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Compact case
Case
-
Reference no. 597-003-1
Subject category: Marketing
Authors: Leo Paul Dana (McGill University)
Published in: 1997

Abstract

This case deals with an industry (beverage; hard liquor) on decline - a lesson in how to handle strategically when the product needs revitalisation to survive. The problem faced by Bacardi is that sales have gone down with the recession of the early 90s. Therefore, a marketing mix has to be considered that will improve performance, taking into account any pertinent uncontrollable variable. The company''s main strengths are the well-known brand and the big size ($150m in profits, 1990). A weakness, though, is that Bacardi have been too reliant on its rum and have nothing to fall back on. Among the opportunities to capitalise on is the large Latin American market with a growing middle class. A threat that has to be taken seriously is that of increased competition from local and multi-national foreign companies in the arena due to NAFTA and other free trade agreements. Recommendation: Pull strategy - make consumers (i.e. primarily young and vibrant ''experiencers'' in urban areas) desire it by (1) geographical diversification and (2) product line extension. The extension should respond to the low-alcohol-trend and consequently emphasise light rum and breezers.
Location:
Industry:
Size:
USD150 million in profits in 1990
Other setting(s):
1990s

About

Abstract

This case deals with an industry (beverage; hard liquor) on decline - a lesson in how to handle strategically when the product needs revitalisation to survive. The problem faced by Bacardi is that sales have gone down with the recession of the early 90s. Therefore, a marketing mix has to be considered that will improve performance, taking into account any pertinent uncontrollable variable. The company''s main strengths are the well-known brand and the big size ($150m in profits, 1990). A weakness, though, is that Bacardi have been too reliant on its rum and have nothing to fall back on. Among the opportunities to capitalise on is the large Latin American market with a growing middle class. A threat that has to be taken seriously is that of increased competition from local and multi-national foreign companies in the arena due to NAFTA and other free trade agreements. Recommendation: Pull strategy - make consumers (i.e. primarily young and vibrant ''experiencers'' in urban areas) desire it by (1) geographical diversification and (2) product line extension. The extension should respond to the low-alcohol-trend and consequently emphasise light rum and breezers.

Settings

Location:
Industry:
Size:
USD150 million in profits in 1990
Other setting(s):
1990s

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