Old Monk is one of the most iconic brands in India. Started in 1954, it is a firm that specializes in Dark Rum. It has an alcohol content of 42.8% and is produced in Ghaziabad in Uttar Pradesh. Old Monk has been one of the most established rum brands in the country, and is sold by retailers all over the world (Hoover, 2016). The company’s primary target are Indian consumers, and those who wish to have alcohol, but are not willing to shell out the money for expensive liquor. The primary entry strategy would be through bars and pubs, and local distributors in the UK. The primary target audience in the UK would be Indians, students and those who might not be able to afford expensive alcohol.
The main research methodology that will be used will be a situation analysis and a SWOT analysis as well.
Old Monk is one of the most recognized brands in India. Started in 1954, it is one of the most recognized Indian-Made Foreign Liquor Brands in the country. The company is estimated to be worth over US $240 million (Kong & Chen, 2018). The company does not believe in advertising, but instead in word of mouth spreading of the name of the brand. Thus, it is one of the only alcohol brands that believes in the loyalty of the customers.
The organization’s main asset is the loyalty that the customers have towards the company. By gaining customer loyalty, they have ensured that they do not need to spend the money on advertising, but can rather come up with better products (Koos, 2011). The main skill and asset is the product itself, which has been known to be extremely inexpensive.
The current market in the UK for foreign alcohol is quite large. Old Monk is one of the few companies that is known to almost every Indian. The UK also has a large foreign migrant population, which is why Old Monk can have a very large potential market of customers (Aggarwal & Kumar, 2012). There are not many cheap alcohol brands that are available in the country, which is why this is a large part of the organization as well.
The Business Environment in the country is versatile. Due to Brexit, the UK government has decided to set up rules and guidelines that make it easier for foreign private companies operating in the country. This has been found to be extremely beneficial, as it would open up the country for Old Monk (Arora, 2106).
The Political, legal and institutional environments allow the organization to succeed in the country (Aw & Lee, 2017). There are no laws regarding the setting up of distilleries by foreign private companies in the country. There are no legal or institutional hoops to jump over for the company.
There is a strict regulation of the alcohol that is served in the country. The regulation to serve alcohol requires licensing by the local regulatory body. There is no particular department that deals with alcohol and sprits in the country (Guivarch & Hallegatte, 2013). However, due to alcohol overuse and abuse, these regulations can increase in the future, and they can become very strict.
Drinking alcohol has been socially favourable in the country for a long time. One of the leading trends in the society in the UK is social drinking (Casico, 2017). Thus, the social environment and the cultural environment is beneficial to the organization in terms of the trends in the country.
The main demographic would be Indians who are living in the UK, other migrants who prefer cheap alcohol, and students. The number of Indians living in the UK are about 1.4 million people, and the number of students factor in at over 2.28 million students. This makes for a very large market in the country as well.
The UK has the latest technology that is available. This would include the distillery equipment that is needed for the organization to survive as well. Since the UK has been a hub for many distillery brands, Old Monk should have no issues in finding the equipment that is necessary for them to start in the country (Aharoni & Grinstein, 2017). The technological environment would suit the start of a distillery in the country.
The natural environment of UK is a cold. It is often snowing and unusually cold or raining in the country, which is of immense benefit for Old Monk, since it is able to support drinking as well. In most cold countries such as the UK and Russia, it is normal to drink alcohol in order to keep warm, so that they can survive in the cold weather as well (Ambrose, Diop & Yoshiba, 2014). This is extremely important, as rum has been known to warm the body down to a large extent.
Physical Environment
There is enough infrastructure in the country to be able to support the brand. In most villages, or on the outskirts of the city, Old Monk will be able to ensure that they are able to efficiently have the infrastructure to have a large distillery.
Nature of Demand
Alcohol is in immense demand in the country, and the presence of students, and immigrants, who might not have the pockets to afford expensive alcohol means that the demand for Old Monk might only increase over time as well.
As mentioned earlier, the size and extent of the demand for Old Monk alcohol is only bound to increase, since it is one of the cheapest forms of alcohol that is available to the general public (Ali, Metz & Kulik, 2015).
3.3.4. Product Category Stage of Product Life Cycle
The product is in the introduction stage of the product life cycle, since it has only been introduced in the country. There are 4 main stages of the product life cycle, which include Introduction, Growth, Maturity and Decline. Since the product has not even been introduced officially in the market, it is still in the Introduction stage of the product life cycle as well.
The structure of the alcohol industry has been provided in Appendix 11.3. The alcohol industry structure in the UK is the same.
Cost Structure of the Industry
The cost structure of the alcohol industry is given in Appendix 11.5. The cost structure for rum industry follows the same structure.
Competitive Structure of Industry
The alcohol industry is extremely competitive. Appendix 11.4 shows the major brands of alcohol that are served in the UK. The revenues show how competitive the market is as well.
The main competition to Old Monk in the UK would be Captain Morgan and Bacardi as well. Thus, they are ones that have the most revenues from the rum that is sold in the UK as well. More than 47% of the population that drinks rum has been known to drink Bacardi rum, and more than 43% has been known to drink Captain Morgan. Thus, these two brands have most of the rum market almost cornered. They have an immense market share, and the reason for this is the advertisement that they have on a regular basis as well. Thus, it is extremely important for the market to ensure that the organization is capable of reclaiming the market share in the organization.
The Internal Strengths and weakness would include the death of the owner. Kapil Mohan, who had been the head of the organization, died in 2018. This would create a large amount of chaos for the organization, and could lead to the creation of many issues for the organization as well (McAdam, 2006). The other weakness would be the lack pf advertisement. Old Monk is one of the biggest and most well-known brands in India, and this can have an immense impact on the organization as well (Tales of an Old Monk, 2018). The profits of the organization have been tied to the product, but in the UK, there might not be many organizations or individuals that have heard of the brand, which could lead to decreased profits as well. It is also dependent on the product itself. The organization prides itself on being one of the cheapest brands of alcohol in the country, which is why it is essentially one of the biggest strengths of the organization as well.
External Market Opportunities and Threats
The main threat is the two main competitors to the market, which include Captain Morgan and Bacardi. They have most of the market covered, which means that it would be extremely difficult for the organization to have a share of the market. This coupled with the fact that the organization does not advertise the products would be the difference between ensuring that the company succeeds or fails. However, most of the people in the country are extremely loyal, and Old Monk has often depended on customer loyalty (Yangy, 2010). It is because of the customer loyalty that the company has reached where it has reached. Another opportunity that is in the hands is the increasing number of Indian migrants and students in the country. Due to globalisation, there has been a huge amount of immigration, and due to Brexit, there are many people in the country who would have to downsize on the amount of money that they spend on alcohol ( Lukianova, 2014). This would mean that they would prefer to have an alcohol that is not extremely expensive, which is of immense benefit to the organization as well.
The SWOT Analysis implies that the organization should consider advertising in the country as well. Old Monk might have been the biggest alcohol brand in India, but it is not able to capture the international market as well it should because of the effect of their advertising and marketing strategies. If the organization does not wish to spend on direct advertisement, they can spend on digital advertising, which is of immense benefits to many brands. By investing in digital advertising, the brand might be able to successfully mitigate the effects of the competition (Canetli, et al., 2017). The biggest strength for the brand however, is the cheap cost. They should be able to maintain these costs in UK as well. This should be a strength that might be the tipping point in the success of the brand. By ensuring that the alcohol stays cheap and affordable, they are able to target a larger amount of people as well.
5.0 Objectives
The main international objective should be to make sure that the organization is able to offer the standard that is has offered in India, and also keep in line with their internal values as well. They should be able to keep the price of the alcohol down, and should be able to provide a quality that is in line with the international standards as well (Minichilli, Zattoni, Nielsen., & Huse, 2011).
The should be able to capture at least 10% of the market within the first year of introduction. It would be hard to capture more than 45% of the market in the first 5 years of their launch, however, this must be one of the main strategies that the organization should have in ensuring that they are capable of operating in the country (Lucarelli, 2018).
6.0 Recommended Marketing Strategy
The target market, as mentioned earlier would be immigrants, especially those of Indian origin and students. Thus, the segmentation would be based on two main factors, cost and nostalgia. Cost is one of the major factors, which means that the brand would have to market itself as being affordable to not just the middle class, but also to the working class as well. It is important to keep this marketing strategy in mind, since the target market could change as the immigration and student laws in the country change (Liu & Shi, 2015). Thus, it would be also essential to ensure that they are able to target the citizens of the country, so that they can effectively have the market share (Ryan & Mizerski, 2010).
Market Positioning
The main market position that Old Monk should take would be the price. By marketing itself as one of the cheapest brands of alcohol on the market, it is able to successfully be different from the other brands as well. Thus, by having this as the major position, it would be extremely different from the other brands as well (Singh, 2018).
Market Entry Strategy
The market entry strategy that is adopted by the organization would be by licensing and franchising. By licensing the brand and allowing pubs and bars to have the license to sell their products, they would be able to successfully capture a larger market than before. This would mean that the organization would be able to effectively capture a larger segment of the population as well (Czinkota, Ronkainen, & Sutton-Brady, 2018). The organization would also be able to franchise to stores that would require there to be a franchising. This would mean that the organization is able to successful capture those who are not capable of going to the pubs and bars due to the cost, but buy their liquor from stores as well.
7.0 Marketing Mix Strategy and Tactics
The brand would market the product under Old Monk, which is the name of the company. It would be branded as alcohol, or specifically as Dark Rum (Sokolinskiy, Sopranzetti, Rogers., & Leuschner 2018). The main long-term goal that can be achieved with the brand would be the inclusion of the brand in one of the top alcohol brands in the UK. This would mean that they have been successfully able to capture the market there (Gupta, Rodirgues & Mathew, 2018).
Place or Distribution Strategy
The distribution would be through bars and pubs, and through local liquor stores as well. This would ensure that the product is given everywhere.
Price Strategy Structure
The price would be in terms of pounds. The 0 ml, 180 ml, 375 ml, 500ml, 750 ml, and 1 litre bottles, would be sold for £5, £10, £15 etc. The larger 1 litre bottle would be sold for £15 pounds as well.
The promotion would be through word of mouth, which is why it is essential for the organization to promote the brand through the method that is given effectively (Huslid & Becker, 2010).
The main assumption would be that the students and Indians, drawn by the affordable rates and nostalgia would buy the product as well.
Forecast Sales and Cost
The expected sales in the first quarter would be around £10 million pounds. The cost should be around £2.5 million pounds.
The profit that the company has would be £5 million pounds. This would mean that the organization is would have an expected profit of 50%.
Sensitivity Analysis
The sensitive areas would have to be the areas that are regarding the sales, and the advertisement.
Implementation and Control
The implementation should be done by the organization in order to successfully ensure that the recommendations that have been suggested have been successful to the organization.
Monitoring of Action Plan
The monitoring would be done by an international agency which also comprises of the CEO of the company, and the managers from both the UK and India.
Formal Contingency Plans
The main contingency plan would be to ensure that the sales and the distillery keep going, despite any set back in the future. This might occur due to changes in the law, or any other major changes. It could also be due to labour strikes. The organization would then plan on importing the rum from India, which is the main centre of production for Old Monk. This would ensure that the product is still available on the market as well.
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