Allow me to answer with LEGO product descriptions.
In the set featuring the Stormtrooper shown in the question, the figure is described as a "First Order Stormtrooper Officer".
Enter the battle with Kylo Ren’s personal Command Shuttle! This fantastic, highly detailed starship has loads of features, including opening front, rear and bottom storage bays; wing-mounted, spring-loaded shooters and detachable weapon racks. And when you’re ready for even more action, activate the amazing extending wing function! It’s time to hunt down the enemy and play out your own great scenes from Star Wars: The Force Awakens! Includes 6 minifigures with assorted weapons and accessories: Kylo Ren, General Hux, First Order Officer, 2 First Order Crew and a First Order Stormtrooper Officer.
Contrast this with another set with Stormtroopers lacking the pauldron:
Lower the ramp, load the troopers and get ready to transport them into battle! This heavily armored First Order Transporter is packed with cool features, like dual spring-loaded shooters, top-mounted dual-stud shooter and hatch with space for a minifigure, pilot cabin with opening hatch and space for 4 minifigures in the hold, big engines at the rear, and hidden, transparent wheels for a cool ‘hover’ look. You can also remove the top section for easy access. Get ready to recreate incredible battle scenes from Star Wars: The Force Awakens! Includes 7 minifigures with assorted weapons and accessories: 2 Resistance Soldiers, 2 First Order Flametroopers, 2 First Order Stormtroopers and Captain Phasma.
According to this, the pauldron indicates a rank of officer, at least among Stormtroopers. Other toy merchandising also describes our red-shouldered anonymous villain as a "First Order Stormtrooper Officer".
A white pauldron'd Hot Toys figure is listed as "Squad Leader", and a black pauldron one called a "Sergeant", further evidence that the shoulder piece denotes rank, and also that color likely indicates which rank.
However, it must be noted that the merchandise may not exactly be canon, or backed up by the movies. The only rank we know of for certain is "Captain", and Captain Phazma was seen to have a cape and chrome armor, not a colored pauldron.