RedBull Final Exam Team2

Strategic Marketing Team 2 1

Strategic Marketing

MBA 6

Lecturer: Nicolas Kfuri

Students: Team 2

Date: December 2014

FINAL EXAM

RedBull: The Anti-Brand Brand

Team 2:

Amela Kerić

Gregor Sablič

Ioana Dragne

Karlo Smojver

Nirvana Abdić

Vinko Berković


Table of Contents

Table of Contents ..................................................................................................... 2

How many elements of GSTIC Framework can you identify in the case? List them and explain ...................................................................................................... 3

GOALS – FOCUS & BENCHMARKS ......................................................................... 3

STRATEGY ................................................................................................................ 4

TACTICS – MARKETING MIX 4PS’ FRAMEWORK .................................................. 4

IMPLEMENTATION .................................................................................................... 5

CONTROL .................................................................................................................. 5

Apply the Brand Ladder Pyramid to the Brand Red Bull, identifying Core Values, Emotional Benefits, Functional Benefits and Attributes ......................... 6

CORE VALUES .......................................................................................................... 6

EMOTIONAL BENEFITS ............................................................................................ 7

FUNCTIONAL BENEFITS .......................................................................................... 7

ATTRIBUTES ............................................................................................................. 7

References ................................................................................................................ 8


How many elements of GSTIC Framework can you identify in the case? List them and explain The GSTIC framework is a cohesive approach of marketing analysis, planning, and management, incorporating several frameworks as: Goals & Focus, 4Ps’ 3 Vs’, OVP etc. for a practical approach of a marketing plan elements’: GOALS – FOCUS & BENCHMARKS

Unlike many products in its category, RB® was never only a drink, but a lifestyle and a belief system, something greater than a liquid in a can. For its co-Creator RB® was always a lifestyle brand, able to gives you wings, “…When you work or study, do your very best. When you do sports, go for your limits. When you have fun or just relax, be

aware of it and appreciate it” (Montague, 2013, p. 5).1That is a vital part of

Mateschitz’s vision. From the basic product Mateschitz built a universe around RB® and everything from the corporate culture to communications reflects that ethos. RB® is not a typical drinks manufacturer, and Mateschitz is not a typical CEO. Marketing and advertising have made RB® and Mateschitz what they are today, and they are the backbone of the whole operation (It’s a (Red) Bull Market After All, 2001). 2 Laid off on the GSTIC framework, RB® mission and vision, reflect the commitment for value creation for owners, employees, energy drinks groups and services purchasers. It is not enunciated on the company website, but is vivid in their approach. This was the goal stated from the beginning and subsequently they focused gathering groups with performance and innovation philosophy next to the product, rather than pushing the product on the market. From the position of a market creator, RB® influenced its competitor’s performance, many companies try to obey or consider their product as benchmark. Due to the competition in the energy drink market, RB® focuses on non-price competitive weapon like offering exhilarating events, high quality products and sponsorships. Aligned with the customers focused goal, RB® needs to forecast also trends in the dynamic environment in which it operates. As statistics revealed the product is an example of a 'functional' drink, RB® operate within the energy drinks sector of the soft drinks market in over 100 markets, being leader in the category for 12 of 13 Western EU markets. In 2003 US represented 40% of Total RB® Sales. Energy drinks are a niche category in Europe, representing only 1% of the non-alcoholic beverages market. In 2012, the European energy drinks sector was estimated at an annual consumption of 1.4 bn litres. Although energy drinks are mostly recognized by a few big brands, leaded by RB®, there are presently more than 190 brands on the market. More than 30% of the market is served by small and medium-sized

1 Montague, T. (2013) True Story: How to Combine Story and Action to Transform Your Business. United States: Harvard Business Review Press. 2 It’s a (Red) Bull Market After All (2001) Rodgers, A. L. http://www.fastcompany.com. It’s a (Red) Bull Market After All. Available at: http://www.fastcompany.com/64658/its-red-bull-market-after-all (Accessed: 2 January 2015).


companies (Energy drinks market overview, no date).3 Currently the RB® Brand is

appreciated by Millwardbrown report as increasing with 6%. STRATEGY

RB® started marketing its energy drink to club goers and the underground scene in Austria in the 1980s and 90s. Initially, the strategy applied by Mateschitz had been “Viral” marketing: CEO Mateschitz paid opinion leaders like DJs and students for promoting the energy drink at parties. Later on, they used more other strategies for marketing the product, as the company became more well-known, both in Austria and abroad: Comic-style TV spots popularized the slogan “Red Bull gives you wings”, while the RB® logo started to appear on the suits and vehicles of sports athletes; The RB® homepage also advertises the product to industrious students and business (wo)men, broadening their original target segment. A strategic shift was the moment they moved from focusing on the underground youth scene to extreme sports sponsorship. The company often organizes free trial distribution to attract new customers. This seems rational especially considering the reluctance a potential consumer might feel when pondering the purchase of the expensive drink for the first time. TACTICS – MARKETING MIX 4PS’ FRAMEWORK

Product Price

RB® is packaged in a slim, sleek, blue & silver can. It isn’t sold in a bottle and it doesn’t have script lettering like Coke or Pepsi. One size. One sticky, sugary flavour. However, a sugar-free version was launched in 2003.

Prices range from €2 in retail - €6 in bars

Promotion Place

No traditional ads like TV, radio, print just “buzz” marketing with selective sales strategy with key accounts for spreading popularity (placing empty can in cubs and bars) College students as RB® Brand Managers RB®'s current taglines are “Red Bull Gives You Wings” and “Red Bull vitalizes mind and body.” The “Bull's Eye” Web Magazine offers upcoming event listings and Red Bull news updates.

Popular places-clubs, bars, concerts, sport events and after shops near universities let them to act fast in the market Van drivers -”Hitting the street“ Distribution mix - partnerships allow Red Bull to be more available to the customers. Vending machines. Event sponsorship that embodies Red Bull spirit – “people to the product” (extreme sport events & culture events: “The music academy” provides a musical outlet for talented young artists to display their musical abilities).

3 Energy drinks market overview (no date). Energy drinks market overview. Available at: http://www.energydrinkseurope.org/energy-drink-market/ (Accessed: 2 January 2015).


IMPLEMENTATION P

eo

ple

Red Bull paid special attention on selection of adequate people for promotion and delivery of their products. When selecting people for their brand managers they focused on individual and non-conformist people, not only on ambitious people who are in hot pursuit for higher sales rates. Each brand coach was provided with a brand bible, to ensure that they really understood Red Bull and what is behind it. Red Bull also selected key individuals who would promote its products to targeted customer groups. For example student brand managers to promote products on campuses, DJs, bar tenders and other trendsetters for promotion in popular bars and clubs.

Pro

ce

ss

es

Red Bull has put focus on speed in their business processes, infrastructure and schedule, especially in domain of effective sales system. The company carefully selected appropriate distribution channels and sales representatives. They had decentralized sales units responsible for sales, marketing and distribution in their area. If someone else also wanted to sell Red Bull, they were refused at first. Red Bull also insisted that only dedicated sales force exclusively distributes Red Bull. If sales partner refused it, Red Bull would set up their own warehouse, and hired their own deliverymen. Red Bull succeeded in being fast on market by dealing with individual accounts rather than with big retailers. When performing a delivery, Red Bull had high standards for deliverymen, they all were dressed in Red Bull outfit and they had their own vans painted in Red Bull colours (usually with Red Bull can mounted on top of it) to empower brand visibility.

Ph

ys

ica

l e

vid

en

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Their products and packaging had more or less the same visual layout everywhere in the world. Red Bull invested a lot in visual identity of company to send clear message when you see their colours and cans (eg. above mentioned vans). Mateschitz also thought that the context of consuming Red Bull is extremely important, so the marketing focused on sampling and event sponsorships that embodied the spirit of Red Bull. The company also opened huge glass hangar on Salzburg airport to support their slogan “Red Bull gives you wings”, and offer their customers a tangible and unique experience of Red Bull.

CONTROL

Even though exact tools, which Red Bull has used for evaluating business progress toward its goals and analyzing changes in the business’s environment, were not stated in this case, we can clearly see that Red Bull made a significant effort in that area. In Exhibit 1 it is possible to notice that Red Bull has increased operating revenue and sales by 8 times in period between 1996 and 2001, so their KPI’s were probably “in good shape”. Beside that they measured Red Bull’s (beverage) consumption rates and market shares across different countries and they used their own workforce for market analysis and research (e.g. they used their student brand managers on campuses to provide them market research). Red Bull also had to take special care of government regulations (FDA approvals) because in some countries it was considered as dangerous substance and was banned (e.g. France and Denmark); Nevertheless they succeeded in being no. 1 energetic drink in the world.


Apply the Brand Ladder Pyramid to the Brand Red Bull, identifying Core Values, Emotional Benefits, Functional Benefits and Attributes Brand Ladder refers to the various benefit levels which a brand provides to it consumers. Over the lifecycle of a brand, marketers project a brand so as to gain customer loyalty. (Keller, 2007, pp. 29–259)4.

CORE VALUES

It refers to the basic (instinct) emotions the product/service creates within consumers; the ideas, associations, social positioning, values and morals that a company tries to project towards its customers. Red Bull identifies the core values of their customers and then represents those values in their marketing strategy. Their strategy is that customers need to associate themselves with the marketing in order to identify the product. These cross associations form the foundation of understanding core values which Red Bull presents. With the branding “Red Bull gives you wings” company provides dual identity – Adrenaline tied activities and mental toughness. These two instil the core values that Red Bull is trying to capture customers through. Upon these the company layered additional values through the initial associations. Slogan “Red Bull gives you wings” gives to the customer idea of being able to fly and not being tired or sleepy at any point. Stimulation of mind and body. They focus on giving us wings, energy, physically and mentally being free and able to be active in various situations. Their customer market is wide. Red Bull broadly defines its consumer segments as active people and hardworking people. Red Bull strategically positioned itself among students, DJs/clubbers, drivers, athletes/extreme spot fans and business people. At first it doesn’t seem that this brand gives some big values but if we take a look at it closely we can see that values for customers which they provide aside from its benefits, are pretty wide- usefulness, freedom, energy, danger, mystique, status values – basically different way of life. The company has a two-way relationship between commerce and culture. Red Bull based on its core values implemented various brand marketing strategies which increased sales, customer loyalty and long term profitability. Remembering these foundations though is integral to long term brand marketing success. As Mateschitz said in the case study “the company policy is to bring people to the product not other way around”.

4 Keller, K. L. (2007) in Keller, K. L. Strategic Brand Management: Building, Measuring, and Managing

Brand Equality. 3rd edn. United Kingdom: Pearson/Prentice Hall.


EMOTIONAL BENEFITS

It refers to how the product/ service connect with the consumer in daily life through its usage (e.g. mobile phone can provide different benefits for its users like gaming, messaging, browsing). With putting lots of efforts and investment into marketing, Red Bull is emotionally very connected with its customers, it reached highest (bonding) level on Brand Ladder Pyramid. It is visible everywhere and with Mateschitz's idea of bringing people to the product with „buzz“ marketing of all varieties of organised events, sponsorships, visibility on streets as well as in clubs and gas stations, Student Brandings, etc., it really reaches top of emotional connection between consumer and product itself. Because of all mentioned activities people are willing to consume it and like taste of it. Therefore, at this stage customers have established a bond with the brand. They've determined that cost, advantage and performance are all at levels that they're happy with. They've also formed a strong emotional attachment to the brand; the brand has become an integral part of their self-image, and helps represent who they are. This, in turn, encourages them to exclude other brands in favour of this one. Customers at this level are also likely to be vocal advocates of the brand, which helps build further awareness within their family, social, and professional circles. FUNCTIONAL BENEFITS

The level defines the benefits that are rendered to the consumer by the attributes. It is claimed that it increases physical endurance, improves concentration and reaction speed, improves vigilance and stimulates metabolism. Also it is said it has reviving effect as energy-giving drink. Over the years mysticism has been built around effects of Red Bull on costumiers. Red Bull had nicknames as “liquid cocaine”, “speed in a can”, or mixed with vodka it becomes known as “liquid Viagra”. The Red Bull’s logo itself, two bulls facing each other or charging on each other is the pure epitome of kinetic virility and pugnacity and it is something what consumers expect or hope to get while drinking Red Bull. ATTRIBUTES

This level represents the physical features of the product like specifications. If we consider the Red Bull as a package, than attributes are:

slender, 250-millilitre (8, 3 ounce) blue and silver can.

If we consider it as a sort of juice than attributes are:

Carbonated, fluorescent yellow liquid, whose main ingredients were taurine (an amino-acid), caffeine, glucuronolactone (a carbohydrate), Vitamin B and sugar;

A thin colour considered as unappetizing one; Refreshing taste.


References

Business (no date). Marketing Mix Implementation Tools Business Essay. Available at: http://www.ukessays.com/essays/business/marketing-mix-implementation-tools-business-essay.php (Accessed: 2 January 2015). Business (no date b). Red Bull SWOT analysis. Available at: http://www.ukessays.com/essays/business/redbull-swot-analysis-business-essay.php#ftn2 (Accessed: 2 January 2015). Energy drinks market overview (no date). Energy drinks market overview. Available at: http://www.energydrinkseurope.org/energy-drink-market/ (Accessed: 2 January 2015). It’s a (Red) Bull Market After All (2001) Rodgers, A. L. http://www.fastcompany.com. It’s a (Red) Bull Market After All. Available at: http://www.fastcompany.com/64658/its-red-bull-market-after-all (Accessed: 2 January 2015). Keller, K. L. (2007) in Keller, K. L. Strategic Brand Management: Building, Measuring, and Managing Brand Equality. 3rd edn. United Kingdom: Pearson/Prentice Hall. Marketing with wings: Dietrich Mateschitz and the art of branding (no date). Marketing with wings: Dietrich Mateschitz and the art of branding. Available at: http://www.europeanceo.com/home/featured/marketing-with-wings-dietrich-mateschitz-and-the-art-of-branding/ (Accessed: 2 January 2015). Montague, T. (2013)True Story: How to Combine Story and Action to Transform Your Business. United States: Harvard Business Review Press. Red Bull (no date). Red Bull. Available at: https://prezi.com/scjdyqhfwsci/red-bull/ (Accessed: 2 January 2015). Red Bull GmbH (no date). Red Bull GmbH. Available at: http://research-methodology.net/red-bull-gmbh/#Usage_of_Marketing_Communication_Strategies_by_Red_Bull (Accessed: 2 January 2015). The Mission Statement Of Red Bull (no date). The UK’s Leading Provider of Free Business Study Resources. Available at: http://www.businessteacher.org.uk/essays/business/the-mission-statement-of-red-bull.php (Accessed: 2 January 2015). Understanding ’brand benefit ladder’ (no date). Understanding ’brand benefit ladder’. Available at: http://www.koreatimes.co.kr/www/news/biz/2014/09/331_102413.html (Accessed: 2 January 2015). (no date). Available at: https://docs.google.com/presentation/d/1dUeAazl4Cb_DbmVZhJYy93gNv73Vrc38WTFJ7EUf9Gw/embed#slide=id.i219 (Accessed: 2 January 2015).

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RedBull Final Exam Team2