Trends And Promotions Promotional Mechanisms Marketing Essay

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5/12/16 Marketing Reference this

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Chapter 4

4.1.1 Introduction

This chapter is a study of Karoulias, one of the biggest drinks companies in Greece.

W.S. KAROULIAS is one of the top wine and spirits companies in Greece, with a dynamic presence and a heritage for over half a century in the industry. The company has enjoyed remarkable growth throughout its history, especially during recent years, when a number of key strategic partnerships and business moves, established Karoulias as one of the leading players in the Greek wine and spirits industry.

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Karoulias aims to market a complete range of top-quality alcoholic beverages and wines, which offer pleasure, day or night; according to the consumers’ personal choice and preferences. Their product portfolio includes top international and Greek brands, in all categories of alcoholic beverages, as well as a selection of high-quality Greek wines.

The central headquarters are situated in Agios Stephanos, Attica, Greece; in a state-of-the-art facility, covering a total area of 20.000m². They operate a company branch in the city of Thessaloniki, covering the Northern Greek market. Their annual turnover is currently 148 million euros and they employ 135 people (Karoulias, 2010).

In the Greek market, Karoulias implements many promotional activities for its main products. These activities are targeted exclusively at an audience of Greek consumers. Statistics provided by the company (Karoulias, 2008) show that although it uses off-trade promotions (e.g., supermarkets), the on-trade promotions (e.g., clubs) is the most successful type. This is due to on-trade promotions’ ability to communicate a more appealing products’ identity as a positive recreational activity, promotions being the most direct way to do so. The main off-trade promotional tool is the On-Pack gift-set, but these promotional activities account for only 30% of the promotional strategic effort. The remaining 70% are allocated to on-trade promotional activities, which accounts for our focus and concentration of these activities.

This chapter will discuss on-trade promotional activities for our select three brands: Sierra, Cutty Sark and Stolichnaya during the period 2007-2008; these three products are categorized in three different spirits categories. Section 4.1.2 of this chapter is about consumer drinking trends. It is followed by a section on Sierra, one on Cutty Sark, and one on Stolichnaya. Section 4.6 is the conclusion to this chapter.

4.1.2 Consumer drinking trends

There are two general trends, in terms of drinking behavior, which can be detected in Greek society during recent years (Karoulias, 2007). The first one is referred to as ‘differentiation through over-consumerism’. Luxury symbols, such as expensive cars, cigars, and mobile phones, are considered more and more often associated withsymbols of status. Therefore, the increase in consumption of deluxe whiskies, such as Dimple, connotes the existence of need for luxury.

The second trend is referred to as the ‘exploration of personal limits’. This experimentation with and expansion of personal limits is mostly accredited as a result of globalization. Globalization has made Greek consumers feel that they need to expand their personal limits. This is expressed through participation in extreme sports, piercing their bodies, gettingtattoos and other behaviors that were not previously considered unorthodox and thus less popular.

In addition to these two general trends, new drinking trends arose in the Greek market. Since 2005, local brands such as Metaxa and Ouzo started to decline and foreign global spirit brands with strong marketable images started to gain popularity as well as consumption, which increased among Greek consumers. In addition, the importance of brand repertoire seems to widen even further, as the emergence of RTD’s were popularized,these are ready to drink spirits, such as Smirnoff Ice that require no mixing.

Moreover, a trend in young drinkers is to go to café-bars to meet their friends and have a drink, rather than coffee; an activity which was previously seen negatively. This is the reason why most of the promotional activities are usually implemented in these types of outlets. Greek consumers also began creating drinking rituals as part of their recreation time. They began having a drink before and after dinner; a trend which resulted in the increase in consumption of spirits. Finally, the last drinking trend in Greece is the growth in choosing mixable drinks with spirits; for example, Red Bull & Vodka in clubs; mixed shots in bars, etc. This change may have been caused by the globalization phenomenon – as Greeks became more exposed to other cultures, via television and the internet, the idea of mixing soft drinks with spirits became more popular.

4.2 SIERRA

4.2.1 Sierra’s History

Sierra Tequila is the world – famous tequila with the…sombrero: From the depths of Mexico, it brings an aura of the desert, the magic of an Aztec legend and a real passion for life. It has a unique, spicy taste and a charming aroma, but also its unique characteristically, Mexican appearance, that has conquered the world. It is distributed in over 85 countries in the world and it is considered the Νο 1 tequila in Europe.

It was born in the depths of the Mexican desert by the fruit of the Τequilana Weber, a blue cactus tree which grows only in high altitudes(1.500 to 2.000m), in Guadalajara, the capital of the Jalisco province and home of the popular tequila drink. According to Mexican law, agave’s distilled products may use the brand category tequila name, only if they originate from Jalisco. After production, Sierra is carried to the Distilleria SIERRA Unidas for storage. Only the distilleries that follow the strict standards ofConsejo Regulator del Tequila (Mexican authority responsible for overseeing and controlling the production of tequila), have the right to call their products a tequila. The Denominacion de Origen (D.O.T. 166) certifies that the tequila, above all, must be of that particular origin. (www.karoulias.gr)

4.2.2 Sierra overview of the Greek market

Statistics provided by Karoulias (2007) show that Sierra is the fourth most popular white spirit in Greece and it continues to grow in volume within the Greek market, white spirits are growing at a 10% rate, whereas tequila is growing at 11%. Sierra’s competitive set is:

Bacardi

Absolut

Smirnoff

Stolichnaya

Jose Cuervo

Beefeater

Bombay Sapphire

For the period 2007-2008, although Sierra was growing in volume, its market share had stabilized. On the other hand, Absolut, Smirnoff and Jose Cuervo, from the white spirit category showed continuous growth.

4.2.3 Sierra brand

The emphasis for the development of the brand in the period of 2007-2008 was to build emotional dimensions and establish competitive points of difference within the category. Sierra focused on two strong consumer need states:

To loosen up/ have fun

To quench thirst/refresh

This is why the promotional activities of Sierra also had to focus on these two necessary states. Life is fast-paced and challenging: we all need to recharge and recalibrate ourselves. Sierra enlivens consumer’s mind and senses. According to Karoulias (2007), this is the key benefit of the brand.

4.2.4 Consumer target group

The target group of Sierra has the following demographic, behavioral and lifestyle characteristics, according to studies by Karoulias:

4.2.4.1. Demographic characteristics

Consumers are between 18-34 years old, male and female, from a middle-upper socioeconomic class (Lagou, 2010).

4.2.4.2. Behavioral characteristics

They have apathy for the sociopolitical circumstances

They are afraid to assume their responsibilities

Success in their career is very important

They are anxious about the future

They believe in values

They consider love as an important value

4.2.4.3. Lifestyle characteristics

They prefer few but good friends

They are dynamic, well-educated and well-informed

They like traveling around the world

They search for their identity

They are independent

As Karoulias (2007) points out, in the consumers’ fast moving lives, only Sierra recharges young adults to get the most out of their own time because the unique (crisp, dry) drinking sensation sharpens their mind and senses. Sierra is stylish, modern and fashionable, but a rather sophisticated drink. This idea of sophistication and modernity appeals only to Sierra´s target group, who are young people and who have specific behavioral and lifestyle characteristics. Sierra’s enjoyed socially with friends mainly outside the home.

4.2.5. Sierra´s promotional strategy – Promotional Objectives

Sierra´s promotional strategy in 2007-2008 had to take under consideration, fashions and trends which have an appeal to youthful and trendy consumer group. The promotional activities tried to inspire and influence the sophisticated and trendy current consumer group, but they also focused on recruiting new consumers in the 18-34 age group, which is Sierra´s target group. More precisely, there were four different main objectives that Karoulias was trying to achieve by using promotional activities in the period 2007-2008 (Lagou, 2010):

Increase usage by available consumers (non-rejecters)

Further increase frequency of consumption

Reinforce Sierra’s youthful, contemporary and fashionable stylish image

4.2.6. Promotional mechanisms presentation for the period 2007- 2008

4.2.6.1. Standard mechanism (bar-clubs)

Bar-Club profile:

cubic capacity: 200-600 people

18-35 years old

Days suitable for promotion: Friday, Saturday

Time of promotion: 11pm-3am

Consumer attitude:

Most people were standing on their feet (only 30% sitting)

They were in the mood to dance and enjoy themselves (Giannakopoulou, 2010).

At the entrance of the bar-club, two promoters offered to all the customers a shot of Sierra. This shot must always be cold and it must also have a slice of lemon. This part of the promotional activity is held because some of the customers who have never tasted Sierra until that time may like it and then order it. On the other hand, if they were just informed about the promotional event and have never tasted Sierra before, they may not change their brand only to participate in the game because they would not know if they are going to like it or not. Lastly, the promoters also informed customers about the mechanism of the Sierra´s game (music animation) by giving them a Sierra leaflet. If these two promoters were not at the entrance, the promotional activity would not have the desirable results because customers would not be informed about the event and would not be motivated to drink the brand.

Another promoter stands in the bar and gives a chip to every consumer who buys Sierra from the barman. The presence of a promoter at the bar is essential in order to make sure that all customers who ordered Sierra were given the chip to participate in the game. If the customer orders from the waiter, the latter must inform the promoter, who then tries to find the customer who ordered Sierra in order to give him the chip. With that chip, the consumer has the right to participate in the Sierra game (music animation) and to win a prize.

4.2.6.2. Game music animation

The consumer chooses and then listens to(with headphones), one of five titles of songs that the game has by pressing the appropriate icon on the screen of the stand. After listening to the music, he/she has to answer three different questions, two of which are about the singer and one about Sierra. If he/she answers all the questions correctly; his/her prize is a Sierra Mexican hat. If he/she answers only one or two correctly, he gets a CD. This promotional game is a game of skills and not a game of chance and it gives consumers the opportunity to win a prize by participating. There are consumers who want to participate just to have fun and others who want to take part just to win a prize. In general terms, this game is designed to entertain the consumers and reward them for their decision to order Sierra.

The questions of the game are relatively simple. They are not designed to discourage consumers, but to motivate them to consume the product more times in the same evening in order to participate again and win more prizes(Giannakopoulou, 2010).

4.4 CUTTY SARK BLENDED SCOTCH WHISKY

4.3.1. Cutty Sark´s History

300 years of knowledge and expertise lead the Berry & Rudd families to the creation of Cutty Sark. Their source of inspiration was the notorious Scottish sailing-boat of the same name, and its glorious ocean-going history: the most appropriate starting point for a voyage through the seas of delight!

Berry Bros &Rudd based in the most posh part of London, 3, St. James str., were wine and spirits merchants since 1690.

In the beginning of the 20th century, when the popularity of Scotch whisky was beginning to grow around the world, one of the Berry Bros & Rudd partners suggested the creation of a new, different-style of whisky; he suggested that only the finest malt whiskies should be selected for the new blend and that the whisky should be naturally light in color. The partners invited a well-known Scottish artist of the time, James MacBey, to take part at the initial discussions. It was he who suggested the name and designed the label of the new whisky. His was inspired by the Cutty Sark, the Scottish clipper ship that had just returned to Britain, after gaining world-wide acknowledgement for its speed and adventures all around the world. The clipper owes its name to a poem by the Scottish poet Robert Burns – “Tam O’ Shanter”- mentioning a young witch that wore a “Cutty Sark”, i.e. a short shirt, and ran like the wind.

This was just the beginning…. Sailing under its incomparable, everlasting quality, the new whisky was soon to conquer the world!

4.3.2. Cutty Sark: overview of the Greek market

Statistics provided by Karoulias (2007) show that Cutty Sark is the number 2 spirits brand in Greece. Its competitive set is:

Dewar’s

Johnnie Walker

Famous Grouse

Ballantine’s

Grants

4.3.3. Target Consumers

Cutty Sark´s target consumers are young men 20-35 years old committed to achieving their physical and emotional fulfillment by progressing in their lives. Therefore, they are seen by the wider mass of consumers as the vanguards of progression (Lagou, 2010).

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4.3.4. Cutty Sark ´s promotional strategy 2007 -2008

The main objective of Cutty Sark´s promotional strategy for this period was to recruit new consumers by achieving 350,000 contacts and 140,000 trial lists (20-35 years old) in the on-trade environment. However, what was actually achieved was 59% of the contacts and 51% of the initial target for the trials. (Lagou, 2010)

As part of the promotional activity, there must be a mechanism which would increase trial and communicate the concept ‘Together’ and the values that go with it, in a way which is relevant to Greek environment. The concept ‘Together’ is well- known through the TV advertising campaign.

For this period there was an extensive on-trade promotion program all over Greece which consisted of:

550 days in Athens

250 days in Thessaloniki

600 days in other areas

The outlets in which promotional events took place were café-bars where young consumers are having a drink while loosening up with friends. The choice of the spots where the promotional activities were conducted had to do with the mechanism of the game. In some way, the game needed the consumer’s concentration and that was only feasible in places where the music was not too loud and the lighting was not so dark.

The promotional activity was implemented over a period of five consecutive days in the same outlet. The game was played on a plasma screen which was very heavy and not flexible. If the promotional activity had to be conducted in different places for five consecutive days, the supervisors would have to transfer the plasma screen every day, which is too tiring and time-consuming. But if it was implemented in the same outlet for five consecutive days, they could just leave the screen in the café/bar so that they could use it again the next day.

4.3.5. Mechanism description for the period 2007-2008.

At the entrance, there are two promoters who welcome the customers on behalf of Cutty Sark and tell them about the game by giving them a leaflet. More precisely, the promoters use the following: “Good evening! Cutty Sark welcomes you at its party full of joy and amusement. Enjoy a Cutty Sark and participate inour game” (Giannakopoulou, 2010).

At the bar, there is another promoter who gives a sticker to those who order Cutty Sark and encourage them to choose one goal among three categories (personal life, adventure and career) which are mentioned in the leaflet given at the entrance. In previous promotional events, the bartenders were responsible for giving that sticker and it was often the case that they forgot to do so. This is the reason why a promoter has to be present at that point. After choosing one goal, the consumer puts the sticker next to the selected goal. Afterwards, he/she can approach Cutty Sark’s stand and start playing the game.

In the game, each selected goal has different scenarios which emerge according to the choices made by the consumer. In other words, each goal is based upon a variety of scripts revealed by the choices of the consumer. The situations that the consumer faces at every level of selection are portrayed on the big screen by a sketch drawn by famous sketch writers. After the last selection, the consumer is given the sketch with the Cutty Sark logo at the top, which he/she can dedicate to a friend or even to himself/herself.

With this promotional activity, Karoulias managed to:

Reinforce empathy/identification with the brand and create feelings such as enjoyment and pleasure;

Achieve impactful communication with consumers (i.e., use of high technology VS simple technology);

Increase consumption of Cutty Sark;

Increase on-trade market share

4.4. STOLICHNAYA

4.4.1. Stolichnaya’s History

Stolichnaya, or just “Stoli” to its many friends, is the world’s best known and top-selling authentic Russian vodka.

Born and bred in Moscow, «Stoli» is part of Russia’s heritage. Only the very finest natural ingredients from Russia find their way into the Stolichnaya vodka. Its production follows the age-old authentic Russian method of double distillation, dating back to the 15th century.

Stolichnaya in Russian means “the one that comes from the capital city”. Stolichnaya’s iconic bottle – featuring a rendering of the historic Moskva Hotel on the label- stands out from the masses and has become a point of reference for the lovers of authentic Russian vodka, the world over. In 2004, Stolichnaya launched its ultra-premium vodka elite by Stolichnaya. This development came very ‘naturally’ in the brand’s history – Stolichnaya has always been the vodka of the Russian elite – and is fully in line with the pioneering ethos that has made Stolichnaya famous all over the globe; Stoli Elit was the first ultra-premium vodka to be introduced in the vodka market. (Karoulias, 2010)

4.4.2. Brand Identity

Stoli has some special characteristics that make it unique and the best-selling premium vodka worldwide:

Stoli is the international vodka brand with an authentic Russian tradition and heritage;

It is the purest vodka worldwide, made by top quality raw materials. It has a unique distillation and filtration process. It is also the fastest growing vodka in Greece.

Stoli has the third place in the Greek market, after Absolute and Smirnoff.

4.4.3. Promo objectives

Karoulias used a promotional activity for Stoli which could achieve four specific objectives. First of all, it would establish a solid and aspirational image for the brand. Second, it would increase the branded demand as most consumers were ordering vodka instead of Stoli. Third, it would increase recruitment within the consumer target group. And fourth, it would increase the frequency of consumption within loyal customers.

4.4.4. Target group

Stoli´s target group is (Lagou, 2010):

Young men and women aged 18-34, with a primary focus on 18-25; middle-upper class living in urban areas;

Sociable, outgoing and modern people who like to enjoy themselves in large clubs and bars.

As a result, the promotional activities would have to take place in outlets frequented by people with that age and behavioral characteristics.

4.4.5. Promotional mechanism presentation for the period 2007 -2008

The mechanism should create a fun atmosphere and also enhance the sociability character of the brand by allowing team-playing. It should add value to the outlet as well as to the consumer. The purchase of the product is a prerequisite for participation and the game has to encourage repeat purchases (Touloupakis, 2010).

At the entrance, there are two promoters who offer customers shots of Stoli and cherry juice. The purpose of this combination is to show them that Stoli can be drunk in many different ways. They also tell them about the Stoli game by using phrases such as this: “Good afternoon. Today we have a Stoli Party. By ordering a drink of Stoli Vodka, we can take a picture of you through which you can discover another dimension of yourself.” The use of the word ‘party’ is to create a fun atmosphere and motivate customers to buy the product and participate in the game.

At the bar, there is a promoter who serves Stoli from a machine. The purpose of this machine is to fill the glass with the appropriate amount of Stoli. After that, she also gives a chip to the consumer. With that chip the consumer can participate in the Stoli game of Photoshop, where he/she can be photographed in a specific place by choosing the background he/she wants.

The game has as its purpose to entertain the consumer and motivate him/her to purchase the product again in order to participate again in the game and have a picture of him/her taken in another background. At the end, the participant takes as a present his/her photo in a Stoli frame. It is not a game of chance or skills; therefore, the consumer does not have to win in order to be rewarded with a present. They all get the same present. However, almost 50% of the promotional days had a very poor turn-out (Giannakopoulou, 2010).

4.5. Conclusion

This chapter discussed Karoulias promotional activities for Sierra, Cutty Sark and Stoli. These activities refer to the period of 2007-2008. They are targeted at Greek consumers and are held in different types of outlets across Greece.

Although Stoli and Cutty Sark belong to a different category than that of Sierra, Karoulias implements promotional activities with similar mechanism for the three of them. First of all, the three promotional activities have as their core element a game which is the final step of the promotional activity. Second, the whole promotional operation for the three products has almost the same stages. For the three products, there are two promoters at the entrance of the outlet who tell customers about the promotional event. But only in the case of Sierra and Stoli the customers can also try the product in a shot.

Another similarity of these three promotional activities is the fact that one promoter has to be at the bar. She is responsible for giving the consumers who have ordered the brand a chip or a sticker with which they can participate in the game. In the case of Stoli, apart from giving this chip, the promoter is also responsible for serving the customers from a specific machine.

With that chip or sticker, the consumer can participate in the game. In that part of the promotional activity, there is the most important difference among the three brands. In Sierra’sstandard mechanism, the game is based on skills and not on chance(the questions). As it concerns Cutty Sark´s and Stoli’s game, they are not based either on skills or on chance. In the case of Cutty Sark, the consumer just chooses one goal among three categories and each selected goal has different scenarios which appear depending on his/her choices. At the end of the game, they all get a present. In the case of Stoli, the game is also not based on chance or skills. The consumers can be photographed in a chosen background.

Another difference among the three promotional activities has to do with the presents. In Sierra standard mechanism only if the consumers answer at least one question correctly, they can get a present. This can probably negatively affect their mood in case they lose. In terms of Cutty Sark’s and Stoli’s presents, they are the same for all the participants and everyone wins.

Karoulias delegated its promotional activities for the brands analyzed in this chapter during the period (2007-2008) to a below-the-line agency called Radical Communications. Radical Communications was responsible for the creation of the promotional mechanism, including the mechanism of the game, and for its implementation. Radical was told by Karoulias about every brand’s promotional objectives, the products’ specific target groups and other characteristics in order to create an adequate promotional mechanism for each product.

CHAPTER 5

5.1. Conclusions

This dissertation dealt with the issue of consumer sales promotions in the Greek drinks industry. It first looked at the main promotional tools which are used by companies in their effort to effectively communicate their marketing messages to their customer base. It then discussed one of these tools (sales promotions), from the consumers’ point of view.

A case study was used as research methods in this work. The case study was about Karoulias, one of the biggest drinks company in Greece, and its promotional activities for three of its brands- Sierra, Cutty Sark and Stolichnaya.

The case study showed that Karoulias uses games (i.e., contests and sweepstakes) as its main sales promotional tool with three purposes. First, it wants to enhance brand recognition of its products. Second, it aims to increase consumption among its current customers. And third, it seeks to recruit new consumers from the target group.

One of the most important elements of a promotional event is the presence of promoters. They are responsible for coordinating the whole activity, from the moment participants arrive at the outlet to the point where they leave. Some of the promoters stay at the entrance of the outlet to greet customers and tell them about the game, whereas others introduce consumers to the game itself and show them how to play it. The promoters can make a significant difference in how people perceive a specific promotional game.

Another important element in games is the prizes given out to participants. It is very difficult to choose prizes which are appropriate and which will attract participants to the game. Yet another element which is also crucial to the success of a promotional event is the motivation that consumers have in order to join in a game, which is to have fun.

As a result of this work, there are a number of recommendations that can be made in terms of the research methodology used and the actual topic of this dissertation, which is about sales promotions in the Greek drinks industry. The case study, for instance, only used one source of data (Karoulias’s documents). The findings would have been more reliable if other sources had been used, as for example, external reports about the company presented by a third party.

Regarding the actual mechanism of the promotional games discussed in the case study, there are also a number of recommendations that we can make. In the case of Sierra, for example, the questions asked of participants in the game are all about music, which of course requires knowledge of this subject. Those who are not familiar with this topic would not be motivated to participate in the game. A recommendation, therefore, would be a choice of questions from different fields of knowledge where participants would be on an equal footing to answer them.

Another recommendation refers to the games implemented for Cutty Sark and Stoli. They seemed to lack an element of interaction and fun in the sense that participants only had to communicate with the game promoters. A game which prompts participants to engage with other people around them may be seen as more fun and more attractive.

In the case of the prizes, participants would always win the same prize each time they wanted to participate in the game. To encourage consumers to purchase the drink more times and as a consequence to participate in the game repeatedly, these events should have different prizes for each time somebody joined in.

5.1.1. Findings and claims

Similar promotional mechanisms are used for different brands; therefore games are successful in transferring communication from the company to the consumer.

One of the most important elements of a promotional event is the presence of promoters.

Another important element in games is the prizes given out to participants.

5.1.2. Limitations

There are some basic limitations in this case study.

Firstof all, all the documents were produced by either Karoulias or Radical Communication.

This means there were no other sources of information which could provide an independent view.

No consumer first hand data, we acted as the consumer

The data was from 2008 promotional events and we did not have access to recent 2010 data

Secondly, the study covers one year and compares the different promotional activities of the three brands for that period. However, as we did not have complete information for other years, we could not draw comparisons for a more extended period of time.

Thirdly, the actual period studied is not the most recent, but it was the only one about which we had full information and access.

Finally, we were asked to keep notes from the promotional data and could not take the presentations or email communications between Karoulias and radical, thus we had to take notes and transfer them quickly onto the dissertation from interviews and the case study in order not to forget any of the information

5.1.3. Future Applications

This study can be used in future research of promotional game applications in a global setting. As we discussed, Greece is the only country that depends so heavily on “on the spot” sales promotions (60%).

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