Understanding the Principles of Marketing Component B

Business Report for Ivan Menezes (CEO)

1 December 2017

Student No: Word Count: 1428

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Executive Summary

This report will focus on the company Guinness & Co, alcoholic beverage company owned be Diageo a global leader in beverage alcohol. Director of the company Ivan Menezes

requires an extensive marketing report and strategy which will help Guinness become a leader in the current beverage market in time. In order to this a SWOT analysis was drawn up to identify areas where the business could improve and therefore gain a larger foothold in the market, from which 2 critical success factors were derived. The current marketing mix for the brand has been analysed, and the suggested strategy the brand needs to target to be successful is to create a low-calorie alternative for the original stout to keep up with market trends and

also gradually switch to more carbon friendly production methods to keep up with competition and brand quality.

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Table of Contents

Table of Contents1.0 Introduction to Company..................................................................................................4

2.0 Critical Success Factors and Prioritisation.....................................................................42.1 Critical Success Factor 1.............................................................................................................42.2 Critical Success Factor 2.............................................................................................................5

3.0 Current Marketing Mix.....................................................................................................53.1 Product.........................................................................................................................................53.2 Price..............................................................................................................................................53.3 Place..............................................................................................................................................63.4 Promotion.....................................................................................................................................63.5 People............................................................................................................................................63.6 Processes.......................................................................................................................................63.7 Physical Evidence........................................................................................................................6

4.0 Recommendations..............................................................................................................64.1 Recommendations for CSF1.......................................................................................................7

4.1.1 Product...................................................................................................................................74.1.2 Price.......................................................................................................................................74.1.3 Place.......................................................................................................................................74.1.4 Promotion...............................................................................................................................74.1.5 People.....................................................................................................................................74.1.6 Processes................................................................................................................................74.1.7 Physical Evidence..................................................................................................................7

4.2 Recommendations for CSF2.......................................................................................................84.2.1 Product...................................................................................................................................84.2.2 Price.......................................................................................................................................84.2.3 Place.......................................................................................................................................84.2.4 Promotion...............................................................................................................................84.2.5 People.....................................................................................................................................84.2.6 Processes................................................................................................................................84.2.7 Physical Evidence..................................................................................................................8

5.0 References...........................................................................................................................9

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1.0 Introduction to Company

Founded in 1759 by Arthur Guinness originating in Dublin it is now a London based brand, and has become a favourite for many around the world. The drink is a traditional Irish stout beer made from roasted barley, hops, yeast, and water. The deep colour and caramelized flavour that are characteristic of Guinness come from barley that has been roasted but not malted. The beer is mixed with nitrogen for smaller bubbles, creating a thick creamy head which it is well known for (Moncel, 2017).

2.0 Critical Success Factors and Prioritisation

2.1 Critical Success Factor 1

Brands targeting healthy substitutes, production of light beers with lower calories and carbs. Current health craze is how competitors are staying on top (Cheers!, 2017). This added to the Increased awareness of health concerns which causes a fall in demand for alcoholic drinks, means the market must be exploited in a new way (Hasting, 2009). Guinness can produce a

Guinness

Figure 1 (Faculty.msb.edu, 2017) Perceptual Mapping Beer Market

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healthier, (less calorie, less alcoholic) beverage. This is because of the growing health concerns of the nation and the success of competitor’s versions of “light” beers. It will allow Guinness to target a new and growing market of more health-conscious drinkers while keeping up with their rivals. According to a report on Mintel one in three UK consumers (32%) who limited/reduced the amount of alcohol they consumed over the 12 months to November 2016, 41% did so in order to manage their weight. This shows weight management to be a primary motivation to curb alcohol consumption, topped only by money saving incentives, cited by 44% (Mintel 2017).  

2.2 Critical Success Factor 2 Most other brewers (particularly micro brewers) use alternative sources of energy like wind, sunlight and Biogas to power operations (Quartz, 2015), combined with the Big Data approach to common issues in beverage industry; improving product quality, resulting in better brand reputation (Mixerdirect, 2013). Guinness can emphasise the “green” production of their unique stout. With rival brewers becoming increasingly eco-friendly, Guinness can combat the impact of reduced in sales from the recession through differentiation from competitors to steal their customers. Emphasising their clean production by advertising the accreditation from Sustainable Travel International for Environmental Practices will draw attention from the more growing segment of environmentally aware consumers.

3.0 Current Marketing Mix

3.1 Product

Guinness advertises its product as a healthy beer due to the significant amounts of antioxidants, B vitamins and the mineral silicon. Guinness original is described as a Stout, which is a particular type of ale. The drink is most known for its characteristic deep colour which comes from roasted barley, the thick creamy head is achieved my mixing with nitrogen producing less bubbles (Drayer, 2017).

Current product range includes (Guinness.com, 2017):

- Guinness draught - Guinness original - Dublin Porter - Golden ale - Hop House 13 larger - Guinness Rye pale ale - West Indies Porter

3.2 Price

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The beer market is very competitive, and Guinness therefore have had to go for a competitive pricing strategy. They offer high quality products, but at a premium pricing, as long as customers know what they are getting value for their money, they are willing to spend and this has led to success for the organisation. The brand has never followed a price reduction, as this would be contradictory to the premium brand image.

3.3 Place

Guinness is brewed in 49 countries worldwide and sold in 150, however it only actually owns 5 breweries itself which are located in Dublin, Ireland (the original), Malaysia, Nigeria, Ghana and Cameroon. The most Guinness is sold in Great Britain which is still supplied by the Dublin brewery (known as the storehouse). Guinness uses a channel of distribution starting with the producer, it then gets sold to the retailer who sells it to the customer. Main retailers include: Supermarkets, Wholesalers, Hotels, Bars, Pubs, Night Clubs and others. The brand now has a website online from which you can also purchase merchandise.

3.4 Promotion

Guinness is one of the most popular beer brands in the industry at the moment, and this is due to very well driven advertising to promote its brand name to customers. The company invest a lot in advertising campaigns, its 1999 “Surfer” advertisement is still remembered as one of the best of all time (Campaign live, 1999) and more recently the brand have worked on a piece with Compton Cowboys to further expand target market (Guinness, 2017).

3.5 People

The brand most often is not in control of sales through staff as it is in the beverage industry so is reliant on retailers selling the product. However, it does have good relations with Rugby Six Nations and Cheltenham festival (Hobbs 2017), showing that the sales team are trained well in trying to find potential opportunities where the brand can be sold to consumers. The brand also relies upon a lot of “word of mouth” advertising from consumers, which has now increased due to social media, a platform where the brand can also speak to consumers.

3.6 Processes

The brand has a huge online presence which the customers are well aware of, the Guinness web page gives the customer extensive information on the business, as well as dealing with queries. The consumer is informed where exactly it can buy the product, how it can visit the storehouse and what the beverage can be used for other than drinking.

3.7 Physical Evidence

The brand offers other services such as a visit to the storehouse in Dublin where brewing is done, so it backs up the quality and identity of the brand. There is also a webstore for accessories to further market the brand, and increase awareness. Sponsoring events and selling merchandise/beer at these events gives a direct experience for consumers to the company.

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4.0 Recommendations

4.1 Recommendations for CSF1

4.1.1 Product

Create a lightweight alternative in order to follow health trends and keep up with competition to gain a stronger foothold in the market.

4.1.2 Price

The price of the pint will not change, a new healthier alternative will still come in at a premium pricing to coincide with brand quality for initial consumers and then be decreased after market penetration to be competitive.

4.1.3 Place

There will be no change in distribution chain for the product. The brand could try selling the new healthier alternative at festivals targeted toward this “healthy audience” in order to increase awareness.

4.1.4 Promotion

Since Guinness are already well known for creating excellent promotional campaigns, it could create a new healthy promotional campaign, and release a new television advertisement also. This has been a huge success in the past for the company.

4.1.5 People

No change to people element is necessary, would not have a huge impact on increased revenue as they do not deal directly with the customer.

4.1.6 Processes

Look for events such as the Rugby Six Nations to further market product and give an outstanding customer experience, opportunities to make new alternative known to consumers through direct interaction.

4.1.7 Physical Evidence

Create a new element of web page online associated with new healthy alternative, and advertise a visit to Dublin storehouse where it is made. Add to the current merchandise creating a new range for the healthier alternative drink.

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4.2 Recommendations for CSF2

4.2.1 Product

No change necessary to the actual brewing or composition of the beer, bottle could get changed to a better biodegradable material instead a bottle.

4.2.2 Price

Price of the beer can remain the same, if the company saves costs using renewable energy then this will increase profit margins although there will be an initial investment on equipment change, consumers will also remain content due to the brand being more environmentally friendly.

4.2.3 Place

No changes needed to be made to particular element of current marketing mix.

4.2.4 Promotion

Start a healthy add campaign by using television advertisement and social media increasing brand awareness to consumers. Offer on website for storehouse visit with reduced price for limited period of time.

4.2.5 People

No change to people element is necessary, would not have a huge impact on increased revenue as they do not deal directly with the customer.

4.2.6 Processes

No changes needed to be made to particular element of current marketing mix.

4.2.7 Physical Evidence

Storehouse visit to brewery will clearly display to customers that the brand has switched to using a more “greener” method of production and also be an enjoyable experience. Create a new element of web page online associated with new “green” method of production.

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5.0 References

Moncel, B. (2017). What Is Guinness?- Overview, Varieties & Use in Recipes. [online] The Spruce. Available at: https://www.thespruce.com/what-is-guinness-1328737 [Accessed 2 Dec. 2017].

Faculty.msb.edu. (2017). Perceptual Mapping - Beer Example. [online] Available at: http://faculty.msb.edu/homak/homahelpsite/webhelp/Content/Perceptual_Mapping_-_Beer_Example.htm [Accessed 2 Dec. 2017].

Mintel (2016) ‘Is the time right for more diet-friendly beer? - 18th September 2017’. Available at: http://academic.mintel.com/ (Accessed: 12 December 2017).

Hastings. G (2009). They’ll Drink Bucket Loads of the Stuff” [online] Available at: https://publications.parliament.uk/pa/cm200910/cmselect/cmhealth/memo/alcohol/al81memo.pdf [Accessed 22nd November 2017]

Cheers!. (2017). Why Light Beer Still Shines Bright. [online] Available at: http://cheersonline.com/2017/07/26/light-beer-trends-2017/ [Accessed 22nd Nov. 2017].Quartz. (2015). Your favorite craft beers aren’t just tasty, they’re increasingly eco-friendly. [online] Available at: https://qz.com/385367/your-favorite-craft-beers-arent-just-tasty-theyre-increasingly-eco-friendly/ [Accessed 10 Dec. 2017].

Guinness.com. (2017). Our Beers. [online] Available at: https://www.guinness.com/en-gb/our-beers/ [Accessed 10 Dec. 2017].

Campaign live. (1999). Guinness 'Surfer' by Abbott Mead Vickers BBDO. [online] Available at: https://www.campaignlive.co.uk/article/guinness-surfer-abbott-mead-vickers-bbdo/930129 [Accessed 10 Dec. 2017].

Guinness. (2017). Compton Cowboys. [online] Available at: https://www.guinness.com/en-gb/advertising/compton-cowboys/ 0 [Accessed 10 Dec. 2017].

Drayer, L. (2017). Is Guinness really 'good for you'?. [online] CNN. Available at: http://edition.cnn.com/2017/03/17/health/guinness-good-for-you-food-drayer/index.html [Accessed 10 Dec. 2017].

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