Examining drivers of red bull's brand preference and price premium using Keller's resonance model among Generation Y in Johannesburg

Abstract

Competing energy drink brands, such as Monster, Score, Dokta, Lucozade, Power Play, Bioplus are much cheaper than the Red Bull brand. For an example, one can of Red Bull energy drink (473ml) is sold at R25.83 compared to one can of Player (500ml) which is sold at around R15.00. Despite the high price, Red Bull’s share of the South African energy drink market grew from a 4.5 million in 1998 to 39.5 million cans in 2010 and the brand has captured the greatest South African market share. It was therefore questionable as to what drives consumers’ preference for the Red bull brand and whether the preference continues to drive their willingness to pay a price premium.

This study tested Keller’s resonance model as a theoretical background for exploring the reasons behind consumers’ preference and willingness to buy Red Bull energy drink, despite it being more expensive than other competing brand. Specifically, the study investigated the impact that salience (brand awareness), performance (product primary characteristics and secondary features, style and design), imagery (sincerity, excitement, competence, sophistication) and judgment (credibility and superiority) have on brand preference. The study also examined the extent to which brand preference drive consumers’ willingness to pay a price premium for the Red Bull brand.

Quantitative data through survey was collected from 300 Generation ‘Y’ consumers of all races. They were recruited from University of Witwatersrand, which a socio-cultural and economically diverse university. Covariance based structural equation modelling analyses using Amos 25 revealed that Red Bull’s brand preference was driven by Product Primary Characteristics and Secondary Features, style and design (performance factors), credibility and superiority (judgment factors) and not salience and imagery factors. The brand preference in turn positively and significantly impacted on consumers’ willingness to pay a price premium.

The empirical testing of Keller’s resonance model with an energy drink does not only empirically validate the model, but it exposed to Red Bull marketers and other marketing practitioners the factors in the model that make the greatest contribution to building brand preference. Since price premium is an important driver of brand profitability, the testing of whether there is a direct relationship between brand preference and consumers’ willingness to pay a price premium sheds light on the importance of branding energy drinks and more specifically, the market performance significance of Red Bull branding amongst Generation ‘Y’ in the South African context.