Monday, January 31, 2011

Blue Ocean Strategy for Alcohol Industry( Part 3 of the series)

                                    fig 1: Alcoholic drinks( source:                                                                    
This is the 3rd  blog of the series: Blue Ocean Strategy for Alcohlic Industry. The 1st two blogs talked about medicinal benefits of alcohol and Strategy Canvass of the alcohlic beverage industry respectively where as this one will talk about the types of non customers of the given industry and the  implementation strategy to target them.

Three types of non customers for the alcoholic beverage industry

Blue Ocean Strategy fundamentally talks about three kinds of non customers:-

a) Customers who are mentally your non customers but occasionally do use your product out of some compulsion.

b) Customers who have the needs for the kind of service your industry offers but who still prefers to choose an alternate industry to fulfill their needs.

c) Customers who are far away from your industry and they are not at all willing to use your product/service.

According to the above frame work the non customers of the alcoholic beverage industry can be categorized into following categories:-

a) People, who are not frequent drinkers, don’t enjoy drinking alcohol as such but sometimes can consume a little bit. This is the most potent target customer for the given BOS plan. It consists of people who do not have any strong opinion against alcohol and hence can be persuaded to consume it in moderation.

b) People, who don’t consume alcohol but don’t have any religious cum cultural bias, also have health based requirements where alcohol consumption can be helpful. Though these people prefer other alternates such as exercise and diet control. It is somehow tough to convince the following non customer section to consume alcohol but still if a proper strategy is put into place a small section can be captured. The given set of non customers might include some top ranking executives and other busy professionals who might not have time for other alternatives such as work out and exercise. Such people can be convinced for moderate consumption of alcohol.

c) People, who have strong opinion against alcohol (often due to religious cum cultural factors). These are the people who will even avoid consuming a low alcohol drink such as a breezier or a beer. Since such people have strong psychological bias against alcohol it will be very tough to convince them for alcohol consumption. Hence it is advisable to avoid the given section of non customers.

Utility, Pricing, Cost, Adoptability

Utility: - Based on the kind of research work conducted by various prestigious medical organizations it can be argued that moderate consumption of alcoholic beverage can be beneficial for one’s health. Moderate consumption of alcoholic beverage can result in prevention of cancer, heart and kidney based diseases etc. Since a large amount of the current population is suffering from such ailments (or is prone to them in the nearby future) moderate consumption of alcohol for prevention purpose might find very high degree of utility.

Pricing: - Since the product is of medical purpose and not an intoxicant hence can be priced at 10-20% lower than the existing alcoholic beverages. This will ensure

1> Higher penetration among various socio-economic spheres.

2> It will also help differentiating the new alcoholic beverage from the existing brands. The existing brands are used as intoxicants , hence having a slightly lower price will help in positioning the newer brand as an moderate non intoxicating drink that can be consumed for medicinal purpose. In other words a lesser price will help in positioning the new brand as a lesser alcohol and hence might find smooth adoptability among non consumers. (Another point to be taken care of is that while a 10-20% reduction will lead to perfect positioning, further reduction might be detrimental. It should be noted that it’s a medicinal product and a very low price might raise questions regarding quality and effectiveness of it.)

Target Costing:- Cost is not a major issue over here. In the given BOS cost is going down on account of fewer investments in packaging, promotional activities, celebrity endorsements, strength etc. On the other newer investments will be required for:-

1> Promoting the idea of safe drinking.

2> Strong promotional campaigns that might require the help of medical fraternity to convince general public towards safe drinking.

Hence there are parameters where cost can be cut down as well as there are newer parameters which will require  investments. Overall it might be concluded that the cost structure will remain unchanged.

Adoptability: - The adoptability will not be very easy initially due to the perception of the product as an intoxicant. But over the period of time with the help of an efficient promotional strategy a lot of non customers can be convinced for moderate consumption. Promotional campaign will be discussed in details in the coming section.

Marketing cum Promotional Strategy

• The given BOS plan requires a promotional plan that is :-

a) Of large scale

b) Clever

c) Genuine

d) Diversified

e) Socially Responsible

Large Scale: - There is a very strong bias against alcohol consumption due to cultural factors as well as side effects of over consumption. Hence in order to convince non customers towards moderate consumption it is essential that the manufacturers must implement a large scale promotional strategy.

Clever: - Along with large scale it needs to be well crafted and subtle in approach. Promotion of alcohol for moderate consumption will attract lot of opposition from various religious cum cultural organizations as well as some medical fraternities. Hence it is essential that the entire campaign must be well crafted in dealing with all this. It should not be very strong in its approach because a strong campaign will attract a strong opposition. It must try differentiating itself from the regular brands which are nothing but mere intoxicant and also emphasize strongly on moderate consumption.

Genuine: - Use of genuine evidences such as research works and testimonies by doctors can add strong strength to the campaign.

Diversified: - Since the given BOS talks about a very new idea it needs to be communicated through various different kinds of media channels. Along with the regular media channels such as print ads, commercials, hoardings etc there is a wide need for on the spot promotion, purchase point promotion etc. Web based platforms like social networking sites; regular web campaigns etc can also add strong value to the overall campaign.

Socially Responsible: - The campaign needs to be socially responsible, must promote only moderate drinking and communicate effectively the harmful effects of excessive consumption.

Six path frame work for the new alcoholic beverage

The concluding part will be looking the BOS with the help of a six path frame work

Look across alternative industry: - In order to realize the potential of the new beverage it is essential that the manufacturers should look across alternative industries. Rather than restricting the definition of alcoholic beverage as mere intoxicant they should also look at them as substance with medicinal values and hence consider other industries such as drug industry, health care industry, fitness industry etc into strategy formulation.

Look across strategic group within industries: - Like any other industry alcoholic beverage industry also has many strategic groups within. There are brands which are priced very high and are known for their exquisiteness , brands which are priced moderately and are targeted for working and middle income class , brands which are known for their strength and then there are low quality cheap brands popular in the third world countries. Manufacturers are supposed to look beyond these strategic groups if they have to offer a value innovative service to their non customers. By simply sticking to their respective strategic groups probably can never get the insight needed for looking beyond the obvious and taping the huge non customer segment.

Look across the chain of buyers: - manufacturers need to consider not only the direct user but also other influencers. For example in this case doctors can play a very important role in convincing the end users. So probably manufacturers can think of targeting doctors along with the end users.

Look across complimentary industry: - In the given context it hardly makes any sense.

Look across emotional and functional appeal:- The general trend have always been to promote alcoholic beverage as a high involvement products used as an intoxicant , companion of good times etc. But in order to capture the Blue Ocean market manufacturers need to look across it. They have to think beyond such stereotypical beliefs.

Look across time: - Though still there are inhibitions in people when it comes to stuffs like alcohol and cigarettes but with time slowly but steadily it’s changing. People these are becoming more open towards such stuffs. Even if they don’t consume such stuffs it can be observed that many of them don’t associate these things with any social stigma. Hence if a proper communication cum promotional strategy is put into place then chances of converting a good amount of non customers into moderate drinking might be high.

1 comment: