Marketing Audit Guinness Nigeria Essay Example

review the changes within the Nigerian beer market and identify opportunities and challenges for Guinness Nigeria. By examining analysing the macro and micro environment, it will demonstrate how this may impact on the organisation and highlight how the new marketing plan will seek to exploit the opportunities presented whilst combating the threat of new sector entrants. The report will recommend how Guinness Nigeria may adapt its current XXX strategy in light of the changing market and emerging new competitors. Marketing Audit The first stage of the marketing planning process is the marketing audit.

Marketing objectives, strategy and tactics for Guinness in Nigeria can only be established after a marketing audit. The marketing audit will include an evaluation of the macro factors (external market forces), using PESTLE; and the micro factors (internal market forces) examining the competitive position of the organisation within the Nigerian beer market as well as the threats it currently faces. The marketing audit will focus on the emergence of local and international competitors and their potential influence on Guinness’s market share.

The marketing audit is ‘a systematic and periodic examination of a company’s environment, objectives, strategies and activities to determine problem areas and opportunities’ (Kotler, Armstrong, Saunders and Wong, 1999). The stages of the marketing planning process are defined in the illustration below: Figure 1: The marketing planning process (Beamish and Ashford, 2006) Macro Environmental Process The macro environment analysis using the PESTLE (political, economic, social, technological, legal and environmental factors) framework examines the external factors that impact upon the company’s strategy.

These external forces are outside the control of Diageo Africa but they will impact on their marketing objective and strategies for Guinness in

Nigeria. Monitoring these factors can help predict their potential future impact on the marketing plan. “Successful companies realise that the marketing environment presents a never ending series of opportunities and threats.... marketing managers must be trend trackers and opportunity seekers” (Philip Kotler, Marketing Management the Millennium Edition, Prentice Hall, 2000)

Pestel Analysis
Political

- Governments use taxation of alcoholic drinks as a revenue stream and the recent calls for the increase of tax in Nigeria by the Health minister (ref 2 sportsday article) would have a major impact on the pricing of Guinness.

- The political environment in Nigeria is stable and will encourage more foreign investors

- “Research shows that political stability is a key component in the rise in beer consumption in Africa,” said Andrew Holland, drinks analyst at Evolution Securities, a stockbroker. “The fact that the Nigerian market has grown so strongly has a lot to do with the relative civil calm. (The times 2009 Mathew Goodman)

Economic

- A growing middle class with more buying power

- GDP is growing due to oil revenues

- Continued private sector investment

- “Nigeria is one of the top 10 fastest-growing drinks markets in the world” (Sarah Rundell 1/10/2009 African Business magazine)

- Nigeria has however been affected by the global downturn and this has affected Heineken owned Nigeria Breweries business

- Nigeria is attracting investment from foreign retailers such as ‘Park n Shop’

Social

- In addition, there is a growing number of expatriate Nigerians returning home and “bringing Western culture to Africa”, (The Sunday Times)

- Alcohol consumption is a social activity.

People rarely drink alone which reflects in a strong on trade market

- Drinking is traditionally done in bars but high crime rates mean that people are

less likely to go out for the evening for fear of kidnap or robbery.

- It is socially unacceptable to be seen as out of control in Nigeria which means that consumption is limited

- Alcohol education/pressure groups

- Growing influence of religion (50% of Nigerian are Muslim and 40% are Christian both discourage alcohol)

Technological

- There are 11m internet users in Nigeria (CIA world factbook) Nigeria accounts for 39. 6 percent of Africa’s current internet population and this, ahead of South Africa, Egypt and Kenya

- 62. 88m mobile phone users (just under half the population)

- Mobile phones now primary access to internet in Nigeria(advantages for advertising and targeting consumers) (Source Vanguard article 22 Oct 2010)

Environmental

- The country has a poor infrastructure; electricity supply is erratic meaning that remote, rural bars cannot keep fridges going so Guinness cannot be served at optimum temperature.

- Poor roads mean product distribution can be disrupted.

- Power supply also has an effect on production

Legal

- The legal drinking age in Nigeria is 18

- Drinking and driving

The macro environmental analysis highlights the rapidly changing landscape in Nigeria.

The country is going through a period of political stability which encourages beer consumption however this has also encouraged international investment most notably in the form of SABMiller (the largest brewer in Africa) and Castel, the French brewer who are already starting to present a threat. The growing middle class presents an opportunity in terms of an increasing market for the high end Guinness product however the general global downturn could have an impact on buyer behaviour by steering consumers away from premium products. The reluctance of people to spend time drinking in bars presents a huge opportunity for developing

a traditionally an on-trade (product sold in bars, restaurants and hotels for immediate consumption) market by introducing products for off-trade sales (product to be purchased for home consumption). The widespread usage of mobile internet presents more opportunities to engage with consumers.

Industry Audit Porter’s Five Force Analysis

New Market Entrants- Medium

- Political stability makes entry to market easier

- However the two major incumbents, Nigeria Breweries and Guinness will put up resistance

- B Threat of substitutes – medium

- Cheaper good quality alternative products

- Fashion and trends affect popularity of brands

- Consumers are unlikely to switch to a generic brand after drinking Guinness but will consider other premium brands Competitive Rivalry - High

- Two new entrants into a market with two well established incumbents in place

- Brand loyalty will decrease with more competition SABMiller’s strategy of acquisition means consumers will still think they are ‘buying Nigerian’

- SABMiller are promoting cheaper beer Buyer Power

- Buyer power is relatively low as but new entrants to the market offer more product choice.

- Buyers are fragmented many in remote areas and are presented with few options.

- Strong emotional relationships with customers

- Consumers buy Guinness as a ‘status’ drink especially C and D demographic

Supplier Power - low

- Guinness has a strong brand reputation, considered to be a ‘Nigerian’ brand

- Long term supplier contracts in place

- Uses many small suppliers who have less influence on pricing Industry analysis: The Nigerian beer market still has huge potential for growth and is nowhere near saturation.

The tables below demonstrate that the population is growing – as is beer consumption The two largest brewers, Guinness Nigeria and Nigerian Breweries have not responded to the threat posed by SABMiller’s incursion

into the market with its cheap beer. Guinness needs to continue to deliver a premium product and remain engaged with its consumers especially those in band ‘D’ who are unlikely to be reached by TV advertising.

The market leader Nigerian Breweries (63% aggregate with Consolidated Breweries who are both owned by Heineken) also produces premium products such as Heineken, 33 and Gulder beers. SABMiller is the world’s second largest brewer and Africa’s largest brewer with its base in South Africa. It wields huge buying power and is breaking into the Nigerian market via the strategy of acquiring small breweries and then selling a good quality product at a lower price. Internal Audit:

Strategy

- The global agenda for the Guinness brand is set by the Guinness brand team based in Dublin and all marketing activities must fall in line with the Diageo Marketing Code.

However, this still allows for a marketing plan which is relevant to particular market.

- Maintain premium position in the Nigerian market and re-engage loyal consumers.

- Work to develop the take home, off trade market

Structure

- Guinness Nigeria is a majority owned subsidiary of Diageo Africa which is a separate business unit of Diageo PLC. It has its own HR, Finance, and Marketing departments which follow the lead of the global Diageo Plc.

- Wider reaching functions such as global supply and IT are run from global headquarters in London.

- Guinness Nigeria has its own MD (Ekwunife Okoli) and functional heads but the MD reports to the MD of Diageo Africa.

Systems

- Supply chain and logistics is very strong but consumers bulk of sales tend to be clustered geographically allowing for small regional producers to launch new products

- Recently

purchased a canning plant, need to streamline production

Shared Values

Corporate Values

- We are passionate about consumers – our curiosity and consumer insights drive our growth.

- We value each other – we seek and benefit from diverse people and perspectives.

- We give ourselves the freedom to succeed – we trust each other, we are open and seek challenge, and we respond quickly to the opportunities this creates.

- We are proud of what we do and how we do it – we behave responsibly with the highest standards of integrity.

- We strive to be the best – we are always learning, always improving.

Skills

- Very strong marketing skills

- Excellent record of working in challenging markets

Style

- An innovator globally and with other brands but recently guilty of complacency in this traditionally successful and still rising market.

- Was top down in approach to advertising due to a lack of consumer insight, now addressing this.

Staff

- Staff all extremely passionate about the brands

- Unions are strong but co-operative due to ‘family’ environment created

Value Chain Primary Activities

Inbound Logistics

- Guinness is made from locally sourced ingredients cutting out any international supply issues

- Well established supply network ensures raw ingredients arrive in a timely manner

Operation

- Two breweries in different parts of the country ensure production is always even. Separate bottling and new canning plant

- Poor infrastructure can cause issues and plants now have their own generators to protect from power outages

Outbound Logistics

- Well established supply chain ensures good are delivered to the most remote regions despite poor road infrastructure

- However costs of distribution are high and cut into profits

Marketing and Sales

- Guinness Nigeria has an in house marketing department with global support

- Well established and successful

sales force

Service

- Guinness sales staff try to ensure drinks served at correct temperature to ensure best experience.

Support Activities

Infrastructure

- Driven by strategic plan from Diageo Africa

HRM

- Guinness Nigeria covetable workplace with many initiatives for staff including free retroviral drugs for staff and their families, training opportunities, succession planning, staff bonuses and perks such as drinks allowance and free social activities

Technology

- Use the SAP finance system for reporting and all global staff have access to global intranet

Procurement

- Well established relationships in market. London based procurement team are part of the Global Supply function.

INTERNAL

Strengths

- Excellent brand equity (the brand represents strength and pride)

- Considered to be a ‘Nigerian’ brand

- Strong CSR programmes and policy as well as sponsorship of sports teams – good global and local citizen

- Strong consumer loyalty

Weaknesses

- Large cumbersome business can take too long to make decisions

- Over reliance on middle class consumers as preferred target market and non recognition of ‘D’ band status consumers

EXTERNAL

Opportunities

- New supermarket retailers such as Spar and Park n Shop opening up presents the opportunity to exploit the off trade ‘take home for consumption market’

- Mobile marketing may be the way to reach consumers in remote regions and to re-engage other consumers

Threats

- SABMiller entering the market with huge buying power and established brand names at low prices

- Smaller local brewers able to launch innovative products quickly

- More foreign investors leading to a more competitive landscape.