MARKETING STRATEGY OF SAB 1

Marketing Strategy Analysis of South African

Breweries

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MARKETING STRATEGY OF SAB 2

Executive Summary
This paper examines the marketing techniques employed by the South African Breweries

(hence referred to as SAB) and their subsidiaries. Specifically, it describes the strategic

principles that have helped to establish the organization as a world-class manufacturer of beer in

South Africa and around the world. With SAB as the case study, the paper is structured, to begin

with, an introduction to examine the competitive dynamics and strategic features of the external

environment as part of a practice. It then conducts a discussion on the concept of internal

strategic planning and analyzes the organization using relevant organizational and strategic

models. Three hundred and third, the report examines the external stakeholder concerns that

SAB Company is experiencing and critically evaluates the effect of these concerns on the SAB’s

corporate image and brand equity. Finally, this report ends with several recommendations for

improvement of the Company’s marketing strategy to ensure it sustains its leading position in the

beer market industry in South Africa.

MARKETING STRATEGY OF SAB 3

Table of Contents

Contents
Executive Summary.......................................................................................................................2
Table of Contents...........................................................................................................................3
Introduction....................................................................................................................................4
Background of the Business...........................................................................................................4
Analysis of target market and positioning strategy........................................................................5
Porter's Five Forces Model Analysis of the Company...................................................................6
Threat of substitute products..........................................................................................................7
Threat of new entrants....................................................................................................................8
Bargaining power of Customers....................................................................................................8
Suppliers' bargaining strength........................................................................................................9
Rivals in the business.....................................................................................................................9
Strengths & Weaknesses................................................................................................................9
Structure of the Organization.......................................................................................................10
Strategic Analysis........................................................................................................................11
Developing a Strategic Plan for a Company................................................................................12
Analysis of the 4Ps (marketing communications strategy)..........................................................13
SAB’s Marketing Mix analysis....................................................................................................13
Product mix..................................................................................................................................13
Place and distribution...................................................................................................................14
Prices and pricing strategies.........................................................................................................14
Promotional Mix..........................................................................................................................15
Recommendation for Improvement.............................................................................................16
Conclusion...................................................................................................................................17
References....................................................................................................................................18
Introduction
The growth of a firm, the prerequisite for novel methods of coordination and area of

business, and the requirement for associations to continually respond to ecological changes

both inside and outside the activity, all require inventive strategies of coordination and area of

business. The organization's methodology, policymaking, hierarchical framework, and the

executives’ strategy are completely impacted by the climate. Vital administration is a system

where an association's conclusions detail, execute and assess cross-sectional jobs and goals to

acknowledge and satisfy prompt and long haul targets and objectives (O'Toole and Meier,

2014). Ecological mindfulness has been demonstrated to be the beginning stage for key

examination. As indicated by Grant (2016), an organization's system should consider both

inward and outside impacts. Key administration for the association requires a wide and target

assessment of both the outer and inside conditions, in light of early discoveries, to set up

administrative key destinations and objectives (Hill et al., 2014). Thus, this examination

inspects the South African Breweries Company's showcasing methods to guarantee effective

help conveyance in an association and makes proposals for improvement.

Background of the Business

Johannesburg, South Africa-based SABMiller (formerly known as South African

Breweries Limited and abbreviated to SAB) is a major refinery with a large presence in the

country. From October 10, 2016, when its proclivities were revealed to Anheuser-Busch

InBev, it had been a fully stated ally of SABMiller. Currently, it is the world's largest

brewery. Anheuser-Busch InBev SA/NV, formerly known as Anheuser-Busch SA/NV, is

now a prompt assistant of the South African Breweries (SABC) (Lisa, 2016). The Castle

Brewery, which is now known as SAB, was founded in 1895 as a result of the growing

commercial sector for tractors and excavators in and around Johannesburg. The company
later changed its name to South African Breweries in 1903. In 24 months, the organization

became the pioneer beer manufacturer to be listed on the Johannesburg Stock Exchange,

and the following year (1898), it became the first contemporary organization to list on the

London Stock Exchange, becoming the first mechanical organization to list on the

Johannesburg Stock Exchange.

The South African Bank (SAB) moved its headquarters and order to Johannesburg in

1950, after 10 years in the capital. [5] After purchasing the Ohlsson's and Chandlers Union

refineries in 1955, Castle Brewing renamed the company South African Breweries to reflect

the new ownership. Its international reach has continued to grow since its first significant

expansion in the 1990s. The organization has acquired several affiliates in both developing

and established industrial areas. A second UK-based holding organization, SAB plc, was

established in 1999, and the company's primary presentation location was relocated to

London (Lisa, 2016). In May 2002, when SAB plc acquired Miller Brewing Company,

SABMiller plc was established. No foreign brewery, including Whitbread of the United

Kingdom, has succeeded in acquiring a significant share of the South African beer market,

despite many attempts by foreign breweries to do so. Even while new organizations tried to

challenge the limiting foundation regularly, they were either forced to go bankrupt or

acquired by SAB before they had a chance to thrive. For instance, National Sorghum

Breweries (NSB) was established in 1990 as "a dim corporate coalition" and was the first

new participant in the beer industry in more than ten years. Some analysts predicted that

NSB would overthrow SAB in few years and capture a 10 percent share of the business

market, while others predicted that SAB's unity would be jeopardized. Due to a variety of

factors, the organization had financial problems and was unable to acquire a significant
 portion of the commercial space.

Analysis of target market and positioning strategy

The leaders of an organization should have the option to expect, recognize, and manage

change in both the inner and outside conditions if the firm is to develop and succeed. There

is nothing of the sort as helpless karma or happenstance with regards to the level of

competition inside an organization. The investigation of the external environment inside an

association like SAB Company, as per Peteraf et al. (2014), includes miniature climate

factors that involve partner bunches inside the association, concern people in the quick

environs, clients, providers, public force and contenders; though large scale climate

components incorporate patterns and factors that occur in the public arena and can contrarily

affect the association's presentation. To successfully investigate both large scale and

miniature ecological impact, the outside climate should utilize Porter's 5 Force Models.

Porter's Five Forces Model Analysis of the Company

Consequently, the power of pressing factors inside an industry dictates the degree to

which deluge of speculation happens and drives benefit to the unrestricted economy level,

just as the capacity of organizations to endure income levels that are better than expected.

The contest in SAB is affected by five significant cutthroat elements. These incorporate the

possibility of new contestants, solid competition among existing organizations, arranging

force of providers, bartering force of clients, and the risk of elective items, to give some

examples (Porter, 1985). Following that, a careful assessment of some external aspects

impacting SAB as well as its market share within the country is carried out.
 Figure 1: Porter’s 5 Forces Model Analysis

The threat of substitute products

Because of advancements occurring in other fermented beverages, the entire beer sector

is feeling threatened. With the introduction of Cider wine into the market, the alcoholic

beverage market share has been diminished. Other companies are introducing tastes that are

more popular with consumers and are sweeter, such as whisky and Vodka, to their product

lineup. Several unique flavors for alcoholic beverages have been developed as a result of the

success of Crabbie's Ginger, which is produced by Ginger flavored Halewood International

and has been on the market for two years. Companies that manufacture alcoholic beverages

will increasingly rely on product modernization to remain competitive while also offering a

wide range of alternatives (Prahalad and Ramaswamy, 2013). This is the point at which
 traditional beer and lager businesses are feeling vulnerable, yet consumers are being drawn

to higher-end brands that have a history of quality and innovation. Individuals are prepared

and eager to spend more for unique and finest things rather than paying the standard price

for a common product (Porter, 1985). As a result, premium, limited edition, and value-

added items were introduced to maintain profits, with the highest priority placed on quality.

As a result, the threat posed by the substitute is considerable.

The threat of new entrants

Though beer sales are down, the younger generation is continuously striving to create

new brands and flavors that are different from the norm. Customers pay close attention to

brands that are unique or have a high level of competence. Clients are looking forward to

new experiences every day and are open to new possibilities. When it comes to premium

beer, it was one of the lager categories that saw growth in 2011. KC Brands' Cambodian

beer King is garnering positive feedback from customers, as are traditional products like

Peroni Nastro Azzurro from Miller Brands, as well as new brands like Mahou 5 Estrellas

and Mahou 5 Estrellas from Carlsberg (Dobbs, 2014). Customers were drawn to imported

lagers because of their association with global foodstuffs and complementary high-quality

lagers, which contributed to their decision to buy.

Bargaining power of Customers

Because South Africa's economy is not in a stable state, it is natural that expenditure

has reduced significantly during the past five years. Consumers and pricing are tightly

related within a certain business; for example, in the case of the SAB industry, regulatory

standards have created a standard for the lowest price to sell beer in retail. Consumers, on

the other hand, are turning away from beers as a result of the current economic climate and

growing interest in other fermented goods. Companies are unable to reduce expenses after
 reaching a certain level, nor can they increase the demand for their products (Nair et al.,

2011). Therefore, because they are locked in this situation, companies face a great risk of

losing their bargaining power to consumers, which should be addressed quickly and wisely.

Suppliers' bargaining strength 

The connection with suppliers is an extended one, and it needs extreme certainty and

comprehension, notwithstanding the criticality of administration. For instance, on account of

SAB, the lager's assembling cycle is tweaked to create a lesser amount of vaporous feel, and

the crude materials utilized in its creation and synthesis are very different. Besides, the

organization has been getting bottles from a supplier of 66oml and 330ml containers for

over four years, making the organization less powerless against dangers from providers

(Sheu and Gao, 2014). This has diminished the measure of cash spent on modifications just

as the measure of time spent on the offering system.

Rivals in the business

In a particularly unified lager commercial center, the leading brewers represent a lot of

brew mass deals, which compares to an 80 percent portion of lager volume deals. In a

merged commercial center with a particular normal item, the portion of the market can

delineate the change in the item's prevalence (Chen, 2014). Subsequently, the risk from

rivals in the business has strengthened. Coors and Molson kept a steady piece of the pie with

restricted development in deals, wherein brands, for example, SAB have kept a predominant

situation in the market from earlier years because of the recent fads in ale drinking that have

arisen lately.

Strengths & Weaknesses

If SAB decides to invest in the beer market, it will be able to take advantage of various

advantages. The fact that SAB is profitable, as seen by the company's above-mentioned
 turnover, demonstrates that it has the resources to invest in expanding the firm.

Additionally, SAB is currently a trademark that is known by the names Claridge and

Cooper, which will aid the sector in raising brand awareness even further (2014). The issue

is in the fact that the brand is not synonymous with high-end alcoholic-style beer of superior

quality. After drinking it, people report that it is a good-quality beer that leaves them feeling

refreshed. The fact that SAB has limited expertise in the beer pub industry is a limitation

that hinders the company's success in today's market. In the customer service sector, there is

no previous experience or engagement; yet, an industry must maintain ongoing

communication with its customers through strategic improvements (Teixeira, 2012). A

study conducted within SAB revealed that the company's experience in beverage and food

production, such as Indian delicacies, is a significant asset when it comes to developing new

and innovative goods. While this can seem difficult, it is certainly doable in the long run.

Structure of the Organization

A typical beverage manufacturing business's organizational system serves as the

foundation for the company. SAB's organizational structure is depicted in the diagram

below: Anheuser-Busch InBev, which controls the majority of the company's shares through

a joint venture, produces a wide range of goods under a variety of brand names. Most

businesses are organized into sections based on the products that they manufacture (Stark,

2015). Its structure is based on the chain of command and is well-organized in general.

Efficiency, product, and environmental friendliness are all prioritized in the company's

departmentalization strategies. As indicated by Wisner et al. (2014), deviations in various

production network standards or vows might unfavorably affect the monetary and financial

ramifications of an organization's activities. There are different co-usable endeavors just as

industry arrangements that are important for the organization's activities, and these
 arrangements direct components of the store network framework. Consider, for instance, the

organization's distribution center and client conveyance structures, which are administered

by joint endeavor concurrences with different bottling works. Undesirable changes to these

agreements could contrarily affect the business and monetary results of their organizations

(Smale, 2014). Dangerous weather conditions occurring more frequently or for a longer

period may interrupt the supply chain, as well as reduce manufacturing capacity and

influence consumer demand for the company's products. As a result of its operational

success, the company's organizational structure has shown to be effective. Management

structure appears to be all-encompassing in its current state, and there appears to be no

requirement to determine whether or not a restructuring is necessary.

Figure 2. Industrial company organizational chart. Source: Anjoran (2014).

Strategic Analysis
It has become progressively obvious that distinctions exist between two degrees of the

hierarchical system: corporate procedure, which is worried about the kinds of ventures to

contend in, and business-level technique, which is additionally worried about how to
 contend inside a particular business climate (Rowlinson, et al., 2014). It has been suggested

that top directors utilize clashing reasonable thoughts and related logical systems to assist

them with settling on choices on the kind of methodology to utilize. Notwithstanding the

way that the business system hypothesis is advancing in essential administration, there has

been minimal exact review to inspect the two business methodology recommendations. The

essential examination of an enterprise requires a wide and autonomous objective review into

the headway of both the outer and inside conditions, with the fundamental discoveries

filling in as the establishment for the advancement of the executives’ key techniques and

destinations (Hill et al., 2014). Enterprise-level procedure and business-level methodology

are perceived as sticking to, and separately, in the techniques of business associations

according to a hypothetical perspective. A similar assessment of the general importance of

corporate methodology and business-level technique in affecting SAB income achievement

will be given in the areas that follow.

Developing a Strategic Plan for a Company

The variety in the organization of an industry's assets between the arrangement of

organizations inside which complete organization organizations contend, as per Korine and

Gomez (2013), is portrayed as the distinction between one industry's procedure and another.

Thusly, SAB's corporate technique might be operationalized through the conveyance of its

resources, representative enlistment, and maintenance, deals, capital financial plan, and

other industry assets got from the organization's tasks in the current enterprises. To build

corporate strategy and achieve profitability, it is critical to first identify the resources and

skills of the organization, and then identify the organization's primary strengths.

Competencies and resources should be larger than those of the company's competitors for

the company to be strategically valuable. The SAB Diversification Division is constantly on

 the go, developing products and experiences that are both new and unbelievably seamless.

This is an illustration of the company's capabilities in terms of maximizing the use of

existing resources efficiently. All that the organization does is injected with splendid

reasoning and imagination, from the plan of its shape breaking cut jug to the business'

weighty SAB Vision short film competition, which is right now underway (Smale 2014).

This was planned as a feature of SAB's sponsorship procedure to allow producers to play

their short advertising clips during the business breaks of smash hit films. HR, substantial

assets, elusive assets, and gifts are needed for the turn of events and execution of an

organization's corporate methodology. This can only be accomplished by an examination of

environmental factors both within and outside the company.

Analysis of the 4Ps (marketing communications strategy)

SAB’s Marketing Mix analysis
SAB uses a marketing mix that includes the four Ps of marketing: product, location,

promotion, and price, to encourage customers to patronize its products and services

electronically. SAB's strategy and marketing plan are built around the four Ps. Customers are

interested in the beer retail platform because of the company's marketing mix. It's a

collection of SAB's marketing techniques (Gauthier's et al 2014). SAB is South Africa's

largest beer manufacturer, and several competing platforms are becoming more powerful. As

a result, the company faces a growing competitive climate in the industry it serves, and if left

uncontrolled, it would lose market share to competitors. SAB can be robust in the

increasingly competitive industry it plays thanks to an effective and efficient market mix.

Product mix
SAB, as the world's largest beer manufacturer, provides customers with a wide range

of goods that align with the company's goal and vision. SAB's goal is to expand the number
of products and services accessible to customers constantly (Sandström et al.2014). Castle

lager, Castle lite, Castle free, flying fish, lion beer, Brutal fruit, Redd's, Corona extra, and a

range of additional products and services are among the options available. SAB has a solid

product mix, which it is continuing to expand to meet expected client needs and desires.

Place and distribution

The many venues used by a corporation to reach its clients are referred to as the place

and distribution mix (Naver, 1990). SAB's principal means of contacting clients is over the

internet via its e-commerce platform, as well as with a large presence in the mainstream

media via advice, promotions, and endorsements. The company also conducts business and

interacts with its target clients through its website (Howarth, 2016). SAB's electronic

presence allows the company to simultaneously communicate with several customers across

the globe. Customers can visit the company's physical bookshops to purchase some of the

company's items in addition to its online presence. The organization also holds conferences

from time to time to engage physically with current and potential customers, as well as the

other stakeholders involved in its business operations. As a result, SAB has a strong market

position and distribution mix that includes both online and physical client engagement.

Prices and pricing strategies

When it comes to pricing and pricing strategies, it refers to how a company sets the

prices of its items and how it utilizes value level as an empowering influence to well contend

while staying beneficial in the commercial center (Lindc, 2011). Given the size of the

organization for this situation study, SAB depends on furnishing clients with the most ideal

evaluation for items and administrations. They achieve this by decreasing their expense of

working together and making utilization of economies of scale. SAB utilizes three particular

evaluating methods, which are as per the following: market-arranged estimating procedures,
value separation valuing techniques, and worth-based evaluating methodologies. SAB's

essential evaluating approach depends on economic situations (Gensler and partners, 2013).

For every item and administration, the partnership looks at what rivals in the market are

offering and, as a rule, tries to give clients a more ideal arrangement. Pricing discrimination

refers to a business approach in which a corporation offers different price levels for the same

product or service depending on the customer's needs. Customer location, preference, the

value placed on a product, and a variety of other factors are taken into consideration when

the Company provides varied prices for the same product. When searching for the price of a

Castle Lager beer on the South African Beer Company's website, the price will be different

from the price you would find on a United Kingdom website (Lindeman et al. 2012). By

implementing this strategy, SAB can increase its profitability while also providing customers

with the impression that they are getting a good deal on their purchases.

Promotional Mix
SAB's promotional mix may be defined as any component of the company's marketing

mix; it refers to the strategies and methods that SAB uses to inform and attract customers to

its products and services (Barr, et al., 2012). SAB employs a variety of strategies to

communicate its product offerings to clients, including the use of advertisements, deals

advancements, corporate social obligation, and customary direct advertising. Publicizing is

the frequently utilized sort of advancement (Jaworski, 1990). The organization pays a

specific measure of cash to organizations or people who work different sites or electronic

stages in return for the arrangement of ads on their site. These devices help in the

organization's capacity to contact an enormous number of clients who utilize distinctive

online stages to lock-in. SAB, in the same way as other different organizations, conducts

special endeavors to gain new customers consistently to build deals. They arrange to lessen
the cost of certain things in their online store and to draw a timetable during which

purchasers can just buy the thing at the marked down cost. SAB additionally offers a

beneficent giving exertion known as SAB grin that urges individuals to give to great

motivations. This is a type of CSF marketing in which the firm distributes a percentage of the

income it generates to a charitable organization on its behalf. This has an impact on the

mindset of customers who are more willing to help others who are less privileged as a result

of this. They purchase SAB items because they believe in doing so and because they want to

help those in need. As a result of this endeavor, the company's image is enhanced in the eyes

of its customers. Customer-facing direct marketing is the practice of a corporation connecting

directly with its customers about its products and services offers. Using email, SMS, phone

calls, placing advertisements on its website, and other kinds of contact, the company

participates in direct marketing. Direct marketing is targeted mostly at existing consumers,

while it may also reach some new customers. With direct marketing, a corporation can be

confident that the message will be received and understood by the target audience.

Recommendation for Improvement

Efforts to make the business components and the company successful are made

possible via collaboration and mutual influence between business and corporate strategy.

Lesser businesses that are right now interested in a single exchange have set up the one

corporate-level key choice they have: which industry to join. Interestingly, less established

areas consider expansion and experience some extra corporate system ends just as business

level choices for the inventive exchange unit, like whether to differentiate its activities

(Esser et al., 2013). The development of SAB, a starting lager maker, into the beer sector

was an essential choice. Molson's business proclamations were fixated on the best way to

contend, and this later educated his employable strategies, which included assembling,
 valuing, circulation, and publicizing, among different parts of the organization's tasks.

Another business methodology that has acquired prevalence as the degree of the worldwide

contest has expanded is the joining of numerous business procedures. SAB might decide to

apply the procedure to improve in their capacity to: conform to natural variances; acquire

innovative abilities and aptitude; and master new abilities and skills (Smale, 2014).

Subsequently, shoppers can get esteem from item includes while additionally addressing a

minimal expense. Foundations that decide to utilize this strategy, then again, should practice

alert so as not to become caught in the focal point of the contention. For instance, not being

in a situation to effectively oversee cutthroat pressing factors and neglecting to accomplish

key seriousness are the two instances of key intensity. As indicated by Meyers et al. (2012),

and adaptable hierarchical construction is needed for the execution of an incorporated

procedure. To viably execute an incorporated procedure, it is important to have a guarantee

of vital adaptability, and dynamic cycles ought to be liquid, halfway brought together and to

some degree decentralized. Business openings are less explicit than they would be in a

normally valuable association, bringing about workforce being all the more significantly

propelled by the craving for solidness among separations and a minimal expense of activity.

Conclusion
Conclusively, in the present cutthroat business world, it is basic for SAB to advance

and lead an imaginative and broad improvement measure inside the firm. A client-driven

methodology with an emphasis on efficiency is at this point not adequate, as organizations

should turn out to be more innovative to adjust to changing business sector requests and stay

in front of the opposition. In case of accomplishment is the ideal objective, the apparent

vital changes in the professional workplace presently call for employable administration.

Notwithstanding the difficulties presented by other cocktail organizations, South African

 Breweries were among quick to enter the market and will keep on driving for quite a while.

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