Essay on Brewdog Marketing Strategy Example essay - Essay Prowess

Essay on Brewdog Marketing Strategy Example essay

Essay on Brewdog Marketing Strategy Example essay

  

Introduction

            Any company that engages in any form of business has profitability at the back of their minds. Besides maximizing profits, they also try to maintain their corporate social responsibility. Such responsibilities, including providing job opportunities, get rid of discrimination and protecting the environment (Desrochers, 2010).

            With the growth of the world economy, there has been an emergence of new markets in which different businesses would want to engage. Most companies are involved in international trade for the following reasons: increasing demands, acquiring capital, mitigating risk, and diversifying revenue and supply sources (Managementstudyguide.com, 2015).

            International business refers to when there are production and distribution of goods and services across country borders. A global economy creates excellent business opportunities; this happens due to the reduction of trade barriers and the changes in consumer preferences (INTERNATIONAL BUSINESS LEARNING OBJECTIVES, n.d.).

            Many companies have a vision of entering and conquering markets that are primarily not in their country of origin. They would want to create dominance in different countries and be a success. When planning to enter into a new country, a company needs to have an entry strategy that will have vital choices that will help in knowing how to navigate the new territory (Vermeulen, 2001).

            In this paper, I shall outline how the BrewDog beer company can strategise itself and enter into the Russian beer market.

Company Profile

            BrewDog is a Scottish craft beer, created by James Watt and Martin Dickie in Fraserburgh in 2007. The founders met while in school at the age of 24 years. James Watt was studying economics and law, while Martin Dickie was studying brewing at Heriot-Watt (Headspace, 2019).

            The mission for BrewDog was to revolutionize the beer-making industry and to re-define the beer-drinking culture of the British people and also to make other people as passionate as they were about the consumption of craft beer (BrewDog.com, 2009).

            BrewDog has grown to be one of the best craft beers in the world, which uniquely runs its operations. It raised funds for its expansion through crowdfunding for shares equating to 8% of the total capital of the company and raised £2 million. The company exports to over 60 countries in the world and has been valued at more than £1.8 billion (Headspace, 2019).

            This beer has achieved significant milestones in a short period such as becoming Scotland’s largest independent brewery in only its second year, by 2009, BrewDog became UK’s fastest-growing alternative beer. Within that year, they also brewed the world’s strongest beer at 32% alcohol level (BrewDog.com, 2009).

            BrewDog has grown to become an award-winning craft beer and has been able to expand its operations and also introduce a wide range of craft beer products to its portfolio. The uniqueness of BrewDog is how it can involve other people in its activities and develop products that resonate with the needs of the population that loves beer (BrewDog.com, 2009).

            As a company of firsts, in 2018, BrewDog opened a craftbeer hotel-the doghouse- which is situated next to their Columbus brewery and also, they have opened a beer museum. BrewDog also broke the record for equity crowd funding by raising over £126million. The BrewDog manifesto was also launched where it gives the blueprint for the future in terms of improving the quality of the beer, and people (www.BrewDog.com, n.d.).

Situation Analysis

            Situation analysis refers to the process by which a company evaluates the environment where it is seeking to implement its mission, vision, and goals. In conducting a situation analysis, the internal and external conditions have to be analysed and to ensure that the company will be able to perform better in the new environment, it wants to set up shop (Brnjas and Tripunoski, n.d.). Conducting s situation analysis is vital as it enables a company to know the type of marketing strategy they can employ.

            In conducting a situation analysis, two significant considerations have to be put in place; macro-environment analysis and macro-environment analysis. The macro-environment analysis involves factors that the company has no influence over, and they include factors such as opportunities and threats that can impact a business. In contrast, micro-environment consists of the inherent characteristics of a company that can propel it to perform in the new market that it is entering (Brnjas and Tripunoski, n.d.).

            The Russian economy is one of the strongest in Europe and has remained on a steady rise over the years with vast oil and gold reserves (The Economist, n.d.). Over the years, the market for import beer into Russia has been growing. A brand that is not well known can sell very well in Russia so long as they have a good distribution network and a fair price (Anon, n.d.).

            BrewDog should enter the Russian beer market as the imports of beer grew by two-digit rates, exceeding the dynamics of other market segments. The beer imports increased by 15% to 351 million litres. The premium market for beer has played a significant role in increasing the import business for beer as it grew by 0.6 p.p to 4.6% of beer imports into Russia (Anon, n.d.).

            Craft beer consumption has been on the rise in the Russian market due to the foreign breweries being known in Russia. Many consumers of beer in Russia tend to take more of the foreign beers than the local Russian beers (Themarketingconcept.com, 2019).

Internal Environment Analysis

            An analysis of the internal business environment is crucial as it examines its resources, competencies, and advantages it has over its competitors (Themarketingconcept.com, 2019).

Strengths

  • They have a product that has a quality and unique taste. This flavour always tastes fresh because it is brewed in a craft brewery and can be easily distinguished from typical beers by their brewing styles and their taste (Themarketingconcept.com, 2019).
  • The beer can generate high-profit margins due to its high demand (Themarketingconcept.com, 2019).
  • It has an exclusive image that easily stands out from other beers and can easily be identified (Themarketingconcept.com, 2019).

Weaknesses

  • Being that it will be a new company in Russia, it will have limited links with distributors and suppliers, and setting up this chain comes at a cost leave alone, making it work smoothly (Themarketingconcept.com, 2019).
  • The beer is usually set at a higher price than commonly brewed beer; therefore, it might face not to be well received with the conservative population that concentrates on price rather than quality (Themarketingconcept.com, 2019).
  • Normally, craft beer such as BrewDog is not always distributed nationally, and it tends to target a specific area or region in the country; therefore, this might limit its popularity and yearly income (Themarketingconcept.com, 2019).
  • The quality of a beer is heavily dependent on its freshness, and this beer cannot be kept fresh for long unless it is refrigerated (Themarketingconcept.com, 2019).

Opportunities

  • There has been a shift worldwide from mass production beer consumption to craft beer consumption, which is commonly referred to as ‘test revolution,’ and the main reason behind it is because people want full-flavoured beers (Themarketingconcept.com, 2019).
  • The volume of sales of craft beer has increased worldwide (Themarketingconcept.com, 2019).
  • There is barely any competitor in Russia that manufactures and sells craft beer nationwide; therefore, BrewDog can create its blue ocean and thrive in it (Themarketingconcept.com, 2019).
  • The beer industry in Russia has a high growth typically and is rarely associated with failure because Russia is known to be a drinking nation (Themarketingconcept.com, 2019).
  • BrewDog will enjoy a low market concentration regarding sales of craft beer (Themarketingconcept.com, 2019).
  • BrewDog is an experience rather than a successful quest, which would make it impossible for commercial breweries to take over as these breweries can not concentrate on small-scale production and will not be able to replicate the taste of craft beer. (Themarketingconcept.com, 2019).

Threats

  • The start-up capital needed for this type of business is not substantial, whereas the beer-making know-how is widespread in Russia. This beer-making know-how makes it easier for microbreweries or larger microbreweries to enter and imitate the product in the same area (Themarketingconcept.com, 2019).
  • Mass production beer manufacturers in Russia may take over the company because they have a high potential, and the beer doesn’t help but create a micro brand mainstream (Themarketingconcept.com, 2019).
  • Its direct competitors will be imports because the beer has a high substitution rate and will be in competition with other kinds of beverages. Its indirect competitors will be alcoholic drinks and non-alcoholic drinks (Themarketingconcept.com, 2019).
  • There has been a sustained campaign in Russia by peer groups to contain the consumption of alcohol in Russia. Since 2003, the consumption rates have gone down by at least 43%. The World Health Organization reports that Russians consume an average of about 12 litres of pure alcohol each year, which is significantly higher than the global figures hence the campaign for reducing the consumption of alcohol. This can prove a challenge for an alcoholic product being introduced into such a market (says, n.d.).

BrewDog’s Financial Objectives for Marketing

  • They will seek to increase their sales revenues in Russia — Although sales volumes and sales revenues are linked, an increase in sales revenues can be accomplished by setting a price premium, which means that there is no need for an increase in sales volumes (Themarketingconcept.com, 2019).
  • BrewDog seeks to minimize costs as a percentage of sales-when sales revenue increases; costs can also rise, so they must be reduced as a percentage of sales (Themarketingconcept.com, 2019).
  • BrewDog also aims to build the value of their business in Russia- this is very important because the foundation of the company in a new country should demonstrate a long-term investment accompanied by a robust and healthy balance sheet (Themarketingconcept.com, 2019).

BrewDog’s Strategic Objectives for Marketing

  • Product leadership-BrewDog will produce distinctive products that can be easily distinguished and discerned from other products and provide benefits at a cost that is favourable for the company and the Russian public (Themarketingconcept.com, 2019).
  • Customer intimacy- BrewDog will try to understand its customer’s dreams, demands, and desires by building a good relationship and creating ambassadors that can get involved with the general public and give feedback to the company about the situation on the ground (Themarketingconcept.com, 2019).
  • Operational excellence- The company will produce and take their product to the market more effectively and efficiently (Themarketingconcept.com, 2019).

Justification (Why Russia)

            The Russian market is flooded with mass-produced beer that tastes the same. BrewDog heads in the other direction, making a craft beer that gives a – blue image of the ocean. Why fight to compete in an already overcrowded market when they can build their market position and capitalize on it by making a new beer? If the Russian beer market is dominated by mass-produced, similar tasting beers competing for market share, then the market has already been developed, and beer drinkers can easily be attracted by a desire for a quality beer with epistemological qualities with more flavour and fewer chemicals (Themarketingconcept.com, 2019).

            Russia has a history of being the world’s leading consumer of alcoholic beverages. In Russia, it is said that men consume almost three times as much as women. Up until 2011, Russia classified any drink that had lower than 10% alcohol levels as a food stuff. This can have a positive influence on the sale of beer, especially BrewDog as it is making entry into a market that has a high tolerance for alcohol (Parfitt, 2012).

            Russia is among the top ten importers of foreign beers in the world. The importation of foreign premium European beer increased in the super premium beer segment. Recently there has been an increased demand for craft beer in Russia. Many people have started appreciating craft beer and its consumption has started to increase. There has been a surge in the production and set up bars that deal with craft beers (Luhn, 2016).

Marketing

            Marketing is the process of developing, sharing, providing and sharing value-added services for suppliers, customers, partners and society at large (AMA, 2017). Marketing is important to any business for the following reasons; it helps in customer education as it informs the consumer about the product/ company, marketing also helps a company maintain its presence in the market, marketing also helps a company sell its products hence increase its revenues, and also marketing helps a company grow and increase its market size (Thian Sheung and Yazdanifard, 2014).

            The marketing cycle is crucial to the economic success of both big and small businesses, as it discusses the most critical aspects of the market. This is about understanding the dynamic environment and ensuring that you can leverage key patterns, reach customers with the right product at the right price, location and time (A brief summary of marketing and how it works, n.d.).

Marketing strategy

            A marketing strategy outlining objectives, targets and measures of performance, along with a budget estimation, needs to be designed. Once specific objectives have been established, alternatives to the current system can be addressed and ways of achieving these options can be selected. Marketing is a collaborative activity that involves a variety of different talents, experiences and personalities to be coordinated (A brief summary of marketing and how it works, n.d.).

Many elements of marketing refer exclusively to evidence and finance; others discuss the complexity and confusion of changing customer preferences. A cohesive marketing strategy is important for managing change, as businesses are involved everywhere in the technical, regulatory, corporate and consumer environments of rapid transformation and change (A brief summary of marketing and how it works, n.d.).

            The Russian market is dominated by mass-produced ads and sponsorship, which markets the same message. It should make BrewDog beer stand apart from the crowd as they use new outlets that they’re fantastic at. Many times the ‘textbook’ marketing strategy that seeks to find consumer holes will try to fill them. That is what is called the thought of the Red Ocean. It is generally compared to a fishing boat attempting to go fishing behind a trawler. BrewDog beer, thinking about their blue ocean, has found a category that they can own. This would probably involve a mental re-calibration of beer drinkers in Russia. Nevertheless, they have held in mind that, for thousands of years, culture has been guided by customers and their search for the best-satisfied goods, and it has been reported that the best-satisfied products are always on the market (Themarketingconcept.com, 2019).

Marketing Tactics and Action

BrewDog is built on the quality of their product, which is their beer. However, their final product is more than the beer, but the quality of their core product is the foundation of their business, and they need to maintain this even when entering the Russian market (Themarketingconcept.com, 2019).

The price will have to be agreed on based on the focus group in Russia. The core product is excellent, and people will enjoy it; they will tell others about it, and the demand will follow. This premium product will require a premium price because it’s of value, and they will need to be steadfast because satisfaction, quality, and value are related. If they are consistent, then they will be able to earn the customer’s trust and loyalty. However, the price set should be determined by their philosophy and not just a variable or digit that will be set to increase their demand in order to increase their sales (Themarketingconcept.com, 2019).

BrewDog already knows that the place to sell their product correctly is not necessarily a crowded supermarket shelf or any liquor store where they can stock their product and sell it cheap. Still, it is all about creating a special place where their customers can get to sit down and enjoy their product (Themarketingconcept.com, 2019).

To be able to market the beer in Russia, BrewDog will identify a local brewery that is well established in the Russian market to handle its product. The brewery will have a good distribution channel and a customer base that is receptive to new products. Besides having a good distribution channel, the brewery will be supplemented in marketing the product using other channels such as social media and other internet channels. With time, BrewDog will establish its own bars where its customers can be coming to enjoy their favourite brew (BrewDog.com, 2009).

The company’s promotion is based on what the customers and staff do or say. Their advertising is not restricted to television adverts. Under their slogan PUNK, they encourage people to be true to themselves, and when they have something to say, they just say it without any restriction, and this is what people all around the world need, including Russia (Themarketingconcept.com, 2019).

            BrewDog has also created a reputation of making products that offer a consumer an opportunity to express himself/ herself without feeling restricted like the other beer brands. BrewDog identifies with the social beliefs and identity of its consumers (BrewDog.com, 2009).

            BrewDog’s marketing strategies have been labelled controversial, from driving tanks through streets, dropping beer from helicopters to brewing beer underwater. One of the most famous controversial marketing strategies employed by BrewDog was launching a beer named ‘not for gays’ which was a protest beer against Vladimir Putin’s anti-gay laws during the 2014 Sochi winter Olympics, they even sent him a crate. Such audacious acts endear themselves with consumers (The Independent, 2014).

Conclusion

For an enterprise that aims to move on to Russia, BrewDog challenges the current paradigms of the beer industry by pursuing a blue-ocean strategy, and that allows the company to shift the views of its consumers. Yet they are lucky enough to reach a new market, as customers are still hunting for the most fulfilling items. However, for a product to be considered, the process of consumer education is required, and BrewDog needs to be involved with the marketplace to ensure a receptive market that will be sustainable (Themarketingconcept.com, 2019).

                For a product that has already established itself in other countries outside its home country, BrewDog has a bright future in the Russian market. Many individuals identify with products that are going against the conventional ways of doing things. By employing tech-savvy individuals and new ways of marketing, more consumers will be reached by BrewDog’s message- craft beer for people.

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