Svedka Harvard Case Solution & Analysis

Introduction

 Guillaume Cuvelier was preparing for the launch of his new product,named Svedka Vodka, a distilled spirit, in the US spirit market. He possessed a lot of knowledge about the industry as he had been the industry insider from 1980s to 1990s. The sales of Vodka were rising and increased by 3.6% in volume in 1998 as compared to 1997. However, the sales of other spirits was not impressive.

Problem Statement

Svedka is a new product in the vodka industry. This product has received good reviews from many analysts for its quality. Cuvelier wants to differentiate this product from other vodka, which has dominated the market. Therefore, a successful marketing campaign was required to penetrate and get hold of the market.

 In order to successfully market Svedka, he needs the combination of elements of the marketing that could help him to market Svedka successfully. Therefore, he wants to identify a successful price point at which to sell the vodka, the ways to promote the unique features of the brand and the ways to distribute amongst its potential customers.

Industry Analysis

This industry has been dominated by Russian vodka named Stolichnayain the United States of America which was introduced in 1965. The brand portrayed its Russian image strongly in the country. However, the sales were adversely affected by the Russian downing of flight 007 in 1982. Then the market was captured by domestic made Russian brand, Smirnoff. The product was quite successful which captured 20% market share in 1998.

Currently, a part of the market is dominated by vodkas which are expensive. The prices of these products range from $30 to above. In this category, the brands of Gray Goose, Chopin, and Belvedere are present. The other part of the market is dominated by cheaper vodkas. The brands of Dutch Ketel One and American sky come under this category.

Analysis

Porter five forces model

The Porter five forces have been used to analyze the market conditions of the product where it is introduced. This model takes into account the Threat of Substitutes, Threat of new entrant, bargaining power of suppliers,bargaining power of buyers and the Competition.

Threat of Substitutes

            The threat of substitutes is high. The market for spirits include whiskey and non-whiskey item. Vodka is sold as a part of whiskey items. The substitutes include U.S whiskey, Canadian, Scottish and Irish whiskey. On the other hand, the non-whiskey items include Gin, Rum, and Tequila. In 1998, the vodka’s share of the market was 7.3%, while the brandy and cognac share was 28%. Moreover, the svedka vodka was anun flavored product while the other competitor’s vodka was flavored one. This product was priced above $10 (lower-priced vodkas) but lower than premium priced vodkas ($30).

Threat of New Entrant

            The threat of new entrant is very low. Although, the drink is developed from cheaper raw ingredients, however it requires substantial investment in complex distilling and filtering methods as well as flavor ingredients. Moreover, this industry is a highly regulated industry. Licenses are required from the governments for producers and importers to sell vodka to wholesalers. Finally, the intense competition also creates barriers to entry for new entrants.

Competition

            The competition appears to come from high priced and lower priced vodkas.Dutch Ketel One and Sky are the vodkas prices below $ 10 and the Grey Goose and Belvedere are vodkas

Above $30.Flavored drinks are prepared to distinguish their brands from other competitors while Cuvelier has restricted his brand to unflavored drink.

Bargaining Power suppliers and buyers

            The bargaining power of the suppliers seems to be high. It is evidenced by the fact that the operating margins for the alcohol beverage companies are about 20%. This shows that the bargaining power of buyer (wholesaler) is low. However, when the vodkas are sold to retailers. Theyoffer considerable discount. It shows that the retailers are powerful in this industry.

Svedka Case Solution

SWOT Analysis

The Swot analysis considers the strengths, weaknesses, threats and opportunities of the business. This analysis will enable Cuvelier to further improve the marketing mix, it has launched for a new vodka product, Svedka.

Strengths

Cuvelier has vast knowledge about the dynamics of the vodka industry. He has used this knowledge to exploit the present gap in the market. Moreover, the product is a high quality one which would be like by any person. Furthermore, as the product is cheaper, it is expected to gain a large market share in the vodka industry. He is the first to take advantage of the entrance of Sweden in the European market as it has deregulated the monopoly of alcohol. The product is targeting the market segment that is not price-conscious and forms 40% of the consumers who consume Vodka..........

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