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  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

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It is completely improper and unethical for a company to promise their customers in an advertisement what they cannot deliver. Red Bull promised their customers that their product has the potential to give them wings which comes with the ability to fly. Although it is very popular, Red Bull did not manage to deliver on its promise. This is according to the accusers of Red Bull (DeGraw, 2016). Anyone who has been a great fan of Red Bull for a couple of years will tell you that they have not yet grown any wings. Therefore, they are entitled to a small piece of the pie the company will be paying out to its customers as settlement for false advertisement. The problem is that this issue has received a lot of publicity in the media that the settlement per customer will be smaller than it was initially thought.

Red Bull accepted to pay $US 13 million as a settlement to a lawsuit or class action due to an alleged false advertisement of its Red Bull energy drink (SBSNEWS, 2014). The advertisement claimed that the product would give its consumers wings. Anyone who bought the Red Bull drink as from January 2002 to January 2014 was entitled to lay a claim for this settlement. Although it was only open to US residents. The company was not really taking the flying part in a literal sense during its advertisement. According to the company, the campaign slogan was meant to mean that by consuming a can of Red Bull, a consumer would get intensified mental clarity, more energy and increased concentration (DeGraw, 2016). When clinical results came out to support the company's claims were released, the customers felt cheated and demanded that Red Bull should compensate them. No proof of purchase was required to prove that one had actually bought a can. The compensation was simply based on a vow of honesty. The consumers received either $US 10 or two Red Bull products for free that were valued at nearly $US 15.

According to (SBSNEWS, 2014), the person at the center of this court suit is Benjamin Careathers. Careathers has been consuming Red Bull drink as from 2002. He tabled the class action suit on 16th of January 2014 at the US District Court for the Southern District of New York. He claimed that the tagline of the Australian company “Red Bull gives you wings” was completely misleading. The claim on the company's television Ads, marketing campaigns and online ads that the drink increases concentration and performance was false, claimed the suit. The suit further stated that such kind of deception by Red Bull through their practices and conduct meant that their marketing and advertisement was not just flattery but also fraudulently deceptive and therefore a lawsuit was possible. The lawsuit cited articles from Nutrition Reviews, The New York Times and the European Food Safety Authority Journal. This articles claimed that energy drinks only provide energy boosts through caffeine and not any other ingredient like guarana.

There is no scientific support backing the claim of Red Bull energy drink has more benefits to its consumer than a mare cup of coffee which, making it the reason why this drink is marketed as a greater source of energy which costs higher than other caffeine sources or a cup of coffee. Even after settling the lawsuit, Red Bull still deny that they have done anything wrong. The company claims to have only settled the lawsuit because they were afraid of incurring more costs and distractions from litigations. They still maintain that they have always had very accurate and truthful in their labeling and marketing. They continue to deny any liability or wrongdoing. The company has even updated their product labeling and marketing materials voluntarily for all their customers in the US. They have also set up a website so that all people who want to be compensated can make their claims.

(Collman, 2014) states that there were a lot of speculations over the reduction of the cash payouts that will be given as compensation to individual customers. More and more people were getting into the settlement website and making claims. In the terms of the lawsuit, Red Bull accepted to pay claims only up to $13 million, not $ 10to every customer who made claim before the deadline. It was not yet clear if the payouts will be reduced depending on the number of customers who made claim or the moment 1.3 million customers made claims then the company would cease accepting claims.

 There seemed to be a lot of interest in the claims because the compensation at one time even crushed. It was reported to have been in and out of service for a whole day before it finally crushed one night. A spokesman from the company would not clarify if the compensation amount would be reduced because of the increased number of customers claiming for compensation. The spokesman only said that all details on how the settlement would be done are found on the compensation website besides the fact that the last time the website was reported to be functional, the parts of the pages that contained that information could not be viewed.

It is sad in one of the lawsuits, one consumer of Red Bull claimed that he has been consuming the energy during for years and has experienced no increase at all in concentration, the speed of reaction or performance. Red Bull made a commitment to change their form of the marketing campaign, although they still insist that there was never one time that their advertising was false or misleading in any way.

Companies should ensure that their have done enough tests on their product in order to ensure that their advertising information is true and reliable, the information given must support the claim or the implication made by the advertisement, finally, the results of the tests made on the product must never contradict exactly what the product is capable of doing, irrespective of if the company itself is doing the tests or an accuser of the company. The final approval of the court hearing was done in May 2015.

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