What Should Be the Priority for Glenmeadies Innovation Efforts - Essay Example

?What should be the Priority for Glenmeadie’s Innovation Efforts? Nunes & Driggs (2006) analysed a whiskey producer d Glenmeadie and their efforts in marketing. Much of the effort seems to be focused on using new technologies to hook in new customers and build relationships with the old; the ‘Web site overhaul’, the ‘local call centre’ and the ‘loyalty card program’ (p38). Innovation is particularly important for a company old enough to have a 25-year reserve, particularly with the most recent explosion in social networking and other online technologies as a platform for sophisticated marketing. However, any company should continue to focus on what the customer really wants, which is an outstanding and reliable product. Marketing experts should be aware that the product is the thing that they’re selling, and innovation in this field is also necessary to build a customer base. The purpose of this essay is to explore how Glenmeadie can balance their innovation efforts between the product and new types of marketing in an effort to impress new customers and build a loyal customer fan base, by using the Ansoff and 8Ps frameworks to provide an illustration on how best to tackle the issues at hand. Glenmeadie The information provided by Nunes & Driggs (2006) paints an outline of Glenmeadie. As a Scotch whiskey distillery, Glenmeadie has won 7 gold medals in one season on a national and international scale, suggesting an upmarket taste and therefore suggesting a target market of whiskey connoisseurs. The marketing campaign led by Bob consists of international efforts to put on Tastemakers events in 25 cities, starting in New York. The aim is to spend $15,000 on each event, offering tastes of various whiskeys and bringing in efforts from an apprentice distiller and buyers from local distributors. Glenmeadie is also trying to give a more personal face to the brand, having interactive websites and creating loyalty card programs. A local call-centre has also been started to give customers information. All of these efforts come to a total of half the company’s profits, although it is suggested that supply may soon outstrip demand, meaning that the marketing campaigns are having a positive effect. The Experts The experts analysing the case consist of David Herman, Jeffrey F. Rayport, Stephen Dull and Joe Scafido. Scafiado, a member of the executive council at Dunkin’ brands, raises concerns about the fact that the front- and back-house innovations programs seem to be presented as separate enterprise. This is mainly because they seem to have separate functions in marketing, with product development being considered part of back-room company enterprises and marketing focusing on customer involvement and sales. However, this is a limited perspective on the matter. At Dunkin’ brands, Scafiado brought together the culinary team and the operating specialists into one department, meaning that any culinary development is being innovated simultaneously with efforts on how to present this to the company. Herman, who is president of Lebanon, agrees that Glenmeadie should be focusing efforts on product excellence as well as drawing customers in with these innovative marketing campaigns. After all, it is the product that is being sold, not the marketing scheme. Rayport, founder and chairman of Marketspace, sees things differently. Although Glenmeadie has reported some stress on research and development budgets, Rayport suggests that this can only be a positive thing, even for Ellis, the distiller. Rayport even goes as far to suggest that Ellis’ argument against expansion in marketing efforts is a paradox, as Ellis cannot have the freedom to create and innovate in the distillery without an expanded market and expanded profits. Dull, vice president of strategy at Greensboro, sees things a little differently. Dull suggests that Glenmeadie is a luxury product, as a whiskey, and therefore the aims of the company to branch into mass-marketing are a mistake. Dull suggests that there hasn’t been much of an effort to connect with the customer, who is likely to be interested in ‘quiet conversation’ (Nunes & Driggs, 2006, p48) rather than purchasing any drink with a catchy marketing campaign. From this perspective, Dull believes that more innovation should be done in the back-office, trying to continually update the product to make sure that it is suitable for the whiskey connoisseur and the ‘right people’ (Nunes & Driggs, 2006, p48) rather than any taster, as at these parties. Balancing Innovation Having seen the suggestions made by the marketing experts and how they conflict, it is worthwhile using various marketing profit frameworks to analyse the possible moves that Glenmeadie can make to move forward in the marketing strategy. The Scotch whiskey market is a mix of global brands such as J&B, Ballantines and Jonnie Walker and local brands, such as Label 5 and William Peel. Surprisingly, the biggest consumer of Scotch whiskey is France and the biggest market share here is with local brands (Kapferer, 2002). Interestingly, the 1980s saw multinational whiskey companies dominate the market, but these companies have failed to maintain their market share in a market which has doubled in size, partly due to the fact that these existing whiskey brands were used to the takes of the upmarket connoisseur and new purchases were being made by a reactionary younger crowd (Kapferer, 2002). Taking this into account, it seems sensible for Glenmeadie to make some effort in trying to attract new consumers with the Tastemakers scheme, instead of doing as Dull suggests and focusing on trying to win over existing whiskey fans (Nunes & Driggs, 2006). Using the Ansoff analysis (see figure 1), for example, it is important to understand the customer markets for both market penetration and product development (Mercer, 1996). Understanding that the Scotch whiskey market may now be populated with young enthusiasts rather than connoisseurs means that there may be room to market existing products in a more modern way as Glenmeadie is attempting here. Kapferer (2002) suggests that the success of local brands in the marketplace is due to the fact that these appear fresh and therefore can appeal to the newer younger audiences. Aside from marketing the products in a new way, it could be useful to develop products in the distillery that are available with shorter maturation times (which would have the additional bonus of increasing supply, something Glenmeadie may need to approach) which again can be marketed to these new audience. This suggests the dual approach that Scafido recommends in the analysis (Nunes & Driggs, 2006). Figure 1 – The Ansoff Analysis of Marketing, as described in Mercer (1996) Smith & Basu (2002) also suggested that Scotch whiskey may be a market in which brand loyalty is very common. This means that Bob’s marketing programs for a loyalty card may be unnecessary as long as the product fills a niche for the customer, because providing that the product is excellent, the customer will have a ‘taste’ for it and therefore will continue to purchase it regardless of any marketing ploy. Removing the aspects of the marketing campaign aimed at building brand loyalty may help to reduce the overall cost of the marketing from half the profits (Nunes & Driggs, 2006). Dull suggests that one of the aims of a marketing department is to build brand strength and endurance, and there may be an aspect of Scotch whiskey that works on this as a product and therefore may need less attention than originally believed. Using this information from Smith & Basu (2002), it may be that market penetration is an unnecessary move because it is unlikely that Glenmeadie will gain competitor’s customers simply because of a marketing scheme. Instead, Glenmeadie should focus on following the trend away from luxury expensive whiskeys into the single malt, as suggested by Rayport (Nunes & Driggs, 2006). However, it could be suggested that considerable investment into product development combined with these Tastemaker sessions could lead to an expansion in the existing market, simply by alerting existing Scotch drinkers that there is an alternative. If, upon tasting, the Glenmeadie product is superior to the existing preferred brand, then it may cause an expansion in the market (Linton et al, 2004). However, this technique will have to be carefully planned to ensure that profits are not wasted. Bob’s decision to go with the Tastemaker program may be more appropriate than a number of the other advertising methods simply because a whiskey drinker is unlikely to taste a different brand on advertising alone (Smith & Basu, 2002). Smith (2010) correctly identifies another difficulty that faces the marketer of Scotch whiskey; the legal and political issues. Not even the larger international producers are free to market their products without constraints, particularly when it comes to different legal drinking ages and laws regarding advertising alcoholic drinks. Additionally, a Scotch must be made in Scotland (MacLean, 2005), putting further pressure on distilleries and marketers alike. These problems relate to difficulties in the international market, and as Herman points out it is unlikely that all 25 cities targeted by Glenmeadie in the piece by Nunes & Driggs (2006) are created equal. It would perhaps make more sense for Bob to divide resources between the cities less equally (particularly as we see that the New York Tastemakers session has gone over budget), perhaps even making considerable savings in some areas. To return to Scafido’s recommendation, it seems sensible for Glenmeadie to approach the market in a number of different ways. It could be sensible for innovations in taste and marketing to be placed in one department so that liaisons can be made between the areas. This means that any innovation in the product can be analysed to ensure that it is perfectly marketed, and the reverse is true, as we can see in Adamy (2007). This would ensure that, if a marketing framework such as the 8Ps (as shown in figure 2) is used (Mercer, 1996), all areas can be addressed directly by one team, building a well-rounded innovative brand in all areas. This would help improve the perception of the brand to the younger whiskey drinking clientele whilst perhaps even tempting away Scotch drinkers from their existing preferred tipple, causing expansion in both new and existing markets (Smith & Basu, 2002). This could be done without any effect on the brand loyalty. The Tastemaker program seems like a useful innovation, but mail-order offers is perhaps a little out-dated and could be culled in an effort to build the brand online, although whiskey cannot be directly sold this way. An additional efforts targeted at distributors, as recommended by Heide (1994), could be a useful investment. Figure 2 - The 8Ps analysis in marketing theory, as described in Mercer (1996) Conclusions Whiskey is a market which relies on drinking trends which are often out of the control of the marketing executives. Careful analysis of these trends is necessary, and has suggested that the expansion of whiskey drinkers since the Second World War is primarily in smaller local brands with larger international companies not increasing their market share since 1980. It has been suggested that this is because of a trend in younger people drinking whiskey, which means that marketing would do well to increase ubiquity of their brand in this area. This could mean a move away from focusing on the luxury products which can be leveraged into higher prices. It seems sensible, therefore, for Bob to push for development in both the back-room and in marketing innovation because there could be beneficial changes to be made in both areas. This could also potentially reduce the economic burden on the company, reducing the marketing budget from 50% of profits much lower, whilst increasing profits to reduce the ratio further. Innovation needs to be continuous, so Bob would do well to keep an eye on the market continuously to ensure that any changes are noticed before market competitors to get ahead in the field. Evidently, there are a number of elements of marketing to keep in mind, but from the above analysis it seems that whiskey follows a number of typical patterns and therefore Bob could employ the Ansoff framework to help decide where to focus his energies, rather than relying completely on new technologies and initiatives to improve Glenmeadie. References Adamy, J. ‘Dunkin’Donuts Whips Up A Recipe for Expansion’. Wall Street Journal (2007): n. pag. Print. Heide, J.B. ‘Interorganizational Governance in Marketing Channels’. The Journal of Marketing (1994): 71–85. Print. Kapferer, J-N. ‘Is There Really No Hope for Local Brands?’ The Journal of Brand Management 9.3 (2002): 163–170. Linton, April, Cindy Chiayuan Liou, and Kelly Ann Shaw. ‘A Taste of Trade Justice: Marketing Global Social Responsibility via Fair Trade Coffee’. Globalizations 1.2 (2004): 223–246. MacLean, Charles. Scotch Whisky: A Liquid History. Cassell Illustrated, 2005. Print. NUNES, Paul F, and Woodruff W DRIGGS. ‘What Serves the Customer Best?’ Harvard business review 84.10 n. pag. Web. 6 Mar. 2012. Smith, Andy. ‘Industries as Spaces for the Politics of Territory: The Case of Scotch Whisky’. Regional & Federal Studies 20.3 (2010): 389–407. Smith, T, and K Basu. ‘A View from the Top: The Impact of Market Share Dominance on Competitive Position’. The Journal of Brand Management 10.1 (2002): 19–32. Read More