The Deconstruction of Red Bull (7 P's)

THE

DECONSTRUCTION

OF REDBULL IT’S ALL ABOUT THE 7 P’S

SEA 170: 7P’S ASSIGNMENT

Jessica Forstner

Sharon Stiasny

Kimberly Hou

Hartley Mendelsohn

Natasha Mladenoska

1 PRODUCT Chaleo Yoovidhya, founder of TC PHARMACEUTICAL INDUSTRY COMPANY LTD, originally developed

Red Bull in 1962, in Thailand. The drink was sold as Krating Daeng (Water Buffalo). Krating Daeng

dominated the energy drink market in Thailand targeting the working class and blue collared workers.

Dietrich Mateschitz, a former marketing executive from Austria stumbled upon Krating Daeng in

Thailand, and in partnership with Yoovidhya, he altered the flavour to appeal to the European palate

and created Red Bull GmbH. Mateschitz was aware he was not only creating a new brand but a brand

new market, the energy drink. Red Bull changed the landscape of the beverage world and further set

precedence as a lifestyle brand.

Red Bull is a carbonated, berry energy drink with benefits of increased endurance, concentration,

memory, vigilance and speed. Red Bull’s beverage product line includes Red Bull, Red Bull Cola (100%

natural), Red Bull Sugar Free, Red Bull Zero Calorie and Red Bull Editions (Red, Blue, and Silver; featuring

different flavours cranberry, blueberry and lime). With the variety of product options, it is no surprise

that Red Bull has currently sold over 40 billion cans in over 166 countries.

Red Bull cans have a unique logo and distinctive shape and size. The cans original iconic colours are blue

and silver, however the cans colours and patterns are modified for each flavour with the same logo of

two gaurs charging towards each other in front of a yellow sun. The sweet, caffeinated drink became an

instant success in Europe creating a demand to further expand global distribution and develop the

brands philosophy, “The World of Red Bull”.

The World of Red Bull has built a product beyond its competitors, altering branding as a good

and service. There are no limitations for Red Bull as a product as it surpasses a refreshing drink and has

become a major provider of content and entertainment. They established Red Bull Media House, which

produces reality television programs, full-‐length films, home entertainment channels, web videos and

magazines. They have dipped into the music market with Red Bull Music Academy, an online radio

station and record label. Red Bull has a mobile application and an interactive website with detailed

information on all events taking place, past, present and future. Their event list is massive, diverse and

ultimately extreme in nature with events such as Red Bull Cliff Diving, Red Bull X-‐Fighters, Red Bull

World Series, and Red Bull Crashed Ice to name a few. Red Bull, thus produces goods and services in an

unconventional way, further proving their authenticity as a brand.

For each P in the Marketing mix we are focusing on the Red Bull product itself as well as one major

event Red Bull produces and hosts, in this case we have selected Red Bull Crashed Ice. Red Bull Crashed

Ice is a major ticketed event that demonstrates Red Bull’s unorthodox capabilities of producing branded

entertainment, which started in 2001. Crashed Ice is an extreme winter sporting event that tours major

cities around the world. The event features a downhill ice cross tournament with half-‐pipes, vertical

drops, and 180-‐degree turns, 4 skaters at a time. The track is made from steel panels, grinders and ice in

an urban environment throughout the hosting city. The venue area is plastered with Red Bull backdrops,

bright lights and music, with over 120,000 attendees. Crashed Ice is an exciting social event many

people identify with, creating a global fan base. Fans share the experience together cheering on their

favourite athlete. Red Bull blurs the lines of the marketing and sponsorship world, as we know it. Their

product line, events, shows, publications and merchandise blend, creating a social and personal

experience. There is no distinction between Red Bull, Red Bull Events or its merchandise as they all go

hand in hand. They are an enterprise with one ambitious marketing campaign “The World of Red Bull”.

2 PEOPLE Based upon the events Red Bull has sponsored, and the associations that are conveyed through

the brand, Red Bull is marketed to both males and females. The primary markets of Red Bull are

teenagers and young adults aged 15 to 29. Red Bull has many associations that target specific

demographics. They tailor to those who are active in or enjoy extreme sports. As well as high

performance athletes who surge towards Red Bull, notably those who participate in extreme sporting

events and others who want to enhance their performance. Additionally, college-‐aged students are an

ideal market for Red Bull. The drink is an alternative to other caffeinated drinks and is further consumed

at social engagements which may include alcohol or studying. Red Bull Crashed Ice is also targeted

towards both males and females aged 15 to 29 years old. The participants in the event are both males

and females, and must be at least 18 years of age. The demographic that this event caters to is ice

skaters, hockey players and all around extreme sports enthusiasts.

3 PLACEMENT

As the leading product in the market for energy drinks, Red Bull has been able to dominate when it

comes to the Placement and Distribution of their product. Originating in 1987 Red Bull was sold for the

first time on April 1st in its home market Austria. Today the distribution process from manufacturer to

consumer still remains close to its home roots with all distribution beginning in Austria and Switzerland

to over more than 165 countries worldwide. The distribution process strives on being as eco-‐friendly as

possible in order to reduce its carbon footprint, Red Bull uses a method called “Wall-‐to-‐Wall”

production at their production sites. This means that their cans are manufactured and filled at the same

sites – helping save many miles of transport while saving resources through short distances. In terms of

transportation Red Bull predominantly uses shipment by train or ship; they will only use trucks when

absolutely necessary. An advantage that Red Bull has for transportation is the fact that the can itself is

compact in shape and light in weight, which makes it a more efficient transport packaging than PEI or

glass bottles. Even though Red Bull is sold in over 165 countries worldwide, they are still looking to

expand into other markets while targeting core markets of Western Europe and the USA.

Red Bulls placement strategy focuses on mass distribution into several different sectors of the

market. The retail channel is the main contact-‐point of the product and the end-‐consumers. Red Bull is

available in almost all channels of the retail market such as bars, night clubs, convenience stores, gas

stations and campus corners, to name a few. Although Red Bull uses the retail channel as its main point

of distribution it also uses other methods such as online and Point of Sale at events. As a matter of fact,

Red Bull has its own online store called “Red Bull Shop” which allows consumers to purchase a wide

array of products and merchandise from events, team jerseys, and event media such as live footage and

games.

This year, Red Bull Crashed Ice will be placed in four different cities; Helsinki (FIN), Saint Paul (USA),

Moscow (RUS) and the final stop being in Quebec (CAN). At this event the placement of Red Bull is

considered to be at mass. With Red Bull being the official host of the event the Red Bull logo is plastered

on all elements of the event from banners, ice rink boards, signage etc. The Red Bull product itself is

also the main Point of Sale at the event.

4 PRICING (PRODUCT VS EVENT: RED BULL CRASHED ICE)

Red Bull energy drink is one of the most expensive non-‐alcoholic drinks in today’s market. Their

prices are higher than their competitors and the reason for this is to maintain their image of being a

premium, high quality product. Red Bull uses two different sectors of pricing strategy that are

determined by the location of the sale. The first sector is called the “On” sector and this is anywhere the

product is consumed at a location, including nightclubs and restaurants. The second sector is called the

“Off” sector and it is locations such as grocery stores and gas stations, where the product is purchased

and then consumed at a later time. The regional managers set the pricing in both sectors; however,

there is more fluctuation of price in “Off” sector compared to “On” sector.

An individual 8.4 oz. can costs approximately $2.99 in stores such as Shoppers Drug Mart, which

is a part of the “Off” sector, while a 12 oz. can costs roughly $3.49. In grocery stores such as Walmart,

which also falls under the “Off” sector, a 4 pack of any Red Bull energy drink flavour costs approximately

$5.98 and a 12 pack costs $17.88. In nightclubs and restaurants, which are a part of their “On” sector,

the cost of Red Bull is inflated and can cost up between $6.00 to $8.00.

The Red Bull Crashed Ice event in itself is free to the public at every location it takes place. The

only additional costs that individuals can choose to pay are for the Red Bull Crashed Ice After-‐Party,

merchandise, and food/beverages. In terms of the Red Bull Crashed Ice After-‐Party, the ticket pricing

varies based on location. For example, in St. Paul, it costs $15.00 for a ticket to the after-‐party.

Regarding the merchandise, it is sold both on the official Red Bull Crashed Ice website and at the event.

A variety of apparel is sold, such as shirts, sweaters, scarves, toques/beanies, hats, and jerseys. The

pricing for the following according to the Red Bull Crashed Ice website goes as follows:

ü Shirts: $25-‐30

ü Sweaters: $60-‐85

ü Scarves: $30

ü Toques/Beanies: $25

ü Jerseys: $70

The food and beverage pricing was not listed on their website, however, it is more than likely to be

sold at an inflated retail cost like at many other events.

5 PARTNERSHIPS Red Bull has diversified its company and has expanded into many different markets. Due to Red

Bull’s vast coverage over many facets of the business world, they have limited their reliance and need

for many partnerships. They have few major partnerships that they rely heavily on, and have many

partnerships that are simply exchange relationships. Red Bull has such a huge market reach due to its

multi-‐faceted structure; including everything from their drink to their media production company and to

their sporting events. Due to this, Red Bull has the ability to implement and produce events and

promotions completely in-‐house without looking for strategic partnerships to provide in-‐kind help or

money. Although this is the case for Red Bull, when analyzing a specific aspect of Red Bull, each event or

campaign seems to have their own specific partnerships.

Red Bull Crashed Ice is one of Red Bull’s most anticipated events. Notably, this brings the notion

that it is an event that will attract many potential partners and sponsors. Red Bull has been able to

capitalize on this opportunity by gaining some major contributing partners and a multitude of sponsors.

The event’s major contributing partners help in the production and broadcasting of Red Bull Crashed Ice.

One of the keynote partners for Red Bull Crashed Ice is a company based out of Germany and

Switzerland called AST. They are the specialist ice fitters that build the racetrack for the event at all of its

yearly locations. AST receives payment for their service; and always has their AST logo presented right

after the title Red Bull Crashed Ice on all promotions and web pages. AST is a key partner that helps to

develop the event. Another key partner for the event is GoPro; providing exclusive and innovative

coverage of the event from the racers perspective. All participating racers in Red Bull Crashed Ice are

required to wear a point of view camera on their helmet as demonstrated in the rulebook. Although the

GoPro brand is not required for these racers, it is the brand that will be provided to a racer if they do

not have their own point of view camera. GoPro also receives signage and promotion throughout the

event for the rental of their equipment. Additionally, Microsoft was brought on as a partner for content.

In this content partnership, Microsoft provides outlets for the documentary style series that is produced

by Red Bull. This brings an alternate medium to reach the target audience. Microsoft receives this

exclusive content to provide to their consumers on their multiple Microsoft devices. In addition,

Microsoft created an X-‐Box game entitled Red Bull Crashed Ice Kinect which took the partnership to new

heights. Red Bull Crashed Ice has built successful partnerships with AST, GoPro and Microsoft that have

flourished and has helped build the event to what it has become today.

Red Bull Crashed Ice also has many small-‐scale partnerships, which are sponsors of the event. They

are able to have many different sponsors as the event takes place in four different cities each year,

which is able to reach an International audience; primarily North America and Europe. The sponsors of

the event simply receive signage on the boards and on the ice at the event. This is seen throughout all

of the content that is shown in advertisements and when it is live streaming on TV and on Microsoft

devices. The list of their recent sponsors include: ARE Skistar, ARE Destination, Betsafe, Samsung Galaxy,

TOTT, Reebok, EXTREM Events, XTravel, Dios, Mini Cooper, Reaxcer, Polaris, Dodge Dart, Mac’s Milk

(Couche Tard), GI Tour, and Boston Pizza. The main sponsors for the event are the ones that are in

Quebec City as this is the destination of the championships every year. Of the above sponsors, Mac’s

Milk (Couche Tard), GI Tour and Boston Pizza were the main sponsors for the most recent

championships in early 2014. It is well established that Red Bull Crashed Ice has the ability to bring in a

variety of different sponsors from all over North America and Europe, which demonstrates how strong

the brand Red Bull is, and how well established Red Bull Crashed Ice has become.

6 PHYSICAL EVIDENCE

There are many physical aesthetics of Red Bull Crashed Ice that bring it to life. The design of the

course begins with Chris Papillon, and from his experience as a former Red Bull racer he is able to apply

his knowledge and expertise to create a unique and innovative track. The sport of ice cross consists of

competitive downhill skating, similar to ski cross where athletes are challenged by steep vertical drops,

sharp turns and high jumps on a man-‐made course. As the location of Red Bull Crashed Ice moves from

city to city, the course is recreated based upon the urban environment around it. The track itself is fully

lit, allowing for the audience to follow the racers during the event. The construction of the course allows

for multiple places of logo placement such as the Red Bull air-‐filled arch and the along the boards of the

course. Another main aspect of the event is the POV camera (provided by GoPro, a partner of Red Bull)

that the racers are required to wear during the race. The GoPro films the point of view of the racer, and

captures the event in a first-‐person perspective.

Additionally, the Red Bull brand ambassadors are another feature of physical evidence. They have

many different outlets of promotion, some of which include the distribution of Red Bull cans at

positioned stations, while walking around, and out of the Red Bull car. In addition, the majority of Red

Bull brand ambassadors are females. All of these elements of physical evidence are what make Red Bull

Crashed Ice unique and stand out among all other sporting events.

7 PROMOTION

Red Bull uses a large range of innovative promotional techniques to improve the process of

communication and drive consumer engagement and loyalty. Red Bull embraces innovation within its

promotional mix and as such is able to create lasting impressions within its targeted consumer groups. The

concept behind Red Bull’s promotional activities is to give people “Wings”, which in turn translates as

pushing the boundaries of what is possible and enriching people’s talents so they can achieve their dreams

and goals. As a company, Red Bull prides itself on using “content marketing” to promote its product to their

target audience. The principle idea behind content marketing is that “the brand creates storytelling

material that attracts readers, viewers and listeners”. The essence of this marketing strategy is to promote

a positive association with the product and to engage with the consumers. Red Bull forms its relationships

with consumers by reaching smaller target groups instead of a mass audience to establish a more

interactive and engaging experience; in return this creates positive feelings by nurturing its targeted talents.

Point-‐of-‐Sale marketing is one strategy that Red Bull excels in and is implemented frequently in the

market. POS marketing is referred to as a technique that encourages consumers to purchase products

when they are in a retail outlet. Red Bull’s primary tool for POS marketing is the branded refrigerated sales

units, which places a mini glass refrigerator in the eye level of consumers in order to engage a purchase.

Red Bull also uses highly visible aluminum window stickers to show availability in stores believing that the

Red Bull can itself is the best promotional tool.

Mobile marketing is one way in which Red Bull distinguishes themselves in terms of promotions versus

their competitors by using the Red Bull mini coopers, which are top of mind in consumer’s perspectives.

This means of promotion is one way that Red Bull “educates” consumers through sampling and trial

tastings using the Red Bull “Wings Team” to travel around in the famous Mini Cooper and promote and

introduce the product to new markets.

The promotion of Red Bull Crashed Ice is distributed over multiple platforms reaching its diverse target

markets. They use conventional mediums such television and radio advertisements. The city which hosts the

event has a vast marketing campaign to promote the event. They post flyers in a variety of public spaces,

sporting venues, bars, and universities. Social media outlets such as twitter, Facebook, and YouTube provide a

beneficial platform to help advocate the extreme, high-‐speed adrenaline rush that embodies Red Bull Crashed

Ice. All of these marketing techniques are consistent in ushering viewers back to their brand, website and

energy drink. Furthermore sports networks and media outlets capitalize on the opportunity to push Red Bull

Crashed Ice as an exclusive sporting event. Red Bull Crashed Ice creates an advertising spectacle of epic

proportion that establishes the “headline hype” for it partners and for The World of Red Bull.

REFERENCES

About Red Bull Crashed Ice (Red Bull Crashed Ice RSS)

http://www.redbullcrashedice.com/en_CA/article/about-‐red-‐bull-‐crashed-‐ice

AST: The Company

http://www.ast.at/

Branded Content Marketing and Red Bull Media House (Executionist Blog)

http://www.executionists.com/blog/branded-‐content-‐marketing-‐business-‐can-‐learn-‐red-‐bull/

How Red Bull Takes Content Marketing to the Extreme (Mashable)

http://mashable.com/2012/12/19/red-‐bull-‐content-‐marketing/

Microsoft and Red Bull team up on Kinect ‘crashed ice’ game for Xbox Live Arcade (Venture Beat)

http://venturebeat.com/2012/08/28/microsoft-‐and-‐red-‐bull-‐team-‐up-‐on-‐kinect-‐crashed-‐ice-‐game-‐for-‐

xbox-‐live-‐arcade-‐exclusive/

Red Bull’s Billionaire Maniac (Bloomberg Business Week)

http://www.businessweek.com/magazine/content/11_22/b4230064852768.htm

Red Bull YouTube Channel

http://m.youtube.com/channel/UCblfuW_4rakIf2h6aqANefA

The Powerful Sales Strategy behind Red Bull (Selling Power)

http://www.sellingpower.com/content/article/?a=9437%2Fthe-‐powerful-‐sales-‐strategy-‐behind-‐red-‐bull

The Wings Behind Red Bull’s Wings (Forbes)

http://www.forbes.com/sites/forbesasia/2013/06/24/the-‐wind-‐behind-‐red-‐bulls-‐wings/2/