Case Study Analysis - Kirin Breweries

Hello Folks,
As a part of my B-School Grind, I have been solving cases under the subject Strategic Marketing. I thought of uploading these cases at my blog. Although they might look awkward in my blog, I am sure it will help B-School Students who might be looking for case -study analysis of such popular cases in Google. I have posted these after sending these to my faculty. I shall update it later with my prof's comments and discussion in the class.
This case study is from HBR. The case study details are here.





Key Problem Identified:
Conservative approach to product strategy in the saturated beer market of Japan (prior to the launch of Asahi Super Dry beer).

Analysis of the Beer Market
The beer market in Japan is a classic case of Red Ocean in which there are several players who are battling for market share in a saturated market. The launch of dry beer by Asahi can be perceived as Blue Ocean stategy whose foundations are built by jettisoning the conventional belief of a good beer. This change in belief has been caused by the shift in the demographics of the market towards the youth. Asahi was quick to spot this as they expanded the market by a new characteristic espoused by  dryness. This helped in revitalizing the saturated beer market and thus making the competition irrelevant.

Analysis of Kirin’s response to the launch of Dry Beer:
  • The market for the Dry Beer comprises three types of consumers.1) Consumers who never drank beer 2)  Consumers substituting Lager Beer with Dry Beer 3) Consumers substituting Draft beer of Asahi with its Dry Beer thus cannibalizing the market of Asahi.  If Kirin doesn’t reply to Asahi’s dry beer in any way, the market share of the Asahi Dry Beer would increase. However, Kirin came up with a new product in the same category, which also indirectly increased the market for Asahi’s dry beer. This was possible as the first two types of consumers remaining the same, the third type of consumer would now substitute the existing old Kirin’s Lager Beer and Kirin’s newly introduced dry beer. This has been written under the assumption that people have started preferring Asahi’s dry beer[evident from the survey’s results].
  • Kirin’s response to the launch of Dry Beer by reducing the price diminishes the confidence of the product in the eyes of the beer drinker. He feels cheated as he believes the company had charged highly all these days
We shall employ The Four Actions Frame work (taken from Blue Ocean Strategy Book) to devise the ideal strategic response.

The four actions framework:
Which of the factors that the industry takes for granted should be eliminated?
Industry assumes that Japanese have no class connotation with beer. This assumption can be challenged by positioning the product for elite consumers with strong class distinction.
Which factors should be reduced well below the industry’s standard?
As the beers are highly taxed in Japan, Kirin could look at ways where the impact of tax on the price of the beer could be reduced. This is slightly difficult as the production of the beer is controlled by the State by a license system.
Which factors should be created that the industry has never offered?
Industry has never offered beer drinkers the class distinction it offers to wine drinkers. Industry has never offered exclusive facilities which cater only to beer drinkers. Niche lounges which serve only beers could be facilitated by Kirin to attract an elite set of consumers.
Which factors should be raised well above the industry’s standard?
The elite nature of the product can be showcased through exclusive retail outlets. Typically, retailers select the beer to sell according to the popularity of the brand. With a strong pull created by the elite nature of this product, a strong loyalty for the product can be achieved.

Segmentation: Heavy user segment, who drink more than equivalent of eight regular 633ml. bottles of beer each week (This segment has been chosen as they will influence the buying decisions of new users).

Targeting: Elite consumers in their 20s and 30s, who would connect with the aspirational value of the product-Kirlin Fine Pilsner.

Positioning: The beer will be positioned as a rich and smooth beer (as opposed to Asahi’s sharp Dry beer).
Communication strategy: The main message of the communication strategy should be focused on building the aspirational value of the product. The consumer has to earn the product and not simply buy it. In this case, this can be built by stressing the need for consumer to drink the beer only after ofuro. The advertisements should reinforce the elite nature of the product by clearly articulating the difference between Kirin Fine Pilsner and other beers. From the data, it is observed that promotional expenses of Kirin, during the year 1987, before the launch of Dry beer, have been higher than that of Asahi, after the launch of Super Dry Beer. However, the survey data (Refer Qn 3) shows that the in store promotion has been ineffective.  This has to be addressed in the communication strategy.

Recommendation: Kirin should stop the production of Dry beer and introduce Kirin Fine Pilsner. Kirin Fine Pilsner can be positioned as an elite drink with aspirational value, thus opening up new and uncontested market space. The product can be made available at lounges which serve only beers.

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