Different people use Red Bull for different reasons. Some drink it to revitalise their mind and body, some to enjoy their vodka and others to justchill out with an exciting, tasty drink. Essentially, Red Bull’s consumers are defined by a state-of-the-mind. They are dynamic, young & activeand relate to Red Bull’s unique personality as an innovative, intelligent, nonconformist, dangerous, self-confident, edgy, witty, charming, polarising and unpredictable brand.
Challenges facing the brandRed Bull has been operating profitably in a niche segment of the soft drink market. With the maturing market and the onslaught of competing brands, however, Red Bull is facing some serious problems. The sales volumes of the energy drinks market has seen the slowest growth in several years and Red Bull’s market share has slipped by the end of 2008. The biggest gainers have been Coca-cola’s two energy drinks brands, Rockstar and Monster. (Sundale research’s State of the Energy and sports drinks industry report 2008)Moreover, Doctors and nutritionists have warned of the dangers of mixing caffeine and alcohol in excessive quantities. Red Bull has been linked to the death of a basketball player in Ireland and three consumers in Sweden. Countries such as Denmark, Norway, and France have banned the sale of Red Bull. (Pearson Education)What then are the options open to Red Bull to overcome these pressing challenges? Is it time for Red Bull to look beyond the energy drinks market? Can it move into others segments keeping its brand image intact? Will the customers accept such a move? Will it make sense from the business point of view?
Matt Haig, in his book ‘Brand Failures’ suggests that expanding in new markets could be a good option for companies facing market saturation. He argues that there are economical benefits of entering new markets using the same brand name as such extensions result in immediate customer recognition, less money spent on advertising and increased visibility of the parent brand.According to Brand Extension Research, brands should be extended if they are well-known, have high awareness and good reputation among the target market and have a ‘fit’ (consumers’ acceptance of the brand in the new category) and ‘leverage’ (impact of the distinctive properties that the brand ‘owns’ that lead customers in the new category that perceive the brand extension as superior to the existing products). It also claims that brand extensions should open a category for the firm and must make business sense. (www.brandextensions.org)Hence, in order to give Red Bull wings to fly beyond its core but saturating energy drinks market, we looked at extending the brand to a new category, keeping in mind:It’s impact on the consumers’ perception of the brand;The likely synergies it would create for the mother brand; andIt’s economic benefits and business sense.