ANIL SURENDRA MODI SCHOOL OF

COMMERCE, NMIMS

MARKET ANALYSIS ON RED BULL

(MICROECONOMICS 2023)

SUBMITTED BY:

B.Com. (Hons.) Semester-I Division-B

B031. Neev Khakhkhar

B032. Nitin T.S
B033. Om Shukla
B034. Parth Goyal
B035. Prakriti Goyal

SUBMITTED TO:
Dr. Boishampayan Chatterjee
 ACKNOWLEDGEMENT
We want to express our profound gratitude and deep regards to our respected
Microeconomics professor Dr Boishampayan Chatterjee, who gave us a great platform and
opportunity to work on this insightful and educational report on the ‘Market Analysis of Red
Bull’. It helped us research and build our perspective on the given topic. Proper and timely
guidance along with constant encouragement from our professor helped us throughout the
journey. The skills learned during this research will be beneficial for us in the future.
We would also like to extend our gratitude to our institute ASM SOC, Narsee Monjee
Institute of Management Studies, and the academic department for their continuous support
and availability of resources without which it would have been impossible to complete this
report within the stipulated time frame.
Lastly, we would also like to thank our classmates and parents for their ideas and
perspectives, which helped us improve our report.
 TABLE OF CONTENT

S.NO PARTICULAR PAGE

NO.

1 Introduction 4

Description and relevance of

2 product
5

3 Methodology of analysis 7

4 Market analysis 9

5 Market Structure 12

6 Conclusion 14

7 References 15
 INTRODUCTION
In the world of economics, the study of successful businesses often provides a rich canvas for
understanding various economic principles and strategies. Red Bull, the iconic energy drink
brand, stands out as an intriguing subject for such analysis. This project aims to delve into the
economic dimensions of Red Bull's operations and market presence, offering valuable
insights into the interplay between economics and business in a competitive global
environment.
Market Dynamics:
Red Bull operates in the dynamic and highly competitive global beverage industry. Exploring
how Red Bull navigates these ever-shifting market dynamics will provide a comprehensive
understanding of the economic forces at play within this industry.

Pricing Strategies:
Red Bull is renowned for its premium pricing strategy, often charging a premium compared
to other energy drink brands. This project will explore the economic rationale behind this
pricing approach and the impacts it has on Red Bull's market share, profitability, and the
perceived value of its product.

Supply Chain Management:

Understanding of Red Bull’s economic dynamics entails a comprehensive analysis of the
sourcing of ingredients, production processes, and distribution networks. By scrutinizing
these elements, we can gain insights into cost-efficiency, logistical efficiency, and their direct
influence on the company's financial performance.

Consumer Behaviour:
Consumer Behaviour involves understanding why consumers are willing to pay a premium
for Red Bull, considering factors such as perceived value, brand loyalty, and shifting
consumer preferences.

In summary, by selecting Red Bull as the subject of our economics project, we embark on a
journey to uncover the intricate economic forces behind the brand's triumph. Through this
report, we aim to reveal the complex tapestry of economic concepts that underpin Red Bull's
continued success on a global scale.
 DESCRIPTION AND RELEVANCE OF
PRODUCT

With its iconic slogan "Red Bull gives you wiiings," Red Bull GmbH has established itself as
one of the most iconic energy drink companies in the world. Under the leadership of its
founder and current CEO, Dietrich Mateschitz, the company maintains the highest market
share of any energy drink company across the globe. Mateschitz founded Red Bull in 1984,
launching the iconic energy drink in Austria, where its headquarters are located to this day.
According to Forbes magazine, Red Bull has sold a cumulative 75 billion cans since its
introduction and has also sold 6.8 billion cans across 171 countries in 2019, generating a
revenue of $6.5 billion. Red Bull is an energy drink known for its distinctive blue and silver
can and marketing campaigns. It contains caffeine, taurine, B-vitamins, and sugar. Red Bull
is often marketed as a way to increase energy and alertness, particularly for activities like
sports or studying.

RELEVANCE:
1. Energy Boost: Red Bull is consumed by many to combat fatigue and increase alertness
due to its caffeine content, making it relevant for people seeking a quick energy boost.

2. Sports and Performance: It's often associated with extreme sports and high-performance
activities, sponsoring events like Formula 1 racing and the Red Bull Air Race. This ties its
relevance to the sports world.

3. Social and Recreational Consumption: Red Bull is also popular as a mixer in alcoholic
beverages, particularly in cocktails, making it relevant in the context of social and
recreational drinking.

4. Marketing and Branding: Red Bull is well-known for its innovative marketing strategies
and extreme sports sponsorships. Its branding is highly relevant in the world of advertising
and marketing.

5. Health Concerns: The health implications of consuming energy drinks, including Red
Bull, have been a subject of debate and research, making it relevant for discussions about the
potential risks of high caffeine intake.
 WHETHER THERE IS A MARKET FOR OUR
PRODUCT
The India energy drink market is projected to register a CAGR of 9.98% over the next five
years.

• Energy drinks are gaining massive popularity among millennials due to aggressive marketing
campaigns targeting young consumers. Moreover, advertisements promote energy drinks as
drinks that ignite the mind, refresh the body, and enhance performance and stamina.
Companies are investing more in identifying the market gap and building the brand image
through existing ideas and concepts. Key players are also adopting innovative marketing and
advertising approaches necessary to drive their products' sales.
• Over the medium term, the increased demand for energy boosters from the young population
in parties and clubs is accelerating the demand for energy drinks in India.
Increased urbanisation, rising disposable income, and growing health consciousness among
the Indian youth have increased the demand for non-carbonated drinks called energy drinks.
At the same time, long and erratic working hours and the increasing occurrence of social
gatherings are driving Indian consumers toward consuming energy drinks, which are
primarily classified as non-alcoholic, caffeinated, and sports drinks.

Through this economics project, we embark on a journey to uncover the intricate economic
forces behind the brand's triumph. Through an examination of market dynamics, pricing
strategies, supply chain management, marketing effectiveness, and consumer behaviour, we
aim to reveal the complex tapestry of economic concepts that underpin Red Bull's continued
success on a global scale.

METHODOLOGY OF ANALYSIS

This part of the project elaborates the analytical tools used in the survey . It includes a brief
outline of the concepts of demand , elasticity and consumer’ surplus .

DEMAND
Demand is the amount of goods or service that a consumer is willing and able to purchase at
a given price and time. The demand function can be represented as:

Qd = f (P)

Here Qd stands for quantity demanded, and it is a function of price (P)

LAW OF DEMAND
This law states that Demand for a good or service falls as their price increases, conversely as
price falls demand rises, other things being constant (ceteris paribus)

DEMAND CURVE
The demand curve represents the relationship between the quantity of a good that consumers
are willing to buy and the price of a good.

The demand curve is generally sloping

downwards from left to right indicating
the inverse relationship between price
and demand, i.e. the consumers are
willing to buy more of a good when the
prices are low.
PRICE ELASTICITY OF DEMAND CURVE

The price elasticity of demand measures responsiveness or sensitivity of consumer’s demand

of a good to changes in the price of the good.

E= %Δ𝑄𝑑/%Δ𝑃

Qd refers to the quantity demanded, and P refers to the price of the commodity.

CONSUMER SURPLUS

Consumer surplus refers to the amount that the consumer is willing to pay for the commodity
minus the amount he actually paid for it. It is a measure of the economic welfare that people
gain from purchasing and then consuming goods and services. Consumer surplus is indicated
by the area under the demand curve and above the market price.
 MARKET ANALYSIS
(Note: The market analysis data relates to the 250ml can)

DEMAND CURVE

Through our survey, which was conducted by the medium of ‘google forms ‘, we have
offered various prices ranges to understand consumer preference, also informing them about
the current market price at which Red Bull is being sold. The responses received were
transferred to ‘Excel’, where graphical functions were used to plot the data on a graph and
derive the demand curve.

The prices displayed below pertain to the 250ml cans. The results were as is the law of
demand which means that keeping other things constant, when the price is increased the
demand decreases and vice versa.

The demand curve and schedule are as follows:

Price Qty Demanded

PRICE ₹

80 98 300
100 97
250
110 91
120 90 QUANTITY DEMANDED
200
150 35 QD
160 18 150
170 17
180 16 100
190 12
200 11 50

210 6
0
220 5 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96
230 3
240 2 FACTORS AFFECTING DEMAND

In a market, factors affecting the quantity demanded of a product are the price of the product,
the consumer’s income, the tastes and preferences, the consumer’s expectations, etc.

According to the reviewed and analysed data survey, the major factors that influence the
quantity demanded of red are its taste and flavour,
 Factors influencing demand for Red Bull

PRICE ELASTICITY OF DEMAND CURVE

From the responses we were able to collect, we first plotted the data in an Excel sheet and
derived the demand curve. With the help of each combination, we used the price elasticity
method, and the findings were as follows:

Combination Quantity demanded Price Elasticity

A 97 100 -
B 90 120 -0.36
C 35 150 -2.44
D 16 180 -3
E 11 210 -3.76

The average elasticity of the product is -2.39. This shows that the demand for the product is
elastic. This implies that an increase in the price will lead to fall in revenue . The negative
sign implies the inverse relationship between quantity demanded and price of the product.
The demand for the product is inelastic at combination B, this implies that the
consumers are insensitive to the price change, but as the price increases, they become more
responsive to the change in price.

CONSUMER SURPLUS
We have calculated consumer surplus based on our findings from the survey by deriving the
difference between consumer is willingness to pay, and what they end up actual paying. We
have drafted a graph depicting the surplus consumers derive when the market price is ₹125.
 MARKET STRUCTURE
Market structure in economics, depicts how firms are differentiated and categorised based on
the types of goods they sell and how their operations are affected by external factors and
elements. Market structure makes it easier to understand the working of diverse markets, and
how the factors influence or affect the position of the product in the market.

CONSUMER PROFILE

AGE COMPOSITION:

The data shows that ages 18-22 years consume more Red Bull. This group covers 59.2% and
consumers in the vary from college students to professionals who are commuting to work or
attending classes and are looking for a source of energy. The next major part is made up of
people below 12-18 age group. This group of teenagers find Red Bull as a premium cold
drink and are a fan of its tasty flavours .

GENDER:
Both men and women belong to Red Bull’s target market . Through analysis, we can say that
it is slightly more demanded by men as compared to women due to their male
centric advertising.

CONSUMPTION HABITS:
The data indicates that consumption habits vary across people. Most people drink Red Bull as
per their mood (36.1%) or to refresh themselves (32%). Some people drink Red Bull during
social gatherings (18.6%) and a few drinks Red Bull as mixers with drinks. The few people
who drink it during meals are at the bottom of the chart.

SUBSTITUTES:
If the demand for one product increases when the price of the other goes up, they are termed
as substitutes. These substitutes provide choices and alternatives to the consumers while
creating competition in the market.

In this case, other beverages preferred over Red Bull (i.e.) the biggest substitute for Red
Bull according to the market survey, is Sprite. According to the data survey, and the results
received, most of the people prefer Sprite (41.2%) and Coca Cola (36.1%) as substitutes
for coffee. While Red Bull was preferred by 27.8% of the people, Sting made up the least
share (8.2%).
 CONCLUSION

The data collected and analysed regarding Red Bull energy drink has given us numerous insights into
its market, through this market analysis we can conclude that Red Bull is a premium cold beverage
brand, holding the key to unlock a very potential market in India especially among the young
population, who find it a very convenient source of caffeine and energy.
While Red Bull enjoys a good market share it is still dominated by other competitive cold drink
manufacturers, especially Sprite and Coca cola. However, the unique flavours provide a
competitive advantage to Red Bull. Significant presence of the company and its brand
awareness still remains in cities.
While men and women prefer Red Bull on an equal scale, the market is still slightly inclined towards
the male population. The demand for the product remains elastic, on the contrary, survey reveals that
a big chunk of consumers is willing to buy Red Bull despite a situation of price increase, indicating
good brand loyalty.
Red Bull holds the majority of market share in its industry (61%), while substitutes are trying
to wear it thin, the Austrian Giant continues to make headway, looking forward for another
bright year full of opportunities as the as the energy drink market in India projects a CAGR
of 9.98%.
 BIBLIOGRAPHY

 India Energy Drink Market - Growth, Trends, and Forecasts (2023-2028),

https://www.researchandmarkets.com/reports/4828017/india-energy-drink-market-
growth-trends-and.
 Red Bull Marketing Research Project - Miller Boyd, http://millergboyd.com/wp-
content/uploads/2020/11/Red-Bull-Marketing-Research-Project_Offical-Copy.pdf.

 Microeconomics Robert S.Pindyck , Daniel L. Rubinfield (8th edition)