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Mgmt 478 - Strategic Management. Group project.
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Team Members Alyssa Bergman
Brant Bumgarner Danielle Sponder
Kaleb Boyer Mat Gross
AGENDA
Part 1: Brief History
Part 2: Problem, Goal, Conditions
Part 3: Strategy and Evaluation
INTRODUCTION
Goal: Develop depth rather than focusing on breadth
Outcome: Increase market share and consumer awareness
INTRODUCTION
Co-Leader in Wine & Spirits
KEY BRANDS Smirnoff, Ciroc, Guinness, Ketel One, Captain Morgan, Jose Cuervo, Crown Royal, Hennessy, Dom Perignon, Tanqueray, Baileys, Goldschlager
BRIEF HISTORY
• French Company with U.S. Subsidiary
• Formed in 1975 through merger of Pernod and Ricard
• Large company with 19,000 employes
• In 70 countries
• Frequent acquisitions including:
• Austin Nichols Wild Turkey, Jameson, Jacob’s Creek, Seagram, Malibu, Kahlua, Absolut
PROBLEM
• Price paid for Absolut
• Absolut is the top premium vodka worldwide based on volume
• Paid premium of $8.34 billion
• Sales slipped immediately after acquisition due to economic slump
• Strategy has focused on expanding breadth of brands, need to focus on awareness of key brands
SOLUTION
• Will increase awareness of our key brands
• Position us as the industry leader
In order to recover the premium paid for Absolut and increase awareness of our
key brands, our goal is to increase market share 5% over 5 years.
CONDITIONS
• Alcohol industry thought to be recession proof, but sales declined with the current recession
• Absolut sales slipped significantly as consumers switched to cheaper vodka brands
• 4 tiers of alcohol industry
• Low price, low quality (Ex: Hawkeye vodka)
• Mid price, mid quality (Ex: Smirnoff)
• Upper-mid price, high quality (Ex: Absolut)
• Premium price, premium quality (Ex: Grey Goose)
STRATEGY
• What didn’t work:
• Improving efficiency of production
• Reducing logistical costs
• The industry is already efficient in these manners
• What will work:
• Marketing
• Creative packaging
• Sustainability
• Family branding
• Guerrilla marketing
CREATIVE PACKAGING
• Limited Edition packaging has been very successful
• Collectables
• Encourages point-of-purchase sales by new customers and repeat purchasing by collectors
SUSTAINABILITY
• Why?
• Company already has focus on sustainability
• A growing trend with consumers
• Growing awareness of environmental impact
• Our market is specifically susceptible to new trends
• How?
• Redirection of materials, no additional waste
• Tie in with advertising and creative packaging
SUSTAINABILITY
• How (continued)?
• Bottle alteration
• Earth Day packaging for month of April
• New bottle and biodegradable bag – plant it to grow flowers
• Include sustainability logo on top 15 brands
FAMILY BRANDING
• Why?
• Increase consumer awareness of Pernod Ricard and key brands
• How?
• Advertise 15 key brands as a family
• Give each brand its own character
• Use for commercials and print advertisements
• Pernod Ricard house online
• Tour each brands’ room
GUERRILLA MARKETING
• What is guerrilla marketing?
GUERRILLA MARKETING
Pop Culture: Trend Forward Marketing
GUERRILLA MARKETING
• Why?• Increase customer base• Discern Pernod Ricard as trendy
• Where?• Large cities such as Manhattan, Chicago,
Los Angeles, Boston• How?
• Fountain wrapped as a bottle• Give out bottle sweaters at night clubs• Taste tests at sponsored events• Growing green alcohol in trees
TIMELINE
• First year• Introduce Earth Day marketing, creative
packaging and family branding• Second year
• Introduce guerrilla marketing• Third year
• Continue four marketing techniques discussed
• Fourth year• Start large sponsorships to reach more
people than our targeted campaigns• Fifth year
• Continue strategies
RESOURCES
• Financial Input• Advertising expense: $0.14 on the dollar• Profit:$0.18 on the dollar• Increase spending on advertising by $296
million over 5 years• Increases net sales 5% (equal to $2.1
billion)• Re-evaluate annually, expense may
change as net sales change• This will increase profit by $390 million• Marketing expenses will not be even year
to year• Different methods require different
expense
CONCLUSION
• Evaluation• Market share growth• Increased profits
• Problem: Focus on growth through acquisitions of external brands rather than developing existing brands
• Solution: Refocus marketing strategy and grow market share
• Strategy: Marketing plan• Creative packaging• Sustainability• Family branding• Guerrilla marketing
QUESTIONS?