A Good Financial Background of Bailey - Term Paper Example

Table of Contents Table of Contents 1 Introduction 2 The way in which Baileys build and communicate brand values 3 Various environmental challenges which has faced over the years by Baileys 5 Key strengths and weaknesses of Baileys 5 Main challenges, opportunities, and threats facing Baileys in 2009 7 Reference 10 Bibliography 11 Introduction At present the company, Bailey’s ranks 7th among the ten world’s top premium spirits. As described by the company “Baileys is a perfect marriage of fresh, premium quality Irish dairy cream, finest spirits, Irish whiskey and a proprietary recipe of chocolate flavours” (Bailey, 2009). The company’s top markets are US, Canada, Global Duty Free, Australia, France, Ireland, Russia, Italy, Germany, and Spain. (Bailey, 2009). At present the company is also concentrating to enhance the sale in Japan and India and they believes that China will prove the greatest potential market in coming days where consumption of while spirit is quite high, and with passage of time number of female consumers belonging to the age group of 25-45 will increase. The company was famous for its cream based liquors but at present there are many other products being offered by the company to the customers. Bailey had a good financial background and the past records indicate that sales have grown with a healthy rate. But due to the world wide economical recession, the sales volume has declined marginally. It can be assumed that as the world economy comes back to the normal gear, company’s sales will be back on the profitability path. The way in which Baileys build and communicate brand values The company’s marketing and communicating strategy has played a great role is enhancing company’s market share in different parts of the world. The company had a desire to remain rooted with the culture and natural environment of Ireland when they first launched the world’s cream liquor in the year 1974. This was a very new experience for the consumers who never had any idea the cream can be mixed with whisky to result into such marvellous drink. While designing the product, two main inspirations for the company was its traditional culture were whiskey always remained parallel to it can second the traditional richness of Ireland’s dairy products (Diageo Ireland, 2009). Before the product was launched an in-depth analysis of the market was conducted. The creams liquor was an outcome of company’s research and development department, as the combination of whiskey and cream was next to impossible, hence the company used the slogan “Impossible cream” to attract the customers and to enhance their curiosity regarding the product. From the early days the company relied extensively on its adverting strategy. The biggest strength for the product was its unique test and even the marketing department tried to in-cash by communicating “the cream is real, the whiskey is real, and only the taste is magic” (New York Magazine, 1981, p.115). This campaign proved successful as company’s sales increased in US succeeded in creating magic on the customers. In 1980 the company research team find out that majority of the customers considers Baileys as an occasional product and prefer to use it infrequently. The marketing department realised the fact if they have to expand, they have to attract more customers and on the other side they have to convert their infrequent customers to regular users (Garavan, 1996, p.54). Soon the company’s advertising patter modified the way in which customers consider Baileys. It was no more considered as a traditional product, and its image was modified into a self indulgent product. Such transformation further enhanced company’s sales volume. The company tried hard to introduce its product as a summer drink and the on rock concept was launched. This not only gave a new dimension to the product but also solved complain of many customers who believed that the cream liquor gets finished soon. But in UK Company’s premium product continued to be an occasional light whiskey product and slowly its sales deteriorated. The marketing managers realised that the pubs can be a used to enhance the sales, so proper training was provided to them to act as a strategic partners. From 1994 onwards company started sponsoring many ice-skating tournaments through which company will get a change to go for strong publicity of their products and they managed to come back to high growth rate in UK market. As the time passage by, new and new products continued to be added in the company’s portfolio and it got too diversified. Then the marketing department realised, the main strength of the company was its attachment with their tradition and emotional attachment of the customers with the product. So in 2003 company changed its name to “Bailey the Original”. This was done to make the product more acceptable in the global market and to put emphasis more on the taste, rather than the Ireland brand tag. With the changing nature and demand of consumer, the company bought relevant changes in their advertising and marketing style. It can be concluded the consumer oriented marketing was the main reason for company’s success (NACRA, n.d.). Various environmental challenges which has faced over the years by Baileys If a company has to retain in the market for a longer phase of time, they have to maintain sustainable growth. Throughout the long journey covered by Baileys, there were many environmental issues which developed in the path of constant growth. The changes introduced in EU legislation were main challenge for the company while enhancing the sales. The company maintains well controlled and managed production units where special care is given toward the safety and hygiene issues related with the product. Bailey use around 275 million litters of milk for extracting cream which are reduced from 40,000 cows in 1500 Irish registered firms. The company sources 80 percent of its ingredients and packaging in Ireland which is a good source of employment for the country. The company as being in the Food and Drink Industry, it always maintained the quality standards to fulfil quality needs as prescribed by the governments of different nations (Baileys-b, 2009). Key strengths and weaknesses of Baileys The company has its own market position in the global world. It was the first company to introduce a combination of Whiskey and cream and today it has made a distinct position among the top ten premium spirit brand. Bailey’s strengthens can be summarised as follows: The company has an efficient market research team which can understand changing need of the customers without any time lag. For example the concept of mixing whisky and cream was unbelievable, but the market research department realised the fact that there exist a need for light spirit which taste a little different from the existing ones and have a traditional blend. So after a constant research and development for two years a new product was developed that resulted into revolution in market history. The company’s success can be contributed to its customer oriented marketing strategy. If one looks at the way in which marketing depart planed and presented the products, it will be visible that by changes the ad massages, they managed to reposition the product to fit it in people’s day to day life. Another fact which acts as a strength for the company is the traditional tag attached with the cream liquor. While planning the marketing strategy, emphasis was given on the natural environment, the whisky culture of Ireland, the cultural richness and the well developed dairy industry. So all these factors attach the product with the country’s roots culture and provide its uniqueness. The company also suffers with certain weaknesses which are summarised and presented as follows: The company succeeded in bringing a vital change in the market of spirit after mixing it with cream. But after that the company failed to introduce any such next change which can be considered a revolutionary change. So the company missed the change to be the market leaders for one more next time. Bailey always represented the cream liquor as occasional, traditional drink to capture the high demand at the festive season. Latter on after understanding the fact that such segmentation will reduce the sales, they repositioned the product as an easy going friendly product. But till date many customers prefer Bailey’s cream liquor as a traditional, safer and boring drink with a delicious taste. Such market image is the output of misguided marketing appeal to the customers. As the company is preferred mostly in the festive season, so this often happens that the shelves dried up soon and the customers have to compromise with some other liquor to celebrate their festival. So there exists a problem in supply chain management. Main challenges, opportunities, and threats facing Baileys in 2009 For Baileys one of the main challenges is constantly changing nature of customers. Initially customers have more attachment with their tradition and culture but at present the customers are more daring, they want variety and thrill in life. They are less loyal and love to experiment something new. So it is highly challenging to match the changing mood of customers. The technology is improving at a faster rate, it might happen that soon a new product comes into market which is more innovative then Bailey’s cream liquor product and eats always company’s market share. The growing health consciousness in many counsumers might result in low consumption of Bailey’s products. Through the changing life style is a challenge for the company, but on the same side such changes have emerged as opportunity for the Baileys. Many emerging nations are considered as potential market for the company’s product. They BRIC nation are highly attractive market for Bailey’s product range. The market of China is also quite promising because to increasing numbers to female consumers of alcohol in the age group of 25-35. The improving economical condition in US and UK is a good sign because in the future the demands will be high in these markets again (Food and Drink, 2004). Though the improving market condition is a positive sign, but it is obvious that other company’s within the spirit market will also try hard to enhance their market share and capture the unexplored potential market. Such growing competition is a major threat for Bailey’s products. The company’s image of traditional and safe drink is a threat because such psychology restricts customers to consume the cream liquor on regular basis. The company has its own position in market and it already has a huge market share. If the company has to retain their competitive position, they have to plan the strategy for 2009 after undertaking all those factors which can affect the customers as well as the company. As the company has earlier made an unsuccessful attempt to enter Japanese market, this time they should be more careful. The best strategy is to go for a joint venture with a local Japanese company who have a better understanding regarding the Japan’s customer and its culture need. The same strategy can be adopted for China. India being the second fastest growing economy can prove a profitable market. If it is hard to remove the tag of traditional product, then should be in-cashed in enhancing the sale. The company can use this tag to fulfil the desire of high end users and for the mass consumption another product can be introduce that will attract the customers many in country like India and many other developing nation. An in-depth market research should be conducted to find out what new flavours can be introduced, what should be the ore convenient bottle size for new as well as existing customer (The European Spirits Organisation, 2005) By introducing all these facts the company will be able to attain high growth rate, higher competitive position with large market share and a sustainability growth for coming generations. Reference Bailey-a. 2009. Product and Company information. [Online]. Available at: http://www.baileys.com/product-and-company-information/ [Accessed on December 08, 2009]. Baileys-b. 2009. Meet the cows, All 40,000of them. The story. [Online]. Available at: http://www.baileys.com/our-story/ [Accessed on December 09, 2009]. Diageo Ireland. 2009. Baileys first and best cream liqueur. Company. [Online]. Available at: http://www.diageo.ie/company/history/baileys [Accessed on December 08, 2009]. Food and Drink. April 29, 2004. Bacardi to take on Baileys in cream liqueur market. [Online]. Available at: http://www.foodanddrinkeurope.com/Products-Marketing/Bacardi-to-take-on-Baileys-in-cream-liqueur-market [Accessed on December 09, 2009]. Garavan, N. S., Cinneide, O. B. & Garavan, M. 1996. Cases in Irish business strategy and policy. Cengage Learning EMEA. NACRA. No date. Baileys Irish Cream. [Pdf]. Available at: http://home.ubalt.edu/ntsbpitt/Baileys.pdf [Accessed on December 09, 2009]. New York Magazine. February 16, 1981. New York: Love & Work. Vol. 14, No. 7. Published by New York Media, LLC. The European Spirits Organisation. 2005. European Spirits News. News and Information from CEPS. [Pdf]. Available at: http://news.europeanspirits.org/archives/ceps_news_2005-06en.pdf [Accessed on December 09, 2009]. Bibliography Hogan, J. M. 2007. Commissioner’s Corner. [Pdf]. Available at: http://www.state.vt.us/dlc/spirit/2007-04.pdf Read More