1. According to the case study, Japanese marketing culture has been described as
one wherein, dominant firms dictate product offerings to consumer, a myth that was broken by Asahi who used the following strategies that give us an insight into the new business culture prevailing in Japan nowadays. According to Chandler (1998), “It is even argued that Japanese companies are “not terribly efficient, entrepreneurial, or liberated. Yet slowly but surely, they have advanced their position in international companies” (pg 214). Chandler has further argued that Japanese cultures are known bring in innovations continuously, incrementally and spirally which along with the observations made by Osada, we can safely state that the Japanese business culture has been one that has been a mantra for successful marketing the world over.
“They value research and the understanding that the results give to them about market size and trends, analysis of consumer behavior. Research into the consumers’ social and leisure habits and purchasing patterns. Insights gleaned from intensive market research have been used to build marketing strategies and campaigns that have proved innovative and captured the Japanese beer market. These research based initiatives which, combined with a good product which meets consumer needs and wants, has proved to be a strong competitive barrier in the home market.”(Osada, 2005, p.1)
Therefore we can glean from this statement that the Asahi Japanese culture has been one of understanding consumer behavior through intensive market research and new product development that suits consumer tastes and satisfies their needs and wants. These strategies will prove effective especially in global competitive markets, wherein a range of products are available to a discerning consumer who is aware of the quality, brand and the value of the products being purchased.
2. Asahi is a leading lager beer brand in Japan. According to the case study, the product’, Asahi Super Dry’ with its fresh and sharp taste, established itself as a brand leader in the dry beer market in Japan. Asahi’s positioning, segmentation and distribution strategy of making their products available at discount and convenience stores helped Asahi in establishing itself in the niche segment for dry beer and also gave serious competition to established beer brands like Kirin in Japan. All the more reason for Asahi to stay in Japan and increase its market share. However, we must keep in mind that a number of brands were struggling as the Japanese economy contended with deflation and consumer confidence was shaken in most products and companies.
Though Asahi grew from a marginal beer brand and their sales volumes gradually increased, the economic environment in Japan requires that Asahi move into international markets and establishes itself as a global brand. The management considered the option of entering the beer market in the UK. However, it can be gauged from the case study that there are a few challenges that have to be considered before the management makes an entry into the market:
a. Competitive Environment : The current trend in the beer market is one of consolidation as major breweries in the market buying other breweries in order to increase their position in the market e.g. Sabmiller is purchasing Grolsch, and Heineken and Carlsburg have decided to take over Scottish and Newcastle (S&N).Global behemoths have already captured a sizable chunk of the market share and existing competitors of note are “Becks from Germany, Cobra, an Indian beer brewed in the UK, and Corona from Mexico”. Budweiser has the largest market share in lager brands with a 14% market share, followed by Becks and Stella Artois.
b. Legal Environment: Alcoholic consumption in the UK has been on the decline due to the new Licensing Act 2005 and the Monopolies and Mergers Commission which led to most breweries selling off their pubs to satisfy the requirements of the Law.
c. Economic environment: Though the consumption of alcohol increased, the percentage of beer consumed decreased from 60 to 43 % between 2004- 2006. S& N was only able to increase its market share by 4% because it targeted the 45+ consumer age group and expanded its product offerings in the market i.e. super chilled lager.
Other factors include an increase in the price of food items and especially the price of barley, that will affect the margins of production in the UK( slated at a margin of 30% in the study).
d. Demographic analysis: The UK beer consumers has been identified as belonging to the age group of 45+ , who are considered to have a higher disposable income and are willing to pay for quality and value that satisfy consumer tastes and lifestyle, according to marketers. Further analysis, shows that the beer consumption is Eastern Europe and Central and South America are higher than in Western Europe and North America.
Considering of the downturn of the Japanese economy and Asahi’s one product business model, we can deduce that Asahi has no alternative but to expand into foreign markets to maintain its profitability.
3. However, in order to arrive at the best possible strategy for Asahi to successfully market its beer in UK an analysis of the its present marketing strategy would be required, Asahi’s current marketing strategy is :
a. Niche Market brand: Asahi has positioned itself as a niche brand and according to Sainsbury it has been recommended as an alcoholic supplement with fish and other spicy foods.
b. Distribution: Asahi sold six million pints through Coors, a Us brewer. Asahi Super Dry is being currently sold at 1000 pubs, bars, restaurants and stocked at Tesco, Sainsbury, Safeway and Majestic Wine
c. Target Market: The target segment of Asahi has been described as relatively niche. Their psychography has been described as young, funky and trendy, working professionals irrespective of age group and gender profiles. . In order to target their niche segment, Asahi is stocking its brand with Yates group and more recently with, Pitcher & Piano; a pub chain that Asahi believes is frequented most by their target consumer segment.
An analysis of the current market strategy of Asahi proves that though it will be successful in establishing a brand presence in the UK market over a period of time. In order to secure a larger market share in the market a few improvisations in the current strategy could increase its sales volume and profitability over a shorter duration.
i. New product development: If Asahi wants to duplicate the success of its Japanese dry beer market brand ‘Asahi super dry’, in its domestic market. Asahi will have go back to the drawing board and start from scratch: Starting with an intensive research on consumer preferences lifestyles, tastes, drinking habits and buying patterns will have to be done. Based on the research findings, a new product will have to be offered that caters to previously undiscovered needs of a niche segment that can afford to buy a premium lager beer.
ii. Distribution: Asahi is currently marketing its beer only through Coors, however to expand its reach Asahi will have to consider partnerships with other breweries and should proceed into negotiations with local pub chains, retailers and discount stores who have established distribution networks that will help Asahi achieve economies of scale.
iii. Consumer segments: the company is currently focusing only on the young and trendy working professionals. According to data, it can be seen that 60% of the UK population are between the age group of 16-65 and the female population has also been identified at 30.2 million in the UK. Another key point to be noted is that one of the S& were able to increase their market share because it targeted 45+ specifically and offered super chilled lager which was positioned as a premium brand at a high cost but was affordable to a target segment with a higher disposable income.
Based on these factors, Asahi could also target, the female segment and the offer a new product range for the age-group of 16-65 after an intensive research on the preferences of the consumers between 16-30, 30-45 and 45-60 as these age groups have unique buying patterns, drinking habits and leisure lifestyles of their own and each category should have a different integrated marketing strategy.
iv. New markets: From the report finding, we can state that beer consumption is higher in Eastern Europe and America. Though it would be seem a viable option to expand to these markets like Carlberg and Heineken have opted to expand into Russia and to India by taking over the S&N market operations in these countries, it is still not a viable option for Asahi as it would require a huge amount of investment and capital to take over another business or consider expanding into another international market.
This option must only be considered when all strategies to remain profitable in the UK markets have failed; at most Asahi should consider expanding into Russia provided they achieve a degree of success in its UK operations.
4. In order to market goods to the suggested target segment it is suggested that Asahi conduct a market research on the following aspects of the UK beer market:
a. Current Industry trends: This information can be retrieved from the various industry journals and reports; in fact the website would be the best and most accurate source of data.
b. Competitive trends: An analysis of the market players who are leading the market in lager beer is also recommended. The current market size, market share of various competitors will give Asahi an idea of which segments are being ignored or not being fully satisfied by the competition.
c. Consumer demography and psychographic research: This report will be key to the formulation of the marketing strategy for Asahi brand in the UK. Primary research is suggested for this aspect and it suggested that an external market research company be directed to use questionnaires and surveys to analyze consumer tastes, lifestyles, drinking and buying patterns across all segments
d. New Product Development: A report must also be generated on the technological advances being made in the beer industry and also of any new products and brands being offered in the market as new products are often introduced to satisfy the needs of a previously undiscovered niche.
e. Price Analysis: It is imperative, that based on the above marketing strategy a thorough analysis of the existing price segments be done of the UK lager market. It is important to analyze the price segment; the target consumer is more likely to buy from and to analyze reasons behind it.
f. Consumer Perceptual Mapping: suggests that various stratagems including focus groups be used to map consumer perception of Asahi and position its beer in comparison to the other lager brands being offered in the market.
5. Conventional channels of distribution would be recommended for Asahi at this point of time, though there are chances that the big wholesalers and breweries would demand exclusive distribution rights for Asahi Beer Brands. But Asahi will have to prove its negotiation skills by keeping a fair distribution network consisting of the distribution systems of local breweries and small retailers, discount and convenience stores.
Another radical distribution system is available is through online stores, a radical concept wherein huge retailers and a few wholesalers’ provide online shopping options to their consumers, if their distribution network can be tapped into, the recommended marketing strategy for Asahi , that required availability of its product offering over a range of consumer segments will be successful.
6. Before implementing the marketing strategy recommended in this paper, the management must closely analyze the various aspects of the pricing dynamics and the consumer segments that have been recommended for their marketing strategies. The strategy must be implemented keeping the following aspects of segmentation and pricing in mind:
a. Segmentation issues : The current target segments that have recommended in this paper are
Consumer Profile:
· Young Funky and Trendy: This segment will include age-groups between 16-60 who frequent pubs, lead an active social life and frequent pubs and trendy restaurants.
· Working Professional 30-45 age group: This age group has a higher disposable income and is well-settled in their professional lives. They have more discernable tastes and value quality in their brand and are not cost conscious. This is the segment that Asahi Brand will try and build a market share in, and its promotional campaigns will be directed generally towards this segment.
· Special market campaigns based on research findings will be directed towards the women buyer, who has considerable buying power as the main purchaser in the family and as a working professional. Through its increased product offering, a specific niche will be created that will not only appeal to the women buyer as a leisure product and also eat into the wine share of the alcoholic beverage market in the UK.
The existing market players have already identified these segments and the market researchers will have to work hard to discover an unmet need that Asahi can slide into though the brand cannot compete on a cost-basis. It will have to rely heavily on the discerning eye of a well informed consumer who may switch from wine to beer, given the proper marketing appeal.
b Pricing issues: The larger players have already achieved economies of scale therefore they are able to control their cost of production and by reducing their cost of overheads they can now offer their brands at cost competitive prices in the UK market, something which would be attractive for the target segment in this economic downturn.
The recommended strategy is based on the assumption that the new product will cater to the needs of a yet undiscovered niche segment that will pay a premium price for a product that caters to their specific needs. A proper analysis of the real disposable income of the targeted segment must be done and Asahi brand must be price positioned in between the higher priced and lower-priced brands that currently cater to the target segment.
7. If the recommended marketing strategy is implemented, and provided that a new product is developed around an, as yet un-discovered need.
a. It can be assumed that Asahi’s sales during the first few months will improve. However, the existing market players will be quick to move into the niche segments with their own basket of new products and Asahi’s competitive advantage will remain for a short duration of time.
b. Therefore other more generic segments have also been recommended in this paper, by offering making other product offerings that cater to the three consumer profiles that will targeted in this paper. Asahi will maintain a hold in the beer market and though it will be competing with other established brand on price and value .If the new product appeals to the consumers; the entire product range of Asahi will benefit as a result leading to increased demand and shelf space for Asahi in the UK.
c. Production: Asahi has established manufacturing units in Japan, therefore the production of its new product range will take place in Japan and in order to achieve economies of scale and reduce cost of labor it can also transfer its manufacturing operation to other developing countries i.e. China. The R&D operations for its new product will take place in Japan where it has an established staff of experienced experts on its panel.
One the market research findings are submitted to their in-house R & D department a suitable lager beer will be developed that will help Asahi compete in the UK market. Though, Asahi has an option like of taking over the operations of existing UK breweries and using their distribution and production units, the strict UK laws governing production would make it more viable for Asahi to base their manufacturing units elsewhere.
d. Logistics: Existing market players have already established strong distribution networks across the UK or are taking over other breweries and using their distribution systems to market their products all over the country, being a new company in a foreign market has its challenges as Asahi is currently dependant on Coors. The recommended logistics strategy would expose Asahi to greater negotiations from its independent wholesale and retail network.
This will include a reduction of its price range in order to move greater volumes of their brand. The wholesalers will also stock the brands of their competitors and there is a chance that unless given enough incentives, these wholesalers and retailers will not make an adequate effort to push Asahi brands.
Conclusion
Ideally, Asahi should maintain its current marketing strategy of promoting ‘Asahi Super Dry’, this one product business model has secured it a 50% market share in Japan; however this is also its greatest weakness because if this brand fails Asahi’s sales will plummet drastically. Therefore the recommendation of introducing a whole new product range is the best option available for Asahi in the UK, as well as, its domestic market in Japan.
References
Osada, H., (2005). Creation of Customer Value and Quality Management: The Role of
TQM for Creating Customer Value. Quality. 35(3). 318-323.
Chandler, A., D., Hagstrom, P., Solvell, O., Eds., (1998). The Dynamic Firm: The Role of
Technology, Strategy, Organization, and Regions. Oxford: Oxford University Press.
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