Strategic Management
Market Positioning Plan
Alba’s high-end product positioning strategy in the wine industry is characterized by premium branding. This marketing strategy has three advantages: high profit margins, strong brand loyalty, and a powerful brand image due to its potential to spread into mainstream markets. For example, business elites and vital political figures dominated the premium wine market in China.
However, today, the market is increasingly patronized by middle-income buyers (Alba – case study, 2020, p. 16). Therefore, Alba’s premium pricing model could generate significant returns for the business and a loyal customer base. Potential drawbacks of adopting the premium branding model include low market access and a high risk of reputational damage if one brand suffers a poor image.
Evaluation of Responsible Marketing Program
Alba has a “responsible drinking” marketing program, which encourages people to drink sensibly. No potential conflicts emerged between this campaign and the average profitability growth of the business. Indeed, saving consumers’ lives through responsible drinking means sustaining a revenue stream.
At the same time, the positive image created by the company’s responsible marketing campaign attracts new consumers who appreciate Corporate Social Responsibility (CSR) practices, thereby creating additional revenue streams. Potential drawbacks associated with Alba’s responsible marketing program are diverse. It could develop losses in sponsorship deals from for-profit partners.
Similarly, it could lead to increased operational costs due to adherence to CSR guidelines. This fete may be caused by the need to adhere to new policies. Alba’s responsible marketing campaign may distort its image as a high-end wine automaker by presenting its credentials as a global champion for responsible drinking. This mixed messaging may negatively affect the company’s brand image.
The Benefits and Risks of Alba’s Continued International Expansion
Good customer service is one of the main strengths of Alba’s export operations. It is founded on its employees’ diversity, allowing them to respond to diverse customer needs (Alba – case study, 2020, p. 15). Alba’s international team ensures that it provides training and support to newbies selling their products. The company’s workforce has improved quality control by enhancing its procurement processes and supply chain effectiveness to increase its manufacturing and distribution capacity.
Comparatively, the low number of store locations in overseas markets is the main weakness of Alba’s export operations because it limits access to the company’s products. Alba’s international market expansion plan portends significant risks and benefits to its operations. Three benefits likely to be enjoyed from implementing this plan include increased profitability, expanded market outreach, and improved risk management. Potential risks that could impede this globalization plan include increased cost of operations, cultural clashes among employees from different backgrounds, and loss of managerial control through partnerships and collaborations.
Market Entry Strategies
Alba can use direct entry and joint venture market entry strategies to expand its market outreach in foreign markets. The firm has used these strategies in India and the US, respectively. The main advantage of the direct entry strategy adopted in the US is increased control of system operations. However, the main drawback is limited market knowledge, which could increase the risk of market failure. Comparatively, the joint venture strategy has a limited number of limitations, thereby making it easy to access local market knowledge, which is its greatest strength. However, the increased decision-making time associated with joint venture policies is a drawback.
Economics
Factors Affecting the Demand for Alba’s Products
Alba aims to improve its corporate performance by adopting measures to enhance its competitiveness locally and abroad. The first initiative the firm has adopted is increasing control of its overseas operations. This strategy will likely give it power over route-to-market operations, enhancing its capacity to meet customer needs. Figure 1 below shows that government restrictions are correlated to alcohol consumption.
NB: Figures on Y-axis represent alcohol consumption levels.
As highlighted in Figure 1 above, the US’s lack of government restrictions creates an increase in alcohol demand, which leads to heightened consumption levels. Alternatively, Russia’s alcohol limitations have caused stagnation in demand. These findings indicate that market constraints are inversely correlated to demand, while a lack of restraints can cause an increase in linked demand. This finding has negative implications for Alba because it limits its ability to achieve high levels of alcohol consumption in restricted markets.
Elasticity of Demand for Alba’s Products
Price elasticity refers to the extent to which demand changes if the price of goods or services alters. A shift in consumer spending would affect Alba because alcohol has an elastic demand. Thus, the elastic demand for Alba’s products negatively affects the sales of high-end spirits. Therefore, to correct market imbalances caused by the elastic demand for alcohol products, the company may package products in lower quantities to cover different price needs in the industry. This flexible pricing plan would ensure that fluctuations in demand are accounted for by creating different classes of marketed goods. This strategy would ensure the company remains profitable despite changes in demand.
Minimum Retail Price in the UK
Price setting may negatively affect the demand for Alba’s products, suppressing sales numbers and diminishing demand. This statement is supported by a combination of classical and Bayesian economic views on alcohol demand, demonstrating that price fixing reduces product supply. Alba can mitigate this risk by diversifying into markets with no such restrictions. Therefore, its potential strategy to venture into unrestricted markets will likely compensate for market weaknesses in non-performing countries.
Marketing
Product Positioning: Strengths and Weaknesses
Alba’s branding strategy has three main segments: scotch whiskey, vodka, and rum. The first product portfolio is scotch whiskey, which has the most brands, including The Old Highlander (Single Malt), The Pretender (Single Malt), Highland Mist (Single Malt), and Victory (Blended) (Alba – case study, 2020, p. 15). The main strength of this product portfolio is the diversity of brands present relative to the other two portfolios, including vodka and Rum, which both have single brands. One weakness of this portfolio is the likelihood that the popularity of one brand in this segment would overshadow that of another. The main advantage of the vodka product portfolio is the potential to focus on only one brand during advertisements. Broadly, this approach of brand determination ensures that Alba’s product gets maximized marketing attention.
The implication of Alba’s segmented product placement strategy is having a solid brand following driven by loyal customers. The potential drawback of this positioning strategy is customers’ limited options when choosing brands to purchase. For example, there is an increased likelihood of buying a competitor’s products if they dislike the Crystal Jaguar brand, which is the only one in Alba’s Vodka product segment (Alba – case study, 2020, p. 16). The Rum portfolio is equally a single-product portfolio.
The main advantage of this assortment is the high popularity of the Grandee brand, which means that a loyal customer group can emerge. The disadvantage is the difficulty of defining customer segments and developing an effective positioning strategy with limited products on the segment. Therefore, it is difficult for customers to understand product differences or tastes within this portfolio. Despite their positive impact on the firm’s growth, Alba’s reputation would be injured if it decreased its prices because it would distort the brand’s image as a premium product.
Code of Conduct for Responsible Marketing
Alba’s social marketing initiative has the potential to impact the community positively. It could enhance the company’s brand image as a responsible producer, thereby increasing its overall value. Similarly, its compliance with practical marketing guidelines endears it to the public as a law-abiding corporate entity worth supporting. It equally increases the company’s ability to secure tax breaks due to its engagement in philanthropic activities. These features make Alba’s marketing plan superior to rivals who do not have such initiatives.
Physical and Organizational Management
Strategies for Enhancing Overseas Employee Awareness of Corporate Values
Alba’s corporate values aim to ensure its operations are aligned with its core mandate of promoting responsible drinking. The firm can take the following two measures to make overseas employees more aware of its corporate values. First, it must ensure that employees in emerging markets in the USA, Southeast Asia, and China use similar assessment metrics across all market divisions. Stated differently, all human resource functions and activities should promote a shared vision.
Secondly, Alba’s employee reward scheme that encourages staff to participate in share ownership may be transformed into a reward-based system to encourage value-centric behavior above all other considerations for promotion (Alba – case study, 2020, p. 18). Therefore, the most valuable employees in the company would be those who demonstrate fidelity to corporate values.
Strategies of Interaction with External Stakeholders
Alba’s four stakeholders include employees, consumers, governments, and local communities. These players impact the company’s corporate performance. For example, employees are involved in quality control, while consumers are instrumental in sustaining demand. Comparatively, the governments ensure Alba meets its legal obligations. Similarly, local communities promote community buy-in for Alba’s corporate policies (Alba – case study, 2020, p. 19). Broadly, these stakeholders reduce project risks and provide expertise to solve operational or marketing problems. Relative to this function, Alba should consider bolstering its social media communication plan to coordinate activities among different teams. This action could improve corporate strategy implementation and operational success by harnessing synergy among the relevant parties.
The second strategy that Alba could use to increase stakeholder engagement is to incorporate feedback into their corporate plans. Currently, the company runs independent websites for each brand with limited opportunities for collecting feedback. The company may consider linking these websites with social media pages to incorporate feedback into its communication plan. This action would demonstrate that the organization is acting in good faith and remains committed to fulfilling the needs of its stakeholders.
Alternatively, Alba could adopt its stakeholder engagement plan to strengthen its core value of involvement, which strives to give stakeholders a voice and enable them to become part of the company’s decision-making process and success. Thus, increased stakeholder involvement will ensure that all parties involved are not excluded from the daily running of the business. Reporting back to them will ensure they know all pertinent information about their investments.
Accounting
Key Financial Indicators and Implications for Alba’s Stakeholders
In the course of conducting business operations, a company’s profits may be negatively affected. This was the case with Alba’s profits, which declined from 2013 to 2014. An increase in the cost of doing business could have been the primary cause of the change because the cost of sales increased during the analysis period (Alba – case study, 2020, p. 22). Alba’s corporate strategy of joint ventures could similarly have had a negative impact on profitability. An increase in administrative expenses suggests that the cost of doing business could have eroded the company’s profitability during the analysis period.
Assessing the Impact of Alba’s Global Expansion on Profitability
Alba’s plan to venture into the international market will positively impact profitability. However, its non-stop globalization strategy means that intense capital inflows may be required to finance the venture. Savings and loans are two sources of funds that Alba could use to finance its foreign operations. The savings option is a primary solution, while loans are secondary. Banks could obtain the loans, while savings would need the Board’s approval.
Evaluating an Alternative Financial Indicator: Return on Investments
Return on Investments (ROI) could be used to assess Alba’s performance. ROI refers to the rate of return an investor would expect from their capital investments. The formula for its computation appears as follows.
Net return on investment/cost of investment x 100%
Based on the above metrics of calculation, computing ROI will be useful to people intending to invest in Alba. It will help investors to estimate the profitability of specific investments. Overall, companies with a high ROI perform better than those with a lower rating (ROI). Therefore, this financial measure is useful in measuring Alba’s economic performance.
Reference List
Alba – case study (2020) Scottish Qualifications Authority, pp. 15-23.