95

CHAPTER - IV

MARKETING AND BRANDING ASPECTS OF

ALCOHOLIC BEVERAGE PRODUCTS.

Introduction:

This chapter deals with the introduction of different marketing concepts

given by the national as well as international experts. It also compares the old

concept of marketing, which was product centered, with the modern concept of

Marketing which moves around the customer, this new concept is called as

customer centered concept of marketing. This chapter also highlights on the

branding concepts in alcoholic beverage. At the same time it also deals with

significance of advertising promotion and growth of surrogate advertising in

liquor industry While focusing on these points, it has also covered the concept of

consumer behavior and marketing of alcoholic beverage industry.

Marketing is a comprehensive term and it includes all resources and a set

of activities necessary to direct and facilitate the flow of goods and services from

producer to consumer in the process of distribution. It is regarded as a

management function to plan, promote and deliver products to the clients or

customers. Human efforts, finance, and management constitute the primary

resources in marketing. Basically, marketing deals with identifying and

satisfying, human and social needs. A marketeer is motivated to convert a private

or social need into a profitable business opportunity. It is the task of creating,

promoting, and delivering goods and services to consumers and business, many

people view marketing as being advertising, sales promotion (i.e. merely selling),

and in some cases, consumer research. ”Marketing is a human activity directed at

satisfying needs and wants through exchange process. The threshold of marketing

is demand generation. After the demand for a product is generated. The process

of satisfying such a demand starts through advertising and sales promotion. But

before going to task of advertising and sales promotion, the marketer has to

match the generated demand with the supply position of company. This is

because; mere generation of demand for a product is just one of the several tasks

of marketing. Failing to match the demand with the supply position of the

96

company may prove disastrous for the marketer. Prof. Philip Kotler, in the article

“The Major Tasks of Marketing Management” has listed various levels of

demand and the corresponding tasks of a marketer. For example, a hotel marketer

on a hill station may be faced with an irregular demand i.e. excessive demand

during the season. Here, his task obviously is to promote the hotel during off

season by offering off season discounts on room and food tariffs, organizing

special events to attract tourists, promoting it as a conference venue, etc.

The very purpose of business is to create a customer, and for this, the

companies have to understand his needs, want and desires in a sharp manner.

Gone are the days, when Indian customer had only Bajaj scooters, Ambassadors

and Fiats for his automotive needs. The wider choice available today cater to

gaps in his personal transportation needs and also tries to match his personality

profile. There are vehicles suitable for men and women, vehicles to shuttle in the

city and vehicles for small families. These vehicles are not only functional, but,

they are aesthetically built too. Technologically, they are aerodynamic and fuel-

efficient. The moral is to keep on changing so as to keep pace with the changing

needs of customers. The winning formula cannot be the same for all time to

come.

Following are two activities that are most significant is marketing.

1) Matching the product with demand, i.e., customer needs and desires or

target.

2) The transfer of ownership and possession at every stage in the flow of

goods from the primary producer to the ultimate consumer.

Marketing comprises all activities involved in the determination and

satisfaction of customer needs at a profit. “Marketing should be considered as a

central business function as it establishes, develops and commercializes long term

customer relationship so that objective of both the parties are met”2 By means of

marketing function, marketer can direct the firm’s response to an ever-changing

market environment and orient all parts of the business towards the creation of a

satisfied customer. Marketing encompasses all activities of exchange conducted

by producers and middlemen in commerce for the purpose of satisfying consumer

demand. “Marketing is typically y seen as the task of creating, promoting and

delivering goods and services to consumer and businessmen”3.

97

The American Marketing Association defines marketing as the process of

planning and executing the conception, pricing, promotion and distribution of

ideas, goods and services to create exchange that satisfy individual and

organizational objectives. Paul Mazur defined marketing as the creation and

delivery of a standard of living to society. This definition catches the creation and

delivery of a standard of living to society. This definition catches the real spirit of

the marketing process. It has consumer orientation. It duly honors the marketing

concept, which indicates a shift from product to customer orientation, i.e.,

fulfillment of customer needs and desires. It emphasizes the major function of

marketing, Viz., satisfaction of customer and social demand for material goods

and services. It includes product planning and development. It makes business

firm a full-fledged marketing organization. However, it is too vague, general and

broad and lacks descriptive tone in marketing.

Brand marketing and competition:

“What’s’ in a name? That which we call a rose by any other word would

smell as sweet”, said Shakespeare. What explains MacDonald’s, Starbucks,

IKEA ,P&G, Apple’s iPod, Toyota and Harley-Davidson, etc, to be among top

100 brands? Is it their sales revenue? No is it their market share? No is it their

profitability? No is it their global presence? No if all of these are not vindicative

of the companies’ entitlement to feature in the global brands’ list, what then

explains their inclusion? The answer is brands. Because these companies are able

to create, nurture, and sustain powerful brands and all the above stated inferences

are consequences of these untiring efforts.

In rapid changing business environment of today, characterized by an ever

increasing globalization, rocketing competition, and continuous market

deregulation a company’s brand can be a decisive feature that distinguishes its

product from its competitors. Now-a- days branding is considered as strategic

tool for companies to pursue increased growth and sales objectives and ensuring

their future success. The basic function of branding is to distinguish a companies

offering from its competitors, to create identification and brand awareness to

guarantee certain level of quality and satisfaction and to help with certain level of

98

promotion of the product. Brand is a crucial element of marketing, as a means of

liking item with the product line or emphasizing individuality of the product.

For a customer brand makes product identification easier, it

communicates features and benefits, it helps product evaluation, it establishes the

product position in the market, it reduces risk in purchasing, and it creates interest

and character for the product. From the retailers perspective the brand implies

benefits from brand marketing support and attracts customers. For the

manufacturers, it helps to create the consumer loyalty, defend against

competition, create differential advantage, allow for premium pricing, helps

targeting and increases the power over the retailers. ‘ when a segment of

consumer market prefers one brand to another and will accept no substitute, the

producer or the distributor of this brand controls the part of the market.

Brand knowledge

Brand knowledge refer to brand awareness (whether and when consumers

know the brand) and brand image (what association consumer have with the

brand). The different dimensions of brand knowledge can be classified in a

pyramid (adapted from Keller 2001), in which brand attachment stems from

rational and emotional brand evolutions, which derive from functional and

emotional brand associated which require brand awareness. Brand knowledge

measure are some time called “customer mind-set” measure because they capture

how the brand is perceived in the customer’s mind.

Brand awareness

Brand awareness measures the accessibility of the brand in memory.

Brand awareness can be measured through brand recall recognition. Brand recall

reflects the ability of measures to retrieve the brand from memory when given the

products category, the needs fulfilled by category, or some other type of probe as

a cue.

99

Brand recall

Measures:

• Please name all the brand of beverages/soft drinks/carbonated soft drinks

you can think of

• Please name all the brand of beverages you can think of that you would

bring to an party.

Possible Results:

• 70% of consumer think of kingfisher when asked to provide the name of a

beer (versus 30% for knock out).

• knockout is in the top three brand of party beverage for 30% of consumers

(versus 70% kingfisher)

It is important to measure not only the depth of recall (the percentage of

people who know the brand) but also the width of recall (the cues that lead to

brand recall) therefore, it is important to ponder the choice of the cue that will be

used in the recall question. A good start is to think about who, when, where and

how the brand will be bought or used).Typical cues are:

Subcategories (beverages/soft drink/colas/diet colas, etc.).

Consumption occasions/goals (beverages that you would consider

purchasing for a romantic date, etc.).

Place (available in a supermarket. In a bar, etc.)

People (drink alone, in a group, etc.)

BRAND LOYALTY

A close link exit among learning, habit and brand loyalty. Brand loyalty

represents a favorable attitude toward a brand over time. It is result of consumer

learning that one brand can satisfy their needs.

Two approaches to the study of brand loyalty have dominated the

marketing literature. The first, an instrumental conditioning approach, views

consistent purchasing of one brand over time as an indication of brand loyalty.

Consumers repeat purchasing behavior is assumed to reflect reinforcement and a

strong stimulus-to-response link. Research that takes this approach user

probabilistic models of consumer learning to estimate the probability of

100

consumer buying the same brand again, again given a number of past purchases

of that brand. The second approach to the of brand loyalty is based on cognitive

theories. Some researchers believe that behavior alone does not reflect brand

loyalty. Loyalty implies a commitment to a brand that may not be reflected by

just measuring continuous behavior. A family may buy a particular brand because

it is the lowest-priced on the, market. A slight increase in price may cause the

family to shift to another brand in the case, continuous purchasing dose not

reflect reinforcement or loyalty. The stimulus (product) and reward link are not

strong. An attitudinal measure combined with a measure is required to identify

true loyalty.

Spirits and wine industry revolves Around Power Brands

Having a diversified portfolio of brand that include power brand will

protect a company against risks in any industry, especially in the spirits and wine

industry.

In the spirits and wine sectors it is important to have a strong portfolio of

brand that includes several described as a brand that it is recognized as a leader

by consumers, as well as the sector it is a party. To compete with established

giants of an industry or to move up in the ranking, a company must be diversified

in its brand portfolio of quality brands is an integral par of being a leader in the

spirits and wine sector, and is a helpful lesson for any portfolio manager.

The five largest companies in the spirits and wine industry, by volume,

are Diageo, Pernod Ricard, fortune brands, Bacardi, and brown-Forman. These

rankings have recently been shuffled when Pernod Ricard and Fortune Brands

together acquired brands sold off by Allied Domecq, a former player in the

industry. The addition of many quality and some key brands by both these

companies have strengthened their positions as leaders in the spirits and wine

market.

Recently, a study on spirits and wine brands from around the world

ranked the 100 most powerful brands. It was the first study of its kind sheds some

light onto the major spirits and wine brands, the owners of those brands, the

general make-up of the industry as a whole, and brand portfolio management.

101

Power Brand Study

A panel of experienced drink industry experts conducted research on

nearly 10,000 brands of wine and spirits to come up with the worlds 100 most

powerful brands. This list of 100 power brands was established according to

volume sales and each brands international presence. Many smaller brands that

are limited to one market were excluded, but a few brands with low volume were

included because of their categorization as super-premium brand were mostly

famous brands of champagne.

Brand power is defined by a brands ability to generate value for its owner.

Value is classified by a series of measures described later. The research was

conducted on all current and potential users of alcoholic drinks. Hard measure

and soft measures were used for defining power of the brands and are excellent

example of drivers of brand value.

Hard measures include the share of market, brand growth, price

positioning and market scope of each individual brand. Share of market is the

volume-based measure of the market share of a brand’s particular category. There

were 12 categories including whiskey, rum, gin, vodka, cognac, other brandy,

still light wine, fortified wine, champagne, sparkling wine, light aperitif, and

flavored spirit. Brand growth is the projected growth based on ten years of

positioning is a measure of the brand’s ability to command a premium. Market

scope in which the brand has a significant presence. Brands were affected in the

market scope area based on whether they sold high volume in a few markets or

low volume in many markets. Having a high volume in fewer markets scored

more favorably than having low volume in many markets.

Soft measures include brand awareness, brand relevance, brand heritage,

and brand perception of each individual brand, Brand awareness is a combination

of prompted and spontaneous awareness among consumers. This is a measure of

how cognizant the population is of a brand, which includes not just its primary

users but the consuming public in general. Brand relevancy is the capacity of the

public to relate to the brand and whether they have a propensity to purchase the

brand. Brand heritage is a brand’s, Longevity, the length of time that it has

existed, and a measure of how it is embedded in local culture.

102

The final category, brand perception, takes into account how loyal

consumers are to the brand and how close a strong brand image is to a desire for

ownership among consumer.

The panel of experts independently ranked each selected brand out of 10

on the above measure (10 high, 0= low). The source given by the individual panel

member were aggregated and averaged to each a total source for each brand,. A

total source was achieved by multiplying a brand’s weighting volume by its

brand source within a defined range. The weighting is designed to adjust the

volumes to a comparable level. Brand source is a derivative of the eight measures

of brand strength. This result in the ranking of the world’s most powerful spirits

and wine brands.

The world’s top ten most powerful spirits and wine according to owner of

the brand in parentheses:

1. Smirnoff vodka (Diageo)

2. Bacardi rum (Bacardi Martini)

3. Johnnie Walker Wisk(e)y (Diageo)

4. Martini light aperitif (Bacardi Martini)

5. Stolichnaya vodka (SPI)

6. Hennessy cognac (LVMH)

7. Jack Daniel’s wish(e)y (brown-Forman)

8. Absolute vodka (vin & spirit)

9. Ballantine’s whisk(e)y (pernod Ricard)

10. Baileys flavored spirit (Diageo).

The owner of the most of the branch in the top 100 are pernod Ricard with

19 brand, Diageo with 14 brands, Fortune brands with 9 brands, Bacardi Martini

with 7 brands. LVMH with 6 brands and Brown-Forman with 5 brands. After the

complete acquisition of Allied Domecq by pernod Ricard the letter’s portfolio of

brand was creased to 19 and that was five more than the industry’s consensus

overall leader, Diageo. Fortune brands ranks third after its acquisition of brand

the two the Allied Domecq sale, behind the two biggest companies, with close

behind fortune Brands.

103

The study, which goes into more detailed breakdown of power brand by

sector country of origin the strongest brands without being adjusted for by each

brand’s weighted volume, and the full listing of all 100 power brand’s is an

indictor of the necessity for having a strong portfolio of brands in the spirits and

wine sector. The combination of power brands with other quality-diversified

brands is a strong asset to any company in any industry.

Industry Leaders and Power Brands

It is no coincidence that the leaders of the spirits and wine sector also are

at the top of the list of companies with the most powerful brands. Brands gain

value through the current and future accumulated brand equity stored in the

minds of its consumer. Power brands produce a more dependable stream of

revenue, profit and cash flow than non branded equivalent products or services.

The increased value allows the owner of an established brand or a power brand to

sell more or to sell at a higher price than the owner of a generic brand.

Established brands are able to command higher prices when sold because

consumers have embraced trusted brand as a primary choice criterion in an

overcrowded and competitive marketing environment. All the five main industry

leaders mentioned earlier – Diageo, pernod Ricard, Fortune, Brands-have power

brands and diversified portfolios of brands in the spirits and wine sector.

Having a diversified portfolio of brands that includes power brands will

protect a company against risks in any industry, especially in the spirits and wine

industry: power brands have been proven over time and will continue to produce

value for an owner. There may be temporary drops in sales, but barring a

catastrophe, these power brands will continue to sell at or near their established

levels. This is what makes power brands attractive and compels companies to

acquire the brands, sometimes at a premium.

A company can also protect itself by having strong brands across a variety

of categories include whisk(e)y rum gin vodka cognac, wine, champagne, and

flavored spirits. This provides separate and distinct avenues for producing

revenue within the company. Having brands in several different categories can

cover risks, which include changing trends in consumer taste or unexpected

change in market for ingredients. An example of this is the recent scare that

104

tequila prices would skyrocket because of the health concerns regarding the

agave crop increase regarding the agave crop in Mexico. If the price of

production increase dramatically causing the cost of the final product to increase,

consumer could shift to the more reasonable alternatives. This is not a perfect

example, as the higher prices will tend to cover costs for producers, but it is an

example of how market forces can affect trends in consumption, in rare cases a,

brand may be so strong that consumers would be willing to accept the rise in

prices.

A good strategy employed by leaders in the industry is to have several

power brands spread across different categories. The top four this regime.

Diageo’s top four power brands are Smirnoff in the vodka category, johnnie

walker in whisk(e)y, Baileys in flavored spirits and caption Morgan in rum.

Perond Ricard ‘s top five power brands are Ballantine’s and Chivas Reagal in

whisk(e)y, Ricard’s in flavored spirits, Maretell in cognac and Beefeater in the

gin category. The third ranked company forune brands has jim beam and

Canadian club in the whisk(e)y category and sauza tequila, finally, Bacardi in

Martini in light aperitif, Dewar’s in whisk(e)y category and sauza tequila.

Finally, Bacardi Martine has Bacardi in the rum category, martini I nn light

aperitif, dewar,s in whisky (e)y, grey goose in vodka and Bombay in gin

categories . these companies also prefer to hive power brands in as many

categories possible to take full advantage of the entire spectrum of spirits and

wine consumers throughout the world. By spreading out the brands and

categories of spirits and wines offered, a company increases its access to the full

base of its consumers on a global basis. Also, being able to sell a variety of

products throughout the globe can lead to additional opportunities for other

brands within a company. A company that does well in a market with one brand

may try and introduce another of its brand trough cross-promotion; which may

lead to increased the newly introduced brand.

105

Table 4.1

Top 10 International Brands of Alcoholic Beverages.

Sr.No Brand Owner Category

1 Smirnoff Diageo Vodka

2 Bacardi Bacardi Rum

3 Johnnie Walker Diageo

Whisky-

Scotch

4 Absolut Pernord Ricard Vodka

5 Jack Daniels Brown Forman Whiskey

6 Pitu EnagarraIamento Pitu Cachaca

7 Nemiroff

Nemiroff Ukrainiam

vodka Vodka

8 Captain Morgan Diageo Rum

9 Balleys Diageo Liqnevrs

10 Velho Barreiro Tatuszinho Cacahca

Source: - Euro monitor (2009-10)

Table No 4.1 shows the Top 10 International Brands of Alcoholic

Beverages. It can be seen that Smiranoff is the No 1 Brand followed by Bacardi,

Jonnie Walker and so on . Diageo has the largest market share and top four

brands under its brand portfolio followed by Pernord Ricard.

Table 4.2

Brand preference of Beer

Sr.No. Brand (Strong) Brand(mild)

1 Kingfisher Kingfisher(mild)

2 Haywards Foster

3 Knock out Budweiser

4 Kalyani black lable Royal challenge

5 Canon Others

Source: - Primary Data (2009-10)

106

Table No 4.2 shows the consumer Brand preference towards Beer in mild

and strong category. In strong category majority of the consumers prefer

Kinngfisher, followed by Haywards, Knock out and kalyani Black label. In Mild

category consumer mostly prefer kingfisher(mild) followed by Foster, Budweiser

and Royal challenge.

Table 4.3

Brand preference of Indian made foreign Liquor (IMFL) – whisky

Sr. No. Brands(Regular) Brands(Premium)

1 Bagpiper Signature

2 McDowell No.1 Royal challenge

3 Green label Blenders spride

4 DSP Antiquity Blue

5 8PM Others

6 Others

Source:- Primary Data (2009-10)

Table No 4.3 shows the consumer Brand preference towards

IMFL(Whisky) in regular and premium brands. In Regular brands majority of the

consumers prefer Bagpiper followed by McDowell No.1,Green label, DSP,8PM

and others. In Premium category consumer mostly prefer Signature, Royal

challenge, Blenders Spride , Antiquity Blue and others.

Table 4.4

Brand preference of Indian made foreign liquor (rum and vodka)

Sr.No. Brand(Rum) Brand(Vodka)

1 McDowell No.1 Smirnoff

2 Old monk White mischief

3 Contessa Magic moment

4 Bacardi Fuel

5 Others Romanov

6 Others

Source: - Primary Data (2009-10)

107

Table No 4.4 shows the consumer Brand preference towards IMFL(RUM

& VODKA) in Rum majority of the consumers prefer McDowell No.1 followed

by Old monk, Contessa, Bacardi and Others. As far as Vodka is concerned

consumers mostly prefer Smirnoff , White mischief, Magic moment, Fuel

,Romanov and Others.

Table 4.5

Brand preference of IMFL – GIN & Brandy

Sr.No. Brand(Gin) Brand(Brandy)

1 Aristocrat Honey Bee

2 Blue Riband John ex Shaw

3 Carew Old admiral

4 Others Golconda

5 Others

Source: - Primary Data (2009-10)

Table No 4.5 shows the consumer Brand preference towards IMFL(GIN

& BRANDY) in GIN majority of the consumers prefer Aristocrat followed by

Blue Riband, Carew and Others. As far as BRANDY is considered consumer

mostly Preferred Honey Bee followed by John ex Shaw, Old admiral, Golconda

and Others.

Table 4.6 Brand preference of Wine

Sr. No. Brands

1 Sula

2 Indage

3 Ambrosia

4 N.D. Wines

5 Others

Source: - Primary Data (2009-10)

108

Table 4.6 shows the Brand preference of wine, majority of the consumers

prefer sula wines followed by the Brands of indage, Ambrosia, N.D wines and

others .

Future of the spirits and wine sector

The future of the sprits and wine sector is wide open. As people continue

to choose their favorite brands, the market will continue to follow suit with the

industry giants acquiring the new and emerging brands to add to their stacked

portfolios of brands. The leaders of the pack such as Diageo, pernod Ricard,

fortune brands, and Bacardi martini will acquire more brands and provide them to

the public, in a effort to increase revenues. It is also a way to prevent competitors

from strengthening their position in any certain category or market.

The current trend has seen the sale of allied domecq to Pernod Ricard and

fortune brands, apart from the sales of grey goose vodka and bushmills

whisky(e)y. today’s global economy is geared toward having several

international conglomerates dominate a business sector and acquire aspiring

competitors before they grow large enough to compete. This may continue in the

sprite and wine sector, as more brands become established and show increase in

value that will attract the established giants.

The big companies in this sector are all set to add brands and diversify

their portfolio of brands increase sales and expand into as many markets as

possible. It is a race among the elite to get to the top and stay at the top. As of

now it appears to be a fight among Pernod Ricard, fortune brands, Bacardi, and

brown-Forman to catch up to Diageo. Pernod Ricard seems to be the company

gaining ground at the moment.

Having a diversified portfolio of brands will enable a company to follow

trends and adapt more smoothly to the changes in sales patterns.

Alcohol Advertising and Promotion

Advertisements have a strong influence in our life. We like them because

they provide information and create awareness about the market. Their

significance in corporate world can not be underestimated. But many times, some

advertisements are accused of misleading people. When such accusations are

109

provide, some advertisements are scrapped off from media. Such instances have

been reported in the advertisements endorsing alcoholic drinks and cigarettes.

Expenditure incurred on Media

Pitch with Madison Media on ‘Ad spend estimates’ show that the

advertising industry in India grew by 21.7% in 2006 to touch a healthy figure of

Rs.14,505 crore against Rs.11,915 crore in 2005. If the breakup among different

media is considered as shown in table No.4.7. These figures show that Industry

believes in Influencing individuals through advertising.

Table no 4.7

Expenditure incurred on Media.

Sr.

No. Medium

2005

(Rs. In crore)

2006

(Rs. In crore)

% Growth

in 2006

1 TV 5003 6000 19.9

2 Print 5700 7000 22.8

3 Radio 200 285 42.5

4 cinema 32 55 70.8

5 Outdoor 870 1000 14.9

6 Internet 110 165 50

7 TOTAL 11915 14505 21.7

Source: Pitch 2007

It can be seen from the above table No 4.7 the Expenditure incurred on

Media, in 2005 the spending on print media was almost 5000 crore and in the

year 2006 it increased upto 7000 crore.so the maximum spending for alcoholic

beverages is done through print media, followed by TV.

Influence of Advertising

Advertisements tell us stories effectively stuffed in a few seconds. But

two famous quotes confuse the ideology behind advertising. Thomas Jefferson,

the founding father said, "Advertisements contain the only truth to be relied on in

110

a newspaper" and famous British author, H.G. Wells said, "Advertising is

legalized lying."

On the positive side, for the corporate plane, advertising enhances market

performance by providing useful information to consumers and by enabling firms

to promote the attributes of their products and services and, thereby, to compete

better with each other. Advertisements providing truthful information about the

price of a product and its attributes reduce the time and effort that consumers

need to expend searching for the products that best satisfy their needs.

Advertising can also provide for greater rivalry among firms because the greater

flow of information brings more firms into competition with each other. Finally,

the ability to advertise new products and services encourages innovative activity

by firms by providing firms with an effective way of informing consumers about

the availability of new products, or new applications of existing products. On the

customers’ front, advertising plays a dominant role in personality creation which

is evident in the consumer behavior theories which talk about customer emulating

brand personalities. The psychographic variables like emotions associated with

the brand image constitute the personality of a brand. The experience of the

consumers with such brand cultivates personality. This logically flows from the

fact that personalities are particularly useful for the creation of brand

associations. Brand associations influence the evaluation of alternatives. In this

stage, and for these goals, advertising is considered to be most effective

communication tool (Brassington & Pettit 2000). Perhaps, the most visible and

best known way of personality creation is by the means of celebrity endorsers,

public heroes, sports people, pop stars and movie stars are hired to lend their

personality to a brand (Erdogan & Baker 2000). Many of the theories about the

influence of advertising communications which would affect the customers mind

if compared collectively, all result in action which in other words is the

‘Purchase’.

111

Table No 4.8

Stages of Impact and Different Models.

Sr.

No.

Stages

Of Impact &

Models

Aida

Model

Hierarchy

Of Effects

Innovation

Adoption

Model

Communications

Model

1 Cognitive

Stage Attention

Awareness

Knowledge Awareness

Exposure

Reception

Cognitive

Response

2 Affective

Stage

Interest

Desire

Liking

Preference

Conviction

Interest

Evaluation

Attitude

Intention

3 Behavior

Stage Action Purchase

Trial

Adoption Behavior

It can be seen from the table No 4.8 the comparative picture of models

which depict the influence of advertising on the individual at different Stages.

Three different stages are shown namely cognitive stage, affective stage and

behavior stage. And all the processing of thoughts is done in the individual’s

Black box.

To appreciate couple of changing trends, the New York Times published

a detailed article “Consumers, Long the Targets, Become the Shapers of

Campaigns” by Louise that quoted number of examples on advertising campaigns

and effect created by them in terms of customer spending. The transition from

‘one way communication’ which is a traditional way of advertising to ‘Interactive

advertising campaigns’ is proving to be effective in the current order. A study at

the Yale Center for Customer Insights found that people who are told that a

product is popular will buy it over a competing product. Mr. Dhar, Director of

Yale School of Management, Professor of Marketing said ‘interactive marketing

helps companies identify the consumers who care about their products and are

most likely to buy them. Making that connection has been a challenge for

companies that manufacture products and sell them through retailers rather than

directly to consumers’.

112

Mr. Parag, a member of ‘Consumer International’ talks about the shifting

target of the advertising industry. Through the 1960s and 1970s it was the house-

wife but this gave way to youth being the target of the ads. The focus then shifted

to children, which continues even today. He says that, today children can be seen

in ads which are not child-products. He cites the Maruti Esteem ad in which two

children compare whose daddy has the bigger car. "In fact, today 84% of parents

take their children along when buying products which are not child-products

simply because children have a big say in buying decisions,”

The producers of alcohol beverage brands (e.g., Heineken or Guinness

beer, Jack Daniel’s Whiskey or Smirnoff vodka, Penfold wine or Mumma

Champagne) use advertising and promotional activities in a way that is no

different from any other branded good manufacturer. They compete for market

share in an exceptionally competitive environment. Competition is not only

between brands but also between categories, so that Heineken lager competes not

only against Fosters or Budweiser, but also against Ballantine’s scotch or Bacardi

run- or Penfold shiraz or a Mondavi merlot.

The competition for a bigger share of the market is strong and incessant,

with advertising being a part- important but still only a part- of the wider

marketing process. In most established, mature markets (where branded products

are well known), total consumption is fairly static. Companies attempt to increase

their business through better bran marketing, enabling them to gain market share

at the expense of the competition by trying to give their brands greater appeal

than other branded competitors. In emerging markets, where the situation is less

static, companies, still mainly compete against each other for market share. There

is little commercial advantage to be gained from generic advertising of beverage

alcohol.

Individual company strategies involve increasing the share of an existing

market for their products. In the USA, beer cons consumption declined 7.5%

from 1990 to 1999. Even within that shrinking market there was intense

competition, and the import sector- foreign beers like Beck’s, Guinness,

Carlsberg and Corona-Managed to increase their share of the total market

significantly from 4.5% to 9.1%.

113

Surrogate Advertisements Promoted By Liquor Industry :

The liquor industry is a prominent player in this game. Few surrogate

advertisements shown in print, electronic and outdoor media are – Bagpiper sod

and cassettes & CDs, Haywards soda, Derby special soda, Gilbey green aqua,

Royal challenge golf accessories and mineral water, kingfisher mineral water,

white Mischief holidays, Smirnoff cassettes & CDs, Imperial Blue cassettes &

Cds, Teacher’s achievement awards etc. These products bear exactly the same

brand name and logo, which we had seen earlier in liquor advertisements. It was

little surprising to know that liquor giants like McDowell’s and Seagram’s have

entered into new segments like cassettes & CDs, mineral water, sports

accessories etc. Later it was found that the basic aim of these surrogate

advertisements was to promote their liquor brands like beer, wine, vodka etc.

This brand extension is an act of bypassing the advertisement ban.

A similar trend is followed by companies making Cigarettes, Paan Masala

and Gutkha. Few examples of surrogate advertisements in this category are – Red

& white bravery awards, wills lifestyle, Four Square white water rafting,

Manikchand awards etc. Billboard advertising of international and domestic

brands of alcohol through surrogate means is widely being employed by alcohol

industry worldwide. Sponsorship of sports and cultural events is widely being

undertaken by alcohol companies in India. “Royal stag” sponsors Indian cricket

matches and cricket players. “Shaw Wallace” sponsored the Indian open golfing

event as the Royal Challenge Indian open and the Kenya cricket team. “Seagram”

sponsors events such as “Chivas Regal Polo championships” and “Chivas Regal

Invitational golf challenge” for corporates.

Indirect Advertising

Teacher’s whiskey has launched the Teacher’s Achievement Awards.

Other sponsored awards and events include: “Smirnoff international fashion

award”. “ Lakme India Fashion Week” was Sponsored by Seagram’s Blenders

pride Sponsored by Seagram’s Blenders pride.

Though a ban has been imposed on advertisements endorsing tobacco

product, this industry has resorted to surrogate advertising a few years ago. The

Health Ministry has recently implemented the tobacco control legislation which

114

will imply a complete ban on advertisements and all direct & direct and indirect

promotional campaigns for tobacco products. In 2001, Indian Tobacco Company

(ITC) had voluntary withdrawn the wills sports sponsorship of the Indian cricket

team when the government had first proposed a ban on advertising through

legislation.

The Corporate Standpoint

The industry segment has its own standpoint in defense. The liquor lobby

claims that everything is in accordance to the government regulations. “If a brand

has equity, why shouldn’t it be allowed to advertise? Also, brand extension is an

industry practice adopted by different product categories”, comments Alok Gupta

of UB group. “When we advertise our products, we follow all the guidelines”,

declares president, sales and marketing, Radico Khaitan. They clarify that they

have stopped showing liquor advertisements and they are free to use the brand

name for any other products. Even the confederation of Indian Alcoholic

Beverages Companies (CIABC) advertising code maintains that advertisements

of products (Real brand extensions) by the liquor industry must be allowed.

From a layman’s point of view, their claims seem to be justified. But this

is a clear example of taking advantage of the loopholes. There is a pint to ponder.

When they have stopped showing liquor advertisements, why the same brand

name and logo is used to promote products like cassettes and CDs or mineral

water? They could have assigned different brand names. It seems they have a

hidden agenda of highlighting the liquor or tobacco brand.

A similar over the issue of surrogate advertisements in politics was raised

in April 2004 on the eve of Lok Sabha elections. Complaints of slanderous and

offensive advertisements were raised by two major political parties – BJP and

Congress against each other. The issue became so serious that the Supreme Court

had to interfere in this affair. Finally on 13 April 2004, the Court gave a verdict

to curb smear advertisements on electronic media. By appointing Election

commission as referee, the court has tried to put an end to surrogate advertising in

politics.

According to the Cable Act under the ministry of information and

broadcasting, - “no broadcaster is permitted to show an advertisement which

115

promotes directly or indirectly, sale or consumption of cigarettes, tobacco

products, wine, alcohol, liquor or other intoxicants… ” Now a new clause has

been added under the act stating that, “any advertisement for a product that uses a

brand name which his also used for cigarette, tobacco product, wine, alcohol,

liquor or any other intoxicant will not be permitted”. Finally, in April 2005, the

ministry resorted to a ban on surrogate advertisements of liquor and tobacco

products on television.

After this directive, the surrogate advertisements are seldom shown on

television. Now the companies will have to reframe their policies. But who will

take care of print and outdoor media is not certain.

According to ASCI (Advertising Standards Council of India), surrogate

advertisements are harmful. Now it will be up to the ASCI to take up the matter

with the respective companies.

116

117

Table No 4.9

COMPARATIVE PICTURE OF ADVERTISING REGULATIONS IN

SELECTED COUNTRIES

Sr.

No.

Points of Emphasis in the

Regulatory codes

INDIA USA CANADA NEW

ZEALAND

1 Emphasis on adult target

group

Major 18 yrs Yes Yes

2 Emphasis on not touching

children related programs

Yes Yes Yes Yes

3 Rule on not Influencing non

drinkers

Yes Yes Yes No

4 Annual check of the age of

Target group

NA Yes No No

5 Emphasis on not advertising

near colleges

NA Yes No No

6 Ban on usage popular brand

ambassadors, models and

characters close to children's

heart

Yes Models & actors

should be over 25 years

No Models

should not be

young

7 Should not be messaging that

drinking is 'rite to adulthood'

NA Yes No No

8 Ban on ads with misleading

decription

Yes Practical

statements

No Yes

9 Portraying religion, cast,

color, Nationality

Yes Religious

themes

should be

avoided

No Yes

10 Sexually oriented messages Implicit Yes Expression of

any feeling

due to

alcohol

Yes

118

11 Should drinking in reasonable

manner

NA Yes Yes Yes

12 sTherapeutic Claim NA Yes No No

13 Communicating that it is the

secret behind success or

answer to problems

NA Yes Yes Yes

14 Should not be associated with

masculine or unruly behavior

NA Yes No Yes

15 Ban on Urge to use NA No Yes No

16 Ban on communicating

product strength, package

NA Factual Yes Yes

17 Ban on communicating that

product makes the person

involved in any immediate

activity

NA Yes That it is

essential

for any

activity

Yes

18 Ban in scenes of consuming

alcohol

NA No Yes No

Table No 4.9 shows the comparative analysis of advertising regulations in

India, USA, Canada and New Zealand. The comparative analysis is made on the

basic of various regulatory codes. Almost all the four countries are following

some of the common regulatory codes, like Emphasis on adult target group,

Emphasis on not touching children related programs etc.

CONSUMER BEHAVIOUR AND MARKETING

Consumer behavior is a broad field of study that investigates the exchange

process through individuals and groups acquire, consume and dispose of goods,

services, ideas and experiences. The principles of consumer behavior are useful

to business managers, government regulators and non-profit organizations as well

as to ordinary people. For marketing manager’s knowledge of consumers

behavior has important implications for environmental analysis, product

positioning, the segmentation of market place, the design of market research and

the development of the marketing mix. Consumer behavior is defined as “the

119

study of buying units and the exchange processes inward in acquiring, consuming

and disposing of goods, services, experiences and ideas.

The above sample definition consists of different purview of the whole

consumer behavior.

A consumer is inevitably at the one end of the exchange process in which

resources are transferred between two parties. It also suggested that the exchange

process involves a series of steps beginning with the beginning with the

acquisition phase, moving on the consumption phase and ending with the

acquisition of the product or service. In acquisition phase researchers analyses the

factors that influence the consumers product and several choices. In consumption

phase researchers analyses how consumers actually use the product or service and

the experience they obtain from such use. The final phase i.e. deposition phase

refers to what consumers do with a product once they have finished using it.

Consumer Behavior is an applied discipline. Though it borrows theories

and knowledge from other fields such as Anthropology, Sociology, Demography,

Economics and Psychology. Hence it is a discipline in its own right. Consumers,

Researchers are developing their own body of knowledge to supplement

knowledge they have obtained from other fields. Central to the field of the

consumer behavior is the study of the exchange process. Exchange is the process

through which some tangible or intangible, actual or symbolic, product is

transferred between two or more social factors. When exchange takes place,

resources are transferred between the parties. These resources include goods,

services, money, status, information and feelings. Finally exchange may be

restricted or complex, internal or external, formal or informal and relational or

discrete.

Research in Consumer Behavior is organized according to three

perspectives that act as a guide thinking about the identifying the factors that

influence the consumer acquisition behavior. These three perspectives are as

follows.

1. Decision making perspective

2. Experimental perspective

3. Behavioral influence perspective.

120

Decision making perspective portrays consumer as taking a series of

steps when making a purchase. These steps include problem recognition, search,

alternative evaluation, choice and post acquisition evaluation.

Experimental perspective on consumer buying proposes that in some

instances, customers do not make purchase according to a strictly rational

decision making process. Instead, they buy certain products and services in order

to have fun, create fantasies or feel desired emotions. These are the purchases

made on certain impulse and purchase made to seek certain varieties.

Behavioral influence perspective assumes that strong environmental

forces propel consumer to make purchase without necessarily first developing

strong feeling or belief about the product. According to these perspectives,

consumer neither goes through a rational decision making process nor relies on

the feeling to purchase a product or service. Instead, consumers purchase action

directly results from the environmental forces such as sales promotion device,

cultural norms, the physical environment and the economic pressures.

Diversity in Market Place

We as consumers differ in age, gender, education, occupation, marital

status, activities & interests, preferences, opinions, foods they eat and products

we buy. There is diversity among marketers; not only among producers but also

sellers. Traditional retailers, mass merchandisers, discount stores, and off-price

stores. But there has been a shift from mass marketing to niche marketing to

direct marketing, from custom catalogs to television shopping to cyber shopping.

There is a great diversity in advertising media. In addition to the traditional

broadcast and print media, we have ethnic media within a great variety of

alternative media. Recognizing the high degree of diversity among us, consumer

research seeks to identify the constants that exist among the people of the world.

121

Table No 4.10

Changes in consumer Behaviour

Sr.

No

1980s 1990s 2003

1 Conspicuous consumer Frugal consumer,

becoming more well-

off

Suspicious but generally

well-of consumer

2 Image-Driven Value-and quality-

driven

Highly eclectic

3 Trusting Skeptical and cynical A “prove it” attitude

4 Brand Loyal Does not exhibit

loyalty

Believe that there is

always something better

5 Emotional buyer Informed buyer Highly informed and

specialized buyer

6 Dreamers Escapists Focused on personal

needs

7 Overindulgent Health-and wellness-

conscious

Health , wellness, and

some overindulgence,

without expectation of

costs or consequences

8 Overworked Burned out, stressed

out, and placing

tremendous value on

convenience and

time

Reliant on technology

and telecommunications

to save time in making

purchasing decisions

9 Industrious baby

boomers

Responsible baby

boomer

Unconvinced generation

next.

Source: Adopted from Principles of Marketing, Kotler, Adam, Brown and

Armstrong.

Table No 4.10 shows us how consumers have changed over three decades.

In fact, you can see in your own family, if you take your parents as buyers and

yourself as a buyer and then see the difference in your behavior.

122

Consumer Behavior and Purchase Process Analysis Alcohol beverage

Industry:

The following are Research findings regarding the purchase process

analysis in the Alcohol consumption -

1) Problem Recognition:

• First-time use is triggered by external stimuli such a peer group, first-time

consumption is influenced by others almost 100% of the time.

• Significantly, first-time use does not have a high correlation with brand

loyalty.

• Habitual users consumption need recognition may be divided into the

following categories –

� With established consumption patterns consumption is ranked as a

majority who drink everyday, those who drink after alternate day.

� With established consumption occasions daily drinkers did not exhibit

specific occasion consumption. Less frequent drinkers ranked

occasions as follows – with friends, when alone, when stressed and

lastly to improve concentration.

� Significant variation was found in the sample based on consumer

gender wherein frequency of consumption with females was

substantially lower and occasions were largely with friends.

2) Information Search / Generation of Alternatives:

• Rarely an active search – brand familiarity and loyalty among drinkers is

significant.

• Alternative seeking is minimal and varies inversely with rate of

consumption.

(I.e. frequent drinkers do not exhibit variety seeking buying behavior)

3) Evaluation of Alternative:

• Not structured evaluation, vaguely-defined criteria.

• Parameters for evaluation declared as follows (in descending order of

rank) – taste, brand, association with self-image, availability, size

hardness, and health.

123

• Parameters were more in the consumer’s mind than obviously conscious

decisions and varied with psychographics instead of demographics

(common demographic segment exhibited varied evaluation criteria).

4) Purchase Decision and Implementation:

• Limited problem Solving Behavior

• Huge degree or brand loyalty

• Time and non-availability are not significant constraining factors for

brand decision or long-term consumption. However, short-term

consumption may be dependent on availability.

• Transforming a purchase intention into a purchase decision is influenced

by a variety of factors. In the long term decision to purchase is based on

the decision to following criteria (in descending order of rank) – Personal

health, family pressure, family health, religious, reasons, guilt. Brand

decision is based on image (further dependent on peer image and

association with self-image). It should be noted however; that these ranks

were given by consumer’s themselves and guilt is liable to play a larger

part among the younger target audience (i.e. first-time drinkers) than

admitted.

• Unanticipated situational Factors (e.g. Reactions of salespersons) are rare

in occurrence and do not have significant impact on the purchase

decision.

6) Post-purchase Behavior:

Satisfaction or dissatisfaction is not dependent on many factors and

remains roughly similar for each consumer across purchase periods. Post-

purchase evaluation is very significant for first-time users (first time use is

defined as consumption not purchase as it is not usually linked with direct

purchase by the final user). This phenomenon decreases as use become more

prevalent, though no specific dividing timeline or use could be identified where

such evaluation loses significance.

Thus, alcoholic consumers exhibit typical ‘habitual buying behavior’.

Once loyalty is established, they change brand infrequently, and tend to remain

124

loyal to a brand for extended periods of time, which change only due to extrinsic

factors like change in peer groups, discontinuation of brand (as in the case of

Wills Lights) etc. Habitual buying results in automatic ‘reach for the brand’

behavior, thus minimizing the sales push opportunity and maximizing the need

for advertising and positioning in the consumer’s mind. There is a high-degree of

brand familiarity as opposed to brand conviction and consumers find it hard to

defend their purchase decision. Post-purchase evaluation is not a frequent

occurrence though must be considered by the marketer, as given the frequency of

consumption, a single bad experience could put a loyal consumer off the brand

for life.

Concluding Remarks:

Since alcohol advertising is expensive, it is therefore specifically and

selectively targeted at consumers thought likely to buy a given products. Market

research is constantly refining the target audience and tightening strategies for

reaching it. Thus, a marketing campaign indiscriminately aimed at the general

public is inefficient and not cost effective. Equally, group who are not already

consumers, such as abstainers or young people below the legal purchase age, are

not a fertile target for advertising resources. Resources are directed at those

already consuming a certain type of product in an effort to persuade them to

switch brands.

The sprits wine sector is a finicky industry because of its cyclical nature

and the recent phenomenon of lifestyle branding. Therefore, it is a good example

of how important portfolio management is for companies. As consumer tastes

change and trend evolve, a diversified portfolio of brands will help companies

manage their economy effectively.

The importance of portfolio diversification and having power brands is

very evident in the sprits and wine sector, but the idea of portfolio diversification

and its benefits translate into any industry or business. The protection provided

by diversification is essential in today’s market when trends change quickly and

consumers’ wants and needs follow those changes. Having a diversified portfolio

of brands will enable a company to follow trends and adapt more smoothly to the

changes in sales patterns.

125

REFERENCES

1. Adams, W., Garry, P., Rhyne, R., Hunt, W., Goodwin, J. (1990). Alcohol

intake in the healthy elderly: Changes with age in a cross-sectional and

longitudinal study. Journal of the American Geriatric Society, 38: 211-

216.

2. Adlaf, E.M. and Kohn, P.M. (1989). Alcohol Advertising, Consumption

and abuse: a covariance-structure modeling look at Strickland’s data.

British Jounal of Addiction, 84(7): 749-757.

3. Advertising Standards Authority (2000). Annual report 2000. Auckland,

New Zealand, (www.asa.c.nz/2000/AR.htm). Advertising Standard

Authority, Inc.

4. Calfee, J. and Scherage, C. (1994) The influence of advertising on alcohol

consumption : A literature review and an econometric analysis of four

European nations. International Journal of Advertising, 13(4): 287-310.

5. Duffy, M. (1991). Advertising and the consumption of tobacco and

alcoholic drink: a system-wide analysis. Scottish Journal of Political

Economy, 38(4): 369-385.

6. Duffy, M. (1991). Advertising in demand systems for alcoholic drink and

tobacco: A comparative study Journal of Policy Modeling, 17(6) 557-577.

7. European commission (2001). Council Recommendation on the drinking

of alcohol of alcohol by children and adolescents. 2001/458/EC.

http://europa.eu.int, March 2002.

8. Evans, J.M. and Kelly, R.F. (1999). Self regulation in the Alcohol

Industry: A Review of Industry Efforts to Avoid Promoting Alcohol to

Underage consumers. A Repot to Congress from the Federal Trade

commission. Washington, DC: U.S. Federal Trade Commission.

9. Fillmore, K. (1988). Alcohol use across the life course: A critical review

of seventy years of international longitudinal research. Toronto, Canada :

Addiction Research Foundation.

10. Fillmore, K., Hartka, E., Jonstone, B., Leino, E., Motoyoshi, M.,

Tempple, M. (1991) A meta-analysis of life course variation in drinking:

126

the Collaborative Alcohol-Related Longitudinal Project. British Journal

of Addiction, 86: 1221-1268.

11. Fisher, J.C. (1993). Advertising Alcohol Consumption, and Abuse : A

Worldwide Survey. Westport, CT: Greenwood Press.

12. Fisher, J.C. (1999). Media influence. In: R.T. Ammerman, P.J. ott, and

R.E. Tarter, Eds. Prevention and societal Impact of Drug and Alcohol

Abuse. Mahwah, NJ: Lawrence Erlbaum Associates.

13. Fisher, J.C. and Cook, P.A. (1995). Advertising, alcohol Consumption,

and Mortality: An Empirical Investigation. Westport, CT : Greenwood

Press.

14. Gius, M.P. (1996). Using panel data to determine the effect of advertising

on brand-level distilled spirits sales. Journal of Studies on Alcohol, 57(1)

3-76.

15. Henry, H. (1996) Does Advertising affect total market size? Admap,

January, 16-19.

16. Heath, D.B. (2000). Drinking Occasions : Comparative Perspectives on

Alcohol and Culture. Philadelphia, PA: Brunner/Mazel.

17. Hibbell, B., Andersson, B., Ahlstrom, S., Balakireva, O., Bjaranasso, T.,

Kokkevi, A., Morga, M., Eds, (2000). The 1999 ESPAD Report-The

European School Survey Project on Alcohol and other Drugs : Alcohol

and Other Drug Use Among Students in 30 European Countries.

Stockholm: The Swedish Council for Information on Alcohol and Other

Drugs (CAN), Co-operation Group to Combat Drug Abuse an Illicit

Trafficking in Drugs (The Pompidou Group).

18. Houghton, E. And Roche, A.M., Eds. (2001). Learning About Drinking.

Philadelphia, PA: Brunner-Routledge.

19. ICAP (1998). ICAP Reports 4. Drinking Age Limits. Washington, DC:

International Center for Alcohol Policies.

20. INRA (2001). Study on the Impact of Advertising and Teleshopping on

Minors. Study conducted for the European Commission DGEAC

(99/S139-102855).

21. " Tobacco ads likely to be stubbed out by Jan-end", Hindustan

Times,22January 2004.