Guinnes Case Study

International Marketing Course
A.Y. 2012/13 Professors: Cantone & Hollensen
Guinness Case Study
Group 1
Carotenuto Marco
Casale Dario
Cascarino Salvio
D’Ambrosio Gennaro
Sangiovanni Andrea
Sorrentino Maria Laura
N27/1145
N27/1307
N27/1157
N27/1484
N27/1133
N27/1181
International Marketing Course A.Y. 2012/13 Professors: Cantone/Hollensen - Guinness Case Study

Agenda
PART 1:
• Beer market: an overview
• Guinness think globally, act locally
• Focus on Nigeria market
PART 2 :
• Case questions

GUINNESS History: time line
In
Ireland, Arthu
r Guinness
created one
of the most
important
Beer of the
world
1759
1769
The first
export
shipment of
GUINNESS
to England.
Shipments of
GUINNESS to
Guernsey, Ba
rbados, Trini
dad. 1820
1840
Shipment of
GUINNESS to
New York.
50% of all
GUINNESS
sold in U.S.A.
is now bottled
locally and
total foreign
sales reach
100.000.
1914
1949
Guinness
starts to
import in
Nigeria
GUINNESS is
exported in
Ghana, Nigeria,
Malaysia,
Indonesia.
1959 – 73
1985
GUINNESS
now sold in
120
Countries
and brewed
in 25.
Diageo
is formed.
1997
2008
Guinness is
on FB

Beer & Stout market: an overview
1%
99%
Stout market is only 1% of
beer market
Stout volume sales (million litres)
Lagers volume sales (million litres)
Guinness
(Diageo)
60%
Murphy's
/Legend
(Heineken)
8%
Zywiec Porter
(Heineken)
2%
Beamish
(Heineken)
3%
Castle Milk
Stout (SAB
Miller)
12%
Others
15%
Stout market: who is the leader?

Porter 5 forces model : which are the main forces that determine the
intensity of rivalry in beer industry.
Source: Porter, M.E. (2004)
Meal occasion
(indoor&outdoor):Wine
Amusement occasion
(outdoor): cocktails, spirits,
Happy hour: analcoholic
Threat of Substitute
products or services
Bargaining power
of buyers
Rivalry among
Existing competitors
Bargaining power
of supplier
Threat of New Entrants
On trade: pub&bar have
low bargaining power
Off trade:
Retailers have high
bargaining power
CR4 in 2010 =46%
(AbinBev, Sab Miller,
Heineken, Carlsberg)

Guinness Stout Market Share all over the world
Western
Europe:
80%
Eastern
Europe:
12%
North
America:
86%
Latin
America:
5%
Asia
Pacific:
64%
Australia
and Asia:
66%
Africa:
45%

Firm Strategy, structure
and rivalry
Relating and supporting
industries
Government
Demand
conditions
Factor
conditions
Chance
Africa is the first Region in
terms of stout volume sales
(720 million).
Guinness has 45% market
share in this market, this
means 324 million litres
sold in this area.
For Guinness is the second
market after Western
Europe (510 million litres).
Why Africa is so important
for Guinness, what were
the conditions that helped
Guinness to build his
success?
Focus on Africa The Porter Diamond
Demand Condition:
• Africans are beer
drinkers since 1820s.
• 7,2% of beer market is
stout (vs. 1% in world)
• Market size
Related supporting
industries:
• Strong presence of row
material producers and
exporter.
Factor Condition:
• The basic raw
materials
maize, sorghum
malt, hops and water
sourced locally.
• Low cost employees.

International market screnning process to produce in Nigeria
1820
Asia Australia
Regional Macro
screening:
• Market size.
• Stout Beer
culture.
Africa
Eastern
Africa
Western
Africa
Northen
Africa
Central
Africa
1962 Angola Nigeria Congo Senegal
Preliminary
screening:
• Raw material
availability.
Specific market criteria:
• Most populated
country.
• 50% christian
population.
• Relatively politics calm
after 1960 , compared
other countries.
Kano;
Kaduna
Lagos ;
Benin
city aba
Ibadan
Specific city/area criteria:
• Overlooking the ocean.
• Most cosmopolitan city.
• Low degree of tribal
culture.
• Good industrial area.

Source: Our adaptation from Diageo.com and Hollensen, S. (2012).
Legend: Upstream Downstream
Strategic Alliances with
Fosters for production
Strategic Alliances
With Sapporo
Strategic Alliance
with Retailers
Contract
manufacturing (i.e.
East African
Breweries for Kenya)
Hierarchical mode
with sales and
production
subsidiary (Nigeria)
Guinness: Think globally
Source: Our
adaptation
from:Guinne
ss.com

How Guinness competes in the international market:
act locally Area
Customer
solution
Western
Europe
Eastern
Europe
Africa
Product
Australia
and
Asia
U.S.
Guinness Draught & Guinness Draught Extra Cold
Guinness extra stout
Malta Guinness
Guinness Foreign Extrastout

act locally Area
Customer
solution
Western
Europe
Eastern
Europe
Africa
Product
Australia
and
Asia
U.S.
Malta Guinness
Guinnes creates a
relationship among
drinkers (on-trade)

act locally Area
Customer
solution
Western
Europe
Eastern
Europe
Africa
Product
Australia
and
Asia
U.S.
Malta Guinness
Mainly used as
drink after meal
(78% sold off
trade)

act locally Area
Customer
solution
Western
Europe
Eastern
Europe
Africa
Product
Australia
and
Asia
U.S.
Guinness Draught & Guinness Draught Extra
Cold
Malta Guinness
Provide to give a product
easy to drink (Malta
Guinness is a free alcohol
drink), and a strong drink
related to viral sexuality and
power

act locally Area
Customer
solution
Western
Europe
Eastern
Europe
Africa
Product
Australia
and
Asia
U.S.
Guinness Draught
Malta Guinness
Guinness Draught
reproduces Irish
culture overseas

Social media Communication
“One of the most important strategic
consideration is whether to standardize
worldwide or to adapt the promotion mix
to the environment of each country”
Social media: the way to understand
young drinker needs and expectations
with GLOCAL APPROACH
Source: Our adaptation from Facebook.com

US Guinness social communication on Facebook
US Guinness target: 25-34 years old
Day of max popularity: March 10th
WHY?
St. Patrick’s day period
Source: Our adaptation
from Facebook.comInternational Marketing Course A.Y. 2012/13 Professors: Cantone/Hollensen - Guinness Case Study

What are the differences ?
Nigeria commercial US Commercial

Product/communication mode
Product
Standard Adapt New
STRAIGHT
EXTENSION
PRODUCT
ADAPTATION
PROMOTION
ADAPTATION
DUAL
ADAPTATION
Promotion
Standard
Adapt
Productinvention

Case questions
1. How would you explain the Guinness pricing
strategy and the underlying assumptions about
consumer behaviour when Diageo reports for
2005 that in the UK and Ireland Guinness sales
volume fell by 3%, but a value growth of 4% was
achieved in both markets, mainly due to price
increases?
2. Motivated by the success of this pricing
strategy, should Diageo continue to increase the
price of Guinness?

STRENGTHS WEAKNESSES
internal
external
THREATS OPPORTUNITIES
• market knowledge
• brand image and brand awareness
• quality and uniqueness of taste
• little market
• complexity of taste and
resistance of potential customers
• strategic alliances
• social media strategy
• customers switch market
( from stout to lager )
• alcohol regulation
(tax and prohibitions)
Guinness Swot analysis

Guinness pricing strategy
• Guinness is sold with premium price because it gives to its consumers
more than a product, it delivers an experience, a lifestyle model ect.
• That’s why in 2005 in the UK and Ireland, with an increasing price
strategy, Guinness was able to achieve a value growth of its sales of 4
percent. How we can explain this phenomena?
Value growth of sales: 4%
Volume fall: 3%
What was the price increase?
7%
εp= %ΔQ / %ΔP εp = -3% / +7% = -0,43

Rigidity of Guinness demand
εp = -0,43
QUANTITY
PRICE
p = + 7%
q = - 3%

Consumer Brand
resonance
Brand
Imagery
Brand
Performance
Brand salience
Source: Keller K.L. , 2008
Consumer Brand
resonance:
-loyal consumers
-high repeat purchase
rate
Customer
Judgements:
- high quality
- Superiority and
uniqueness of
the brand
Brand Imagery:
- mostly male adults > 25
– Supporters of the strong taste with
decisive personality
- A 250 years old brand
- Strong experience
-Share moments with other people during
sport occasions, events
Brand Performance:
-Irish beer with coffee taste, 5-6%
alcohol
- Aggressive price- increase policy
- A typical “on trade” consumption
Customer feelings:
-fun (feel playful)
- excitement( feel energized)
- social approval
Brand salience:
- high awareness: most commonly recalled alcoholic dark beer
CBBE
Keller’s Model

3. In Choueke (2006), an anonymous beer retailer buyer comments
on Guinness’ decreasing sales volume: “Guinness has an older
profile of drinker and with an ever-increasing availibility of
continental lagers and a fast growing range of alcopops, the
younger generation of drinkers simply haven’t bought into it.
Innovation – widgets and gadgets – will keep the brand alive for a
while but where else can Diageo go? Flavoured Guinness? No
thanks. It is in decline and Diageo’s best minds can’t do much
about it. The brand may have only a couple of decades worth of
life in it and I would milk it for everything before getting rid of it
and concentrating on spirits. Do you agree with this statement?
Explain your reasons.
4. What elements of the Guinness international marketing strategy
would you focus on in order to increase global sales
volume, value and profits?
Case questions

INTRODUCTION GROWTH MATURITY DECLINE RE-CYCLE
S
A
L
E
S
STAGE OF THE PRODUCT LIFE CYCLE
Product life cycle:
Guinness strategic marketing choices
Milk strategy?
Revitalize the
brand

ENACTED: focus on what it
means rather than what it can do
FUNCTIONAL: focus on what it can
do rather than what it means
REIFIED:
brand closely
identified
with product
ABSTRACT:
brand almost
product-
independent
Manage the brand space concept
GUINNESS
CONSUMERS
YOUNG
DRINKERS

How to revitalize the brand?
• CO-BRANDING :
Limited edition collection +
• SPONSORSHIP :
International Guinness
poker tour
• “GUINNESS MIX&MATCH APP ”:
An application with the list of
recipts, for cocktails and dishes
Guinness based with the
opportunity for the customers to
enrich the library with their
creations.

The 6C model of social media:
“Guinness Mix&Match App”
Company Content
PUSH
Control
Community
CustomersPUSH
PULL Conversations
online (wom)
Company’s border of control over content
Diageo
Guinness Mix&Match
App available free on
FB and Apps store
Publishing the best
recipt and cocktail FB and Youtube
users

Sources:
• Hollensen, S., (2012), Essentials of Global Marketing, UK, Pearson
Education.
• Keller, K.L. (2008), Strategic Brand management, NJ, Pearson
International Edition.
• Porter, M.E. (2004), Il vantaggio competitivo, Einaudi Editore, p. 13.
www.facebook.com
www.guinness.com
http://www.diageo.com/en-row/Pages/default.aspx
http://www.guinness-nigeria.com/
http://visual.ly/global-beer-consumption-statistics-and-trends

Thank for your attention

Guinnes Case Study

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