RED BULL: THE HYPE & THE BRAND
A case study of the world’s most successful energy drink
It may be ranked consistently among the worst in taste tests, and is rumoured to be a health risk, but Red Bull’s dominance over the energy drink market actually depends on such rumours. This company only manufactures and markets one product – and has become very good at it, being at the forefront of popular culture without being too outlandish. How did a traditional recipe from Thailand take over the world and become the world’s number one energy drink?
Introduction to Red Bull and its Marketing Environment
Corporate legend has it that its founder, Austrian Dietrich Mateschitz was on a business trip in Thailand when he spotted a business opportunity with the local “energy drinks”. An energy drink called Krating Daeng, or Red Bull in Thai, caught his attention for curing his jet lag. At the time, Krating Daeng had already built a loyal following among Thai blue-collar workers such as taxi drivers by helping them stay alert during long and irregular working hours. Sold on the drink’s effectiveness, he brought some samples home to Austria where he could gain greater clarity on the kind of business and marketing plan required to implement the “Big Idea” called Red Bull. In 1984, he co-founded Red Bull GmbH in Austria with Chaleo Yoovidhya, the owner of Krating Daeng. Armed with marketing and scientific know-how, Red Bull would take over the world as a product that defined its category. Red Bull is the current market leader in the energy drinks market, a category it helped define. It holds 40% market share. Competitors may or may not be in this category because the beverages business depends on products in adjacent categories which are interdependent. As a first-mover product that defines the energy drinks category, category perceptual mapping must factor in Red Bull, by which a favourable marketing strategy for competitors would be to avoid direct competition.
While some other competitor companies, such as the Coca Cola Company and, rely on umbrella branding and brand extensions to market their products, Red Bull GmbH strictly sells one main product line which is Red Bull. Recently, other companies have attempted to encroach into Red Bull’s core product domain by selling similar products. Naughty G attempts to differentiate itself from Red Bull by offering different flavours such as cola and green tea, as well as a raunchy X factor. Shark is priced as more affordable to Red Bull but is more intense. Red Bull also belongs within the caffeinated drinks category. Competitors within this category include coffee drinks from Nescafe and Starbucks. 2
Red Bull’s strengths are its authenticity, unique formula and its proven effectiveness. Much speculation is held over how the formula works, and is the subject of academic literature. While it is discouraged by health professionals because of various reasons, many urban legends exist about Red Bull and its supposedly therapeutic properties. Red Bull’s weaknesses are its steep price point and its terrible taste. Red Bull is not a drink anyone would want to drink for breakfast. Opportunities for Red Bull are market segments which could use the product benefits. For example, tertiary students were recently identified as people who drink lots of Red Bull because of the need to stay awake while studying for exams. Threats to Red Bull are its company’s dependence on a single product. Environmental factors affecting the company include the latest research regarding the product. Red Bull has been subject to studies which say that the product is unhealthy or unsafe for regular consumption. As a result, there is a sizeable portion of the general public who would stay away from the product or advise their peers to stop drinking Red Bull. Because of these studies, Red Bull has even been banned in Germany, France, Denmark and Norway for various reasons like excessive caffeine, taurine or even...
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