• Marketing a Bull to Withstand a Monster

    by  • April 1, 2012 • Branding, Leadership, Marketing, Strategy

    RedBullFlyIn my blog of last week, entitled A Monster of an Idea, I gave kudos to the Monster Beverage Corporation for becoming a ridiculously-profitable, high-growth $2 billion dollar enterprise despite ignoring the Holy Grail of marketing commandments. Monster entered the market after Red Bull, discounted their product, proliferated the hell out of the brand, and committed a boatload of sins that would give marketing pundits Al Reis and Jack Trout migraine headaches. Yet, despite Monster’s disregard for the immutable laws of marketing, the brand’s “cult” status insulated it from any punitive market damage. Today, Monster Beverage keeps chugging along at a phenomenal 30% annual growth rate. I hadn’t realized it, but that blog of last week left people with an unanswered question – how in the world did Red Bull withstand the onslaught?

    Like Monster, Red Bull was also created by an entrepreneur. Dietrich Mateschitz, a former Jacobs Suchard marketer with plenty of blue chip packaged goods experience, launched Red Bull in 1987. A market did not exist for his brainchild; Mateschitz believed he could create one. You see, Mateschitz was brilliant at understanding the power of brand image – in the case of Red Bull, an irreverent image expressed by the target’s consumption of a rebellious product. Unlike Monster, Dietrich Mateschitz followed the strategic disciplines of brand marketing that he’d learned at Unilever and Jacobs. Over 25 years, Red Bull tenaciously sticks to strategy in everything it does. The difference to conventional branding is this: “cult” imagery and the “buzz” created by breakthrough marketing execution that continues to drive Red Bull’s distinctive image. 

    Red Bull’s initial target market was the college crowd. Without a large budget, Mateschitz relied on sampling students to create word-of-mouth awareness. The strategy was wildly successful. Then as sales grew, he leveraged the growth and invested in Red Bull sponsored sports and entertainment events directed at young urban professionals. Mateschitz never looked back, even though he had a host of predators at his heels, including Rockstar and entries from Coke and Pepsi. The current slogans, “Red Bull Gives You Wings,” and “No Red Bull, No Wings” are as strategic as you can get; they not only relate to the stimulating properties of the product, but also the Red Bull way of life.

    The irony in Red Bull’s approach to publicity is a new business that may very well exceed energy drink sales. A few years ago Red Bull realized they were becoming one of the biggest content sources of action sports and culture on the planet. So they created a revenue-generating media business parallel to Red Bull’s beverage business. Red Bull Media House produces content wherever followers of the Red Bull lifestyle may be. The content can show up on DVD, on-line and on television. Beyond action sports, this amazing company is pushing the limits of programming – fundamentally producing content of interest to its potential audience, such as the documentaries Bouncing Cats, Red Bull Street Kings (the power of hip-hop to improve the lives of Ugandan children), and Mission to the Edge of Space (to advance scientific discoveries for the benefit of mankind). Check out Red Bull Stratos site and ask yourself if Pepsi or Coke would ever think of such an initiative? This is game-changing thinking by new-game entrepreneurs.

    Two similar products, two strategic paths, two successful energy drink companies. Yet, the one that followed the principles of marketing with outstanding creativity and continued entrepreneurship remains the leader. The proof is in the numbers. Sales: Monster – $1.95 billion, Red Bull – $5.2 billion; Profit after Tax: Monster – $286 million, Red Bull – $855 million; Market Share: Monster – 29%, Red Bull – 42%. Yes, in the energy drink market there is more than one way to skin a cat. But no one has figured out how to skin a bull.

     

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    About

    Formerlife: Jacobs Suchard CEO (Kraft, Nabob), Strategy Consultant. Afterlife: Palgrave Macmillan Author, Business Blogger, Wannabe Novelist

    3 Responses to Marketing a Bull to Withstand a Monster

    1. April 11, 2012 at 10:33 am

      A great post that reminds us of the importance of understanding what customers like, not just what companies can offer! Do what your customers will respond to, not just what you already know how to do.

      • John
        April 11, 2012 at 4:49 pm

        Thanks for the input, Kerry. The most remarkable thing about this company is how a “classic” packaged-goods marketer can balance the emotional with the rational side of branding. I’ve seen no one do it like Dietrich Mateschitz of Red Bull . . . and he’s certainly developed an amazing group of like-minded disciples to help him. Best way to describe the Red Bull “way” is disciplined entrepreneurship.

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