Five years ago Red Bull had a market share of 75% in the energy drinks market. The price? Rs 100 to 110 for a can of 330 ml.
Then Sting came along. It was a 250 ml energy drink priced Rs 20/-. The market exploded and a complete new segment took to energy drinks.
Today the market share of Red Bull has declined to 7% but the absolute sales figures remain the same. How?
Let us figure this out. Five years ago Red Bull had 75% market share in a market that was let us say worth Rs 1000 crores. This means a sale of Rs 700 crores.
Five years later the market had expanded ten times. Now the market is worth Rs 10000 crores and Red Bull gets the same sale, 750 crores.
Should Red Bull be happy or worry. I would say worry more than be happy. Their absolute numbers have remained the same.
Market expanded 10x but market share declined by 70%. Right now number remain constant but did not grow.
The new users all seem to be lovers of Sting. Red Bull needs to rethink it's strategy. Introduce a low priced Red Bull at may be Rs 40/-. Will this move being in new customers from Sting or make old customers move away?
Hard times ahead for Red Bull. Appears to be caught "between a Rock and a hard place.
Red Bull paid 13 million for not giving wings .
ReplyDeleteLowering the price might bring in new customers who want more affordable alternatives like Sting. But it could also make loyal Red Bull consumers unhappy because they like its premium image and price (Brand dilution).
ReplyDeleteRed Bull should invest in market research, diversify products, innovate marketing and consider strategic partnerships to adapt to the changing energy drink market and maintain its competitive edge.