Red Bull Brand Equity - Assignment Example

?RED BULL: A Case Study in Brand Equity Background Red Bull energy drink is present in more than 120 countries globally; it has built its brand image as a “functional energy” beverage, which is neither a recreational drink on the one hand, nor a medicinal drink on the other. Red Bull is the first of its kind in the global market, and carved out for itself a new category that did not exist before. This distinction and the elements that built it are the sources of brand equity. Brand equity is defined as the added value that is endowed on economic goods as a result of branding (Bick, 2009; Farhana, 2012; M’zungu, et al., 2010; Znaidi & Fidha, 2012). it is – “[The] differentiation effect of brand knowledge on customer response leading to long-term outlook, customer knowledge, brand name, brand power, product innovation, brand quality, brand extensions, brand credentials, brand advertising, brand publicity and above all, effective brand management.” (Arora, et al., 2009, p. 75) 2. Case issues 2.1. Identification of Red Bull’s sources of brand equity The most important issue is the identification of Red Bull’s sources of brand equity, because they drive the product’s value creation. If the firm is to move production forward into the next higher level and avoid obsolescence, it must innovate along the line of its brand equity to ensure that what has been achieved has not been diminished. 2.2. Determination of new products under the Red Bull brand The innovation necessary to preserve brand equity and create value must emanate from the source of brand equity; having identified this in the first issue, the secondary issue is to put this knowledge into practice by choosing among alternative products that add further value. 3. Analysis of the Case The case treats on the entry of the Red Bull brand into new product categories, and the impact of this move on brand equity. These aspects are the gist of the three questions the answers to which follow: 3.1 Description of Red Bull’s sources of brand equity – Aaker’s sources of brand equity consist of 10 items spread over five dimensions, namely brand loyalty, perceived quality/leadership, associations/differentiations, awareness, and market behaviour (Gill & Dawra, 2010). These are all present in Red Bull. One element of brand loyalty is premium pricing; Red Bull is well received because its high price was seen to be justified by its added benefits above other drinks. Perceived quality and leadership are partnered with differentiation; Red Bull was marketed as the first energy drink, and thereafter leader of its class. The fourth dimension, brand awareness, was evident in German and Hungarian markets where, solely through word of mouth, mystique about the brand spread (including reference to “bulls’ testicles” as ingredient) such that the product was well anticipated and demand created long before its introduction. The fifth dimension, market behaviour, was positive in countries such as Austria where the product was first introduced, and the positive response worked to create brand equity in new markets Red Bull subsequently entered. 3.2 How Red Bull’s marketing program contributes to brand equity The elements of the marketing mix employed by Red Bull all contributed to a different experience in the mind of the consumer, which was important in creating product recall and influencing future choice (Korkofingas & Ang, 2011). The marketing mix includes the 4 P’s, namely product, pricing, placement, and positioning. 3.2.1 Product – The first of a new class of beverage, the energy drink, which competitors first dismissed as a fad and then later on imitated. In Austria, the company needed to lobby for the creation of a new category, “functional food,” because the product did not fit into any of the established categories. The taste, which was adjusted to approximate the traditional cola, nevertheless retained a hint of “medicinal” flavour that still distinguished it as a functional beverage. 3.2.2 Packaging – The single package, a Japan-inspired slender silver-and-blue 250 ml can (Keller, 1989, p. 74) was unlike that of its competitors, sending the message that Red Bull was stronger than other drinks; the logo of two red bulls charging each other above the words “Energy Drink” conveyed the same. Buying the cans singly rather than in packs retained much of the financial element of the brand equity because it did not offer a discount for bulk purchases. 3.2.3 Positioning – The brand was positioned around the slogan, “Revitalizes the body and mind,” expressing the tangible benefit as well as the mystique of the wonder drink. The product was also broadly positioned and was not limited as to market segment or type of consumption occasions; it was appropriate to drink anywhere by anyone and at any time, being a quick health beverage. It was also used as a mixer, and while welcome, the drink maintained its stand-alone principal position. 3.2.4 Pricing – The pricing strategy throughout was one of premium pricing to enable it to maintain “best of class” positioning – that is, it is the best in its class therefore it is valued more. With its slimmer package and therefore reduced contents, Red Bull was still a best seller despite costing up to effectively more than 300% per ounce over its traditional counterparts (Keller, 1989, p.76). The market program likewise included low-profile promotion of the product such as by word of mouth and testimonial rather than wide-scale advertising or large-scale presence in supermarkets. Changing this type of promotion resulted in low sales in the UK. Much of Red Bull’s brand equity relied on “seeding” by targeting the popular shops, clubs, bars and stores. The firm maintained the simplicity of its message, made Red Bull available to the right people at the right time, and left it to the consumers to try the product for themselves to prove its benefits (Keller, 1989, p. 77). 3.3 Red Bull’s move into herbal teas, fast-food and magazines In proposing Red Bull’s entry into these product categories, the firm must be aware that it is departing from its principal position as energy drink. A construct called “brand relevance in category” (BRiC) which generally pertains to the differences in brand equity across categories within the same brand. In short, BRiC does not vary across brands within a single category (Fischer, et al., 2010). Brand relevance therefore calls for the application of the knowledge, awareness, loyalty, and attributes (mystique, functionality, differentiation) that built the Red Bull brand, to see if they remain relevant for the new categories of products. Herbal teas reduce the brand equity because of its opposite connotation to the sporty, energetic nature of the Red Bull brand. Herbal teas are associated with the laid-back, contemplative image, which does not square with the active consumer lifestyle identified with Red Bull. The similarity of the product class (beverages) may also detract from the image of Red Bull by reducing the brand’s differentiation in the minds of the consumers. Fast foods bear some compatibility with energy drinks, as long as the nature of the “fast food” products is not seen as unhealthy. Red Bull is a fast energy drink with health benefits, and fast food should also pertain to food quickly available also with healthy benefits. These two products categories are complementary and highly relevant, and energy-giving healthy foods made quickly available fit the positioning and differentiation of the Red Bull brand, as well as the lifestyle of its regular market. Finally extension of the Red Bull brand to magazines has brand relevance, but subject to the qualification that it is “devoted to the Red Bull lifestyle of music, extreme sports, night life, and social trends” (Keller, 1989, p.91). However, the publication business is entirely different from the beverage industry, and offers little in the way of information that may not be found in other similar magazines. 4. Recommendations and implementation Red Bull should forego the herbal iced tea concept as it is already showing poor reception in early marketing, likely due to the diametric image of calm and serenity for teas compared to fast-paced and energetic lifestyle of energy drinks. The brand may develop the idea of a fast-food outlet or chain, as long as the product offerings are perceived as healthy and nutritious. Food made for the fast lifestyle of Red Bull drinkers complements the original brand image and may therefore enhance brand equity. An example would be quickly packaged salads or sandwiches without preservatives, as the industry has already developed the technology for sourcing and storing fresh produce and similar ingredients for quick preparations. Finally, an online magazine may be explored that highlights the Red Bull lifestyle, although a print version should be avoided because of high costs and low demand of print media, and the fact that print publications is outside the expertise of Red Bull’s principal business. A further qualification would be for the magazine to be published online rather than in print, because of the dwindling demand of printed publications. In order to enhance Red Bull’s brand equity, the magazine should project dynamism, and include articles pertaining to the interests of Red Bull drinkers (e.g. health, family, work, sports, travel, social events, entrepreneurship, etc.). Launching an online publication is cost-effective, easier to manage, and enables readers to interact with the magazine’s staff and thereby provide feedback to the firm for marketing purposes. References Arora, A, Raisinghani, M, Arora, A, & Kothari, D 2009, 'Building Global Brand Equity through Advertising: Developing A Conceptual Framework Of Managing Global Brand Equity', International Journal Of Global Management Studies, 1, 4, pp. 75-96, Business Source Complete, EBSCOhost, viewed 28 September 2013. Bick, GC 2009, 'Increasing shareholder value through building Customer and Brand Equity', Journal Of Marketing Management, 25, 1/2, pp. 117-141, Business Source Complete, EBSCOhost, viewed 28 September 2013. Farhana, M 2012, 'Brand Elements Lead To Brand Equity: Differentiate or Die', Information Management & Business Review, 4, 4, pp. 223-233, Business Source Complete, EBSCOhost, viewed 28 September 2013. Fischer, M, Volckner, F, & Sattler, H 2010, 'How Important Are Brands? A Cross-Category, Cross-Country Study', Journal Of Marketing Research (JMR), 47, 5, pp. 823-839, Business Source Complete, EBSCOhost, viewed 28 September 2013. Gill, M, & Dawra, J 2010, 'Evaluating Aaker's sources of brand equity and the mediating role of brand image', Journal Of Targeting, Measurement & Analysis For Marketing, 18, 3/4, pp. 189-198, Business Source Complete, EBSCOhost, viewed 28 September 2013. Keller, K L 1989 “Red Bull: Building Brand Equity in Non-Traditional Ways.” Best Practice Cases in Branding: Lessons from the World’s Strongest Brands, 3rd edition. pp. 73-99 Keller, K L 2006 ‘Measuring Brand Equity,’ in Gover R & Vriens, M (eds.) 2006 The Handbook of Marketing Research: Uses, Misuses, and Future Advances. Thousand Oaks, CA: Sage Publications Inc., p. 546 Korkofingas, C, & Ang, L 2011, 'Product recall, brand equity, and future choice', Journal Of Marketing Management, 27, 9/10, pp. 959-975, Business Source Complete, EBSCOhost, viewed 28 September 2013. 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