Research Objectives
- To assess Red Bulls market share against its competitors
- To classify the demographic/socio-economic profile of energy drink consumers
- To identify the level of advertising done by Red Bull and V drink
- To determine the factors that play an important role in a customer’s decision to purchase energy drinks
- To assess the customer’s post-purchase consumption experience and the product characteristics which compels them to repeat the purchase
- To identify the gaps in the market from the customer point of view, their likes and dislikes
- To determine the attractiveness of the market in terms of whether the current customers provide sufficient market and what is this markets size?
Secondary Research
Secondary research uses database from well known syndicated research agencies such as Roy Morgan, ACNielsen and Euromonitor International (EI) that have a wide range of data available on various industries, organizations and consumer markets. Roy Morgan, a well established market research and public opinion survey company considered by many as the authoritative source of strategic global market information with over 65 years experience offering both qualitative and quantitative research, was founded in 1941 by Roy Morgan (Roy Morgan Research, 2011). Roy Morgan specialises in obtaining detailed information regarding demographic, psychographic and lifestyles along with behavioural, satisfaction scores and purchase intentions in various categories.
ACNielsen established in the United States in 1923 by Arthur C. Nielsen, Sr., offers an integrated suite of market information gathered from a wide range of sources, advanced information management tools, sophisticated analytical systems and methodologies. ACNielsen works with their client’s trade managers, category managers, brand managers, channel/account managers, as well as store planners and space planners, to address key issues in areas that include visual merchandising, space management, assortment management and store planning (Nielsen, 2011).
As an independent company founded in 1972, Euromonitor International (EI) has become a leader in strategy research for consumer markets and offer unmatched detail and unbiased content for every region, country, category and channel. From socio-economic context to intimate detail on the smallest products or markets, EI provides market research. EI publishes reports on industries, consumers and demographics and offer insight into market size and market share in New Zealand; as well as industry trends in each specific industry (Euromonitor International, 2011).
Secondary data derived from these established sources will help in answering the following questions;
- Current size and overall growth of energy drinks market
- Red Bull’s current market share
- Demographic data for energy drink preference
- Level of advertising expense of Red Bull and its closest rival V drink
Attractiveness and size of the market
The New Zealand market for energy drinks has been growing at a steady rate in the last five years. There has been a substantial growth of 173 percent in the market size, which has increased from NZ$ 82 million in 2005, to NZ$ 142 million by the year 2010 as seen in the below graph (Euromonitor International, 2011).
Source: (Euromonitor International, 2011)
The figures in the next table show that the market for energy drinks is very attractive and consequently more products have been introduced into the market but they have not been able to significantly influence the market as compared to the top brands. Despite the growth of the market, Red Bull has failed to compete successfully with V drink and other market leaders and this will be further discussed in the next section.
Source: (Euromonitor International, 2011)
Red Bulls market share against its competitors
Statistics from the ACNielsen Media reports suggest that the market share of the top five competitor brands by value has not changed drastically over the last five years. The market share of V drink has been around 40 percent whereas Red Bull has around 14 percent of the share. The following charts provide a breakup of the market shares of the top five brands from 2005 to 2010. It can be concluded from these charts that the top brands have been able to defend their market share successfully however they have not been able to significantly increase it. However, Powerade has grown from 11 percent to about 20 percent while all other brands have either grown or shrunk marginally.
Source: (ACNielsen, 2005-2010)
Source: (ACNielsen, 2005-2010)
Demographic/Socio-economic profile of energy drink consumers
According to a Roy Morgan study conducted in 2006 which focussed on the non-alcoholic beverage consumption in the last seven days among men and women, it was found that men were more likely to consume energy drinks as compared to women. The total percentage of consumers who consumed Red Bull was less than the total percentage of consumers who consumed V drink.
Source: (Roy Morgan Research, 2006)
As per Roy Morgan study of the age group of people who consumed energy drinks, it was found that the percentage of consumers for V drink was higher in the 14 – 34 age group compared with people who consumed Red Bull in the same age group.
Source: (Roy Morgan Research, 2006)
It can be seen from the below table that Generation Y and Generation Z consumers are more likely to consume V drink compared to Red Bull, which constitutes to the larger customer base for V drink.
Source: (Roy Morgan Research, 2006)
Ethnic groups like Pacific Islanders and Maori’s together are more likely to consume energy drinks compared to the rest of the ethnic groups as seen in the below table. The consumption of the Red Bull and V drink is visibly different amongst these users compared head to head.
Source: (Roy Morgan Research, 2006)
Source: (Roy Morgan Research, 2006)
Advertising expenditure of Red Bull
The advertising expenditure for Red Bull compared to V drink is provided in this segment of the report. This data has been collected from Nielsen Media research AIS and it is clearly visible from the below table that Frucor Beverages Ltd. has been spending a lot more on promoting V drink as compared to Red Bull promoting its own product. It is important to compare the advertising expenditure of these two brands with their sales figures.
Source: (Nielsen Media Research, 2006 - 2010)
The amount spent by Frucor on promoting various brands of V drink has seen a steady rise in spite of the economic downturn whereas Red Bull on the other hand has been significantly decreasing its expenditure on advertising and promotion as seen in the below chart.
Source: (Nielsen Media Research, 2006 - 2010)
Primary Research
Secondary research helped to answer questions regarding the attractiveness of the energy drinks market, Red Bulls market share based on demographic/socio-economic profile of consumers, the level of expenditure on advertising compared to the market leader V drink. However, there are a few more questions that secondary research was unable to answer and primary research would help in answering those questions.
- Consumer’s post-purchase consumption experience and the product characteristics which compels them to repeat the purchase
- Trends, ideas and opportunities for product development or innovation
- Factors that play an important role in a customer’s decision to purchase energy drinks
- Gaps in the market from the customer point of view, their likes and dislikes
Defining the Population
As per Wiid & Colin (2010:196) “the population consists of a comprehensive number of individuals, units or items than can become objects for observation. The concept of population is defined as the total group of people from whom the information is needed. The population can, for example consist of a specific group of individuals, households, families, business, manufacturers and professional people from whom data is required. Population must be clearly defined in terms of the sample unit, sample element, extent and time”. The target population for the purpose of this research is defined as the group of people between the age 14 and 50 and who have consumed energy drinks in the last 4 weeks.
Data Collection
In order to quantify data, generalize results from a sample to the population of interest, and to understand the customer behaviour and emotions, a mix of Quantitative and Qualitative research methods will be used. Data will be collected based on techniques such as online questionnaires, on-street or telephone interviews (Snap Surveys, 2011). Since the statistical data is in the form of tabulations, it is easier to draw conclusions which are usually descriptive in nature.
Quantitative Research Methods
Surveying a large group of people will be the best way to find out about the frequency of energy drink consumption, the elements that drive the purchase decision, characteristics of the drink that the consumers considered important, post-purchase consumption experience, possible gaps from the customer’s point of view which will help in identifying ideas and opportunities for product development or innovation. Surveys can provide reliable direction for planning programs and messages by revealing certain customer behaviours, behavioural intentions, and attitudes (Orise, n.d.). The results of the research will help the management take corrective decisions.
Sampling Method
Probability random sampling method will be best sampling method to carry out quantitative research. Online surveys can be accessed by a large number of users and these surveys can be displayed on some popular websites like New Zealand Herald and Trademe. This method of sampling gives all members of the population a known chance of being selected for inclusion in the sample and this does not depend upon previous events in the selection process (Birchall, 2011).
Research Instrument Method
Self administered online surveys are a fast, reliable and cost-effective approach to data collection and allows respondents to answer privately and at their own pace with little or no human assistance. This eliminates the interviewer bias associated with face-to-face interviews and has a higher response rate.
Sample Size
The equation developed by Cochran (1963:75) to yield a representative sample for proportions will be used for determining the sample size, since the total number of people for the research is large (population of New Zealand).
where, n0 is the sample size, Z2 is the standardized value associated with a confidence interval, e is the desired level of precision, p is the estimated proportion of energy drink consumers present in the population, and q = (1-p). The value for Z is found in statistical tables which contain the area under the normal curve (Israel, 2009).
For the purpose of this research, the value of Z for a confidence level 95% is 1.96, given that the desired level of precision e = 3. Assuming that the proportion of population p, which consumes energy drinks, is 60% then percentage of population that does not consume energy drinks, q is 40%.
Hence, the sample size for this research is 1024 people.
Data Collection Method
There are many ways for collecting data for research but when a marketer needs to achieve a better understanding of the issues related to their product(s), which are not known to them, they can use exploratory research. This approach works well when the marketer doesn’t have an understanding of the topic or the topic is new and it is hard to pinpoint the research direction. Exploratory research is more dynamic and flexible than descriptive research. In this case, experience survey of energy drink consumers will be used.
In addition to offering the marketer basic information on a topic, exploratory research may also provide direction for a more formal research effort. For instance, exploratory research may indicate who the key decision makers are in a particular market thus enabling a more structured descriptive study targeted to this group (Exploratory Market Research, 2011).
Analyzing the Data
The process of analyzing the data to determine the key learning’s from the research begins when the data is in a form that is useful. The method used for analyzing this data depends on the approach used for data collection. Essentially, there are two types of methods of analysis – descriptive and inferential (Exploratory Market Research, 2011).
Descriptive Data Analysis
Descriptive analysis, as the name implies, is used to describe the results obtained. In most cases the results are merely used to provide a summary of what has been gathered (e.g., how many liked or dislike Red Bull or V drink) without making a statement of whether the results hold up to statistical evaluation (Exploratory Market Research, 2011).
Inferential Data Analysis
While descriptive data analysis can present a picture of the results, to really be useful the results of research should allow the researcher to accomplish other goals such as:
- Using information obtained from a small group (i.e., sample of customers) to make judgments about a larger group (i.e., all customers)
- Comparing groups to see if there is a difference in how they respond to an issue
- Forecasting what may happen based on collected information
To move beyond simply describing results requires the use of inferential data analysis where advanced statistical techniques are used to make judgments (i.e., inferences) about some issue (e.g., is one type of customer different from another type of customer). Using inferential data analysis requires a well-structured research plan that follows the scientific method. Also, most (but not all) inferential data analysis techniques require the use of quantitative data collection (Exploratory Market Research, 2011).
Benefits of the Research
The findings of the research study can help the management at Red Bull to gain insights into the causes for their declining sales and consumption. The findings will also help in achieving the objective of the research and will help in solving the management problem. It will also help in understanding what the consumers want the most and will help in identifying opportunities for growth and innovation. One of the major benefits of research is to minimize risks for future. It will also help the Red Bull management to set a benchmark to measure their progress as well as of their competitors.
References
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Birchall, J. (2011). Sampling and Samples. Retrieved March 24, 2011, from Market Research World:
Cochran, W. G. (1963). Sampling Techniques, 2nd Ed. New York: John Wiley and Sons, Inc.
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Exploratory Market Research. (2011). Exploratory Market Research. Retrieved March 25, 2011, from Knowthis.com : Marketing Tutorials, News, How-to and More:
Euromonitor International. (2011, March 18). Soft Drinks: Euromonitor from trade sources/national statistics. Auckland, Auckland, New Zealand.
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Gregor, K. (2011, January 18). Frucor unleashes bestseller V on Spain's energy drink market. Retrieved March 18, 2011, from NZ Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10700302
Gschwandtner, G. (2004). The Powerful Sales Strategy behind Red Bull, Selling Power Magazine. Retrieved March 15, 2011, from http://www.redbull.com/images/historysection/pdf/1/Selling_Power_DM_Sept.pdf
Israel, G. D. (2009). Sampling The Evidence Of Extension Program Impact. Program Evaluation and Organizational Development, IFAS. Florida: University of Florida.
Nielsen Media Research. (2006 - 2010, Jan - Dec). AIS Drillable. Auckland, Auckland, New Zealand.
Nielsen. (2011). Our History. Retrieved March 21, 2011, from Nielsen New Zealand:
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Wiid, J., & Colin, D. (2010). Marketing Research. Pretoria: Juta and Company Ltd.
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