Red Bull energy drink is present in more than 120 countries globally; it has built its brand image as a “functional energy” beverage, which is neither a recreational drink on the one hand, nor a medicinal drink on the other. …
Red Bull is the first of its kind in the global market, and carved out for itself a new category that did not exist before. This distinction and the elements that built it are the sources of brand equity. Brand equity is defined as the added value that is endowed on economic goods as a result of branding (Bick, 2009; Farhana, 2012; M’zungu, et al., 2010; Znaidi & Fidha, 2012). it is – “[The] differentiation effect of brand knowledge on customer response leading to long-term outlook, customer knowledge, brand name, brand power, product innovation, brand quality, brand extensions, brand credentials, brand advertising, brand publicity and above all, effective brand management.” (Arora, et al., 2009, p. 75) 2. Case issues 2.1. Identification of Red Bull’s sources of brand equity The most important issue is the identification of Red Bull’s sources of brand equity, because they drive the product’s value creation. If the firm is to move production forward into the next higher level and avoid obsolescence, it must innovate along the line of its brand equity to ensure that what has been achieved has not been diminished. 2.2. Determination of new products under the Red Bull brand The innovation necessary to preserve brand equity and create value must emanate from the source of brand equity; having identified this in the first issue, the secondary issue is to put this knowledge into practice by choosing among alternative products that add further value. 3. Analysis of the Case The case treats on the entry of the Red Bull brand into new product categories, and the impact of this move on brand equity. These aspects are the gist of the three questions the answers to which follow: 3.1 Description of Red Bull’s sources of brand equity – Aaker’s sources of brand equity consist of 10 items spread over five dimensions, namely brand loyalty, perceived quality/leadership, associations/differentiations, awareness, and market behaviour (Gill & Dawra, 2010). These are all present in Red Bull. One element of brand loyalty is premium pricing; Red Bull is well received because its high price was seen to be justified by its added benefits above other drinks. Perceived quality and leadership are partnered with differentiation; Red Bull was marketed as the first energy drink, and thereafter leader of its class. The fourth dimension, brand awareness, was evident in German and Hungarian markets where, solely through word of mouth, mystique about the brand spread (including reference to “bulls’ testicles” as ingredient) such that the product was well anticipated and demand created long before its introduction. The fifth dimension, market behaviour, was positive in countries such as Austria where the product was first introduced, and the positive response worked to create brand equity in new markets Red Bull subsequently entered. 3.2 How Red Bull’s marketing program contributes to brand equity The elements of the marketing mix employed by Red Bull all contributed to a different experience in the mind of the consumer, which was important in creating product recall and influencing future choice (Korkofingas & Ang, 2011). The marketing mix includes the 4 P’s, namely product, pricing, placement, and positioning. 3.2.1 Product – The first of a new class of beverage, the energy drink, which competitors first dismissed as a fad and then later on imitated. In Austria, the company needed to lobby for the creation of a new category, “functional food,” because the product did not fit into any of the established categories. The taste, which was adjusted to approximate the traditional cola, nevertheless retained a hint of “medicinal” flavour that still distinguished it as a functional beverage. 3.2.2 Packaging – ...
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