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Lecturer: Hilde Eeckhout

BRAND REVIEW
Latvijas Balzams (Latvian Balsam)

Laura Krasovska
MoCoMa

June 14, 2007


Belgium, Gent
Brand Review Latvijas Balzams

Table of Contents

1. General Information on the Company


1.1. History 3
2. Mission ` 4
3. Positioning 5
3.1. Strategic Positioning 5
3.2. Psychological Positioning 5
3.3. Communicative Positioning 6
4. Objectives 7
4.1. Company Objectives 7
4.2. Marketing Objectives 7
5. Market Situation and Competitors 8
6. Marketing Mix 10
6.1. Product 10
6.2. Price 10
6.3. Place / Distribution 12
7. SWOT Analysis 13
7.1. Strengths 13
7.2. Weaknesses 14
7.3. Opportunities 14
7.4. Threats 15
8. Analysis of Different Communication Strategies and Applied Tools 15
8.1. Case 1; Brandy Bonaparte 15
8.2. Case 2; Riga Black Balsam 17
8.3. Case 3; New Packaging of LB Vodka 18
9. Media Strategy: which media are used? 19
10. Conclusion 20
11. References 21
12. Bibliography

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Brand Review Latvijas Balzams

1. General Information on the Company


1.1. History

The origins of Latvijas balzams mastery can be found back in 1900, when the first Riga
State Spirits Warehouse No.1 started its operations.
World War I stopped the trade of spirits for some time, however, already at the very
beginning of Latvia as an independent state, the operations of spirits distillery were
resumed. The production output at that time amounted 25 000 26 000 bottles a day.
According to the information provided by Riga City Bureau of Statistics, in 1924 Riga
Spirits Warehouse employed 24 employees.

In 1940 the distillery was nationalized and named as Rgas spirta un degvna rpnca (Riga
spirits and vodka distillery).
In 1949 the distillery started producing liqueurs and was renamed
accordingly, i.e., Rgas liieru un degvna rpnca (Riga liqueur and
vodka distillery).
In 1960 the company started export production.
In 1970 the company acquired its present name. But a few years
following the resumption of national independence of Latvia,
Latvijas balzams became a state-owned joint stock company.
In 1997, the company was privatized and in 1998 A/S Latvijas
balzams shares were listed in Riga Stock Exchange.
In 2000, as the result of acquisition, Latvijas balzams joined with
A/S Rgas vni, which enabled LB (Latvijas Balzams) to acquire a substantial market share
in the growing wine segment and develop the production of light alcoholic drinks.
Since 2001, one of the top priorities set by the company has been the development of new
products. New brands have been created both in the segment of strong and light alcoholic
beverages, enabling the company to strengthen its competitiveness.

In 2002, the company celebrated the 250th anniversary of Riga Black


Balsam. Riga Black Balsam is an ancient drink, created in the middle of
the 18th century, as the first written evidences of the unique mixture
date back to 1752. This brand carries a very special meaning to the
company, which actually bears its name. Riga Black Balsam is made by
JSC Latvijas Balzams and the traditional recipe invented by Abraham
Kunze, a pharmacist living in Riga, is based on a composition of 24
different ingredients like plants, flowers, buds, juices, roots, oils and
berries prepared in oak barrels. It is sold in ceramic hand-made jugs. According to legend,
Empress Catherine the Great of Russia, became ill during a visit to Latvia, but was cured
after drinking Riga Black Balsam. Over time experts from many countries have highly
regarded the outstanding quality of Riga Black Balsam. It is the visiting card of the
company in Latvia and abroad where Riga Black Balsam has received more than 30 awards
at various international fairs.1

In 2002, the company celebrated the 50th anniversary of the sparkling wine brand Rgas
ampanietis (Riga Champagne).
In late October 1952 in the wine production facility (which is still located in the same place
- the industrial part of Riga city centre at Aristda Brina Street), LB produced the first 300
bottles of a new product. It was created on the basis of an ancient and well-known French
method double fermentation of bottled wine.
Today A/S Latvijas balzams is the largest manufacturer of alcoholic beverages in Latvia
and in the Baltic states. According to the information of the SRS Excise Goods

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Brand Review Latvijas Balzams

Administration, in 2003 the market share of the company reached 43% in Latvia. By today
the market share of the company is not less than 48% in Latvia. Latvijas balzams is a wide-
ranging producer of alcoholic beverages, manufacturing more that ten product groups,
including Riga Black Balsam, different brands of vodka, liquor, sparkling wine, gin,
brandy, whiskey, cocktails, in total more that 115 brands.

Today the majority shareholder of Latvijas Balzams is S.P.I. Distilleries.B.V. Since S.P.I.
Group has become the majority shareholder extensive investments have been made to the
company. Over the last two years more than 8 million lats have been invested towards
increasing of production capacity and development of operations. Due to substantial export,
the company has doubled its production capacities.2

2. Mission

Company has developed number of points, which emphasize its mission, but no
particularly one mission statement is highlighted in one concise formulation. According to
accessible information in companys web-site, their mission is:

To be the leading producer of alcoholic beverages in the Baltic region,


consolidating the traditions preserved over the centuries and modern manufacturing
practice.

To supply consumers with high quality alcoholic beverages employing the


traditions and experience preserved over the centuries.

To ensure unchangingly high quality of products and compliance with the


international quality standards through regular modernisation and upgrading of
technologies.

To understand and satisfy the needs of consumers in line with the market
development.

To form the cooperation with the shareholders, personnel, customers, consumers, so


that the operations of the company meets the interests of all stakeholders and the
general public.

To develop the alcohol consumption culture that would be in line with public health
interests. To stress the importance of personal responsibility for moderate usage of
alcohol. We would never support the situation where people addicted to alcohol are
seen as a model for others.

As the history of a/s Latvijas balzams dates back to more than hundred years, while
the origins of its historic brand Rgas melnais balzams (Riga Black Balsam) is more
than 250 years old, we must preserve the values that are important to the history of
Latvia.3

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Brand Review Latvijas Balzams

3. Positioning

Further, couple of positionings is going to be analyzed. As Latvijas Balzams is the brand


(and also the name of the company), which is so called mother-brand and uses multi
branding and line extension brand strategies, these positionings are mostly concentrating on
overall company profile itself. There are some small positioning modifications for some
particular products, in order to differentiate them according to target group needs and
preferences, but generally this divided positioning affects all the Latvijas Balzams products
and profile actions.

3.1. Strategic Positioning

Latvijas Balzams has acquired big market share in Latvia, and is expanding to Baltic States
and other EU states continuously. Their position relative to other competitors and their
production is that Latvijas Balzams is the largest producer of alcoholic drinks in Baltic
countries as well as the most contemporaneous alcoholic production in Latvia. A share of
enterprise at Latvian market of alcoholic products amounts to almost 50% and, therefore,
has great availability and also respect among other competitors. Latvijas Balzams is an
open stock company and since 1998 its shares are quoted on a stock exchange, which is
highlighted by companys transparency policy.
The company is a member of Association of Latvian Spirits Producers and Distributors,
whereas the Association, in turn, has joined the European Confederation of Spirits
Producers, which gives the reliability and assurance of quality standards of their
production:
The quality plays the leading role in our operations. High and consistent quality
standards have been implemented in our day-to-day production business and apply
as well to the purchase of raw materials, packaging and the culture of work.
For Latvia and Riga we are significant tax - payers. Here, in the country we are
working in, we strive for growth and development in order to be able to create jobs
for more and more people.
The companys extended statement, which also presents their positioning they state
themselves as valuable force in the society.

3.2. Psychological Positioning

Psychological positioning of the organization is about the position the organization wants
to occupy in the mind of the target groups and also overall publics. According to the
information accessible about Latvijas Balzams, their statements show what they want the
society to know about them and think about them. Company is also concerned about
internal matters, so their publics are also their employees;
Our work is aimed at satisfaction of every single customer and every single
employee of the company.
Thinking of today, we are looking towards tomorrow with the sense of
responsibility. We support projects aimed at improving the alcohol consumption
culture in Latvia. Being the alcohol producer, we would like to see our customers
as responsible alcohol consumers able to take the responsibility for their actions.4

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Brand Review Latvijas Balzams

This shows their position, what they want the publics to know about the company.
Because the alcohol issue is very slippery in a sense, that although society likes
companys production, constantly there are arising discussions about alcohol usage among
people below the legal age (18 or 21 years) and also health issues as well as problems
arising, when people are driving drunk. In these cases society often attacks the alcohol
producers.
LB (Latvijas Balzams) takes care of the improvement of professional skills of its
personnel through performance evaluation and training processes that has
contributed to the competitiveness of our personnel in the labor market. The
company benefits from these processes in terms of efficiency and quality. This is
the positioning the company wants its employees to have in mind. This is also
about the stating the company for overall publics as attractive place to work for.
Being aware of the historical role of the public joint stock company Latvijas
balzams in Latvia, we have made our contribution also to preserving of Latvian
heritage values. Riga came into being more than 800 years ago. The first evidences
on Riga Black Balsam date back to year 1752. This is one of the oldest Latvian
brands with an international fame, created by the multicultural city of Riga and its
craftsmen whose skills have been praised by the powerful of this world.
This is how the company presents the mother-brand (also the name of the company) and
wants to be perceived in mind of publics. The high value historical heritage appraisal is
emphasized. According to different public opinion polls, Latvijas Balzams has succeeded
of fulfilling its positioning aspects.

3.3. Communicative Positioning

Communicative positioning is about the way position is being realized through


communication. This can include a mix of different characteristics, such as concept, view
point, message etc.
As already mentioned above, due to the fact that Latvijas Balzams is alcohol producer,
some problems related to alcohol abuse and health consequences from time to time are
being addressed to the company. Therefore, in order to underline the above mentioned
psychological positioning that the company supports the responsible consumption of
alcohol, there is developed the communicative positioning statement, such as
The company believes that moderate and responsible alcohol consumption does
not interfere with harmonious and healthy lifestyle. What causes the problem and
undermines the quality of life is alcohol abuse.

So, the key message Latvijas balzams is carrying respect and take pride in your country,
your city, your people and their achievements.

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Brand Review Latvijas Balzams

4. Objectives
4.1. Company Objectives

To increase the profit by an average of 15% annually


To invest in spirit factory development and move it out from the city centre
To maintain the production of high quality beverages
To increase the volume of the production
To increase the number of employees provide more working places
To increase the aggregate amount of exported products by an average of 30%
annually
To expand the export directions - fuller uptake of Baltic States, as well as of EU
markets
To gain recognition in world fairs
To keep on following the strategic positioning

4.2. Marketing Objectives

Increase product awareness and attitude among the target audiences by an


average of 15% in one year.
Improve sales by maintaining quality and heritage image for existing products
and company.
Increase sales of most demanded light-alcoholic drinks. (According to market
characteristics).
Improve sales by building images and awareness for new products.
To keep on differentiating the positioning of different products, due to the fact
that company is using multi branding and line extension brand strategies.

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Brand Review Latvijas Balzams

5. Market Situation and Competitors

As Latvijas Balzams is Latvian company and mainly operating in Latvian market, the
market situation is described more from Latvian market perspective. Nevertheless, some
foreign markets related characteristics are going to be mentioned.

More alcohol is consumed in Latvia than in other Baltic and CIS countries, Latvians head
the ranks in Europe, claims the WHO (World Health Organization). And yet residents of
Latvia have started to drink less, especially the strong drinks, approves the national
excise tax goods administration, adding that beer is consumed in growing amounts, as are
other light beverages like cocktails. Although the Latvian parliament has excluded it from
the law on alcoholic beverages, and listed its stouts and lagers as foodstuff, nevertheless
beer producers are strong competitors.
The total amount of alcohol sales have increased in Latvia during last years. Latvian made
drinks are covering approximately 65% of the market.

Producers. Local alcohol produce has seen a tendency to increase in volume during the
past years and there is a rise with growth in exports. Nevertheless, the popularity of light-
alcoholic cocktails is increasing. At the same time, people have started to drink more
imported beverages. The output of locally produced brandies and liqueurs has diminished
as they are not very popular any more; while the amount of natural wines consumed has
tripled. The output of Latvian champagne production has fallen a bit, partly because of
more imports of foreign sparkling wines. It should be noted that the renowned herbal Riga
Black Balsam, also enjoyed in places abroad, gave a 26% rise to strong beverage
production. Vodka still makes up almost half of the total alcoholic drinks produced, of
course, not counting all the liters of beer drunk to cool the hot summer months and not
only. Moskovskaya Osobaya Vodka or the Moscow Special was the most popular drink in
the country for several years, but has now given up its first place to LB vodka.
Both of these favorites are made by the same producer, also the biggest drinks maker in
Latvia (and the Baltic states), Latvijas Balzams, taking up to 48% of the whole Latvian
market after increasing its share considerably by merging with another large producer,
Rgas Vni (Riga Wines), in early 2001. Raw spirits is officially produced by five
companies in Latvia. If some time ago the main producer of spirits was the Latvijas
Balzams distillery (made from rectified spirits coming from the Jaunpagasts Plus
distillery), today more than 55% of the rectified spirits is distilled by the Rigas Bestsprit
distillery in Kalsnava.

Importers. 57 firms in Latvia hold license to import alcohol. According to accessible


public information, five importers Mobil plus ADV, Lion&Co as well as Mono M, L.D.V.
and S.D.V, all constitute two thirds of the total import turnover. The three latter companies
are all part of the Mono holding company and specialize in premium alcohol beverages.
Approximately 13 million liters of imported alcoholic beverages are consumed in Latvia
annually, quite a bit for a total population of 2.6 million. Imported drinks are consumed in
growing amounts in rural areas. The past couple of years have seen vodka imports double
basically on the expense of cheaper brands produced mainly in neighboring countries,
but bearing labels in Latvian. Typically a fifth of the alcohol market is filled with so
called Soviet brandy, like Manastirska Izba, a cheap Georgian wine produced in Bulgaria

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Brand Review Latvijas Balzams

and others like it. The prices of these drinks are way down and falling, as many companies
are in on importing the sought after and affordable booze of choice, and also because of
the generally poorer quality.
All market players, according to Armands Sterns, marketing director at Mobil plus ADV,
were worried over the new strategy of Latvijas Balzams after a change in shareholders, as
the clients of the importers the shops depend on the main distillery due to its almost
monopoly status. Around that time, the press published reports on Latvijas Balzams
handing over exclusive rights for the wholesale of its production to AV&D, which is said
to be supposedly related to the Mono holding.5

Export zone for Latvijas Balzams


The aggregate amount of exported products has reached 14.9 million lats in the first half
of year 2006, which is by 41% more than in the first half of 2005. The main export
directions in the first half of year 2006, included Baltic States, Poland and Scandinavia, at
the same time, with active development of new export markets. In the beginning of the
year, sales of JSC Latvijas balzams products were started on ferry lines Eckero line,
Viking line and Silja line, as well as cooperation with Tallink ferries has been continued
successfully. Since June 2006, Riga Black Balsam bar is opened on Tallink ferry Regina
Baltika which runs between Riga and Stockholm, where guests and tourists can taste not
only the Riga Black balsam, but also to become acquainted with information about its
history and traditions. By now, the production of Latvijas Balzams is being exported to
Great Britain, Germany, Italy, USA, Ukraine, Nordic countries, Lithuania, Russia,
Denmark, Belarus, Estonia, Slovenia, Norway, as well as to far-away exotic countries, like
Mexico and Japan.

Competitors
In the territory of Latvia as well in foreign countries, the main competitors of Latvijas
Balzams are foreign alcohol producers. The main ones are Allied Domecq, Constellation
Brands, Fortune Brands, Diageo, Pernod Ricard and others. Latvijas Balzams pricing
policy, therefore, mostly in foreign countries is middle prices for consumers with middle
income. But they are also differentiating their prices according to their more expensive or
luxury production.

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Brand Review Latvijas Balzams

6. Marketing Mix
6.1. Product

Latvijas Balzams is a drinks manufacturer with a broad spectrum, which at the moment
produces ten different sorts of products including Latvijas Melnais Balzams (Latvian
Black Balsam), vodkas, bitters, liqueurs, aperitifs, gins and brandies altogether 50
different titles. 55% of the total amount of products sold are vodkas, 12% liqueurs and
18% brandy based drinks.
Due to the large amount of products, only main and most popular sorts of products are
going to be described here from perspective of benefits, options, quality, design and
packaging.

Riga Black Balsam


24 ingredients. Subtle hints of linden blossom, birch bud, valerian root,
raspberry, bilberry, and ginger as well as touches of nutmeg and black
peppercorn tease the palate and come alive in the glass.

Riga Black Balsam, a most valued drink and the best gift of friendship, was
first made in Riga in the middle of the 18th century. The legend has it that
Empress Catherine the Great of Russia, having fallen ill during a visit to
Latvia, was cured after drinking Riga Black Balsam.

Riga Black Balsam is carefully prepared in oak barrels, which allow its
characteristic strength and the slightly bitter-sweet taste to develop. You will
feel elixirs fruity aroma and its special taste with every sip. Enjoy it straight up, on the
rocks, or mixed in a variety of cocktails. Riga Black Balsam is available in different
souvenir packaging boxes and tubes.
Alcohol content: 45%
Volumes available: 0.04l, 0.2l, 0.35l, 0.5l, 0.7l, 1.0l, 3.0l

LB Vodka
LB Vodka excels in an outstanding purity and is produced from the top
quality spirit by a fourfold distillation method. LB Vodka is based on the
best traditions acquired by Latvijas balzams distillers over more than 100
years of the companys history

According to the data provided by the Excise Goods Administration, in


2005, LB Vodka is the third most popular vodka brand in Latvia. Different
others tastes are available, such as apple rhubarb, cranberry, Riga Black
Balsam Vodka and grapefruit taste.
Volumes available: 0.2 l; 0.35l; 0.5 l; 0.7 l and 1.0 l
Alcohol content: 40%

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Brand Review Latvijas Balzams

Kaznacheyskaya Vodka
Kaznacheyskaya vodka brand has originated from the legend that tells
about Russian vodka monopoly at the end of the 19th century. It tells that
in 1861 a new procedure for vodka procurement was introduced in Russia
landed gentry and landlords supplied vodka to the State Treasure as an
equivalent of tax payments, whereas the quality of vodka and terms of
delivery were under a strict control of the State.
Kaznacheyskaya vodka is original Russian vodka, the recipe and
production technology of which has been developed in Russia.
Kaznacheyskaya vodka serves as a model for vodka quality and purity
standards. Tastes and sorts, such as gold, bereza, currant, lemon,
cranberry, pepper and honey available.
According to the data provided by the Excise Goods Administration, in 200
Kaznacheyskaya vodka ranged the first among the top vodka brands.
Volumes available: 0.2, 0.35, 0.5, 0.7. 1.0 l
Alcohol content: 38%.

Riga D`OR
A new, exclusive V.S.O.P. class brandy created specially on the occasion of
Rigas 800th anniversary. Material for this special product have been
purchased in France, the country famous for its historical experience in
cognac and brandy production, supplying the raw material to many
distilleries all around the world. Chivalrous and noble Riga dOr symbolizes
the golden age of Riga and carries the message of its return.

Volume available: 0.7 l


Alcohol content: 40%

Beaufond Cognac XO
Beaufond XO is a 20 years aged cognac boasting an exceptional
mahogany coloring. At first, its scent seems elusive, but after a moment
you will feel the adorable nuances of sandalwood, tobacco, leather and
raisins.
The cognac leaves a balanced aftertaste, which lasts for several minutes
after enjoying the drink.
Alcohol content: 40%
Volume: 0.7

Latvijas Balzams production also includes sparkling wines red, Muscat, sweet, medium
sweet, medium dry and brut, classical red and white champagne, Desire Cherry, Desire
Strawberry and Gold Medal sparkling wines. Ordinary wines also available.

Long drinks are very popular product as well: Black Balsam Cola, Cherry, Currant,
Cranberry, Gin Tonic, Rum with Coke, Vodka and Tequila cocktails and also energy drink
cocktails.

Within category of ciders, Latvijas Balzams is offering Lucky Dog with tastes of apple,
apple-vanilla, pear, kiwi, caramel, strawberry and pineapple tastes.

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Brand Review Latvijas Balzams

Sarlote Riga Black Balsam


A popular cream liqueur with Riga black balsam. The unique taste
composition owes to the famous Riga black balsam, the recipe of which has
been created in the 18th century as a blend of 24 ingredients: herbal, berries,
flowers and other components. Also available liqueurs, such as Sarlote Coffee,
Mia Bella Irish Cream and Vanilla, Mocca, Cranberry, Cherry, Strawberry and
Mint liqueurs.
Serve Sarlote pure, on ice, as a cocktail ingredient, with coffee or with dessert.

Alcohol content: 17%


Volume: 0.35l, 0.5l

6.2. Price

Due to the fact, that Latvijas Balzams is one of the largest alcohol producers, their product
prices vary. Mostly they are using middle range prices for most of the products. Latvijas
Balzams has many brands of vodka, liqueurs, brandies and cocktails, so for different brands
they are adopting different price policy. This is according to the status and quality of each
product. Nevertheless, they have developed special, more luxury product brands, which,
accordingly have higher price.
It is possible to purchase the production in the shops on the basis of clearance. If the client
is buying the production in gross/ wholesale, the discount is given. For example, if the
value of the production is more than 30 Ls, then client gets 5% discount. If the purchase
exceeds 100 Ls, then discount of 10% is given.

6.3. Place / Distribution

Production release

Since year 2000, the main distributor of Latvijas Balzams


production is SIA AV&D the wholesaler of alcoholic drinks,
which constantly provides all the supermarkets and other shops
with the alcohol production. Within the distribution chain, the
company can guarantee free delivery of the entire assortment
available within 24 hours to every place in Latvia and in any
amount. More over it is possible to buy import alcoholic drinks
in SIA AV&D warehouses.
SIA AV&D warehouses are located in Riga, Madona, Kuldga
and Daugavpils the cities in Latvia.
The production of Latvijas Balzams is available in every
supermarket, food and drink shop as well as kiosks in Latvia.

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Brand Review Latvijas Balzams

Specialized Store Chain

At the moment, Latvijas Balzams owns 45 company stores. They all are
set according to one unitary concept as specialized alcohol production
stores. This means, that all these stores have the same identical look as
well as unitary standards for serving the clients. Also the uniforms of the
employees of these stores have unitary
design. The outlook of the store is
characterized with the signboard with
companys name and logo brown letters on the yellow
background. Latvijas Balzams store specialization is trading
alcohol production. Over 70% of there sold alcoholic drinks are
the production of Latvijas balzams. Nevertheless, in these
kinds of stores it is also possible to buy tobacco products,
different sweets, and small gifts or souvenirs. In some
specialized stores, greater amount of other food items is
available. The assortment of specialized stores of Latvijas
balzams is set so that people can buy nice presents good
beverage and some box of tasty confection before going to a birthday party or some other
celebrations.

7. SWOT Analysis
7.1. STRENGTHS

Good financial situation - turnover of JSC Latvijas balzams has reached 38.3
million lats in the first six months of the year 2006, which is by 6 million or 18 %
more compared to the first half of the previous year. The profit gained by the
enterprise was 739 thousand lats in the first half of 2006, which is by almost 12 %
more than in the same period of 2005.6
Stable market share Latvijas Balzams is the largest alcohol producer in Latvia
and its production sales has reached more than 48% of the market.
Brand knowledge among consumers Latvijas Balzams brand is one of the oldest
and best known brands in Latvia and is gaining more and more recognition in other
Baltic Countries as well as EU trade fairs.
Multi-branding and line extension strategy Latvijas Balzams is using its brand
name only on particular product categories, which strengthens its awareness,
because of the high quality and historical value which is often related to the brand.
In most cases, other brands, if not successful, dont damage the overall perception
of company brand name.
Variety of products consumers have great choice of different products (see 6.1.)
as well as various available tastes, which each and every consumer can pick
according his/her wishes. For example, if a consumer wants not just ordinary vodka
it is possible to get different tastes of it, and more over, the prices comparing to
competitors are more attractive.
Patented technologies this is what makes the brand unique.

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Brand Review Latvijas Balzams

Latvijas Balzams is handing over exclusive rights for the wholesale of its
production to AV&D, which is said to be supposedly related to the Mono holding.

Communication managed according to set company mission all the


communication activities have so far been managed within the companys mission
background. This strengthens publics attitude towards the brand they respect and
believe in high values set by the brand.
Clear strategic direction the brand has been operating according its strategic
objectives and has clear understanding of their objectives as well. This has helped to
maintain the course of development and gaining profit.

7.2. WEAKNESSES

Internal problems - there might arise some internally related problems, which
might interfere with the transparency of the company; the audit discrepancies,
work force conditions and not so strong internal communication as the external
one.
Clients with low income due to the fact of high inflation and increasing taxes in
the country, the company also will have to raise the prices, so they might loose
some part of the client sector.
Increasing competition in the market - more imported alcohol is gaining
recognition within consumers. The brand weakness can be that although it is well
recognized among consumers, it still doesnt have the same perception as
consumers have towards, for example, Hennessey, Absolut and others.

7.3. OPPORTUNITIES

Increasing consumer paying capacity there will also be a sector of consumers,


whose paying capacity will surely increase, and therefore, possibly to gain more
profit from more expensive alcoholic drinks. This is also the opportunity to acquire
new market segment by starting producing more qualitative, more expensive drinks
that would harmonize with the lifestyle of more wealthy people.
Increase export due to the access of EU, the previously tied boundaries are open
for a while. More over, if loosing some percentage of the market share in Latvia,
there is an opportunity to gain the percentage sales back within other foreign
countries.
To improve the quality of production competitors are still not so powerful, so
by improving the quality and introducing new product ideas/lines, it is the
opportunity to fight them back, because most of them are in the Product Life
Cycle Stage of introduction and growth.
To improve the technical equipment due to the investor support, Latvijas
Balzams can invest in factory development, by improving also the environmental
protection etc. This is also the opportunity to gain bigger market shares in overall
EU market, because of the increased quality standards.

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Brand Review Latvijas Balzams

7.4. THREATS

Healthy lifestyle - although Latvijas Balzams states that the company believes
that moderate and responsible alcohol consumption does not interfere with
harmonious and healthy lifestyle. What causes the problem and undermines the
quality of life is alcohol abuse, nevertheless, there is a threat that more and more
people might stop consuming alcohol at all, thinking about healthy lifestyle. If
some strong and impressive campaigns are run against alcohol consumption, this
might have effect to the companys profit as well as brand name itself.
Unfavorable upgrades in legislation due to the high inflation, the Parliament is
adopting different taxes strategies to excise products. There might be some
changes in limiting the productions or selling time of strong alcohol, due to
problems with people under legal age.
Demographic situation in Latvia - it is acquired that there might be a decrease of
consumers, because of higher death rates than birth rates. It is assumed that
younger people are consuming more alcohol than older people.

8. Analysis of Different Communication Strategies and Applied Tools

Due to the fact that Latvijas Balzams is well known mother brand and as well, holds the
name of the company, has different branding strategies (multi branding and line extension),
it is evitable, that company itself has adapted different communication strategies for
different aspects of its operation. So, further in this paper, some different communication
strategies and tools are going to be analyzed.

8.1. Case 1; Brandy Bonaparte

Communication Objectives
To maintain brand knowledge (Brandy Bonaparte) and support brand loyalty.

Target Groups
All consumers of legal age that are aware of the brand and are following the Eurovision
Song contest.

Positioning
Assuring mental commitment between consumer and the brand, using catchy slogan.

Message
The underlying key message Latvijas balzams is carrying respect and take pride in your
country, your city, your people and their achievements.

Laura Krasovska 15
Brand Review Latvijas Balzams

Instruments
Advertising in magazines.
Background information
about the ad: The displayed
people were the
representatives of Latvia in
Eurovision Song Contest
2007. This groups name is
Bonaparti.lv.
1st line of says: We sound
together a way of playing
with words. (The sound
when something sounds,
relating to Eurovision, and
the sound meaning the
name, which, in this case is
basically the same, and the
meaning of we the
relation of the product and
the contestants)
The last line warns: Using
alcohol has negative influence.

Advertising Objectives
A mix of cognitive and affective objectives;
Cognitive to maintain brand knowledge;
Affective to evoke patriotism feelings by the ad and combine them with likeability and
the sense of belonging to country, which is representing itself in Eurovision and to evoke
relation between national feelings and national brand Bonaparte.

Message
We sound together!

Creative strategy
Formal execution strategy emotional appeal, trying to evoke and link positive emotions
of supporting the Eurovision contestants and therefore, their relation, positive and
nationalism feelings to the product in the minds of consumers, using non-verbal elements.

Creative idea - as it was the time period before Eurovision Song Contest and the
contestants from Latvia were chosen Bonaparti.lv, the relation of names was found. The
idea was to use the joint promotion for both sides to gain benefit. As the names are related,
the ad is easy made group Bonaparti.lv are seen there at the music instrument to
highlight their contestant status, and Napoleon Bonaparte is sitting next to them, tasting
his brandy and listening, showing that he likes the sound. Therefore, all the participating
characters are related and support each other.

Laura Krasovska 16
Brand Review Latvijas Balzams

8.2. Case 2; Riga Black Balsam

Communication Objectives
To create brand awareness and purchase intention.

Target Groups
Foreign people of legal age that are coming to visit Riga, Latvia

Positioning
Use of product for creating typical national characteristic associations.

Message
The underlying message is that Riga Black Balsam is one of the most valued historical
heritages and is a visit card for Riga, Latvia.

Instruments
Outdoor advertising posters in Riga airport territory
and billboards inside the airport premises.

Advertising Objectives
A mix of cognitive and conative objectives;
Cognitive to create brand awareness
Conative - to create purchase intension

Advertising Message
Have you really been to Latvia?
Riga Black Balsam a European legend since 1752

Advertising type
This advertisement includes awareness and
symbolism characteristics.
Awareness it is creating advertising recall, more
over, for foreigners coming to Latvia this is a new
product, therefore here is the same situation as if
the product would be in the introductory stage of
the brand life cycle.
Symbolism this advertisement also communicates
symbolic brand meaning, such as being legend, some Latvian national thing

Message strategy
ESP- Emotional Selling proposition, influencing the potential consumer that this is the
product he/she has to buy to find out what is really typical or legend for Riga, Latvia.

Creative strategy
Due to the fact that usually people, who are visiting foreign country, want to bring some
souvenir back home, the advertisement is just there to let them know WHAT should they

Laura Krasovska 17
Brand Review Latvijas Balzams

taste, bring home and tell everyone about. Nice, respectful picture of the product is
displayed, mentioning its legendary dawn. Non-verbal communication.

8.3. Case 3; New packaging of LB Vodka

Communication Objectives
To reinforce brand knowledge due to the changes of packaging.
To maintain the brand loyalty.

Target Groups
All the existing costumers of legal age, that were familiar with old packaging, all alcohol
consumers of legal age that are familiar in a way of the brand, and might try the renewed
version due to the interest.

Positioning
Highlighting the product with reassurance (promise, message) that quality and values have
remained.

Message
The underlying message is that the packaging has changed, but the quality and values of
the way of lifestyle of the product have remained.

Instruments
Advertising in magazines
The background information: LB Vodka
had changed the packaging. In this
advertisement in each picture the text
means: test nr. 3, 7, 12 The text next to
the product means: Life proven;
unfailing since 1900
The last line means: Using alcohol has
negative influence.

Advertising Objectives
A mix of cognitive and affective
objectives.
Cognitive creating the awareness of
new packaging
Affective - evoking positive feelings
related to the lifestyle the consumers
might like.

Advertising Message
Life proven; unfailing since 1900
Tested

Advertising type
This advertising stresses relationship a link between loyal costumer and the brand and
reinforces the emotional, lifestyle involvement.

Laura Krasovska 18
Brand Review Latvijas Balzams

Message strategy
Emotional selling proposition

Creative strategy
Creative idea - to show in the advertisement different people lifestyles, moments of life,
when people might drink vodka. The advertisement shows 3 moments of life, in order to
broaden the audiences at least some of these moments, such as being with friends, skiing
in mountains or fishing might be close to heart.

9. Media Strategy: which media are used?

As observed, Latvijas Balzams is using a mix of above-the-line and below-the-line media.


Mostly used above-the-line media are:
Broadcast;
Television-advertising
Cinema-advertising

Print;
Newspapers
Magazines

Out-of-home-media;
Billboards

Internet;
Own web-site

Below-the-line media are:


Out-of-home-media;
Corporate and product-brochures
Trade fairs

PR;
Press releases
Press conferences and events
Sponsoring

POS;
Posters
Packaging

Promotions;
Premiums
Discounts
Contests

Laura Krasovska 19
Brand Review Latvijas Balzams

10. Conclusion

Latvijas Balzams is one of the oldest and therefore best known brands in Latvia.
Nevertheless it is using different branding strategies, which help to experiment in
developing new product and evaluate how well it can compete in the market. Latvijas
Balzams shares its mission with overall society and has high social responsibility. It has
good overall external communication, which welds the positive attitude towards the
company. This makes the brand strong in the market. Although being alcohol producer
nowadays is a very risky business from peoples possible negative attitude perspective,
Latvijas Balzams stands for beliefs that moderate and responsible alcohol consumption
does not interfere with harmonious and healthy lifestyle. What causes the problem and
undermines the quality of life is alcohol abuse. More over, thinking of today, the company
is looking towards tomorrow with the sense of responsibility as mentioned before. Latvijas
Balzams support projects aimed at improving the alcohol consumption culture in Latvia.
Being the alcohol producer, they state that they would like to see their customers as
responsible alcohol consumers able to take the responsibility for their actions. They have
also supported the campaigns such as: Drink, Drive, Die, which might bee seen unusual
to the alcohol producer. But inevitably this is a part of its mission. As a consequence, one
will never see the advertising of Latvijas Balzams promoting drinking, or consuming
alcohol as such. It is all about the values, quality, responsibility, know-how to enjoy.
To add, recently Latvijas Balzams has acquired new markets and keep on looking forward
in releasing the production and promoting the quality and the value of historical heritage of
Latvia.
This all makes the brand Latvijas Balzams the Latvian brand of which Latvians can be
proud of.

Laura Krasovska 20
Brand Review Latvijas Balzams

11. References

Laura Krasovska 21
1
http://en.wikipedia.org/wiki/Riga_Black_Balsam
2
http://www.balzams.lv/html/
3
http://www.balzams.lv/html/eng/28837.php
4
http://www.balzams.lv/html/eng/28841.php
5
http://www.spi.ru/en/lbalzams_e.html
6
http://www.balzams.lv/html/eng/28840.php

12. Bibliography

Eeckhout, Hilde; Marketing Communications; notes

Patrick De Pelsmacker, Maggie Guens and Joeri Van den Bergh; Marketing Communications. A
European Perspective. 3rd edition, FT Prentice Hall/Financial Times 2007

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