Svedka Vodka (C): Marketing Mix in the Vodka Industry Case Study Analysis
Threats: Inability ofincreasing the sales and gainingthe market share would lead towards an increase in the inventory cost. This would significantly lead to an increase in production cost,making the product price go high. Declined sales and customer interest towards the sale of alcohol product would lead to financial instability.
Porter’s Five Forces:
Rivalry: The threat of competition is high in the vodka industry. This is primarily due to the presence of vodka brands, such as: Smirnoff and Absolut. Some of the value brands of vodka in the market mainly include:Barton, McCormick, Aristocrat, and Crystal Palace. Similarly, the industry is also dominated by some super-premium brands as well, such as: Grey Goose, Belvedere, and Chopin. The super-premium category was primarily invented by Grey Goose in the year 1997.
Threat of New Entrant: The threat of new entrant is moderate because of the requirement of high advertisement cost i.e. the vodka industry spent no less than $200 million through different channels like television, newspaper, magazine and outdoor advertisement.
Threat of New Substitute–The threat of substitute is moderate due to the availability of alternate products in the market, such as: fruit juices, soft drinks, and flavored drinks at cheaper prices, which might alter the customers’ interest.
Bargaining Power of Supplier–The bargaining power of supplier is high because the distribution and manufacturing of alcohol products is restricted. This leads to the limitation of suppliers in the market. Due to this reason, the demand of suppliers is high,which allows them to charge additional price.
Bargaining Power of Buyer – The price of vodka products represents variation i.e. above $200 and below $35 for 9 L case. Such variation in the price serves as the basis of high bargaining power of buyer despite ofvariation in quality.
Political – Considering the Prohibition repeal in the year 1933; the alcohol distribution in the United States is mainly highly regulated by a three-tier system. This restricted the producers to directly distribute alcohol throughout the state. In 1919, the manufacturer, sale and transport of alcohol were banned by the constitutional amendment.
Economic–Due to significant changes in taxes and regulation, retail prices of vodka variesacross different states. Labor cost is relatively lowerwith low interest rates. The demand and supply of vodka products is high.
Social – The income of the population is high due to which the purchasing power of customers is also high.
Technological–The evolution of packaging to new innovations has been on its peak,based on the change in shape. The flavors of the products have been extended by an increase in the number of vodka brands i.e. 14 to 26……………………………….
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