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Red Bull’s Marketing Strategy Analysis

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Founded in 1987, Red Bull is a successful beverage company which specializes in energy drinks. Its success is hinged upon its unique marketing strategy. In 2017, Red Bull possesses a 70 percent share of the energy drinks market (Gschwandtner, 2012). Red Bull remained steadfast and held onto the market through targeting a singular sector of the market – energy drinks. As a result, Red Bull has created a strong brand, and is regarded one of the most successful energy drink company in the world (Donovan & Henley, 2010).

The Strategy of the Brand

The Red Bull brand echoes out spirit, vigor, passion, zeal, life, adventure and other characteristics about on the youths. Thus, consumers identify words like ‘cool’ and ‘trendy’ with the brand. According to Gschwandtner (2012), its creative branding strategy resulted in becoming the top energy drink brand. Its success is due to its market segmentation of targeting youths aged 18 to 34, to which Red Bull’s two main marketing strategies – sponsorships & guerrilla marketing – separated them from its competitors. These strategies helped consumers develop enduring perceptions and a strong brand personality on Red Bull.

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The first strategy is sponsorship. Red Bull’s sponsorship programs consist of a diversified class of sports, talents and athletes, appealing to many existing and promising consumers (Cornwell, 2014). A sponsored event such as sporting events or high-profiled parties allows Red Bull to engage young adults to experience the company’s products. Moreover, Red Bull’s sponsored events are likely to feature celebrities and presents them with opportunities to distribute free samples to generate interest and bolster its image (Kotler & Keller, 2012). The most significant example would be Bull Stratos. It aimed to send a message: Have a dream and look forward to. In doing so, it can be contended that such events inspire the young to achieve their dreams and that anything was possible. Through Red Bull’s aggressive sponsorship, many youths identify Red Bull with people destined for greatness.

Guerrilla marketing refers to a strategy in which a company uses unconventional and surprise elements to promote their products. The aim of guerrilla marketing is to produce buzz with the content circulating rapidly. Moreover, this unconventional marketing is said to be useful in building a relationship between the brand and the consumer with the consumer develops an emotional attachment to a brand, product, person, or idea. As a result, Red Bull hires students, DJs, young opinion leaders and unconventional sports athletes as brand ambassadors to endorse their brand and promote it (“Unconventional Marketing Tactics…”, 2009). Not only is this strategy cost-effective, but it also places the brand close to the target market whereby deeper insights could be made.

All in all, these marketing strategies have demonstrated to be extremely powerful.

However, in spite of its advantages, Red Bull possesses various shortcomings and vulnerability it must address to stay atop in the highly competitive industry. Firstly, Red Bull’s operates within a monopolistic competitive market, providing opportunities for competitors to steal away and diminish the market share. This may translate into a loss of profits, and may lead to increased budgets for marketing. Following Red Bull’s success, competitors such as Coke and Monster have launched their own energy drinks.

Secondly, given Red Bull’s market segmentation and marketing strategy, Red Bull’s decision to target youths aged 18 to 34 translates into opportunity costs for consumers aged 35 and above, and for women. Currently, 60.0% of the consumers of energy drinks are male and 35.0% of people consuming energy drinks are above 35 years age (‘Global Energy Drinks …’, 2019). Additionally, Red Bull has to tackle the negative perceptions surrounding energy drinks to boost sales in all demographics. For female consumers, two-thirds are convinced that energy drinks feel both unhealthy and unnatural, with 60% mentioning that energy drinks ultimately do more harm than good (Clifford, 2018). For the working adults, ER visits related to energy drinks are on the rise. The U.S. Substance Abuse and Mental Health Services Administration, or SAMHSA, observed that the biggest spike in ER visits came from the 40–and–older set, whose visits to the ER after consuming energy drinks nearly quadrupled from 2007 to 2011(“Energy drinks: The Truth…”, n.d.).

Possible Improvements

Red Bull could look to traditional and digital forms of advertising, towards the general public to capture a larger target group, to market their brand and reinforce their image in the competitive market. They could utilize television, outdoor billboards and print media to widen their contact with consumers of all ages. Moreover, as more people are spending more hours surfing the web, Red Bull could also utilize digital advertising through the internet. Given Red Bull’s creativity, they could potentially maintain their marketing strategy by creating or sponsoring extreme online sporting games, advertising through those channels.

For Red Bull, more representation could be given to individuals aged 35 and above and towards its female counterparts. Brand repositioning can also be done to improve brand awareness for Red Bull. An excellent example would be Red Bull’s campaign: Stratos whereby Felix Baumgartner was 43 years old when he leaped from Earth’s stratosphere to land. Felix’s record-breaking feat sent a statement to both the young and old to take action and fulfil their dreams, a message Red Bull advocates. Moreover, in 2019, Red Bull released two fruit-themed drinks: Red Bull Crisp Pear & Red Bull Peach to attract female consumers and a broader health-conscious audience (Barnes, 2019). Hence, both efforts were Red Bull’s attempt to increase its brand awareness through the different demographics, which I believe should be continued to reach out to a wider audience and target market.

Ethical Issues Relevant to the Marketing Strategy

Red Bull’s marketing strategies are however, considered to be unethical to some due to false advertising. Advertisements falsely represented the energy drink’s capability to enhance performance and reaction speed, even though scientific studies report otherwise. According to studies conducted on the drink by the European Food Safety Authority Journal, energy drinks were only found to have caffeine as its only active ingredient, and therefore, it had no performance enhancing properties (Breda, et al., 2014). As such, Red Bull’s exaggerated product claims prompts consumers to purchase its energy drinks, providing false promises in its capabilities to improve productivity, performance and energy. Thus, Red Bull’s deceptive and fraudulent methods arguably makes Red Bull’s marketing strategy unethical. Red Bull had not handled these ethical issues well, having been fined and settled with US$13 million for false advertising (O’Reily, 2014), as well as narrowly escaping a ban by the Advertising Standards Authority (Bradley, 2018). Red Bull maintains that its marketing and labelling have always been truthful and accurate, denying all wrongdoings or liability, but that remains to be seen.

References

  • Barnes, A. (2019, February 6). Red Bull Gives You Hearts And Wings In 2019: Falling In Love With New Flavors. Retrieved from https://www.forbes.com/sites/amybarnes/2019/02/06/red-bull-gives-you-hearts-and-wings-in-2019-falling-in-love-with-new-flavors/#62b9f8a514e8.
  • Bradley, S. (2018, February 21). Red Bull escapes ASA ban following complaints around ‘false health claims’. Retrieved from https://www.thedrum.com/news/2018/02/21/red-bull-escapes-asa-ban-following-complaints-around-false-health-claims.
  • Breda, J. J., Whiting, S. H., Encarnação, R., Norberg, S., Jones, R., Reinap, M., & Jewell, J. (2014, October 14). Energy drink consumption in Europe: a review of the risks, adverse health effects, and policy options to respond. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4197301/.
  • Clifford, L. (2018, August 15). 5 consumer insights to give energy drink brands a boost. Retrieved from https://medium.com/street-voice/5-consumer-insights-to-give-energy-drink-brands-a-boost-e18e6a59569e.
  • Cornwell, T. B. (2014). Sponsorship in Marketing. doi: 10.4324/9781315816371
  • Donovan, R., & Henley, N. (2010). Principles and Practice of Social Marketing. doi: 10.1017/cbo9780511761751
  • Energy drinks: The truth may rock your assumptions. (n.d.). Retrieved from https://healthplans.providence.org/fittogether/find-your-fit/healthy-eating/making-good-choices/energy-drinks-the-truth-may-rock-your-assumptions/.
  • Global Energy Drinks Market Growth and Trends by 2026 with Top Analysis: Red Bull GmbH, T.C. Pharma, DOHLER, Rockstar. (2019, July 27). Retrieved from https://www.marketwatch.com/press-release/global-energy-drinks-market-growth-and-trends-by-2026-with-top-analysis-red-bull-gmbh-tc-pharma-dohler-rockstar-2019-07-27.
  • Gschwandtner, G. (2012, March 1). The Powerful Sales Strategy behind Red Bull. Retrieved from https://www.sellingpower.com/2012/03/01/9437/the-powerful-sales-strategy-behind-red-bull.
  • Kotler, P., & Keller, K. L. (2012). Marketing Management. New Jersey, US: Pearson Education.
  • O’Reilly, L. (2014, October 8). Red Bull Will Pay $10 To Customers Disappointed The Drink Didn’t Actually Give Them ‘Wings’. Retrieved from https://www.businessinsider.com/red-bull-settles-false-advertising-lawsuit-for-13-million-2014-10?IR=T.
  • Unconventional Marketing Tactics: IT Training and Consulting. (2009, November 19). Retrieved from http://www.exforsys.com/career-center/marketing-management/unconventional-marketing-tactics.html.

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