Guinness - Place

To reach consumers, Guinness, like all other products, must be distributed. There are a number of ways in which this may occur.
Channel of distribution (place) refers to "a group of individuals and organisations tbat direct the flow of products from producers to consumers" (Dibb, Simkin, Price and Ferrell, 2012). Figure 5.0 displays the four channels of distribution available.

Figure 5.0

Factors when choosing a channel of distribution:

Cost:

The more stages in the channel of distribution, the more costly the product will be for the consumer as every member of the channel wants to make a profit.

Types of goods and durability:

Some goods are bulky whilst others are perishable. Perishable goods - "likely to decay or go bad quickly" (Oxford Dictionary, 2014) - need to be distributed more quickly than bulky goods therefore products like this are generally directly sold to the retailers/consumers, avoiding wholesalers etc.

Market size:

If the market is large, it may be more economical to use a wholesaler to break bulk, store, and transport the goods to the retailer.

E-business:

Using a company website, companies can advertise and sell their products and services online. Orders are placed and the items then are sent to the postal service or courier services. E-businness has become extremely popular in recent times.

Channel of distribution used by Guinness:

Guinness uses a channel of distribution which starts at the producer, to the retailer and finally to the customer. In Ireland, large supermarkets such as Dunnes Stores and Tesco buy directly from Guinness itself in Dublin, to then sell the product onto the consumer. This channel benefits both the consumer and the retailer. The retailer buys in bulk from Guinness. This is cost effective compared to buying in smaller quantities as buying in bulk avails of discounts. The retailer then sells the product in smaller quantities to consumers. This is known as bulk breaking - "the division of larger product quantities into smaller quantities as products get closer to the final market" (Stafford, 2016). Therefore the consumer has the benefit of buying in small quantities and the retailer makes a profit from the discounts availed of through buying in bulk.
As aforementioned, Guinness is sold directly to retailers in Ireland. However, Guinness is also sold directly to customers from producers in Ireland. This occurs at the brewery tour in Dublin, where visitors learn about brewing Guinness and therefore get to directly taste "fresh" Guinness and also buy it in their restaurant. Pubs around this area in Dublin also buy their Guinness directly from the storehouse, again using this shorter channel of distribution. Short distribution channels like such, provide the chance to establish added value in the area and to highlight the distinctiveness of Guinness in this case. There is even a competition between pubs in Dublin near the Guinness Storehouse for who sells the best Guinness.
On a global level, since Guinness has merged by Diageo, the same channel of distribution of producer, retailer and customer has been able to still apply. This is because as Diageo owns many breweries worldwide, Guinness is also now brewed in Diageo's breweries. This is ideal as it would be more costly for Guinness to have to ship product worldwide from Dublin.

References:
1) Diageo (2016) Guinness. Available at: http://www.diageo.com/en-ie/ourbrands/infocus/Pages/Guinness.aspx (Accessed: 22 November 2016).
2) Dibb, Sally; Simkin, Lyndon; Pride, William M. and Ferrell, O. C. (2012). Marketing: Concepts and Strategies (6th ed.).London: Cengage.

3) Oxford Dictionary (2014) Available at: https://en.oxforddictionaries.com/definition/perishable (Accessed: 21 November 2016)

4) Stafford, A. (2016) Bulk-breaking marketing definition. Available at: http://www.marketingbinder.com/glossary/bulk-breaking/ (Accessed: 21 November 2016).

Guinness - Promotion

Promotion refers to "the entire set of activities, which communicate the product, brand or service to the user. The idea is to make people aware, attract and induce to buy the product, in preference over others" (Bennett, 2016).

Communication and Target Market:

Without communication with customers it would be quite difficult for any company to keep a product alive, especially one such as Guinness. Guinness utilises a communication strategy. Communication refers to “the act or an instance of communicating; the imparting or exchange of information, ideas, or feelings” according to McDermid V. (2016). This could be verbally, nonverbally, or visually. The reason behind Guinness using this strategy is that they wanted to dominate the market and ensure that potential consumers were aware that their brand existed.

Guinness has strong communication with customers. As Guinness is an alcohol, which cannot be sold to anyone under the age of eighteen, it is clear that their target audience ("the section of the potential market at which a product or service is aimed" - Collins, 2016) is anyone over the legal age to buy and consume alcohol. It is important for any company to understand their target market in order for their product to be effective. It is also not just about knowing your audience. In this day and age it is about building relationships with consumers which are strong, loyal and long lasting. Everything should and can be planned around a target market. For instance, what time you send them promotional emails, when you interact on social media or when your advertisement is shown on the television. As Guinness targets those above legal age to drink, their ideal time to show television advertisements is in the evening or after the watershed. For social media users, the early evenings or first thing in the morning would be ideal as assuming people check their phones on the way to university or work.

While Guinness' target market is those over the legal buying/consumption age, they can also specify who they target within this group, in other words they can segment this broad market that they have. This is known as market segmentation. Market segmentation refers to the "aggregating of prospective buyers into groups, or segments, that have common needs and respond similarly to a marketing action" (Investopedia.com, 2003). Figure 4.0 displays different categories in which markets can be segmented. For example, Guinness' market could be subdivided by age, gender, location or ethnicity. This helps Guinness to understand the needs of customers better and therefore improves their advantage over competitors.

Figure 4.0

Promotion Methods:

Guinness has been innovative in the way that their products are promoted. A myriad of promotion methods have been used and uniquely, Guinness has ensured that through promotion their heritage still remains. This myriad of promotional methods includes advertising, direct marketing, publicity, personal selling and internet promotion. Guinness tries to incorporate all of these aforementioned methods of promotion into their promotional mix.

Advertising:
Advertising can be reffered to as "a means of communication with the users of a product or service" (Bennett, 2016). Advertising is costly yet the price may be worth it as it can have big impacts on consumers. Types of advertising include brand advertising, cooperative advertising and corporative advertising. Guinness uses brand advertising. Brand advertising is the proccess involved in exposing the public to a unique name and image through advertising campaigns. Guinness has reached large geographically dispersed audiences through advertising. In the early advertising days for Guinness, consumers perceived the advertised good of stout as legitimate due to the brand image and name being exposed frequently to potential consumers. Although it is an expensive way to get their brand across, advertising has been a success medium of communication for Guinness. Below are two different advertisements by Guinness - one being very old and one being much newer. The newer advertisement can be seen to focus more on the heritage of Guinness and on a young target audience of around the 20-30 age mark. Guinness is one of the few companies who have successful understood the need of promotion in order to reach a wide section of society.

References:

1)      Bennett (2016) Definition of ‘advertising’ - the economic times. Available at: http://economictimes.indiatimes.com/definition/advertising (Accessed: 19 November 2016).

2)      Bennett (2016) Definition of ‘promotions’ - the economic times. Available at: http://economictimes.indiatimes.com/definition/promotions (Accessed: 19 November 2016).

3)      Collins, H. (2016) ‘Definition of target market’, in Available at: http://www.collinsdictionary.com/dictionary/english/target-market (Accessed: 19 November 2016).

4)      Investopedia.com (2003) ‘Market segmentation’, in Available at: http://www.investopedia.com/terms/m/marketsegmentation.asp (Accessed: 19 November 2016).

5)      McDermid, V. (2016) ‘Definition of communication’, in Available at: http://www.collinsdictionary.com/dictionary/english/communication (Accessed: 15 November 2016).

Guinness - Price

Price is "the value placed on what is exchanged", to a buyer (Dibb, Simkin, Pride, Ferrell, 2012). Price is one of the most important elements of the marketing mix as it is the only element with generates a turnover. For this reason, price must support the other elements of the marketing mix. For example, it costs to design and produce products, it costs to distribute products and it costs to promote products. The price of a product should reflect the supply and demand relationship. Pricing a product too high, or equally too low, could result in sales loss for a company.  

Factors affecting pricing decisions:

Pricing objectives:

"Overall goals that describe what a company wants to achieve through its pricing efforts" (Dibb, Simkin, Pride and Ferrell, 2012). Many marketers use a combination of pricing objectives including return on investment, cash flow, product quality, profit and market share. In the case of Guinness, they operate a marketing orientated pricing policy as a combination of costs, competition, explicability and value to customers. It is a price-quality relationship and product-line pricing blend to determine its brands' prices.

Costs:

When establishing a price, cost must be taken into consideration. For example, Guinness want to make a profit, therefore the selling price of their products must incorporate production costs. In order to make a profit Guinness must first break even and anything after that will be profit. If Guinness did not cover all expenses into their selling prices, the company most likely would not survive.

Buyers' perception:

This refers to what a customer thinks the price of a product should be. More often or not, a customer sees a higher price as a higher quality product. Customers interpret prices by an internal reference price, which refers to a "price developed in the buyer's mind through experience with the product" and an external reference price, which refers to "a comparison price provided by others" (Dibb, Simkin, Pride and Ferrell, 2012). In July 2007, Guinness was priced at €5.20 a pint in Dublin. This price is a liitle more than competitors' prices. However, as customers see Guinness as a premium drink, as in there is no other stout like Guinness, this price is feasible.

Competiton:

It is important for any company to know who their competitors are. A company may set prices below or above competeting products. Competitor orientated pricing forms part of Guinness' pricing strategy. This is because Diaego plc takes the going rate for Guinness brands. Again, the unique taste of roasted barley and malts with a light brown creamy topping is an advantage here as there is no other product on the market with such a taste. 

Regarding reacting to competitors' price changes, Guinness has never followed price reductions. If they did this could cause contrary to the brand image as it is seen as a premium stout.

Types of pricing strategies:

Differential pricing:

"Changing different prices to different buyers for the same quantity and quality of product" (Dibb, Simkin, Pride and Ferrell, 2012). For example, Guinness may decide to up their prices in Ireland when tourist season is high, especially around St.Patrick's Day.

Product line pricing:

This refers to "pricing a whole line of items rather than setting prices for individual items seperately" (Dibb, Simkin, Pride and Ferrell, 2012). Premium pricing, used by Guinness, is covered under this heading. Premium pricing is used to reflect the quality of an item through the price of an item. It is often used in markets with product specific features. For example, Guinness is specific because it is a stout and it's quality is reflected in it's premium pricing.

Psychological pricing:

This is based on the theory that prices have a psychological impact. The positioning of the price of the product in the market is considered with psychological pricing. For example, if Guinness ever decided to use this strategy, they could sell a pint for €4.99. The reason why this method works, although it is not used by Guinness, is that the consumer will still think they purchased something for less than €5, even though it was just a cent away.

Other pricing information:

Guinness has had it bads times, ethnically. The Competition Authority were close to charging Guinness with price fixing charges in the late 90s. This came about after a sales representative made accusations that during his time at Guinesss, he was present at price fixing meetings with top management in the business. However, despite this, Guinness has majorly benefited from being an internationally recognised brand as many of such regulations which do still apply in Europe, do not in international countries, where stout is enjoying high sales and profits e.g. in the Central African Republic. In the Central African Republic, the stout is associated with sexuality which in Europe would be seen as morally wrong.

References:

1) Dibb, Sally; Simkin, Lyndon; Pride, William M. and Ferrell, O. C. (2012). Marketing: Concepts and Strategies (6th ed.).London: Cengage.

2) Guinness® – beer made of More™ Available at: https://www.guinness.com/en-gb/ (Accessed: 11 November 2016)

3) Marketing mix (4P’s) price and pricing strategies (2015) Available at: http://www.learnmarketing.net/price.htm (Accessed: 20 November 2016).

4) Suttle, R. (2016) "What is a product mix?", Small Business Chron

Guinness - Product

As stereotypical as it is, Ireland is known for its apparent large consumption of alcohol. There is a wide variation of alcoholic beverages sold in Ireland of course, but without a doubt, Ireland is primarily associated with Guinness.

Lets begin with product. As obvious as it may be, Guinness is evidentally a product. A product is "everything, both favourable and unfavourable, tangiable and intangible, received in an exchange of an idea, service or good" (Dibb, Simkin, Pride and Ferrell, 2012). To be more specific, Guinness is a good, which is defined as "a tangible physical entity" (Dibb, Simkin, Pride and Ferrell, 2012). However, as it is consumed by drinking, it is a non-durable goods.

Guinness is a dry Irish stout, founded by Arthur Guinness at St.James' Gate in Dublin in 1759. The product mix, "the total number of product lines that a company offers to its customers" (Suttle, 2016), is appropriate for Guinness as it includes stouts, ales and lagers. All of these three brands are sold in draught, bottled and canned form. There are a wide number of variations of Guinness, which in return adds the depth element of the product mix to the company - "the total number of variations for each product" (Suttle, 2016). 

Figure 1.0

Variations include: (see figure 1.0)

Africa Special Stout

Blonde American Lager

West Indies Porter

Foreign Extra Stout

Dublin Porter

Original

Golden Ale

Harp Lager

Kilkenny Draught Irish Cream

Product life cycle:

A product's life cycle includes four main stages: introduction, growth, maturity and decline. Like every other product, Guinness has went through this cycle. 

Introduction Stage: 

This is when a product first appears in the marketplace before profit or sales are made (Dibb, Simkin, Pride and Ferrell, 2012). In it's introductory stage, Guinness wanted to raise product awareness and also create a market for the product. Quickly Guinness established branding, a quality level and obtained intellectual property protection including patents and trademarks. As the popularity of Guinness increased, the founder wanted to ensure that the average person could afford the product over other competitors' alcoholic beverages. This price comparison has remained throughout the years and today it is in line or below its competitors with regards to price.

Growth Stage:

"The stage at which a product's sales rise rapidly and profits reach a peak, before levelling off into maturity" (Dibb, Simkin, Pride and Ferrell, 2012). Acceptance of Guinness as a product, a good, was quickly shown by customers. Initially it was only sold in Ireland. However, come 1769, Guinness exported its first barrel to England, showing its popularity. It is clear that Guinness was growing in demand as by the early 1800's, it became popular amongst many European countries and even reached Barbados, Africa, America and India. To reduce shipping costs, Guinness smartly set up bottling factories worldwide.

Maturity Stage:

This is the stage of the product life cycle where "a product's sales curve peaks and starts to decline, and profits continue to decline" (Dibb, Simkin, Pride and Ferrell, 2012). Unlike many other alcoholic products, Guinness has been around for over 250 years, which in turn makes it difficult to pinpoint an accurate maturity stage. However, from the 1800's onwards, it is clear that Guinness is still a top selling alcoholic beverage worldwide.

Decline Stage:

The decline stage occurs when sales rapidly fall (Dibb, Simkin, Pride and Ferrell, 2012). For the first time, the sales of Guinness dropped in Ireland and the U.K. in 2001. This was due to consumers choosing to drink at home and since Guinness from a pint is different from a can, many chose to buy other forms of beer. Sales could most definitely be better and maybe perhaps we could see a re-cycle or revitalisation of Guinness.

Conclusion:

Based on the product life cycle of Guinness, two diverse observations can be made. 

Guinness is in the maturity/decline stages in Europe due to the drop in sales. However, in foreign African and Asian markets, Guinness’ market share is still growing even as competitor brands emerge. Brand preference in such markets is continuingly being built by project Guinness’ uniqueness.

Due to competition, Guinness has had to become innovative in extending their sales stability and maximising profits. An example of how they have successfully achieved this was by introducing Guinness Red, which further retained customers and brand loyalty - ("the extent of consumer faithfulness towards a specific brand and this faithfulness is expressed through repeat purchases and other positive behaviours such as word of mouth advocacy, irrespective of the marketing pressures generated by the other competing brands" - Kotler & Keller, 2006).

Re-branding of the product:

Rebranding "is the process of changing the corporate image of an organisation. It is a market strategy of giving a new name, symbol, or change in design for an already-established brand. The idea behind rebranding is to create a different identity for a brand, from its competitors, in the market." (Bennett, 2016). 

In 1997, Guinness rebranded itself to Diageo plc. It became the world's largest beer, wine and spirits company when it later merged with Grand Metropolitan. However despite this, the names "Diageo" and "Grand Metropolitan" are still nowhere near as popular as the name "Guinness".

Within the last year, Guinness has introduced their new logo (as seen in figure 2.0). A logo gives a company an easily recognisable visual symbol, in Guinness' case, the harp. By having a logo, people are given consistent exposure to brands. The more that people are exposed to that logo, the more synonymous the logo becomes with the name and brand. 

Guinness is no exception to this. As seen in figure 2.0, there is not much of a difference with the new logo apart from a new font and more detail in the harp. However, the logo still remains classic, reminding consumers of the classic colour and the classic texture of Guinness. Even though the new logo is hand-crafted, the new look does not say "artisan" but says "classic", which makes sense. Despite the changes, the designers have kept the well-conceived logo which has been instrumental in building and maintaining their brand imagine whilst still remembering what Guinness is about.

Figure 2.0 Before (left) and After (right)

Brand Equity:

Since rebranding to Diaego plc and merging with Grand Metropolitan, the brand of Guinness has become an asset to the organisation. Brand equity refers to the "marketing and financial value associated with a brand's strength in the market, which is a function of goodwill and positive brand recognition built up over time, underpinning the brand's sales volumes and financial returns." (Dibb, Simkin, Pride and Ferrell, 2012). Brand equity is associated with four major elements, all of which Guinness has (see figure 3.0).

Figure 3.0

Brand awareness has led to Guinness being familiar, not only in Ireland, or Europe, but worldwide. Due to the increase in awareness of the brand, the Guinness Storehouse in Dublin has become an internationally recognised tourist attraction. As a result, they now run a Guinness Storehouse tour, which generates sales and profits from tickets and the Guinness Storehouse gift shop. Guinness is seen as reliable and like no other brand and for this reason people choose to visit places such as the Guinness Storehouse, as the myth is, Guinness tastes its best from Ireland.

Brand loyalty is an important element of Guinness' brand equity. Brand loyalty reduces Guinness' vulnerability to competitors' actions. It allows the organisation to retain their existing customers without having to spend enormous amounts of finance on gaining new ones. Loyal customers provide brand visibility and reassurance to potential new customers, which again means Guinness does not have to use huge amounts of resources to get new customers. This is much a benefit to Guinness.

The perceived brand quality of Guinness' name itself stands for a certain level of quality in the customers mind. In cases such as with Guinness, customers cannot physically try the brand therefore make purchase judgements based on the brands reliability and perceived quality. As aforementioned, the myth is that Guinness tastes best from Ireland therefore when tourists visit Ireland, their perceived quality of Guinness increases as they are led to believe it tastes better in Ireland. There is no evidence of this being true, it is merely just opinion. However, until it is tried and tested by the consumer, they rely on other people's opinions. 

Brand associations significantly contribute to a brand's equity. The purpose of this is to connect a brand with a lifestyle, or in some cases a personality type. For example, Guinness beer is associated with having a bitter taste with a barely/malt flavour whilst being heavy and creamy. It is also one of the main things associated with Ireland. This sets it apart from competitors' products

References:
1) Bennett (2016) Definition of ‘Rebranding’ - the economic times. Available at:      http://economictimes.indiatimes.com/definition/rebranding (Accessed: 10 November 2016).
2) Dibb, Sally; Simkin, Lyndon; Pride, William M. and Ferrell, O. C. (2012). Marketing: Concepts and Strategies (6th ed.).London: Cengage.

3) Guinness® – beer made of More™ Available at: https://www.guinness.com/en-gb/ (Accessed: 11 November 2016)
4) Suttle, R. (2016) "What is a product mix?", Small Business Chron

Introduction

Welcome to my blog! I have decided to demonstrate my knowledge of the marketing mix through my pride of being Irish.
 Therefore, this blog will be focusing on the well known Irish brand of Guinness. 
Enjoy!