Demand and Supply Analysis

Red bull is an energy drink composed by caffeine, taurine, glucoronolactone, B group vitamins, sucrose and glucose and alpine spring water. Thanks to this unique combination of ingredients, Red Bull vitalizes body and mind. This drink is originally from Australia where it is produced and distributed in over twenty countries including USA, Mexico, New Zealand, South Africa and Eastern and Western Europe.

Finding the right target group for this drink is almost impossible, because of the various applications of Red Bull.

Hence a clear-cut categorization in age groups and socio-economics groupings is not feasible. Therefore they are aware of the fact that it would not be very useful to restrict the target market to either the geographic areas or the psychographic segmentation of the targeted consumer. The typical Red Bull drinker is dynamic and active; gender does not play a role at all.

The main reason for this is that for a product like Red Bull it would be far to narrow since it is a product that cuts across lifestyles, demographics and socio-economic boundaries.

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The marketers for Red Bull decided that the best solution would be to just set the target market as a behavioral segmentation.

Red Bull is not just an energy drink it is primarily a utility drink to be taken against mental or physical weariness or exhaustion.

This is a product created primarily for the following:

• Athletes- helping them to get the best out their body and improving endurance or speed, by making the Red Bull a part of their diet and sport life.

• Workers- anyone from a street worker to a manager, who wants to get pushed up and have a better performance in the work area.

• Clubbers- this is a fairly new category, since it was discovered some couple of years ago, that combining Red Bull with alcoholic beverages, makes you feel even more energetic while partying and it also makes cocktails taste better.

The main reasons why people buy this product are:

• To increase performance

• To stimulate metabolism

• To increase concentration and reaction speed

• To make you feel more energetic, improving your overall well-being

• To improve vigilance

Demand shifters

Consumer Income

Consumer income plays a big role in demand for Red Bull, since this is a normal good, whenever income increases, the demand for Red Bull will increase. However, over the past years, income has decreased in various countries, but since the price of Red Bull does not represent a very big part of consumer income, demand for the drink has not decreased very much.

Consumer tastes

It is been proven that the beverage is well liked by the 70 percent of the people that have tried it. In fact, the two most important attributes of the brand are taste and effectiveness. Red Bull rated poorly in terms of healthiness, yet consumers also find this attribute as the next most important.

Complementary goods

Consumers seem willing to try out Red Bull with alcohol, Red Bull with vitamins and Red Bull with juice, since there are many complementary options, it is very likely that demand will not change if the price for one of these goods increases, because people can just switch brands.

Substitute products

There are a lot of substitutes for Red Bull but the ones that represent the biggest threat in Red Bulls dominance in the energy drink market are Monster and Rockstar.

Consumer expectations

Red Bulls most important attributes are packaging, taste, effectiveness, price, portion size and “”healthyness” and brand recognition, compared to Monster and Rockstar, Red Bull would always score higher than its competitors.

Population

Long working hours, long commutes and rising female employment increase demand for energy-enhancing products. The effective marketing campaigns and strategies that Red Bull designs are major demand shifters for the product, making it more popular and expanding their market.

Supply shifters

Price of joint products

Since Red Bull does not necessarily have a joint product because it is a drink that is produced separately from others and consumed separately too, the price of joint products does not play a part in its supply estimation.

Prices of substitute products

There are many substitute products for Red Bull, meaning that if the price of the drink goes up, the opportunity cost of producing the good will go up too and the demand for the product will go down, because consumers can find energy drinks that contain the same ingredients for a cheaper price. Also, if the price of a substitute goes up, the demand for Red Bull will increase.

Number of sellers

The popularity and demand for Red Bull has been growing worldwide, its market has expanded a lot during the past years and new factories have been placed all over the world causing an increase in supply.

Technology

Due to the technological growth, the can is now environmentally friendly. And they are now using social media to advertise the product, such as Facebook, Twitter and the Web in general, which is obviously resulting in an increase in supply and demand.

Future price expectations

Estimations suggest that the price for Red Bull will stay the same for the upcoming years, so supply for the product will continue to increase.

Government restrictions

The popular energy drink Red Bull was banned in France after the death of eighteen-year-old Irish athlete Ross Cooney, who died as a result of playing a basketball game after consuming four cans of the drink. This ban was challenged in the European Court of Justice in 2004. Denmark also banned Red Bull for a while, although the ban has recently been revoked. Britain investigated the drink, but only issued a warning against its use by pregnant women and children. More Counties are starting to worry about the damaging effects that Red Bull can cause, and may end up banning it just like France did, which is causing a big decrease in supply.

Forecast of equilibrium for the next three years

According to the information presented above, I think that demand will continue to grow if marketers keep doing the great job they have done so far, because new brands will arise challenging Red Bull’s dominance in the market.

Also the brand, has come up with many different products, giving more options to consumers and aiming to different tastes and likes that people have, this new products include; Red Bull clothing, Red Bull energy bar, Red Bull energy mints, Red Bull with protein, Red Bull with vitamins, Red Bull juice, Red Bull energy gum, Organic Red Bull, Red Bull Alcohol and White Bull.