Evaluation of Red Bull - Case Study Example

Case Study Evaluation: Red Bull BY YOU YOUR SCHOOL INFO HERE HERE Case Study Evaluation: Red Bull Red Bull’s Sources of Brand Equity Red Bull has multiple sources of brand equity that come from having a well-known and recognized brand with considerable recognition and recall (Holehonnur, Hopkins, & Fine, 2009). Sources of this equity include the heavy investment in advertising content that has been created for television, print literature, radio advertisements, event marketing, and even sampling efforts for consumers to taste the product (Keller, 2008). Though it is not the advertising itself that contributes to the equity, it is the impact of this dedicated promotional activity that gives Red Bull much more brand loyalty and recognition. The presence of this energy drink in desired consumer markets has made Red Bull stand out over other energy drink marketers by appealing to their emotional and/or psychographic lifestyle tendencies. For example, the adult cartoon concept maintains sophisticated content with a very clear message that is reinforced by the integrated messages delivered. By not selecting a specific target segment, the business is able to promote itself to many different audiences that have a need for energy drinks. This gives the brand more word-of-mouth capabilities and therefore improves brand equity since it is well-known by so many different demographics domestically and across the world. For the most likely target groups to use Red Bull as a lifestyle choice in energy drinks, the company built even higher brand equity through events marketing principles that included opinion leaders that have the ability to influence consumer behaviour (Keller). Event marketing links lifestyle with attitude and uses appropriate logo presentation so that recall of the brand is possible in these events where Red Bull has decided to advertise. The positioning strategy selected by Red Bull also improves brand equity as it gives consumers the correct impression about what to expect as tangible benefits of this energy drink option. The slogan “revitalizes body and mind” sends a very distinct and clear message that Red Bull is intended for energy purposes and has some form of lasting benefit for the buyer related to their needs for thirst or energy production based on lifestyle activities. Equity is built by not confusing the customer segments with complicated messages and stays focused on its position as a market leader among competition. The brand’s distinctive packaging and features also contribute to equity, as well as content and caloric content for those who are concerned about excess calorie consumption. For example, a typical can of Red Bull only has 12 calories (drinksmixer.com, 2010). This is desirable for markets that have social and athletic trends where the volume of excess calories consumed is an emotional need, therefore the psychology of the brand builds more equity from satisfied diet-conscious drinkers. Packaging includes a smaller 3 oz can (Hein, 2001) so that there is not a considerable commitment. It is convenience packaging for customers that do not require large-volume drinks to sustain their thirst needs and thus establishes itself as an energy drink that can be consumed in one, immediate setting. As far as convenience is concerned, equity is built by satisfied users that are concerned about volume quantities. The equity built does not change from country to country since Red Bull sends consistent messages about the quality and use of the product, though the advertising style changes slightly from region to region. The executive leadership at Red Bull believes that using the cartoon advertising format sends a consistent message despite the need for translation of the content (Keller). Basically, Red Bull marketers believe that thirst and energy needs are rather uniform from one consumer to the next all across the globe and can therefore use the same messaging format to deliver perceptions of quality and value. Other than areas where the brand is promoted, such as sports marketing in the U.S. versus rejecting these activities in other countries, equity is delivered through this consistency and dedication to concentrated marketing efforts with an integrated focus related to the marketing mix. Analysis of Red Bull’s Marketing Programme Red Bull saves costs in advertising concept and style which is a significant strength compared to competing energy drinks. The brand tends to use Red Bull as a sponsor for high-performance athletes who do not carry a celebrity status, and thus a high contracted price tag for their sponsor services (marketingpractice.blogspot.com, 2008). By sponsoring more low-key athletes from local regions, Red Bull gains more marketing exposure and appeals to those who appreciate the benefits of such sponsorship which can, sometimes, turn these athletes into local or national celebrities based on the brand’s reputation. The sampling teams were another example of the brand’s strengths toward building equity by giving Red Bull more national and global exposure to develop its own personality and identity. The recruitment of students who performed market research on drinking trends in schools and universities gave the business much more concrete marketing knowledge about lifestyle that assisted in developing new advertising and promotional concepts. The energetic recruits that facilitated these sampling activities brought a better word-of-mouth with younger consumers and again reinforced the integrity of Red Bull. Not previously discussed in this project is the point-of-purchase marketing tactics that definitely brought much more brand equity to Red Bull. Using in-store or in-house refrigeration units that clearly displayed the Red Bull logo and colours at stores, bars, cafeterias and convenience stores (to name only a few) brought the brand more visibility in areas where lifestyle would likely demand energy drink consumption. The business believed that the packaging was Red Bull’s best selling feature and therefore did not have to produce costly and extensive hanging literature for stores or shelf talkers commonly found in grocery outlets (Keller). This strategy made the product convenient, highly visible, and provided a cool drink when customers would likely appreciate one. Equity is built, then, on convenience and relevance to their lifestyle activities. This was a significant strength for sales growth and brand recognition. A weakness of Red Bull’s marketing strategy, however, was in its efforts to establish presence in the United Kingdom by negating word-of-mouth strategies that had brought it considerable success in the United States (Keller). An already well-established energy drink brand, Lucozade, had the majority of market share in this region and Red Bull had decided to use a different distribution strategy and had too much reliance on billboard promotions (Keller). This made Red Bull to be considered a failure in the UK market when it attempted to label the brand as a sports drink rather than with the same reenergizing concepts delivered to the U.S. and other countries where revenue and consumer acceptance were high. However, once the brand was overhauled and returned to the same principles that were driving distribution and ad strategy in the UK, revenues increased which further supported the importance of staying consistent with total brand strategy domestically and internationally. Maintaining marketing momentum and extension opportunities Red Bull can sustain its marketing momentum if it continues to deliver integrated marketing campaigns using a consistent ad and positioning strategy. In the United States, the product is priced as a premium-priced energy drink product that is supported by high consumer sentiment and willingness to purchase. For instance, at major retailers in the United States, a small 4-pack is $5.89 with a 12-pack at $19.99 (Marco, 2008). Premium pricing ensures higher revenue production so long as this element of the marketing mix does not conflict with consumer price elasticity or changing trends related to external conditions like the current global recession. It is important for Red Bull to conduct ongoing primary market research to determine whether price sensitivity impacts sales of this energy drink and then restructure pricing accordingly and promote if necessary. Marketing momentum can also be sustained if Red Bull maintains a key awareness of competitive activities and new market entrants. Some energy drinks try to use sex appeal as a means to take market share from Red Bull, however to mixed results. Just this year, a new market entrant brand referred to as Loaded Stamina Shot is intended to have aphrodisiac properties as a means to entice the 18-30 year old female and male audience (Reynolds, 2010). This gives competition a new kind of brand personality that will either meet with absolute acceptance and long-term recognition or loyalty and Red Bull must be aware of these competitive activities to witness whether their marketing strategies are taking sales away from the Red Bull brand. Red Bull has already experimented with a brand extension with a cola-flavoured variation of Red Bull having a different product name that is higher in sugar (Clark, 2008). However, there is competition between rival brands already for shelf space in some of the more prominent retailers and therefore this new cola-variant for Red Bull is achieving very low revenue and customer adoption. This serves as one example of where brand extensions might not work for the brand. However, since Red Bull found such considerable following and recognition when marketed in night club environments where youths frequently attend, this existing brand extension with cola-based properties might find more acceptance. However, it would require Red Bull to abandon some of its non-targeted advertising and create new ad and promotional concepts geared specifically for a more youthful audience. Already, Red Bull is a highly popular mixer in clubs especially when mixed with vodka (Hoovers, 2010). A brand extension of a new energy drink when linked with the Red Bull logo or overall brand might provide higher revenues since many of their customers are younger drinkers. A new marketing strategy would be required for the extension, however, depending on its properties and benefits for users which could create higher costs of promotion and advertising. Other brand extensions that would work with the same marketing strategy might be energy bars packaged with the same colours as Red Bull for instant recognition and adoption by consumer markets. Extending to non-drink markets Red Bull’s move into herbal teas and fast food chains or magazine production would require an entirely new marketing focus. Psychographic segmentation involves a person’s lifestyle and personality based on how they live and their personal interests (Rodoplu, 2008). This would require Red Bull to conduct new primary market research on segmentation strategies based on lifestyle, as certain magazines only have certain readership (etc.) and these do not have the same revigorating or rejuvenating properties that Red Bull has received much loyalty for. Even though the name Red Bull would be attached, it is likely that consumers would not accept the new extensions. Unless revenues start to significantly decline for Red Bull, the costs of entering new markets with different products, including the cost of manufacture, does not make valuable sense currently. The disadvantages of extensions are definitely new cost absorption while the advantages would likely only be niche sales with segmented customers not currently loyal to Red Bull as a drink option. Effectiveness at advertising to varied groups Red Bull is extremely effective at advertising by rejecting traditional segmentation and targeting strategies. Needs associated with energy and thirst are universal, as was described by Red Bull executive leadership in the case study. It is likely that youthful club-goers who enjoy Red Bull as a social drink mixer also have lifestyle interests related to sports, shopping or other relevant areas of consumerism where Red Bull is already present. These needs for thirst and energy would follow the consumer throughout their entire daily or weekly lifestyle and they already have a devoted following to the brand that continues to bring international sales results. Fortunately for Red Bull, the brand has benefits in the professional environment as a pick-me-up and also in social environments involving intense activity or just recreation. No particular lifestyle is more in need of the product to sustain their needs. Therefore, the advertising that includes point-of-purchase promotions is the most effective way to continue to build brand equity and make customers of diverse lifestyles recognize it on sight. Varied groups are everywhere and the sales achievements speak for themselves. References Clark, N. (2008). Stretching brand extensions too far, Marketing, August 13, pp.24-25. Drinksmixer.com. (2010). Drinks Mixer. Retrieved June 24, 2011 from http://www.drinksmixer.com/desc646.html Hein, K. (2001). A bull’s market – the marketing of Red Bull energy drink, Brandweek. Retrieved June 23, 2011 from http://findarticles.com/p/articles/mi_m0BDW/is_22_42/ai_75286777/ Holehonnur, A., Hopkins, M. & Fine, A. (2009). Examining the customer equity framework from a consumer perspective, Journal of Brand Management, 17(3), pp.165-180. Hoovers. (2010). Hoovers Profile: Red Bull GmbH. Retrieved June 24, 2011 from http://www.answers.com/topic/red-bull-gmbh Keller, K.L. (2008). Best Practice Cases in Branding, Lessons from the World’s Strongest Brands, Third Edition, Prentice-Hall. Marco, M. (2008). Target’s Red Bull pricing scheme rewards people who pay attention. Retrieved June 23, 2011 from http://consumerist.com/2008/01/targets-red-bull-pricing-scheme-rewards-people-who-pay-attention.html Marketingpractice.blogspot.com. (2008). Red Bull: It gives you wiings. Retrieved June 24, 2011 from http://www.bized.co.uk/compfact/redbull/redbull6.htm Reynolds, J. (2010). Achieving staying power, Marketing, July 28, p.16. Rodoplu, K. (2008). Psychographic segmentation, School of Applied Technology and Management, Bilkent University. Retrieved June 24, 2011 from http://www.tourism.bilkent.edu.tr/~benice/restonews/page52.doc Bibliography Jackson, A. (2002). Brand loyalty’s influence on consumer behavior. Retrieved June 24, 2011 from http://www.essortment.com/all/brandloyalty_pqk.htm Keller, K.L. (2008). Strategic Brand Management, Building, Measuring and Managing Brand Equity, Third Edition, Prentice-Hall. Murat, A. (2011). Predicting Consumers’ Behavioral Intentions with Perceptions of Brand Personality: A Study in Cell Phone Markets, International Journal of Business and Management, vol.6, pp.193-206. Read More