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The Case of Red Bull

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The Case of Red Bull Master Thesis Value creation by branding: the case of Red Bull Copenhagen Business School – 15th May 2018 International Marketing and Management Supervisor: Jonas Nielsen Stausholm – 107017 Peter Schrøder Jon Kjartan Kristinsson – 107553 Characters/pages: 271,459/119 Abstract Firms have to rethink what they see as their core competencies, as brand capital is becoming the main value creator in the 21st century, compared to physical capital in the 20th century. Red Bull is the world’s largest energy drink manufacturer, the brand as a resource, is the source of sustainable competitive advantage for Red Bull, a strong brand is the main factor of differentiation within the energy drink industry. The core identity of the Red Bull brand is to give wings to both people and ideas. The brand meaning is value based, making it possible to successfully extend the brand far beyond the core business. Since its foundation Red Bull has successfully diversified into several sport sub-industries - as for example eSports, football and Formula 1 - generating high brand awareness. Red Bull´s ownership strategy of sport teams, athletes and events, is significantly different from the strategy of their competitors, as well as other strong brands. Sport activities are guaranteed to create memorable experiences, and these experiences build and maintain Red Bull´s strong brand, a brand which has achieved a truly loyal base of consumers. These consumers exhibit both behavioural and attitudinal loyalty. Red Bull is perceived to be superior to its competitors, as well as being a premium brand, generating several essential benefits for Red Bull. The high degree of brand awareness, as well as the emotional attachment generated by associating the Red Bull brand with sport activities, supports the utilization of the brand as a resource which is the source of a sustainable competitive advantage for Red Bull. Table of Contents Introduction ............................................................................................................................................... 6 Red Bull Gmbh ...................................................................................................................................... 6 Sport milestones .................................................................................................................................. 7 Problem identification ......................................................................................................................... 10 Research question ................................................................................................................................ 10 Limitations ........................................................................................................................................... 11 Structure of the thesis .......................................................................................................................... 11 Methodology ............................................................................................................................................. 12 Research philosophy ............................................................................................................................ 12 Data collection ...................................................................................................................................... 13 Primary data ...................................................................................................................................... 13 Expert interview........................................................................................................................................... 14 Consumer interviews .................................................................................................................................... 14 Secondary data .................................................................................................................................. 14 Validity and reliability ....................................................................................................................... 15 Theory ...................................................................................................................................................... 16 Strategy ................................................................................................................................................ 16 Resource-based view ......................................................................................................................... 18 Essential tests .................................................................................................................................... 18 Parenting advantages ......................................................................................................................... 19 Five forces of competition ................................................................................................................. 20 Value chain ....................................................................................................................................... 22 VRIO ................................................................................................................................................ 23 Summary on strategy ......................................................................................................................... 24 Branding .............................................................................................................................................. 25 Brand equity ...................................................................................................................................... 26 Brand Loyalty.................................................................................................................................... 29 Behavioural loyalty ...................................................................................................................................... 30 Attitudinal loyalty ........................................................................................................................................ 31 Experience economy .................................................................................................................................... 32 True loyalty ................................................................................................................................................. 34 Satisfaction and expectation ......................................................................................................................... 34 Satisfaction and Loyalty ............................................................................................................................... 35 Brand Architecture ............................................................................................................................ 36 Brand Extension ................................................................................................................................ 37 Summary on branding........................................................................................................................ 38 Network Theory ................................................................................................................................... 39 Social media ...................................................................................................................................... 40 Summary on network theory .............................................................................................................. 41 Summary .............................................................................................................................................. 41 Analysis .................................................................................................................................................... 42 Competitive advantages ....................................................................................................................... 42 The energy drink industry .................................................................................................................. 42 Entry barriers ............................................................................................................................................... 43 Threat of substitutes ..................................................................................................................................... 46 Rivalry......................................................................................................................................................... 48 Bargaining power of suppliers ...................................................................................................................... 50 Bargaining power of buyers.......................................................................................................................... 51 Summary on the energy drink industry .................................................................................................... 53 Red Bull´s value chain ....................................................................................................................... 54 Supporting activities ...................................................................................................................................
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