Wednesday, December 17, 2008

Red Bull - Multi Pack Product Strategy

In an industry that is getting larger (product size), it may appear strange that Red Bull is maintaining its product size, but creating new 'multi-packs' instead. Surely the traditionalists amoungst the marketing fraternity would suggest that a larger product equals greater value and hence more people will buy it. Yet Red Bull's contra argument is more a solid business decision rather than a marketing construction. Simply put, they are stoutly leveraging their positive brand equity and asking customers "if you want more, buy more". So I ask you, is this strategy wise?

Red Bull Australia released 4 packs in energy and sugar-free which was a huge success and they have now begun the roll-out of 12 packs in various channels. Big W & Kmart are already stocking and the convenience grocery channel is being implemented as we speak. So what evidence are they working off?

Here are some stats for Red Bull 12 pack:
  • #1 selling SKU for Walmart
  • #2nd largest SKU in USA grocery convenience (#1 Red Bull 255ml)
  • #1 Fastest growing pack in UK convenience
Note: These stats are from AC Nielson Global Report 2008

These are impressive stats, but lets have a look at reality. Mother & V have launched much bigger can sizes 1/2 a litre to be exact. I know from looking around my office that people are buying them for the extra value (size). Can Red Bull maintain their vigilant stance, or will they cave in and be a 'me too' after leading the market for so long?

Josh Strawczynski's Opinion:
Red Bull's branding is too strong! Next time I visit Melbourne head office, I will take a picture of the wall of shame (failed competitors). There are literally hundreds of scalps (empty cans) on the wall, all of which have failed. I'm sure that there is market share to be lost, but I think Red Bull will continue to sell strong and these multi-packs will make them more money than any competitor.

Daniel Oysten's Opinion:
I agree, Red Bull's branding so strong that are becoming one of those brands that people use to describe a product category. For example, in the UK, people say they are going to "Hoover" (brand) rather than vacuum (action). Some people in Australia say they are going to have a "Breville" (brand) rather than a toasted sandwich (result). I have noticed people starting to say "I need a Red Bull" but then not actually purchase one and instead buying an energy drink.

However, while the brand starts to become a pseudo name for the product category, I don't think it changes behaviour? Do you? Or does it position them as the coolest/best brand in the category and along with that status when you buy one? 

I don't think they will follow into the larger packaging unless there is market share is actually lost. Here's a thought though ... what if they skipped the large can approach, ala Mother, and got straight to 1.25lt?


Daniel Oyston is the author of The Oyster Project, an eclectic marketing blog on everyday experiences and thoughts. He works as a Marketing & Sales Manager in B2B Project Management for Tanner James, Canberra, Australia
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