Boston Beer Innovation Management Approach - Essay Example

Boston Beer Innovation Management Approach Affiliation Name Introduction of Boston Beer Company This is one of the companies that have grown from scratch as a small microbrewer firm to a large scale international company. The company’s product line that is attributed to the founder Samuel Dams’ product line has not changed since 1984 when the company was started to the current state it is at present (Kell, 2012). Most of these outstanding features emanates from the image that was set and was maintained with a lot of commitments to the processes of brewing. However, the company has recently implemented new growth strategies that include light beer that has a lot of mainstream appeals; this has caused the company to lower their brand name. Due to this fact the Company has taken some strides and made tremendous shift for growth strategy to protection strategy. They had to focus on keeping their profits and maintaining their name by protecting big and small brewing enterprises from entering into the market and stealing their massive resources and dominating the markets share (Pilbeam, 2012). The company started as a small microbrewery in 1984 at Boston in Massachusetts. At that time when they started, they sold their products at Boston bars, but later expanded and branched out to other parts. This was made even stronger by the recognition of their brand “Samuel Adams Boston Lager” that was made available in the East coast during that time. In the year 1995, the company went public and entered the New York stock exchange (Sullivan, 2012). The company utilized the differentiation strategy for its growth. They had to produce a product that was of high quality than most of their competitors by incorporating more ingredients that are expansive, have less water, and combined it with its packaging. They used this to advertise in their commercials and attributed this to their commitment to quality. Due to the use of barley, water, hops, and yeast ingredients; the product was the first American beer to be sold in Germany and it is through this that they won the honor of being the first beer form American to go to Germany; this boosted the image mile ahead (Duff, 2012). Boston Beer Innovation Processes In American, the major beer companies uses malt and other grains as their raw materials for brewing their beer. This is due to the fact that they are less expensive and have fewer flavors. The Boston beer company has international competitors such as the Corona, Heineken, and Guinness as well as local competitors such as the Pete’s, Sierra Nevada and quite a number of small other breweries around the country (Kell, 2012). Despite the tough competition on the industry, there exist health competition that is based around the quality of the product produced and not the company name. There are many alternatives for quality better beer. The substitutes for the Boston beer are the alcoholic beverages, but the closest is the malt beverages and the American beer. Other brands are the Budweiser, Coors, and Miller. These are large brand names but they are of low quality and low prices as compared to Boston better beers. These beers are typically bought by customers whom are price sensitive. There are other product such as the Sminorff Ice, Skyy Blue, and Silver. These are the same in quality and price as the Boston better beer but they have fruit flavors and are suited to customers who have different taste preferences (Sullivan, 2012). The company utilizes the 4P’s of innovation in the development of the their products. Boston Beer Company’s Innovation Network The Boston beer suppliers are the same as those from other companies; the raw materials required are the ingredients such as water, hops, barley, brewing equipments and transportation. These are not expensive. The hops are set as a central ingredient so as to make sure that there are adequate supplies for this product. To achieve this, they acquire hops futures (Drutman, 2009). The Boston beer Company makes use of the aggressive contract strategy. Therefore they use the policy of three fifth (3/5) of all the beer products manufactured in the company are from the contractors while the remaining are from the company. Under this, they utilize the geographical distribution and thereby reducing on the transportation and equipment cost that would have been incurred and therefore keeping their product quality high and fresh. Despite the risk involved in the strategy adopted, the company enters into contract with other companies in order to produce large amount of beer. This aims at protecting the company from contractors who might default on the way of the contracts (Lehrich, 2012). As a way of complementing their products, the company engages in customer education, advertisement, and their premium ingredients. This aims at convincing the customers of the product quality that is superior and commensurate with the price. The company has an advantage over other companies since there is an allowance on the economies of scale as more customers are reached compared to the amount of money spent on educating customers (Tidd & Bessant, 2009). When we see other competitors, the companies that make beverage can enter into Samuel Adams market and these calls for the company to be aware of it. However, the most dangerous is the beer companies and other craft competitor who might want to copy and steal the Boston market share. In the same note, the vast raw materials available might be used by other companies to brew beer products that are more superior to the Samuel Adams and enter the market and compete favorably. Another threatening factor is the combination of two companies where one will buy a micro brewery company and use their advertising and distribution chain to market themselves to the public on a bigger scale. Through the use of the short comings, other companies can enter into the market and reduce the Boston Beer Company’s market share and wipe away all the profits. In my own view, I believe that the company should rapidly respond to these potential and slot in at the business strategies of growth for their immediate and bright future (Sullivan, 2012). Boston Beer Company’s Innovation Strategy The Boston Beer company was initially using inorganic growth strategy whereby the firm was growing internally. This was enough and good for the microbrewery at that time when it was seeking to attract a wide spectrum of customers. In the early 1990s the firm had to take advantage of the fact that there was increasing consumer demand for small brewing companies. The firm was able to cut a niche by using the Samuel Adam brand and curved itself in the national beer market. Despite the reputation gained, there was a decline in growth. The company had to change and increase the demand for craft beer. This was achieved through aggressive advertising on a large scale, and this was strengthened up by increasing the light beer into the market. This was aimed at bringing the light beer customers to the better beer market (Tidd & Bessant, 2009). The firm’s strategy became efficient and effective for a very long time. This enabled the company to come at the top and become the company it is today. In order to keep and maintain it profitability in the market, the company ought to shift the company’s strategy and increase the market instead of mainstreaming the market. This will enable the firm to protect the market from new competitors that are coming into the market. One of the biggest competitors is companies that have large massive resources allowing them to enter into the market and compete. The company’s experience and distinguished reputation are the major advantages that the company enjoys (Lyon, 2012). The reputation and experience are the only forces that bar other competitors from entering into the market, therefore the company must at all cost protect the reputation that was earned through though struggle over time. The best option that the company ought to adopt is to reduce its growth and protect the brand name; even though this is risk as small craft breweries will take advantage and penetrate the market, it will be better as it will reduce incentives for large companies and this is worth the risk. The strategy for years to come is to build the loyalty of customers by strengthening its product foundation line (Lehrich, 2012). There is a call to reduce on the expenditures. This is realized through the reduction of advertising especially on brands that does not have much customer impact such as Sam Light. The implications on the finances of the product could hurt the company by spoiling the name and reputation that have been gained by Samuel Adams brand name. The company cannot afford to lose the uniqueness. The product is one of the revenue earners for the company but it should not be put as the main focal point for the company. Beside this, products such as Twisted tea, Hard core should be done away with as this product spoil the name by reducing the company’s reputation. The will improve the company’s integrity and image and therefore protect the brand name for the better beer product. As a result, the stiff competition that is looming from other competitors will not be a threat any longer (Sullivan, 2012). When the company started growing, they utilized extra brewing space that was available to brew their beer as one of their growth strategy as they had no extra capital to develop its own breweries. Because their products were sold in almost all parts of the country; this gave the company an opportunity to utilize this strategy by maximizing the amount of beer sold. The company produced quality products by ensuring that the best experts are employed to look on brewing both on its own, and later acquired a plant in Cincinnati. Ohio (Pilbeam, 2012). There was a turnaround in 2002 when the company introduced the Sam Adam light, and through this they had to expand their customer base that they were targeting. This was so lucrative to be ignored. The new brand had short term positive effects of attracting customers and long term positive effects of establishing and to maintain their brand. The growth of the company at this time was so impressive and all this is tied with the unique products, good growth strategies, and market that were not saturated (Lyon, 2012). Boston Beer Company’s Market development The Company has a way of maintaining the position as one of the leading innovator; the company continues to develop new products that allow their products to try a variety of styles of malt beverages. This is done by brewing different beers and sold under different brand names so that they can assess the customers’ preference test. On top of this, the company engages in the Long shot American six pack contest in which the employees and customers take part. The company continues to develop and spent time in developing beers for the company’s potential future, and through this, they launched three new products under Angry Orchard brand. The Company reverted back to the old label since the current label is so simple and has very few colors that are similar to the major company label. This is in contrast with the label of small brands label are distinguished and have complex picture. The sure way out is to switch to the Brewer patriot label. This will stir up new and old customers that the company is dedicated to for quality (Tidd & Bessant, 2009). Boston Beer Company’s Joint venture and Alliances In the same spirit, the company collaborates with other companies with the intention of finding new opportunities that may be geographically aligned with the existing breweries. The collaboration with Alchemy and Science is a one step ahead as the company will be looking and finding ways of coming up with new brands by incorporating new brewing techniques. There will also be researching on ancient brands so that they can integrate this brand techniques used with the new technological advancement (Pilbeam, 2012). The Company strives to create leading world class beers and the alcoholic drinks with the intention of widening the spread of the product line. In order to curve it amongst others in the market, they advertise and promote the two products i.e. Samuel Adams Lager and Samuel Adams Seasonal Beers. Products the company sell are produced in limited quantities and are going at higher prices than other company’s products. The company employs on time service delivery, forecasting, planning their production, and encouraging cooperation with the customers. The company also engages in campaign through the media, TV, radio, bill boards, and print media. This aims at reaching a large number of audiences (Kell, 2012). Boston Beer Company’s Business Planning In order for the company to attain great success and remain at top in the industry, it must plough back the tremendous profit that they earn. Contacting has proved to be efficient especially during the growth phase. At the moment contract brewing does not have any significant impact now. First, there are numerous occasion where the company has incurred expenses in the name of contractors and this has hurt the company to a great extent. Secondly, the competitors also do use the same contractors to manufacture their products too. In this view, they have gone to the extent of advertising and telling customers that there is no difference in the Boston beer brand as they are manufactured by the same contractors in the same manner in which they manufacture their brands (Lyon, 2012). The company came distant themselves from these allegations by brewing their own beer. On top of these, several disputes arising between the company and the contractors can be eliminated. Since Boston Beer is producing a half of the company’s product, they cannot be defeated in producing the remaining half. The company can plough back the profits and acquire other companies so that they can increase their capacity (Tidd & Bessant, 2009). Conclusion It is clear that the Boston Beer has successful innovation strategy for the success and growth of the business. The company through the management should show that they can lift up and maintain its current profitability level. This can be achieved by adopting new and more innovative strategy approaches. The industry entry barriers are overcome by merging with regional microbreweries such as the American breweries. This is a company who has experienced quality and has the resources to market new brands nationwide. The major distinguishing characteristic of the Boston Beer company is the good reputation which they gained when they first entered into the market. Since the company has slowed down in terms of its growth, it requires incurring expenses and funding programs that assist in boosting the image and integrity. If Boston Beer Company has to differentiate themselves from other big American companies, then it must continue to hold its customer base and protect its market share so as to maintain its profits. The lesson I can learn from Boston Beer Company innovation strategy is that as an entrepreneur and an innovator one need to respond to changes rapidly, and travel the road of achievement gradually. The reason is that one need to start small and see a broader perspective of issues, come up with new ideas as a team, and implement them to reality. My recommendation to Boston Beer Company is that besides their reputation, they need to tap new advancement in technology so that there is efficient and effective system of production and branding their products so as to build and maintain their status at the top. There is the need to use knowledge in order to manage change and innovation for the benefit of the company. Read More