Mc Dowell s Vintage Premium Malt Whisky Integrating the

Mc. Dowell’s Vintage Premium Malt Whisky Integrating the Marketing Mix XMBA 206. 1 Summer 2008 Ganesh Iyer 1

Agenda l Administrative stuff, presentations and exam. l Integrating the marketing mix…Mc. Dowells Vintage l Course Wrap up l Questions, Evaluations Ganesh Iyer 2

Presentations l Remember presentation format handout. l Please email to presentations to Houman by say 2. 00 pm tomorrow. Please name your powerpoint file as Group #. ppt modarres@gmail. com l l Ganesh Iyer I am hoping that each group finishes in about 8 mins. which will help entertain 1 -2 questions or comments from the class. 3

Exam l I will be in my office between 11. 00 – 12. 00 if you have any last minute questions. l 4. 30 to 7. 30 l Final will be easy, but… l Any questions Ganesh Iyer 4

Iyer’s Framework for Marketing Analysis Competitor Analysis Perceptual mapping Company Analysis Marketing Myopia First mover advantages Customer Analysis Positioning Segmentation Marketing Strategy Pricing process (ODI) Pricing and innovation Non Traditional advertising and promotions BMW Z 3 Direct marketing Calyx and Corolla Product Marketing Orientation Branding Intel Inside Price Promotion Place Traditional Advertising Planning Process Going to market Goodyear Market Ganesh Iyer 5

1. Consumer Analysis Demographic Profile l India’s GDP per-capita was < $1500 p. a. in 1996…($3300 in 2005, $4182 in 2006). » Approximately 5 mn. upper-upper class, many of then “nouveau riche” with per capita of > $100, 000 p. a. » Adopting the life styles of the old money group is an aspiration for the nouveau riche. l A growing middle class - 200 MM ($4000 p. a. in 1996), but in 2006 about 300 MM with over $6000 p. a. l Adoption of Western lifestyles is an established trend among the middle and upper-middle classes, particularly in big cities such as Mumbai and Delhi. Ganesh Iyer 6

Demographic Profile (cont. . ) l Automobile ownership in 1996: confined to less than 5% of the population (the upper-upper class). » Actual ownership may be less than 2%. » An automobile is a luxury product. l Changing trends…$2500 car » Tata_Nano » Nano_IHT » Tata_Jaguar l Ganesh Iyer Membership in 1) gymkhana clubs 2) racing associations etc. » prestigious institutions which exist from the colonial era. » Membership connotes “old money, ” westernization and social elitism. » part of the social life of the establishment and is aspirational for the nouveau riche 7

Consumer Behavior & Segmentation Cultural Dimensions of Serving Scotch Two Segments l A small group of “old money” and establishment types, with Western lifestyles and with Scotch as the preferred drink. » Why scotch? . . . a carry-over from British colonial days. l Scotch is therefore a status symbol and an aspirational product for the nouveau riche. » This group serves and consumes Scotch in a conspicuous, public manner to make a statement: – you have arrived, you have class – you can afford it Ganesh Iyer 8

Social Constraints l Despite the allure of Scotch, Indian society as a whole is still quite conservative and there are many social and religious barriers to consuming alcohol. Consequently: » drinking alcohol has a “forbidden pleasure” element to it for many middle-class families. » Barriers rapidly dissolving during the past decade. Ganesh Iyer 9

Marketing Environment Availability of Scotch l At the time of this case, import of Scotch was tightly regulated. » Permit based system. » Primary recipients were government organizations, five star hotels, and exclusive clubs (e. g. , gymkhana clubs). l Ganesh Iyer This promoted an active market for “bootleg” Scotch which was readily available, but whose quality was highly variable. 10

Legal Constraints on Marketing l Mass media advertising of alcoholic beverages is prohibited by law. l Distillers have devised many ingenious ways to circumvent this law: » setting up companies or using distributors to sell “proxy” products (decanters, salt and pepper shakers) which mimic the brand name and other brand properties of a particular brand e. g. , Diplomat Mens Accessories, Mc. Dowells Club Soda. » Event marketing e. g. , the No. 1 Mc. Dowell’s Derby, » http: //www. clubmcdowell. com/org/events. html » http: //www. clubmcdowell. com/brands/mc_main. htm » http: //www. theubgroup. com/events. html Ganesh Iyer 11

Premium Whisky Market in India l Locally manufactured Premium Indian Whisky (PIW) is an alternative to Scotch. It is a blend of 5% -10% imported Scotch and good quality ethyl alcohol. l Appropriate blending, flavoring and color are used to give it the appearance, taste and flavor of Scotch whisky l Sales are as follows: » Scotch Whisky (permits + bootleg) - 200, 000 cases per year » Premium Indian Whisky - 200, 000 cases per year. Ganesh Iyer 12

Interaction between PIW and Scotch l None of the Premium Whiskies are able to make a dent in the Scotch market due to » Lack of consistent blend quality » The aura and the image of Scotch l Ganesh Iyer Thus PIW cannot satisfy the aspirational needs which the serving and consumption of Scotch fulfills. 13

The New Product l A premium whisky containing > 15% Scotch blended with high proof ethyl alcohol and flavoring and color to approximate the taste and flavor of an imported Scotch. l Manufacturing Cost (Including packaging and overheads): Rs. 25/- per bottle as opposed to Rs. 15/- for a Premium Indian whisky. l Proposed name: Mc. Dowell’s Vintage Premium Malt Whisky Ganesh Iyer 14

Iyer’s Framework for Marketing Analysis 3. Competitor Analysis Perceptual mapping 2. Company Analysis Marketing Myopia First mover advantages 1. Customer Analysis Positioning Segmentation Marketing Strategy Pricing process (ODI) Pricing and innovation Non Traditional advertising and promotions BMW Z 3 Direct marketing Product Marketing Orientation Branding Price Promotion Place Traditional Advertising Going to market Goodyear Market Ganesh Iyer 15

2. Competitive Analysis Brand Pricing Information Ganesh Iyer 16

Competitive Positioning Analysis Positioning Decision Position as a superior PIW, or as an alternative to Scotch? At what price Premium Indian Whisky Scotch Rs 750 Rs 400 ? ? Ganesh Iyer ? ? 17

What did they do? Ganesh Iyer 18

Positioning: Why buy me? Why Should the Consumer Buy Mc. Dowell’s Vintage? 1. Because it will offer a blend quality equal to a regular Scotch (Johnnie Walker Red, Vat 69) and distinctly superior to all Indian Premium Whiskies. 2. Because it will have an image/aura which will satisfy the aspirational needs which serving and drinking Scotch satisfies. 3. Because most Scotch whiskies available locally (from bootleggers) are spurious. Support for creative. Ganesh Iyer 20

Marketing Objectives l To launch Mc. Dowell’s Vintage Premium Malt Whisky and sell 30, 000 cases in the first year. (in 4 metros) l To provide a direct alternative to Scotch whisky drinkers. l To capture and upgrade drinkers of premium whisky segment from competing brands. Ganesh Iyer 21

Iyer’s Framework for Marketing Analysis 2. Competitor Analysis Perceptual mapping Company Analysis Marketing Myopia First mover advantages 1. Customer Analysis Positioning Segmentation 3. Marketing Strategy Pricing process (ODI) Pricing and innovation Non Traditional advertising and promotions BMW Z 3 Direct marketing Product Marketing Orientation Branding Price Promotion Place Traditional Advertising Going to market Goodyear Market Ganesh Iyer 22

3. Marketing Strategy Product Strategy l Launch a blend distinctly superior to any PIW and a taste and appearance similar to Vat 69. The brand name connotes something rare and precious to support the alternative to Scotch claim l The package design the like of which has not been seen in the country and of truly international class. l Launch in Quart (750 ml) and Pint (375 ml) (and no Nip (180 ml)). l Why not launch the Nip…(Exclusion) Ganesh Iyer 23

Pricing l Price Mc. Dowell’s Vintage as the most expensive product in the (PIW) market to complement its image. l Need to achieve substantial distance from other premium Indian whisky prices. l Retail Price chosen is Rs. 550 - 560. Ganesh Iyer 24

Advertising and Promotional Strategy l Ganesh Iyer How do we develop brand image for this “status” product in an environment where mass media communication is illegal? 25

Direct Marketing Strategy l A direct mail campaign, addressed to the “old money” and establishment group as well as the nouveau riche as identified from: (200, 000 mail ins) » » l gymkhana clubs racing associations lists of guests from 5 -star hotels automobile associations What was the rationale for using direct marketing in a mass market consumer product category? » Direct marketing in the 1980’s and 90’s was rare in India…only done by a few industrial and durables sellers. Ganesh Iyer 26

Direct Marketing Strategy l Tightly defined market in terms of geography » 6 major metros (with population of around 55 mn) are the major markets. l p. u. contribution very high l Using DM for an image product. This is different from the U. S. experience. » The direct marketing campaign itself became a social thing Ganesh Iyer 27

Direct Marketing Strategy l Use direct mail to: » create launch awareness and excitement. (because of social dimensions of direct marketing in India) » build a core group of vintage consumers. » maintain a continuing dialogue with this group and track their behavior » Focus on lifetime consumer value. Ganesh Iyer 28

Teaser Mailers…Pre-Launch l A sequence of 2 provocative teaser mailers to generate awareness and interest 2 weeks before physical launch. » teaser 1: “take a walk johnnie” » teaser 2: “what an answer for 69” » teaser 3: “she was regal” (not chosen) l The mailers will introduce Mc. Dowell’s Vintage as an alternative to Scotch. l Teasers have a response device built in (coupons for free drinks at a five star hotel) to identify “prospects” from a “suspects” Ganesh Iyer 29

Launch Mailer l l Mc. Dowell’s Brings You a Rare Classic To all prospects: » Introduced Mc. Dowell’s vintage premium malt whisky as an alternative to Scotch » Presented the total product package, together a response device. Response to a questionnaire earns privilege coupons for free Vintage drinks at 5 star hotels. (12% response obtained). Ganesh Iyer 30

Theme Mailers…Post launch l 3 theme mailers. l Build around antique/priceless/rare items and subjects and relate it to Vintage. » “the what is what of crystalware” » “distinguished decanters” » “vintage time pieces” l The mailers give prospects the expertise to talk about the fine things in life and to contemplate purchases in exclusive and expensive product categories. (making DM a social phenomenon. . . small company executives solicitation) l Communicated that this will be an ongoing relationship. Ganesh Iyer 31

Media Advertising l Mc. Dowell’s Vintage page: » a regular & standard feature column in leading national dailies and newsmagazines. Feeds off the information on vintage subjects in theme mailers. » to break 3 months after brand launch. » Note the coordination between direct mail and media advertising Ganesh Iyer 32

Consumer Promotions l To 350 selected opinion leaders: » a velvet wrapped bottle hand delivered to the individual. » tied to the direct mail campaign. l Tie ups with all five-star bars for a special “vintage weeks” when “privilege drinks” can be served (sampling related to the response device). l Note the coordination between direct marketing and salesforce activity. Ganesh Iyer 33

Trade Promotion l Brand image window display » display in all Class A outlets to contain Vintage l In-shop activity: » 300, 000 coasters with the teaser campaign design given to bars and pubs for in-shop distribution. » In store merchandising materials which introduced the brand also linked to the launch mailers. Ganesh Iyer 34

Trade Promotion l Dealer detailer: » dealer detailer developed to aid the salesmen during launch distribution. l Other giveaways: » playing cards » clocks Other Activities Event Marketing l Mc. Dowell’s Vintage Car Rallies. l Mc. Dowell’s Vintage Jazz. Ganesh Iyer 35

Key Learning l Marketing strategy for the launch of an image product in a developing market from the perspective of a domestic firm. l Launching an image product requires an integrated strategy with every element of the marketing mix should working together. l Tactics and execution matter a lot. Ganesh Iyer 36

Postscript l Vintage created the super premium segment in India. l The super premium market has exploded. » Consumers wanted even more distance from the PIW and were even more willing to pay for Scotch quality l Mc. Dowell and other firms started pushing up this ladder and Mc. Dowell launched Signature and Single malt l The presence of Vintage constraining the super premium brands and Vintage phased out. l The entire direct marketing database asset and the Vintage strategy transported to Signature. » http: //www. signature. indiatimes. com/ » http: //www. clubmcdowell. com/brands/signature_main. htm Ganesh Iyer 37

Postscript Evolution of a Product Manager Grass does not grow on busy sidewalks Ganesh Iyer 38