Marketing Strategy Of Angostura Marketing Essay

In evaluating Angostura presence and marketing strategy it is imperative that one must have a clear understanding of what strategy is and what it entails to make a company such as Angostura successful. According to Johnson and Scholes (1993) “Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”. This can be said to be a perfect definition of what angostura is employing as they have revitalise their presence within the alcohol industry after years from having a very little presence in the marketed and letting the population know of their existence in this competitive market. However Quinn defines strategy as a pattern or plan that aligns goals, policies and actions into a cohesive whole and Mintzberg however contends that the term strategy is implicit and, as such, can be defined under five broad headings as plan, ploy, pattern position or perspective. (Mintzberg & Quinn: 1996). The definition of Quinn can be argued to be accurate or conclusive of what Angostura is hoping to achieve with this new direction for the company and its products. Furthermore Mintzberg, ‘ said …strategy is not just a notion of how to deal with an enemy or set of competitors or a market…It draws us into some of the most fundamental issues about organizations as instruments for collective perception and action’ (Mintzberg & Quinn 1996) .Angostura has adopted a strategy to regain their presence and lost market share from the influx of competitors who have created a crowded market space and in some way confused or manipulated the market with their marketing activities to increase the sale and awareness of their products. Based on all the definitions stated all can be applied to Angostura Ltd because they all tend to lead to some sort of result however the research is more incline to agree more with Mintzberg five broad headings theory.

Marketing Strategies that can be adopted

Angostura Limited has several strategies that they can use to execute their new objectives to receive the rewards that they want in the long term. These strategies must be well analysed and structured in a way that gives them the desired results that they are seeking.

Marketing strategies are used as the framework to implement the new desired goals and objectives in a systematic and strategic format. A definition of a marketing strategy can be defined as a process or model that allows a company or organization to focus limited resources on the best opportunities to increase sales and thereby achieve a sustainable competitive advantage. Another definition for strategy is that it integrates an organization’s marketing goals into a cohesive whole (www.businessdictionary.com). Ideally drawn from market research, it focuses on the ideal product mix to achieve maximum profit potential. The marketing strategy is set out in a marketing plan

Angostura may have looked at several strategies when assessing their new direction to increase their market share. This strategy would guide the implantation and execution of their revised product line

Marketing strategies are what drives the organization. This is where the strategies are executed to meet the overall strategies set and keep align to the business model that are implemented. Marketing strategies will differ depending on the climate of the organization, but there are many options of strategies. Strategies are based on the overall objective of the organisation which can be

• Market dominance
• Growth
• Market share
• Innovation

Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive offerings.

Typically there are four types of market dominance strategies that Angostura can use to apply to their new overall strategy: The two that angostura can adapt are the market challenger and market niche

Angostura can adopt the market challenger portfolio to implement this new strategy as they are considered to be a strong company , who may also have a dominant position that is following an aggressive strategy to gain market share. It can be said that this is the strategy that they have employed because they are bold facedly attacking the market leaders in the alcohol market who is Johnnie Walker Black. The fundamental principles involved are:

• They must assess the strength of the target competitor. Consider the amount of support that the target might muster from allies.
• Choose only one target at a time this can be done by product.
• Determine a weakness in the target’s position. Attack at this point. Consider how long it will take for the target to realign their resources so as to reinforce this weak spot.
• Launch the attack on as narrow a front as possible. Whereas a defender must defend all their borders, the attacker has the advantage of being able to concentrate their forces at one place.
• Launch the attack quickly, and then consolidate.

Some of the options open to a market challenger are:

• price discounts or price cutting
• line extensions
• introduce new products
• reduce product quality
• increase product quality
• improve service
• change distribution
• cost reductions
• intensify promotional activity

This strategy can be employed also as each product can be considered a niche market based on the brand profiles submitted by the company so a niche or focus strategy may be most suitable . It is hoped that by focusing marketing efforts on one or two narrow market segments and tailoring the marketing mix to these specialized markets, angostura may have a chance of meeting the needs of that target market.

Angostura typically looks to gain a competitive advantage through effectiveness rather than efficiency.

The most successful nichers tend to have the following characteristics:

• They tend to be in high value added industries and are able to obtain high margins.
• They tend to be highly focussed on a specific market segment.
• They tend to market high end products or services, and are able to use a premium pricing strategy.
• They tend to keep their operating expenses down by spending less on R&D, advertising, and personal selling.

Porter generic strategies

The porter strategy is another strategy that Angostura Limited can employ to increase to achieve their objectives. This strategy is based on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firm’s sustainable competitive advantage. The generic strategy framework (Porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and low-cost leadership each with a dimension of Focus-broad or narrow.

Angostura developing a differentiation strategy requires the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product will allow the firm to charge a premium price for it and hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product’s unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily. For Angostura to succeed in a differentiation strategy they will have to

• A skilled and creative product development team.
• Be equipped with a strong sales team with the ability to successfully communicate the perceived strengths of the product.
• Corporate reputation for quality and innovation.

The risks associated with a differentiation strategy could be changes in customer tastes.

Mc Kinsey Growth pyramid vs the Ansoff Model

Angostura can adapt this model into the implementing of a new strategy as it meets with the objectives and goals of the organisation. This model is similar in some respects to the well-established Ansoff Model. However, it looks at growth strategy from a slightly different perspective. Another framework that can be employed by Angostura to develop and effective strategy is the Ansoff Growth matrix. It is a tool that will help them decide their product and market growth strategy. Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These two strategies can be considered as Angostura is seeing to increase their market share and become a force to reckon within the alcohol industry in Trinidad & Tobago.

However the McKinsey model argues that businesses should develop their growth strategies based on:

• Operational skills
• Privileged assets
• Growth skills
• Special relationships

Whereas Ansoff argues that the business should develop their strategies based on

• Market penetration
• Market development
• Product development
• Diversification

Any of the two options can be looked at to be used as a marketing strategy for the organisation, however the strategy most suitable will be used to analyse Angostura present position and be used as a guide to direct the existing and proposed marketing strategies .

Competitive advantage

Competitive advantage is important for Angostura which will give them the edge to be a leader within the alcohol industry. This competitive advantage can also be seen as the main reason for their existence within the industry.

Porter (1980) says “competitive advantage is at the heart of a firm’s performance in competitive markets” and goes on to say “how a firm can actually create and sustain a competitive advantage in an industry and how it can implement the broad generic strategies.” Thus, competitive advantage means having low costs, differentiation advantage, or a successful focus strategy According to Porter, Angostura may have competitive advantage as it can be assumed that they have implemented a focus strategy with a differentiation advantage based on some of the changes that they have made within the organization. In addition, Porter argues that “competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it.” The added value that is perceived with the products being sold can give the company its competitive advantage over their competitors

However Peteraf (1993) defines competitive advantage as “sustained above normal returns.” She defines imperfectly mobile resources as those that are specialized to the firm and notes that such resources “can be a source of competitive advantage” because “any Ricardian or monopoly rents generated by the asset will not be offset entirely by accounting for the asset’s opportunity cost”.

Barney (2002: 9) says that “a firm experiences competitive advantages when its actions in an industry or market create economic value and when few competing firms are engaging in each of these measures mixes market prices with historical costs in a different way. All omit the “cost” of some scarce intangible assets. Barney goes on to tie competitive advantage to performance, arguing that “a firm obtains above-normal performance when it generates greater-than-expected value from the resources it employs. Besanko, Dranove, and Shanley (2000: 389) say “When a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market, the firm has a competitive advantage in that market.

Based on the discussion discussed above the most suitable author that can and will be used to explain the competitive advantage of Angostura is Porter definition on competitive advantage

Importance of Branding

Angostura has considered branding as one of their most important attributes of the organsaition because an effective brand strategy gives a major edge in increasingly competitive markets.

David Ogilvy defines brands as “the intangible sum of a product’s attributes: its name, packaging, and price, its history, its reputation, and the way it’s advertised.” However Kotler defines brands as “A brand is a name, term, sign, symbol, or design or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of the competitor.” Any of these definitions can be applied to the Angostura because they all encompass what the Angostura brands mean.

When accessing the branding of the company several things would have to be taken into consideration such as the brand promise, strategy, positioning and identity.

The brand is the promise to the customer, it tells them what they can expect from these products, services and the organization and it differentiates the offering from the competitors’. Angostura brands will be evaluated if it has maintained its brand promise to its customers. The establishment of the Angostura brand is how they use the logo, how they package their goods, promotional materials and the integration of the internet with the brands.

The brand strategy of the company will also be evaluated as based on the “5 W’s & 1 H” framework (Who, when , why , where , when and how) who is the target audience , how they communicate to them is how, what, where, when and to whom the plan is communicating to and delivering on the brand messages.

If Angostura is consistent and strategic with its branding that will lead to a strong brand equity, which generates added value brought to the company’s products or services that justifies for a higher price to be asked from the consumers for the brand than what identical, unbranded products command. The added value intrinsic to brand equity frequently comes in the form of perceived quality or emotional attachment.

Brand Positioning

Brand positioning sets the direction of marketing activities and programs what the brand should and should not do with its marketing. Brand positioning involves establishing key brand associations in the minds of customers and other important constituents to differentiate the brand and establish (to the extent possible) competitive superiority (Keller et al. 2002). Besides the obvious issue of selecting tangible product attribute levels (e.g., horsepower in a car), two particularly relevant areas to positioning are the role of brand intangibles and the role of corporate images and reputation.

Brand Intangibles

An important and relatively unique aspect of branding research is the focus on brand intangibles aspects of the brand image that do not involve physical, tangible, or concrete attributes or benefits (Levy 1999). Brand intangibles are a common means by which marketers differentiate their brands with consumers (Park, Jaworski, and MacInnis 1986) and transcend physical products (Kotler and Keller 2006). Intangibles cover a wide range of different types of brand associations, such as actual or aspirational user imagery; purchase and consumption imagery; and history, heritage, and experiences (Keller 2001).

Brand Relationships.

Research has also explored the personal component of the relationship between a brand and its customers. Fournier (1998) examined the nature of relationships that customers have as well as want to have with companies. Fournier views brand relationship quality as multifaceted and consisting of six dimensions beyond loyalty or commitment along which consumer brand relationships vary. Aggarwal (2004) explored how relationship norms varied for two types of relationships: exchange relationships, in which benefits are given to others to get something back, and communal relationships, in which benefits are given to show concern for other’s needs.

Brand Identity

To develop Angostura branding in a strategic manner there are several models that can be used to guide the brand. One model that can be used is the Brand Identity Prism created by Jean-Noël Kapferer is often used by marketers to gauge the identity for any brand. The model has 6 dimensions on which a brand is to be evaluated.

1. Physical Facet
2. Brand personality
3. Brand Culture
4. Brand Relationships
5. Customer Reflection
6. Customer Self Image

Another model that Angostura can use for developing the brand identity was made by Leo Brunette who uses the dimensions framework. The brand follows the following dimensions

1. Functions,
2. Personality/Image,
3. Differences
4. Source

Angostura can also use the BLIP model to develop its brand strategy. It is a relatively new framework that is used for understanding, managing, and organizing the full scope of brand management tasks. It emphasizes the need to consider not just how to build and advertise brands, but how best to leverage them, how to identify the positions that they hold, and how to protect past brand investments. In the area of strategic brand management, there is a tendency to over-concentrate on the important issue of brand building. While brand building is indeed important, focusing on it alone risks neglecting the other critical elements of strategic brand management.

This is what the BLIP model hopes to achieve. It identifies four components of branding:

• Building
• Leveraging
• Identifying
• Protecting Brands

The above frame works will be used and determined which is most suitable for the organisation to use to develop is brand and the relevant attributes that goes along with a good brand for the Angostura brand specifically to the single barrel brand as this is the brand that is being used fo r this paper.

Digital Marketing

As companies approach the 21st century all companies must embrace that technology and the way that humans interact with one another has changed drastically especially since the introduction of the internet . With the introduction of social media such as facebook, myspace and YouTube which allowed for multiple conversations at one time and in different parts of the world. Digital marketing has become a crucial way for marketing and reaching one target audience especially the baby boomers . Angostura must evaluate these platforms as alternatives to communicate with their target audience

Coviello, Milley and Marcolin (2001,26) have defined e-marketing as “using the Internet and other interactive technologies to create and mediate dialogue between the firm and identified customers.” Smith (2007) defines Digital Marketing is the practice of promoting products and services using digital distribution channels, reaching targeted consumers, building iterative relationship with those consumers, and having the ability to produce measurable results. Digital Marketing must be targeted, it must be measurable, and it must involve building strong relationships.(Kevin L Smith 2007)

The use of digital channels to strengthen customer loyalty has received surprisingly little attention, despite the obvious opportunities for using these channels to keep in touch and serve customers cost-effectively. It seems like the concept of “digital marketing” has been used more operationally, while the theoretical understanding and comprehensive models of how and why to use different digital channels are still developing. Despite the growing use of ICT in marketing, there are few definitions of digital marketing. Urban (2004, 2) suggests that “Digital marketing uses the Internet and information technology to extend and improve traditional marketing functions.” This is a broad definition, concerning all of the traditional 4 P’s, and both customer acquisition and retention. We also acknowledge that terms like “interactive marketing,” “one-to-one marketing,” and “e-marketing” are close to digital marketing, but neither are they defined very precisely. They also consider emarketing as a subset of e-commerce. In their view, more than creating discrete transactions, e-marketing is focused on managing continuous IT-enabled relationships with customers by creating dialogue and interactivity.

Buyer behaviour

In Angostura ltd attempt to convince consumers to switch from scotch to rum there must be an understanding of consumer/buyer behaviour. This is important as one must understand what can trigger a change in ones behaviour towards a product.

One model that can be used is the Black box model. The essence of the model is that it suggests consumers will respond in particular ways to different stimuli after they have ‘processed’ those stimuli in their minds. In more detail, the model suggests that factors external to the consumer will act as a stimulus for behaviour, but that the consumer’s personal characteristics and decision-making process will interact with the stimulus before a particular behavioural response is generated.

It is called the ‘black box’ model because we still know so little about how the human mind works. We cannot see what goes on in the mind and we don’t really know much about what goes on in there, so it’s like a black box. As far as consumer behaviour goes, we know enough to be able to identify major internal influences and the major steps in the decision-making process which consumers use, but we don’t really know how consumers transform all these data, together with the stimuli, to generate particular responses. Another model that can be used to influence behaviour is Maslow’s hierarchy. Maslow

According to Abraham Maslow, there are general types of needs (physiological, safety, love, and esteem) that must be satisfied. As long as we are motivated to satisfy these cravings, we are moving towards growth, toward self-actualization. These two models will be used to analyse the approach that Angostura have adopted to convert or convince consumers to drink rum and not scotch.