February 14, 2005

Excerpts: Brand Hijack - Part II

By: 800-CEO-READ @ 7:17 PM – Filed under: Management & Workplace Culture

No new product has ever failed this convincingly.That was the verdict reached by the research firm hired to test a new beverage concept with consumers. Initial results were abysmal. The thin color of the drink appeared unappetizing. The sticky texture and taste were disgusting. The stimulates mind and body concept was irrelevant at best. Dont quit your day job, they advised the middle-aged entrepreneur who sat before them.
But Dietrich Mateschitz was past the point of no return. He had exited the corporate world exactly three years earlier to create Red Bull, a beverage styled after energy drinks popular in Asia. And in some ways, the devastating consumer reactions to the drink were only the beginning of his troubles. Mateschitz was already locked in a drawn-out battle with the Austrian food and drug authorities: Getting approval for the first energy drink in a European country was no easy task. And in the add insult to injury category, the friend who Mateschitz had hired to handle advertising couldnt come up with a single good campaign idea. Those were the worst three years of my life, Mateschitz says today.
Of course, Red Bull now holds a place in the marketing hall of fame alongside such enigmatic miracle brands as Hotmail, Palm, eBay, and Starbucks. It beat the odds by throwing conventional marketing wisdom overboard and developing a powerful new go-to-market template.
Red Bull was an innovativeeven disruptiveproduct. It established a new category: the legal, yet hip stimulant. And it placed absolutely no importance on taste. (In fact, its safe to say that Red Bull tastes like melted gummy bears mixed with cough syrup. The industry blog BevNet gave the drink a generous D+in its initial taste rating.) But that didnt stop Mateschitz from selling Red Bull at an ultrapremium price pointabout eight times higher than Cokewithout any higher authoritys endorsement to justify the steep margin.
As you might imagine, an expensive, funny-tasting soda/stimulant hybrid can make for a complex pitch to consumers. But Red Bulls marketing approach never shied away from complexities.
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