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.