Red Bull's Innovative Marketing: Transforming a Humdrum Product into a Happening Brand

            
 
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Case Details:

Case Code : MKTG141
Case Length : 21 Pages
Period : 2001-2006
Organization : Red Bull GmbH
Pub Date : 2006
Teaching Note : Available
Countries : Austria, UK, USA
Industry : Beverages

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"In terms of attracting new customers and enhancing consumer loyalty, Red Bull has a more effective branding campaign than Coke or Pepsi. Red Bull is building a beverage brand without relying on the essential equipment of a mass-marketing campaign. Perhaps the indispensable tools of marketing aren't so indispensable after all." 1

- Nancy Koehn, Professor of Business Administration at Harvard Business School, in 2001.

"When we first started, we said there is no existing market for Red Bull. But Red Bull will create it. And this is what finally became true." 2

- Dietrich Mateschitz, Founder and Managing Partner of Red Bull GmbH, in 2005.

Red Bull Acquires Second F1 Team

In September 2005, Red Bull GmbH, the manufacturer of the Red Bull energy drink, acquired Minardi, an Italy-based Formula One (F1)3 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 management4 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 serve as the 'rookie team' in 2006. Red Bull GmbH intended to use the team to train young drivers sponsored by the company.

Red Bull, widely acknowledged as the creator of the 'energy drink'6 category, maintained a close association with sports from the time it was launched in 1987. Red Bull GmbH was known for its sponsorship of extreme, alternative sports like white water kayaking, hand gliding, wind surfing and snowboarding -sports that 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 beverage.

For a product that did not have any extraordinary qualities, and was made of ingredients whose effects had often been called into question,7 Red Bull had a huge market presence. The company was reported to hold almost 70 percent of the worldwide market for energy drinks in 2005. Analysts attributed the beverage's success to the unconventional marketing strategy adopted by the company to promote it in new markets.

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1] Anni Layne Rodgers, " It's a (Red) Bull Market After All," Fast Company, October 2001.

2] Kerry A. Dolan, "The Soda with the Buzz," Forbes, March 28, 2005.

3] Formula One, abbreviated to F1, and also known as Grand Prix racing, is the highest class of single-seat open-wheel formula auto racing in the world. The 'formula' in the name is a set of rules which all participants and cars must meet. http://en.wikipedia.org

4] Minardi was then owned by Australian millionaire Paul Stoddart.

5] Scuderia Toro Rosso means 'Red Bull Stable' in Italian.

6] Energy drinks are beverages that generally contain legal stimulants, vitamins, and minerals. Most of them contain taurine and glucuronolactone, and a high content of caffeine and sugar or glucose. Many energy drinks are flavored and/or colored to resemble soft drinks.

7] Red Bull's main ingredients taurine and glucuronolactone are extremely controversial.

 

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