Slow Cow: the New Red Bull?
AALBORG UNIVERSITY – MASTER OF INTERNATIONAL MARKETING
Slow Cow: the New Red Bull?
How does Slow Cow benefit from its main competitor’s success?
Group 4 – Celine Arca, Mathieu Courrias, Matthew Fleming , Steve Popowich & Houman
Zafarnejad.Supervisor: Allan Grutt Hansen
Submitted on June the 16th, 2011.
Problem formulation: Can Slow Cow successfully define and become the market leader of a new product, relaxation drinks, while positioning/marketing themselves off of Red Bull energy drinks? Does the Purple
Ocean strategy guarantee long-term success for Slow Cow? Is the Purple Ocean strategy feasible in other industries given similar circumstances?
Executive Summary
The scope of this report is to analyze the marketing strategies of the Canadian relaxation beverage company Slow Cow and provide recommendations for any start-up company who sees the Ocean marketing strategy as a potential market strategy. Slow Cow appears to be positioning themselves off of Red Bull energy drinks, an existing and established beverage on the market. Slow Cow, first launched in 2008 by Lino Flury, is a Canadian start-up company who offers a new product, a relaxation beverage, to the market.
First, the report proposes an overview of both Slow Cow and Red Bull, providing their historical background, their product portfolio, a description of their marketing efforts, and the main critics they are subjected to. After the presentation of the companies, the methodology part explains the construction of the report, with a general approach and an explanation about the theories used and the limitations created by the problem formulation and the particularities of the companies. With a basic understanding of each company, we then further explore the marketing segments for each company, noting differences and similarities. Using the similarities between the companies, the report then formulates the shared market segment. Furthermore, this report will examine consumer behaviors in the shared market, in which Slow Cow uses Red Bull as leverage to establish its brand in the market. As a result of analyzing the markets and consumer behaviors, this report will then present the ‘Purple Ocean’ marketing strategy that Slow Cow employs: a strategy formed with a combination of Blue and
Red Ocean strategies. Moreover, a SWOT analysis will be undertaken, looking at the threats and weaknesses that the devised Purple Ocean strategy presents for both Red Bull and Slow Cow.
Thanks to this empirical analysis, a conclusion can be drawn with recommendations for the viability of using a Purple Ocean strategy for any new company entering a market with an already established power brand in the market. To conclude, some reflections are made related to issues encountered during the research and redaction process of this project.
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Table of contents
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1. Problem formulation
1.1. Introduction
The scope of this semester project is to examine the widely expanding energy drink/anti-energy drink markets, looking at the new revolutionary brand Slow Cow and linking it constantly to the dominating global brand Red Bull . On the one hand, the famous energy drink Red Bull was created in 1987 by the Austrian entrepreneur Dietrich Mateschitz, who was inspired by an already existing drink in Thailand which helped him to cure his jetlag. Nowadays,
Red Bull has clearly become the leader in the energy drink market, selling a total of 4,204 billion cans worldwide in 2010. On the other hand, the new Canadian anti-energy drink Slow Cow was invented by Lino Fleury in 2006, who recognized the success of the energy drinks, but protested the effects of their consumption on the consumers’ stress. While he was passing through relaxed and calm cows in the country side, he decided he will find a product to help people slow down like these cows, and commercialized it rapidly. Recently, Slow Cow has started its expansion to the United States and is planning on expanding worldwide as soon as possible.
Their contrast is expressively highlighted in their marketing message. While Red Bull’s slogan is
“Red Bull gives you wings”, Slow Cow claims to offer “an acupuncture session”.
In this project, the development of the company Slow Cow will be examined in order to understand how it is directly benefitting from the credibility of his principal rival Red Bull.
Indeed, Slow Cow has been accused of copying Red Bull because of the similarities between the packaging of their cans and between their logo. However, their resemblance goes further.
Although its product is defined as the opposite of the Red Bull energy drinks, Slow Cow is simply using the same marketing strategy, including similar sponsoring of events and athletes, and approximately the same market segments. Hence, while looking at the current case of Slow
Cow, the project will especially aim at this energy drink/anti-energy drink market, describing and comparing the consumer behaviors and their characteristics.
Moreover, the project will be describing and using the Blue Ocean Strategy in order to study the position of the two companies, Red Bull and Slow Cow, in their competitive
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environment. According to the developers of the Blue Ocean theory, W. Chan Kim and Renée
Mauborgne, when a new company enters a new market, the purpose is to be within the Blue
Ocean. However, the industries gradually start to find themselves within a new Red Ocean. A good example in this case is one of our focused companies Red Bull which started its innovative idea within the energy drink market, but step by step found this market crowded with other companies commercializing the exact same type of energy drinks, like Dark Dog, Burn or
Monster for instance. The Blue Ocean Strategy challenges the classic battle market position by making a mindset and approach based on creating a new market without competitors. It goes without saying that, in one way, this appears clearly to be the strategy adapted by Slow Cow.
Indeed, the company has created a new market of anti-energy drinks, which can also be called the relaxation drink market. Therefore, our report will analyze how Slow Cow is developing this niche market, while using the existing one, and what consequences the company will have to face in the future.
For all these reasons we think it will be very interesting to analyze the development of Slow
Cow in order to identify possible weaknesses in the company and its strategy. Therefore, our project will be answering the following problem statement:
Can Slow Cow successfully define and become the market leader of a new product, relaxation drinks, while positioning/marketing themselves off of Red Bull energy drinks? Does the Purple
Ocean strategy guarantee long-term success for Slow Cow and is it feasible in other industries given similar circumstances?
1.2. Methodological approach
Before answering our problem formulation, it is important to work meta-theoretical and thereby look at the basic assumptions of our group, which will affect our view of the world, the work process and theories used in this project. The justification of these theories used in the project will be the subject of discussion. We will criticize the sources used, and we will discuss the limitations that we have encountered when analyzing the theories. Initially, we will develop the paradigm study and in particular a comparison between the two research traditions,
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Positivism and Interpretivism, in the case of our project. Secondly, we will explain the study design which develops the using of the qualitative approach in compare to the quantitative approach. Then, we will discuss about the limitations of our report; the different problems that we encountered to develop our project. Finally, a chart will show the structure of our project with the different phases which are complementary.
1.3. Theoretical and empirical approach
The overall approach to answering the question is based on the assumptions of the marketbased view of the two companies rather than on the resource-based view. The reason we chose the MBV over the RBV is the increasing intensity of competition in the market that appears like one of the main challenges for this energy drink/anti-energy drink market in the future. More and more companies are developing products similar to Red Bull and more and more companies will be developing products similar to Slow Cow. Therefore, the main focus of this project will be to analyze the market that Red Bull and Slow Cow operate in.
In order to answer the problem statement we will be dealing with three sub-problems throughout the project:
1) Assuming that Slow Cow is directly benefiting from the credibility of an existing brand in
Red Bull, do these two companies target the same consumers?
2) Which market ocean strategy does Slow Cow use in its own marketing strategy? How is the overall soft drink market deviated amongst different category types? How does Blue
Ocean strategy apply to Slow Cow?
3) What potential risk/threats does this Ocean strategy pose for both Red Bull and Slow
Cow? What legal aspects come into play in the case of Slow Cow vs. Red Bull, looking at their threats and weaknesses?
Firstly, our assumption that Slow Cow is directly benefitting from Red Bulls credibility mentioned earlier in the paper, will remain consistent throughout the paper. Question one will be examining the current markets that both Red Bull and Slow Cow target, it will specifically
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analyzing the ‘overlapping’ market segment where Red Bull and Slow Cow are both present.
How are two brands who offer products with opposing effects able to target the same segment? In probing this segment, we will look at target segment and consumer behaviors theories, and be assessing the consumer decision making models, the black box theory and hierarchical models.
Our second sub-question is specifically directed at Slow Cow. After examining the market segments in the first section, which concludes that Red Bull and Slow Cow do share/target the same segments, this questions will examine the differentiation in products between these two companies. It will also inspect the similarities/dissimilarities between the companies. This all assists in examining motivations behind Slow Cow grabbing Red Bull’s tail. It will also illustrate the strengths and opportunities present when applying such an approach. This will also spark a theoretical discussion of the Blue/Red Ocean theories and the creation of our own, new ‘Purple
Ocean’, which is the strategy Slow Cow seems to be employing.
The third part will build off of the previous discussion regarding our conceived ‘Purple Ocean’ strategy. Taking the sides of both Red Bull and Slow Cow, we will analyze the weaknesses, threats and risks that such a strategy poses for each company and their market segments.
Finally, our problem statement will try to get answers using all previous discussions on; market segments, Purple Ocean strategy and risks/threats/weaknesses of the strategy for both Red Bull and Slow Cow. This part will be analyzing whether Slow Cow is or can be successful in defining and becoming a market leader, while positioning itself off of Red Bull. The conclusions will also explore whether this Purple Ocean strategy guarantees long-term success for Slow Cow or not.
In doing so, it will also propose alternatives for long-term success. Finally, the feasibility of the
Purple Ocean strategy in other industries, if similar circumstances are present in the market, will be discussed. Answering these issues will provide solution for Slow Cow and other startup companies granted similar circumstances.
The theories described above will be modified and combined to form a theoretical framework for this project. Afterwards the framework will be applied to the case of the two companies,
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Slow Cow and Red Bull. In the very last part of the project, we will reflect on the general approach, the chosen theories as well as the process of writing the project in order to evaluate the project and the group work. Furthermore, it will be pointed out, if in retrospective some issues should have been approached differently to achieve better results. This reflection will be helpful to evaluate the results of the project and will also offer useful information for future projects.
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2. Presentation of Slow Cow.
2.1. Historical background
“The pressures of life cannot all be solved by a small can of energy, but it may give you that added stimulation and caffeine kick needed to push your body and mind to its maximum potential aiding you in any struggle“. Well, at least that’s what the billion dollar energy drink market would like its consumer to believe. In a world that seems to be placed on a race track, where people are constantly on the move trying to do more in less time every day, energy drinks seem like the obvious solution.
Lino Fleury, the visionary behind the Slow Cow drink, recognized the successful energy drink trend and questioned why energy drink manufactures created products that stress people out. The idea came to him while driving through the country side and seeing cows grazing in the field, they looked so relaxed and calm, he wondered if there was a product to help people slow down like these cows. One problem with energy drinks is that the caffeine amounts have a tendency to increase anxiety instead of reduce it. From this insight, Fleury and the Slow Cow
Inc.
team started developing a new drink in 2006 that would allow the drinker experience a relaxed concentrated state of mind and body (Image 1).
The company based out of Quebec, Canada, launched their finalized product in 2008 within Canada. Slow Cow Inc. hopes to expand into foreign markets like France, Russia, United
Arab Emirate, Lebanon, Italy and China, after establishing a strong presence across the
Canadian market. Recently, the company successfully entered the U.S market in Atlanta,
Georgia and is looking to continue this growth.
Image 1: Slow Cow’s slogans promoting its relaxation benefits.
Source: Slow Cow Website, 2011.
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2.2. Product portfolio
Slow Cow is a relaxation beverage that helps in the improvement of concentration, memory and learning capacity without causing sleepiness.
Slow Cow contains no calories, no caffeine, no sugar and no preservatives. Another important feature of Slow Cow is its 8 all natural ingredients. The key ingredient being L-Theanine, an amino acid found in tea, which is responsible for the improvement of memory, learning and concentration. It also helps with relaxation and affects cerebral levels responsible for pleasure by increasing them. The other ingredients assist in reducing anxiety, treating (minor) insomnia through relaxation, and helping restore damaged muscle tissue after strenuous workouts.
Slow Cow is also known as the “anti-energy drink”, because it affects the drinker the opposite way of an energy drink does. Its slogan in contrast to Red Bull, “Red Bull gives you wings”, is “An acupuncture session” which promotes its relaxation benefits. The company only produces one product, Slow Cow, which is only available in one flavor and one size (250ml). A 4 pack retails for approximately $10(CDN) and an individual can for $2.77(CDN). Slow Cow Drink was named 2010 sofi Silver Finalist for Outstanding Confection by the National Association for the Specialty Food Trade.
2.3. Marketing efforts
a. Target Market
Although Slow Cow claims it is for everyone, its focus target market is men and women from the ages 18-44. Through interview footage, it also appears that they would like to target athletes after their workout and stressed out students, who both could benefit from the drinks properties. b. Distribution
Currently, the product is sold in 1500 independent convince stores as well as large retailers like IGA, Sobeys and Metro in select areas in Canada and a few regions in the United
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States. Slow Cow announced on February 23 rd
, 2011 that it will be available to passengers on
USA 3000 Airlines . Slow Cow is also occasionally available online at www.ebay.com. c. Promotion
Slow Cow uses trade shows and news media to promote their product. The company has appeared at events such as 2010 UK Soft Drink Convention and The National Association for the Specialty Food Trades Fancy Foods Show. Their product has been featured in numerous magazines and news articles/videos explaining the new relaxation drink trend, Slow Cow’s benefits and the negative side of energy drinks. Aside from trade show events, the company often attends/supports many local events in Quebec, Montreal, such as speaking at the Salon
PME HEC management seminar and The National Exhibition of Women.
Slow Cow also uses athlete sponsorships to promote its products through the sports
Golf, Indy Car Racing and Moto Cross. Professional Golfer, Ben Boudreau and Indy car racer
Alex Taglian are Slow Cows two main athlete affiliates. Slow Cow attends these sports events and promotes their products in branded tents (Image2).
Image 2: Promotional tents on sports events
Source: Slow Cow Website, 2011. d. Red Bull Parody Strategy
Slow Cow has never officially stated that it has designed its product to parody Red Bull’s.
However, from numerous articles and news reports, as well as one of their Facebook pages, it
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appears they are using their similar look to leverage their product off of Red Bull’s current popularity and success. Slow Cow uses a two sleeping cows within a circle, while Red Bull has its famous logo of two bulls charging each other within a circle. Also, it is obvious that Bulls and
Cows are Male and Female counterparts in the animal world. The similar size and shape of packaging/can is another apparent similarity between both products.
2.4. Critics
The similarities between the two products (Image 3) have sparked some resentment from the Red Bull team. As a result, after the launch, Red Bull GmbH sent Slow Cow Drink Inc. a formal notice to close, claiming that Slow Cow's packaging copied Red Bull's. While Fleury admitted to the similar packaging, he said that his lawyers " are confident they will win this case ". Currently, the status of this litigation is not known. Their site does not seem to be active since 2010, which may imply they are busy with this obstacle. However, their official Quebec
Facebook Slow Cow page is still active and updating consumers about events they are attending and new distribution locations.
Image 3: Similarity between Slow Cow and Red Bull cans
Adapted from:Slow Cow and Red Bull Websites, 2011.
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3. Presentation of Red Bull
3.1. Historical background
Red Bull GmbH is famous for selling the Red Bull energy drink. The company was established in 1987 by the Austrian entrepreneur Dietrich Mateschitz, who was inspired by an already existing drink in Thailand, called Krating Daeng. Indeed, as the international marketing director for Blendax, Mateschitz visited Thailand in 1982 and discovered that Krating Daeng helped to cure his jet lag. Between 1984 and 1987, Mateschitz worked to adapt Krating Daeng for the European market, modifying the ingredients. Consequently, Mateschitz founded
Austrian Red Bull GmbH in partnership with Chaleo Yoovidhya, who invented the Thai energy drink, each investing $500,000 of savings. Chaleo and Dietrich each held a 49% share of the new company, giving the remaining 2% to Chaleo's son Chalerm, but it was agreed that Mateschitz would run the company. The product was launched in 1987 in Austria. In 1989, the product was first expanded internationally to Hungary and Slovenia. Then, it entered the United States market in 1997 and the Middle East in 2000. In 2008, Forbes magazine listed both Chaleo and
Mateschitz as being the 260th richest persons in the world, with an estimated net worth of $4.0 billion. In 2010, a total of 4,204 billion cans of Red Bull were sold worldwide, representing an increase of 7.6% against 2009. Moreover, thanks to currency and price factors, company turnover increased by 15.8%. The outstanding sales of the Red Bull in markets such as Turkey,
Japan, Brazil, Germany and the USA, but also the efficient cost management and ongoing brand investment are explaining these incredibly successful results. Also, in 2010, Red Bull employed
7,758 people in 161 countries, with more than 5000 students gaining their first working experience at Red Bull GmbH (Red Bull Website, 2011).
3.2. Product portfolio
Red Bull GmbH has a limited product portfolio with three main products: the Red Bull energy drink, the sugar-free version of it, and the Red Bull Cola (Image 4).
Red Bull is sold in a tall and slim blue-silver can. It contains taurine, glucuronolactone, caffeine, B vitamins, sucrose, and glucose. Red Bull sugar-free also contains aspartame,
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acesulfame K, and sucralose in place of sucrose and glucose. Finally, Red Bull Cola contains the coca leaf, which has sparked a controversy in Germany regarding minute traces of cocaine. The company has distributed the products in three different sizes (Image 5): the 8oz energy shots, the basic 12oz cans and the large 18oz cans.
Image 4: Red Bull’s product portfolio Image 5: Different sizes of the Red Bull cans.
Source: Red Bull Website, 2011. Source: Red Bull Website, 2011.
Red Bull claims to: increase performance, concentration and reaction speed, improve vigilance, stimulate metabolism, and make consumer feel more energetic and thus, improve his overall well-being. In addition, Red Bull has widely expanded his famous slogan "Red Bull gives you wiiings".
3.3. Marketing efforts
Red Bull has an aggressive international marketing campaign. The numerous sponsored activities range from extreme sports , like mountain biking, snowboarding, skateboarding, surfing, rally, Formula 1 racing, and break dancing, to art shows, music, and video games. While staying focus on their target market of young males, Red Bull has also received help from celebrities, such as Eminem. It also hosts events like the "Red Bull Flugtag" and many other contests. Red Bull also sponsors association football teams, with clubs in Austria, Germany, the
United States and Brazil featuring the Red Bull trademark in their names. By associating the drink's image with these activities, the company seeks to promote a "cool" public image and
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raise brand power. Hence, this one energy drink has helped to create a market for over 150 related types of merchandise, like Red Rooster and Blue Lightning.
Red Bull's slogan, "it gives you wings", is widely used in these marketing activities. In
Malaysia, however, Red Bull does not use its "Gives you wings" slogan, but instead a single oneword slogan, Bullleh!
, a word play on the Malay word Boleh (literally: Can be done ) and the word Bull .
3.4. Critics
a. The health effects.
In 2008, a review argued that there was no negative or positive health effects associated with the amount of taurine used in Red Bull. Indeed, it concluded that "The amounts of taurine, and ginseng found in popular energy drinks are far below the amounts expected to deliver either therapeutic benefits or adverse events. However, caffeine and sugar are present in amounts known to cause a variety of adverse health effects." A single can of Red Bull contains
80 mg/250 ml of caffeine, which is equivalent to one cup of normal coffee, or slightly less.
Adverse effects, due to consumption of quantities of caffeine commonly present in Red Bull, are effects such as headache, nausea, and anxiety, but also tachycardia.
Besides, a scientific study showed that the ingestion of one sugar-free Red Bull, in a sample of 30 healthy young adults, had an immediate effect on both endothelial function, and normal blood coagulation, thus raising the cardiovascular risk in these individuals to a level comparable to that of an individual with established coronary artery disease. Based on their results, researchers cautioned against the consumption of Red Bull in individuals under stress, in those with high blood pressure, or in anyone with established atherosclerotic disease. Red
Bull representatives, however, stated that this observed increase in cardiovascular risk was not felt to be different from that associated with drinking a regular cup of coffee.
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b. Cocaine controversy.
In 2009, Red Bull Cola drinks were found to contain between 0.1 - 0.3 micrograms of cocaine per liter. In Taiwan , it was found that the importer was due to launch a marketing campaign the next day, while importing cocaine to the island is an offense that is punishable by death or life sentence. In Germany, 11 out of 16 states had already banned the drinks in May
2009.
Testing of Red Bull Energy Drink and its variations has shown that a person with a low tolerance for cocaine would have to consume two million cans of the drink in a single sitting before becoming critically ill from the cocaine. However, this finding is legally irrelevant since distribution of cocaine is illegal in any quantity. c. Legal status
Red Bull has been subject to bans in France, Denmark and Norway for several years, but they have been lifted afterwards, and the energy drink was re-legalized in those countries.
In France, the ban began in 1996 due to concerns about taurine. Therefore, the drink could not be sold as-is in France. Instead, a different recipe, without taurine, was introduced. The ban was challenged by the European Commission in 2004, before the French food safety agency, in
2008, was unable to prove definitively the existence of any health risk, taurine-related or not.
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4. Methodology.
4.1. Introduction
Slow Cow, a new relaxation drink brand, aims to become well known in the market and to be perceived well by the consumers. In this case, the brand wants to use the image of Red
Bull, which is the leader of the energy drinks market, to do so. In this report, it’s important to identify each of the mentioned companies and to understand their marketing strategies and why the consumers want to buy their product(s). In consumer behavior, it is an important to comprehend how a company is perceived by the consumer and what can improve done in order to improve the image or the strategy. This report describes the Slow Cow Company via marketing analysis, in comparison to Red Bull. Several theoretical points of view are developed throughout various part of the report and the proceeding methodology section will explain our reflection about the construction of this report. For this report, it is important to understand the different steps because all steps have a specific sense in the development of our reflection.
The beginning of the report describes the two companies Slow Cow and Red Bull, it is important to analyze the companies and to find theories about them and in particular about their strategy in general. After this description, it is important to find theories corresponding to the companies, to describe and understand them in order to analyze in the case of Slow Cow and
Red Bull. This part is one of the most critical parts in our report. It is very interesting to understand the link between the theories and the strategies of the companies to develop our reflection about the problem formulation. In the methodology, it is important to have a view of the report which is different than the report itself, in this part we want to justify the using of the theories that have been developed in the report and criticize them. In creating the specific problem formulation, this report intends to develop the limitations because this choice creates a path to follow during the development of the project and it is important to identify these limitations. The comparison of Red Bull and Slow Cow create limitations that it’s interesting to identify and to explain in order to understand the general idea of our report. Finally, this part will help us to understand the project in general without in all analytical details.
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4.2. Paradigm study
Research philosophy is the decision of which method is best suitable to gather, analyze and use data on a particular phenomenon. The two main research traditions are Positivism and
Interpretivism, each have differing view on the objectives of research therefore they prefer different methods for collection of data.
Positivism also known as “Scientific Research” looks at society under scientific laws and analysis the facts, believing that reality is generally stable, observable and can be described from an objective point of view (Roberts 2005). This form of research favors quantitative methods to measure phenomena’s, also isolating individual factors and manipulating reality to identify independent and dependent variables. Positivists use predictions made on the basis of the previously observed and explained realities and their inter-relationships (Roberts 2005).
Although this method has proved successful in physical and natural sciences there is much debate on its effectiveness in social sciences because of its objectivity and generalizing nature.
In this respect the majority of our paper uses Interpretivistic research methods where social phenomenon are looked at on an individual/micro scale, exploring the meanings and motives behind people’s behavior/interactions. Due to the lack of quantitative figures relative to our subject matter, and the inherent biases and errors associated with questionnaires and interviews, interpretive methods were chosen. This method allows for the interpretation of observed/researched data, where critical theory is examined and assumptions about its use in practice are broken down, then the relations and use in our subject matter is suitable for predictions and analysis. In this paper the interpretive use of critical consumer behavior and blue ocean strategy theories for research have been used.
In contrast we have also used some Positivistic research methods when dealing with our empirical research. In this section quantitative market facts and figures have been used to analysis and predict outcomes of the identified problems/situations. These facts and figures are also appropriate for formulating the current market environment, for example its market share leaders.
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In respect to the section on legality both paradigms are used for research as laws generally follow legal positivism, separating “validity conditions of law and ethics/morals” although the two are not separated in practice (Rajapaska 2010). The analysis of trademark infringement in further analyzed from the pure legal positive laws and then taken into an interpretive method of research, where of course these laws are explored regarding consumer behavior.
In general we have chosen to use a pluralistic paradigm of study, where both positivism and interpretivism are used to obtain the richest form of research method, and analysis of market strategies.
4.3. Study design
The general design of our study uses qualitative research based on market research, to uncover to the best of our resources, the consumer perspectives/behaviors in relation to the two companies in focus. Qualitative assumptions have been made where quantitative methods would be unsuitable and undesired. The qualitative approaches are suitable for interpreting the reasons behind why these companies occupy market positions, while quantitative research with facts and figures assists in relating our interpretations to underling facts about the current true market conditions. This report hopes to explore the main theories of the Blue Ocean and consumer behaviors in order to formulate a new qualitative opinion and analysis of how Red
Bull and Slow Cow will proceed operations in the future with respect to their marketing strategies and positions.
4.4. Limitations
Limitations of our research include the low resource material on the company Slow Cow as it is a new product as well as the company does not wish to share information about the company at the time. Interviews and questionnaires are also very limited in response and valuable knowledge as most consumers are unaware of Slow Cow because of its relative
‘newness’.
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The situation between Slow Cow and Red Bull is relatively recent and unique meaning case examples and relative articles were more difficult to find and therefore there was less insight in to the problem.
There was difficulty converting the new intriguing situation of the brands in to a problem formulation that allowed for an analysis with numerous theories to explore, thus limiting the scope/depth of our analysis.
4.5. Paper structure
The following chart is showing the structure that this project is using. The main focus is to make use of 3 main areas. The first is the market segment analysis which is covering the consumer behavior theories but also argues for the segment that Slow Cow is dealing with. The second part is an overall analysis to the market, and here especially in the own created concept of purple ocean comes to play. The third part is the analysis of applied strategies in terms of their weaknesses.
There are five phases in this project, and each phase is a complementary part to one or the other. The first phase is describing the overall aim of this project, while the structure of other parts aims to answer to each of asked questions within the problem formulation. The relation between each part is creating an overall understanding about the questioned areas. As a result, the reader is able to follow the project from the opening phase to the end, which is the concluding phase.
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5. Theoretical considerations.
5.1. Consumer behaviors
5.1.1 Target markets
Target markets are vital for every company, in every industry, entering any market, and targeting all segments of the population. Having a well-defined target market(s) is the initial step that is required for all marketing strategies. A target markets is a focused marketing strategy where a company specifies a group of customers in which the majority of their marketing efforts will be aimed towards, for specific products. Identifying this specific niche is critical to a business’s success as, “firing ten bullets in random directions instead of aiming only one at the bull’s eye can be expensive and dangerous” (Entrepreneur Media, 2011).
Target markets just don’t ‘appear’, companies must do extensive research to narrow down the population in to segments and from here target the market that emerges as the most sustainable suitor for the company and product The target segment needs to be under constant watch as consumers/markets are ever changing and in order to complete optimal consumer satisfaction, the target market must me continually maintained.
Once that target market is identified, a company has several considerations to access regarding the product(s) and feasible market segments. The Target Market Strategies are;
Single Segment, Selective Specialization, Product Specialization, Market Specialization and Full
Market Coverage.
Figure 1: Target segments strategies.
Adapted from: Internet Centre for Management and Business Administration, 2002
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The figure above (Figure 1) displays the 5 potential target market strategies. Each one representing the area in which the company is focused upon, give their products and three segments. This can vary company to company depending on the actual number of products and segments. The amount of resources and size of the company typically progresses from left to right in Figure 1 as reaching a greater number or segments or having multiple products typically requires resources, which reflects the size of a company.
Single Segment
A single segment market strategy is one that is typically employed by small or startup companies. This strategy has a goal of perusing a very specific and niche market where their specific product is marketed in a single specific and well defined market where there is an organizational goal of growth and to eventually broaden the company’s profile. This strategy is ideal for small/start-up companies, with limited resources, as it allows for companies to peruse a large share of small or sub markets, rather than grabbing a miniscule share of a large market
(Wright & Esslemont, 1994). Containing such a specific strategy and usually possessing limited resources, being small or a start-up firm, expansion can be difficult (Kolter, 1976).
Selective Specialization
Selective specialization or multi segment strategy or differentiation strategy is a single segment strategy that is employed several times by the same company. Where the company focuses is place on a single well defined market, but this is done several times, (as shown above in Figure 1). The product itself may/may not be different in each segment but the message or means of marketing will be tailored to the market it is being placed in. This strategy can be appealing to risk adverse companies as they are not dependent on one product or segments and have ‘other’ segments in case of failure in another.
Product Specialization
Products Specialization is once again, only a modification to the selective specialization strategy, although focus is place on a specific product. This product does not differ, and remains
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constant across all segments. This strategy is dependent upon one product (ergo, risky) and the goal is to establish a strong brand and build off of its success.
Market Specialization
Market Specialization provides many products to one market. The company attempts to, ‘take the segment by storm’, attempting to become a market leader and constantly adapting/innovating products that are/can be appealing to any customer in the segment.
Example; Supply all types of sporting goods to the athletic/sporting goods market (Voice
Marketing, 2011).
Full Market Coverage
This strategy requires, by far, the largest amount of resources and is typical for larger companies. The strategy is to offer anything/everything to everyone. The company has many products and offers them too many segments. This type of strategy can typically be seen in the newspaper industry (Internet Centre for Management and Business Administration, 2002).
In section 6.1.1 of the empirical analysis of this report, the target segments of both Slow
Cow and Red Bull will be defined and a Common target segment will be formulated. Both Slow
Cow and Red Bull will be examined explicitly in terms of the ability to process and narrow down the general population into their chosen target segments, as well, the target market strategy that is most applicable to each company and the common segment will be identified.
Now the target markets and strategies are understood from a theoretical stand point, this report will proceed with a theoretical analysis of the consumers in this market. In specific to the Consumer Decision making process, this will be assisted by stimulus-response and hierarchal models.
5.1.2 Stimulus-response and Black Box Models
Concerning the arousal of human motives, one main philosophy is explained by the behaviorist school (Schiffman, L.G. et al., 2008). They believe that motivation is a mechanical
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process, where behavior is the response to a stimulus and the elements of conscious thought are unknown. According to the stimulus-response theory, the consumer has a limited cognitive control, reaction largely to external stimuli during the buying decision. The stimulus-response model is described as a well-developed and used model of buyer behavior (Tutor2u, 2011).
Kotler's Black Box Model is a model devised by the U.S. marketing academic, Philip Kotler, to explain the hidden nature of consumer decision-making. Using the well-established analogy of the "black box" to represent the human mind, Kotler describes the marketer's task as that of trying to understand why, how, when, and from whom, consumers buy. The following figure 2 summarized the main characteristics of the stimulus-response model, also known as the black box model:
Figure 2: Stimulus-Response Model of Buyer Behavior
Source: Tutor2u, 2011.
The black box model shows the interaction of stimuli, consumer characteristics, decision-making process and consumer responses. In this figure, we can observe that marketing stimuli and other environmental stimuli enter the customers “black box” and produce certain buyer responses. The marketing stimuli are planned and processed by the companies, whereas
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the environmental stimuli are given by social factors, based on the economic, political and cultural circumstances of a society. The main objective in marketing management is to find out what is going on in the mind of the customer, the “black box”, by analyzing the buyer characteristics and the buyer decision-making process.
The buyer’s characteristics influence how he or she perceives the stimuli, whereas the decision-making process determines what buying behavior is undertaken. The decision-making process will be described and explained in the next section of this report. Besides, in order to understand the buyer’s behavior, it is important to examine the factors which affect these behaviors by determining the buyer characteristics in the “black box”. The buyer characteristics include: beliefs and attitudes, values, learning, motivation, needs, perceptions, personality, lifestyle, knowledge… These characteristics can all be localized in the pyramid of the following figure 3.
Figure 3: The pyramid of buyer’s characteristics.
Source: Tutor2u, 2011.
In the interest of our project in progress, the Black Box model appears as a relevant tool for the analysis of the impacts of Slow Cow’s marketing strategy on its consumer behaviors and decision-making process. Therefore, in our empirical analysis, we will look at how Slow Cow uses Red Bull’s credibility and success, as marketing and environmental stimuli, in order to
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influence the buyer characteristics and decision-making process, and thus, modify the potential buyer responses.
5.1.3 Consumer decision-making Models
We call consumer decision making process the situation where a consumer has to make a decision between products which can be different but which have the same end. In this case the consumer has a reflection about the choice that he has to do, from the need recognition to the purchase of the product and this reflection can be affecting by different factors.
Figure 4: Scheme of the consumer decision-making process
Need Recognition & Problem Awareness
Information Search
Evaluation of Alternatives
Purchase
Post Purchase Evaluation
Source: Own creation, 2011.
Explanation of the steps in the decision making process:
The first step of the consumer decision making process is the need recognition. All people, when they have to make a choice between products have to do this choice to satisfy a specific need. There are two kinds of needs: functional and psychological. The functional needs are those that we have to satisfy like eating. The psychological needs are those that we want to satisfy not for ‘save’ our life.
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When they have a need, consumers want to have information about products which could satisfy their need and they can find this information from different external sources like family, friends, advertising, magazines... To try the information, it can be different if the product is ‘famous’ or not and it depends on the product itself, if it’s a specific product to satisfy specific need (medicine for example).
When people have information, they have to choose which product could be better than another and they evaluate all the alternatives that they have to make the good choice to satisfy their need. The evaluation of information can depends on the product because if you have a lot of products which can satisfy your need, you have to make a good evaluation of the information to find the product which could be the best for you. In another way, you can have just few products which can satisfy your need and it can difficult to choose the good one because they are similar. There are no rules to evaluate the information of products; it depends on several internal and external factors.
After those steps, consumers can buy the product because they think it could be the best one to satisfy their need. There are two kinds of purchases; the high involvement purchases and the low involvement purchases. The first one includes high expenditure as when consumers want to buy a house or a car. The second one is simple because it doesn’t include personal risks, as buying a sandwich or food in the supermarket.
After that, when they bought the product and they consume it, they can evaluate their choice and see if the product that they choose is good to satisfy their need or not.
5.1.4 Response hierarchy Models
Models of effects help marketers to set marketing goals, structure objectives and analyze message impact as a series of steps called a Hierarchy of Effects (Heuvel, D. 2010).
When confronted with a promotional message, consumers proceed through some type of response process. The response process they use in a particular situation will depend upon a range of factors, and in particular the extent to which the consumer is involved in the decision
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making process. The level of involvement (Figure 5) depends upon a range of factors including person, object and situational factors.
The high-involvement model is also called the Think-Feel-Do model because it represents a series of standard responses typically found in consumers who are active participants in the process of gathering information and making a decision; they are active thinkers. In contrast, the low-involvement model changes the order of responses to Think-Do-
Feel, with the idea that consumers first learn about a product, then try it, and finally form an opinion. This situation occurs when there is little initial interest in the product or when there is minimal difference between the products, requiring little decision making. It also describes impulse purchasing. While there are several well-established and famous high-involvement response hierarchy models such as AIDA – Attraction, Interest,
Desire, Action – or the hierarchy-of-effects model (Appendix 1), the number of low-involvement hierarchy theories is very limited.
Figure 5: High vs. Low involvement
Source: Own creation, 2011.
In the case of Slow Cow, we are in the situation of a low-involvement purchase because the purchase of a relaxation drink is not very expensive and it doesn’t include personal risk.
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Consequently, in our empirical analysis, we will go into the low-involvement theories in a little more depth, looking at the Think-Do-Feel response of the Slow Cow buyers.
5.2. Marketing strategies of Red and Blue Ocean.
5.2.1 Market oceans
In this decade, business markets have grown largely, and this is based on the effect of globalization and new market opportunities. The positive aspect of globalization has opened up, and increased the market worth for numbers of companies with the aim to enter new markets. This aim by itself has caused a rise in competition. Businesses do not longer compete just on their existing crowded market, but also goal to enter new markets with new products or services. Based on the theory available in the Blue Ocean Strategy, it is clear that the Blue
Ocean has a perpetual existence, but it is also different from time to time. According to the developers of this theory, W. Chan Kim and Renée Mauborgne, at the time when a new industry enter a new market, the aim is to be within the Blue Ocean. However, the industries gradually start to find themselves within a new Red Ocean. A good example in this case is one of our focused companies Red Bull, which started its innovative idea within the energy drink market, but gradually found it more and more crowded with other actors in the market.
In order to have a better understanding about our focused companies Slow Cow, which is indirectly competing with our other focused company Red Bull, it is important to give a clear theoretical background for the Blue and Red Ocean.
5.2.2 History and foundation of Blue Ocean
The professors from INSEAD, W. Chan Kim and Renée Mauborgne, are the master-minds behind the idea of changing companies’ minds of traditional competition. Based on what they describe in their book “Blue Ocean Strategy: How to Create Uncontested Market Space and
Make Competition Irrelevant” (2005), the markets in general are divided to Red and Blue
Oceans.
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Red Ocean is characterizing the known market in which companies are aiming to outcompete directly against each other. At the time market space become congested, the level of potential for profits and growth drop. For this reason, the market is not attractive in the long-term, except if the company is dominating the market.
Blue Ocean is the unknown market, which shows the potential opportunities for highly profitable growth. The Blue Ocean Strategy aims to establish a leap in value for buyers and the company.
The Blue Ocean strategy is a philosophy which has been discussed within the past five years.
The authors, W. Chan Kim and Renée Mauborgne, challenge the classic battle market position by making a mindset and approach based on creating a new market without competitors: this being the base of the Blue Ocean concept. According to Kim and Mauborgne, the writers achieved this by creating and capturing new customer needs (Blue Ocean), as opposed to supporting the existing demand, which dominates the classical theories (Red Ocean).
Strategic developments in Blue Ocean Strategy are focused on making product and services cheaper and better, and it is usually the firms’ theoretical and practical need to make a choice between these two factors.
Michael E. Porter describes in his book “Competitive Strategy - Techniques for Analyzing
Industries and competitor ” about the fact that companies are either highly differentiated or have a low price.
Blue Ocean Strategy's thinking is to remove cost-value barrier, and thereby, offer something that is cheaper, better and different. There are both supporters and critics of the book, ‘ Blue
Ocean Strategy - The new winning strategie s’. Critics argue, among other things, that strategy is only perception, since it is based on companies' already created success. In addition, they believe that many companies go bankrupt, because they are trying to find the Blue Oceans that critics do not believe exist.
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According to the strategies of credibility and usefulness within the subject marketing, these theories are mainly built on experience from industry. Some companies have pioneered new thinking, and their experience in industry is described as theory.
Blue Ocean Strategy is a new approach for their future strategy schedules. Views are spread in the strategy of innovation. Some marketers understand the strategy as being random for business success. Other marketers describe the book as a new strategy classic, and call book for groundbreaking.
The debate about Blue Ocean Strategy has been dominant for businesses within the past four to five years. Yet, today, it is interesting to elucidate why the Blue Ocean Strategy has got so much attention. It has truly changed the thinking of many managers in relation to classic theories like Michael E. Porter, and thereby, created a new response pattern in business.
In general, competition for some businesses is difficult to understand and modify, in case they have no understanding about the Blue Ocean way of thinking. Kim and Mauborgne's mindset and production of Blue Ocean Strategy is an interesting way to analyze and gain deeper insight into the theoretical recharge strategy for corporate strategy planning.
5.2.3 Value innovation
Value innovation can be defined as a strategic logic underlying emphasis on value and innovation. Balance corridor between value and innovation must be balanced. There is only value innovation, if the company has innovation within the product value, price and cost positions. This means that, if the company only has a strong emphasis on value, but lacks the innovative part, the company tends to focus only on the value of the product. Therefore, the company will not be able to assert itself on the market, because it lacks the functional part of the product to compensate for value creation. If the company reversed only focus on the innovative part, the company will be inclined to be technology driven or futuristic. This can lead to firm pricing, too high relative to buyers' assessment.
Compared to the classical theory of breaks value innovation in Blue Ocean Strategy, it is clear that this theory is in view corridors of value and costs. Michael E. Porter has made its
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views known within competition, so that one must choose between strategic differentiation and low cost. Below is illustrated how these two approaches may be combined into one unit.
Figure 6: Value Innovation
Source: Kim & Mauborgne 2005
According to W. Chan Kim and Renée Mauborgne, there is an option to combine value and cost strategy by reducing the costs and increase the value for customers. By gathering these two approaches into a single entity, there will be a leap value for customers and the company. This will eventually eliminate the factors that company's market competes on, and as a result, give companies cost savings. This factor does also further increase value for customers through prioritizing and creating elements the industry has not seen or used before.
5.2.4 Characteristics of Red and Blue Oceans
In order to sum up the theory, it is essential to mention the characteristics of each market ocean, before starting analyzing the soft drink market ocean and our focused companies.
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Table 1: Red and Blue Ocean Highlights
Strategy behind the Red Ocean Strategy behind the Blue Ocean
The ability to compete in existing market
The ability to win competition
The ability to use existing market demand
The ability to create a market without competition
The ability to make the competition irrelevant
The ability to create new market demand
The ability to compete based on price/cost The ability to make the price/cost irrelevant
Changing an enterprise system of activities into the strategic choice between differentiation or low costs
Changing an enterprise system of activities effort to aim differentiation and low costs
Source: Kim & Mauborgne 2005
5.3. Model of theoretical considerations.
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6. Empirical considerations
6.1. Consumer behaviors
6.1.1 Slow Cow’s and Red Bull’s target markets
Target markets were previously outlined in the theoretical section of this report. This section will be examining both Red Bull and Slow Cow’s target segments independently. In doing so, this report will also identify the target market strategy employed by each company and assess both strategies feasibility for each company respectively. This report will specifically focus on similarities between each company’s target segments. This overlapping market segment, which we assume the majority of their marketing efforts are focused towards, will then become subject of examination. We will inspect this market even further to understand how these two companies can target the same segments when their products offer opposing effects.
As previously discusses, segmenting and targeting markets take an extreme amount of effort to form, especially one in which a company believes to be feasible. Starting with the general population, certain aspects are identified and narrowed down and thus, the companies are able to establish a focused approach at a target market. The following section will illustrate the target markets that Red Bull and Slow Cow have established.
Red Bull
Red Bull primarily targets urban males ranging in age from 14 to 35, who can be grouped into one of the two following segments, athletes and young adults. The athletic segment primarily participates in extreme sports, such as skate-boarding, wake-boarding, cliffdiving, sky-diving or motor-racing. The young adults segment aspires to be like the athletes who endorse the Red Bull products. These individuals like to participate in challenging recreational endeavours that expand across the globe ( Kenneth, 2011).
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Slow Cow
Slow Cow’s representatives claim their product is for everyone, “from 7 to 77, from someone who needs to be regenerated after hockey game, to students needing to concentrate, to anyone wanting to relieve stress” (Food Channel on the Road, 2010). Although this appears to cover a majority of the general population, upon further research, Slow Cow primarily targets both males and females aged from 18 to 44, focusing on the athletic segment, as well as the student population. The athletic segment is anyone who needs to relieve stress, recover and concentrate: for example, the likes of professional golfers. The student segment is primarily young adults, most likely in university or other secondary studies, of who can benefit from the claimed effects of Slow Cow.
Target Market Strategy
The target market has been established. Consequently, the target strategy must then be assessed, and, as discussed in the theoretical section of this report, there are five potential target market strategies that can be employed based on the feasibility of the strategy, taking into account how a strategy meshes with the companies’ size, resources, products etc.
Red Bull
Red Bull is well-established and well-known. It has a large amount of resources and a line of products that expands beyond that of their Red Bull energy drink, including the sugarfree version of it, and the Red Bull Cola . Taking into account all of these factors, an agreement can be made that Red Bull’s target market strategy resembles most to a market specialization.
It appears Red Bull has evolved into this strategy from a single segment strategy, where newer companies focused specifically on a niche market, in order to gain a larger market share. Over the course of its existence, Red Bull has become established in the mind of the consumer, they have grown and advanced their strategy into market specialization. Red Bull does indeed, ‘take the market by storm’, and has allowed its brand to expand the several different products across the market, thanks to its diverse product portfolio.
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Slow Cow
Slow Cow is a new, start-up company. Yet, they are still to be reputable in a market as they are relatively unknown. Due to the fact it is such a new company (2006 launch date), its resources are limited and falls under a target market, single segment strategy. This strategy fits
Slow Cow very well as its product is very specialized and is ideal for niche markets. Slow Cow could use this strategy to gain a large share of a small market and use this small success as a foundation for organizational growth. As in the case of Red Bull, from here there is potential to grow within the market itself via Market Specialization (like Red Bull) or product specialization.
Common Segments
The empirical analysis has just concluded regarding the target markets and the target market strategies for both Slow Cow and Red Bull. Of course, these are not the only factors that contribute to the market strategies. As forthcoming sections of this report will examine, the
Red and Blue Ocean strategies assist in companies forming their marketing strategies. This report will proceed forward in generating the common target segments between these two companies, which support our assumption that Red Bull and Slow Cow do target the same markets. Finally, this will assist in later sections in supporting our assumption that Slow Cow is leveraging off of Red Bull.
Image 6: Red Bull and Slow Cow Target Market Venn Diagram
Source: Own creation, 2011.
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As each company’s target segments are described above, we will now formulate the segment of which both Red Bull and Slow Cow target and discuss the commonalities between each target segment strategy.
Based on the commonalities between these two segments, the common segment can be defined as athletes and young adults, both male and female, ranging in age from 14 to 44.
This segment primarily engages events, in which the individual believes they are required to be in an improved state, which can be provided by the products, in order to accomplish the tasks at hand. This market also believes in the repercussions of consuming these beverages, and even though these two companies offer products that have opposing effects, this market can benefit from the effects of both these products.
If we transpose target market strategies of both companies, we can see that Slow Cow and Red Bull are currently engaged in the same segment. Taking a look at figure 7, where Slow
Cow’s single segment strategy is imposed over Red Bull’s market specialization strategy, we can see the Common segment in which both companies target (Dark Purple area). This darker purple area represents the common target segment as described above. The lighter purple portion of figure 7 is an area in which Slow Cow is able to access due to the Purple ocean strategy, which this report will be examining in the analysis section. This purple ocean strategy supports our assumption that Slow Cow is leveraging directly from Red Bull’s strong establishment in the market and Red Bull’s creditability.
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Figure 7: Common Target Market Segment Strategy
Source: Own creation, 2011.
6.1.2 The Black Box Model effects on Slow Cow
As we have detailed in the theoretical considerations section, the Black Box represents the human mind in the process of buying responses. It includes the hidden buyer characteristics and decision-making process as a result of marketing and environmental stimuli. In other words, the Black Box, also known as a part of the Stimulus-Response Model, corresponds to the unknown buyer behaviors resulting from the interaction of stimuli and engendering their responses.
Looking at the case of Slow Cow, we can focus at the main stimuli regarding its use of
Red Bull’s credibility and success. On the one hand, there are many relevant similarities and differences in the marketing stimuli. First, the Slow Cow relaxation drink is simply described as an anti-energy drink, the opposite of the Red Bull energy drink. However, the product is similar to Red Bull in many ways: similar kind of packaging (cans of 250mL), similar logo (Cows vs.
Bulls), similar approximate price, similar promotion strategy (sport events and sponsoring famous athletes…), similar target markets, similar potential markets etc. … On the whole, Slow
Cow’s marketing stimuli are approximately the exact same as Red Bull’s. Actually, the only
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difference is that Slow Cow claims to be the opposite of Red Bull. Therefore, the main question regarding the Black Box buyers’ behaviors must be: how does that marketing strategy of using the same marketing tools, while claiming to be the opposite product of Red Bull, affect the buyers’ behaviors in their characteristics and their decision-making process?
On the other hand, other external stimuli including economic, political, social or technological factors can have impact on the buyer behavior. First, politically, the only stimulus susceptible of influencing the buyer behaviors seem the legal issues with Red Bull itself, as it has brought an action against
Slow Cow for copying the product and packaging. How does that legal battle between Red Bull and Slow Cow affect Slow Cow’s potential buyers?
Besides, in our current busy way-of-living, our extremely active and dynamic societies suffer from a huge amount of stress, which Slow
Cow claims to help with. Indeed, Slow Cow wants to help people suffering from stress, insomnia or lack of concentration, by providing a relaxation drink supposed to be equivalent to an acupuncture session. As a result, it appears that, on a social and economic point of view, Slow
Cow is fulfilling a niche market, responding to a social existing need. Consequently, the Black
Box also contains a major question on how does Slow Cow better responds to a social need than
Red Bull and how can that be reflected on the buyers’ behaviors?
Thanks to this analysis of the principal marketing and environmental stimuli that Slow
Cow is facing in his constant comparison with Red Bull, we have been able to stress out several areas of questioning being part of that buyers behaviors’ Black Box. While the following section will examine into depth the buyer decision-making process, we will first try to figure out the main buyers characteristics of this Black Box, by providing possible answers to these previously established questions.
First of all, focusing on the impact of the marketing stimuli on the buyers characteristics, it appears relevant that the similarity with Red Bull is an important tool in the attraction of new potential customers. The Slow Cow buyers must predominantly belong to the people knowing about Red Bull. They can be Red Bull fans, confident about Red Bull’s impacts and seeking for the opposite impacts in some situations: for instance, athletes needing to relax with a Slow
Cow, after a physical effort for which they had a Red Bull. Also, they can be reluctant to Red Bull
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because of their already high state of stress, and thus, feel more attracted to the virtues of Slow
Cow instead. Also, being a relaxation drink makes Slow Cow a much wider product than Red
Bull. Indeed, children, pregnant women, seniors or people suffering from heart diseases are all supposed to avoid drinking Red Bull because of its caffeine contents. However, these markets could benefit from the virtues of Slow Cow and become potential buyers.
Additionally, other stimuli such as the political and social stimuli highlighted previously, are also influencing the buyer characteristics from that Black Box. The legal issue between Red
Bull and Slow Cow can be beneficial, but also unfavorable to Slow Cow as Red Bull fans might agree with Red Bull’s attack and feel like Slow Cow is just copying their beloved product. Yet, most people might believe that attacking Slow Cow for copying is a lack of competitiveness from Red Bull and a sign of fragility. Moreover, regarding the social stimulus, the stressful state of our current societies definitely has a favorable impact on the expansion of Slow Cow. The product seems to fill a niche market and create a new area of anti-energy drinks, the relaxation drinks. Consequently, the buyers might behave like Slow Cow being a new astounding drink discovery and thus, feel attracted by this novelty.
From this analysis of Slow Cow’s buyers’ characteristics affected by the marketing and environmental stimuli presented through the comparison to Red Bull, we have brought out several areas of interrogations included in this Black Box model and provided various explanations of the main buyers’ characteristics. As a continuity of this section, the following study of the buyers’ decision-making process will offer some explanations regarding that second part of the Black Box model.
6.1.3 Slow Cow consumers’ decision-making process
These different steps show the reflection of all consumers that we are. When we have to make a choice, we do not think about all these steps and we take them automatically. However, in a lot of cases, there are not all these steps in our reflection. In fact, sometimes, we are making choices with just few information, because the product is very famous or because we already know it. In this case, the decision-making process is only from the need recognition step
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to the purchase of the product. In the case of Slow Cow, this situation is evident. When consumers of energy drinks or relaxation drinks have to make a choice between different brands, they do not search a lot of information about these products because they know it and this choice is easy for them.
In the case of Slow Cow, we are in the situation of a low-involvement purchase because the purchase of a relaxation drink is not very expensive, in comparison to a car for example, and it does not include personal risk. As we just said before, the consumers do not need to find a lot of information about energy drinks or relaxation drinks, because they already know these products. The next step which is very important is the evaluation of alternatives, to buy one relaxation drink more than another. In this situation, the strategy of Slow Cow could be better than the other brands of relaxation drinks.
One of the most important parts in the evaluation of alternatives is to analyze the perception of a brand by the consumers. In the case of a market of energy drinks and where the brands are famous and knew by all the consumers, the perception that has the consumers about one brand can be the most important criteria to make the choice. It is the same case for the market of relaxation drinks because there are not a lot of brands and, in comparison to the energy drinks market, the perception of one brand can be the best evaluation to make a choice.
We assume that Slow Cow is directly benefiting from the credibility of an existing brand,
Red Bull. In this case, the strategy of Slow Cow is very interesting because the perception of the consumers is used by the brand. Red Bull is the most famous brand in the market of energy drinks because of their marketing strategy. All people know Red Bull and therefore, if the image of Slow Cow is a parody of Red Bull, the brand can be famous quickly and it can have the best perception in the head of a lot of people. This is the most important part in the consumer decision-making models of the brand.
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Analysis of the consumer decision-making process:
The consumer decision-making process explains the reflection of the consumer in his brain when he has to buy a product. The purchase of a product is not always simple, and it depends on the product and other internal and external criteria. In this case, we can say that the purchase of a product depends on the product itself and on different characteristics that can change the vision of the product by the consumer.
‘It became clear that consumers possess and implement a repertoire of consumer decisions making strategies depending on the product, situation, context and previous experience’ (Salomon, 1996; in Erasmus A.C et al. 2001).
This citation shows that there is a consumer decision-making process, but it is not always respected depending on the kind of purchase. Also, consumers can use different strategies during their buying decision-making process. When consumers want to buy a product, the purchase of the product can be influenced by external factors. This includes the context of the purchase (purchase location) and the situation: for example, consumer price threshold based on income and previous experiences with this kind of product, or if family or friend influences them on the purchase of this product. In general, the consumers’ choices depend on the type of product, the timing, and the people who are concerned by the purchase of the product (Burns & Gentry, 1990; in Erasmus A.C. et al. 2001).
Compensatory and non-compensatory strategy:
When we are talking about the consumer decision-making process, we assume that it depends on internal and external factors (Calhoun, 2011). External factors, as it was explain in the previous paragraph, are all factors which can influence the purchase of the product.
Internal factors are all the elements of the product itself, like the price, the quality or the brand.
These elements show the importance of the product for a consumer. The importance of the product itself and the importance of the purchase of this product are factors which will have consequences in the consumer decision-making choices. When consumers are faced with a
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purchase situation, choosing to purchase a product depend on both internal and external factors, and consumers use one of the two strategies when ultimately purchasing a product.
These strategies are compensatory and non-compensatory. With the compensatory strategy, consumers spend a lot of time to analyze all the positive and negative aspects of the product before buying it. If positive aspects are more important for the consumer than negative aspects, he can decide to buy the product. The second one is the non-compensatory strategy, literally the opposite of the compensatory strategy. In this situation, the consumer makes repeated decisions or low-involvement decisions. In this strategy, the consumer takes fast decisions without a significant cognitive effort. The consumer does not want to compare product aspects, thus, a visible negative aspects will result in the purchase of the alternative product. This situation can explain that the consumer already knows a brand and which brand he wants to buy.
Brand loyalty:
In the consumer decision-making process, when a consumer has to find information or when he has to evaluate the alternatives, one thing which can be a special relevant criteria is the brand loyalty. When the consumer knows a brand and the particularities of this brand, his decision-making process becomes easier. The brand perception is very important for a consumer when he has to buy a product and ‘ the brand can often the key discriminating factor in a customer’s decision to select one product over another’ ( Infotrends, 2011 ). The perception of a brand depends on the previous experiences with the brand, the interactions with sales/customer services, the experiences of relatives with this brand, the reviews by reputable sources or the advertising campaigns of the brand. When a consumer has to take a decision in a short period of time, it seems obviously easier when he knows the brand. Therefore, it really matters for a brand that the consumer has the good perception of its image and products.
Conclusion of the consumer decision-making model part:
In the case of Slow Cow, the consumer decision-making process is simplified because, to buy a relaxation drink, consumers do not need a lot of information. This explains why Slow Cow
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has chosen to target the same segments as Red Bull. Consumers know the famous brands of energy drinks, and Slow Cow is sold with the energy drinks. The perception of a brand by the consumers is very important in a market where there are a lot of brands, like the energy drinks markets, and the strategy of Slow Cow, aiming to become famous using the image of Red Bull, is very interesting in this way. The relaxation drinks and Slow Cow in particular have the same characteristics concerning the consumer decision making model. Indeed, to buy an energy drink or a relaxation drink does not represent a purchase with significant consequences in the life of consumers, and it represents a low-involvement in contrast with the purchase of a house or a car. Consumers do not take a big risk if they buy a brand or another of relaxation drinks.
Consequently, Slow Cow has to become the most famous possible to be chosen by consumers.
The purchase of an energy drink or a relaxation drink is not very difficult in term of reflection, and consumers can be influenced by different things when they have to buy this kind of product. In the case of Slow Cow, consumers do not know a lot the relaxation drinks market.
The perception of Slow Cow is thereby very important and, if the brand uses the image of Red
Bull to become famous, it will certainly be easier for consumers to recognize the brand. This is the second reason why Slow Cow targets the same segments as Red Bull: consumer will recognize Slow Cow because of Red Bull, but, in the same time, they could also make the difference between them. When we talk about strategy in the consumer decision-making model, in the case of Slow Cow, the non-compensatory strategy seems to be applied. Indeed, when consumers want to buy a relaxation drink, they do not want to take a long time to reflect about which brand they will choose. The decision is taken rapidly, without a significant cognitive effort and consumers are not comparing positive or negative aspects. Relaxation drinks are still relatively unknown. If Slow Cow is more famous than others, it will be a positive aspect for consumers because they already know the brand and the characteristics of the product. This is the third reason explaining why Slow Cow targets the same segments as Red
Bull, because the non-compensatory strategy is applied in the market of energy drinks and the reflection of consumers is the same that for the relaxation drinks. Finally, we can see that the brand loyalty is very important for Slow Cow. Red Bull is very famous and, if Slow Cow can be famous like Red Bull, by targeting the same segments but one being an energy drink and the
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other a relaxation drink, it could be a positive situation for Slow Cow to be perfectly perceived by the consumers and to make their purchase choice easily and quickly.
6.1.4 Application of the hierarchy response model to Slow Cow
In the case of Slow Cow, we are in the situation of a low-involvement purchase because the purchase of a relaxation drink is not very expensive and it doesn’t include personal risk. In low-involvement situations, the customer is relatively indifferent to the product or service and essentially responds to repeated marketing. In the hierarchy-of-effects that occurs in lowinvolvement decision-making, beliefs are formed first (cognitive), followed by behavior, and finally by attitude formation (affective). Therefore, a Think-Do-Feel response process is more likely. The learning is passive rather than active information processing. Also, the low-risk associated with low-involvement purchases means that consumers often find out about a product, give it a try, and then form an opinion on the product. Consequently, a person who has never tasted the Slow Cow relaxation drink before can enter a store, see the brand Slow
Cow, remember seeing an ad for it and some beliefs, and can then decide to buy the brand without really knowing whether she likes it or dislikes it. In other words, the memory of the brand’s name and some beliefs can be enough to create the purchase of the product. In the case of Slow Cow, people can remember the brand Slow Cow itself, or its effects on relaxation, or maybe an advertising about the product. However, they can also remember it because of its similarities with Red Bull regarding marketing and merchandising strategies, or because of its opposite effect on the organism.
Besides, the commercialization of a low-involvement product like Slow Cow has some implications for the company’s marketing strategies. Indeed, it has been proven that the development of repeated advertising, the use of a memorable brand name and the choice of the best Point-of-purchase display in store are relevant tools for low-involvement products. As expressed previously, the advertising used by Slow Cow seems like totally beneficial for the company, even if it is maybe not as repetitively as it could be, because it is emphasizing the anti-energy drink status of the product. Therefore, the company has chosen the brand name
“Slow Cow”, in connection and opposition with Red Bull, and has usually been able to foster its
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retailers to display the Slow Cow cans next to the Red Bull cans, in order to constantly stress the comparison with Red Bull.
As we developed in the theoretical considerations of the response hierarchy models, there are only few low-involvement theories and implications. One which may appear relevant to the case of Slow Cow, as to most of the energy drinks in general, is the Passive Learning
Theory. When Herbert E. Krugman wrote his article “The Impact of Television Advertising:
Learning without Involvement” (1965), he presented a theory that became rapidly adopted in the advertising area. While learning is in majority conceived as an active and goal-directed behavior, Krugman analyzes the passive learning as “effortless, responsive to animated stimuli, amenable to artificial aid to relaxation, and characterized by an absence of resistance to what is learned, thus opening up possibilities that, depending on one’s point of view, one may welcome or deplore”. As a result, according to Krugman, there are only three levels of exposure:
Curiosity, Recognition and Decision. A potential customer for Slow Cow will start by feel curious about the product thinking “ What is this new highly-merchandised product protesting the energy-drink market by claiming to offer relaxation benefits to its consumers”? Then, this potential customer will, at a point, be in a position of a possible purchase of the Slow Cow product, while doing his groceries or buying his lunch for instance, and recognizing the product he has heard so much about and has felt so curious about. Finally, he will take the purchase decision and try Slow Cow, maybe just by curiosity or because he has an important business meeting or exam for example. Still, it is only at the end of the whole process that the customer will decide whether he approves it or not.
Through the linking with Krugman’s Passive Learning Theory, we have shown how the process of Slow Cow customer’s hierarchical responses can be modeled, while focusing on a low-involvement product.
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6.2. Slow Cow application of the red and blue oceans strategy
6.2.1 The soft drink market ocean
Now by mentioning the theory behind Red and Blue Ocean strategy, it is essential to analyze the soft drink market, since our subjected companies Red Bull and Slow Cow are positioned into this market. The definition of soft drink products is in term of non-alcoholic beverages that usually contains carbonated water, a sweetener, and a flavoring agent. The sweetener could be sugar, high-fructose corn syrup, or a sugar substitute which is seen in diet drinks products. Soft drinks seem to usually contain caffeine or fruit juice, and the level of these mixtures varies from product to product.
As we look at the soft drink market within the past three decades, it is clear that there have been changes into the products and categories of these drinks. As we understand the market today, the soft drink products can be defined into three main categories: American Soft drinks,
Energy drinks and the new Relaxation drinks. a. American Soft drinks.
This category of products contains over eighty different brands, and the title “American” is based on the biggest actors in this market. Coca-Cola and Pepsi Cola are the biggest brands in this market, and based on their market share, but also their long history in this trade, they are defining the name “American soft drinks”. There are numbers of projects and subject dedicated to this market. Still, the general view to these products define beverages as daily products used primarily within the segment of 10 to 50 year olds. This represent a huge market which is not segmented based on a specific social group or need, but on a large number of consumers who buy these products based on their basic needs. b. Energy drinks.
Energy drinks normally contain methylxanthines, which includes caffeine, B vitamins, and herbs. Other commonly used ingredients are carbonated water, guarana, yerba mate, acai, and taurine, plus various forms of ginseng, maltodextrin. Some contain high levels of sugar, and many brands offer artificially sweetened 'diet' versions. Energy drinks entered the soft drink
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market back in the early 2000’s, and yet, today, there are still not representing a perfectly mature market. The variety in brands is limited. Also, there are some few companies who aim to establish themselves as branded products. c. Relaxation drinks
Relaxation drinks, in opposite with Energy drinks, are having anti boost effects, and, in fact, are defined as being drinks which help people to cool down and relax. The entering phase of these drinks was back in 2006. In the beginning, the products were similar to herbal teas and natural drinks and medicines. Yet, by introducing new formulas and by developing more interesting packaging and marketing, the relaxation drinks are nowadays getting more and more known by the societies.
6.2.2 Soft Drinks Oceans and positions
In order to have a better understanding about the current situation of oceans within the market of soft drinks, it is important to clarify the position of different categories, products and companies.
The following graph has been made to explain the current situation of the soft drink market, and it is viewing oceans in which the level of competition, market share and connection of each segment to each other are explained.
As it has been mentioned, the Red Ocean describes a tight level of competition. Looking into soft drink market, it is clear that the category of American soft drinks contains numbers of known branded products and companies. The competition in this segment is tough, and yet, companies are trying to dominate the market by competing directly on each other’s product. It is after all a reality that the markets share of American soft drinks represent the majority of markets in both size and turnover. Huge actors in this segment can be mentioned as Coca Cola and Pepsi Cola, and the rival between these two brands has been known since day one of their existence. As it has been shown in the graph, the color of competition in this category is dark bloody red, and this emphasizes on the tight completion in this market, but also the high level of competition between each actor to obtain a higher market share.
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Another category of product that has been defined as being the Red Ocean is energy drinks.
The number of energy drinks is increasing every day, and the competition within different actors in this segment is becoming tighter. The dominant brand in this segment has been shown as being Red Bull. The market share of this company is quite high considering the medium size of this segment. Still, this branded company has been facing some new competitors in its trade within the past few years. Therefore, the level of competition in this market is red, and this is truly based on the fact that success within the segment of energy drinks is after all based on winning the market, and aiming to increase market shares.
Figure 8: The Soft Drink Market Ocean
Source: Own creation, 2011.
The third category in the graph is the segment of relaxation drinks. The market is relatively new, and there are not that many actors in this trade. The level of competition has
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been shown to be lightly red, and this illustrates that the rivalries between companies exist, but not as much as other categories like the American soft drinks or energy drinks.
So far, as it has been described in theory, the soft drink market has been shown within the perspective of Red Ocean strategy. The darkness and lightness of each category has been differed, still the main description was focused in rivalry and its level between different companies and their brand.
The new perspective of theory is also available in the graph. The company Slow Cow has been shown to be in the Blue Ocean, but nevertheless, this brand has also created a new Purple
Ocean. In order to understand this new strategy, it is important to analyze Slow Cow both in context of Red and Blue Ocean market, since this is truly the reason behind the combination of red and blue; creating purple.
6.2.3 The Blue Ocean of Slow Cow
Generally, as described before, the relaxation drink market is relatively new, and for this reason the innovation behind products in this segment could be understand as being new, and noncompetitive with other categories, since they are not having a common product. As it has been said in theory, Blue Ocean is consisting on elements which are creating a unique value innovation for companies. By looking into the product of relaxation drink, it is clear that these products do have common ingredients and components which are also available in product category of American soft drinks and Energy drinks. Still, the fact that relaxation drinks based on their formula are having another effect on consumers is the reason behind differentiation in these products comparing to others.
Slow Cow, as it is representing a great deal of relaxation drink market, is also defined as being innovative with its product and market. The company is offering a product which might contain common flavors of other categories of drinks. The product is differentiating itself with other categories of drinks.
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6.2.4 The Red Ocean of Slow Cow
As it has been mentioned in the theory, no company can remain ‘unique’ when employing the Blue Ocean Strategy. This is not based on consumers’ reaction towards a product, but essentially based on the fact that other companies and competitors will recognize such an opportunity and want to join this new market. What is interesting about Slow Cow in this context is the fact that this company is not yet seeing competitors entering the relaxation drink market massively, but, on the contrary, the company by itself is entering other categories
“Energy drink” Red Ocean, and based on this Slow Cow is creating a new Purple Ocean.
6.2.5 The Purple Ocean of Slow Cow
In theory of Red and Blue Ocean, scenarios have been described into two main oceans.
Here, in connection with Slow Cow and the marketing approach that they are using, it is not truly defined as just one perfect ocean. In the next parts, we are emphasizing more on the advantages and disadvantages of being in Purple Ocean but, for now on, the focus is to describe the reason of Slow Cow being Purple, instead of only Blue or Red.
As it is seen in the graph, the Slow Cow has been divided into two colors, Blue and Purple, but in fact, the separate color of Slow Cow is just blue. The justification behind that has been said as being innovative and having a unique product. Yet, the reason that Slow Cow is becoming Purple is the positioning part of this company. Slow Cow is not keeping itself into the certain category of relaxation drinks, and this is not because the company has other products which could be categorized in other segments. The action of overlapping into energy drinks or to be more exact of overlapping into Red Bull which is positioned in the Red Ocean is defined to be the Purple Ocean strategy of Slow Cow.
As it has been justified in the section on consumer behaviors, Slow Cow is sharing and targeting the same segment of consumers for its products as Red Bull does. Based on the fact that Slow Cow is presenting its product as a complementary product to Energy drinks or to be specific “Red Bull”, but also the fact that the philosophy and the main idea of Slow Cow is
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engaged with existence of a Red Bull, there is thus, a direct join between the construction of
Slow Cow and its connection to Energy drink market and Red Bull.
Complimentary goods are products which are associated with one another. Where demand generated by one product has a strong positive correlation in demand with the complimentary product. A simple example is a CD player and CDs: if the demand for CD players increases, then the demand for CDs will increase, as these two products go hand in hand with one another
(Carbau, 2006). In the case of Red Bull and Slow Cow, they are not directly complimentary goods, but Slow Cow has the opportunity to position them to become one. Slow Cow is still in the early developmental stages of the product and the brand. Slow Cow, as mentioned above, needs to make the target segment aware that, if they need to ‘overcome stress’ prior to a task, as Red Bull offers in the Red Bull Brochure (2011), then, after they also need to reduce stress, and relax. To do this, they require a Slow Cow.
By analyzing Slow Cow from the Blue Ocean perspective, it is correct that the company is making competition irrelevant by presenting a product which is not similar to existing products in the market. However, by looking at Slow Cow from the Red Ocean perspective, it is obvious that the company is directly attacking the energy drink market, but also in specific Red Bull. In the next parts, we will emphasize more on these attacks but, what is obvious so far is the fact that having a brand name and logo which is directly connected to another company in another category is truly what is defining Slow Cow as having a Purple Ocean strategy. An approach which consider differentiation in product and creating a value innovation as a must, but at the same time attacking and targeting competitors in the mirror market as a necessity for success.
6.3. Analysis of the threats and weaknesses of the Purple Ocean strategy
6.3.1 Logo Dispute: Trademark Laws
Defined previously in the paper, Slow Cow has chosen to enter the soft drink market and use the “Purple Ocean” to help position its brand/product as well as generate buzz. This strategy has mainly involved using Red Bull’s image to invoke interest of consumers by, in contrast, parodying it, naming the brand Slow Cow and using the logo of two sleeping cows.
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Although this seemingly brilliant and creative strategy has been successful in building Slow
Cow’s brand awareness and popularity, it also has become a major threat to the company as the issue of legality is questioned. Mentioned earlier, the outcome of Red Bull’s requests for
Slow Cow to shut down operations has not been made public and thus, it remains unclear of where it stands. This case falls under trademark infringement laws, and being such a major threat to the company, a brief analysis of these laws may assist in indicating whether Slow Cow has a defense or whether in fact their strategy is illegal - U.S Trademark laws will be the basis of the analysis as Slow Cow is a North American company where litigation will most likely occur.
A trademark is a word, symbol, or phrase, used to identify a particular manufacturer or seller’s products and distinguish them from the products of another (Cornell University Law
School, n.d.). In order for a trademark to be applied, it must be unique so that consumers can recognize the product’s source. Trademarks can fall under four categories: generic, descriptive, suggestive or arbitrary. Red Bull’s and Slow Cow’s brand logos and names would be considered suggestive as their marks “evoke or suggest characteristics of the underlying product”
(Berkman Center for Internet & Society at Harvard University, n.d.). The ways to obtain rights to a trademark are by, either being the first to use the mark in commerce, or being the first to register the mark with the appropriate bureaucratic trademark office. Currently, Red Bull’s product is available and presumably trademark protected in over 160 countries (Red Bull
Website, 2011).
Registered trademarks serve both parties, consumer and producer of goods, by protecting them against the two causes of actions of infringement and dilution respectively, which are protected under “The Lanham Act” in the United States. In contrast, producers who have been accused of infringement can use the fair use or parody defense to justify the use of another producer’s trademark, if certain conditions apply.
Infringement is primarily a matter of “likelihood of confusion” (Berkman Center for
Internet & Society at Harvard University, n.d.). Its intent is to prevent situations where a customer may be unclear of the source of a product, subsequently leading them to believe it was produced by one company when in fact it was another. Courts look at the following factors
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when deciding on the likelihood of customer confusion: (1) the strength of the mark, (2) the proximity of the goods, (3) the similarity of the marks, (4) the evidence of actual confusion, (5) the similarity of marketing channels used, (6) the degree of caution exercised by the typical purchaser and, (7) the defendant's intent. Polaroid Corp. vs. Polarad. infringement also takes account of confusion as a result from misleading connections/affiliations between nontrademark-holding producers and authentic trademark products (Emerson, 2011).
Dilution can be brought to action along with the action of infringement. This action first and foremost protects a trademarked product from other producers. Dilution does not require confusion and protects a famous trademark or one with selling power from blurring or tarnishment by other producers. Blurring decreases the distinctiveness of a trademark. In other words, it decreases the well-known association consumers have with the trademark, thus reducing its brand power. Tarnishment harms the trademarks reputation by “casting it in an unflattering light” (Berkman Center for Internet & Society at Harvard University, n.d.). Emerson
(2011) recognizes that “As confusion is not required in dilution actions, trademark holders can sustain actions against parody: (i) even where consumers get the joke, and (ii) where consumers are neither confused as to the origin of the parody, nor confused into thinking that the parody producer is affiliated with the mark holder”. Meaning in some cases, a parody defense can be overruled as a result of dilution of a trademark. This is achieved by the court recognizing the “good name” of the brand and placing its importance in front of the overt parody product of the trademark holder.
With this general look at infringement laws, the question is: “ Has Slow Cow infringed on
Red Bull’s trademark and, if so, is the parody defense applicable?” It is evident that Red Bull’s name and logo are strong as it was established in 1987 and now is recognized around the world as one of the leading energy drink on the market. Slow Cow entered the market in December
2006 and has received notable recognition in some regions in North America, mainly Canada, but is far from being a recognizable name among the majority of consumers, and is virtually unknown on the international market. Although Red Bull is an energy drink and Slow Cow is a
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relaxation drink, there are aspects of the two products that may allow for customer confusion and action for Red Bull to sue Slow Cow.
The main concern would appear to be the similar logo that Slow Cow has created.
Although not a direct copy, it shares alike types of animals, cows instead of bulls, which are positioned together in a sleeping position. This is similar to Red Bull’s “bulls” which are instead charging towards each other. Moreover, the general simple style and layout of logo/graphics are also comparable, noting both have the product name above the “cattle logo”, and the product description below that. Even though these logos are similar, so far there has been no public evidence or articles on consumers who have mistakenly thought Slow Cow was Red Bull.
In reality, most consumers recognize the similarities between the products, but are fully aware of the opposite products and their functional effects. An assumption is made that consumers take a general degree of caution when shopping for energy drinks as any normal daily consumable such as a candy bar or bottle of pop. In this case, Slow Cow’s name really helps distinguish itself from Red Bull. If someone wanted/intended to purchase a Red Bull energy drink, they would quickly second guess buying a product that has the word “slow” in it.
While the two brands can be distinguished as different products, Slow Cow’s symbol may still be an action of infringement because of the inherent similar looks that could lead to misleading consumers into believing there is a connection between Slow Cow and the Red Bull trademark/company. This connection might further be implied as Slow Cow product is sold in the same area within retail stores as Red Bull, in close proximity and sometimes positioned right beside it (Image 7). Also, Slow Cow is using similar marketing channels to promote and sell product as Red Bull, like sports events. With this view, by law, there seems to be grounds for an infringement case. However, in reality, by examining the current consumer/beverage trade, views “likeliness to confuse” is marginal.
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Image 7: Energy drinks sold in automatic machines.
Source: Own photo, 2011.
Many describe Slow Cow as a parody product of Red Bull, because of its anti-energy traits and inherent play off Red Bull’s logo. Although Slow Cow has never officially stated it has designed its product after Red Bull, there is a parody defense against infringement accusations.
This defense is primarily used in cases of editorial and artistic parodies of trademarks where there is a primary function to criticize, and is granted in relation to the United States First
Amendment. Trademark parodies are only permissible, if they are not created primarily for commercial use. This means Slow Cow would not likely be able to successfully use the parody defense, although this may be the strategic reason behind never officially stating that they intended to parody Red Bull. Alternatively, Slow Cow may not be an actual parody, rather true there is weak underlining connection between the two products, but nothing indicating they are produced by the same people or one is making a joke/satire of the other. Instead, this is just a case of pure opposites.
If there is no “likeliness to confuse”, action of dilution can still exist where Slow Cow has diluted the distinctiveness of Red Bull’s trademark through blurring. Slow Cow’s similar logo could slowly wither-away at Red Bull’s brand power and uniqueness. As Slow Cow becomes more popular, consumers associations with Red Bull’s “two bulls” logo may also elicit new
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associations with Slow Cow and its functional properties, draining the energy out of Red Bull’s brand.
This brief analysis of trademark laws helps shine light on the litigation risks associated with Slow Cow’s market strategy. Although it seems Red Bull’s case is on the weaker side, the pure size, recognition and brand power of this company may continue to prove to be its greatest strength. The difficulty lies in court’s decision on whether they see Slow Cow as a harmful product towards the Red Bull trademark, or if it will take something away from Red
Bull’s popular associations or confuse consumers with its brilliant but controversial design. Also, the issue would be arguing on Slow Cow, as being a great idea with a strong marketing strategy, perfectly legal and completely fair competition. Ultimately, the fact remains to the best of public knowledge. Red Bull has never officially taken action against Slow Cow: it has just delivered a notice to close, and Slow Cow currently remains in operation.
6.3.2 Slow Cow: Using Red Bull as leverage
Threats a) Negative Associations – Slow Cows similar product design to Red Bull creates natural connections to Red Bull, and although the drink is opposite this connection also allows the negative views of energy drinks to transfer to Slow Cow’s drink. If a consumer who feels energy drinks are unhealthy were to see Slow Cow next to Red Bull they most likely would group the products together, not taking the time to inquire about Slow Cow and seeing it has all natural ingredients, and is a relaxation drink. As well even with the knowledge of Slow Cow’s healthy side consumers may still be skeptical of these functional drinks sold in similar market channels.
At a quick glance, the proximity and alike logos of the products might lead consumers to believe Slow Cow is a knockoff of Red Bull; both are also priced at the same price point, ultimately dismissing the Slow Cow can from a purchasing alternative and reaching for an
“actual” Red Bull. b) Battling the Giant – Slow Cow’s market strategy has positioned its product to compete with or at least encroach in Red Bull’s market, where Red Bull currently has the greatest market
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share in the energy drink market. This bold strategy has obviously caught Red Bull’s attention and they are not enthused with Slow Cow’s new product. Red Bull being the brand giant it is, along with large financial resources has the motive and ability to attempt to drive Slow Cow out of the market through various marketing tactics. c) Litigation – As mentioned earlier litigation maybe a large threat to the Slow Cow Company.
Even if Slow Cow has not committed any infringement, the pure cost associated with litigation could be a hefty burden on the companies’ budget. If Red Bull chooses to draw out and purse
Slow Cow in court this could be one tactic to slowly drain and drive Slow Cow out of operation.
Weaknesses a) Identity Crisis – By leveraging off Red Bulls image Slow Cow is less able to create its own unique identity. Like the threat of being categorized as an energy drink, it will be more difficult for Slow Cow to separate its brand from this group when it needs to convey its opposite values, such as being an all-natural relaxation drink. Relaxation drinks are quite new to the market, if
Slow Cow would like to be the one to gain the market share and define what relaxation drinks are, their less unique trademark may decrease their chances of becoming a strong distinctive brand. b) Parody or Product – The fact that Slow Cow is viewed as an anti-energy drink and more or less a parody of Red Bull can also become a limiting factor to their success. The initial boost in popularity and buzz created by their strategy may soon peak then decline and plateau. The seriousness of this product might be lost in the parody of Red Bull and customers may lose interest after the joke has past. Another point to this weakness is questioning whether a parody like product can ever become more famous or successful than the actual product it was parodying. Slow Cow might not be able to overcome the shadow that the large Red Bull company cast on the market, by continuing to be affiliated with them but never as an equal or greater brand/product, like the younger sibling who can never surpass the older siblings’ achievements.
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c) Demographic limitations – Slow Cow has identified its target customers as male or female ages 18-44, although they truly feel there product is for everyone(all ages). Being an “all natural” product that has been compared to tea because of its qualities and ingredients, suggests it most likely would appeal to a larger demographic then the one Slow Cow has targeted, perhaps even children and seniors. By positioning itself to compete against the energy drink market it has somewhat limited it’s demographic, as most people who consume these drinks are teens and young adults. Being sold next to the energy drinks and categorized with them also means that consumers who never buy those types of drinks because of their negative aspects will never be exposed to the Slow Cow product. d) Supply and Demand – Slow Cow has done an exceptional job promoting its product and increasing awareness in North America. “Google-ing” the brand will generate many articles from different sources that show many consumers have taken an interest and liking to the idea of this new relaxation product and its anti-energy attitude. These consumers are eager to try
Slow Cow and experience its “acupuncture session in a can,” unfortunately Slow Cows distribution channels do not seem to be as strong as their promotion strategy as many consumer are unable to find a location to actually buy the product. Slow Cow’s largest retail distribution channel is “Sobeys/IGA”, which is a large grocery store chain with locations across
Canada. Although securing this distributor, it has yet to be sold in all locations across Canada.
This buzz and demand for the product is at stake if Slow Cow does not create a wider availability of the product as consumers will quickly lose patience and interest.
6.3.3 Red Bull: Defending against Slow Cow as a Market Leader
Threats a) Loss of customers – Energy drinks and relaxation drinks are opposite products although there is still overlap in target market and user demographic. The main users Red Bull may lose to Slow
Cows new product are the students who need to study for long hours. Currently many students use Red Bull to stay awake when they need to focus and study. With Slow Cow’s new all natural relaxation drinks on the market that claim to increase concentration without the negative
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aspects of energy drinks (post consumption caffeine crash, increase anxiety, unhealthy ingredients) more students will find this alternative better suits their needs. b) Trademark Dilution – As discussed earlier in the legal section of the paper “Trademark
Dilution” is a threat to the Red Bull reputation. c) Slow Cow “Kryptonite”- Slow Cow is metaphorically Red Bulls “Kryptonite” (referring to the popular super hero “Superman” who’s only weakness is this element) because of its completely opposite effects and safe ingredients. This “safe” side (all natural ingredients) of Slow Cow is a danger for Red Bull, as the negative aspects of energy drink ingredients continue to hinder their popularity and success. As a result a sudden rise in popularity of relaxation drinks might shine more light on the cons of energy drinks and flip users to the “slow side” of beverages.
Weaknesses a) Allowing new entrants to market – Red Bull either fail to recognize or did not initiate on the relaxation drink opportunity. Instead they have allowed Slow Cow and other drinks of this type) to capitalize on this new market and have been placed in a situation where their competition is using their image to gain success, more so adding “insult to injury.” b) No product to compete – In addition to not recognizing the relaxation drink opportunity Red
Bull does not have a product to compete with these new specialty drinks. Red Bull “lost out” by allowing Slow Cow and others to be first to the market and gain the majority of the market share. In contrast Red Bull may not be able or does not see it in their best interest to create a relaxation drink because their brand stands for energy, and any other introduction of a new beverage would dilute the brand and its message.
“ We Tried to make a relaxation drink but everyone got tired and gave up ”
- Addison’s on Monster energy drinks attempt to create a relaxation drink c) Product line extension – Red Bull only supports a few core products, Red Bull Energy Drink,
Red Bull Sugar Free, Red Bull Energy Shot and the new Red Bull Cola. Having a narrow product line is great for creating a clear unified brand image however it also prevents the company from
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expanding and protecting their core product line. By not entering other markets, like relaxation drinks, it has allowed other companies to encroach on Red Bull market territory. In one case
Red Bull has recognized opportunity from the negative opinions of energy drink ingredients and extended its product line creating the new Red Bull Cola with 100% natural ingredients, conversely this drink does not increase energy but is purely a cola beverage. Red Bulls biggest competitor in the energy drink market is Monster Energy, who in comparison has successfully developed many product line extensions to compete in various energy drink segments and is increasing its market share annually.
6.4. Conclusion and recommendations
This section will act as a conclusion to the problem formulation of the report. In this conclusion the main components that will be covered and the feasibility of the Purple Ocean strategy long term for Slow Cow directly, from here the long term practicality of the Purple
Ocean Strategy and alternative solutions for Slow Cow moving forward will be presented. After this examination, an example from the telecommunication industry will be presented in order to draw parallels in the Slow Cow-Red Bull scenario.
6.4.1 Conclusions to the problem formulation
In conclusion of this report, the problem formulation will be revisited and assessed. From this, it a brief summary of the four main issues will be concluded. These conclusions in connection with the feasibility of the Purple Ocean as described about should provide sufficient evidence to support our case.
Based on the problem, ‘Can Slow Cow successfully define and become the market leader of a new product, relaxation drinks, while positioning/marketing themselves off of Red Bull energy drinks? Does the Purple Ocean strategy guarantee long-term success for Slow Cow? Is the
Purple Ocean strategy feasible in other industries given similar circumstances?’ the conclusions that have been formulated are as follows;
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In an assessment of Slow Cow and Red Bulls target markets and target market strategies, this report concludes that Slow Cow and Red Bull do indeed target the same target segment of, athletes and young adults, both male and female, ranging in age 14-44. This segment primarily engages events, in which the individual believes they are required to be in an improved state, which can be provided by the products, in order to accomplish the tasks at hand. With Slow
Cow using a Single segment target segment strategy and Red Bull employing a Market
Specialization Strategy, when transposed, and based on the common target segment, we can see that the common target segment is justified.
To further justify that these two companies target the same segment, the consumer behaviours thus became topic of examination. This report concludes that the purchase of such drinks
(energy and relaxation beverages) is a low-involvement purchase that does not require a plethora of information, and the consumer employ a non-compensatory decision making strategy. Ccharacteristics of the buyers are affected by the marketing and environmental stimuli presented through the comparison to Red Bull, we have brought out several areas of interrogations included in the Black Box model and provided various explanations of the main buyers’ characteristics. Due to this, brand perception is important to consumers, Slow Cow is not yet established as a brand (as Red Bull is) and this is where positioning as a complimentary product becomes critical to Slow Cow.
6.4.2 Feasibility of Purple ocean strategy
Prior to diving into the long term feasibility of the Purple Ocean strategy, the strategy itself will first be discussed in order to provide support for the claims presented.
The market ocean of Slow Cow, a definition based on the book “Blue Ocean strategy” which was positioned companies into two oceans, Red and Blue. As this part concludes, Slow
Cow is positioned in the edge of both oceans. The company aims to be Blue but at the same time attacks competitor by getting Red. The overall conclusion of this part focuses on the fact that the theory of Red and Blue Ocean can be extended into a new ocean. This new ocean contains values from number of differentiating scenarios, for example; a grey zone which considers alternative marketing strategies. This new ocean is defined to be Purple Ocean (see
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Appendix 2), a concluding fact which focuses on non-definite Red and Blue Ocean positions.
This part is finally concluding that the soft drink market contains three main product categories, and these categories position themselves in a different manner based on the rivalry among each other.
As it has been mentioned earlier in the report that there are several legal and ethical cases to be made against the Purple Ocean Strategy, however in the context of this report, it can conclude that no illegal or unethical boundaries have been crossed, but this needs to be constantly monitored as one minor misstep can result in unfortunate legal action. There are numbers of regulations and laws which companies have to consider before launching a new product. A risky business can cost companies like Slow Cow whole their existence, but also an issue which companies should constantly be aware of. Taking into account all the empirical analysis, this report can conclude that the Purple Ocean Strategy, in the case of Slow Cow-Red
Bull is indeed a feasible strategy to use giving the circumstances of the products and opportunity that has been discovered by Slow Cow. However, this strategy appears to be feasible for only a short period of time, due to some limitations that can arise when employing the Purple Ocean Strategy.
Limitations that make the Purple Ocean Strategy only a short term solution can be seen as the uncontrollable external factor, the previously mentioned legalities as well as resource limitation. Uncontrollable external factors refer to those of the independent company, Red Bull in this case, as Slow Cow is essentially doing as Red Bull is doing. This is risky and is gives a level of uncertainty to Slow Cow and if Red Bull were to redirect themselves in a new direction, Slow
Cow would be forced to ‘tag’ along which they may not have predicted. It is easier for Slow Cow to predict short term then forecast long term, as resources need to be properly allocated long term.
By accepting the fact that a Purple Ocean Strategy is more favorable in the short term, focus of this section will shift to the long term viability of this approach. The previous part mentions, dependency on an external /independent company can be a potential threat as no control can be had on this external company. This is the predominate reason why the Purple
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Ocean Strategy is more appealing short term, because it is easier to predict/adjust short term then it is to forecast long term.
Two scenarios appear feasible long term, in the case of the Purple Ocean strategy and specifically Slow Cow. In shifting from the short term success of its Purple Ocean Strategy, the two evident long term scenarios that prevail are brand/product extension and a buyout.
The first scenario to be examined is brand/product extension. Brand extension occurs when a firm develops a new line of product based on its established brand name, but the product targets a different product category. Example: Ralph Lauren extending from Clothing to bedding and linin. The new product will carry the values and goals are associated with the brand but fulfill a need of the customer that differs from the original product. (Broniarczyk &
Alba1994)
Product extension, like brand extension uses what is already established and known to introduce a new product. However in the case of a product extension, typically product line extension, a new product is introduced in the same product category. (Wilson & Norton 1989)
Example: Coke introducing Cherry Coke in to the Soft drink market. As mentioned for brand extension, this product will carry values and goals associated with the brand but the new product still need to be accepted by the consumer.
Brand/product extension becomes popular, because leveraging a new product off of an existing product requires less time and money to become present in the consumers mind.
Considering the fact that a Blue Ocean strategy in preferred by startup companies, to avoid harsh market competition, there is still concern for marketing the product/service as the brand is relatively unknown. The brand/product extension strategy can be a solution for an established brand, because they currently possess a solid brand foundation to fall back on.
These startup companies do not have such a, ‘safety net’ in place; this is where the Purple
Ocean Strategy comes into play. The Purple Ocean strategy can be used (by the startup firm) in the same way as brand/product extension can be used by a mature company.
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In the case of Slow Cow, over time the company needs to grow into a well-known brand
(within a five year period) and with it, comes reputation, and a loyal consumer base. Once these elements are established, Slow Cow will then begin in its pursuit into brand/product extension. Creating a new product in a new product category that will still carry the values that have been created by the brand and that exist with Slow Cow. Slow Cow should consider items that stray true to their brand values and company identity. In the case of a brand/product extension, Slow Cow could consider products that help consume, ‘concentrate and relax, without causing sleepiness’, products such a massage devices. Product line extension could include flavored relaxation drinks or depending on reputation, could go the direct completion route (with Red Bull) and develop an energy drink In doing so consumers can still tie the Slow
Cow values into the products being offered.
The second scenario to be examined is a buyout. A buyout occurs when one company over takes/purchases majority ownership equity of another company. This scenario seems the most applicable to Slow Cow as by using this Purple Ocean Strategy, having positioned the relaxation drink product as a complimentary item to Red Bull. From the perspective of both Red
Bull and Slow Cow, a buyout seems like the most logical option.
In the case of Red Bull and Slow Cow, Slow Cow has wisely positioned itself as a complimentary product in a niche market where they are one of the early movers in this market. This market so happens to be related to Red Bulls market (As displayed by Figure 7) and although Red Bull would benefit from a product extension into the anti-energy drink market, it would cost far too much to develop such a product, so Red Bull should just keep moving forward in the energy drink market and buyout Slow Cow, whom is already established, and thus keeping its momentum going in the energy drink market but still expanding its product line.
Concerning using Purple Ocean strategy in other industries, it is evident that the circumstances in different industries vary from each other, and this is based on the size and functions of each industry. In order to analyze the Purple Ocean industry in another context or industry, it is applicable to find an industry which has had a parallel experience and history with
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Purple Oceanic companies. Observing what has occurred in other industries where similar circumstances were present has helped this report in concluding which options seems ideal resolutions for the long term.
The telecom industry in general has had many actors and competition in its long time of existence. Looking into the market of telecommunication companies and the development that has happened within the past decades, it is clear that innovation in technology, products and services have had a massive role in these companies’ growth.
A number of ideas have entered the market under the name and brand of existing actors, as well new innovations and plans which have been developed through new startup companies. Concerning the marketing strategy applied in these cases, it is clear that the existing telecom brands have invested on innovative projects based on a Red Ocean strategy and an aim not to be behind from their competitors in the market. Looking into the new startup companies, it is obvious that they applied innovation as a differentiation factor, so by doing this, they can create a gap to avoid competition. Theoretically it is questionable to ask the ocean strategy purposed and applied by these new startup companies. Was the aim to create a
Blue Ocean strategy and as a result creating a new market possibilities, or no this is in fact something similar to our current case with our focused company Slow Cow: an ocean which is neither Red nor Blue, but in fact a newly created Purple Ocean strategy. An example of this strategy can be found within a Danish Telecommunication company Onfone, a company which succeeds with its innovation in price packaging, commercials, and in the end got bought out from TDC which is a biggest mobile operator in Denmark. (Børsen 2011)
By mentioning the telecom industry and the example of Purple Ocean strategy in this trade, it is proper to conclude and sum up the following:
Purple Ocean strategy is an approach which is neither red nor blue.
Purple Ocean strategy can be defined as a short term successful approach. An approach which has the ability to save promotion time and costs.
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Purple Ocean strategy can be a good solution for new startup companies to establish themselves successfully in short term.
Purple Ocean strategy is a solution for people who aim to run innovative projects/plans, but do not consider working for big brands and firms.
Purple Ocean strategy is an approach which requires to be changed or get shifted in long term.
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7. Reflections
By looking into the process and progress of this project, it is clear that there are some limitations and issues in addressing this subject. The main issue in general, is the chosen company “Slow Cow” which is new, small and has a short history and background. This by itself is not a critical point, still considering the fact that information available about this company was limited to forums and discussions online; it is therefore clear that the source reliability is relatively low. Another challenge in this project was the continuous compare and contrast with the other company of intrest, Red Bull. The level of focus on Red Bull was in fact a challenge in balancing the role of this company in context of Slow Cow. These companies were compared directly against each other, while they have been mentioned to be competitors, but also argued to be in two different product categories.
The theoretical part has also had its own considerations. Sticking to some main standard theories taught in this semester, using them as the bases of this semester project, or going one level further and picking new theories and models which could be used to add strength to this report. The combination of doing both approaches, but also adding modifications in theories was indeed a risky part which required clear logic and arguments. The main example of this is the Purple Ocean strategy, an approach which has been defined and shaped through the process of analyzing Slow Cow. This new theoretical perspective may be seen as innovative, but is still a concept which is based on the mother theory of Blue Ocean.
Entering the phase of law and regulation issues was also a complicated area to work with. This required focus on balancing in between the direction of this project, but also the ability to give a light description of copyright and legal aspects in our context.
Overall the fruit of this project was the ability to analyze matters in different methods and models, but also the aiming to underline that there are no perfect scenarios in business strategies today. The reflection in general, declares the fact that doing analysis on different companies requires reliable resources and information channels. It also communicates that the
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level of understanding towards products and brands differ based on the perspective and viewpoints of each individual.
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Appendices
Appendix 1: Principal high-involvement response hierarchy models.
Source: Adapted from USQ, 2006.
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Appendix 2: SWOT Slow Cow Purple Ocean Strategy
Strengths
• Uniqe product
• Familiar brand
• Affordable
Weaknesses
• A copy image product
• Poor identity
• Less known
Opportunities
• Potential to increase market share
• Attractive to be bought up
Threats
• Lawsuit with Red Bull
• Losing market identity
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