Absolut Vodka, first introduced in Sweden in 1879 under the name of “Absolut rent branvin”, which means “Absolutely pure vodka”, based on brand-new distillation method, has quickly become one of the most famous spirits in the world. It was first exported in 1979 to the United States of America and immediately caught on with the consumers’ taste. During the first year on American market, only 10,000 nine-liter cases of vodka were sold. The product was launched first in Boston, New York, then in Chicago, Los Angeles, San Francisco, and then all over the rest of the country. In 1982, Absolut vodka surpassed its main Finnish competitor which had entered American market 10 years before. In 1985, Absolut overtook the major Russian rival to become the leading imported vodka in the USA. In a very short period of time, Absolut has become form Swedish domestic vodka one of the 10 global leading brands, thus establishing international sales phenomenon and becoming example for its numerous followers. In 1994, Absolut vodka was ranked among top ten premium spirits on global scale. Today, Absolut is the number one selling imported vodka in Canada, the USA, Finland and other counties. It is present and available for purchase in more than 80 counties around the world.
The current work discusses in detail advertising strategies of V&S, the producer of Absolut and leading liquor company of Sweden in promoting the largest premium vodka brand in the world. The work will provide explanations why and how the advertising company for Absolut became perceived as an “advertising legend” around the world. The advertising element is the basis of Absolut positioning strategy which is built on differentiating their product from their competitors, of conveying its message through package, through style, though advertisement, that Absolut vodka is slightly different from other types and brands of spirits. The promotion element of marketing mix is the most important decisive part of brand building and differentiating the brand on the global market. Absolut ad campaign has increased vodka sales of V&S Group by 14,900% over the course of 15 years. This innovative advertising helped to create brand recognition and awareness around the world.
Absolut advertisement campaign is one of the most outstanding in the world until the present day, and the paper provides a clear ground to state that the largest element of the company’s image and competitive advantage relies exclusively on its marketing and advertising strategy. With such solidly established brand having powerful positions on global spirits market, few recommendations could be made. The company should keep up with the pace of time and explore new areas and means of advertisement, at the same time preserving its style and image. The message created for Absolut brand recognition is very felicitous and the company should further expand the ways to convey the message to constantly growing market. Besides growing, the market is also highly competitive, and to preserve its positions and expand further, the company should develop a range of product appealing to different consumers strata and needs. This is the question of satisfying both middle-class and highest class consumers, and establishing of the Level brand is very successful movement in this direction. It is worth to stay that the company possesses very powerful management resource able to flexibly respond to the latest developments. The company keeping track on the global trends further, there is no doubt it will remain global leader in liquor industry in future.
Table of Contents
- Executive Summary
- Table of Contents
- Brief current situation analysis
- Goals/objectives that the company has set
- Target market chosen by the company
- Absolut chosen differentiation and positioning strategy and tactics
- Assessment of the company’s marketing mix, linking every element to the branding and brand positioning
- Conclusions and recommendations
- List of References
The paper will be focused on integrated marketing communications of Absolut Vodka, one of the world’s leaders of spirits. Absolut Vodka, first introduced in Sweden in 1879 under the name of “Absolut rent branvin”, which means “Absolutely pure vodka”, based on brand-new distillation method, has quickly become one of the most famous spirits in the world. (Absolut case study). It was first exported in 1979 to the United States of America and immediately caught on with the consumers’ taste. During the first year on American market, only 10,000 nine-liter cases of vodka were sold. The product was launched first in Boston, New York, then in Chicago, Los Angeles, San Francisco, and then all over the rest of the country. In 1982, Absolut vodka surpassed its main Finnish competitor which had entered American market 10 years before. In 1985, Absolut overtook the major Russian competitor to become the leading imported vodka in the USA. In a very short period of time, Absolut has become from Swedish domestic vodka one of the 10 global leading brands, thus establishing international sales phenomenon and becoming example for its numerous followers. In 1994, Absolut vodka was ranked among top ten premium spirits on global scale (From the Fine art of advertising to the advertising of fine art.). Today, Absolut is the number one selling imported vodka in Canada, the USA, Finland and other counties. It is present and available for purchase in more than 80 counties around the world. The current work aims to discuss in detail advertising strategies of V&S, the producer of Absolut and leading liquor company of Sweden in promoting the largest premium vodka brand in the world. The work will try to provide explanations why and how the advertising company for Absolut became perceived as an “advertising legend” around the world.
Brief current situation analysis
The current section explores current situation analysis of Absolut vodka using 5C (company, customers, competitors, collaborators, climate)and SWOT frameworks (Guide for student, 2004).
Absolut Vodka is produces by V&S, the leading Swedish spirits company. The Absolute story began long before the introduction of vodka on American market and can be read on every Absolut bottle: “This superb vodka was distilled from grain grown in the rich fields of southern Sweden. It has been produced at the famous old distilleries near Åhus in accordance with more than 400 years of Swedish tradition. Vodka has been sold under the name ABSOLUT since 1879.” In 1878, Olsson Smith registered a trademark under the name of “Absolut Rent Brännvin”, meaning “Absolutely pure vodka”. With this product, Swedish entrepreneur introduced a revolutionary way of distilling vodka: a continuous distillation process which produces superior product. Absolut is still distilled with this method, though it has been further improved.
First exported form Sweden in 1979, in 1985 Absolut ranked first among imported vodkas in the United States. Today, Absolut ranks third largest spirit brand around the world and is virtually available in 126 markets. Being premier global brand, Absolut has the pre-eminent growth share in the category of premium vodka. In 2003, shipments to the United States increased 7.7 percent to reach 72.9 million liters. Its sales growth on global scale has grown from 10,000 nine-liter cases in 1979 to 7.5 million nine-liter cases in 2002 (Mucha, T., 2004). When talking about Absolute success story, it is impossible to mention its outstanding marketing and advertising campaign: the campaign has been running for more than 25 years and was built on carefully developed strategy. Since the beginning of promotional campaign by launch of Absolut Perfection in 1980, more than seven hundred absolute advertisements were created (From the Fine art of advertising to the advertising of fine art.). In 1999, Advertising Age named absolute ad campaign among the ten best advertising campaigns in the twentieth century. In 2002, Forbes named Absolut Vodka the number-one luxury brand globally. For 25 years of Absolut promotional campaign, the company won more than 30 awards for its outstanding advertisements.
At the present moment, Absolut vodka is produced for import more than for domestic use. Most of all, it is consumed in USA, Canada and Finland, where it is among top three spirits. The vodka is available of broader global scale; it is present and sold in 126 markets.
Over long period of time, Absolut was doubtless leader in imported spirits category on American market. But at the moment, it experiences difficulties of confronting new serious competitors which gain popularity and customer loyalty among Americans. The brands are Grey Goose, Ketel One and Belvedere (Miller, 2004), with cost per bottle higher than Absolut. These competitors gain ground in luxury drinks market, while such domestic company as Smirnoff with the cost per bottle lower that Absolut’s, compete for loyalty of middle-class customers. The company takes measures, such as launching of Level brand, to deal with the threats coming from its competitors (Miller, 2004).
Today, vodka is most popular product of all distilled spirits around the world. According to Impact databank data, total shipments of vodka to the United States overcame 42 million cases in 2003. Vodka is especially popular in the USA, where more than 60 percent of vodka in the entire Western world is consumed. On American market, imported vodka takes leadership over domestic, with doubled imports consumption since 1996 (Hamilton, 2000). Today, Absolut ranks as the number-one premium imported vodka on this market with commanding market share over its two main rivals.
Liquor is one of the most difficult areas as to creation of a new consumer brand. There are many hurdles. Generally, there is a ban on TV and radio advertisements (in USA there was a decade-old voluntary ban lifted only lifted since 1996, though in Europe television advertisements were allowed earlier) , marketers cannot go door-to-door dropping samples of products like soap.
Distribution of liquor is expensive and difficult to acquire. Making a new brand profitable can take many years of even can never occur. Most people do not experiment with the new liquors. This results in the situation, where the market leader of 1950 retains leading positions until the present day. For imported spirits, there was a historical tradition of domination of Russian vodka on American market. But it should be noted that environment influenced on establishing of the brand in 1980s as well as its outstanding promotional campaign. In 1980s, the Cold War took a new turn with the beginning of Afghanistan war and issue of European missiles. In such situation, American market had considerable reasons to question its ties with Stolichnaya, a leading imported vodka at the time. President Reagan description of the USSR as the “Evil Empire” certainly contributed to that perceptual shift. At the time, Absolut as a brand was established as being different, a classical version of cowboy of Marlboro. The product’s style, package and advertising “whispered” to the customer that the product is different from other brands of vodka all in similar bottles decorated in vibrant colors.
It would be useful to sum up the information presented above in the SWOT analysis framework.
- famous brand strongly established on American, Canadian and other markets (number one leading imported brand in the US and number three liquor brand there as well)
- exclusive and most powerful advertising campaign of all spirits brands (increased the sale of Absolut Vodka by 14,900% over 15 years)
- unique production methodology (revolutionary distillation process)
- leading luxury brand in the world
- powerful image of the company closely connected with strong associations to art and chic
- expanding channels of Advertising campaign (Internet and TV)
- establishing new brands to meet variety of customers needs concerning cost and style of the product (Level)
- expansion on other markets worldwide. Absolut is present in 126 markets, but further development as to deeper representation and promotion is possible to gain leading positions on local markets
- weak company’s position after reform of distribution channels (Seagram, one of the three importers of Absolut in the United States, went out of business, which caused the formation of Absolut Spirits, distributor of Absolut and Jim Beam worldwide.)
- almost complete reliance of Absolut brand on its image. Liquor industry agents have nothing distinctive concerning quality or taste of the product to offer except the image
- emergence of new powerful competitors (Gray Goose, Ketel One, Belvedere. In last three years, 120 brands of vodkas were introduced on American market.)
- Pressure from both more expensive brands of the luxury liquor segment, and from less expensive brands such as domestic Smirnoff.
- active usage of TV, radio and other advertising means by the competitors in the industry.
Goals and objectives that the company has set
The objective of Absolut is to retain its position of market leader in imported spirits category in the United States and promote its brand further worldwide. Absolut is the world’s leading company in liquor industry and therefore it is natural that the goal of the company is to retain its leading position and increase the sales volumes even further. Also, the company targets to further establish strong brand image of the company through its unique and ingenious marketing campaign centered on artful, beautiful and chameleon-like bottle, exclusive quality of the product and appeal to luxury and chic.
Target market chosen by the company
Absolut targets at the global spirits market. Being available in 126 countries, the brand has acquired American, Canadian and Finnish market as its main export targets. In these countries, it has leading positions in liquor industry. Along with such broad operations area, Absolut’s strategy is aimed at acquiring specific industry niche worldwide: niche of luxury brands in the liquor industry. Today, Absolut is a leader in production of corporate chic. That is the major reason their product costs $35 per bottle.
The efficiency of such strategy is confirmed by the recent fact that even more expensive spirits gain their ground in American liquor market, exclusively due to their price. Therefore, in the first place, Absolut sells a mental image of instant cool (their site with its novel flash technologies, send this message in the most vivid manner). Absolut sells the image of chic and luxury. And naturally their target market consists of people looking for such image in the things they buy.
Absolut chosen differentiation and positioning strategy and tactics
Positioning strategy refers to how the organization want its consumers to perceive their product. The positioning strategy includes the message the company wants to convey to consumers about its product (Ries, Trout, 1986).
The positioning strategy of Absolut is built on differentiating their product from their competitors, of conveying its message through package, through style, though advertisement, that Absolut vodka is slightly different from other types and brands of spirits. The positioning and differentiation strategy of Absolut relies on the main option: emphasizing the distinctive unique benefit of the vodka concerned. This is emphasized by the price, by the package (uniqueness of bottle), by the unique advertising company, conveying both broadcast and narrowcast messages (Aaker, 2003), by the production method, and, most important, the quality of chic and magnificence attached to the product. Competitive differentiation, thus, is the dimension of such positioning strategy undertaken by Absolut, which provides a strong foundation of building competitive advantage of the brand and drive all future marketing decisions. The differentiation strategy of Absolut enables turn the vision, the image of the company in this particular case, into the reality and manage customers’ perceptions. Apart from the quality of the product, the peculiarity of package, and the exporting country, the main element of differentiation strategy employed by V&S, the producer of Absolut, is its unique advertising campaign aimed at creating the image of intellectual, artful, luxury brand. In the liquor market, there is very little scope for differentiation due to limited taste and quality differences in the product line (Stern, 1990). Therefore, it is vital, notwithstanding of the fact, for a company wishing to establish itself as a corporate leader, to invent viable and unique differentiating strategy of its product. This is done by establishing fashionable and artful image of the company through the means of advertisement. Absolut advertising campaign still follows a carefully elaborated strategy on the basis of variety and continuity. The advertisements are sophisticated, witty and imaginative as they communicate the brand’s values (A Visual Analysis of the Absolut Vodka Advertising Campaign). Since the launch of advertisement campaign, about 1,500 Absolut ads were created. This absolutely innovative advertising helps to create brand recognition and brand awareness among consumers and impact greatly on differentiating product specially when competing in product categories which do not provide considerable scope for differentiation (Kiely, 2003). The following section will focus on marketing mix, revealing product, place price and promotion decision targeted at embodying the company’s branding and positioning strategies.
Assessment of the company’s marketing mix, linking every element to the branding and brand positioning
Marketing mix, according to McCarthy, includes four elements: product, price, place (route of distribution) and promotion decisions (Clow, Baack, 2004).
The brand’s name is Absolut, derived from primary name of “Absolutely pure vodka”. The style and package of the product differentiates it from all the other vodka producers around the world (the bottle shape was taken from classical Swedish medicine bottle which was weird at the time since it differed from the standard vodka bottle shape. The product also aims to differentiate itself in quality dimension: Absolut defines its approach to vodka production as One Source. This One Source is Åhus, a small picturesque town in the south of Sweden near the birthplace of Absolut founder Lars Olsson Smith, where every drop of Absolut vodka is made. The water for vodka comes from Absolut-owned well, “deep in pristine subterranean aquifers”, as mentioned on their site. Producing all the production of the company in single space using local raw materials provides Absolut with total control over all production stages and ensures that every drop in its 500,000 bottled made daily comply with its high quality standards. A revolutionary distillation method invented by Olsson Smith, the continuous distillation process is used to produce Swedish vodka to ensure that Absolut achieved the quality it claims to have. Continuous distillation process serves a superior way to remove impurities in vodka while maintaining the taste and character of the raw materials used. Thus, it is evident that practically all parameters of the product concerned are unique.
Since Absolut positions itself as a luxury brand, it uses skim pricing strategy to support its claim for leadership in chic market. Skim pricing aims at skimming the cream of the top of the market by setting a high price for its product (Porter, 2001) The bottle of Absolut costs $35 while a bottle of American Smirnoff is worth $14. Thus, with no apparent difference in taste, Absolut sends a message to the higher-strata consumers about coolness of its brand (Mucha,2004). In this, the company pursues quality leadership objective. Recently, a number of competitors, such as Grey Goose, emerged on American market with price per bottle even higher than that of Absolut. They attracted a considerable share of customers’ attention, since they appealed to the customers with similar message: a sign of extremely high quality and chic. Absolut responded by launching Level, a new brand of Vodka with most innovative distillation process based on combination of continuous and batch distillation, which is revolutionary to vodka production. It is understood that the price per bottle is high as well underlining the uniqueness of production process and appealing to luxury market segment.
Distribution (place) decisions
To develop its competitive advantage, Absolut decided to strengthen and integrate its distribution channels, After Seagram, one of three leading American distribution partners of V&S Group, left business in the early 1990s, Absolut has undergone a major transition with its distribution partners to form Absolut Spirits Co., responsible for importing and marketing of Absolut, Jim Beam and other brands worldwide and in the United States particularly.
In Absolut’s case, promotion element of marketing mix was the most important decisive part of brand building and differentiating the brand on the global market. Absolut ad campaign has increased vodka sales of V&S Group by 14,900% over the course of 15 years. This innovative advertising helped to create brand recognition and awareness around the world. As Goran Lundquist, the president of Absolut, noted about Absolut sensation, “the consumers drink ads as much as they drink vodka” (Lewis, 1996). “Absolut advertising is celebrated not just for its longevity but also for its ingenuity. Readers tear out the ads and hang them on their walls. Librarians have to guard their magazines from being de-Absoluted. College student actually collect and trade ads. A SoHo antique shop hawks copies of Absolut Wonderland, while a Madison Avenue newsstand carefully razors the Absolut pages from its stock and sells them for a few dollars apiece (naturally, selling the magazines as well)” says one of the numerous case studies on Absolut ad campaign (A Visual Analysis of the Absolut Vodka Advertising Campaign). The Absolut advertising campaign still carefully follows a strategy developed 20 years ago. Since the first ad, 1,500 Absolut ads were issued all going in line with the brand image: witty, imaginative and sophisticated. For more then twenty years of Absolut ad campaign, it was running solely in print ads form, with Internet and TV ads added to the advertising concept not so long ago. But indeed it’s printed ad campaign that contributed most to the building of Absolut image and is appreciated worldwide.
In Absolut ads, “Readers enjoy a relationship with this advertising that they have with few other advertising campaigns, especially in the print media. They are challenged, entertained, tickled, inspired, and maybe even befuddled as they try to figure out what’s happening inside an Absolut ad.” (Lewis, Absolut Book , 1996). The first element of Absolut ad recognized by the customer is bottle. Since ad has been running for more than 20 years, readers have become familiar with the way Absolut ads present themselves. The readers look at the bottle and try to guess what the image is trying to convey. Words below the image, always in the form of two-word slogan, “Absolut + something”, give the final key to the idea. This is the point where Absolut ads become unique. Even if the reader cannon fully comprehend the message of the bottle, he still identifies himself with the main element of the ad, the bottle. Thus, the most important part of the ad always shines to the reader. In the end, Absolut advertising campaign refers to cultural knowledge. Each Absolut ad makes reference to some element of pop culture. Even if the ad references itself, Absolut has become such a landmark, that it is considered by readers as cultural icon (A Visual Analysis of the Absolut Vodka Advertising Campaign). The word “absolute”, present in each ad, gives it’s a definite quality. Thus, the references are portrayed as some definitive version of cultural element. At the same time, Absolut ad conveys the message that it is made out to be definitive vodka. Nothing defines what vodka is better that Abslout. Absolut ad campaign is also outstanding due to the reason that it refers to both broadcast and narrowcast codes when reading the ad message. Narrowcast codes are intended to appeal to the limited audience, which possess unique knowledge to understand the message of the ad (Clow, Baack, 2004). This can be illustrated by the example of Warhol advertisement. Only those people who know the works of Andy Warhol can read the message sent to them. They thus get the feeling that the ad was tailor-made for them. As Richard Lewis in his Absolut Book notices, “It’s a special set of ads that are obviously not for everyone. We run them only in literary-minded publications such as the New Yorker and the New York Times Book Review or occasionally in film and entertainment magazines… But we hear time and time again that people appreciate the challenge, particularly when the conquer it.” (1996, p.87) Thus, narrowcast ads are rewarding for people who have enough cultural knowledge to understand. This makes sense of their appeal and adds to the Absolut intellectual image.
Absolut attained one more result by referring to the world of art and fashion phenomena in their ads: they positioned themselves as intellectual brand closely related to art, fashion and all modern progressive movements.
One of recent development of Absolut ad campaign is its active introduction on the Internet with their high-tech chic site. When the company launched Absolut Vanilla on the internet, the event was a departure from its old tradition of print advertisement to introduce new products. Though internet ads were used earlier, that was the first time World Wide Web was used ad a primary advertising channel. The site offers lots of interactive features and again shows that Absolut goes in pace with time.
Another outstanding recent development was Absolut’s introduction on television in 2004 to promote new Raspberry flavor. The move was made in response to competitors (like Smirnoff and Grey Goose) TV advertisements. The absolute expansion onto television is a noteworthy event because the success of the brand over 25 years was built exclusively on its printed campaign (Elliott, 2004). The new form of ad, created by Absolut, the “art form” continued to live through TV advertisement and through such innovative advertisement means as Absolut sculptures exhibition within the framework of Absolut Spectacular worldwide creative vodka advertising campaign.
The last thing to mention in promotional decisions section is the cost of ad campaign. In 2004, the cost of Absolut advertisement only in the USA made up $34 million, which is a considerable sum even for a world leader.
Conclusions and recommendations
The current work was focused on Absolut brand and included detailed analysis of the company performance with particular attention to brand positioning and differentiation. The utter importance of promotion and advertising for successfully establishing the brand on global scale was explored. Absolut advertisement campaign is one of the most outstanding in the world until the present day, and the paper provided a clear ground to state that the largest element of the company’s image and competitive advantage relies exclusively on its marketing and advertising strategy. With such solidly established brand having powerful positions on global spirits market, few recommendations could be made. The company should keep up with the pace of time and explore new areas and means of advertisement, at the same time preserving its style and image. The message created for Absolut brand recognition is very felicitous and the company should further expand the ways to convey the message to constantly growing market. Besides growing, the market is also highly competitive, and to preserve its positions and expand further, the company should develop a range of product appealing to different consumers’ strata and needs. This is the question of satisfying both middle-class and highest class consumers, and establishing of the Level brand is very successful movement in this direction. It is worth to stay that the company possesses very powerful managerial resource able to flexibly respond to the latest developments. The company keeping track on the global trends further, there is no doubt it will remain global leader in liquor industry in future.
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