Red Bull Brand Valuation

As Red Bull uses demographic and psychographic segmentation, we decided to focus on demographics segmentation as psychographic is difficult to identify and determine through our survey results. Based on the demographic data we obtained from the survey results, we decided to further segment it into the frequency of usage: heavy users, medium users and light users.

Assumptions:

Heavy users have reached saturation but medium users are likely to drink more and hence, annual growth is expected to be higher. There will be slower growth among light users.

Assumptions:

1.  Heavy users are loyal customers of Red Bull who have behaviorial loyalty and attitudinal attachment. They will always include the brand in their consideration set because of their high preference for Red Bull and will usually choose the brand for purchase. Hence, RBI is high.
2. Medium users are customers who regard Red Bull as their preferred brand of energy drink and will include them in their consideration set. But they are ready to switch to better alternatives when available.
3. Light users are customers who have little behaviorial loyalty and attitudinal attachment. They do not always include Red Bull in their consideration set and are always ready to switch to other alternatives when available. Light users may purchase Red Bull because the brand name is well-recognised.

Explanations:

• Leadership: It is currently the market leader in the energy drink segment.
• Stability: Over the years, Red Bull has been able to maintain a consistent image associated with extreme sports through its marketing activites such as events and sponsorships.
• Market: There are low barriers of entry which allows new competitors to enter the market easily as evident from the entrance of energy drinks such as Naughty G and Shark over the years.
• International Image: Red Bull adopts a standardized product strategy in the 162 countries it distributes its products in which allows high familarity and brand recognition amongst its consumers.
• Trend: There are trends of consumers switching to healthier alternative drinks such as Brand's Essence of Chicken. Red Bull faces the challenge of adapting to this trend because Red Bull traditionally target consumers who live life to the fullest with health not being the top priority. Furthermore, there has been several controversies about Red Bull causing health-related problems in some countries which would hinder their ability to adapt to this trend.
• Support: Red Bull has consistently beenproviding marketing support such as sponsorships of events (eg:F1)
• Protection: Red Bull GmbH and Red Bull Company Limited are the proprietors of all logos and trademarks associated with the Red Bull Energy Drink.

 

To look at the complete version of the brand valuation spreadsheet, please click REDBULL BRAND VALUATION.