Magners Competitors in the Cider Market - Essay Example

Running Head: Marketing Strategy Magner’s competitors in the cider market: Cider has been inthe UK market since time immemorial. It was made in Britain even before the Romans ventured there and since then has been so abundant that it is now used to pay farm wages. Cider has moved in and out of fashion time and again. It’s presence in the market was never constant. Magners has a lot of strong competitors in the cider market. Most of these competitors have existed for decades now. During the early 1990s, Diamond White and Max were a major rage all over. This was before alcopops took over and nudged traditional drinks on a corner. During the 1960s and 1970s, pear cider gained a lot of popularity. This was a result of the marketing campaign by Baby champ. The industry continues to grow and has grown its set of competitors in the market over the years. The industry is of the view that the current renaissance will take the somewhere. Some major set of competitors include Scottish, Newcastle and Constellation Europe. They have spent a lot of moolah on promotional campaigns and advertisements to promote Cider. What remains to be seen is to what extend will each of these big wigs fare in the market. When Magner was launched initially, it was perceived as a drink for teenagers and park benchers. Since then it has gone through a makeover. They have come up with various ways to promote their brand. Most notably by lowering the alcoholic content in the bottle, serving it chilled and by launching a 30 million advertising campaign. Magner soon regained its position via this and grew by 33 %. Rivals did not rest low. They were quick to react as they saw potential in the cider market. Magner’s success thus paved way for a huge influx of other brands. Scottish and New Castle as mentioned earlier were quick to re-launch their Bulmer’s. They were all over the market and Bulmer’s had a massive marketing campaign wherein its packaging was identical to that of Magners. Irony, is the fact that today, Magners is sold as Bulmer’s in Ireland. Another big competitor for Magner’s is S & N’s English Bulmer’s which has also shaken up the market. However it is only in UK at the moment and has not yet ventured into the Irish market. As a result, this industry has grown by 27% since 2007 according to a research conducted by AC Nielson. UK is consuming more than a billion pints of cider every year. With competitors standing on their toes and giving Magner’s a tough time, the real challenger for Magner lies in their ability to retain and sustain their market position. Importance of Branding and Magner’s current strategy- A literature review: Over the last couple of centuries, the importance of branding and maintaining certain brand equity has quadrupled. Brands have become a major competitive asset in today’s age and time in this market. According to Hill, brands last forever. They cannot be scaled. The premium and revenues that they generate are enormous and are compatible with products and even different categories. Irrespective, consumer profile and preferences have changed over the years. In the current age of knowledge, the consumers are more informed of their products. They are well aware of competitor prices and through exchange of opinions with other consumers of the product on the internet. Thus, they don’t consume impulsively now. There is a lot of thorough research and investigation that goes into their decision making now. However, consumers of this industry have become very passionate about the brands they buy, and the way they taste. For them, these brands are a form of self-expression as said by Brady. This has made the task for brand managers more difficult and challenging. The competition in this industry keeps rising and becoming fiercer. Every season, there is a new flurry of products that comes and sweeps away the market. Amidst, this kind of cut-throat competition, brand managers is faced with the daunting task of establishing and retaining the value of their brand. According to Kapferer (2004), while everyone is aware that a particular brand is successful they don’t know when to create the next one mostly. (Kapferer; 1997; n.p.) Another issue as put by King (2001) is that of a marketing meltdown. This is because of the expanding world of consumer products and services. Not only is the product world expanding, but the consumer world is shrinking on the other hand. As a result, the price plays a very crucial role as a decisive factor in most purchasing decisions made today. Irrespective of this cut throat competition, some brands continue to grow. (King; 1991; 3-30) Thus due to the immense importance that these brands hold, a lot of research has been invested in them in the last couple of years. Literature claims that there are different ways in which a strong brand can be established. While Karl (2004) asserts that a brand is transformed into a great brand over time, is through natural development over the course of years. (Speak; 1998; n.p.)On the other hand Balmer et all (2003) are of the view that brand success is directly related to a certain blue print formula. (BALMER; 2003; n.p.) Brandy et all (2004) feels that brands emanate from the distinct ideologies on which they are based and with a committed and dedicated consumer base. Aaker (1900) meanwhile, feels that brands need to be managed by managing brand equity, brand portfolio and brand extension. (Aaker;1900; n.p.) Where brand management and brand equity is concerned, brand extension can play a key role in this regard. It helps contribute to the overall success of the key brand and re-inforces the brand name. however this has to be carefully managed as brand cannibalization needs to be avoided at all times. A company cannot afford to risk one brand at the cost of the other. Magners keeps coming up with new flavors every season. It keeps adding more value to its brand’s depth. However at any point, it can’t afford to cannibalize one brand of it’s with that of the other. In order to retain its strategic advantage, it has to work very cautiously. Strategy formation: Magner is planning to cash in on the fruit cider category with the growing popularity of fruit ciders. It has already stationed itself a market leader in the UK in apple cider market. Now it is planning to expand into the apple cider market. The aim of their marketing campaign in this regard is to drive home the message that the Magner’s Pear is made from 100 % pears. The brand will be launched with the name of Magner’s Pears only to give the customer the impression that this brand is what it has promised. Strategic brand management involves not just the management team of an organization but also the Directorial Board and various other stake holders related to the organization. It also depends on the organizational structure of the organization. Strategic management is a process in its own right. It helps evaluate and control those industries associated with the business, which have already engaged with the company. It also helps ass’s competitors, sets goals and strategies, to counter all competitors and later on reassess every strategy chalked down annually or quarterly. It evaluates the overall impact of the strategy, whether it achieved desired objectives or should it be replaced due to changing trends and paradigms, in the wake of new economic, social, financial or political environment. Strategy formation: Magners is roping to cash in on its pears ciders to cultivate its brand name in the next five years. It can capitalize on its core competency, which is low alchololic drinks compared to the others by coming up with more fruity variants to their line. That is, that this be done via brand extension of their brand line and brand depth. The main objective of its branding strategy would be to become a market lead in the cider category and retain its market position. Magners should begin from UK and later on expand to different target markets. Each target market will have different tastes. It will be important to adapt the strategy according to the needs and requirements of that particular maket. This will help develop a bigger customer base for ciders world over. As mentioned in the case study, the brands should each be labelled after Magners in their brand name followed by the flavor name. The strategy is simple, it will directly communicate the idea to the customers that the drink is made from 100% , their favourite fruit. To retain it’s brand identity and brand equity, Magners would have to retain its impression as an Irish brand, which ever market it targets. And Irish are asssociated with a certain sense of humor world of over. So most of the ad-campaigns will be light, frivolous and fun-in nature. For instance “100 percent pear : zero percent disappointment” as an ad slogan for pear flavor, would work fine. Magners can cash in on the humorous edge of Irish people and thus come up with ultra funny ads for tv and radio both. For their marketing campaign, Magners should opt for both print and TV as their main medium. Ads should be published during peak prime time as that’s one TV is watched the most for entertainment. The TV and print ads need to be catchy and should be able to retain the attention of the target audience. Other than, that free-sampling for the first two months should also be done near and around most of the main outlets in the main cities to penetrate further into the market. Similarly, the billboards and flyers need to be colored with Magner’s ads. Strategy Assessment: In order to asses, whether a particular organizational strategy is suitable for an organization it is important to conduct a SWOT analysis. The SWOT analysis points out the strengths, weaknesses, opportunities and threats of the organization in question. To assess how effective an organizational strategy would be, it is very important to conduct a SWOT analysis. SWOT analysis is an overall strategic planning methodology. It is used to assess a strategy from the point of view of its strengths, weaknesses, opportunities and threats. It involves the business environment and the business objective of a particular project and how internal and external factors will help achieve those objectives. The technique was developed by Albert Humphrey. He led a convention during his stay at Stanford University in the 1960s and the 1970s. He incorporated data from some Fortune500 companies. The same will be done for Magner’s. A SWOT analysis usually begins with clearly defined state and objectives. Strengths: In strengths it is checked which attributes of the company will help in achieving the desired objectives. Magner’s is an Irish company and Irish people are associated with good humor. The aim of the company’s branding strategy is to promote it as a low in alcohol fruit flavored brand. This directly coincides with the kind of brand identity; it wants to build i.e. youthful and peppy. Weaknesses: In weaknesses it is checked which attributes of the company will be harmful in achieving the objectives. Magner’s does not have any significant weaknesses at the moment. Opportunities: What opportunities will work in favor of the desired objectives? Magners has a lot of potential in various untapped markets all over the world, especially in flavor based fruit work. Threats: What are the external conditions which would rather bring about damage to the objectives intended? The biggest problem with this industry is the abundance of competitors lurking around. This keeps the competition cut throat and fierce all round. Identification of SWOTs is very important to figure out how successful a strategy would be for an organization. First the managers have to decide if the objectives would be achievable in the light of SWOTs. If the objective can’t be achieved, a different objective needs to be selected and the entire process repeated. Macro environment factors: = One of the main things that one needs to do when assessing a strategy for an organization is check whether its macro environmental factors will affect the decisions of the managers or the organization. Macro environment factors include factors related to tax changes, trade obstacles, demographic changes, government policies, political environment etc. In order to analyze these factors, managers have categorized them under the PESTEL model. (Kotler;2000;n.p) The model will be looked at from the point of view of Magner’s The PESTEL model asserts the following factors: 1. Political factors. Political factors are largely governed by government policies. These maybe the degree of government involvement with the economy. To what extent is the government facilitating in the provision of goods and services. Is it subsidizing any firms, is it offering any other incentives. Political decisions are very impactful on business environment. They impact different things, for e.g., the education and literacy of the employee work force, the medical state of the nation, the quality of the infra structure of the economy such as transportation facilities. The situation in UK is politically stable. Thankfully the isles of British have not been struck with political wars, and inner turmoil. Thus, this won’t be impeding their growth. Moreover, Manger’s can think of expanding into other European countries, where political situation is stable and where the government encourages subsidizing of offers. 2. Economic factors: = Various economic factors should also be kept into account when assessing strategy. Economic factors such as interest rates, tax charges, and overall economic growth, exchange and inflation rates. Economic factors can have a huge impact on the overall behaviour of a firm. Recession had hard hit the world. For instance, In order to build employee confidence and assure them that recession won’t lead to lying off; the management in Magner needs to secure their jobs as an organization’s success is largely dependent on a fast and motivating staff. Other factors also need to be checked upon. For example, high interest rates may obstruct investment as it costs more to borrow. A strong currency will create more problems of exporters as it will raise the price for exporters in terms of foreign currency. Inflation may lead to employees demanding more wages and eventually raise costs. If the nation’s income growth is high, it will trigger demand for a firm’s products. At the moment, the world is going through a major recession time. This has made people precarious and cautious about the way they spend money. UK has been one of the biggest victims of this changing trend. These factors need to be kept into perspective by Magner before expanding its operations. 3. Social Factors: Changing social paradigm can also affect a firm’s products, its availability, and the willingness of individuals to work together. For instance in UK, the employee base is aging. This has lead to heavy costs for firms who are engaged in pension payments to their work force, because their staffs are living longer. This also means that some firms, like Ads have started hiring older employees to capitalize on the labour pool. Customer trends, life style and demand keep changing. These changing paradigms help the customer to drift his attention from one focal point to the other. Since Manger’s target audience is the youth, it needs to be kept in mind, that the youth keep changing their tastes every now and then. They get bored too easily. It is hence important to keep renewing ads, flavours and other things to keep them attracted. (Gobe;2001; n.p) 4. Technological factors: New technology paves way for better and improved process and products. Today iPods, touch screens, computer games, mp3 games, online gambling and high definition TVs have all created their own market in technological advances. Online shopping, CAD, bar coding, are all big improvements which have given a new name to the way we conduct business. Technology can cut down on costs, give way for better quality and also pave way for innovation. Induction of online payments and free delivery at homes can greatly trigger massive sales. 5. Environmental factors: Environmental factors include climatic conditions and weather related aspects. Changes in temperature can affect various industries such as farming, insurance and tourism. Today Global warming has taken over the climate and is being given a lot of importance. Firms are being compelled to consider environmental issues before taking any concrete steps. 6. Legal factors: Legal factors have to do with the legal environment in which the organization is working. In the last couple of years, there have been various legal changes in UK which have affected the way organizations work and operate there. For instance the age discrimination barrier, disability discrimination law, increase in minimum wages are to name a few. The rules and regulations observed at Magners are extremely strict. It is currently operating in only those countries, wherever legislations of host countries impact international business for real long term sustainable business growth and don’t affect international business abruptly. Porter’s five forces Model to assess strategy: Porter’s five force model can be used to assess an organization’s strategy. The following factors need to be taken into account for this analysis: Competitive Rivalry: The number of competitors in the market who will affect the strategy. Threat of substitutes: Are there any substitute products in the market? Can they affect the organization’s objectives? Threat of buying power of buyers: How easily buyer preferences change. Do they have a lot of bargaining power? Threat of bargaining power of supplier: How many suppliers are there in the market? How important are they. What is the bargaining power of every supplier? All such questions need to be considered and looked into when assessing an organization’s strategy. (Porter) For instance let’s consider TUI, which is a European market leader in the tourism and its strategic analysis. Competitive Rivalry : The total number of competitors in this market far too many. Newcastle and Scottish are to name a few. There are named few competitors. Magner’s total expenditure amounts up into billions which is itself difficult to compete. The threat of Substitutes : There are various substitutes out there in different industries such as wine, liquor and beer. The Bargaining Power of Buyers : . The buying power of these buyers is high because they have a lot of options available in front of them. They are extremely well informed about the relative prices of each brand and can easily shift from one brand to the other. The Treat of New Entrants This market keeps growing, so there is always that perceived threat of new entrants. Works Cited Aaker. (1900). Dimensions of Brand Personality. Journal of Marketing Research . BALMER, J. M. (2003). Corporate Brands: What Are They? What are they made of . European Journal of Marketing . Gobe, M. (2001). Emotional Branding: The New Paradigm for Connecting Brands to People. New York : Allworth Press. Kapferer. (1997). Strategic Brand Managment. Kogan Page. King, S. (1991). Building the brand in the 1900s. Journal of Marketing Managment , 3-30. Kotler, P. (2000). Marketing Management. The Millennium Edition. Upper Sadle River: Prentice Hall. L, B. (1985). Strategy and Environment: A conceptual study. Porter. (1990). Competitive Strategy. NY: NY Press. Simpson. (2002). Business Studies. London: Cambridge University Press. Speak, K. (1998). Brand Stewardship. Design Managment Journal , 0-30. Read More