ABSTRACT
This is a report investigating and analyzing main marketing activities of Guinness- Diageo. An examination of the organization’s orientation was analysed, strengths, weaknesses, opportunities and threats peculiar to Guinness Diageo was reviewed in comparison with academic literatures. The competitive advantage Guinness Diageo has over its competitors was reviewed and the impact, positive and negative, of the organization’s marketing mix was subsequently evaluated.
BACKGROUND OF DIAGEO
Diageo is the world’s leading premium drinks business with an outstanding collection of international brands across spirits, wine and beer. Many of its brands have been around for generations, while some have been developed more recently to meet new consumer tastes and experiences. Trading in approximately 180 markets, Diageo employ over 20,000 talented people around the world. With offices in 80 countries, its manufacturing facilities across the globe including Great Britain, Ireland, United States, Canada, Spain, Italy, Africa, Latin America, Australia, India and the Caribbean. Diageo is at the forefront of industry efforts to promote responsible drinking.
The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO).its company values are listed below:
- Acting sensitively with the highest standards of integrity and social responsibility, and as well to enjoy and benefit from diversity.
- Constantly set high standards and then try hard to exceed them in other to be the best.
- To seek and benefit from diverse people and perspectives and also to strive to create mutually fulfilling relationships and partnerships.
- To carry out annual employee values survey in other to demonstrate how serious they are about company values
- Being passionate about customers and consumers by constantly searching for new ideas that drive growth and spinning them across the company business.
The company’s Strategy
Diageo business strategy is to deliver sustainable organic growth (which contributed 58% of total volume in the year ended 30 June 2009) through the stewardship of outstanding range of premium drink brands. This is supported by strong financial discipline and cash management, and where appropriate will be supplemented by selective acquisitions.Over the years, they have built a great mix of strengths and resources which is manage to target growth in both the good times and more challenging times. This range of capabilities enables the company to be agile in response to global and local market conditions, and as well supports the company scale and diversity, which in turn provides the company with resilience and growth opportunities. Diadeo uses world-class marketing capabilities to combine the benefits of global scale with local insight, and act with flair and agility to delight consumers with both their trusted brand favourites and the introduction of new and exciting innovations. They strive to execute everything they do to the highest possible standard, and continue to invest in the skills of its leaders in otherfor them to become leaders today, and for tomorrow
ORGANISATION ORIENTATION
Guinness Diageo slogan is celebrating life everyday everywhere. The orientation of Diageo is to be a total beverage alcohol (TBA) company rated as No1 supplier in beverage alcohol in every market they operate. The consumer is at the heart of everything Guinness Diageo does with its brands. It want consumers to be delighted by its brands which is delivered by a wide array of innovation that satisfy consumers insights/drinking motivations and creative marketing/sales activities that creates great value for consumers and customers. Guinness Diageo is committed to creating a positive role for alcohol in society through active support for responsible drinking and contribution to communities and environmental programmes.
Guinness Diageo employees are valued for their skills and performance contributions. There is a focus to delivering amazing relationship with teams, customersand partners that results in Business Leadership in market share and profits.
In line with Slater and Narver (1995) “market orientation is a culture that attributes priority to profits and to keeping superior value for customers, considering at the same time the interest of the enterprise; sets the norms for the development of the organization action lines and of market information”. Gray (2002) also states that “market orientation is the implementation of a corporate culture or philosophy which encourages behaviours aimed at gathering, disseminating and responding to information on customers, competitors and the wider environment in ways that add value for shareholders, customers and other stakeholders.”
There are two other emerging themes in the market orientation and innovation literature. The first is the need for an internal marketing orientation (Conduit, 2000) to ensure that staff buys into and articulate the desired marketing and/ or innovation cultures which the organisation is trying to develop. This appears to be particularly important for Guinness Diageo as service providers, given that their businesses are dependent on satisfactory personal interactions. The need for good interfunctional co-ordination (Narver and Slater, 1990) to disseminate market information internally is reflected in many market orientation scales. The second emerging theme is the importance of organisational learning to ensure that market and product knowledge is retained and that firms learn from their innovation and/ or marketing strategy failures as well as their successes. (Hurley and Hult, 1998).
Guinness Diageo while rendering a service enterprise, can obtain important advantages in internal organisation as well, apart from the external market profits that can be put down to orientation. Siguaw et al.(1994) discovered that, if there is a strong market orientation in an enterprise, the sales will help a greater customer orientation. This will reduce uncertainty in work: the work carried out will be more satisfactory, which in its turn will provide a greater satisfaction of consumer needs. Also there exist a positive relationship between market orientation in an enterprise and employees’ dedication.
STRENGHT AND WEAKNESSES
Among Guinness Diageo strength are: quality and strong brands (Vodka, Smirnoff, Baileys and RTD), market coverage structure to cover both on and off trade, part of a global company Diageo (Search and Spin across markets), innovation in all category (Total beverage alcohol), people and skill, capacity and partnership. While the major weakness is growing Guinness Diageo share in beer category.
OPPORUNITIES/THREATS
Opportunities enjoyed by Guinness Diageo includes: biggest RTD market in Europe, economic growth ahead of Europe average, growing off trade in alcohol servings( over 55%), consolidation in convenience sector i.e. supermarkets (easy to serve), growing in home consumption (innovation opportunities) and growing market for spirit and wine. However, the following threatens Guinness Diageo: dominance of off trade by multiple groceries (Tesco, ASDA, Morrisons), decline in beer, slower consumer spending and focus on wellbeing (healthy product), RTD taxed as spirits, media attention on responsible drinking, imported brands and aging drinkers.
Kern (2001) demonstrated that response planning process begins with an in-depth information-gathering technique called a SWOT analysis. A SWOT analysis helps understand the product’s attributes, the competition, and sales opportunities. It helps you develop consensus on the scope of the marketing project required to achieve desired sales goals, and to understand the marketing and financial resources available to do the job. In addition, a SWOT analysis gives valuable input from management team about key messages and issues.
Assess Organizations’ Strengths
In the first part of the SWOT session, the goal is to identify the most important attributes of the product. Begin by asking about the product’s strengths, focusing on its three most important or unique strengths in the marketplace. This helps participants narrow their thinking and focus on the top characteristics of the product: Is it the least expensive, the highest quality, the most durable, the most flexible, the most powerful? After determining the top three strengths, it is valuable to ask what other characteristics or benefits the product offers. This gives participants permission to expand their thinking and generate additional ideas. In addition, ask in what way the product or service of the organization is superior to that of the competition. Also examine company strengths that could be considered assets vis-�-vis the product, such as brand awareness, marketing muscle, distribution, and a skilled sales force. What can you leverage to succeed? Is your company or product well known? Do you have an extensive distribution channel? Finally, how does the marketplace and competition perceive and react to organization strengths?
Understand Organization Product’s Weaknesses
The second part of the SWOT session, examine organization weaknesses. The goal is to determine the obstacles or problems that organization product poses which needs to be worked on. Search for the hard answers. What are the product’s three biggest weaknesses or negative features? What doesn’t the product have? What weaknesses or missing features will the sales force need to sell around? Continue probing for additional weaknesses. Delve into what can be done to improve the product. Contrast your company with the competition. Are competitors already making improvements? Have competitors already addressed these issues? Return to issues related to the company itself: What company weaknesses could be considered liabilities vis-�-vis the product, such as no brand awareness, limited marketing resources, no distribution channel? A sanity check is needed to compare internal beliefs and perceptions to marketplace realities. How do the marketplace and competition perceive and react to these weaknesses?
Seek Marketing Opportunities
In the third part of the SWOT session, the focus is on the best place to invest marketing pounds to generate the largest return in the shortest period of time. What targets, markets, segments, titles, companies, and industries show a deep need for the product or service? This question is designed to identify markets or groups of individuals that desire or need company’s product. It is far easier to generate leads from audiences that are in need than from those that require education about why they need your product. Investigate the size of the opportunity to find out where, in the long term, the large market opportunities are. Which opportunities can generate the most revenue for the company? What needs to be overcome to leverage these large market opportunities? Do you need a special sales force? Do you need to modify your product for the market? Do you need case studies showing that others are using your product in a given market?
Carefully consider any marketing edge, such as marketing opportunities the competition doesn’t know about.
Deal with Threats
Finally, watch out for ripples in the market or in competitive response that could impact the marketing program. What changes in the market could influence the success of the lead generation campaign? This question is designed to identify anything on the horizon that could have a long-term impact on results, such as changes in interest rates, a softening of the stock market, import-tax increases, or new government regulations. Look for peculiarities of the market too, since these may afford opportunities or have negative impacts. What trade shows, competitive events, or promotions could hurt the program? What are important trade show dates?
As a Marketing Consultant, I recommend Guinness Diageo to exploit their organizational strength to overcome their weakness, grasp opportunities and defend organization against threats.
COMPETITIVE ADVANTAGE
Guinness has competitive advantage over its rival by the organizations sales force structure that enables the organisation cover all part of the country, has great brands in all category, retail redistribution scheme for effective product coverage, retail activation on the 4 P’s, motivational trade terms for distributors e.g. volume rebate, extended credit facility, yearly MD award for best performing distributors and efficient and effective logistic in terms of delivery.
A firm is said to possess a competitive advantage over its rivals when profit sustained by the firm exceed the average for its industry. A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Cost and differentiation advantages are known as positional advantages since they describe the firm’s position in the industry as a leader in either cost or differentiation. A resource-based view emphasizes that s firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation.
A CRTICAL ANALYSIS OF GUINNESS’ MARKETING MIX
Product Mix
Following David Jobber’s (2007) view, Guinness beer product can be divided into five closely knitted brands lines- Guinness Draught, Guinness Draught Cans, Guinness Original, Guinness Draught Extra Cold, Guinness Foreign Extra Stout, Baileys, Smirnoff Ice and Vodka. The depth of Guinness lines has been influenced by customer requirements, competitors’ offers and Guinness’ resources. Creation of Guinness Draught Cans in late 1980’s was motivated by competitive challenge necessitating a homely available pint. Again, beers looked ‘cool’ in cans. Guinness Foreign Extra Stout has been manufactured locally in Africa, Asia and the Caribbean since the 1960’s in respect to the distinctive tastes in warmer areas. Guinness Draught Extra Cold was produced as a response to customers’ preference for a colder beer. Guinness brand extensions illustrate its strength and uniqueness as a world class authentic beer brand.
But just how strong is Guinness? At its very cradle- Ireland, sales of Guinness fell by a huge 3% in the later part of 2001, FASTCOMPANY.COM (2008). Seemingly, Guinness till then had not done enough to reinforce the brand’s old image. So Guinness in 2002, redesigned it visitor’s centre in Dublin, replacing the 1904 building with a contemporarily designed seven-story brick, glass and steel multipurpose building. This is just one of the various challenges global brands face. David Jobber (2007) states that strong brands are category leaders that represent company value, extend, change consumer perception, bar competition, increase profits and offer quality certification to customers who trust.
Everyone will attest that their original perception of Guinness is not a good one as they are put off by the bitter, burnt flavour, Epinions.com (2003). This sour taste follows when part of the beer is boiled down to half of its volume and then vinegarized. Guinness has been unique in changing consumers’ initial taste perceptions. Once ignored, the bitterness transforms into sweetness facilitated by capping chocolate flavour with a creamy white head resulting from nitrogen gas discharge, Wiki Answers (2008). It is quite likely that some beer consumers have never been able to come to terms with the taste. This is why the Guinness Red, a smoother, sweeter and lighter form of Guinness was launched in 2007 with a multi-million pound investment by parent company Diageo to get back some lost lager and bitter drinkers, BBC (2007). About company value, in 2001, 2 billion pints of Guinness were sold around the 50 countries wherein the beer is sold. And in the same year, 1 million pints were sold daily in Great Britain.
When it comes to competition, Guinness’ home markets have suffered from its ageing image, with the new century seeing a decline in sales especially in England and Ireland by 13% and 30% respectively since 2001. However, Guinness has been able to bar competition in foreign markets, being the leading stout brand in the Middle East and Africa from 2006 with a 51% volume share and doing well in America too. Africa alone accounts for 33% of Guinness sales worldwide and Nigeria in the third largest and second most profitable market for the brand. The preferred brand in Africa is Guinness Foreign Extra Stout, The Drinks Business (2008). Despite Guinness’ dominance in Africa, competition from Nigeria Brewery’s Gulder Max Dark beer launched in 2006, Brasseries du Cameroune and Union Camerounaise de Brasseries’ Pelford beer and Kadji Brune both which took 1% and 3% of stout sales in Cameroon in 2006, all offer Guinness intense competition on the planet. However, reiterating its strength as a strong brand, there has been an aggressive advertising campaign in Nigeria featuring Tuface, a young and popular musician for youth appeal, since 2006 as Guinness Foreign Extra Stout was launched in 300 and 500 millilitre cans. Further brand extensions like Guinness Extra Smooth launched in 2005 to young Nigerian larger drinkers and the non-alcoholic Malta Guinness Quench was also launched in Cameroon in 2007 to emphasize the natural goodness of malt, The Drinks Business (2008).
Quality certification for Guinness has been fairly mixed from frequent disagreements amongst consumers as to which Guinness brand is most pleasurable. However, it is observed that the undisputed beer of choice in foreign markets is Guinness Foreign Extra Stout. Associating Guinness with strength and sexual virility in most African countries especially Nigeria, colloquially known as ‘black power’ with backing from advertising campaigns like the Michael Power campaign, has provided quality certification to these consumers as they trust that Guinness makes them physically and sexually stronger, The Drinks Business (2008).
As a well built brand, Guinness’ positioning, repositioning, quality and being first has been outstanding. Its positioning respects the 4C’s framework of Clarity, Consistency, Credibility and Competitiveness. We have already seen how competitive Guinness is. In England, the main idea is carried in the message, “Good things come to those who wait”, stressing Guinness’ evolution over time. In Africa, the beer is associated with ‘strength and power’. These messages have been clear and consistent over time. Guinness’ credibility as a unique black stout with a creamy white topping and bitter taste is genuine. It can also be seen as a first of its kind with widget cans that diffuse nitrogen gas to create millions of delicious creamy bubbles. Being a consumer good, its quality is reflected in its premium price and its ability to maintain this price in the face of competition. Guinness has also been able to reposition itself by coming up with non-alcoholic alternatives in Malta Guinness and also the most recent sweeter Guinness Red.
In 1997, Guinness plc easily re branded itself to Diageo plc to become the world’s largest beer, wine and spirits company as it merged with Grand Metropolitan. The combination brand name, Diageo and even Grand Metropolitan are not still as popular as the Guinness name. Apart from being able to re brand, we have also seen how deep Guinness has been able to extend its brand although Guinness Draught Cans, Guinness Draught Extra Cold and now Guinness Red have been criticized for being a step too far from the original brand, Guinness Original. These brand extensions account for a greater proportion of Guinness worldwide sales.
Lastly, the Guinness product mix evaluation will be incomplete if we fail to scrutinize its introduction, growth, maturity and decline with time using the Product Life Cycle, Jobber D. (2007). In this respect, we can make two different observations- old European markets where sales have been static on one hand and African, Asian and American markets, where sales have been increasing. Guinness is in the maturity/decline stages in Europe because from 2001 Guinness sales in England and Ireland dropped by 13% and 30% respectively. However, heavy campaign investment from parent company Diageo plc saw Guinness sales in Europe increase by 3% in February 2008 and remained UK’s 3rd most popular beer, The Independent (2008). It can be said that sales are stabilized and due to competition, there have been innovation like Guinness Red to extend sales stability and maximize profit by maintaining brand loyalty and customer retention.
Guinness is still enjoying growth in foreign African and Asian markets as market share is increasing while competitor brands are emerging. Building brand preference by projecting Guinness’ uniqueness and penetrating the market are the main focus in these areas. Sales and profits are going through the roof as Guinness had 51% volume share of the beer market in Africa and the Middle East in 2006, The Drinks Business (2008). This fast sales and growth has invited competition as we have discussed earlier. See diagram.
Pricing MixHH
It will seem Guinness operates a marketing orientated pricing policy as a combination of explicability, costs, competition, and value to customer, price-quality relationship, and product-line pricing all blend to determine its brands’ prices. On February 1st 2008, Diageo announced a 3% price increase for Guinness. A spokesman for Guinness said, “In line with our annual pricing review we will be increasing the price of Guinness Draught on 1 February 2008 by 3%. The increase is in line with previous years and owing to a number of factors including inflation and cost of goods”, Morning Advitiser.co.uk (2008). This justifies Guinness’ reliance on corporate ability to explain high prices, changes in cost, and value to customer to make constraints on price flexibility.
Competitor orientated pricing also forms part of Guinness pricing strategy because Diageo plc takes the going rate for Guinness brands. Guinness’ differential advantage with a unique taste of roasted or burnt barley or malts with a light brown creamy topping and also the invention of Guinness Draught Can with its widget mechanism clearly was a precedence in the beer can market which on which a premium price of almost �4 in the UK has been built.
Guinness’ unique brand qualities and power of explicability have enabled it to initiate price increases. One of the main reasons Guinness keeps citing for price increases is inflation. In July 2007, Guinness was priced at �4.20 a pint in Dublin. Earlier price increases by 15 cents for stout and other beers were announced by Irish publicans in May 2004. However, since 1976 there had not been too much increase as to alter how many pints consumers could purchase with their weekly wage, Finfacts Ireland (2008). But the price increase announced in February 2007 did receive a lot of criticism. However, this criticism has never affected sales.
In terms of reacting to competitors’ price changes, Guinness brands have never followed price reductions because this may go contrary to the brand image as it is seen as a premium stout.
Ethically, Guinness has had its nasty times. In 1998, the Competition Authority almost pressed price-fixing charges against Guinness following allegations by Tommy Doyle that he, as sales rep for Guinness had been attending price fixing meetings with top officials in the company. Guinness has benefitted from being a global brand as many regulations that apply in Europe, do not apply in areas where the stout presently enjoys high sales and profits like in Nigeria. Here, the drink is directly associated with sexuality which is morally wrong in Europe.
Promotion Mix
A strong communication strategy has been adopted by Guinness in order lead the market and making its consumer aware of the brand existence .
Guinness has been the out of box thinker in promoting its product and have used various means of promotion to make its heritage known to the consumer.
Guinness tries to get use all element of promotional mix like advertising, personal selling, direct marketing, internet promotion and publicity. Advertising is one of the important elements of promotional mix.
While maintaining a significant level of advertising, Guinness gained extensive PR coverage through being the first UK Company to “advertise” on the World-Wide Web. It has used aggressive promotional campaign in order to achieve it position in the market. All promotion made by Guinness were to take the competitive advantages over its competitors, a competitive advantage which has led to an extensive and highly-developed Web presence.
Guinness advertisement focus on its heritage and tries focusing on the young target audience of 20-35 through television, posters and outdoor. Guinness has been the few companies who have understand the need of promotion in order to reach the wide section of society.
Guinness stout remains the best-selling alcoholic beverage in Ireland. However, globalization, it has expanded itself as a product and has reached different countries.. With the recent roll out of products in countries like Nepal and Ethiopia (Guinness now has a market presence in more than 150 countries throughout the world).
Guinness is using the internet promotion in order to reach the mass society and to make them aware about its different products. Guinness covers the large section of society and promotes the fact and figure about its product details through internet.
Celebrity endorsement have been used by Guinness as a tool of direct marketing in order to promote its product in younger people and focus on its growth expansion.
Guinness has an aggressive sales promotion technique in order to provide certain incentive to the consumer. It spend lot of money in its sales promotion and make new strategies in order to retain its consumer and with innovative promotion followed by Guinness to reach larger part of the society.
Thus Guinness has aggressive promotion strategies which help it to give an edge before its competitors in the market. The global heritage helps Guinness to reach people and major money spend on promotion help consumer to understand the product better. The basic objective of the Guinness