Red Bull: "How a Company Gave Wings to the Energy Drink Market"
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This material is exclusively prepared for Ringle Customers Material for your English session Red Bull: "How a company gave wings to the energy drink market" 0 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers [Summary in English] I. Red Bull: The brand that created the energy drink market Dietrich Mateschitz was inspired to start Red Bull in the 1980s on a trip to Thailand, where he tried a functional beverage (a health or energy drink) for the first time. He began selling Red Bull in 1987. • Mateschitz, who often traveled for work, learned about a functional beverage that could relieve the fatigue of long flights and jet lag, and he was surprised at its effectiveness. Later, on a trip to Thailand, he met Chaleo Yoodvidhya, who was developing and selling a drink called Krating Daeng. It was a kind of restorative drink made with sugar, taurine, and caffeine. It had appeared on the market in the 1970s and was very popular for its effective fatigue relief. • In 1984 Mateschitz acquired the rights to sell Krating Daeng outside of Asia. He translated its name into English as ‘Red Bull.’ He then created Red Bull’s symbolic silver and blue can design and a simple logo of two bulls charging at each other. • Mateschitz spent a year and a half reviewing dozens of ideas and suggestions for his company slogan and finally decided on ‘Red Bull Gives You Wings.’ He also adjusted the flavor of the drink to suit western tastes. However, market research showed that, excluding a very small number of customers, the majority of people reacted negatively to the brand name, logo, and flavor. • Despite these poor results, Mateschitz and Yoodvidhya founded Red Bull Trading GmbH (GmbH is a designation for private companies in German). Red Bull received approval from the Austrian business authorities and launched its product in 1987, but its sales were so low that it could not cover even its marketing costs. Reasons for such low sales included its high price and low brand recognition, [1] polarizing flavor, and a lack of awareness of energy drinks among customers. • However, the brand reached a turning point when it became known as a good mixer in clubs and bars, where it was mixed with various alcoholic drinks. Because customers felt that drinks mixed with red bull created a pleasant feeling of drunkenness, bartenders had to use it. Selling Red Bull as a mixer solved its price and flavor problems and created its premium image as a ‘trendy drink sold at the hottest bars and clubs.’ Three years after its product launch, Red Bull finally [2] broke even, and the brand prepared to continue its development by reinvesting its surplus earnings. 1 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers • After expanding into other European countries, Red Bull entered the German market in 1994, and the brand was so successful there that production could not keep up with sales. Red Bull then created a brand image that distinguished it from competitors by reinvesting its surplus earnings in branding and marketing. Red Bull pioneered and dominated the energy drink market with its unique branding and marketing strategy. • In 1997 Red Bull, which was growing fast enough to enter a new market every month, finally entered the United States market. Red Bull gained widespread popularity by holding ‘guerilla events.’ In these events Red Bull sent cars filled with free samples to gyms, beaches, and schools where target customers gathered. Using this strategy, Red Bull created a new category of ‘fatigue-relieving energy drinks,’ which was an unfamiliar concept at the time. Red Bull was able to distinguish itself from existing carbonated beverages through its high price, unique branding, and unusual distribution strategy. • Mateschitz, who remembered the positive effect that distribution in bars and clubs had on sales and brand image, created Red Bull’s premium image as ‘a cool, elite beverage’ by sponsoring various events and providing bars and clubs with free mini-fridges exclusively for Red Bull. • Each time Mateschitz entered a new market, he first established a distribution network of only a few elite clubs and bars, giving red bull an image of a ‘rare and valuable drink’ because it was famous but only available in a few places. His strategy was to expand this distribution network only when demand sufficiently surpassed supply. • Red Bull maintains a distribution method of beverage production at in-house factories in Austria and Switzerland followed by international shipping. When Red Bull entered the US market it founded Red Bull Distribution Company, but instead of monopolizing the supply of products, it constructed cooperative relations with regional distribution and logistics businesses. Using this strategy, Red Bull was able to reduce the cost of investment in logistics and utilize the specialized knowledge of regional logistics businesses. This helped Red Bull to enter the market effectively. • In 2003 Red Bull controlled two thirds of the energy drink market, selling over 500 million cans. In 2016 it sold over 6 billion cans for sales of around $8 billion. It achieved more than double the sales of its competitor, Monster Energy, to maintain its unrivaled [3] top spot in the energy drink market. 2 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers II. Red Bull’s unique marketing strategy Red Bull’s marketing actively utilized bold and daring events, which were consistent with its brand image, and constructed a premium image through high prices and differentiation strategies. • Red Bull focused on conveying the simple marketing message ‘Red Bull gives you wings’ to its customers. The company hosted an event called ‘Red Bull Fly Day,’ in which participants rode flying machines they had created themselves into the ocean. It also hosted a paper plane contest called ‘Red Bull Paper Wings,’ which developed into a worldwide event of around 40,000 participants. It continues to support daring and adventurous events that help its brand image, such as ‘Red Bull Air Race’ and ‘Red Bull Can You Make It.’ • In 2012 Red Bull launched the Red Bull Stratos project. In this project, Austrian sky diver Felix Baumgartner completed a four minute and nineteen second free fall to earth from a point in the stratosphere 39 kilometers above New Mexico. He was the first person to reach a speed of Mach 1.25 without engine power, and he holds the world record for ‘highest point reached in a balloon by a person’ and for ‘highest place jumped from by a person.’ The jump was broadcast live on Youtube, and 8 million people around the world watched it at the same time. Customers naturally encountered the Red Bull brand and its values through the logos visible in the video, for example on Baumgartner’s helmet and clothes. Red Bull invested $65 million over five years in the project and achieved an advertising impact of $40 billion. After the broadcast, sales increased 16% compared to the previous year. • Red Bull created a unique and unrivalled brand image which other companies could not imitate. They did this through limited selection of distributors, flexible supply adjustment, bizarre events, daring marketing expenditures, and high prices that were double the prices of their competitors. Red Bull’s founder Dietrich Mateschitz focused on content that would excite his core customers. • Rather than promoting the product or the founder of Red Bull, Mateschitz focused on increasing brand loyalty through events and contents that appealed to young people, who are the company’s target customers. Mateschitz was confident that hosting attractive events to excite youthful fans and increasing brand recognition and likability by making Red Bull products and logos visible at these events would naturally increase product sales. 3 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers • In 2007 Red Bull founded Red Bull Media House and began to produce all Red Bull content in-house. Even though Red Bull is not a media company, it invested more than two thirds of its marketing expenses in content production and management, which helped to construct and strengthen its brand image. Red Bull’s Youtube channel has more than 7 million followers and has 20 videos with more than 10 million views. Its most popular video has 86 million views. This is by far the most popular of any company marketing video in the world. • Red Bull directly manages many F1, hockey, and soccer teams, publishes a magazine and creates TV programming related to extreme sports, and sponsors NASCAR races. These diverse activities actively strengthen Red Bull’s brand image. In particular, Red Bull decided that F1 races, in which drivers compete at incredible speeds, are a good match with their brand image, and now the company invests more than $50 million every year in operating its F1 team.