Case study of absoulte vodka
By acquiring business, PR could expand their vodka business to world easily (especially US market) for the season that it had a well-established brand name and consumers were familiar with such brand name. Further, financial objective was another motive for such acquisition since it offered PR a viable option to broaden their vodka portfolio to Ready To Drink (RD) and Flavored Alcoholic Beverages (FAA) markets.
Last but not least, Poland or Russia are always come with a positive COO (country of origin) of adds (Mesoderm and Henley, 2007), and Absolute Vodka (VA) is an associate product Ninth positive COO image as it has been exported to eastern European countries for 5 years history, PR could expand all the major vodka markets across the world with a positive connation image by acquiring VA. SQ. A. For US market, vodka industry is design driven among consumers’ trends.
(Food Manufacturing, 2013) Hence, Absolute Vodka (VA) could emphasis the ‘Absolute Unique IXIA)’ line as each of them has different design of coating and pattern.
Also, it won the packaging design awarded by FAA (see below figure). It definitely could grab consumer’s attention on self and make gimmick among customers’ eyes. Thus, Word of mouth’ and ‘market voice’ are created which benefit to the marketing promotion. On the other hands, as importer/ agent play an important role in the distribution system in US, it is suggested that providing peter vouchers as an extra commission to salesperson if they reach certain amount of sales target in order to motivate their sales works.
If possible, it is suggested VA entered US market by piggybacking on a confectionery firm, which could set up an own distribution organization with lesser recourses. Apart from it, brand positioning is another topic to boost US market shares. The majority of VA loyalty consumers are among the aged of 35 and older. For such age group, VA could use foreign consumer culture positioning (FCC) to build up a brand mystique around a Russian vodka image as it is perceived as a Russian related brand with a long history export.
Further, Avis product segment could be used as another driven since VA has a wide range of vodka categories, from Platinum to Popular priced, that satisfy universal needs of the mature drinkers.
In contrast, VA must consider splitting demographics group to 21-34 millennial drinkers. Or achieve such goal, VA could use celebrity endorsement to promote their products and then become an ‘opinion leader’ among youngsters. For instances, appears their FAA products in music clips or sponsorship of sporting and cultural events.
At last, as the consumers’ tastes are very volatile in American market, VA could try to release a new flavor every season and each of them are limited editions which could fly consumers’ kites. If such product is attractive, VA could consider produce it as a permanent line. Source: International Food and Beverage For European market, VA facing two major challenges, competitive rival brands and Neck Country-of-origin (COO).
The primarily strategy to increase market share is ‘above the line” marketing strategy.
However, EX. legislation has restrictions on alcohol industry in respect of advertisement and marketing. “For instance, Ireland, Austria and France have legally banned spirits advertising on television and radio. In Portugal, advertising spirits is not allowed in cinemas and on billboards.
In Sweden, Slovenia, Poland and Finland advertising of spirits is almost banned & Young, 2013) Also, Poland or Russia always has a positive COO image of vodka. Thus, their place of origin has a comparative weak perception among European consumers’ eyes, especially for Eastern European customers.
It is suggested that V&S could build its brand as long haul which creates brand-building strategies to overcome stereotypes and misconceptions. Such strategy is focus on mature and white-collar workers groups to invent a new position of VA itself in a different category, as platinum, heritage and pure vodka and underemphasizes its Sweden root. Besides, with reputation of one of the world leading premium vodka, VA should stick on its heritage as a selling point. It fosters the buyers’ self-image as being lifestyle and knowledge.
Eventually, customers would see VA as a luxury brand In vodka category. As there has been a monopoly phenomenon occurred in the rest of the world, Sunroof leading the rest of the market in 2011. It manufactured a wide range of alcoholic beverages, from whisky, vodka, gins, rum to liqueurs. However, different from V, it is only specialized in vodka products with different flavors. Avoiding direct conflict with Sunroof, V could use universal niches strategy on its Flavored Alcoholic Beverages (FAA) products.
Since the main competitor, Sunroof does not produce such category. And, also, it could exploit the new millennial and female ringer groups as female drinkers consume more Abs than male drinkers. Such strategy could enhance customer preference and comparative advantages of VA. Besides, VA could build alliance with other strong brands, such as cooperating with Hagen-daze to produce vodka flavor ice-cream or Cataracts to form vodka flavor frappé. These approaches could bolster a very narrowly defined group of consumers No seek a very special bundle of benefits. SQ.
From the case, it is concluded that there are two potential regions for Absolute Vodka to develop their business, which are European and North American regions. It is commend VA to allocate much more resources into EX. market due to the following doctors:- In regard to US market, it is seen as a proficiency place to evolve since A already established their own power range, taking up the largest market shares across the world. Sides, from the date concluded by Ernst & Young, US market ranked the top of the top 10 non-EX. export market for distilled spirits in 2009.
Therefore, it seems a worthy market for VA allocates resources indeed.
However, there are several uncertainties in US market outgrow its advantages. Firstly, US market has reached saturation point already, and there is no any capacity for VA o expand. Secondly, the drinkers in US market are very demanding as their tastes and consumption behavior are fluttered and it requires much more resources and cost to meet execute marketing strategies. Lastly, redundancy of distribution system in US spirits make is another caveat.
As the importer/agent are not the owner of the goods and therefore they do not assume the risk of not being able to sell profitably.
In contrast, VA manager’s should concentrate marketing resources in EX. countries that have a lower market shares but high per capital consumption to generate their market share. Although there are many rival brands in EX. market (shown in the above chat), VA revenue are mainly rely on such market (especially in Eastern European), which accounts for 75. 5% of their total source of sales in 2009.
Besides, accordingly to Ernst & Young, Vodka and Flavored Spirits are the two top popular beverages sold in EX. market, which are the main products that VA serves. It proves that EX. market still have large capacities for Vats bolster their revenue. However, due to the EX.
governmental regulations are differ from each countries, VA have to decide which kind of marketing strategies they are going to use, and, also, adaptation to cultures is another main agenda for Vats allocate resources. Absolute Vodka did not have the right competences for extending the new line, Absolute Cut (AC).
No doubt that VA won a great success in Canadian market as Sac’s taste is less sweetens than other mixer which fit Canadian consumers’ tastes. Also, for the extension itself, VA did a right competence for launching AC line. Since VA already ‘own’ the ingredient of making vodka, thus, it is logical fit for AC to produce three new flavors which capitalized the association of its parent brand, VA.
Also, the aren’t brand VA already are well-known, have high awareness and good reputation among the new target markets, hence, it should be a right extension for launching AC.
However, Avgas failed in delivering to US market as it is targeted towards the mature group. As the recent vodka consumption trend among consumers are drinking “less but better” which means they prefer purer and premium vodka instead of mixer alcohols. Further, the biggest competitors of VA, Sunroof Ice already gained group of loyalty consumers whose ages up to 65. Thus, that is tough to break through the existing circumstance.
On the other hand, VA did not have a right competence in marketing strategies when launching AC in the due course.
The main reason is that AC had the same bottle shape design shape as its parent brand and it IS nard tort consumers able to distinguish why they nave to purchase the new line instead of the original product. Besides, as mentioned formerly, US vodka market is design-driven trend, AC packaging design definitely lost among consumers’ eyes on self. Lastly, the AC launching did not make business sense as the flavors they served Nerve mainly citrus and orange. As half of the current drinkers already mix vodka with moaned or orange. Thus, there is no motivate for consumers purchase the same product they have already had.
Obviously, VA did not conduct a comprehensive marketing research before releasing AC. SQ. Absolute Vodka should not reliance a mixer product in global FAA market due to the following reasons:- Niche supporting to evolve FAA products Most of the brand extensions are highly rely on a large clout of membership as the loyalty consumers would follow their favor brands. However, considering the major consumers of VA is aged above 35, and also evidence shown that the consumption of Abs generally declines steadily with ages. Therefore, it is hard to achieve success for AC without patrons to support.
Change of market conditions rhea market conditions change rapidly.
For instance, US alcohol market was dropped by 20% by 2011 since the consumption behavior changed. As awareness of health trend, most of the drinkers notice the harmful and side effect of alcohol. At the mean time, a new tendency was brought out that “less is more” which encourage people to drink cleaner and purer alcohol. Further, with a common perception of flavored alcohols are contain of artificial coloring and sugar, AC might not have advantages to reliance in the global market.