RED BULL: 3 YEAR BRANDING STRATEGY

Executive SummaryRed Bull is amongst the fastest growing brands in the world competing with the likes of Lucozade, Gatorade and others in the energy drinks category. The company has positioned itself as a premium brand for the youth, athletes and party animals worldwide who take pride in consuming a Red Bull can. Using a differentiation strategy, the company entered the European market and slowly took over the world with its storm of effective marketing. The most intriguing part of Red Bulls market plan is their integration of marketing communications (IMC). They have been actively involved in implementing buzz marketing strategies as well as sponsorship.Furthermore, this report also focuses on the 3 year strategy developed by Red Bull for a possible brand extension in which they intend to tap into a new market by introducing a protein shake for people who are keen on working out and muscle toning. By analysing the ACORN segmentation methods, they segmented different markets and targeted the ones that fit the criteria of their protein shake. They started off with a bit of viral marketing through different social networks to create a hype of their product by using product placement. An effective marketing mix of the 4Ps would help them achieve becoming a key player in an already competitive market. The 4Cs methods would be used to position properly the new product in order to maintain and enhance the brand image.

TABLE OF CONTENTS1.INTRODUCTION32. KEY SUCCESSFUL FACTORS32.1 Segmentation, Targeting, and Positioning32.2 Product42.3 Sponsorships and Buzz Marketing53. RED BULL 3 YEAR STRATEGY: RED BULL MUSCLE63.1 Segmentation and Targeting63.2 Positioning93.3 Marketing Mix103.3.1 Product and Packaging103.3.2 Price103.3.3 Place103.3.4 Promotion10CONCLUSION11REFERENCES12APPENDIX15MEETING LOGS16

1. INTRODUCTION

This report will discuss 3 critical success factors of Red Bull which derive from segmentation, targeting and positioning, the product, and sponsorship. These factors have led the company to be successful in the past 20 years. The key factors will formulate a marketing strategy for the launch of a new Red Bull product, Red Bull Muscle and how it will continue to grow in three years time. The marketing strategy will state how this product will carry Red Bulls brand image to the next level and capture the market of protein shakes.The content of this report is only limited to UK market.

2. KEY SUCCESSFUL FACTORS2.1 Segmentation, Targeting, and Positioning

The STP process is the technique to segregate the entire market into different divisions in order to target and position a product or service better (Baines et al., 2008).Focusing on Red Bull, they created a new category of drinks, the energy drinks, in which the company used a differentiation strategy to enter the niche market. Red Bull has set its position in the beverage market creating a category of its own. In this way Red Bull has defined its own positioning strategy to be known for quite some time as one of leaders in the energy drink category (McDonald, 2011). The brand and the product itself are perceived as a premium product in this new market sector where the company has positioned its strategy focusing on the benefits offered. To meet their goals, Red bull set the price of the drink higher than its competitors as it claims the drink can give tangible benefits (Keller, 2004).Moreover, Red Bull desires to be seen as a driver of performance. The brand is placed in sports, positioning its energy drink as being beneficial to athletes (Gorse et al., 2010). According to the Red Bull official website, Red Bull consists of unique high quality ingredients to vitalise body and mind (Red Bull, n.d. a). As a result, this shortly became a competitive advantage of the company. As Gorse et al. (2010) mentioned, the company entered the market by focusing on Generation X to create brand awareness, and then developed the product that met Generation Ys preferences. Target customers such as athletes, workers, clubbers, and college students became loyal to the product not because of its taste but its efficiency to improve attention, reaction time, concentration, emotional status, stamina, and speed (McDonald and Boudway, 2011).

Tradition

Red BullCommon carbonated drinksInnovation

Function

Taste

2.2 Product Armstrong et al (2012) define the product as anything in the market that can provide benefits in order to meet customers needs. Although Marketline in 2012 didn't recognize the product itself as an effective key of the Red Bull success, focusing their attention more on the promotional aspect. Other authors, such as McDonald and Boudway (2011), see the new Austrian energy drink a revolutionary item that cracked a hidden market.It was based on an energy drink sold in Thailand by Chaleo Yoovidhya known as Krating Daeng, which was very common for its stimulating proprieties. Red bull took Krating Daeng's main ingredients, caffeine and taurine, to create this brand-new and unique beverage designed to give the user a burst of energy.The fact that Mateschitz understood there were no similar drinks in Europe, led him to introduce the drink in the Austrian market in 1987. After 7 years of its release, in 1994 Red Bull was able to expand into the UK market (Hein, 2001).In addition, the brand name Red Bull and its logo also took origin from its Thai predecessor. In fact Krating Daeng sponsored some boxing and bullfighting competitions. It is from the latter sport event that Mateschitz chose the name for his company and the image that we can now see on Red Bull cans (Gorse et al, 2010). Beside the gives you wings slogan, created to quickly communicate the main feature of its unequalled drink, Red bull focused on packaging to strongly differentiate the new product from the existing carbonate drinks such as Coca Cola or Pepsi. Mateschitz and his team spent three years to find the correct can design that could effectively represent the company image before launching the new product.The aim was to allow Red Bull cans to stand higher than the competitors and ease the retailers stacking them in small spaces. Additionally, the single product offering by the company made the Red Bull drink unique, by limiting to just a few flavours such as Red Bull Cola (Marketline, 2012).However this exclusivity can limit Red Bull to consider future developments. Growing competition may affect the companys success unless they consider creating a fresh formula before its existing one becomes obsolete (Gillander, 2012)2.3 Sponsorships and Buzz MarketingBrassington and Pettitt (2006) define sponsorship as a relationship in which a financer, in search for certain commercial benefits, supports an individual, an organisation or an event. One of Red Bulls critical success factors is considered under its heavy sponsorship and so called buzz marketing techniques. Red Bull has shifted from the nightlife mixer to become recognised as a sports energy drink for increased performance and stamina. Red Bull managed to step into the sports industry after the Flugtag event. (Gschwantner, 2004).Red Bull is innovative in terms of sponsorship. Apart from actually paying to have its name displayed for publicity in sporting events, the company has an active role in running, developing, and creating events. To illustrate this, Red Bull owns two soccer teams, and two Formula 1 teams with an intention to maintain long term possession and success (Red Bull, n.d. b). Besides team sports, Red Bull also focuses on individual athletes in order to publicise the brand in less popular sports and to reach the niche audiences for example X Fighters Motocross Freestyle, Red Bull Rampage, and a Free Ride mountain Bike Competition (Gschwantner, 2004).

Furthermore, Red Bull provided a helicopter to take those base jumpers and cliff divers to unusual mountain ranges as the attractiveness depends on the level of danger of the events. Through creating an edgy and energetic appearance by making the brand stand out, Red Bull was able to increase its reputation with its customers through online sharing (DataMonitor, 2007).According to Hein (2011), Red Bull uses its own marketing strategy in order to strengthen the brand awareness.As Sweeny (2004) mentions, the events are not only limited to sports-based projects, Red Bull even established its own music academy, an internet radio station, a television station, a record label, and music festivals. The company also makes efforts to set up breakdancing competitions to access urban and street cultures. Red Bull aims not to gain an economic advantage but rather to increase its recognition (Marketline, 2012).

3. RED BULL 3 YEAR STRATEGY: RED BULL MUSCLEIn order to maintain and enhance Red Bulls brand image, the company is advised to focus on brand extension over a 3 year period. A way in which Red Bull can pursue this is by creating a new formula to be consumed by weight lifters and body builders. This will be in the form of a readymade protein drink.

Intrawebnet (2010).3.1 Segmentation and TargetingA basis of conducting psychographic segmentation arose from reviewing a recent government report forecasting the increasing obesity levels amongst UK citizens. If no action is taken to improve lifestyle habits, 60% of men and 50% of women will be obese by 2050 (KeyNote, 2011). The same article highlights the importance for consumers to maintain good healthy lifestyles by availing the opportunity of health clubs, that are Red Bulls main marketplace.

As the table shows an increasing trend in subscribing to health clubs, Red Bull foresees this as a chance to break into a new market to target body builders and weight lifters (Key Note, 2011).ACORN Segmentation Methods After understanding the individual characteristics of our potential target market, Red Bull has grouped their customers using the ACORN classification. Wealthy achievers and the urban prosperity groups were identified.

(Caci information solutions, n.d.)

Considering the characteristics of the product and the existing brand image, the table below illustrates the main characteristics of the chosen target market.

VariableTypical user of Red Bull Muscle

Behavioural

Benefits soughtEnergy and performance

Purchase occasionIntense post workout

Purchase behaviourSolus buyers

UsageHeavy

Perceptions, beliefs and valuesFavourable for now

Psychographic

LifestyleHealth and Fitness conscious, sporty

PersonalityRugged outdoorsy and tough

Profile

Age18 40

GenderMales

Life cycleYoung singles, middle age

Social ClassUpper middle and middle

Terminal education age18+

Income15,000 IAT +

GeographicUrban

GeodemographicWealthy Achievers Group A, Urban Prosperity Group D and E.

(Jobber, 2010)

3.2 PositioningAfter reviewing the products offered by competitors in terms of prices and ingredients, Red Bull will position its Protein Shake as shown in the perceptual map (Workout world, n.d.) (Bodybuilding, n.d.). The way this drink distinguishes itself from other competing protein shakes is by containing more natural rather than artificial ingredients. To clarify this differential advantage, Red Bull Muscle will be associated with the slogan Natural Supremacy. Furthermore, Red Bull Muscle will base its credibility on the existing brand image; energy and performance drivers. In the similar way, bodybuilders and weightlifters reflect themselves as proactive, energetic and sporty. Finally, Red Bull will deliver the same consistent message maintaining some features of the existing sister brand such as the domain logo and packaging (Kotler and Keller, 2012). Artificial

Red Bull MuscleEASNatural

Premium (/ml)

(?ml)

Economical

CNPMaxiMuscle, Lean body

(See appendix)

3.3 Marketing Mix3.3.1 Product and Packaging

Red Bull Muscle is a ready-made protein shake. The core function of the product is to provide protein as a key component. It helps to build muscle and aid recovery for body builders and weight lifters after their workout. The differential ingredient is the green tea extract. As Sinija and Mishra (p. 239) states, green tea with its thermo genic properties can also promote faster metabolism of fats and sugars.Concerning the actual product, Red Bull has decided to conform to its original packaging in the form of a 355ml aluminium can. As the companys website claims, aluminium cans are neutral in taste and are oxygen-proof in order to maintain the freshness of the drink and high quality for an extended period of time (Red Bull, n.d.). Amongst several ready-made protein shakes that are usually consumed in bottles, Red Bull Muscle will be consumed in an aluminium can to differentiate from other competitors.3.3.2 PriceAfter reviewing competitors prices, the Red Bull Muscle will be priced as a premium drink in order to maintain the brand image. Online purchasing of the product allows bulk buying for customers to save costs.3.3.3 PlaceRed Bull Muscle can be purchased from the big four supermarket stores, e-commerce, and in health clubs. These placement techniques chosen will help reach Red Bulls target market. Through product innovation, Red Bull can now allow users of the product to purchase directly from the website.3.3.4 PromotionRed Bull can make use of direct marketing by sending sales representatives to health clubs to promote the protein drink and provide free samples and product information. The company will use digital marketing to utilise social media such as YouTube and Facebook to advertise the product. Red Bull will use experts from the health and fitness sector to promote the drink since they have knowledge and hands on experience about the product. By using experts, customers are more inclined to trust and believe the product benefits.The product will be launched from January 1st 2013 in time to meet the needs of body builders and weight lifters to comply with their new years resolutions to stay fit (KeyNote, 2011). Four weeks prior to the launch, a teaser trailer will be released on the Red Bull YouTube channel to encourage viral marketing techniques.In order to create short term buzz marketing Red Bull will use product placement methods. Using celebrities such as Dwayne The Rock Johnson, who has an active Facebook and Twitter account as a form of digital marketing enables integrated marketing communication methods. With the intention to promote the release of Red Bull Muscle, Red Bull aims to advertise the product in The Fast and Furious Six movie next May 2013 (IMDB, 2012). The purpose for selecting The Rock is that he is an icon for bodybuilders as well as a main character in the upcoming movie.CONCLUSIONIn conclusion, there are 3 important factors behind Red Bulls success which are its effective STP, its differential product, and its unique sponsorships. A 3 year strategy of Red Bull will be based on brand extension to maintain and enhance their traditional brand image and characteristics through Red Bull Muscle.Moreover, Red Bull should consider extending its existing product variety, for instant, more flavours and the use of more natural ingredients. Despite the product variety extension, Red Bull should conduct research and development for brand stretching to Energy Chocolate bar or Red Bull Powder in order to maintain and prolong the brand in the future.

REFERENCESArmstrong, G., Brennan, R., Harker, M. and Kotler, P. (2012) Marketing an Introduction. 2nd Edition. Harlow: Pearson Education Limited.Baines, P., Fill, C. and Page, K. (2008) Marketing. New York: Oxford University Press Inc.Big Red Management (no date). Available at: http://www.bigredmanagement.com/commercial/brand-ambassador/ (Accessed: 6 November 2012)Bodybuilding (no date). Available at: http://uk.bodybuilding.com/store/rtd.html (Accessed: 7 November 2012).Brassington, F. and Pettitt, S. (2006) Principles of Marketing. 4th Edition. Harlow: Pearson Education Limited. Caci information solutions (no date). Available at: http://mmedia.glos.ac.uk/modules/mu308/links/acorn-brochure.pdf (Accessed: 4 November 2012).Datamonitor (2007). Lucozade and Red Bull case study: repositioning energy drinks to meet consumers' needs. London: Datamonitor.Fahy, J. and Jobber, D. (2012). Foundations of marketing. 4th ed. London: McGraw-Hill.Gillander, A. (2012) Red Bull: Success Using Buzz Marketing. Victoria: University of Victoria, Gustavsson School of Business. Bachelor of commerce best business research papers, 06/2012.GoGeo (2010). Available at: http://www.gogeo.ac.uk/gogeo-java/resources.htm?start=170&cat=2&newscat=2010&archive=1 (Accessed: 7 November 2012).Gorse, S., Chadwick, S. and Burton, N. (2010) Entrepreneurship through sports marketing: A case analysis of Red Bull in sport, Journal of Sponsorship, 3(4), pp. 348-357. Gschwandtner, G.G. (2004) The Powerful Sales Strategy Behind RedBull, Selling Power Magazine, pp. 1-11 [online]. Available from: http://www.redbull.com/images/historysection/pdf/1/Selling_Power_DM_Sept.pdf (Accessed: 26 October 2012).Hein, K. (2001), A Bull's Market, Brandweek, 42(22), p. 21-24. Business Source Complete, EBSCOhost [online]. (Accessed: 1 November 2012).IMDB (2012). Available at: http://uk.imdb.com/title/tt1905041/ (Accessed: 2 November 2012).Intrawebnet (2010). Available at: http://intrawebnet.com/pics/funny-pics/can-art-red-bull-can-weightlifting-made-from-red-bull-cans/ (Accessed: 2 November 2012)Jobber, D. (2010) Principles and Practice of Marketing 6th Edition Maidenhead: McGraw-Hill Education.Keller, K.L.K. (2004) Building brand equity in non-traditional ways, Coolbrand Storytelling [online]. Available from: http://www.coolbrandsstorytelling.org/dmdocuments/expert_cases/ECRedbull.pdf (Accessed on: 28 October 2012).Key Note (2011) Health Clubs & Leisure Centres. 11th edition. Hampton: Key Note. Key Note [online] Available at: http://www.keynote.co.uk/media-centre/in-the-news/display/health-clubs--leisure-centres/?articleId=53 (Accessed: 3 November 2012).Kotler, P. and Keller, L. (2012) Marketing Management 14th edition. New York: Pearson Education Limited.Marketline (2012) Red Bull: A trailblazer in marketing strategy. London: Marketline [online] Available at: http://web.ebscohost.com/ehost/detail?vid=3&hid=106&sid=dc039334-ae8f-4d8480f8c8d5fc37fd40%40sessionmgr113&bdata=JkF1dGhUeXBlPWlwLHNoaWImc2l0ZT1laG9zdC1saXZl#db=bth&AN=82195884 (Accessed: 30 October 2012).McDonald, D. (2011) Red Bull's Billionaire Maniac Bloomberg Businessweek, 19 May, pp. 1-5.McDonald, D. and Boudway, I. (2011) The Mastermind of Adrenaline Marketing Bloomberg Businessweek, 23-29 May, pp. 64-70. Red Bull (no date, a). Available at: http://www.redbull.co.uk/cs/Satellite/en_UK/How-it-all-started/001243026264745?pcs_c=PCS_Article&pcs_cid=1242989363202 (Accessed: 21 October 2012).Red Bull (no date, b). Available at: http://www.redbull.co.uk/cs/Satellite/en_UK/Sports/001242758893111 (Accessed: 24 October 2012).Red Bull (no date, c). Available at: http://www.redbull.com/cs/Satellite/en_INT/can-lifecycle/001242939604115?pcs_cid=1242972066285&pcs_pvt=chapter2 (Accessed: 19 October 2012).Sinija, V.R. and Mishra, H.N. (2008). Green Tea: Health Benefits, Journal of Nutritional & Environmental Medicine, 17(4), 232-242.Sweeny, M.C. (2004) Red Bull loses fight with 'copycat' Mean Fiddler. Haymarket Business Publications Ltd [online]. Available at: http://www.marketingmagazine.co.uk/News/EmailThisArticle/210711/Red Bull-loses-fight-copycat-Mean-Fiddler (Accessed: 11 October 2012).Workout world (nodate). Available at: http://www.workoutworld.co.uk/supplements/bars-ready-to-drinks/default.aspx?View=All (Accessed:7 November 2012).

APPENDIX

MEETING LOGS

MEETING 1 Monday 15th October 2012 (1 Hour 30 Minutes) Discussed the assignment and decided how the group will approach the task. Brainstormed ideas on how we think Red Bull has been successful. Allocated research to each group member to find journals and articles on Red Bull paying specific attention to differentiation and positioning.MEETING 2 Friday 19th October 2012 (1 Hour) Discussed what the group had found. Research how other Red Bull competitors improved their strategy and how they have been successful.MEETING 3 Monday 22nd October 2012 (3 Hours) Discussed how Red Bull became widely recognised from their heavily use of sponsorship techniques including extreme sports. Started writing up assignment as a group.MEETING 4 Wednesday 24th October 2012 (2 Hours) Debated ideas for Red Bulls 3 year strategy (Red Bull Gasoline, Red Bull Coffee).MEETING 5 Monday 29th October 2012 (4 Hours) Discussed the 4Ps.MEETING 6 Thursday 1st November 2012 (3 Hours) After meeting with the module Co-ordinator to discuss assignment we had a clearer idea for the 3 year strategy. We continued to brainstorm ideas to maintain and enhance Red Bulls branding strategy and decided to create a new product through brand extension, Red Bull Muscle (readymade protein shake). Started to discuss and focus on Segmentation, Targeting, and positioning for Red Bull Muscle.MEETING 7 Thursday 8th November 2012 (4 Hours) Started typing up Segmentation, Targeting, and Positioning for Red Bull Muscle. Introduction. Conclusion. Executive summary. Compiled all our references.MEETING 8 Friday 9th November 2012 (4 Hours) Compiled group work together. Contribution sheet. Checked our work on Turnitin to see if whether we had made any mistakes. Submitted

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