Consumer Behavior Implications to Red Bull - Essay Example

Knowledge and Understanding of Consumer Decision Making Process and Implications to Red Bull Table of Contents Need Recognition 2 Repurchase Search 3Evaluation of Alternatives 3 PSYCHOLOGICAL CORE AND CONSUMER DECISION MAKING PROCESS 5 Attention 5 Perception 5 Motivation 6 Learning 7 Attitude 7 Memory 8 CONSUMER ENVIRONMENT AND CONSUMER DECISION MAKING PROCESS 10 Culture and Subcultures 10 Group 12 Social 12 Lifestyle 13 Bibliography 14 CONSUMER DECISION PROCESS The consumer decision making process can be divided into three categories including input stage, process stage and output stage (Figure). Consumer behaviour is affected by two categories of factors including the psychological core and the consumer’s culture. The psychological core is the internal process which provides knowledge and information to consumers to influence their decisions whereas the consumers’ culture is the external process (Abramovich). In this report, the consumer decision making process of Red Bull has been discussed. The scope of the report is limited to the discussion and analysis of psychological and consumer environment factors and their impact of consumer purchasing decision of Red Bull energy drink. The case study of Richey & Michaels (2001) has been used to study the various marketing activities and strategies of Red Bull. In consideration to the consumer behaviour models and theories, the marketing practices of Red Bull have been discussed. In the first section, the consumer decision process has been discussed. In the second section, the impact of psychological core factors on consumer decision process has been studied and in the last section, the impact of consumer environment factor on consumer decision process has been discussed. As shown by Schiffman & Kanuk in the model of Consumer Decision Making, the three steps are very important in decision making process. These steps shape the psychological core factors of consumers, which directly influence the decision of the consumer; therefore, the three steps are very important for the companies to influence the consumer behaviour. Need Recognition A consumer recognises a need when he faces a problem. For example, the need for a drink may arise when an athlete has exhausted after playing a game, a spectator in the audience is lacking energy to fully participate in the concert, a truck driver is staying at the rest area on highway after long driving, a working person is back home from office, a student is lacking energy to keep a pace in studies etc. Out of the two states of consumers for problem recognition including actual state or desired state, the need for a drink will be the desired state of the consumer. Repurchase Search After recognising the need, the repurchase research beings, if the consumer perceives that purchasing or consuming a particular product can satisfy his need. In most of the decision making process, the consumer recalls his past experiences however, when the consumer does not have any prior experience, he may need to conduct an extensive research depending on the nature of need. This stage of decision making process is largely influenced by perceived risk. The need to revitalise the fatigued body and mind may encourage the consumer to search for an energy drink. If the consumer has used an energy drink before and his experience is good then he may skip the third step and directly purchase the product, however if he is looking for an energy drink for the first time, he may conduct a small search to find the desirable product. The degree of perceived risk to consume an energy drink may vary depending on the situation. For example, a working man coming back from home may have a low-risk situation whereas, an athlete playing for his national team face a high-risk situation. The marketing strategy of Red Bull can be considered successful in this regard because company has made the search easier for its target market. By conveying its products benefits through advertisements, by distributing free samples, by making the products available at different ideal locations and by sponsoring the events, company has reduced the zone of information search for its customers. As in most of the situations, the consumers’ need for an energy drink is a low-risk situation and if products benefits are already conveyed to consumers then, consumers will definitely prefer the known product. Evaluation of Alternatives The last step of decision making process is the evaluation of alternatives which can be done, once the few brands are selected. In the evaluation of alternatives, a consumer typically has the list of brands and he sets the criteria to evaluate each brand. For example, if an athlete recognises his need to take a drink, then after search he may come up with few brands of sports drink, energy or stimulating drinks and other beverages. The evaluating criterion is usually based on the product attributes. If the attribute of Red Bull energy drink fit with the need of the consumer and consumer does have identified these attributes during the search, then customer may end up purchasing a Red Bull drink. Figure I: Simple Model of Consumer Decision Making Process Source: Consumer Behaviour by Schiffman & Kanuk PSYCHOLOGICAL CORE AND CONSUMER DECISION MAKING PROCESS Before people make decisions, they must need some knowledge or information based on which they can make their decisions. This source of knowledge or information is known as the psychological core (Hoyer & Macinnis, 2009, pp.10-12) and its components include attention, perception, motivation, learning attitude and memory. Attention The attention of the people to any information which can influence the way they think during their purchasing decisions process, directly influence the purchase of the product. Red Bull has attracted the attention of the people by establishing the brand visibility by sponsoring events, providing information on the product usage and consumption and by creating effective advertising and marketing strategies. Unlike various other brands in the beverage industry, Red Bull has not attracted the attention of the people by reinforcing the taste of the drink rather the company has conveyed the direct performance benefits of the drink or image association of the product. Perception Consumer perception is the awareness of consumers about the product. To build a strong perception as an energy drink about Red Bull in the minds of consumers, company has been engaging in pre-marketing activities. For example, sponsoring events in the countries where Red Bull has not yet entered such as Red Bull organised Snowthrill of Chamonix ski contest in France although it was not selling its products in France. Red Bull pre-marketing strategy is aimed to facilitate the recognition of Red Bull as a pre-eminent brand, even if it is not available in that region (Richey & Michaels, 2001). In short, Red Bull develops the perceptions of consumer on its products. Another challenge for Red Bull was to change the perception of the people towards the energy drinks. Since Red Bull was an energy drink and it claimed to offer performance benefits to people therefore, people used to consider it dangerous for health. To change the perception of the people, Red Bull product documentation was prepared which comprised of 3000 pages (Richey & Michaels, 2001). A number of scientific studies were commissioned by Red Bull to reveal the performance benefits of its products and to change the perception of people. Motivation Consumer motivation is the process that encourages the consumers to behave in a manner as they do when a need is aroused. Company positioned its product as “Revitalising body and mind” which not only conveyed the tangible benefits to consumers but also highlighted the suitable consumption occasions of the product. The consumers have been motivated to use the product whenever they need a lift. Consumers do not purchase products rather they purchase motive satisfaction or problem solutions (Hawkins, Best, Coney & Mookerjee, 2007, pp.401). Figure II: Latent and Manifest Motives in a Purchase Situation Source: Model retrieved from Consumer Behaviour by Hawkins, Best, Coney & Mookerjee Learning Consumer learning is the process of changing behaviour which happens as a result of experience or direct observation of the event which affect others. Red Bull affects the learning process of consumers through its marketing activities. The company engages in sports marketing by sponsoring marketing events and individual athletes who participate in the sports events and establish credibility among the opinion leaders. Company ensures the availability of its product to athletes at the venues and also ensures that the sport and the athlete fit the image of the product. Being a represent of Red Bull, Group Marketing and Sales Director, Kraihamer argues that company ensures that consumer experience the product the right way, at the right time and in the right situation (Richey & Michaels, 2001). When an athlete, during a sport event, uses Red Bull for its stimulating event, he also drives awareness among his audience, thereby, affecting their learning. Since consumer learning drives brand equity (Erdem et al, 1999) therefore, the marketing activities of Red Bull which have been adopted to influence the learning process of consumers have created brand equity for the company. Attitude Attitude is the feel, act and belief of a consumer towards the product. Attitude of consumers towards Red Bull is an important psychological factor that can influence the decision process of consumer. The following table shows the ABC of attitudes of consumer towards Red Bull, the marketing activity of Red Bull to influence the attitude and the impact on the attitude of consumer (Table I). Table I: ABC of Attitudes ABC of Attitudes Marketing activity of Red Bull Attitude Affective Component (Feel) Making available Red Bull at concerts, sports events, parties, festivals, rest areas at highways where tired drivers stay, at campus libraries etc. I feel energised about myself when I drink Red Bull during game Behavioural Component (Act) Free sampling of Red Bull to impact the behaviour and to facilitate the repetition of the need I will buy Red Bull next time when I will play Cognitive Component (Belief) Providing product at the right time, at the right place and in the right situation by Red Bull I think Red Bull is an energised drink Memory Another factor which is very important in the consumer purchasing decision process is the memory of the consumer memory. Consumer memory is the acquisition and storage of information in the mind of consumers that will be available when required. The following table shows how the memory of consumers impact their decision making process to purchase Red Bull (Table II). Table II: Consumer Memory and Decision Making Process CONSUMER ENVIRONMENT AND CONSUMER DECISION MAKING PROCESS Culture and Subcultures Culture is the process through which the members of the society acquire and share the knowledge, morals, values, norms, beliefs and habits (Hawkins, Best, Coney & Mookerjee, 2007, pp.40). Since culture defines the framework under which the individuals’ lifestyles evolve therefore, it directly affects the consumption pattern, thereby, affecting the consumer purchasing decision process. When Red Bull entered into the Austrian market, it faced huge challenges and the major one was the approval to sale products in Austria. The Austrian government has defined three categories of food and drugs including traditional food, dietary food and pharmaceuticals. Since Red Bull has positioned itself as a functional drink therefore, it did not get fit with any of the three food categories followed in Austria. By conducting huge scientific research, Red Bull lobbied a fourth category of food “Functional Food” in Austria, thereby, changing the norms of Austrian Food industry through knowledge and research (Richey & Michaels, 2001). Figure III: Values, Norms, Sanctions and Consumption Patterns in Austria Source: Model retrieved from Consumer Behaviour by Hawkins, Best, Coney & Mookerjee When Red Bull targeted the European market (in 1990 when Austria was not a part of European economy) it faced a huge opposition because of the ingredients of the product. Taurine which was being used in the preparation of Red Bull was not in the list of allowable food ingredients therefore, entering into any European country which did not have Taurine in allowable list was not possible. Scotland, on the other hand, used to follow the “Negative list of food ingredients” and fortunately, Taurine was not in the list, which made it possible for Red Bull to enter into Scotland (Richey & Michaels, 2001). The idea is that Red Bull faced many challenges especially related to its product features when it planned to enter different countries. Figure IV: Values, Norms, Sanctions and Consumption Patterns in the UK Source: Model retrieved from Consumer Behaviour by Hawkins, Best, Coney & Mookerjee The varying cultures did not only create product characteristics challenges, but they also influenced the marketing strategies of the company. Red Bull has always considered cultural differences very important whilst developing marketing strategies. When company entered from Austrian to the UK market, it changed its marketing formula in three ways; first, Red Bull product was positioned as a Sport drink rather than a stimulating drink in the UK market; second, rather than using word-of-mouth strategy which was being used in Austria, company adopted largest beverage channels; third, rather than using electronic media, billboards and outdoor advertising strategy was adopted. The strategy of marketing the product as a Sport drink appeared as a major flaw in the marketing strategy of Red Bull because consumers in the UK were already familiar with the category of Sport drink and Red Bull did not meet their beliefs and expectations. To avoid the cross-cultural differences, Red Bull has always adopted universal concepts of ads. In the different countries with different languages and living patterns, which Red Bull has targeted, the company used the same cartoon figure to convey the same message. All ads of company featured adult cartoons and an intelligent dialogue which focuses on product benefits rather than its taste and people’s culture. In this way, Red Bull successfully overcame the cultural and sub-cultural differences and hindrances. Group Different groups in the society have different characteristics which generally differ based on status, norms, role, socialisation and power (Loudon & Bitta, 2002 pp.200), thereby, influencing the consumer behaviour. In the early years of Red Bull in Austria, it was adopted by clubbers, dancers, truck drivers and students. The product started expanding into these groups such as it became popular among truck drivers who used to stay awake on long drives. If the company continue pursuing this image of the product then Red Bull’s market segments get narrower. In order to avoid association of the product from any specific group and to influence the decision of other consumer groups to purchase the product, Red Bull repositioned the product and enhanced marketing campaigns. Social Most of the societies have social class hierarchy which generates status classes of consumers in the society (Hoyer & Macinnis, 2009, pp.326). The people belonging to a specific social class usually shares same behaviour and lifestyle. Although Red Bull is recognised as a premium drink because of its pricing as compared to the other drinks in the beverage industry, still, Red Bull did not target the people based on their social class. Red Bull has not pursued a demographic or psychographic strategy to segment its market, rather company has targeted the consumers based on their need for energy and stimulating drink. By ensuring that product has been positioned as a drink for mentally or physically fatigues people, Red Bull ensured its huge growth in various market segments (Richey & Michaels, 2001). This strategy of Red Bull has positively influenced the decision process of consumers to consumer Red Bull because consumers do not think of their social status while buying a Red Bull product rather they think of their mental or physical need. Lifestyle Red Bull has not developed its consumer base on the basis of social class variables however; company does know the importance of different lifestyles of people and their influences on decision making process of consumers. The sampling teams of Red Bull, which visit colleges usually comprise of members which are college students (Richey & Michaels, 2001). In this way, by employing the energetic college students, who could endorse the product in the college students of the similar lifestyles, Red Bull positively influenced the consumer decision making process. Similarly, by sponsoring individual athletes, company developed a huge sport players’ customer base. Bibliography Abramovich, D., n.d. Consumer Behaviour: Chapter 5. [Online] Available at: http://www.marketingplannow.com/userfiles/marketing/Image/pdf/Consumer%20Behavior%20DA-5.pdf [Accessed on 9 December 2010] Erdem et al, 1999. Brand Equity, Consumer Learning and Choice. [Online] Available at: http://www.springerlink.com/content/u12p571k0t646784/ [Accessed on 9 December 2010] Hawkins, I. D., Best, J. R., Coney, A. K., & Mookerjee, A., 2007. Consumer Behaviour Building Marketing Strategy. Edition 9. McGraw-Hill. Mason. Hoyer, D. W., & Macinnis, J. D., 2009. Consumer Behaviour. Edition 5. Cengage Learning. Mason. Loudon, L. D., & Bitta, D. J. A., 2002. Consumer Behaviour: Concepts and Applications. Edition 4. Tata McGraw Hill. New York. Schiffman, G. L., & Kanuk, L. L., 2009. Consumer Behaviour. Edition 9. Pearson Education. India. Richey, K., & Michaels, J., 2001. Red Bull: Building Brand Equity in Non Traditional Ways. [Online] http://books.google.com.pk/books?id=Izmn_6a6SE0C&pg=PA73&lpg=PA73&dq=red+bull+building+brand+equity+in+non-traditional+ways&source=bl&ots=H1W0yHIR8F&sig=EpzCBzfKn9QbbdqzT7eqRNG-kFI&hl=en&ei=MfsFTe_PH8zAswaG3-TrCQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CEIQ6AEwCQ#v=onepage&q=red%20bull%20building%20brand%20equity%20in%20non-traditional%20ways&f=false [Accessed on 9 December 2010] Read More