1Executive Summary
It is generally agreed today that due to technological changes, database technology and changing buying habits, direct marketing together with e-communications has probably undergone the most drastic changes of all communication mix (Kitchen and Pelsmacker,2004). Therefore, this proposal provides a detailed marketing plan for Guinness with particular emphasis on direct marketing activities for 12 months from July 2005to June 2006 based on a budget of £2million and highlights recommendations for activities to be carried out in 2006 to 2007.
The initial stage is based on segmenting existing customers by potential value to Guinness, which can only be achieved by using qualitative and quantitative techniques to develop an understanding of their profiles. This segmentation will permit us to increase average consumption of existing Adopters with the aim of not only showing that Guinness understands their needs but as well as target potentially high value customers more precisely. Kitchen and Pelsmacker(2004),rightly stated that professionally managed direct marketing relies heavily on databases in which useful customer information is stored and on which well targeted and individualized marketing communications and customer contact are based. Indeed the database plays a crucial role in this process and as a result of this campaign will be a sophisticated database with huge amounts of customer information that will be valuable for both future direct marketing and other marketing activities.
2Situational Analysis
2.1Company Situation
Guinness is GB’ fifth largest beer manufacturerwith 1 million pints sold every day in the UK. It is specialist in “stout” category and holds effective monopoly with a series of popular products, including Guinness Draught, Guinness Draught in a Can, Guinness Original and Guinness Foreign Extra Stout. While the sales between different product categories are not in proportion, the ratio of GD to GDIC is about 1:4 with Adopter group. In terms of channels, Guinness has become the most widely distributed beer brand in this country with a 90% distribution almost double higher than its leading lager competitor.
2.2Competitive Situation
The brewers in the UKbeer market have been intensively competing with each other for centuries. Beer is under pressure from other drinks sectors, notably wine. The industry is at last acting to address the poor image of beer. National and regional brewers have teamed with the British Beer and Pub Association and are developing a generic campaign to emphasize beer’s purity and heritage and the health benefits associated with drinking it. Beer is simply less appealing. There is little doubt that stouts continue to fight hard for their share of the leisure pound in the nation's pubs and off-licenses while high street trading conditions remain difficult. In the last 15 years, consumer spending on beer has declined by over 20%, with ales in general, and cask ales in particular, taking the brunt of the fall (Mintel, May 2004).
2.3SWOT Analysis
StrengthsStrong brand values with rich Irish culture attachment to St. Patrick’s Day and Rugby;
Unique product identify: bitter taste, black & white color;
Interesting and exciting pour process lasting 119.5 seconds;
Most widely distributed channels;
Large & advanced customer database management in UK bear market
r centuries. ompetitior. ributed beer brand in this country with a 90% distribution alomst nness Foreig / Weaknesses
90% distribution of the products mean that further distribution will not improve sales;
Guinness stout is an acquired taste;
Customer biased perception of GDIC
Opportunities
The growing number of health conscious consumers;
The worldwide prevalence of Irish culture;
Large potential international market where “stout” has not been introduced. / Threats
Highly fierce competition in beer market at home and aboard;
Diversified customer taste, an inclination to prefer wine in whole drink market and lager in beer market.
3Objectives
Prime Marketing Objective / To strengthen the affinity of existing Adopters to the brand in order to increase average consumption of this group by 4 pints GD/GDEC per week and 2 cans GDIC per week to the consumptions level of Adorers over a one-year period.General Marketing Objectives / To increase the current overall consumption of Guinness by 4,560,000 units, specifically 1,520,000 cans per month off-trade and 3,040,000 pints per month on trade, respectively.
To improve the overall profitability by 3.26% (￡384,000 per month) by the end of one-year.
To enhance the image and affinity of Guinness brand in the UK market.
Direct Marketing Objectives / To retain the current 200,000 Guinness Adopters and segment them in terms of value generated.
To identify and profile the most profitable segment within the existing 200,000 Guinness Adopters.
To target the most valuable Adopters in each segment with the most appropriate and creative proposition.
To improve the quality, scale and specificity of current customer database.
To meet the prime marketing objective by using database and direct marketing tactics.
To realize the sales growth On-trade by 2.64 million and Off-trade by 1.92 million.
To realize the overall profit contributed by each customer in the High consumption group to be ￡30.97, Medium consumption to be ￡10.52, and in Low consumption to be ￡9.25 by the end of one-year.
4Marketing Strategy
4.1Segmentation
4.1.1The role of segmentation
Pareto’s Principle, known as the ‘80/20 rules’ reveals that no all customers contribute the same. It reminds us of the importance of the most valuable customers in direct marketing practice. Therefore, segmentation can help Guinness to find out who and where they are. In addition, their profiles can also used to project potential high value customers. Most importantly, in the decision making process of media, segmentation becomes a key role to the success of the whole marketing campaign, as customer behavior in each segment tend to be diversified towards different media, so the segmentation is instrumental in finding the right media for the right audience.
4.1.2Segmentation Method
(1) Segmentation by Gender
According to the case study, 90% of Guinness Adopter in existing database are male, the remain 10% are female; therefore, the majority of our customers lie in the male gender segment. In the UK, the drinking market is predominantly mastered by males, and the market is consistently large. So, it will be profitable for Guinness to focus its segmentation on male market. In our plan all strategies are based on the whole population, focusing on men and no special consideration given to the female group.
(2) Segmentation by D.O.B
Segments must be measurable, substantial, accessible, differentiable and actionable Kotler (2003). We will therefore segment adopters into subgroups(CIM 1992) according to their date of birth, reason being that this data field is fully populated by the adopters, making it substantial. It is greatly actionable because it presents creative opportunities to contact the adopters now and also in the future.
(3) Segmentation by Demographic Split
In fact, there is conflict between the definition of DOB and Demographic from the existing adopters’ database. The definition of Up-For-it and Family Focused distinguish them from the other according to their ages, that is age 35; for Up-For-It group should be below 35 years of age and Family Focused over 35.
However, when we refer these figures to DOB, it tells that there are only 30% of the population below 35, and 70% above. This does not match the profile which the demographic split shows; that is, Up-For-It’s - 40% and Family Focus – 60%. Therefore, it is clear that there is a group existing in between who possess the traits of both Up-For-It and Family Focus, this is to say these people consume different products from both On-trade and Off-trade channels. The group In-between should account for 10% in demographic split, providing it comes from the middle age.
(4) Segmentation by Products
The existing database reveals that the average consumption by adopters is 4 pints GD and 2 cans GDIC weekly; this is to say 24 pints/cans altogether monthly. To separate the different consumption groups, it is assumed the High, Medium and Low consumers drink 9, 6, 3 cans/pints per week (36, 24, 12 cans/pints per month) on average, respectively (the conversion ratio of week to month is 1:4). It should be admitted that cross-selling occurs across different channels (On-trade and Off-trade); however, for the purpose of simplifying the calculation, assume that all Up-For-It consumers drink GD or GDEC exclusively, and Family Focused customers only enjoy GDIC.
(5) Segmentation by Consumptions/Channels
In order to identify the most valuable customer group it is necessary to further segment adopters in terms of their consumption. As described by Guinness’s current database, the characteristics of different age-groups indicate there is a relation between occasions and places where they drink, their average age and consumption. It tends to be that younger drinkers consume more; therefore, it is further divided into three groups (High, Medium, and Low) based on their consumption, in which people below 35 drink the most, 35-44 the medium, and above 44 the low.
We will concentrate more on the high value customers at the same time we will target the medium high value customers in order to turn them into high value customers and finally subject to the availability of resources we will also invest into medium low value customers to turn them into medium high value customers. The low value customers who can not be of any value to the company will be encouraged to leave while those who show some potential of becoming valuable will be kept and encouraged to spend more.
4.1.3Assumption and Projection
The statistics reveals that 1,000,000 pints are sold every day in the UK, that is to say 28,000,000 a month (the conversion ratio of day to month is 1:28 per month). Based on our assumptions, if all existing adopters can be successfully converted to adorers; simultaneously there will be the same number acceptors who will graduate to fill the pool of adopters. In this case, by updating the existing valuable adopters they will contribute 16.29% of our sales in UK (16.29% comes from 4,560,000:28,000,000). In practice, we project 20% of existing adopters will be moved up to be adorers, it is assumed there will be same number of acceptors who will take the places these adopters leave, it is projected that profit will increase by 3.26% to￡384,000 each month on average over the one-year campaign.
4.1.4Segmentation Standards
(1) Segmentation by Title
Data Field / Data Segment / Population / % Adopters / Sub PopulationTitle / Mr. / 200,000 / 90% / 180,000
Ms./Mrs./Miss / 10% / 20,000
Total / 100% / 200,000
(2) Segmentation by DOB
Data Field / Data Segment / Population / % Adopters / Sub PopulationDOB / 18-24 / 200,000 / 10% / 20,000
25-34 / 20% / 40,000
35-44 / 50% / 100,000
44+ / 20% / 40,000
Total / 100% / 200,000
(3) Segmentation by Geographic Split in Each Age-Group
Data Field / Data Segment / Population / % Adopters / Sub PopulationUp For It / 18-24 / 200,000 / 10% / 20,000
25-34 / 20% / 40,000
Subtotal / 30% / 60,000
In-between / 35-44 / 10% / 20,000
Family Focus / 35-44 / 40% / 80,000
44+ / 20% / 40,000
Subtotal / 60% / 120,000
Total / 100% / 200,000
(4) Segmentation by Consumption in Demographic Split
Data Segment / Data Segment / Sub Population / Data Segment / Sub PopulationUp-For-Its / 18-24 / 20,000 / High / 20,000
25-34 / 40,000 / 40,000
Subtotal / 60,000 / 60,000
In-between / 35-44 / 20,000 / Medium / 20,000
Family Focus / 35-44 / 80,000 / 80,000
44+ / 40,000 / Low / 40,000
Subtotal / 120,000 / 120,000
Total / 200,000 / 200,000
(5) Consumption in Segments
Data Segment / Data Segment / Population / Consumption P/P/M / Consumption P/MUp-For-Its / High / 60,000 / 36 / 2,160,000
In-between / Medium / 20,000 / 24 / 480,000
Family Focus / Medium / 80,000 / 24 / 1,440,000
Low / 40,000 / 12 / 480,000
Subtotal / 120,000 / 1,920,000
Total / 200,000 / 4,560,000
(6) Consumption in Channels/Products
Data Segment / Products / C-Consumption / T-Consumption / PercentageOff Trade / GDIC / 1,920,000 / 4,560,000 / 42%
Up-selling / GD and GDIC / 480,000 / 10.5%
On Trade / GD & GDEC / 2,160,000 / 47.5%
Total / 4,560,000 / 4,560,000 / 100%
(7) Profits in Segmentations
Data Segment / Data Segment / Consumption P/M / Unit Profits (Pounds) / Profits (Pounds)Up-For-It / High / 2,160,000 / 0.40/GDEC / 864,000
In-between / Medium / 480,000 / 0.40/GD/GDIC / 192,000
Family Focus / Medium / 1,440,000 / 0.50/GD / 720,000
Low / 480,000 / 0.30/GDIC / 144,000
Subtotal / 1,920,000 / 864,000
Total / 4,560,000 / 1,920,000
(8) Profit Contribution by Each Adopter/Adorer
Data Segment / Data Segment / Profits (Pounds) / Population / Profits/P (Pounds)Up-For-It / High / 864,000 / 60,000 / 14.40
In-between / Medium / 192,000 / 20,000 / 9.60
Family Focus / Medium / 720,000 / 80,000 / 9.00
Low / 144,000 / 40,000 / 3.60
Subtotal / 864,000 / 120,000 / 7.2
Total / 1,920,000 / 200,000 / 9.6
(9) Segmentation by Sport Preference
Data Field / Population / Data Segment / % Adopters / Sub PopulationSports Preference / 200,000 / Football / 20% / 40,000
Rugby / 30% / 60,000
Both / 40% / 80,000
None / 10% / 20,000
Total / 200,000 / 100% / 200,000
(10) Segmentation by Sports Preference in Demographic Groups
Data Field / Population / Data Segment / % Adopters / Sub PopulationUp For It / 60,000 / Football / 20% / 12,000
Rugby / 30% / 18,000
Both / 40% / 24,000
None / 10% / 6,000
Subtotal / 60,000 / 100% / 60,000
In-between / 20,000 / 100% / 20,000
Family Focus / 120,000 / Football / 20% / 24,000
Rugby / 30% / 36,000
Both / 40% / 48,000
None / 10% / 12,000
Subtotal / 120,000 / 100% / 120,000
Total / 200,000 / 100% / 200,000
(11) Segmentation by Sports Preference in Consumption/Age Group
Data Field / Population / Data Segment / % Adopters / Sub PopulationHigh
(28-24; 25-34) / 60,000 / Football / 20% / 12,000
Rugby / 30% / 18,000
Both / 40% / 24,000
None / 10% / 6,000
Subtotal / 60,000 / 100% / 60,000
Medium
(35-44) / 100,000 / Football / 20% / 20,000
Rugby / 30% / 30,000
Both / 40% / 40,000
None / 10% / 10,000
Subtotal / 100,000 / 100% / 100,000
Low
(44+) / 40,000 / Football / 20% / 8,000
Rugby / 30% / 12,000
Both / 40% / 16,000
None / 10% / 4,000
Subtotal / 40,000 / 100% / 40,000
Total / 200,000 / 100% / 200,000
4.2Target Market
It is quite clear from the case study and the above standards that the younger groups, 18-24 and 24-35 groups make the most contribution to Guinness both in profit and consumption on the whole. These young groups present common preference for sports and socializing in a group; therefore, it will be easy for Guinness to target and communication them with right media.
Since we have identified the most valuable customers who are in 18-24 and 24-35 age groups drinking GD or GDEC normally in pubs, all the following strategies are developed focusing on them.
4.3Strategies
4.3.1Acquisition Strategy
Even though, all budget of this campaign – 2 million is required to spend on the retention and update of the existing Adopters of Guinness customer database, this is by no means to say that it is not necessary to recruit new comer to Guinness customer pool. In that case, Guinness would expect no increase till all customers in database would convert to Adorers. Direct marketing communications produce direct response, the direct marketing planner has a continuous stream of data to inform planning. So, acquisition still plays an important role in long-running sustainable development, which should not be ignored in our campaign.
However, in the view of the shortage of efficient money to run acquisition-directed activities, a general media strategy is utilized to ensure the equivalent number of successor will take the place where their predecessors left. Simultaneously, it is also a supplementary approach to strengthen the communication with existing targeted adopters, and recruit more customers by “stealing”them from other competitors.
In an attempt to realize the binary effects of this acquisition strategy, a set of integrated approaches is built up.
(1)A combination of media plans: above-the-line and below-the-line. Use below-the-line activity to increase penetration and additional occasions in pubs and bars, and in the off-trade.
(2)Newspaper, magazine, radio and internet banners are used to acquire customers who have the same characteristic with our most valuable customers, that is to say all these media choices focus on developing key customers (Please see appendix for more details).
(3)New customers are obtained through the current customers database, there are typically three ways:
Conversion of previously unconverted prospects;
Recovery of lapsed customers;
Referrals (of new customers) from established customers.
4.3.2Retention Strategy
Since the prime objective of this campaign is to strengthen the affinity of existing Adopters to the brand in order to increase average consumption of this group, the emphasis should be placed on them..
A lot of research reveals that there isn’t a customer loyalty problem with the Guinness, what it needed to do is brand building, especially with the Adopter whose consumption is about 4 times lower than the adorer. Therefore, our retention strategy will focus on updating the existing Adopters in the database to move them up to Adorer level. In fact, they not only contribute a visible increase in their personal consumption, but introduce our products to their friends and hopefullycomplain less about our products. However, brand building is not easy job to do, it has to inject into the Guinness brand ‘flesh, blood’ and more importantly,‘Spirit’, to liven in up.
(1) Brand building through culture cultivation
Guinness has been traditionally representative of Irish culture for centuries. As an essence of Guinness, Irish ness doesn't have to be overt, but should not be ignored. There is a natural relation between Guinness and Irish culture, especially the embodiment of St Patrick’s Day and Rugby with Guinness. Therefore, all our strategies, including media choice, message content, all revolve around strengthening the relationship between Guinness and Irish culture.
Addressing the health and responsible-drinking issue: Guinness has been committed to responsible drinking for many years. Although, this may conflict with our marketing objective to some extent; on the other hand, rational drinking fits in Guinness’ identity and positioning, which may improve customers’ affinity to the Guinness brand. Furthermore, Guinness has been telling their consumers through their advertising slogan that "Guinness Is Good For You". Now it has been proved by many researchers, which will definitely enhance customer trust to Guinness (African Business, 2004).
(2) Optimizing the message to customers
Harmonizing messages around the brand promise;
Achieving consistency of brand values and message;
Avoiding dissonance, especially the messages to different segments, this has to ensure specificity to each segment whilst not diluting brand identity.
4.3.3Cross-selling and Up selling Strategy
In the terms of product variants, it depicts an unbalanced profile, while GD is overwhelming popular in the younger groups as opposed to the GDIC in the older groups. This is partly because the younger are more likely to drink out in the pubs than the family focused group.The fact that GDIC has traditionally not to be seen as of the same quality as GD and GDEC, the Guinness brand tends to become a drink only for special occasions, e.g. St. Patrick’s day. Whilst in the same GD category, young Adopters prefer GDEC rather than GD in their pursuit of in-vogue fashiontrends.
In this circumstance, it looks difficult for Guinness to cross-sell and up-sell within its product profile. However, this is by no means to say that we should give up the large potential business opportunities underlying the existing valuable customers. Especially in the FMCG sector haunted with marginal profits, cross-selling can be vital to the viability of a direct marketing approach (Tapp, 2005). Whilst in an attempt to transform customers’ perception and attitude, a long term customer education program is required. This shall be achieved through the following tactics: