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Campaign Plan Proposal

Svedka Vodka Elijah Clark-Ginsberg, Dana Cornelius, Hilary Kee, William McHugh


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Introduction Svedka Vodka, a young but promising brand in the adult beverage industry is a crowd favorite accepted by connoisseurs and occasional drinker alike. It has been named a gold medal winner in many competitions, including the World Spirit and International Spirit Awards in 2010, and the Exceptional Taste and Best Buy Competition in 2008 and 2009. Despite success in competitions and overall ratings, Svedka has not yet reached its potential in terms of building a large market share. Svedka’s current ad campaign, featuring a sexy fembot, fails to clearly communicate the brand’s qualities and tends to confuse and turn off consumers. By redefining Svedka as a premium yet affordable vodka and revamping the creative, it can successfully appeal to a broader market. Aiming simultaneously for audiences that like to socialize and enjoy life on a budget as well as more premium minded consumers, Svedka can be accessible to both because it continually offers a high-quality product. A carefully repositioned brand campaign could reach more consumers and more clearly communicate Svedka’s brand values.


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Situation Analysis Target Audience Profile The 21-25 year-old young adult demographic is a unique one. Especially in Boston, the segment is dominated by college students and recent graduates. In 2006, under 25 year-olds spent a total of $230 billion, almost $4 billion – or 1.7% – of which was for alcohol. While less than 2% may not sound like a significant portion of spending, it is significantly higher than the percentage among 25-34 year-olds or 35+ year-olds (“Spending Power”). Young adults may not have much money compared to their older counterparts, but they’re much more willing to spend it on alcohol, especially when they feel they’re getting good bang for their buck. Across spirits-drinkers of all ages, relaxation and socialization with friends are the most common reasons to drink (on both counts, 56% of respondents report those reasons to drink spirits). However, among young adults, there is a strong pronounced preference for using alcohol to socialize rather than to relax. Only 47% of young adults report using spirits to relax, but 70% say they drink them to socialize with friends (“Spirits: The Consumer”). Clearly, 21-25 year-olds are most interested in the social aspect of drinking and regard it primarily as a group activity to be enjoyed with friends. Young adults believe in working hard and playing hard, and they consider alcohol a key part of their play. Young adults are not yet set in their drinking habits and brand preferences. This behavior makes them easy to gain as a customer, but relatively difficult to keep. They are significantly more likely than the average across all age groups to be swayed by things like recommendations from friends, family, bartenders, waiters, or salespeople, packaging design, sponsor or price promotions, and advertisements, especially ones on social media. This penchant for social media


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is understandable, considering how tech-savvy and plugged in the young adult demographic is. Low price, however, remains the dominant choice factor with 38% of young adults stating that as their reason for loyalty to a given brand and 51% saying that low price is what motivates them to try a new brand (“Spirits: The Consumer”). Young adults are most likely to drink at their own home, with 47% (compared to 54% across all age groups) saying that is the primary place they consume spirits. Nightclubs and bars are also popular drinking locales for 21-25 year-olds, with 30% of young adults (versus 20% of others) saying they drink primarily in these locations. Young adults are more than twice as likely as other age groups to drink primarily at a friend or family member’s home, with 19% reporting that as the main location they consume spirits. Interestingly, two thirds of young adults report that they’re willing to drink cheaper spirits brands at home and more than half say that they prefer the taste of cocktails made by professional bartenders (“Spirits: The Consumer”). When consuming spirits, 21-25 year-olds tend to combine them with a single mixer. Young adults most frequently combine their spirits with soda (71%), juice (56%), or energy drinks (24%). Young adults also consume their alcohol neat or on the rocks more commonly than the general population and they do shots twice as frequently as other age groups (62%). Perhaps more surprisingly, young adults are also more likely than other age groups to consume speciality cocktails (i.e., drinks such as Cosmopolitans or Margaritas rather than a drink such as rum and coke) . On the whole, 21-25 year-olds are just as adventurous in how they drink as they are in what they drink (“Spirits: The Consumer”). However, the preference for shots and single, cheap mixers indicates that young adults are looking for a cost-effective and no fuss way to get drunk.


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Brand Concept Despite being a preteen brand in an industry dominated by centuries-old distillers, Svedka has already carved out a respectable share of the vodka market for itself. As of 2009, Svedka held a 4.7% market share, while the leading Smirnoff held 16.2% (“Spirits: The Market”). In 2007, Svedka was sold to Constellation Brands for $384 million, almost a sixth of what Bacardi bought Grey Goose – arguably the most equitable vodka brand of all time – for in 2004 ("Constellation Brands to Purchase”). Clearly, Constellation sees potential for growth in Svedka, as it should. Although Svedka has gained a strong following because of its low price and high quality, that success is largely in spite of its current ad campaign, which leaves many consumers confused, offended, and turned off. The campaign does not promote Svedka’s unique position as a genuinely high-quality, low cost vodka and instead claims it will be the #1 vodka of 2033 and pokes fun at cultural institutions. A 2009 bottle redesign attempted to capture Svedka’s “cheap chic” positioning and make it “bilingual” so that it can appeal both a hip, young crowd and an older and more affluent audience (Ebenkamp). Svedka’s cheap chic brand, like that of fellow Swedish imports Ikea or H&M, is built on the promise of quality at very low prices. Svedka is priced similarly to market leader Smirnoff at less than $20 for a 750ml bottle. Svedka has also won numerous awards and titles and has an aggregated rating of 560, easily outpacing top shelf brands like Ketel One and Belvedere (“Vodka Bottle Listing”). Like Smirnoff, Svedka is technically classified as a midrange vodka, although it is often perceived as a budget product. In order to improve brand perception and


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equity, Svedka needs to leverage its superior quality and reposition itself firmly as a premium vodka at an affordable price. As Figure 1 illustrates, Svedka’s price and quality – and therefore its value – are very similar to that of Smirnoff. Numerically superior brands such as UV and Rokk are not a serious threat due to low availability, so Svedka is the brand more advantageously positioned to leech market share from Smirnoff (which saw a 4% decline in share over the same period Sveda saw a 23% increase). Svedka needs to maneuver itself into a more premium position in order to entice consumers who are weary of Smifnoff’s decidedly midrange status. As Grey Goose and other top shelf brands prove, perception as a premium product has much more with marketing than it does with quality and taste. Svedka may claim to be the #1 vodka of 2033, but it’s time for it to become the #1 vodka of right now. Figure 1. Product Comparison of Svedka and Selected Competitors Product

Price1

Rating2

Availability4

Country of Origin

UV

$11

611

55.55

66%

USA

Rokk

$14

597

42.64

33%

Sweden

Smirnoff

$15

593

39.53

100%

Russia

Svedka

$16

560

35

100%

Sweden

Skyy

$20

643

32.15

100%

USA

Finlandia

$19

472

24.84

16%

Finland

Stolichnaya

$26

594

22.85

100%

Russia

Ketel One

$28

467

16.68

100%

Netherlands

Belvedere

$33

379

11.48

100%

Poland

Value3

1 Price reported by rating institutions aggregated by Proof66 and may not reflect actual Boston-area retail price. 2 Scores provided by Proof66 and based on aggregate scores from San Francisco World Spirits Competition, The Beverage Testing Institute, Wine Enthusiast, Proof66 editors, and users. Some scores do not include ratings from all three judging institutions. 3 Calculated as points per dollar. 4 Percentage of availability among eight Boston-area liquor stores surveyed.


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Hot-Buttons Profile The 21-25 year-old demographic works hard and plays hard, and they want quality spirits without having to spend all of their hard-earned cash. Especially because most members of this demographic are in college or have recently graduated, low cost is a very prominent hot-button. Of young adult respondents, 64% said that low price is a very important or somewhat important factor in choosing a spirit brand (“Spirits: The Consumer”). All age groups find ingredient quality to be an important choice factor, and young adults are no exception. Not only do 64% of 21-24 year-olds want a cheap spirit, 64% want a highquality one as well (“Spirits: The Consumer”). Young adults are not willing to compromise but, if cleverly repositioned, Svedka can easily sit at that intersection between price and quality. The social pressure of popularity is also a hot button for this demographic. Young adults are 15% more likely than other age groups to drink the brand that everyone orders. Of this demographic, 30% also say that they will not drink value-brand spirits when with friends and 70% say that socializing with friends is the reason they drink spirits (“Spirits: The Consumer”). Svedka should leverage its growing market share and reposition itself as a more premium brand in order to become a popular choice among groups of friends. Country of origin is less important to young adults than it is to older demographics, but 21-25 year-olds have a strong association with other Swedish brands (Ikea and H&M, primarily), meaning that Svedka’s Swedish origins should be leveraged rather than ignored. Figure 2. Factors Respondents Say are “Very” or “Somewhat Important” When Choosing a Spirit Low Price

Ingredient Quality

Popularity

Country of Origin

All Ages

55%

65%

25%

38%

21-24

64%

64%

40%

32%

Source: Mintel, May 2011


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General Advertising Campaign Objectives A new advertising campaign for Svedka, first and foremost, needs to communicate the brand’s most prominent strength: not just value, but high quality at a low price. Svedka should be positioned as more than just a Honda at a Honda price – it should be a Mercedes at a used Geo Metro price point. The primary objective of the campaign should be to inform consumers about Svedka’s unique position at a crossroads between low price and high quality. The campaign should also persuade and convince consumers of Svedka’s value and build desire by creating a connection to their lifestyle (or the lifestyle that they aspire to). Ultimately, the campaign should create an increase in positive product-focused brand conversations (rather than the unproductive, or even corrosive, advertising-focused conversations created by the current campaign) and, consequently, an increase in sales among the 21-25 year old target demographic. Additionally, the campaign should aim to increase repeat purchasing with seasonally appropriate and timely creative that emphasizes the wide variety of occasions and settings for which Svedka is the perfect spirit. Whether for a quiet cocktail at home in September, a wild party in October, or a holiday celebrated with family in November, the campaign should emphasize the desirability of Svedka. Because of Svedka’s poor on-premise sales performance at present, the campaign should also encourage and glamorize ordering Svedka at bars and nightclubs. Of the target age group, 30% report that they will not drink value spirits when with friends, so Svedka should position itself clearly as a midrange or premium vodka in order to encourage on-premise orders from groups of friends (“Spirits: The Consumer”). Unlike being caught in bed with a Fembot, ordering Svedka shouldn’t be something to be ashamed of.


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• More sophisticated packaging can encourage sales from more affluent or aspirational segments while increasing shelf and back bar appeal. • A new ad campaign can begin to repair the brand corrosion caused by the current campaign and can more clearly communicate Svedka’s brand values. • Traditionally strong Absolut sales have been slipping in recent years (“Spirits: The Market”). Svedka can maneuver itself to steal some of Absolut’s market share, which benefits from popularity at nightclubs.

Weaknesses

• Svedka is priced affordably (under $20 and on par with market leader Smirnoff) • Svedka’s taste and quality have earned it gold medals and high ratings from spirit competitions and judging institutions. It falls in the 90th percentile for quality based on its aggregate score calculated by Proof66 (“Vodka Bottle Listing”). Together with low price, this makes Svedka a great value. • Svedka is widely available: it is carried by all Boston-area liquor stores surveyed. • Svedka is imported from Sweden. According to 2008 research, imported vodkas account for 32% of the market share and are growing in popularity (“Spirits: The Market”). • Svedka has a competitive market share that is growing quickly. Its market share increased 23% to 4.7% between 2008 and 2009 (“Spirits: The Market”).

Threats

Opportunities

Strengths

SWOT Analysis • Despite its high quality, Svedka is perceived as a value brand by many rather than as an affordable premium brand. • Svedka’s current ad campaign is confusing and off-putting to consumers and does not communicate brand values. • Svedka’s immature branding makes it unattractive to older, affluent, and sophisticated segments. • Svedka is not frequently requested at bars and nightclubs, resulting in low onpremise sales (“On-Premise Alcohol Consumption Trends”).

• Competitors such as Smirnoff, Absolut, and Skyy have larger market shares and ad expenditures than Svedka (“Spirits: The Market”). • Other low-cost high-quality brands such as Rokk and UV could endanger Svedka’s positioning, especially if they gain improved distribution. • Younger audiences like to experiment with their spirits brands, making it difficult to gain brand loyalty among those demographics . • Regulations limiting alcohol promotion and consumption threaten growth in the spirits industry as a whole.


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SWOT Strategy With a redesigned ad campaign, Svedka can fix the issues of perception created by the current campaign as well as reaffirm the consumer’s beliefs that Svedka is a fantastic vodka at a great price. Svedka is in an even more powerful position because of the recent decline in sales of Absolut, among the largest competitors in the market. In addition to being a fellow Swedish export, Absolut occupies a a midrange-premium market position that Svedka would benefit from moving into. Absolut is also a popular brand for on-premise spirit sales, an area where Svedka falls behind, and by advertising Svedka as a premium brand worth ordering at a bar or club, it can claim some of this market share. By using the quality of the product as leverage and the current brand awareness as a driving force, Svedka can overtake the top position with only a few adjustments. The main focuses of the revamped brand would include new and more stylish packaging and an ad campaign specifically targeted towards an increase in on-premises sales as well as a continuing rise in retail sales for home consumption . With a more sophisticated bottle, Svedka would increase its shelf and back-bar presence as well as promote a more premium perception while still maintaing a low price that will appeal to young adult and college-aged spirits drinkers. A less iconoclastic ad campaign that focuses on the positive brand attributes of Svedka can also appeal to budget and taste-conscious young adult consumers more effectively than the current campaign. By clearly positioning itself not as a value brand to be ashamed of ordering, but as an affordable premium product, Svedka is poised for success.


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References "Alcohol Consumption at Home - US." Mintel. June 2010. Web. 11 Nov. 2011. "Beverage Packaging Trends - US." Mintel. Feb 2011. Web. 11 Nov. 2011. "Constellation Brands to Purchase Premium SVEDKA Vodka." Constellation Brands. 6 Feb. 2007. Web. 14 Nov. 2011. <http://www.cbrands.com/news-media/constellation-brandspurchase-premium-svedkar-vodka>. Ebenkamp, Becky. "Svedka Vodka Gets an Upgrade." Adweek. 14 Mar. 2009. Web. 12 Nov. 2011. <http://www.adweek.com/news/advertising-branding/svedka-vodka-getsupgrade-105432>. "Inaugural Vodka Tasting Results!" Proof66. Web. 10 Nov. 2011. <http://www.proof66.com/ article_display.php?id=18>. "On-Premise Alcohol Consumption Trends - US." Mintel. Apr. 2011. Web. 11 Nov. 2011. "Phone Interview with Boston Liquor Stores." Telephone interview. 11 Nov. 2011. "Premium Brand Alcohol - US ." Mintel. Mar. 2008. Web. 11 Nov. 2011. Sanders, Holly M. "Svedka and 'Femme Bot' Likely to Offend Everyone." New York Post. 5 Oct. 2005. Web. 12 Nov. 2011. <http://www.nypost.com/p/ svedka_and_femme_bot_likely_to_offend_m3J0t69XOWOFMydvO1Gk3I>. "Spending Power of Young Adults - US." Mintel. Oct. 2008. Web. 11 Nov. 2011. "Spirits: The Consumer - US." Mintel. Sept. 2011. Web. 11 Nov. 2011. "Spirits: The Market - US." Mintel. Sept. 2010. Web. 11 Nov. 2011. Svedka. Web. 10 Nov. 2011. <http://www.svedka.com>.


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"Svedka Case Study." Amalgamated Advertising. Web. 12 Nov. 2011. <http:// amalgamatednyc.com/project/svedka-case-study/>. "Svedka Vodka." Lovely Package. 16 Mar. 2009. Web. 12 Nov. 2011. <http://lovelypackage.com/ svedka-vodka/>. "Vodka Bottle Listing." Proof66. Web. 10 Nov. 2011. <http://www.proof66.com/display.php? t=vod>.

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