Corona Beer: Challenges of International Expansion
Corona Extra has been the world’s fourth best selling beer in terms of volume in 2005 due to its strategy in differentiation. Corona marketing campaign of “fun in the sun” and its light and citrus flavor helps products to expand its target customers far beyond its competitors. However due to merger and acquisition that occur in the industry, Corona needs to adjust itself in order to sustain its growth and improve its competitive position.
* Government regulation prohibits to import alcohol product in some country.
* Tax policies on alcohol beverages may result in higher ...view middle of the document...
Also new entrants will need to have heavy start-up cost of capital.
Substitute (High Threat)
* High threat from substitute because there are various kinds of liquor in the market. Altogether with non-liquor drinks in the market are also considered as substitutes for beer.
* Since there is price sensitive for beer in the market, company needs to have a suitable pricing strategy in order to maintain the market share. And since there is low switching costs for buyers therefore company must maintain their product quality and availability; otherwise, they will buy other brands.
* Although, there is a large group of distributors in industry, there are few numbers of distributors which have capability to deliver premium beer in the market in order to meet the minimum customer satisfaction.
* Since there are low number of big players in the industry which some them have already implemented backward vertical integration strategy, suppliers in the market will have few bargaining power.
Beer industry can be best characterized as global since there is small different between the taste of customer in each country. Therefore firm in the industry take advantages of using the same marketing strategy for worldwide expansion. According to the consumption of beer, US had the largest beer market in the world until China have surpassed it in 2003. For US market, top three breweries have control almost 80 percent of the market.
For industry key success factor, product availability is the first key since drinker might change to their second choice of beer if their first choice product is not available and might get frustrated after. Second, vertical integration and economies of scale is the main driver for firm operating margin. Lastly, deeply understanding in local taste in particular country, as some countries are having distinct cultural tastes.
Modelo is using “board differentiation strategy” for expanding Corona worldwide with its uniqueness of its clear and unique bottle and different marketing. Also its taste of light and citrus flavor help the product to expand its target customer far beyond its competitor.
* Strong Brand Image: Corona unique brand image represent Mexican in both image and characteristic. Product look and feel of clear and unique bottle, and different marketing also make the Corona brand distinguished from the competition and gain reputation. Include in the Impact Magazine "Hot brands" list for 10 in last 11 years
* Strong distribution channels with highly efficient distributor : Strength of the relationship between the importers and Modelo with well organize strategy
* Product uniqueness : Look and feel of corona beer product is unique in term of look and feel of the product in term of refreshment
* Effective marketing : Unique marketing campaign that able to make the product differentiate from...