3. 3
1. INTRODUCTION
The Absolute Company is a subsidiary of French spirits mega-company, Pernod
Ricard. Within that, The Absolut Company consists of a strong brand portfolio
including Absolut Vodka, Malibu, Kahlua, and more. Absolut Vodka, distilled since
1879 and Swedish-owned since 1917, only became public and available globally in
1979, when it came to the US. Since then, Absolut Vodka has become one of the
world’s best-selling spirits, ranked No. 6 among premium brands by value (Holodny,
2015). As a brand, Absolut positions itself as a premium vodka, with its largest single
market being in the United States. However, in the past year, vodka sales as a whole
have taken a hit in the US market as more consumers have been purchasing brown
liquors. Due to declining sales in its key market, Pernod Ricard devalued Absolut
Vodka this year (Landauro and Chow, 2015).
1.1. MISSION STATEMENT
“The Absolut Company's mission is to be a positive part of those special moments
when people socialize. All over the world, we inspire great conversations with
our brand communication and add a dimension of style and sophistication with
our products.”
In its Mission Statement, Absolut outlines its desire to become more than a spirit, but
also an integral part (and perhaps even catalyst) of positive social interactions. Their
aim is to either inspire conversations among their target customers, or be the subject
of those conversations, which is executed by immersing the brand in stylish and
sophisticated cultural touchpoints. Absolut clearly defines its brand personality and
aspirations for consumer interaction. However, Absolut’s mission statement only
includes two of the nine components considered important for a successful, customer-
centered mission statement to provide a cohesive touchpoint for its marketing efforts
(David, David and David, 2015).
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1.2. MARKETING OBJECTIVES
The first marketing objective will be to increase Absolut’s brand preference among
consumers by at least 2% within the next year, as measured by its ranking on
Interbrand.
The second objective will be to entice an increase distributor promotional spending per
case because of enhanced brand awareness and brand preference.
2. MARKETING OBJECTIVES
2.1. MARKET ANALYSIS
A PESTLE analysis has been conducted in order to identify trends, regulations,
and behaviours that could reveal opportunities or threats to Absolut’s current
business environment. These identifiers fall under six categories: Political,
Economic, Social/Cultural, Technological, Legal, and Environmental (Brady, 2015).
Table 1 PESTLE Analysis
5. 5
2.2. CONSUMER ANALYSIS
In a post-recessionary market in the US, consumers have begun to show more
interest in the Spirits industry as a whole. In a change from the past, consumers,
particularly Millennials, are less likely to be loyal to one particular drink such as
beer or wine and will instead mix the types of alcohol consumed in one drinking
session. Diversified consumer interest has in part prompted the recent growth of
premium and craft alcoholic drinks. This has given various premium drinks
opportunities to expand and reach new markets, since Millennials will be the
largest consumer market in the future, and tend to have consumption patterns
based on trends and the “next big thing” (Euromonitor, 2015).
While the percentage of volume consumed fell from the past year, this is indicative
of consumers are trading up to more expensive premium brands at the cost of
lower consumption. Within the spirits industry as a whole, brown liquors are seeing
meteoric increases in sales while white liquors are slumping.
In terms of sales, spirits are seeing a rise in sales both in terms of value and
volume off-trade, while on-trade sales remain fairly consistent (Euromonitor, 2015).
2.3. COMPETITOR ANALYSIS
Part of the key to forming a successful marketing scheme is being able to identify
and satisfy the needs and wants of target customers better than the competition.
This requires that companies select their target markets in a way that they can
exploit a competitive advantage. In order to do this, companies will undertake a
process of identifying its key competitors, assessing their strengths, weaknesses,
and strategies, and deciding which competitors they should face directly or avoid
(Brady, 2015).
For Absolut, there are two levels of market competitors to consider when
approaching the consumer market. The first level is immediate competitors—other
brands of vodka. Absolut shares a market with other vodka brands such as Grey
Goose, Belvedere, Skyy, Finlandia, Smirnoff, and more. Absolut’s position within
the vodka market is indicated in the positioning map (Figure 1). As shown, within
6. 6
the premium/super premium vodka categories, Absolut’s primary competitors are
Grey Goose, Finlandia, and Skyy.
The second level of competition is the spirit industry as a whole. When identifying
competitors, it is also necessary to consider how their capabilities differ and which
ones might be best suited to serve market needs. This can be done with a
framework mapping two criteria: market commonality, and resource similarity
(Doole and Lowe, 2005). According to market trends, Absolut’s sales in the United
States are not falling because of competition with other vodka brands, but rather
from competition with other types of spirits, such as whiskey (Euromonitor, 2015).
The second competitor map (Figure 2) indicates uses the framework to indicate
Figure 1 Competitor Map
7. 7
Absolut’s position within the spirits industry compared to its primary competitors,
whiskeys/bourbons.
2.4. COMPANY ANALYSIS
A SWOT analysis has been conducted for Absolut in order to identify the
company’s internal factors (strengths and weaknesses) and external factors
(opportunities and threats). The conclusions are represented in Table 2 below.
Figure 2 Competitor Map #2
8. 8
Table 2 SWOT Analysis
3. MARKET SEGMENTATION
3.1. MARKET RESEARCH
Market research is essential to ground any marketing campaign. Through a
process of asking relevant questions and gathering relevant information, a
company can determine if there is a market for their proposed product or service,
and if there is, how best to approach that market. In Table 2, the market research
process has been broken down into three areas—obtaining information about the
product, the place, and the people.
•Absolut has a strong brand--it is well-known and easily recognized
•Distilled in one location, resulting in consistent high product quality
•Strong market position
•Historically strong and relevant advertisng
•collaborations with well-known culture icons (Jay-Z, Andy Warhol)
Strengths
•Somewhat weak, ineffective online presence
•"Flavour Fatigue"--too much variation in Absolut's prodcut line has weakened the brand. Absolut
became product oriented rather than customer oreinted (Levitt)
•Struggles to market effectively to multicultural segements due to anti-big brand sentiments
Weaknesses
•As economic environment improves, so do opportunities for Absolut
•Can continue to cultivate collaborations with culture icons
•Growth of cocktail culture provides new avenues
•Potential new market in Generation Y
Opportunities
•Consumer preferences are shifting towards whiskey spirits
•New competitors entering market--craft liquors may not last, but they do take up market share
•Brand proliferation: brands that inlcude multiple subcategoreis. Ex. New Amsterdam sells both
vodka and gin
Threats
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Table 3 Market Research Questions
3.2. SEGMENTATION
In marketing segmentation, a market for a product is broken down into different
categories, or segments. Customers in a market generally share a market segment
with other customers who have similar wants or needs (Kotler & Keller, 2012).
When researching markets for segmentation, market researchers look at two
different groups of variables: descriptive variables, which include geographic,
demographic, and psychographic information; and behavioural considerations,
such as usage occasion, benefits derived, and brand loyalty. The key to market
segmentation is recognizing customer differences in order to choose an
appropriate target market for a brand (Kotler & Keller, 2012).
After conducting appropriate market research, it is vital to segment the consumer
market into different categories of customers. Geographically, this plan is
addressing Absolut’s market in the United States. As statistics show that
consumers in the 18-35 age range consume the most spirits in the US, the
segmentation will cover the different subsets of consumer within the 21-35 age
range (Gallup, 2012). The segmentation below is a needs-based segmentation
ABSOLUT MARKET RESEARCH
Product
• Do consumers
have established
brand
preferences?
• What is the
reason for
consumption?
Place
• Where are people
buying/consuming
spirits?
People
• What
demographic is
buying spirits?
• When do people
buy spirits most?
10. 10
approach, which groups customers into groups based on similar needs and
benefits sought by the customer when purchasing or consuming (Kotler & Keller,
2012). Table 3 below outlines different potential customer groups for Absolut,
divided into four segments.
Segmentation of Consumers who can drink.
Table 4 Segmentation Chart
3.3. TARGETING
After assessing each market segment for its attractiveness, potential, and reach, it
is assumed that Absolut’s target market is “Status Seekers”, such as Sophie.
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Meet Sophie. She is 25-29 years old and is part of Generation Y, which makes up
more than 25% of the population in the United States (US Census Bureau, 2015).
She’s been working full-time for a few years now, and makes between 25-50K per
annum after impressing her boss and receiving her first promotion last year.
She’s finally outgrown her old IKEA-university flat and is excited to have friends
over to her newly styled place for dinner-parties and get-togethers. She spends her
weekends exploring her city, heading for nights out with coworkers and girlfriends,
and spending the next morning chatting with them over brunch. She is always
looking for fun, unique, and local things to do to and places to see to share with her
network on Instagram. She likes feeling connected to her city and has a sense of
pride about where she lives.
She used to be more of a tequila girl in university, but is now trying to branch away
from her old university preferences, except for the occasional margarita. However,
she hasn’t quite figured out what her drink of choice is yet, and doesn’t want to
spend a lot of money on super-premium brands she isn’t sure she’ll like. However,
she does still want a spirit she’ll feel good displaying in her flat when she has
Sophie: Status Seeker
• Makes 25-50K per annum
• Goes out for drinks about 1-2 a
week
• Lives in an urban city
• Active on Facebook, Instagram,
Twitter, and Pinterest. Checks all
platforms more than once a day
• Enjoys spending disposable income
on quality food and drink
• Makes purchases based on style
• Reads lifestyle magazines, but
chooses restaurants/bar using
internet and word of mouth
• Makes up about 83 million of the
US population (US Census Bureau)
Figure 3 Sophie, the Target Market
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friends over and can experiment with her new cocktail set her mum got her for her
birthday.
Once segmenting is complete and a company has chosen its target market, the
viability of the target market should be evaluated based on MASDA, which
assesses whether or not the chosen target market is measurable, accessible,
substantial, differentiable, and actionable (Brady, 2015).
Measurable: This implies that the size, purchasing abilities, and characteristics of
a target market can be measured. Looking at Sophie as a representative of the
young professional class in the US, this could be a potential market of 83.1 million
consumers (US Census Bureau).
Accessible: Evaluates whether the chosen segments can be appropriately reached
and served.
Substantial: Measures whether or not a market segment is large enough to be
worth serving. With Millennials entering the professional world between ages 25-
29, this is one of the largest potential markets in the US, currently and for the
future.
Differentiable: Measures whether or not the target market has different wants and
needs than other target markets. In this case, the young professional class drinks
and purchases spirits for different reasons than other target markets, such as the
“Cocktail Connoisseur”. Where the “Status-Seekers” might spend a little less and
purchase for style, the “Cocktail Connoisseur” will spend more and purchase for
quality.
Actionable: Evaluates whether or not effective marketing mixes can be formed to
reach the target market.
This target market is perfect for Absolut—it’s a premium brand, which will satisfy
Status-Seekers’ desire for quality and status, and it has cultural ties to art, music,
and nightlife, which will meet the need for style. At a mid-price range, Absolut can
13. 13
be bought more regularly than super-premium brands, which could help instill
brand loyalty at a young target age.
3.4. POSITIONING
In its United States market, Absolut has taken two approaches to it positioning—
premiumisation and innovation. It is perceived as being slightly better quality, and
sold at a slightly higher price-point than the standard vodka, Smirnoff. However, as
a premium vodka, Absolut is still cheaper than super-premium brands such as
Grey Goose or Belvedere. Absolut’s position in terms of quality/premiumisation
and price point is shown in Figure 4 below.
Figure 4 Positioning Map
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Figure 5 shows Absolut’s comparative positioning against its competitors in terms
of its second strategy, innovation.
However, currently Absolut’s positioning as a large, well-known, premium brand is
hurting them in a market where consumers are beginning to veer towards more
craft and niche products. At this moment in the market, it is imperative for Absolut
to strategically redefine their positioning to cater to a more alternatively styled
consumer.
However, redefinition does not necessarily mean Absolut abandoning or changing
its values completely. In order to appeal to a new type of young and trendy
consumer, Absolut needs to alter the context of its premium and innovative
positioning to align more with the values of young American consumers.
4. MARKETING MIX
When developing the marketing mix for a company, appeals to the target market
should follow what are considered the “seven P’s”: Product, Place, Price,
Promotion, People, Process, and Physical Environment (Brady, 2015).
Figure 5 Positioning Map, #2
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4.1. PRODUCT
Within the spirits market, Absolut is a well-known name and brand. However,
looking at Figure 6, Absolut is reaching the maturity stage in its product life cycle
despite its brand equity.
Within the maturity stage,
Absolut is transitioning
between the second and third
phases—from stable to
decaying maturity (Kotler &
Keller, 2012). At this point,
level of sales have started to
decline as it faces competition
from whiskey and bourbon and customers have switched to other products.
Improving sales relies on population growth and Absolut’s finding alternative
demand for its vodka (Kotler & Keller, 2012).
Considering the market Absolut is targeting and recent market trends, Absolut
should take a two-pronged approach to improving the appeal of its products.
Premium Taste
The first approach would involve Absolut focusing on the strengths it already has—
a great, high-quality product—and returning to the core of its premiumisation
positioning. The target market wants to buy Absolut because the premiumisation
gives the impression of good quality and luxury style at a lower cost. With this in
mind, Absolut should look at refining and focusing on its core product line of
Absolut Premium Vodkas. While its flavoured line of vodkas may have been
popular and driven sales in the past, the sharp decline of flavoured vodka sales in
the past year indicates an oversaturation in the market. As described by Ahrendts,
“There’s nothing wrong with any of those products […] they added up to just a lot
of stuff—something for everybody, but not much of it exclusive or compelling”
(Ahrendts, 2013). Consumers are experiencing “flavor fatigue”, and are defecting
to spirits they perceive as having greater initial depth of flavor, like whiskeys.
Figure 6 Product Life Cycle
16. 16
The product approach to counter this, called “The Absolut Drink”, would focus on
the product Absolut already has. “The Absolut Drink” would highlight the distinct
complexities and depth of flavor in vodka and disbanding the misconception that it
is a tasteless, odorless “beginners” spirit (Bieler, 2010).
Local Innovation
The second approach would involve a local product strategy. Absolut can continue
with the development and promotion of the “Our/Vodka” product. Our/Vodka is a
vodka that takes Absolut’s renowned distilling process, but is distilled on-site in
different cities with local
water, ingredients, and flair,
by local entrepreneurs (Miller,
2015). In the United States,
Our/Vodka is currently in two
cities—Detroit and Seattle.
This type of product would
appeal to the target market’s
sense of local pride and
desire to interact with
products in their communities. It would also tap into ‘self-brand connection’, where
consumers are likelier to favour brands and products they feel align with their self-
identities (Chowdhury, Desai and Bolton, 2014). Since the target market, Sophie,
sees herself as a “local explorer” in her city, a product that embodies a local
entrepreneurial spirit will resonate with her. Additionally it would give Absolut a
face against its niche market competitors without having to totally alter the
positioning of the original Absolut product.
4.2. PRICE
In terms of pricing objectives, Absolut is looking to remain competitive against
other vodkas, and in the Spirit industry as a whole in the United States. To do this,
they should look to stay consistent with its positioning and advertising as a
premium product in order to not send mixed messages to their target market.
Within the premium vodka category, Absolut already has the highest sales in the
17. 17
premium category at $130.9 million in the US in 2015. However, if they try and
drop their price to compete, they will immediately lose ground to the standard
brand, Smirnoff, who has the highest sales of vodka in the US overall at $316.35
million (Statista, 2015).
4.3. PROMOTION
The sales promotions for a product should always consider the target market as
the basis, with individual methods planned around how best to reach the target
market. Absolut’s promotion will focus in the long-run on providing a total customer
experience—from personalizing the relationship with the target market through
localization methods, and adding touchpoints in the form of meaningful
experiences (de Swaan Arons, van Den Driest and Weed, 2014).
Advertising
Given that Millennials are the most digitally connected consumer group in the
market, social media and digital technology will play an important role in how
Absolut reaches and engages its target market. While Absolut has spent years
focusing on its creative marketing, it has never really effectively talked about and
highlighted the spirit itself. Absolut’s advertising strategy will need to focus on
creating value and demand for the spirit itself, as creative ad campaigns are fairly
useless if the market doesn’t want the product. The execution of promoting this
particular style of product campaign will involve key players in the People and
Process subcategory, described further below.
Sales Force
Absolut’s sales promotion will focus on the growing mixology and craft cocktail
trend taking hold in the United States. Absolut can offer sales promotions and work
to secure partnerships with key mixologists and restaurateurs in food-centric urban
cities, such as Atlanta or Houston. This will ensure that Absolut will appear on
various drink menus in stylish and up-and-coming restaurants and venues
frequented by the target market. If successful, Absolut will have the bartenders and
mixologists as an unofficial sales force.
Within the corporate structure, Absolut will construct a defined, decision-based
collaboration between its marketers and sales force. This will ensure that Absolut’s
18. 18
brand visuals and messaging are not diluted and altered by sales, and that the
sales reps are up-to-date and can focus more time on connecting with Absolut’s
distributors and retailers, to financial benefit (Joshi and Gimenez, 2014).
Events and Experiences
While Absolut has had a history of putting on large-scale events and experiences
tied to music and culture, merely planning large events will not be sufficient as a
promotional strategy on its own. While things such as its large concerts or club
nights in New York are interesting to read about, for the large majority of Absolut’s
target market, these events are inaccessible. Absolut needs to take its global
brand to its target market in a local context in order to stimulate engagement
(Vignali, 2001). Absolut should refocus the kind of experiences it offers its target
market to frame the events around the spirit itself. This could be executed through
a strategy that could utilize a touring pop-up bar/mixology classes. The pop-up
would be staffed by a rotation of notable mixologists, or recruit well-known local
mixologists, and each stop in a city could focus on making/teaching drinks with
local ingredients and influences. For example, the pop-up would stop in Atlanta,
which is currently host to the emerging drinks and food culture of the American
South (Hunt, 2015). The mixologist could feature a mint julep, a typically southern
cocktail but with a vodka twist, or a Bloody Mary, which is a southern brunch
staple.
Additionally, the pop-up could be an opportunity to appeal to multi-cultural
communities in the United States, which large national brands tend to have
difficulties with. Drinks with Asian influences could be featured on the West Coast,
drinks with Hispanic influences could be featured in the South, and so on. The
mixology aspect of the pop-up would provide a channel for Absolut to actively
engage with its target market, teaching them to make drinks while appealing to the
target’s local spirit. The bar aspect would still provide the social benefits the target
market seeks from consuming alcohol; they would get to interact with friends, while
taking part in an experience that would be very shareable on social media, creating
positive content for the absolute brand. In order to advertise the pop-ups, Absolut
19. 19
could approach local lifestyle bloggers and social media accounts, which is a
primary way the target market stays up to date on events in their location.
4.4. PLACE AND PHYSICAL ENVIRONMENT
When looking at the place and physical environment that a product is sold, it is
important that it aligns with the customers expectations, so they can be sure of the
quality of product and service they’re receiving Kotler et al., 2012). An industry
such as Spirits, which the target market engages with for experiential and social
benefits, should utilize a mix that employs a variety of sensory tactics to enhance
the customer’s experience.
Absolut Vodka is sold in two types of
locations—on-trade locations, or bars and
restaurants where spirits are served; and off-
trade, which would be individual liquor stores
or state-run ABC stores.
Off-trade: In terms of selling in an off-trade
physical environment, in a market which is
currently saturated with product, the most
effective way of distinguishing a product to a
customer is through its appearance and
physical presentation in stores. Absolut
should work through its distributors to secure
end-cap shelf space so that its product is
visible to the customer first. In addition,
distributors should be provided with an adequate marketing budget and material to
design a display to catch the eye of the consumer first.
Digital “Environment”
Another key area for a brand to succeed in the modern consumer market is the
way they present their digital real estate. Looking comprehensively at their
company website and social media accounts, while much of the content Absolut
posts and displays is eye-catching and interesting, it is scattered and not framed in
such a way that adds value to the brand. Additionally, the “Drinks” part of the
20. 20
website, which lists various recipes to try at home, lists a significant amount of
recipes that don’t use vodka as the spirit base. This seems counterintuitive for
Absolut to advertise recipes for cocktails that require its competitor spirits.
4.5. PEOPLE AND PROCESSES
Process
Absolut is distributed as a subsidiary company under Pernod Ricard; in the off-
trade category, it is distributed to customers by a variety of retailers and
wholesalers, where it controls about 13% market share for spirits (Bieler, 2010). In
the on-trade category, vodka would be purchased from a distributor by a bar, club,
or restaurant to be served to customers on-site. In this category, Absolut
dominates with about 25% market share.
Depending on the liquors laws in each state, Absolut uses a variety of service
channel designs to move product to its customers. Absolut’s service channel
design and the relationship they maintain with their distributors influence how their
product is presented and marketed to their customers in a brick-and-mortar store.
Table 5 below illustrates the different types of service channels Absolut uses to
make their vodka available to customers.
Table 5 Absolut Service Channel Blueprint
Producer
(Absolut)
State
Government
(Wholesaler)
Retailers (can
be state
contracted
and/or run)
Consumers
On-trade
Consumers
Distributors
On-trade
Consumers
Retailers
Consumers
21. 21
People
Absolut’s service line is structured in such a way that an Absolut employee will
rarely actually interact with consumers in a sales or marketing capacity. Most
interaction for consumers will consist of the bartender or waitress or serves their
drink, or the cashier who rings up their bottle purchase in the retail store.
Following the idea that all service encounters are, “first and foremost social
encounters” (Giebelhausen, et al. 2014), Absolut needs to take advantage of the
customer rapport a good bartender shares with his clientele. Since often, a
customer’s drink choice can be heavily influenced by recommendations or
offerings from the bartender/mixologist, Absolut should work on winning back the
bartender. A report executed by Absolut found that most people, including
bartenders, don’t really know what flavor profiles to look for or how to describe
vodka’s complexities, resulting in a focus on spirits like rye and whiskey (Bieler,
2010). Involving bartenders and mixologists will be an essential part of Absolut’s
“The Absolut Drink” strategy, which will focus on utilizing a bartender’s service
relationship with the customer to emphasize their positioning. To do so, Absolut will
target key cities in the US that are cultural/food-centric hotspots, such as New
York, Atlanta, New Orleans, etc., and send “Flavour Scientists” to popular and
stylish restaurants to educate about the vodka and build collaborative relationships
with the venue’s bar staff.
5. IMPLEMENTATION AND CONCLUSION
Based on Pernod Ricard’s previous marketing spend for the Absolut brand, which
was 478 million in 2015, the budget for this year’s marketing strategies will be
increased by 7% to 511 million for 2016. The increase in budget is to allow
additional budget to go towards developing more local marketing initiatives and
distributor relationships. This strategy will enable Absolut to meet customers at the
‘evaluate’ stages of the consumer journey through distributor relationships than
merely at the ‘consider’ and ‘buy’ stages (Edelman, 2010). Based on the
marketing mix, the rest of the budget allocation is as follows:
22. 22
To conclude, the effectiveness of the marketing mix applied to the marketing
objectives will be measured using appropriate performance metrics and analytics
to identify increase in brand preference, positive digital preference and
communication with the target market, and sales. If appropriately aligned and
implemented, the marketing mix will achieve satisfactory reach and resonance with
the target market, and Absolut should succeed in meeting its marketing objectives.
Figure 7 Absolut Marketing Budget
23. 23
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Food Journal, 103(2), pp.97-111.
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• Absolut has a strong brand--it is well-known and easily recognized
• Distilled in one location, resulting in consistent high product quality
• Strong market position
• Historically strong and relevant advertisng
• collaborations with well-known culture icons (Jay-Z, Andy Warhol)
Strengths
• Somewhat weak, ineffective online presence
• "Flavour Fatigue"--too much variation in Absolut's prodcut line has weakened the brand. Absolut
became product oriented rather than customer oreinted (Levitt)
• Struggles to market effectively to multicultural segements due to anti-big brand sentiments
Weaknesses
• As economic environment improves, so do opportunities for Absolut
• Can continue to cultivate collaborations with culture icons
• Growth of cocktail culture provides new avenues
• Potential new market in Generation Y
Opportunities
• Consumer preferences are shifting towards whiskey spirits
• New competitors entering market--craft liquors may not last, but they do take up market share
• Brand proliferation: brands that inlcude multiple subcategoreis. Ex. New Amsterdam sells both
vodka and gin
Threats
ABSOLUT MARKET RESEARCH
Product
• Do consumers
have established
brand
preferences?
• What is the
reason for
consumption?
Place
• Where are people
buying/consuming
spirits?
People
• What
demographic is
buying spirits?
• When do people
buy spirits most?
