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Marketing management Research report

Abstract

The report has addressed the segmentation, targeting and positioning strategies of Diageo and the way it applies it to the company in detail. Further the report has gone about addressing the marketing mix model which encloses the 7Ps elements of the model in detail. Followed by this, the relationship marketing strategy with the current strategies of the firm has been addressed. Based on the performance of the company in the market few suggestions have been provided to heighten the performance of the firm in the market and achieve success.

Introduction

Marketing is the process of advertising and popularizing the products of the company in the market for it to be known to the customers (Nyaosi, 2012). Diageo Plc. is a multi-national beverage firm situated in London, England. The firm is spread across 180 countries and is known to be the world’s largest water distiller in the world. The report will address the segmentation, targeting and positioning strategies of Diageo and the way it applies it to the company in detail. Further the report will go about addressing the marketing mix model which encloses the 7Ps elements of the model in detail. Followed by this, the relationship marketing strategy with the current strategies of the firm will be addressed. Based on the performance of the company in the market few suggestions will be provided to heighten the performance of the firm in the market and achieve success.

Concepts of segmentation, targeting and positioning of Diageo

Segmentation, targeting and positioning form the base of the marketing strategies for any company. It is important to use these marketing strategies by the firm to segment and target the right kind of audience to ensure the sales are heightened and profits are incurred to the company.

Segmentation

Segmentation is the process of dividing a target market into smaller groups and into more defined categories (Mosher, 2012). Diageo follows a unique STP strategy to prosper in today’s competitive environment. For the development of marketing strategy the firm needs to segment and identify the target audiences and specific buying behavior of customers. The buying behaviors of the target audience and customers depend on variety of factors such as age, gender, lifestyle, income and values. Segmentation technique will help the firm in narrowing down the large and diversified target audience into specific narrow groups. Market segmentation surveys are known to be the common methods of obtaining the customer-related data that can be used to create specific groups that share the common traits. This helps in interpreting the buying behavior of the target audience and gives the firm the required information that can be used to fulfill the requirements of the customers with time. Diageo uses the technique of geographic segmentation that divides the target market according to geographical locations. Diageo intends on having complete category participation rather than only focusing on individual brands within categories.

Targeting

Targeting is known to be a marketing strategy that divides the larger market into smaller segments to concentrate on specific smaller segments and target only the required audience (Lulu, 2020). Post segregating the large diversified customer market into smaller groups with homogenous traits and the strategy is devised to evaluate the commercial attractiveness and growth of the identified groups. As per the resources and the capability that the firm holds it can choose one or more segments to reach out and target the right and a vast audience. The important categories of the company involve scotch, whisky, vodka and rum. The main target audience of the company is the luxury customers in emerging markets and more of the female population. The firm recently introduced super-premium vodka called Ciroc. The firm believes to grow by targeting female customers in the business which is being practiced across all markets. Another target of the company is the middle class people of the developing nations by pushing heritage brands such as Haig whisky in Latin America.

Positioning

The positioning strategy can be defined as the process of establishing or creating an image or perception of the brand in the minds of the consumers (Muzellec and Lambkin, 2008). By this process, the consumers will perceive the brand in a certain way and will accordingly distinguish it from other brands already present in the market. Diageo established very aggressive statements for four global trademarks which are known to be the highest sellers in the market in the current times. The four global trademarks are Johnnie Walker, Smirnoff, Bailey’s original Irish cream and Guinness Stout. There are certain statements that are given for each of the trademarks established by Diageo in the market that stands strong against the other competitors in the beverage market. Smirnoff was considered to be the highest volume brand that achieved immense sales in the year 2005 (Khan et al, 2015). To be successful in the competitive market the firm needs to position itself in the market in the right manner and market the products in a certain way to yield not just sales but also consumers out of it.

Marketing mix model

Marketing mix is known to be a base model for businesses that is centered on the 7Ps elements within the model. The model consists of set of marketing tools that is used by the company to fulfill the marketing objectives within the target market. It can also be defined as the set of actions and plan of action undertaken by the company to promote or advertise the products and services of Diageo. Technically there are 4Ps within the model which is been extended by three more Ps and now the model consists of seven P elements that helps the firm in achieving their business objectives by marketing products via these 7Ps.

Product: the firm’s products are spread across five different categories and each of them serves as different product lines within the market. The broad categories that the firm sells its products into are Johnnie Walker, Smirnoff, Bailey’s original Irish cream and Guinness Stout. The firm has 40 brands all over the world and serves different target groups with these brands. The firm signifies in delivering best quality and convenient products to the customers that are of premium quality. The products made and sold by the company are considered to be of better quality and good pricing in comparison to the quality that is provided by its competitors in the market.

Place: the products of Diageo are sold all over the world within the different established stores that are accessible to the customers to purchase from. It sells its products via two marketing channels of which the first is it sells directly to its customers with the help of online websites and the second method is to sell it to the wholesalers who then sell it further to different retailers and make money (Kwabo, 2014). The firm has about 500 retailers in the country and the products of the company are sold via these retailers in extensive amounts. The intensive marketing strategy of the firm ensures the products of the firm are easily available to its customers at all places in all countries.

Price: Diageo follows a competitive pricing strategy within its firm to price the products and services of the company. This pricing strategy is based on the data collected from the competitors which is easily available in the market because there are large number of competitors already present in the market. The prices of the product are put as per the quality given by the company within its products. Diageo’s products are premium priced for premium customers that belong to a certain class in the society. The firm also uses optional pricing strategy for few of its products where the price is put for base products and the accessories that come along with it.

Promotions: promotion in the current times has become easier for companies to promote and advertise the products in the market via both traditional and digital promotional strategies. Traditional promotions are done via banners, posters, radio, television etc. but in the current age of digitalization promotion via online channels such as social media and other different websites have made it easier to reach out to customers on large scale. Diageo also promotes its products via exhibitions and events following the traditional promotional strategy to reach out to the customers personally and give them a first-hand experience of the products of the company.

People: the staff and the employees of Diageo are well-skilled and trained to carry out the operations of the company and achieve the target sales and business objectives of the company successfully. The employees are well trained in persuasive techniques and at the same time are very polite to its customers offering the best customer service (Hawkins and Mothersbaugh, 2010). The customer service unit of the company is in constant touch with its potential customers for any queries and grievances and ensures they connect to the customer and solve the query as soon as possible with a convenient solution. It has various people working constantly with suppliers to provide its customers the best quality of products from the firm’s end.

Processes: quality has always been one of the most important elements within Diageo that has to be followed at all times at all costs. The firm ensures that the products sold by the company are always readily available to the customers across all locations and at all stores at all times. The retail stores of the firm have systems installed in the store where it notifies the staff if the inventory levels of the products are low. This ensures that the stock is always readily available in the store and the customers can always buy what they wish for.

Physical evidence: Diageo sells its products in customized packaging that makes it easier for the customers to locate the brand and identify the products of the brand within other brands already present in the market. It has a distinct color packaging with its label on top making it easier for customers to recognize the brand amongst the other brands present in the stores or in the markets. There is also innumerable data present on the website of the company to access the information of the company and the products that are served by the company.

Relationship marketing strategy

Relationship marketing is a plan of action designed to promote loyalty and trust of customers, interaction, and bring about long term interaction and engagement from the customer’s end (Grahn, 2013). The strategy is created to build long term connections and bonds with the potential customers of the firm by providing them with information that is directly suited to their needs and interests. This strategy also brings about open communication from both the firm’s end and the customer’s end thereby strengthening the relations between the two parties.

Data plays a crucial role in the current times because it greatly helps in accessing the performance of the company which depicts the standards and success rate of the company in the market. This access to information to the customers helps them to choose better brands and the companies that provide good quality products with affordable pricing over those products. Hence, it is now become even more important for the company to connect with its potential customers and build a strong bond with its customers by providing them with the right information and keep them connected. Organizing and collecting data of its customers of their requirements and needs can greatly help not just fulfill those requirements and needs but also create good bonds with the customers which will bring about customer retention.

Diageo owns seven of the world’s top 20 spirit brands of which the beer brands of the firm involves only the global stout brand and the Guinness (Fifield, 2012). An amalgamation of these two beer brands accounts for approximately 20% of the net sales while the wine brands of the firm accounts for 5% of the total sales. The continuous level of competition increasing in the global markets has made innovation a necessary aspect within the company. The operating review performed by the firm in 2011 has made it evident to bring about changes in the structure and focus of the company and this has resulted in a movement of staff from developed market regions to the emerging market regions (Ferrell and Hartline, 2012). This type of restructuring planned by Diageo will bring about effectiveness and will enhance the productivity of its operations by positioning the resources close to the market and the regions where there is potential growth.

To strengthen its bond with the customers the company came up with a digital marketing programme for Guinness. It is named post the firm incepted, the 1759 platform that aims to provide its customers with experience and content simultaneously offering inspiration for night outs. The 1759 site will feature branded content and contributions from variety of websites that will help in offering suggestions and recommendations for night outs. This will be split into four categories namely life, sports, entertainment and what’s on. The content provided in this programme will also be personalized depending on the browsing habits of the users to make it more customized for the consumer. It will tailor information and data with each visit from the consumer’s end which will greatly help in strengthening the relationship and build strong bonds with the customers. With more and more people joining the age of digitalization this programme would prove to be a successful step to bridge the gap between the consumers and the company and create meaningful bonds (Esser and Jernigan, 2015). These bonds with strengthen with time and help the firm in retaining the customers for longer periods of time earning the company the required sales and profits.

Suggestions on enhancing marketing strategy of Diageo

Marketing is one of the strongest mediums to reach out to the customers in the market and engage them with the firm to enhance the sales and profits of the firm. Hence, Diageo is re-focusing on its marketing strategy around six drivers of expansion to expand the reach of its brands like the Guinness and Baileys. The aim of the firm is to become the best performing consumer goods firm in the entire world. Witnessing a slowdown in the emerging markets the firm is planning on expanding its global footprint, product offerings, and innovation simultaneously providing better margins for the firm (Dörnyei, 2020). The firm can plan on targeting a certain set of customers of a certain age that will bring in influx of customers in large numbers. It can segment the audience based on age or location and then apply strategies to reach out to the right kind of customers that can bring about sales to the company.

The beverage industry in the North American market is constantly evolving that is driving voluminous changes in Diageo’s products. The competitive rates quoted by new distillers have brought about a change in the prices and marketing strategies for the firm. For the firm to stay in the competition and at the top it has to access the current marketing trends and the changing requirements of the customers to stay consistent in the competitive environment. Currently US is shifting from vodka towards American whiskey and this information has to be considered by the company and the firm should work on it to ensure the sales of the firm are not missed by providing vodka to the customers when American whiskey is in demand.

The recent popularity of whiskey in the US has changed and this should also bring about changes in the production of the company as per the demands. Despite the Johnnie Walker brand the firm has not prioritized whiskey in its brand portfolio and has had very little presence in the trend of American whiskey (Chappe, 2020). Post decrease in sales, the firm brought about innovation with crown royal regal apple which matched the consumer preferences. It is highly recommended to concentrate on the demand that is currently present in the market which is American whiskey and earn sales out of it as long as it can.

The wine industry on the other end is a divided and a competitive business line with brand loyalty much lesser than spirits. The wine sales within Diageo only accounts to 4% of the annual income within the company for which the firm has invested a great deal in. Hence, it is suggested that the company cuts out wine from its portfolio because there is no demand for it and it is not bringing in much sales for the company. Beer sector is a large and an influencing sector that brings about 18% of the annual sales to the company. The firm should concentrate on bringing about innovation in this sector and introduce new products in this line to attract customers soon and earn sales (Babor, 2006). The largest contributors to the beer sector within Diageo are the market sales that are earned from Europe which is 28.9% and Africa which is 46.6%. The focus of the firm should be on the younger generation of the society because they can turn to be long term customers of the brand and provide sales and profits for the firm in the long run. Trends and requirements need to be accessed and researched for within definite intervals of time because the trends keep changing with time and with generations. Social media can be used by the firm to reach out and market to large mass of customers all over the world. It is a very strong platform for the firm to reach out to customers and build good bonds with the customers that will bring about customer retention.

Conclusion

Diageo Plc. is a multi-national beverage firm situated in London, England. The firm is spread across 180 countries and is known to be the world’s largest water distiller in the world. Marketing is the process of advertising and popularizing the products of the company in the market for it to be known to the customers (Baker, 2014). The report has addressed the segmentation, targeting and positioning strategies of Diageo and the way it applies it to the company in detail. Further the report has gone about addressing the marketing mix model which encloses the 7Ps elements of the model in detail. Followed by this, the relationship marketing strategy with the current strategies of the firm has been addressed. Based on the performance of the company in the market few suggestions have been provided to heighten the performance of the firm in the market and achieve success.

References

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Chappe, L., 2020. Demographics, cultural dimensions and cognac consumption in France: a consumer behavior analysis based on the marketing mix (Doctoral dissertation).

Dörnyei, K.R., 2020. Limited edition packaging: objectives, implementations and related marketing mix decisions of a scarcity product tactic. Journal of Consumer Marketing.

Esser, M.B. and Jernigan, D.H., 2015. Multinational alcohol market development and public health: Diageo in India. American journal of public health, 105(11), pp.2220-2227.

Ferrell, O.C. and Hartline, M., 2012. Marketing strategy, text and cases. Nelson Education.

Fifield, P., 2012. Marketing strategy. Routledge.

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Hawkins, D.I. and Mothersbaugh, D.L., 2010. Consumer behavior: Building marketing strategy. Boston: McGraw-Hill Irwin,.

Kwabo, F.U., 2014. An examination of how the market entry decision influences the business ability to internationalise and survive in a foreign market (The case study of Diageo in African market) (Doctoral dissertation, University of East London).

Khan, I., Ostheimer, S. and Mujtaba, B., 2015. Managing Innovation and Marketing in a Globally Dynamic Firm: Best Practices in Management at Diageo. Advances in Social Sciences Research Journal, 2(5), p.47.

Lulu, T., 2020. The effect of extended marketing mix strategy on business performance: The case study of Habesha and Dashen brewery s. co (Doctoral dissertation).

Mosher, J.F., 2012. Joe Camel in a bottle: Diageo, the Smirnoff brand, and the transformation of the youth alcohol market. American Journal of Public Health, 102(1), pp.56-63.

Muzellec, L. and Lambkin, M., 2008. Corporate rebranding and the implications for brand architecture management: The case of Guinness (Diageo) Ireland. Journal of strategic marketing, 16(4), pp.283-299.

Nyaosi, E.G., 2012. The effect of relationship marketing amongst the stakeholders of the East African Breweries Limited (Doctoral dissertation).

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Shankar, V., Carpenter, G.S. and Farley, J. eds., 2012. Handbook of marketing strategy. Edward Elgar Publishing.

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Walker, O.C., Mullins, J.W., Boyd, H.W. and Larreche, J.L., 2006. Marketing strategy. New York: McGraw-Hill Irwin.

ZELEALEM, E., 2019. THE EFFECT OF MARKETING MIX ON CUSTOMER SATISFACTION IN THE BREWERIES INDUSTRY: A CASE STUDY OF DASHEN BREWERIES SC (Doctoral dissertation, st. mary's University).

Appendix

Marketing mix

Fig: Marketing mix model

Fig: Marketing mix model. (Source: https://www.brandwellgr.com/)

STP Strategy

Fig: STP strategy

Fig: STP strategy. (Source: https://expertprogrammanagement.com/)

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