Signha Beer: Boon Rawd Brewery

1. PROBLEM/KEY ISSUE

How can Boon Rawd Brewery maintain its competitiveness in Thailand’s alcoholic beverages market as the legal enforcement of total ban regulations on alcoholic drink advertisements become effective?

PORTER’S FIVE FORCES ANALYSIS OF BEER INDUSTRY IN THAILAND (AS CONSOLIDATED INDUSTRY)

THREAT OF NEW ENTRANTS – LOW

Entry barriers (i.e. huge capital investments in breweries) are high resulting in low threat of new entrants.

THREAT OF SUBSTITUTE PRODUCTS – HIGH

Other types of alcoholic beverages such as wine, spirit and liquor represent the substitutes of beer, though not perfectly substitutable.

THREAT OF BUYERS’ GROWING BARGAINING POWER – LOW

Wholesalers and agents are considered as buyers for Boon Rawd Brewery in which they have to follow the predetermined prices.

THREAT OF SUPPLIERS’ GROWING BARGAINING POWER – LOW

Suppliers who mainly provide key ingredients for beer (i.e. hops and bottles) tend to be not powerful since they are neither concentrated nor organized and the costs of switching suppliers are not high.

THREAT OF INTENSE SEGMENT RIVALRY – HIGH

Beer market in Thailand contains some strong and aggressive incumbents such as Boon Rawd Brewery, Thai Beverage and Thai Asia Pacific Brewery.

BOON RAWD BREWERY CO., LTD. TOWS MATRIX

STRENGTHS

In-depth beer industry experience and insight

Well-managed and established distribution channels

Top quality ingredients used to produce Singha beer

Brand image strength associated with “International Thai” identity

WEAKNESSES

High production costs of Singha beer

Singha beer is priced higher than economy beers

OPPORTUNITIES

Taxation according to alcohol degree

Overseas markets

Light beer trend

Offer premium beer (i.e. Kloster) to capture premium segment (S1, S2, O1)

Foreign markets expansion (S1, S3, S4, O2)

Develop light beer (i.e. Singha Light) and price lower than Singha (W2, O1,
O3)

THREATS

Total ban regulations on alcoholic drink advertisements

Adverse economic recession

Importation of foreign beers due to FTA agreements

Full-line forcing strategy adopted by Thai Beverage

Utilize color and symbolic forms which are associated with Singha’s brand identity to do IMC (S4, T1)

Price war (S1, S2, T1, T2, T3, T4)

Develop fighting brand (i.e. Leo) to compete with economy beers (W1, W2, T4)

BRAND IDENTITY AND POSITIONING FOR THAILAND’S BEER INDUSTRY

The above figure shows the positions of these “virtual images” on the perceptual map. Note how Heineken and Kloster represent well the Master European Brewer “space”, while Carlsberg appears slightly off-center in the Cosmopolitan World Traveler space. Singha appears on the edge of the International Thai space while Leo represents the Heritage Thai dimension. Chang does not seem to be able to be explained by any of the images. As a low-priced brand and the cheapest on the market, sold in bulk with a whisky product via a predominantly rural market, Chang seemed to compete mainly on price. As several focus group participants mentioned: “You drink Chang to get drunk!” The Modern Thai space does not appear to be served by any product.

In addition, the brands towards the top of the Established-Contemporary dimension had a more modern, new, up-to-date, fresh, and present or future image, as compared to the brands at the bottom, which were perceived as traditional, established, and consumed by older and more conservative people. However, the brands towards the left of the Head/Heart dimension were perceived as more logical, and serious, while those towards the right were perceived as appealing more to the heart.

2. ALTERNATIVE ACTIONS

Utilize color and symbolic forms which are associated with Singha’s brand identity to do IMC

Foreign market expansion

Compete on price (Price war)

3. EVALUATION OF ALTERNATIVES

Utilize color and symbolic forms which are associated with Singha’s brand identity to do IMC

PROS

Conform the government regulations while maintain corporate brand awareness

Reduce the negative perception towards the company

CONS

Might not be as effective as product-oriented advertisements

Foreign markets expansion

PROS

Increase sales from foreign markets

Go beyond the limited market opportunities due to the small size and fierce competition in domestic market

To reduce production costs as Singha beer can be locally brewed in foreign markets

CONS

Does not bolster the competitiveness of Boon Rawd Brewery in Thai market

Sales from overseas market can be minimal comparing to sales from domestic market

Compete on price (Price war)

PROS

Can utilize the resources elsewhere (i.e. advertising budget) to do price cutting

Boon Rawd Brewery can survive in Thai beer market

CONS

Brand image erosion

Product quality must be worsen off to be a low-cost leader

4. RECOMMENDATION

STRATEGIC INTENT

To be the Thailand’s leading portfolios of beer brands and the Thailand’s leading brewers in terms of sales volume and profitability domestically and internationally

STRATEGIC MISSION

To maintain the competitiveness in Thailand’s alcoholic beverages market as the legal enforcement of total ban regulations on alcoholic drink advertisements become effective

KEY RESULTS AREAS

Firm’s market share

Integrated Marketing Communication (IMC)

STRATEGIES

Utilize color and symbolic forms which are associated with Singha’s brand identity to do IMC [Alternative 1]

Foreign markets expansion [Alternative 2]

OBJECTIVES

Conform the government regulations while maintain corporate brand awareness

Reduce the negative perception towards the company

Increase sales from foreign markets

Go beyond the limited market opportunities due to the small size and fierce competition in domestic market

To reduce production costs as Singha beer can be locally brewed in foreign markets

IMPLEMENTATION PLAN FOR BOON RAWD BREWERY CO., LTD. (2007-ONGOING)

DOMESTIC MARKET (2007)

For beer drinking areas, replace the brand “Singha” with Singha logo and use yellow color theme

Generate new TV commercials with the emphasis on corporate brand

Do event marketing to current beer drinkers with symbolic and color marketing

Place more attention on Corporate Social Responsibility (CSR)

INTERNATIONAL MARKETS (ONGOING)

Expand to US and Europe markets by first adopt Thai restaurants as marketing channels

Expand to Supermarkets where Asians live

Expand to modern trade stores

In conclusion, marketing strategies for year 2007 are considered as the fulfillment for the brand “Singha” to remain in the market. However, if the government regulations are altered, the marketing strategies can be adjusted according. In the worse case, the firm may have to enter the price war and adopt the cost-leadership strategy.

REFERENCES

BrandAge Megazine. (Yr. 7, vol. 9). _Tipping Point Global Brand._ Retrieved April 17, 2007, from http://www.brandage.com/issue/cs_detail.asp?id=1911

BRANDAGE MEGAZINE. (YR. 7, VOL. 12). BEER WAR 2007 SYMBOLIC WAR. RETRIEVED APRIL 17, 2007, FROM HTTP://WWW.BRANDAGE.COM/ISSUE/CS_DETAIL.ASP?ID=1991

MANAGER MEDIA GROUP PUBLIC COMPANY. (2003, SEPTEMBER 2). RETRIEVED APRIL 17, 2007, FROM HTTP://WWW.GOTOMANAGER.COM/NEWS/DETAILS.ASPX?ID=7746

MANAGER MEDIA GROUP PUBLIC COMPANY. (2007, JANUARY). RETRIEVED APRIL 17, 2007, FROM HTTP://WWW.GOTOMANAGER.COM/NEWS/DETAILS.ASPX?ID=55510

Orient Pacific Century Market Research. _BOON RAWD BREWERY: Researching beer brand image and strategy options._ Retrieved April 17, 2007, from http://www.brandingasia.com/cases/case5.htm

Internal Factors

External Factors

 Orient Pacific Century Market Research. BOON RAWD BREWERY: Researching beer brand image and strategy options. Retrieved April 17, 2007, from http://www.brandingasia.com/cases/case5.htm