Assignment 1 – MKT235

Red Bull:
A report into the elements of a successful brand

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Table of Contents

Introduction...........................................................................................................................................3
Brand positioning and values................................................................................................................3
Brand characteristics.............................................................................................................................5
Benefits.................................................................................................................................................5
Brand Communities...............................................................................................................................6
Brand equity..........................................................................................................................................7
Conclusion...........................................................................................................................................10
Bibliography.........................................................................................................................................11

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Introduction

With younger generations becoming less responsive to advertising through traditional media,
firms need to find new and creative ways of attracting and creating dialogue with younger
consumers without alienating their already established customer base. While Red bull is
currently available for sale in over 130 countries and still has substantial room for growth in
as of yet unexplored markets, many of the markets it has entered over the last 20 years are in
or are reaching maturity. They must therefore find new and engaging ways of providing
benefits to their customers in order to maintain market share and growth beyond the initial
‘buzz’ surround their market entry. The purpose of this report is to:

 Discuss how Red Bull has positioned itself in the marketplace, how that affects
consumers views toward the brand, and the mechanisms through which Red Bull
expresses the intrinsic values of the brand
 Describe the characteristics of the brand
 Outline the benefits the product has and how this impacts on customer satisfaction
 Discuss brand communities and their potential to create customer loyalty
 Outline the sources of brand equity for the Red Bull Brand

Brand positioning and values

According to [ CITATION Kel \l 3081 ] brand positioning is the act of designing the companies
offer or image so that it occupies a distinct and valued place in the customers mind. This
means finding the proper ‘location’ in the minds of consumers, the result of which allows
them to think about a product in the desired way to maximise the potential benefit to the
brand. The core idea of positioning postulates that each brand occupies a point in the
consumer’s mind which is determined by their own perceptions of the brand relative to its
competitors. In order to differentiate itself and capitalise on this, Red Bull must occupy a
unique position in a consumer’s mind that leads to them purchasing their product over
another offering. [ CITATION Sen05 \l 3081 ] Positioning concept consists of 4 components:

 Product/Class market – can be defined as the set of products and brands which are
perceived as substitutes to satisfy specific consumers need. As Red Bull has no intended
usage occasion, it initially took the position as a substitute for coffee and other

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caffeinated beverages and as an alcoholic mixer. With the establishment of the energy
drink category it now competes with substitutes from within this market.
 Consumer segmentation – Positioning theory differs from other marketing theory in its
definition of segmentation in placing emphasis on the target consumer’s perceptions of
brands in comparison to other brands. But like other theory its main focus is on the
expectations, needs and characteristics of consumers. Red Bull sought to reach a broad
range of consumers based on their need for a stimulating drink. “We have only two
dimensions, people who are mentally fatigued and people who are physical fatigued, or
both” [ CITATION Kel08 \l 3081 ] . Red bull broadly defines its consumer segments as:
clubbers, students, driver, athletes and business people.
 Perceptual mapping – Is a graphical representation of the underlying dimensions that
differentiate consumer’s perceptions of a brand to existing brands within the dimension.
In today’s competitive context this defines Red Bulls main competitors, which in
Australia by volume they are V, Mother, Rock Star, Red Devil, Red Eye and Monster.
 Brand attributes and benefits – Are the company’s views on the attributes of their
product that through the consumer’s frame of reference form the perceived benefits. Red
Bull adopted the positioning statement “revitalises the body and mind” which intended to
convey the products tangible benefits as stimulating, detoxifying beverage that
consumers could drink whenever they needed a lift.

[ CITATION Kap97 \l 3081 ] notes that the position concept does not however reveal all the
brands richness of meaning or reflect all of its potential and does not help fully differentiate
powerful brands competing against each other in the same category. He postulates using the
brand identity concept to offset these limitations and provide a framework for overall brand
coherence and measure the means of expression, unity and durability of a brand. Although
positioned relatively close to their competitors, it is their expression of their cores brand
values of being a fun, involving, creative and energetic brand through events like Flutag and
Red Bull Soap Box Derby that form part of their identity and differentiate them from other
brands.

Brand characteristics

Brand Characteristics Red Bull

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Personality Fun, involving, creative and energetic

Organisational associations Large specialised company, creators of the ‘energy drink’ category,
market leaders

Symbols Iconic logo depicting two red (energy) bulls (power) clashing horns
in front of a yellow sun. Used across product range as well on
event and athlete sponsorship
Brand/Cultural relationships Associated with youth culture and extreme and adventure-related
sports, such as motor sports, mountain biking, snowboarding and
dance music.
Self expression and emotional benefits Consumers are rewarding themselves with edgy, youthful,
premium beverage and projecting an image as a select member of a
small group of individuals of similar values.
User imagery Represents the ego ideal of consumers - who I want to appear to be
because I use your product: fun, creative and energetic. Part of a
special community
Country of origin Originated in Thailand, westernised and re-released in
Austria, now available in 130 countries worldwide –
A global brand

Benefits

Red bull is a carbonated ‘functional energy’ drink designed to invigorate the body and
stimulate the mind. Its specially formulated ingredients have the following effects:

 Taurine – A non-essential amino sulphonic acid named after the Latin Taurus, (which
means bull or ox) was first isolated in ox bile and semen in 1827 [ CITATION Car06 \l 3081 ] .
Taurine acts as a metabolic transmitter and additionally has a detoxifying effect
 Glucuronolactone - Is listed in the ‘Merck Index’ as a detoxificant and metabolic
transmitter
 Caffeine - Caffeine is a central nervous system and metabolic stimulant, and is used to
reduce physical fatigue and restore mental alertness when unusual weakness or
drowsiness occur
 B vitamins - Supports and increases the rate of metabolism
 Sucrose and glucose provide high GI carbohydrates which are readily converted into
energy in situations of high exertion

According to Red Bull the unique combination of these ingredients is said to stimulate the
central nervous system, increase metabolic rate, aid in the secretion of toxins and waste

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material, and provide a source of high GI carbohydrates which can be readily converted into
glycogen for energy in situations of high exertion. Customer satisfaction is the state of mind
that customers have about a company when their expectations have been met or exceeded
over the lifetime of the product or service [ CITATION AlR01 \l 3081 ]. The achievement of
customer satisfaction leads to company loyalty and product repurchase. The tagline “Red
Bull gives you wings” and the words “energy drink” printed on the can hint at products
potential benefits to revitalise the consumers mind and body without making any direct
claims. By using this ambiguous, non-quantitative tagline, Red Bull can more easily
reconcile the products benefits, with consumer’s expectations of the product as each person
is allowed their own unique experience. “They know it’s doing something, they just don't
know what exactly” [ CITATION Pho01 \l 3081 ]

Brand Communities

[ CITATION Mun01 \l 3081 ] Observes that brand communities – “a specialised, non-

geographically bound community, based on a structured set of social relationships among
users of a brand” have the ability to organise consumers in a complex web of relationships.
In today’s climate, companies like Red Bull need to find new ways of reaching and creating
dialogue with consumers; brand communities are a relatively new concept that may offer
some assistance. [ CITATION McA02 \l 3081 ] Describe that the benefits to a brand are “many
and diverse”. They suggest that customers integrated through community serve as brand
campaigners who deliver the carry the brands messages to other consumers outside the group.
[ CITATION Bra08 \l 3081 ] Suggests that there are four essential elements in actively involving
customers in creating communities around a brand:

1. A strong story or myth surrounding the brand that gives it authenticity. Customers
relate to and identify with brands and express their sense of self through their
consumption. Red bull could potentially leverage on its mystique and reputation as an
energetic, vibrant and involving brand to attract a community of like minded
individuals that personify these ideals.
2. For a community to be adopted consumers must feel a need to connect with one
another in the context of the brand consumption. By identifying with a particular
market segment i.e. generation Y, they can build a community around youth culture

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and capitalise on younger consumers who feel a strong sense of expressing their
unique personality by embracing the Red Bull brand.
3. Identifiable brand elements such as logos, symbols, clubs and memberships that are in
line with the brands identity that allow community members to not only identify with
each other but distinguish themselves from the rest of society.
4. Create a unique culture: By creating unique events in which community members can
be actively involved Red Bull allows consumers to interact with the brand, other
consumers and the company simultaneously. Such events allow consumers to
experience the brand in their own memorable manner and are part of the value
creation process.

Brand equity

[ CITATION Kel \l 3081 ] Defines brand equity: “A brand has positive customer-based brand
equity when consumers react more favourably to a product and the way it is marketed when
the brand is identified than when it is not”. While Aaker’s definition expresses brand equity
as “the set of assets and liabilities linked to a brand’s name and symbol that adds to or
subtracts from the value provided by a product or service to a firm and/or that firm’s
customers”. They key difference between these two definitions lies in their view of
consumers and the role they play in establishing brand equity. While Aaker’s definition
includes physical components of the brand that are not connected to an audience, Kellers
definition requires and audience in order for equity to exist. [ CITATION Kap97 \l 3081 ]
Proposes the following model as a way for companies to establish the value or ‘equity’ of a
brand:

BRAND AWARENESS
+ IMAGE
+ PERCIEVED QUALITY
+ EVOCATIONS
+ FAMILIARITY
= BRAND ASSETS ADDED VALUE, PERCIEVED BY
CUSTOMERS
- COST OF BRANDING
- COST OF INVESTED CAPITAL
= BRAND FINANCIAL VALUE
(BRAND EQUITY)

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Interbrand identified and examined Kapferer's, and 22 other models used for measuring the
value of a brand and applied them to a list of the most powerful brands in the world. They
postulate that by using this approach they would be able to identify, on balance, key attributes
shared by these brands that would allow them to distinguish their sources of brand equity.
They were able to use this information to identify the brands that continually topped the list
regardless of the methodology used to measure them and have identified the core sources of
brand equity that were common across these brands. We can apply these sources to the case
of Red Bull to gain a better understanding of the origins of their brand equity:

 Brand Associations - Keller describes the necessary strategy for building brand
associations: “link strong, favourable and unique associations to the brand in
memory.” There are two factors to strengthen brand association:
1. Personal relevance
2. Consistence in its presentation over time
Keller postulates that direct experiences create the strongest brand benefit
associations. Red Bulls market entry strategy is to ‘seed’ places such as shops, clubs,
bars and stores focusing initially on opinion leaders who obtain positive direct
experience with the brand. Once word of mouth has created a buzz about the product,
they then widen distribution to areas surrounding the “in” spots. The theoretical
foundation behind creating these associations suggests that by creating these
favourable connections between the brand, the experience, and the category, the more
inclined a consumer will be to choose a particular brand over other competitors in the
category. At its most extreme these brand/category associations are demonstrated by
the use of word ‘Google’ in the modern lexicon when used as a synonym for general
web searching.

 Brand loyalty - In Keller’s definition of brand equity, strong brands achieve greater
return on marketing investment through building brand loyalty which ‘smoothes out’
future cash flows and reduces customer acquisition costs as a proportion of total
marketing expenditure. [ CITATION Dic94 \l 3081 ] Defines brand loyalty as the
attachment customer feels towards the brand. Red Bull in its promotional activities
associates its name with extreme sports, adventurous identities and pop culture events
is able to create meaningful dialogue with its consumers and cultivate a two-way

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relationship ship between culture and commerce. This helps them in creating loyalty
among their target groups who are now most valuable part of their success.

 Brand awareness - Keller (p 54) notes the key elements of Brand Awareness:
- Recognition and;
- Recall

To increase brand recall, Keller (p 55) advises that a slogan or a jingle can establish
the memory linkages that improve recall. An example of this can be seen in Red
Bulls approach in its above the board advertising which it uses in its matured markets
to improve recall consisting of unusual animated shorts that end with the slogan,
“Red Bull gives you wiiings.”

According to Norbert Kraihamer, director sales and marketing for Red bull, they
identified 5 user categories which they deemed key to spreading the awareness for
Red Bull; students, drivers, night clubbers, businessmen and athletes. They identified
where these 5 key accounts most frequently shopped and targeted these venues with
promotions. Norbert Kraihamer said: “As soon as I can find loyal customers I can
convince them that the product works. If they experience that the product keeps them
awake in a good mood, focused and vigilant then they will buy it again. If you do it
right you’ll be getting up to 75% or even 80% re-purchase rate.” [ CITATION Pho01 \l
3081 ]

Conclusion

Red Bull has come a long way in the last 26 years. Beginning in a practically non-existent
market, today the market is extremely diverse and saturated with competitors. Revolutionary
marketing techniques created the Red Bull “buzz” coupled with controversial ingredients
ensured the drink was “edgy”, and the product sold itself. Non-specific advertising captivated
a non-descript audience, whilst sponsoring extreme sports and events proved effective in not
only publicising the drink, but also making it become a “way of life”. Competitors such as
Monster and Rock Star may well take a significant market share here in Australia. However,
diversifying into “Organic energy drinks” such as Red Bull simply Cola, and creating a
“lifestyle” to match; Red Bull has entered a new market for the “health conscious consumer”.

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The latest business plan to include multi-million dollar island resorts and theme parks
coupled with Red Bull’s expansion into new and developing markets will not only spread the
name of Red Bull but also boost sales. Despite the “credit crunch”, Red Bull’s future looks
bright.

Bibliography
Al Ries, J. T. (2001). Positioning: the battle for your mind. New York: McGraw Hill.

Carey, F. A. (2006). Organic Chemistry. New York: Mcgraw Hill.

Dick, A. S. (1994). Customer Loyalty: Toward an Integrated Conceptual Framework. Journal of the
Academy of Marketing Science , 99-113.

Kapferer, J. K. (1997). Strategic Brand Management. London: Kogan Page.

Keller, K. (2008). Best practices cases in branding: Lessons from the worlds strongest brands. Upper
Saddle River: Pearson Education.

Keller, K. L. (2003). Brand Synthesis: The Multidimensionality of Brand Knowledge. Journal of

Consumer Research , 595-600.

Keller, K. (2008). Strategic Brand Management. Pearson Education.

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McAlexander, J. S. (2002). Building Brand Community [Electronic version]. Journal of Marketing , 38-
54.

O’Guinn, M. A. (2001). Brand Community. Journal of Consumer Research , 412-32.

Phoenix, C. (2001). The Red Bull- Facts and Functions. Soft drinks world .

Sengupta, S. (2005). Brand positioning: strategies for competitive advantage. New Dehli: Tata
McGraw Hill.

VanAuken, B. (2008, December 2). Building a Brand Community. Retrieved April 8, 2010, from
Branding Strategy: http://www.brandingstrategyinsider.com/2008/12/building-a-brand-
community.html

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