Red Bull: Brand Strategy and Analysis

According to (Keller K. , 2008) brand positioning is the act of designing the companies offer or image so that it occupies a distinct and valued place in the customers mind. This means finding the proper ‘location’ in the minds of consumers, the result of which allows them to think about a product in the desired way to maximise the potential benefit to the brand. The core idea of positioning postulates that each brand occupies a point in the consumer’s mind which is determined by their own perceptions of the brand relative to its competitors. In order to differentiate itself and capitalise on this, Red Bull must occupy a unique position in a consumer’s mind that leads to them purchasing their product over another offering. (Sengupta, 2005) Positioning concept consists of 4 components:

Product/Class market – can be defined as the set of products and brands which are perceived as substitutes to satisfy specific consumers need. As Red Bull has no intended usage occasion, it initially took the position as a substitute for coffee and other caffeinated beverages and as an alcoholic mixer. With the establishment of the energy drink category it now competes with substitutes from within this market.

Consumer segmentation – Positioning theory differs from other marketing theory in its definition of segmentation in placing emphasis on the target consumer’s perceptions of brands in comparison to other brands. But like other theory its main focus is on the expectations, needs and characteristics of consumers. Red Bull sought to reach a broad range of consumers based on their need for a stimulating drink. “We have only two dimensions, people who are mentally fatigued and people who are physical fatigued, or both” (Keller K. , 2008). Red bull broadly defines its consumer segments as: clubbers, students, driver, athletes and business people.

Perceptual mapping – Is a graphical representation of the underlying dimensions that differentiate consumer’s perceptions of a brand to existing brands within the dimension. In today’s competitive context this defines Red Bulls main competitors, which in Australia by volume they are V, Mother, Rock Star, Red Devil, Red Eye and Monster.

Brand attributes and benefits – Are the company’s views on the attributes of their product that through the consumer’s frame of reference form the perceived benefits. Red Bull adopted the positioning statement “revitalises the body and mind” which intended to convey the products tangible benefits as stimulating, detoxifying beverage that consumers could drink whenever they needed a lift.

(Kapferer, 1997) notes that the position concept does not however reveal all the brands richness of meaning or reflect all of its potential and does not help fully differentiate powerful brands competing against each other in the same category. He postulates using the brand identity concept to offset these limitations and provide a framework for overall brand coherence and measure the means of expression, unity and durability of a brand. Although positioned relatively close to their competitors, it is their expression of their cores brand values of being a fun, involving, creative and energetic brand through events like Flutag and Red Bull Soap Box Derby that form part of their identity and differentiate them from other brands.

According to Red Bull the unique combination of these ingredients is said to stimulate the central nervous system, increase metabolic rate, aid in the secretion of toxins and waste material, and provide a source of high GI carbohydrates which can be readily converted into glycogen for energy in situations of high exertion. Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service (Al Ries, 2001). The achievement of customer satisfaction leads to company loyalty and product repurchase. The tagline “Red Bull gives you wings” and the words “energy drink” printed on the can hint at products potential benefits to revitalise the consumers mind and body without making any direct claims. By using this ambiguous, non-quantitative tagline, Red Bull can more easily reconcile the products benefits, with consumer’s expectations of the product as each person is allowed their own unique experience. “They know it’s doing something, they just don’t know what exactly” (Phoenix, 2001)

Brand Communities

(O’Guinn, 2001) Observes that brand communities – “a specialised, non-geographically bound community, based on a structured set of social relationships among users of a brand” have the ability to organise consumers in a complex web of relationships. In today’s climate, companies like Red Bull need to find new ways of reaching and creating dialogue with consumers; brand communities are a relatively new concept that may offer some assistance. (McAlexander, 2002) Describe that the benefits to a brand are “many and diverse”. They suggest that customers integrated through community serve as brand campaigners who deliver the carry the brands messages to other consumers outside the group. (VanAuken, 2008) Suggests that there are four essential elements in actively involving customers in creating communities around a brand:

A strong story or myth surrounding the brand that gives it authenticity. Customers relate to and identify with brands and express their sense of self through their consumption. Red bull could potentially leverage on its mystique and reputation as an energetic, vibrant and involving brand to attract a community of like minded individuals that personify these ideals.

For a community to be adopted consumers must feel a need to connect with one another in the context of the brand consumption. By identifying with a particular market segment i.e. generation Y, they can build a community around youth culture and capitalise on younger consumers who feel a strong sense of expressing their unique personality by embracing the Red Bull brand.

Identifiable brand elements such as logos, symbols, clubs and memberships that are in line with the brands identity that allow community members to not only identify with each other but distinguish themselves from the rest of society.

Create a unique culture: By creating unique events in which community members can be actively involved Red Bull allows consumers to interact with the brand, other consumers and the company simultaneously. Such events allow consumers to experience the brand in their own memorable manner and are part of the value creation process.

Brand equity

(Keller K. , 2008) Defines brand equity: “A brand has positive customer-based brand equity when consumers react more favourably to a product and the way it is marketed when the brand is identified than when it is not”. While Aaker’s definition expresses brand equity as “the set of assets and liabilities linked to a brand’s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or that firm’s customers”. They key difference between these two definitions lies in their view of consumers and the role they play in establishing brand equity. While Aaker’s definition includes physical components of the brand that are not connected to an audience, Kellers definition requires and audience in order for equity to exist. (Kapferer, 1997) Proposes the following model as a way for companies to establish the value or ‘equity’ of a brand:

BRAND AWARENESS

+ IMAGE

+ PERCIEVED QUALITY

+ EVOCATIONS

+ FAMILIARITY

= BRAND ASSETS ADDED VALUE, PERCIEVED BY CUSTOMERS

– COST OF BRANDING

– COST OF INVESTED CAPITAL

= BRAND FINANCIAL VALUE

(BRAND EQUITY)

Interbrand identified and examined Kapferer’s, and 22 other models used for measuring the value of a brand and applied them to a list of the most powerful brands in the world. They postulate that by using this approach they would be able to identify, on balance, key attributes shared by these brands that would allow them to distinguish their sources of brand equity. They were able to use this information to identify the brands that continually topped the list regardless of the methodology used to measure them and have identified the core sources of brand equity that were common across these brands. We can apply these sources to the case of Red Bull to gain a better understanding of the origins of their brand equity:

Brand Associations – Keller describes the necessary strategy for building brand associations: “link strong, favourable and unique associations to the brand in memory.” There are two factors to strengthen brand association:

Personal relevance

Consistence in its presentation over time

Keller postulates that direct experiences create the strongest brand benefit associations. Red Bulls market entry strategy is to ‘seed’ places such as shops, clubs, bars and stores focusing initially on opinion leaders who obtain positive direct experience with the brand. Once word of mouth has created a buzz about the product, they then widen distribution to areas surrounding the “in” spots. The theoretical foundation behind creating these associations suggests that by creating these favourable connections between the brand, the experience, and the category, the more inclined a consumer will be to choose a particular brand over other competitors in the category. At its most extreme these brand/category associations are demonstrated by the use of word ‘Google’ in the modern lexicon when used as a synonym for general web searching.

Brand loyalty – In Keller’s definition of brand equity, strong brands achieve greater return on marketing investment through building brand loyalty which ‘smoothes out’ future cash flows and reduces customer acquisition costs as a proportion of total marketing expenditure. (Dick, 1994) Defines brand loyalty as the attachment customer feels towards the brand. Red Bull in its promotional activities associates its name with extreme sports, adventurous identities and pop culture events is able to create meaningful dialogue with its consumers and cultivate a two-way relationship ship between culture and commerce. This helps them in creating loyalty among their target groups who are now most valuable part of their success.

Brand awareness – Keller (p 54) notes the key elements of Brand Awareness:

Recognition and;

Recall

To increase brand recall, Keller (p 55) advises that a slogan or a jingle can establish the memory linkages that improve recall. An example of this can be seen in Red Bulls approach in its above the board advertising which it uses in its matured markets to improve recall consisting of unusual animated shorts that end with the slogan, “Red Bull gives you wiiings.”

According to Norbert Kraihamer, director sales and marketing for Red bull, they identified 5 user categories which they deemed key to spreading the awareness for Red Bull; students, drivers, night clubbers, businessmen and athletes. They identified where these 5 key accounts most frequently shopped and targeted these venues with promotions. Norbert Kraihamer said: “As soon as I can find loyal customers I can convince them that the product works. If they experience that the product keeps them awake in a good mood, focused and vigilant then they will buy it again. If you do it right you’ll be getting up to 75% or even 80% re-purchase rate.” (Phoenix, 2001)

Conclusion

Red Bull has come a long way in the last 26 years. Beginning in a practically non-existent market, today the market is extremely diverse and saturated with competitors. Revolutionary marketing techniques created the Red Bull “buzz” coupled with controversial ingredients ensured the drink was “edgy”, and the product sold itself. Non-specific advertising captivated a non-descript audience, whilst sponsoring extreme sports and events proved effective in not only publicising the drink, but also making it become a “way of life”. Competitors such as Monster and Rock Star may well take a significant market share here in Australia. However, diversifying into “Organic energy drinks” such as Red Bull simply Cola, and creating a “lifestyle” to match; Red Bull has entered a new market for the “health conscious consumer”. The latest business plan to include multi-million dollar island resorts and theme parks coupled with Red Bull’s expansion into new and developing markets will not only spread the name of Red Bull but also boost sales. Despite the “credit crunch”, Red Bull’s future looks bright.