Over 1000 competing energy drinks have entered the market that Red Bull helped create in 1987. As the granddaddy of all energy drinks nears its teenage years, it’s time for Red Bull to re-evaluate their marketing plan.
Red Bull’s marketing program, although complex in its delivery, consists of only a few key elements. Their product packaging—the sleek and silver 250ml aluminum can—remains their most important element. Direct advertising, like television, is less important than their indirect word-of-mouth strategy, which includes sponsorship, endorsements, frequent sampling, and highly visible point-of-purchase marketing. As Harvard’s Nancy Koehn put it, they’ve proven that “indispensable tools of marketing aren’t so indispensable after all.” They don’t buy stadiums, they buy racing teams. They don’t fly blimps, but they ask Red Bull drinkers to build their own homemade aircraft and launch it into a lake or the ocean.
In the very beginning Red Bull relied primarily on the effectiveness of their product and word-of-mouth referral by opinion experts and users. But they also manufactured interest with guerilla advertising techniques. They planted their eye-catching cans in nightclubs and pubs where folks would find them. When other companies flashed their product directly in the customer’s face, those customers turned their heads to look away—and Red Bull was there waiting to be noticed from the corner of their eye.
Some attribute the mystique of Red Bull to its Eastern origins and exotic ingredients, some say it’s the appeal of alternative lifestyles and sports, while other say their limited cellular growth model has made them the most successful energy drink on the planet. I say it’s because they created the mold instead of trying to fit into it.
Red Bull followed the wrong path in the U.K. and saw the product fail. They could not market themselves as a sports drink; in the mind of the consumer, the core qualities of a “sports drink” differ from “energy drink.” They could not assert themselves as cachet (thereby worthy of a premium price) while flaunting on billboards like the 12oz colas. They could not find commonality between their underground brand position and their above line billboard advertising.
They learned a hard lesson in the U.K. and took years to repair the damage, but Red Bull’s true weaknesses appeared when they entered the U.S. market. American consumers, constantly barraged by multimedia advertising, instantly took to the Red Bull subculture. American corporations, however, quickly began to exploit two key characteristics of their product: size and taste.
I’m going to be blunt: Red Bull put a moderately fowl tasting product in a small container and sold it at an inflated price, but people bought it because they perceived it as “medicine.” Today, a blog entitled Energy Drink Reviews lists over 1000 competing energy drinks, most of which, based on reviews, taste better than Red Bull and offer 16oz for the same price or less. Hundreds of energy drinks contain more caffeine and taurine—and many offer additional supplements like yohimbine bark and ginseng. The variety of flavors now available is astounding.
Startups are gaining some attention, but most new products come from major beverage corporations. These big companies, operating behind brands like Monster and Rockstar, can use Red Bull’s underground marketing strategy against them because they are seen as the established market leader. Worst of all, Red Bull’s product line changes—the sugar-free line, their all natural cola, and the introduction of 16oz cans and quantity sales—only further vindicates the competition and may serve to drive them from cachet to passé.
If Red Bull does not make changes quickly, their momentum will peak and rapidly decline. I recommend they revise their marketing communications program in three ways:
First, it’s time for Red Bull to accept its place at the head of the table and behave accordingly. Red Bull has become ubiquitous, so certain elements of their word-of-mouth strategy are obsolete. Instead, they should expand their encoding variability—improved product memory created by broadening consumer exposure to the brand—with increased emphasis on events, athlete sponsorships and endorsements.
Second, they must shift their brand position to assert themselves as the original formula for the energy drink industry. As new products push the limits of danger appeal, plastering their cans with warning labels and overloading their products with controversial stimulants, Red Bull should appear clinically measured and proven. While others mask themselves with artificial flavors and sugar, Red Bull should present themselves as unmasked and reliable flavor.
Repositioning Red Bull as the original, consistent formula will likely damage their appeal to rebellious and risk-seeking groups, but open them to a vastly larger market of mature consumers. More conservative, older individuals—now familiar with energy drinks but concerned with risk—will turn to Red Bull as the safe and dependable option.
Finally, to regain their stature among the young and hip, Red Bull needs to develop a new product and brand. They can use their current marketing skill set to establish the brand’s cultural foundation, but should also utilize new techniques—social media and online viral marketing—for generating buzz and publicity. They can’t simply brand a new flavor of energy drink nor introduce a new stimulant; that would go over as well as New Coke. Instead, they need a product that, like its big brother Red Bull, defines a new category of consumables. It’s a daunting task, but they have proven themselves as mold-makers and I think they’re up to the challenge.
Ron S. Doyle is a freelance writer in Denver, CO.
References:
Energy Drinks Reviews. http://taurinerules.blogspot.com.
Rodgers, Anni Layne. 2008. It’s a (Red) Bull Market After All. Fast Company, September 11. http://www.fastcompany.com/articles/2001/10/redbull.html.
Keller, Kevin L. 2008. Best Practice Cases in Branding: Lessons from the World’s Strongest Brands. 3rd edition. Upper Saddle River, New Jersey: Pearson Prentice Hall.
Keller, Kevin L. 2008. Strategic Brand Management: Building, Measuring, and Managing Brand Equity. 3rd edition. Upper Saddle River, New Jersey: Pearson Prentice Hall.
