CASE STUDY
Case study about Absolut
MKM assignment case 1: Absolut Jeremy Lee, marketingmagazine.co.uk, 2010
The brand has conspicuously failed to take advantage of vodka’s popularity, writes Jeremy Lee. Sales of vodka surpassed whisky in 2007, making it Britain’s most popular spirit. However, recent figures suggest the nation’s relationship with the tipple is now more shaken than stirred. One brand appears to be suffering more than most – Absolut Vodka, sales of which fell 39.3% in value and 47.4% in volume in the year to 12 June. In the market as a whole, volume sales fell 5%. Rises in VAT and duty have been blamed for deterring shoppers from vodka, while retailers have eschewed deals. As a result, it has lost share to other spirits such as gin and rum.
For Per nod Richard-owned Absolut the slump is little short of disastrous. Famed for award-winning and highly stylised advertising, designed to appeal to a new generation of drinker, it has failed to market itself at this most crucial of times. Indeed, rivals such as market-leading Smirnoff Red Label and newcomer Russian Standard grew 12.2% and a spectacular 54.3% (albeit from a low base) respectively on the back of extensive marketing activity. With other spirits categories being perceived as ‘more interesting’, on account of their innovation and ability to cater for different tastes, and consumers put off by price increases, the sector needs to work fast if it is to prevent its sales continuing to slump. What can Absolut, in particular, do to reignite interest in it? We asked Jason Goodman, chief executive of Albion, which works on Jose Cuervo, and Stephen Woodford, chief executive of DDB UK, which handles Budweiser’s account.
ABSOLUT SALES PERFORMANCE Value -39.3% Volume -47.4% Year ending 12 June Source: Nielsen DIAGNOSIS – Two industry experts offer views on how Absolut can call the shots again JASON GOODMAN, CHIEF EXECUTIVE, ALBION It’s been a tough 12 months across all sectors and the drinks industry has inevitably suffered during the recession. Premium alcoholic drinks are luxury items and can be one of the first things people cut back on when budgeting. A business like Pernod Ricard, with a stable of premium-priced spirits, inevitably faces the challenge of dropping prices in extremely volatile markets. Its Mumm Champagne, for example, is reported to be one of the worst performers of its 14 brands. No doubt the category overall is suffering, but it’s also a brand that sits in the middle ground, having insufficient appeal to the very wealthy or the consumer searching out value. However, the strongest brands, such as Absolut, can maintain their margin. Its product design heritage, focus on its Swedish roots and constant innovation in new flavours and modern branding mean it’s high in consumers’ minds. It’s proof of the value in focusing on innovative product design and investing in a ‘lighthouse’ brand. Campaigns like ‘Cosmo’, which homes in on the female audience, is cleverly executed with a savvy use of celebrity – just more of Absolut’s top-quality marketing. REMEDY – Invest in product design that delivers ‘lighthouse’ brand standout: innovation in the serve, packaging, in-bar experience and the web are the places to focus attention. – Don’t reduce prices at the cost of brand reputation and the ability to maintain share of voice. – Narrow the focus onto a smaller group of brands with proven marketing platforms and invest in innovative techniques to reach your audiences. – For younger audiences, put digital at the heart of the marketing mix.
STEPHEN WOODFORD, CHIEF EXECUTIVE, DDB UK Absolut was once the zeitgeist vodka, despite its premium price, but has now vanished from the public radar, retreating into its VIP veneer. The ‘Absolut perfection’ strapline has been around for 30 years, but the ultra-hip brand is in a far from perfect position, having declined so dramatically in both value and volume sales. Absolut’s market share is diminishing as it’s caught between younger brands such as Grey Goose and the ever-successful Smirnoff. The former proves that you can remain a premiumprice product and still get close to consumers through select events such as the Oscars and its Soho House partnership. By comparison, Absolut seems to have stayed in Sweden. Its website is beautifully designed, but, like the brand, too detached, offering no interaction. There is almost no level of engagement. Producing a label-less vodka seemed clever, but with shrinking market share now seems silly, and the Absolut Icebar looks tired rather than cool.
Furthermore, the Spike Jonze tie-in – he directed the short film I’m Here in a ‘creative collaboration’ with the brand earlier this year – was fine for a certain market, but never destined to deliver significant sales. REMEDY – Secure brand ambassadors that fit the brand’s design focus: Damien Hirst and Zaha Hadid, for example. – Partner with the coolest Tokyo/London/NYC bars in collaboration with Wallpaper* or Monocle. – Host pop-up bars at key cultural events: Mercury Music awards, London Fashion Week – market by association. – Ask consumers to nominate the coolest bars worldwide, then compile a book/online guide. Assessment Question: Absolut is positioned as an aspirational product carrying a premium price tag. Vodka drinkers are traditionally known to be shift-loyals or wandering customers and they showcase a very low degree of brand loyalty unlike scotch and whiskey drinkers.
QUESTION
Identify what options the brand has to grow revenues by influencing and acquiring loyal customers when these “repertoire drinkers” or those who enjoy many different types of alcohol but don’t decide what to drink until the last minute.
HOW TO ANSWER THE QUESTION
PART ONE
pls DO SWOT ANALYSIS,PEST ANALYSIS,RESOURCE AND CAPABILTIES ANALYSIS OF ABSOLUT , VALUE CHAIN and pls in ur research use mintel,sage,customer database as ur sources and reference etc and pls give ur opinion as to whether the market is attractive of not
PART TWO
PORTER GENERIC STRATEGY
please align with align yourself with differentiation or focus
and pls briefly discuss also ansoff strategies
of product, market development,diversification or market penetration which one is best option for absolut
and pls most important discuss POSITIONING in regards to the case study
Lastly pls analyse with graphs and thorough analysis of absolut and pls avoid writing too theories
thanks look forward to working with you more
