Market Research

Red Bull vs. Rockstar

Marketing and Consumer Preference

Prepared By: Kyle Schwarz

May 11, 2009

Red Bull and Rockstar are two companies offering a similar product in a competitive market place. Do events, athletes, and company image make a difference in consumer opinions and buying patterns? Or does taste, potency, and price have a greater influence on what people buy?

Contents

Executive Summary. 3

Statement of Information Needs. 4

Strategic Marketing. 6

Events. 7

Market Place. 8

Search Hits. 9

Health Risks. 10

Results from Secondary Research. 11

Questionnaire design. 12

Data analysis. 13

Results. 16

Recommendations. 16

Limitations of the study. 17

Bibliography. 18


Executive Summary

Red Bull and Rockstar are competitors in a growing market place that will be worth $1,826,300,000 by 2009 (Snapshorts International LTD). The energy drink market had been growing exponentially; but in the recent years growth has been decreasing. How can energy drinks cope with a dwindling market place? Along with dwindling growth, competitors Red Bull and Rockstar have to deal with smaller startup companies trying to steal market share. This report will analyze market share reports from Snapshots International LTD, as well as many other sources. One company that wasn’t even on the top 5 list in 2005, Monster, is now the second biggest competitor in the market place in 2009. Is there a correlation between energy drinks that sponsor sports events or more of a correlation to sponsored athletes? This report will also examine Price, Place, Product and Promotion that Red Bull and Rockstar use. There is a 50/50 split with energy drinkers and non drinkers alike, how can energy drinks expand their sales outside of the energy drink market. This report will also analyze results from Google trends which shows a graphical analysis of search hits.

Along with secondary research, this report also includes a primary research section. Included in this section is a survey posted to Survey Monkey.com. With 100 respondents this survey finds out the primary concerns and preferences of energy drink consumers and non-drinkers as well. Broken down within this section are results from Red Bull drinkers, Rockstar drinkers, non-drinkers, as well as those who drink energy drinks only 1-2 times per week and those who drink energy drinks regularly at least once a day.

Statement of Information Needs

Red Bull entered the United States market in 1997. Before Red Bull, only beverages such as coffee and soda were used by consumers to get energy. Red Bull continues to enjoy a comfortable 40% market share in supermarkets in 2009 (MMR 1). In 2004, Rockstar Energy drink captured 57.7% of the market (Snapshorts International LTD 5). Today, Rockstar has only 11% of the market and has lost its second place slot to Monster. Rockstar and Red Bull’s marketing, products, prices, promotions, and company image are polar opposites.

This report will investigate the differences between Rockstar and Red Bull; image, market share, and consumer preference, as well as the energy drink market and issues within the market. In the energy drink business, image is everything; market share differs greatly in the market. Loyal consumers voice their strong preference for each brand. What factors make people choose an energy drink or choose not to drink one at all?

Secondary Research

Image

Red Bull Experiment where pro FMX rider, Ronnie Renner, jumped 59″2′                     Santa Monica, CA June 19, 2008

Rockstar and Red Bull have defined company images. Though Red Bull has established its self as an “Anti-brand,” (Nirmalya Kumar 3). Its name, logos and philosophy have become synonymous with action and adrenaline sports. Red Bull presents itself as a premium product. Its athletes are clean and well kept. Its various race cars, planes, and motorcycles are outfitted with the best equipment possible and its events are well planned and taken to the largest scale, giving professional athletes ample room to stretch their “wiings.” In events such as the one previously pictured, Red Bull takes every opportunity to market their product. By holding large competitions and by sponsoring the best athletes Red Bull establishes itself as the energy drink super power.

On the contrary, Rockstar energy drink has set its foothold as the energy drink of the counter culture. Rockstar lets their inspiration be known on the side of their can:

“Bigger. Better. Faster. Stronger. ROCKSTAR is the world’s most powerful energy drink. Enhanced with the potent herbal blend of Guarana[1], Ginkgo[2], Ginseng[3] and Milk Thistle[4], ROCKSTAR is scientifically formulated to provide an incredible energy boost for those who lead active and exhausting lifestyles–from athletes to rock stars…” (Rockstar Energy Drink)

Rockstar’s image is one of glamour.  It encourages consumers to race, ride and board all day, and still have enough energy for the after party. Rockstar sponsors professional athletes as well as fraternities and parties. Rockstar is the bad boy energy drink.

Strategic Marketing

Price

Red Bull is priced as a premium product. An 8.4 fl oz. can is priced at $2.59, a 12 fl oz. can sells for $3.25 and the 16.9 fl oz can retails for $3.75. The 16 fl oz. Rockstar retails for $1.50 in most gas stations which is about half the price per fl oz. when compared to Red Bull.

Place

Red Bull and Rockstar are sold at gas stations, liquor stores, and supermarkets. With energy drink popularity on the rise, most gas stations have an entire cooler dedicated solely to energy drinks.

Product

Red Bull and Rockstar’s product line are completely differentiated.  Red Bull focuses on their original product by offering only three flavors: Original, Sugar Free and their newest product Cola. Rockstar has 17 types of beverages as well as Clothing, Helmets, Hats, Jerseys, accessories and luggage. (See Table 1). Both drinks share active ingredients taurine[5] and caffeine.[6] They also both contain a bodily cleansing agent: Milk thistle for Rockstar and Glucuronolactone[7] for Red Bull.

Promotion

Red Bull relies on its events and its wiings team. The wiings team is a group of young women that drive mini coopers, wear backpacks filled with Red Bull, and distribute coolers full of free drinks (Red Bull). In its early days, Red Bull would give cans to club DJ’s, and leave “empty cans on tables in trendy bars and pubs, as well as in garbage cans outside select night clubs” (Nirmalya Kumar 6). Red Bull also does not do anything to dispel absurd rumors that one of its products active ingredients taurine, comes from bull semen.

Rockstar relies more on pricing then it does on street promotion. Gas stations regularly run specials on Rockstar such as 2 for $3 or 3 for $5. Rockstar also uses the same strategy as Red Bull by having models pass out energy drinks and merchandise at sports events.

Winners from X-Games Rally in 2008, Drivers from left to right, Tanner Foust(Rockstar), Travis Pastrana(Red Bull), Ken Block(Monster),Dave Mirra(Monster).

Events

Red Bull sponsors countless events from aircraft races to soap box races[8]. Every Red Bull event pushes the sport to absolute extremes. In 2008 Red Bull launched the first Empire of Dirt, a slope style BMX event that combined disciplines of dirt, street and vert in one large course. Another event that pushes progression is the Red Bull Rampage a mountain bike event that takes place in the red cliffs of Utah where riders negotiate unprepared courses to get the best trick scores.

Though Rockstar doesn’t host many events, its athletes are among the top contenders at every action sport event. Pictured above is Tanner Foust, Rockstar’s star driver. Rockstar also sponsors team Makita Suzuki, one of the top super bike teams. Other athletes include Alistair Whitton (BMX), Rob MacCachren (Trophy Truck), Chad Reed (Moto-X) as well as countless others. (Rockstar Energy Drink)


Market Place

“The target market for energy drinks is mostly male teenagers and twentysomethings, a notoriously fickle bunch” (Helm). Capturing market share is no easy task. Energy drinks have to contend with each other, giants such as Pepsi and Coke, as well as health concerns from the public. The greatest advantage to an energy drink company is their total sales. With more available assets energy drink companies can hire more top athletes, sponsor more events, and increase their advertising.

Market History

Red Bull has dominated the energy beverage market ever since there was one. According to Snapshots International in 2005 Red Bull accounted for 59.2% of market share with about $150 million dollars in sales (Helm). Rockstar was in second place accounting for 7.7% of market share. (Snapshorts International LTD 6). 2001 had the strongest growth rate, where market sales increased by 111%. In the years prior to 2001 market growth has decreased at a steady rate of about 10%.

Market Forecast (2005-present)

According to Snapshots International, in 2009 sales for the energy drink market are expected to exceed 1.8 million dollars. The growth of the market is expected to dwindle from a 56.1% rate of growth in 2004 down to a 13.9% growth in 2009.[9]

Current market

Currently Red Bull holds 41% of the US Market. Rockstar trails behind Red Bull with only 11% market share. Rockstar continues to increase dollar sales by 6.2% since 2008. While Rockstar’s dwindling sales increased by only 4%. A player that wasn’t even on the map four years ago, Monster Energy, has boomed into the energy market. Monster now accounts for 16% of market share in early 2009 and has increased sales by 12.7%.

Search Hits

Red Bull vs. Rockstar California Only

Search hits can be a way of measuring a company’s popularity and to see if their events and athletes are successful in getting out the company name and causing interest in the company. The following graph was taken from Google trends[10]. It shows the popularity of Red Bull (blue trend line) compared to Rockstar (red trend line).  Red Bull’s search hits hover well above Rockstar’s, especially in the global market, but they are a much larger company. The greatest volume of Red Bulls search hits come from Europe, however, one of the top ten cities in the world where search hits come from is San Diego, were Red bull’s corporate office is. San Diego houses a large population of college students which the energy drink targets. It comes as no surprise then that the number one hit for Rockstar is Las Vegas, Nevada. Some other valuable information from this chart is that Red Bull is doing something right by periodically refreshing interest in its company. By occasionally reminding customers through news and events, they build brand loyalty and increase brand exposure. Rockstar’s search hits were relatively flat in 2005 but steadily increasing until 2008. In 2008 and 2009 Rockstar showed exponential growth in search hits and interest in the company. Rockstar has since showed some periodic trends like Red Bull.

Health Risks

The biggest road block that energy drinks must overcome today are the health risks[11] associated with drinking them. Energy drinks are not considered food; they are considered an energy supplement. Most energy drinks have extremely high caffeine content. Rockstar contains the highest concentration of caffeine at 10mg per fl oz. Consuming over 250mg of caffeine in a short period of time can cause caffeine intoxication (Current events 2), and consuming 2 16 fl oz cans of Rockstar or Red Bull would cause caffeine intoxication. Caffeine, Taurine and Guarna are known stimulates and raise heart rate. Caffeine is also diuretic, like alcohol, and when used as a mixer, reverses the effects of alcohol and can cause dehydration and overexertion. This has caused deaths among athletes and partiers alike. Monster Energy warns, “Consume Responsibly- Limit 3 cans per day. Not recommended for children, pregnant women or people sensitive to caffeine.” When consumed in the proper dosage energy drinks are not dangerous, however, when they are abused, they can be deadly.

Results from Secondary Research

Red Bull’s Hyndi Genesis Drift Car

Overall, my secondary research proved that Red Bull is still the primary player in the market. Though their market share has decreased due to increased competition, they still have relevant growth to maintain the majority share in the market. Red Bull has attempted to enter into the beverage market with the introduction of Red Bull Cola, this new drink allows them to reach a new market that doesn’t need energy supplements or considers energy supplements too dangerous to drink on a regular basis. Red Bull’s events and marketing effectiveness is demonstrated through their search engine hits worldwide. Another way Red Bull boosts consumption is by periodically increasing interest in their company. Overall, Red Bull charges a premium price for their beverages but consumers are willing to pay it because of brand quality.

Rockstar’s Nissan 350z Drift Car

Rockstar has an enormous product line for most energy drinks. They sponsor athletes with a “bad boy” image and have models pass out their energy drinks which attracts the male youth. Though Rockstar charges nearly half the price of Red Bull it has been unable to capture more than 8% of market share. It appears that Rockstar has made no effort to leave the slowly growing energy drink market to pursue a foot hold in the stable beverage industry. Rockstar has been stepping up its marketing campaign because of the increase in search hits since 2008 after having a slow growth since early 2005. In summary Rockstar has a solid image, a progressive sports team, and a large product selection that captures the loyalty of their consumers.

Primary research

Questionnaire design

The questionnaire was designed to have two parts. Part one was designed to get some general information of the group that was surveyed. It included age, what sports surveyed that they enjoyed watching, as well as if they watched Fuel T.V. or the X-Games, both of which are inundated with energy drink advertisements. The final question of part one was targeted to find out if the surveyed drank energy beverages; or if not, what the reasoning was for them to choose not to.

Part two determined why consumers would choose an energy drink. Frequency, preference, needs, and desired qualities were all included.

The surveys were posted onto Survey Monkey .com and distributed onto two forums www.NASIOC.com (North American Subaru Impreza Owners Club), a Southern California Subaru owner community, and www.SoCalTrailRiders.org a Southern California mountain biking community. In total there were 100 surveyed respondents during the 24 hour period that the survey was open.

Data analysis

General Sample information

Out of 100 respondents 81% of respondents were in the energy drink demographic 16-32 years old[12]. With the greatest number of respondents in the 19-25 age range (46%).  For the question, “Which action sports do you enjoy watching?” The highest percentage of answers were Mountain Biking and Rally, both having 60%. The least popular answer was wakeboarding with 12%. This preference for the two sports can easily be explained by the distribution of the survey to a Subaru and mountain biking forum. Out of the sample 69.7% of people watched the X-games and 44% of people watched Fuel T.V. The X-games and Fuel T.V. are important to the two companies because that is the biggest and easiest way of showcasing their athletes to their target age groups. 52% of my respondents said they drank energy drinks while 48% did not, this is mirrored in Red Bulls primary research where “50 percent of our test group was crazy about Red Bull, and 50 percent said it tasted terrible” (Nirmalya Kumar 2).  Of the 48% that did not drink energy drinks, 7% of the sample said it was because they didn’t need energy. 12% of the sample said that energy drinks tasted bad, and 29% said that the health side effects stopped them from drinking. Contrary to secondary research only 25.4% percent chose Red Bull while 22.4% chose Rockstar, 10.4% of respondents said that they would drink both interchangeably. Most respondents drank energy drinks because they lacked energy 50.8%. Another 49.2% chose energy drinks because of taste and 17.5% drank energy drinks because of the performance benefits associated with them. Customers rated taste as their first preference for an energy drink. Potency for their second was second preference, price for their third and size for their last.

71.4% of energy beverage consumers drink 1-2 per week, 12.7% drank 3-4 per week. 7.9% drank 5-6 per week, and 7.9% drank one or more every week.

Red Bull Drinkers

Red Bull[13] drinkers had an even age distribution. Of the people that preferred Red Bull, 70.6% watched the X-Games. 62.5% of Red Bull drinkers drink it for energy and 62.5% drink Red Bull for the taste.  73.3% of Red Bull drinkers voted taste as the most important quality of an energy drink. Price was one of the least important qualities of a drink. 68.8% of Red Bull drinkers only have 1-2 per week.

Rockstar Drinkers

Rockstar’s[14] average age is skewed toward the 19-25 age group, which make up 66.7% of Rockstar drinkers. Though sport preference was fairly evenly distributed: BMX, Rally, Mountain Biking and Moto-X were the top preferences. 60% of Rockstar drinkers watched the X-games and 60% also watched Fuel T.V. Most Rockstar consumers drink it primarily for energy. Rockstar drinkers stated that taste was most important, size was second most important, price was less important and energy content was least important. 66.7% of consumers drink Rockstar 1-2 times per week.

Chronic consumers (7+ per week)

The chronic consumers[15] of energy drinks are ages 19-25 for 60% and age 33 and older for 40%. Rally and Moto X were the top sports they enjoyed watching.  60% of chronic energy drinkers watched the X-Games and Fuel T.V. Chronic energy drinkers have established energy preferences and only drink one type of beverage, 40% chose Rockstar and 40% Chose Red Bull. Chronic energy drinkers drink energy drinks for taste and energy. Taste and price were the most important factor for choosing an energy drink.

Energy Supplement Users (1-2 per week)

Most supplement users[16] are ages 19-25. They prefer other energy drinks than Red Bull and Rockstar. The primary reason that they buy energy drinks is to take them as an energy supplement. Taste was the most important to them while energy content and size were the second most important. Price was the least important to these consumers.

Non-Drinkers

Non drinkers[17] are evenly distributed between the 19-33+ age groups and 61.7% of them watch the X-Games. The primary concern of non-energy drinkers was that they are bad for you and the second biggest concern was that they taste bad.

Results

Taste is the most important attribute of an energy drink. People who consume energy drinks on a consistent basis are more likely to be price sensitive than people who occasionally drink energy drinks. Most consumers drink energy drinks 1-2 times per week. The primary reason for people to drink them is for energy. In southern California Red Bull and Rockstar sell evenly, but most consumers choose from the plethora of other energy beverages. Most people who drink Rockstar are in the 19-25 age group. Red Bull captures a larger age range. Overall, my primary research supports the claims of the secondary research found earlier in the paper.

Recommendations

Both companies are on track. For establishing a market that didn’t even exist 10 years ago, Red Bull and Rockstar have found their nitch in the energy drink market. Both offer different products and images that consumers affiliate themselves with. Red Bull has done what it takes to keep its consumers happy and interested. They could use improvement on merchandising. Someone wearing a Red Bull hat or t-shirt, most likely works for Red Bull or is sponsored by them. Red Bull does not give consumers a chance to show their preference for their brand by wearing their clothing. Rockstar has increased their presence in the energy market. Their promotions are getting more results (Google search hits) and their clothing, stickers and helmets have allowed people to show their affiliation with their brand. Rockstar needs to improve their marketing by getting their athletes onto T.V. more often. Red Bull has several series on Fuel T.V. and MTV that feature their athletes.  Monster also has a T.V. series with pro athletes.  Rockstar also needs to sponsor more events to promote their energy drink. Rockstar already has some of the best athletes in the world; they just need their own stage for showcasing them.  Rockstar should follow Red Bull’s lead by expanding out of the slow growing energy drink market and produce non-energy beverages that can reach the 50% of people that choose not to drink energy beverages. Both companies need to excel at what they’re doing to secure their piece of the $1,826,000,000 market where they will find themselves in 2009.

Limitations of the study

This study was limited by restricted access to privately held company’s financial statements. This study was also limited by lack of corporate background and information for Rockstar Energy which is dwarfed by the amount of studies and information readily available for Red Bull. Another limit of the study was finances. In all the study cost $30. People were reluctant to talk about energy drinks face to face and in focus groups without any compensation for their time.

Bibliography

Blevins, Jason. “Red Bull, “king” of energy drinks, lets wild approach do the hawking.” 21 October 2008. Denver Post. 17 April 2009 <www.Devnerpost.com>.

Current events. Analyze the Chart. 12 January 2009. 17 April 2009 <www.findarticles.com>.

Gillogly, Keith. “Energy Drinks Inferior to Natural Sleep.” Daily Titan 9 April 2009: 1.

Google Trends. 29 April 2009 <www.google.com/trends>.

Hein, Kenneth. “A Bulls Market- The marketing of Red Bull energy drink.” 28 May 2001. Advertising Industry. <http://findarticles.com&gt;.

Helm, Burt. Business Week: Energy Drinks and Their Buzz. 5 January 2005. 17 April 2009 <http://www.businessweek.com/print/smallbix/content/jan2005/sb200&gt;.

MMR. Energy Drinks. 12 January 2009. 17 April 2009 <http://findarticles.com/p/articles/mi_hb3235/is_1_26/ai_n31214305/&gt;.

Nirmalya Kumar, Sophie Linguri and Nader Tavassoli. “Red Bull: The Anti-Brand Brand.” July 2004. http://www.london.edu. 12 March 2009.

Red Bull. 17 April 2009. <www.redbull.com>.

Rockstar Energy Drink. 2009 April 17 <www.rockstar69.com>.

Snapshorts International LTD. US Energy Drinks 2005. March 2005. 17 April 2009 <www.snapdata.com>.

Survey Monkey. 1 May 2009 <www.surveymonkey.com>.


[1] A Plant grown in Brazil that produces twice the amount of usable caffeine compared to coffee.  It increases cognitive ability and attention.

[2] A  supplement thought to increase memory

[3] A root that improves cognitive ability, it is grown in northern Asia.

[4] A plant which extracts are used to treat chronic liver disease

[5] A naturally occurring antioxidant in the human body

[6] A stimulant that improves coordination and alertness

[7] Naturally occurring chemical in the liver used as a detoxicant

[8] See appendix 6

[9] See Appendix 1

[10] See Appendix 9 for complete Google Trends results.

[11] See Appendix 8

[12] See Appendix 10 for complete survey results

[13] See appendix 11 for complete results

[14] See Appendix 12 for complete results

[15] See Appendix 15 for complete results

[16] See Appendix 14 for complete results

[17] See Appendix 13 for complete results

4 thoughts on “Market Research

  1. Pingback: Red Bull Market Research Paper | Kyle G Schwarz

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