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McDowell’s Vintage Premium Malt WhiskyIntegrating the Marketing Mix

XMBA 206.1Summer 2008

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Agenda

Administrative stuff, presentations and exam.

Integrating the marketing mix…McDowells Vintage

Course Wrap up

Questions, Evaluations

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Presentations

Remember presentation format handout.

Please email to presentations to Houman by say 2.00 pm tomorrow. Please name your powerpoint file as Group #.ppt

modarres@gmail.com

I am hoping that each group finishes in about 8 mins. which will help entertain 1-2 questions or comments from the class.

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Exam

I will be in my office between 11.00 – 12.00 if you have any last minute questions.

4.30 to 7.30

Final will be easy, but…

Any questions

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Iyer’s Framework for Marketing Analysis

Market

Customer AnalysisCompetitor Analysis

Company AnalysisMarketing Myopia

Marketing Strategy

Product

Price

Promotion

Place

Marketing Orientation

Perceptual mapping

Segmentation Positioning

First mover advantages

BrandingIntel InsidePricing process (ODI)

Pricing and innovation

Going to marketGoodyear

Direct marketingCalyx and Corolla

Traditional Advertising Planning ProcessNon Traditional advertising and promotionsBMW Z3

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1. Consumer Analysis Demographic Profile

India’s GDP per-capita was < $1500 p.a. in 1996…($3300 in 2005, $4182 in 2006).

» Approximately 5 mn. upper-upper class, many of then “nouveau riche” with per capita of > $100,000 p.a.

» Adopting the life styles of the old money group is an aspiration for the nouveau riche.

A growing middle class - 200MM ($4000 p.a. in 1996), but in 2006 about 300MM with over $6000 p.a.

Adoption of Western lifestyles is an established trend among the middle and upper-middle classes, particularly in big cities such as Mumbai and Delhi.

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Demographic Profile (cont..)

Automobile ownership in 1996: confined to less than 5% of the population (the upper-upper class).» Actual ownership may be less than 2%.» An automobile is a luxury product.

Changing trends…$2500 car» Tata_Nano» Nano_IHT» Tata_Jaguar

Membership in 1) gymkhana clubs 2) racing associations etc.» prestigious institutions which exist from the colonial era.» Membership connotes “old money,” westernization and social elitism.» part of the social life of the establishment and is aspirational for the

nouveau riche

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Consumer Behavior & SegmentationCultural Dimensions of Serving Scotch

Two Segments A small group of “old money” and establishment types, with

Western lifestyles and with Scotch as the preferred drink.» Why scotch?...a carry-over from British colonial days.

Scotch is therefore a status symbol and an aspirational product for the nouveau riche.» This group serves and consumes Scotch in a conspicuous, public

manner to make a statement:– you have arrived, you have class– you can afford it

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Social Constraints

Despite the allure of Scotch, Indian society as a whole is still quite conservative and there are many social and religious barriers to consuming alcohol. Consequently:

» drinking alcohol has a “forbidden pleasure” element to it for many middle-class families.

» Barriers rapidly dissolving during the past decade.

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Marketing EnvironmentAvailability of Scotch

At the time of this case, import of Scotch was tightly regulated. » Permit based system. » Primary recipients were government organizations, five star hotels,

and exclusive clubs (e.g., gymkhana clubs).

This promoted an active market for “bootleg” Scotch which was readily available, but whose quality was highly variable.

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Legal Constraints on Marketing

Mass media advertising of alcoholic beverages is prohibited by law.

Distillers have devised many ingenious ways to circumvent this law:» setting up companies or using distributors to sell “proxy”

products (decanters, salt and pepper shakers) which mimic the brand name and other brand properties of a particular brand e.g., Diplomat Mens Accessories, McDowells Club Soda.

» Event marketing e.g., the No. 1 McDowell’s Derby, » http://www.clubmcdowell.com/org/events.html» http://www.clubmcdowell.com/brands/mc_main.htm» http://www.theubgroup.com/events.html

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Premium Whisky Market in India

Locally manufactured Premium Indian Whisky (PIW) is an alternative to Scotch. It is a blend of 5% -10% imported Scotch and good quality ethyl alcohol.

Appropriate blending, flavoring and color are used to give it the appearance, taste and flavor of Scotch whisky

Sales are as follows:» Scotch Whisky (permits + bootleg) - 200,000 cases per year» Premium Indian Whisky - 200,000 cases per year.

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Interaction between PIW and Scotch

None of the Premium Whiskies are able to make a dent in the Scotch market due to» Lack of consistent blend quality» The aura and the image of Scotch

Thus PIW cannot satisfy the aspirational needs which the serving and consumption of Scotch fulfills.

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The New Product

A premium whisky containing > 15% Scotch blended with high proof ethyl alcohol and flavoring and color to approximate the taste and flavor of an imported Scotch.

Manufacturing Cost (Including packaging and overheads): Rs. 25/- per bottle as opposed to Rs. 15/- for a Premium Indian whisky.

Proposed name: McDowell’s Vintage Premium Malt Whisky

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Iyer’s Framework for Marketing Analysis

Market

1. Customer Analysis3. Competitor Analysis

2. Company AnalysisMarketing Myopia

Marketing Strategy

Product

Price

Promotion

Place

Marketing Orientation

Perceptual mapping

Segmentation Positioning

First mover advantages

Branding

Pricing process (ODI)Pricing and innovation

Going to marketGoodyear

Direct marketing

Traditional AdvertisingNon Traditional advertising and promotionsBMW Z3

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2. Competitive Analysis Brand Pricing Information

Scotch Price ($ equiv)

Chivas Regal Johnny Walker Red Cutty Sark Vat 69

Rs. 820/- ($23) Rs. 740/- ($21) Rs. 640/- ($18) Rs. 640/- ($18)

Indian Premium

Peter Scot Royal Challenge McDowells Premium

Rs. 430/- ($12)

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Competitive Positioning AnalysisPositioning Decision

Premium Indian Whisky Scotch

Rs 750Rs 400

?? ??

Position as a superior PIW, or as an alternative to Scotch? At what price

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What did they do?

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Positioning: Why buy me?Why Should the Consumer Buy McDowell’s Vintage?

1. Because it will offer a blend quality equal to a regular Scotch (Johnnie Walker Red, Vat 69) and distinctly superior to all Indian Premium Whiskies.

2. Because it will have an image/aura which will satisfy the aspirational needs which serving and drinking Scotch satisfies.

3. Because most Scotch whiskies available locally (from bootleggers) are spurious.

Support for creative.

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Marketing Objectives

To launch McDowell’s Vintage Premium Malt Whisky and sell 30,000 cases in the first year. (in 4 metros)

To provide a direct alternative to Scotch whisky drinkers.

To capture and upgrade drinkers of premium whisky segment from competing brands.

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Iyer’s Framework for Marketing Analysis

Market

1. Customer Analysis2. Competitor Analysis

Company AnalysisMarketing Myopia

3.Marketing Strategy

Product

Price

Promotion

Place

Marketing Orientation

Perceptual mapping

Segmentation Positioning

First mover advantages

Branding

Pricing process (ODI)Pricing and innovation

Going to marketGoodyear

Direct marketing

Traditional AdvertisingNon Traditional advertising and promotionsBMW Z3

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3. Marketing Strategy

Product Strategy Launch a blend distinctly superior to any PIW and a taste and

appearance similar to Vat 69. The brand name connotes something rare and precious to support the alternative to Scotch claim

The package design the like of which has not been seen in the country and of truly international class.

Launch in Quart (750ml) and Pint (375ml) (and no Nip (180ml)).

Why not launch the Nip…(Exclusion)

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Pricing

Price McDowell’s Vintage as the most expensive product in the (PIW) market to complement its image.

Need to achieve substantial distance from other premium Indian whisky prices.

Retail Price chosen is Rs. 550 - 560.

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Advertising and Promotional Strategy

How do we develop brand image for this “status” product in an environment where mass media communication is illegal?

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Direct Marketing Strategy

A direct mail campaign, addressed to the “old money” and establishment group as well as the nouveau riche as identified from: (200,000 mail ins)» gymkhana clubs» racing associations» lists of guests from 5-star hotels» automobile associations

What was the rationale for using direct marketing in a mass market consumer product category?» Direct marketing in the 1980’s and 90’s was rare in India…only

done by a few industrial and durables sellers.

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Direct Marketing Strategy

Tightly defined market in terms of geography» 6 major metros (with population of around 55 mn) are the major

markets.

p.u. contribution very high

Using DM for an image product. This is different from the U.S. experience.» The direct marketing campaign itself became a social thing

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Direct Marketing Strategy

Use direct mail to: » create launch awareness and excitement. (because of social

dimensions of direct marketing in India)

» build a core group of vintage consumers.

» maintain a continuing dialogue with this group and track their behavior

» Focus on lifetime consumer value.

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Teaser Mailers…Pre-Launch

A sequence of 2 provocative teaser mailers to generate awareness and interest 2 weeks before physical launch.

» teaser 1: “take a walk johnnie”» teaser 2: “what an answer for 69” » teaser 3: “she was regal” (not chosen)

The mailers will introduce McDowell’s Vintage as an alternative to Scotch.

Teasers have a response device built in (coupons for free drinks at a five star hotel) to identify “prospects” from a “suspects”

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Launch Mailer

McDowell’s Brings You a Rare Classic To all prospects:

» Introduced McDowell’s vintage premium malt whisky as an alternative to Scotch

» Presented the total product package, together a response device. Response to a questionnaire earns privilege coupons for free Vintage drinks at 5 star hotels. (12% response obtained).

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Theme Mailers…Post launch

3 theme mailers.

Build around antique/priceless/rare items and subjects and relate it to Vintage.

» “the what is what of crystalware” » “distinguished decanters” » “vintage time pieces”

The mailers give prospects the expertise to talk about the fine things in life and to contemplate purchases in exclusive and expensive product categories. (making DM a social phenomenon...small company executives solicitation)

Communicated that this will be an ongoing relationship.

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Media Advertising

McDowell’s Vintage page:» a regular & standard feature column in leading national

dailies and newsmagazines . Feeds off the information on vintage subjects in the theme mailers.

» to break 3 months after brand launch.

» Note the coordination between direct mail and media advertising

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Consumer Promotions

To 350 selected opinion leaders:» a velvet wrapped bottle hand delivered to the individual.» tied to the direct mail campaign.

Tie ups with all five-star bars for a special “vintage weeks” when “privilege drinks” can be served (sampling related to the response device).

Note the coordination between direct marketing and salesforce activity.

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Trade Promotion

Brand image window display» display in all Class A outlets to contain Vintage

In-shop activity:» 300,000 coasters with the teaser campaign design given to bars

and pubs for in-shop distribution.

» In store merchandising materials which introduced the brand and also linked to the launch mailers.

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Trade Promotion

Dealer detailer: » dealer detailer developed to aid the salesmen during launch

distribution.

Other giveaways:» playing cards» clocks

Other ActivitiesEvent Marketing McDowell’s Vintage Car Rallies. McDowell’s Vintage Jazz.

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Key Learning

Marketing strategy for the launch of an image product in a developing market from the perspective of a domestic firm.

Launching an image product requires an integrated strategy with every element of the marketing mix should working together.

Tactics and execution matter a lot.

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Postscript

Vintage created the super premium segment in India.

The super premium market has exploded.» Consumers wanted even more distance from the PIW and were even more

willing to pay for Scotch quality

McDowell and other firms started pushing up this ladder and McDowell launched Signature and Single malt

The presence of Vintage constraining the super premium brands and Vintage phased out.

The entire direct marketing database asset and the Vintage strategy transported to Signature.

» http://www.signature.indiatimes.com/» http://www.clubmcdowell.com/brands/signature_main.htm

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Postscript Evolution of a Product Manager

Evolution of a Product Manager

Grass does not grow on busy sidewalks