Red Bull: Building Brand Equity in Non Traditional Ways

TABLE OF CONTENTS

Executive Summary

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Red Bull is the pioneer in the energy drink category worldwide. Red Bull
exemplifies the typical branding success story. The brand came into
existence in 1984 and was formally launched in 1987. The iconic eye-
catching logo and slogan “red bull gives you wings” were then designed. It
was created by an Austrian professional turned businessman Mr. Dietrich
Mateschiz who got to know about a so called energy drink in Asia, which
Asian managers drink before meetings in order to be able to stay awake and
concentrated.

Mateschitz believed consumers would take Red Bull’s benefits seriously only
if the product cost more than an average soft drink. Therefore from the
outset, the cost per can was set 10% above the most expensive competitor,
regardless of country. This is why a single can of Red Bull can cost up to
300% more than a traditional soft drink

By the year 1987, Red Bull achieved a cult brand status across Europe and
America. Red bull now has been established world wide and has reached the
market leader position in the global energy drinks market by both volume
and value. Red Bull is produced as a single facility in Austria and then
distributed around the world via a network of local subsidiaries and external
importers and distributors. The expansion of of international distribution has
been central to Red Bull’s growth strategy, with the brand now available in
more than 130 national markets around the world.

Red Bull positioned itself, by sponsoring events which had dare and certain
energy quotient; it also marketed itself by sponsoring athletes in such sports.
“Word of Mouth” was the strategy from where they started and never looked
back.

SWOT Analysis

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Strengths
Market Leader: When Red Bull entered the market for simulation it actually
created the category for a simulation drink which did not exist before and
hence it got the 1st mover advantage in most of the markets.
Its strategy was to slowly enter new markets and create a buzz about Red
Bull. This proved highly successful as consumers were curious about the new
drink.
They were able to create a fresh and strong brand identity using ads
campaigns which emphasized the functional benefit of the product saying
“Red Bull gives you wings.”
Its positioning as “Revitalizes body and mind” conveyed the tangible benefit
in an easy to understand manner. It also covered a broad set of appropriate
occasions for consumption. This broad positioning helped it grow in a variety
of market segments.

Weaknesses
Pricing: Red Bull was priced at premium above all soft drinks. Also, they did
not offer discounts on six-packs or cases i.e. Red Bull cans would cost the
same as 24 cans brought separately. This could be a weakness in increasing
mass consumption of Red Bull.
It a new company compared to some of its competitors like Coca Cola, Pepsi
etc and it has a small product family.

Opportunities
The fact that compared to the soft drinks market which stands at $66 billion
the energy drinks market is very small at $3.5 billion also means that there is
still room for expansion and a lot of untapped markets exist for Red Bull.
Expanding the brand with new products also provides huge opportunities for
Red Bull e.g. the herbal tea, fast food chains and also the magazine devoted
to Red Bull lifestyle. Also, launch of Red Bull sugar free helped in catering to
the health conscious customer segment.

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 Red Bull: Building Brand Equity in Non Traditional Ways

Continuing with large scale advertising and promotions as competition

increases and product innovation will Red Bull in its expansion plans e.g.
Launching new ad campaigns showing the Red Bull lifestyle which is
adventurous, exiting and fresh. Also, in trying to attract new customers Red
Bull can use social networking for promotion.
Sponsoring of events and athletes which match the Red Bull image helps in
increasing the brand visibility.

Threats
As consumers today are becoming more and more health conscious they
might not prefer Red Bull because of the caffeine contents in it. Organic
energy drinks may take the market of Red Bull which is only a simulation
drink and not really an energy drink as consumers become more health
conscious.
Also, the bad publicity due to stories of people experiencing health problems
after drinking Red Bull and then exercising vigorously. (E.g. the Death of Ross
Coney). Countries like France, Norway and Denmark prohibited the sale of
Red Bull following this.
The new competitors were a threat. In 2004 more than 100 drinks were
launched in US in the Energy and Sports drink category.
Also as Red Bull expands to new markets in Asia it may not be accepted in
the new markets where the concept of energy drink or sports drink is not yet
that well spread.

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 Red Bull: Building Brand Equity in Non Traditional Ways

Marketing Mix

Product
Red Bull is a sweet, caffeinated drink aimed to give consumers the high
energy kick. Available only in rather expensive 250 ml cans, 350 ml bottles
with 4 packs and only two flavours (original and sugar-free). It contains
caffeine, taurine, glucuronolactone and vitamins. It was in 1985 Dietrich
Mateschitz, an Austrian and today it has become the world’s leading energy
drink, a staple in many young and active people’s lives.

Price
Red Bull has always pursued a premium pricing strategy. The reasoning
behind this is that people would be less likely to believe in Red Bull’s energy-
enhancing properties if it was priced the same as a traditional cola beverage.
Red Bull would always set a price which was 10 percent greater than the
most expensive competitor in order to maintain a best of class positioning
and also stake out a unique territory in the beverage market.

Promotion
Red Bull has adopted an aggressive marketing campaign. The company
adopted the following strategies for its promotion:
• Advertising: Red Bull used all the available media channels, that is,
television, print and radio for its advertisement. They used an
animated advertisement which clearly communicated the product
benefits and was the main reason for its success. The animated Ads
were adopted uniformly across the company’s global markets.
• Event Marketing: Red Bull had an extensive network of events that it
was involved with. Red Bull either invented the event from ground up
or brought the product to an existing event. When Red Bull created an
event it controlled all aspects of the event (The Red Bull Flu tag). Red
Bull was also associated with many sporting events. These events
increased Red Bull’s visibility and also reinforced the brand’s
positioning as an independent, stimulating beverage.

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• Sampling: Product trial was an essential part of Red Bull’s marketing

campaign. Red Bull sought to reach the consumers at the right place at
the right time, mainly when consumers needed or wanted a boost. So
Red Bull sampling campaigns took place at concerts, parties, festivals,
sporting events, at the beach and at campus libraries. The sampling
team reached the consumers at ideal places and explained to them
product benefits and encouraged them to drink a full can for maximum
benefit.
• Point-of-Purchase Marketing: Red Bull’s primary point-of-purchase tool
was the branded refrigerated sales units. Red bull placed these
miniature glass refrigerators which prominently displaced the Red Bull
Logo in convenience stores, bars, clubs, sport shops, cafeterias. These
refrigerators ensured Red Bull a prominent location in the retail
environment. Red Bull hired a team of delivery van drivers whose sole
responsibility was to stock Red Bull, so as to ensure quality and
consistency.

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Questions & Answers

1. Describe Red Bull’s sources of brand equity. Do these sources
change depending on the market or country?

RedBull uses non-traditional ways to achieve its targets and unique

approaches to create the brand equity. Right from the beginning the
company makes it very clear to it all its existing and potential customers the
message of its product functionality in a clearway. Related to the pricing of
the product company positions the product above 10% of the upper-segment
of the competition in order to create the mindset of the premium brand and
also influencing people by not letting them buying a simple beverage drink.
This also helps the company from being categorized different from other
beverage drinks . The company is different form other beverages company
because it uses word of mouth marketing and creating the brand awareness
by this way. Once the brand awareness is created then it resorts to ads within
the TV and other related media channels. The company also tries to create
the mystique by participating and sponsoring events within the market even
before the product is not available within the market. Also the company plays
the market entrance relatively strategically by targeting a niche audience
and trying to influence them first rather than spreading out to the whole
target of consumers. Indeed the company tried different ways of market
entrances and different kind of brand equity management within different
market however most of the cases this strategy failed as it is stated within
the case as the U.K. case. The company tries to play the cell strategy within
markets like the USA, however this methodology is relatively same to other
countries but the difference is related to the geographical situation of the
USA and relatively spread out demographics within this market.

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2. Analyze Red Bull’s marketing program in terms of how it

contributes to the brand’s equity. Discuss strengths and
weaknesses.
I think the Red Bull’s marketing program is quite successful in terms of brand
equity.
• Targeting a niche segment in the beginning and then spreading out to
the whole target makes a lot of sense.
• Because the marketing program was really focused at first as a
segment of people it creates the concentration and brings up the
success.
Related to the disadvantages of this methodology and also it is started for the
niche segment the product’s understanding for middle and upper aged
people is quite different.
• In my opinion thus these segment of people tend to stay away from
the drink because of having wrong perception of the brand.
• On the other hand sometimes the product is understood as a mixed for
the alcoholic drinks and you need time to break that perception as
well.
However the overall whole brand equity management is successful in case of
Red Bull.

3. How can Red Bull maintain its marketing momentum? Would

you recommend that Red Bull develop any brand extensions? If
so, what would they be? Would you use the same marketing
strategy?

Red Bull has a fantastic marketing momentum and it has taken the nation by
storm and continues to maintain its stranglehold on the energy drink market
– despite an abundance of competitors. It seems like Red Bull is omnipresent:
all over TV, sponsoring every sport, and utilizing every other major form of
advertising. While it may seem like Red Bull is flooding every advertising
arena, in fact it does not. Red Bull has an advertising strategy that separates
them from competitors, and it has been paying dividends. Red Bull should

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now concentrate on maintaining the leading position in existing countries and

develop new markets. Red Bull has always focused on youngsters and used
them as brand ambassadors by recruiting student brand managers. They
should continue doing it because these students tend to take the brand
forward with their growth. Initially they use Red Bull on its own, but over age
they can use it as a mixer, which is generally done by working adults.
Related to the pricing, Red Bull should take this forward, as an image has
already been created for them based on its pricing. Related to the packaging
I think Redbull should keep its packaging style as the brand and the
traditional can is becoming a classic day by day. Indeed refreshing the
packaging might be an idea but my opinion would keep the tradition related
to this. Brand extension also should remain as it is because there are quite
big risks related to this as the brand image might be effected and also the
focus will be lost.

4. Evaluate Red Bull’s 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?

My opinion is related to the success of the brand until now keeping the focus
and not trying to diversify and loose focus from its main product. This might
be the failure of other global brands such as coca-cola etc when entering the
energy beverage market. Still there might be some opportunities by entering
the tea market in order to grab the market share from mid and old aged
potential customers. The reason for this is related to the perception of the
brand as the brand is perceived relatively more targeting the youth market.

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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?

Talking about demographics I think the younger people at early or mid

twenties tend to drink the product relatively more compare to the
businessman segmentation. I think this is related to the market strategy and
the perception of the product. Because the product is being first launched at
night clubs and so on the perception of the brand is a drink for younger
people. Related to the advertising campaigns red bull also tries to push the
product to this segment as well. If we think in the logical way of body needs it
is obvious that someone at his/her late thirties indeed fell exhausted more
easily compare to somebody who is at twenties. Still the product is valid and
accepted by people and day by day there will be new fans of the product
which is definitely help Red Bull grow in its segment if it remains focused the
way it is today.

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