Question

In: Operations Management

Felix Baumgartner, an Austrian skydiver and daredevil, made history’s highest and fastest jump. After ascending to...

Felix Baumgartner, an Austrian skydiver and daredevil, made history’s highest and fastest jump. After ascending to more than 128,000 feet in capsule tethered to a helium balloon, Baumgartner jumped and became the first human to break the sound barrier as he fell at a rate of 833 miles per hour and had a free-fall of more than 4 minutes.

The event was sponsored and funded by Red Bull – a company known for pushing the envelope of crazy and risky sports.The company doesn’t consider this a stunt though, preferring to characterize the program as a professional flight test program. Red Bull spent more than five years on the project with an expert staff of scientists, engineers, and physicians – many of whom had experience with NASA programs. The cost to Red Bull has not been disclosed, but estimates on the return to the company in regards to visibility, branding, and goodwill tops $8 billion.

Why do companies sponsor events – oftentimes events that seem to have little to do with their products?

What do companies gain? What do they risk?

How does the Stratos project fit with the Red Bull brand and target market? How does it fit with other promotional tools used by Red Bull?

Solutions

Expert Solution

Sponsoring such events helps the company in promoting its product and creating awareness about its offering among the targeted consumers. The companies can gain greater market share as such events attract media attention. This helps the company in getting much-needed exposure to enter new markets or to promote new products.

It is also a risky move as if anything goes wrong during the stunt, the company may have to face severe backlash from the public and authorities and it may result in negative publicity. This could heavily impact the sales of its products and its standing in the industry.

The Stratos event fits perfectly with the Red Bull brand and its promotional activities. We often see ads of people being energized after drinking Red Bull with its famous tagline "Red Bull gives you wings".

Sponsoring an event which literally means that the skydiver was in the air, free-falling, for 4 minutes would emphasize on the tagline and would help in establishing the brand among the adventurous sports lovers.


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