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RED BULL: BUILDING BRAND EQUITY IN NEW WAYS

Assignment 2
02-05-2011

ATEEQ UR REHMAN (13722)

Question 1: Describe Red Bulls sources of brand equity. Do these sources change depending on the market or country? Answer: Red Bull has a strong marketing strategy for communicating product value to customers. The strategy for building the brand has been created around a simple goal. Whenever a consumer is in need of energy, the company wants then to automatically think of Red Bull. The brand uses traditional media channels, but more important has been the role of word of mouth marketing, playing on associations with energy, danger and youth culture. Red Bull associates itself with numerous sports events along with young professionals and students who need a high energy level. This has been fostered through an alignment with extreme sports and adrenalinfuelled activities, as well as street culture and music events. Through happenings such as these the roles of engagement and brand experience play a critical role. These campaigns have created a strong brand name globally. Such a strong brand name makes it natural leader among all energy drink providers. As a result of marketing campaign, in almost all countries where it operates, it has managed to attain at least 70% of market share. Moreover, Red Bull also has good distribution system to make sure that target customers get the product. However cost structure for these extensive marketing programs is expensive and constitute major chunk of their total cost. Red Bull contains, per 250 mL (8.4U.S. fl.oz.) serving, about 21.5 g sucrose, 5.25 g of glucose, 50 mg of inositol, 1000 mg of terrine, 600 mg of glucuronolactone, vitamin B 20mg of niacin, 5 mg of vitamin B6, 5 mg of pantothenic acidand 5mg of vitamin B12, 80 mg of caffeine. Red Bull has unique proprietary feature due to these ingredients and itscomposition. Red Bull also has good financial strength to analyze changes in customers needs and wants. Red Bull offers a product that has unique attributes that are values by the customer. For example Red Bull claims that it has the most unique taste and customers may even agree toit. Customers perceive Red Bull to be different from all the other energy drinks and thisallows the company to charge a premium price. Red Bull passes its costs mostly to the customers in form of the high price. The reason why Red Bull has been successful in broad differentiation is because it has a vast network of sales team who successfully communicate the strengths of Red Bull. Also having a highly skilled product development team is also a plus point. Its corporate image for quality and uniqueness also plays a major part in its success.

Question 2: Analyze Red Bulls marketing program in terms of how it contributes to the brands equity. Discuss strengths and weaknesses? Answer: Red Bull, using unconventional marketing tactics, has uniquely positioned itself in the beverage industry. Red Bulls unique positioning has allowed it to capture a considerable amount of the energy beverage market share in the countries it is distributed in. Although the companys financial information is not released to the public, it appears Red Bulls marketing strategies have been successful in terms of market share, revenue, and units sold. While I personally think overall the tactics will prove successful for years to come, the same mysterious quality surrounding the drink that has proven successful currently likewise has the potential to erode the brands equity in the future. Unique positioning strategies targeting high-school burnouts and college students, night clubbers, and athletes have built the brands equity. Grassroots marketing campaigns emphasize the drinks image as being a cool and trendy drink for cool and trendy young adults. Word of mouth and an intentionally vague strategy have made the brand mysterious. By not emphasizing what the company itself feels are the products strengths, it allows consumers to decide for themselves, as well as facilitates the emergence of rumors, some quite outlandish, adding to the drinks perceived value and increasing the brands equity. Red Bull does not have a passive hand, however, in the marketing of its energy drink. The company provides college students free drinks to give away at parties and owns sports teams and events. All of these branding events, unconventional as they are, align well with the products perceived unconventionality, and are strong elements of the brands strong equity, many of the tactics, including those contributing to the lack of public information concerning the company and the Red Bull drink, also provide the potential to erode the brands equity. Health officials have concerns over its ingredients and it has not been approved for sale in Canada or France. It has been linked to a number of deaths and it appears particularly dangerous when mixed with alcohol.

Question 3: Evaluate Red Bulls move into herbal teas, fast-food chains, and magazines. Does it make sense for the company to expand into these areas? What are the potential benefits and dangers? Answer: A sports drink is a beverage to help rehydrate and replenish electrolytes, sugar and other nutrients, which are used up after strenuous exercise, training or competition. Sports drink share different from energy drinks. Sports drinks replenish electrolytes and are generally isotonic. Energy drinks provide sugar and caffeine only with no other benefits. Sports drink share linked to the science of nutrition and sports medicine and often provide rehydration, boost sports performance and aid muscle recovery. They often include electrolytes, carbohydrates, and proteins in the form of amino acids and peptides. The functional energy drink market consists of energy drinks, neutraceutical drinks, smoothies (milk and juice blends) and sports drinks. The sports drinks market is approximately US $300 billion in terms of sales worldwide in2008. The global sports drinks market increased by 10% in 2008. Currently the sports drink market is targeted not only at athletes but also towards health-conscious general consumers and the largest growing segment of the sports drink market is for non-athletes. This market shift has led some sports drinks manufacturers to specifically target and develop products aimed at non-athletes, such as low-sodium or low-calorie sports drinks. New growth will likely be driven by reaching new demographic groups; the introduction of new brands, brand and flavor extensions; and an increased focus on exercise in health and wellbeing. The sports drinks market covers a wide range of products from advanced specialist sports nutrition for body builders and athletes to products for common consumer. Approximately 38.3% of market sales are distributed through on-trade retailers.

Question 4: Because product usage was not marketed as being limited to one or even a few occasions, Red Bull users could continue to use the product even as their priorities shifted. The case states that, a Red Bull consumer first attracted to the product as a nightlife enhancer in his or her early twenties might later use the drink as a morning pick-me-up or a revitalizer during a long day of meetings. How effective is Red Bull at advertising to these varied groups? Answer: Red Bull had an extensive network of events that it was involved with. Red Bull either invented the event from the ground up, or brought the product to an existing event. When Red Bull created the event, it controlled all aspects of the event, including the name, logo, promotion, and media production. Classic Red Bull-owned events included the Red Bull Soapbox Race and the Red Bull Flu tag ("Flying Day"). The Red Bull Flu tag was a comical event in which participants constructed a flying object and attempted to launch it off a ramp into a lake or ocean. The event was a perfect fit for Red Bull because it required use of both the mind (in the design of the flying object) and body (in the power to get it off the ground). The winner of the event received free lessons for a pilot's license. Sporting events developed by Red Bull include the Red Bull Snow thrill extreme skiing competitions in France and Alaska, and Red Bull Cliff Diving World Tour Finals event in Hawaii. These events enhanced Red Bull visibility and also reinforced the brand's positioning as an independent, stimulating beverage. "People who attend one of our events have the indelible awareness that it was sponsored by Red Bull because of the unusual amount of control we can exert over our own events," Red Bull corporate communication manager Emmy Cortes. The more unique an event, the more likely television stations would wan tto broadcast it, or newspapers would want to cover it. Kraihamer explained, "We want to have the most creative ideas and do the best things so that they get automatically into the media.