Monday, January 31, 2011

Blue ocean Strategy for Alcohol industry ( Part 2 of the series)

                                               fig 1: alcoholic beverage( source istockphoto) 

The previous blog dealt with the medicinal benefits of alcoholic beverages, now the 2nd one will be dealing with Strategy Canvass of the alcohlic beverage industry.

Alcohol industry is right now focussing on the following parameters:-

1>Huge expenditure are on promotional activities .This includes the following:-

• Promoting alcoholic beverages as a companion of good times.

• Promoting them as a great intoxicant. Something that can get you high

• Promoting social drinking in pubs and parties.

2> Alcoholic beverages are also promoted on account of their strength and alcohol contents.

3> Signing in of celebrities with strong presence in the media and strong fan following.

4> Huge investment as well as emphasis is  made on the distilleries used and the process of beverage making adopted by the manufacturer.

5> On  strong distribution network.

6> High taxes:- In most of the countries around the world generally the govt. charges huge taxes on such products.

7> Stylish packaging:- A very large amount of investment goes in providing exquisite and very stylish kind of packaging. There is always attempt by manufacturer to promote such beverage as an ego satisfying entity. Hence stylish and exquisite packaging becomes inevitable.

8> Miscellaneous factors such age of the drink, legends associated with the drink, drinking traditions etc also consume a good amount of investment.


9> The industry is not focussing very high on the medicinal properties of such beverage.


So the industry canvass can be drawn as follows:-

Table 1: -
Properties                                           Degree of investment/ Emphasis


Promotional Strategy                           High

Celebrity Endorsements                       High

strength                                               High

Distribution network                            High

Taxes                                                  High

Process of manufacturing                     High

Packaging                                           High

Miscellaneous                                     High

Medicinal properties                           Low

fig 2: Strategy Canvass of the existing Alcohol industry
 
Now According to the blue ocean strategy the proposed drink will target the non customers in the following way:-


1> Moderate expenditure on promotion:-

• The strategy should not be to promote alcoholic beverage as an intoxicant.

• Proper emphasis will be given on promoting it for social drinking and as a companion for good times.

2> Beverage will not be promoted on the basis of strength.

3> Celebrities can be signed in but not big celebrities with huge fan following but responsible ones with moderate fan following. Celebrities that are considered more popular among the intelligent circles should be signed.

4> There will be moderate focus on the process of manufacturing to specify the safety level associated with the consumption.

5> High investments in distribution network. This will not only include selecting a large no. of efficient channel partners but also proper sales force training. The sales force needs to play a very important role in convincing the non customers for safe drinking.

6> Taxes will be high initially but it had been assumed that the given strategy aims towards moderate and safe drinking; so some pressure can be built on the govt. machineries for tax reduction. Hence it might go moderate in the long run.

7> There has to be minimal expenditure in packaging since the purpose is not to promote alcoholic beverage as an ego satisfying drink but as a health drink.

8> Minimal expenditure will be incurred on factors such as age and taste of the drink.

9> High investments will be incurred in educating people regarding the medicinal properties of alcohol.

10> High investment will be incurred in promoting safe and moderate drinking.



New industry canvass

Table 2

Properties                                                     Degree of investment

Promotional Strategy                                    Moderate

Celebrity Endorsements                               Moderate

strength                                                       Low

Distribution network                                    High

Taxes                                                          Moderate

Process of manufacturing                             Moderate

Packaging                                                   Low

Miscellaneous                                             Low

Medicinal properties                                   High

Safe & Drinking                                  High


fig 3: Strategy canvass of the new proposed market 


Now the next figure will be comparing both the red ocean as well as Blue ocean market


fig 3: Comparison of existing as well as proposed market 
Now in the concluding part of the blog the author attempts an ERRC framework which goes as follows

 Eliminate


• Heavy drinking

• Intoxication due to heavy drinking

• Health and other risks associated with heavy drinking

• Stylish Packaging Reduce

Reduce

• Celebrity promotion

• Promotional expenditure

• Taxes

• Emphasis on the process of manufacturing



Raise

• Awareness regarding medicinal properties of alcohol

• Other utilities (stress remover, Fighting cold etc) Create

• Awareness regarding safe drinking.

• Promotion of alcoholic beverage as a health enhancer.

Create


• Awareness regarding safe drinking.

• Promotion of alcoholic beverage as a health enhancer.

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