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Fosters Group Company Case Study


Introduction

Pure Blonde came into the market in 2004. It was first produced by Fosters Group and it has become the first low-carbohydrate beer which was really successful in Australia. Many companies attempted to produce such kind of bear in the previous years.

For example, Bond Brewery had Swan Gold in the 1980s, but it did not do well in sales and Cooper’s launched Coopers diet beer in the 1960s, but decided to remove it from the market in 1990s due to a declining market share.

After a whirlwind product development process which took 90 days and with a promotional focus on customer discovery instead of aggressive push, Pure Blonde single handedly re-launched the ‘Low-carb beer’ market in Australia.

Foster Group Company is known for manufacturing beer and soft drinks. It was founded in 1888 by two brothers, William and Ralph Foster who owned a refrigerating plant. Two decades later, the Brewing Company decided to form a liaison with other four companies to form Carlton and United Breweries.

Today, this group stands as a sub-branch under the Foster Group umbrella. The Foster Group has become popular in Australia and is famous for brands such as Victoria Bitter, Carlton Drought, Crown Larger and Cascade. Pure Blonde was the first low-carbohydrate beer to be successful in the Australian market in spite of the failure of other companies to market their brands successfully.

In 2004-2005, the dominant players in the beer market were Foster group and Lion Nathan. The popularization of the Aitkins diet and the rising health awareness led to the Australian consumers preferring low carbohydrate products in the 1990’s and early 2000’s. Why did Pure Blonde succeed in this market when so many had failed before? Deeper investigation of the customer base can reveal signposts to its success.

Situational/SWOT analysis

Pure Blonde’s success was based purely on the consumers’ preference of the premium beer sector. Premium beer is one segment that was under constant scrutiny. The Premium Peter beer segment seemed to grow at a much faster rate due to favorable economic times, raised standards of living and education, and the delay to have children.

This resulted in the decline of Victoria Bitter. Unfortunately the Premium beer market was quickly becoming crowded and it became increasingly difficult to differentiate between the different brands. This was a major threat to Fosters’ profits.

Fosters immediately identified this problem in the Australian market and came up with a low-carb beer that differentiated its products from the others in the market. This gave it a strength or higher hand over the other products in the market. A good way of exploring opportunities for Fosters was conducting a market research.

It was found that the premium beer was linked to the Maslow’s Hierarchy of needs. Maslow hierarchy of needs dictates that an individual needs to look good and sophisticated. Those who drank Premium Peter needed to communicate that they fit into this profile. Therefore the main drive here was ego. Consumers of Premium Peter needed to show that they were masculine in spite of this gentle side.

However, they also didn’t want to be referred to as metrosexual because to them this translated that they were homosexual. Fosters Group concluded that Premium Peters image didn’t quite match to what being considered as male and masculine according to the Maslow hierarchy of needs. A weakness that they found in their marketing strategy was how to position Pure Blonde to the consumers’ best.

Pure Blonde couldn’t be categorized as being feminine or masculine. More research was required in order to understand where the average consumer placed Pure Blonde and they also had to avoid cannibalizing their lead selling beverage, Crown, market share.

Consumers of Premium Peter needed to consume the beer knowing that it was masculine and still had low-carb content. This clearly had set it apart from Pure Blonde. Fosters managed to make Pure Blonde its premium full strength beer that was low in carbs.

The packaging was of high quality, not to mention the European style bottle and the gold stylish label. Fosters decided to launch the product in 6X350 ml bottle that was sold in clubs and pubs in bottle, giving the consumer an opportunity to discuss the product.

This allowed those who consumed Premium Peter to discover Pure Blonde and tell their friends about it. This reinforced the masculine perception of the beer. Fosters had regained differentiation of its beers and this saw Pure Blonde being a success in the beer market.

They managed to regained differentiation and, within a year, Pure Blonde had achieved a great success with an estimated 3.3per cent by value of the entire Australian beer market and was reported to be twice the size of its nearest low carbohydrate competitor.

Situational problem

The main problem in this case study is the decline in the demand for Pure Blonde and Premium Peter. Currently, the Fosters and Lion Nathan are facing erosion in their market share. This can be due to the fact that Australians have more disposable income and the “premiumisation” of the beer market has led to the consumers demanding higher quality products.

The two companies have experienced a drop in sales for the past ten years with demand shifting from ready to drink spirits to foreign beer products. In addition, a blend in product innovation and packaging, specifically the four bottle packs, could be another cause.

The government could have also played a key role in the decline of local beer consumption when it announced in 2010 the introduction of an alcoholic volumetric measuring system to implement changes in the taxation of alcoholic beverages. This resulted in a 5% rise in beer prices.

The market share is set to face continual erosion in the future because of intensifying competition from other competitors that flood the market with their products. Entrants such as Coopers are set to re-enter the market with low-carb beer brands and Coca-Cola Amatil which recently acquired the Blue Tongue Beer brand.

Traditional retailers also present another problem to the beer market as they decide to promote their own brand low-carb beer instead of Pure Blonde, thus making them direct competitors. For instance, Coles has taken up advertising of its own Maxx Blonde beers over Pure Blonde by directly comparing the two products.

Currently, there are more competitors in the market who have flooded it with their own low-carb beers making it difficult for the average consumer to differentiate between the various brands. As a result, there has been a decreased loyalty between brands.

Pure Blonde has suffered greatly because of this competition and has not been able to combat Fosters’ current decline in Victoria Bitter sales. Major assumptions that may help explain the current Pure Blonde’s challenges include a shift in competition and changes in tax laws.

A closer look at Premium Peter shows that there has been a continuous growth in its sales. This is evident through a careful analysis of the premium beer segment, which has seen strong growth with total premium beer sales growing by 11.3 per cent in 2009. This might have taken quite a long time to explain the continued decline in Victoria Bitter’s brand which had lost over 3% of its market share since 2005.

Identification and alternatives used by Fosters

The premium beer segment has seen significant growth in spite of the declining low-carb beer sales. As the Premium Peter segment grew in numbers, it can be argued that this segment has evolved or even fractured.

Further analysis of the softer segmentation criteria, for example, attitudes and beliefs, understanding of self and self-concept, can help in defining these fractured segments. In order to maintain sales in the market, the key players have developed a strategy of maintaining their consumers by catering to their constantly evolving needs and preferences.

Fosters Group and Lions Nathan have sought to capitalize on the premium beer trend through investing in exclusive licenses to sell imported beers. This is seen by Fosters to obtain the sole license to sell Corona Extra in Australia.

To compensate this, Pure Blonde has expanded its distribution and has begun selling through liquor retailers and service venues including bars, clubs, cafes, and restaurants. They took another step and made the beer available on tap at clubs and pubs.

Pure Blonde sits comfortably in the center of the relatively concentrated premium beer price range, with Maxx Blonde and Platinum Blonde occupying the bottom price ranks and products such as Peroni Leggera sitting at the top.

The product has been effectively promoted and appeared to have held on to its ‘Jack-of-all-trades’ positioning with a focus on the ‘purity’ of the brand.

This positioning is clearly seen through advertisements featuring a 30-something man nurturing a dove back to health along with the tag line ‘from a place much more pure than yours’. Other current promotional materials available carry the message: ‘for men or women, anyone who is weight conscious’.

Recommended course of action

This case study suggests that the customers of Foster Group have a distinct set of values such as taste of beer, physical fitness and health in general, and self-image. The managers of Fosters Group should rely on the psychographic elements of segmentation in order to move away from the ‘one- size-fits-all” positioning.

This is why they need to offer several groups of products. In the first case, they should emphasize the taste qualities of their beverages and brand image. In the second case, they should stress the fact that their products contain very low amounts of carbonate, and that such beverages will be more beneficial for the health of customers. In such a way, the company will make a distinct value proposition to various groups of customers.

Discussion Questions

How shifting the market would gain Pure Blonde Competitive advantage

The average Australians are health conscious and this in turn makes them prefer low-carb diets. Promoting Pure Blonde as a low-carb beer attracts consumers who are health conscious, unlike premium beer consumers. The Pure Blonde product can capitalized on this understanding by effectively aligning its brand personality to the personalities of the segments, with positive results.

However, women are more conscious of their weight and appearances as compared to their male counterparts who are more concerned about maintaining appearances and fitting in with the boys. Therefore, if the beer is attributed to being more feminine than masculine, then the product may lose its male consumers.

On the other hand, it is traditionally viewed that many women aren’t great beer drinkers as compared to men therefore the product might only decline in sales if it is attributed to being feminine. However, the current woman is more educated and independent, and current trends show that many women embrace lighter beers and other low-carb beers such as Pure Blonde.

Although it would be a difficult task to re-invent Pure Blonde to fit both, the male and female consumers that will definitely be advantageous to the product in the market. The main limitation of this strategy is that many customers felt attached to former brands of Foster Group. I

t may be difficult for low-carbonate beers to win their loyalty. This issue is particularly important for the segment called Premium Peter or male customers who valued premium beer products. They may switch to other premium beers instead of purchasing Pure Blond. This is the risk that the company should not overloo

Customer profile for Pure Blonde

  • Female
  • 18-35 years of age
  • White collar job
  • Single, looking for a partner either short or long term leading to marriage
  • Prefers to look beautiful and healthy
  • Is social and likes fitting in with friends
  • Earns a good salary and has little financial and emotional commitment
  • Likes to be seen as a bit of a ‘lovable larrikin’ but also likes to be taken seriously in a work environment
  • Works very hard so as to be successful and plays hard.
  • Is currently on a diet and identifies that the Atkins diet
  • Low-carbohydrate diet ‘is a good thing’
  • Would forego a beer to save the calories- watching her weight
  • Would choose a beer with a sweet taste
  • Socializes with friends usually at clubs, pubs etc.
  • Alcohol consumption is out and about.

The two key aspects that the female consumer is interested in according to the above profile is the taste of the beer and the amount of calories it contains.

Customer profile for Pure Blonde

Recommendations for the Fosters Group

On the basis of this customer profile and perceptual map, one can recommend the marketing strategies that Forsters Group. The company should make a distinct offering to female customers. While advertising such a product, they need to focus on the idea that Pure Blond products will not lead to the increase of weight, but at the same time they have the excellent taste qualities as other premium beverages.

Their main message should that the company’s beer is low-carbonate, but they should connect this message to such priorities of female buyers as physical appearance and self-image.

Premium Peter

The segment called Premium Peter did not completely disappear; it continued to expand even despite the global financial crisis. Male white-collar employees, who place emphasis on style and sophistication, still continue to consume high quality beers when socializing with their friends.

Probably, the lifestyles or attitudes of these people have evolved in a certain way. For instance, they may have changed their attitude toward marriage or health. However, they still play an important role for the producers of premium beers.

Moreover, the main values of these people such sophistication and good appearance did not alter significantly. The existence of this segment will affect the strategies of Pure Blonde. They will have to set stress on the quality of their products when designing packages for their beverages or advertising them.

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IvyPanda. (2019, July 9). Fosters Group Company. Retrieved from https://ivypanda.com/essays/fosters-group-company/

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"Fosters Group Company." IvyPanda, 9 July 2019, ivypanda.com/essays/fosters-group-company/.

1. IvyPanda. "Fosters Group Company." July 9, 2019. https://ivypanda.com/essays/fosters-group-company/.


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IvyPanda. "Fosters Group Company." July 9, 2019. https://ivypanda.com/essays/fosters-group-company/.

References

IvyPanda. 2019. "Fosters Group Company." July 9, 2019. https://ivypanda.com/essays/fosters-group-company/.

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IvyPanda. (2019) 'Fosters Group Company'. 9 July.

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