Internal Analysis
Diageo is a global leader when it comes to premium drinks enterprise. The company has an exceptional collection of alcoholic drinks that include wines, beer and spirits. Diageo’s most famous brands include Crown Royal, Windsor, Johny Walker, J&B, Smirnoff, Ketel One, Captain Morgan, Guinness and Jose Cuervo among others. Most of the alcoholic brands produced by Diageo have existed for several generations, however, there are other that have been developed in the recent past to cater for customer experiences and taste. Diageo’s net sales in dollars in 2011 were 15.73 billion dollars. Currently, Diageo commands 28% of the world’s market of premium spirits. This is larger than the market share commanded by any of its competitors (Trev 48).
Diageo’s main competitors in the premium spirit industry are Bacardi, Brown-Forman and Pernod Ricard. In the beer industry, Guinness faces competition from brands such as Heineken. Diageo’s global market share stands at 28%, this is huge compared to its main rivals like Pernod Ricard that commands 19%, Brown-Foreman 6%, while Bacardi commands 10%. In terms of sales, Diageo still leads all of its competitors, with Pernod Richard commanding 9,883 million dollars compared to Diageo’s 15.73 billion dollars.
Diageo’s internal strengths include excellent financial performance, which can be seen in its strong cash flow of about 1.204 billion pounds per year. The company has also registered at least 15% increment in net sales annually. The second internal strength that can be attributed to Diageo is successful marketing strategies. The company utilizes approximately 358.2 million dollars in global advertisement, which has made the company to be ranked as the 94th largest advertiser globally (Icon Group International 12).
Another internal strength that has made Diageo a leader in the alcoholic beverages market is faster adaptation to consumer trends, and response to customers’ needs. The company has achieved this through constant innovation and deep understanding of consumers’ needs. Global reach is also another internal strength of this company. This has shielded the company from economic problems that may arise in particular regions. Diageo’s internal weaknesses include lack of bitter spirits in their brands. Bitter spirits are becoming popular among trendy drinkers especially consumers in big markets like Europe and North America.
The company also over relies on net sales generated from global brands. For example, in 2009, global brands contributed to 58% of total volumes sold, generating a total of 5, 131 million pounds. Another internal weakness of Diageo is that it has failed to capture emerging markets. Global trends have indicated that the company’s traditional markets in North America and Europe are no longer growing. Therefore, emerging markets are the remedy. Finally, Diageo has not put enough effort in producing wine brands. This has made the company to lose wine market share to its competitors like Pernod Ricard (Icon Group International 13).
Diageo is considering a plan to increase the production of Scotch whisky. In this plan, Diageo will increase the production capacity of its distillery in Speyside, and in all other plants that produce whisky. This decision was informed by the increasing popularity of Scotch whisky globally. In addition, this plan was also aimed at offsetting the stiff competition faced by Diageo that has the potential of lowering its profit margins and market share. This competition mainly emanates from regional and local companies within the countries Diageo operates in, and international companies (Icon Group International 14).
External Analysis
The external conditions that have impacted the alcoholic beverage industry are increased political and social attention. This attention is due to public concern about problems caused by alcohol abuse such as underage drinking and drunk driving. This has made many governments to pass stringent laws regulating consumption of alcohol. For example, the U.S government has prohibited alcohol advertisements in certain Medias like television (Mosher 54).
Despite the strict laws regulating alcohol consumption in some western countries, the market size for alcoholic beverages has been gradually increasing. Spirits like Ketel one have become popular among young trendy drinkers. This is because many young people prefer drinking and partying as one of their favorite past time activity (Mosher 55).
The stability of the market is due to emergence of new drinking trends and patterns. Companies like Diageo have been innovative and always meet the needs of their customers. This innovation is the key reason why the market has remained stable and expanded gradually. These conditions i.e. innovations generally provide new market opportunities for alcoholic beverages companies such as Diageo to expand their market share. Innovations by different companies have increased the level of competition by different companies and this has posed a threat to the market share of Diageo (Mosher 56).
Implementation, Control and Accountability
This marketing plan is aimed at increasing the sales of Ketel One among middle class and upper middle class career women in New York and Chicago. The strategies that are going to be used in implementing this marketing plan include, packaging Ketel One in bottles and bags that are appealing to the female gender, promoting the drink in sporting events like golf whereby golf capes and bags will be labeled with Ketel One logo, and promoting the drink through female clubs and spars. This process is forecasted to cost 250, 000 dollars.
Young women with marketing knowledge and experience will be hired to facilitate the implementation of the plan. Young women will be chosen to market Ketel One because they can freely and comfortably interact with the target group. The implementation process will start in June 2012 because this will coincide with the beginning of a financial year, which will enable effective measurement of the outcome. The results will be measured in terms of total sales. At the end of the financial year, the net sales of Ketel One will be compared with net sales in the previous years before the marketing strategy was implemented.
The information that will be needed to indicate whether the marketing plan has failed, or succeeded will be the net sales records. The marketing plan will be monitored and controlled by Diageo’s marketing department. If significant deviation from this plan is needed, then the respective team member will be responsible.
Works Cited
Icon Group International. Diageo Plc: International Competitive Benchmarks and Financial Gap Analysis. New York: Icon Group International, Incorporated, 2000. Print.
Mosher, James. “Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market.” American Journal of Public Health 102.1 (2012): 56-63. Print.
Trev, Nuadha. Diageo. Saarbrucken: International Book Marketing Service Limited, 2011. Print.