C&C Marketing Strategy Recommendations - Case Study Example

C&C Marketing Strategy Recommendations Segmentation of the market (the different target markets) Today most companies are moving away from mass marketing and instead adopting market segmentation and targeting as their strategy which involves the identification of market segments, selecting the ones to be targeted with the organizational resources and efforts and then position the product in these chosen segments with suitable marketing mix (Kotler & Armstrong, 2000). It is important that companies identify their operating space as well the broader business domain so that their marketing strategies are developed in context of the larger business domain in which it operates so that the company does not become myopic in its view of the market (Levitte 1965). Figure 1 below illustrates the Blumer/Magner market in relation to the larger business domain of beverages. Figure 1 – Business Domain and Operating Market Analysis Having identified the operating space for the product, some companies choose to target and serve a single segment out of the market by practicing niche marketing strategies while others choose several segments out of the market and offer differentiated offers. Some companies on the other hand do not segment the market but target the whole market with a single offering. Figure 2 below illustrates the different targeting strategies available for a company. Figure 2 – Alternative Market Coverage and Targeting Strategies Segmentation, which is the first step of targeting, divides the market in to distinct groups of buyers with different needs, characteristics or behavior. Next step of targeting involves evaluation of each market segment’s attractiveness and selecting one or more of the market segments to enter (Wisner 1996). In the case of Magners & Bulmers a niche marketing strategy is being adopted. Although segmenting can be based on factors such as demographics or geographic segregation or on economic classifications, the more sophisticated segmenting tools combine above factors with “Key Benefits Sought” (KBS) Analysis. These KBS are dependent on the alcohol content, taste and texture of the cider as well as the image factors. Table 1 below provides the segmentation of the cider market, which can be targeted by Magners/Blumer, based on “Key Benefits Sought” and further qualified by demographic, and Psychographics factors. Key Benefit Sought Age Groups Economic Group Usage Occasion Mind Set High & quick Intoxication drink 18-24 years Low income Sports events, collage parties and other social gatherings and pubs. “A pint that makes you high fast” Economy drink 18-35 years Low income Sports events, House and beach parties, pubs and individual consumption “A pint worth my cents” Social Drink 30 + years Middle income Pubs and individual consumption at other locations. “ Cider is traditional, as also natural” That’s how I like my pint.” From the above three target markets, the Magner is focusing on the Social Drink segment. In this category the product can effectively compete with mild and mid strength beers as well as wines provided the product image is developed to high standards. The Magner image has to change further to appeal to the sophisticated UK premium drinker category. The packaging still falls behind in comparison to appearance of wines. However in future times the company should look at the option of expanding its market through differentiated marketing strategy that merely sticking with niche marketing. Differentiated marketing is justified as it usually leads to greater customer loyalty as different needs of each segment is being met better with different marketing mixes. Furthermore, differentiated market targeting yields greater sales than an undifferentiated approach. ( Kotler & Armstrong) Once the product establish itself as an alcoholic beverage an image same as wine or beer, the strategy should be to offer differentiated products as “Magner Mild” and “Magner Plus”. The “Magner Plus” version can be offered to the segment, which seeks high intoxication at high speed, which comprise of the younger consumers. To appeal to this segment the product should be made available in handy and trendy packaging as pint bottles or in can form similar to beer. Most importantly, to serve the UK consumers who prefer their product in draught form, the product should be introduced through pubs in keg form as “ Cider in a Keg” concept. As this mode of serving closely aligns with Magners unique serving suggestion of “Pint Over Ice” the concept of cider in keg from can be easily adopted to the C&C strategy. 2. Consideration of useful research for C&C The company should commission a qualitative research on the drinking preferences, habits and attitudes associated with the UK consumers. This is important as the company is seeking to change the mindset of the UK consumers of the image of the cider product. In order to undertake such a task, it is essential that the current mindset is properly understood. In-depth focus group research with geographic representation from whole of UK should therefore be commissioned prior to the marketing campaign. In addition to above, C&C should also subscribe to secondary research sources such as media advertising spend for the alcoholic beverages category which will provide the company with information on competitor ad spend as well as their media choices. Mintel’s research report on UK Cider market will also be an invaluable source of information on general trends and growth rates of the segment (Cider UK – 2004). Another useful market research would be focusing on the UK pubs where the demographics of the pub sector as well as the purchasing patterns of consumers from the pubs can be unearthed. Such information will aid the company in planning effective campaigns to capture the UK pub sales. 3. Promotional Ideas for Target Segments Magner needs to successfully position the product as a premium drink with nature, tradition and heritage as its product attributes. In doing so, all facets of marketing mix must be in harmony to ensure that the desired product positioning is achieved, which is the basis to marketing success (Reis & Trout 1981). All modes of marketing communications should convey the same message, which is achieved through Integrated Marketing Communications (IMC) strategy. IMC involves advertising, public relations, personal selling, dales promotions as well as direct and online marketing (Aaker 1996, p.69). Some of the promotional ideas suited for the targeted segment are discussed below: 3.1 Mass Media Advertising Advertising which is considered the strongest element of the communication mix is defined as any paid form of no personal communications about an organization, product, service or idea by an identified sponsor (Belch & Belch 2004). The mediums available include TV, Radio, Press and Print mediums. There is also the bill boards and outdoor signage. Use of television as a means of maintaining brand recognition and reinforcing the brand superiority is recommended. It is common for consumers to associate superiority perceptions with frequently exposed brands with high media presence. The company should bring in the “Pint Over Ice” concept in to all the creative within this segment where the message appeals to the UK consumers who prefer their drink in draught form. The current theme of naturalness, tradition and heritage should be combined with the Pint on ice message. To do this, the product progress can be shown from the C&C’s orchard up to the stylishly designed new premium Magners’ bottle. Then a premium looking crystal glass clinking with ice cubes and Magners Cider being poured slowly over can be shown. The pay off line for these commercials can be “An Icy Pint of Natural Richness ”. As the objective of the communication campaign is to create an image of premium product, the usage occasion too should indicate social gathering, plush pub settings and 30+ age group users with high image. As the product is competing with beer and wines directly the usage occasions can be kept flexible and replicate both beer and wine usage occasions. The key point to support this ad campaign would be the packaging to be improved to give a more premium quality appearance. A memorable closing shot from the TV ad can be modified and used in outdoor advertising with prominence given to product illustrations. The billboards should be strategically located in high traffic exposure areas. 3.2 Public Relations - Sponsorships Public Relations is the management function, which evaluates public attitude, identify the policies and procedures of an organization with the public interest and execute a programs of actions to earn the public understanding and acceptance (Frazier & Canfield 1977). Public Relations function uses a variety of tools such as publicity, involvement in community service projects, fund raising, special sponsorships and various public affairs activities. It is proposed that C&C utilise this mode of promotion by focusing on sponsorship activities, which is an essential element of brand image transferring. Sponsorship activities have the commercial objective of brand awareness and image development (Scott & Suchard 1992). Magners is already sponsoring the successful sports club of London Wasps. Magner should also choose other sports clubs and events, which can be chosen at regional levels. Sponsorships of other community events and social activities are also essential to further the brand image. In addition to above sponsorships, the company should also explore the possibility of sponsoring events related to bar tenders associations and organise events and competitions for the bar tenders and pub staff. This will increase the goodwill of this segment of intermediaries who play a crucial role in the delivery of the product to the consumers. Sponsorships of pub material such as costars, serviettes with Magners’ brand should also be considered as this provides a two-pronged benefit. The consumers are exposed to the brand image even if they are not consuming the Magners brand at the pub and the good will of the pubs with the company also increase, which facilitate the marketing push of the product. 3.3 Public Relations – Tours & Clubs Managing company tours and awareness and entertainment venues highlighting company products and production process as well as history and heritage is an effective promotional tool. Award winning Cadbury World or Walt Disney’s Disney Land is such examples. These can create long-term relationships with customers leading to increased brand loyalty (Aaker & Joachimsthaler 1997). Magners can promote “C&C Orchard and Cider House” Tours where the visitors are given an chance to see how the product is derived from its natural sources and how much time is spent in making the product which will back up the Magners’ claim of premium status. Loyalty clubs and members clubs such as those managed by Harley Davidson or XXXX Beer in Australia are good examples of how customer loyalty can be established. A “Magners Club can be initiated and membership provided with special incentives, competitions and members events to increase brand excitement. Sales Promotions refers to those marketing activities, which provide extra value or incentives to the sales force, distributors or to the ultimate consumer with the aim of stimulating sales volumes. Sales promotions are generally either consumer oriented or trade oriented (Belch & Belch 2004). Advantages of Sales promotions are that it leads to short-term stimulation of sales. Magners can make use of premium coupons and extra or free samples to initiate trial. This is also an avenue to respond to price sensitive customers while maintaining premium-pricing strategies. Free branded items such as caps and T-shirts can be used to entice trial customers. Sales Promotions such as sweepstakes, competitions and draws create customer involvement and excitement, gaining and maintaining top-of-mind brand recall rate at a high stage. 3.4 Online marketing The company’s website can be used as a highly effective tool for interactive marketing communications. This can be used to support, product launches, PR activities, create and maintain members clubs and carryout sales promotions. Direct selling can be also done via the company’s online shop. The site is also used in launching ad campaigns and to gain pre-wetting for the creative content. 4. Budget Forecasts for Proposed Promotional Activities The table 2 below provides preliminary budget forecasts for the proposed promotional activities to support the launch of Magners brand cider in the UK national market. Table 2– Preliminary Communication Budget for year 2006 IMC Tool Details Budget Allocation –Euro Allocation % TV Advertising Production & Scheduling of 30 sec. Advert with new creative theme. Prime time and non prime time programs of selected channels. 6.0 Million 43% Press & Magazines ½ page ads in magazines as cosmopolitan and outback at the rate of A$ 2000 per insertion. 0.5 million 4% Outdoor – Billboards & Signage Outdoor billboards, bus and train branding, outdoor signage, pub signs with logos 1 million 7% Sales Promotions Three sales promotion campaigns including a year end grand draw. 2 seasonal sampling drives. Branded item giveaways as caps, beer mugs, T shirts and coasters 1.5 million 11% Public Relations Sponsorship of club merchandise such as coasters, outdoor umbrellas etc. 0.5 million 4% Social service projects, press conferences, tours for the orchard and cider house and Magners Club events. 1.5 million 11% Sponsorships Sponsorship of sports teams and sports events. Sponsorship of Bar Tenders’ competitions. 3.0 million 21% Total Budget 14.0 million 100% 5. A SWOT Analyses for C&C. A SWOT analysis is an important analysis tool and the findings should be used for developing weakness areas by strengthening the internal deficiencies and building required core competencies. It also allows for identifying opportunities, which the company can exploit as well as the threats, which the company should safeguard against (Duncan, Ginter & Swayne 1998). Following SWOT analysis identifies the Strengths, Weaknesses, Opportunities and Threats for C&C company – the manufacturer of Magners and Blumers Cider. Strengths: The long standing business experience of the company and its success in the beverage marketing field, proven in its home country – Ireland as well as in other international markets such as USA. Wide product portfolio covering alcoholic as well as non-alcoholic beverages, which establish the company in many markets within its business domain of beverages. Own orchards and well developed production process. Being a quoted company, which indicates financial strength and access to capital funds, which may be required for expansions. High ranking Strategic partners such as Young Advertising who has proven its caliber with winning awards such as “Advertising Agency of the Year 1994 in Ireland.” Established brand name of Blumer – in Irish market. Newly improved product with low alcohol content and new packaging . Weaknesses: Cider Products low image in new markets such as UK. Possibly small advertising budgets being disposed in new markets where greater effort is needed to achieve the task of image change of the product category. Lack of highlighting what the marketing team perceives as the key selling point “Pint Over Ice” in the current marketing communications. Ownership of “Blumers brand” in UK market by another company. (Takes away the brand synergy effect which could have been achieved if Blumer was sold as Blumer in international markets as well as in Ireland, instead of being Magner” Opportunities: New markets allowing for expansion. UK market’s preference for beverages served in draught form, which can be compatible to the Magners’ unique serving suggestion of “Pint over Ice.” Growing segments of aging populations, which are the target market for repositioned Magner , the premium cider. Threats: Unstable excise duties can erode profitability. Existing competitors in UK market such as Scottish & New Castle may launch extensive retaliation activities with heavy advertising budgets. Cultural implications of the British who may not be willing to appreciate the Irish heritage or tradition associated with Magners. 6. PEST Analysis for C&C For a company to be successful in crafting and implementing business strategies, a clear understanding of the organisational environment is required (Abell 1980). Influencing factors in the macro environment of the organisation needs to be analysed and understood so that strategies being developed will fit well with the environmental conditions. (Thomson & Strickland 2003). Macro environmental effects can be evaluated with the use of PEST analysis covering, Political, Economic , Social and Technological aspects of Macro Environment (Zeithaml & Zeithaml 1984). Following PEST analysis considers the environmental conditions within which the C&C’s cider brands have to perform. Political factors such as increased free trade, relaxed Foreign Direct Investment policies as well as opening of new markets such as China will allow for greater expansion opportunities for C&C’s international division. However, with the current volatile status in the world political arena marked by increased levels of terrorism may impact on the level of social and sports related events being held which affect the C&C’s product consumption. Some countries may also resort to boycotting Irish products as was the recent case where Danish products were boycotted by many Islamic countries over the cartoon controversy. Government stance on cider is also important as increased duties and excise taxes will erode profitability. Economic factors needing consideration involves the increasing level of per capita spending power across the world and how people move away from cheap product options to premium products. On the other hand, changing employment patterns such as contract employments, part time and freelance arrangements where job security is no longer a standard offer in employment provides less financial stability. This may reduce the peoples’ propensity to spend on products such as premium alcohol (Armstrong & Kotler 2000). However this increasing per capita income has favourable potential where developing countries are being considered. These countries may consider cider as a premium product compared to their home brewed product. The globalization and increased free trade across the world is putting pressure on price offers as well as creating intense competitions. The supply chain can utilise sources across the world thus allowing operations to drive down costs by sourcing from cheapest possible suppliers. Social factors needing consideration includes the changing demographic make up of the society. The increasing aging population of the world means that more and more mature people will be representing the markets. These people do not prefer to be quickly and heavily intoxicated as the younger age groups. . The world in near future will be supporting over 50% of the aged population through less than 35% of productive workforce. The implications on economy in terms of lower levels of income generation will be drastic. Lifestyles today indicate small families, low rates of marriages and many bachelor people. These trends impact on consumption locations and consumption package sizes of alcohol. People today have many modes of entertainment, mainly related to TV and Internet. The outdoor lifestyles and being replaced. Thus, spirit of outdoors and sports associated with alcoholic drinks such as beer and cider may be less influencing. Technology factors needing consideration includes the widespread use of Internet, which facilitates online exposure to branding of the product. It also affects most people’s propensity to go out and enjoy social events and facilitate what is termed “cocooning” effect where people are having the impulse to stay within their homes as outside world gets dangerous and unsafe (Popcorn & Merigold 1997). The new developments in the industry should also be considered. State of the art manufacturing facilities are being utilised by many companies in brewing industry to keep costs down through increased productivity and efficiencies. New packaging developments are also to be considered under technological developments. Use of online marketing tools available through improved telecommunications systems should also be taken in to account. References Aaker, D. A & Joachimsthaler, H. (1997) “Building Brands without Mass Media,” Harvard Business Review. Jan-Feb. pp.39-50. Armstrong, G. & Kotler, P. (2000) Marketing: An Introduction, 5th ed. Singapore: Person Education Inc. Belch, G. E. & Belch, M. A. (2004) Advertising & Promotion: An Integrated Marketing communication perspective. Illinois: Irwin. Duncan, J. W., Ginter, P. & Swayne, L.E. (1998). Competitive Advantage and Internal Organisational Assessment. Academy of Management Executives, Vol.12, No 3. pp. 6 –16. Levitt, T. (1965) Exploit the product life cycle, Harvard Business Review, vol 43, November-December , pp 81-94. Smith, G. (2004) “Brand Image Transfer Through Sponsorship”, Journal of Marketing Management, Vol. 20, no 3-4, pp. 457-474 Scott, D. R. & Suchard, H. T. (1992) “Motivations for Australian Expenditure on Sponsorship- an analysis”, International Journal of Advertising, Vol.11, pp.325-332 Thomson, A. A. Jr. & Strickland, A. J. (2003) Strategic Management Concepts and Cases, 13th ed. New York: McGraw-Hill Publishing Company Ltd. Wisner, B. (1996) Applied Marketing. New Jersey: Prentice-Hall Inc. Zeithaml, C. & Zeithaml, V. A. (1984). Environmental Management: Revising the Marketing perspective. Journal of Marketing, spring. pp. 44-53. Popcorn. F. & Lys, M. (1997).Clicking. New York: Harper Collings. Read More