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Market and Competitive Analysis - Introducing Blue Moon Beer to Chile - Research Paper Example

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The paper "Market and Competitive Analysis - Introducing Blue Moon Beer to Chile" highlights that the strategic choice of the city of Valparaiso will ensure the location of the warehouse in the proximity of the port to avoid extra charges for transport from the port to the warehouse…
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Market and Competitive Analysis - Introducing Blue Moon Beer to Chile
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25 April Market and Competitive Analysis - Introducing Blue Moon Beer to Chile. Executive Summary Chile is a country placed inthe Southern part of South America bordering Bolivia, Peru and Argentina. Its predominant transport mode is by road while communication is by telephony. Valparaiso city is located in central Chile and approximately 80 miles to the northwest direction of Chile’s capital city, Santiago. Chilean beer consumers have unique preferences that have revolutionized from the traditional chicha to the currently predominant pale ale and lager. Craft beer has for a long time been in existent, though its market share and consumer population has stagnated for a some while, maintaining only loyalists and few new loyalists. Chilean three-tier distribution ensures that the consumer gets his or her beer from the nearest retail outlets. Distribution channels by Blue Moon need to be based on the local modes to ensure competitiveness. The popularity of the distributed beer brands in Chile is based on the company’s advertising and promotion power, encompassed with a perfect pricing strategy that would edge out any competition. The predominant competitors that Blue Moon Beer is bound to get would arise from beers from two brewers: Compania Cervecerias Unidas (CCU) and Cervecerías Chile. Government regulations are another aspect to be highly considered during the establishment of a market share for Blue Moon Beers (Canadean Ltd, 4). In order to come out as a viable competitor among the growing beer market holder in Chile, Blue Moon Beer has to put into considerations all the discussed aspects. This could only be achieved by installing a reliable management team, failure of which Blue Moon Beer’s failure could be imminent. I. Introduction Wine has for a long time been the predominant alcoholic drink consumed in Chile. Chicha, the representative of the traditionally and locally brew in Chile followed next in the pecking order of alcoholic drinks popularity. However, the mid 21st Century has seen a revolution in the alcoholic drinks market where beer started to take a higher market share of total alcohol sales. Beer growth sells eventually overtook other alcoholic drinks sales in 2010 to sale over a half the percentage with a figure of approximately 54% alcoholic market share. This increase was a further increase of the already record breaking 49.4% back in 2009. The above stated statistics were favorable enough for our team to introduce a new beer brand in the Chilean market going by the name Blue Moon Beer. This brand of beer would be imported into Chile to add on the list of other imported beers that were largely referred to as premium beers in the country. The initial market launch will focus on the city of Valparaiso due to its proximity to the ocean and thus port facilities. This limited focus of marketing Blue Moon Beer will give a good scope to make a good evaluation of the acceptance of the beer brand and further analyze the preferences of drinkers so as to improve the brand before its nationwide launch. II. Blue Moon Beer Blue Moon Beer is a Belgian-style beer brand brewed by the Blue Moon Brewing Co. in Colorado, US. This brewer was launched in the mid 20th Century around 1995, and its current ownership is divided between two international beer brewers: MillerCoors based in Chicago and Tenth and Blake Beer Company. The beer is classified as a witbier, a class of beer that are fermented from wheat and yeast suspension the flavored by various types of gruits, describing a variety of spices and flavors that include orange and coriander. The beer has a color bordering on amber and orange and its flavor has a pronounced taste of orange than most of the other beers in its categories. The predominant bitter taste is present in Blue Moon, a character that most wheat beers contain. Blue Moon Beer is highly nutritious and has balanced contents of 171 calories, fats, sodium, carbohydrates, proteins, vitamins and minerals in appropriate measures and an alcoholic content of 5.4%. Its packaging is done in bottles of 355 milliliters, cans of varying sizes and keg. The outer package cover has the beer’s brand name in blue, the description of the type of beer, alcoholic content, restriction age of drinking and the brewers contact information. III. The Market A. 1. Description of Chile and the City of Valparaiso Geographical Regions Chile is a country located geographically in the Southern part of South America. The country forms a strip of land on the left side of the South American continent with an aerial view made of the country on a map or an Atlas. Chile is bordered between Peru and Bolivia on the northern side and the rest of its border, which is the majority, is bordered by Argentina. The borders of Chile stretching from the north to the south parallel to the South Pacific Ocean make it one long country, if at all such a description could be allowed geographically. Valparaiso, the targeted city of focus for Blue Moon Beer marketing is one of the largest cities in Chile with a population of 865,000. The city is located in central Chile and approximately 80 miles to the northwest direction of Chile’s capital city, Santiago. Valparaiso is an important city in the economy of the country as it hosts a significant port facility for the country where most of its imports dock and in return, goods freighted for exports. This was the major reason that the city was chosen for the pioneer launch of Blue Moon Beer that was to be largely imported from its brewers in North America. A. 2. Forms of Transport and communication available in the Region Road transport is the dominating transport mode of transport in Chile. The length of Road coverage is a total of 80, 505 kilometers, a distance to be appreciated as it covers a huge part of the country. The Pan-American Highway, running the whole length of the country, plays an important role in road transport in Chile It is the most preferred to its speed and efficiency in both human and freight delivery. Rail transport in Chile is the 4th largest rail system in Latin America and covers 7,082 kilometers. This mode of transport is still favored in some business entities; however, low speeds have given roads an upper hand in transportation. Ports are a strategic modes for transport majorly used for imports and exports. Chile has ports in San Vicente, San Antonio, Puerto Vertanas, Coronel, Huasco, Lirquen and Valparaiso. The location of the port at Valparaiso make the city a perfect city for a pioneer role in Blue Moon Beer market in Chile Communication in the country is mainly done through telephones, mobile handsets, the internet, radio and television. Telephones was recorded back in 2010 as having 3.458 million users in the country Mobile handsets reportedly had 19.852 million subscribers in 2010 In 2009, Chile realized 7.009 million internet users while 1.854 hosts were recorded in 2011. Television stations and Radio stations are numerous in numbers given private ownership, with the number of radio stations having the possibility of surpassing the 250th mark. A. 3. Consumer Buying Habits\ a. Product-use patters Most beer is drunk in the evening hours and during a large part of the weekends when most Chileans are off-duty as beer in most cases is prohibited at work places. Most beer is purchased from recreation centers, entertainment joints and other retail outlets in direct contact with customers. These beer sales account for more than 70% sales of beer given the large population in cities. 89% of Chileans live in cities. The most predominant age group drinkers is 20 to 30 years In the current scene on average, each Chilean drinker takes in 36 liters of beer In 2012, the beer market in Chile generated revenues worth $1.1 billion that accounted for 3.3% of the Compound Annual Growth Rate, an important economic aspect. Most of the old beer drinkers prefer craft beer while the younger age that is the majority is trendy with premium beer brands. b. Product feature preferences Pale ale is the most preferred beer in Chile Craft beer is preferred by the old loyalist guard Packaging and advertising modes influence a lot in the way the younger generation consume beer, with most going for the brands that appear to be most trendy. Preference is mostly on locally made beers by the two domineering companies, Compania Cervecerias Unidas (CCU) and Cervecerías Chile. c. Shopping Habits Most beer is purchased in retail outlets that include bars, supermarkets and other retail joints. This is given the proximity of these outlets to the consumers rather than pursuing the middle men or brewers. Sales recorded from retail outlets account for over 70% of all the beers sold. The remaining percentage is directly sold by distributors to large scale beer consumers, a scenario that gives expense advantage to the customers. This is however possible to only those lucky to be in the surrounding of a nearby distribution centre. A. 4. Distribution of the product a. Typical Retail Outlets Bars, restaurants, small beer shops and supermarkets form the main typical retail outlets. Social gatherings also sprout retail outlets given the need for beer access in such environments. b. Product Sales by other middlemen Chile is a liberal and secular country and thus the essence of the middle-man only appears in the sense of distributors: Various competitive distributors of beer act as middle-men between retailers and brewers, thus in a way influencing the price of the beer to the consumers. S The internet has limited or no use at all in the beer market scene apart from advertisements, promotion and communication where the internet is exceptional at doing. A. 5. Advertising and Promotion a. Advertising Media usually used to reach target market Television is the dominant advertising mode. This is given statistics that show 88.6% having access to colored television, 60% of whom have access to satellite or cable television. This statistics give a high advantage of viewership for the advertisements. Generally, television in Chile in the year 2009 accounted for about 54% of advertisements. Print media (newspapers and magazines) form the next biggest advertising mode. Chile has close to 100 newspapers and even more magazines published. Combined, these two account for 28% of the whole advertising. Radio comes at a distant 3rd despite its popularity. It accounts for only 7.5% of all advertising. The internet is last as it only accounts for 3% of all beer and other merchandise sales. Promotions have been practiced by most beer makers in a bid to attract new consumers and maintain old ones. These include: Contest incentives where consuming of different types of beers could put one in a position to win prize money or other gift packages is the dominant promotion strategy Most brewers especially the big two, sponsor events and market their beer brands in these platform During festive seasons, many bonus packages emerge in a bid to lure customers A. 6. Pricing Strategy a. Customary markups Chile’s tax system is not harsh on imports. Beer is categorized as a luxury import and thus incurs a 15% tax after access within the Chilean market. In addition to this markup, a 19% value added tax that every other domestic product is subjected to is also added to the beer products. b. Types of Discounts Available Discounts in the beer market in Chile are brewer-imposed and not dictated by just any source. This gives power to each brewer in deciding whether to impose discounts or not. Mostly, discount is imposed due to promotion purposes. However, the Chile beer market regulations are friendlier to allow such occasional discounts to ease the pressure on the consumer. B. Compare and contrast your product and the competition’s product B.1. Competitor’s Products a. Brand names The main competitors of Blue Moon Beer are beer brands from Compania Cervecerias Unidas (CCU) that owns 80% of the market share. The famous beer brand names from this company include Cerveza Cristal, Royal Guard and Escudo. b. Features and Package Cerveza Cristal: this is stout beer that is made in three plants in Chile namely Santiago, Antofagasta and Temuco. It has a unique flavor that is full of nutrition and is dark brown in color. It is packaged in 355ml bottles with the brand name, company, age restriction and company details. Sits retail price is approximately $2.85. Royal Guard: This is pale lager that has a light golden color and a flavor of sweet and pale malt with an allusion of dough. However, it lacks bitterness than most pale lagers have. It is mostly packaged in an aluminum can that comes in a variety of colors and general information about alcoholic content, nutritional levels and other company information around the brand name. This beer is priced at an average of $3.40. Escudo: this is described as the best pale lager in Chile. The high content of corn makes it have a unique blend and flavor favored by most beer drinkers. It has a pale yellow color and is packaged in dark brown bottle with a unique shape from the other CCU beers. B.2. Competitor’s Prices The average prices f the CCU beers falls at $3.00 per 355ml of beer. This is competitive price that would have Blue Moon start at a friendly price in order to stay in competition. B.2. Competitor’s Promotion and Advertising Methods CCU uses three main advertising means: Television, which it has purchased most prime time to advertise its beers. This is given its large financial capacity that it strives to market itself in a thorough way. Print Media: CCU buys up considerable space in newspapers and magazines to advertise to over 10 million daily newspapers and magazine readers. CCU has of late started utilizing social media through the internet to attract the young customers and also people from the corporate world having internet skills. Events Promotion: This is the main way that CCU promotes its brands. It uses its huge financial advantage to sponsor numerous events while marketing itself among the population. Consumer Incentives: CCU puts up several incentives and prizes to be won on its various beer products so as to improve sales. B.4. Competitor’s distribution Channels CCU, based in Valparaiso, has several independent distribution chains all over the country. the amount of beer it sales has ensured that it doesn’t have independently run distributor names, however, the company uses some of the subsidiary microbrewers it has acquired to sometimes distribute its beer products. C. Market Size C.1.Estimated Industry sales for the planning year CCU through its beer brands in 2009 held an annual market share of $880 million. This was a whole 80% of the entire beer market in Chile. The entire industry sales amounted to 165000 million liters. With a growth rate of 2.2%, the industry sales are approximately 363,000 million liters. C.2. Estimated sales for your company for the planning year Given the target of Blue Moon Beer, it would be expected that at least it would have compared to an eight of the leader in the market. After calculations, this gives a figure of 45375 million liters and sales of about $110 million. D. Government participation in the marketplace 1. Agencies that can help you The Chilean beer market is liberal and independent. There is therefore no third party influence and thus the company will ensure to send representatives to wind up with the process before importation resumes. 2. Regulations you must follow Standards of the imported goods should satisfy the standardization board of Chile and stamped with a standardization Mark. Tax that importers are subject to will be fully complied Importers will observe the VAT that is imposed on all domestic products in Chile Importers shall allow access of goods by government scientists to test for standard compliance Imported products shall comply with copyright, patent and intellectual property rights in the country E. Channels of Distribution 1. Retailers: these are a must inclusion in the distribution channel in Valparaiso as they form an important link with the customer base. There is thus high likelihood that they are bound to market the Blue Moon beer effectively in order to get profit too. a. Type and number of retail stores Food Retailers: 33,163 outlets 254 supermarkets 30,609 small scale independent grocers 2,300 food specialists b. Retail markups for products in each type of retail store 35% markup on alcoholic and other luxury products 19% markup on all domestic products 6% markup on essential exports c. Methods of operation for each type (cash/credit). Both cash and credit are accepted on all platforms whether independent or dependent in order to promote business. The credit, however, has a catch where a set date should be duly obeyed and the appropriate dues paid in time. d. Scale of operation for each type The small retail and food distributors are the biggest gainers given the majority middle class in the city and in the larger Chile. This, however, doesn’t dismiss the performance of the medium and sized distributors that are favored for large scale purchasing for cheapness. 2. Wholesale middlemen Given the manipulation that middlemen engage in, the pioneer project will not involve any of them. a. Type and number of wholesale middlemen Non-durable goods : 200 Durable goods : 435 b. Markup for class of products by each type Imported beer has markup of 34%. Other imported essentials have markup of 25%s c. Methods of Operation for each Credit can be applied all the way down the chain with the assurance of payment as long as there is business continuity. d. Scale of operation Large scale of operation will be used by distributors to ensure maximum sales. 3. Import/export agents Liberal market flexibility will ensure employment of company agents imported from company premises to work with local agents to foster a good image of the beer brand. 4. Warehousing a. The warehouse will be a fully furnished building with refrigerators to preserve the beers as they await distribution in the city. Given the size of the city, the beers will have to be redistributed to ensure equality in distribution throughout the various city wholesale agents. b. Location The strategic choice of the city of Valparaiso will ensure the location of the warehouse in the proximity of the port to avoid extra charges for transport from the port to the warehouse. Works Cited Canadean Ltd. Chile Beer Market Insights 2011. Daneshill: Canadean Ltd, 2011. Beal, Anne. Strategic Market Research: A Guide to Conducting Research that Drives Businesses. New York: iUniverse Star, 2010. Stevens, Robert, Loudon, David, Sherwood, Phillip, and Dunn, Paul. Market Opportunity Analysis: Text and Cases. Washington: Routledge, 2006. Read More
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