SWOT Analysis of Angostura Holdings Limited

Angostura Holdings is a company whose headquarters is in Trinidad, Tobago. The company’s subsidiaries are focused on manufacture and sale of rum, aromatic bitters, bottling of beverage, alcohol and food products. As one of the major producers of aged rums in the Caribbean, Angostura always employ significant marketing strategies. Angostura Annual Report (2013) shows that the strategies are based on product which they distribute such as spirits, wines, rums and gins; price which is their tool of becoming competitive; place, the distribution centers in Trinidad enable the company’s products to be accessible, and promotion, which is the company’s too for developing its brands to sustain the competition in the industry. The other factors are people, physical evidence and process. The economic presentation of Angostura company includes the SWOT analysis, new product, future marketing objectives and Financial forecast including profits, sales and costs.

Angostura Holding Limited

SWOT Analysis

Strength

Angostura enjoys a wide variety of operations. It enjoys all benefits accrued since it’s the holding company and has various subsidiaries. The subsidiaries are involved in manufacturing and selling of various products. This leads to diversification of the product line. Diversification reduces risks involved in modes of operations. Among them include aromatic bitters, producing and selling food products, bottling alcohol products and other beverages and finally manufacturing and selling rum products. This has given the firm an upper hand in its operation hence a notch higher. Additionally, it has a centralized management as it has a main office based in Trinidad and Tobago. Consequently, this helps in having operation control. All major decisions are made at the main office. Once this has been achieved, subsidiaries are in a pole position implementing and offering additional information. Managerial decisions are prudent in achieving organization goals and objectives set. It enjoys a wide market having over 50 global markets. This increase the market share and hence improved earnings. Furthermore, it enjoys an excellent brand name which has been in existence for over 191 years. It has built its reputation over a long time hence an excellent and stable operation. This has been achieved over time hence recognition and several awards in the last five years. Again, it has established proper pricing mechanisms for all its product line. It has in mind the effect of increasing the market size hence an appropriate pricing model. The large pricing satisfies all different clients. It is evident its products range from hundred dollars to thousand dollars. The lower prices for some products are compensated by the other products. One advantage of different pricing is that it increases earning through price differentiation. Again, it enjoys financial muscles since it’s in a position to promote its products through magazines, newspapers, billboards and other advertisement modes. The company enjoys reputable business growth from its employees. This is achieved through regular training, amicable employee relations, and friendly adjusted working conditions. Consequently, improving product quality and motivation of workers. Technological advancement makes it a sales giant as it enjoys electronic points of sale (EPOS). Finally, it enjoys a wide and spacious area which houses big and important department including distillery, museum, and retail outlet and dining halls. The above makes it better than others hence improved profits.

Weaknesses

Angostura diversifies its product line. As a result, this poses various weaknesses due to diseconomies of scale. To start with, it overlooks some products to others due to price discrimination evidently through the large price ranging hundred dollars to thousand dollars. It classifies various products as the cash cow, stars, question marks, and dogs. All the above are as a result of the different product line. Secondly, the various products lack specialization. This reduces and compromises quality. Again, many product lines lead to lack of focus on an individual brand.

Opportunities

There is a huge room for growth. This is attributed to legacy and good reputation. Existence for a very long time gives it an upper hand in expanding its market share. Various factors are attributed to such for example financial muscle which is associated with increased earning. Additionally, there is room for growth as it’s in a pole position incorporating new product line. Increased social pattern and population offer an opportunity for growth. Furthermore, improved technology raises an upper hand, for example, Electronic Point of Sale advancement to offer extra and convenient added advantage. Finally, the financial muscle offers an appropriate opportunity by decreasing price hence driving competitors away. Consequently, enjoying extra market share.

Threats

Angostura faces stiff competition from AS Bryden and AMCO. The two distributes competing products. The first distributes Johnny Walker while the later produces two major products namely Jack Daniels and Barcadi. The two competitors reduce market share enjoyed by the company. Reduced market share reduces income generated. Many countries have revised their domestic market regulations. Many are protecting their local producers. In so doing, there is a likelihood of reduced sales in the affected countries. Various countries have decided to protect infant industries with a view of increasing job opportunities and discouraging external exploitation for example in the industry discussed.

As discussed above, it’s clear the company must perform SWOT Analysis. It must increase its strength, reduce weaknesses, embrace opportunities and come with proper and stable mechanisms to stabilize its market share. Both strengths and weaknesses are internal factors which the management can control (Conger, 1989, p. 35). On the other hand, opportunities and threats are external and the company should be in line with the changes as to grab the opportunities and reduce threats for example competition as fast as possible.

New Product

Overview of the New Product

The company has established a new product line through the newly established bottling plant. It can produce 36,000 bottles for every hour. New product is Angostura Aromatic Bitters curbs local shortage. As evidently stated, the company commands a 90% market share hence a controlling the market significantly. The proposed product is a favourable icon as it has high and powerful standards. It’s viewed to have a big impact since all mechanisms have been laid down. There are well defined distributing channels in order to actualize such motive. Consequently, this new product will extend the 90% local market share hence improved earnings.

Branding Approach Used

Various mechanisms need to be implemented for effective branding. To start with, there must be brand awareness. This is achieved by the following; proper innovation inclusive of a new campaign in order to incorporate new ideas, consistent communication and a large pool of funds to achieve this (Dahl, 1957, p. 56). In terms of innovation, the company should have different ads, digital fridges, star serve, extra cold and electric picnic among other innovative measures. Subsequently, it should consider consistent information about the product. Various mechanisms can be used to achieve this for example casting, music, and an appropriate voice tone. The product must remain relevant by attracting the target company not the rival companies. In conclusion, the firm may use a combination of the following to stay relevant; look, action, assess and listening approach. Look approach can be achieved by having advanced technology, advertisement through the required media, moderation and craft movement (Dahl, 1957, p. 56).  Secondly, it should maximize customer relationship usually called talk and listen to its employee’s report, consumers and all news. Furthermore, it should access and maintain action approach through free apps, vigorous mobile advertisement and moderation actions.

Packaging Approach           

Various approaches should be used based on several marketing segmentations such as the type which includes cans, bottles, pouches, bag-in-boxes, cartoons, and boxes. Secondly, in terms of application, the following should be used, beer, spirits, wines and other for example FAB and ciders. In terms of packaging materials, the following should be used; glass, plastic, metal and both paperboard and papers (Forsythe. 1992, p. 234). The above should incorporate different sizes for the different social class.

Target Market

Segment

Details

Geographic

It covers a global population around 164 markets. This will increase the market share. Consequently increased profits.

Demographic

It targets mostly the young generation. Additionally, it targets population with disposable income.

Physiographic

The growing tourism industry attracts extra market hence improving market share.

Behavioural

Young generation through promotion hence enhancing loyalty for their products.

Marketing Objectives

The following is the short-term objectives. Increasing knowledge concerning the product. Since the product is new in the market, there is a need for increasing customer knowledge through, say, advertisement and promotion. This familiarizes the target market about the existence of the products and all it entails this helps to join a networking group (Forsythe, 1992, p. 245). Any new product must be introduced in the market through, say, distribution channels that in turn help in availing the product to consumers. By so doing, short-term objectives will be achieved. Secondly, the company aims at improving its corporate image in the industry. Reputation is built over a long-term usually more than one year. A good reputation will improve efficiency and economies of scale.

Financial Forecast                             2018                             2019                                                                                       2020

Sales

700,000,000

750,000,000

800,000,000

Cost of sales

250,000,000

210,000,000

250,000,000

Profits

500,000,000

540,000,000

550,000,000

Budget Breakdown

2018 ‘000’

2019 ‘000’

2020 ‘000’

Sales

700,000

750,000

800,000

Cost of sales

250,000

210,000

250,000

Gross Profits

500,000

540,000

550,000

Other variable costs

10,000

15,000

20,000

Selling and administrative costs

50,000

55,000

60,000

Net operating profit

440,000

470,000

470,000

Fixed costs

100,000

120,000

140,000

EBIT

340,000

350,000

330,000

35% Tax

119,000

122,500

115,500

Net profit

221,000

228,000

214,500

Future marketing objectives and strategy for the new product identified

Short Term Marketing Objective

Mitchell et al., (2010, p.170), argues that short-term marketing objective are those goals that are to be attained after a particular set period which is usually short for example one year. Generally, the short-term goals of marketing have a crucial advantage over the long-term objectives, and this is attributed to its flexibility in case of any dynamics in the environment as a result of various factors such as technology. The short-term marketing objective of Angostura holding company is to improve the brand perception by the customers on the company’s products. The above purpose is expected to be achieved in the next two years using a variety of brand strategies such as attitude branding, brand extension and crowdsourcing (Wrenn, and Mansfield, 2014, p.456).

Long-term marketing objective

According to Hoffman, and Fodor, (2010, p.71), the long-term marketing objectives are the set goals which are used for improving an organization’s technology leadership, competitive position, corporate image, return on investment and profitability of the organization. However, the primary long-term marketing objective of the company will be to provide value to the customers for an extended period that is as long as the firm continues with its normal operations. Such an objective will be achieved by the provision of quality products and hence meet the demands of different customers across the globe (Chung et al., 2011, p.448).

Marketing strategy

According to Hammad (2012, p.34), the marketing strategy is the key driver of an organization and hence must be selected carefully. The company has a variety of marketing strategies which it can adapt to achieve the new objective which helps it to reap huge in the long term. However, the firm should examine any particular marketing strategy it intends to adopt such that they have to be well structured to achieve the desired results of the set goals (Baker, 2014, p.200). The angostura holding company is going to adopt a marketing strategy to regain its presence in the market and also to recover the already lost market share which has been associated with the increased competition from the primary challengers (Wilfried, 2014, p.50).

The Ansoff model consists of four essential elements such as market penetration, diversification, market development and product development. Based on the Ansoff model, the marketing strategy that will be adopted by Angostura holding company is that on diversification with the intent of reaching new regions where there is no competition and increasing the sales volume of the particular product (Baker, 2014, p.200). The diversification strategy constitutes four elements that are market penetration which involves expanding the market share through a variety of promotional strategies to access new markets that have not been occupied by the other competitors.

            The other element is on the development of new products for the existing market, and this will involve either on improving the products already existing markets or the development of new products to provide new tastes to the customers (Team, 2013, p.107). Further, under the diversification strategy, Angostura company will add a new feature to the existing products to improve the quality of product with the intent of increasing the volume of sales. The strategy is advantageous in the sense that it tends to utilize low costs in the event of adding the new features which were never in the product (Team, 2013, p.107). The last element under the diversification is on reaching new markets to increase the market penetration. The above strategy will be in regards to the fact that if the existing market fails to provide customers who can purchase the products, then an alternative market has to be found. This can be done geographically such as selling the products in a foreign country or maybe to a particular category of consumers such as the low-income groups.

Ansoff model

Market Penetration

Advertising campaign

Loyalty program

Product development

Launch of new products

Market development

Introduction of new products

Diversification

Future Marketing Mix

People

The future marketing mix under this category will involve recruiting more qualified staff in the marketing department to enhance communication and hence maintain personal contact with the customers, training and development of the employees, proper remuneration of the staff including bonuses for extra work done and creation of good public image in the company (Hanlon,  2014, p.200).

Price

To encourage purchase and hence increase the sales volume, various pricing strategies will be used such as giving credits to the customers, providing discounts, use of economy pricing, market penetration strategies and making available a variety of payment methods such as debit cards, bank transfers, mobile payments and use of money orders (Mohammad, 2015, p.80).

Product

Under this marketing mix, the products will be rebranded to help in attracting new customers. Also the various qualities of the company’s products will be improved with the aim of providing new tastes to the consumers. The other thing will be to add new features to the existing products to add additional benefits to a variety of clients of the firm’s products (Khan, 2014, p.95).

Promotion

Angostura holding company will adopt various promotional strategies to help in reaching new markets all over the world. The types of promotional strategies will include, use of personal promotion, sales promotion, direct marketing, public relations and branding of the product (Khan, 2014, p.95).Also, the marketing communication system will be improved with the intent of giving responses on queries made by the clients in order to meet their varying demands.

Processes

Under the process marketing mix, the company intends to adopt a variety of processes such as research and development to help in developing and improving the quality of products. The other process will be on customer focus to explicitly deal with their demands to fully satisfy them. Also, the company will adopt the IT-supported process where all the orders and purchases will be done online to enhance the speed of completion of orders and hence enhance the quality of services provided(Khan, 2014, p.95).

Physical Evidence

For the physical evidence marketing mix, the product packaging will be changed to make them suitable for a variety of customers irrespective of beliefs and cultures. Also, the salespersons will be trained to enable them to gain experience with the brands of the company in order to comprehend the products and hence provide a clear explanation and description of the products to different customers while marketing and making sales. The various products of Angostura will be made available online in the company’s website to enhance physical evidence and the online experiences of both the customers and the workers of the firm (Akroush, 2011, p.30).

Financial forecast including profits, sales and costs

Angostura Holding Company

3*3 matrix for the sales, cost of sales and profits

For the period ending 31st, December, 2014, 2015 and 2016

Year                                            2014                               2015                         2016

Sales                                           672,234                         649,409                  620,469

Cost of goods sold                      278,569                        266,025                   249,123

Gross profit                                393,665                        383,384                    371,000

Expenses

Selling and marketing               117,784                         116,455                   62,476

Administration expenses

Wages and Salaries                    80,345                               78,668                  109,890

Depreciation                                9,400                                 11,349                  17,438    

Maintenance                                28,039                               26,438                   8,560   

Sales and Marketing

Advertising                                58,892                                  58,228                  67,944

Direct Advertising                      32,456                                 42,489                 50,890

Profit before tax                         212,939                                 212,718                202,636

Tax expense                               50,680                                     54,318                49,448

Profit after tax                            162,259                                    158,400              153,188

Budget for the next three years

Year                                              2014                                   2015                       2016

Revenue                                     672,234                             649,409                    620,469

Expenses

General and Administration      117,784                             116,455                   135,888

Wages and Salaries                     80,345                              78,668                        109,890

Depreciation                               9,400                                  11,349                       17,438    

Maintenance                                28,039                                 26,438                         8,560

                                                    117,784                               116,455                       135,888

Sales and Marketing                117,784                                 116,455                       135,888

Advertising                                58,892                                     58,228                       67,944

Direct Marketing                       32,456                                     42,489                       50,890

Print Advertising                        26,436                                    15,738                        17,054

Public Relations                       70,567                                    65,895                          98,900

Press releases and media           50,450                                    53,356                           45,870

Press kits                                 20,117                                     12,530                                 53,030

Research and Development 100,560                                   150,450                                178,750

Technology licences                  40,000                                  65,450                                 80,560

Patent                                         60,560                                  85,000                                 98,190

Monitoring and Control mechanisms

According to Siebels and zu Knyphausen (2012, p. 380), the monitoring and control mechanism primarily involves those actions taken to ensure that the set objectives of the company are achieved optimally. The process will include comparing the actual performance with the standard performances in the organizations to identify any kind of deviation from the desired results expected by the management of the firm (Büschgens et al., 2013, p.780). The mechanisms will involve a set of procedures to facilitate monitoring and control of various activities with the aim of achieving the desired goals (Miller, and Rice, 2013, p.300). The methods include the verification and monitoring of some marketing activities by identification and management of a variety of elements such as the people, technology and other requirements for the pursuit of set objectives. The second procedure will involve establishing a schedule control where all the changes that may influence the attainment of the goals of marketing and this will be prepared by the marketing department (Astrachan, 2010, p.10).

Further, a cost control mechanism will be adopted to help in minimizing the costs that will be used in accomplishing the marketing objectives through a variety of strategies (Misangyi, and Acharya, 2014, p.1700). The cost control is to be documented by the management team. The other mechanisms are the quality control which will involve monitoring the set marketing strategies to ascertain if they will comply with the set standards and later the undesired results of such plans will be eliminated (Ferrell, and Hartline, 2012, p.344). Another monitoring and control mechanism is the reporting of performance and results produced based on the set strategies, and this includes, progress measurement, forecasting and status reporting (Pirson, and Lawrence, 2010, p.560). Additionally, the risk control mechanism is also adopted by the company, and it involves risk control processes to identify a variety of risks, develop risk response plans and later assess the effectiveness of risk control techniques that will be used in minimizing various dangers in the process of applying the set marketing strategies. Once all the above methods and mechanisms have been used for control and monitoring, the report will be presented to the management. The marketing department to identify a variety of difficulties and challenges that may be encountered in pursuit of the marketing objectives and after that make necessary changes aimed at attaining the set goals (Artto et al., 2011, p.410).

In summary, based on the company analysis, Angostura holding company has had a tremendous generation of revenue over the last few years. Such a massive generation of profits has been attributed to several factors which mainly are based on the marketing strategies that have been adopted by the company by the management. For example, the company has over the years applied the 7Ps marketing mix as a key element towards the achievement of desirable results. The 7Ps marketing mix includes the people where it has employed skilled and qualified staff. The other one is the product where quality products are developed daily and improvements made to them through research and development. Different marketing mixes are the physical evidence, promotion, processes, and prices.

Based on the swot analysis, the company may be considered as having gained a competitive advantage over its critical challenges, and this has been contributed by the strengths Angostura holding company possess, unlike its competitors. The company, for instance, has a variety of brands of its products and hence it is able to satisfy many different consumers across the globe, unlike its challengers who rely on one particular brand of their product. Apart from the many different brands, Angostura holding company has many promotional events across the country and even globally and hence it is able to reach a wide range of customers and therefore the huge volume of sales. Lastly, the firm intends to venture into the local market to absorb the local consumers, and this will help facilitate the charging of low prices of the products which would increase demand by the consumers.

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