Red Bull Report free essay sample

Red Bull is one of the most famous brands in the drink industry. With an innovative product Red Bull was able to sell millions and millions of cans and to draw profits of dizzy amount. But as often it is not only the product which determinates the success or failure of a company. And of this Red Bull is a very good example. Although nowadays Red Bull has to compete with the biggest drink companies in the world (Coca Cola, PepsiCo), it detains in its segment almost everywhere more than 50% market share. It is true that Red Bull was the first large and international energy drink producer, but for their leadership they did and still do a lot of accurate marketing actions in order to preserve and improve their awareness and image and as consequences their position. Like mentioned the marketing actions of Red Bull were very accurate and coherent themselves. Dietrich Mateschitz, the founder of Red Bull, was spending about two years to create the product and their packaging. He conceived an advertising strategy with basically two slogans (â€Å"Red Bull gives you wings† and â€Å"Red Bull revitalizes body and mind†), which are still in the Red Bull ads nowadays. The message of the ads is always the benefit of the product. This red line has been seen from the beginning until today. Red Bull focused a lot of the functional side of the drink. Also because of that Red Bull is practicing a premium price, they argue that it is easier to believe in an efficiency of a product if it is more expensive than their competitors. A lot of marketing actions of Red Bull wants to show people the different use opportunities of their drink. It should not be only a mixer or a clubbing drink. Therefore Red Bull defined 5 potential users: students, drivers, clubbers, business people and sports people. Red bull was able to get in some way mystic. But why? First of all the category of drink (energy drink) was completely new. Then Red Bull has a clever distribution and a new-market-enter concept. First they are available in â€Å"in† bars, discotheques and stores. They sponsored peers to take Red Bull in the public (confiding in the word-of-mouth) and only in a successive moment Red Bull is available in the discount stores, when a lot of people already know it. They call this concept â€Å"seeding program†, that were able to create a wave of buzz around the drink before and the first time of its apparition. Also the only available packaging (cans of 250 ml without reducing the price if taken in great quantity) contributes to the mystification and success of Red Bull. Red Bull is very active in the event and sponsor marketing, taking a lot of attention if this kind of event or sport (sport sman) fits well together with the message of Red Bull as an energetic drink. So the sports are often extreme sports or related to speed (see Formula 1). All this things were contributing and still contribute to the brand equity. The company has always take care a very lot of their image and awareness. So Red Bull is an example of a good, successful and advised marketing. Do these sources change depending on the market or country? The Red Bull global marketing strategy is to use similar techniques everywhere, without differentiating the product or the brand characteristics depending of different countries or different markets. The Red Bull now-famous package is similar everywhere, characterized by the blue and silver small can (250 ml), which allows the company to give a different idea of drink to consumers. In fact this small can signal that the product is different and stronger than traditional soft drinks. The demonstration of the power and success of this can comes from the Red Bull attempt to commercialize a different package for its product. The company developed a glass brown bottle that had to be sold in places where cans were not allowed; it was introduced in Germany when Red Bull was launched in this country, and the quick demand of the product outpaced supply, so the company was forced to sell glass bottles. As soon as glass brown bottles were commercialized, sales fell off. Dietrich Mateschitz, the company founder, wants Red Bull to be drunk by everyone and everywhere; he wants consumers to drink it whenever they need a lift, whether it is morning, noon or night. This is another point of strength of Red Bull marketing strategy, because the company doesn’t define a specific demographic or psychographic segment as its target market. Red Bull doesn’t want to focus on a narrow consumer target, and this ensured to the company to be able to grow into numerous market segments. Moreover Red Bull’s advertising doesn’t specify any consumption occasions, which further facilitated an elastic positioning. In fact, at the beginning, Red Bull consumers in Austria were dancers, clubbers and ravers who used the drink to stay fresh during late-night parties. This was a very good publicity for the company, because this party-association created a significant buzz around the drink. Red Bull was used primarily as a mixer, a strategy allowed from the company useful to make Red Bull to be present in every kind of place and to be drunk in a lot of contests; in fact Norbert Kraihamer, Red Bull’s Group Marketing and Sales Director, said â€Å"We are not against mixing, but over time we must make sure that the product is regarded as much more than a mixer†. The Red Bull intention has always been to communicate to everyone and in every country same concepts, and to do it the company used animated television spots adopted uniformly across the company’s global market. Said Kraihamer: â€Å"Even in a country where they speak a different language, we send the same message using the cartoon†¦. The power of our marketing mix works†. The mot â€Å"Red Bull gives you wiiings† became a well-known sentence in all over the countries where the drink was sold. Usually the company used a â€Å"pre-marketing† strategy to establish awareness in markets where the product were not yet sold. It consisted in sponsoring events that took place in countries where Red Bull was not available, because like Kraihamer said â€Å" we want to be recognized as the pre-eminent brand, even if we are not there†. Only once Red Bull tried to go over his traditional marketing entry strategy and it was a big mistake. It happened when they were introducing the product into the United Kingdom in 1995. In fact, marketing managers wanted to change the idea of â€Å"stimulating† drink in that one of â€Å"energy† drink. It was a failure. In England consumers were very familiar with sport drinks category, dominated from decades by another brand, Lucozade. Management also changed the word-of-mouth strategy which characterized the awareness of the product until then. All preliminary steps were skipped and Red Bull started to be sold in the largest supermarkets and convenience stores, delaying every kind of buzz that has always been the strength of the brand. The last mistake in which UK management incurred was to introduce a new advertising concept; instead of the usual slogan they used a new one: â€Å"Never underestimate what Red Bull can do for you†, which not really clarify what was the company positioning. What is more, they focused advertising efforts on billboards that were not as effective in communicating product’s benefits as electronic media. After necessary changes, between 1997 and 2001 Red Bull was able to gain the 48% of the energy and sports drink market. Another different, but successful marketing entry strategy was applied during the introdu ction of Red Bull into the US market in 1997. The company used the so-called â€Å"cell† approach, consisting in dividing key markets in the country into targeted geographic segments, rather than attempt a nationwide launch. Even if the entry strategy was different from the usual one, Red Bull didn’t change the sources of brand equity that have always dictated the success of the company by giving to all consumers the same idea of what Red Bull drink was, and which were its benefits like functional product. Red Bull’s Marketing Program Analysis in terms of how it contributes to its brand’s equity. When a new product is launched on a market, first thing to do is to choose brand elem ents, identify points of difference and points of parity. Unless we do that, we can’t start thinking about marketing activities and so on. The reason is very simple. Everything must fit each other. The message that we are sending through our marketing program must reflect the desired perception of our product that we want to fix in consumers’ minds. The truth is that marketing communication is the main source of consumer’s knowledge about the product. There can’t be any misunderstandings or contradictions between this and the brand image. In our opinion, in case of Red Bull’s marketing program, everything was carefully planned. It contributed to build strong brand equity. Everything was important: pre-marketing, sponsorship and way of advertising. First of all, they managed to build one scheme of introducing their energy drink, which they copied in each country. It is how they made the product recognizable in every country in the same way with the same associations across the cultures. It also allowed lowering the costs of expanding, because the product did not need additional adaptation to another country. A very important point of their strategy was to make a buzz over the Red Bull energy drink before launching on a new market. People were talking about this drink, wondering what it is exactly, an atmosphere of excitement was created. This marketing trick was increasing brand’s equity. Firstly, the brand was known before entering the market. Secondly consumers were aware of its benefits and unusual ingredient which was kind of mystery. Of course sometimes the rumors were negative, but still everybody was just waiting to try â€Å"this new thing†. Word-of-mouth communication was the key of their marketing program. Slightly controlled, by for example placing empty cans in clubs and pubs to build an illusion of popularity, it helped to build brand equity based on consumers’ own impressions. As they said: â€Å"we do not market the product, we let the consumer discover it†. Thanks to that, Red Bull users are more convinced of the effect that the drink brings, as it seems to come from them-selves and from peers, not â€Å"from the TV screen†. That kind of media is maybe the oldest one, but the most efficient. It does not mean that they completely resigned from advertisements. In fact, TV commercials are still one of the most efficient ways of influencing consumers as they can reach the biggest spectrum of them and they allows for sight, motion and sound and so they stimulate many human senses. Of course Red Bull had some TV spots, but very simple one. A cartoon always based on the same scenario two people, one advising to another lacking the energy to drink Red Bull and the line: â€Å"Red Bull gives you wiiiings†. It could fit consumer of every age. It allowed the brand not to be classified for only one target group. Although these are young people of 14-19 years old, who are the biggest group of buyers, this openness for people of every age brought by marketing program is the point of difference. Other products of the same category are focusing on specific target group or specific occasion of usage. Red Bull case is different. They wanted to make a product for every occasion. And so advertisements where never specifying the proper time of drinking. They were emphasizing the purpose of using – whenever people are mentally or physically fatigue – these were the only two dimensions characterizing a Red Bull consumer. Thanks to that brand equity increased as it better cover the market. Sampling was a crucial part of the Red Bull marketing program. Energetic people conv incing others to try and drink Red Bull at the right time and at the right place – every aspect of a product trial was carefully planned. Thanks to that brand’s equity increases, because people can try the product just â€Å"in time† to see how it works, to feel benefits and so to spread the good word further to friends. The most important thing that contributed the brand equity was their approach to sponsor sport events. By sponsoring individual athletes or international competitions and events, they were showing brand’s involvement in viewer’s country. This pre-marketing strategy helped to establish awareness of the product and good associations with the brand before entering the market. The whole Red Bull marketing program was well-considered. Marketers have chosen various communication options, which shared common meaning but simultaneously were complementary, to build strong and unique brand equity. They did just one mistake during launching the product on the UK market as they thought it differ from another. Fortunately, they realized their mistake very quickly and they took necessary steps to fix the situation. Future Scenarios for Red Bull How to maintain its momentum? How to develop its extension? What would its marketing strategy be? Red Bull, in spite of its premium marketing strategy, will figure lots of new challenges in the future. Even if there have been some mistakes in the direction’s choices, as the launch in the UK or the attempt to commercialize the tea â€Å"Carpe diem†, it’s clear that they have invented not only a new category of food: â€Å"Functional†, but also a very good way to enter in people’s mind, focusing on each costumer. However, there is a question: how to keep this little empire on the top? Now, more than ever, it is important to focus on its core product, as had happened in the first years. The reason for this is simple: too many big competitors on the market as well as small ones. Consequently to this situation, Red Bull has lost a big market share due to others brands attempting to copy Red bull’s marketing strategies to enter the various segments. Another problem is the major cost they have to support for the different advertising campaigns: more than the 30% of the revenues, in spite of the big competitors like Coca Cola and Pepsi that just spend 9% of them. This is a necessary cost, if Red Bull wants to remain a top brand in its sector. Anyway, as we could see from the results, all attempts to launch new products or to try common marketing strategies have failed or didn’t have much success. A good example of that are the â€Å"Carpe diem† tea and eventually the fast-food chain with the homonymous name. The costumers’ awareness has been build trough the years focusing on every â€Å"cell† they got in; now that all this work has been done, they can’t just adopt big brands strategies. They have to continue to keep the image in people’s mind, the one of their first and so innovative product. In these last years, we’ve seen the scarce answer that the market has given to product as â€Å"Red Bull Light† and above all the â€Å"Red Bull Cola†. This last one, even if it has been presented trough the usual channel used by Red Bull, like the â€Å"Red Bull Teams† out of Universities and Colleges, it had no success. It has been for sure a too big challenge for them. They moved too much from their border this time; it is the reason why in many European Countries the product has not even been launched. It means they’re very scared of the present situation since the big competitors are taking more and more shares of Red Bull’s market. If they want to try to move in new sectors or to create a new product for different segments, they should create other brands. In the present situation they’re giving an image of dispersion, just losing more space without any profit. On the other hand, the evolution of its marketing strategy being a sponsor of extreme and high-speed sports and also the decision to buy a soccer team and to create a F1 team, makes us understand that its basic values are still the same. We can see how it sponsors athletes, who are the best in their ranges, even if their sports are still not so famous, or are not given any particular recognition to. Thanks to that, in the future, Red Bull will have best champions in new, very fashion and extreme sports. To be remembered, the Red Bull project to develop an air team; this requires a lot of money, but gives an enormo us payback in awareness and image. The brand is also very good in creating new events and contests, so to give them a very personal mark. These are the best occasions to strengthen again the relations with its core classes of costumers, like sportsmen and clubbers. At the end, we can say that Red Bull is still doing a really good job thanks to its creativity and fantasy, but it should take care not to get confused and disoriented because of many competitors trying to take its place. Stay focus and remember not to mix new and old challenges. That is the only way to get into the worldwide trade and extension.