+
Bristol Business School
Academic Year: 09/10
Assessment Period: August
Assessment Type: Referral Open book
exam
Module Leader:
Module Number:
Module Name:
Word Limit:
Jenny Lloyd
UMKCPD-20-1
Introduction to Marketing
Coursework Submission Date and Time:
Open book exam in which you are allowed to bring your prepared case
into the exam with you.
The time and date of the test will become available when the exam
timetable is published.
UNIVERSITY OF THE WEST OF ENGLAND, BRISTOL
LEVEL 1
Introduction to Marketing
Component B: Referral Assessment
Module No UMPCPD-20-1
2009 / 2010
BRIEFING DOCUMENT
MARKET ANALYSIS AND STRATEGIC RECOMMENDATION:
ANALYSING THE CIDER INDUSTRY
ASSIGNMENT TYPE:
ASSIGNMENT ISSUE DATE:
ASSIGNMENT SUBMISSION:
Individual report written in controlled
conditions
Week commencing
Assessment under controlled conditions in
the referral assessment period
MODULE LEADER:
Dr Jenny Lloyd
Assessment Overview
 This assessment will test your ability to undertake an environmental
analysis of a given market sector.
 Attached to this brief, you will find a broad market overview of the cider
market.
 You are expected to supplement the material in this case by
researching this market sector to a level where you are able to
undertake a ‘macro’ analysis.
 In ‘controlled conditions’ (exam-style), you will be given additional
information that relates to a company and its ‘micro’ environment and
you will be expected to undertake further analysis using appropriate
frameworks and answer a series of questions on the basis of both your
macro and micro analysis.
 You are allowed to take the basic case study ‘Industry Overview: The
Cider Industry’ into the exam with you annotated (by hand). No other
notes may be brought in. The annotated case study should then be
handed to the examiner with your written script at the end of the
examination period.
Learning Outcomes
Upon completion of this assignment students will have demonstrated their
ability to:
 apply marketing analysis frameworks to strategic marketing planning
decisions;
 to identify the needs of stakeholders in a given market and their role as
potential drivers of innovation
 identify the potential threats and opportunities within a given market sector;
 analyse a given organization to identify the strengths and weaknesses that
it possesses within that market segment;
 critically appraise the ability of that chosen organization to address the
threats and exploit the opportunities that exist within their sector;
 generate clear, rational and reasoned recommendations, supported by
theory, as to a preferred course of action taking into account the short,
medium and long term future of the organization.
Assignment Format
This assignment comprises of two stages: ‘preparatory research and analysis’
and ‘execution’. In the preparatory stage, you will be given a ’brief’ and are
expected to research the specified market, analysing it as far as possible
using established marketing frameworks. You should make full use of all of
the services the University Library has to offer; for example:





Mintel market reports
Marketline
Emerald and Business Source Premiere databases
Nexis
WARC (World Advertising Research Centre)
In addition, the Government publish a wealth of statistics online
(http://www.statistics.gov.uk) that offer real insight into social trends
The ‘execution’ element will take place in the referral assessment period
under exam-style ‘controlled conditions’. Whilst this assessment is technically
the ‘coursework’ component of this course (known as ‘Component B’) the fact
that the ‘execution’ element will be undertaken in examination conditions
means that it will be scheduled as an examination in the referral assessment
period.
Under exam-style conditions you will be given information pertaining to a
company and its micro environment. You will then be asked to respond to a
series of questions that will test your ability to undertake an effective analysis
of a marketing environment. You are allowed to bring your copy of the basic
case study into the exam with you, annotated with hand-written notes only.
No additional notes will be allowed.
The Brief
Within the context of this assessment, you are expected to assume the role of
a marketing consultant. Your Managing Director has been approached by a
potential new client, the owner of a medium sized cider manufacturer who is
seeking advice as to the best options to develop his business.
In preparation for a meeting with this client, he has asked you to undertake a
macro analysis of the cider sector so that you can demonstrate a clear
understanding of the opportunities and threats that exist for all clubs in the
cider industry. He has provided you with a basic case study that details a
limited number of salient facts but as the information is relatively superficial, it
is necessary for you to undertake further research in order to be able to
complete the task satisfactorily.
Under controlled conditions, you will then be presented with a report that
contains details of the company and its micro environment. You will be
required to analyse the report and, on the basis of your prior research and the
information in the company report, answer questions that will test your ability
to generate or demonstrate any or all of the following:



An effective market analysis that contains elements of both macro and
micro environment.
An understanding of the relevant stakeholder groups and their varying
needs.
A correctly executed SWOT/TOWS matrix with components correctly
identified.


The ability to generate critical (key) success factors on the basis of
macro and micro analysis undertaken.
Strategic recommendations (based upon the analysis undertaken).
Assessment Criteria
Your work will be assessed on your ability to:
1. Demonstrate a clear, detailed and insightful understanding of the UK cider
industry the needs of its stakeholders and the markets that it serves.
2. Undertake a market analysis correctly and thoroughly at both a ‘micro’ and
‘macro’ level.
3. Correctly identify the components of a TOWS/ SWOT analysis on the basis
of macro and micro analyses undertaken
4. Generate critical (key) success factors on the basis of the opportunities,
threats, strengths and weaknesses identified
5. Draw logical conclusions from the analysis undertaken and, in conjunction
with theoretical constructs, generate strategic recommendations.
6. Use of up-to-date market information in combination with appropriate
theoretical frameworks as a basis of the analytical process throughout.
INDUSTRY OVERVIEW: THE CIDER INDUSTRY
INTRODUCTION
Cider is a beverage made from apple juice whose heritage can be traced back
many centuries. Traditionally it was made in both alcoholic and non-alcoholic
form; the latter known as ‘apple cider’ in the US. Earliest mentions of cider
are visible in writings dating back to early Roman, Greek and Egyptian
civilisations which noted the consumption of fermented apple juice as a
beverage. However, over recent centuries, cider production has largely been
located in Europe; most specifically the UK, France and Spain. The UK boasts
the highest consumption of cider by volume and, unlike sales of other types of
alcoholic beverage, it appears to be a growing market (see Figure 1).
Figure 1 Sales of Cider and Perry (Source: Mintel 2008)
2003
2004
2005
2006
2007*
2008*
(est)
m
litres
index £m
Index £m
at Index €m
2003
prices
Index
481
495
523
565
665
726
100
103
109
117
138
151
100
104
111
123
146
161
100
106
112
124
148
152
1,170
1,213
1,296
1,435
1,710
1,888
1,170
1,189
1,246
1,347
1,558
1,646
100
102
106
115
133
141
1,691
1,788
1,896
2,105
2,500
2,568
TYPES OF CIDER
There are a number of different types of cider. At the most basic level, ciders
can be divided into those that are ‘still’ and those that are ‘sparkling’.
‘Sparkling’ ciders are those that contain carbon dioxide (a gas that is
produced during the fermentation process) and are usually stored under
pressure in a similar fashion to beers and soft drinks. In contrast, ’still’ ciders
are simply a form of fermented apple juice that contains no carbonation.
Cider types are also distinguished by their production method and alcohol
content. For example, it has already been noted that, in the US, ‘apple cider’
is a non-alcoholic refreshing apple juice drink. In contrast, ‘French style’ cider
contains alcohol but is manufactured using a process that halts fermentation
so that the alcohol content of the liquid is limited to between 2% and 5%
ABV1. ‘Draft’ cider, which may or may not be served from a keg is generally
limited to 6% ABV and ‘farmhouse style’ ciders (often called ‘real cider’) can
have an ABV that ranges from between 5% and 12%). ‘Farmhouse style’
cider is often mistakenly labelled as ‘scrumpy’. However, a cider can only be
regarded as ‘scrumpy’ if it has been made with cider apples using traditional
methods, has not added yeast to support the fermentation process and does
not contain additives of any form.
There are also a number of cider variants. ‘Perry’, in particular, has
experienced a resurgence of interest in recent years. Made in a similar
fashion to cider, it is made from a mixture of apple and pear juice.
In
contrast, apple juice can be fermented to a point at which the ABV exceeds
12% when it is considered ‘apple wine’. Finally, ‘cyser’ is an form of mead
traditionally thought to have been made by ancient monks. It is a sweet liquid
produced by fermeningt a mixture of apple juice and honey with yeast to a
point at which the ABV can reach up to 13.5%.
1
ABV is an abbreviation for Alcohol By Volume and simply represents what proportion of the total volume of liquid is
alcohol. The higher the percentage, the stronger the alcoholic beverage
THE COMPETITIVE CONTEXT
Cider competes in what is known as the ‘long drink’ market2. The market is
divided into five types of ‘long drink’: cider/perry, ales/stouts, lagers and
liquids known as ‘flavoured alcoholic beverages’ (FABs) in the trade but more
commonly by consumers and the media as ‘alcopops’. Whilst cider may well
be the only ‘long’ alcoholic drink to be experiencing growth over past years, it
still commands a relatively small proportion of the overall ‘long drink’ market.
However, despite its recent growth, the market for lager is still worth five times
as much as that for cider (See Figures 2 and 3).
Cider is sold through what are known as ‘on trade’ and the ‘off trade outlets’.
In the UK, retailers selling alcohol to the public are required to get a license
and the ‘on’ and ‘off’ element relates to the type of license they possess. An
‘on trade’ license permits sellers to sell alcohol for consumption on the
premises, for example, in bars, pubs and restaurants. In contrast, an ‘off
trade’ license permits the sale of alcohol but does not permit consumption on
the premises.
Typical ‘off trade’ retailers are supermarkets such as
Sainsbury’s and off-licences such as Oddbins.
Figure 2: UK volume sales of alcoholic drinks, by type, on and off trade 200608 (Source: Mintel 2008)
2006
m litres
%
2007
m litres
Ales
stouts
Lager
Wine
FABs
Total
%
2008 (est)
m litres
%
%change
2006-08
1,645
23
1,544
22
1,443
21
-12.3
4,087
1,242
200
57
17
3
3,954
1,259
165
57
18
2
3890
1,270
151
58
19
2
-4.8
2.3
-24.5
7,174
100
6,922
100
6,754
100
-5.9
A ‘long drink’ is one that is of relatively and usually relates to beers, ciders and spirits consumed in
dilution with mixers (ie a gin and tonic). In contrast ‘shorts’ are usually spirits which are served
undiluted in short measure (sometimes described as ‘shots’).
2
FIGURE 3: UK retail value sales of alcoholic drinks, by type, 2006-08 (Source:
Mintel 2008)
2006
2007
2008
£m
%
£m
%
£m
%
%
change
2006-08
Ales and
stouts
Lager
Wine
FABs
5,908
19.6
5,711
19.1
5,503
18.4
-6.9
10,994
12,135
1,082
36.5
40.3
3.6
10,874
12,468
893
36.3
41.6
3.0
10,948
12,675
830
36.5
42.3
2.8
-0.4
4.4
-23.3
Total
30,119
100
29,946
100
29,956
100
-0.5
Lager, ales and stouts
There appears to be some decline in the sector overall, some of which may
be attributable to the decline in the number of pubs and the smoking ban.
However some products and brands appear to be bucking the trend;
particularly specialist ales and imported lagers which appear to be successful
in both in the on and off-trade. In contrast, lager, which enjoyed an
unprecedented boom in the 1990s early 2000s, has experienced a fall in
demand. Whilst it is difficult to attribute the decline to a single reason, there
are those in the industry who believe that its association with the binge
drinking and ‘lager lout’ culture negatively affected its image. In addition,
consumers have begun to display preferences for less bland alternatives to
lager and appear to be increasingly drawn to drinks that possess authenticity,
provenance or a distinct flavour. However, lager brands do benefit from
higher levels of brand loyalty than cider brands and sales of lager appear to
be far less seasonal than those of cider.
Wine
Sales of wine appear to be increasingly slowly if steadily in terms of both
volume and value sales. This may be because, as a sector, it is less
vulnerable to the challenges generated by the decline in pub numbers and is
well positioned to respond to the new smoke-free restaurant focussed pubs.
Another reason for its continued growth is its strong appeal across both male
and female drinkers of all age-groups.
Flavoured alcoholic beverages (FABs)
As a sector, flavoured alcoholic beverages (FABs) are in decline. Over recent
years, the sector has become closely associated with underage and binge
drinking cultures and such negative connotations appear to have directly
impacted upon its sales. Young drinkers who were once the target market for
the FAB sector appear to have turned to cider and this boom in cider sales
has helped to banish the similarly negative associations that were once linked
to cider.
THE BROADER MARKET ENVIRONMENT
Within the context of the cider market, there are a number of broad issues that
have a potential impact upon organisations, customers and consumers within
the long drinks market.
Impact of the Recession
One of the most obvious factors affecting all organisations within the alcoholic
drinks industry over is that of the recession. In a time of economic
uncertainty, increased unemployment and concerns over impending increases
in levels of taxation to cover the budget deficit, consumers have altered their
spending patterns in terms of both what they buy and where they spend their
money. ‘Budget’ retailers such as Aldi and Lidl have seen a growth in sales of
up to 21%i, whilst more upmarket retailers such as Waitrose introduced basic
or ‘Essentials’ ranges to cater for increasingly price conscious customers.
Changes in Consumption Patterns
A recent report by the Office for National Statistics highlighted a more tragic
side to changes in consumption; in 2008 9,031 alcohol-related deaths were
recorded in the UK; an increase of 307 upon the previous year. It was also
noted that the number of drink-related fatalities has more than doubled since
the early 1990s; the majority of which involved people aged over 35.
However, 11 of those deaths related to alcohol consumption recorded in 2008
involved individuals aged between 15 and 34 years of age.
In a separate survey, the Office for National Statistics suggested that middleclass professionals were more likely to be heavy drinkers than people from
less-privileged backgrounds. The study, ‘Smoking and Drinking Among
Adults’, showed a clear class division in drinking habits. Professionals
admitted consuming 13.8 units of alcohol a week, compared with 10.6 units in
the households of manual workers. It was also noted that middle-class
drinkers also tended to drink more frequently, with almost one in five admitting
drinking alcohol on five or more days a week, compared to just 11 per cent of
manual workers.
The Demise of the Pub
Whilst the recent economic recession is not the only cause of the closure of a
large number of pubs in the UK, in recent times it can certainly be seen as a
contributory factor. According to CAMRA3, thirty six pubs are closing every
week. The smoking ban coupled with supermarket promotions that sell
alcohol as a loss leader have both been cited as major contributing factors to
the decline in pub numbers. Those pubs that are managing to successfully
weather the current storm tend to be those that serve food and the sector has
seen major growth in the number of ‘gastropubs’. Unfortunately for the cider
sector, however, it is often the case that wine is chosen as an accompaniment
to the food or, in cases where diners have had to drive their cars to the pub,
soft drinks become the beverage of choice.
Associations with Underage Drinking, Binge Drinking and Anti-Social
Behaviour
One of the biggest challenges that faces the cider industry is its association
with under-age drinking, binge drinking and anti-social behaviour. Significant
concern has been voiced by both health agencies and the Government about
the increasing incidence of binge drinking and anti-social behaviour that is
directly attributable to the consumption of alcohol. The concept of binge
drinking is not clearly defined, however, it is generally seen to occur when
individuals drink large quantities within a short period of time with the primary
aim of getting drunk. In defining ‘binging’ the Government-backed ‘Drink
Aware’ campaign cites the marker used by the NHS and National Office of
Statistics which suggests that ‘binging’ is drinking more than double the daily
recommended units of alcohol in one session. The Government guidelines
state that men should not regularly drink more than three to four units a day,
and women should not regularly exceed more than two to three units daily
.Binge drinking for men, therefore, is drinking more than eight units of alcohol
– or about three pints of strong beer. For women, it’s drinking more than six
units of alcohol, equivalent to two large glasses of wine.
Because of its sweetness and the availability of high strength liquids, cider,
FABs or spirits diluted with squash or juice are often the drink of choice of
under-age consumers. However, the consequences are potential dire. Every
day, 15 children under the age of 16 are admitted to A&E in hospitals because
of alcohol abuse with some having consumed more than a bottle of vodka in
one session. Of the 11-13 year-olds who state that they drink regularly, the
majority claim to consume more than 10 units of alcohol a week with the result
that now children as young as 12 are being diagnosed as alcoholics.
Scientists have recently warned that teenagers who drink heavily are risking
permanent brain damage, in particular to their brain function as alcohol has
been shown to cause significant memory loss in youngsters; a condition that
has been proved to extend to adulthood.
The Crime and Disorder Act 1998 defined antisocial behaviour as acting in a
‘manner that caused or was likely to cause harassment, alarm or distress to
3
CAMRA – The Campaign for Real Ale
one or more persons not of the same household’. This can take a variety of
forms including such acts as behaving in a drunk and disorderly, creating a
public nuisance, graffiti and defacement of public property, harassment and,
more seriously, assault and rape. Findings from the 2004 Home Office Crime
and Justice survey found that youths who indulged in underage consumption
of alcohol were more likely to offend or suffer an offence. It was reported that
who drank alcohol once a week or more committed a disproportionate volume
of crime, particularly amongst the young as alcohol-fuelled crime accounted
for 37% of all offences reported by 10- to 17-year-olds.
The Potential for Government Intervention
In response to both changes in consumption and a public desire for action on
antisocial behaviour the Government has sought to address the issue through
budgetary measures. In the 2010 Budget, Chancellor Alastair Darling
increased duty on cider by 10 per cent above the level of inflation with the
result that the price of a litre of cider increased by 5p. By comparison, a 1 per
cent increase in duty was made on beer, wine and spirits, adding 2p to a pint,
10p on a bottle of wine and 36p to a bottle of spirits. He also stated his
intention to raise alcohol duties by 2 per cent above the rate of inflation for two
more years from 2013.
In targeted attempt to reduce the consumption of the very strongest ciders, it
was also announced in the Budget that the very definition of cider will be
changed so that higher-strength versions can be taxed more. Alistair Darling,
the Chancellor at the time, suggested that the increase in cider duty would
reduce the number of people abusing high-strength alcoholic drinks, but cider
producers said that it could damage the industry.
In a report in the Times newspaper on March 25th 2010, Henry Chevallier,
chairman of the National Association of Cider Makers, stated: “We are at
saturation point on the duty on alcohol — even for a success story like cider.
This dramatic increase could well reverse the growth we have generated in
recent years.
“Depending on how retailers deal with the duty it will add significantly to what
consumers pay for a pint of cider. We have no control over the retail price of
cider, but it could mean up to 10p a pint. What makes this so serious is that
cider makers have invested millions to plant thousands of acres of new
orchards in the last decade. Orchards take years to yield a return and the loss
to the rural economy and the environment will be enormous if sales decline
sufficiently and the demand for English apples falls.”
THE OUTLOOK FOR THE FUTURE
According to Mintel (2008), the outlook for the cider industry is challenging. In
the past, increases in cider consumption such as those seen in recent years
have been the result of short-term fads and are likely to be unsustainable.
This, compounded with a difficult economic climate and Government
initiatives to encourage the public to adopt more healthy modes of behaviour
is likely to see sales of cider flatten or potentially tail off in years to come.
In addition, the tough economic climate and the UK Government’s desire to
reduce its budget deficit is likely to generate its own problems for the cider
industry. Sharp increases in taxation on alcoholic drinks, including cider, offer
the potential for multiple benefits. Not only would it generate valuable
income, it might also dissuade binge drinking and with it reduce the estimated
£3 billion that it costs the NHS to treat drink-related injuries and illnesses
every year.
However, all is not totally bleak for the cider industry. Over recent years the
there has been strong growth in ‘artisan’-style products across all sectors.
‘Artisan’ products are those that are crafted using traditional methods and
materials and this is an area in which many traditional cider makers have
great expertise. In addition, sales in both the premium and the organic
sectors have continued to grow albeit at a slightly reduced rate.
Marking Guide
First Class. 70%+
Distinctive submissions that demonstrate exceptional learning in ALL the
following criteria:
- Tasks in assessment brief are comprehensively addressed and of a
consistently high standard;
- Clear integration and substantiation of relevant marketing tools;
- Submission has practical feasibility within industry context;
- Conclusions drawn at various stages are sustainable and appropriate;
- Effective and concise communication of ideas and written quality of report
format and writing
- Evidence of wider reading
- Clear acknowledgement of ALL relevant academic sources using the
HARVARD Referencing system where appropriate;
- Outstanding presentation quality, structuring and written in language
appropriate to a business environment
Upper Second Class 60-69%
Above average submissions that demonstrate substantial learning in ALL the
following criteria:
- Tasks in assessment brief are comprehensively addressed and of a
consistently high standard;
- Integration and substantiation of relevant marketing tools demonstrated;
- Conclusions drawn at various stages are sustainable and appropriate,
though the comprehensiveness of the coverage may not be clear;
- Effective and concise communication of ideas and written quality of report
format and writing;
- Some evidence of wider reading
- Clear acknowledgement of ALL relevant academic sources using the
HARVARD Referencing system;
- Strong presentation quality, structuring and appropriate business
language.
Lower Second Class 50-59%
Average submissions that demonstrate broad learning across the assessment
but with no outstanding areas:
- Tasks in assessment brief are addressed and of an acceptable standard;
- Integration and support of relevant marketing tools with no major
omissions;
- Effective and concise communication of ideas and written quality of report
format and writing;
- Minimal evidence of further reading having been undertaken;
-
Acknowledgement of majority of relevant academic sources using
HARVARD Referencing system;
Acceptable quality of presentation, structuring and minimal spelling/
grammatical errors.
Third Class 40-49%
Submissions indicate poor but adequate learning in the module:
- Tasks in assessment brief are superficially covered, lacking in detail, with
minimal supporting explanation given;
- Main marketing tools are utilised but coverage and discussion weak;
- Conclusions drawn at various stages are weak and without academic
underpinning;
- Sufficient communication of ideas and written quality of report format and
writing, albeit weakly evidenced;
- No evidence of wider reading;
- Few academic sources cited and incorrect referencing system used;
- Adequate level of presentation some structural, spelling and grammatical
issues;
Referred < 40%
Submissions indicate minimal learning in the module:
- Inability to address the tasks set out in the brief, coverage of material
sparse;
- Fails to answer the tasks set;
- Minimal application of relevant marketing tools and misses key points;
- Minimal / no indication that the student is aware of and can use module
material;
- Conclusions drawn at various stages are sustainable and appropriate;
- Ideas and written quality of report format and writing not supported with
appropriate evidence;
- No evidence of wider reading
- Inaccurate citing of academic sources;
- Poor level of presentation, lacking structure, some structural, spelling and
grammatical issues.
Thompson, James (2008) ‘Lidl and Aldi see sales soar amid economic downturn’, The Independent,
Weds, 25th June
i