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The Internationalisation of Red Bull

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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The Internationalisation of Red Bull
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
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
Prod uct /
Brand Image
Mark eting
Strategy
Emerging M arkets and
Emerging Market
Country of
Cons umer
Behaviour
The Internationalisation of
Brand Position and Market
Segmentation
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The Internationalisation of Red Bull
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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The Internationalisation of Red Bull
Red Bull History
Contra to popular belief Red Bull in fact originated from Thailand, developed in 1981 by TC
Pharmaceutical to compete against Japans 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 rednecks type beverage best to be
avoided.
It wasnt 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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The Internationalisation of Red Bull
In 2000, in order to realign the Krating Daeng brand with
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,
sponsoring everything from extreme sports to art shows
and music events, the company had created a very
marketable "cool" image with tremendous brand power.
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).
Mile Stones
1981
TC Pharmaceutical developed
Krating Daeng.
Krating Daeng rebranded as
Red Bull and launched to a
European market
Red Bull Extra launched in
Thailand
Red Bull Gmbh launches Red
Bull sugar free.
Krating Daeng launches
Krating Daeng Coffee.
Red Bull Gmbh launches
Simply Cola.
1987
2000
2003
2005
2008
Krating Daeng Coffee
Krating Daeng & Red Bull Extra
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The Internationalisation of Red Bull
Maximu
Minim
1 2 3
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:
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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The Internationalisation of Red Bull
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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The Internationalisation of Red Bull
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 Gmbhs marketing strategy for the
UK market will be compared to Krating Daengs 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
Internationalisation of Red Bull
Data Collection
Primary Research
Secondary Research
Interviews
Employees
Findings/Evaluations/Discussions
Observations
Questionnaires
Customers
Seminars
Literature Review
Internet
Books
Case Studies
Create Research Model
Test Research Model
Evaluations/Conclusions/Write Up
If further research is required
If further research is required
START
Brand Audit
General Public
Journals
If further research is required
Diagram 1.3 Research Methodology
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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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