Pricing Strategy in Relation to Competition
Red Bull’s pricing strategy is to demand a high cost for their goods. This is due to the fact that Red Bull’s product is thought to be of superior quality than those of its rivals. Red Bull also has a highly strong brand, which allows it to charge a higher price while still maintaining demand for its product. Red Bull costs more than Monster Energy but less than Rockstar when compared to its rivals. This is probably due to the positioning of Red Bull as a luxury product and Monster Energy as a discount product. Because it enables the business to charge a higher price while still maintaining demand for its product, Red Bull’s pricing strategy is beneficial in establishing a competitive edge.
Red Bull’s ability to charge a premium price is made possible, in part, by the perception that its product is of superior quality to that of its rivals. In addition, Red Bull has developed a strong brand, so even if its cost is higher than that of its rivals, consumers are still ready to pay that cost because they believe the product to be of excellent quality (Benoit et al., 2020). Red Bull’s pricing approach has been effective in giving the business a competitive edge. Due to its strong brand, it can continue to offer its goods at a greater price than its rivals while maintaining larger profits.
Best Price Strategy and Effect on Business Success
Increasing profitability is the main goal of Red Bull’s current pricing strategy. The business uses a premium pricing approach in which it sets its prices higher than those of its rivals. This enables the business to benefit more from each sale (Benoit et al., 2020). The new coffee-flavored items might not benefit the most from this price plan, though. Due to the intense competition in the market for energy drinks with coffee flavors, Red Bull may not be able to set prices as high as it does for its other products. The business might not be able to compete successfully and might lose market share if it does not lower its prices. Given the fierce competition in the market for energy drinks with coffee flavors, Red Bull ought to reduce the cost of its new products. By doing this, the business will be able to more effectively compete with its rivals, which could increase sales and market share.
It would be advantageous for Red Bull to reduce the cost of its new coffee-flavored products for a number of reasons. First off, as was mentioned previously, this market is quite competitive. There are several well-known energy drink brands with coffee flavors, including Monster, Nescafe, and Starbucks. These companies dominate the market and offer more affordable costs than Red Bull. Red Bull will be at a disadvantage and risk losing market share if its prices are not lowered. Second, Red Bull is not a manufacturer of energy drinks with coffee flavor. It is famous for its first energy drink in particular. Customers might not be as willing to spend as much on its coffee-flavored products as they are on its original energy drink as a result.
Effect of the Pricing System on the Marketing Mix
One of the most crucial components of the marketing mix is pricing since it may affect a customer’s choice to buy a product. While the wrong price may discourage customers and result in lost sales, the right price may draw customers and boost sales. The pricing decisions made by Red Bull regarding its new line of coffee-flavored energy drinks will have an impact on the place, promotion, and product components of the marketing mix.
Where the new energy drinks with coffee taste are offered will depend on their pricing. Only high-end retailers will sell the beverages if the price is too high, while bargain stores will sell them if the price is too low. The new energy drinks with coffee flavors will be advertised differently depending on how much they cost. Red Bull will need to utilize high-end advertising to advertise the product if the price is too high, while mass-market advertising will be necessary if the price is too low (Benoit et al., 2020). Finally, the cost of the new coffee-flavored energy drinks will have an impact on the final product. When the price is too high, the item is perceived as a premium item and is of greater quality; when the price is too low, the item is perceived as a cheap item and is of poorer quality.
Effect of the Strategy on the Company’s Economy Success
Market share and profitability are two factors that affect a company’s capacity to succeed financially. The number of items sold by the firm in comparison to the number of products sold by the competitors determines the market share of the business. The ratio of the company’s revenue generation to its expense-accruing activities determines the profitability of the business. The price policy chosen by the business will have an effect on both its market share and profitability. The firm may not be able to sell enough items to earn enough income to pay its expenditures if it implements a pricing plan that is too high. On the other side, if the business chooses a pricing plan that is overly aggressive, it could sell many things, but it might not make enough money to pay its bills (Benoit et al., 2020). The company should adopt a pricing strategy that is appropriate for the products being offered and the market conditions, not too high or low, in order to maximize the company’s financial success.
Reference
Benoit, S., Kienzler, M., & Kowalkowski, C. (2020). Intuitive pricing by independent store managers: Challenging beliefs and practices. Journal of Business Research, 115, 70-84. Web.