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All data comes from the past
Red Bull is a business that made no sense on paper. It was a drink that cost a lot, came in a tiny can, and that research found consumers basically mildly repellent. It had some existing popularity in Thailand, where lorry drivers reportedly bought it to stay awake at night, and someone made the leap of imagination into an uncertain future.
Relying only on data causes a second problem. The things a company focuses on tend to be the same things all its competitors focus on, so it grows more and more similar to every other business in its category, less and less distinctive, and ends up in a race to the bottom.
How did Red Bull begin?
Chaleo Yoovidhya created the Thai tonic Krating Daeng in the 1970s, and it sold to truck drivers and laborers. The Austrian marketer Dietrich Mateschitz tried it on a trip to Thailand in 1982. He partnered with Yoovidhya, they founded Red Bull GmbH in 1984, and the drink went on sale in Austria in 1987.
Why do rivals in one market look alike?
The economist Harold Hotelling described this in a 1929 paper. In his model, two ice-cream sellers on a beach each move toward the middle to capture the most customers, and they end up side by side. The result is known as the principle of minimum differentiation.
Why do taste tests mislead for new products?
Coca-Cola ran blind taste tests of roughly 200,000 people before launching New Coke in 1985, and a sweeter formula won them. Customers rejected it when it replaced the original, and the original Coca-Cola returned after 79 days. A sip test measures a sip, and it cannot measure how people feel about a familiar product disappearing.
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