Fundamental Direction: Keep Flying
Why keep it? Red Bull Media House (North America) is Creating Shared Value to the world.
From Business Perspective: The initial purpose for Red Bull Company to set up own media company is to help to build and reinforce Red Bull’s overall brand image. This is a unique marketing strategy by running the Red Bull Media House. The Media House has become a major part of the Red Bull’s culture and helps to stabilize its status and reputation in energy drinks market. Despite of advertising Red Bull, the Red Bull Media House North America made numerous products and content, ranging from online network services to electronic goods. Such as Live Broadcast, Red Bull TV, etc. It is clear that this is also an effective way for business to earn income besides of selling energy drinks. Furthermore, Red Bull Company used the idea of disruptive innovation to set up their business, the media house helps Red Bull to build an unforgettable image in competitors’ mind, gives a strong visual impact to its audience and attracts potential partners as well as investors for their business. In contrast, if Red Bull chooses to fold its wings, they may lose the way to target customer segmentation (See Appendix A) and lose numbers of customers, because the customer loyalty is built via the media house. Therefore, in order to perform well in the competitive energy drinks market, Red Bull has to keep running the media house and this idea comes from the sustainability.
From society perspective: There’s no doubt that customers really enjoyed the things that Red Bull Media House North America offered during these years. The popularity was gained for both of the premium media products and compelling content, which were closely related to sports, culture and lifestyle. Such as the Red Bull Radio, music as well as some sports-‐related activities. One of a convincing examples should be the event called Red Bull Stratos; millions of people watched the extreme stunt in live streaming coverage and television broadcast. Several new records were set during this big event. Red Bull Media House made a great contribution to society by raising public awareness on extreme sports, broadening people’s horizons though this tech activity. Similarly, some competitions such as the Red Bull Crashed Ice and the Red Bull Rampage also provided the general public a way to get to know the basic knowledge about extreme sports as well as a consumptive idea with positive, energetic and healthy meanings behind.
Thus, CSV is a main element of Point Of Difference for Red Bull Company in positioning their brand in marketplace. This is a key competitive advantage for Red Bull Company to differentiate their products with competitors’ goods. More importantly, creating the Red Bull Media House North America is a direct way to get to know about the taste of consumers, so that the managers can make better business decisions in order to meet the core needs of market while making their new products and services through this invisible communication channel. Good and close relationships are built at the same time.
Why keep it? Red Bull Media House North America has a great market potential to make profits after taking some financial and marketing actions.
Financial and Marketing Analysis of Red Bull Media House
(Inefficient use of capital investment leads to a pessimistic Return On Capital Employed.)
- Red Bull Media House continues producing premium audiovisual media content too quickly to find the interested corporate clients. This shows the supply has exceeded the market demand; the failure is caused by insufficient work of Research and Development Department. To solve this problem, R&D needs to have a successful market research to find out the market demand before to launch their products to market.
- Red Bull Media House loses chances to earn profits through its media channel (See Appendix B). Each year, the company spent more than a million dollars to produce big events such as the Red Bull Stratos; The Arts of Flight, the Red Bull Signature Series, millions of people watched it through their media channels. However, it was free for anyone to view at anytime. Obviously, these events were great chances for Red Bull Media House to earn profits, but they didn’t catch it. An effective way to tackle the issue is to charge a fee to audience. These events that the company produced were unique in the market and they gained popularity and recognition in society. According to the Porter’s Generic Strategies, the managers of the Red Bull Media House should choose to use the focus strategy while charging a fee to its audience. Once by taking this action, the company will gain much more profits to try to cover its initial investment.
- Losing market share was caused by both of the new entrance competitors like some Asian and European brands and also existing competitors such as Monster and Rockstar. These competitors chose to use less capital-‐intensive approaches to their beverages, and they did make success. According to the statistics, Monster sold more volume of energy drinks than Red Bull did and it had the highest operating margins in the industry. Which clearly showed that Red Bull Company didn’t get more market shares even it invested much more funds than Monster Company. This is due to the derailment of ideal and reality in managing the capital. The Red Bull Media House should realize that investing too much capital does not mean their market share will be increased. In contrast, Red Bull Media Company North America needs to pay more attentions to the local market. One of its main customer groups should be the high school and university students. By creating big events do not get closer to these customers because they have no time to enjoy the activities. In other words, Red Bull Media House North America should look for some small competitions and activities for these people, for example, setting up some interesting sports games or sponsoring the sports-‐related program in school. This is the only direct way to let student become familiar with Red Bull brand.
- Moreover, it is worth to keep running the media house because it has so many opportunities. The media house earned a licensed fee to news media; they charged a fee to other companies by offering them a direct access to its fans; and Red Bull Media House North America cooperated with Fox Sports to advertise their brand, Fox Sports will help to fulfill RBMH’s (North America) goal; more importantly, they got the ITunes’s storefront on the site. These evidences also show that the Red Bull Media House North America has a great potential to earn profits by making the changes mentioned before.
Добрый вечер!!
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До свидания!