Creating a New Brand in a Competitive Environment
EXECUTIVE SUMMARY The purpose of this document is to show how the marketing has changed to adapt to the modern world, and international companies work to offer the best services and product, competing with other firms.Some Marketing tools have varied depending on the approach; this is why some companies prefer to use a disparity of elements to attract customers and retain them, offering some added value.In the research it is possible to find different theories applied to real examples, and taking companies such as Diageo, Louis Vuitton Moet Hennesy (LVMH), and SABMiller like an example, to introduce a new product in an unexplored segment.
Beginning with a short background explaining how the main company works, their star product and direct and indirect competitors.
Also, it has discussed about the challenges that this companies have been facing and how they solve these issues, implementing some strategies. The Swot will be explained more in detail, which is important to know the internal and external forces, are influence the company stability. The differentiation is also important, because this gives to the company uniqueness, originality and authenticity part that consumers see it like added value.
After an intensive study, the recommendations to launch a successful product are made to implement in a new market, avoiding imitations and confusion in customers, due to the huge range of competitions in the same sector. Diageo is always caring about their customers; they support campaigns to avoid underage drinkers. INDEX Page Introduction3 1. Case Background 4 2. Key Findings 5 2. 1. What is the real challenge that Guinness faces at the market? 5 2. 2. More than a want 5 2. 3. A big competition5 2. 4. Marketing Channels 6 2. 5. Finding main challenges in the competition6 . 6. Segmenting Markets7 2. 7. SWOT7 2. 8. Designing a marketing plan8 2. 8. 1. Opportunities in the UK market 8 2. 8. 2. Target Market 9 2. 8. 3. The New 4 P’s 9 2. 9. Creating Brand value 10 2. 10. Branding 11 2. 11. Differentiation strategies 11 Recommendations 12 Conclusions 13 Appendix Bibliography INTRODUCTION The main purpose of this assignment, it is to explore different marketing approaches in current markets, apply a disparity of theories studied at class and expose perspectives from both sides in the market, consumers-companies.
In general, this project will focus in how to launch a product in a competitive market, where the beer will be the main competitor. Introducing companies such as Diageo, which has a short trajectory but its brands a long heritage history, Louis Vuitton Moet and Hennesy is recognizing for their luxury products; and SABMiller, the variety is the strong part. 1. CASE BACKGROUND Diageo is one of the market leaders in premium beverages companies; they provide a huge range of alcoholic drinks, for example, spirits, beers and wines.
They include brands such as Johnnie Walker, Crown Royal, J&B and among many other. Besides this, it is possible to find this company in roughly 180 markets, employing more than 25. 000 people with 80 offices. Its company structures and orientation is classified in Geographic, this is why Diageo desires sell the right product to the right customer, and therefore certain products are selling according to the demand of each country. In UK, Guinness is the most popular beer in Bars and Pubs, and it is not only its taste, is also the way to communicate the correct message, which I will discuss in more detail.
Apart from this, it has been rated one the top tasting beers around Great Britain. Additionally, having a long heritage makes this brand stronger and trustworthy for drinking people. However, positioned companies, like Louis Vuitton Moet Hennesy (LVMH) and SABMiller, do not facilitate its distribution and selling, so to differentiate each company has worked in the strategic marketing plans, taking into account that LVMH is the indirect competitor in the alcoholic beverages market. 2. KEY FINDINGS 3. 1. What is the real challenge that Guinness faces at the market?
A long heritage brand could be difficult to revitalize in a modern and competitive market, due to a huge range of brands trying to imitate the taste and the shape, but how does Guinness keep being recognized by people all of ages without losing their well-know brand and their main features? This question is one of the big challenges that Diageo currently faces. 3. 2. More than a want Historically, beers have been the drinks for people who want to enjoy and celebrate any moment, making them special and unforgettable, and these facts make beer more than a want, a demand which is covered for a lot of companies around the world.
Nowadays, the Guinness Brand has become more popular and desirable for everyone, because Diageo just do not want to reflect a beer, but also an entire history of a community that has grown with it. 3. 3. A big competition In this days and age, the competition in this sector has increased, which make more difficult the inclusion of new product. There are more than 40. 000 companies’ worldwide, offering different alcoholic beverages, new contrast, and new messages. According to Euromonitor International (2011), in the UK despite of crises, unemployment and economic downturn, Guinness is still the most popular beer.
Nevertheless, in this industry firms such as LVMH and SABMiller, keep doing very well and creating a diverse way to differentiate from the competition. 3. 4. Marketing channels in Guinness compared with SABMiller and LVMH Guinness SABMiller LVMH| Communication | Distribution | Service | As it has been mentioned in the previous table the different method to keep in touch with their consumers and, even better, attracting new ones, is the only way to differentiate between the competitions.
Guinness’ authenticity and originality tries to parley the moment drinking beer, into joining these special moments into all their history.However, while Diageo tries to keep in the traditional way, SABMiller is gaining the younger market and LVMH is taking advantage of the weakness in Diageo, and forgetting that luxury wines and spirits are a strong part of their competition. 3. 5. Finding Main Challenges in the Competition As a Global Firm, the role of SABMiller has some challenges that still face nowadays. Their main issue is competing with local brands and the inclusion of new global brands.
As a result they always keep practicing their main strategies, in which Nick Fell (2011), SABMiller’s Marketing Director, mention that “we believe is key to sustaining our competitive edge. Our ability to nurture and grow brands that consumers want is one of our most important business assets”. Meanwhile, LVMH is a luxury brand company which always wants to offer the best quality in a high price. Despite the financial crisis in the last years in Europe, LVMH has grown in the previous years (Lucy Shaw, 2012), this appears to show that the strategies to keep the high prices in the offering luxury products, have worked.
Beyond price and luxury products, brand trust is also important (Kapferer, 2012), because it provides more certainty. They are taking advantage of their brand creating value for consumers. Nevertheless, at the same time, LVMH are forgetting a big part of the market; the youngster. Due to high prices and long heritage history, the products just have covered a small part of the market; as a result Louis Vuitton Moet and Hennesy are making the same mistakes that Guinness made. Taking into account the previous examples, the diffusion of innovation theory (Rogers, 1962, cited in Kotler & Keller, 2011, p. 84) describes five types of consumers, 1) Innovators, 2) Early adopters, 3) Early majority, 4) Late majority, and 5) Laggards, the last category just refers to 16% of people who still buy the same product for a long time, and they believe and trust in the brand; consequently, these companies are covering roughly less than 20% of the market. 3. 6. Segmenting Markets Regarding market segmentation each company and brand identifies a group of customer with similar needs or wants to satisfy. All different companies have different approaches, taking SABMiller for example, which is segmented geographically depending on the country region.
In that way they can operate closer to their customers, develop some programs or activities to compete with local stores and concentrate in reacting in any variations of their business competitor. Either way, the grassroots marketing(REF) is a good strategy to implement, when it has been considering including a large part of the market. In addition, it is important to mention that the aforementioned company has an approach in business to business, which it also works as a channel distribution.
As well as SABMiller, Diageo uses the same global segmentation strategy in local markets, but simultaneously splitting the market demographically in accordance with gender and age. In this case, Guinness has been segmented by age and behavior, which belongs to age group in 20 to 35, and people who want to enjoy a moment, taking some time, and relax without worries. Having discussed SABMiller and Guinness segmentation strategies, it could expose the LVMH segmentation strategies. Spirits and wines sold by LVMH have been segmented demographically, which includes income and social status, people who want to feel sophisticated in a luxury market. . 7. SWOT (Strengths, weaknesses, opportunities, threats) Strengths * Strong structural companies, powerful brand extensions and long heritage history. Diageo has all the variables to succeed in a market where it already has launched some products. It also has a long history with brands such as Guinness, Johnnie Walker or Buchannan. Even when the company is relatively new, it has more than 80 offices around the world, this would indicate huge market knowledge. Weaknesses * Venture in a completely new segment. This could be a huge growth opportunity but, if it the new brand fails, the reputation of the other brands can be affected.
Opportunities * Low competitions in a new market. The UK is famous for its beer, some whiskeys and cider, but all of them focus on men, regardless the female of what wants and demands are. The growth of women markets is a chance to venture in a new segment. Threats * Big companies and big brands. The hard competition in well-known brands and the ease of imitations can become a threat to the beer product in the UK. Coupled with this, is the entry of this substitute’s products (Porter, 1985, cited in Ranchhod and Gurau, 2007), like cider (Bulmers, SABMiller) or wines (LVMH), which are located in the top percentage of drinks aimed towards women. . 8. Designing a Marketing Plan As said by Kotler and Keller (2011), a marketing plan has two levels: Strategic and tactical, which include target market, value proposition and product strategy respectively. 3. 9. 1. Opportunities in the UK market According to Alcohol Concern (2008), approximately 90% of British women drink at least once per week, while men drink 21 units of alcohol per week, women drink 14 units. These facts make the female segment a strong one, to penetrate this forgotten sector.
So, due to this huge demand in the alcoholic beverage market and thinking in the female sector, Diageo has taken the initiative to launch a special product for women and their wants and demands. Besides, studying this segment, it has found that the competition offering beer for women is really low. In the graph below, it shows the amount in units drinking of each gender: Fig 1. Office for National Statistics (2005) Units per week [Medium] [Online] Available at http://www. alcoholconcern. org. uk/assets/files/Publications/Women%20factsheet. df (Accessed: 22 February 2013) Following this short but essential research, it is promising to say that the women are an unexplored market, where companies like Diageo have a great opportunity to venture in this segment. 3. 9. 2. Target Market Diageo brands have a long heritage history with strengths make easy to get into unknown segment, and consequently reaching a position in the alcoholic drinks market. Diageo realizes this area of the market occupied by women market is an ideal segment to launch a product, which caters to their wants and demands.
This product is addressed to young professional women, who just want to enjoy life in any given moment, regardless of worries. So, FEM-Ale is targeted to young women, who are aged between 21 to 35 years old, and women just want to relax after a long hard day at work. To be more specific, it will target the market according to the income of women, the hourly pay rates are between 6 and 10 pounds per week (BBC, 2012). 3. 9. 3. The New 4 P’s (Marketing Mix) It has been mentioned that the old marketing has changed, and not all the tools are still used to develop attracting strategies.
This is because of people behavioral change and also the world has been affected by some forces such as globalization, consumerism and commercial agreement involving governments. One of the first authors that mention the marketing-mix tools was McCarthy (1960), who determined different activities of marketing: Product, price, place and promotion. However, in this contemporary world it is necessary to look at some changes as to the effectiveness of this tool, which encompasses market communications, value and other variables that make the outcome more productive.
Trying to adapt the modern world to traditional tools, authors like Piercy (2012) and Kotler and Keller (2011) have tried to establish the new four Ps. Kotler believed that the new 4 elements of the marketing mix should be: people, processes, programs and performance, taking into account that these components are more closely identifiable to the real needs in a company. Meanwhile, Piercy highlighted that the tools do not need to change at all but give them a different approach, for instance: the roduct and pricing policies ought to be focused in value offering, while place and promotion should be used like marketing tools. To describe the strategies used by Fem-Ale, Piercy is the author chosen to explain each one. The Value Offering To begin with Product Policy, there are a lot of variables that can affect the offering by the brand and they will be described as part of the product strategy: * Brand name: the name of the beer, want to show the rude side of boys but the female and delicacy of girls, Fem-Ale. Product variety: currently Diageo has a lot of brands that could be used by them to show the same reliability and trustfulness, for instance, at the beginning the beer will be an original sweet flavor and depending on the product placement will launch a disparity of flavors and varieties. Comparing the product diversity with SABMiller, the direct competitor, they have more than 80 options and flavors, which some of them are targeted at women, such as Redd’s beer, a brand which was launched successfully in Colombia and the UK (Fernandez, 2008), without success; with only the Colombian market showing success. Design and packaging: Kotler (2011) has mentioned packaging like the fifth P. It is really important because is the first contact with the customer; it is a moment of truth, in which the marketer may know if this product strategy works. The beer will come in two different packages: a can and bottle, with a pink-black color label, which describes the name, because in line with Madden, Hewwet, and Roth (2000, cited in Dibb, 2006), colors are a good strategy to attract consumers and communicate what they truly expect, do not attract teenagers market to confuse them, due to the huge problem that the UK have with underage drinkers.
Establish pricing strategies is also important, because this is where the company can expect to gain a good profit. Fem-ale beer is a product for any women with a special flavor and taste tailor to their specifications, Fem-ale beer is also aimed towards any women who want to relax. That is why Diageo should keep the same price as other brand extension in the same sector. This would be a competitive price. Marketing tools Places or Distributions are all the channels to sell, deliver and offer the product. Initially, Fem-Ale would start offering some samples in pubs and retail stores.
At the beginning, the coverage will be small towns close to London, because it is an easy way to introduce a new product, where people are more flexible and depending on people’s acceptance, it will be introduced to other towns. The last elements are promotional strategies or marketing communications. These are a method to introduce the product to the consumers, inviting them to try the innovations, attracting through services and promotions, and retaining loyalty customer offering some value. Within marketing communications strategies will be a web-site, describing recipes of dishes or cocktails that could accompany the new brew.
As well as this some events and concerts would be sponsor by FEM-ale, a big campaign showing why this beer will satisfy the women’s wants, and using Guinness’ well-known brand, to incite trust and confidence to people who are already committed to the long heritage history of Guinness, and by means of co-branding (REF) like a promotional strategy. 3. 9. Creating Brand value It is good to show that not just young women may be sexy, self-sufficient and do not depend on anyone else to be happy, because Diageo just want to show that there is no discrimination between genders, and in this modern world women need a place to shine.
This approach will be focused to make women feel strong and they just have the entire world in them hands. Diageo is creating an approach totally different from traditional beers, and giving support to the female side. (REF) 3. 10. Branding 3. 11. Differentiated strategies: POP and POD On the other hand, SABMiller are using the dual adaption strategy (Keegan, 2005), in which communications as well as product has to be adapted to the local markets facts, including packaging, colors, name and taste. In this case, they are sure that their customers are satisfied with the cultural facts of each country. . 12. Supporting campaigns to avoid underage drinkers RECOMMENDATIONS Nowadays, the world has changed and consequently people minds have changed as well. The consumerism, globalization, big competitions in markets, crises downturn, and among many other reasons, they are some forces that affect(REF) people choice at the moment to buy a product and make people desire more goods with more specific requirements. Not all is about low prices, good quality, offers a good service, but communicating the correct message to the right consumers it is the easy way to create a product-customer connection.
CONCLUSIONES Bibliography Pag 82 Market-led Author Nigel F. Piercy The New strategic Brand Management http://www. guinness-storehouse. com/en/Inside. aspx http://www. guinness. com/en-row/arthurs-day/default. html http://www. thegatheringireland. com/I-Love-Ireland/I-Love-Ireland-Blog/September-2012/Arthur-Guinness-the-man-behind-the-brew. aspx http://www. fastcompany. com/44736/brand-marketing-guinness http://www. marketingmagazine. co. uk/news/1152779/Guinness-launches-cloud-TV-campaign/ http://www. marketingmagazine. o. uk/news/1145962/Guinness-celebrates-Arthurs-Day-global-ad/ http://www. marketingmagazine. co. uk/news/1152357/Guinness-takes-skies-social-media-driven-campaign/ http://www. marketingmagazine. co. uk/news/rss/1156974/Q-A-Guinness-global-strategy-communications-director-Grainne-Wafer/ http://www. dailymail. co. uk/sciencetech/article-1363835/Why-Guinness-tastes-better-Ireland-world. html http://library. bcu. ac. uk/learner/writingguides/1. 02%20Reports. htm http://www. guinness. com/en-gb/theads. html