guinnes case study

International Marketing Course A.Y. 2012/13 Professors: Cantone & Hollensen

Guinness Case Study

Group 1

Carotenuto Marco

Casale Dario

Cascarino Salvio

D’Ambrosio Gennaro

Sangiovanni Andrea

Sorrentino Maria Laura

N27/1145

N27/1307

N27/1157

N27/1484

N27/1133

N27/1181International Marketing Course A.Y. 2012/13 Professors: Cantone/Hollensen - Guinness Case Study

AgendaPART 1:

•Beer market: an overview• Guinness think globally, act locally• Focus on Nigeria market

PART 2 : • Case questions

International Marketing Course A.Y. 2012/13 Professors: Cantone/Hollensen - Guinness Case Study

GUINNESS History: time line In Ireland,

Arthur Guinness

created one of the most important

Beer of the world1759

1769 The first export

shipment of GUINNESS to England.

Shipments of GUINNESS to

Guernsey, Barbados, Trinidad.

1820

1840Shipment of GUINNESS to

New York.

50% of all GUINNESS

sold in U.S.A. is now bottled

locally and total foreign sales reach

100.000.1914

1949 Guinness starts to import in Nigeria

GUINNESS is exported in

Ghana, Nigeria, Malaysia,

Indonesia. 1959 – 73

1985 GUINNESS now sold in

120 Countries

and brewed in 25.

Diageo is formed.

1997

2008Guinness is

on FB


Beer & Stout market: an overview

1%

99%

Stout market is only 1% of beer market

Stout volume sales (million litres)Lagers volume sales (million litres)

Guinness (Di-ageo)60%

Murphy's /Legend

(Heineken)8%

Zywiec Porter (Heineken)

2%

Beamish (Heineken)

3%

Castle Milk Stout (SAB

Miller)12%

Others 15%

Stout market: who is the leader?


Porter 5 forces model : which are the main forces that determine the intensity of rivalry in beer industry.

Source: Porter, M.E. (2004)

Meal occasion (indoor&outdoor):WineAmusement occasion (outdoor): cocktails, spirits, Happy hour: analcoholic

Threat of Substituteproducts or services

Bargaining power of buyers

Rivalry among Existing competitors

Bargaining power of supplier

Threat of New Entrants

On trade: pub&bar have low bargaining power

Off trade: Retailers have high bargaining power

CR4 in 2010 =46%(AbinBev, Sab Miller,Heineken, Carlsberg)


Guinness Stout Market Share all over the world

Western Europe:

80%

Eastern Europe:

12%

North America:

86%

Latin America:

5%

Asia Pacific:

64%

Australia and Asia:

66%

Africa: 45%


Firm Strategy, structure and rivalry

Relating and supportingindustries

Government

Demand conditions

Factor conditions

Chance

Africa is the first Region in terms of stout volume sales (720 million). Guinness has 45% market share in this market, this means 324 million litres sold in this area.For Guinness is the second market after Western Europe (510 million litres).Why Africa is so important for Guinness, what were the conditions that helped Guinness to build his success?

Focus on Africa The Porter Diamond

Demand Condition: • Africans are beer

drinkers since 1820s.• 7,2% of beer market is

stout (vs. 1% in world)• Market size

Related supporting industries:• Strong presence of row

material producers and exporter.

Factor Condition:• The basic raw

materials maize, sorghum malt, hops and water sourced locally.

• Low cost employees.


International market screnning process to produce in Nigeria

1820Asia Australia

Regional Macro screening:• Market size.• Stout Beer

culture.

Africa

Eastern Africa

Western Africa

NorthenAfrica

CentralAfrica

1962 Angola Nigeria Congo Senegal

Preliminary screening:• Raw material

availability.

Specific market criteria:• Most populated country.• 50% christian

population.• Relatively politics calm

after 1960 , compared other countries.

Kano;Kaduna

Lagos ;Benin

city abaIbadan

Specific city/area criteria:• Overlooking the ocean.• Most cosmopolitan city.• Low degree of tribal

culture.• Good industrial area.


Source: Our adaptation from Diageo.com and Hollensen, S. (2012).

Legend: Upstream Downstream

Strategic Alliances with Fosters for production

Strategic Alliances With Sapporo

Strategic Alliance with Retailers

Contract manufacturing (i.e.

East African Breweries for Kenya)

Hierarchical mode with sales and

production subsidiary (Nigeria)

Guinness: Think globally

Source: Our adaptation from:Guinness.com

How Guinness competes in the international market:act locally Area

Customer solution

Western Europe

Eastern Europe

Africa

Product

Australia andAsia

U.S.

Guinness Draught & Guinness Draught Extra Cold

Guinness extra stout

Malta Guinness

Guinness Foreign Extrastout



Customer solution

Western Europe

Eastern Europe

Africa

Product

Australia andAsia

U.S.



Malta Guinness


Guinnes creates a relationship among drinkers (on-trade)



Customer solution

Western Europe

Eastern Europe

Africa

Product

Australia andAsia

U.S.



Malta Guinness


Mainly used as drink after meal (78% sold off trade)



Customer solution

Western Europe

Eastern Europe

Africa

Product

Australia andAsia

U.S.



Malta Guinness


Provide to give a product easy to drink (Malta Guinness is a free alcohol drink), and a strong drink related to viral sexuality and power



Customer solution

Western Europe

Eastern Europe

Africa

Product

Australia andAsia

U.S.

Guinness Draught


Malta Guinness


Guinness Draught reproduces Irish culture overseas


Social media Communication

“One of the most important strategic consideration is whether to standardize worldwide or to adapt the promotion mix to the environment of each country”

Social media: the way to understand young drinker needs and expectations with GLOCAL APPROACH

Source: Our adaptation from Facebook.com

US Guinness social communication on Facebook

US Guinness target: 25-34 years old

Day of max popularity: March 10thWHY?

St. Patrick’s day period

Source: Our adaptation from Facebook.comInternational Marketing Course A.Y. 2012/13 Professors: Cantone/Hollensen - Guinness Case Study

What are the differences ?

Nigeria commercial US Commercial


Product/communication mode

Product

Standard Adapt New

STRAIGHT EXTENSION

PRODUCTADAPTATION

PROMOTION ADAPTATION

DUAL ADAPTATION

Prom

otion

Standard

Adapt

Prod

uct i

nven

tion


Case questions

1. How would you explain the Guinness pricing strategy and the underlying assumptions about consumer behaviour when Diageo reports for 2005 that in the UK and Ireland Guinness sales volume fell by 3%, but a value growth of 4% was achieved in both markets, mainly due to price increases?

2. Motivated by the success of this pricing strategy, should Diageo continue to increase the price of Guinness?


STRENGTHS WEAKNESSESinternal

externalTHREATS OPPORTUNITIES

• market knowledge

• brand image and brand awareness

• quality and uniqueness of taste

• little market

• complexity of taste and resistance of potential customers

• strategic alliances

• social media strategy

• customers switch market

( from stout to lager )

• alcohol regulation

(tax and prohibitions)

Guinness Swot analysis


Guinness pricing strategy

• Guinness is sold with premium price because it gives to its consumers more than a product, it delivers an experience, a lifestyle model ect.

• That’s why in 2005 in the UK and Ireland, with an increasing price strategy, Guinness was able to achieve a value growth of its sales of 4 percent. How we can explain this phenomena?

Value growth of sales: 4%Volume fall: 3%

What was the price increase? 7%

εp= %ΔQ / %ΔP εp = -3% / +7% = -0,43


Rigidity of Guinness demand

εp = -0,43

QUANTITY

PRICE

p = + 7%

q = - 3%


Consumer Brand resonance

Customer

Judgments

Brand Imagery

Brand Performance

Customer feelings

Brand salienceSource: Keller K.L. , 2008

Consumer Brand resonance:

-loyal consumers-high repeat purchase

rate

Customer Judgements: - high quality

- Superiority and uniqueness of

the brandBrand Imagery:

- mostly male adults > 25– Supporters of the strong taste with

decisive personality- A 250 years old brand

- Strong experience- Share moments with other people during

sport occasions, events

Brand Performance: -Irish beer with coffee taste, 5-6% alcohol- Aggressive price- increase policy- A typical “on trade” consumption

Customer feelings: -fun (feel playful)- excitement( feel energized) - social approval

Brand salience: - high awareness: most commonly recalled alcoholic dark beer

CBBEKeller’s Model


3. In Choueke (2006), an anonymous beer retailer buyer comments on Guinness’ decreasing sales volume: “Guinness has an older profile of drinker and with an ever-increasing availibility of continental lagers and a fast growing range of alcopops, the younger generation of drinkers simply haven’t bought into it. Innovation – widgets and gadgets – will keep the brand alive for a while but where else can Diageo go? Flavoured Guinness? No thanks. It is in decline and Diageo’s best minds can’t do much about it. The brand may have only a couple of decades worth of life in it and I would milk it for everything before getting rid of it and concentrating on spirits. Do you agree with this statement? Explain your reasons.

4. What elements of the Guinness international marketing strategy would you focus on in order to increase global sales volume, value and profits?

Case questions


INTRODUCTION GROWTH MATURITY DECLINE RE-CYCLE

SALES

STAGE OF THE PRODUCT LIFE CYCLE

Product life cycle: Guinness strategic marketing choices

Milk strategy?

Revitalize the brand


ENACTED: focus on what it means rather than what it can do

FUNCTIONAL: focus on what it can do rather than what it means

REIFIED: brand closely

identified with product

ABSTRACT: brand almost

product-independent

Manage the brand space concept

GUINNESS CONSUMERS

YOUNG DRINKERS


How to revitalize the brand?

• CO-BRANDING : Limited edition collection +

• SPONSORSHIP :International Guinnesspoker tour

• “GUINNESS MIX&MATCH APP ”:An application with the list of recipts, for cocktails and dishes Guinness based with the opportunity for the customers to enrich the library with their creations.


The 6C model of social media: “Guinness Mix&Match App”

Company ContentPUSH

ControlCommunity

CustomersPUSH

PULL

Mar

ket

mav

ens

Conversations online (wom)

Company’s border of control over content

DiageoGuinness Mix&Match App available free on

FB and Apps store

Publishing the best recipt and cocktail FB and Youtube

users

Barte

nder

,

blog

ger,

the b

oss

of th

e bee

r


What are the differences ?

Nigeria commercialUS Commercial

http://www.youtube.com/watch?v=CwOu7EnVNaA

http://www.youtube.com/watch?v=SXsr1UrXRg8


Sources:

• Hollensen, S., (2012), Essentials of Global Marketing, UK, Pearson Education.

• Keller, K.L. (2008), Strategic Brand management, NJ, Pearson International Edition.

• Porter, M.E. (2004), Il vantaggio competitivo, Einaudi Editore, p. 13.

www.facebook.comwww.guinness.comhttp://www.diageo.com/en-row/Pages/default.aspxhttp://www.guinness-nigeria.com/http://visual.ly/global-beer-consumption-statistics-and-trends

http://www.facebook.com/

http://www.diageo.com/en-row/Pages/default.aspx






http://www.guinness-nigeria.com/

Thank for your attention


guinnes case study

Business

act locally areacustomersolutionwesterneuropeeasterneuropeafricaproductaustraliaandasiau

case questionsinternational marketing

guinness draught

international market

international marketing

2012 13 professors

guinness competes

million litres