EBAY AND REDBULL CASE ANALYSIS
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Ebay and Redbulls’ business strategies, competitors, operating environment, stregthns and weaknesses, challenges and recommendations.
EBay
EBay owes its immense success in the online social networking business to many factors. Perhaps the most significant it’s the innovative ability of its founders. Pierre Omidayar has the insight to identify the need for an online marketplace long before his major competition was formed. EBay had been in existence for almost a decade before Facebook, and Twitter was formed. Google had chosen to focus on its core business missing out on the chance to capitalize on online social networking. Subsequently, eBay with “a very wide berth to develop its business model and optimize operations”(Kotler & Keller 2012).
In addition, eBay has developed a good relationship with its customer base by optimizing their interaction. Mambi(2010) reports that “in addition to providing a platform from where e-commerce can flourish, eBay provided the resources to enhance their experience while conducting business online” (pg 47). Skype and PayPal good examples of this resource and they demonstrate a commitment by the company to its most important asset –the customers.
Looking at eBay’s fee structure, one cannot fail to notice that it’s highly dependent on advertisement and sales. While the framework provides the bulk of the company’s revenue, placing all the emphasis on direct sources of revenue presents liability and risks. “Online advertisements have come up as a modern method of diversifying revenue generation for companies with a large online presence” (Dayal & Zachariah 2012). Ebay could consider leasing our advertising space to other companies that are not direct competitors thus generating more revenue. Otherwise, relying on only one source results in problems especially now that global economic outlook is not as promising, and purchases are markedly going down.
EBay needs to concentrate on defending its territory from attack by contemporary firms that have invaded the online social networking industry. Almost everyone has joined the online networking business for a piece of the vast revenues it generates. EBay needs to counter the effects of Facebook, Google and Twitter, who threaten its market share and one sure way if doing this is innovation. Social connections continue to be the front from which any successful online networking company utilizes to increase market share, and eBay needs to improve its connections. Not only do potential clients need to connect at a benign level to discuss price and quantity, the relationships between eBay customers needs to be more personalized. In order to do this, pictures could be brought on-board as well as a more interactive rating system to boost interaction.
The anticipated growth could be sourced from demographics eBay has traditionally shunned. Unfortunately, the small-scale traders are more than their large-scale counterparts and eBay failed to factor this in their original business model. Main competitors like OLX are utilizing this shunned portion of the market meaning eBay should strategize in order to bring this important sector of the market on board alongside the more established large-scale clients.
Red Bull
Red Bull obtains its great success from the fact that its strategy is different from the rest of the competition. While companies like Coca-Cola use massive media campaigns to drive their sales and create product awareness, Red Bull uses tactical awareness drives. Such “innovativeness is the essence of a company’s success as it thinks differently preferring to present their products directly to the prospective customer as opposed to general media campaigns” (Stafford & Faber 2009).
In addition, Red Bull has a target market for its energy products that it aims for. Anyone who is between 16 years and 29 years of age falls under the category Red Bull targets. Pepsi and Coca Cola utilize a more generalized approach in their energy drink promotion leading to lower adoption by the same. Red Bull’s defined target market means it can focus on their needs and desires. Such attention to detail is what sets Red Bull apart from its competition.
The company has not been without problems that undermine its ability to perform better. As more companies such as Monster enter the energy drink sector, the level of rivalry grows to levels that become destructive. Issues of “directing negative publicity at competitors have now become common and Red Bull is no exception” (Dahlen et al. 2010) In addition, the competition have started undermining the composition of each others’ products to capitalize on the increased health consciousness of the consumer.
Red Bull’s promotion strategy has been largely successful in advertising the product. There is “no need to revise the company’s promotional strategy to include traditional advertising as that is Coca-Cola and Pepsi’s strategy that might not necessarily work for the company” (Bucholz et al. 2009). Perhaps the only competitor that could force a shift in advertisement tactics is Monster. This competitor seems to have “replicated Red Bull’s promotional technique of strategic partnerships with extreme sports” (Kotler & Keller 2012).
The current trend in Red Bull sponsorships patterns seems to point to trouble, but that is far from the case. Red Bull is a high energy product that cannot be associated with softer forms of recreational sports. This means that the company will naturally want to be associated with men jumping from space, race cars, speed bikes, and other high-adrenaline sports activities. Johnson et al. (2010) reports “there is a need to control the extent to which the company associates itself with high adrenaline activity to avoid compartmentalizing itself” (pg 98). There is an increasing probability that the many could shift to other products if their current one only talks about high-risk, high-energy, high-adrenaline sports.
References
Boswijk, A., Thijssen, T., Peelen, E., & Johnston, T. S. (2010). 1DT and Qdance. In The experience economy: A new perspective (p. 98). Amsterdam: Pearson Prentice Hall.
Buchholz, A., Wördemann, W., & Wiley, E. E. (2009). Balancing act between flop and global success. In The impossible advantage: Winning the competitive game by changing the rules. Hoboken, NJ: Wiley.
Dahlén, M., Lange, F., & Smith, T. (2010). Red Bull: Austrian-Thai Myth creates a Global Buzz with Red Bull Buzz. In Marketing communications: A brand narrative approach (p. 315). Chichester, U.K: Wiley.
Dayal, R., & Zachariah, P. (2012). The Psychology of Advertising. In Advertising and promotion management (p. 200). New Delhi: Mittal Publications.
Kotler, P., & Keller, K. L. (2012). Delivering Value. In Marketing Management (5th ed., p. 411). Retrieved from http://www.slideshare.net/amandinevermeulen/marketing-management-kotler-keller
Kotler, P., & Keller, K. L. (2012). Communicating Value. In Marketing Management (5th ed., p. 498). Retrieved from http://www.slideshare.net/amandinevermeulen/marketing-management-kotler-keller
Mambi, A. J. (2010). The Impact of eCommerce and Law in Tanzania. In ICT law book: A source book for information and communication technologies & cyber law in Tanzania & East African community (p. 47). Dar es Salaam, Tanzania: Mkuki na Nyota.
Stafford, M. R., & Faber, R. J. (2009). Managing the power of curiosity. In Advertising, promotion, and new media (p. 175). Armonk, NY: M.E. Sharpe.
