Final Essay Absolut Vodka HBM525 Payal

ESSAY REPORT
ON

ABSOLUT VODKA PROPOSED METRICS AND DECISION TOOLS

PREPARED FOR: DR. ANN MITSIS PREPARED BY: PAYAL

STUDENT ID #

SWINBURNE UNIVERSITY OF TECHNOLOGY

Final Essay Absolut Vodka HBM525 Payal

INTRODUCTION Authorization This report has been commissioned by Dr Ann Mitsis as the final assessment task for the unit HBM525 Marketing Decision Making tools. This essay helps in developing an understanding of the metrics being used by companies within the Australian Alcohol Industry. The report helps in developing a fundamental knowledge about the marketing metrics used by the management of companies. The results obtained by using these metrics aid the management to make decisions by identifying the gap in their performances and business strategies and also identifying future areas of growth. The results and the analysis would help the companies improve their efficiency in terms of quality and increase their profits. Scope of the Report The essay defines and elaborates five different metrics being used by Absolut Vodka in determining the marketing and management strategies of the company. Absolut Vodka is an international reknowned brand name dealing with alcohol products specially vodka. The company uses various metrics to analyse its performance and suggest methods to improve its efficiency and increase profits. These metrics are both internal and external. The qualitative and quantitative aspects of the metrics are explained in the essay. Organisation Background: V&S Group is one of the worlds leading international spirits companies with sales in 126 markets. The biggest brand is ABSOLUT VODKA, the fourth largest international spirits brand in the world. V&S is a leading producer and distributor of wines and spirits in northern Europe. Its product portfolio includes many strong international, regional and local proprietary brands, as well as agency products. The group has wholly owned operations in 10 countries. ABSOLUT VODKA, introduced in
the US in 1979, is the fourth largest international premium spirit in the world and

Final Essay Absolut Vodka HBM525 Payal

is available in 126 markets. ABSOLUT VODKA is the number two brand of premium vodka worldwide. (source: Impact International) Since its launch in 1979, ABSOLUT VODKA has achieved significant worldwide sales growth, from 10,000 nine-liter cases (90,000 liters) to 10.7 million nine-liter cases in 2007 (96.6 millions of liters). Some 500,000 bottles of ABSOLUT VODKA are produced every day. Every bottle of ABSOLUT VODKA is produced in hus, in southern Sweden. (source: V&S Absolut Spirits) The award-winning advertising and marketing campaign of ABSOLUT VODKA continues to break new ground in communicating the brands core values of clarity, simplicity and perfection. In 1999, the ABSOLUT VODKA advertising campaign was listed among the ten best advertising campaigns of the past century by Advertising Age.

History of Absolut vodka

ABSOLUT VODKA introduced in1979. ABSOLUT PEPPAR introduced in 1986. ABSOLUT CITRON introduced in 1988. ABSOLUT KURANT introduced in 1992. ABSOLUT MANDRIN introduced in 1999. ABSOLUT VANILIA introduced in 2003. ABSOLUT RASPBERRI introduced in 2004. ABSOLUT APEACH introduced in 2005. ABSOLUT RUBY RED introduced in 2006. ABSOLUT PEARS introduced in 2007. ABSOLUT 100 introduced in 2007. ABSOLUT MANGO introduced in 2007.

MARKETING PERFORMANCE METRICS Noted academic and author, Roger Best in his Book Market BasedManagement suggests that metrics measuring marketing performance are a suitable compliment towards conventional measures of financial

Final Essay Absolut Vodka HBM525 Payal

measurement

procedures.

Marketing

performance

metrics

allow

marketing managers to understand, track and manage the marketbased performance (Best, 2009). These metrics can be classified into three main categories, i.e. Market Performance Metrics, Competitive Performance Metrics and Customer Performance Metrics. In the article Taking on the metrics challenge published in 2007 the author Laura implies that performance metrics are made up a number of sub-metrics and analysis tools that can be used by the companies to analyse the results and performance of the companies strategies. The major success point of all metrics is to align the business model with the practicalness of the strategies to increase revenue and improve quality and efficiency. The business needs to be certain as to which metrics it needs to select for analysis. According to Roger Best ( 2009 ) both internal and external metrics play an important role in determining the success of any business and the financial analysts and stakeholders are able to judge the performance of the company much more. Thus keeping in mind the imoprtance of both kinds of metrics while determining the value or opportunity in any organization, the recommendations have been made for Absolut Vodka. The reasons for selection of the particular metrics has also been elaborated.

The external and internal metrics recommended for Absolut Vodka have been explained below as follows: Customer Satisfaction (CS)

Final Essay Absolut Vodka HBM525 Payal

Roger Best ( 2009 ) has classified and grouped various metrics under different sub-sections. Customer Satisfaction is one such building block on which the generic metric of Customer performance is based. There is a growing concern about the consumers preferences in any business. This metrics is recommended as an analytical tool for Absolut Vodka. According to Laura, this would lead towards increasing satisfaction levels of consumers and more customer retention. Fecikova (2004) suggests that to manage something, it is first required to measure it. So if the company wants to manage customer satisfaction, it will need to measure it. They need to quantify the feeling of the consumers using quantitative and qualitative market research. The most common techniques to quantify customer satisfaction would be to perform surveys within the customers with a quantitative and qualitative questionaire. These surveys should be having feedback forms for the customers to pass their comments and views on the products of the company. These can be made available at the various distribution points for the company like stores or dealers and questions will be asked to the customers about their preferences and suggestions. The preferences obtained in such a manner would help the company make modifications to its product line which would suit the taste of the consumers even more. The metrics obtained from this data can be molded into business and marketing strategies to ensure future profitability and performance.

Final Essay Absolut Vodka HBM525 Payal

Market share The market share of the companys products suggest the percetage of sales of the whole market attributed to the sales generated by the companys products. This quantitative analysis along with the profit levels of the company help the managers while formulating the strategies and making decisions for the required outcomes for the organization. It shows stakeholders the information about the current market position in competition with its competitors (Best, 2009). The information required to product this metric is obtained from the financial reports of various competitors and other research and market research company profile publications like IBISWorld or Datamonitor to obtain the financial positions and company reports on Supply Chain Management (Distribution) Supply chain management deals with the logistics, distribution of final products and the supplies of inventory required by the manufacturing departments of the company. The perfect inclination of these activities leads to a major overhaul of efficiency and thus helps in increasing the profit for the company. This particular metrics is recommended to be used by a manufacturing firm like Absolut Vodka as there are a number of specific ingridients that are mixed to form a product like flavoured alcohol. Absolut tries to minimize the effect of all these ingridients by trying to source all of these ingridients locally. There have been reports that company even uses the water for production from its own well !! This single metrics is a wide-spread metric affecting the efficiency of the company in sourcing materials and distributing the final products.

Final Essay Absolut Vodka HBM525 Payal

According to Kuo et al (1999), managing supply chain and logistic activities is critical to stay competitive in the industry. It is aimed to ensure the product availability on the right place and the right time to satisfy demand or customers. Absolut can be satisfied with the high level of the results obtained from the up-stream activities metrics comprising of the supply side and the production side factors.

Quality Measurement According to Laura, the metric dealing with the quality and its management for the company attains significant importance to the company due to its place in the business model. One of the distinguishing factors and traits of the companys products is quality. This is obtained by doing random sample checks and assessing the whole batch quality based on the results of few random samples.

Employee satisfaction The company has its plants in only one location, in Sweden. The town has a population of nearly 10,000 people while the company produces millions of bottles of alcohol yearly. The company needs to focus on the employee satisfaction metric as this will provide an insight about the expectations of the employees and the management goals. As per Fecikova (2004) employee satisfaction is an integral part of the cyclic process of organizational activities as happy employees leads to a better improvement in efficiency helping in reducing costs and increased efficiency.

Final Essay Absolut Vodka HBM525 Payal

Source: The circle of satisfaction, Fecikova (2004).

CONCLUSION / RECOMMENDATION
The above metrics are a combination of internal and external metrics that have their own distinct importance for a company like Absolut Vokda present in the Global Alcohol Industry. Absolut Vodka has the brand image of being the fourth largest alcohol brands being sold in the world in terms of sales of units. These metrics are important to the companies but they are not the only mandatory ones. The company might be using several of its own devised metrics that prove to be beneficial for the company. The companys marketing effort and commercials have been voted to be having the highest impact on the consumers. These marketing and promotional campaigns would have been devised on certain metrics. The most probable metrics would be the customer feedback and customer expectation metrics that allow the company and its marketing and R & D team to develop and promote products as per the specific requirements of the consumers.

Final Essay Absolut Vodka HBM525 Payal

Both internal employee relationship and supply demand metrics and external metrics like financial and competitor analysis are significant for a company of Absoluts magnitude. The company has to be careful in identifying its areas of concern and possible future growth before collecting data and performing analysis. The interpretation of these results would dictate terms to the managers while formulating the future strategies for the company.

Appendix Sample of Questionnaire

1. Is the health effects of Alcohol really matter to you? Yes No 2. How will you rate Absoluts overall brand image? Extremely satisfied Somewhat satisfied Neither satisfied nor dissatisfied Somewhat dissatisfied Extremely dissatisfied

Final Essay Absolut Vodka HBM525 Payal

3. What are your perceived expectations from Absolut product range? _______________________________________________ _______________________________________________ 4. Select according to your preference? Flavour or Taste Quality Brand Image Price of product

5. To what extent are you satisfied/dissatisfied with product quality and tastes? Extremely satisfied Somewhat satisfied Neither satisfied nor dissatisfied Somewhat dissatisfied Extremely dissatisfied 6. Rank Absolut Vodkas dealership performance? Extremely satisfied Somewhat satisfied Neither satisfied nor dissatisfied Somewhat dissatisfied Extremely dissatisfied

7. In a scale of 10, 0 being minimum and 10 being maximum, Please mark the quality of the products or services offered by Absolut Vodka

0 1 2 3 4 5 6 7 8 9 10
Have you ever returned a product for faulty or bad quality or taste ? Yes No