Analysis of Red Bull Distribution Channel free essay sample

They relied heavily on store executions to get the necessary retail push. Since 2009, Red Bull has begun selling to wholesellers and began the practice of price cutting. The reasons for these changes in strategy was that the competition in the energy drink segment was increasing through the improved presence of XXX and Cloud9. As a result of these changes there is a high volatility in the prices of Red Bull in the retail channels. There are two consequences to high price volatility/price cutting: 1. Lower margins to the company: Selling at multiple price points and focusing heavily on retail push will lose the company a lot of money which it would have been entitled to had it sold on a single price. 2. Retailers remain confused regarding their costs for stocking Red Bull. Also, retailers complain about missing out on short-lived lucrative prices as they were already well stocked and couldn’t afford to buy more from the distributor when the low price was on. We will write a custom essay sample on Analysis of Red Bull Distribution Channel or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The cost per can of Red Bull varies from Rs 65 – Rs 75. The MRP of the product is Rs 85. Hence the retail margins vary from 11. 7% to 23. 5%. Recommendations: Red Bull should stop the practice of volatile pricing and should go back to implementing a single landing price for retailers. Price volatility and the consequent high retail push makes sense for products that have a high amount of competition and low pull. This is also an effective strategy when the company is unable to execute the retail stores effectively. But, Red Bull is the leader of the category and currently there is no visible competition for it. Neither Cloud 9 nor XXX