Innovation Strategy And Product Strategy Assignment Help
It is an INDIVIDUAL case study. Select a brand that you admire for its innovation strategy. Analyze the evolution of its product portfolio and the major innovations/milestones along its history. Discuss the innovation strategy and connect it with the product strategy.
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The present report is based on analyzing the Innovation strategy of Red Bull. It is an energy drink that is marketed and sword by an American company Red Bull GmbH. Red Bull is a functional beverage that comprises of ingredients like caffeine, taurine, B-Group Vitamin, sugars, and Alpine water. Red Bull was introduced by Dietrich Mateschitz in the 1980s. He generated the unique formula for the drink and also sold the product through an exceptional marketing concept. At present, Red Bull is marketed in 171 countries, and so far 75 billion cans have been sold out (Daly, Liou, & Brown, 2016)). The company has employed approximately 12239 employees all over the globe. In 2018, there has been a positive turnover of 3.8%. This is because of its outstanding sales in markets of India, Germany, Eastern Europe, Northern Europe, and Brazil (Remane, Hanelt, Tesch, & Kolbe, 2017). As a part of innovation, Red Bull is the first company that has introduced an energy drink in the market. It guarantees to provide energy in any situation such as lectures, studying, sporty, driving, or going out. Vitalizes both body and mind of the individual after drinking it. The report will discuss innovation strategy of Red Bull in context to product portfolio and will discuss its major innovations.
Analysis of product portfolio and major innovation
Being the first company to introduce an energy drink, it has also incorporated innovation in its product portfolio. It has basically three types of products that are designed keeping in mind various customers, (i) Healthy, (ii) Champagne, and (iii) Exclusive. The "healthy" variety of Red Bull drinks was introduced for the customers who are health conscious and prefer to maintain an active lifestyle. The healthy Red Bull is available in a "green" can. It is sugar-free and does not contain any calories. It is one of the most effective options for people to get instant energy in a healthy way that can last for hours. However, other options like sugar and caffeine last for only a few hours. It is an ideal option for those people who have a long day at work, or long driving, or students studying for exams. The prime reason for introducing a healthy product in the market is to shift customers from "can lovers" to "can buyers" (Elitok, Öz, Panc, Sarikaya, Sezikli, and Pala, 2016). According to Remane et al (2017), it is evident that most of the people identify themselves with brand and lifestyle, but on the other side, preferred to buy healthy products. For such a group of customers, the healthy green can Red Bull is the appropriate option. The prime objective of introducing a healthy drink is to get an entry into the health-based product market and acquire the customers belonging to the active lifestyle segment. Another innovative strategy behind the healthy line of the brand product portfolio is to capture the young students to make them more focused on studies and also provide energy for sports in schools. This approach not only helps in developing brand awareness and relationship at a young age but also brand loyalty, thereby securing the future customers. As a part of innovation, the company has replaced caffeine with other forms of natural booster like Guarana, B Vitamins, Ginkgo, and Arginine. Motiva the simple form of sugar is also replaced with healthier and complex carbohydrates having lower GI such as maple syrup, coconut palm sugar, and cane sugar. Secondly, the "champagne" variety of Red Bull drinks. This product was included in the product line to provide wings to the celebrations. According to the brand, it is the first kind of champagne that will help to boost energy in the party (Emond, Sargent, & Gilbert-Diamond, 2015). It is the first-ever and appropriate mixture of an energy drink with champagne and is available in the black can. The product was introduced with an objective to promote and advertise itself during the award-winning ceremonies of sports which it supports and sponsors. It is the first of its kind in the market and is also able to enter the club scene as well. Finally, the "exclusive" variety of Red Bull. The exclusive products condense unique are premium ingredients, packaged in a premium box along with the complementary products. Since it is an exclusive product, it has a high product range and has limited editions that are 1/499 (Daly et al, 2016). This product range is particularly used for marketing purposes as a reverse marketing strategy. The brand provides this product to the influencer as a brand promotion strategy invidious social media platform. The company is well aware that people like to show off on social media platforms like Instagram, Twitter, and Facebook. In such a situation, the premium product of Red Bull is the best option. Here, the end of users will eventually promote exclusive products by themselves. Hence, the goal behind introducing premium products is to use the marketing impact of the premium product's consumers on regular customers.
Red Bull has achieved several milestones in its 31 years of career. The company aims to introduce adventure and thrill, from the origin of the product. For this purpose, it has invested a huge amount of sports events like erases, marathons and other sports activities. It has approximately more than 50% of the energy drink consuming population on a global basis, which is possible due to customer loyalty and excessive demand (Emond et al, 2015). It has a strong marketing campaign that is possible through famous athletes linked to it such as Siya Kolisi, Tom Pidcock, and Carissa Moore.
In the case of Red Bull, innovation has to be seen from a broad perspective. It has made innovation in different areas like market segmentation, channel, and marketing.
Market segmentation innovation
The traditional soft drink companies target the general population. On the other hand, Red Bull started to market its product market segment 18-25 years, particularly the sports personalities. this approach helped the company to get fit into the 4Ps and gain an advantage over the traditional soft drink brands (Emond et al, 2015).
The traditional soft drinks like Pepsi and Coca-Cola holds high power over the distribution channel. On the contrary, Red Bull uses an innovative channel approach to enter the market. In this context, he started to market its products in small distribution outlets like health clubs, bars, and sports club and focused to promote its product in these small outlets (Elitok et al, 2016). Eventually, with the increase in the number of customers, it is able to persuade the retail distribution channel to distribute its product by using the pull and push method.
The traditional means of advertising such as on-site and media promotion was unavailable to Red Bull for several years. For this purpose, the company adopted an innovative and creative marketing approach. In this context, the company used targeted on-site marketing to advertise its product along with promotional caravans in extreme events like bar or beach parties (Remane et al, 2017). However, after gaining attention from customers Red Bull started to use the conventional means of marketing with an intention to get broader awareness for its product.
Connection of innovation strategy with product strategy
Red Bull isknown as the founding father of sports and energy drinks in the market. Its innovative concept has created a special customer base of products that comprises of youth, sports, and energy. As a part of its Innovation strategy, the company owns several sports teams and one of them is the successful Formula 1 team. It has introduced innovation in its product line through its innovative strategy. In European and Asian countries, there are numerous soft drinks and functional drinks available in the market, prior to the entrance of Red Bull. The traditional soft drink emphasizes on thirst-quenching, while the sports drink focuses on revitalizing Body balance through sugars and minerals. While alcoholic drinks have an advantage due to their alcohol content that relaxes body and mind and the hot drinks like coffee contain caffeine which creates the awakening effect. Moreover, alcoholic drinks and coffee do not go with the young image, like that of soft drinks. Therefore, Red Bull introduced a combination of all these effects along with the advantage of being a functional drink, which suits all customers. It has adopted a unique can design along with an attractive slogan "Red Bull gives you wings" (Remane et al, 2017). Furthermore, it has priced its product at a premium above other soft drinks so as to reinforce its effectiveness.
In summary, the present report illustrates the Innovation strategy by taking the case example of Red Bull. In this context, the report has mentioned the product portfolio of the brand that includes three different types; Healthy, Champagne, and Exclusive. These different product categories range for varying customers according to their requirements and lifestyle. In addition to this, the different innovation strategies adopted by the brand in context to market segmentation, channel and marketing has been outlined. Finally, the connection between Red Bull's innovation strategy in its product strategy has been described. It is inferred that, unlike the traditional soft drink companies, Red Bull has incorporated the awakening effect of coffee, revitalizing impact like sports drinks, along with taking the advantage of being a soft drink.
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