Coors Case Study
Direct sale to retailers bought only 5% of total sales. Whether it is On- Premise Retailer( Bars and I Restaurant) or Off-premise Retailer(grocery, I Convenience store or liquor store) have limited selection of beer and are weak force. I I However Coors have selected weaker distributors and insisted to distribute their own brands. I RIVALRY AMONG EXISTING FIRMS : STRONG I because in case they lower the price , their brand image get diluted. Differentiation is created by offering premium , suppertime I regular beer and light land I beer.
Some price differentiation done on the basis of alcohol content.
Large brewer use the advantage of their brand for launching I I I new products and can Nora launching expense. SOOT Analysts I Strengths 1 12. They had 2 unique aspects of brewing process 12. If beer was still on shelves after 60 days it had better beer Tit be thrown away 1 13. Used an actor stating why Coors was a 1 14.
First mover, pioneered the first all aluminum can I 1 12. Able to concentrate on excellence because they market impasses provided to a lot more states than Coors operation beer at the beginning 13. Had growth because they had their own refrigerated trucks 12.
Other I Just 1 brand of Operating Performance Change relative to its competitors from 1975 to 1985 with Financial Implications Success phase till mid sass Coors was extremely successful prior to 1977. Key to their strategy was a set of unique, specialized elements: geographic focus, low-cost production, a differentiated product, and market power over their distribution customers.
By managing these aspects well, Coors achieved 21. 2% market share in their market, tit the lowest relative amount of advertising in the industry. At the same time Coors’ low cost per barrel, at $29, was second only to Hellman.
Meanwhile, as Coors’ marketing division lost track of the image, market, and product that had driven wild success prior to 1977, Corporate Governance Coors’ management similarly spoiled the corporate image through poor reputation with minorities, unfair treatment in the workplace, tough treatment of its distribution channels, topping union hate lists, and eventually being boycotted by the FALL-CIO. Indeed, it wasn’t until 1985 that Coors launched a successful campaign of their Banquet product by returning to the quiet natural setting and focusing on their better, fresher product.
Product Line and its success It is not surprising that simultaneous to Coors’ new “approach” to marketing, their key past success of the premium segment Banquet product sold in their core 11 states lost ground rapidly to Its competitors. Although Coors’ total sales Ana grown almost In lockstep with the national average, their total market share had grown 8% more slowly than their competitors driven by market share decline of 40% of their premium product and a decline by 25% of sales in their primary territory of 1 1 stern states.
Coors Light is the product which is giving a major hand to Top line and Bottom line of Coors. Cost per barrel of Coors light is less costlier than that for Banquet and hence contribution is better. Coupled with the same growth in sales and also the proper diversification of packaging in canned containers made Coors to survive in market without major Financial crisis. From 1975 to 1985, industry capacity in the west grew 82%, from 17 to 31 million barrels due to Coors’ competitors’ new production facilities while capacity utilization dropped industry-wide by about 10%.
Pressures to fill excess capacity caused prices to drop over the same period, and Coors’ competitors, with a regional production strategy and California manufacturing, had little choice but to challenge Coors in the west on price. The result was that Coors lost 25% market share in the west while its competitors gained there 20%. Coors responded to the need to fill excess capacity by expanding nationally, almost doubling median transportation distances and increasing costs due to shipping by as much as $3. 50/barrel. In 1985, the $51.
5 million in additional shipping costs due to national expansion equated to 55% of
Coors’ profits. One final affect of the decreased concentration of sales in their key 1 1 state region was the affect on Coors’ ability to manage its distribution channel. As Coors searched for new wholesalers, those that were willing to sell only Coors dwindled to a minority. Coors focused on weaker distributors than it had in the past and spent more to manage the relationships. This was caused by applicant’s previous experience in the beer business, higher distributor/sales ratios, rising distributor attrition rates, and the desire by distributors to have Coors’ be more responsiveness.
In the Western region.