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Question 1 Marketing Research plays an instrumental role in all three phases of the marketing management process in: planning, implementation, and evaluation. 1. Discuss how Red Bull uses marketing research in the above three phases. The marketing research process as described by Kotler and Keller (2006:103) consists of the following steps: [pic] The next sections detail an analysis of how Red Bull has been able to achieve planning, implementation and evaluation using the above marketing research process: A. Planning Red Bull’s Problem definition
The introduction of the case study describes the variety of energy drinks which is available on the South African market and the aggressive campaigns of Red Bull’s competitors. The challenges Red Bull had before entering the market are listed below: 1. Avoiding the trap of being perceived as a “sports” drink only. This is where others have failed previously. 2. Promote the product sufficiently so that awareness is well created within the South African market. 3. Avoid thinking bigger in terms of the potential consumers within the market category of energy drinks. . Product price 5. Ability to mix with alcoholic drinks. The Research Plan Red Bull designed its research plan as follows: Data sources: Observation of current consumption of energy drinks within the South African market Research approaches: The research approach that was employed was mainly observation and surveys about customer perception about the product. Sampling staff would gather this information and try to convince consumers about the benefits of Red Bull. Research instruments: A uestionnaire might have been employed by sampling staff while interviewing customers Sampling plan: Red Bull’s strategy is to market to specific targeted group which is not restricted to sports only. Contact methods: direct interviews B. Implementation Collecting Information Primary data was collected as follows: |Data Source |How did Red Bull proceed | |Observation |Red Bull does observation based on the feedback of the sampling people dedicated for educating the consumer.
However, | | |observation is not the core of primary data collection mechanism used by Red Bull | |Focus groups |Not used by Red Bull | |Survey Research |This activity is the core of Red Bull’s data collection strategy.
It has a dedicated team on the field who listens to | | |the customer and they gather fruitful info about: | | |Likes and dislikes | | |Misconceptions about the product | | |Complaints, e. . high content of caffeine | | |Response to customer queries | |Behavioural |Red Bull puts much emphasis on the first impact the product has on the customer. They are encouraged to drink the whole | |data |to feel the effect. This will undoubtedly have a snowball effect and encourage new potential customers. |Experimental |Red Bull targeted consumers who most likely would consume energy drinks, not restricted to sports only. Thus, it has | |Research |tried to strike two birds with the same stone by targeting most people who need physical complements as well as those | | |who need to be boosted mentally ??? the reason why it is distributed to hospital staff as well. | | |Scientific tests have also been performed to prove that the product is secure. | C.
Evaluation Information Analysis and Findings The information analysis steps explained by Harvard Business School Press (2003: unknown) consists of statistical analysis methods and software to determine correlations that will enable management decision. The case study does not directly describes how Red Bull conducts information analysis, but the company knows what are the main concerns of the market which are price, distribution, ingredients, effects, etc. and the sampling staff are well equipped with answers for this.
The information about the product, when given on the spot coupled with the ability of Red Bull to provide the best taste of the product ??? from the cold fridge ??? may change the buyer’s perception instantly. Part 2 2. Identify the extent to which the initial energy drink was modified in light of the market research conducted. The original energy drink recipe from Asia has been modified to meet the demands and tastes of the western market based on the research carried out in terms of: 1. Consumer perception of energy drinks a.
To fit in the western market, Red Bull had to adapt to the philosophy of energy drinks. It should not be perceived as a cure to disease ??? like physical or mental fatigue else this would require pre-marketing clearances. b. After market research, Red Bull realises the importance of giving the consumer information about the real benefits of the product and that’s why it has been tested on extreme sportsmen like cyclists. Furthermore, Red Bull has focused mostly on the benefits to the mind and the body to clear out all doubts from the consumer’s mind.
The actions taken by Red Bull are: 1. Several testing of Taurine in labs to prove product is not harmful 2. Assess physical and mental performance on the human body It is playing in a market where people are educated and the success lies in the creation of comfort level within the consumer that the product is safe and the benefits obtained from it. Pricing is not that important in the western market. 2. Consumer taste Red Bull has been adapted to fit into the market for several reasons as explained below: 1. The taste should be pleasant enough for it to be in the mainstream. . It needs to be able to mix well with alcoholic drinks, so that partygoers can also be targeted. 3. Added contents should not have any side effects. The above criteria have been met after rigorous market research and the product has been customized accordingly to fit into the market. 3. Package Modification Bryce and Dyer (2007: unknown) describe the entry of Red Bull on the US market in 1997 which started at double the price of a Coke or a Pepsi. The Red Bull can is designed as narrow, tall cylinders, so retailers could stack them in small spaces.
After gaining much loyalty, it is now present in the conventional outlets next to a Coke or Pepsi. The observation data collection method conducted at outlet level enabled Red Bull to squeeze into the shelf of conventional outlet and display next to Pepsi and Coca Cola. In doing so, it is being identified both in the energy drink as well as the soft drink category. Question 2 Part 1 The market entry of Red Bull was rooted firmly in its brand identity. Discuss Red Bull’s brand identity and its well-defined positioning strategy.
Red Bull was voted among the top brands in Africa and Europe in 2001 as per the chart below: [pic] Source: Kumar, Linguri and Tavassoli (2004: unknown) As per Kumar et al (2004: unknown), Red Bull makes use of “word-of-mouth” marketing. The brand identity of Red Bull was reinforced not to be only a symbol of virility but to ensure the softer side by the introduction of the cartoon and slogan “Red Bull gives you wings”. Let us align the Red Bull’s brand identity and positioning strategy with Kotler and Keller’s Brand Resonance Model (2006: 281) in the table below: Nature of Relationship |Red Bull’s Positioning | |[pic] |Red Bull has captured between 70 to 90 % market share in more than 100 countries – | | |Gschwandtner (2004: unknown). | | |Gschwandtner (2004: unknown) reports that Mateschitz believes in “We don’t bring the product | | |to the consumer, we bring consumers to the product. | | |From the above, we infer than Red Bull has an intense brand loyalty and has attained | | |resonance in many countries. | |[pic] |Red Bull does not focus on personal judgments of customers and succeeds to assure consumers | | |towards it. It supports close to 500 world-class extreme sports athletes and often | | |record-breaking events across the globe to promote emotional buying. |[pic] |1. It has been adapted to fit partygoers to keep them awake | | |2. To stimulate the body and mind for the big market. | | |3. Product has been modified to mix with alcohol | |[pic] |Its strong brand identity allows smooth entry on a new market and Red Bull only has to build | | |up towards resonance. The PDCL Model Ghodeswar (2008: unknown) proposes a conceptual model to build a brand identity ??? which is a combination of existing brand models – in competitive markets as follows: [pic] Source: Ghodeswar (2008: unknown) Discussion Positioning the brand There are several methods applied by Red Bull to position the brand during the early days of the product. a. The “Ying-Yang” concept of balance between body and mind. b. Consumers are given as much information to attract them towards the product. c. The ability to increase body and mind efficiency in case of fatigue.
It should however be highlighted that Red Bull has benefited from several windfalls as explained below: 1. In the early 1990s, clubbers needed something to revive them into the early morning hours. Red Bull hits “bull’s eye” at that time. 2. The early 1990s is the start of human resource performance management within most organizations around the world. One of the drawbacks identified within performance management is the tendency of people to overwork and sitting at the office for long hours. This change in work practices forces people towards energy-drinks.
The market needed it; they had it at the right time. 3. The introduction of laws against medical stimulants in the sports world shifted the need towards products which are permitted. Red Bull falls in this category this paved the fast track towards brand loyalty. Communicating the brand message Red Bull marketing does not spend a lot in advertising but sponsoring events in sports which does not cost that much compared to massive television advertisements and other media advertisements. It sponsors around 500 extreme sports events which attracts more than 50,000 people.
The celebrity community is also invited, examples are California Governor Arnold Schwarzenegger and Naomi Campbell appears when Mateschitz is the host – Gschwandtner (2004: unknown). Delivering the brand performance The chart below gives an idea of how Red Bull performance increased from 1987 to 2001. Its 2003 global sales were ???1. 26 billion and around 1. 5 billion cans. The figures and the exponential growth show how the brand was performing exceptionally well in the market. [pic] Source: Kumar et al (2004: unknown) Leveraging Brand equity
In order to respond to market threats, Red Bull released the sugar-free version in 2003. In 2004, Red Bull launched “LunAqua”, drinking water carrying the bull logo. This is to illustrate the Red Bull’s strategy to diversify its portfolio to support the parent brand. Part 2 Explain the benefits that Red Bull’s brand identity achieved According to the MANCOSA textbook, an effective brand identity achieves the following: ??? It establishes the product’s character and value proposition. ??? It conveys this character in a distinctive way ??? It delivers emotional power beyond a mental image For identity to work, it must be conveyed through every available communication vehicle and brand contact ??? Even a seller’s physical space can be a powerful image generator In relation to the above let us analyse the benefits that have been achieve by Red Bull in terms of: ? Functional Benefit ? Emotional Benefit ? Social Benefit 1. Functional Benefit When the product was launched, much emphasis was put on the functional benefits in terms of: 1. Increase physical endurance, improve concentration and reaction speed, improve vigilance and stimulate the metabolism. 3. Mixes well with alcoholic drinks, e. . Vodka 4. Detoxifies the body and mind of fatigue hormones 2. Emotional Benefit Ron (2007: unknown) explains only few brands have been able to translate the functional benefit into something consumers start a new relationship. Some examples of such brands are: Coca-Cola, Starbucks, Singapore Airlines, and recently Apple. Further explanation is given in the same article in terms of relevancy and consistency. The emotional benefits achieved by Red Bull are: 1. The slogan “Red Bull gives you wings” influence the psychological behaviour of consumers 2. The word-of-mouth communication strategy used 3.
Influence by sponsorship of extreme sports evens, usually record breaking to give the crowd thrilling experiences. 3. Social Benefit 1. Mixing with the partygoers, it has become a norm during Rave parties so that people are awake till early morning and can still enjoy. 2. The Red Bull Music Academy (RMBA) events held in several cities around the world, gathered aspiring musicians and DJs. This was well accepted by the music community ??? Kumar et al (2004: unknown). 3. In 2004, Mateschitz announced the creation of a motor sport and aviation centre where visitors will be able to race cars and fly different airplanes.
There will be several restaurants, hotels and a shopping mall ??? Gschwandtner (2004: unknown). Part 3 Identify any one of Red Bull’s competitors and describe its positioning. V is the most eligible competitor to Red Bull and it is gaining a lot of popularity in the west. The following describes the positioning of V vis-a-vis Red Bull: 1. Points of Difference Relevance Guarana is being used as an energy drink in Brazil and is also being widely used in western countries. Distinctiveness Compared to Red bull, V’s core constituent is plant based and thus, may have the tendency to surpass Taurine, which is derived from meat and seafood.
The Muslim community may still have certain doubts regarding the source from where this ingredient is derived even though Red Bull certifies that the product is 100% Halaal. The promotion strategy compared to red Bull is more media based and more targeted towards the youth as stated in the case study. Believability Nowadays, people tend to go more for products whose ingredients are plant based. We have seen how Aloe Vera, for example, has been the ‘panacea’ of the 21st century. Most of the health care products And now even baby nappies contain Aloe Vera lotions. 2. Points of Parity Category 1.
V falls under the energy drink category and being widely used in Brazil as energy drink 2. The target market is very similar to Red Bull, starting with the youth. 3. V is also adopting aggressive promotion campaigns on TV and radio to have a high impact. Competitive 1. V is emphasizing a lot on its ingredient and conveys a lot of the functional benefit to the market. 2. It is trying to use position the brand at the Judgment and feelings level in the Brand resonance pyramid. That is why it has been disallowed to use the slogan “revitalises body and mind” formerly used by Red Bull. Question 3
Red Bull ascribes most of its success to its unique and specific promotional strategy, the “four pillars of Red Bull”. Part 1 Critically evaluate the four pillars referred to in the case study. The four pillars are the promotion mix of Red Bull, not the marketing mix as stated in the case study. 1. Advertising Advertising Budget Red Bull spends a lot on advertising. The following factors decide the advertising budget: |Stage in the product life cycle: new products need large advertising for |Red Bull does not need to spend here | |market penetration | |Market share and consumer base: Taking share requires larger advertising |Red Bull spends massively at this stage in events and sponsorships. | |spending. | | |Competition and clutter: a brand must advertise more heavily to be heard. |Red Bull spends to promote buzz marketing rather than making noise. | |Advertising frequency: create brand image in the consumer’s mind |Red Bull’s money is concentrated on niche market advertising | Advertising Media
MANCOSA textbook summarises the advantages and limitations of each media type as follows: |Media |CONS |How did Red Bull counteract? | |Television |1. Short-lived nature of the message can cause product-related messages|1. Create a message that will be memorable by using witty | |& cinema |and the brand itself is overlooked. |animated advertisements. | | |2. The large number of ads make consumers to ignore or forget ads |2. Displaying high value of Red Bull, thus impacting on | | |3.
High costs |emotional buying behaviour. | |Radio |1. Lack of visual images and relatively passive nature of the consumer | | | |processing that results. | | 2. Sampling Sampling ambassadors at Red Bull has several tasks instead of just collecting marketing data. These tasks are: 1. Identify target audience 2. Give them enough information to influence their buying behaviour 3.
Clear out any misconceptions about Red Bull. 4. Provide the consumer the best form of Red Bull ??? served chilled The above is quite common, but Red Bull selectively chooses the sampling staff in order to reflect the brand image. We would tend to compare with the big fashion brands where sex appeal is a major component when choosing salesperson. To hit the British market, Red Bull employed student brand managers and targeted those students who had most influence in their group which Red Bull qualifies as ‘alpha bees’- Kumar et al (2004: unknown).
This strategy worked out to be very effective when niche market is concerned, where brand gets closer to the consumer. 3. Sport sponsorship Sponsorship is taking a serious perspective in the marketing strategy of companies. Javalgi et al (1994 in Dolphin 2003:177) describes the objectives of sponsorship: 1. Enhancing corporate image 2. Increasing awareness of brands 3. Stimulating the sales of products or services 4. Leveraging corporate reputation. The above objectives are very much in line with the objectives of Red Bull stated in the case study.
Sport sponsorship is not new since we have seen the sponsorship of Nike-Michael Jordan, which targets the mainstream. Since mainstream sponsorship is exorbitant, Red Bull went for selective sponsorship. The trend in sports sponsorship has controversially changed in 2006 where Red Bull is now spending $300 million – one third of its marketing budget to buy its own teams instead of just sponsoring them as per Ho (2006: The Washington Post). For me, this is a massive investment and it is costing a lot for Red Bull to keep the momentum of 70% to 90% market share. 4. Events
Why Red Bull has selectively chosen sports events can be explained by the reasons given by Shannon and Turley (2000: 323): 1. Emotionally charged environment: excitement and affiliation that fans associate with the game will transfer to the product or organization. 2. High number of stimuli: environment can influence a number of behaviours and attitudes including satisfaction. 3. Impact on sports fans: Studies on advertisements in college basketball arenas and football stadiums found that approximately 70% percent of their respondents indicated that they noticed in-arena advertising.
This is how Red Bull makes the impact. 4. Products sold inside arena: products benefit most from the advertising that is placed there. 5. Recognition and recall: The constant display of ads help transfer from short term memory to long term memory. This is a means to help Red Bull ensure brand resonance. Part 2 Discuss the strategy used by Red Bull in the use of animated advertisements representing the lighter side of the brand’s profile. At first, Red Bull’s Red Bull’s brand identity was dominated two big bulls facing each other to represent strength, performance and balance.
MANCOSA textbook speaks of 4 types of advertising namely information advertising, persuasive advertising, reminder advertising and reinforcement advertising. Red Bull’s animated advertisements are reinforcement advertising. The cartoon characters are intended to reinforce brand identity rather than create awareness. The amusing stories give the consumer a funny experience with the brand and give life to the slogan. It should however be noted that these media are more specifically meant to target the young population. Mc Kinsey survey of 2003 gives an indication of media consumption in the US for year 2003 as follows: [pic]
Source: The Mc Kinsey Quarterly 2005, Number 2 It is also estimated that by 2010, television advertising will be only 35% as effective as it was in 1990. The above shows that online advertising will be the most effective means of communication to the youth ??? six times as much time spent than the overall population. Red Bull has not ignored this part as well. The web site contains a lot of animations and the Graphical User Interface (GUI) is far much interactive compared to traditional static websites. The website even hosts online games for our young surfers.
Discussion The table below compares the objectives of animated advertisements and whether Red Bull met these objectives: |# |What were the objectives? |Were the objectives met? | |1 |Create interest and momentum. |Consumers are bombarded with a large number of ads and make it easy for them to ignore or | | | |forget. Red Bull comes with a ‘witty’ story to make the brand memorable. Red Bull thus | | | |positions itself in the mind of the consumer.
Objective met. | |2 |Reflect the high value of the product |The visualisation concept gives consumers the benefits aspects of Red Bull. That’s why Red | | | |Bull does not choose print media. This is a ‘push’ to make consumers think and purchase Red | | | |Bull to experience the benefits. We cannot quantify how much animated ads have contributed | | | |towards sales, but it has had success.
Objectives met. | |3 |Appeal to a specific market |Radio, TV and cinemas are meant to target young people. Radio ads however obviously lack | | | |visual images and consumer process results passively. Objectives partially met for radio ads. | |4 |Summing up of the Red Bull positioning |Strengthen current position: Intention is to reinforce brand identity rather than create | | |statement |awareness. | | |Deposition or reposition the competition: Animated ads do not compare with competing products. | | | |Focus is about benefits on body and mind. Objectives partially met. | Question 4 The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decision. Part 1 Discuss the psychological factors that affect consumer buying behaviour and show how Red Bull addresses these factors.
A customer’s buying behaviour is influenced by cultural, social, personal factors and psychological-Kotler and Keller (2006:174). The psychological are further broken down into the sections discussed below. 1. Motivation Crawford (1997: unknown) defined a motive as “an impulse to act in such a way as to bring about the meeting of a specific need”. How has Red Bull motivated consumers? | |Maslow’s Hierarchy of Needs |Red Bull Motivation | | |1.
Physiological Needs |Red Bull is not a basic commodity. So focus is not here | | |2. Safety Needs |Some safety need since it is not a 100% natural product | | |3. Social Needs |This is where Red Bull focuses the most. It creates a sense of belonging among sportsmen as well | | | |as partygoers.
The fact that it helps to keep people awake in the early hours will motivate | | | |people towards it. | | |4. Esteem Needs |The selection of sportsperson to act as brand ambassador is something paramount for Red Bull. | | | |Moreover, to create the sense of self-esteem and recognition among consumer, record breaking | | | |events are sponsored and organised by Red Bull.
The Taurus Award – annual award for the world’s | | | |best stuntmen and stuntwomen ??? organised to create the sense of belonging to the brand. | | | |Gschwandtner (2004: unknown). | 2. Perception Perception is more about how the consumer pictures the product in his mind. 2. 1 Selective attention |Facts |Red Bull | |People are more likely to notice stimuli than |Red Bull created the need for partygoers to remain awake till early in the morning. |relate to a current need. |”Revitalises body and mind” and “Red Bull gives you wings” attracts attention | |People are more likely to notice stimuli than they|Red Bull does not generate stimuli that people would anticipate, but controversially do things | |anticipate. |that people would not thought of, like record breaking sports events. | |People are more likely to notice stimuli whose |The four pillars of Red Bull are the customised Red Bull’s promotion strategies to create the gap | |deviations are large in relation to the normal |vis-a-vis the competitors’ promotion strategies. |size of the stimuli. | | 2. 2 Selective distortion The Red Bull Flugtag event is some sort of selective distortion not for the mainstream but intended to reinforce buzz surrounding the brand. 2. 3. Selective retention The selective retention techniques employed by Red Bull are: 1. 25% more performance 2. Detoxifies the body from fatiguing toxins 3. Revitalises body and mind 3. Learning The sampling team is well trained to give the consumer a memorable experience with Red Bull. They are encouraged to drink the full can so that the real benefits can be felt.
Much information is given to them when they first encounter the sampling women so that this influences the buying behaviour. 4. Beliefs and Attitudes When Red Bull entered the British market, sales was very difficult at the beginning. Red Bull focused on night clubs and the student market. It used “alpha bees,” and if they like the product, they will tell others about it. People believed in alpha bees, and by 2000, its sales nearly approached that of Germany (Gschwandtner (2004: unknown)). Part 2 Discuss how the Five-Stage Model of “Consumer Buying Process” could be used to ensure that customers continue to buy Red Bull.
Kotler and Keller’s (2006:191) model describes the consumer buying process as per the diagram below: [pic] Red Bull’s Buying Behaviour Before using the above model, it is very important to understand in which consumer behaviour category is the purchase of a Red Bull. The psychological factors discussed in part 1 of the question depicts that the purchase of a Red Bull is emotional buying. According to Rook (1987 in Bayley and Nancarrow 1998: unknown) describes the characteristics of an emotional purchase – The feeling of an overwhelming force from the product; An intense feeling of having to buy the product immediately; – Ignoring of any negative consequences from the purchase; – Feelings of excitement, even euphoria; – The conflict between control and indulgence. New York Times reporter Curtis (2006: unknown) narrates that Red Bull promotes “an attitude of originality, non-conformism and dreamy reverie”. Coupled with the above, the mantras of Red Bull “vitalizes body and mind” and “gives you wings” generated the force of attraction and excitement to go towards a Red Bull.
According to Verplanken et al (2005 in Silvera, Lavack and Kropp 2008: unknown) emotional buying does not fit neatly into existing models of behavior. People do not necessarily require the need for energy drink; it is not a physiological need. Thus only some stages of the consumer buying process could be used to ensure that customers continue to buy Red Bull. Important Stages for Red Bull Continuity Since Red Bull is an emotional buying behaviour, much emphasis will be on the purchase decision and post purchase behaviour. Purchase Decision Stage
MANCOSA’s textbook gives a break down of five sub-decision processes related to the Brand, the Dealer, the Quantity, the Timing and the Payment-method, out if which only the Brand and the Quantity which are relevant to Red Bull. The extent to how the Brand is presented to the consumer will affect him emotionally and Red Bull does this very well. Every interface with the consumer has been exploited namely: 1. Retail Outlets ??? Presence of sampling staff 2. Youth ??? Sports, student brand managers in the UK. 3. Party – music events, DJ shows
Post Purchase Behaviour Marketers must monitor post-purchase satisfaction, post-purchase actions, and post-purchase uses. Red Bull’s main focus is mainly on the post-purchase satisfaction. Sampling staff force customers to drink a whole can to benefit from the full benefits of the product. After they have set the expectation about the benefits, they want consumers to experience it and they are meeting expectations in order to build loyalty. This is proven by Red Bull’s market share of 70 to 90% in most countries around the world.
The loyal customer, through word-of-mouth marketing, will influence others’ buying decision and this is how Red Bull ensures ever growing market share. Bibliography Anderson, J. , Narus, J. A. (1998). Business Marketing: Understand what customers value. Harvard Business Review. Bryce, D. J. , Dyer, J. H. (2007). Strategies to Crack Well-Guarded Markets. Harvard Business Review. Bayley, G. , Nancarrow, C. (1998). Impulse purchasing: a qualitative exploration of the phenomenon. Qualitative Market Research: An International Journal. Volume 1 number 2. MCB University Press.
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