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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Monday, December 15, 2008

Free Broadband Product Strategy

Telstra broadband has been discussing the potential for the Australian broadband to be free or heavily subsidised by internal targeted advertising. The strategy would allow them to heavily target user demographics and hence offer advertisers enormous reach to specific target clients. The plan has been compared to Googles free gmail strategy for attracting market share, but will it work?


The strategy worked wonders for Google when they launched g-mail, attracting customers by giving them something for nothing, which gave them enough loyal users at their disposal to create some real channel power in the online community. As their dominence has continued, the competition for online space has heated up and Google are able to charge more and more.

The real pitfall of the pricing strategy is the cost of setting it up. For those who don't know much about Australia, or Australians that have been living on Mars for the last 20 years, Telstra owns most of the telecommunication infrastructure. Despite this, the country is so big that it is nearly impossible to offer full service to everyone. Unlike Google who only needed a few new servers and a couple of tech staff, the advertising revenue would need to be enormous to pay for the extra infrastructure required.

Another problem they face is that Google will soon be rolling out a demographic targeting software (as they have in the USA) that will facilitate users advertising in the same way, so Telstra will be facing stiff competition when it comes to price setting.

Finally, a positive point, that targeted advertising is a good thing...yes, I know that every non-marketer out there is fuming at the thought, but it works the same way as a Christmas gift. When someone knows you, they give you something you want, so as an extension of this, when you are looking for a new car, then ads catering to this need are a good thing.

Josh Strawczynski's Opinion:
I saw this fail when it was with a 56k internet company and I'm really not sure the plan has changed all that much. I don't know how you can take on Google and win and I'm sure that Telstra will not improve the infrastructure if they can help it!

Julian Cole's Opinion:
Hey Telstra, Where are my free phones calls?!?!?!?! I have been waiting for ages for Telstra to serve me ads so that I get free calls! I would be up for this if it were possible, seeing as though I am already giving up all my personal information to Facebook?

And they are not giving me any discounts anywhere. This just seems like a win-win situation however I will wait to see if Telstra can actually deliver the goods?


Julian Cole writes Ad-Space Pioneers blog, specialising in social media. He was named in the top 40 under 40 (years old) and works for The Population a social media strategy company in Sydney, Australia.

Thanks to Creative Economy Online for the basis of this story
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Sunday, December 7, 2008

Want To Be A Guest Writer On CIIMS blog?

As of the my next blog I will be asking fellow bloggers to fill the role of Sam Berringer and have their opinion (along with a link to their blog) on each of the blogs I publish. The idea is simple and offers value to everyone involved.

 
Reasons to join me
1.) Readers get your insight to add to the interest of my post
2.) The blog becomes more interesting and reputable
3.) I can stop paying Sam so much and start outsourcing to you.

Ok, the last one was a gag, but it will be an interesting experiment to see how well we can engage the audience and who knows? Maybe we can encourage a few new faces to start blogging.


Josh Strawczynski's Opinion:
Brilliant! Very interesting study and I for one, am in.

Your Opinion Here
Please leave a comment if you are interested in being my guest writer in the upcoming posts.  Opinions are preferably 60 words or less.
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Wednesday, December 3, 2008

Internet Advertising Is A Tool Not A Strategy

SEO & SEM are the new buzz terms around internet marketing, but let me clarify that they are not a strategy, they are a tool.  For those not in and around the industry, SEM refers to the highlighted websites at the top of a Google search page and the ones that run down the right of the page.  SEO refers to the process of improving your websites organic ranking.  The point of explaining this is that too many people invest their life savings into putting a store on the web only to see it fall apart on them.  In this article, I want to explore the role of strategy in online marketing.




Working in the industry, I have worked on countless campaigns for websites that are not up to scratch and have given themselves nothing in the way of competitive advantage.  Much like the SEO Sydney Blog wrote about, these websites still require an old school style strategy, be it price, branding, product quality, anything!  Instead, they believe that posting a site and getting some traffic will do the job...it won't!

Think of it in the context of a bricks and mortar store at your local shops, sure people will buy the occassional low involvement item from them, probably because they are too lazy to look around, but would you ever buy a $1000 table because of convenience?  Very few can honestly answer yes to that and so is my point, you need to work on a proper strategy.

Here I outline my very basic keys to success:

  • Get a professional website designed

  • Make the next click obvious

  • Differentiation - Are you cheap? Better product? Convenient? An expert?

  • Positioning - Read anything by Kotler - Choose a differtiator and stick to it

It sounds simple doesn't it, yet small and medium business stuff it up constantly.

Josh Strawczynski's Opinion:
SEO & SEM are essential to driving qualified traffic to your site, but you need to make it simple for them and give them a reason to purchase.  I remember one of my best clients was a well known travel agent and they got clicks and subsequent sales because of their brand name and known quality.  SEM & SEO got them there because they are a tool that capitalised on the ground work already done.

Sam Berringer's Opinion:
There is an argument to be made for solving the need of a customer, but you still need to do the ground work and at the very least make your site look professional, check out Golf Retreats website for a good example of a simple, professional, easy to use site.
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