Red_Bull

Red Bull & V Mr. Joshua Thompson International Management Dr. Renee Scapparone December 7, 2010   Red Bull is a unique product in the newly flourished industry commonly referred to as the energy drinks market. In 2006, the global beverage market grew by 2.8 percent, reaching a value of $1,056.3 billion, with volume growing 3.1 percent to a volume of 535.3 billion liters (Global beverages, 2007, p. 3). One of the fastest growing segments is a fairly recent trend in the industry, as previously mentioned - energy drinks. Understanding that to ignore fledgling trends is at their own peril, beverage manufacturers are flocking to this unique market segment in hopes of capturing valuable market share. Two of companies vying for market domination are: Red Bull and V, with one currently far more successful than the other. This paper will critically evaluate and compare the performance of Red Bull and V. It will describe and contrast how each has built brand equity, and will provide a strategy for the less successful brand to improve their performance in the marketplace, both locally and internationally. Red Bull was initially created by Dietrich Mateschitz; Dietrich originally came up with the idea for his energy beverage in 1984, after traveling to Asia and discovering the popularity of energy drinks in some areas (A new market, 2007). Mateschitz brought several samples back to Austria and after three long years developed his own version involving both medical research and scientific testing (Brunnen, 2007). It was “this period (that) saw the birth of the product positioning 'Red Bull vitalizes body and mind' and the unique slogan 'Red Bull gives you wiings!'” (A new market, 2007). First launched in Austria, in 1992, it was then quickly rolled out throughout most of Europe. This was then followed by North and South America, Africa counting global sales as well as hometown sales in Australia. By 2002, more than one billion cans were being sold annually (Brunnen, 2007). In 2003, Red Bull established an alliance with Cadbury Schweppes as a means of extending its presence in the Australian market. Red Bull continued to spread its “wiings” as it reached out to the four corners of the Earth. The following year, 2004, Red Bull expanded into the rapidly growing beverage market of India. Despite global market dominance, the company has refused to sit on its laurels and brand building continued to be a focus for the organization. In 2006, the Major League Soccer team, the New York MetroStars, competed under the name Red Bull New York. These New York Red Bull’s recently traded for French mega-star Thierry Henry to attach a sports figure with its flourishing “Red Bull gives you wiings” campaign. Two months later, Alaska Airlines announced its plans to provide customers with Red Bull in-flight (Brunnen, 2007). V is produced by Frucor Beverages Ltd., a New Zealand-based beverage manufacturer and marketer. Recognizing the consumer need to provide people “who lead a busy lifestyle with a boost of energy and vitamins in one swift (nonalcoholic) hit” (About V, 2003), Frucor launched V, an energy drink specifically developed for daytime use, with the qualities of both caffeine and Guarana, in August 1997, in New Zealand. Since its introduction, the company states that V is the leading energy drink in New Zealand and Australia. Two-thirds of energy drink sales, in New Zealand, are V. “As a result of 'V's launch, Energy Drink consumption per capita in NZ is one of the highest in the world, estimated at over 3 liters per year” (About V, 2003). Currently, Red Bull is distributed to 100 countries throughout Europe, North America, South America, Africa, and the Asia-Pacific region. They currently command 80 percent of the worldwide energy drink market and clearly have global dominance (Brunnen, 2007). In comparison, V is currently distributed in New Zealand and Australia solely. Despite their limited globalized reach, their presence in New Zealand, in particular, is strong. Red Bull is interested in learning how Z has managed such a loyal dominance with their product despite the lack of worldwide recognition. As noted earlier Frucor puts forth that their V is the highest consumed energy beverage in the world per capita, using the per capita statistics in their home market of New Zealand, of 3 liters per person, per year. Brand equity is a perceived consumer value regarding a brand. It is measured based on the level of trust consumers have in that particular brand when compared to a non-branded product. This typically can be approximated as the price a consumer is willing to pay for the branded product above that of another competitive brand. Brand equity is built through several tools. First and foremost is effective marketing through the use of advertising and other forms of public relations and promotion. In addition, a brand's equity is also affected by the organization's ability to maintain their relationship with the consumer and further build upon that trust. Both Red Bull and V have relied upon individual branding strategies, as opposed to family branding. Red Bull has built their brand equity through the use of a unique and effective advertising campaign featuring the slogan, “Red Bull gives you wiings”. The entertaining and quirky cartoon advertisements feature a character drinking Red Bull and escaping some danger or getting that extra burst of energy they need. However clever these campaigns have been, insinuating itself in social culture has truly been the key to Red Bull's success. All night ravers took to the beverage, and its energy enhancing effect, immediately, building that trust that the product does provide the effect that it promises. When the development of Red Bull and vodka hit the local bar scenes, it only further enhanced the brand equity. Further brand equity is built through “buzz-marketing” strategies that bring crowds of consumers to exclusive and exciting, high media coverage events (Gshwandtner, 2004, p. 2). The company sponsors nearly 500 world-class extreme sporting events around the world, such as the Red Bull Air Race. Mateschitz's theory involves bringing the consumers to the product, not just the product to the consumers. It is for these reasons that although the contents are not patented and all ingredients are listed on the outside of each and every can, that for more than a decade companies like Coca-Cola and Anheuser-Busch, and dozens of others eager to get a piece of the pie, simply have been unable to permanently take market share away from Red Bull (Gshwandtner, 2004, p. 2). V, in contrast, has only marginal brand equity outside of New Zealand. Australia is the only other market that it has presence and has encountered significant competition with Red Bull and its partner Cadbury Schweppes. However, like Red Bull, V has geared its marketing to unique methods. Most notably is V-Raw. Through the use of the popular MySpace website, the program offers job opportunities in some of the toughest industries to get a foothold in. Positions in design, fashion and music are offered throughout the year, with the lucky individuals who are accepted for these positions blogging about their experiences (V-Raw, 2007). One of the organization's recent radio campaigns has been highly successful in building brand equity. A radio campaign targeting 18 to 24-year olds featured a widely suffered condition the ad referred to as “The Afternoonies”, also known as crashing, waiting to that special second wind; “The Afternoonies” are referred to as the slump in energy that can be experienced throughout the day, typically post-lunch. Frucor found it an effective way to promote V to their young, highly mobile, audience (Radio delivers, 2006, p. 18). Clearly V has a long road ahead of them in order to compete with Red Bull on a global scale. Their current marketing campaigns have much in common with Red Bull, focusing on unique advertising, a youthful target audience, and, particularly, bringing the consumer to the product has helped brand performance in their home country of New Zealand and their neighboring Australia. However, once they expand beyond this familiar marketplace, Red Bull's grip on the market will be more firmly felt. With Red Bull's control of such a large market share, it will be difficult for V to make successful entry. To improve their performance in the global marketplace, V should carefully consider the inroads Red Bull has already made. It is said, imitation is the sincerest form of flattery. By imitating Red Bull's successes, V can profit from their previous experience. Embedding itself in popular culture will be critical to V's success in improving their brand performance. Sponsoring sporting and other cultural events where their target audience is likely to be in attendance will facilitate this. Increased usage of mobile advertising in the form of Internet marketing, podcasts and radio advertisements will also more effectively reach today's more mobile audience, allowing them to build relationships with their consumers and the trust necessary for brand equity, in a hyper-competitive globalized marketplace. The comparison of V and Red Bull, David vs. Goliath per se, illustrates numerous international management and marketing strategies from all angles. Both multi-national corporations provide similar and different implementation strategies in order to sustain brand awareness, market of entry, developing transnational operations etc., in a thriving “energy drink” industry. Red Bull’s first entry and sophisticated marketing agenda has allowed for smooth dominance in an industry that was nonexistent a decade ago. Other companies like alcohol energy drink Four-Loko should change some ingredients to pass imposed legal sanctions and mimic Red Bull’s customer audience and begin a slow road to success. References Brunnen, A. 25, April 2007, 'Red Bull GmbH' MarketLine Business Information. Retrieved September 10, 2007, from Datamonitor database. 'Global beverages' March 2007, Datamonitor, pp. 1-19. Retrieved September 10, 2007, from Datamonitor database. Gshwandtner, G. September 2004, 'The powerful sales strategy behind Red Bull', Selling Power. pp. 1-11. A new market, 2007. Retrieved September 10, 2007, from http://www.redbull.com/#page=CompanyPage.AsTimeGoesBy 'Radio delivers on youth for V', February 24, 2006, B&T Weekly, vol. 56, no. 2553. pp. 18-18. Retrieved September 10, 2007, from Business Source Complete database. V-Raw, 2007. Retrieved September 10, 2007, from http://www.myspace.com/vraw.