Evaluation of Growth Strategies

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UNIVERSITY OF SOUTH AFRICA DEPARTMENT OF MARKETING AND RETAIL MANAGEMENT POSTGRADUATE DIPLOMA IN MARKETING MANAGEMENT

STRATEGIC MARKETING MANAGEMENT (STB400V/2010) ASSIGNMENT 02

“Evaluation of the Possible Growth Strategies that Amarula could follow in order to achieve a double-digit growth in volumes in the next three years”

Presented by

Mr. B. Banyishayi Student No: 35124857

July 2010

2 1. INTRODUCTION
In this assignment I will evaluate the possible growth strategies that Amarula could follow in order to achieve a double-digit growth in volumes in the new three years.

Amarula was initially launched as a clear liqueur in October 1983. However, its appeal was limited and in 1989, the decision was made to extend the product line with a cream based version, called Amarula Cream. It was a runway success and before long, Amarula was the only variant on the shelves. Amarula cream is one of South Africa’s most successful exports. Not only does it dominate the local market, it has also been a resounding success in a number of international markets. One out of every two bottles finds its ways to foreign stores. It is particularly strong in markets such as Canada, Germany and Brazil.

Concerning growth, Amarula has been a success story in both the local and international market with impressive growth figures being delivered year after year. With strong growth in global sales, 81% since 2000, Amarula Cream in continuing to maintain its strong position in the global creams arena. One of the objectives of Distell (Amarula’s parent company) is to grow Amarula to become a leading global brand. Siobhan Thompson, Global Business Development Manager of Amarula, says the overall global success of the brand can be attributed to several factors, including the brand’s unique taste derived from the marula fruit that is found only in sub-equatorial Africa; its versatility when sampled on its own, as a cocktail or used as an ingredient in food preparation, as well as its ‘African heritage’ brand story that differentiates it from its competitors. Amarula has shown tremendous growth since its introduction and despite a number of negative factors emerging in the South African and global markets, there is still plenty of room for further growth. (Cant & Machado 2008:187-197). Let’s evaluate now some possible growth strategies that Amarula could follow in order to achieve a double-digit growth in volumes in the next three years.

2. POSSIBLE GROWTH STRATEGIES THAT AMARULA COULD FOLLOW
There are five ways Amarula could follow in order to achieve a double-digit growth in volumes in the next three years. These include growth in existing products markets; growth through product development; growth through market development; growth through diversification and growth through integration.

2.1 Growth in Existing Product Markets With this strategy, an organization tries to find growth by looking opportunities in its current market and with its current product portfolio (Du Plessis et al. 2006:265).

3
There are three major options that Amarula could adopt to do this: 2.1.1 Increase the current market share:

In this instance, Amarula should tries to gain market share either at the expense of competition or by drawing a greater proportion of the new consumers entering the market (Du Plessis et al. 2006:265). To increase the current market share Amarula should accomplish two important tasks: (1) retain repeat product (Amarula Cream) from its existing customers, and (2) continue to capture the major portion of sales to the growing number of new customers entering the market for the first time.

2.1.2

Increase the quantity of product usage

This implies that Amarula should understand the underlying reasons for purchase and should convince consumers that more of the product should be used (Du Plessis et al. 2006:266). Amarula could introduced lowalcohol cream, instead of 17% alcohol, they can reduced it to 13% for...
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