Bokrapport om inviduell inlrning

Global Marketing

Absolut Vodka Defining and attacking for a better position in the global vodka market

Table of ContentsIntroduction to Absolut Vodkas History2Introduction to Absolut Vodka2The Brand of Absolut Vodka3Target Group4Marketing Methods4Absolut Vodkas Campaigns5Absolut Vodka in the Global Market6Absolut Vodkas Competition6Absolut Vodka SWOT- analysis7Strengths of Absolut Vodka7Weaknesses of Absolut Vodka8Opportunities of Absolut Vodka8Threats of Absolut Vodka9Absolut Vodka Case Study11Question 111Question 211Question 412Question 512Bibliography12

Introduction to Absolut Vodkas History

Absolut Vodka is a Swedish Vodka brand established by Lars Olsson Smith in 1879. When Smith first introduced fractional distillation, which means it produces liquor without fusel alcohol, it was called Absolut Rent Brnnvin (means Absolutely Pure Vodka). It was and still is produced in hus, Sweden. Around this time, nowadays the very famous, shape of the bottle got its design. The Absolut Vodka bottle got its inspiration from a traditional Swedish pharmacy bottle design, which dates back to the sixteenth century. Lars Olsson Smith challenged Stockholms liquor monopoly, and sold it outside the city border for a lower price, which he was very successful in. In year 1917, Swedens alcohol industry was monopolized, and the Absolut Rent Brnnvin was now owned by Vin & Spirit AB, and started selling all over the country.

In year 1979, Absolut Rent Brnnvin became upper-price range vodka, and then also the name was changed to Absolut Vodka. Also in 1979 Absolut Vodka was introduced to the international market and started to sell in the U.S. Their first shipment 90,000 liters and after that they have been growing all around the world.

In 2008, a French company, Pernod Richard, bought the Absolut Company for 5.63 billion. The acquisition led Pernod Richard to become the second largest vodka producer, and to catch up with the sales of their biggest rival Diageo (Hollesen 2014). Introduction to Absolut Vodka

Absolut Vodka, as I already earlier told is a Swedish Vodka brand, now owned by the French spirit company Pernod Richard. Absolut Vodka is known all over the world, and has become to be called as a somewhat icon in the vodka industry.

Absolut Vodka is premium vodka, which means it is basically more filtrated and distilled. It also leads it to be a more upper-price ranged vodka. It has 17 different permanent flavors, which included for example, the basic Absolut Vodka, Absolut Peppar, Absolut Citron, and Absolut Kurant etc. It also has a lot of limited edition bottles and different bottle campaigns, which I will tell more about later. Absolut Vodka also has one super premium vodka, called Absolut Elyx. Absolut Vodka tried to launch a new product in the FAB market in 2004, called Absolut Cut, which would have been a ready mixed drink that consumers could have drank straight our of the bottle. They launched it in Canada, Australia and U.K, but they failed with their attempt.

Since Absolut Vodka became a part of Pernod Richard, their revenue increased to 8.2 billion. Other known brands that Pernod Richard owns are: Havana Club, Jameson Irish Whiskey, Kahlua, Malibu and Beefeater. Absolut Vodka is sold in around 130 countries, and sold about 100 million liters in 2011-12. This also comprises to Pernod Richards largest share of all their products and also accounts for more then half of the imported vodka sales in the U.S (Hollesen 2014).The Brand of Absolut Vodka

Absolut Vodka has become icon in the vodka market and the marketing world. They have a clear brand image that revolves around three basic words; clarity, simplicity and perfection. The brand image has always been a main focus for the company, and they have absolutely succeeded. They have very successfully combined creativity and persistency, with different campaigns and still keeping the base of the bottle always the same. You can see aspects of persistency through their logo design, personal graphic design and visual image. Absolut Vodka has managed to keep their image young and hip, still not too young to fit a lower middle-age target group. Absolut Vodka has genius brand management and creative marketing campaigns for example in an absolute world. They have managed to create brand awareness around the world trough fashion, art, music and sponsoring events etc. (Alvesson 2013)

Target GroupAbsolut Vodkas target group basically about men and women in the age range between 25 to 40 year olds. The target group is value-driven shoppers and they usually also has some kind of brand loyalty to Absolut Vodka. Their marketing methods are fitting for consumers who dont respond to traditional luxury marketing, but more to a creative kind. This is also very good way to target urbanites, who also belong to their target group and enjoy the perception of the brand. An urbanite is person who inhabits a major city. They are affluent consumers that have an optimistic outlook of life that differ a lot from life in small towns or rural areas. Their main characteristics are city-proud, time-poor, brand-centric, trend-sensitive, media-literate and culturally aware. These characteristics fit well with Absolut Vodkas brand, and reacts especially to their marketing methods and campaigns (Krashinsky 2013) (Elliott 2007).

I think Absolut Vodka has found a way to create a very good and strong target group for them to aim for. Because Absolut Vodka differs from the rest of its rivals, it has found a good group that I dont think that many companies target or succeed in targeting. Marketing Methods

Absolut Vodka has a strong use of campaigns in their marketing methods. They differ the campaigns fit different events or situations, and by this way they reach a lot of customers with their advertisement. The bottle itself is also used as a marketing method. The shape is so known that consumers can connect it to the brand itself. This gives Absolut Vodka more freedom in their advertisement, and takes away the need to have the bottle in the ad itself, even though they still use the shape in most of the ads.

Absolut Vodka has done world of content-based marketing, by having their bottles shown in a series of TV-shows, movies and music videos. For example Swedish House Mafias song Greyhound, was a big hit, but Absolut Vodka wasnt really satisfied still with the result. Jonas Thlin, Absolut Vodkas Vice-President of Global Marketing stated that video didnt really tell much about the brand (Greenfield 2014). They have also done a lot of collaboration with known artists. Absolut Vodka has a good PR and media recognition, through influential people like Andy Warhol and Lenny Kravitz, who are well known around the art and music scene. Absolut Vodka launched a campaign with both off them and with this got a lot of media recognition. Absolut Vodka wants to create experiences through living art projects, like what Absolut Vodka calls Art Bars. In these Art Bars they organize events, which draw people to, and interesting experience and people remember an eventful night forever. Absolut Vodkas website is full of inspiring pictures from past events and cocktail recopies, that has gotten a good response from the consumers (Greenfield 2014). Absolut Vodkas Campaigns

Absolut Vodka has done a lot of different campaigns since 1980. The most significant have been Absolut Perfection in 1980, Absolut Art in 1985, Absolut Statehood in 1991, Absolut Cities of Europe, In an Absolut World in 2007 and Absolut Unique in 2013. The bottle has been the fundamental concept in all the campaigns for over 25 years.

The campaign Absolut Perfection has been the most used one for a long time. It was the first campaign and determined the way the rest of the campaigns would go for a long time.

The campaign Absolut Art was their first camping working with a lot of influencal artist like Andy Warhol and Keith Harring. Absolut Statehood was a campaign spanning for to years in the U.S. The campaign focused of art from local artist from the 50 states of America and the District of Columbia. Absolut Vodka had different art works appear in magazine USA Today every other week. After this campaign 300 lithographs were sold, and the money gathered from these art works was donated to the national US organization Design Industries Foundation for AIDS (DIFFA) (Absolut Ad ei pvm).

Absolut Cities of Europe is one of the most visible campaigns of Absolut Vodka in the past 5 years. The ad was published in Newsweek, and with it came an article about the city with information about the citys bars and restaurants.

The campaign In an Absolut World, was tried to launch before in 1997, but was premature. In this campaign Absolut Vodka introduces a Planet Absolut where things are different. In this world you can pay with love, men can get pregnant and you can get a Pinocchio nose of lying (Elliott 2007). The Absolut Unique is a product and a marketing campaign, that they say its the brand itself is creating the product. Absolut Vodka maybe the production line to create variation and randomness to get 4 million unique bottles. They bottles where numbered and randomized and shipped all around the world (Tepper 2012)Absolut Vodka in the Global Market

Absolut Vodka is known worldwide and is sold in 130 different countries. It started first its export to U.S in 1979. Absolut Vodka sold around 100 million liters of Absolut in 2011. Absolut Vodka tried to explore the FAB (flavored alcoholic beverages) market in 2004, but failed. Absolut Vodkas standings are the strongest compered with total volume distribution 9.7% in North America, with a market share of 10.3% and the weakest in Eastern Europe with a market share of 1.3%. Eastern Europe would be a very important market for Absolut Vodka to increase their market share in, because the volume share of distribution of vodka is 80.9%. In Asia-Pacific, where the market is growing but the total distribution is only 1.4% of the total volume in the world, Absolut Vodkas share is a good 10.9% (Hollesen 2014). Figure 1: Distribution of world vodka sales by volume and value. (2011) (Hollesen 2014)

Absolut Vodkas Competition

Absolut Vodkas biggest competitors are Smirnoff, Stolichnaya, Finlandia and Grey Goose. Smirnoff is the biggest vodka manufacturer in the world (2011) and has double the sales as Absolut Vodka. Grey Goose is a newcomer in the premium vodka market, and shows a lot of potential, and that is why it is one of the competitors. We made a small price and quality comparison with the different brands (Hollesen 2014) (Under the Label 2014) (Wine Enthusiast 2014).

Figure 2: Vodka compersion

Absolut Vodka SWOT- analysis

Figure 3: SWOT-analysis of Absolut Vodka

Strengths of Absolut Vodka

One of the strengths of Absolut Vodka is unique marketing, their brand image and story. Absolut Vodka has a different way to do marketing, and they are very creative about it. Their ads are often connected to them automatically. Absolut Vodka also has a lot of different campaigns that reach a lot of different campaigns that reach a lot of different people. Absolut Vodka has a strong brand image already and they have found their way to separate themselves from their rivals. I think this is actually one of their strongest strengths. Absolut Vodkas background story is really different from their rivals; they could use this more for their advantage.

Their leading position is already strong, but they still have to try to increase sales to go past Smirnoff Vodka in sales (Hollesen 2014). Absolut Vodka has a lot of variation in flavors and in their bottle designs. This is a good strength, because the consumer can keep buying the same product without getting frustrated non-existing variation. Todays trends and ins and outs change very quickly, which often makes it hard for one product to stay in a high position for really long. This wont be a problem to Absolut Vodka with all their variation in flavor and bottle design. Their last strength is their visuality and the recognition they have gotten from that. You can be able to see Absolut Vodka in movies, TV-series, art and your also able to hear them in music. They have had a major influence especially in the art section. They have been helping young artist with letting them design bottles for them and do artwork for Absolut Art, which is a website where you can buy art made by these artist. It has gotten many awards for their inspiring and different ads (AbsolutArt 2015). Also they have done a lot of work with well-known artist, like Andy Warhol, which has given Absolut Vodka a lot of media recognition (Absolut Ad ei pvm).

Weaknesses of Absolut Vodka

Absolut Vodkas weaknesses might be their price. Many consumers dont maybe want to spend that much money on alcohol, which is not a problem now, but might at some point turn in to that if things changes. Absolut Vodkas campaigns often follows a same patter, they all have the bottle or at least the shape of the bottle in the ad, which could get too repetitive for some consumers (Pernod Richard 2015).

Absolut Vodkas target group is a little bit narrow, and concentrates on a really specific group of people. The price could be a problem here. If the young target group stops being so value driven, they might not want to buy a more expensive alcoholic beverages. Absolut Vodkas target group doesnt really fit the older middle-age people, which are a big group and a big part of Smirnoffs target group (Hollesen 2014).

Absolut Vodkas positioning in the European market has always been lower compered to the U.S market, especially in Eastern Europe and Russia where the vodka consumption is one of the largest in the world (Hollesen 2014). If Absolut Vodkas rival companies get a hold of this market area, it would grow their sales and Absolut Vodka could loose their current position in the global vodka market. In this area especially, it is hard for Absolut Vodka to compete with all the local vodka brands with much lower prices. Also Eastern European and Russian areas doesnt really fit to Absolut Vodkas target group directly. Opportunities of Absolut Vodka

As I describe in the weaknesses a narrow target group could become a problem. Absolut Vodka still has the opportunity to expand their target group through for example campaigns, and get to advance closer to their biggest rival Smirnoff on the level of sales. Brand loyalty is an opportunity to Absolut Vodka. They could somehow take more advantage of brand loyalty, by organizing some events for loyal customers or etc. and which this get consumers to be more loyal to the brand, instead of buying the brand now and then.

The growing vodka market is growing all over the world. This is a great opportunity for Absolut Vodka to expand their market share. In the last ten years the U.S vodka market itself has grown around 65% in volume. The article in Gin & Vodka states that premium vodkas have a bigger demand than earlier, it has increased in the last year by 7.6% (Gin & Vodka 2015).

Trade barriers are disappearing and its getting cheaper and easier to export around the world, especially in Europe. This helps Absolut Vodka to explore new markets easier and lower expenses in exporting (Froman 2014).

Threats of Absolut Vodka

Absolut Vodka already has a threat from Smirnoff Vodka, owned by Diageo, and they could have a possible threat from the newer vodka brand Grey Goose, owned by Bacardi (Bacardi 2012) (Diageo 2015). Smirnoff is already in a leading position in the vodka market in U.S, with double the sales as Absolut Vodka. It has been really hard for Absolut Vodka to try to come out of this situation, and their situation hasnt really changed. Now the newcomer in the vodka market, Grey Goose, has started to grow in the U.S market too. If they keep growing, they could harm Absolut Vodkas current position.

The laws about alcohol and marketing are getting stricter in a lot of parts of the world, especially in Scandinavia. This is absolutely a big threat for Absolut Vodka. For example in Finland, the strong alcohol is sold as a monopoly only in a state owned liquor store (Alko 2013). Also in the last couple years the alcohol taxes have been rising, which raises prices of the products. Also in 2015, Finland passed a new law about marketing of alcoholic products, which prevents companies to advertise alcoholic products. This harms Absolut Vodka; because they cant do advertising. There are some loopholes in this law, for example, a company can sponsor an event and through that have their logo showing in banners or flyers etc. (Finlex 2015). If this law starts being more common, it could harm Absolut Vodka and other companies in the alcohol industry.

Politics affect trade barriers and that can make it difficult to export alcohol to some countries. Sometimes it can even put a company to a situation where there is suspicion of bribery and that gives the company a bad image. One other subject that can be a threat for Absolut Vodka is religion. For example in the Arabic countries it is prohibited to drink alcohol as a Muslim, and this lowers the level of alcohol consumption in these countries. It can be hard or even pointless to try to export products to these countries. It can increase expenses and not be worth it in value.

Absolut Vodka Case Study

Question 1

What was the main motive for Pernod Richards acquisition of V&S (including Absolut Vodka) in 2008?

The main goal for the acquisition with V&S was to get Absolut Vodka as a product. It gave Pernod Richard an opportunity to grow as a manufacturer, as they did. Before the acquisition Pernod Richard was only among the worlds 20th leading vodka manufacturers, when Absolut Vodka was a part of their products, they became the 2nd leading vodka manufacturer. They got the opportunity to expand their market, both geographically and with sales, and this grew their companys revenue to 8.2 billion (2011). The deal increased Pernod Richards sales to a closer to Diageos level, which was the global spirit leader (Hollesen 2014). Question 2

Which alternative marketing strategies should the Absolut Company have to increase its market share for Absolut Vodka in US?

I would keep going to the same direction; the past proves that has worked well. The marketing strategies could some more outbound marketing to reach new customers. This way you would get as much as possible potential consumers to see the advertisement. Also for this Absolut Vodka could launch a new and different campaign to reach a larger target market, his would lead to increase on the market share. Do more collaboration with influencers and that way Absolut Vodka might get a bigger market share. If it wouldnt be too expensive, Absolut Vodka could create a campaign that consumers could create their own Absolut bottle. This could reach loyal customers. Absolut Vodka should also invest more in digital marketing, e.g. create a cocktail app or a social media contest (Hollesen 2014).

Which alternative marketing strategies should the Absolut Company have to increase its market share for Absolut Vodka in Europe (incl. Eastern Europe)?

To increase marketing shares in Europe, I would recommend doing some guerilla marketing in festivals and more visibility in nightlife. In Europe it would be a good idea to launch the FAB market again. I think the FAB market would be popular in Europe, for example in Spain. Digital marketing with social media contest would be popular in Europe, if the legislation does not cause problems. For the Eastern European part I would conduct a research for doing the segmentation and seeing what gets them to buy the product (Hollesen 2014).

Which alternative marketing strategies should the Absolut Company have to increase its market share for Absolut Vodka in other parts of the World?

In China Absolut Vodka already has a high position in the vodka market, which is continually growing. In rest of Asia Absolut Vodka could try to do a charity campaign, which could be attractive to Asians. Otherwise just put more recourse to outbound marketing (Hollesen 2014).

In Australia it could be good to create more local campaigns, invest more in outbound and digital marketing. Also trying to relaunch the FAB market could be a good investment. I would say the earlier try to launch it was premature (Hollesen 2014).

In Arabic countries, investment to airport areas and more visibility in events. Also investing to have more visibility in large hotel chains and try to do a wider segmentation.

Question 3

In which region (country) of the world would you recommend Absolut Vodka to allocate more marketing resources?

I would recommend Absolut Vodka to I allocate more marketing resources in Russia and in Eastern Europe. The total volume of vodka sales is largest in this part of the world with 80.9%. Absolut Vodkas market share is low in this area (1.3%). If Absolut Vodka would succeed to do a attractive marketing campaign in Eastern Europe and Russia, they could increase their market share and maybe pass Smirnoffs positioning in this area (Hollesen 2014).

Question 4

Did Absolut Vodka have the right competences for achieving international success for its Absolut Cut?

For achieving success for Absolut Cut, I think Absolut Vodka had the wrong competences. I think the marketing for this new product was lacking and not effective enough. I also think Absolut Vodka should have bind the marketing and the product more to the image and brand of the company. Absolut Vodka tried to launch it in Canada, Australia and the U.K, of which I dont think Canada is a suiting country. I think the product was prematurely launched and felt a little bit forced. Absolut Vodka should have done it by their own conditions and not just attempt to reach competitors, with products like Bacardi Breezer and Smirnoff Ice (Hollesen 2014).

Question 5

Should Absolut Vodka relaunch a mixer product in the global FAB market?

I think Absolut Vodka should relaunch Absolut Cut. I think it has good potential to succeed the second time. They could launch the same product or change it a little. But they should change it to a drink with a fresh and urban image. Also this time around they could try to connect it more to the Absolut Vodka image, and maybe even get loyal consumers to favor this drink as well. It would be good to connect the drink to nightlife, festivals and vacation spots, where you can relax and enjoy the drink. The name was good, but the cut the crap campaign was a failure from my viewing point (Hollesen 2014).

Global Marketing

15

Bibliography

2014. http://www.winemag.com.Absolut Ad. http://www.absolutad.com/absolut_about/history/advertising/#absolut_statehood."AbsolutArt." 2015. http://www.absolutart.com/eu/?gclid=CLDD04blgsYCFSrJtAod5HQAIg.Alko. 2013. http://www.alko.fi/alko-oy/yritys/hallinto-ja-johto/.Alvesson, Mats. The Triumph of Emptiness: Consumption, Higher Education, and Work Organization. Oxford Univeristy Press, 2013.Bacardi. 2012. http://qa.bacardi.com/de2/start.Diageo. 2015. http://www.diageo.com/en-row/Pages/default.aspx.Elliott, Stuart. The New York Times. 2007. http://www.nytimes.com/2007/04/27/business/media/27adco.html?_r=0.Finlex. 2015. http://www.finlex.fi/fi/laki/alkup/2014/20140152.Froman, Michael. "National Trade Esitmate Report on Forgein Trade Barriers." ustr.gov. 2014. https://ustr.gov/sites/default/files/2014%20NTE%20Report%20on%20FTB.pdf.Gin & Vodka. 2015. http://www.ginvodka.org/factsheets/Vodka_Market_Global_Picture.asp.Greenfield, Rebecca. Fast Comapny. 2014. http://www.fastcompany.com/3032598/most-creative-people/the-evolution-of-absolut-vodkas-advertising-strategy.Hollesen, Svend. Global Marketing. Sixth Edition. Pearson, 2014.Krashinsky, Susan. 2013. http://www.theglobeandmail.com/report-on-business/industry-news/marketing/absolut-vodka-strives-for-authenticity-in-ads-aimed-at-millennials/article14205567/.Pernod Richard. 2015. http://pernod-ricard.com.Tepper, Rachel. The Huffington Post. 2012. http://www.huffingtonpost.com/2012/09/13/absolut-unique-vodka-bottles_n_1882025.html.Under the Label. 2014. http://vodka.underthelabel.com.