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Sales and consumption in New Zealand

Red Bull, the brain child of Austrian businessmen, Dietrich Mateschitz, is the global leader in the energy drinks market which by 2013, is expected to grow by 64. 3 percent to a value of $44. 3 billion (Datamonitor PLC, 2008). Red Bull holds 70 percent of the market worldwide (Gschwandtner, 2004), however it has not been able to replicate this success in the New Zealand market.

V drink belonging to Frucor Beverages Limited has a much larger market share compared to Red Bull in the New Zealand market. In supermarkets, V drink has a 55. 3 percent share compared with Red Bull’s 20.5 percent and at petrol stations and convenience stores 60. 5 percent against Red Bull’s 18. 4 percent (Gregor, 2011).

The senior management at Red Bull, New Zealand is concerned about their position in the domestic market and has asked their Marketing Director to improve the sales figures in the next three years. Secondary research from syndicate sources helped to gain an insight into the current size and overall growth of energy drinks market in New Zealand, Red Bull’s current market share, the demographic data for energy drink preference and the level of advertising expense of Red Bull and its

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closest rival V drink.

Questions regarding post-purchase consumption experience and the factors that play a role in decision making along with the possible gaps in the market remain unanswered and need further research. The findings of this research study will help the management at Red Bull to understand the reason behind their declining sales and consumption in New Zealand, and will help them in solving their management problem. Red Bull, the brain child of Austrian businessmen, Dietrich Mateschitz, is the global leader in the energy drinks market which by 2013, is expected to grow by 64.3 percent to a value of $44. 3 billion (Datamonitor PLC, 2008).

Red Bull holds 70 percent of the market worldwide (Gschwandtner, 2004), however it has not been able to replicate this success in the New Zealand market. V drink belonging to Frucor Beverages Limited has a much larger market share compared to Red Bull in the New Zealand market. In supermarkets, V drink has a 55. 3 percent share compared with Red Bull’s 20. 5 percent and at petrol stations and convenience stores 60. 5 percent against Red Bull’s 18.4 percent (Gregor, 2011).

As a result of this competition, the senior management at Red Bull, New Zealand is concerned about their position in the domestic market and has asked their Marketing Director to improve the sales figures in the next three years. Secondary research uses database from well known syndicated research agencies such as Roy Morgan, ACNielsen and Euromonitor International (EI) that have a wide range of data available on various industries, organizations and consumer markets.

Roy Morgan, a well established market research and public opinion survey company considered by many as the authoritative source of strategic global market information with over 65 years experience offering both qualitative and quantitative research, was founded in 1941 by Roy Morgan (Roy Morgan Research, 2011). Roy Morgan specialises in obtaining detailed information regarding demographic, psychographic and lifestyles along with behavioural, satisfaction scores and purchase intentions in various categories.

ACNielsen established in the United States in 1923 by Arthur C. Nielsen, Sr. , offers an integrated suite of market information gathered from a wide range of sources, advanced information management tools, sophisticated analytical systems and methodologies. ACNielsen works with their client’s trade managers, category managers, brand managers, channel/account managers, as well as store planners and space planners, to address key issues in areas that include visual merchandising, space management, assortment management and store planning (Nielsen, 2011).

As an independent company founded in 1972, Euromonitor International (EI) has become a leader in strategy research for consumer markets and offer unmatched detail and unbiased content for every region, country, category and channel. From socio-economic context to intimate detail on the smallest products or markets, EI provides market research. EI publishes reports on industries, consumers and demographics and offer insight into market size and market share in New Zealand; as well as industry trends in each specific industry (Euromonitor International, 2011).

Secondary data derived from these established sources will help in answering the following questions; 1. Current size and overall growth of energy drinks market 2. Red Bull’s current market share 3. Demographic data for energy drink preference 4. Level of advertising expense of Red Bull and its

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closest rival V drink 1. 1. Attractiveness and size of the market The New Zealand market for energy drinks has been growing at a steady rate in the last five years.

There has been a substantial growth of 173 percent in the market size, which has increased from NZ$ 82 million in 2005, to NZ$ 142 million by the year 2010 as seen in the below graph (Euromonitor International, 2011). Source: (Euromonitor International, 2011) The figures in the next table show that the market for energy drinks is very attractive and consequently more products have been introduced into the market but they have not been able to significantly influence the market as compared to the top brands.

Despite the growth of the market, Red Bull has failed to compete successfully with V drink and other market leaders and this will be further discussed in the next section. Source: (Euromonitor International, 2011) 1. Red Bulls market share against its competitors Statistics from the ACNielsen Media reports suggest that the market share of the top five competitor brands by value has not changed drastically over the last five years.

The market share of V drink has been around 40 percent whereas Red Bull has around 14 percent of the share. The following charts provide a breakup of the market shares of the top five brands from 2005 to 2010. It can be concluded from these charts that the top brands have been able to defend their market share successfully however they have not been able to significantly increase it. However, Powerade has grown from 11 percent to about 20 percent while all other brands have either grown or shrunk marginally.

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