Red Bull Energy Drink - Case Study Example

? Brand Development: Red Bull Case Study Analysis Executive summary Red Bull is one of the most established energy drink companiesin the world. The brand has been spread by a word of mouth campaigns and other marketing strategies. The product was able to expand to various market segments. The company has advertisement strategies. Red bull is perceived to be a pioneer in the energy drinks market. The strategic team has had to use various branding theories to maintain the market share and expand to new markets. The drink has a best-of-class strategy that makes it the most expensive in the market. The company is not against mixing. However, the marketing team is keen to sure that it creates a uniqueness that ensures increased revenues in the extensive market. Red Bull uses sports, pre-launching marketing and research, pricing and a strong reputation to maintain its market share. The brand is diversifying to new market products and segments. According to Red bull strategic and marketing team, successful branding must be associated with information and insights. Introduction Red bull energy drink was founded in the year 1985 by Dietrich Mateschiz. The Austrian founder happened to be a former marketing manager for Procter & Gamble’s Blendax. The concept was born from the many business trips he made in Asia, where the Red Buffalo drink was already popular. The product began to expand to foreign markets after dominating Austria for a period of five years. Red Bull became a market leader despite a lot of competition from established companies like coca-cola and PepsiCo. The company had a meteoric rise in the energy drinks market which attracted aggressive competition necessitated brand equity strategies and marketing. Overview of the branding issues Red Bull has heavily invested in brand equity, brand identity and brand architecture. The founder of the Red Bull brand was keen on its positioning. The slogan “revitalizes the body and the mind” became effective in communicating a profound message to the targeted markets. The strategic team wanted to create the impression that the drink can be taken any time of the day. The consumption of the energy drink was not limited to certain occasions. This has had the product competitive in all target markets. The strategic team developed the product on the premise that it was to be taken for energy production and not fun. This made the drink popular in the Western market. The drink was said to improve physical endurance, mental alertness, improve concentration and reaction speed, and overall wellbeing. These attributes attracted the consumers to the product leading to increased revenues. Red Bull energy drink is supplied in single packages. This size signaled to the consumers that the product was different from the traditional drinks (Kotler, 2000). The small size created the impression that the drink was stronger and more concentrated than other traditional drinks. On the side of the package was the words “energy drink” which had a conspicuous message to the consumers. The company also developed small brown glass bottles to be used in multiple locations. This enhances brand equity (Ellwood, 2002). When the product was launched in Germany, the demand easily outpaced the supply (Riezebos & Grinten, 2011). This forced the company to sell the bottles. The company believed that the use of glasses would lead to loss of revenues. Relevant branding theories In developing Customer-based brand equity (CBBE), Red Bull has established a proper brand identity through intensive brand awareness strategies. The company believes that the best way to promote the brand is to use testimonials from peers (Fayren & Lee, 2011). This gives the company increased revenues through increased consumer-interaction (Kotler, 2000). The brand is careful to use events sponsorship, endorsements from top athletes and electronic media to market its products. The strategic and marketing team ensured an elastic positioning. The company has targeted all the ages and occasions. Red Bull has forged brand relationships that transcend age and location (Bendixen et al, 2004).Red bull creates appropriate brand meaning through unique brand meaning and associations. CBBE has earned Red Bull intense and active loyalty from customers. This enabled the brand to expand into many diverse markets with much ease (Kapferer, 2008). Millward Brown’s Brand Dynamics model has been helpful in branding Red Bull. The model insists of the presence and relevance of products to the target customers. The positioning of a brand plays a crucial role in the strengthening of a brand. Successful branding must be associated with information, ideas and insights (Ellwood, 2002). Brands must transcend products and services of any organizations. The MBBD model has led to increased bonding with Red Bull users. The marketing team of the Red Bull energy drink has been careful to project a strong brand that offers all round services to the consumers (Riezebos & Grinten, 2011). Pricing plays a very important role in the promotion of any brand. Red Bull pursues a premium pricing strategy. According to the leadership of the company, pricing the product in the same way with the other traditional drinks would mean that there is not real difference in the product. The company uses a premium price while selling the drink (Kapferer, 2008). Pricing is one of the main aspects of the marketing mix. Branding is separate on the marketing mix but works closely with marketing mix elements. The company was keen to ensure that there is a 10 percent price increase of its product compared to the most expensive competitor in every market in most markets. This helped to maintain the best-of- class mentality among consumers. Branding is about perception (Fioroni & Titterton, 2009). Branding demands companies to understand the contexts in which they operate and to understand their competitors. The pricing and perception are inseparable when it comes to branding (Riezebos & Grinten, 2011). Red Bull ensures that the expensive price is an indicator of the value of the product to the consumers. Branding theory and practical issues Red bull conducts marketing research before venturing into new markets. This has given the brand unprecedented success. The management says that they do not force scientific evidence down the consumers’ thoughts. This means that the branding and marketing team is careful to the needs of the market, regardless to the indicators of the market research. Mystical brands are said to perform better in markets. Brand theories indicate that many new consumers try the drink for adventure. Most of the consumers outside Austria have not encountered official marketing of Red bull. Most of the consumers thought it was a beer or liquor (Riezebos & Grinten, 2011). The mystification of the brand had negative effects to the company as well. The popularity of the brand in the rave scene caused the product to be associated with drug abuse and death among the youths. The rumor persisted even after it was found to be untrue (Jackson, 2000). The press aggravated the impact of the rumors especially in Germany. The company has used seeding program to spread to new market. The marketing team has accessed gray markets and targeted the elites. The marketing team also targets the opinion leaders. The marketing team heavily invests in pre-marketing activity even before the product is launched in new markets (Fisher-Buttinger & Vallaster, 2008). This premarketing strategy was effective in France, Colombia and other countries. The company has ensured that it doesn’t define a narrow consumer target. In Brazil, the red bull brand was first energy drink. The company appeals to the intelligence of the consumers in the ads. This is one of the strengths of the marketing strategy in promoting brand equity.ads are effective in communicating the benefits of the product without promising any physiological results. The use of animated ads has been adopted by Red Bull in all its target markets across the globe (Kotler, 2000). This reveals that consumer perception in the diverse target markets tend to be the same. Red Bull uses sampling in the product trial as part of the promotions to branding equity. This provokes consumer feedback which is important for the company. Solutions to the case discussions Brand equity is the unique, strong and favorable brand associations in the memory of customers (Clifton et al, 2003). The source of red bulls brand equity is its brand awareness and brand image. It is easy to recognize and recall Red Bull. The company has outstanding packaging. The logo and the consumer experience left by the product has increasingly become a strong asset. These aspects have minimal changes from one market to another. This is because the market demands and forces change from country to country (Ellwood, 2002. The Red Bull has rolled out a strong marketing program to strengthen its brand equity. The company uses traditional television, print and radio media of advertising. The company has heavily invested in entertainments and sports (Fisher-Buttinger & Vallaster, 2008). This has led to increased sales revenues and market share. In the process of enhancing brand equity, the company ensures that the consumers discover the products first. The marketing program incorporates event marketing in its extensive network. This increases product visibility and brand positioning. Red Bull believes in sports marketing through prominent athletes. This has happened in racing and golf among other sports. The point-of-purchase marketing aims at using branded fridges and electronics in popular joints (Fioroni & Titterton, 2009). This has enhanced the company’s brand equity. Some of these marketing programs have not been effective in all the markets. Most of these marketing programs have been expensive to run, making them a weakness to the profitability of the company. Red Bull can maintain its marketing momentum by adopting technology in the marketing strategies. The rise of mobile applications has opened the global market. The company needs to target the global market through internet marketing. Red Bull needs to develop brand extensions in new markets. The company should come up with products that are affordable to all social classes. The company can diversify from energy drinks to energy foods. The expansion to the fast-food, herbal tea and magazines is bound to increase revenues. The can use the strong reputation to expand its market share in the new target markets. The established brands and stiff competition are going to pose a direct danger to this expansion. The company can acquire companies that develop different but complementary products. This would lead to automatic consolidation of the consumer base. Red Bull has been effective in adverting to the variety of the target groups. The marketing team for Red bull was careful to ensure that the energy drink can be taken in all occasions. This has enhanced brand equity for the energy drink. Red bull has become more competitive with a stronger brand identity. This arises from the fact that the product serves all the market segments and occasions. Conclusion The company should deliver excellent products to maintain the standards of the brand. The product is developed with a flavor to communicate its value as a functional energy drink. In order to match the competitors, the drink is both carbonated and sweet. Some customers said the drink had a medicinal taste. The flavor consolidated the position of the flavor. Many thought the drink was more than refreshment. Most of the consumers said that the drink was most pleasant when taken cold. The flavor has been one of the biggest assets of the brand. The company creates a uniqueness that ensures increased revenues in the extensive market. References Aaker, D. A. (1996). Building strong brands. New York: Free Press Bendixen, M., Bukasa K.A. and Abratt R. (2004). Brand equity in the business-to-business market. Industrial marketing Management. 33(5): 371-380. Clifton, R., Simmons, J., & Ahmad, S. (2003). Brands and branding. London: Profile Books. Ellwood, I. (2002). The essential brand book: Over 100 techniques to increase brand value. London: Kogan Page. Fayren, C., & Lee, G. C. (2011). CUSTOMER-BASED BRAND EQUITY: A LITERATURE REVIEW. Journal of Arts Science & Commerce, 11(1), 34-39. Fioroni, M., & Titterton, G. (2009). Brand storming: Managing brands in the era of complexity. Basingstoke [England: Palgrave Macmillan. Fisher-Buttinger, C., & Vallaster, C. (2008). Connective branding: Building brand equity in a demanding world. Chichester, England: Wiley. Jackson, D. (2000). A consumer interest study of Red Bull energy drink (1st ed.). Centage. Kapferer, J. -N. (2008). The new strategic brand management: Creating and sustaining brand equity long term. London: Kogan Page. Keller, K. L. (2088). Strategic Brand Management, Building, Measuring, and Managing Brand Equity (3rd ed.). Prentice-Hall. Kotler, P. (2000). Marketing management. Upper Saddle River, N.J: Prentice Hall. Riezebos, H. J., & Grinten, J. (2011). Positioning the brand: An inside-out approach. Abingdon, Oxon: Routledge. Read More