Red Bull New York: To Build or Not to Build off of the Parent Company’s Image?



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Red Bull New York: To Build or Not to Build off of the Parent Company’s Image?

Case Study: Red Bull New York: To Build or Not to Build off of the Parent Company’s Image?

Jake Whiteley

Western Kentucky University



Abstract

The energy drink category has a clear global market leader. Red Bull built their brand by becoming the “antibrand” and using viral marketing campaigns to engage young fashionable people around the world. The underground feel that became linked to the brand helped drive the drinks popularity to build product recognition and targeted consumer loyalty. In 2006, Red Bull purchased a Major League Soccer, the New York/New Jersey MetroStars, and renamed them Red Bull New York (RBNY). Merging RBNY into the Red Bull way of marketing did raise questions around how much to leverage the Red Bull brand to grow RBNY brand. While there were some questions and challenges to RBNY building off of its parent company the benefits for both sides are clear and outweigh the potential risks.



Company Profile

In 1984 Red Bull GmbH was created in Austria which was the conception of the energy drink category. Dietrich Mateschitz founded Red Bull during the mid-1980s after determining that the functional drinks he consumed while traveling to Thailand help eased jet lag. The drink that Mateschitz enjoyed the most was Krating Daeng, which is Thai for “red bull”, was produced by T.C. Pharmaceutical who eventually formed a subsidiary, Red Bull Beverage Co. Ltd (Lee 2010).

Red Bull Energy Drink was sold for the first time in April of 1987 in Austria after its approval from the Austrian FDA. The product mostly sold in convenient stores, as it was mostly purchased by drivers for its high caffeine content. Red Bull made it to the United States in 1997 when it was marketed in select California markets. Within five years it would have distribution across the entire United States. Globally, since 1987, Red Bull has spread to 165 countries employing almost 9000 people in 2012. The 8,996 employees in 2012 were responsible for selling 5226 billion cans of Red Bull which is an increase of 12.8% against 2011(Red Bull 2013).

Red Bull has become much more than just an energy drink company by establishing a media company called Red Bull Media House in 2007. The Red Bull Media House is a multi-platform media company that focuses on sports, culture, and lifestyle (Red Bull Media House 2013). They strive to offer a wide range of media across multiple channels to a global audience. While much of their content is created they also offer other opportunities to partner with other businesses looking for opportunities to distribute content or licensing. Red Bull Media House summarizes their goal on their web page. At Red Bull Media House, they’re on a mission to fascinate. “We constantly strive to create and distribute top-quality media assets that leverage not only our own media brands, but also those of our third-party media partners.”(Red Bull Media House 2013).



Business Situation

Red Bull worked hard to create an “underground” feel to their brand, but as the product and its advertising have become mainstream can or should they try and keep the same feel to it? The “antibrand” that was established early in the launch process and continued as Red Bull has spread throughout the world could be questioned when they are purchasing and rebranding professional soccer teams. The great success they have experienced by avoiding traditional marketing has changed some over the past few years, but the product has become a part of many individuals lifestyle.

Sponsoring and owning sport related events and teams were nothing new to Red Bull. Since 1991, when the Flugtag event was held in Vienna, Austria, they have sponsored a variety of events from surfing to mountain biking while owning professional sports teams ranging from Philippian professional basketball to racing teams at NASCARs highest levels. Red Bull has chosen to own or least sponsor their future. Their self-produced reality shows that document surfers and snow-boarders is prime example of owning your own media and creating interesting content that people want to watch will produce consumer engagement that leads to loyalty.

How does soccer play into the “underground” and “antibrand” strategy feel that Red Bull has worked so hard to deliver? It was apparent due to the lack of fan interest with its previous ownership that the MetroStars needed to try something different. Traditional marketing strategies and partnerships had not worked and the disengaged fan base clearly displayed that. Soccer is associated with most people as a high endurance sport that requires long hours of training that result in the sharpening of the player’s skills. So the associations with Red Bull, an energy drink that gives it consumers an “edge” seems almost natural. The disengaged fans seem to help make this a natural fit by adding an outsider feel to the club. But, Red Bull clearly brings instant brand recognition to the team and with a positive on field performance, the Red Bull Energy Drink should benefit with soccer fans around the world taking note.

Multiple concerns initially came into play when the Red Bull purchased the New York/New Jersey MetroStars and began rebranding them as Red Bull New York. Red Bull had decided to remove New Jersey and Metro from the name and logo which created push back from fans. But, Red Bull quickly made public relation and soccer moves that created positive energy around the organization. These moves, hiring of renowned coach and freeing up salary cap space so they could go sign several big name players, were the first step in regaining the trust of the local fan base. The moves also helped to raise brand awareness throughout Major League Soccer.

The next move made by Red Bull, and possibly the boldest, was the commitment to build a soccer only fan friendly complex that would hold 25,000 fans. This new stadium was set to be built in Harrison, New Jersey and would be called Red Bull Arena. While it was difficult for Red Bull to receive funding for the arena, they were able to tie in local youth soccer programs which created more community involvement giving them the support of local government.

After establishing a relationship with the community and displaying its desire to produce a winning club, Red Bull New York has begun using more traditional advertising and marketing strategies and tactics to grow its brands. These advertisements have included images that bring attention to both brands. An example of these ads is a 2008 campaign that featured Jozy Altidore and Juan Pablo Angel titled “Flying High”. The images included the players kicking the soccer ball with a red bull coming from their foot giving the appearance that the red bull was providing extra power.

Red Bulls advertising and marketing strategies have become mainstream in the past decade. One concern is, how will this impact the brand image moving forward? The idea that consumers will stop buying the product because they watch a commercial on network television seems to be farfetched, but over a longer period of time the impact of more mainstream could affect the brand image if that is the only way they choose to promote their product.



Branding Strategy

Red Bull’s original marketing strategy was to become the “antibrand” with the perception of being “underground”. This strategy would set them apart in the eyes of consumers as they would quickly understand the anticorporate sentiment and appeal to individuals who seek to be different. By becoming an “antibrand”, Red Bull insinuates to consumers that they are more concerned with consumer needs as opposed to corporate infrastructure or demands. To do this they would implement multiple viral marketing campaigns.

The first phase of this strategy included restricting supply of product and refusal to advertise. Phase two was to make the product available and create a preference at key locations, such as nightclubs, in which most of the attendees would be younger. At these key locations Red Bull would have influential figures host the parties while drinking and serving Red Bulls. Even, going as far as having bartenders create alcoholic drinks which contained Red Bull. Loyalty and exposure for the brand began to explode with the club and bar communities giving the image that Red Bull drinkers were enhanced both day and night by its benefits.

The next phase of their market strategy focused on creating a connection with “style of life” by leveraging the idea of drinking or purchasing Red Bull the consumer image will improve. While trying to make your product trendy or popular is not an original idea; the viral marketing campaign did help build the brand in this way. Another part of this strategy was to ensure that they remained the premier product in their growing category.

While continuing to utilize viral marketing to build the “antibrand” in new and existing markets; the decision was made to increase customer engagement to support the recognized brand image and further entrench the brand as part of lifestyle. The company decided to conduct events that would give attendees a hands-on opportunity with a variety of art, music, dance, and other action based experiences. These events became popular quickly, and one the best examples of these events are the Flugtag event which was first held in the early 1990’s. The events challenge teams of up to five to create and launch homemade flying machines off a ramp and are then evaluated in three categories: distance, creativity, and showmanship. Flugtag events have grown around the world bringing together large crowds of spectators. In 2003, at London’s Hyde Park, over 250,000 spectators arrived to watch the Flugtag forcing the park to close the gates. The largest Flugtag event held in the United States took place in Tampa Bay, drawing more than 110,000 fans in 2008. At the end of 2012 Red Bull had hosted more than thirty-five Flugtag competitions in countries all around the world. Red Bull’s approach and target audience hasn’t changed much over the years as displayed in their Flugtag FAQ for the 2013 Chicago event. The question is “WHAT happens on Red Bull Chicago event day?” Answer: “Crazy stuff. Scary stuff. More extensively the fearless pilots launch their team-powered flying machines off a 30-foot ramp into (or over!) the Lake Michigan waters below.”(Red Bull Flugtag Chicago FAQ 2013).

Red Bull has used more traditional marketing strategies such as paid advertising, sports advertising, sponsorships, and product placement. In 1992 they launched a cartoon campaign strategy: a well-known character, event or subject, to which a broad audience can relate, is found in a "larger than life" story with an unexpected twist (Red Bull 2013). The first cartoon released was asks the question “Did Leonardo Da Vinci invent Red Bull?” The ad not only suggests that Red Bull is a masterpiece, but it closes with cartoon Da Vinci stating “Red Bull gives you wings” as he flies away on the can he just created. More recently in 2011 they sponsored the worlds breakdancing championship, motorsport racing teams around the world, and a LPGA golfer in the United States. The current tag line on the Red Bull Milestone page is “Available in more than 165 countries & more than 25 years of Giving Wings...” Red Bull continues to sponsor events around the world that inspire individuals to achieve their goals and have maximized “giving wings”.

By capitalizing on the brand awareness that the Red Bull energy drink has created, is one of the keys to Red Bull New York’s strategy for building their brand. Soccer is a game of nonstop action and the participants must be in top physical shape as they are required to push their bodies to its limits. This type of physical competition creates an obvious connection to the energy drink.

Red Bull New York has also leveraged a unique and aggressive strategy to brand their product and drive fans to their stadium and create fan engagement. The New York and New Jersey area offers endless options for fans with discretionary income, making the marketing strategy even more crucial. Beyond some of the more traditional tactics, they have partnered with several marketing firms to come up unique ideas that engage their target audience. In 2009, they partnered with Attack!, a marketing company, to create a presence marketing campaign. This campaign was designed to draw awareness for the Red Bull’s home opener. Attack! was able to deliver over 160,000 brand impressions over a five night period leading up to the game by using a projector to display the images in targeted locations.

Another influential tactic used in 2010 was created by a partnership with a New England based company, Archival. When their new stadium, Red Bull Arena, opened in 2010 in New Jersey there was concern around fans from New York coming to watch the games. The advertisement shows a fan getting ready for the game by taking the train and arriving at the stadium and has clips of a player getting ready for the game. The tag line is “There are two paths to Red Bull Arena. Yours is just a train ride away.”(Archival 2010). These unique ways of marketing to consumers with the right message are a solid example of how the Red Bull way is benefiting the Red Bull New York Club. The Red Bull brand makes all their marketing more impactful.

Results

The success of Red Bull is well documented and their results speak for themselves. At the end of 2012, they had 8,966 employees in 165 countries selling more than 5226 billion cans of Red Bull globally. In the companies twenty-five year history they have sold over thirty-five billion cans of energy. Their consistent and unique approach has built one of the most recognized brands in the world. Not only have they created and marketed a profitable leader for energy drinks, but Red Bull has been able to influence their success into other opportunities.

Launching in 2007, Red Bull Media House has become one of the world’s leading media companies. They produce and create documentaries, music, films, reality shows, photos, and live broadcasts of action sports for fans to watch around the world. Mobile applications and gaming are also are part of the media companies present and future. From console gaming to mobile gaming they are working to increase the already millions of downloads of their products.

Red Bull New York did open a new soccer only stadium in 2010, Red Bull Arena, which can hold up to 25,000 fans. The average attendance for the three seasons prior to the stadium opening was 15,836 fans per game. Over the last three seasons since Red Bull Arena opened attendance has averaged 19,065 fans per game (ESPN 2013). But, while the clubs past three year average attendance has increased versus the prior three, the team still ranked 18th in total attendance for 2013 Major League Soccer regular season. In comparison, the number one ranking team for attendance in MLS regular season was the Seattle team who averaged over 43,000 per game. The 2013 MLS season was a successful season on the field. The Red Bulls finished with the best record in the regular season before losing in the leagues playoffs.

Attendance, facilities, and on the field performance have improved for the club since being purchased by Red Bull although there are some areas for concern. In November 2013, article published by Forbes, Major League’s Soccer Most Valuable Teams, Red Bull New York are listed as the sixth most valuable team in the MLS. They are reported to be valued at $114 million and to generate $28.1 million in revenue. The downside to this article shows that they have an operating income of -$6.3 million, the largest deficit in MLS (Smith 2013). Also, causing some concern is the New York expansion team set to take the field in 2015. The addition of this expansion will complicate things at best. Many of the Red Bull fans come from New York City to watch and the expansion will also be constructing a new stadium. Red Bull New York’s market strategy moving forward will be crucial to the long term success and profitability of the club’s brand.

Key Takeaways

Red Bull’s strategic launch of its energy drink was incredibly successful. Their approach took great discipline to continue to embrace its strategy even as orders were increasing and demand was climbing. They built their brand from the ground up, almost one consumer at a time creating customer loyalty and demand. A non-traditional approach gave them a clear advantage over the competition and set the stage for further launches around the world. Being able to duplicate their launch success from market to market and country to country shows that their strategy works.

It is equally as impressive to think about the wherewithal it took realize that the brand was ready to evolve to more traditional advertising strategies such as television. But, even as the brand advertising evolved, Red Bull was still able to keep its individuality with its unique commercials and messaging. There consistent approach to “antibrand” even when they are changing themselves, sets them apart from other companies that will quickly change their strategy to fit with the latest fad.

Red Bull’s timing to the market place was also a factor in their success. The growth of individual sports and society embracing new and different activities have also played a role in the way that they have been able to sponsor athletes and create events that would have not been popular twenty years ago. They used their media company to grow and push these types of events to their limits. From the surfing and snowboarding documentaries they are showing Red Bull athletes doing things that seem unreal.

Social Media is another avenue in which Red Bull has been successful in building their brand. They currently have over 1.2 million twitter followers and have tweeted over 31,000 messages. Their description on Twitter is “Red Bull is the only Energy Drink that #GivesYouWings. Follow if you desire to be active and have a zest for life.” It is these types of simple messages that continue to engage their followers and keep them coming back for more. According to Ric Dragon, of Social Media Today, “One of the most remarkable aspects about Red Bull’s social media, is you never see community managers talking about the energy drink itself. Occasionally there are product shots, along with the ubiquitous slogan, “Red Bull gives you wings.” What you do see, over and over, are photographs of people doing remarkable things: surfing, snowboarding, car racing, skateboarding – and usually in some extreme manner. That slogan can be felt in the very content itself.”(Dragon 2013). Red Bull is a company that understands how to connect with consumers by showing them who they could be.

Red Bull New York has benefited from being purchased by Red Bull. Red Bull gave the soccer club an identity that the public could identify with. The Red Bull identity helped to build a new soccer arena for the community beyond paying the sponsorship dollars for the naming rights. The brand awareness has also given them the ability to leverage more traditional advertising strategies that will appeal to their target audience as well as reaching nontraditional fans. Bringing together soccer and Red Bull makes sense on many levels. This natural partnership allows both brands to feed off of each other’s success.

Both MLS and the energy drink market are becoming more crowded every day. In the coming years it will be interesting to see how they change and modify their strategies in a more complex market. With Red Bull making the decision to be a media company that sales an energy drink; how will that impact the future? It should allow for all platforms to expand, gain flexibility, and leverage the strengths of each segment to benefit the company as a whole. Red Bull New York should control the powerful brand of their parent company to maximize their potential along with helping Red Bull in strengthening their already solid and respected brand.

Discussion Questions

Besides ownership and the name, what products do team Red Bull New York and Red Bull GmbH beverage have in common?

Red Bull owns the naming rights for the stadium that RBNY plays in. They also impact the Red Bull Media House on multiple platforms. There are a variety of items that have the RBNY logo. Products include soccer balls, shirts, pants, outdoor winter gear, and number of home and office accessories.



What are the major positives and negatives associated with aligning RBNY branding efforts with the established Red Bull brand?

RBNY has struggled for an identity since their arrival and going through a few name changes. The Red Bull brand gives them an identity that consumers can connect with and understand. Branding themselves as Red Bull also fits well with their sport. Soccer is a sport that requires participants to be in top shape and long hours of training are needed.

For Red Bull a potential negative is that current customers could perceive that they are going mainstream and possibly losing the “antibrand” that they had worked so hard to establish. One positive for Red Bull is the large number of consumer impressions that will be created by putting their brand on a sports team that represent one the largest markets in the United States.

Does RBNY need to separate itself from the existing Red Bull image?

RBNY does not need to separate itself from the existing Red Bull image. RBNY should embrace the image and use it where appropriate. This image is one that consumers connect with and the global leader in its category. The Red Bull image adds credibility to MLS and RBNY franchise.



Should Red Bull GmhB attempt to shed its racy image of the “antibrand”, which could be its major competitive advantage, for the purpose of future growth?

I don’t believe that Red Bull needs to shed its “antibrand” image for the purposes of future growth. They can continue to position themselves as unique and as a life style brand while continuing to use more main stream marketing approaches to grow their brand in different areas. Red Bull has become a widely used an accepted product that is consumed around the world and must position themselves in that way. But, that doesn’t mean they should change the image that got them to where they are today.



What will become of the “underground” feel associated with Red Bull, which is and was a large part of the success for the product, since the company is moving toward a mass marketing appeal?

Red Bull has lost its underground feel. It is available everywhere for purchase and is consumed by a wide range of buyers. But, I don’t believe that its loss of the unground feel takes away from the company trying to do things differently than other companies. Red Bull has clearly displayed a way of thinking that it is outside of the box, and while their marketing strategies and tactics have become more mainstream their commitment to do things their own way hasn’t. Red Bull is still viewed as the “antibrand” by pushing the envelope with its media company, its events, and its effective way of promoting its product line. They still use viral and experimental marketing to increase awareness of their products as they partner with marketing companies that present new ideas.

References

Archival (2010), NY Red Bulls Two Paths, Retrieved from


http://www.archrival.com/work/12/ny-red-bulls-two-paths.

Attack! (2011), New York Red Bulls Guerrilla Projections, Retrieved from


http://www.attackmarketing.net/case-studies/redbull.php.

Dragon, Ric (2013, October 21), The Big Brand Theory: Red Bull's Social Media Marketing,


Retrieved from http://socialmediatoday.com/Big_Brand_Theory/red-bull-social-media-
marketing.

ESPN FC (2013), Major League Soccer Stats: Team Attendance – 2013, retrieved from


(http://espnfc.com/stats/attendance/_/league/usa.1/year?cc=5901).

Lee, Jason W (2010), “Red Bull New York: To Build or Not to Build off the Parent


Company’s Image?
” Branded, 171-182.

Red Bull (2013), The Company Behind the Can, Retrieved from

http://energydrink-us.redbull.com/company.

Red Bull Flugtag Chicago Event FAQ (2013), Retrieved from


http://redbullflugtagusa.com/page/cities/city/3/chicago.

Red Bull Media House (2013), Red Bull Media House Company, Retrieved from


http://www.redbullmediahouse.com/company.html.

Smith, Chris (2013, November 20), Major League Soccer’s Soccer Most Valuable Teams,


Retrieved from http://www.forbes.com/sites/chrissmith/2013/11/20/major-league-soccers-
most-valuable-teams/.

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