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The brewery industry was transformed in scale after the mid-nineteenth century through advances in the science and technology of brewing and as consumption rose due to population growth (Wilson, 1998). Since then, the brewery industry has been faced by many challenges over the past years, with beer consumption demand declining due to the world macroeconomic landscape and tough marketing conditions such as oil price increase, rising of alcohol duty, the Euro zone crisis, unemployment, high inflation level and shifting consumer trends. The consolidation of breweries worldwide is counterbalancing the consolidated distribution networks in the mature beer markets, which determine the beer sold in various outlets (Marinov and Marinova, 2000).
Globally, the beer market is estimated to have grown by 1.6% in 2008 to reach a value of USD 453.9bn, which Europe accounting for 49.2% of the total value and consumption to reach 2.0hl by 2013 (See figure 1.1 for World beer production), (Canadean, 2012).
Beer market and demand vary a lot across the world, for example, in mature western European countries the beer market are stable or slightly declining, while emerging countries such as Asian, Africa and Eastern Europe are showing a rapid growth rates. Internationally, the global beer consumption increased by 2.4% in 2010 which is below the 5%+ growth rate seen earlier in decade (Canadean, 2012).
The global and regional beer consumption growth rate varies as shown in the above graph. Asian market is the biggest contributor with the forecast to increase by 187 mhl between 2010 and 2016 with China having the highest volume growth of 43 per cent and 37% of the volume growth from emerging markets (SABMiller, 2012). According to Canadean, (2012) beer consumption in Asian and Africa is predicted to grow at a CAGR of 5.0% between 2009 and 2015, Latin America 3.0%, Middle East 5.5%, East Europe 1.5%, North America 0.5% and Western Europe 0.016%.
Source: Canadean, 2012
Recently they have been a trend in alcohol production and worldwide trade showing that globalized alcohol beverages are playing a leading role in developing countries (Byrom and Lehman, 2009) and looking forward to enter Africa to cover up for the decrease share market in the developed countries. This developmental trend has been supported by the general increase of beer consumption worldwide where the four brewing giants, Heineken, AB Interbrew, SABMiller, and Carlsberg account for 42% of beer sold worldwide, (See figure 1.4 for the World Top Brewers,( Canadean, 2012).
Source: Canadean, 2012
Global beer firm such as SABMiller has more than 50 per cent of the whole beer market share in Africa, in volumes terms, Heineken, which is the main brewer in West African countries purchased two Ethiopian breweries, Diageo, the leader in Kenya and Castel, all these brewers account for approximately 80% of the African market (Economist, 2012). While their objectives in established highly competitive markets are to defend and possibly increase market share through strategic alliances and acquisitions, in high growth emerging markets their strategies are aggressive (Marinov and Marinova, 2000).
In Africa, beer industries consist of both small and large producers, contributing to production capacity of just above 1.0m hl per year (Economist, 2012). Recent research by Canadean (2012) shows that Africa produce 4.8 per cent of global beer, China 23 per cent, U.S.A 13 per cent, Russia 6 per cent, Brazil (6.0%) and Germany 5 per cent, but has the lowest global per-capita consumption rates of 6.0 litres pp, due to low purchasing power of consumers (See figure 1.5 for the Beer production) (Canadean, 2012).
Although most alcohol is produced and consumed locally, global firms use strategic alliances and sophisticated marketing technologies to penetrate to the developing countries market. This trend forces brewers with high internationalization aspirations, especially in mature markets, to develop and implement a strategy based on strategic alliances with strong international players (Marinov and Marinova, 2000).This has created high competition in the brewer industries and financial pressure as the firms are making significant effort to catch up with the leaders by improving they marketing techniques and constantly reviewing they strategic planning process in order to anticipate the consumer tastes and preferences.
Source :( EABL, 2012)
East African Breweries Limited (EABL) was incorporated in 1922 and traded as Kenya Breweries Limited (KBL) until 1936, when it merged with Tanganyika Breweries Limited resulting to change of name to EABL. EABL headquarter is located in Nairobi and has 1775 employees. EABL is a public limited company and its majority shareholder consists of:
Diageo Kenya Limited
Diageo Holding Netherlands BV
Board of Trustees NSSF Board
Guinness Overseas Ltd
CFC Stanbic Nominees
Source: EABL, 2012
'Tusker' was the first beer brewed in 1923 and became the most popular beer in Kenya, also highlighted as a source of Kenyan Pride in 1990's. In 2002, EABL and South African Breweries International (SAB) signed license agreements and consent for share exchanges in Tanzania Breweries Limited and Kenya Breweries Limited, and after a prolonged marketing war the agreement was for the SAB to shut down its brewing plant in Thika, Kenya the Castle Breweries Kenya Limited .
In 2010, EABL acquired a significant interest in Serengeti Breweries Limited, the second largest brewing company in Tanzania and in November 2011, it commissioned a new brewery in Tanzania as a part of the continuing investment (Diageo, 2011), in order to meet consumer demand and to strengthen its position as the top beer and spirits distributer in the East Africa community.
EABL along with its subsidiaries has range of supporting industries such as Glass industry which provide containers and bottle products, East Africa Malting industry which supply quality raw materials, distilleries, breweries, distribution network across the East African region and engaged in marketing, brewing/manufacturing beer brands which include the Kenya's leading brand- Tusker (the flagship brand and a Kenyan icon).Others brands include Bell lager, Pilsner ice, Serengeti Premium Lager, Pilsner Extra, Guinness, White cap, Senator, Allsopps and Smirnoff, and spirits brands includes Vodka, Whisky, Brandy and triple refined spirits. The company also manufactures non-alcoholic drinks and exports its products to Rwanda, Burundi and Southern Sudan (EABL, 2012).
Maybe include EABL core value and company structure
2. Research aim and objectives
The main aim of this research project is
Evaluate the strategic planning and marketing effectiveness by East African Breweries Ltd (EABL).
The main objective is:
Examine EABL key supply-side and demand trends.
Analyze EABL market trends and market growth.
2.1 Research Questions
The research questions are as follows:
Does EABL maintain and build competitive advantage over the competitors?
Which variable of the marketing mix are most or least emphasized by EABL?
What are the marketing opportunities of EABL brands in the future?
2.2 Research hypothesis
The research hypothesis of this research project is to determine whether the EABL strategic planning and marketing techniques used, if they are effective or not.
3. Overall structure
The overall structure of the research is designed to explore and to provide a framework which will be used in meeting the research aim and objectives. The two research questions forms the basis of the research and offers an insight into the complex world of the brewing industry particularly to East Africa Brewery limited (EABL). The research is divided into chapters each which sub sections. Chapter 1 provide the background of the research project, setting out clearly the research aim, objectives and the research questions.
Chapter 2 provide a critical review of the literature on strategic planning and marketing effectiveness. Evaluation will be carried out in order to identify research gaps in the literature by using relevant theoretical frameworks such as Ansoff matrix, and Competitive advantage and SWOT analysis.
Chapter 3 discuss the research methodology/design used for data collection, the methods and techniques used to analyse the findings and limitations of the research design, data analysis and approach.
Chapter 4 discusses the results and analysis derived from the current secondary literature. In this chapter, key findings will be presented in tables, graphs, charts and results will be interpreted
Chapter 5 provide an overall summary of key findings of the research project, limitations of this research and recommendations for future research will be considered.
3. Research Approach and Methodology
To evaluate how EABL adapt to it strategic planning and marketing effectiveness, the research adopted an exploratory methodology. The main aim of the research was to gather descriptive data on strategic planning and marketing effectiveness practices in brewery industries, in order to shed light upon wider issues concerning the strategic decision making and marketing strategy in brewery industries in particular the East African Brewery Limited. The research focuses on the beer brewing industry in Sub-Saharan Africa countries (SSA) because it provides a context in which significant isomorphic forces counter-balance strategic initiatives in the strategic and marketing strategy (Lamertz at el, 2005). Beer brewing is a highly institutionalized field in which homogenizing effects result from (1) stratification by economies of scale in production and distribution, (2) regulations on production, sales, and consumption, and (3) social forces that challenge the industry's legitimacy (DiMaggio and Powell,1983).
Given the nature of brewery industry, the research covers three Sub-Saharan Africa countries, limiting on one brewery industry in each country. In West Africa, the research covered the Nigerian Breweries Ltd; in South Africa, it covered the SABMiller breweries limited and in East Africa, the research covered the East African breweries limited.
The research approach depends upon the conclusion one expects after conducting the research and the theory used explicated in the presentation of the findings and conclusions (Saunders, et al., 2003). The research strategy used to answer the research questions and objectives is the case study. Robson (2002:178) defines case study as "a strategy for undertaking research which entails an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence". The case study method has a rich history of bridging the difference between theory and actual practice in the real world (Breslin and Buchanan, 2008). The case study was introduced to the scholarly community by legal scholars as a teaching method and has since been used in the scholarly works by social scientists (Breslin and Buchanan, 2008).
The case study strategy explores the existing theory surrounding the research projects in order to generate answer for the research project. As such, an exploratory research approach is considered appropriate and, for this reason, a qualitative case study technique was used for data collection aimed at gaining insights into the topic investigated (Yin, 1994).The case studies were published case, as published cases are useful source of data as they contain factual and detailed information about the practices and strategic designs of actual firms (Lim, 2006). Case studies as source of data can be more reliable as such information, having been gathered through tedious fieldwork, is extremely rich and not easily extracted through quantitative surveys, as the writers rely on multiple key informants and archival records to construct the cases (Jaunch et al., 1980).
Most studies of case study research have used questionnaire data with samples of between 48 (Grinyer et al, 1986) and 199 firms (Lindsay and Rue, 1980). The result is quantitative data that can be subjected to statistical analysis, but which fail to capture the richness and complexity of firms' planning practices (Grant, 2003). Merriam (1998), argue that by focusing on certain factors within a single phenomenological events or context, it is possible to further understand important facts about the events studied.
To date, little has been published on strategic planning and marketing effectiveness of Sub-Saharan Africa brewers, therefore the selection of the research methodology and techniques used depend on the quality and quantity of data collected. This provides the basis for the information required to meet the objectives of the research project (Crowther and Lancaster, 2012). Crowther and Lancaster (2012), also argued that before any primary data is collected, secondary data should be checked first by the researcher as they is no need to gather such expensive, time consuming new data if the data needed, or at least some of it, already exist in the company or generated by outside organization.
A mixture of strategies was used in order to fulfil the objective of the research project and to answer the research questions which were designed as qualitative in order to have a clear understanding of the strategic planning and marketing effectiveness of EABL. Secondary data is data that have already been collected for some other purpose, perhaps processed and subsequently stored (Saunders, et al., 2003).
With developments in data and information technology systems, secondary data is more abundant than ever and widely used because it is quickly accessible and available, and most company have a lot of data in their websites, book records, from press media release and the researcher can use such data to evaluate and analyze the research issues and problem (Crowther and Lancaster 2012).
Case study research is not restricted to a particular source of data and the evidence can include both qualitative and quantitative data (Yin, 2011). Qualitative data may be considered non-numeric data, such as word tables while, quantitative data can be considered numeric data (Yin, 2011).
The data collection for the research project involved multiple sources of evidence such as, the study of documentation of historical and contemporary data published in annual reports, board minutes, magazines journals, newspapers articles, websites and books, in accordance to guidelines suggested by qualitative researchers (Gerring, 2007; Yin, 1994; Eisenhardt, 1989).The research project also relied on theoretical concepts, as with any other empirical study, the researcher need to consider how the case study may relate to an appropriate research literature so that the case study's findings may provide advance knowledge about the research topic (yin 2011).
3.1 Classification and Presentation
The data and information collected from various data sources has to be classified and presented in such a way it draws a meaningful conclusion. The data were classified into:
Geographical classification: In geographical classification, data were classified on the basis of geographical areas, for East African breweries, geographical areas where divided into three segments i.e. Kenya, Tanzania and Uganda, and for Nigerian breweries and SABMiller breweries, geographical classification was not needed as the research was mainly to cover EABL.
Qualitative classification: In qualitative classification, data were classified on the basis of consumer preferences, alcohol brand quality and market trends (more detail on chapter 4).
Quantitative classification: In quantitative classification, data were classified using various variables and frequency (more detail on chapter 4).
The data were presented using three methods (Jain at el., 2007): (see chapter 4)
Tabular presentation as it provided simple, brief, and clear data presentation.
Diagrammatic presentation in the form of pictograms and cartograms, pie-diagrams, bar diagrams, rectangles which were helpful in facilitating comparison.
Graphic presentation which facilitated in easy estimation, correlation of price and demand and location of averages.
3.2 Limitations of research
The limitation of the research will be as a result of the chosen research methodology. The research project used case study research, and according to Remenyi, (2007); Curran and Blackburn (994) and Eisenhardt, (1989) some of the limitations of case study research includes; (1) lack of detail about the data collection methodology, (2) unclear definition of research objectives/ unclear reasons for choice of case studies, (3) lack of objectivity, (4) generalisations, (5) repeatability and (6) results may result to sequence of loosely related stories.
Although, less study have been carried out on strategic planning and marketing effectiveness research on East Africa region, some of the research limitations were the immense amount, broad selection, and many sources to gather the information from which were of less important to the research. According to Wiid and Diggines (2009: 71), some of the inherent problems relating to secondary data are:
Tracing the desired data from numerous sources,
Processing or adapting the data to suit the problem situation,
Determining the accuracy and reliability of the data
Most of the secondary data collected are for specific purpose that differed from the research questions and objective (Saunders, at al., 2003) and the researcher has to seek out the relevant information for the research objective which normally consumed a lot of time and energy. Also, Kervin (1999) argues that the final criterion for assessing secondary data is a comparison of the costs which include both time and financial resources (Saunders, at al., 2003).
Some of the secondary data published are out of date, irrelevant, inconsistent and inaccurate. This add pressure on the research due to time constraints as a detailed assessment of the validity and reliability of source of data which involved an assessment of the methods used by looking at who were responsible for collecting the information and examining the context by which the data were collected (Saunders, at al., 2003).
The lack of primary data as a source of the data collection can be seen as an issue adding subjective bias to the research report. But Taylor (2005: 79) argued that "a comprehensive review of the literature is of prime importance before conducting quantitative or qualitative research" thus exploration of all possible secondary sources is important in order to draw meaningful conclusion (Panneerselvam, 2006), keeping in mind the research objective and research question.
3.4 Ethical Issues
Wells (1994:284) defines "ethics in terms of a code of behaviour appropriate to academics and the conduct of research", and it can happen at all stage of research project, and normally understood more narrowly and discretely as concerned with the need to follow a set of clearly defined precepts concerning appropriate and acceptable research conduct (Buchanan and Bryman 2009 ). According to Buchanan and Bryman, (2009) research ethics involves explicit consideration of how we should relate to research participants, other researchers, institutions that support research, and research audiences, including those who read and apply our research; Therefore ethical permeate the entire research process for all researchers whether positivist, interpretivist, postmodernist, and whether dealing with quantitative and/or qualitative data.
The analysis of data derived from case study research can raise particular ethical, for instance, not being selective about which data to report or, where appropriate, misrepresenting its statistical accuracy (Zikmund, 2000). Ethical issues involves a researcher's choice of topic, the nonfalsification of research data, avoidance of plagiarism, judgements around whose voice will be represented in the research and how ( Wray-Bliss, 2004) the research will be written up.