Analysis of Competitive Advantage in an ‘Absolut’ World

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Analysis Of Competitive Advantage In An ‘Absolut’ World
An Illustrated Report

DESIGN 1
ARTD 6058

Aleisha Pillai
MA Design: Design Management
----------------------------------
Winchester School of Art
University of Southampton
ABSTRACT

This illustrative report explores the unique ‘Absolut’ brand of vodka. Currently the fourth biggest brand name in the liquor market, Absolut has managed to sustain their competitive advantage through areas such as innovation, design and branding. Using Porter’s (1985) generic competitive advantage model, this report analyses and critically evaluates how ‘Absolut’ has used the Differentiation Strategy in order to garner competitive advantage in the liquor and spirits industry.

CONTENTS

Absolut – The Story……………………………………………………………………………………………….4 Introduction………………………………………………………………………………………………………4 History of ‘Absolut’…………………………………………………………………………………………….4 Production – The ‘One Source’ Concept………………………………………………………………4 The Absolut Brand………………………………………………………………………………………………5

Competitive Advantage in the ‘Absolut’ World……………………………………………………..6 Types of Competitive Advantage…………………………………………………………………………7 Differentiation Strategy…………………………………………………………………………………………7 Quality……………………………………………………………………………………………………………….7 Product Innovation…………………………………………………………………………………………….8 Design………………………………………………………………………………………………………………..9 Packaging Design…………………………………………………………………………………………….9 Marketing & Advertisement Campaigns ………………………………………………………….10 Brand Value…………………………………………………………………………………………………….11

Conclusion…………………………………………………………………………………………………………….12 Bibliography………………………………………………………………………………………………………….13

ABSOLUT – THE STORY

Introduction
Currently the fourth largest spirit brand in the world, Absolut Vodka is a subsidiary of Pernod Ricard, the world’s co-leader in spirits and wines. (Top Ten Premium Spirit Brands Worldwide 2007, 2007). Considerably young in the market, and then a part of ‘V & S Vin and Sprit’, Absolut started branding and exporting their premium blend of vodka a mere 30 years ago, in 1979, where in, began the start of the iconic ‘Absolut’ brand.

History of ‘Absolut’
Though the production and export of Absolut started in 1979, the start of the story goes aback a hundred years to 1879, when in Åhus, Sweden, a young man named Lars Olsson Smith, also popularly know as the ‘King of Vodka’ revolutionized the production and purification of Vodka by a process called ‘Continuous Distillation’. He called the Vodka made through this process ‘Absolut rent Bränvin’ which in Swedish means absolutely pure Vodka (Lewis, 1996). Realizing the power of the name ‘Absolut’ he registered the brand name in 1879. A hundred years passed, as Absolut vodka continued to be refined and sold in Sweden, but by the late 1970’s, it became obvious that in order to sustain the distillery, they had to export their vodka to improve sales. The American market were the biggest consumers of vodka in the western world, so it was natural that Absolut decided to start their journey in America in 1979. In five short years, Absolut Vodka found itself being available in eighteen countries and by 1985, it was number one among imported vodkas being sold in the United States. (Absolut The Story, 2004)

Production – The ‘One Source’ Concept
Lars Olsson Smith had transformed Swedish Vodka, which was traditionally unrefined since the invention of the continuous distillation process. Absolut has continued to produce vodka in this manner. This production of superior quality vodka involves the use of high quality raw materials. Absolut’s concept of production is the ‘One source’ concept, where in, all the raw materials have been obtained from the same, singular source. The raw material for Absolut, which is winter wheat, is cultivated in fields surrounding the small town of Åhus in southern Sweden. The water which is used comes from their own deep...
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