Red Bull was established by Dietrich Mateschitz in year 1985. Company introduces energy drink exclusively in Austria in year 1987. After five years of exclusive operation in Austria Market, Company expanded its business in European market. Company decided to slowly enter into foreign markets in order to create buzz and anticipation. This paper intends to analyze brand equity and other related aspects of Red Bull.
Brand Equity reflects value premium earned by the company from its product that has well recognized and establish brand name in the market as compare to competitors. Company creates brand equity by making their products superior and valuable in terms of quality, taste, associated services and price. Consumers spend more in order to buy product that has good brand equity. For example people pay higher money for Starbucks’ coffee instead getting a general coffee because of brand equity.
Red Bull’s Sources of Brand Equity
Red Bull utilizes various non-traditional ways in order to maximize its reach to target audience and develop brand equity. Since beginning company very clearly conveyed functioning of the product to the target customers. Company very effectively describes how its product is different from other drinks available in the market. Company also priced its product ten percent above than competitor’s products in order to build a perception of premium product among consumers. Company did not emphasize on distributing sample unlike other brands who promote their products by distributing good number of sample packs. This strategy helps in positioning Red Bull as premium brand. Red Bull created brand awareness through word-of-mouth and advertisement on television and other media channels.
Red Bull emphasizes on public relation activities by sponsoring events in new markets where product is not yet introduced. Company also targeted a niche market at beginning instead opting for mass market in order to influence consumers. Company tries unique ways to build brand equity in different markets. However it has seen that company’s adopting such strategy often fails for example Red Bull initially fails in U.K. market. Brand equity of any brad could be analyzed by accessing perceived quality, brand loyalty, awareness, brand association and channel relationships. Brand equity is value associated with brand in the mind of consumers. Main sources of brand equity of Red Bull are:
- Brand Awareness
- Consumer’s perception about superior quality of brand
- Consumer’s preference towards the brand due to status attached with owing the brand.
Red Bull successfully achieved three aspects associated with brand equity.
Brand Awareness: Within ten year of its introduction, Red Bull was presented in 25 international markets including East Europe, South Africa, and New Zealand. This shows that brand has global awareness. Red Bull slogan very clearly conveys benefits associated with the brand i.e. “Revitalize body and mind”. Through this slogan company conveyed that drink can be consume at any time and by any one.
Consumer’s perception about superior quality of brand: Red bull improved its ingredients and encouraged word-of-mouth publicity in order to develop a product known for its quality. Company also made changes to improve physical appearance of cane. Red Bull stimulate metabolism of human body and help in eliminating waste elements. The drink provides a sense of well-being and enhances mental attentiveness. The taste and ingredient mix was created to provide excellent quality to the customers.
Consumer’s preference towards the brand: Red Bull positioned its drink as supplementary drink that offers additional medical benefits to the consumers. Sportsmen, athletes, models, college students, cool dudes, people related to entertainment and fashion world are target customers for the strategists of the health drink. Company makes its advertisements to allure these categories of customers.
Red bull seems to be doing well where issue of brand equity comes into play. The strategy was to start from a particular place and then expand it to other places. Initially it was focused on a particular segment of customers which was expanded later into several other categories. The disadvantages associated with the product is misconception among mind of few consumers that product has sedative elements like alcohol and the product is not for middle and elderly people. However, Red Bull successfully created brand equity.
Red bull adopted several especially designed marketing strategies that helped it in being a well known brand. Some effective marketing strategies, adopted by red bull are as follows-
- Marketing by using word of mouth- one of very effective and oldest methods of marketing is word of mouth and knowing its importance, red bull adopted it as its strategy of marketing. Word of mouth helped red bull especially in the initial years of its business into market. People came to know about this drink through other’s mouth who consumed this drink. Buzzing about the drink made others aware and curious about the drink, people purchased and consumed red bull and this strategy helped red bull in a substantial way.
- Marketing through creating aura- since its launch, red bull was presented in a way that it created curiosity and enthrallment among the Austrian people where it was originated. It was publicized as unique functional energy drink and people were excited to taste it. When People of neighboring countries heard about the product, they also became curious to taste it and companies’ strategy worked.
- Direct entry into micro market- After getting benefits from its previous strategies, company entered into next phase which was clubs, retail stores, super markets, bars and shops. As soon as the product hit shops, stores, bars and clubs people of every class and category came into its contact. The strategy worked for company and it moved one step forward.
- Proxy marketing strategy- Company started sponsoring some famous play, shows and events in order to make its reach to new customers. Its focus was to tap customers from different class and age groups. This strategy gave company a new diversified market.
- Expansion programs- red bull attempted to reach a broad category of consumers. Company targeted youngsters too adults and people of different built and categories. It targeted people from business category to sports category, students to bar visitors, clubbers to gym goers. The effect of new strategy was more visible on Youngsters below 18 years of age.
- Marketing through new ideas- red bull launched an aggressive marketing campaign after it made its solid ground. Company shelled money on attractive advertisements, different kinds of marketing strategies like sports marketing, event marketing, and sponsoring different kinds of events, plays and shows. Company did not hesitate in Putting canopies and stalls in different kinds of functions.
SWOT Analysis of Red Bull
- Market leadership: Red bull is the market leader in its segment. Red bull has its presence in almost every market and sales millions of cans across the world.
- Marketing efforts: Marketing strategies of company provided it a strong base. Aggressive and attractive advertisement campaigns of the company made its reach to People of different class.
- Alliance with Cadbury: In Australia Red Bull alliance with Cadbury Schweppes. This alliance helped company in achieving wide distribution network and in reducing threat of rivals in terms of innovation, brand equity, excellent marketing communication, loyal base of customers and unique products (Red Bull, 2013).
- Lack of innovation: Company lacks innovative ideas and emerging competitors with new ideas cause a big threat to company.
- Reliant on small product base: Company has limited products to offer which makes it position vulnerable in competitive market.
- Marketing expense: Company will have to find new ideas to face challenges from big brands and to expand it in environment of aggressive competition.
- Diversification of retailing mediums: Red bull can enter into vending which is an effective tool to increase sales and has been using by other major players of the market.
- Product line addition: Expansion plans are required to increase sales by finding new class of consumers. Launching new products is also a good idea.
- Geographical expansion
- Finding new markets in different parts of world is inevitable for red bull
- Health concerns- tougher rules from government on high caffeine content. Consumer awareness of health and well being- people may start to drink more water as it is associated with healthier life style.
- Public health concerns: Red bull will have to pay attention on the issues that has been raised by its consumers regarding the quality and risks related to this drink. The drink has been earned bad name in a number of countries.
- Maturing market: Energy drink segment faces a slow growth which can dampen company’s sales, revenue and growth.
- Consumer awareness of health and well being: Today Consumers are aware than ever and in order to allure them, it is inevitable to provide them good quality, hygienic and safe products.
- Continuously increasing competition
- Economic slowdown
Red Bull should maintain its marketing momentum by expanding its business in new markets and adding new categories. Red Bull marketing communication strategy differentiates it from other competitors existing in the market. Company should keep on emphasizing on youth through public relation activities, making unique animated advertisements, showing sports persons and celebrities and organizing sport events. Company should focus on maintaining market leadership position while expanding business in markets and new categories. Company should stay with its present packaging as it is stylish and associated with consumers (Red Bull, 2013).
Sustainable Brand Equity
Red Bull should adhere with:
- Present Logo
- Product Positioning as energy drink and premium product
- Patent of brand elements
Stimulating Vs Leveraging:
- Stimulating brand equity with present brand image
- Red Bull with Zero sugar
- Performance association with functional food (energy drink) and innovative product (zero sugar)
- Imagery association through displaying empty bottles, and logos
- Increasing brand awareness through buzz marketing, Red Bull Charm and positive word-of-mouth
- Enhancing brand image by scientific research and leaders’ opinion
- Entry into emerging markets
Red Bull maintains marketing momentum through: Positive word-of-mouth, brand knowledge, strong brand image, excellent response of customers on promotional activities and maintaining consistency. Company should adhere with its positioning, innovative approach and marketing activities in order to maintain its marketing momentum (Red Bull, 2013).
Red Bull can expand its business in following categories:
Sports Restaurants and Bar: Red Bull can establish sports restaurant and bar near to different sport facilities and clubs.
Energy Snack and Chocolates: adopting similar position of premium products and pricing, company should create a buzz about new line of energy snacks for affluent class.
Entertainment Sport Channel: this will feature events sponsored by company and other sports to increase visibility and add additional source of revenue.
Future Marketing Strategy
Red Bull does not position its brand as mass market brand. Red Bull is known for its differentiating strategy. Hence it is important that Red Bull develop brad that is superior to its competitors and capable to transfer its effects on all stakeholders of company. Company should emphasize on developing integrated marketing communication strategy and social media to encourage participation of consumers. Company should consider following in new marketing plan:
- Profitable target market
- Unique positioning
- Effective brand personality
- Strong brand vision and architecture
- Impressive tag line and strong visual identity
- Effective communication plan
Red Bull recently introduced herbal tea, fast food chain and magazine.
Herbal Tea: Company is associated with energy drink; introduction of herbal is expansion in similar category. Herbal tea also considered as healthy drink but Red Bull does not have any prior experience and competitive advantage in herbal tea. Company should evaluate what benefits its product is offering to the customers over products of competitors.
Fast Food Chain: Red Bull’s expansion in fast food category does not go along with present image of the company. There are various fast food giants that offer excellent meal at very competitive rates and have strong supply chain such as Mc Donald and KFC. Fast food category required specialized skills and good management of supply chain activities. Energy adventures not go along with this concept.
Magazine: Sport oriented magazine go along with brand image hence should be considered by the company. Company should focus on adventurous sports events in order to gain more popularity. Magazine could be an additional source of income and periodicity should be decided according to availability of events and popularity. Red Bull should encourage peoples to write for its magazine. Award winning articles would receive a gift from Red Bull (Red Bull, 2013).
Potential Benefits and Dangers
Business expansion in herbal tea, fast food restaurant and magazine will have different impact on target markets. Fast food category is completely different from preset business hence, it is important that company consider negative aspects associated if business fails. It will certainly bring loss on money and goodwill. Hast food business will leave some unsatisfied customers who will spread negative word-of-mouth. This decision may impact present image of the company.
Business expansion in other categories will offer some benefits to the company in terms of leveraging on present brand equity, goodwill and reinforcing brand image and association. All these will increase customer’s trust and knowledge on Red Bull. Company can consider herbal tea and magazine as medium to increase its brand awareness, promote products and encourage customer’s participation.
Red Bull attracts younger people who are in there twenties rather middle age and elderly people. The strategy adopted by Red Bull created perception in the mind of consumers that drink is more suitable for young people. However if go by the logic, middle age and elder people lost their energy more quickly and requires to regain it. Red Bull effectively pushes its products to customers of all age group especially young. Red Bull initially launched in night clubs hence people considers it as drink of Youth.
Effectiveness of Red Bull’s Advertisements
Red Bull advertisement is very effective because it reinforce slogan “Red Bull gives you wings” that derived from positioning message “Red Bull vitalizes body and mind”. Company used animation that attracts target group and appealing to all age groups because of humor. Advertisement strategy adopted by the company is very innovative and impressive. Red Bull effectively conveys the message about product quality and performance through advertisements. For example a recent Red Bull commercial in Australia shows the link between Caffeine based drink and Guarani to show the improved sexual performance of male. Red Bull commercials communicate promise made by product very effectively.
The best aspects associated with Red Bull advertisement is that it communicate benefits associated with drink without promising for physiological results. Red Bulls advertisement showcase cartoons that keep on emphasizing benefits of energy drink. Red Bull introduced magazine to spread brad awareness and explore another source of revenue. Company utilizes existing wide distribution network to sell its magazines. Company also distributed 1.2 million copies of magazines with major newspapers. Red Bull tries to develop its own marketing products similar to other companies like P&G that has Rouge magazine, J & J owns BabyCenter website. These additional medium of communication establishes a relationship with the customers (Red Bull, 2013).
Business world is entering in to a new age of digital media where customer’s expectations guide organizational media habits. Red Bull media division is performing well by considering customer’s expectations and positioning product effectively. Media activities of company maintains well establish brand image and equity. Interactive websites, social media and other two ways communications made marketing communication activities more influential and impactful. Red Bull magazine provide complete information on life style categories such as food, shopping, street art, music and culture along with cover story and Red Bull advertisements. Media people of Red Bull are committed to bring excellent story to the readers and latest events. Red Bull organized events and various marketing activities to build brand equity. Advertisement strategy adopted by Red Bull is very effective across the world.
Red Bull. (2013). Retrieved November 7, 2013, from www.redbull.com: http://www.redbull.com/in/en