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Executive Summary
The report entails an analysis of how Absolut Vodka which operates within the spirits industry intends to succeed through creation of effective market awareness. The report illustrates the advertising plan that Absolut Vodka intends to utilize. An analysis of the external business environment is conducted using the PESTLE model. A competitive analysis is also conducted by considering the firm’s core competitors.
In addition, the firm’s internal and external environment is evaluated using the SWOT analysis. The report describes the characteristic of the firm’s target market.
Considering the fact that a firm operations must be guided by certain objectives, the report outlines the objectives that the firm intends to achieve through the advertising plan. In order for the advertising to be effective, the plan illustrates the message and creativity to be used in the advertising campaign. The media strategy illustrates the various mediums to be used in creating awareness.
A summary of Absolut Vodka Media Strategy is illustrated. A budget of how the 2 million pounds to be used in the advertising will be allocated is also illustrated. In addition, the timeline for the various advertising mediums is also outlined. The report also illustrates the evaluation and mechanisms that will be used to determine the effectiveness of the advertising plan. Finally, a conclusion and a set of recommendations are given.
Background to the study
For a firm to be successful, it must be effective in its marketing practices. This arises from the fact that there has been an increment in the intensity of competition within the businesses environment.
One of the marketing practices that firms should consider includes creating effective market awareness. To achieve this, firms should undertake advertising planning.
Absolut Vodka brand was established in 1879. In its operation, the company specializes in the production of alcoholic spirits. Absolute Vodka is produced from natural ingredients. There are no added sugars in its production which makes it to be an exclusive drink. However, the brand faced various challenges for a number of decades. In 1979, Abslut Vodka brand was reestablished to the market.
During the next few years, Absolut Vodka’s popularity increased internationally. One of the factors that contributed to increment in its market popularity is the aggressive advertising campaign which was conducted by the firm. The firm’s advertising campaign was based on the unique bottle shape.
The campaign played a vital role in the marketing of Absolut Vodka. As one of the alcoholic spirits is in the world, Absolut Vodka is ranked as the fourth largest brand.
Aim
The report is aimed at illustrating the advertising plan to be adopted by Absolut Vodka in its marketing process.
Scope
The report is organized into a number of sections. The first section entails a situational analysis which is undertaken by using the PESTLE and SWOT analysis models. The second part entails a competitive analysis which illustrates the firm’s core competitors.
The objectives of the firm are illustrated in part three while the target market is analyzed in part four. The message and creative strategy is evaluated in part five. Part six entails an analysis of the firm’s media strategy. Finally a conclusion and a set of recommendations are illustrated.
Situational Analysis
PESTLE Analysis
According to Havaldar (2005, p.272), businesses do not operate in a vacuum. However, their operations are affected by diverse macro- environmental factors. The main macro environmental factors that affect firms operations include the political factors, economic factors, legal factors, technological factors and social factors. Similarly, Absolut Vodka is affected by macro-environmental factors.
Political environment
Absolut Vodka is affected by an increment by the legislations that are implemented by the UK government. For example, in an effort to increase its tax revenue collection, the UK government increased the indirect tax that is levied on alcoholic drinks. Increase in tax means that the firm will be forced to increase the price of their products.
Additionally, the UK government increased the import quotas with regard to alcoholic drinks. This means that it is possible for travelers from the European Union to come into UK with large amounts of alcoholic drinks.
Increasing import quotas means that there is a high probability of firms within the alcohol industry suffering through reduced market. As a member of the European Union, UK established the free trade with other EU members in 1999. This increased the intensity of competition within various industries.
Economic environment
Over the past few decades, the UK has experienced a significant economic growth. As a result, there has been an increment in the consumer’s purchasing power due to an increment in the disposable income. However, the recent global economic recession had adverse effects on the consumers’ purchasing power.
This is due to the fact that a large number of individuals lost their jobs as companies incorporated the concept of downsizing. Currently, consumers around the world are experiencing an increment in the cost of living. This means that Absolut Vodka may experience a decline in its sales revenue as consumers shift their consumption concerns to basic necessities.
Social environment
Drinking is entrenched within the social fabric of different communities. In the UK, drinking is considered as a social phenomenon. Currently, the UK is also characterized by an increment in the number of women who are incorporating drinking in their consumption patterns.
The daily guidelines with regard to alcohol consumption amongst the male and female gender are at 39% for men and 31% for women. During social gathering, Vodka is being mixed with other beverages in order to make cocktails.
Despite the changes in the political environment in UK that contributed towards an increment in the amount of alcohol in the country, alcoholic drinks did not result into a social problem within the country. A study conducted in UK on the social problems associated with consumption of alcohol.
A comparison of alcohol-related social problems during the period ranging from 2003 to 2004 indicated that there was no increment in the social problems as a result of drinking (Gustafsson & Ramstedt, 2010, p. 4).
Technological environment
The current technological advancement has presented an opportunity to businesses in their operation. One of the areas which have been affected by technological changes relates to marketing. Firms are increasingly adopting emerging technologies in developing their products.
With regard to the alcohol industry, there has been emergence of technologies that is enabling firms to be efficient in packaging and bottling. The emergence of e-commerce presents an opportunity to firms in their effort to improve their marketing efforts.
Legal environment
According to Taylor (2004, p.3), the operations of firms in different economic sectors are affected by the legislations implemented by the government. With regard to the alcohol industry, different governments are implementing strict legislations that are aimed at controlling advertisement of alcoholic drinks. In an effort to achieve this, different governments are undertaking campaigns aimed at discouraging drinking.
These legislations have arisen from a rise in the number of deaths associated with accidents as a result of drunken driving. The UK is one of the countries that have implemented stiffer penalties on firms within the industry. These legislations and campaigns have the effect of tarnishing the image of firms within the industry.
Firms within the alcoholic spirits industry are also affected by policies implemented by the World Health Organization (WHO). The WHO has implemented policies that limit access of alcohol to young people. These legislations are also associated with how firms market their products such as their advertising. This has resulted from the fact that there has been an increment in diseases associated with drinking.
SWOT Analysis
The table below illustrates Absolut Vodka strengths, weaknesses, opportunities and threats.
Competitive analysis
In its operation, Absolut Vodka faces intense competition from other firms. Some of the firm’s core competitors include Smirnoff. Currently, Smirnoff has the largest market share on a global scale. One of the factors that have made Smirnoff to have a large market share relates to its price competiveness.
Smirnoff is relatively cheaper than Absolut Vodka brand. Additionally, the brand also faces intense competition from the Russian Vodka. Firms within the alcohol market segment have invested a significant amount in their advertising budget. For example, approximately 202.5 million pounds was spent on alcohol advertising.
The company could apply the Porter’s five forces model that implies that the return rates are always constant across the industries and the relative firms. The manager in the strategic manager can use the model to get a competitive edge and understand the market in which the company operates.
The five forces are supplier power, threat of substitutes, buyer power, degree of rivalry, and threats of new entrants. Initially competition leads to zero profits, and rivalry between firms creates a competitive edge (Hill & Jones 2010, p. 42). In the porters model other products like Russian Vodka may be a threat to the Absolut Vodka brand. This can arise if the substitute reduces its price to operate below the market prices.
So the company should consider the effect of other substitute s in the market. The buyer power is the impact that esteemed customers have on the industry (Hill &Jones 42, p.42). So Absolut Vodka should ensure the ensure that it maintains a strong relationship with its buyers. It should also avoid any incidents of monopsony where the buyers set the pries.
Supplier power determines the relationships that exist between the industry and the firms (Hill & Jones 2010, p. 43). Threat of new entrants and entry barriers ensures that no new companies enter the market (Hill & Jones 2010, 43).
For this Absolut Vodka should be able to enter and leave the market based on competition and market share. Some of the entry barriers include brand switching etc. Dynamic nature of industry rivalry of an industry is crucial (Hill & Jones 2010, p. 43). Absolut Vodka should ensure that it understands the market rivalry well.
Absolut objectives
In its marketing processes, Absolut Vodka is guided by a number of objectives as outlined below.
- To increase the market awareness of Absolut Vodka brand by a margin of 10% in Great Britain by 2012.
- To increase the firm’s market share within the Vodka segment with 3% in UK by 2012.
- To increase the total sales of Absolut Vodka by a margin of 5% in Great Britain by 2012.
Target market
According to Boone and Kurtz (2011, p.276), effective market targeting plays a vital role towards a firm’s success in the market. The target market refers to the specific market segment that a firm identifies in marketing its products. In its operation, Absolut Vodka has incorporated a number of market targeting variables.
For example the firm targets consumers defined by clarity, simplicity and perfection as their core values. Absolut Vodka targets both men and women in its marketing. With regard to age, the firm targets young and upcoming consumers aged between 21-35 years.
These customers intend to succeed both in their profession and personal spheres. Additionally, these customers are developing interest in emerging trends. They are also conscious in their consumption patterns. For example, they are selecting products that satisfy their need. Consumption of high quality alcohol has become a part of their natural life in an effort to attain satisfaction.
As a result they have developed a drinking preference which entails associating themselves with high quality alcohol brands. The consumers are also trendy which is evidenced by the large numbers in which they are patronizing bars, night clubs, discos and attending friends parties.
The Message & Creative Strategy
In developing its advertising campaign, Absolut Vodka has integrated the 5M’s of advertising. These include the mission, message, money, media and measurement. It is the firm’s objective to increase its market share on a global scale. This will contribute towards the firm attaining an optimal market position.
McDaniel, Hair and Lamb (2008, p.23) assert that attaining an optimal market position enables a firm to deal with increase in competition. In an effort to achieve this objective, the firm’s management team has allocated 2 million pounds towards advertising in its marketing budget. This is aimed at ensuring that there is a sufficient market awareness of Absolut Vodka on a global scale.
According to Bilton (2007, p.30), creativity is an important element in marketing. Absolut Vodka is very creative in its advertising campaign. This is evidenced by the strong and emotional message used in the advertising.
The firm has adopted the slogan ‘In an Absolut world’ which contributes towards appealing the consumers’ emotions by presenting the product as a desirable product for all. The slogan ‘In an Absolut World’ used in the advert below illustrates that there is nothing to be ashamed of and that there is nothing good or bad.
The advert shows a bottle of Absolut Vodka and a lady holding a glass containing Absolut Vodka and a man holding a cup. This plays a critical role in persuading the customers to change their attitude towards consumption of Absolut Vodka as one of the alcoholic drinks.
The advert shows a change in lifestyle amongst consumers. This is illustrated by the fact that the advert shows that even women are considering consumption of Absolut Vodka. As a result, the advert will change the attitude of women towards consumption of Absolut Vodka. This means that there is a high probability of the firm increasing its customer base.
It also depicts a sense of freedom amongst consumers in that they can consume Absolut Vodka while travelling. The advert ‘in an absolute world’ depicts that everything becomes vivid upon consumption of Absolut Vodka. However, it also depicts consumption of alcohol as grotesque which is indicated by the message in the advert that advices its customers to drink responsibly.
The slogan ‘In an absolut world’ is uncomplicated and easy to grasp. The distinct characteristic of the brands slogan makes it to be memorable and fitting to its target market. The advertisement depicts a sizzle in that the brand is perceived to be sexy. The firm has also incorporated the concept of copywriting (Sawyer, 2006, p. 14).
In this strategy, the firm ensures that it provides consumers with information regarding Absolut Vodka on the bottle. For example, the firm illustrates the characteristics of the drink. By consuming Absolut Vodka, consumers benefit in that the brand does not have hangovers.
Consumers do not experience foul after tastes and pungent odors after consuming Absolut Vodka. This acts as a persuasion strategy that enables consumers to consider Absolut Vodka as the appropriate brand.
With regard to creativity, the advert depicts a high degree of sophistication in the background of the travelling tube.
In an effort to be effective in its creativity, the firm will also outsource the services of an agency. The role of the agency will be to create premium quality product message. This will play a vital role in inspiring the consumers. This will contribute towards Absolut Vodka being positioned effectively in the consumers’ minds. The agency will also be charged with the responsibility of enhancing cocktail culture.
Media strategy
For a firm to be effective in increasing its sales by creating awareness through advertising, it must consider integrating different mediums (Andreasen & Kotler, 2003, p.34). In an effort to increase its market awareness, the firm will utilize different mediums.
The firm will use both traditional and emerging market communication channels. Some of the channels that the firm will consider include use of outdoor channels such as bill boards, print medium, television and radio. The print mediums that the firm will use include use of magazines and newspapers. On the other hand, the firm has its adverts being aired through the television during the prime time.
This will enable the message to reach a large number of individuals. The firm will also undertake its advertising using public transport. This will be achieved by branding public transport vehicles with its products. The firm will also conduct its advertising by using underground medium walls. Bill boards will also be elected in Central London.
The firm will also integrate emerging technologies. This will entail using the internet in its marketing practices (Chaffey, Mayer, Johnston & Ellis-Chadwick, 2003, p.43). The firm will use its website through which it will undertake online advertising. Other online mediums that the firm will use include viral videos and banners. Absolut Vodka will also use emerging social communication tools.
Some of the viral videos that the firm will use include using Flash Videos and You Tube. Additionally, the firm will also use social networks such as Twitter and Face Book in creating market awareness.
By using these tools, there is a high probability of the firm accessing a large number of potential customers. This arises from the fact that a large number of customers whom the firm has targeted use these tools daily (Kotler, Roberto & Lee, 2005, p.34).
A summary of Absolut Vodka Media Strategy
OOH: Non-standard Billboards, Advertising on Public transport and in underground, branded cars
First Period: September 2011 – Feb 2012 Build awareness
Second Period: June 2012 – Aug 2012 Increase sales
(Touch points)
Recommended dislocations: 1-2 zones, City, Canary Wharf areas.
Underground Media walls – Central, Piccadilly lines, and 1-zone stations – premium London locations
Bus stops: Central London
Billboard: Central London
Recommended quantity: 25-30
Press: Trendy Magazines (premium magazines)
Period: Jan 2012- May 2012
Men: (GQ, Esquire, Men’s Health) exposed to more brand awareness
Women: (Cosmopolitan, Viva, etc) exposed to various products that appeal’s (Cocktails)
Online: (Banners, Website, and Viral Videos)
Website: will be integrated with the campaign
Banners: on campaign “Absolut World”
Viral Videos: Youtube and flash videos
Social networks: Facebook and twitter
Budget for the advertising campaign
Advertising budget; the 2 million advertising budget will be broken down as follows:
Advertising Budget by Distribution Channel Monthly
Timeline for the advertising campaign
To be effective in its marketing communication, the firm has segmented its advertising campaign into two parts. The period ranging from September 2011 to August 2012 will be used to create awareness to the public. The other half of the year will be used to generate sales revenue.
Evaluation and measurement
In an effort to determine the effectiveness of the advertising campaign, the marketing department of Absolut Vodka will conduct a continuous evaluation on the effectiveness of the advertising plan. Some of the ways of evaluation and measurement which the firm will use includes evaluating the change in sales revenue.
Absolut Vodka will analyze the effectiveness of its online advertising by evaluating the online traffic volume. Additionally, the firm will also conduct a survey to determine the level of brand awareness in the market. This will aid in determining the effectiveness of the advertising strategies adopted. The firm will also analyze the changes in its market share.
Stake holder Analysis
According to Schwalbe (2009, P. 83) stakeholder analysis is used to give information on stakeholders so as to help them in managing relationships among themselves.
Stakeholder analysis of Absolut Vodka should include the following, names of key holders, the roles played by each stakeholder, facts about the stakeholders, and interest levels of the stakeholders to company, influence they have on the company, and any relationship suggestions among the stakeholders. Stakeholders’ analysis should be carried during the inception process so as to gather relevant information (Schwable 2009, p.83).
This information is normally sensitive and should not be available to every person but instead it should be availed to project managers and other members. Harrison and John (2009, p. 12) note that information given by stakeholders can be used to develop and modify the company’s strategic directions, implementation plans and any strategy that the company may use.
Conclusion
Through incorporation of effective advertising plan, there is a high probability of Absolut Vodka increasing its market coverage. This arises from the fact that a large number of consumers will become aware of the firm’s products. The resultant effect is that the firm will increase its sales revenue and hence its profitability.
Recommendation
In order to achieve a high market share in the global market, Absolut Vodka should consider improving its incorporating the concept of Integrated Marketing Communication. This will play a vital role in ensuring that there is an effective creation of market awareness.
In its advertising strategy, the firm targets the UK; however, it is vital for the firm to consider expanding its advertising plan to cover the global market. This will contribute towards improvement of the firm’s competitive advantage.
Reference List
Andreasen, A., & Kotler, P. 2003.Strategic marketing for nonprofits organisations.UK: Prentice Hall.
Bilton, C., 2007. Management and creativity; from creative industries to creative management. Malden, MA: Blackwell Publishers.
Boone, P. & Kurtz, D., 2011. Boone and Kurtz contemporary marketing. Mason: Cengage Learning.
Chaffey, D., Mayer, R., Johnston, K., & Ellis-Chadwick, F. 2003. Internet marketing, strategy, implementation and practice. London, UK: Prentice Hall.
Gustafsson, N. & Ramstedt, M., 2010. Changes in alcohol related harm in after increasing alcohol import quotas and a Danish tax decrease; an interrupted time series analysis for 2000 to 2007. Stockholm: Stockholm University.
Harrison, J. S., & ST. John, C. H., 2009, Foundations of Strategic Management, South-Western Pub, Mason, Ohio,
Havaldar, K., 2005. Industrial marketing; text and cases. New Delhi: Tata McGraw- Hill.
Hill, C. W. L., & Jones, G. R., 2010, Strategic management theory: an integrated approach, MA, Houghton Mifflin, Boston.
Kotler, P., Roberto, N., & Lee, N., 2005. Social marketing, improving the quality of life. London: Sage Publications.
McDaniel, C., Hair, J. & Lamb, C. 2008. Essentials of marketing. New York: Cengage Learning
Sawyer, R., 2006. Kiss and sell- writing for advertising; redesigned and rekissed. Lausanne: AVA Publishing.
Schwalbe, K., 2009, Introduction to project management, Course Technology, Boston.
Taylor, D., 2004. Brand stretch: why 1 in 2 extensions fail, and how to beat the odds; a brandgym workout. Chichester: John Wiley
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