Idea Transcript
The Internationalisation of Red Bull
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The Internationalisation of Red Bull Paper no.20 Abstract A paper by Fan (2008) indicates that very little is known in academia about emerging market multinationals (EMM) and their marketing strategies or how they are organised, how they compete and what competitive advantages they have. In the past few years there have been steady increases in emerging markets and EMMs from countries such as Brazil, Russia, India and China (Fan, 2008). Thailand is set to become one of those emerging market with many EMM companies succeeding internationally. This study will compare and examine the Thai and UK beverage industry using Red Bull as a case study. There are so many aspects to this investigation that makes it interesting and worthwhile to study as a research topic; covering issues such as how significant would the country of origin be on influencing consumer behaviour or how a particular culture would accept the product knowing the country of origin? The branding and brand positioning of Red Bull differs between Asian and Western markets. Is this due to the paradoxical nature of whether to adapt or standardise the marketing strategy to meet with local market needs? Following the international success of Red Bull, how will this translate back to its domestic market?
Red Bull Formula 1 Racing Car
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Introduction In order to maintain a competitive edge due to intense competition in domestic markets from both local firms and western multinationals, many companies are left with little choice but to seek out new markets by going global for growth, development and profit. As a result in the past few years there have been a steady increase of emerging markets and emerging market multinational (EMM) from countries such as Brazil, Russia, India and China (Fan, 2008). Now Thailand is rapidly proving itself to be an emerging market with many EMM companies such as Red Bull, Singha Beer, Thai Airways, Tipco and Malee to name but a few brands that have gone international. As defined by Fan (2008) an emerging market is a term which refers to a country that has undertaken transition in its political or economic systems, experiencing rapid economic development and an emerging market multinational (EMM) is a company based in an emerging market country but have engaged in business operations in international markets.
This study will examine the beverage industry of the Thai market in comparison to the UK market using Red Bull as a case study of how a Thai company became a successful international brand. There are so many aspects to this investigation making it interesting and worthwhile to study as a research topic as indicated by diagram 1.1. A paper by Fan (2008) indicates that very little is known in academia about EMMs and their marketing strategies or how they are organised, how they compete and what competitive advantages they have. It would therefore be interesting to examine the marketing strategy of Red Bull to see how they managed to succeed where other companies fail.
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The Internationalisation of Red Bull
Country of
Emerging Markets and Emerging Market
Marketing Strategy
The Internationalisation of
Product / Brand Image
Brand Position and Market Segmentation
Consumer Behaviour
Diagram 1.1: Key focus areas of this research.
Many do not know that Red Bull is in fact a Thai product since the country of origin has been down played. This raises the interesting question of how significant the country of origin is in relation to the brand and the product image. It also poses the question if knowing about the country of origin would influence consumer behaviour or how a particular culture would accept the product. At the same time the branding and brand position of Red Bull differ between Asian and Western markets. This is perhaps due to the paradoxical nature of whether to adapt or standardise the marketing strategy to meet with local market needs or whether this difference actually stems from a difference in management styles. In the west Red Bull is regard as the epitome of cool and a favourite amongst the hip young e-generation crowd whilst in Asia it is seen as a lowly health tonic drunk by Thai blue collar workers. So bearing this in mind, the question then arises, how will the international success of Red Bull will be used to leverage the brand in its own domestic market, repositioning itself for the Thai youth market without
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alienating loyal consumers. These are all very interesting questions but as the study progresses other issues may come to light that would change the model in diagram 1.1, which represents a breakdown of key areas believed to be contributing factors in making the internationalisation of Red Bull so successful.
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Red Bull History Contra to popular belief Red Bull in fact originated from Thailand, developed in 1981 by TC Pharmaceutical to compete against Japan’s Lipovitan. Red Bull also known as Krating Daeng ( in Thai, literally translated means Bull Red), named so most likely due to its symbolic meaning and association with the product since the bull is an animal that signifies strength and power while red is the colour of fire, passion and in Asian culture is the colour that symbolise good luck (Bruce-Mitford 1997).
Krating Daeng was designed to combat mental and physical fatigue, temporarily increasing metabolism, concentration, energy, and endurance making it very popular amongst Thai blue collar workers such as taxi and truck drivers, construction workers and farmers (Wikipedia). However Krating Daeng proved to be unpopular with the upper classes of Thai society due to health concerns associated with the beverage and the fact that it had such a strong association with the blue collar workers that it was seen as a low class or redneck’s type beverage best to be avoided.
It wasn’t until 1987 that the Thai product was transformed into a global brand by an Austrian entrepreneur, Dietrich Mateschitz, who worked with TC Pharmaceutical to adapt the taste of Krating Daeng for a European audience and rebranded as the next cool product to have. The Thai owner, having 51% of the shares became a silent partner in the newly formed Red Bull GmbH, while Mateschitz with a 49% stake in the company was given the task of running the company (Wikipedia).
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In 2000, in order to realign the Krating Daeng brand with Mile Stones 1981
TC Pharmaceutical developed Krating Daeng.
1987
Krating Daeng rebranded as Red Bull and launched to a European market
the International Red Bull Brand, Red Bull Extra was launched in Thailand with the hope of repositioning the product to appeal to the Thai youth market The fact that internationally Red Bull has become a huge success,
2000
Red Bull Extra launched in Thailand
sponsoring everything from extreme sports to art shows
2003
Red Bull Gmbh launches Red Bull sugar free.
and music events, the company had created a very
2005
Krating Daeng launches Krating Daeng Coffee.
marketable "cool" image with tremendous brand power.
2008
Red Bull Gmbh launches Simply Cola.
This lead to the launch of a sugar free version of Red Bull in 2003 by Red Bull Gmbh and in 2005 saw the launch of Krating Daeng Coffee exclusively to Asia Now in an attempt to expand its product range even further Red Bull Gmbh introduced 'Simply Cola', the company's own take on a cola beverage in 2008 (Red Bull website).
Krating Daeng Coffee
Krating Daeng & Red Bull Extra
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The Internationalisation of Red Bull
Methodology Diagram 1.2 is a modified graphical representation of the PhD process as the progressive reduction of uncertainty (Phillips and Pugh, 1987). Breaking this diagram into 3 key stages, Stage 1 is the preliminary stage where by background research is conducted into the field of interest; Stage 2 involves data collection and analysis while Stage 3 focuses on incorporating findings into a structured thesis.
Diagram 1.2, The PhD process as the progressive reduction of uncertainty: Maximu
1
2
3 Minim
PhD Stages...
Thesis Form...
Source: Estelle M Phillips and Derek S Pugh. How to get a PhD (P.74, 1987)
At Stage 1 where there is still a high level of uncertainty and the study is still unstructured with key issues yet to be clearly defined. An exploratory investigation where the main aim is to avoid being constrained by preconceived notions is adopted in order to discover where problems, opportunities or area of interest are likely to reside. This can be done by exploring past and current literature which will facilitate in determining boundaries and defining variables which
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are relevant to the field of research (Ali 1998 and Webb 1992). This will progressively focus the research allowing for formulation of possible topics and hypothesis that would eventually lead to the collection and analysis of data in Stage 2 as indicated in diagram 1.2.
Stage 2 will focus on data collection and analysis but at this early stage where the focus is still on the preliminary investigation of reading the available literature in the topic area, it is too soon to indicate the exact method for data collection at this point in time. From the general direction that the research is taking, the case study research methodology combining both quantitative and qualitative data will most likely be adopted. In combining both quantitative and qualitative methods it is hoped to increase the probability of collecting information that is both valid and reliable. This approach is often referred as mixed-methods or multiple methods research and has been proven in the past to be an effective way to test, prove and verify hypotheses (Saunders, Lewis and Thornhill, 2007).
As defined on Wikipedia, Quantitative methodology involves information dealing with numbers and anything that can be measured, such as questionnaires or use of data for analysis involving graphs or statistics. Quantitative research is often used to complement qualitative research which is the examination, analysis and interpretation of observations in a manner that does not involve mathematical models, such as interviews and focus groups. Saunders, Lewis and Thornhill, 2007 also go into great detail describing how quantitative and qualitative methodology could be conducted to ensure meaningful results are obtained. However before the actual data is collected, it would be wise to perform a pilot study where by formulated questions and methods are tested to ensure cohesion, correct interpretation and that the appropriate and relevant questions are
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asked. The collected data will eventually be tested and analysed using various computer programs such as SPSS, NVivo and LISREL and so it is worth bearing this factor in mind when designing questionnaires or deciding upon an interview format.
Yin (1984) defines the case study research method “as an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used”. This method has been criticised as a research tool for its inability to produce a generalisation from the findings hence a multiple-case design method will be implemented instead of single-case design in order to overcome this problem (Saunders, Lewis and Thornhill, 2007). The multiple-design method allows for comparisons between cases as well as exploring and understanding complex issues, explaining both the process and outcome of the phenomenon through observation, reconstruction and analysis (Tellis 1997). Yin (1984) classifies three types of case studies, which are exploratory, descriptive and explanatory. An exploratory case study explores any phenomenon in the data which serves as a point of interest, a descriptive case study describes the natural phenomena which occurs within the data in question while an explanatory case study examines the data closely both at a surface and the deeper levels in order to explain the phenomena in the data. For this investigation Red Bull Gmbh’s marketing strategy for the UK market will be compared to Krating Daeng’s marketing strategy for Thailand. It is worth bearing in mind that Krating Daeng is not managed in the same way as Red Bull Gmbh therefore the findings could be used to compare the difference in marketing strategies to see what lesson can be adapted or applied for each market in question. Another possibility is for the findings to
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be compared with another successful global brand such as Coca Cola to see if there are any colorations or with a different Thai beverage company to see if the successful process of internationalising Red Bull could be recreated and applied.
Stage 3 will involve incorporating all the findings into a structured thesis so that all arguments are pieced together with all points backed up with facts, indicating how the investigation developed over time showing a progressive reduction of uncertainty. As indicated by Saunders, Lewis and Thornhill 2007, Phillips and Pugh 1987 and others, have recommended to write the findings whilst conducting the research in order to avoid the daunting task of remember how the research unfolded from start to finish.
At any time during the research process it might be necessary to go back and collect additional data which could result in discovering a different path, evolving the research in a new direction hence further reading or data collection might be required so the research methodology model could be represented by diagram 1.3,
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The Internationalisation of Red Bull
Diagram 1.3 Research Methodology
START
Internationalisation of Red Bull
Data Collection
General Public
Internet Books
Case Studies
Journals
Findings/Evaluations/Discussions
Create Research Model If further research is required
Test Research Model
Evaluations/Conclusions/Write Up
If further research is required
Customers
Seminars
Employees
Literature Review
Secondary Research
Questionnaires
Observations
Interviews
Brand Audit
If further research is required
Primary Research
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References: Ali S (1998), Research Methodology: Back to Basics. ABAC Journal, Thailand.
Bruce-Mitford M (1997), Signs & Symbols. Dorling Kindersley Publication.
Estelle M Phillips and Derek S Pugh (1987), How to get a PhD. Open University Press.
Fan Y, (2008), The rise of emerging market multinationals and its impact on marketing. BURA publication.
Saunders M, Lewis P and Thornhill A (2007), Research methods for business students. Pitman Publishing.
Webb J (1992), Understanding and & Designing Marketing Research. The Dryden Press, London.
Yin R. K, (1984), Case Study Research: Design and Methods. Beverly Hills, Calif: Sage Publications.
Online Resources: Red Bull. http://www.redbullextra.com (Thai website).
Red Bull. http://www.redbull.com (International website).
Tellis W, (1997). Introduction to Case Study. The Qualitative Report, Volume 3, Number 2, July. http://www.nova.edu/ssss/QR/QR3-2/tellis1.html
Wikipedia, the free online encyclopaedia. http://en.wikipedia.org/
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