 percent partner with Chaleo Yoovidhya and his son. The company began marketing its namesake drink in Austria in 1987; a million cans were sold in the year. Red Bull made its first forays into the southern hemisphere, via South Africa and Brazil, in 2001. In October 2002, Red Bull opened a regional headquarters in Dubai and was planning to build a plant there as well. Red Bull's worldwide sales were estimated at EUR 1.4 billion ($1.32 billion) in 2002. Milestones Milestones as mentioned and highlighted in the company’s history: Max Verstappen claims victory in Malaysia Max Verstappen celebrated his 20th birthday with a win at the Malaysian Grand Prix in 2017. Let's take a look back at some of the best drives in his career so far. Max Verstappen started his 20’s with a commanding, mature victory at the Malaysian Grand Prix that belied his lack of years and also compensated for the seven retirements that have blighted his season. Verstappen has been one of the most talked-about prospects in Formula One since before his debut with Toro Rosso, when he became the youngest driver to ever race in F1.
Max Verstappen youngest F-1 winner
Max Verstappen became the youngest driver to win a Formula One race when he scored a sensational victory on his debut for Red Bull Racing at the Spanish Grand Prix. Red Bull Iznanka
The unique Russian dance theatre show created in collaboration with the emerging experimental street dance collective Jacks Garret. The show premiered in 2015 and has been followed by an expansive Russian tour in 2016 covering 5 cities. Over 6 000 spectators had a chance to experience this one-of-the-kind theatrical performance. The show has been positively acclaimed both by the audience and media. Based on this success the tour will be resumed in 2017.
Give me five!
One weekend - five titles for Red Bull Motorsports athletes: Marc Marquez (ESP) - MotoGP Champion, Sébastien Ogier (FRA) - World Rally Champion, Mattias Ekstroem (SWE) - World Rallycross Champion, Marco Wittmann (GER) - DTM Champion, Kenan Sofuoglu (TUR) - World Superbike Champion. Olympic pool redefined
Forty years after Olympians first tested its waters for the 1976 summer games, Montréal’s Olympic Pool was transformed into a multilayered listening environment that blurred the lines between sound, light and water. A custom-built soundsystem diffused a specially commissioned work by Lorenzo Senni, a live set by Dopplereffekt and an all-Drexciya DJ Stingray set through a network of speakers located under the water, at the surface of the pool and in a dedicated dancing space – making for a one-of-a-kind event at the Red Bull Music Academy 2016. Bryce Menzies (USA) - New Frontier Truck Jump World Record
After six months of preparation, Bryce Menzies made history by jumping his off-road truck 379.4 feet over a New Mexico ghost town to set a new truck distance record. The project saw Menzies launch ramp-to-ramp in his Pro 2 race truck, soaring past the official Guinness World Records distance record of 301 feet as well as the unofficial record of 332 feet. An adjudicator for Guinness World Records was on-site to verify the distance and authenticate the new record.
Dietrich Mateschitz
Some facts on Dietrich Mateschitz: Born on the 20Th of May in 1944 in Marein in Murztal, Austria Lives in Fuschl am See, where the headquarters of Red Bull are Partner Marion Feichtner, parents of a son Owns Red Bull and started Red Bull with a partner Net worth: approx. 15 bln. dollar Ownes a.o.: 4 football teams: Red Bull Salzburg, Red Bull Leipzig, Red Bull Brazil and the New York Red Bulls. Formula 1 teams: Red Bull Racing and Scuderia Toro Rosso Formula 1 circuit: the Red Bull ring in Austria The private island Laucala (near Fiji) A submarine and a private plane Started the Taurus Foundation (helps wounded stunt professionals) Wings for Life (research on paraplegia (“dwarslaesie”) The company The original formula was altered for Western palates. Some ingredients were dropped and carbonation was added. Components of the legendary elixir included B vitamins, glucuronolactone, sodium, and caffeine. One ingredient, the amino acid taurine, was derived synthetically, not from bull testicles, as rumor had it. Red Bull's selling proposition was that it increased stamina and mental concentration, making it a natural for one of the original target users; long-distance drivers. The taste of the thick yellow beverage, said to be akin to liquid gummi bears, lent added distinction to the brand. Red Bull GmbH, leads the world's energy drink market. Red Bull holds a 70 percent share of the world market for energy drinks, or functional beverages, a category it was largely responsible for building. Its dominant position in the fastest-growing segment of the soft drink market in a number of countries has drawn a number of imitators. Rumor has it that more than a 100 companies tried to copy the formula.
Red Bull has become a case study in successful guerilla marketing in the United States and United Kingdom. Marketing is aimed at hip young people with active lifestyles, though the formula began as a popular tonic for blue collar workers in Thailand.
International Expansion in the 1990’s Red Bull's distribution expanded into neighboring countries Hungary and Slovenia in 1992. Red Bull was introduced in Germany in March 1994. By June, it was claiming a quarter of the sports drink market there, reported the Associated Press, putting it ahead of Gatorade. It was priced about three times as much as a can of Coca-Cola. Red Bull was introduced in the United Kingdom in 1994 and marketed there as Red Bull Stimulation after 1996. Red Bull entered the United States in 1997, focusing at first on four western states: California, Oregon, Texas, and Colorado. It was marketed to Americans as a non-corporate alternative to Coke and Pepsi, and both packaging and pricing helped set it apart. The drink was sold in unique, narrow 8.3-ounce cans for $2. Red Bull associated itself with the extreme sports movement. The company sponsored snowboarding and free skiing contests and Flugtag, a homemade flying machine challenge (Mateschitz was an enthusiastic collector of vintage aircraft). While Red Bull had appealed to athletes and, in the United States, tired white collar workers, the real story of Red Bull's growth lay in the promise of further endurance at clubbing, giving it a special appeal for young people exhausted from working hard all week. The Los Angeles Times reported that the beverage appeared to glow green under the fluorescent light of nightclubs. The drink became a very popular mixer, especially with vodka. Red Bull deepened its involvement with the club scene by sponsoring a month-long school for deejays in New York City called the Red Bull Music Academy.
Worldwide sales were logged at 300 million cans in 1998 by Beverage World. By the end of 1999, Red Bull was sold in more than 50 countries, and sales estimates varied between 600 million and one billion cans worldwide. Red Bull led the energy drink category in the United States and the United Kingdom, where it displaced the venerable Lucozade brand owned by pharmaceutical company SmithKline Beecham (later GlaxoSmithKline). The company promoted the lift the beverage offered with the slogan "Red Bull gives you wings." Traditional advertising was limited, as the company focused heavily on getting product samples into the right hands. The company sometimes put up edgy, graffiti-style billboards. In the late 1990s, Red Bull produced animated TV ads for mature markets. By this time, Red Bull GmbH was the most highly valued company in Austria, worth about $11 billion according to one estimate. This made Mateschitz, with his 49 percent holding, the country's richest individual. Continued Success in the 2000s Mammoth beverage marketers such as Coca-Cola Co. and Anheuser-Busch were pouring out new drinks designed to capture a share of the success of "cult" energy drinks, a $300 million market. PepsiCo acquired South Beach Beverages, maker of the SoBe brand, in 2000, and Quaker Oats, owner of Gatorade, the next year. Liquor distributors were also eyeing Red Bull's share of the mixer market, introducing pre-mixed premium drinks such as Smirnoff Ice. Former Red Bull employees launched a competitor, Roaring Lion, in 2001, its marketing and distribution tailored for the nightclub market. Red Bull sued a number of bars for surreptitiously substituting knock-offs when customers ordered mixed drinks specifying Red Bull. Red Bull's Australian distributor rolled out its own competing beverage called LiveWire. A court later found Sydneywide Distributors copied Red Bull's packaging too. In the meantime Red Bull introduced the sugarfree version, further strengthening their market position. Now 62 billion cans of Red Bull are sold worldwide in 2016, representing an increase of 1.8% against an already very successful 2015. Company turnover exceeded the six billion euro mark for the first time, increasing from EUR 5.903 billion to EUR 6.029 billion. The main reasons for such positive figures include outstanding sales in the markets in Chile (+28%), Scandinavia (+13%), Poland (+13%), the Netherlands (+12%) and South Africa (+10%), combined with efficient cost management and ongoing brand investment. Ad of the end of 2016, Red Bull employed 11,865 people in 171 countries - compared to the end of 2015 -when they had 10,997 employees in 169 countries. Now Red Bull is targeting the core markets of Western Europe and the USA and growth markets in the Far East, while also focusing on the worldwide roll-out of the Red Bull Editions. Online Red Bull Media House manages all online activities for the Red Bull brand through platforms, content, and social media. As the content curator, platform owner, and operator, Red Bull Media House extends the real-life experience of their consumers into the digital world by focusing on unique concepts and content. For partners, this means not only greater overall reach, but also segmented targeting of specific interest groups.
Red Bull’s online channels RedBull.com The Redbull.com network is the main entry point to a world of content, games, social tools, and applications. RedBull.TV Platform for live programming and on-demand video content from Red Bull Media House and its partners. Red Bull TV is a digital video service that features inspirational programming from the world of Red Bull in live global events and an extensive selection of sports, music and lifestyle entertainment. Attracting viewers of all kinds, Red Bull TV takes audiences up close and behind the scenes to reveal the real-life stories of a diverse range of people – fascinating personalities who are compelling not only for their achievements, but also for their passion and emotion in facing life’s toughest challenges. Available in a variety of formats, Red Bull TV broadcasts through several channels: 1. Red Bull TV window for broadcasters
Licensing partners can request content tailored to specification for any broadcast or format, with negotiable frameworks and flexible licensing models. 2. Red Bull TV App
The Red Bull TV App brings the anywhere, anytime engagement of Red Bull TV to mobile devices (iOS, Android and Windows Phone), as well as selected partners’ platforms such as Amazon Fire TV (U.S.), Apple TV, Chromecast, Kindle Fire, Xbox 360 and several Smart TVs.
3. Red Bull TV Online
Red Bull TV provides online viewers what they want, when they want it. Fresh content is loaded daily, and even live events are served up free of charge. RedBulletin.com RedBulletin.com is based on the idea of Visual Storytelling and translates The Red Bulletin magazine’s content into the digital world. Servus am Marktplatz Servus am Marktplatz is our online shop in the Servus World. A market place full of exclusive high-quality products. Social Media Our social channels are highly frequented and liked by millions of followers, friends and fans. Speedweek Cars, motorbikes and the sound of engines. Every issue brings all the latest information on global motorsports events. Max Pichter Max is an experienced manager working in International business for a pretty long time. He thinks he knows most ins and outs and is fully convinced that an energydrink like Red
Bull has a long period of further growth ahead of it. It survived the whole health hype, among other things, and younger people will always like the boost an energy drink can give them. Max remembers a period in which both Dietrich and himself could have used it, when both where ambitious young men working on getting high up in the Austrian skiing hierarchy. With varying success, as Max remembers, but always with a lot of fun. Max truly believes in the concept of bringing products directly to the consumer. A number of parties already tried doing that (including supermarkets of course, shaving knives, men’s underwear, restaurants and fast food shops, etc. ) Where Max is going to make the difference is that he will be able to improve the business model of all the home delivery activities. Supermarkets have a difficult time in getting their home delivery services profitable, mainly because they have to extend their services. In the conventional supermarket business model a customer will pick their own products, put them into a shopping cart, take them to the counter, pay them, bring them to their car or bicycle, bring them home, and put them away. If you deliver to the final customer the supermarket has to do that, excluding the “put them away” part. This seems to be one of the most important elements in not getting the operation profitable. But: especially with recent distribution developments it might be very interesting to start up a new delivery service, working with all available parties, and acting as a middlemen in getting a fixed number of cans in a fixed frequency to a fixed and growing number of customers. This should improve the business models of the companies involved, because we are looking at a continuous business, and we can offer them a higher than average profit margin. Obviously this is only going to work with the parties who have a “sort of” fixed customer base and a “sort of” fixed frequency. Max plans to start the operation in Northern Europe, because a number of variables seem to be favourable for this specific business model. Northern Europe will be defined as: The Netherlands, Germany, the UK, Denmark, Finland, Sweden and Norway. He plans to introduce the concept in Southern Europe a year later. It seems to be the right time to develop the concept of a “distribution agent”. Max wants to call it the “Red Bull Direct Energy Service” (RBDES) He intends to check the buying intention for the direct energy service in Northern Europe, and uses the opportunity to immediately check the concept for Southern Europe also, with the intention to roll it out as soon as possible. The outcome of the market survey on establishing the buying intention is:
Will subscribe to RBDES Will not subscribe to RBDES
Northern Europe 172 136
Southern Europe 184 208
The outcome is of the financials of the business case is the following, (k ((.000)) euro’s)
Year Year Year Year Year
1 2 3 4 5
Turnover 1.000 k 2.000 k 3.000 k 4.000 k 5.000 k
Cost of sales 500 k 1.000 k 1.500 k 2.000 k 2.500 k
SGA 80 k 100 k 120 k 140 k 160 k
Depreciation 25 k 50 k 100 k 100 k 100 k
Interest 0,6 k 1,2 k 2,5 k 2,5 k 2,5 k
Max calculates with an investment of 125 k in year 1, a total investment of 250 in year 2, and total 500 in year 3 and further. Max calculates with a hurdle rate of 15 % and he uses a 5 year period to calculate the return of the project. For all practical purposes Max includes the extra investment of year 2 and 3 in the cash flows of those years. Text: drs. R.J. Fetter Intersumma, based upon public information with alterations, Max Pichter and questions from R.J. Fetter.
Attachment 1 Supporting information on degrees of freedom and reliability
Degrees of freedom
Reliability 0.95
Reliability 0.975
1
3,84
5,02
2
5,99
7,38
3
7,81
9,35
4
9,49
11,14
5
11,07
12,83 END
Questions and answers.
The answers should be seen as indicative; obviously a number have different answering modes. 1. Perlmutter developed a model of internationalization. a. Explain the outline of the model in relevant detail Answer: EPGR, coming from a truly national (local) company you will grow through an export company into a multinational into a truly global company - Ethnocentric. What we do in our home market is basically the benchmark for what we do in other countries. Hardly any regional adjustment. - Polycentric. Local companies do have a certain degree of independence. Activities are partly tuned to local or regional circumstances. -Regiocentric. Decision making within regions (countries together in regions, f.e. the America’s) - Geocentric. Starting from a worldwide platform, country organizations are integrated, still ensuring both integral strategy and local differences. HR is being transferred without looking at nationality. Challenges in the process of internationalization will be the balance between a fully local (regional) approach and trying to save costs by standardizing the marketing mix.
b. Indicate the position Red Bull has in Perlmutters model. Answer: a healthy market, driven by a continuously increased position in the TOM (Top of Mind) position of young people regarding the market for sports drinks. Strong business development, resulting in sales in 171 countries. As usual with fast moving consumer goods (supermarkets) there is a relatively low income elasticity, as people will always continue to buy these kind of products. Peculiar in Red Bulls position is that it is a truly global position, but some of the characteristics are that of a domestic operation with an export department. All communication is truly standard, the product is standard all over the world, for the rest of the marketing mix is uniform.; the World as one”. Red Bull is comparable with Coca Cola in the beginning; everything is the same everywhere.
2. Sponsoring is a major factor in the communication platform of Red Bull. a. Indicate the major characteristics of sponsoring. Answer: Sponsoring can be defined as: (based on Marketing Lexicon): an activity whereby one party materially supports (usually in monetary or financial form) another party or person who performs an interesting performance (either sport , creative, etc) which is interesting for part of a targetgroup, and in return receives brand or name recognition. b. Indicate the most important advantages and disadvantages of sponsoring. Explain your answer. Answer: Advantages: - you might realise a large reach with a relatively low financial effort (if the sponsored activity is very popular (Max Verstappen in the beginning of his career f.e., Jumbo and Exact) - might take you global relatively easy (if it is no surprise, we can safely assume that Jumbo has hardly direct international ambitions) - especially with social media an enormous spin off is a possibility. Disadvantages: - closely tied in with the sponsored activity (Nike with Tiger Woods, Rabo with doping and cycling etc) - comparatively little control over the sponsored activity compared with other forms of communication. c. How effective would you rate the Red Bull sponsoring program. Answer: - very effective in increasing brand value on all parameters (awareness, loyalty, image and personality) - very effective in creating a bond with younger people who are ambitious in sports and hobbies. But: Extremely broad and probably doing a lot more than necessary in realising business
goals. Mateschlitz gives the impression that there is quite a lot of personal interest. 3. Tracy and Wiersema identified three so called value disciplines or strategic directions. a. Name those three value disciplines including explanations and relevant examples. Answer: Product leadership, f.e. Apple, your product is leading on a number of relevant aspects. (relevant for the customer) Customer intimacy, f.e. McKinsey, the best total solution for your customers. Operational Excellence, f.e. Lidl, targeted assortment, minimal overhead, usually a very competitive price level. b. Name the value discipline Red Bull uses, include your arguments to support your answer.
Answer: Ped Bull seems to be extremely successful in providing the best product (for a premium price). Numerous competitors tried to come up with a similar product and although they succeeded they never got the same appealing product (products in all aspects) as Red Bull. 4. Assuming Dietrich Mateschitz will at one point in time sell his company interest and another party will take over; they might want to change to a more conventional communications program. a. What are the outlines of a (more) conventional communications program? Answer: Define your objectives Define your communications target group Outline the communication propositions, message, the pay-off Outline media, incl social, define media reach. Outline TOV (Tone of Voice) Indicate appearance, colours etc. Action and timeline Budget and control b. Design an alternative communications program for Red Bull in relevant detail. Answer: Objective: f.e. retain current levels of awareness and loyalty Be intimate with some of sports (target groups), be specific Try to define what you would like to retain in the sponsoring and social media program Restructure all media exposure including social media activity (skip Red Bull t.v. f.e.) Restructure your sponsor program You might propose to skip (f.e. the flying program, skip one of their F1 teams)
Try to tune your online and social media more specifically to a narrower and maybe diverse target group. 5. Max plans to start the operation in Northern Europe, because he thinks a number of variables are supporting this decision. a. Name at least five factors which could support Max his decision to go to Northern Europe first. Answer: Northern Europe has major advantages for this kind of business: a. high penetration of internet in general b. high penetration of online shopping c. used to home deliveries d. used to pick up points e. sophisticated buying behaviour, and probably higher brand loyalty b. Explain why those factors would support going to Northern Europe first. Answer: Both high penetration of internet and the high penetration of online shopping result in getting used to home deliveries and on the other hand increasing irritation with some of the complexities of online ordering (security, safe accounts, etc). Red Bull has a large and loyal target group which probably is interested in getting their Red Bull delivered to their home address, in a fixed frequency and in a fixed amount. Obviously you should target the heavy user. (20% of your customers responsible for 80% of your turnover). c. How would you asses the attractiveness of the plan in the longer term, include your arguments. Answer: Long term, - your spoiling your heavy user which will almost certainly further increase customer loyalty - the habit of getting your “fix” of Red Bull daily will almost certainly further increase loyalty with the heavy user group - plus, the consumption with the heavy user group will increase because of constant availability of the product. So in general very attractive for Red Bull. Whether the concept is as attractive for Max remains to be seen. If his bond with Mateschitz loses effectiveness, he might be confronted with increased competition.
6. A concept which is embedded in the marketing concept is customer value.
a. Define customer value in relevant detail. Answer: The total of attributes, advantages, characteristics and image of a certain product, subjectively valued and including the relationships with suppliers. A good customer value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors. Gaining a customer's attention and approval will help build sales faster and more profitably, as well as work to increase share. Understanding customer needs is important because it helps promote the product. For a business to have customer value proposition, there is a set of key components that businesses needs to focus, discuss and follow in order to gain and achieve success. The key components are: "developing a customer value proposition starts with an analysis of customers' needs, competitors' offerings, and the firm's strength to be outstanding within the share market. Possible to include Treacy and Wiersema and the customer journey. b. Indicate the customer value for Red Bull in RBDES ((Red Bull Direct Energy Service) Answer: Here you obviously have to include Red Bull as the supplier: so: - the unique product - unique product properties, including energy providing aspects - recognisable package - all “soft” aspects like all sponsoring and all communication in general. - the brand, brand name and brand value. You have to add for RBDES: - trouble free home delivery, ensuring - adequate supply for use at any given moment - ease of payment etc. c. Indicate where customer value differs between the normal buying behaviour for Red Bull and the buying behaviour in RBDES. Answer: the major difference is that the buying behaviour for Red Bull is traditional: - the need for the product - find an outlet - look at alternatives - obtain the product - drink it - manage the packaging (dispose of the can in difficult in f.e. Germany. For RBDES you look at the contract, a one time deal. 7. Two forms of analysis have been made to further support the business case for RBDES. Market research is supported by a chi square analysis and a cash flow analysis has been
made for the Business case. a. Calculate the chi square test and explain the outcome in marketing terms Answer: Calculate the expected value under the condition that the “nul hypothesis” is tru: Total in the table: 356 will subscribe 344 will not subscribe Northern Euroipe: total observed 308, Southern Europe; total observed 392 Grand total 700 356/700 x 308 = 156 356/700 x 392 = 199 344/700 x 308 = 151 344/700 x 392 = 192 (all rounded off downwards) difference always 16 (rounded off to come up with the similar numbers) 256/156 + 256/199 + 256/151 + 256/192 = 5,96 Degrees of freedom, 1 (number of rows – 1) (times number of columns – 1 ) = 1 Critical chi square is 3,84. Outcome of 5,96 is higher, so there is a difference in the intention to buy between Southern and Northern Europe. So, apart from logistical reasons, another argument for Max to start with Northern Europe.
b. Calculate the net present value of the financials and explain the outcome in financial terms.
T0 = 0 T 1 = 500-80 = 420 – 125 = 295 T 2 = 1.000 – 100 = 900 – 250 = 650 T 3 = 1.500 – 120 = 1.280 – 500 = 880 T 4 = 2.000 – 140 = 1.860 T 5 = 2.500 – 160 = 2.340 Present value of future cash flows:
295/1,15 650/1,32 880/1,52 1.860/1,75 2.340/2,01
= = = = =
257 492 579 1.063 1.164
Total present value of future cash flows = 3.555 = net present value because T0 is 0, highly profitable because the return is substantially over 15%.
This is not a surprise because investment is very low and pay-off is substantial. From a financial perspective this is a very interesting project.
END