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Red Bull Building Brand Equity in Non-Traditional Ways Teaching Notes Summary The Red Bull case is unique

e because it deals with a single product that found new ways to build a brand in a very competitive category. It is a good case to supplement students learning about nontraditional marketing methods. Red Bulls founder, Dietrich Mateschitz, was an experienced marketing professional and approached the creation of Red Bull from a branding perspective. Red Bull essentially invented a new category energy drinks in Western markets, and marketed its product without much above-the-line advertising. The product was the primary marketing tool, and as a private company Red Bull exercised control over the distribution of its product. The company expanded very selectively into new markets, yet still achieved exponential growth. Red Bull became one of the major success stories in the highly competitive beverage market in the 1990s. Students should consider the following questions as a basis for discussion: 1) Describe Red Bulls sources of brand equity. Do these sources change depending on the market or country? 2) Analyze Red Bulls marketing program in terms of how it contributes to the brands equity. Discuss strengths and weaknesses. 3) How can Red Bull maintain its marketing momentum? Would you recommend that Red Bull develops any brand extensions? If so, what would they be? Would you use the same marketing strategy? 4) Evaluate Red Bulls move into herbal teas, fast-food chains, and magazines. Does it make sense for the company to expand into these areas? What are the potential benefits and dangers? 5) Because product usage was not marketed as being limited to one or even a few occasions, Red Bull users could continue to use the product even as their priorities shifted. The case states that, a Red Bull consumer first attracted to the product as a nightlife enhancer in his or her early twenties might later use the drink as a morning pick-me-up or a revitalizer during a long day of meetings. How effective is Red Bull at advertising to these varied groups? Teaching Objectives 1) 2) 3) 4) To discuss how to build awareness and image using non-traditional marketing methods To analyze channel and distribution strategies To analyze the implementation of a global marketing program To examine the task of dealing with competition

Teaching Strategy The Red Bull case can be used in tandem with the Starbucks case, since it reinforces many of the same points. Red Bull is a good case to discuss selection of brand elements, implementation of a marketing program, building a brand using non-traditional marketing means, and outlasting competition. Since the product is the star for the brand, the case goes into much detail about the history and design of Red Bull. Students can be asked to describe the product, since many will be familiar with the beverage, and analyze the brand elements. They should come up with something along the following lines: Flavor o Medicinal taste reinforces efficacy o Carbonation gives refreshment, energy, and mixer associations Packaging o New size & unusual shape creates interest o Single-serve cans, no multi-can packs, reinforced premium positioning o Visually appealing silver-and-blue Ingredients o Caffeine, taurine, other energy ingredients allow Red Bull to make claims about health benefits o Sugar for flavor Positioning o Revitalizes body and mind o Broad positioning, drink suitable for any occasion when consumer needs a lift o Early adopters: athletes, clubbers, hipsters, gives drink cachet/exclusivity Price o At least 10 percent greater than nearest competitor o Stakes out premium price point o High price makes health claims plausible in minds of consumers

Students can be asked to analyze these brand elements in terms of their establishing points-of-parity and points-of-difference with other beverage brands. Points-of-parity and points-of-difference can be expressed in relation to usage occasions as well, as depicted in Figure 1 of the case. Red Bull relied on a word-of-mouth strategy to build awareness for the product in the early stages of its launch in Austria. The company made Red Bull available in convenience stores, bars, and clubs, giving access to the groups of consumers who began drinking the product ravers, clubbers, young people and formed the user imagery. As more people began drinking Red Bull, word of the products benefits spread throughout the country and beyond its borders. Because the product was not available for sale outside Austria for five years, a mystique developed around Red Bull and demand for it led to its appearance on black markets in other countries. Here the discussion can touch on topics from Chapter 6, such as buzz marketing and mixing and matching communications. Students can be asked what moves Red Bull made and what factors were unintentional that led to a buzz marketing effect. Students can also be probed as to what other companies can learn from the brand and how it is being marketed.

As Red Bull began to expand into other European countries, its marketing program became more sophisticated. Many of the lessons from Chapter 14: Managing Brands Over Geographical Boundaries and Market Segments will be useful in this part of the discussion. Students can be asked to enumerate the aspects of the marketing program: television advertising, point-of-purchase marketing, sports marketing, sampling, event marketing, and college marketing. Each aspect can be analyzed for its contribution to brand equity. Red Bull also exercised control over the distribution of the product, limiting the number of locations and the type of locations in which the drink was to be sold upon entry into a market. In the U.S., Red Bull adopted a cell approach to break the country down into manageable geographic segments. This limited launch strategy contributed to a buzz marketing effect because it was designed to reach the early adopters most likely to influence the general public. The Red Bull refrigerated units that appeared in bars, clubs, and convenience stores, as well as the van teams that distributed exclusively Red Bull, served as push strategy. Students can compare Red Bulls push strategy with its pull strategy. As Red Bull became more widely known, a variety of competitors emerged. These competitors pitched consumers with a number of positioning options, ranging from energy-focused to partyfocused, but none had the broad positioning of Red Bull. Students can discuss how the competitors limited positioning options in terms of usage occasion could effect Red Bulls positioning, as discussed in Chapter 3. Students can also examine Red Bulls strategies for dealing with competition, which include pre-marketing, price premiums, and adhering to its marketing program. Here it may also be useful to discuss other alternatives, such as a lower-priced fighter brand extension or an extension with a narrower positioning. This can lead to the broader question of how Red Bull can continue its exponential growth as its markets near maturity. In its first market of Austria, Red Bull achieved per-capita-consumption increases every year except one since its debut, but the question remains if the company can replicate this success in other markets. Lessons from Chapter 13: Managing Brands over Time, can be applied here. Key Lessons Red Bull was created from a strong strategic branding foundation Red Bulls ability to support health benefit claims with product efficacy helped to create a successful marketing program By targeting specific consumer segments and employing clever push strategies, Red Bull built awareness and image with little initial marketing expenditures Integrated marketing communications and much buzz marketing helped to maximize the benefits of Red Bulls marketing campaigns

Discussion Questions 1) Describe Red Bulls sources of brand equity. Do these sources change depending on the market or country? Sources of equity o Product efficacy o Hip image o Limited availability o Association with athletes/sports o Multiple consumption occasions o Sleek packaging Changes depending on market or country o Red Bull employs the same marketing strategy in every new market, so many sources of equity remain consistent across markets o Major consumption occasions may vary by market o Importance of sports association varies by market 2) Analyze Red Bulls marketing program in terms of how it contributes to the brands equity. Discuss strengths and weaknesses. Highly integrated, all marketing efforts consistent with fundamental promise of efficacy Limited availability at time of launch builds buzz awareness, also highly targeted in terms of user imagery Advertising mainly awareness, but some image component in terms of conveying consumption occasion and humor Sports marketing primarily image Point-of-purchase/on-premise mostly awareness, also image in terms of placement Sampling program builds awareness, product dispensed when consumers most likely to appreciate its affects 3) How can Red Bull maintain its marketing momentum? Would you recommend that Red Bull develops any brand extensions? If so, what would they be? Would you use the same marketing strategy? Red Bull should continue expanding in other countries using its successful positioning strategy based on occasions. Brand extensions could be considered, but marketing research needs to be conducted to assess the effect of such extensions on the image of the brand. Lower-priced extensions as well as extensions to new product categories are possible options. Consistency in the marketing strategy deployed is highly recommended unless marketing research proves otherwise. Discussions of different examples would be very useful in this case.

4) Evaluate Red Bulls move into herbal teas, fast-food chains, and magazines. Does it make sense for the company to expand into these areas? What are the potential benefits and dangers?

Evaluation is subject to class discussions and arguments Benefits o Diversify and grow the business o Capitalize on the diverse target markets o Herbal tea would be consistent with the healthy image o A magazine could generate good publicity to the brand Dangers o Fast-food chains could be risky to the healthy image

5) Because product usage was not marketed as being limited to one or even a few occasions, Red Bull users could continue to use the product even as their priorities shifted. The case states that, a Red Bull consumer first attracted to the product as a nightlife enhancer in his or her early twenties might later use the drink as a morning pick-me-up or a revitalizer during a long day of meetings. How effective is Red Bull at advertising to these varied groups? Successful among several age ranges (14-19; 20-29; and 29-39: See Exhibit 2) Students are encouraged to evaluate some examples and advertisements, and compare the effectiveness of this strategy to the performance of the brand in the market.