Red Bull Stratos Case Study PDF

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Case Study: Red Bull Stratos...

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Pushing boundaries? Growing beyond yourself? Always seeking for a new challenge? That is what Red Bull stands for and the energy drink giant carries its message out into the world by sponsoring top and extreme athletes. But it is not only the athletes who are constantly pushing themselves to the limit and breaking records, but also Red Bull itself. In 2012, Red Bull created the event "Red Bull Stratos", where Felix Baumgartner's record-breaking jump was broadcast live on numerous platforms all over the world. In fact, the jump was broadcasted by more than 40 TV stations across 50 countries and 130 digital outlets. This live broadcast could be realised by more than 40 cameras capturing the jump: More than 35 cameras on the ground and in the air and another 5 attached to Felix’s suit. The campaign was a great success for Red Bull: The live stream on YouTube racked up a 8 million simultaneous viewers, a new record. Red Bull gained more than 140,000 Facebook fans, 235,000 Twitter followers and more than 300 million views of its YouTube channel. Social media platforms were flooded with posts about the jump. The campaign also brought Red Bull Media House a Sports Emmy. Can this success be repeated? Let’s have a look.

Reviewing the market Red Bull has a strong position in the market. Red Bull's largest market is the USA, where almost half of all cans are sold. All other markets, including Mexico or Brazil or Germany are about the same for Red Bull. Although the USA was already the most important market for Red Bull in 2012, that is also where the greatest potential still lies, both in terms of volume and value. Red Bull is the market leader in the global energy drink market, closely followed by Monster Energy, whose share of volume and value has increased steadily since 2007. Besides Monster Energy, Coca Cola is also one of the big competitors of Red Bull on the market. However, Red Bull is no longer just operating in the energy drink market, but has also established itself as a real media company. With the Red Bull Media House, Red Bull creates high-quality media content around the topic of extreme sports. However, Red Bull does not buy this content, but creates it itself. Red Bull organizes countless extreme sports events and uses them as content for Red Bull TV or the Red Bulletin magazine, for example. This makes Red Bull not only a media company that brings content to the people, but also to an organizer and creator. This unique position in the digital media market makes Red Bull very successful in its niche. This is branded content par excellence. All over the world, Red Bull is associated with extreme sports. When people think of soccer or Formula 1, they automatically think of Red Bull. This is extremely important for Red Bull's brand awareness. Hardly anyone doesn't know the Red Bull logo - This is extremely important for Red Bull's brand awareness. Hardly anyone doesn't know the Red Bull logo. Either you know it because the energy drink or because of the sponsorships and creations of sports events or both. However, the digital media market is also fast changing: User behavior is changing, mobiles and wearables are becoming increasingly important, while traditional television is losing ground. Streaming is booming, as is the use of many devices simultaneously. Only those who know the user behavior can play the appropriate and relevant content and thus gain a decisive advantage. Content is everywhere and everyone is trying to get a piece of the users' attention. Without relevant content for the respective target group, you can't survive in this flood. Red Bull TV is in direct competition with Sky or similar, but also with Netflix and Amazon Prime - digital streaming services that also play relevant and high-quality content. Red Bull has focused on sports and especially extreme sports, but there is now also sports content on most digital platforms. 1

Therefore, it is important to create highly relevant content that users enjoy interacting with and that generates high engagement. It is essential that the content fits the brand and the overall orientation of the company. To summarize, the digital media market is highly competitive, everyone wants to get a piece of the attention pie and therefore you need to know how to specifically target your audience and know them inside out.

Competitive position in the market Let’s have a look at the competitive position of Red Bull in the market. To do that we use the 5 Forces Model by Porter. We will analyse the threat of new entrances and substitutes, the bargaining power of customers and suppliers and the competitive rivaly. 

Threat of new entrances: medium

It It's not hard to create branded content. But it is hard to create branded content that is not perceived as advertising, that is relevant to the target audience, and that the target audience wants to interact with. Branded content should also fit the brand and be authentic. To produce such content, it is not only important to do a lot of market research and analyze consumer behavior, but also to have the right infrastructure to create highly relevant content. You need the right employees who have the knowledge of the digital media market and can recognize trends quickly. You need the financial resources to be able to create content yourself and not just buy content. And you need innovative ideas that attract attention but also fit the brand. Red Bull has all of that and all of that needs companies trying to deliver as good content as Red Bull. I would therefore rate the barriers to entry as medium. To get started with digital content on websites or social media, you don't need a lot of money. But to organize entire extreme sports events and turn them into branded content, much more is needed. 

Threat of substitutes: medium

The history of Red Bull as an energy drink shows that Red Bull cannot be overtaken so easily. Although the taste can be easily copied, other companies have still not managed to threaten Red Bull's market position. Only Monster Energy, which also sponsors sporting events and has high brand loyalty can be considered a real competitor in the energy drink market. Monster can also be named as a substitute for Red Bull events in the media market. Monster also sponsors extreme sports events like Red Bull and thus achieves a high brand awareness, but Monster Energy does not produce such huge projects as Red Bull Stratos. Netflix and Amazon Prime, or all streaming services that are booming at the moment, are a bigger threat. They have the financial means to produce just as high-quality sports content as Red Bull. I wouldn't say that they also want to organize such live events, but I can very well imagine that they offer extreme sports content on their platforms. 

Bargaining power of suppliers: low

Red Bull produces its own content and creates its own live events. They don't have to rely on external content. But when it comes to implementing such incredible spectacles, Red Bull 2

naturally relies on collaboration with other companies. This also applies to raw materials for the energy drinks. But Red Bull has such incredible market power that suppliers can't exert any pressure. 

Bargaining power of customers: medium

The greatest danger is the market power of consumers. There are countless substitutes for Red Bull on the energy drink market, which may not be perceived as high in quality, but are a lot cheaper and taste almost identical. Therefore, they can switch whenever they want to. However, Red Bull is not just about the product itself, but rather the lifestyle that is conveyed. And those who want to feel this lifestyle will not reach for another brand. The same applies to the digital media market. Red Bull produces branded content that is highly relevant to the target group and also unrivalled in terms of quality. Red Bull captivates people who are looking for new challenges and conveys a lifestyle to them that cannot be easily conveyed by any other brand. If you are looking for innovative premium sports content, you will hardly find it anywhere else. 

Competitive rivaly: medium

There are many other energy drink suppliers on the market that are equivalent to Red Bull's product. The taste doesn't matter, but the price does. Red Bull is expensive compared to the other energy drinks and does not taste extraordinarily different. The price is simply justified by the quality and Red Bull as a status symbol. The brand image is difficult to copy. Monster Energy, Red Bull's biggest rival, conveys a similar message, but the energy drink costs half as much and you get twice as much. Nevertheless, Monster has not yet become the market leader, because Red Bull as a brand is incredibly strong, Red Bull has an extremely high brand awareness and the customers are loyal. If you have a look at the leading players in energy drinks, Red Bull has still the largest share of both volume and value sales. But what you can also see is that Red Bulls shares are constant over time, whereas Monster Energy as the most important competitor has gained volume and value sales. Especially in terms of volume sales Monster Energy is approaching Red Bull more and more. Since 2007 the energy drink firm has increased its share of volume sales from about 8% to about 15%. In comparison, Red Bull holds a share of about 21%. So Monster Energy is growing steadily while Red Bull’s share in volume sales remain the same over time. When it comes to value sales Red Bull holds an higher share, namely about 32% in 2012. There has been a marginal increase since 2007, but overall the share of Red Bull remained the same. Monster Energy has experienced an increase of share in value sales over time. In 2007 there they held an 9% share and it increased over the years to a share of about 13% in 2012. We can observe that Red Bull is stagnating and its biggest competitor, Monster Energy, is gaining share. However, Red Bull still makes up the biggest share in value and volume sales but the firm has to be aware of the threat that Monster Energy and also other rivals are growing in shares. From a media perspective Monster Energy is also a big rival because they are also sponsoring extreme sport events and are following the same marketing strategy as Red Bull and create the same content. However, Monster Energy is not the only competitor Red Bull has to deal with. Digital media marketing is fierce und changes quickly. Red Bull Media House also has to compete with big players like Amazon or Netflix with its content. Although neither of them really generate sports content and content around events yet, they could still do so if they realise that this content is relevant to their target group. On the media market, Red Bull operates in a niche with its focus on high quality content about extreme sports and 3

extraordinary events. I think that Red Bull has a USP here and therefore I don’t think that there is a big threat of rivals who offers equally extraordinary and unique branded content.

Consideration of brand value elements in the decision-making process When it comes to deciding whether or not creating an equally innovative event as Red Bull Stratos, Red Bull should consider the following elements of their brand value: 

Brand awareness

Red Bull is known worldwide for its energy drink, but also for its sponsorships of sports events. Red Bull has attracted extreme attention through the Stratos Jump. It broke the YouTube live stream record, gained 180'000 new YouTube subscribers within a week and obtained more than 140'000 facebook fans and 235'000 twitter followers. The whole world was talking about Felix Baumgartner's jump, users made more than 820,000 positive posts about the project on social media. From this point of view, an event that is as spectacular as Red Bull Stratos can boost Red Bull's brand awareness to an incredible extent. 

Brand association

The associations with Red Bull are varied, but most people associate Red Bull with the energy drink, extreme sports or new challenges. Most associations with Red Bull are positive, but many certainly find the price unjustified or see the sponsorship and creation of extreme sports events as a danger to athletes. Another event like this could associate Red Bull even more with extreme sports - in a positive or negative sense. If the stunt fails, it could evoke negative associations with Red Bull, which will also have a strong impact on the brand's image and not least on sales. If the stunt is successful, the lifestyle that Red Bull is trying to convey would be even more ingrained in people's minds. Then, when people want to try something new or simply need energy, they would probably think of Red Bull even faster than they already do. So it can go both sides, depending on the success of the project. 

Brand Image

Red Bull stands for high quality, courage to dare new challenges and to be active. In general, Red Bull is known as a premium brand and also positions itself that way with its aboveaverage price for it’s energy drink. Actually, Red Bull is a strong brand with a very good image, especially for their target group. The brand is authentic, credible and produces content that fits the brand philosophy. Everything is coherent at Red Bull. A mistake in the stunt could cause the brand image to crumble. The stakes are high for Red Bull, but their experience in creating such events allows them to accurately assess and weigh the risks. Since the company decided to hold the Stratos Jump in 2012, I don't think the risks are too high for Red Bull.

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SWOT analysis Strengths       

Brand awareness: Everybody knows Red Bull Loyal customer base: Red Bull’s customers are very loyal Customers identify with Red Bull Sponsoring of top athletes (role models) Market leadership in the energy drink market Lots of experience in creating innovative events and branded content Good partnerships that can help realising a stunt

Opportunities          

Gain followers on social media Increase brand awareness Customers can identify better with Red Bull Media coverage contributes to increasing brand awareness and enhancing brand image New content for Red Bull Media House Improve market position Gain an advantage in the market Pushing back competitors Boost volume and value sales Gain new users for Red Bull Media House

Weaknesses   

Bargaining of the social media platforms “Unhealthy” product A lot is at stake: Red Bull has such a good brand image that can be threaten through a risky stunt

Threats       

Accident Criticism on social media and in the news negative feedback stunt is not as spectacular as the Stratos Jump and therefore not interested Project is not relevant for users and customers Low engagement Doesn’t attract as much attention as Red Bull Stratos

Timing and technological developments in the target group

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Red Bull wanted to become the first thing people think of when they are in need of energy. Its main target group are young people between 18 and 30 years, who live an active lifestyle, are interested in sports, in particular extreme sports and like to party. They feel a special connection to their friends and identify themselves through music, sports and action. Although Felix Baumgartner's jump can undoubtedly be classified as extreme sport, which usually attracts active people who like to take on new challenges (simply the main target group of Red Bull), it has also made its way into the mainstream, since people all over the world were interested in this record-breaking event – and so it will be with the next stunt. Let’s have a look at the user’s behaviour of Red Bulls main target group: Gen Z and also the young Millennials. The reasons why Gen Z and Millennials use social media are similar. Gen Z likes to use social media to share content themselves, but also to be inspired or to read news. Millennials also use social media also mainly to share things, to chat with friends and read the news. A crucial difference can be seen in the media used by the two target groups: 87% of Millennials use Facebook, but only 36% of Gen Z. YouTube and Instagram are very popular among both generations. Twitter seems to be a little different, as 42% of Millennials use it, but only 29% of Gen Z. Snapchat is more popular with Gen Z, as 68% use this platform, but only 52% of Millennials. In fact, Red Bull has to consider that the different generations use different platforms. In order to target the Millennials, Red Bull has to share content on Facebook or YouTube. When trying to order Gen Z, Red Bull should also upload videos on YouTube, but also on Instagram. Speaking of videos: When browsing through the networks, people search for a video button. If they can’t find one, they look at for pictures and last but not least, the read the text. So when announcing the stunt and creating excitement, Red Bull should focus on uploading teaser videos instead of publishing articles or sharing pictures. Additionally, the mobile phone is being used more and more. Not least because the bandwidth doubles every year. In these days, 50% of the time spent on the internet happens via the smartphone. Gen Z looks at their mobile phones every 5.8 minutes. Moreover, people tend to use their devices simultaneously. They are watching a TV series on Netflix while chatting with their friends via WhatsApp on their phone. What Red Bull should consider is creating content that is not only mobile friendly, but is also appropriate for different devices since people use them often simultaneously and therefore the content should also be coherent and in the same style. Last but not least, Red Bull should make use of the new technologies. New live streaming platforms such as Twitch can be used as an additional platform to broadcast the stunt. Wearables are also very popular these days, so Red Bull could also try to integrate them in their strategy. VR glasses could be used in order to give the user a first-hand experience of the stunt.

Recommendation I am very much in favour of doing such a project again. Monster Energy is experiencing strong growth and Red Bull needs to defend its position as market leader. In addition, we 6

have gained a lot of experience through the Stratos project and know the behaviour of our users in depth. We can use the new technologies to offer the customer an even better experience and make it even more exciting. The risks are manageable and also similar to those we already had with the Stratos project. The Stratos project was almost 10 years ago and I think we can once again offer our customers an experience they have never had before. I recommend organising a new spectacular event that the world has never seen before.

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