Report on the Case Study of the Red Bull Brand - Essay Example

Report on the Case Study of the Red Bull Brand Introduction This report examines the salient features of branding and brand management related to the Red-Bull case study. It examines the sources of brand equity, the relationship between marketing strategy and brand success, as well as possible survival techniques for the Red-Bull brand. Sources of Brand Equity for Red Bull and the Variation of Sources of Brand Equity in relation to the markets or countries in which the brand is sold. Branding is about enabling people to identify a product from alternatives offered in the markets (Percy, 2003). “Brand equity is the creation of positive brand attitudes or service” (Schroeder et al, 2006). In other words, brand equity involves the creation of attitudes and perceptions that will enable a consumer to identify a product from alternatives offered by competitors. Although Red-Bull is a single product offering, it has been able to achieve brand equity across the world through its uniqueness and other factors that enable customers to identify it as unique and different from other soft drink and energy drink offerings on the market. In summary, its unique packaging (the blue, silver and red 250ml can) is famous around the world. Also, the unique content and effects on users is a very strong element of brand equity since it gives consumers a very positive physical, mental and health advantages that most competitors do not give. The Burnett model states that a brand equity has four main facades: personality image, source, differences and functions (Randall, 2000). In terms of personality image, customers around the world feel good about the health and mental alertness that Red Bull provides. They respect it as a premier energy drink because it does what a normal cup of coffee would do but with a very positive impact on the individual. Secondly, Red Bull seems to stand for good health, vitality and productivity and that is exactly how it is promoted and packaged as a revitaliser. Also, Red Bull was originally created to be different from all other soft and energy drink offerings on the market. Now that several similar products are available, Red Bull still maintains its distinct packaging and content which keeps it embedded in the mind of consumers. In spite of the universal nature of Red Bull's brand, there was the need for some variation in the brand offering in markets around the world. Dunn (2004) points out that there are six main processes that a business needs to go through before they can create brand equity and they are: 1. Market Analysis 2. Brand Architecture 3. Creation of a Strategic Branding Idea 4. Marketing Communication 5. Employee Involvement and 6. Measurement Market analysis involves scanning the dominant environmental factors in a country before offering your products in a country. For the case of Red Bull, the regulatory requirements, market penetration, presence of potential competitors and dominant culture played a major role in the establishment of the brand in Austria. This varied in other parts of Europe so their expansion into Europe required a high degree of analysis and understanding of the dominant culture. In growing from Europe to other markets around the world, Red Bull had to also understand the vital elements of these markets before they could move into them. Brand architecture involves the technical components of determining the brand's DNA (Dunn, 2004). Although the name, identity and character of Red Bull was sustained in most markets around the world, the vision, positioning, target market, emotions and pricing had to be varied based on the social, economic and cultural factors of the market they were entering. Thus we notice that the arrangements for entry into the UK market was quite different from that of the South African market because the political, economic and cultural structures of both countries required Red Bull to modify its brand penetration systems. I notice in page 79 of the Case Study that the advertisement in Europe was so much Western and it involved the use of characters like Dracula and Frankenstein. However, in the developing world, the concepts of advertisement had to be varied with the use of animation and other techniques that presented the message but in a more effective form to enable the brand to stick with the people. The strategy for the branding was to promote it at functions that energy was needed like outdoor events, sporting events and the like. This basic strategies were however altered around the world to ensure maximum penetration and identification of the brand to win optimum brand equity. The strategies blended optimum communication, management and customer involvement through at thriving business culture and the monitoring of results in relation to strategies and modified as and where necessary. Analysis of Red Bull's Marketing Strategies and how the contributed to the brand's equity. Strong brands create competitive advantage for businesses (Paley, 2006). Marketing strategies, which form an integral part of corporate strategy must therefore seek to create long-term and short term brand strategies that will make them drivers of competitive advantages and optimum results for the organisation (Meek et al, 2007). Ferrell & Hartline (2008) identify that brand equity is a function of brand awareness and brand loyalty. Brand awareness is the recognition, preference and in the extreme form, insistence for a given brand. Red Bull's marketing strategy sought to personalise their brand through word-of-mouth and other niche marketing techniques like seeding programmes, and one-on-one advertisement campaigns like sampling. This was designed to give the most important and most influential people in every market they promoted their brand in, a very personalised and emotional attachment to Red Bull. This succeeded in influencing a large chunk of the market to gain interest and build loyalty in the brand. However, the downside of such campaigns is that it can be expensive and it requires a lot of technical ability to implement and monitor. This is because segmenting the market and identifying the best people to invest the strategy in is quite difficult. In spite of this, the strategy was the best way of penetrating into the crux of the markets they operated in. This encapsulates the short-term strategy used by Red Bull. For longer term and large scale marketing, the strategy used by Red Bull was one where they advertised the unique features of Red Bull through the media, events and other strategic points of sales. This was done by presenting Red Bull as a mystique which sought to raise a high degree of awareness for the product. Once the awareness was created, the product's positive feature supported in building a loyalty base amongst customers. Again, this seem to be a very difficult thing to do since there is the need for so much innovation and monitoring to ensure that these strategies for a product that had never been on the market before was working and achieving their aims and purposes in creating and sustaining brand equity. Additionally, the weakness of the Red Bull strategy is that it could be easily duplicated by other soft drink manufacturing companies. This obviously led to the glut in the energy drink market in places like USA after Coca Cola and other smaller players in the industry offered similar brands. Evaluation of Red-Bull's Diversification into Herbal Teas, Fast Foods & Magazines. Reasons & Cost-Benefit Analysis “Brand decline refers to a situation where a brand loses its customer loyalty and the brand loses its goodwill” (Moss, 2007) Clearly, there are so many indicators that show that Red Bull is going through a phase which can cause its primary brand, the Red Bull Energy drink to lose its market share. This is echoed by the fact that new entrants have entered the market. These new entrants range from large established soft drink companies like Coca-Cola which have the necessary capital base to build a brand that can over-shadow Red Bull as a brand. Secondly, brands like Monster are very much skewed towards the market that Red-Bull controls. They are therefore using more superior marketing strategies and tools like the internet to target potential customers of Red-Bull which shows signs that Red-Bull could decline as a brand before these consumers if they shift to brands like Monster. Thirdly, the legal and health compliance challenges that Red-Bull has gone through in parts of the world like the outright ban in France and the limitations in Canada makes it skewed towards specific markets. These external factors are key factors in the decline of the Red-Bull brand. The presence of competitors and limiting factors like these unfavourable legislations require Red-Bull to offer its products through different brands. These indicators show that the Red-Bull brand is ageing which implies that the brand is losing its appeal to customers (Haig, 2011). This therefore means that the brand needs to be presented in a different way that will maintain its appeal to the customers and build the undisputed loyalty Red Bull was offering to its customers in the past. There are several options available to Red-Bull at this stage and this include re-branding, multi-branding and diversification (Donnelly & Linton, 2009). The options available here include Red-Bull presenting a different brand all together and re-launching it with new features. The second option means creating several types of Red-Bull brands to cater for the needs and expectations of different groups of people. Also, Red-Bull could focus on being a corporate brand and present several product offerings to the market rather than just focusing on Red-Bull energy drink only. Diversifying Red-Bull's brand to include herbal tea, fast foods and magazines will enable Red-Bull maintain a corporate brand that will remain profitable even though there are limiting factors. This is because, Red Bull will be building on its reputation acquired as a brand to create a corporate brand under which there would be several portfolios of brands like herbal tea, fast foods and magazines which can offer similar services that are related to the original Red-Bull energy drink. This will ensure that Red-Bull will continue to exist as a corporate brand but not a product brand. This is common around the world since there have been many businesses that have evolved from focusing on a single brand to becoming a corporate brand with several entities under it. For instance, Coca-Cola was just a drink but now, it is a corporate brand that has a cope spanning over several product brands like Sprite, Fanta and others. So if Red-Bull decides to go into the production of magazines, herbal tea, fast food, it would be evolving to a corporate brand with several brands that will be managed as business units and this diversification will ensure that it will survive as a business. How Red-Bull can regain its market momentum through a Brand Extension Approach Brand extension gives a business a variety of brands which they can offer to customers at the same time (Egan, 2007). This therefore means that Red-Bull can choose to offer several other brands aside its energy drink to ensure that its corporate brand remains profitable and productive into the foreseeable future. The essence of brand extension is to spread the risks and rewards of a business over a range of brands (Botten, 2010). This will mean that Red-Bull has the option of creating some other brands under its product and grow them in order to retain its control over the markets. Red-Bull can therefore decide to remain as an energy drink producer and use a brand extension strategy to create several energy drink brands that have different features targeting different groups of people. In the scenario, Red-Bull can opt to maintain the traditional Red-Bull as its main brand. It can add other brands with generally acceptable caffeine levels and these brands can be sent to markets where Red-Bull is banned on health and legal compliance grounds like France. There could be other offerings have no caffeine at all. Additionally, there could be Red-Bull brands that are created specifically to target the markets that competitors are succeeding within, like the markets that Coca Cola energy drinks and Monster energy drinks are succeeding within. Red-Bull also has the option of considering other products and services not in the beverage industry in their brand extension drive. This will entail indulging in activities like the health tea, fast foods and magazines as identified above. Whether they chose to stay within or out of the energy drink industry, Red-Bull can gain market momentum by analysing its brands globally, using the Boston Consulting Group Growth-Share matrix and the product life cycle. At every point in time, each product will be examined on the product life cycle scale which puts a brand in the category of introduction, growth, maturity, saturation, decline and abandonment (Sobel, 2009). Based on the relative stage a product will be put in, it can be classified on the Boston Consultancy Group on the basis of its growth rate and market share. The growth-share matrix will put each of Red-Bull's products in a category of either a Star, Problem Child, Cash Cow or Dog. These classification will enable Red-Bull to offer its numerous brands to the market making the best use of resources. Predictably, it can be said that the current Red-Bull brand will generate revenue for the growth of the other brands. This will enable Red-Bull to capture and hold on to its grip over the markets. Effectiveness of Red-Bull in advertising to the varied consumer groups The fact that younger people are likely to be attracted to the Red-Bull brand and remain loyal to it indicates that the marketing of the Red-Bull brand involved a proper segmentation of the markets before offerings were made. Marketing a brand entails segmentation, targeting and positioning (Kotler et al, 2008). Segmentation means dividing up the markets into various categories and classes. Targeting means identifying and establishing a brand marketing technique for each group. Positioning means offering the product to people in each group through the marketing techniques identified. In terms of market segmentation, Red-Bull divided its potential market into students, drivers, clubbers, business people, and sports people. These broad groups were people who originally needed energy to carry out their activities. This identification enabled Red-Bull to create ways of targeting them by presenting their products to them at the best times. The idea of segmentation also ensured that brand loyalty could be built throughout the lives of these people. This is because once they developed a taste for Red-Bull, they were likely to use it whilst they are carrying out other activities not related to the primary means through which they were identified. In other words, the marketing segmentation sought to identify clients at their greatest point of need and from there, build a buying habit and develop a taste for Red-Bull in the future. Since most of these people targeted were people who very productive and younger, they became the influential group who would grow the market. Thus, concentrating on them gave Red-Bull a greater hope of developing the taste of these younger consumers so that they could become loyal clients in the future when they were old. Conclusion The Red-Bull brand gained brand equity through a blend of global strategies and local strategies. It was supported with efficient marketing strategies. The decline in the Red-Bull brand can be solved through re-branding and brand extension. References Botten, Neil (2010) CIMA Coursebook: Enterprise Strategies 2010 Edition Butterworth-Heinemann Donnelly, Ray & Linton Colin (2009) CIM Coursebook: Delivering Customer Value Through Marketing Butterworth-Heinemann. Dunn, David (2004) Branding: The Six Easy Steps London: E-Agency Egan, John (2007) Marketing Communications John Wiley & Sons Ferrell, O. C. & Hartline, Michael (2008) Marketing Strategy London: Thomson Learning. Haig, Matt (2011) Brand Failures London: Kogan-Page. Kotler, Neil; Kotler Philip & Kotler Wendy (2008) Museum Marketing & Stragy Hoboken, NJ: John Wiley & Sons. Meek, Helen; Meek Richard & Palmer Roger (2007) Managing Marketing Performance 2007 – 2008 Mason, OH: Cengage Moss, Giles David (2007) Pharmaceuticals, Where is the Brand Logic? London: Routledge Taylor Francis Group Parley, Norton (2006) The Manager's Guide to Competitive Marketing Strategies New York: McGraw Hill Percy, Larry (2003) 'Advertising and Brand Equity' Branding & Advertisement eds Flemming, Hansen & Lars-Bech Christensen. Copenhagen Business School Randall, Geoffrey (2000) Branding: A Practical Guide to Planning your Strategy London: Kogan Page Schroeder, Jonathan, Salzer-Morling Miriam & Askegaard, Soren (2006) Brand Culture London: Routledge Taylor Francis Group. Sobel, Milo (2009) MBA in a Nutshell New York: McGraw-Hill Read More