Executive summary
The choice to take up a new innovation within a firm is dependent upon the value that a company aims to acquire from the process. In this case, an innovation solution may bring forth esthetic, technical, or functional benefits. For a firm to become competitively advanced, the decisions that will be made in the process of implementing the new innovation depends upon risk and the overall value that can be acquired from the endeavour. Generally, enterprises tend to lack human, structural, or financial resources that can be employed in the process of innovating and implementing new technology. As demonstrated by this research, Red Bull Media Company has successfully managed to disrupt the content publishing industry using principles of New Product Development (NDP).
Introduction
Red Bull Company introduced the concept of anti-branding into an international market, which was accustomed to traditional methods. In the concept, a new strategy, which is known as buzz marketing is employed, and it use of the client’s capabilities to spread information about the product. The target groups for this strategy are the youth (Mazzarol, Malone, & Reboud, 2017). Analyzing how red bull has been able to overtake other soft drink giants by exploiting an innovation that was not in the industry is the highest objective of this report. When Dietrich Mateschitz, introduced Red Bull into the market, he knew that there existed steep competition that could not be overcome by a growing company. Therefore, he decided to implement a market niche that did not exist. In this case, an in-depth analysis of the development of content marketing will by Red Bull will be looked at so as to understand how the company managed to avoid the risks when introducing the new product in into the market.
Project Outline
The success of Red bull can only be defined by the process that has been used to market the company and its products across the globe. Content marketing has enabled Red Bull Company fly using the wings are generated by the myth. The main objective of the organization is not to sell Red bull energy drinks, but to associate the company activities with clients. The content marketing process of Red Bull has been created out of a myth, and then the company tries to create reality by sponsoring extreme events. The slogan “Red Bull gives you wings to fly” makes potential clients want to explore its reality. Rather than employing conventional marketing strategies such as mass marketing. Red Bull chooses to spread awareness about the energy drink by generating a myth about the product.
Product development and commercialization process
Before commercializing a product or idea, there is need to understand the market dynamics, competitors, and client needs. Content marketing has worked for Red Bull Company since Dietrich Mateschitz understood what lacked in the industry of energy drinks. The commercialization of an idea such as content marketing would require implementation of the Stage gate process.
The Stage Gate is normally used for new industry entrants (Cooper, & Edgett, 2009). It is advantageous since it offers a clear path that can be used to implement an idea to the end. Applying it to the case of Red Bull brings to light various factors that had to be considered by the managerial team when the idea was incepted.
Market Readiness
The use of content marketing at Red Bull is disruptive since it does not incorporate the use of traditional marketing strategies. Content marketing involves building a better association with the clients, and that is why the process is different from former paradigms. Content marketing was easily implemented since it was readily integrated into the market.
Role of the End user
Using the myth that Red Bull give you wings to fly, the end user is convinced that the energy drink has special effect, and this creates the urge to explore the product. When target clients are convinced of the usefulness of an idea, they will embrace it fully like it happened for Red Bull.
Market Gaps
Before the use content marketing to advertise sporting activities, only the conventional methods were used. Dietrich Mateschitz realized the need to revamp the manner in which products were marketed and the process truly propelled the Red Bull company.
Firm preparedness for the technological innovation
An analysis of the four parts of the Innovation Diamond provides a better overview of the market preparedness for the idea (Alvarez, & Barney, 2004).
Market index
The index helps to analyse client needs and how content will live up to the expectations of clients. Clients were able to relate easily with the idea of “wings to fly,” and the prices of Red bull products are manageable to many people (Cooper, & Edgett, 2009). As a result, many clients are psyched to try out the new product before they can embrace it for daily use.
Innovation Index
It is based on the premise that the idea at hand will bring maximum success to the organization. Clients play a huge role in enabling the success of content marketing that is used by Red Bull as they relate well with the program. The innovation index assesses the legal aspects of an idea such as trademarks and patents.
Resource index
Product commercialization is highly dependent on financial, technical, human, and managerial aspects. The marketing processes of Red bull are considered to be very expensive. However, the success is associated with the excellent resource allocation that is availed to the entire process. For instance, there is the Red Bull Media house which creates thrilling content for promotion (Cooper, & Edgett, 2009).
Strategy index
It involves an analysis of how competitors, clients, and suppliers are affected by the techniques that will be used in product commercialization.
The four indices can be assessed based on a scale of 1-5.
Return-risk analysis of the new technological innovation
Red Bull’s innovation process can be described using the Champion topology of RENT. Content marketing enables selling of products in international markets, attainment of huge profits, and it can be used over an extended period. The strategy is very disruptive and it requires a huge amount of investment within the market and for the product (Mazzarol, Reboud, & Soutar 2009).
The commercialization of a new idea will be successful if the returns will surpass the risks that are associated with its implementation. The returns include things like wider market coverage and extended market dominance for a long time. On the other hand, risks include the extremely high costs of creating content. While a conventional model such as Real Options offers an overview of how a disruptive technology may turn out to be lucrative, it never assesses the actual risk-return (Mazzarol, & Reboud, 2005).
When assessing an idea that will be implemented over a long period of time, the RENT model is suitable. RENT=Volume* Length* Rate.
Volume-annual sales amount for each financial year.
Length-Expected lifecycle of a concept
Rate- Expected profit margins
RENT analysis model
Commercialization of the technological innovation
An innovation strategy outlines the steps that can be used to execute an idea. Managing the innovation processes should be undertaken rigorously, or else the role that an innovation is supposed to play may remain undefined while the revenue gains from the process remain minimal (Mazzarol, & Reboud, 2005). Special factors that should be considered before an innovation process is commercialized:
The innovation should be very inspiring, and it should be in a capacity to outline the future progress of the organization. Red Bull employed content marketing since it was difficult for other firms to employ the strategy due to its high cost requirements, and this would ensure that the firm would lead the industry for many years.
The innovation should be ambitious such that it will help to alienate a company from the competitive processes (Mazzarol, Malone, & Reboud, 2017). Content marketing enabled Red Bull to create a market niche that does not exist.
The innovation should be open such that it can be incorporated into all undertakings without having to change any aspect by a large portion. The content marketing process creates flexibility since the company can market any activity without interfering with the production process of Red Bull Energy drink.
The innovation should relate to the time within which it is being designed, i.e it should address current problems such as price disparities (Mazzarol, Malone, & Reboud, 2017). The hype in content marketing focuses on availing a product that had a favorable price for clients and also address the sports segment, which did not have dedicated sponsors.
Evaluation of the impact of the new project
The right approach has obviously been taken Red Bull in the process of tackling the market. Content marketing is a strategy that focuses on the long terms operational capabilities. The method is a radical since it involves overhauling of the existing methods. On the other hand, incremental innovation involves applying changes in small parts to the technology that is being used. As much as Red Bull started with radical innovations, at one point (approximately 10 years) there will be the need to implement incremental innovation so as to keep up with the market competition (Kumar & Kumar, 2018). Red Bulls managerial team understands the market, and that is why more resources are continually being availed toward the product promotion process rather than focusing on the product production. Any extreme activity can be promoted by Red Bull, and this enables the company to take a hold of the market for an extended period. Red bulls marketing strategy is focused on sport promotion, and that is an activity that most people love to associate with.
Discussion on findings and analysis
A company’s products and ideas are normally faced by a short time span and they can easily be replaced with other innovative ideas. While the new ideas of penetrating a market can easily be challenged when they are being implemented to the point that they end up failing, they can also succeed and become great ideas that will be emulated by other companies. Red Bull has been able to outdo its competitors by far, and it continues to dominate the soft drinks market for many years. Red Bull dominates both the Soft drinks and advertising segments. New Product development and commercialization is associated with different aspects which that ensure the product can be embraced by the general society (Kumar & Kumar, 2018). As the development of a concept continues to be actualized, it should subjected to rigorous tests so that it can be implemented in a manner that is readily acceptable. The different steps that a concept passes through are meant to determine its overall viability. Applying radical and incremental innovations both help Red Bull Company to become and remain innovative.
Conclusion
The adoption of new technologies allows a company to become more competitive. Numerous research undertakings have proved that new concept innovation definitely allows a company to become more productive. New ideas such as content marketing at Red Bull will continue to boost the sales levels of the company for many decades before a different strategy is invented to assist in the process of production. However, the success of implementing an innovative idea in a business cannot come without the proper implementation of appropriate models as outlined in this research. Evaluating how an innovation will affect the business is probably one of the most critical undertakings as it helps to prevent the implementation of solutions which might lead to business failure as a result of financial wastage on a venture that does not augur well with the processes in a company.
References
Mazzarol, T., & Reboud, S. (2005). Customers as predictors of rent returns to innovation in small firms: an exploratory study. International Journal of Entrepreneurship and Innovation Management, 5(5-6), 483-494.
Mazzarol, T., Reboud, S., & Soutar, G. N. (2009). Strategic planning in growth oriented small firms. International Journal of Entrepreneurial Behavior & Research, 15(4), 320-345.
Alvarez, S. A., & Barney, J. B. (2004). Organizing rent generation and appropriation: toward a theory of the entrepreneurial firm. Journal of Business Venturing, 19(5), 621-635.
Cooper, R. G., & Edgett, S. J. (2009). Product innovation and technology strategy. Stage-Gate International.
Mazzarol, T., Malone, P., & Reboud, S. (2017). Scanalyse—A Case Study of the Role of Social Capital, Strategic Networking, and Word of Mouth Communication in the Diffusion of an Innovation. In Strategy and Communication for Innovation (pp. 147-174). Springer, Cham.
Kumar, N., & Kumar, N. (2018). Why companies should strike a balance between radical and incremental innovation. Scroll.in. Retrieved 18 April 2018, from https://scroll.in/article/811035/why-companies-should-strike-a-balance-between-radical-and-incremental-innovation
Appendix
Innovation Diamond results
Market Index-7
Resource Index-9
Innovation Index-8
Strategy Index-10
Return-risk analyses, including RENT and planning response contingency matrix
Rent Score Calculation
Volume-Q.7 (3) +Q.8 (4) +Q.9 (5)= 12
Rate- Q.10 (4) +Q.11 (2) +Q.12 (5)= 11
Length-Q.13 (3) +Q.14 (4) +Q.15 (4)= 11
The RENT for the innovation can be plotted on the following table.
Volume is- (>7) ++
Rate is- (>7) ++
Length is- (>7) ++
The content marketing strategy applies to the Champion RENT configuration.
