Qijin Feng 997347740
RSM322H1F L 0201
September 29TH , 2011
TO: Manager of the Distillers Delight in the United Kingdom
Date: September 29th, 2011
Subject: The strategy of the company and the problems the company faced in 2003 As the case stated, there existed a lot of problems in Distillers Delight in the United Kingdom in 2003. In addition, the strategy the company adopted affects the performance of the brand significantly. The strategy that the company adopted may be the market niche. Market niche is a strategy adopted when there is a small market segment for which the products are specially designed. (Appendix A) As the case demonstrates, the brand was once the leader of the low-proof alcohol market in the UK, so the brand should be specifically designed for the people who prefer the taste of the low-proof alcohol. It is one sign of the market niche. (Appendix B) Market niche is also a strategy adopted by the companies which compete with generic products and are concerned with cost reduction. (Appendix C) As the case mentioned, Distillers Delight had a lot of competitors, including some huge international corporations, who compete so rigorously with Distillers Delight, such as Diageo plc. Per nod Ricard, Bacardi Limited, Allied Domecq, Constellation Brands.(Appendix D) Consequently, the company should consider about the cost reduction while compete with other companies. However, when the excise tax was raised by the government, the sales of Distillers Delight declined sharply as the cost reduction was not used immediately after the implementation of the new tax policy. (Appendix E) It also represents the adoption of market niche strategy. In addition, market niche is a strategy adopted by the companies that should spend on extensive marketing to build the brand image of the products at the same time of concerning about the cost reduction. (Appendix F) As the case indicates, the companies which compete with Distillers Delight were taking action. The companies took the aggressive new advertising campaigns to capture the market share. However, Distillers Delight responded slowly which resulted in the dilemma of losing the leader position in the market it faced in 2003. The action other companies took and the reaction of the Distillers Delight shows that the company adopted the market niche strategy. (Appendix G) What implies the adoption of the market niche strategy by the Distillers Delight includes the factor of keeping up to date with the needs of its special market segment. (Appendix H) As the cases said, the tax was increased by the government. The companies responded it by continuing with the existing price policy, while the consumers resisted the price increase and the sales declined drastically. The company decided to cut the price later to maintain the profit margin and the market share, which was useful at that time. (Appendix I) The company firstly did not fulfill what customers need, so they fell into the difficulties, which exhibits the application of market niche strategy. What the customers want is the stable price of the low-proof alcohol with good quality, despite the tax is increased. There was not much brand loyalty when lots of competitors existed. Distillers Delight encountered the challenge and difficulties in 2003, and the problem is that the profit decreased when the company continued using the existing price policy, and the company diverged from the budget expected. It can be identified from several aspects. Firstly, the company did not prepared for the possible change of the policy and the possible danger in losing the market share. (Appendix J) They predicted the future too optimistically, and were misled by their planning and budgeting assumptions. They thought the sales and the development could...