Case Study: Red Bull
The Red Bull case describes the history of the Red Bull brand with an emphasis on how the brand had stimulated and harnessed word-of-mouth to build a new category (functional energy drinks) and a brand franchise.
1. What created Red Bull’s success? Where is the core franchise and benefit? Has the product’s positioning changed over time? What is the role of alcohol mixing to Red Bull’s success?
2. What is Red Bull’s success formula? For which kind of product/beverage categories will this formula work? How does Red Bull know when to turn on the advertising? What metrics would you use to make this judgment?
3. Assume tough competition is coming. How can Red Bull protect its franchise? What actions would you recommend?
(Case Study: EMR Innovations)
Eric and Mary Reynolds operate an RV repair shop and are avid RVers themselves. Because of their familiarity with RVs, they have developed the Lock-Awn Anti-Billowing Device, which they believe is a superior alternative to other existing fixes for a common problem with RVs. In addition to the Lock-Awn, they would like to develop and sell other new products that address additional RV problems on a regular basis through their new company, EMR Innovations. Eric and Mary believe they have a sure winner in the Lock-Awn product, but they must decide on a marketing strategy as the next step in the process to consider whether or not the Lock-Awn and EMR Innovations, for that matter, are viable. In order to make this decision, Eric and Mary review their information about potential customers, competitors, and possible distribution strategies to identify potential target markets and positioning strategies.
1. Evaluate the market attractiveness for EMR Innovations using industry analysis tools.
2. Identify potential target markets for the Lock-Awn Anti-Billowing Device, using a five-step process of determining segment (1) needs; (2) identification; (3) attractiveness; (4) profitability; and (5) positioning.
3. Determine the sales of the Lock-Awn (in units and revenue) needed to break even and the payback period for the initial capital investments, for both the “more-for-more” and “more-for-less” niche. (Hint: Assume the Reynolds borrow $200,000 at 8 percent interest to be paid back in two annual payments. Further assume that the Reynolds incur maximum marketing expenses. For breakeven analysis, use straight-line depreciation method over 3, 5, and 7 years, respectively, for mold and tooling, office equipment, and assembly and packing equipment.)
What is the impact on break-even if sales are higher than expected by 25 percent? Lower by 25 percent? What is the impact on break-even if sales are higher than expected by 50 percent? Lower by 50 percent? How likely is it that EMR Innovations can break even and recover its investment costs?