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Coors Case Study

2281 words - 10 pages

Let¡¦s start by defining the concept of production-oriented marketing and where this strategy can be successfully implemented. The production concept states that consumers favor products that are available and highly affordable and that management should therefore focus on improving production, low cost, and distribution efficiency. The concept of production oriented marketing may do well in an environment where demand exceeds supply due to its uniqueness, scarcity or recent creation. It may also be successful in a market where production costs are high and increase in market share is dependable on reducing costs. In the case of Coors, it is evident that the main strategy ...view middle of the document...

Its advertising, promotion, construction, and machinery design were all managed by within the organization to lower cost. The last characteristic of the production-oriented concept is distribution efficiency. Coors had only one brewery in Golden, Colorado. Even when Bill Coors turned his attention to graphical expansion in the early 70s, a single brewery was still used to handle the production of beer. But the concept of production orientation marketing succeeded only during the period where demand exceeded supply and the mystique of Coors was at its highest. This certainly happened during the 60s and early 70s when Coors became the brew of celebrities and the symbol of purity and freshness of the west.On the other hand, a marketing oriented strategy states that achieving organizational goals depends on determining the wants and needs of customers and delivering the desired satisfaction more effectively and efficiently than competitors. Because of the great competition and loss of market share that Coors started to face during 1976, Coors was forced to change its production strategy to a marketing oriented strategy. This was evident by the introduction of a new product, the development of a new product, the promotional expenditures, and the expansion efforts of Coors to adapt to a new environment where consumers¡¦ preferences were the main focus. Since the beer industry was only growing at a 3% a year and this growth was coming from two products light beer and superpremium beer and none of these beers were offered by Coors, Coors introduced Coors light in 1978. They also started developing a superpremium beer in 1980 and promotional expenditures increased to a total of $200M in 1987 where in 1976 Coors had only spent $2.2M. Despite all efforts of Coors to remain competitive in an industry where main competitors have greater resources, it has only achieved a distant third in the industry with a domestic market share of only 11%.2. As mentioned previously, the production-oriented concept may only succeed and last while the following conditions exist: the demand for a product exceeds supply and the product cost is high and has to be decreased to expand the market. The main emphasis of this concept is to produce large volumes of output and thereby enjoy economies of scale. The Maquiladora industry is an example of a production-oriented industry. Many companies from the US are switching their manufacturing practices to Mexico. Technological innovations are achieved and lower production costs are incurred because as the level of production rises, the result is a gain in efficiency through a decline in average cost. Another example of a production-oriented industry is the housing real estate industry in San Diego. Even as the cost of housing has gone up, demand has outstripped supply. Home construction in the San Diego region has simply not been keeping pace with the population growth. In addition, homebuilders do not consider building...

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