Ch. 11 - Developing and Managing Products

 

Cocaine Cola anyone? In 2008 Red Bull developed a new, non-energy drink product, called Simply Cola, which was released in 23 test markets (countries). The plan was to introduce a “natural” cola without the added phosphoric acid and high fructose corn syrup ingredients typically found in products like Coke and Pepsi. What they ended up with, however, was a headache after German food regulators found trace amounts of cocaine in the beverage in 2009.

 

Despite only trace amounts being found, the negative press resulted in the drink disappearing from shelves in Germany. This German ban then prompted Taiwan to mistakenly confiscate 18,000 cans of the original Red Bull Energy Drink.

 

The German Institute for Risk Assessment did declare the product safe shortly after the fiasco and Simply Cola was placed back on shelves in August of 2009. Great news for Red Bull right? But no – the combination of negative press and an already saturated cola market proved to be too much of an uphill battle for Simply Cola to withstand. Largely considered a failure, In 2011, Red Bull Simply Cola was forced to retreat back to it’s core markets in Germany and Austria where it is now distributed exclusively.

Ch. 8 - Segmenting and Targeting Markets

According to the perceptual map above from Mintel - In 2012 Red Bull owned a whopping 37.3% market share in a comparison of the top five energy drink companies. What is most interesting about the data shown is that 5 Hour Energy, who is said to have the most effective product (in terms of obtaining maximum energy from consumption) ranks only number three in market share. Red Bull who is perceived by consumers to lead in “coolness factor” (where brand image is concerned) also happens to lead majorly in market share percentage. This data shows us that, for consumers, the functionality of an energy drink comes second to the perception of the brands image and the lifestyle it represents for them.

Ch. 15 - Marketing Communications

When it comes to “owned media” – Red Bull stretches the definition to unprecedented heights. Red Bull Media House (RBMH) is a multi-million dollar film production company fully owned and operated by the soft drink giant. This leg of the company engages world-class directors, producers, camera crews, actors, and athletes to produce gripping feature length films and documentaries of “Hollywood quality” – many of which are released for sale on iTunes and other online video services.

 

While the films mainly focus on extreme sports, outdoor adventure, and popular music – the glorious part of it all is that the Red Bull logo seems to tastefully make its way into almost every shot while somehow not being too noticeable or overbearing to the viewer. Imagine a movie-length commercial-in-disguise so wildly compelling that millions seek it out and pay to watch it! Making this dream a reality is the task at hand for RBMH, and they manage to carry it out with flawless success.

 

“Brands have lately woken up to the fact that their information and entertainment outputs can and should go beyond the paid, interruption-based model known as advertising” said fastcompany.com’s Teressa Iezzi in her feature on RBMH (who came in at #29 on the sites list of Most Innovative Companies for 2012). “Content isn't considered a loss leader [for Red Bull], and it expects Media House to turn a profit and be a business unto itself.”

Ch. 10 - Product Concepts

In 2013 Red Bull extended their product line to include 3 new flavors, or "Editions" as they are called. All the familiar benefits of their classic energy drink were promised with a cranberry, lime, and blueberry twist. The new drinks were well received by consumers and the line was extended further in subsequent years to include even more flavors.

 

To determine the likelihood of a flavors success before implementing a large-scale roll-out, small introductions were made in various test markets to gauge consumer reception. Since initial launch - Red Bull Editions have grown to a total of seven unique flavors. Check back soon for an interesting post on Red Bull's failed "Simply Cola" product when we discuss developing and managing products in Chapter 11.

Ch. 17 - Personal Selling and Sales Management

Almost no personal face-to-face interaction occurs between the company and their customers. True personal selling is not a part of Red Bull’s marketing plan. Energy drinks, which are considered to be a low cost consumer good, do not require the same expertise or sales guidance that a larger ticket item such as a car or a house does. Instead, all of Red Bull’s success with the public is a direct result of aggressive advertising and sales promotion.

Ch. 16 - Advertising, Public Relations and Sales Promotion

Red Bull sponsors sports and music events year-round across the globe to ensure major awareness is with their target market. For instance, a sponsored music festival may have a designated “Red Bull Stage” to which a large portion of the event’s scheduled performers will be assigned. The assigned stage, any tables, and the nearest bar will typically be branded and reps may hold contests or give out merchandise in between sets. Aside from the highly visible theatrics – all tickets sold, flyers, and show schedules will most likely mention “Red Bull Stage” to direct concert goers to the appropriate area in order to catch their favorite band at the scheduled time.

 

After being subjected to this level of logo saturation it is impossible for attendees not to recognize the brand. Red Bull employs this highly successful PR tactic as a way to gain a sense of familiarity in the public mind and ultimately be remembered by each  of these consumers next time they visit a convenience store and are faced with a can of Red Bull in a sea of competing products.

Ch. 14 - Marketing Channels and Retailing

 

Red Bull uses intensive distribution as a technique for achieving such widespread product placement. More of a low-impact impulse buy - consumers are not likely to research, compare, or go out of their way to find a specific brand of energy drink before purchasing. Red Bull must get their product in front of consumers around the world by way of an extensive distribution channel. Following production, Red Bull ships its goods out of two main facilities located in Austria and Switzerland to over 165 countries mostly by train and ship. From here, a large network of wholesalers and distributors take on the product to fulfill orders and deliver Red Bull to retailer shelves nearly everywhere. Sales rely mainly on this extensive process as the target market will otherwise reach for the next energy drink on the shelf.

 

Ch. 6 - Consumer Decision Making

The act of choosing and purchasing an energy drink is considered a routine response behavior given their relatively low cost and minor impact on a consumer’s life. In order trigger a “need response” in shoppers Red Bull will often make agreements with store chains to place branded coolers stocked only with Red Bull in check-out lanes other high visibility areas. These glowing coolers stand out to customers waiting in line and burdens them with questions such as – “Are you tired? Are you thirsty?” By ensuring premium product placement with retailers, Red Bull is able to effectively increase the chance that a customer will reach for their product over a competitors.

Ch. 5 – Developing a Global Vision

Legal difficulties in France due to health concerns over Taurine (one of the drink's main ingredients) once forced Red Bull to produce a “modified” version of the beverage for export to France only. This unforeseen development made it impossible for Red Bull to continue producing a globally standardized product.

 

When the ban was eventually lifted in 2008, Red-Bull used the opportunity to push the original recipe once again in France, only this time with a marketing twist. New cans emblazoned with a stamp that read “Taurine Formula” were produced for the French market to both alert loyal consumers to the change and to attract newbies by emphasizing the mysterious ingredient on the packaging.

Ch. 4 – The Marketing Environment

 It is predominately generation Y males across the globe who find themselves in the crosshairs of Red Bull’s wildly successful marketing plan. This being the case, I did some digging to find out why this approach has been so effective for them. A 2012 research study conducted by Kaohsiung Medical University (located in Kaohsiung, Taiwan) endeavored to “to examine whether exposure to concepts of masculinity increased the desire for energy drinks and whether the use of energy drinks contributed to the achievement of a masculine sense of self.” The study confirms both suspicions and wraps up with: “the finding that consumption of energy drinks reinforces one’s masculine sense of self may provide a partial explanation for why energy drinks such as Red Bull are extremely popular among adolescents and young adults in traditional male-oriented societies.” When we juxtapose the conclusion of this research with Red Bull’s testosterone fueled marketing campaigns it becomes clear that the company understands what drives the demographic they are targeting to purchase and introduces concepts of masculinity to their advertising as a response.

Ch. 18- Social Media and Marketing

As one of Red Bull’s core marketing tactics is to appear as “one of us” through personal engagement and compelling media content – it’s no wonder that they rely heavily on all major social media platforms to spread their message. Most of the content shared has nothing to do with the flagship beverage they produce, but rather the extreme lifestyle they want you to feel connected to by associating yourself with their brand. Captivating videos, beautiful imagery, and clever captions are shared with over 46 million fans by the hour – who in turn share with everyone they know, and so on. Their strategy is unique in that they seem to not let on that there is a product to even be sold by them. They are not pushing a product at followers and saying “Our drink tastes so good! Try it!” Instead the goal is to captivate an audience so much as to be absolutely sure that the fans will do the work of sharing the content, engaging new people, and creating more and more Red Bull awareness for them as each minute passes. At the start of writing this post, Red Bull’s Facebook page had exactly 46,045,259 followers. As I finish writing, the page has grown to 46,045,721 in minutes! Only truly fascinating content and a highly skilled social media team can generate a loyal following of Red Bull’s magnitude.

Ch. 2 - Strategic Planning for Competitive Advantage

Since it’s launch, Red Bull has devised many strategic plans over the years in order to introduce the drink to new age groups, cultures, and genders. With a heavy focus on market development, these strategic plans have mainly involved aggressive advertising, viral video campaigns, event sponsorships, and newsworthy extreme stunts intended to build a connection with the targeted group and make them feel as though they too can tap into the thrills perceived to be associated with their product. For instance, between 2011 and 2012 the company made an effort to increase Red Bull awareness with the 35 to 65 age group. One campaign included organizing a freefall from the “edge of space” featuring skydiver Felix Baumgartner – who was transported 13,000+ miles above the earth by Red Bull Stratos (one of Red Bull’s strategic business units) for a record-breaking jump that was sure to make headlines. The stuntman in our story, you guessed it, was in his mid 40’s at the time of the jump. Footage of the incredible feat inevitably spread like wildfire and was, of course, saturated with the famous Red Bull logo.

Ch. 1 - Overview of Marketing (Brief History and Mission Statement)

 

Inspired by an energy drink called Krating Daeng during a business trip to Thailand, Austrian entrepreneur Dietrich Mateschitz developed the formula and concept of Red Bull in the mid 1980’s. The drink was first sold in Dietrich’s home market of Austria, blowing a new product category wide open for the rest of the world as it steadily made its way through a majority of Europe, before reaching the US in 1997. Fast forward to 2016 and Red Bull is now sold in more than 169 countries with approximately 60 billion cans having been consumed worldwide. The company slogan is “Red Bull Gives You Wings” – with the product historically being perceived as targeting young men with advertising and sponsorships that include a host of male dominated extreme sports.