I. Executive Summary
The target should be to cover the mainland Australia market by use of the already popular James Bloag name. The current human resource in J. Bloags should be retained when the acquisition is legally complete. The J Bloag’ premier and premier light market is very good despite their high prices because of their high quality and characteristic tastes. Their popularity is due to the winning of the best beer awards ten consecutive years and promotion from the rugby supporters. Their machines, personnel and raw materials are the best despite use of the worlds best river water.
The current potential consumers are adults aged over 35 and youth having fat pay slips. The key purchasers are hotel, club and bar owners. The consumers buying behaviour is directed by the economic ability and need to be associated with the best beer.
The major cometitors are Cascade from Tasmaina, Fosters in the mainland Australia and XXXX in Queensland. No major political ties, is conforming with legal requirements to a large extent, and has embraced the current technological advancements.
The major strengths are in their production resources especially the personnel, machines and raw material resourcing, and the countrywide popularity of the brand name. Weakness is in pricing policy and association with unpopular rugby game of the rich. It has opportunity in the technology advancement and a posible sponsorship by the rugby supporters. Competitors in the beer industry, wine industry and possibility of new beer tax increase pose the ket threats to this plan.
The promotion and product components of marketing mix are most stressed. The implimentation should involve staff from J. Bloag’s and from L. Nathan. Research is neccesary to obtaib consumer needs. Two years is enough time for the marketing plan completion.
A good monitoring and evaluation team is needed to ensure timely execution of the activities.
A. The Internal Environment
Current marketing goals and objectives.
James Boag and Son Ltd has been doing brewing business for a long time. Late in the year 2007, Lion Nathan, being one of the major beer distributing companies in Australia has showed an intent to acquire the James Boag and Son brewing company. The core business of James Boag and Son company is brewing and their target has been to achieve the position of the best premium beer brewer in Australia and eventually in the whole world. Lion Nathan has to complement these goals immendiately the acquisition process is legally approved by the local city council. Second, The Lion Nathan is advised to set goals that will see the expansion of the James Boag and Son company in to the mainland of Australia where there is a lucrative market for the premium brands and other beers produced by J Blogs. In this mainland, the J Blogs is well known and has gained very good reputation especially in the New South wales, and Queensland through a possible sponsorship and publicity by the rugby union members and supporters who are very well known for drinking premium beers, especially those made by the James Blogs (Flex News 2007).
Senior management of Lion Nashon company are advised not to fire the current human resources management team currently working in the J Blogs Company because they are very competent in management and have mastered the best methods of running a brewery. Instead, the executive should resolve to training and convincing the human resources team from Boag’s about why they should sell Boags premium even more over the premium brands already owned by the Lion Nathan. The L. Nathan should ensure that their packaging bottles have the name of James Boag clearly labelled. This way, they will end up promoting the brand name more than they would be promoting their acquired company name. This will play a key role in attaining their corporate goal of economic growth through more sales.
Current marketing strategy and performance
The company also has got marketing strategies that are currently in use. Some strategies have won the company very good reputation while others need some improvement to attain desirable goals. One of products that has been well marketed throug pre determined strategied is the Boag premium. The strategy behing the market success for this product is in the concentration of quality and taste. Most consumers who have been interviewed have praised the characteristic taste of the Boags premium beer brands. Althoug the products have been selling pretty well, their market has been limited to certain social classes among the population. These are mainly the noble people and young people who have good paying jobs and therefore can afford. The price of the beer has been tagged very high to limit the kind of consumers. This can be improved if the pricing policies of the company are revisited. On the issue of distribution, the premium has penetrated the market in Tasmania very well, but on the Australian mainland, the distribution needs to be checked. This does not means the local market already established in the island should be assumed because this will have a retrogressive impact on the efford geared towards attaining the goals of L. Nashon company. In terms of promotion, J. Boags and Sons ltd has succeded to a good level. in fact, the premium beer has attained international recognition and is very well known among the Australian youth and the middle aged as well as among some senior citizens. However, the L. Nashon management is advised to do more promotion of the name because it is the one that appears to sell the premium brand. They should also persuade the consumers that the brand retains its quality properties. Generally the performance trend of the J Boags is improving because for the last three years, the ecomomic performance has been increasing and experts have predicted that it will continue that way even in the future. The improving industry performance is mainly due to the recent publicity and fame of the beer brand when it was the first ever to win the prestigious crystal award in the year 2007 for for consecutively producing the best beer and also getting golden mentals for ten consecutive years.
The performance of J. Boags is currently good. The sales have been increasing annually and has a market share of about 11 % of premium beer drinkers in Australia. Its profitability has been one of the best compared to the only four major premium beer brewers (JBP 2007).
Current and anticipated organisational resources needed
The current organizational resources have been deployed wisely. Just as in any kind of business, financial resources are a challenge to this company. In terms of capital, it has very good brewing machines that brews an average of 46 million litres per annum. The machines are designed to produce beer at a low temperature. The company has an exellent resourcing strategy for its industrial raw materials that accounts for the best quality. The company has one of the best human resource team for running its industrial operations. They are very qualified and very experienced such that its competitors have been trying to acquire the workers to work for them. The company has very high staff retention by offering the best incentives to motivate its workers. There are plans by the company to expand its brewing cacacity by setting up a new brewing plant. As a result, the human resources are expected to expand and a corresponding increase in its distribution resources such as the trucks and depots. Since this will demand financial investment, the financial resources are expected to reduce for a while and pick up as the new plant and expanded distribution start regenerating revenue for the company. It has kept very good relationships with its suppliers of raw materials while the customer’s quality needs have been met satisfactorily.
B.The Customer Environment
Current and potential customers
The current customers of the company are adults and mature youth living in Tasmania. This beer has been associated with the people who are economically fit and those who fancy the rugby game. These fans are usually the top management employees of the best companies, because such companies are the ones that sponsor them. The customers are generally people who are above 35 years of age. No children but women hae been the key target for the premium light brand. The product is used almost through out but there are peaks especially during festive seasons or when there are rugby tournaments or even when the economically lesser people get paid at month end. The company has tapped another set of potentiaql customers. Although it targets the above 35s, there have been a group of young professionals who are mainly graduates and have been posted to management levels of their companies or are doctors and engineers who earn lucrative salaries. There ages have been estimated to range from 18 to 28 years and are a real market potential since they consume too much beer comapred to their older counterparts. The company has got also plans to expand to reach the premium beer lovers in the mainland Australia.
Important players in the purchase process for the J. Bloag’s premier beet and premier light
First, the major purchasers in the Tasmania main market are the owners of clubs, bars and major hotels. There has also been purchasers in the mainland Australia in the Queensland and New South whales. During rugby events, the clubs purchase the premium for the players and funs. The purchasing decision is influenced by the sports club and the government. The distributors of the beer influence on who is to buy and who is not. This is because in areas where the distributors have not started their operations, potential purchasers have not been able to purchase the stocks. The purchasing has also been greatly influenced by the organization that rates the premium beers in Australia. This is especially after the J. Boags has been rated as the best company and its premium beer has been rated the best quality and taste for ten consecutive years. Through media and especially the TV, most purchasers have been influenced to buy the beers (Kruger 2007).
Why customers select the J. Boags’ products
Products from the James Bloag and Son Ltd company anf especially the James Bloag Premium beer and premium light have several benefits that makes them to be placed at a higher level than most other products of the company and from its competitors. First, it has relatively low alcohol content and since the machines used allow for an extended maturation period, the beers are of low calorific value. Second, the health issues of the Australian population who form the bulk of domestic market is considered. The water used to make the beer has been voted the purest river water in the world. It is also fermented at low temperatures and has low risk of pathogenic infestation. The high class people have always wanted to be associated with high quality products. The J. Boags premium beer has came to meet this need. This same class of people loves being separated from the rest by their purchasing habits. They live cosy life and the pricing policies of this company address this issue. With the possibility of price increases due to the foreseen government tax increase, the consumers at the lower economic margin are likely to request for reasonable prices for the products.
There has heen several customers who have the potential for purchasing the premium but have gone for the alternative brands. First, women prefer beer with low alcohol content and therefore have turned to other alternatives. Most Australians are sensitive on their spending behavior. They do not like spending so much on a product when there are cheaper alternatives. There has also been an association of the beer with rugby game and the rich. Those who dont like the game or do not like pride and boastfulness in public have turned to hating the brands. In regions where distriution has not penetrated, potential consumers have been compeled to use other beers. A posibility of non- customers being converted in to customers is only viable if distribution is expanded. Therefore the seniour management of the Lion Nashon company is being persuaded to consider expanding the productivity of the company and also expand the distribution efforts geographically to cover wider market. Attracting more market through fair pricing is unapplicable because the government has already showed an intention to impose more taxes. In fact the prices are bound to increase.
C.The External Environment
Although there are several brewing companies in Australia, there are four major beer brewers with James Brags and Son being one of them. Therefore , there are three key competitors for the premium beer in the market and they exert competition forces in the major geographic regions. In Tasmania for example, there is the Cascade which has commanded considerable market. In mailand Australia there is the Fosters and the XXXX gold is very well known in the Queensland market where it has acquired a very big connection with the rugby club supporters and management. They have considerably been performing well in the localised markets but have not outcompeted the J. Boag’s. The Lion Nathan senior management should take note that the marketing capabilities of these competitors cannot be under estimated. They have sustainably sufficed the needs of their customers for all these years they have been established. They have also been planning to expand their operations. They have successfully covered their local territories in terms of distribution. More promotion has been going on in the local freet -to- air TV. Most importantly is the pricing policies of these competitor beer producing companies. They have been designed strategically with consideration of the reputation of J. Boags has commanded in across the whole Australia. Their prices are comparatively lower and through this strategy, they have won a sizeable portion of the customer pool (www.whoisjamesboag.com.au).
Economic Growth and Stability
Much population in Australia do not earn high salaries. This is a good indicator of the countries economic status. In Tasmania, the people are considerably spending on beer and the trend has been on the rise, thus the economic growth appear to be positive. More people have invested in beer business by opening new clubs and hotels. The country has been a major tourist destination and this is a new market. The L. Nathan are therefore advised to consider establishing a tourist centre where the premium beer shall be sold to tourists, both local and from foreign countries. This region and the anticipated new distribution regions have good transport and communication lines and therefore the new venture for expanding the distribution may not face a major challenge from this perspective. The recent adoption technology in communication is a big boost to the marketing and promotion/ advertisement efforts the L. Nathan may need to apply.
There are no major political threats to the marketing plan because first, the company has got no political ties. The L. Nashon has already made its intention to buy the J. Boag’s public and no political force has been directed towards that move. However, as it also applies to all other companies, it is anticipated that new policies will affect the current market prices of beers. As a result the brewing industry owners are planning to mobilize the communities to campaign against the proposed increase in beer prices. Since the company recovers its extra government tax expenses by increasing the prices of their products, the L. Nashon should support this move because the impact of price rise on their sales and revenues is expected to be negative.
Legal and Regulatory Issues
Although it has not been implimented, one of the major changes in policies is when the government is going to debate the current beer pricing policies. These policies are perceived to be against the wishes of the common citizens and also against the wishes of the beer manufacturing companies. However, in the strategic development plan for the government, it is encouraging more industrial investment in any sector. The expansion plan of J. Boags immediately after it is acquired by the L. Nashon is therefore supported by the government although the permission to begin the development of the new factory has not been granted by the local city council in Tasmania. The establishment of this new plant should also critically consider the issue of environmental pollution because if the responsible authorities discover any harmful activity as a result of the plant, it may issue a court order to stop the brewing operations.
The impact of technological advancement is a real asset in this plan. First, it is very much encouraged to use the newly introduced free to air TV which is embracing the digital transmission technology. As opposed to the analogue TV technology, this digital technology has a wide geographical coverage and can reach very many customers at a tome. By this technology, the costs of promotion and advertisements will be cut very much in the effort of promoting the premium beer. Today, many Australians have incorporated the technological advancements in their daily activities. A survey conducted last year revealed that many australians are doing on line shopping. The Internet technology is being used by most companies to market their commodities. The Lion Nathan company management are therefore being advised to consider this technological concept. Through ousourvcing for a very competent on line marketiong company to market its premium beer and premium light brands, the very distinctive pictures of the beer bottles with the James Goags outstanding above the rest of the wordings, then the brands are going to become more popular among the working Australians. Consumers shall be identifying the brands from the on line advertisements which also directs them to the joints where these beers are sold (LN, 2003).
The company is also advised to adopt more reliable and effective methods of obtaining consumer information by introducing a web based e-mail where the millions of consumers can post their views and commends. Through this method, the company will save so much of the costs it would have incurred if it employed people to go to the field to collect customer opinions about the products. During the delivery and distribution of the products, the use of the wireless communication technology is highly recommended. This will ensure tracking of consignments. During the TV advertisements, the company should show their contact number clearly on the screen. This is supposed to help in dealing with the problem of un even distribution and the problem of potential non consumers whose needs has not been addressed. After the plan is implimented, the consumers who reside in the interior regions which shall not have be covered should be persuaded to report the issue through the advertised contact numbers for the company to respond fast. Technology advancement has also found its way to the mechanical equipment used in the industry.
Australian population is not very worse off in terms of leisure activities. Most people opt for drinking during leisure people. They do so from their homes or during outings with their loved ones especially during the weekends. Most beer consumer are male and youth. The male are relatively fewer than their female counterparts. However, the major target should be the citizens who are aged above 35 years of age. This move is more likely to get social support from parents because most young people in Australia have been victims of over consumption of alcohol. Most of them tend to overdrink when they are with their peers during functions. There are several youth who have been joining the social class of the rich people as early as the age of 18 years or latest at the age of 28 years. This group of responsible youth are mainly young graduates who have fat pay slips. The marketing plan should consider this group of customers because they consume beer in large quantities, to the benefit of the J. Boags premier beer brewing company. The company sholud be aware of the cultural diversity of the mainland Australia population where it needs to expand its operations as compered to thew culture of the Tasmanians where the industry is located. Many Tasmanians are beer lovers and and live more urbanised lifestyles. The mainland dwellers are not very serious beer takers.
On the issue of environment, afew areas need L. Nathan’s attention. Beer production is an industrial process and just as there are inputs in to the process, there are products and waste materials produced. The company during the running of its machines produces smoke it the atmosphere. This is a pollutant and it may bring a detrimental impact on the health of the residents living within the nearby areas. There are also high calorific effluents that are released in to the river. These effluents have materials that can cause eutrofication down the stream. This can lead to death the aquatic fauna and flora due to suffocation when oxygen becomes deficient in their aquatic environment. The people living down the stream who might not be aware of the dumping of these waste materials may use the water for domestic purposes and be affected. This is a challenge that may face the extra brewing plant (Leavitt 2000). The company should therefore consider establishing effluent treatment plant complex whiere the materials will be allowed to stand for a long period to allow optimum oxidation before it is released in to the river. The recyclable materials like the water used in cooling the machines should also be recycled to ensure conservation of the water. Since the operations of the existing J. Boag industry and the new plants shall be relying on the river water, the company should also consider consulting with the communities living in the upstream so that they may launch conservation activities to ensure the river regimen is sustained indefinately. The use of petrolleum fuel in running the industry is harmful to the environment. It is highly recommended that they company should consider using electricity and suppliment with solar energy during the warm periods of the year. During the construction period, there shall be so much destruction of the landscape, nearby plants and micro organisms. They may seem insignificant but they play a key role in the terrestrial and aquatic ecosysytems. During the industry set up, the damage to them should be as minimum as possible.
Lastly, the most important factor to consider is the social issue. Already, the existing operations of the J. Boag and Son Ltd are very much rooted in the community. This is because most of the work force in the brewing and in the distribution activites come from among the local people. Second, the company has already started many social projects to assist the local people. This is a good step that the Lion Nathan should adopt when it acquires the J. Bloag. Although the J Bloag did not succed very well, the L. Nathan should publickly denounce excessive consumption of its alcohol by the youth. This will be welcomed very much by the parents who have been worried by the way their young boys and girls have turned to excessive drinking and eventually to crime activities to get money for drinking after they have become addicts. This move will not have any significant financial impact to the company because the youth who shall be addressed this way are not potential consumers of the J. Bloags premier beer and premier light ( Jones 2000).
Strength 1: The J. Boags and Sons Ltd has very exellent brewing machines which are capable of producing beer fermented at low temperature. The premium light has low alcohol content to meet the preference of most women and business executives. Most competitors do not have the kind of machines this companies have. Its enginners are exceptional.
Strength 2: Very competent Human resources and top management team. The customers have always wanted quality goods that match their prices. This team has ensured the best methods of brewing and have gone to the field to take the opinion of the customers, such that the customer relation to the company is very good. The company is being supported by people from all social classes.
Strength 3: The company’s strategy in resourcing for its very high quality raw materials has placed it above the rest. These materials enable the company produce beers that have their own distinctive taste. They taste great.
Strength 4: For the last ten year, the company has gained popularity across the country and beyond. The awards given were for producing the best beer. It still leads. Its competitors have larked behind all this time.
Weakness 1: Pricing policy: The desire to persue very high quality products has necessitated the prices of the company premier beer and premier light to be very high comapred to their competitors. Their pricing policies have not considered the concepts of economie of scale. They have limited consumers because of their high prices. On this point, the venture should re-consider this policy. If the prices could go down abit while the quality and reputation remain, the newly acquired company could perform economic wonders.
Weakness 1: Minimum conservation and pollution control efforts: The company has enjoyed much recognition and social support from the community yet, it has done very little to conserve the catchment of the river which has been behind its success. It is praised becaused of its best quality and pure water used yet its effluents have been disposed to the river.
Weakness 3: Association with unpopular game: The J. Bloag’s has been associated with rugby fans which is not fancied by many people. It is associated with the rich and the high social class. It has has failed to address this psychographic difference (Peck, 1998).
Opportunity 1: Technology: To understand the needs of customers well and in time, the company should embrace the use of modern cyber space technology and digital TV. The customers need to be informed of any new development in the industry the quickest possible. This is possible by use of TV adverts. During the collection of consumer opinion, use of Internet and wireless communication gadgets is encouraged. The company is advised to capitalize on the TV technology during its promotion of the premier beer and premier light.
Opportunity 2: The rugby supporters have showed interest of sponsoring the J. Bloag’s premium beer. This opportunity is yet another chance of raising the popularity of the beer and most importantly the name of the company. After the acquisition, all the products of the Lion Nashon shall be associated with the James Bloag and its is anticipated that their popularity will also rise. What a brilliant business strategy! The desire of customers to have cheap beer form a popular and the best company shall be met because by then, the J Bloag and Son shall be associated with the Nathan’s.
Threat 1: The Cascade and Fosters brands have also been selling well in the market. Their strategies in winning the customers are based mainly on their pricing policies. Through this tactic, they have succeeded to some extend. However, this company is likely to handle this threat successfully if it stresses on the relationship between the products of the original L. Nashon and products of the former J Bloags and Son Ltd in that they are produced and distributed by one and the same company. This should come out clearly during the promotions and TV advertisements. By doing this, the L. Nashon is likelyto win the high class consumers with the expensive beers while the economically lessr population will still have the feeling of being associated with the best brewers when they consume the cheaper brand. Thus the pschographic difference shall have be bridged (Kruger 1998).
Threat 2: Wine Industry has also been targetting the same consumers. With their low priced products that serve almost the same consumer nees, the youth and poorer population is likely to turn to wines. The company can respond to this by producing its own wine brands. If they tag them with a selling name like the James Bloag Wines with the name of James Bloag conspicuously, it is very likely that the wine can compete favourably with these already in the market.
Threat 3: There is a threat from the Government incase the perceived beer prices are raised. Recently, the prices of the mixed alcoholic drinks were raised through increased taxes. It is likely that the beer industry is the next. The consumers are likely to turn to cheaper stuff, especially those who are still strungling to attain economic indipendence. The control of this threat is beyond the capability of the company (Smith 2001).
Marketing Goals and Objectives
Marketing Goal A: To expansion of the James Boag and Son company in to the mainland of Australia where there is a lucrative market for the premium brands.
Marketing Goal B: To maintain the reputation of J. Bloag’ through continued production of the best premium beer in Australia.
Specific Marketing Strategies
A. Target Market:
The target should be mainland Australia population aged 35 years and above and also the young people within the age bracket of 18 to 28 who are earning good salaries. These people like spending on luxuries and expensive drinks. The youth are heavy beer takers.
B. The Marketing Mix
The marketing mix will mainly revolve around promotion and the product. The company has the reputation for producing the best quality. In the mainland market, this quality should be maintained. Through wide range digital TV, the introduction of these new products will be known to the targeted consumers.
The process of implimenting the process should involve the J. Boag’s personnel team together with personnel from the L. Nathan Ltd. First, the team should carry out market research to establish the needs of the customers, the existing distribution activities, the wines and beers that are already selling in the market and the best methods of advertisements and promotion. The high quality of materials used in production should be resourced from the same suppliers. The research results should be analysed and key decisions made by the senior management personnel on the way funds shall be allocated for actual implimentation. The whole set of activities including the build up of the new brewing plant and distribution expansion should be complete in two years time and about Aus $25.5 million should be allocated for this venture. A contigency of about 10 % should be allocated to cater for any unforeseen expense.
Evaluation and Control
Before the plan is implimented, a momitoring and evaluation team should be set to monitor whether there is timely execution of the activities. The financial and human resource inputs should be ready before any of the activity commences. The employees should be trainned on customer relations and familiarised with possible field conditions. The use of media should be used to establish areas that have not already been covered based on what the consumers say.
Flex News, 2007, ‘Lion Nathan Adds J. Boags,’ Business news for food industry, [on line]
Available at: http://www.flexnews.co.au/
James Boags Premium, 2007 [on line] at www.boags.com.au/
Jones, G. 2000, Beer industry in Tasmanis, Routledge, Sydney.
Kruger, C. 2007, L. Nathan bags J. Boags for 325 m Aus Dollars, Business focus,Tasmania.
Leavitt, H.T. 2000, Brewing in Tasmania, Melbourne University, Melbourne.
Lion Nathan ltd, 2003, Price Surveillance Authority on Beer, Tasmania, Australia.
Smith, R. 2001,Boags James, Melbourne Univ.Press, Melbourne.
Peck, H. 1998, Brewing industry report: Business Periodicals, F;M Press, NSW.
Wilson R., 1998, International Brewing, Routledge, London.
Who is Tames Boag? www.whoisjamesboag.com.au