Red Bull Case Study
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Red Bull is an energy drink that doesnt do well in taste tests. Some say its too sweet. Others just shake their heads, saying, “No.” Its contents are not patented, and all the ingredients are listed on the outside of the slim silver can. Yet Red Bull has a 70 to 90 percent market share in over 100 countries worldwide. During the past 15 years, the drink has been copied by more than 100 competitors, but such companies as Coca-Cola and Anheuser-Busch have been unable to take market share away from Red Bull.
Says Red Bull founder Dietrich Mateschitz, “If we dont create the market, it doesnt exist.”
Mateschitzs secret to creating a $1.6 billion worldwide stampede for Red Bull lies in a highly ingenious “buzz-marketing” strategy that herds consumers to exclusive and exciting events that get high media coverage. Red Bull supports close to 500 world-class extreme sports athletes that compete in spectacular and often record-breaking events across the globe. Mateschitz explains, “We dont bring the product to the consumer, we bring consumers to the product.”
Today Red Bull is a powerful global brand and very few customers know the story of the highly talented, creative and determined salesman, publicity-shy Dietrich Mateschitz. Tiny Austrias only billionaire, Mateschitz located his office in the quaint lakeside village of Fuschl, near Salzburg, Austria. His architect is currently building a new office building in the shape of two volcanoes. His collection of 16 airplanes is located in a steel and glass hangar, which serves as an aviation museum and the home of the Flying Bulls at Salzburg Airport. He tries to keep it down to working three days a week. He likes to keep things simple. The size of his headquarter staff is only 200. Mateschitz farms out the production and distribution of the 1.5 billion cans sold worldwide. The total number of employees worldwide is only 1,800, which brings the sales volume per employee close to a million dollars. Mateschitz not only generates brilliant sales and marketing ideas, he is equally talented in the execution of the biggest and boldest business ideas. His latest project involves a $1 billion motor sport and aviation theme park in Styria, Austria.
Dietrich Mateschitz founded the Red Bull company.
According to company legend, the idea for Red Bull came about as Mateschitz sat at a Hong Kong hotel bar in 1982, drinking a popular local health tonic. As he sipped, he envisioned a business opportunity to market the Asian energy drink to Western consumers.
Two years later, he teamed up with Thai businessman Chaleo Yoovidhya, fiddled with the traditional formula to make it less syrupy and more fizzy, and renamed the beverage Red Bull.
Packaged in silver and blue cans that picture two red bulls fighting, Mateschitz marketed the concoction to young people as an energy booster, using sassy advertising spots and the catchphrase “Red Bull gives you wings.”
First launched in Mateschitzs homeland of Austria, Red Bull branched out to neighboring European countries before being introduced in the United States in 1997. Today, the company reports sales in more than 100 countries.
Red Bull spends relatively little on traditional print and TV advertising, instead relying on sponsorships of extreme sports or giving away samples at local events.
Mateschitz sits in front of a Corsair airplane, part of his “Flying Bulls” fleet. Flying Bulls is a daughter firm of Red Bull.
Mateschitz also has been involved in Formula One racing for more than a decade, using the events to draw attention to his brand. In addition, he sponsors the World Stunt Awards, an annual fund-raiser to help injured stunt workers.
The companys nontraditional marketing has paid off: More than a billion cans of Red Bull are consumed each year, according to the company. The drinks global popularity has surged quickly. It now captures about 70 percent of the worldwide energy drink market, according to Hoovers Inc., an information database of the worlds top businesses.
Red Bull has paid off for Mateschitz, too. Forbes magazine welcomed the beverage mogul to its billionaires list in 2003.
Mateschitz credits good marketing — as well as a good product — for his success, he told a Thailand newspaper last year.
“It is essential that one develops a unique communication and advertising strategy a campaign that combines body and mind in a very nonconformist way,” he said in an interview with the Bangkok Post. “The image of Red Bull is definitely nothing to do with any food product, but has a luxury, lifestyle identification.”
WHEN he launched Red Bull, a sweet and tangy energy drink in a slim silver can 15 years ago, Dietrich Mateschitz wrote a new chapter in marketing history. The Austrian entrepreneur not only created a new beverage category: the global market for energy drinks now doubles every year. His gut feel for branding made Red Bull a global cult drink, with euro1.4 billion ($1.3 billion) of sales last year.
“We dont bring the product to the people,” says Mr Mateschitz, a bronzed and energetic 57-year-old. “We bring people to the product. We make it available and those who love our style come to us.” What Red Bull showed, according to Nancy Koehn, a historian of brands at Harvard Business School, is that mass-market advertising was not the most effective way to reach and keep customers.
Instead Mr Mateschitz launched the brand by persuading students to drive around in Minis and Beetles with a Red Bull can strapped on top, or to throw Red Bull parties around weird and wonderful themes. The companys only advertisements are a series of whimsical television cartoons.