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Absolut Vodka Case Study

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2. Which alternative marketing strategies does V&S Absolut Spirits have to increase its market share for: A) Aboslut Vodka in the USA?
In the last 20 years American citizens have developed a tendency for drinking ‘less but better’ alcohols; thus many people now drink cleaner and more pure alcohol. V&S Absolut Spirits must take advantage of this trend as this fits perfectly into their message. Absolut falls into the premium segment therefore they need to key on this with their advertising. Social media has become an extremely effective tool in regards to advertising; Facebook alone has over 1 billion users. In the United States social media advertising has become the norm, we see it everywhere, Facebook, Twitter, Youtube, and Pinterest. Social media has become one of the most successful ways to advertise a product. In facts 80 percent of social media users prefer to connect with brands through Facebook. V&S Absolut Spirits must exploit the benefits of social media and increase their promotion on Facebook in order to increase their market share in the United Sates. Currently Absolut only has 4 million likes on their official Facebook page compared to Smirnoff who has 10 million! B) Absolut Vodka in Europe?

In Europe there are very few established brands, most prefer locally produced vodka’s especially in Eastern Europe. The brand leader in Western Europe is Smirnoff which controls 16 percent of the market. In Eastern Europe the vodka market is very large and diverse with hundreds of brands on the market. The regional leader Kristal controls only 7 percent of regional sales, with its nearest rival brand, Smirnov, holding 4 percent of regional sales. I think for V&S Absolut Spirits to increase its market share in Europe they must venture to promote Absolut as an established ‘up market’ brand preferred over ‘local vodka’. C) Absolut Vodka in other parts of the world?

The rest of the world’s vodka market is mostly controlled by Diageo’s
Smirnoff brand. In Latin America Smirnoff controlled over 24 percent of the regional market with its closest competitor holding only 8 percent regional sales. In the rest of the world Smirnoff is the dominant brand. It led the market in Asia-pacific, Australasia, Africa and the Middle East. In order for V&S Absolut spirits to increase their market share in the rest of the world they should educate consumers in these countries on how to mix and consume vodka – something they have already began doing. They have also began offering prizes to individuals who share pictures of themselves on social media drinking Absolut. Works Cited

Thomsen, Sine. Swedish brand Absolut teaches Chinese how to drink vodka. Scandasia.com Web 2013. Melin, Eric. Social Media Statistics That Affect Your Marketing Plan. Socialmediatoday.com Web 2013. 3. In which region (country) of the world would you recommend V&S Absolut Spirits to allocate more marketing resources? Many believe the United States, which is Absolut’s largest market, has reached saturation. It would make little sense to put any more marketing resources into an already flooded market. So with little room to grow in the United States V&S Absolut Spirits must develop a plan in which they can gain a large market share in another region. I believe Eastern Europe presents a massive opportunity to V&S Absolut Spirits which they must utilize. 86 percent of the world’s vodka is consumed in Eastern Europe. The markets of Eastern Europe are distinguished not only by their high vodka consumption but also by how much consumers know about alcoholic beverages and their appreciation of quality.

However, political uncertainty and the lack of well functioning infrastructure in several Eastern European countries make short-term developments difficult to predict. In Eastern Europe there are very few established brands with the regional leader Kristal controlling only 7 percent of the regional sales. Diageo’s Smirnoff is the largest international brand on the market. These numbers show that if a brand can separate itself from the competitors there are massive opportunities in Eastern Europe. V&S Absolut Spirits need to develop a strategy which focuses on Absolut as a higher quality than that of their local vodka’s. As stated earlier Eastern Europeans pride themselves in their appreciation of quality. If they were to become aware that they were drinking an inferior product they would certainly give Absolut a try. However if Absolut were to employ this marketing strategy they would have to ensure their product was at least on par with the local vodkas. If they aren’t consumers will question the validity of Absolut as a brand and never purchase their products again.

4. Did Absolut Vodka have the right competences for achieving international success for its Absolut Cut? Absolut Cut was first launched in 2004 and was V&S’s first foray into the world of pre-mixed drinks. Absolut Cut is a mix of vodka and tonic blended with a lemon and lime twist. Absolut Cut has the same distinctive bottle shape as its parent brand and was rolled out to both the on and off-trade markets in Canada, Australia and the UK. However in July 2007 management concluded that Absolut Cut had failed to deliver sufficient volume in Cananda, Australia and the UK, promting it to be taken off the production line in all three markets. Clearly Absolut Vodka did not have the right competences for achieving international success for its Absolut Cut line. When one thinks of ready-to-drink products the first that comes to mind is Smirnoff Ice.

Very few ready-to-drink products are able to compete with Smirnoff Ice, in 2008 6,800 youths were surveyed on what their favorite alcoholic brand of choice was and it was found that Smirnoff Ice was the brand of choice for 54% of the respondents – making it 2.5 times more popular than its nearest competitor. Smirnoff was introduced in 1999 so by the time Absolut Cut was introduced; Smirnoff Ice was firmly established leaving little room for Absolut Cut to be successful in the market. V&S learned the hard way that in a world where manufacturing companies are increasingly looking to cut costs by moving production to cheaper labor markets or constantly looking to secure inexpensive raw materials, Absolut’s unique production process is a shining example how quality will always remain top priority. Absolut Cut simply watered down their product, something people were clearly not interested in. V&S should focus on the quality of their premium vodka, which remains their highest grossing product.

Works Cited

Mosher, James. Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market. ncbi.nlm.nih.gov Web 2012.

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