The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable and superior in quality and reliability.
Mass marketing campaigns can also help to create brand equity. If consumers are willing to pay more for a generic product than for a branded one, however, the brand is said to have negative brand equity. This might happen if a company had a major product recall or caused a widely publicized environmental disaster.
The additional money that consumers are willing to spend to buy Coca Cola rather than the store brand of soda is an example of brand equity. Red Bull uses the non traditional ways to chive its targets and unique approaches to create the brand equity. Right from the beginning the company makes it very clears to it all its existing and potential customer the message of its product functionality in a clear way. Related to the pricing of the product company positions the product above 10% of the upper segment of the competition in order to create the mindset of the premium brand and also influencing people by not letting them buying a sample beverage drink.
This also helps the company from being categorized different from other beverages company because its uses word-of-mouth marketing and creating the brand awareness by this way. Once the brand awareness is created then it resort ads within the TV and other related media channels. The company also tries to create by mystique by participating and sponsoring events within the market even before the product is not available within the market. Also the company places the market instance relatively strategically by trading a niche audience and trying to influences them first rather than spreading out to the whole target of customers.
Indeed the company tried different ways of market instance and different kinds of brand equity management within different market; however, most of the cases this strategy failed as it is started within the case as. The UK case the company tries to play the cell strategy within markets like the USA, however this methodology is relatively same to other countries but the difference is related to geographical situation of the USA and relatively spread out demographic within this market.
The value of a brand based on the extent to which it has high brand loyalty, name awareness, perceived quality, strong brand associations, and other assets such as patents, trademarks and channel relationships. Brand Equity is a differential value of a brand which a consumer has in his mind due to the amount of knowledge he has about that brand. “Brand Equity is that incremental value that occurs to a product when it is branded. Those are the main sources of brand equity based on Red Bull:
- Brand awareness is one of the sources of Brand Equity.
- A consumer’s perception that the brand is better than it really is.
- A consumer’s preference for a brand based on cachet or status of owning it.
If one is successful in these 3 aspects an added benefit is that it will pull the customer to carry your product thus helping in increasing sale of that particular product. In the said case study Red Bull has gained Brand equity through the following ways.
By 1997 Red Bull was launched in Austria, Red Bull was available 25 markets globally including Western and Eastern European, New Zealand and South Africa. This indicates the global awareness of Red Bull. Initially the Red Bull’s slogan was “Red Bull gives you wings”. Later on as the taste changed with the change of its ingredients. Earlier it was an energy drink and later it was functional energy drink. Mateschitz devised the brand positioning that Red Bull “Revitalizes Body and Mind” This phrase conveyed the tangible benefit of the product in an easy grasping manner. It meant that Red Bull can be drunk any time whether it was morning, noon, or night. Thus Red Bulls consumption was not limited to any occasion or activities.
In Austria due to the difficulty faced in getting approval for Sale, they marketed this product this product by different ways like getting the customers to try this product by testimonials from peers who bought Red Bull. Thus by Word of Mouth the Red Bull was made aware to the masses of consumers. This is the oldest and the best method. From the beginning Red Bull was the source of interest to the consumers of Austria. Its functional energy was brand new for them. So curious consumers tried this brand and spread the word about it.
They were not contented only with the word of mouth to evolve naturally that is why shortly after the product launched in Austria the company would place empty red bull cans in clubs and bars to create the illusion of popularity. Between 1987 -1992 Red Bull was available only in Austria. Consumers in adjacent countries like Germany and Hungary who had not been to Austria heard about the product from WOM testimonials. In this way consumers outside Austria were made aware of this product Benefits.
Perception that the brand is really good than they actually it is. The second aspect about gaining the brand equity is creating the perception about your brand in consumer’s mind that your brand is really good than actually it is. The same can be done by different ways by advertising or marketing more about end result in term of qualities and properties of the product to the user. In case of Red Bull Drink following tactics were used or applied. They came up with the slogan that “Red Bull gives you wings’. So people who really wanted boost their energy used to drink Red Bull.
They also marketed or advertised on the energy enhancing ingredients of Red Bull like Caffeine, Taurine and Glucuronolactone. It also claimed the flowing properties. So consumers used to drink Red Bull to get some of these properties. Improve physical endurance. Stimulates metabolism and helps eliminates waste substances. Improves overall feeling of well-being. Improves reaction, speed and concentration. Increase mental alertness. Next time they have changed the ingredients and flavor a bit. This they intended to communicate the product value as functional energy drink rather than just an energy drink.
It was sweet in taste and carbonated as cola. As they were more concerned about the function of the drink they did not really care about the taste. The strong taste indicated to the customer that the drink was something more than mere refreshment. As direction printed on the cans drink served”well-chilled” most of the customer found the taste more pleasant when they drank it cold. They came up with second Slogan Red Bull “Revitalizes body and mind”. This slogan was easy to grasp and covered a broad set of appropriate consumption occasion.
Whenever consumer needed lift anytime whether morning, noon or night they can drink this. It was not time bound or occasion and activities bound. The package was designed in a such way that it used to attract customers cost wise, convenience wise and aesthetic wise. In the market entry strategy Red Bull targeted Opinion leaders who are likely to influence the consumer purchased. These include sports athletes, entertainment celebrities, and hip urbanites. The company attempted to reach these individuals by making Red Bull available at sports competitions, in limos, before award shows and at exclusive after parties.
In Austria it was difficult for Red Bull to get an approval for sale because Austrian government had 3 categories for food and drugs. Therefore Red Bull lobbied to create an entirely new category. Functional food. Red Bull’s marketing strategy was encouraging product trial. People were curious to try this new category as this had some medicinal benefit beyond a dietary product, but also contained food properties that made them different from a pharmaceutical. These sources do change depending on the market or country. Every country has different government policies.
Like in this case study Austrian government had different categories for food and drug than UK and USA and Red Bull had difficulties in getting approval for sale in this country? Analyze the Red Bull’s marketing program in term of the brand’s equity: I think the Red Bull marketing program is quite successful in terms of brand equity Trading a niche segment is the beginning and then spreading out to the whole target makes a lot of sense. Because the marketing program was really focused at first as a segment of people it creates the concentration and brings up the success.
Related to the disadvantages of this methodology and also it is started for the niche segment the product understanding the for middle and upper aged people is quite different In my opinion thus these segment of people tend to stay away from the drink because of having wrong perception of the brand. On the other hand sometimes the product is understood as a mixed for the alcoholic drinks and you used time to break that perception as well. However the overall whole brand equity is successful in case of Red Bull. In the said case study Red Bull has adopted following marketing programs or strategies which contributed to its brand equity.
Marketing Red bull through Word Of Mouth
Red Bull Adopted the best and the oldest media called as word of mouth for marketing Red Bull. It was the central component in all Red Bull’s marketing activities. Word of Mouth drove awareness in the early stages of entering market. Knowledge of the product spread, a buzz would build around the brand. Eventually consumer everywhere would be talking and purchasing this brand. So this was a successful strategy.
Developing Red Bull Mystique
From the start, Red Bull was source of intrigue or fascination for consumers. The functional energy category was brand new for Austrians so curious and adventurous customers tried the brand and spread the word. The company was not satisfied to let the word of mouth evolve naturally, that is why the company would place the empty cans of Red Bull in the clubs and bars to create the illusion of popularity. At the same time people in adjacent countries like Hungary and Germany who had not been to Austria before heard about the brand thru Word Of Mouth testimonials. Thus outside Austria this product was made aware and marketed.
Thus not only in the country where this product was born the Brand equity thru awareness about this product was gained in the neighboring countries also. So this was also a reasonably successful marketing programme.
Market Entry Strategy
Red Bull strove to build buzz about the product through its “Seeding Pro gramme” where the company micro – Targeted in Shops, clubs, bars and stores. This enabled the cultural elite to access the product first and hopefully spread the word of mouth to other customer and influence them. They also reached the mass markets via super markets.
Red Bull also engaged in “pre-marketing” to establish awareness in markets where product was not yet sold. Pre marketing involved where sponsoring events that took place in a country where Red- Bull was not available. Through Pre-marketing programme Red Bull tried to get recognized as pre-eminent Brand. Through this strategy not even a single thing is left where awareness and marketing of this product is not done.
Red Bull’s Target Market
It really did not targeted on any demographic or psychographic segments. Their attempt was to reach the broad range of consumers. They had only two dimensions people who are mentally fatigued and physically fatigued or both. This dimension covers five broadly defined categories: “students, drivers, clubbers, business people and sports people” Bye using this strategy Red Bull grew into numerous markets segments. Red Bull achieved its highest penetration in the range of 14-19 age range.
Red Bull engaged in variety of marketing Pro gramme.
Advertising – The Ads were effective because they clearly communicated the product benefits without promising specific physiological results.
- Sampling- This was essential part of Red Bull marketing pro gramme. Red Bull tried to reach the maximum number of consumers only in occasions such as concerts, parties, festivals, sporting events, at the beach, at highway rest areas for tired drivers and at campus libraries.. By using sampling programme they made a point that people experience the product the right way right place and in the right situation when they have met with particular fatigue or are in the need of food.
- Event Marketing – When Red Bull created an event it controlled all aspects of event including the name, Logo, Promotion and media production.
- Sports Marketing- Sports was done through opinion leaders who participated in action sports. These athletes who played these sports exhibited many of the qualities Red Bull wanted to project in its Brand Personality, Innovative, individual, non-conformist, unpredictable and humorous.
- Point –of –purchase Marketing – its point of purchase tool was the branded refrigerated sales units. Red Bull placed these miniature glass refrigerators and which prominently displayed the Red –Bull logo in convenient stores, bars, clubs, sports shops, office buildings, cafeterias and commissaries.
Due to these refrigerators Red Bull could establish itself in the retail market as a prominent brand as compared to other beverages.
SWOT analysis of Red Bull
Market leadership. Within the energy drinks market Red Bull is the industry leader throughout the world. Marketing Efforts. a lot of promotions and well targeted campaigns and sponsorship e. g. formula 1 helps to expand Red bull brand and increase consumer brand awareness Within the energy drinks market Red Bull is the industry leader throughout the world. It has annual sales of a billion cans, with a significant presence in Europe and the US.
In 2003 it achieved an 80% brand share of the UK energy drinks market. In Europe the company produces two-thirds of overall volume in the region. The brand is present in 13 West European countries and holds the lead in 12 of these. The rest of the top 20 brands take a combined 17% share. In terms of market trends, fewer new brands are being launched compared with the 1990s, and there has been a clear shakeout since 2000. Even the products offered by leading drinks manufacturers are failing to make major headway against Red Bull, with products such as Coca-Cola’s Burn absent from the top five.
Marketing efforts. The heavyweight promotion and expansion of the Red Bull brand, which brought the concept of stimulation drinks to the western market, has driven functional drinks growth over the years. The company employs well targeted marketing campaigns that appeal to the core 18-25 age group. It has promoted its product using its’Red Bull gives you wings’ slogan and sponsoring Formula 1 driving; free skiing; BMX biking and other dangerous sports. This has significantly increased consumer brand awareness of the product, and differentiated it from its competitors.
Cadbury Schweppes alliance Red Bull has established an alliance with Cadbury Schweppes in Australia. The alliance has helped expand the brand’s marketing distribution, allowing more customers to have access to Red Bull across the nation. Sales, which are already 40% up compared to the same time last year, are set to rise dramatically as a result of the pending partnership. Red Bull believes Cadbury Schweppes can help it reach new channels such as food courts, vending machines, hospitals, colleges and sports and travel facilities, ensuring an increased customer base.
Such partnerships allow the company to reduce competitive threats from its rivals and extend its sales opportunities. Reputation management Innovation Strong brand equity Strong financial position Unique products 360 brand Effective communication Loyal customers
Lack of innovation. There are a lot of competitors in the market and they have their own USP which leaves Red Bull behind. Reliant on small product base- The Company only markets one branded product, Red Bull Energy Drink (along with a sugar free variety). A number of new energy drinks have been launched in 2004.
Raw Energy Fuel. Cell is a Canadian vitamin and glucose drink, which is endorsed by World Wrestling Entertainment. This product contains no taurine and has less caffeine than rival offerings. It also comes in 330ml PET bottles as opposed to Red Bull’s 250ml cans. Other firms are also making headway in the market by introducing sports drink packaging and other initiatives. With little change in its product format, Red Bull is being left behind from the majority of its competitors. Reliant on small product base The company only markets one branded product, Red Bull Energy Drink (along with a sugar free variety).
It is therefore vulnerable to market fluctuations, especially as the energy and sports drink category in which it operates is the smallest sector of the overall soft drinks market. With consumer interest turning away from Red Bull’s major strength of carbonates towards healthier alternatives, the firm is finding itself as less of a giant in the playing field. The company would therefore benefit from introducing drinks into other, more successful drinks categories.
Red Bull has recently detailed an initiative to use vending as a new route to increase sales. Vending is increasingly acting as an important advertising vehicle and the company is exploiting this avenue in order to stimulate growth. The manufacturers of Coca-Cola and Pepsi have long used this route, and firms such as GlaxoSmithKline and out span have also entered the market. Red Bull’s decision to introduce vending illustrates its commitment to diversify its distribution network and keep up with industry trends. Extension of product line
New entrants into the market are unlikely, as extensive marketing and promotion are required to retain market share, needing large financial resources. Data monitor expects the most successful new product in the market is likely to be an extension of an existing brand, and will succeed best in the non-cola carbonates sector of the market. Marketing products as functional drinks the company may be able to extend its product line, capitalizing on strong consumer awareness of its brand. Geographical expansion With sales derived from 100 countries, Red Bull has an extensive geographical reach.
The company is building upon this by making inroads into developing markets such as India. With a distribution deal secured with Mount Shivalik and Narang Hospitality Services, these firms will market distribute and manage the logistics of the drink. Red Bull will initially be promoted in North, East and Central India, with a view of rolling out the product to further regions in the long-term. The Asia Pacific region holds a good opportunity for growth for Red bull as in 2003 it accounted for 50. 9% of the global market share of the Functional drinks market (40% of which is energy drinks).
The market is also predicted to grow at CAGR 5. 2% in the next five years reaching a market value of around $16. 1 billion by 2008. Other opportunities: Emerging markets and expansion abroad Innovation Product and services expansion Emerging markets and expansion abroad [New products. ex, Red Bull & vodka, Red Bull Tea, Red Bull tablets… and so on Society becoming increasingly “time-poor”. Threats: Health concerns- tougher rules from government on high caffeine content. Consumer awareness of health and well being- people may start to drink more water as it is associated with healthier life style
Public health concerns Red Bull’s energy drink has been banned in France due to concerns over its high caffeine content. Experts fear that the drink could be potentially deadly when combined with alcohol or when drunk after strenuous exercise. The move has been backed by the EU’s high court, asserting that the drink is a real risk to public health if consumed in excess. Denmark is the only other country to ban Red Bull, although authorities in Ireland, Turkey and the US have expressed concerns about it. The drink is classified as a medicine in Norway and until recent years was only available in pharmacies in Japan.
These issues are creating significant adverse press for the company. Maturing market The energy drinks market has witnessed slowing growth in recent years. In 2003, the US carbonated soft drink industry posted volume growth of only +0. 6% overall. That growth rate represents a slight decrease from the 2002 growth rate of +0. 8%. It is far below the industry’s annual 2%-4% growth rate range seen throughout most of the 1990s. This slowdown in growth may inhibit the company’s revenue expansion potential going forward. Consumer awareness of health and well being
Drinks retailers are becoming increasingly aware of the potential growth in bottled water sales. Per capita consumption of bottled water has now risen to 35 liters, in comparison to one liter 20 years ago. Consumers are becoming increasingly aware of their health, and bottled water is associated with health and well being. Although Red Bull has recently launched Red Bull Sugar free, the drink’s high caffeine content may remain a concern for the health conscious.
Other threats are in the following: Competition Economic slowdown Lower cost competitors or imports health concerns Economic slowdown European Laws against Vitamin/mineral enriched products, like in Denmark and France Lower cost competitors or imports Health Concerns Unknown whether or not the Generation Y cohort will continue to drink Red Bull as they age or whether the next generation will adopt Red Bull as their caffeine beverage of choice.