It's a (Red) Bull Market After All

During the height of dotcom mania -- a dimly remembered time of roll-away office cots and 10 PM conference calls -- Red Bull energy drink became the fuel of choice at West Coast kitchenettes, predawn dance parties, and Kozmo.com checkout lines. Three years and one stunning economic downturn later, office fridges are bare of complimentary beverages, and 22-year-old consumers can hardly afford résumé paper much less a caffeinated kick in the pants -- especially one that costs $1.99 for just 8.3 ounces.

So how is Red Bull marketing its brand to meet the changing needs and budgets of its customers? How will the privately owned Austrian company expand its product line beyond the silver-bullet beverage that "gives you wings"?

The short answer: It's not. And, quite frankly, it doesn't need to. Not yet, anyway.

Red's Dawn: The Birth of a Bold Brand

Red Bull founder Dietrich Mateschitz introduced his taurine-fueled beverage to Europe in 1987. (Coincidentally, it was the same year Howard Schultz acquired a small, Seattle-based coffee outfit called Starbucks Corp.) Ten years later, Red Bull charged into the United States, launching a new category of nonsoda energy drinks aimed at burned-out high-school and college students.

Remarkably, America's hottest new brand bucked the trend of aggressive, excessive marketing that swept through upstart companies in the late 1990s. While Pets.com and eToys were lavishing millions on prime-time advertising, Red Bull was quietly converting America's youth into devoted, enthusiastic customers.

Since its inception, Red Bull has shunned print advertising in its marketing strategy. It has not created one Web-marketing campaign. And it hasn't tweaked or expanded its product line one iota. Red Bull has, however, expanded into 50 countries, experienced annual double-digit growth, and captured the loyalty of a notoriously fickle consumer group: teenagers. Today, a dozen imitators like Whoop Ass and Red Devil vie for the number-two high-voltage beverage spot, and Mateschitz is the richest man in Austria.

So what gives? How did Red Bull come to dominate the energy-drink market through stealth and thrift? How did it become the coolest brand since Slim Shady without a branding blowout?

"In terms of attracting new customers and enhancing consumer loyalty, Red Bull has a more effective branding campaign than Coke or Pepsi," says Nancy F. Koehn, professor of business administration at Harvard Business School and author of Brand New: How Entrepreneurs Earned Consumers' Trust from Wedgwood to Dell (Harvard Business School Press, 2001). "Red Bull is building a beverage brand without relying on the essential equipment of a mass-marketing campaign. Perhaps the indispensable tools of marketing aren't so indispensable after all."

Here are some tools that Red Bull doesn't use: billboards, banner ads, taxicab holograms, blimps, Super Bowl spots. Even its TV spots -- all of which feature the whimsical sketches of a mysterious Austrian artist -- serve more to amuse than to educate or entice consumers.

Bull Shift: Marketing Makes a "You Turn"

Like its product, Red Bull's branding campaign is sleek and small. Its grassroots efforts fly well beneath the radar, and they provide a startling return on investment. In fact, its most lucrative strategies cost next to nothing.

"Grassroots marketing is enjoying a resurgence with Starbucks, Red Bull, Krispy Kreme, and Trader Joe's -- young, successful brands built by word of mouth," Koehn says. "Person-to-person marketing is going to be a big part of the next chapter, the next frontier of branding competition."

The sudden shift from TV blitzes and blimps to low-key, low-cost marketing schemes, says Koehn, follows the convergence of three trends. First, advanced communications technology is creating a generation of consumers skeptical of every TV ad, email message, and celebrity endorsement. If a marketing message doesn't offer a distinct, unique benefit to the individual consumer, he or she will tune it out, Koehn says. "As information overload becomes a time-management issue for consumers, mass marketing is necessarily going to be less effective."

Second, people are casting votes with their credit cards. "People are using products to provide things that they think traditional institutions no longer can, like social progress, a sense of community, and a sense of public good," she says. "Companies that want to claim consumers' votes will have to implement branding strategies that represent something."

Finally, Koehn says that consumers are looking for authenticity, self-identity, and community in the brands they endorse. And for Red Bull's target audience, being authentic means being a bit irreverent, a bit antiestablishment, and every bit different from your parents, says Marc Gobé, president and CEO of the desgrippes gobé group, a New York-based branding firm with a client list that includes Godiva, Versace, and Starbucks.

"The beauty of Red Bull is that it's the antibrand brand," says Gobé, author of Emotional Branding: The New Paradigm for Connecting Brands to People (Allworth Press, 2001). "Red Bull doesn't have any of the commercial trappings of a traditional, off-the-shelf product. It's underground, even when it's above ground, and that appeals to the young people who drink it."