Strategic Marketing Plan - Harnessing the Lost Alco Pop Market Share - Case Study Example

10/6/2011 Strategic Marketing Plan Harnessing the Lost Alco Pop Market Share Student No: Name of Supervisor: Name of Student: Executive Summary The Strategic Marketing Plan was developed by a team of marketing managers from a major Australian alcoholic beverage firm in order to recapture the lost market share engendered by exodus of consumers once the excise tax was introduced to the RTD category. This market share consists mainly of 18-30 year olds. A market analysis of this group showed that about 53% of this age group prefer spirits as their alcohol of choice, although when broken down into gender populations, the females have a preference for bottled wine and the males for full strength beer. A significant proportion of both populations do consume wines and spirits however. Hence, the strategy developed involved innovation of a new cocktail product that is fortified with vitamins in order to cash into the new ‘trendy’ cocktail culture and deal with negative publicity that sees alcohol as bad for health. The strategy would be implemented via targeted marketing. Contents Contents 2 Table of Figures 3 Introduction 4 Business Definition and Scope 4 External and Remote Environment 5 Economic/Socio-Cultural/Politico-legal/Technological/and Natural Environment Forces 7 Market Review/ Competitive Review/ Distribution Channels/ End User Customer Supply Critical Success Factors. 7 Swot analysis 9 Marketing and Non-Marketing Capabilities 9 Marketing Objectives and Higher Level Marketing Strategies 10 1. Grow our share of the spirits market that is experiencing a rise in profitability due to emerging ‘cocktail culture’ 11 3. Targeted marketing to various consumer segments. 12 4. Undertake a major IT infrastructure development to reengineer business processes and create a world class operation system. 14 5. Expand Customer Relationship Capabilities 15 6. Sustainable Business Platform 15 Budget 15 Implementation and Control Tactical Marketing Strategy 16 Ethical Considerations 16 References 17 Figure 1: a snapshot of alcoholic beverage industry statistics. 5 Figure 2: Segment Mix Share (Volume) 6 Figure 3: retail share off premises 8 Figure 4: Preference for selected alcoholic beverages by year, proportion of the female population, Australia 2001-2007 12 Figure 5: female oriented drinks 13 Figure 6: Preference for selected alcoholic beverages by year, proportion of the male population, Australia 2001-2007 13 Figure 7: male oriented advertising 14 Strategic Marketing Plan Harnessing the Lost Alco Pop Market Share Introduction As the Marketing Manager team for this alcoholic beverage company we are tasked with creating an innovative plan to regain the lost market share of the total alcoholic beverages group which occurred on introduction of excise tax to the Ready to Drink category of drinks. We intend to accomplish this aim with the following plan. Business Definition and Scope The firm has a corporate strategy which consists of the following pillars. i. Creation of Value: this will be done through our innovative products that will create its own niche in the market within the 18-30 age group using the trends seen in introduction as a guide. ii. Configuration: being a major alcoholic beverage firm in Australia, we have a wide geographical reach together with a multi-market scope in straight spirits, cider, wine, RTDs and beer. iii. Coordination: with every sector managed under its own team with the whole brought together under one overall general manager there is individual attention paid to every division whose target market segment is diversified. Our corporate strategy consists of three tiers: Business innovation; to create horizontal expansion into the 18-30 year old segment. Vertical integration; in order to facilitate forward and backward expansion. Geographic Scope; expansion into more geographical locations and export. External and Remote Environment The main alcoholic beverages in any country is produced by a collection of local manufacturers who cater to the prevailing tastes and traditions of the domestic market. Most of these beverages are not exported but the government keeps records of their usage for tax purposes. Figure 1: a snapshot of alcoholic beverage industry statistics. Market Structure The alcoholic beverages market in Australia is worth around $16.3 billion, and comprised of the following major sub-categories/segments: beer, cider, wine, RTD’s and straight spirits. Figure 2: Segment Mix Share (Volume) Segment Margins The highest percentage gross margin segment in the alcohol market is straight spirits, followed by cider, wine, RTD’s and beer (in that order). Alcohol Consumption Patterns amongst Australians Frequency 1991 1993 1995 1998 2001 2004 2007 Daily 10.2 8.5 8.8 8.5 8.3 8.9 8.1 Weekly 41.0 39.9 35.2 40.1 39.5 41.2 41.3 Less 30.4 29.5 34.3 31.9 34.6 33.5 33.5 Ex-drinker 12.0 9.0 9.5 10.0 8.0 7.1 7.0 Never 6.5 13.0 12.2> 9.4 9.6 9.3 10.1 Table 1: Frequency of alcohol consumption, proportion of population As can be noted from the table, the trend seems to favour an overall reduction in drinking habits although not to a significant degree except for the weekly drinkers whose consumption has stayed fairly constant. Economic/Socio-Cultural/Politico-legal/Technological/and Natural Environment Forces Alcohol is a big part of Australian culture, especially of the young. This consumption is influenced by social, individual and marketing factors (Donovan, 1997) such as being a member of social groupings at which alcohol is served, peer pressure to indulge at social gatherings and the perceived social advantages of drinking (Abbey, Scott and Smith 1993). Marketing factors that influence alcohol consumption include innovation in product design and packaging, discounts and promotion (Gentile et.al., 2001). 53% of the 20-34 year old age group and 30% of the over thirty fives prefer spirits as their alcohol of choice. Older adults tend to prefer wine and low alcohol beer (AIHW, 1999). There are differences in alcohol consumption for different regions. Rural and remote areas report a consumption of alcohol inversely proportional to size of population (Strong et al 1998). Market Review/ Competitive Review/ Distribution Channels/ End User Customer Supply Critical Success Factors. The Australian wine industry can be depicted as a monopolistic competitive industry where a variety of producers have unique products with a low cost of entry and exit. Beer and potable spirits on the other hand are in an industry best described as differentiated oligopoly which means the producers are few and the costs of entry and exit are high. Distribution Channels The alcoholic beverage market in Australia is divided between two major distribution channels: retail liquor outlets/off-premise and on-premise outlets. On-premise sites account for around 25% of alcohol sales (volume) and the remaining 75% of volume sales are through off-premise sites. This implies that we would concentrate most of our distribution channels in the off premise sites especially the big bottle shops as they seem to do the largest volume of business, followed by the supermarkets. Figure 3: retail share off premises The Key Success factors when it comes to end user supply include: Assured supply of crucial raw materials. Supply of Product to high-profile establishments. Effectual product advertising. Innovation of products. Economies of scope. Financial structure of the company. Swot analysis Strengths: i. Diversified portfolio in product range. ii. Strong research and development department that innovates new products. iii. Strong sales and marketing team. Weaknesses: i. Declining consumer numbers due to health concerns. ii. Negative publicity on violation of Alcoholic Beverage Advertising Code (DSICA, 2003) Opportunities i. Development of innovative alcoholic beverage fortified with vitamins to combat health concerns. ii. Advertising campaign aimed at responsible drinking habits. iii. Targeted advertising using demographic information on preferred beverage for differing groups. Threats i. Legislation aimed at regulation of alcohol advertising in the media (Donovan et.al, 2006). ii. Possible changes to alcohol excise (Bryant 2010). Marketing and Non-Marketing Capabilities This will involve the development capability of company brands in the following ways; Degree and reach of sales team. Customer servicing capability must be high tech and high touch. A national manufacturing capability that is highly efficient as well as a physical distribution capability. Capital allocation in areas where competitive advantage is strongest and fiscal proceeds are maximum. Marketing Objectives and Higher Level Marketing Strategies In order to grow its share in market leadership the firm will aim to promote its core competencies in the manufacture and sale of premium brands, customer service and manufacture and distribution nationally of its products. Primary Outcomes; 1. Grow our share of the spirits market that is experiencing a rise in profitability due to emerging ‘cocktail culture’(Bryant, 2010). 2. Expand the beverage portfolio through an innovative beer fortified with vitamins to combat increased awareness of healthy lifestyles. 3. Targeted marketing to various consumer segments. 4. Undertake a major IT infrastructure development to reengineer business processes and create a world class operation system. 5. Expand important customer relationship capabilities. 6. Ensure that our business platform is sustainable. 1. Grow our share of the spirits market that is experiencing a rise in profitability due to emerging ‘cocktail culture’ Aim: to propel a larger portion of category value and volume across each market segment. How: Merchandise and package development Innovation in cold drink equipment Customized channel offering Enlarge our premium product offerings Outcome: Anticipated market volume enlargement. Achieve a larger share of that amplified market. 2. Expand the beverage portfolio through an innovative beer fortified with vitamins to combat increased awareness of healthy lifestyles. Aim: To gain new clientele and retain those who are affected by the negative publicity depicting alcohol consumption as unhealthy. How: Value addition in the product by addition of water soluble vitamins. Packaging of product to maximise on its attraction as a ‘trendy’ drink. Coupling this with simultaneous advertising to promote healthy drinking habits such as drinking water after every drink and having designated drivers. Outcome: Expansion of consumer base of the younger, trendy generation. Creation of a niche market. 3. Targeted marketing to various consumer segments. Aim: To narrow down advertising messages according to feedback data obtained from analysis. How: Figure 4: Preference for selected alcoholic beverages by year, proportion of the female population, Australia 2001-2007 Figure 5 shows that for females, bottled wine is the drink of choice fairly constantly in the study period followed by spirits and liqueurs. Therefore advertising in this sector would be aimed at female audiences. Figure 5: female oriented drinks Figure 6: Preference for selected alcoholic beverages by year, proportion of the male population, Australia 2001-2007 As can be seen from the table, the preferred drink for males is full strength beer although bottled wine and spirits are not far behind. Figure 7: male oriented advertising Outcome: Increased market share through targeted advertising. Improved customer relationships. 4. Undertake a major IT infrastructure development to reengineer business processes and create a world class operation system. Aim: To streamline corporate structures in order to eliminate waste and improve efficiency. How: Material end-to-end technology development. Outcome: To completely modernise the process from order to cash. Business processes re-engineered to facilitate a more efficient transfer and utilization of information across the total business. Development of shared services capability. 5. Expand Customer Relationship Capabilities Aim: Tailored solutions for customers. How: Amplified focus on product and package segmentation by store using more refined shopper basket analysis Outcome: Increased customer loyalty. 6. Sustainable Business Platform Aim: Ongoing development of social, economic and environmental platforms. How: Via enhanced transparency and accountability of our sustainability programme. A conventional business plan with impetus from Board level through Managing Director and other senior executives across the board. Outcome: Regular reports on the environment, community, marketplace and workplace sustainability platforms. Budget Taking into account the proportion of market share we intend to gain back and the large outlay needed for our programmes, we are looking at 5% of the company’s strategy budget. Implementation and Control Tactical Marketing Strategy The marketing strategy will be implemented in four phases; 1. Innovation of new products. 2. Advertising and promotion. 3. Feedback from the market. 4. Adjustment and response. Ethical Considerations 1. Maintenance of truth in advertising. 2. An attempt should be made not to encourage alcohol abuse amongst especially among the 18-30 year old segment who are vulnerable. References Abbey A, Scott RO, Smith MJ. (1993) Physical, subjective, and social availability: their relationship to alcohol consumption in rural and urban areas. Addiction ;88:489 – 99. Alcohol Policy Coalition (2008), ‘Marketing and Advertising of Alcohol – Policy Statement’. Australian Institute of Health and Welfare (AIHW) (1999) 1998 National Drug Strategy Household Survey, First Results, AIHW cat. No. PHE 15, Drug Statistics Series, AIHW, Canberra. Biennial Conference of the Society for Research in Child Development, Minneapolis, Minnesota, 2001. Clancy, Sean (2003), ‘Hangover Warning’, B&T Today (www.bandt.com.au). Distilled Spirits Industry Council of Australia (2004), ‘Alcohol market and RTD facts’, Pre-budget Submission. Donovan RJ. (1997) A model of alcohol consumption to assist in developing communication strategies for reducing excessive alcohol consumption by young people. Technical report prepared for the Health Department of Western Australia, Perth. DSICA – Distilled Spirits Industry Council of Australia,(2003) Inc. Issues: The Alcohol Beverages Advertising Code, online at: http://www.dsica.com.au. Foodweek online (2008), ‘Aussies drinking less beer – and getting choosier’, www.foodweek.com.au. Gentile D, Walsh D, Bloomgren B, Atti J, Norman J. Frogs sell beer: the effects of beer advertisements on adolescent drinking knowledge, attitudes and behaviour. Paper presented: Murphy & Odell (2005), ‘Consumer Led, Customer Driven’, Fosters Group Strategy Briefing. NDARC Submission to the Senate Affairs Community Affairs Committee (2008), ‘Inquiry into Ready-to-Drink Alcohol Beverages’. Preventative Health Taskforce (2008), ‘Technical Paper 3: Preventing Alcohol Related harm in Australia’. Various company/manufacturer generated reports and presentations sourced online. Read More