RICH PICKINGS: Witty marketing gives Red Bull wings
In the past 25 years, Dietrich Mateschitz has transformed Red Bull from a little-known energy drink into a global power brand by following one rule – get the product noticed, no matter what the cost.
Not only was his friend’s life at risk, but there was surely some risk to his business as well. Mateschitz’s $5.1 billion fortune is built on the energy drink Red Bull, which sponsored and funded Baumgartner’s record-breaking dive.
In the end, it all went well. Baumgartner landed safely and Mateschitz landed another marketing coup that some claimed was worth more than $200 million.
For the former toothpaste salesman, the Baumgartner stunt is another chapter in what has been an incredible career.
In the space of 25 years he has turned Red Bull from a little-known Thai energy drink into a global power brand known in 160 countries.
The way he has built the company and his impressive fortune is a testament to his skill as a master marketer.
Let’s look at some of his top lessons.
Look further afield for great ideas
The story begins in 1944, when Mateschitz was born in a small Austrian village. After studying ship building he took 10 years over a commerce degree before going to work in marketing for German toothpaste group Blendax. But by the age of 38 he was burned out.
It was on a holiday to Thailand that Mateschitz tried a local "tonic” that he found cured his jet lag. Soon after, he was sitting in a Hong Kong bar when he read an article that stated that the biggest tax payer in Japan was the maker of a similar tonic. He was struck by an idea – take the Asian tonic to the West.
In 1984, Mateschitz teamed up with a Thai businessman called Chaleo Yoovidhya, who invested $500,000 alongside Mateschitz. Red Bull was born, with one crucial difference – the Thai tonic was carbonated to make it more attractive to the Western soft drink market.
Ignore the focus groups
Mateschitz might have thought he was onto a winner, but potential customers disagreed. A famous focus group he conducted just prior to the release of Red Bull in Austria in 1987 returned an unpromising verdict. "People didn't believe the taste, the logo, the brand name," Mateschitz told Forbes in 2005. "I'd never before experienced such a disaster."
While anyone who has had a Red Bull would have to agree with the focus group’s opinion on its taste, Mateschitz decided to back his hunch. Besides, as Mateschitz told Businessweek last year, taste matters less than the idea behind the product. "It's an efficiency product. I'm talking about improving endurance, concentration, reaction time, speed, vigilance, and emotional status. Taste is of no importance whatsoever."
Make a statement with your pricing
Creating a brand at the premium end of the market is something most entrepreneurs aim to do. But Mateschitz went a step further, pricing his product more than three times the average soft drink. It was a masterstroke. Mateschitz wanted to tell consumers that this was a drink with real benefits (a caffeine and sugar-fuelled energy boost) and the high price helped him do it. It also put Red Bull in a category all by itself, at least initially. "If we'd only had a 15 per cent price premium, we'd merely be a premium brand among soft drinks, and not a different category altogether," Mateschitz told Businessweek last year.
Get the kids on board
Not surprisingly given his marketing background, Mateschitz spent a lot of time before he launched working on his branding and packaging, working with an old friend called Johannes Kastner, the man who would come up with the famous "Gives you wings” slogan prior to the launch. A nice slideshow from Kastner’s advertising firm sets out the very deliberate personality of the brand, which he describes as "innovative, self ironic, intelligent, nonconformist, self-confidence, witty, charming, polarising, unpredictable” – in other words, a brand that young people could identify with.
Ram your brand down their throats
Creating the brand is one thing. Getting it out there is another and it’s a task that the Red Bull empire takes very seriously. The company admits to spending 30 to 40 per cent of its revenue on marketing, which equates to a spend of somewhere around $1.5 billion a year. As Kastner’s presentation shows, there are four distinct areas of spending:
– Above-the-line advertising – to build up awareness and image
– Opinion leader marketing – to support credibility of the product and the brand
– Event marketing – to prove that the brand is up-do-date and different
– Sampling – to convince consumers
A few of these areas deserve special attention, as they really underline why Red Bull has been able to create a marketing edge.
Content is king
While many brands create content as part of their marketing efforts, Mateschitz takes a very different approach to this using his sponsorship dollars to actually put his brand right in the middle of the action. The stunt with Felix Baumgartner and the company’s endorsements with a range of athletes are an example, but Red Bull has gone to another level by actually buying or creating entire sporting teams, including two Formula One race teams, four soccer teams and a hockey team.
Naturally, these organisations are run as a business with the aim of turning a profit, but there are different ways to measure return. "In literal financial terms, our sports teams are not yet profitable, but in value terms, they are," Mateschitz told Businessweek. "The total editorial media value plus the media assets created around the teams are superior to pure advertising expenditures."
Play the media
Creating content on the word’s sporting fields and tracks is one thing – owning a media group to showcase that content is another. Red Bull Media House was created by Mateschitz to produce and distribute content across print (it has created magazines for US newspapers including the LA Times), television (it has funded programs shown on sports network ESPN), film (including a snowboarding film called The Art of Flight) and online platforms. "Its first and primarily goal is to produce and distribute high quality and unique content for our own channels as well as for our partners. What one also has to take into account is that we create editorial media value for our brand, which offsets investments. In the long term, we expect that Red Bull Media House to be profitable,” Mateschitz told GoCreate in February.
It’s not the safest way to make your product a success, but getting Red Bull banned in countries including France and Denmark hasn’t exactly hurt Mateschitz. Safety concerns about the drink and rumours about its ingredients have followed Red Bull around the world, but Mateschitz hasn’t exactly moved to quash these – indeed, rumours that one ingredient came from the semen of bulls were even explored on the company’s website. "In the beginning, the high-school teachers who were against the product were at least as important as the students who were for it," Mateschitz told Businessweek last year. "Newspapers asked, 'Is it a drug? Is it harmless? Is it dangerous?' That ambivalence is so important. The most dangerous thing for a branded product is low interest."
It’s the essence of Red Bull – push the boundaries and push some buttons, but just make sure you get noticed.
James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.