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why red bull loves its haters

When Dietrich Mateschitz launched Red Bull in 1987, he wanted the brand to be perceived as an ultra-premium drink so he made it the most expensive carbonated drink around at $2 a can.Red-Bull

He also wanted the brand to be polarizing. It was just as important to him that high school teachers hated Red Bull as it was that their students loved it.  He nurtured the brand’s exclusive appeal by offering only three varieties and strictly adhering to a no licensing, no brand merchandising philosophy.

This approach, which might seem limiting, drove tremendous success, Red Bull achieved double digit sales growth for the next decade.

Contrast that to the strategy behind Monster Energy’s launch. Monster wanted to appeal to as many customers as possible; pricing its 16 oz. cans the same as Red Bull’s 8.3 oz. offering, essentially a low-price strategy. It introduced a host of new variations and put its logo on an array of items ranging from apparel to condoms.

Monster currently rivals Red Bull in sales–$3.1 billion versus $3.4 billion[i]. But Monster hasn’t been able to match Red Bull’s profit margin, which is the most revealing indicator of brand power.  Red Bull’s profit after tax was $855 million; Monster’s, $286 million — in 2012, the last full year of data available.[ii]

Red Bull enjoys such a huge profitability advantage because it understands brand power–customers who love you will be willing to pay a premium to buy your product. And you don’t create passion by appealing to all people equally.  Red Bull doesn’t chase customers, according to CEO Mateschitz: “We don’t bring the people to the product. We make it available and those who love our style come to us.[iii]

How do you cultivate brand lovers? Consider these three things that helped companies like Chipotle, Method and Patagoinia build strong brands:

  • Segment the market and seek out only those people whose attitudes and values make them ideal customers for your brand.
  • Express your brand purpose and positioning with confidence.
  • Do a few things well, and reject opportunities that detract from your main expertise
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