Red Bull Five-Force Model
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- Date Submitted: 11/30/2013 01:36 PM
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ENERGY DRINK AND PORTER’S FIVE-FORCE MODEL
Threat of new entrants: High
In the market of energy drink is going very quickly, new entrants are catching this market. The big company such as Coca-Cola and Pepsi already has plans to launch energy drink in Indian market. Because of cost of entering in this market is not too high so new companies can enter in this market easily but other barriers like following with too many regulations and government laws is very high. Energy drinks have caffeine as a key ingredient and the quantity and quality of this caffeine is tested on various parameters of the government. For example, the monster brand pulled ahead of Red Bull in the US energy drinks market in 2009 in volume sales terms but remains second to Red Bull in value terms. Monster has achieved wider presence in supermarket and forecourt retailers. (Red Bull GMBH IN SOFT DRINKS, 2013)
Bargaining power of buyer: High
Bargaining power of buyer is high because there are many similar products kind of energy drink. Thus, buyers can compare price and quality to other similar products. In order to attractive more consumer, Red Bull faces buyers with high level of bargaining power, and it is a real risk for Red Bull. Main reason for this high bargaining power of power in this case is the switching costs in the energy drink buyers (retailers and wholesalers) purchase products in large quantities, and it is obvious that the more buying in quantity, the more bargaining power the buyer has. So they can use their power to reduce the cost of energy drinks. (Engaging consumers through word of mouth marketing, n.d)
Bargaining power of supplier: Low
Bargaining power of supplier is low because composing of energy drink is easy to find and any company or competitor can imitate products. For instance, the supplier of Glucuronolactone is Glaxo Smithkline Company. Red Bull energy drink buys their Glucurnopolacton inputs from this company. So the bargaining power of this supplier is very...
Threat of new entrants: High
In the market of energy drink is going very quickly, new entrants are catching this market. The big company such as Coca-Cola and Pepsi already has plans to launch energy drink in Indian market. Because of cost of entering in this market is not too high so new companies can enter in this market easily but other barriers like following with too many regulations and government laws is very high. Energy drinks have caffeine as a key ingredient and the quantity and quality of this caffeine is tested on various parameters of the government. For example, the monster brand pulled ahead of Red Bull in the US energy drinks market in 2009 in volume sales terms but remains second to Red Bull in value terms. Monster has achieved wider presence in supermarket and forecourt retailers. (Red Bull GMBH IN SOFT DRINKS, 2013)
Bargaining power of buyer: High
Bargaining power of buyer is high because there are many similar products kind of energy drink. Thus, buyers can compare price and quality to other similar products. In order to attractive more consumer, Red Bull faces buyers with high level of bargaining power, and it is a real risk for Red Bull. Main reason for this high bargaining power of power in this case is the switching costs in the energy drink buyers (retailers and wholesalers) purchase products in large quantities, and it is obvious that the more buying in quantity, the more bargaining power the buyer has. So they can use their power to reduce the cost of energy drinks. (Engaging consumers through word of mouth marketing, n.d)
Bargaining power of supplier: Low
Bargaining power of supplier is low because composing of energy drink is easy to find and any company or competitor can imitate products. For instance, the supplier of Glucuronolactone is Glaxo Smithkline Company. Red Bull energy drink buys their Glucurnopolacton inputs from this company. So the bargaining power of this supplier is very...