Saturday, November 15, 2008

Red Bull's Brand Equity

According to Keller (2008, p 53), brand equity is the strong, favorable and unique brand associations in the memory of customers. He goes on to identify (p 54) two sources of brand equity: 1.) Brand Awareness; and 2.) Brand Image. Red Bull has well defined tactics for both sources.

The Brand Awareness Source for Red Bull Brand Equity
Keller (p 54) notes the key elements of Brand Awareness: 1.) Recognition; and 2.) Recall. He postulates that if buy decisions are made at the point of purchase, then brand name, logo, packaging and the other elements of brand recognition are important factors. If the buy decision is made before arriving at the point of purchase, then brand recall is centrally important. Duncan (2005, p 140) concludes that low-involvement purchase is usually done for products that are relatively cheap, bought frequently, and are low risk. In such cases, in addition to traditional advertising with its reach and frequency drills, it would be productive to spend time getting the name, logo and packaging correct.

Red Bull did just this. The Pearson Case Study 4 (2006, p 70) describes how Red Bull selected a distinctive, slim can. They also created a prominent and eye-catching logo of two bulls and a yellow sun. Package wording effectively communicates the products benefits: Energy Drink. The packaging is an important part of the branding, as we might expect for a low-involvement product. Pearson Case Study 4 goes on (p 70) to note that changing the carefully selected package elements, in Germany substituting a glass bottle for the slim can, resulted in a dramatic drop off in sales.

To increase brand recall, Keller (p 55) advises that a slogan or a jingle can establish the memory linkages that improve recall. Pearson Case Study 4 (p 69) relates that Red Bull developed an effective slogan, “Red Bull gives you wiiings.” They use little advertising but when they do it consistes of unusual animated shorts that end with the slogan, “Red Bull gives you wiiings.”

The Brand Image Source for Red Bull Brand Equity
Keller (p 56) gives the necessary strategy for building a brand image: “link strong, favorable and unique associations to the brand in memory.” There are two factors to strengthen brand association: 1.) Personal relevance; and 2.) Consistence in its presentation over time.

Keller (p 57) goes on to say that direct experiences create the strongest brand benefit associations. This fits into Red Bulls strategy according to Pearson Case Study 4 (p 73). Their entry strategy is to seed happening places such as shops, clubs, bars and stores. They thus focus initially on opinion leaders who obtain positive direct experience with the brand. Once word of mouth has created a buzz about the product, they then widen distribution to areas surrounding the “in” spots. Keller (p 57) postulates that word of mouth advertising is particularly effective at building positive brand image in the product categories of restaurants and entertainment. It is not a stretch to see that this happened with Red Bull as well.

Keller (p 58) discusses how desirability and deliverability are critical factors in creating a favorable brand image. For Red Bull, Pearson Case Study 4 (P 70) gives the energy boosting and detoxifying benefits for the product. Red Bull improves endurance, increases mental alertness, improves reaction time, and eliminates waste substances. These are favorable for athletes, business people, and clubbers. In addition to favorability, Keller (p 58) says another factor to stimulate desirability is believability. Direct experience and word of mouth from opinion leaders is very believable.

Deliverability – does the product deliver what it promised? Pearson Case Study 4 (p 69) gives the pharmacology of Red Bull. It consists of caffeine as a stimulant, and two amino acids: taurine and glucuronolactone. These are both energy enhancing and detoxifying. This is confirmed by pharmaceutical studies. The formula for the drink has been patented by a Thai Pharmaceutical company.

Uniqueness is the third major factor for building brand image. According to Pearson Case Study 4 (pp 71-2), Red Bull created a new food category, Functional Food that enabled it to have the unique ability to make any performance claims about a food. The study notes (p 81) that this act enabled Red Bull to “establish the brand’s prominence on its own terms.” This gave it a unique message to communicate to its users, and a significant barrier to entry for competitors. It now enables Red Bull to establish in consumers the belief that its characteristics are prototypical for all members of this category, because today there are competitors. Keller (p 59) notes that this is positive for brand image.

For a more complete analysis of Red Bull integrated marketing communications, see Redmond Review

References
Duncan, T (2005). Principles of Advertising & IMC. McGraw-Hill/Irwin.

Keller, K (2008). Strategic Brand Management. Pearson/Prentice-Hall.

Neumeier, M (2006). The Brand Gap. New Riders.

Pearson Case Study 4 (2006). Red Bull: Building Brand Equity in New Ways!. Pearson/ Prentice-Hall.

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