Angove´s St Agnes Brandy (página 2)

The brandy market was affected by the Whitlam government"s increase in spirits tax. Since these days the Australian market and producers have being damaged, some companies could survive but others could not. Foreign brandies are mainly from France, which have been characterized by low prices. Actually, Angove"s have 40% of the domestic Australian market, and 45% of the market is captured by French brandies (Mine, 2005). According to the report of the company William Reed LTD (2004, p.2) the main French brandies are:

• 1. Courvoisier VS

• 2. Three Barrels

• 3. Martell VS

• 4. Jules Clairon

• 5. Remy Martin VSOP

These products have been trying to build their image with luxury labels and bottle designs. Samples in chocolate bottles have been produced to state the status of the brand, most of the time they are distributed in fancy restaurants (William Red, 2004).

Shield (1995, p 2) mentions in "The brandy Balloon Goes up" some of the most important Australian brandies:

Brandy Company Characteristics of the flavor

Other important companies in the brandy market are Southcorp"s Chateau Tanunda, and Tarac"s Barossa Brandy, but the main problem for Angove"s St Agnes brandy is not the rivalry between local or French brands. The real problem is the customer image of brandy. Brandy is thought to be old fashioned, for older people, and Angove"s want to reposition the brand for a market between 25 – 40 years. The budget to do it is $200,000 (Milne 2005).

Mr John Carlyon Angove knows that the budget for this campaign is short, compared with other products of the company, and he is conscious that the image of the market is not going to change over night (Milne 2005). If the marketing agency does not do something to change the image of brandy the product will decline even more in the Australian market. Another market alternative is the American market, which grew 10% in the last year.

(Second Credo)

Actual sales of Angove"s brandy are 90,000 cases per year, and the goal for this year is 100,000 bottles. Recently, Angove"s company and Qantas signed an agreement where domestic and international flights (Bawden 2005) will provide St Anges brandy to the passengers, which will bring a increase of 1,000 cases per year. An extra benefit is the exposure of the brand to overseas consumers (Milne 2005). Financially it will provide 12% more sales for the company (Bawden 2005).

The forecast in Business Monitor International (Q1 2005) shows that the Australian alcohol market will have an increase for the following year. Some of the products that are expected to lead this tendency are beers, low alcohol beverages, new premium products and non alcoholic products.

The following chart shows the past, actual, and future sales of Alcoholic drinks in Australia (Business Monitor International, 2005)

The main income in sales was in supermarkets, followed by discount stores, and convenience stores sales (Business Monitor International, 2005).

A SWOT analysis in the Australian beverage business is shown in the following chart:

Strengths

• High level of education in the workers

• Highly developed transportation infrastructure

Weakness

• Low levels of investment compared with the Asian market

• Small possibilities for growth in the market

Opportunities

• US free trade agreement,

• Development in Asian markets

Threats

• High levels of taxation in Australia

According to Business Monitor International (Q2 2004), the United States is the biggest retailer in the world. The American soft and alcoholic drink market is expected to grow 12.5% for the next year, and the sales forecast for the year 2006 is US $136.3bn. This result makes the American market a good option for Angove"s company.

Important information was found in the report of BMI, where it shows that 75% of the sales in hot beverages were achieved from coffee. This makes a good opportunity for Angove"s, where one of the strategies that will be proposed is to create exotic beverages. More information will be discussed in the future of this essay.

Another opportunity for the Angove"s Company in the American market is that slow growth in the alcohol market will be driven up by sales of "higher quality and premium products" (Business Monitor International, Q2 2004, p 5).

The following table shows the behavior of the Alcohol and coffee drinks market in America (Business Monitor International, Q2 2004, p 6):

The previous table shows the size of the American market, managers from different marketing agencies must take into account the sales potential that this market could bring for the company.

A marketing plan must be implemented to help Angove"s company to state the actual position of the company, to decide where the company what to go, an what are your plans to arrive there (Auld 1997, p. 36).

According to Auld seven steps must be done to create a marketing plan (Auld 1997, p36-41)

• 1. "Determine where you are now (SWOT analysis)

• 2. Establish your objectives

• 3. Who are you talking to (Which is your target market)

• 4. What strategy will you use to achive your objectives (being the first choice in your market)

• 5. Determine your tactics (creating offers to your target market)

• 6. What is your budget? (budget for new and current customers)

• 7. Tracking and reporting (how Angove"s company are going to measure the results)

In the budget point, is important to state that Angove"s company must determine the value of each customer. After this must decide how much of the budget is going to spend to retain her/him. If the customer is giving big income to the company, direct markting must be focused more to her/him in the future (Auld 1997, p. 59)

In addition, Angove"s"s marketing managers must also consider in this marketing plan: "direct marketing, public relations, advertising, sales promotion, distribution, and sales training" (Auld 1997, p. 41)

(First Credo)

It is important for all the people that will collaborate with the development of the marketing of the company to know that we are starting a new era in the way that we communicate, and that the company"s strategies must change. The budget to develop a successful marketing campaign is small. For this reason our ideas must be innovative and targeted to our customers.

Godin analyzed that 100 years ago companies were successful because they had large extensions of land, making it possible to have power and be unbeaten in the market. In the second century, successful companies were characterized by the enormous construction of factories. Today, the way of do business is to create great ideas for the market (2000, p 18). These ideas must be embraced by our customers.

Godin in his book "Unleashing the Ideavirus" creates a new word, "ideavirus". This concept states that every person who interacts with the product or service must be infected with the idea. Ideavirus is created when the concept of your product is talked about by friends, workers, classmates, and other people. The important of this concept is that people find some value of your product that satisfies them (2000, p. 19).

People are interacting and communicating more than ever. For this reason it is impossible to stop them from marketing (Godin 2000, p.20). Angove´s St Agnes can win if the ideavirus is spread successfully.

For this reason we must focus in this campaign more than ever on the people, effective communication, and marketing that arrives directly to our customers. Customers will help us to spread the idea and image faster than any other media.

People in charge of Angove"s marketing must know that ideas are not forever, and the lifecycle is short. For this reason a new idea must be developed to replace the old one. Furthermore, marketing, media and PR people in the company must help customers to interact and spread the ideavirus between them, while not forgetting to ask what the customer wants (Godin 2000, p. 25).

(Third Credo)

In the brief introduction, at the beginning of the paper, it was mentioned that Angove"s St Agnes brandy is an icon of South Australia. If we concentrate on this idea, and try to get the Australian people to see St Agnes as a South Australian icon, this will help to build the national image and the perception of the brand. In addition, Godin mentions that if the ideavirus is not up to 15% in the target market, or the percentage does not dominate the market, the ideavirus will not be successful (2000, p. 27). Angove"s must start to create Angove"s brandy as icon of the country. Angove"s brandy must be the most famous spirit in Australia, like tequila in Mexico.

The ideavirus described before will help to the increase the local market share, and start to develop the idea overseas. Managers in this task must differentiate between ideavirus and word of mouth to achieve the goal.

Moreover, the alcohol market is a very attractive market in which to do business. Firstly, the markets capacity for growth is enormous, there are a lot of people that do not drink, or do it but not in large quantities. Secondly, the behavior of drinking is a "social phenomenon, perfect to for spawning ideavirus" (Godin 2000, p. 199). Related ideas will be discussed in the future of this paper.

(The Fourth Credo)

According to Dru, marketing of diet drink companies must "make people think that when they are drinking" (Dru 1996 p. 114) some sugar free beverage customer must think that they are drinking "the real thing" (Dru 1996 p. 114) with sugar. This idea can be developed to the alcohol market, people must not think that they are drinking alcohol, they must think they are drinking fun.

Advertising Agency

Angove"s company already knows that drinking is a social phenomenon, and it must create a link between friends and alcohol. Advertising can be linked to the social circle of the customers, giving the idea that drinking will improve their relationships with their friends.

It is an important goal in this marketing campaign to grow faster than the market. Absolute has done it successfully during the last years. This vodka brand is 50% more expensive in the American market, and customers still buy it. The reason for this success is that Absolute focuses its image in the perfection of the product, and not on the competition. To understand this idea better it is relevant to quote "The Law of the opposite" (Trout 1994, p.51). This law mentions that is not so important to better in the market, the most important thing is to be different.

French brandy is cheap and could have other qualities, what Angoves´s´s marketing managers need to do is to change those strengths into weaknesses (Trout 1994, 51), but the main point in Angove"s strategy is be different.

Even more, Angove"s can create a customer brand image where the point is to be different from the crowd (Dru 1996, p. 117).

Another way to advertise this product is to create episodes in the advertising. Divide the T.V spot in two or three parts. This will create interest in the consumer about your brand. This also can be managed with some magazines or other media. This way of advertising is linked strongly with PR, and the strategy of having another idea prepared and ready for when the first idea declines (Dru 1996, p. 168).

PR company

One idea to communicate with customers could be the concept of "consumer insights" (Dru 1996, p. 172). This concept creates ideas based in observations about life. Ideas that managers of marketing can take are "stolen moments, fleeting forays into real life, and revelations of the way people think or what they do." These ideas are not just ways to communicate, but are also elements to build your campaign.

In the book "the fall of advertising and the rise of PR" (Ries & Ries 2002, p. 51) states that the most important for PR and advertising is to deal with the perception of the consumer, and not with the product. Common advertising make famous the advertising and do not focus to the main point that is create sales value.

To create the concept that Angove"s is going to promote is important to have in mind the theory "One – two – three Approach". This theory is based in the concept that PR people must support the concept to promote with two real events already happen.

Another interesting idea is what Absolute has created with PR. The concept is to sacrifice the message. They apply the credo of sacrifice, creating different histories where the idea to communicate can change in each history. Angove"s can create the story of the founder, the story of distillation, or other. (Morgan 1999, p. 130).

(The sixth Credo)

In the chapter "Rebuilding an Old Brand with PR" (Ries & Ries 2000, p. 123) states the example of how Bacardi has been successful in the market. It is explained that the company has focus to increase the knowledge, experience and range of activities that of the brand. There are many way to advertise Bacardi rum, and also de varieties that had been developed during this years. This elements has done of the company the most famous alcohol company in Americas (Ries & Ries 2000, p. 123).

Mr Angove"s is an excellent channel for PR. A brand, product or service could not be interviewed but a person can be done. When the product brings the name of the founder results are multiplied by two (Ries & Ries 2000, p. 160)

New brand needs publicity because key element that is missing is credibility, contrary to old brand that needs advertising. Advertising helps brands to have "oxygen in their life- support systems" (Ries & Ries 2000, p. 221) .Nevertheless, advertising and PR can be managed successful at the same time if managers understand the importance of each one(Ries & Ries 2000, p. 221) .

Direct marketing/customer relationship management supplier

According to Auld the benefit to create direct marketing by the web is that you can measure, and is cheaper than other media. What is relevant in this type of direct marketing is to have the ability to record all the answer of your customer, and also the ability to know why some customers did not answer (Auld 1997, p. 41).

In direct marketing is important to build the database, creating this information it is possible to email or mail your customers. In database it is important to have the philosophy of "Ready, fire, aim". The meaning is to have the information in the right moment, in the right place, and with the right target (Auld 1997, p. 74).

In direct marketing, is important to remember the rule 20/80, where 20% of your customers make the 80% of your profits. For this reason is not relevant the mass marketing in this industry (Auld 1997, p.28).

E-mail can be used as direct marketing. This way of communication with the customers can include images of Angove"s brandy production. Managers must remember that e-mail has some hidden cost, some of this are shown in the next table with an example of 200,000 e-mail (Auld 1997, p.65):

As we saw not all the e-mails were effective, and this can affect directly in the cost of the message. As we known, Angove"s"s budget is limited and we need to focus in the right people (Auld 1997, p. 66)

With customer relationship management, and the way that the company is going to distribute the information about the products is in the same way that physical distribution does. Buzz distribution information are designed to communicate "from manufacturer, to reseller to end user" (Rosen 2000, p. 219). This system will create more interaction, the task for marketing media is to create the ways.

Internet, and e mail is allowing the customers to be more educated about the goods that they buy. Years ago customers only received information from the sales people in the store, today if someone wants to buy something it is common for them search for information on the net. For this reason the company will develop more ideas and links for the interest of the consumer. One idea is to create an online space where customers can interact and talk about the products, or give recommendations or opinions about the product. Information from a wine expert can be included in the web page of the company, the point is to help customers to communicate.

(The seventh credo)

Customer relations can be improved by the creation of a customer product information telephone number. Customers can call and express their ideas or opinions, or ask questions about brandy. Providing different communication channels it is important (Dru 1996, p.171).

Old customers are very important to Angove"s St Agnes. The reason is that the longer they stay with the brand the more they spend in out product. A second benefit of these customers is that the amount spent in serving them decrease with the time (Dru 1996, p. 333). Marketing people must remember that loyalty is not achieved with gift, is achieved with the customer service provided each time that customer comes to buy our product (Dru 1996, p. 336).

During the development of this essay, is possible to notice that communication that the value to talk, and the communication that we have with the customer in the future is the most important, and for sales promotion is not the exception.

To create a new value in the curve of customer, the chapter "Analytical tools and Frameworks" suggests for non alcohol berage the next four steps:

Reduce

• All factors the alcohol industry had long competed on

• Tannins

• Oak

• Complexity

• Complicated labels

• Terminology

• Ranch of products

• Stockkeeping units

• Variety

• Simplify wine displays

Eliminate

• Compromises, and industry forces

• Investment in factors that an industry competes on

• Difficult process to choose

Create

• New demand, and shift the strategy pricing of the industry

• Accessibility

• Fun

• Social drink

• Simple products

• Non traditional products

• Non traditional labels

• Easy selection

• Recommendations

Raise

• Buyer value, elements across alternative industries

• New experience for buyers

• Sales

• Mass media

• Consumer advertising

Media buying house

Dru mentions that we are arriving in an era where things are becoming more intangible, for this reason it is important to reinforce the brand position. He suggests doing this with pre ideas, like pre-campaign or pre-messages (Dru 1996, p. 160). This is suggested in four areas: "branding ideas, added-service ideas, event ideas, and media ideas" (Dru 1996, p.161), which are the responsibility of the media house.

A branding idea for Angove"s brandy could be to give a relaxed name to the product, something that customer will feel comfortable buying and drinking in front of his/her friends. Also Dru suggests using simple or easy names to remember, names that give great ideas to the perception of your customer (1996, p. 162)

If we focus on the idea to create service ideas, we can take the examples of Starbucks Coffee. This company is trying to educate its customers in the field of coffee, making them connoisseurs (Dru 1996, p. 164). This idea can be created if Angove"s try to do the same with brandy. Some times companies put brand stores in up market malls or shopping centers. The idea of these stores is to build the image of the brand, rather than making a profit at that particular store. In these stores the communication is direct with the customer, from producer to end user.

In addition, if we remember that 75% of the hot beverage market in America is achieved by coffee. The idea to create exotic beverages is good, but is better if we can make a corporate contract similar that the one with Quantas, but this time with Starbucks. This agreement can bring us excellent revenues, and internationalize the brand of Angove"s brandy. This idea of making our customers connoisseurs benefits both companies.

Angove"s can develop the idea of the great Australian brandy around the world, helping to build the image of the company.

Angove"s Sales and distribution staff

The salesforce can wear t-shirts that communicates the most important points to customers.

(The Eighth Credo)

Distribution staff is an important link in the marketing communication. These people are involved a lot with the customers and have many ideas that can improve products. Nevertheless is important to create alternative ways of communication with the customers. Capacity and ability to communicate knowledge of the product can change from one store to other, damaging the campaign of the company (Rosen 2000, p. 220). Time is also import because the way "to spread buzz can change over time" (Rosen 2000, p. 220).

The creation of web sales can be useful. Firstly, it can bring new and direct information from the customers, and secondly Angove"s company can relate direct information from customers and design a chat where they can see the products that other customers buy it.

Another idea for Angove"s sales is to design a site where customers can go and ask the sales representative for a product suggestion for their dinner party or event.

It is also important to remember to the people involved in the marketing plant that if Angove"s St Anges can not be the first in the category, we must find a new category where the company does it (Trout 1993, p. 11). Be the cheapest brandy in Australia is not the most important, remember it¡¡¡¡

In conclusion, the way of do businesses is more intangible than ever. Communication between humans and companies is changing. Databases are more complex and sophisticated, and in the marketing business perception is becoming to be everything.

References

Auld, M 1997, Direct Marketing Made Easy, Harper Business, Australia, pp. 36-41,59

Baker, T 14 March 2003, "What I like about home, sweet home" Dow Jones & Reuters, viewed 10 April 2005, Factiva

Bawden, T 16 February 2005, "St Agnes gets her wings" Dow Jones & Reuters, viewed 10 April 2005, Factiva

Breakenridge, Deidre & DeLoughry, Thomas J – The New PR Toolkit: Strategies for Successful Media Relations, Financial Times Prentice-Hall, USA, 2003

Dru, J 1996 Disruption, John WHey & Sons, New York, pp. 114,117,160-171, 336

Food & Drink Forecast Australia Q1 2005, 16 April 2004, viewed 10 April 2005, pp. 1-10, Busines Monitor

Food & Drink Forecast United States Q2 2004, 16 April 2004, viewed 10 April 2005, Busines Monitor

Gladwell, Malcolm 2000 "The Tipping Point, Little, Brown" & ~~, London,

Godin, S 2000 "Unleashing the Idea Virus, Do You Zoom Inc", USA, pp. 18-27, 199

Milne, C 21 February 2005, "Angove"s in high spirits for a revival" Dow Jones & Reuters, viewed 10 April 2005, Factiva, p.2

Morgan, Adam 1999, "Eating the Big Fish: How Challenger Brands Can Compete Against Brand Leaders", John Wiley & Sons, p.130

Off licence news, 3 September 2004, "Cognac and grape brandy" Dow Jones & Reuters, viewed 10 April 2005, Factiva

Rehm, J & Rehn N 2003, "The Global Distribution of Average Volume of Alcohol Consumption and Patterns of Drinking" European Addiction Reseach, pp. 149-155, viewed 1 April 2005, Karger AG

Ries, AI & Ries, L 2002 "The Fall of Advertising & The Rise of PR", Harper Collins, New York, pp. 51,123,160,221

Rosen, E 2000 "The Anatomy of Buzz – How to create word-of-mouth marketing", Doubleday, New York, pp.219,220

Shield, M 19 March 2005, "The Brandy balloon Goes up" Dow Jones & Reuters, viewed 10 April 2005, Factiva, p.2

The Advertiser, 16 February 2005, "St Agnes set to travel" Dow Jones & Reuters, viewed 10 April 2005, Factiva

Trout, J & Ries, AI 1993 "The 22 Immutable Laws of Marketing", Harper Business, New York, pp.11, 51

http://www.angoves.com.au (online)

BIBLIOGRAPHY

Grey, AM & Skildum-RK "The Sponsorship Seeker's Toolkit" (2nd Ed), McGraw-HiII, Australia, 2003

Jones, JP 2002 "The Ultimate Secrets of Advertising, Sage Publications". California, USA

Sutherland, M & Sylvester A 2000 "Advertising and the Mind of the Consumer", Alien & Unwin,

Autor:

Nahum Romero Santana

14 de mayo de 2005