Rich Pickings: Red Bull’s billionaire marketing maestro

feature-felix-200When Austrian daredevil Felix Baumgartner threw himself out of a hot-air balloon 40 kilometres above the earth last week, it’s a fair bet that fellow countryman and billionaire Dietrich Mateschitz was watching own nervously.

Not only was his friend’s life at risk, but there was surely some risk to his business as well. Mateschitz’s $5.1 billion fortune is built on the energy drink Red Bull, which sponsored and funded Baumgartner’s record-breaking dive.

In the end, it all went well. Baumgartner landed safely and Mateschitz landed another marketing coup that some claimed was worth more than $200 million.

For the former toothpaste salesman, the Baumgartner stunt is another chapter in what has been an incredible career.

In the space of 25 years he has turned Red Bull from a little-known Thai energy drink into a global power brand known in 160 countries.

The way he has built the company and his impressive fortune is a testament to his skill as a master marketer.

Let’s look at some of his top lessons:

Look further afield for great ideas

The story begins in 1944, when Mateschitz was born in a small Austrian village. After studying shipbuilding he took 10 years over a commerce degree before going to work in marketing for German toothpaste group Blendax. But by the age of 38 he was burned out.

It was on a holiday to Thailand that Mateschitz tried a local “tonic” that he found cured his jet lag. Soon after, he was sitting in a Hong Kong bar when he read an article that stated that the biggest taxpayer in Japan was the maker of a similar tonic. He was struck by an idea – take the Asian tonic to the West.

In 1984, Mateschitz teamed up with a Thai businessman called Chaleo Yoovidhya, who invested $500,000 alongside Mateschitz. Red Bull was born, with one crucial difference – the Thai tonic was carbonated to make it more attractive to the Western soft drink market.

Ignore the focus groups

Mateschitz might have thought he was onto a winner, but potential customers disagreed. A famous focus group he conducted just prior to the release of Red Bull in Austria in 1987 returned an unpromising verdict. “People didn’t believe the taste, the logo, the brand name,” Mateschitz told Forbes in 2005. “I’d never before experienced such a disaster.”

While anyone who has had a Red Bull would have to agree with the focus group’s opinion on its taste, Mateschitz decided to back his hunch. Besides, as Mateschitz told Businessweek last year, taste matters less than the idea behind the product. “It’s an efficiency product. I’m talking about improving endurance, concentration, reaction time, speed, vigilance, and emotional status. Taste is of no importance whatsoever.”

Make a statement with your pricing

Creating a brand at the premium end of the market is something most entrepreneurs aim to do. But Mateschitz went a step further, pricing his product more than three times the average soft drink. It was a masterstroke. Mateschitz wanted to tell consumers that this was a drink with real benefits (a caffeine and sugar-fuelled energy boost) and the high price helped him do it. It also put Red Bull in a category all by itself, at least initially. “If we’d only had a 15% price premium, we’d merely be a premium brand among soft drinks, and not a different category altogether,” Mateschitz told Businessweek last year.

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