Armstrong and Kotler define environmental/situational influences as “all those factors particular to a time and place that do not follow from a knowledge of the stable attributes of the consumer and the stimulus and that have an effect on current behavior” (Armstrong & Kotler, 2011). Red Bull understands the pertinence of these factors in the decision-making process and therefore, engineers its marketing and sales strategies in accordance.
In order to deliver value to the company and its shareholders, Red Bull’s environmental scan considers factors such as stakeholder analysis, the energy drink industry/market, competitor analysis, demographic variables, psychographic variables, and economic trends. In regard to stakeholders, Red Bull utilizes the P. E. S. T (Political, Economic, Social, and Technological) model of analysis. In regard to Political Stakeholders, the company is subject to the mandates of both domestic and international institutions and the international, domestic, and federal governments and environments in which the company operates.
In regard to Economic Stakeholders, Red Bull is also influenced by its customers (which include but are not limited to corporate, grocery stores, and general public), vendors, transportation services, banks, and competitors such as Monster Energy, Rock Star etc. In considering Social Stakeholders, the company is influenced by employees/team members, potential employees, community and environmental leaders, unions, joint ventures, and alliances and any other similar groups that exert some influence on their operations.
In regard to Technological Stakeholders, this includes Red Bull’s Board of Directors, Shareholders, potential investors, and market participants. In order for Red Bull to maintain their absolute advantage in the industry, the company prioritizes its interactions with these various stakeholders and strives to maintain a positive relationship with these entities as they have the ability to not only affect their activities but also to curtail them. According to Bateman and Snell, “developments outside the organization can have a profound effect on the way managers and their companies operate” (Bateman & Snell).
The energy drink industry is an interesting one because in comparison to other beverage industries it could be categorized as fledging. However, this particular segment of the market generates billions of dollars annually. It is also an industry that continues to experience significant growth. Our research indicates that there are “more than 300 varieties of energy drinks representing more than 200 brands in the United States alone (Energyfiend 2009). Although one would imagine that this should be cause for consternation, Red Bull’s market share accounts for 42% of the entire industry (Red Bull USA, 2012).
Current market projections indicate the continued growth and profitability of the industry. Demographic data offers pertinent information of one’s target market. By reviewing this, the company can determine the behavior of its target market and can (to an extent) predict what their response to its products will be. Via effective analysis of consumer behavior and trend analysis, organizations can project and predict the behavior and patterns of their target audience.
The practice of consumer behavior permits business entities to strategically position their products and services within a market. As such, demographics, psychographic, geographic, and behavioral segmentation play an integral component in predicting consumer behavior and spending patterns. In the case of Red Bull, “…the majority of energy drinks are targeted at teenagers and young adults 18 to 34 year olds due to this generation’s on-the-go lifestyle and receptiveness to advertisements for these types of products” (Lal 2007).
The analysis of demographic variables is invaluable in strategic planning and the formulation of a viable marketing plan. Psychographic variables consist of the analysis of particular variables pertaining to an organization’s target market or audience. Utilizing variables pertaining to spending habits, preferences, social class, level of education, and lifestyle, Red Bull can better direct their goods and services to particular subsets of the market. In fact, Red Bull’s existence and performance in the market can be attributed to psychographic variables.
The company’s success could be attributed to their ability to fulfill the “behavioral needs, attitudes and… customers consumption patterns” (Perreault, Cannon, McCarty 98). Red Bull considers psychographic variables pertaining to lifestyle- i. e health conscious, athletic, consumer preferences, etc. Via psychographic segmentation, Red Bull has capitalized on brand recognition and product differentiation- a strategy that has contributed immensely to the company’s success. Red Bull has become synonymous with high quality beverages, fastidious manufacturing processes, sourcing, and price.
The adherence to brand recognition reflects the importance of iconography. Brand image is all that a customer can possibly associate with a particular product or corporate identity” (Using Perceptual Maps in Marketing, 2012). According to Armstrong and Kotler, “consumer behavior occurs within four broad categories or types of situations: the communications situation, the purchase situation, the usage situation, and the disposition situation (Armstrong & Kotler, 2011). Fundamentally, these variables represent significant nuances of Red Bull’s target audience.
Red Bull’s continued absolute advantage in the market needs to place added emphasis on their capabilities, service delivery, logistics, convenience, authenticity, and customer satisfaction. An environmental scan allows companies to adapt to the vicissitudes of the market because it is one of the way’s by which the company can determine patronage, maintain customer loyalty, and attract potential customers. In addressing these shortcomings and vulnerabilities, Red Bull can maintain their market share, remain a competitive force in the industry, and ensure their continued success in the beverage industry.