Molson-Coors Brewing Company
Molson Coors Brewing Company (Molson) is a Canadian holding company that engages in the manufacturing, packaging, and selling of malt beverage products, including alcoholic coder, beer, stouts, ales, and lager. The company concentrates its operations mainly in Canada, the US, and in the UK, with headquarters in Denver, Colorado. The company has a diverse portfolio of more than 65 strategic brands and partners positioned with signature brands such as Molson Canada, Coors Light, Coors, and Curling.
PEST Analysis
Political environment
The manufacture and sale of alcoholic beverages is highly regulated in Canada and these changes may have negative impacts to the business. Even though the industry may not experience another prohibition, there are some changes such as legal drinking age, how beer is sold, and where which might happen in a lifetime (Johnson, Scholes, and Whittington, 2009). Given the close association of beer and hockey, and, thus, Canadian identity, the existing Canadian laws do not pose any significant political risk to the industry.
Economic environment
Even though industry is experiencing decrease in beer consumption per capita, there is an expansion of the market of premium and crafted beers. The world is experiencing economic recovery, but historically, alcohol sales have held up during economic recessions. Even though major economic indicators are not favorable, interest rates, which is important for capital-intensive industries are relatively low. Beyond the barriers created by the government, the existence of large competitors with large market share, economies of scale, and huge brand awareness, together with high capital costs for brewing plant are the main elements deterring new entrants to the market.
Social environment
Many youths today view beer as old fashioned, especially some Molson and Labatt manufactured products. Increase in consumer choice due to introduction of premixed vodka and other drinks into the market have considerably reduced the per capita beer consumption. Changing consumer trends are constant but provide low risk to the industry (Capon, 2008). There is growth in consumption of foreign beers is another trend that provides moderate risk to domestic brewing companies. Asian beers are associated with brand familiarity among immigrants and cuisine. The decrease in per person consumption is offset by higher willingness to pay for premium brands. Additionally, there is a market for cheap strong beer. The industry has not experienced any significant reduction in revenue due to decrease in volume sales.
Technological environment
Brewing process is a primeval process that only requires improvement to systems for heating, cooling, and moving liquid, but fermentation and mixing process is constrained by time. Improvements such as new strains of barley and yeast get discovered, but there is limited risk that the equipments used for brewing can become obsolete. The industry poses low technological risk to new entrants provided they have the correct equipment and personnel.
SWOT Analysis
Strengths
Molson is an innovative company as exemplified in the way it survived the first prohibition in the US. They were able to divert to bottling water following prohibition of alcohol. The company has also won many international brewing awards making it one of the strongest brands in the world. They also package their products in unique packages that customers can easily recall. The company also manufactures fully fermented larger that most diabetics view as healthy alternative. Additionally, Molson use high quality raw materials to produce a distinct quality beer (Griffin, 2011).
Weaknesses
Molson has many brands present in the market, which reduces the size of the market that the company can serve. In addition, market penetration is low and not easily available because many customers in the market already have established tastes and preferences.
Opportunities
The increasing number of people adopting healthy lifestyle will increase the demand for low calorie beer in urban areas. Market trends show increase in spending power among consumers as income increases. The market size for beer consumers in Asia is increasing and the company can consider venturing into this region as the market expands.
Threats
The main threat for the company comes from competitors who offer comparatively low prices to attract large market share. Additionally, top competitors such as Heineken, Carlsberg, Kirin, and Ashai threaten survival of the company as they hold large portion of the market share. Stricter laws and regulations for drunk-driving cases in most countries including Canada pose threat to the company and the industry. Changing preferences of customers also threaten the company. There is a growing perception that beer is not as healthy as other alcoholic beverages such as wine (Ferrel and Hartline, 2010).
2) Many companies adopt multi-branding strategy in order to achieve economies of scale by using the basic advantage of the strategy. However, multi brand strategy can fail because of poor management and adoption of unprofitable business models. It refers to a marketing strategy where a company markets two or more of its similar products under different brand names (Robertson and Caldart, 2009). In most occasions, such brands compete in the same market under unrelated brand names. The two companies that have been quiet about their multiple brand strategy include Molson Coors Breweries and Proctor & Gamble Canada. People are aware of the large number of branded products they consume, but rarely realize that Gillette shaving cream, Pantene shampoo, Crest toothpaste, and Duracell batteries all belong to one company, in this case Proctor & Gamble. Molson also operates under different brands, including Molson Canadian, Carling, Black Label, Pilsner, Keystone Light, among other brands.
Companies such as Molson opt to adopt multi-branding strategy to help them obtain a larger share in the market as there is little competition left for businesses in the brewing industry. Using this strategy also helps companies fill quality gaps and price gaps of each target market. This can enable a company gain greater market share in the markets that it serves. Companies may elect to keep their strategy quiet because multi-brand strategy depends on the success of the initial brand.
3) Product life cycle is the sequence of stages that a new product progresses through from introduction to growth, maturity, and decline (Porter, 1985). The concept of life cycle may apply to a brand or a category of product. An example of a product that is currently in the introduction stage of the product life cycle is iPad mini, which was introduced in November 2012.
Introduction stage is when the public first sees or hears about the product. During this stage, companies may choose one of the twp pricing strategies. They may charge their products higher to compensate for the initial expenses that went into introducing the new product (Campbell, Edgar & Stonehouse, 2011). For example, Apple introduced its iPad mini 20% above the price of Google Nexus 7, which is arguably the closest competitor to iPad mini in the smart phone market. Apple made such strategy after considering the hype and anticipation associated with new technology. At this stage, promotion is aimed at promoting brand awareness. Apple’s initial campaigns have targeted women with the company primarily buying space for iPad Mini ads on TV shows and publications that cater for women.
Growth stage is characterized by intense competition and rapid revenue growth. An example of product in growth stage is Bud Light Lime. Sales for the product have increased over the recent months as more customers become aware of the product and its benefits as additional market segments are targeted (Garrett & Gray, 2005). Organizational goal during this stage is to gain consumer preference and sales. The product has new features in terms of taste and packaging options. The beer targets the young adults and is promoted through video campaigns as this group of consumers indulges more on video.
Maturity stage is the most profitable. Due to strong brand awareness during this stage, spending on advertising will be reduced (Rumelt, 2011). Increased competition may result into reduced market share and prices. Marketing strategy during this stage involves maintaining share and extends the product life cycle. An example of product in this stage is Carling beer, which has achieved high level of brand equity among its current target market. During maturity stage, product modifications are made to differentiate the product from competing products. Molson, the manufacturer of Carling that traditionally targeted males through football sponsorship, such as ‘The Curling Cup’ has added its product range to target women. This involved the introduction of Kasteel Cru Rose to appeal to the female segment.
Decline stage is marked by decline in sales as market becomes saturated, customer taste and preference changes, or technology becomes obsolete (Garrett & Gray, 2005). Companies can adopt three options during decline stage: maintain the product in hope that competitors will exit, reducing cost in the hope of receiving more profit, or discontinue the product. Example of product in decline stage is Apple’s iPod, which has experienced drastic decline in sales leaving the company with the task of deciding on whether to drop the iPod Classic and focus on other new products. Apple has focused on introduce innovative products that appeal to customers.
4) Companies such as Monson Coors Canada have in the past used traditional methods to deliver their marketing message. As such, the company has targeted the male market by delivering its marketing message through football sponsorship as in the case with ‘The Curling Cup’. As noted by Bowman & Gatignon (2010), there are more mobiles than computers and televisions combined. As such, company brands such as Molson Coors Canada have responded to this major shift and delivered most of its marketing message through mobile phones.
Despite adopting mobile marketing strategy, the company also uses integrated marketing campaign to reach the target customers through news media, print media, social media, product placements, and online television. An example of TV ad is the recent Carling ad found at http://www.carling.com/carling-advert. The company has also used mobile advertising to promote Black Label brand among football fans. The promotion dubbed ‘Be the Coach’ gave fans the starting players for the Carling Black Label Cup games.
References:
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