Wednesday, August 7, 2013

Red Bull: STiR-communications Marketing Company of the Year

To know me is to know I am on the go from the get-go. I move fast, talk fast, my ADD has a case of ADD, and have been accused of being heavily caffeinated. Guilty of all, however, one thing I don’t have is wings. That has not stopped me from admiring the legions of angels who do.

Our Marketing Company of the Year: Red Bull.

Even though Red Bull has been credited with inventing the energy drink industry, they do not sell you an ounce of it. If you look closely at their marketing, they sell you adrenaline, they sell you action, they sell you passion. They just happened to bottle it into a small blue and silver can than contains taurine. That is one of the most masterful sales in history.

Go to its Facebook page, which is closing on 35 million fans as of this writing, and you will be hard pressed to find a single picture or a mention of the Red Bull bottle. As a matter of fact go to their homepage and you will also have great difficulty finding a single picture of the product on such prime real estate. Red Bull marketing does not sell you drinks. Red Bull may taste like carbonated medicine in a can while promising physical energy through glucose or a mixture of sugars, but it’s much more – it’s the most dominating aspirational brand in the category since Coca Cola.

As I write laying next to me is its lifestyle magazine, to which I subscribe. That’s right, I do not drink the product, but Red Bull has captured me and millions of others within its brand attributes.

In-Bound Marketing
In quarter three in 2012, Red Bull sponsored a skydiving jump from space. The skydive jump for Felix Baumgartner was delayed for weather reasons on three separate occasions and critics were questioning why would Red Bull would dump so much money in sponsoring such an event when their objective is to sell drinks. What critics were not paying attention to was the legions of followers online during this timeframe.

Red Bull’s marketing strategy was born via an in-bound marketing strategy of two-way communication and during the period of time when the launch was delayed amassed a huge social media following. Red Bull’s Facebook page is currently ranked 41st, which is ahead of Starbucks, Harry Potter, and McDonald’s. There is only one beverage company that is ahead of Red Bull in Facebook rankings: Coca-Cola. It would be wise to watch its back … In more ways than one.

To answer the question of why, well, for one it broke the record of the most watched live streaming event on YouTube with over 8 million people. The previous record you might ask? It was the London Olympics with an audience of 500,000 concurrent streams. Red Bull smashed the previous record by a multiple of 16! No small feat indeed. Then, according to the Huffington Post: besides YouTube, the jump was shown by more than 40 TV stations and 130 digital outlets. Red Bull’s Facebook post-jump photo of Baumgartner gained almost 216,000 likes, 10,000 comments and over 29,000 shares within 40 minutes, and half the worldwide trending topics on Twitter were related to Red Bull.

Do these benefits translate into profits for the company? That is hard to say since Red Bull is private and does not report its financial statements; however, it would be a very safe bet to say that the skydive from the edge of space, the three-peat Constructor’s Championship in Formula 1, along with Sebastian Vettel’s three-peat Formula 1 Driver Championships, the numerous Flugtag events, and the tons of other non-traditional sponsorships cannot have hurt. In fact, it is known that back in 2010 it sold 4.2 billion cans worldwide with just over a billion of them here in the United States. That represented a jump in revenue of 15.8% year over year. What was Coca-Cola’s increase? Between 3 and 4%.

There is no question that Red Bull Marketing is a force to be reckoned with. I sincerely believe that 2012 will be shown to have been the inflection point in Red Bull’s meteoric rise to the top. I have said it before and I’ll say it again, strategy is not about doing things better, it is about doing things differently. Red Bull has its headquarters in Austria near Salzburg (birthplace of Wolfgang Amadeus Mozart) in a town called Fuschl. Not your typical seat of a multi-billion dollar conglomerate. Yet, there is nothing typical about Red Bull nor its marketing. Red Bull has thrown the old marketing book out the window and is writing its own. We should all be so lucky to peruse it.

How Red Bull Did It
In today’s society, consumers are bombarded with promotional messages from organizations. Consumers receive these messages when they listen to the radio, watch television, read a newspaper, commute to work or simply walk around a city. Effective promotion relies on the message reaching the consumer in an accurate and timely way. However, there are so many messages it can be difficult for a business to reach its target audience. Promotional messages can easily become simply noise. They crowd the marketplace and make everything more confusing for consumers. This creates a marketing problem. To address this problem, some marketers look for new ways to communicate with consumers. They seek to break the traditional rules of marketing by reaching consumers in innovative ways.

Dietrich Mateschitz founded Red Bull in 1984 after discovering the widespread popularity of tonic drinks in the Far East. He developed the Red Bull Energy Drink, launching the product on the Austrian market in 1987. Since then, Red Bull has launched a range of products, including Red Bull Cola in 2008 and Red Bull Energy Shots in 2009. Today, Red Bull has annual sales of around 4 billion cans in 160 countries and employs more than 7,700 people. Red Bull has a distinctive approach to marketing: using a progressive marketing strategy. This type of strategy aims to constantly evolve and develop the brand. This approach allows Red Bull to engage with consumers using new and exciting channels of communication.

In recent years social media has become a vital marketing tool for many organizations. Its increasing popularity, predominantly with young audiences, has had a huge impact on modern marketing techniques. Digital and social media campaigns are integral to Red Bull’s marketing strategy. This case study illustrates how Red Bull uses a range of innovative promotional techniques to improve the process of communication and drive consumer engagement and loyalty.

To meet the needs of its customers, every organization seeks a distinctive marketing mix. This is often referred to as the 4Ps. It involves focusing on:
  1. product – the specific features and benefits of the product
  2. place – where and how the product is sold
  3. price – setting the right price in each market
  4. promotion – using the most suitable form of promotion to reach customers
For example, the marketing mix for Red Bull is based around:
  1. A distinctive product – the taste of the product is unlike any other, it also has a functional effect in comparison to other soft drinks
  2. It is easy to obtain as it is sold in a variety of places – including retail outlets and food and drink establishments
  3. Red Bull uses a premium pricing strategy. The product is priced above that of competitors’ products. Consumers will pay a premium for Red Bull due to the quality of the product and the product’s benefits. This is reflected in the fact that it is the world’s best-selling energy drink.
  4. However, perhaps the most interesting element of Red Bull’s marketing mix is its approach to promotion. Red Bull embraces innovation within its promotional activities and as such is able to create a lasting impression on consumers. The concept behind its promotional activity is to give people ‘Wiiings’. This translates as pushing the boundaries of what is possible and nurturing people’s talent so they can achieve their goals and dreams.
The aim of the promotion element of the marketing mix is to grow the business and increase market share. Businesses develop a promotional strategy in order to encourage customers to purchase their products. Many base their approach on AIDA principles. AIDA is an acronym that is shorthand for the stages in a sales process, Attention, Interest, Desire, Action.

There are several traditional approaches to promotion:

Perhaps the best known is advertising. This is a key element of what is known as above-the-line promotion. This type of promotion usually delivers messages to a wide audience using the press, television, radio and the Internet. Although this makes it easy to reach a large audience, it is more difficult to deliver a memorable message that is tailored to a specific target market. It can be costly: for example, television adverts at prime time are very expensive. In addition, businesses cannot completely control who sees or hears their adverts or how they respond. Red Bull’s above-the-line promotion primarily helps to increase top of mind brand awareness amongst consumers.

Below-the-line promotions encompass all other forms of promotional activity. To reach targeted groups of consumers, Red Bull focuses heavily on developing inventive below-the-line promotions. Unlike many businesses, Red Bull does not use traditional sponsorship as a method of below-the-line promotion. Red Bull takes a different approach. It creates and organizes its own events around the world. These events provide a platform for talented athletes to showcase their skills and ambition.

Sporting events include Red Bull X-Fighters and Red Bull Air Race, where the world’s top FMX riders and pilots respectively perform world-class flips, turns and tricks in front of tens of thousands of spectators. These events help to establish the brand values. They also begin the AIDA process with the participants and audiences for these events, creating awareness and interest in Red Bull products.

A key aspect of Red Bull’s promotion is about creating genuine relationships with individual athletes, such as Robbie Maddison, who was able to achieve his lifelong ambition when he performed the first ever motorcycle back flip over a raised Tower Bridge in London. Through supporting these athletes in pushing themselves beyond their limits, Red Bull is able to engage with consumers. Red Bull events provide experiences that excite, surprise and challenge participants and spectators. For example, events in summer 2011 included Red Bull cliff-diving in the south of Italy and the Red Bull Flugtag event in Leeds. Red Bull Flugtag challenges brave and creative individuals to design, build and pilot their own homemade flying machines off a 30ft-high flight deck. Almost 100 Red Bull Flugtag events have been held around the globe. Teams are judged on the distance flown, as well as the creativity and originality of their flight machine idea. They also win points for their performance during their pre-flight speech to the thousands of spectators.

Events like these support the brand ethos and contribute to the Red Bull experience. They are based on a belief that mass awareness can be achieved without requiring big budgets. In fact, the large-scale activities, such as the Formula 1 team that is owned by Red Bull, are not the cornerstone of its promotional strategy. These activities are focused on building talent and pushing the sport to new levels through innovation. However, the emphasis is on local activities that can have a big impact and create interesting media coverage. These have the advantage that the company can quickly and inexpensively change anything that is not working. It can repeat or develop ideas that work and seem to have good public appeal. The program is managed through an annual activity plan, which is based on a three-year overview of promotional work.

Pull Marketing
Word of mouth (WOM) promotion is based on the principle of pull marketing. It relies on the transmission of a positive marketing message from person to person through conversation or a personal communication such as email or text message. Pull marketing gets consumers to bring other consumers to the product. In contrast, push marketing uses above-the-line promotional techniques to put products in front of consumers in order to generate sales.

Red Bull extensively uses pull marketing. This approach involves getting consumers excited about the product and conveying this excitement to their family and friends. It is also about trying to get coverage of Red Bull events in the press. This coverage can encourage consumers to find out more about the product. It helps to generate momentum through creating interesting stories for people to talk about, which in turn helps to create brand awareness and grow sales.

The founder of Red Bull used pull marketing to promote his original product in the 1980s. He hired a Red Bull Wings Team to go out and talk to people one-to-one about the product. This helps to create consumer interest in the product. As people experience the drink and appreciate its qualities, they become advocates for the brand. They share their opinions with other consumers when they talk with friends. The promotion therefore creates a ripple effect.

Red Bull continues to use this process to reach consumers in innovative ways, including:

Red Bull Wings Team –
The team of students go out on the road in their Red Bull mini to help launch the product in new markets. The branded mini has a Red Bull can on the back of it. The team offers a cold can of Red Bull to people in need of energy to demonstrate the product’s qualities. Through engaging consumers in a fun, non-threatening way they create a personal and positive product experience. For example, the Wings Team attended the 2010 London to Brighton mini run. The team was there for the early start to offer competitors a cold can of Red Bull.

Student Brand Manager Program –
Individual students help activate a variety of events on campus. They organize activities around the world to get people talking about the product and get students actively involved on their own university campus.

Red Bull Bedroom Jam –
This is a competition to help teenage musicians get out of their bedrooms and onto the big stage, giving them an experience they may never have been able to have. Red Bull records bands playing live from their bedrooms for the world to see via the Internet. The bands that create the most attention online then compete for long-term career support and the opportunity to play at festivals and be tour support for established musical acts. This helps create interesting media coverage that gets people talking about the brand.

Red Bull Reporter –
This project provides opportunities for aspiring writers, filmmakers and presenters to report on world-class Red Bull events, giving them the chance to have their work published in a variety of credible publications.

These creative and original projects help Red Bull to capture the attention of its increasingly knowledgeable audience. They aim to build brand loyalty by creating relationships with consumers.

Digital and Social Media
Digital and social media are core elements for all of Red Bull’s campaigns. These tools provide direct and relevant lines of communication with Red Bull’s core youth audience. Facebook, Twitter and online blogs make it easy for people to exchange information quickly between themselves. These channels of communication make word-of-mouth and other pull marketing strategies more effective.

To remain competitive and interact with consumers, Red Bull is constantly creating new ways of reaching its audiences online. Red Bull also uses a variety of smart phone applications to promote its campaigns. These methods create connections with consumers, which minimize the risk of ‘noise’ affecting the promotional message. Unlike advertising campaigns, which have to be planned months in advance, the great advantage of some of the techniques that Red Bull uses is that they are easy to adapt and refine. Red Bull constantly creates new methods and techniques to engage with consumers. This is vital in such a competitive market.

For promotions to remain effective, Red Bull has to analyze the impact of different campaigns. Word-of-mouth promotions can be more difficult to measure than some traditional methods of promotion. Although healthy sales are an important measure, Red Bull uses other measures to evaluate the effectiveness of its activities. For example:
  1. Setting targets for sales returns from the smaller promotional activities.
  2. Evaluating the amount of editorial coverage its activities receive in the media.
  3. Measuring the number of blogs related to Red Bull’s products and the frequency of comment on these blogs.
  4. Evaluating the online influence of Red Bull activities in the social media. For example, on Twitter there are around 875,000 followers of Red Bull activities. On Facebook, more than 35,000,000 consumers ‘like’ Red Bull.
  5. Conducting an annual brand health-check with consumers to ensure that they like the brand.
Return on Investment
Measuring the outcomes of Red Bull promotions is not just about return on investment. These figures do not create the whole picture. This is because it can be difficult to value word-of-mouth promotions on paper. Sales returns do not take into account other factors such as longer-term brand loyalty.

As a specific example, the Red Bull Wings Team has proved to be a very important part of the marketing strategy. When Red Bull has launched products in countries without this program as part of its promotional mix, they have not been received as well by consumers.

Red Bull adopts a progressive marketing strategy that is constantly evolving to push the brand forward. Social and digital media is at the heart of all of its promotional campaigns.

This type of strategy allows Red Bull to adapt its promotional activity to reflect technological and social changes, for example, the increasing use of smart phone applications as a channel of communication to its audience. Consumers’ expectations are higher than ever, and as such Red Bull strives to use innovative marketing techniques to reach its audience.

In short, 6 basic tenets have turned this company into the world’s leader within the energy drink category and made them STiR-communications’ Marketing Company of the Year:
  1. Embrace a sense of purpose
  2. Beyond Big Society: do more than grow your bottom line
  3. Move beyond ROI: pitch for emotional impact
  4. Embrace ‘extreme marketing’
  5. Behavior trumps brand values
  6. Place commitment above all things

1 comment:

  1. Thanks for taking the time to share this, I feel strongly about it and love reading more on this topic. If possible, as you gain knowledge, would you mind updating your blog

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