Mark e t i n g

Red Bull"s Innovative Marketing

Transforming a Humdrum Product into a HappeningBrand
drinkwos launchedin Austrio in 1987,bv Dietrich The RedBull energ,r nzos that e1.l<ttt*redged RedBttllb stlccess It Moteschitz. wasgenerLtlly the pt'oductoJ'thecomponl,'sinnovativenctrketing efforts. This t;ase studt, discusseslie marketing strategy adopted by Red BuII GmbII, including the company's eftective employment of buzz marke{ing in extreme oJ new ntarkets, and its sponsotship sportingactivities,especially to alternative sports, enhanceitsimage. Thecasealso talksoboul Red It Bull's torgel markets, and its pricing and diftbrentiation strategies. surrounding RedBull, includes a section on the various controversies oJ end the eJJects theseon its brand image. Thecompetitivesituatiott in competitors, Lheenerg.v drinksmarket and RedBull'sposition tzs-d-r'rs RedBull's utitha r;ontrnentan'on concludes The is ctlso disr:ussed. c:ctse in ond utl.entpls brand extension, the contpany's at lutureprospects the rlependence a singleproduct. on ligltt of its e..xcessii.e
lotalty, In ternts of' ottracting new custonters cntd ertltancirtg c:ortsturt.er tlmn Coke or Pepsi. Red ll:rrs nutre effectiuebranding cantpcti.grt a Recl BulL ecluil.ttrtctt.t brancJ withottt rehirtg ort.tlrc esserttiaL beuerage Bull is buildhg cL cant.paign.Perhaps the irtdispensablctools of'trtarhetittg of a ntass-ntcLrheting ofter all. at'ert't sctirtclispensabla ,\'nrrcry Koehrt, at Adntirti.stratictrt Profbssorot' Btrsitrcss S , HoruarulBztslticss chool.i.n 2001.1 is we. When wa fi.rst sta,rted, said th.are rLoc.tistittgrttarketfrn'Red Bull. But lrtte. Red Bull u;iLl t:rtlateit. And llis is uhal firtctll.t'beccurte - Dietrich Muteschitz, F'ottnderartd Mottogirtg Partnar ttl Red Bu.ll GntbH, itt 2045'!
" Arni I.ayrie llodgcr.s, It's a Lllod) Bull \{alket Af'tel All," Fasl (\ttrtpart.t'.Octoher'2001 "l'hc Soda rvith thc Lluzz." Forf,'s. N{alch 28.20()5 Kcllr.r\ Dolln. i..2006TheIc|iri(jcrrter-{brNItrrliltgorrrtltrtllcsctrt.chlIt]Mtt)'A|lRightsllcscr.ve<l.1|tlracccssitrgtrtrdprcrcttrillg icmritrdIa.olg uli log on to wrvrv.erct'h.crant'icld.ac. ot rvu'rv.

R e d B u l l ' sI n n o v a t i v e a r k e t i n gT r a n s f o r m i n g H u m d r u mP r o d u c ti n t o a H a p p e n i n g r a n d M : a B

Red Bull Acquires Second Fl Team

In September 2005, Red Bull GmbH, the manufacturer of the Red Bull energy drink, acquired Minaldi, an Italy-based Formula One (F1)'r team for an undisclosed amount. Dietrich Mateschitz (Mateschitz). the founder and managing partner of the company said that the Minardi team would continue under the existing managementa till the end of 2005, after which it would be renamed for the 2006 racing season. Red Bull GmbH already owned another F1 team, Red Bull Racing, at the time it acquired Minardi. Red Bull Racing had participated in F1 as Jaguar Racing, until Mateschitz bought it from its previous owner, the Ford Motor Company (Ford) in November 2004. After the acquisition of Minardi, Mateschitz announced that Red Bull Racing would be the company's main team, and the newly acquired Minardi (renamed Scuderia Toro Rosso (STR)5 for the 2006 racing season) would "rookie serve as the team" in 2006. Red Bull GmbH Red Bull, widely intended to use the team to train young drivers sponsored achnowledgecl as the by the company.

ereator
Red Bull, widely acknowledged as the creator of the "energy drink"(j category, maintained a close association

of the "energy category,

drinh"

maintained a close with sports from the time it was launched in 1987. Red Bull GmbH was known for its sponsorship of extreme, associatian with sports alternative sports like white water kayaking, hand from the time it was gliding, wind surfing and snowboarding---sports that Iaunched in 1987 involved elements of adventure and risk. Red Bull's association with F1 Racing, one of the world's most glamorous and expensive sports, also helped enhance its image as a trendy drink. Analysts said that the company's sponsorship of extreme sports that required stamina and energy was also just right for the image of the beverase.
For a product that did not have any extraordinary qualities, and was made of ingredients whose effects had often been called into question,i Red Bull had a huge market presence.The company was reported to hold almost 70o/c the worldwide market {br energy drinks in 2005. Analysts attributed of the beverage's successto the unconventional marketing stratery adopted by the company to promote it in new markets.
r Formula One, abbreviated to Fl, and also known as Grand Prix racing, is the highest class of single-seat open-wheel lbrmula auto racing in thc wolld. The "formula" in the name is a set of rulcs which ali participants and cars must meet. http:i/crr.wikipedia.org Minardi Scudcria was then owned by Australian millionaire Paul Stoddart. 'I'oro "Red Rosso means Bull Stablc" in Italian.

1 ; li

Energy drinks are bevcrages that generall,v contain legal stimulants, vitamins, and minerals. llost of them contain tauline and glucuronolactone. trnd n high content of caffeine and sugar or glucose. Manv energy drinks are flavored and/or colored to resemble soft drinks. Red IJull's main ingredicnts tauline controversia[. and gluculonolactone are extremely

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Red Bull's InnovativeMarketinE: Transforminga Humdrum Productinto a HappeningBrand

Background
Dietrich Mateschitz was born in 7944 in Austria, to parents who were primary school teachers. After graduating with a marketing degree from the Univer-sity of Commerce in Vienna, he took up marketing jobs at unilever and Jacobs coffee, before becoming the international director for marketing at Blendax, a German company that dealt in FMCG products like toothpaste, skin creams and shampoos,in 1gT9. Matescrritz's job involved a lot of travel around the world, and during one ofhis trips to Thailand, he discovered an "energy drink" called Krating Daeng, which was very popular among blue collar workers in the country. When he sampled it, Mateschitz reportedly discovered that the drink was good at combating jetlag. The idea for marketing an energ'ydrink in western markets came when he realized that energy drinks had a huge market in Asia and that there was no such product available in Europe. Mateschitz approached Chaleo Yoovidhya (Yoovidhya), the owner of TC Pharmaceuticals, which made Krating Daeng, with a proposal to marhet the beverage in Europe. Yoovidhya agreed to give Mateschitz the itireign licensing rights to the drink in return for a partnership in the venture. In 1984, Mateschitz resigned from his job to pursue his new bilsiness. Mateschitz and Yoovidhya each invested $500,000 to become equal partners, with a 49%, stake each, in the new company. The remaining 2(,4 was held in trust for Yoovidhya's son. The founders agreed that Mateschitz would run the company, while the Thais remained sleeping partners. The Thai name Krating Daeng roughly translated into "red water buffalo" in English. After the new venture was formed with Yoovidhya, Mateschitz changed the b e v e r a g e ' sn a m e t o " R e d B u l l " t o m a k e i t more suitable for western markets. He then named the company after its only product. Mateschitz also modified the beverage to make it more acceptable to western consumers. The main changes he made were to carbonate the drink and to package it in a slim blue and silver can. In Thailand, the drink was sold in glass bottles (Refer Exhibit I for a picture of Krating Daeng). However, he left the main ingredients-caffeine, glucuronolactone and taurine in place.s Before launching Red Bull in Europe, Souner w,. so/arravJgJtornet Mateschitz hired a marketing research firm to test the market for energy drinks in the region, and to gauge the potential of'Red Bull. The research results showed that Red Bull was not likelv to
G l u c u r o n o l a c t o n e i s a c a r b o h v d r a t e , a r " r dt a u r . i n r , i s a r n a c i d i c c h e m i c a l s u b s r a n c c foun,:l in thr: tissues of many anirnals

Exhibit Krating l: Daeng TheThaiRedBull

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find favor in the market, as consumers sampled liked neither the taste of the beverage, nor the name Red Bull. The test consumers found the taste "too acidic" and "strange on the palate". However, Mateschitz chose to disregard these findings and launch the product. He set up an office near Salzburg in Austria to act as the company's base. In the meantime, one of his friends coined the slogan "Red Bull gives you wiiings", which becamethe theme of the company'spromotion campaign. A major obstacle in the launch of Red Bull was regulatory approval. Red Bull contained several ingredients that had not been used in European markets before. Therefore, Red Bull had to get approvals from the regulatory agencies in various countries berforeit could be launched. Austria was the first to grant approval, and Red Bull was launched in the country in 1987. This ',vas followed by its Iaunch in Hungary, the United Kingdom (UK), Slovenia, Germanye and Switzerland, in the early 1990s. Supported by the company's unconventional marketing activities, Red Bull became an instant success in Europe. The beverage's target m:rrket was young urban professionals who often pr,rt in long hours at work, and weekend revelers who wished to partl' a,ll night. By 1990, almost four million cans of Red Bull were sold in Austria.

Red BuIl was generally aehnowledged by marheting experts to be a good example of an ordinary product of Red Bull was launched in the United States (US) in uncertain worth that was 1997 and found successthere as well. Over the late 1990s, transformed into a the company expanded rapidly across Europe, South America, Australia and Asia. Bv the early 2000s, Red pou)erful brand through Bull was ranked among the top 10 carbonated beverages innoaatiae marheting
in the world. In 2003, Mateschitz was on the Forbes' 1o billionaires list.

Red Bull GmbH was a private company, and hence was not required to publish its frnancial information. But it was estimated that the beverage's global sales exceededg2 bn in 2004. As of 2006, Red Bull was sold in more than 100 countries across the world, and the company employed around 1,850 people, of who 200 worked at the headquarters near Salzbure.

Elements of Red Bull's Marketing

Strategy

Red Bull was generally acknowledged by marketing experts to be a good example of an ordinary product of uncertain worth that was transformed into a powerful brand through innovative marketing. The emphasis Red Bull placed on marketing was evident from the fact that the company
Germany had at iirst banned Red Bull claiming it was an anesthetic. But reportedly, a lai'ge number o{ cans wcrc smtLgglcd atrloss the Austria-Germany border to be consumed at weekend partics. A prominent business magazrne.

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s p e n t a r o u n d 3 0 ' , 4o f i t s a . n n u a lt u r n o v e l o n r n a r k c t i n g - m u c h h i g h e r than r-nostother beverage manufacturers who spent approxim:itely 107. Red Bull was positioned :rs an energy drink that "invigorated rnind ar.rdbody" and "improved endurance ievels". i'he companv's slogan "Red Bull gives you rviiings" rein{brced this positioninpJ.'Ihc bcvcragc was targeted at people who sought increasedendurance,speed, concentration 'fabie and :rlertness (Rcfer I for the "benelits" l: Drink o f ' R c d B u l l a s c l a i m e d b y t h e Table RedBull Energy cornpany). llor,vcvcr,dcspitc the cornpany's o Increasesperformance clairns. nutritior.rai cxpcrts declared that . Increases concentration.rnd the proclucl had no ingredients thtrt could reaction strlee.d c o n l ' e l a c t u a l b e n e f i t s . o t h c r t h a n . lmpfoves vigilance p r o v i d i n g a n i n s t a n t " k i c k " a f t e r o lmproves the emotional status consnmption. o
Stimulatesnretabolism

flc.d liill's rnain ingreclients lverc -r.*,-*.di^i/"i:;rfirinc. sLlgiir. sonle vilanrins and (R ' r : h c r . r r i t i slr r b s t a n c e r is e rt a u l i n e a n d s l l r c u l u n o l a c t o n e r e l ' e i t r x h i b i t I I r l k I i r r " , l r t ' i n s r ' o d i c n t o f R e r cB u l l ) . ' I h e s e rv , ' l ' e l o r e o l ' l e s s t h e ' s a m e s i n ingrt:clicnts found in other solt drinks like Cclca-Cola(Coke) and Pepsi. Flowevei',thc quantities o1'c:rffeineand sugar in Red Bull were almost dotrble those found in large servings of cr-rla soft drinks. The additional cafl'cincan,:lstrgar were thought to be rersponsibie the "lift" consumers frir c x p e r i c n c c t l s o o n a f t c r c l r i n k i n g i t . A c c o r c l i n gt o s c i e n t i s t s . s u g a r a n d human bodv inrrle.diiitely.and this is what caffcine at'c absorbcd hv tl'rer givesa suclden A similal effect could bo obtainecl drinking sulge of'cnulgt,. bv ext i'u-stLonrI s',vcctcnerlcoft-cc. Accrii'ding to the Amc'rican Dietetic -i\ssr,ciiition(ADA). thele r.vasno evickrnccthat Red Btrll or anv olhcr cnerrgvclr:ink cotrlclhtrve tr restorertive eflect on ir.tjlccl mind ancl bod.r:"'fhe'y (ene,r'gy drinks) :rre usuallv ver.-v high irr sinrple sugars ancl c:ontairrat least some caffeine. Those ar-etwo t h i n g s t h a t , . v o u r b o c l r , ' l v i l lt r s e r i g h t a w a y . S o t h e s e d r i n k s d o p l o v i d e rluick cnor-gv. Llnfirlttrniitcl)', caffeinc and sugai'arc used up by the bodv vcrv qr-ricklv35 larell, the lift doesn't l:rst very long. You could probablv so accomplislrthe sanre thing with a glass of'jtrice arid a cup of coffee." said E d d i e l l o g a n , a s p o k e s m a nf o r t h e A D A . ' r Apart Ii'om this, Red Bull did not rate verv high with consumers on the taste dimernsion. Reportedly,the drink had a slightiv medicinal flavor with tr lemonlr base. It smelled sweet, but the tiiste rvas a mix of sweet and b:tter tinges. In fact. few people actually liked the taste of Red Bull, and the company did not fbcus on taste in its plornotions. llowever, trnalysts "energy thought that the boosting" propelties o1'Red Bull and the benefits prevailed over the taste aspect ir.rconsumers' minds. it pron-rised Red Bull's brand image was that of'a stimulant or party dlink. The values associatedwith the brand-irreverence and individualism-appealed to lhe young urban consumersit targeted. "The beauty of'Red Br-rllis that
' Jefl Flrhvalds, "Liquid C o c u i n e " , h t t p : l : r l c h i v e . s a l o n . c o r n .F c b l u a l v 2 . 2 0 0 1

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Exhibit RedBull,s ll: Ingredients

Each 250 ml tan of Red Bull contained the following: I I I Ingredient

1r9!!I
1000nrg

A l s o . k r * r w r r a s 2 - a n r i n o e t h a n e s u r f . n ia c i d , t a u r i n e i s i m p o r t a n t i n c several rnetalrolic.Jlroce.ses ofthe body. Taurine functions in erectricailyactiva tissues such .ls the l)rrin and heaft to help stabirizeceil membranes. rt arso has functions .n the gallbladder,eyes,and blood vessels and may have some antioxidantand detoxifying properties. Cluctrronolactone A naturally occurring substancemanufactured by the human body. Like raurine, glucuronolactoneis supposedto detoxify the bocry.Littreresear<:h ha.s been croneon the effects, and theonly relevantstudieshave been conducted on animals so the risk to humans cannot be adequatelyassessed. Caffeine An alkaloid found naturally in such foocisas r:offeebeans,tea, kora nuts,yerba mat6, guarana,and (in small amounts) cacao beans. Niacin (niacinamide) Also known as nicotinir_ acid or vitamin 83, niacin is a water_soluLrle vitamin whose derivatives such as NADH play essentiar roresin errergyrnetaborism the rivineceil. in Pantothenic acid (calcium d-pantothenate) A. anti'xidanr, water-sol.bre vitamin n.edecl to break down c.lrtrorrycirates, proteins, and fats.lt is foLlnd in wlr.le qrdi. t:eredls,legumes, eggs,meat.rriclother foods. Vitamin 86 (pyridoxide HCt) A water-soluble vitanrin that exists in three major r:hernicarfbrms: pyridoxine, pyridoxal, and pyridoxamine. vitamin 86 per{orms a wide variety of iundions in your body-for example, protein ancJrecl blood cell metabolism. Riboflavin

600 mg

B0 mg

1 Bm g

ntg

mg

Also known as vitamin 82, riboflavin is an easily absorbed, water_soluble m r c r o n u t r i e n tw i t h a k e y r o l e i n m a i n t a i n i n g h u m a n h e a l t h . L i k e the other B v r r a m r n s ,t.r s u p p o r t s e n e r g y p r o d u c t i o n b y a i d i n g i n t h e m e t a b o l i z i n g of fats, c a r b o h y d r a t e s ,a n d p r o t e i n s a n d c a n b e f o u n d l n m i l k , c h e e s e , l " u f y g;;; vegelables,liver, yeast,almonds and mature soybeans. Vitamin 812 (cyanocobalamine) Helps maintain healthy nerve cells and red blood cells, and needed for the production of DNA, the genetic material in all cells. Deficiency of vitanrin B 12 is the cause of severalforms of anaemia.Also called "cobalamin,,because it contains the metal cobalt. Standard non-medicinal ingredients Carbonated water, Sucrose,Clucose, Citric acid, Inositol, Flavors, Caramel.
Adapk'dfron"lntlrcc.an:Rerl&tll'slng('dlent-sDls-rcded,"cB(

1 . 6 5m g

mcg

N4a*etprace,v,w,.(b6ca,Febiltan,(r,)it)5

it's the anti-brand brand. Rcd Bull doesn't have any of the commercial tr.ppings of a traditional, off'-the-shelfprocluct. It's undergr'uncl, evcn whe' it's :ibove ground, and that appeals to the young p"opi" *,ho drir-rk it," said Marc Gobe (Gobe), the author of Enuttir.trtol ,l,he Brlrrtuli.rtg; l{eu: Pctrocligrrtfor Crnrrcr:ti;tg Brartcls tctpeople.t: F r o m t h e s t a r t , R e d B u l l ' s m : r r k e t i n g s t r a t c g n -w a s u r c o n v e n t i o n a i . w h e n t h c d r i n k w a s f i r s t l a ' n c l ' r e c li n A u s t r i a , M a t e s c h i t z understood
.Ar"rniLayr.reRodgct.s,..It,sa(Rt.cltBullx{ar.ke1,tti".ffi 2 0 01 .

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that its target market in Europe would have to be different from its blue collar market in Asia. In Europe, coffee was the preferred "pick-me-up" used by all classes of people. However, Mateschitz was confident that he would be able to create a market around hip, young rrrban professr'onals and students who would be open to a new "cool" alternative to coffee. Red Butl dispensedwith traditional modes of advertising to make effective use of ltuzz marketing in promoting the beverage to the target market. "We were always looking for a more creative, different point of view," said Matesc,ritz.rrl When Red Bull first entered a new market, the company's sales people provided f'reecasesof the drink to influential, trend-setting collegestudents, and encouraged them to throw parties for their classmatesand friends. The idea was that once the product was tried out by the target group, it would be easier to establish the market. This strategr allowed Red Bull to gain immediate acceptance among the college-going crowd as a cool and happening beverage. It also built its reputation as a party drink for people who needed the energy to party all night.

When Red Bu.lI first entered a new marhet. the contpany's seles people proaided free cases of the drinh to influential, trendsetting college students, and encouraged them to throw parties for their classmates and friends

Analysts said that Red Bull's buzz marketing played a critical role in helping it gain a foothold in new markets. According to marketing experts, "Generation Y" (people born after 1981) was generally skeptical of traditional marketing, and consequently, traditional modes of advertising have little impact on them. Besides, during the 1990s and early 2000s, companies had been deluging customers with promotional material, and people had l e a r n e d t o b l o c k o u t m o s t o f t h e s e m e s s a g e s .I n t h i s context, what was needed was an innovative method to cut through the clutter and make an impact on the target market.

Red Bull's grassroots marketing helped it cut through the clutter eff'ectively.The company was able to get its message across to the target market without being too "obvious" about it. Using students to market the product to other young people gave it instant credibility in that consumer age group. "Cool college students have become Red Bull's best ambassadors because they carry the most credibility with cynical consumers. It's almost as if brands have to be elected to be part of the culture now", said Gobe.Ia The company also ensured that it chose people who were young, athletic and stylish to be its brand ambassadors,to enhance its image in the market. In addition to sponsoring student parties, Red Buil employed "consumer educators" to get its message across to the general public. Consumer educators were the company's sales representatives who frequented public p l a c e s l i k e b e a c h e s ,e x h i b i t i o n s a n d m e e t i n g s w h e r e y o u n g p e o p l e congregated, and gave away free samples of the beverage. Additionally.
Kerr:v A Dolan, "The Soda with the Buzz," Forbes, March 28, 2005. Anni Lnvne Rodgers, " It's a (Red) Br.rll Market Aftel All." Fast Compont, October 2 0 01

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they distributed promotional material about the product, and answered any questions people might have about Red Bull. nupo.j"Jty, consumer educators often left empty cans on tabres in clubs and bu.r, ..,btry making the prodrrct one that peoplc saw arouncl ancl g<,rt familiar with. Red Bull also developedthe Mobile Ilnergy Team (MET) propyam, where students drove around in cars and pick-up trucks, and distributed free cans of the beverage "where energy was needed,,.These vehicles were painted blue and silver-the colo.s of Red Bull, and had an oversize Red Bull can strapped on the back or top. These Racers, as they were ca,ed, created tremendous visibility fbr the company, and helped underscore Red Bull's image as a youthful and hip brr,rrd. An important reason for Red Bull's success was that the company chose its target market weil and reached it effectively. visibility and availabilitv were the central themes in ar of Red Buil's promotions. For instance, Recl Bull gave awav free samples at organizations and places where people worked long hours, in stressful conditions. The availability of the drink encouraged people to try it when they felt enervated, and many of them soon got hooked on Red Bull Red Bull was also widel-v availabkr near gyms ancl colleges, and was aggressiveryma'kct,ed to bartenders and bar owners. If it was not possible to retail throush convenience stores in_!h1 selected region, the sales ffi opened kiosks to sell the drink. Th" .o_puny also a d v e r t i s e d i n , , W i p e o ut 2 , , a g a m e , on the Sony PlayStation, by putting the name "ithu d.irlk on virtual billboards that flashed by as a player drove around on the virtual racetracks in the game.'; ,,We don,t bring the product to the people. We bring people to the product. We make it available and those *t o touu our style come to us," said Mateschitz about Red Bull,s promotions.rri

Red Bull also deuelopetl the Mobile Energy Teant (MEII) program, where students droue around in cors and pich-up truchs, and distributed free eans of the beuerage ,,where
energy Laas needed,,
%

when Red Burl first entered a market, the company's sales reps tied up with distributors in key locations_near coll"g"r,-gy*., "t.. I_'utty, th" company paid for the distributors' promotional anf,uarru.tr.r.rg costs and also bore the cost of the samples distributed, for a period of arouncl three months' once Red Bu'.established its presence in the region, the company gradually phased out this support. R:d Bull usually attempted to estabtish an,,exclusive,,network of .. distributors in each of its markets. After it gained a foothold in a new market, the company generally insisted that the distributors carry only Red Bull and no other ber'erage, even if the other b"rr".ug". *ere not direct competitors' If this *u. rot possible, the company ."t ,p-u *urehouse in the region, and hired students and other yo.,.rg p"";i; to act as distributors' The main task of these budding distributors was to see that the beverage was suppried to the stores in the region and that it was given prominent shelf-space.
r; "' Dieseljeanswere"d@ "Seiling Ener.gv," The Eee,,,r,ntisr Mar-l^ lt

2002.

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Very soon after entering a new market, Red Bull's sales reps contacted bars and trendy nightspots to promote Rcd Bull to the bartenders and owners. After a har had placed an order ibr a celtain number of cases,the company would give it Red tsull branded coolers ancl othel pt'ot.notion material. "We go to on-premise accounts first, because the product gertsa lot ol'visibility and attention. It goes faster to deal with individual accounts, n o t b i p ; c h a i n s a n d t h e i r a u t h o r i z a t i o n p r o c e s s , "s a i d M a l k u s P i c h l e r (Pichler), the Executive Vice-President for strategic planninpl nt Red Bull North Arnerica.It Once Red Bull gained a foothold in thc rnarket and the distt'ibution n e t w o r k w a s e s t a b l i s h e d ,t h e c o m p a n y e m b a r k e d o n t h e p r o m o t i o n a l activities that were to supplement the grtrssroots marketing efforts. Sports 'l'hc sponsorships formed the core of Red Bull's marketing strategy. c o m p a n y p r i m a r i l y a s s o c i a t e di t s e l f w i t h e x t r e m e a l t e r n a t i v e s p o r t s , although it was also involved with some popular ones iike Ibotball. The idea behind this was to reinforce Red Bull's image as zr beveragc for adventure-seekersand risk-takers. Red Bull sponsoredand organized sporting activities like kayaking, hand-gliding, rough-terrain biking, clifl' diving and skateboarding. Some of the sporting events it sponsored at various locations were the Red Bull Huckf'est, a ski and snowboard freestyle competition held "flving in January, and the annual Fluggag (German fbr day"), where participants built their own flving nrachines and leapt off from a height into n body o1'w:rter.Red Bull r,l'asalso a sponsor {br the Cyberathlete Prof'essional League for professional computer game playei's. In addition to conducting alternative sporting events, Red Bull also sponsoled scveral athietes invoived in these snorts around the world.

Red BulI sponsored and organized sporting actiuities lihe kayaking, hand-gliding, roughterrain bihing, cliff diuing and skateboarding

Red Bull also sponsored mainstream sports. :rnd owned sevcral sporting teams. In April 2005, it bought the Austrian football team SV Austria Salzburg and renamed it Red Bull Salzburg. The company also purchased the New Jersey-based MetroStars Major League Soccer team from its former owner Anschutz Entertainmcnt Group and renamed it Red Bull "in excess Yorh Times reported that Red Bull had paid New York. The .4y'eru of'$100 mn" fbr the MetroStars. which included complete ownership of the team. n:rming rights of their new stadir-rmand 50% stake in the new stadium (the rest of the stake was to be held by Anschutz Entertainment Group, which would also bc responsiblefbr the operationsof thc stadium). thc lted Bull As ol'early 2006, the company was in the processof buildir-rg 'fhc soccerPark stadium in Ne"v Jersey to act as the base for thc team. specilic stadium was likcly to be ready bv 2008. was tlotor One oi'thersports witl-rwhich Red Btill was closell'associate'd ils rac,ing. The company sponsored several racing evcnts as u,c'11 teams
"A Kcnnetl'r IIcin, l l u l l ' s M a r - k e t - T h e N ' [ r r l k e t i r . r gr i l t l t ' d I ] L r l l I i n c l g l l J ru r ,d L t ' t , t , l iN I a , t '2 8 . 2 0 0 1 . . Dlink

Case Folio

46

F e b r u a r y2 0 0 7

Marketing

weretheDeutscher."*"-*ii.Tn1'Jri'"1-d;"'li:#d;T;:**"^P."*_T:
Team, Champ Car World Series, and World Rally Cfr.-oi"^friolf" .aaiti"" to this, Red Bull had a.mrounced that it *"ufj ap""r"! t*"'6o"uo. ,..*" in NASCAR'sr8 2007 Nextel Oup in the US. ffl" "o_purry-nti"J "porl"o""a the NASCAR driver Robby Gordon. Red Bull was also closely associated with F1 racing. The company entered the F1 arena through its sponsorship of the Saub"erteam rn 1995, when it bought a 64o/ostake in the holding ""-p."V tf..i"*""J the team. Ifowever, in 2002, Mateschitz had differeice. *lt}liir" i"rrn _"nagement oler the hiring of driver Kimi Raikkonen, and ned Buff soij iis stat e in the holding company to Credit Suisse. Even after the fallout with Sauber. Red Bull remained interested in F1. Consequently, in November 2004, when Ford announced it" i""rsio' to exit F1 after a major restructuring-program, Red Bull bought the company,s Jaguar Racing F1 team for an unJisclosed amount. s""" ,?i"" ifr. p"."rr."", Jaguar was renamed Red Bull Racing. Red Bull Racing debuted in the 20OEAustralian _ Grand prix with a new chassis painted with the Red Bull logo tR"f". Orhilit iii fo. u'p,"t.,." ot. Red Bull Racing's 2005 car). Red Bull Racilrg fini;hed ir., ti"."u"rltf, position in the 2005 Constructors, Championshiu.

around the world. Some of th

In late 2005, Red Bull acquiredMinardi and renamed _ it Scuderia.Ibro Rosso.STR made its debut in th" Bnh.uirl C*"a p"i" iniOoOlih",uuwas to be Red Bull's ,,B,,team or ,,rookie,, team in the ZOOO lu"i"* ""u.u". Mateschitzsaid that the main motive behind the company,s acqulsrtion was ro give its young clrivers chance ga'in a io il elperien"e. 1f |,'IlarOi Red Bull conductedRed Bull Junior Team (Europe) a"ndn"J grff O.iu", Search (US) programs to identify urra p.o-otJ J.ir.irr*"i}"''", *-""g youngsters. The selected drivers signeda contract with the'cornpany, wnich then sponsoredthem through funding and "tfr* ""pp".i. fi";ld;; series sanctioned NASCAR the NEXTELC"r, ,l'"'e";";-#ffifiiil: by are

Craftsman Truck Series. It also oversees seven regional series and one local -#gfassroots series.

Case Folio

February2007

Brand Transforming HumdrumProductinto a Happening a Marketing: RedBull's Innovative

programs, which were launched in 2001 and 2002 respectively, Red Bull selected several young drivers from around the world, some of whom also raced in F1. Over the years, the company found itself in a position where it had "We have more drivers than more drivers than it could bring into F1. cockpits and we had only two possibilities. First, we try to find cockpits for our talents in other teams or second, we try to increase the number of our own cockpits. We decided to do the second, simply because we can control it. We have all the responsibility, safety, spirit in the team, performance of the car-which we cannot guarantee and control when we put our drivers in other teams," said Mateschitz.r' By acquiring another team, Red Bull was able to give many of its young drivers an opportunity to participate in F1. Scott Speed (Speed), Vitantonio Liuzzi (L|';Lzzi), and Christian Klien (Klien) were among of the drivers selected through the programs, who raced in the 2006 season (Speed and Liuzzi raced for STR, and Klien was one ofthe drivers for Red Bull Racing). Considering that F1 was among the most expensive sports in the world, analysts were surprised at Red Bull's decision to own and operate two F1 teams simultaneously. Considering that Mateschitz had always been a close follower of F1 and had been a personal sponsor to Austrian driver Gerhard Berger in the late 1980s, some analysts wondered whether Mateschitz had bought two F1 teams to indulge a personal hobby.

Red BuIl had been inaesting heauily on both its teams' infrastructure, and. had, hired. some of the best engineering talent in F7

'As However, Mateschitz denied any such rnotives. the CEO of Red Bull, I am responsible as a CEO. So I cannot spend any marketing money, any budget, any sponsoring for Red Bull on behalf of my personal passions or likes or dislikes. F1 is good for the brand and good as a marketing instrument. It is a marketing tool," he said.'o Besides, it could not be denied that association with a high profile sport like Fl gave Red Bull great mileage around the world. In early 2006, Red Bull announced that it would not conduct the Driver Talent Search program that year, but would continue to support the existing young drivers. It also said that although STR was to operate as a rookie team in 2006, it would graduate to being a full-fledged team over the next few years. Red Bull had been investing heavily on both its teams' infrastrrrcture, and had hired some of the best engineering talent in F1, including Adrian Newey, who had helped create championship winning cars for F1 teams Williams and Mclaren. Red Bull and Mateschitz had already begun making an impact at F1 in the 2006 season. Mateschitz believed that F1 was losing much of its following in the early 2000s as it had become too straight-laced and serious
t' ' "Minardi Bought by Red Bull," hftpilltvrLz.co.nz, September 11, 2005. Dan Knutson. "Mateschitz Ensures Red Bull Means Business in Formula One," http://indianapolismotorspeedway.com,June 16, 2006.

Case Folio

2007 February

Marketing

Consequently, youngsters were no longer interested in watching it. Mateschitz claimed that he was trying to bring the fun back to -t.1. Red Bull parties were reportedly the most exciting parties on the F1 circuit. The company also published a humorous newoletter for people in the Fl paddock during the race weekends and was generally making its presence felt in F1, even if it did not win any races. By early 2006, Red Bull was estimated to have captured a market share of roughly 70Voin the global energy drinks markef 1in some countries it was as high as 807c). It also commanded a 47Eo market share in the US, one of its major markets, in early 2006, and sales had been g.towlng at a rate of 40Vo every year from the time it was launched in the country in 1997. Analysts said that given the price and other attributes of Red Bull, it was surprising that the beverage had maaaged to capture and hold such a major part of the global enerry drinks market. In the US, an g.B ounce2r can of Red Bull sold for around g2, which was around double the price of a 12 ounce can of Coke. In the UK, a 250 ml can of Red Bull was sold for around f1. However, despite the premium pricing, it was estimated that Red Bull's sales were higher than those of items like beer. water" milk and soda in certain conveniencestoreo. A unique feature of Red Bull,s marketing was t h a t t h e c o m p a n ys o l d t h e b e v e r a g e n o n l y o n e i size-the 250 mll8.3 ounce can. The companv placed a lot of emphasis on packaging. Mateschlr, wanted packaging to be one of the differentiatins aspectsofRed Bull. as he did nol want the produci to look like a tlpical soft drink. With this in mind, he approached a firm to manufacture aluminum cans with different dimensions from those used by soft drink manufacturers. The manufacturer came out with a slim, tall 8.8 ounce can, which was adopted by the company. The exterior of the cans was dominantly silver and blue and carried a picture of two charging red bulls (Refer Exhibit IV for a picture of the Red Bull can). Typically, soft drinks were sold in squat l 2 - o u n c ec a n s w i t h s c r i p t l e t r e r i n g r a s w i t h C o k e and Pepsi). However, Red Bull,s packaging succeededin giving the product a European image. The can's smaller than the normal size also reinforced the feeling that the beverage was a "concentrated experience". Red Bull used conventional advertisins media l i k e p r i n t a n d t e l e v i s i o no n l S w h e n t h p m a r k e t was thought to have matured. Traditional

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Case Folio

Red Bull's InnovativeMarketing:Transtorminga Humdrum product into a HappeningBrand

advertisements were used to reinforce the brand rather than to introduce it to a target market. "Media is not a tool that we use to establish the market," said David Rohdy, Vice-President of marketing at Red Bull North America. "It is a critical part. It's just later in the development "r! Red Bull created two television advertisements a year for its mature global markets. The advertisements were usually animated and had quirky themes. Most of the advertisements featured people sprouting wings and I\.ing afler drinking Red Bull. The print advertisements a.lsoevoked the company's slogan (Refer Exhibit V for one of Red Bull,s print advertisements). According to analysts, Red Bull's advertisements serwed to amuse viewers rather than to educate them about the product or entice them to buy it. However, despite its successwith Red Bull, the company was unable to successfully extend its product line. The Red Buil beverage continued to be the main product sold by Red Bull GmbH, although a sugar-tiee version had been introduced in 2003. "We are one of few companies around the world that can stay focused on one product. We do what we do best," said Emrny Cortes (Cortes) Director of communications for Red Bull North America.'3

Controversies
Red Bull had been a controversial product right from the start. When Mateschitz first planned to launch the beve::agein Europe, he had to wait for three years to get approval in Austria, his home country. After that, it took another five years before it could be sold internationally, and Hungary became Red Bull's first foreign market in 1992. Red Bull's launches in new markets were almost always preceded by controversy, usually centering on the nature of the ingredients in the drink. While exotic ingredients were acceptable in many Asian markets where food regulations were not stringent, in Europe, the beverage faced difficulties in getting approval from the authorities. As of 2006, Red Bull was banned in France and Denmark. In Norway, it was classified as a medicine that could only be sold in pharmacies.
Kcnneth Hein, 'A Bull's Market The Marketing of Red Bull Energy Drink,,, Brandtuech, May 28, 2001. zr Anni Layne Rodgers, " It's a (Red) Bull Market After AII," Fast Compan!, October 2001. 2

Case Folio

February 2007

Marketing

The most controversial ingrcdicr-rtin Red Bull was taurine. 'Ierurine. a n a c i d i c c h e m i c a l s u b s t a n c e .w a s a n u n t e s t e d f o o d p r o d u c t i n r n a n v westcrn countries and was thought by some to bc harmf'ul. The controversies \\rere further fueled by rumors that taurine ."vasactuall.y derived frorrr lhe bile oI'l,rulls.'' A n o t h e r i n g r e d i e n t , g l u c u r o n o l a c t o n e ,r v h i c h w a s l i s t e d o n t h e c a n , w a s r u m o r e d t o c a u s e b r a i n t u m o r s . G l u c u r o n o l a c t o n e ,a n a r t i f i c i a l l v manul'actured stimulant, was first dcveltped for the American govcrnment in the 1960s, and distributed to American soldiers during tl.re Vietnam Warr; fbr stress and fat,igue relief. 'ihe distribution was reportedly d i s c o n t i n u e d w h e n s e v e r a l s o l d i c r s b e c a m e i l l a n d d e v e l o p e dr e a c t i o n s r:rnging from severe migraines to brain tumclrs.2"As of'2006, the cffects of' taurine and glucuronolactone on thc human body were still not well researched,which increased thc mystery surrounding Red Bull. Red Bull's high sugar and ca{I'einecontent was also believed to pose health threats. Whilc excess sugar could lcad to hyperactivity and anxiety. caffeine was a dehydrant that could cause problems when taken in excess.
Although Red Bull was positioned as a rejuvenating ss j6a'.8&ir4+^.i#4e*F{as:tar.:r.;!irl

enerS/ drink, if a person drank Red Bull after physical exertion. he or shc stood a chance of actually accelerating dehydraticln. which could put ii strain on the heart. Red Bull carried a warning on the can that people should not drink more than two cans in a day. But r e p o r t e d l y , t h e c o m p a n l " s s a l e s p e o p l et o l d p o t e n t i a l consumers that there was no such limit. A Canadian newspaper once reported hearing saies reps tcll a customer: "'Ihere's no rule or regulation really of how much you can have. As long as you know how much your body czrnhandle. Becauseevervone'sdiffercnt... and everlrbody'sRed Bull experienccwill be difT'erent.":;

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The biggest controvers.y surrounding Red Bull was its use as a "mixer" with zrlcohol.Over the years, Red Bull had become popular in bars as a mixer and it wris most commoniy mixed with vodka or Jii:germeister'. Mixing Red tsull (which was high in caffeine) with alcol-rol. reportedl.r' roduced the drowsiness :tssociatedwith gletting drunk. So, people u'ere able to imbibe more alcohol without feeling its ell'ects. But hetrlth expelts \\rere concerned about the repercussions of' rnixing calTeineand alcol-rol and consuming them in exccss. According to them. mixing an energ-v dlink with alcohol couid lead to abnol'mal ireart be:it and future heart oroblen.rs. It could also lead to sevcre erl'ols in.judgment especially while performing activities likc driving.
Sonre ulso cl:rimed that it rvas obtained tl'oru bull gonacls. But according to thc c o i ) l p l n \ ' . t h c t a n l i n e r i n R o d l J r . r l lr , v a ss y n t h c t i c u l l v m a n u l i r c t u l e d . 'l h t ' \ ' i t ' l n i r r r \ \ ' u l u l s f i r t r3 h t f r o n r l f ) i r 7 t o 1 l ) 7 i r .' l h c L S r v a - *i t l ' o l v c c l i n t l r t ' u a r fiom l959 to 197i1. Glucuronolactono was a populal ingrt-'dient in enelgv drinks in thc cally 2000s. ",All i n a L a b e l : I s R e c lf l u l l i t ' N a t u l a l H o r r h l r I ) r ' o d t r c t . " /r"v r v l v . c b c . c a .c b r u a r r . ' i . 2 0 t ) 5 . F

ciiJrori.

J I

F e b r u a r y2 0 0 7

R e d B u l l ' sI n n o v a t i v e a r k e t i n gT r a n s f o r m i n g H u m d r u mP r o d u c ti n t o a H a p p e n i n g r a n d M : a B

Red Bull did not openly' prornotr) itself'as a rnixer, but reportedl.v dicl nothing to discourager it either. Sonrc people fotrnd it hv-pocrilical that the compiln.,v rcfused to associ:rte itseli'with alcoho,l. r,r,hen its first targets i1 a ir!w nrarkct wcro btrrs. F{owever, solrlces at Rr:cl Bull clairncfl thrrt lh1 L'onlllany targeted bars as it wanled to position the dt'ink as a substirr,rtc' ibr al<:ohol ar.id not as a mixer'. "The idea is to piace Red Flull u.hcle people nced a liil.. Diince clubs and nightspots:rre a pelfcct fit, but we tkrn't encolrrage drinking Red Bull and alcohol. 'l'lie idea is that Red Bull is an alternativ: to alcoholic bcverages," said flor-tes.j. Whilc Red Bull wa,s never co-blandcd or co-ptonioteci r,vith an.r, lirlr-ror blands, th,: company ciid not acti."'el-ydiscotu'agc its usc in bars. "\\'e rlon't tiv to control horv people usc Red Bull. \Ve ille no nrole conccniecl nbout it ihan Minute Ma.id is that orang,c ir.rice is urixed in u sci'er.,di'iyerr'."said Crlrtcs. 11' Sornc healtl.r activists also mtrintained that Red Btrll wits an trdult th'ink atid r.vasunsuituble fcrr consumption b-y minors. Some convenicnce store-q

Red Bull did not openly promote itself as a mixen but reportedly did nothing to discourage it either

evcn relirsed to sell the prodr,rctto rrir-ror-s. Ilr-rt a larrdonr experiment conducted bv a nc'nvspaper Oanaclashowcd in that children, even thosc be'lolvtl.reiige of 10, {bur-rd ncr difliculty in buving thc beveragc. The companl' r,ilsodid not mention explicitlythtrt the drink should not bc consurncd by children. Ovcr the years, thcrc \vere several incidents repoltecl oi'pcopie consumingReclBLrlland sull'ering severc erlter'cffect.s. the ealiv 2000s,the Irish Prirne Nlinister cailcd In lbr an inquirv into lhe ingredients and effects of' Iled Buil, altei:' a student r,vhohad consumcd the beverase d i e d s u d d e r r hl r l i r s p o r t i n ge v l n t .

A s c h o o l i n C : i l i f ' o r n i i lb a n n e r l R e d B u i l f l o m i t s cilr'npusaltel two studcnts becamc seriouslv ill aftcr drinking Red Bull just bclorc. {botball practice. Appai'entlr,', the students sudder-rl.y beciime dizz.yand clisorientcd.The school authorities aiso noticed that the;' were not perspiling at all, in spite ol'it bcing a vcr.\'hot dalr When thc stuclents lvo'e r:xanrine'done of thcm r.r,as founcl to hale an exccptionaii.y high pr-rlse
ri1te. H o r v c ' r . ' c r ' , p a r r a c i o x i c a l l . _ v i,t w i l s t h o u : , 1 - l i t t h a t t h e i ' u m o r s r i n d contloversjes actuallv firelcd the sales of'lleci Bull. Analy,.ts stricl that the rllnlor-s of Recl Bull's abilitv to give the constrmer "drr-rg-like" highs. nradc t n o r e p e o p l c w a n t t o t r - v i t o u t . ' I ' h r : l c o m p i , r n y a l s o | a r e i y r e : r c t . c dt o o r dcrtiercl Llic rumors, no mattcr horv contrrvcrsial tlie-v rvcre. 'fhr: cornpan-v'-s s t r ' t r t c g ' \ ' u ' a s s a i c l t o b e " r u n ' r o r b v o n r i s s i o n " . , v h e r e i t c o n s c i o r - r , s l a,n c l r calclirlly cultivatecl thc trvstcr'\, around tl-re ploduct ancl allow.ed tht: ltublic to slrcr:'.ilale on its nirtule nnd efi'ects. 'Ihis ci'r-.aterd ltttzz. rvhich |ur.necl a
" J c f l j d n ' a l r l s . ' ' l , i q r r i d ( l o c a i n i ' . " l r 1t p : ' t r l c h i v r ' . s r l l o n . c o t l L . I i e b r u a l r ' 2 . 2 0 ( ) l . 1 " 1 [T : r ] ' r : , r ' , l s L i , 1 r r i r(l l t r r i r r e . " h t t p : ' a l c h i v c . s 1 1 l o r . . . c o r n ,I " e b l u : r l r , 2 . 2 0 0 1 .

Case Folio

F e b r u a r y2 0 0 7

Marketing

out to be beneficiai to sales.Some ReclBull sponsoredrvebsitescven sttrrted a rumols scction to "keep the mvthology grorving ancl evolvir-rg.",r,, Threats to Continued Suecess

Red Bull rvas a mar.ket leader in its catcgory in the carl-r,2000s, gtlr.nering s t r o n g s a l c s i n i t s v a r i c i u sm a r k e t s a r o u n d t h e r v o r l c [ . e v e l t h e ] e s s . N analysts were skeptical:rbout the cor'par.-v's continued su'r.i'al ancigJi.or.vth as therc were several ftrctors th.eatenir.rg the brand's long-ternr prospecrs. Red Bull's successh.d spa."vr.rcclspate of imitators, all w.ntrng to a cash in on lhe boomi.g enel'g\. drinks market. Some of thc knock-offs even had names thi,rt cvoked thc ReclBuil brzrnd-Red riger ancl Ame'ican Btill bt-'ingnot.blc ex.mples. The LIS itself saw the launch of brands like Red Dr:vil, NltG. Itclipse, Illue ox, Niagara, Dynamite, Red Rooster.Energy Rush. Solle Aclrenaline Rr-rsh, Mad croc, Hansen's Functional, and Jones whoop Azz. 'mong others, in the energ'y drinks market during the early 2000s. Not to be left behind, certain American celebrities like rap srars Cornell Iral Hayes, Jr. (known as Nelly) and Jonathan Smith (known as Lil Jon) also carne out with their own b r a n d s . N e l l y l a u n c h e d i i n e n e r g . yd r i n k c a l l e d p i m p Juice, while Lil Jon lar-rncheilthc Crunl< brand. Overall. it was estimatcd that as of 2005, there vrere 125 plavers Red Bull's suecess had in the energv drinks rnarket in the US. Major" bevcrage companies like Coke, pepsi and beer all wanting to major Anheuser-Busch had also come out with new energy imitators, drinks. Coke and Pepsi launched KMX ancl AMp cash in on the booming respectiveiy,while Anheuser-Busch launched 1g0. in the energy drinhs tnarhet early 2000s. Analysts said that competition from big companies might affect Red Bull, as these companies, with their greater spending po\r.er, had the potential to give thc brand a run for its mone-v.,,strategically. Red Bull couid be r,'ulnerableto such giants as coke arrd pepsi, which can,t sit back and simply do nothing," said John l{udson, coordinator of the gracluate b'siness school at the university of parernro. "They could wind up competing in the samc segment. It would be hard to fight that b-ttle.";rl Smaller brands like Monster, Rockstar and Roari'g Lion also posed serious cornpetition to Red Bull. Monster, which was launched in 2002 b-v Hansen Natural, a major beverage and cereal manu{acturer i' the LIS. had become popular bv 20()5-2006. ,nvas One of the reasons for it-q_quc:cess thought to be the Red Br,rll-iike sr,r'.tegy adoptedto pr.mote the bc'eragc. it Likc Red Bull, Monstel' also sponsoi.edextreme sports and ther compi:nv had signed on Rickv carmichaer, a motocross tind sutrre.rcr,ss (motorcycre racing) racing star as :i celebrit._v endorse,r. carl-v2006. in Rockstar, a Las Vegas-trased compilnjr,introduced an eners/ drink in the early 2000s, whicir b1-2004 had becomc the number t*o pioy". in the
rvww. rvired n ews. com "I{ow Far Can Red Bull Flr,?" http wharton.universia.net, Mav 1g, 2004

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Case Folio

53

February 2007

R e d B u l l ' sI n n o v a t i v e a r k e t i r r c , ; . M :
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f--

IJS energy drink market (Refer Exhibit VI fb. the sales of energv drink b.ands in the us in mid-2004).By 2005, the company htrd three versrons of energy drinks-Rockstar, Diet Rockstar.nd Rockstzrr trJncrgv()ora. 'l'he colrpany's biggest coup was the distribution agreem".rf it- rr.,ur.,ug" trr ente. into with coca-cola consriliclated (ccBuc). charlotte, N.... cu.n_ Cola's second-largestdistributor in 2005. -

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,,

\ot/rft'sr 'rI(r/11r'l'()rlRc-s,trrccs /tlc, Total foor!,drug andrna-ss nrercirardne /br the 5l rr,rekstudl ng lrl\, I j , :o01, laurie /lusro, ,..\prr15EnergyDrltk_A../alt,rs lalico, CnDt,,..Beverage Inclustry Tabloi(i, ,100)

Another potcntiar contender for Red Bul|s top spot was Roarrng Lion. Roari.g Lion was launched in thc L r S i . 2 0 0 1 b y s o m e e x - R e c lB u l l empll-vees,and positioneclitserf as a crirectco'rpetitor oI' Red Buil. Trrc company's slogan "Fly twice as higrr" was a take on Recr Bul's slogan, pricing and packagi'rg *"." urro ain.red at taking advantage ol Recl 19..th" Bull's weak snots. L'nlike Red Bu' which dicl not atte'.rpt to associate itserf wit.r .n' :rlcoholic drinks mannfacturer. Roaring Lion had forn.recl."t.rr"".rrro'l with several vodka comp.nies and Jrige''eister, which started promotlng the bcrverage a mixei'in bars. It also as solclthe beveragoin conta're.s of dif{b.ent sizes, which was mo.e useful fo. bar owners who 'eeciecl difTcrent quantities fo. mixi^g. As Red Buil came onrl.in one sized-can,bartenders fb,'d that there was a lot of'\\rastage wher-rtrrey used only, rrulrl,, .,,r. o, ,n as a nrixer'.Altirough Roaring Lion cricl not feaiu'e o-o.rg the iop enLrrgr. dri'ks i. tire US as of ernrl.v 2cc6, anarysts said that the co'panv \\ras . seriuus potential threat to ReclBull. Rccl ts.ll fikrclcasesagainsr Roa.irg Lion ancl Monster on thc grounds ti:at ti-'r.: 'vere giving incentivestn tru^ and bartencl".. to gir," "ustolrers
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their drinks when they asked for Red Bull. However, the company ciaimed that it rvas unfazed bv the competition as it was "often copied never equaled."'12 In Europe too competition had increasr:d, aithough Red Bulr stilr held a large part of the market. Majo. retail chains Tesco and ASDA created their own in-house brands of energl' drinks-cranberry Diet Kick and Lemon and Lime respectively.other Red Bull competitors in Enrope included Shark from Austria and Battt'rv {rom F nland, which reportedly had the secondand third largest market shares irr 2004-2005. Besides.some of the US brands like Roaring Lion and the brands from coke and pepsi were also present in Europe. In canada. Red Bull r,r'annabes like RELoAD. Red Rain, Sobe and Red Rave were popular. Many of Red Bull's c.mpetitors had introduced energy drinks in multiple flavors iike cranberry, orange, lime and cola, among others. The reasoning was that energ)- drinks would find more buyers if they were offered in a variety of familiar tastes. considering that Red Bult did not taste very good, this was a major threat to the comDanv. Analysts said that there 'vas very little to choose between the various energy drinks crowding the market. All of them were essentially made of the same ingredients Many of Red Bull's -sugar, cafTeine and other substanr:es like vitamins. competitors had amino acids and taurine in different proportions. The only differences were in the taste, where some drinks introduced energy drinhs tasted better than others. However, it was not clear in multiple flauors like whether taste was an inrportant consideration for eranberry, orange, lime consumers in this particultrr market.

and cola, arnong However, according to Mateschitz, Red Bull had a strong brand, which competition could not hurt. ,,The market isn't generic; it doesn't exist if we don't create it. "We It's a branded market," he said.3,r created the market. If you appreciate the product, you want the real one, the original. Nobody wants to have a Rolex made in Taiwan or Hong Kong.',,r,
Another limiting factor in Red Bull's long-term successwas the nature of the company's target market. Red Bull's main market consistecl of college-students and young urban prof'essionals.It was not clear whether the company would be able to retain these customers as they grew older. Energy drinks were generally not popular among older people because of their high sugar and catfeine content. Therefore, as its consume.s grew older, the company would have to keep finding new customer gr'oups. Fi.ding new geographic markets was also going to bc diflicult for the company as it was already present in most of the countries with sizeable demand. Analysts said that the company would only have to sustain and extend its existing markets, but also maintain its relevance to customers.
'' '!t
rx

others

rvrvu'.redbull.com "Selling Energy," The Econontist, Malch g, 2002 " mL^ L . e-r r y A n ^o^ - n , , ,T h e o ^ i ^ , - , : 1 r K , - * , A D l la S o d a w i t h - r e B L r z z , " F o r b e . s ,M a r c h 2 g , 2 0 0 5 th

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February 2007

R e d B u l l ' sI n n o v a t i v e a r k e t i n gT r a n s f o r m i n g H u m d r u mP r o d u c ti n t o a H a p p e n i n g r a n d M : a B

However, the extent of organic gr-owth the brand wouid be able to achiever was belicved to be limited, as by the early 2000s, Red Bull hacl beco'c trs ubiquitous as Coke and Pepsi in convenience storesand other retail outlets. with this Lrbiquity, Red Buil also {aced lhe cianger. cliluting its .'coolness, of factor, by losing its exclusivity and its identification with a sper:ific group
oI ctistontet's.

T'he {act that the company hacl only one ma.ior prodr-ictwas anothcr q u e s t i o n m a r k o v e r t h e c o m p a n y ' s p r o s p e c t s .A l t h o u g h R e c l B L r l l h a d introduced a sugar-f'ree version of'the beveragein 2003, the variant cotrld not truly count as a new product. Besides, even by 2006, the sugnr-tr.ee Red Bull was not able to replicate the original's success. considering the extent oi competition in the energy drinks market, this haci the pote.tial to be a latal weakness. Growing health consciousness i'nong collsumers was anotirer factor that could afl'ect thc brand's fatr_.. Resides.it dici not help the company that its fbrmula I'or the drink wns .o secret uncl ail ihe maior inp;redientswere listed on the can. A I t h o L l g h M a t e s c h i t z h a d s a i d t l i a l a v o i c l i n gp r g c l l c t e x t c r . r s i g l sh r i d ; been a deliberatc stlateg-v on pat't oi' the conrpan.v. in 2002, Red Bull GrnbH launchecl LunAqua, a blancl o1' still water that was said to be bottled during Iull moon Although Red Bu.ll had nights. The compar-ryclaimecl that water reachecl its introd.uced a sugar-free h i g h e s t b i o e n e r g e t i cp o w e r d u r i n g t h e I u l l m o o n . , f h e uersion of the beuerage in w a t e r w a s l a u n c h e d i n t w o v a r i a n t s , o n e o f w h i c h c o n t a i n e d c a f { ' e i n e .A l t h o u g h , l v i t h L u n A q r _ r a , h e t 2003, the uariant could compan.yattempted to create a new c:rtegor-v ,,energ-v of' not truly count as a water" the product u'as a frrilure.

new pr.oduct

In 2005, Mateschitz stai'ted tcst marketing a rangc o { ' h e r b e r l t e a s u n d e l t h e C a r p e D i e m , r :b r a n d i n L o s , (The Carpe Diem brand w:rs owned bv Stock An11eles. Vil,al Inc., an Austria-ltased company set up by l,Iatescl.ritz i n t h o 1 9 9 0 s . )T h c s e h e l b a l t c a s w e r e s u p p o s e dt o i m p r o v e m e t a b o l i s n r atrd boost the immune system. 'l'he teas hzrclaiso been ltrulchccl i1 llpi'ooe i' tl-rchtc 1990s,but had not met witl.r much initial success.

Mateschitz also planned to use the c:rrpe Diem branci to start n chain o{'fast Ioocl outlets offering Austrian and international fbocl packaged in ccliblecontainers made out of potato. Another: proje.ctir-rthe pipeline nas t o s t a r t a q u a r t e r l v m a g a z i n e i n I l u r o p e . c o n t i r i i r i n ga l t i c l e s o n t h e n l e s "t'he Precl that ovokedlluli lvorld" like c:<tt'r.r.ire sprilis. niuhtlil'c. nrLrsic lprcl socialtrends. Howevt:r,the lirte of LunAqua sccnrcdto indicute that llecl l]r-rll'spcrv 'I,he busiricsses nright not be vcr-ysuccersslirl. r.t,suits a survel. concltrcted of by vivaldi Partners"{'and ,Fbr'bcs magai:ine to identil-r,,,Ncxt (icleratign G r o w t h B r a r r d s " , i n n r i c [ - 2 0 0 5 e e m c c lt o r e i n f o r c e t h i s v i c r v . N e x t s
' phlase rvi-riclr reitns.'Scize tl.rel)ar n V i Y a l d i I r l t t ' t t . t t ' r 'i s r t g i o b a l c o n s u l t r n g f r l r r s p e r : i a l i z i n g i n s t r i l t o g . r . b l l n c l i n g s .
' ,rt k' t iDl-. ill)(l iilil{i\ittiulI.

(lnrpc f)icrn is lr Lttin

Case Folio

February 2007

Marketing

Generation Growth Brands * Exhibit Vll: 2005Forbes VivaldiPartners were those that hatl NextGeneration Growth Brands outperforrncd lreil peelsirr t Name Brand Value 2OO5 Brand Value thc filst lbur vearrsof the ($ bn) Increasefrom 2000s,ar.rcl the potential had 2001 to 2005 to continue doing so in tl-re cAcR (./.) future (Refcr Exhibit VII fbr 1 . Apple 5.3 3B a l i s t o { ' t h e 2 0 0 5 F o r b e s2 . Blaclibe'r.y 1.2 .16 Vivaldi Next Gcneratiorr (ioogle -?,. 8.7 36 Growth Brands)"
1.

Amazon.( olTl Yahoo

2.7 6.8 7.4

35

Whitc Red Bull wiis ranked seventh anrong the top 20 growth brands. on a('('oulrc,f t ht' incrt'trscrr t i its brancl value between 2001 rind 2005, the studl' found that it had very lovr. brand resilience, ol the capability to cope with change, proactively as wcll as reactivelv.Thc low brancl r-esilience score \ ras mainlv a resull of the llcd Buli's s t r o n g a s s o c i a t i o nw i t h r r single ploduct, and the i a i l u r e , o r "l a c k , o { ' b i ' a n c l t , x t e n s i o r rc f f o r t s b y t h t , company.

5. b. 7. B. 9.

33 31 31
')2

eBay Red Bull Starbucks Pixar

1.7 3.0 2.9 3.9 o.7 6.9 7.0 14.3 6.rl 7.1 25 . 8 3.2 9.3 7.6

1 0 Coaclr 1 1 Whole Foods 1 2 EA Sports/Cames 1J l ' + Santsurrg 1 5 Vicbria's Sr,r'ret 1 6 lrlike 1 7 Tol,ota i8
Formula C)ne

22 22 21 21 17 16 16 t5 14 t1

1 9 ESPN 2 0 Harley-Davidson

5otlrc: vrurqvly.l/dipafl ncrs.rOnr

According to rnarketinE; experts, while Rcd Bull's markeling strategy seemed rather simple and e:rsy to pull o{1', this was in fact not the case. Subtlety was the key to a s u c c e s s f u lb u z z m a r k e r i n g s t r a t e g y , a n d R e d B u l l w a s o n e o 1 ' t h e f c w companies tl-rat managed to executc such a strategy succcssfulhr It rvers thought that a major part of Red Bull's successcarne about beczruse, :i ris private company! Red BulL Gmbl{ had the flexibility to take risks. and market its product in u'ays that rnany publicly-ireld companies could not. 'l'his h a d h e l p e d R e d B u l l c l e a t e a s u c c e s s f u lb r a n d a r o u n d a r a t h c r . pedestrian product of queslionable merit. However',it remained to bersct'n rvhcther Rcd Bull rvas a lacl that u''ould soon be forgotten bl. its con-*uirrer'-s. or an enciuring brllrd u,irl thc sti-erig'tir fol gro-uvtli antl sr-ri'vival.$ Sltirisha Regani, Iio t u I l.y Asscrcrolc, 7-ltclc/iti Cottt't' for fuIcittngcrnctr.t Reseoltlt (ICMRl. S S George, Dire,ctot', (ICMRt. The lcfcti. (lenter for Managenrcnt Resectt-r:h.

Case Folio

February 2O07

R e d B u l l ' sI n n o v a t i v e a r k e t i n gT r a n s f o r m i n g H u m d r u mP r o d u c ti n t o a H a p p e n i n g r a n d M : a B

References 1Jeff Edutards, Liquid 2,2001.

cocaine, http:lorchiue.salon.r:ont,Febrttar^.

2.

Kenneth Hein, A BuII's Mqrhet - The Marheting Energy Drinh, Brandweek, Mat, 28, 200j. Red BulI: Raging Success, bbc.t:o.uh, Jutv 15, 200j. Anni Layne Rodgers, It's a (Red) Bull Company, October 2001. Marhet

of Red Bult

3. 4.

After

All,

Fast

Globq.l Trends - Marhet Trend,s - Red Bull's Bottled Water, Prepared Foods, January, 2002.
o. 7

Neu Fortified

The Year of the Energy Drinh,

wwu,.beunet.com, Jctnuary 1, 2002.

Selling Energy, The Economist. Mart:h. g, 2002. The Marheting of Red BuIl, Outside Magazine, Aprit 2002. Mateschitz, Forbes, 200J.

8. a

World's Richest People: Dietrich

1 0 . Red Bull us. Lion in Bq,r-mixer Duel, www.beunet.corn, September 21. 2003. 1 1 . Red Bull Founder Rides Vtaae of Szccess, http:lled.ition.cnn.conl, 2001.
19

Hout Far Can Red Bull 2004. Red Bull 2004.

FIy? http:lluhorton.uniuersia.net, Mav lg,

1')

Snaps Up Jaguar

F7 Team, bbc.co.ulz,llouentber lS,

1 4 . Andrew Puruis, Dietrich

Mateschitz.

Time, Decentber 20, 2001. Tahe on Gictnts,

1 5 . Laurie Russct,Sports, Energy Drinh-Makers Beverage Industry Tabloid, 2005. 1 6 . Burt HeLnt, Energy Drinhs January 5,2005. Build Their

Buzz, BusinessWeek.

1 7 . Red Bull, The Independent, January 6, 2005. 1 8 . Raging

1Q

Bull: Health Warnings ouer popular Energy Drinh being Brushed off? wuw.cbt,.r:a,Februorv 6, 2005. Dissected, cBC Marketplace,

rn the can: Red Bull's Ingredients wLtw.cbc.ca, Februart, 6, 2005.

20. All in a Label: Is Red BuII q .Natural

uLww.cbc.ca, February 6, 2005.

Health

product,'?

Case Folio

F e b r u a r y2 0 0 7

Marketing

2 1 . Mired Messages: Alcohol and Red BulI, wu:w.cbc.ca,Febnt,ary 6,

2005.

22. Kerry A DolcLn., The Soda with the Buzz, Forbes, Morclt 28, 2005.
t2

Mq,hers Defend Red BulI

after Ban, hbc:.co.uh, ,luly 18, 2005.

24. Energy Drinh Marhet

2005. 25. Red Bull Confirms September 10, 2005.

'to Hit f,I bn', netus.bbt:.t:ct.uh, AtLgust 71,

Minardi

tDurchase, Luuw.grandprr.x.cont,

26. Red Bull Swoop for Minardi 27. Minardi

13, 2005.

DeaI, bbc.co.uh.Septentber10, 2005.

Bought by Red Bull, http:lltunz.c:o.rtz, September 11, 2005. w w w.grond.prix.co Septe m, mber

28. Interuiew : Mateschi tz on Minardi, 29. Andrew Murr, Monster

as. Red BulI,

Newsweek. March 11, 2006.

30. Red BuII Mashs Alcoholic nffect, bhc.co-ult,, March 26, 2006.
t ) 1 -

Bill Saporito, US Soccer Reboots.'I'inte, Ma1, 14, 2006. Scuderia

.

a9

Toro Rosso, bbc.co.uk, motorsport, Ma1, 31, 2006.

.l.f

Dan Knutson, Mqteschitz Ensures Red BuII Means Business in Formula One, lt ttp :I IindianapoLismotorspeedw a:/.conl,J une I 6, 2006. BuIl Marheted, htt|t:I I uwu.snopes.contlmedicaLlpotables I redbull.asp The Red BuIl Story, www.plan-b.bizlpdf

a ,

35. Speed-in-a-can:

36. w u w.uiu al dip art rters.cotrt

Q'7

www.redbull.cont

38. t uu u . l t o o u e r s . c o t t t 39. f i rtartce..v lto o.co t1r o 10. w w u . w i r e d n , e u s . c o n L 1 1 . w rD soI drnau i gato r.rtet w. 42. www.grandprix.com

Reference# I4M-2007-02-06-02

Case Folio

59

February 2007