Marketing Plan for Aire Valley Breweries Plc - Coursework Example

INTRODUCTION Marketing plans seek to guide the organization’s marketing team on the achievement of their departmental objectives that are derived from the overall corporate strategy. These plans seek to provide the marketing teams with various strategic approaches towards their objectives especially in dynamic business environments. In developing marketing plans, five stages are taken into consideration namely; situation analysis, marketing objectives, market analysis, market exploitation tactics and marketing controls. This paper seeks to develop a marketing plan for Aire Valley Breweries Plc as it strategizes on entering the Chinese market with its various products. THE STRATEGIC TRIANGLE The Company Aire Valley Breweries Plc is located in the Aire Valley Leeds that is an investment area identified by the UK government towards improving the region’s economic performance. The company operates in the UK beverage market as a manufacturer of various bottled premium beers, lagers and stouts. Majority of these products are consumed nationwide as the company solely operates in the UK. Aire Valley Breweries has consolidated its UK market by offering five major beer brands namely; Hostenbeck. European style lager beer, San Bernardo European style lager beer, Camelot British style dark bitter beer, Camelot British style dark bitter beer and Pot of Gold Irish style dark stout beer. These beer brands have different alcohol content and taste that seeks to ensure consumer satisfaction. Despite having the right market segmentations, the company incurs increased manufacturing costs due to the lack of inefficient internal business processes. This inhibits the company’s ability to maximise their operational revenues although it adopts effective marketing strategies (Worthington & Britton 2006, p28). The company’s beer products are sold at affordable prices both at supermarkets and up-market entertainment spots. Customers The company’s beer products target the high-end consumers that have a taste for hard drinks. The beers are manufactured in three major categories that are premium beers, lagers and stouts. Consumers therefore have a choice in their preferred beers drink that the company offers. Aire Valley Breweries has segmented its consumers depending on their drinking capabilities. Due to this segmentation, the company manufactures various beers with different alcohol content although they are higher than the average alcohol content for local Chinese beers (Euromonitor 2009). On the other hand, the company packages its beer products in three major quantities namely 260ml, 240ml and 500ml. With these quantities, the consumer has a choice in their alcohol consumption and they therefore enjoy their beer drinks responsibly. The company’s beer products are made available at supermarkets and upmarket bars thus emphasizing on the company’s focus on high-end consumers who often flock these facilities for entertainment among other purposes. Competitors The Aire Valley in Leeds is a region set aside by the government to encourage investors in creating wealth in the region. Competition in the region’s beverage market is high due to the simple and flexible regulatory requirements accorded to the region. As a result, the company has decided to venture into foreign markets and is considering the Chinese beer market. Large-scale beer manufacturers have monopolised the Chinese beer market as they utilise the economies of scale and hence reduced manufacturing costs. Competition in the Chinese nation is regional and thus the company will have to face the regional competitors. According to Food&Drink, local manufacturing companies are in a dominance tussle with imported beer products that have resulted into unethical business practices (2003). However, local Chinese alcoholic drinks still dominate the beer market compared to the imported drinks (Euromonitor 2009) SEGMENTING THE CHINESE MARKET According to the Wall Street Journal Reports, the Chinese beer market is the second largest as China occupies the second position in beer consumption. This increase in beer consumption has relatively increased the nation’s beer production capacity. In 2008, China was the highest beer producer worldwide with 41.03 million tons (China Research and Intelligence 2009). Beer production in China is regional whereby local beer companies seek to dominate the local markets and avoid competition from beer companies operating in other regions. The Chinese beer industry has an excessive production surplus of 40 per cent that has resulted into the development of price wars, unfair competition and unethical business practices. It is expected in the future that the Chinese beer industry will be dominated by the large-scale manufacturers as they take advantage of the economies of scale and their financial capabilities. Year Litres (m) Annual Growth (%) 2007 32035.83 10.04 2008 33459.42 4.44 2009 34904.69 4.32 2010 36371.73 4.2 2011 37860.59 4.09 Fig. 1: Forecast Retail Market Vol. for Beer in China, 2007-2011. Retrieved from Business Insights 2006 Geographical Segmentation Considering the aforementioned factors, Aire Valley Breweries should seek to tactfully exploit the Chinese beer market. This market can be segmented depending on the operational regions that have not been dominated by a single beer company. This region is the North West that the beer manufacturing companies have had no interest in. By seeking to penetrate these regions, the company is certain of an unexploited beer market and hence establishing itself. Local beer companies will tap into the market once the company indicates the region’s beer market potential. To mitigate the competition effects, the company should seek to achieve consumer loyalty and ensure sustainable operations (Baker & Hart 2007, p98). Demographic Segmentation The northwest region is the least populated and relatively underdeveloped compared to the other six regions hence presenting unprecedented market opportunities (RedOrbit 2005). However, the region has attracted majority of foreign investors due to its growth potential and thus its diverse cultures. Children constitute 45 per cent of the local populations with the middle aged constituting 35 per cent. With this in mind, the company should seek to provide affordable beer products in these markets as they seek further penetration in the market. According to China Research and Intelligence, future predictions of the Chinese beer market indicate a monopolistic trend with dominance from the large-scale manufacturers (2009). These manufacturers are partly owned by foreign investors hence their increased financial capabilities. With market dominance and loyalty, local companies will seek to manufacture the beer product under a franchise agreement with Aire Valley Breweries Plc. 76 per cent of the middle-aged population comprises of married couples who are in their early thirties. Behavioural Segmentation Majority of the middle-aged population are casually employed in agricultural farms and this provides them with adequate time to engage in fun-filled activities. The youth like to spend their days at designated places and engage in discussions while enjoying their favourite drinks. During the evenings, the middle-aged flock entertainment spots to unwind their day by watching sport action (RedOrbit 2005). Aire Valley brewing plc can therefore target this market by availing their products in the entertainment spots and engaging the local youth in productive activities as part of their CSR. MARKETING PLAN Target Market The company seeks to establish itself in the northwest region of the Chinese nation whereby the target market comprises of the middle-aged population. Adults aged 21-45 years account for 35 per cent of the region’s population (Food&Drink 2003). By targeting this age bracket, the company seeks to avoid violating the 21-years minimum drinking age. At this age, individuals are considered mature enough to make sound decisions pertaining to their behaviours and morals. By entering the Chinese beer market, the company should observe the local laws and ensure its cooperation with the Chinese government. Failure to observe the local policies will be highlighted as a weakness by the competitors and thus provide them with an opportunity to forcefully wind up the company’s activities in the region. Majority of this age bracket is made up of young adults that frequent entertainment spots in the evenings hence providing the company with a substantial consumer base. At the commencement of the company’s operations in Northwest China, the company ought to inform the local population of the company’s products in the local market. This requires the choice of an appropriate advertising medium that communicates to the target consumers. They include a combination of the print and electronic media with an aim of convincing the consumers to try the product. Posters at the local entertainment spots can prove to be effective to consumers that are not loyal to any of the beer products already in the market (Baker & Hart 2007, p49). Print and electronic media might not be effective in luring the target consumers in consuming the company’s beers available in the market. This may be caused by poor layout of the advertisements and inaccuracy of the advertisement’s content. To complement these marketing efforts, the marketing manager should consider offering incentive products to consumers that purchase the beer products. Considering the income constraints evident among the target consumers, the company should consider providing freebies to their consumers as a way of achieving their loyalty. These incentives in turn increase the product’s consumption levels as well as their production hence being able to satisfy the market. In marketing, communication between the seller and the buyer is very vital towards the achievement of the marketing objectives. Aire Valley Breweries should seek to maintain open communication lines with their consumers to ensure sustainable operations within the region (Rix 2007, p117). This can be in form of newsletters and emails that establish viral marketing where the consumer assists the manufacturer in developing their product’s quality. The target population can really assist in this since they are technologically savvy and may prefer a product that identifies with their personalities. MARKETING MIX Price Price plays a great role in luring or repelling consumers to a product during the execution of the marketing strategy. In highly competitive environments, participants turn to price wars as a method of attracting customers to their products (Weinstein 2004, p38). However, in setting the price of a product, the company ought to consider the various costs incurred in the production process and a reasonable mark up. Towards this end, the efficiency of the company’s production process has a great impact on the product’s market prices. Rix suggests that efficient internal operations reduce the company’s production expenditures and hence directly impacting on the company’s products (2007, p32). However, companies should not trade in quality and value for price as this will reduce the satisfaction levels among consumers. Consumers prefer deriving value for their money through the consumption of quality products. To influence the consumer’s purchase decision through price, the company can reduce the package quantity of their beer products. Place Towards encouraging product consumption, the company should ensure the availability of their products on the market. Consumers tend to disapprove on-and-off market products and therefore the company should ensure constant supply of the beer product in the Chinese market. Shipment and custom arrangements should be made in advance to avoid major hold-ups at the port due to un-cleared custom fees. To ensure adequate supply of the beer products, the company should establish effective distribution channels that are cost efficient and timely (Worthington & Britton 2006, p130). This requires the identification of a local distributing company that can access the products from the ports and distribute them across the Northwest region of the nation. The distributor will be compensated on a monthly basis depending on their distribution performance over a given time frame. This will facilitate performance evaluations and resultant decision making on their value in the distribution chain. Additionally, the distributing firm will be required to own trucks and storage facilities that the company will hire over the contractual period. This will ensure that the products are locally available for their supply as the firm seeks to establish a centralised distribution channel. The owners of entertainment spots across the region will be able to place orders and have them delivered to their establishments promptly. % Retail Sales 2000 2006 Licensed Individual Stores 56.23 51.27 Supermarkets & C-stores 33.84 38.37 Department Stores 2.37 1.83 Farm Supply Shops 0.51 0.45 Other Food Shops 7.06 8.08 Total 100 100 Fig 2: % Breakdown of Retail Alcoholic Drinks Sales by Outlet Type, 2000-2006. Retrieved from Business Insights 2006 Product Most beer products in China are locally manufactured and have a rich Asian taste since they target the Asian population. Aire Valley Breweries is involved in the manufacture of European, British and Scottish beer tastes that will give the local inhabitants a different taste. The products come in three major categories that are premium beer, stout and lager. The rich western taste will provide a major characteristic of the company’s beer product’s promotion strategy. Majority of the Chinese population consumes premium beers and thus the company should consider aggressively promoting their lager and stout brands (Food&Drink 2003). Promotion The choice of the advertising medium is directly related to the target market and its various characteristics. Baker & Hart (2007, p78) state that promotion strategies should be derived from the market segmentation exercise that identified the various market characteristics. Consumers within the target group should be able to deduce the presence of the product in the market from an advertisement carried on in the media. Print media will inform the local population about the company’s products due to their aesthetic appeal. Place Price Product Promotion Fig.3 Marketing Mix Elements The four elements of the marketing mix will be successful as they seek to reduce operational costs while generating substantial revenue for the company from its foreign operations. References Baker, MJ & Hart, S 2007, The Mkting Bk 5TH Ed., New York: Butterworth-Heinemann. Business Insights 2006, Beer in China, Retrieved on Dec. 11, 2009 from < http://www.globalbusinessinsights.com/content/rbaa0012m.pdf > China Consulting 2008, China Beer Mkt Rprt, 2008, Retrieved on Dec. 11, 2009 from < http://www.researchandmarkets.com/reportinfo.asp?report_id=613722 >. China Res. & Intelligence 2009, Res. Rprt on Chinese Beer Industry in 2009, Retrieved from < http://www.marketresearch.com/product/display.asp?productid=2401676 > on Dec. 11, 2009 Euromonitor International, Beer in China, Accessed on Dec. 11, 2009 from < http://www.euromonitor.com/Beer_in_China > Food&Drink 2003, Premium Opport. in Chinese Beer Mrkt, Accessed on Dec. 11, 2009 from < http://www.foodanddrinkeurope.com/Consumer-Trends/Premium- opportunities-in-Chinese-beer-market >. Nanyang, C 2009, China Beer Industry: Big Beer Makers Vie for Chinese Brewers, Accessed on Dec. 11, 2009 from < http://emerging-business- markets.suite101.com/article.cfm/china_beer_industry >. RedOrbit 2005, China’s Northwest Region Has the Fastest Pop. Grwth, Retrieved on Dec. 11, 2009 from < http://www.redorbit.com/news/science/200613/chinas_northwest_region_has_fastest _population_growth__agency_report/index.html >. Rix, P 2007, Mrkting: A Practical Apprch, Sydney: McGraw-Hill Austr. Weinstein, A 2004, Hndbk of Mrkt Segmentation, California: Routledge. Worthington, I & Britton, C 2006, The Bus. Environ., New York: FT Prentice Hall. Read More