Absolut Vodka Proof

Contreras 1 Maria Contreras Professor Belch MKTG 479 04/01/23 Absolut Vodka: The Spirit of a Brand Absolut Vodka was first introduced in Stockholm, Sweden by Lars Olsson Smith. Smith discovered a distilling method that made the vodka unique from others in the white spirit segment. This distilling method required distilling the vodka hundreds of times to remove any impurities (pg. 3). The ingredients used were also considered to be raw and in their purest form. The wheat used was grown in local fields that were free of fertilizers and the water came from company-owned wells that were unreached by pollution (pg. 3). When Absolut Vodka entered the United States in 1979, marketing research indicated that due to the bottle being shaped like a traditional Swedish medicine bottle and the absence of a label, the product would not be attractive to consumers. However, six years later, Absolut became the best-selling imported vodka in the United States (pg. 4). The packaging succeeded due to being able to showcase how clear and pure Absolut vodka was. Not only was Absolut able to establish itself as a brand of "clarity, simplicity, perfection, and premiumness" through its product and packaging but through its advertising as well (pg. 4). Over a thousand advertisements were produced which consisted of "Absolut" in the headline and as a subject. Each marketing advertisement was published diversely from art to business to music. The purpose being to inspire and entertain consumers but would often result in them feeling challenged and confused in attempt to figure out what was going on (pg. 4). Absolut's product line strategy differs from other brands in the industry because instead of lowering the price of their Absolute vodka, Pernod Richard acquired two other V&S vodka brands. One of the brands being Frïs, was priced at $9.99 ranking in the standard segment (pg. 6). While the other brand, Level, cost $29.99 per bottle competing in the super-premium segment (pg. 7). By acquiring these brands, Absolut was able to offer products at different price points that would attract consumers in the white spirit industry. Frïs allowed the brand to provide a much more affordable vodka option without lowering the price of Absolut vodka. The standard segment vodka would appeal to the 51% of consumers in the market that switched from a more
Contreras 2 expensive brand to a more affordable option (pg. 1). These consumers state that often, the cheaper alternative is just as good if not better than the original brand. During 2008, the United States faced an economic recession and as a result, many of Absolut 's customers were trading down to mid-priced brands. While most mid-priced vodka brands were experiencing an increase in sales, Absolut sales started to decline at a rate of 5.9% (pg. 1). Svedka was one of Absolut's more aggressive mid-price competitors. Unlike Absolut, Svedka targeted young adults with affordable pricing and fun advertising (pg. 8). Each bottle retailed for $14.99, which was $7 cheaper than Absolut (pg. 8). As of 2008, Svedka ranked as the fifth-largest imported vodka brand. To prevent Svedka from replacing Absolut as the number one vodka imported into the United States, Absolut decided to extend their brand and acquired two new brands. Vertical brand extension refers to using the brand name and trademark on a new product that is introduced. In this case, it would be Absolut introducing a new "basic" vodka that is mid- priced to appeal to younger consumers (pg. 9). One of the benefits of brand extension being that the younger consumer will associate the new product with high quality because of Absolut's brand reputation. Absolut is a brand that is known to be of "clarity, simplicity, perfection, and premiumness" (pg. 4). Being aware that the product belongs to Absolut, consumers who are looking to trade down for less expensive vodka that is still of high quality, are likely to reach for this new "basic" vodka (pg. 9). The problem with vertical brand extension being that it would damage Absolut's strong reputation that it spent years building. Offering a product at a lower price point can make customers think of the brand as cheap, the vodka will no longer belong to the premium segment but rather fall under the standard segment. Traditional consumers of Absolut are also likely to be feel alienated, as if the vodka is only targeted towards younger audiences. Seeing as how young adults have a greater likelihood to increase their alcohol consumption than their traditional consumers, this is the key consumer segment. While it is important for Absolut to target this younger audience, Absolut should not ignore their traditional consumers, those who are aged between 35 to 44 (pg. 2). To be able to target both age groups, I would recommend Pernod Ricard to rebrand Frïs and Level under the Absolut name. By doing so, Frïs would compete in the standard vodka segment and attract a younger market due to its lower price point. Frïs also has introduced three different flavors: Frïs Cherry, Frïs Blueberry, and Frïs Grape
Contreras 3 (pg. 6). These flavored vodka options are more likely to be of interest to younger consumers who want to try new alcoholic beverages (pg. 2). Rebranding Level would allow Absolut to also compete in the super-premium vodka segment. The super-premium vodka market is more popular among older consumers due to factors like price, rarity, and quality. If Absolut then decides to compete in a higher segment such a prestige, it can purchase or create a more luxurious brand. To come off as luxurious and expensive, Absolute can create a unique packaging and limit the production of the bottles. Knowing there is only a limited number of bottles available and not everyone will be able to get their hands on it, the product will become more desirable. It would be especially popular among status seekers who are willing to spend more money on a bottle of vodka or collectors of special addition bottles.
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