Assignment One Marketing Management
An in-depth look at Fullers Brewery… “Where are we now?”
By Darryl Hall Student No: 5043727 Group: MWAM
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2.0 Contents Section Introduction of Report History of Fuller’s, Smith and Turner PEST Analysis - Political Factors - Economical Factors - Sociological Factors - Technological Factors - Evaluation Competitor Analysis - Greene King - Young’s - Conclusion Competitor Positioning Map Competitor Threat Analysis Table Porter’s 5 Forces - The Power of Buyers - Power of Suppliers - Threat of New Entrants - Threat of Substitutes - Extent of Competitive Rivalry Fuller’s Organisational Structure Fuller’s Capabilities in the Brewery Environment Porters Value Chain SWOT Analysis - Strengths - Weaknesses - Opportunities - Threats Conclusion Appendix Supporting Research References
Page 3 3 4 4 6 7 8 9 10 10 12 14 15 16 17 17 18 19 19 20 21 22 23 25 25 26 27 28 29 30 34 37
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3.0 Introduction to Report This report will cover various aspects of Fullers Brewery, to understand what the companies current state is. The report will explore the current situation in the macro-environment, using a PEST Analysis. This report features a fully comprehensive competitive audit, which will explore their strengths and weaknesses, as well as their objectives and strategies. An analysis has also been carried out of the threat of new entrants to the market. An internal analysis is included which… A) Assesses the structure and resources of Fuller’s B) Evaluates capabilities of the brewery C) Explores primary and support activities and the added value of these. Finally a SWOT analysis is undertaken which explores strengths and weaknesses of the brewery and the external opportunities and threats it faces in today’s brewery market.
3.1 A Brief History of Fullers Brewery The brewery has been in operation for over 161 years. The company expanded a lot up till early into the 19th century, when money problems meant that the owners Douglas and Henry Thompson and Philip Wood had to find a business partner to help their cash flow crisis. John Fuller was approached to help the company out, which he later did and joined the partnership in 1829. The partnership didn’t turn out too well and 11 years later, one of the partners “Douglas Thompson”, disappeared to France. In 1845 John Fuller's son, was joined by Henry Smith from the Brewery Ind & Smith and head brewer John Turner, thereby forming Fuller Smith & Turner, which it is known by, up to today. Since then, fuller’s brewery has made quite a few acquisitions of other breweries and in 2005, acquired George Gale & Co. (Gales) which means that Fullers owns more than 362 public houses. The company is no longer a partnership, but a fully limited company, with a lot of aspirations for future expansion still.
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4.0 PEST Analysis
Political Factors Taxation Alcohol is a very heavily taxed commodity that seems to always get a mention in the news. It is the center of debate about reasons for increasing the tax put onto it, to discourage underage drinking and binge drinking problems that are in epidemic proportions currently. • The current tax on beer is 13.26 (Rate £ per hectolitre per cent of alcohol in the beer) • Compare that to the rate of 19.56 (Rate £ per litre of pure alcohol) You can see that beer has a lot less taxation burden on it than spirits such as Vokda/Rum/Tequila/Sambuca, etc … Have on themselves!
Effect on Fullers: • Being a brewery, means that any influxes in taxation on alcohol will directly affect the company. • Any rise in taxation will affect Fuller’s direct competition also. • The negative of an increase would be that beer might be bought less because of the cost of it, which would give a competitor in a different drinks market, Fuller’s previous consumers.
4.1
PEST Analysis
Single European Market Being part of the EU, means that many industries (including the brewery industry) gets help with fighting away international competitors entering the marketplace. Increased taxes and duties on international imports of Alcoholic beverages make it hard to enter the beer market.
Effect on Fullers: The barriers to entry are high for the UK and European beer market. This is a positive affect for Fullers, meaning that the chances of entry of a new competitor outside the EU are slim.
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5.0
PEST Analysis
Single European Market Being part of the EU, means that many industries (including the brewery industry) gets help with fighting away international competitors entering the marketplace. Increased taxes and duties on international imports of Alcoholic beverages make it hard to enter the beer market. The international market for beer has opened up greatly within Europe, with many continental beers making it to our shores. Fullers could expand the business into other European countries with similar drinking habits like Austria, Germany, Holland and the Czech Republic. The table to the right displays a clustering chart. The UK shares similarities with Germany and so this is something that could be explored in the future if Fuller’s with to expand internationally.
Effect on Fullers: The barriers to entry are high for the UK and European beer market. This is a positive affect for Fullers, meaning that the chances of entry of a new competitor outside the EU are slim. If Fullers ever wanted to expand outside of the UK, they have a good infrastructure in place already to manufacturer and distribute their beverages to neighbouring EU countries.
5.1
PEST Analysis
Licensing Laws Licensing laws are a national statutory basis, but local licensing decisions are coming in force across the UK, giving more dimensions to the differences between licensing from one county or city to another.
Effect on Fullers: Fuller’s own over 362 Public Houses across the UK, the company is going to have to spend a lot of R&D time to make sure they are conforming to the licensing laws in all of the areas they operate. They could also delegate that responsibility to the individual public houses. This would make it easier to be abiding by the local licensing.
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6.0 PEST Analysis
Economical Factors Cost of Imports & Materials The cost of imports and raw materials is a key factor here; both will fluctuate constantly, as the price of raw materials generally goes up by a fraction or two, year on year. Where those raw materials are coming from is a concern also, as a national crisis or a very unstable government will alter the price of shipping and importing to this country (if the materials are sourced from outside the EU) Import duties might also fluctuate with inflation issues, new legislation, etc… So watching out for when they will change will help the business keep up to date and be able to predict and adjust easily to changes.
Effect on Fullers: Fullers may be sourcing from abroad, so the best thing that the company can do is as stated above, be prepared and have a good team of people who know what is happening and who can predict to a certain degree if there will be any adverse effects to their business when a change does come.
6.1 PEST Analysis Health Conscious Market With recent problems that people have been having with binge drinking. Being a brewery is a hard job, as more people are turning health conscious these days, the best thing to do is educate people into understanding alcohol isn’t terribly bad for your health if consumed In a light way and balanced with proper exercise and an overall healthy diet. The drinks industry are losing customers in the long run though, as a new health conscious consumer wave takes force. A lot of companies are trying to stay ahead of the game, by introducing healthy alternatives or non-alcoholic alternatives.
Effect on Fullers: Although Fullers will be losing some customers to this new health conscious lifestyle people want now, Fuller’s operates in a sort of Niche market, with providing mainly real, traditional ales. So there won’t be a massive loss of customers, but after a long period of time, there might be a noticeable decrease in sales. Fuller’s other products and markets it operates in such as its hotel chains will not be affected by this consumer trend.
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7.0 PEST Analysis
Sociocultural Factors Alcohol “The Legal Drug” What seems to get bypassed is the fact that Alcohol is still a drug, but a drug that is socially acceptable to consume. There are many problems associated with consuming alcohol, such as the long-term effects, which include… • Permanent damage to vital organs • Several different types of cancer • Sexual dysfunctions • High blood pressure Sourced from: www.gdcada.org These facts need to be accepted by brewers and not be forgotten, especially when advertising, as advertising a drug has to be moral and ethical.
Effect on Fullers: People are trying to be more health conscious now and so Fuller’s will lose customers because of the side effects of long term alcohol use. Investment and research needs to be done to understand what causes the long-term illnesses from alcohol consumption and new products to be created to be better for their customers.
7.1 PEST Analysis Children & Underage Drinking “The Ipsos/MORI report indicates that almost twice as many underage young people have tried alcohol compared to a similar survey four years ago. Girls start drinking regularly later than boys, but by the time they are 14 or 15 their intake of alcohol outstrips boys.” Sourced from: Office of the Children’s Commissioner There is a lot of bad publicity surrounding alcohol recently, with increased underage drinking. Pressure groups are trying to get the government to toughen their stance on it, along with increasing the price of alcohol to as it were, keep it out of young people’s price reach.
Effect on Fullers: Fuller’s own over 360 Public Houses in the UK. At the current state of the drinking problems in this country, they should take a toughened stance in all of their public houses and fully prevent underage purchases. This will make their company image better, where they are trying to solve the problem.
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8.0 PEST Analysis
Technological Factors Relatively Minor Role The brewing industry has very little technological factors that are involved very often. The brewing process will occasionally get more efficient machinery to do the job it is supposed to be doing, but this does not change very frequently.
Effect on Fullers: There is very little effect on Fuller’s. Unless a competitor discovers a new faster/cheaper/better quality way of manufacturing its ales, then Fullers shouldn’t have to worry.
8.1 PEST Analysis New Packaging? Packaging is sometimes what attracts buyers to the product, without knowing if the product is good or bad. The competition will always be doing revamps of their product images and re-designs, so re-packaging in new ways, such as different bottle shapes and materials is a good competitive edge, especially in the traditional ale market, where a lot of work goes into the bottle designs.
Effect on Fullers: Packaging on Fuller’s label brands will need to change and be modified every so often, so research into different bottle designs and manufacturing processes is a positive idea. Staying ahead of the competitors is always a positive thing and if this gives Fuller’s their own USP, then it is worth the investment!
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9.0 PEST Analysis
Evaluation The PEST factors that can influence Fullers are limited to political and Economical factors, as being a manufacturer of alcoholic beverages; Fullers are constrained to conditions and licensing by British and European policies and law. Overall the current situation in the macro environment is stable and there is very little likelihood that changes could come from overlooked factors. Research into political and economical factors that could have an effect on the industry has shown that there is a high barrier to entry into the market, especially from foreign business. There is a health conscious market to deal with now, which to date, Fuller’s has not tried to address with a differential product. Sociocultural factors show that there is a lot of negative feeling to the industry that Fullers primary business is in and there could be a lot of loss in customers and revenue if attitude is changed.
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10.0 Competitor Analysis Greene King Background
Greene King has old routes, just as Fuller’s do. The company goes back 200 years. In recent years, the company have made many acquisitions of smaller brewery groups, gaining huge amounts of assets year on year. In the last 11 years, the company has made 12 acquisitions in total. * The company prides itself from its quality assets, such as the fact it has many of its Public Houses off the high street. Environment and Corporate Social Responsibility are a high priority too, as featured in their Annual Report *
Financial 2006 (£ Millions) Annual Turnover Greene King Fullers Profit 1. Greene King Fullers
2005 (£ Millions)
(%) Change
818.6 91.1
687.6 67.4
+ 16 + 35
120.9 10.9
87.6 8.4
+ 23 + 31
Products
Greene King currently own over 3000 Public Houses, including Inns with accommodation. Food sales are a primary focus in many of its Public Houses around the country, but more so in the East Anglia region.
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Marketing
Greene King heritage is marketed with their products and Public Houses. They pride themselves of a long history of good reputation and like to carry on that tradition through to this day. The company treats its brewing company’s goods as a premium priced product. They take a measured approach to price promotions, to keep this premium price point, as well as coming across socially responsible. The marketing of their Inn’s is not treated as a completely separate company at Greene King, but more as a section of the business.
Facilities As Fuller’s and Young’s currently do, Greene King prides itself from the food service that it is able to sell to its customers in most of its Public Houses. *Referenced on the back page
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12.0 Competitor Analysis Young’s Background Their Mission statement "Delighting our customers with stylish pubs, unique beers and great service." Shows that the brewery group wants to keep with their traditions, but offer customers a product that isn’t behind with the times. The brewery group is the oldest in the UK, as well as the largest. Financial
Annual Turnover Young’s Fullers Profit 2. Young’s Fullers
2006 (£ Millions)
2005 (£ Millions)
(%) Change
123.8 91.1
119.5 67.4
+ 3.6 + 35
11.0 10.9
12.5 8.4
- 12.2 + 31
Information sourced from Fuller’s & Young Financial Reports (referenced at back)
Young’s have been making acquisitions recently and so their operating profit is down somewhat because of the large amount of capital needed to secure those acquisitions. Fuller’s financial accounts hint at massive leaps of market share being gained currently, along with high rates of growth. Many of Young’s product offerings should be classed as cash cows, whereas Fuller’s have many product areas that are Stars or soon to be cash cows, this is a positive difference.
Products 208 pubs & Inns (164 Freehold) 112 Managed and 96 tenanted houses. Food Sales are creating increased profits for the company. In their words they hold “A Unique Culture of Excellent Service Standards” Cockburn & Campbell is owned by Young’s, selling Wines and Spirits. Charles Wells was acquired in May 2006 adding to Young’s product portfolio Strong Portfolio of growing beer brands
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Licensed brands -Corona, Red Stripe, Kirin Ichiban
Marketing Brand recognition is now a factor that Young’s will be considering as recently; their old logo has had to be replaced to accommodate their new name “Wells & Young’s Co”. So in the immediate to long-term future, there will be a lot of advertising that will be displaying a new logo.
Marketing at Young’s is similar to that of Fuller’s, where re-enforcing the company’s image is very important to hold onto their existing customers.
Most marketing comes in the form of displaying the young’s logo on the sides of their Public Houses, as seen in the image below, as well as incorporating their logo on their products and on the inside of the Public House, such as on coasters and matt’s, etc…
The company image being placed on the side of their pubic houses not only tells people it is owned by Young’s, it also can give re-assurance to someone that the quality as well as food and drink is going to be consistent with other Young’s establishments.
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Facilities Mostly all of Young’s Public Houses have hot food served in the shape of meals catered by one nationwide distributor. It is a growing trend to offer food to customers, as described in a recent report in Keynote... “The most profitable outlets owned by the major brewers are being distanced from the traditional tie by balancing their income from meals, wines, soft drinks and entertainment, and not just pints of beer” * *Referenced on the back page
14.0 Competitor Analysis Conclusion: From the information gathered about the competitors of Fullers, it shows some good prospects for the Brewery group. From financial data, it seems that Greene King are slowing down in turnover increase and the main reason they are not declining as of yet, are because of the number of acquisitions in the brewery market place. Young’s are growing considerably and are the fastest growing competitor out of the companies looked at. Their success isn’t limited to just takeovers, which might be a threat to Fullers as the company that is most comparable to them is Young’s and currently, Young’s are growing at a faster rate and already have higher turnover and profits than Fullers. Marketing in the industry consists of keeping traditions and values in place and in the face of the consumer. Overall marketing of their products is discrete and not encouraged by price promotions and both competitors are very aware of the bad publicity of factors such as underage drinking and binge drinking, which is why both of the breweries take a lot of consideration into their marketing. Food sales are big drivers, with the profits used to bolster up their other product offerings and the importance of food availability at all of their Public Houses is a growing trend from both brewery groups.
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15.0 Competitive Positioning Map The competitive positioning map can highlight where Fuller’s stands in the marketplace, with its competitors. The competitive positioning map highlights 2 areas in particular, the quality value to its name and the price factors. Fuller’s should be placed in a position that shows its premium quality image, along with its reasonable pricing.
High
Low
Price
High Quality
Low
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16.0 Competitor Threat Analysis Table LOCE Chart: (Likelihood of Competitor Entry)
The Likelihood of entrance into the marketplace from new competitors:
Yes
No
There are high profit margins in the industry
1
0
There is unmet demand (insufficient supply) in the
0
1
There are no major barriers to entry
1
0
There is future growth potential
1
0
Competitive rivalry is intense Gaining a competitive advantage over existing firms is feasible
0
1
1
0
4
2
industry
Total
No
Yes High Likelihood of Competitor Entry
From the table and scale above, it is clear that competitors have easy access to Fuller’s market. This means that a constant awareness of prospective entrants coming into this industry is necessary. Although the setup of a brewery group isn’t performed overnight, so there would be plenty of time to be ready for more competition.
(This chart & scale was created solely for this report)
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17.0 Porters 5 Forces Porters 5 forces allows us to look at the overall market of an industry and get a better understanding of where the company sits in it and what type of power we have compared with our customers, suppliers, new competitors and substitutes of our own products that are available on the market.
Appendix A*
The Bargaining Power of Customers The brewery group Fuller’s has a somewhat flexible amount of bargaining power with its customers, as many will exhibit some form of brand loyalty, especially with the ales that are sold by Fullers in the Pubs that it owns, as there are larger selections of its own brand ales available to customers and so for a customer, their bargaining power is very little in choice. A few determinants to consider with customers Bargaining power with Fullers are:
Buyer concentration to Competitor concentration Ratio Bargaining leverage The Cost of Switching for the Customer Availability of existing substitute products Price sensitivity
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18.0 Porters 5 Forces The Bargaining Power of Suppliers The list of suppliers needed by Fuller’s to run include:
Malt Suppliers (For Instance, Simpsons Malt*) Hop Suppliers (Such as Charles Faram & Co*) Fresh Water Suppliers (Such as Thames Water, Three Valley’s Water*) Catering (Such as Brake Bro’s & 3663 Food Service*) Distribution (UPS & DHL Couriers*)
As well as many more smaller scale suppliers, the above are some of the suppliers that have the most influence on the company. There seems to be an exhaustive list of suppliers in the many industries that Fuller’s need to deal with, so the power of suppliers needs to be considered, as there could be constraints of being with certain suppliers in the different sectors and it is a good idea to know where the company stands in terms of power to have good value supplies as well as the quality being the best that can be obtained from the market. The determinates of the power of suppliers are:
Supplier switching costs relative to the cost to the supplier if Fuller’s decide to switch. Does the supplier have more of a need for Fullers than Fuller’s need them? Degree of differentiation of suppliers in the industry Presence of substitute suppliers Supplier concentration to Brewing Business concentration (Ratio) Threat of forward integration by suppliers relative to the threat of backward integration by firms Cost of supplies relative to selling price of Fuller’s products. Importance of volume to supplier. If Fuller’s were to change supplier, would the previous supplier not be able to offer its other customers the same buying volumes, does the supplier need to sell large volumes of its own product?
* Suppliers List Sources available at the back reference page
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19.0 Porters 5 Forces The Threat of New Entrants As previously discussed and demonstrated in the LOCE Chart*, the threat from new entrants is possible in this industry. But the brewery group industry is very highly dominated by Brewery groups that have a very long history. Thus a new competitor entering into the market place is going to struggle to make connection with customers like the older and much larger ones such as Greene King, Young’s and Fullers do. There is also a very high likelihood that a new entrant to the industry could be initiated into a takeover by one the other brewery groups. The determinates of the threat of new entrants are: The existence of barriers to entry Economies of product differences Brand equity established already by existing Brewery Groups. Capital requirements Access to distribution channels and suppliers of enough volume of Hop/Malt/Fresh Water/Logistics, etc… Cost advantages Learning curve advantages Expected retaliation from the larger companies such as Greene King, a takeover will surely occur in this highly competitive market. Government policies as well as competition policy
The Threat of Substitute Products Price wars on products that Fuller’s sell, are not a factor that needs too much consideration, as all of the major brewers try to be corporately and socially responsible and aren’t in the market for price wars. All three of the largest companies concentrate on selling their products at a premium price and quality. Thus a substitute product, will be in a different market to them, so shouldn’t be too much of a concern. The determinants of Substitute Products are: Buyer inclination to turn to a substitute Relative price performance of substitutes Buyer switching costs, meaning will it be a great cost and hassle to the consumer to switch Perceived level of product differentiation
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* LOCE Chart available on page 14
20.0 Porters 5 Forces The Intensity of Competitive Rivalry Leading Brewers and their brands by value (%), 2005 Company
Value (%)
Dark Beers
Lager
Scottish & Newcastle PLC
27
Foster’s & Kronenbourg
Interbrew UK ltd
21
John Smith’s. McEwen’s and Courage Boddingtons and Bass
Coors Brewers Ltd
20
Carling and Grolsch
Carlsberg UK Ltd
12
Caffrey’s and Worthington’s Tetley
Stella Artois and Tennent’s
Carlsberg
Other (Including 20 London Pride Greene King, Discovery Young’s & Fullers) * (Keynote) Breweries & The Beer Market, July 2005, Market Report Fuller’s industry is a very competitive market, with a lot of takeover’s and mergers in the last few decades. The market is heading towards a point where there maybe be only a handful of companies. The determinates of the Intensity of competitive rivalry are: Number of competitors, which are 3-4 that are in direct competition with Fuller’s. Rate of industry growth, this seems to be on the rise, with a good steady pace. None of the top companies are losing money, which indicates a growing demand. Exit barriers. For Fuller’s, their main market are from their Public Houses and Brewery. Their only other market outside of these is the inn’s that they make an incremental profit from compared to their other business sectors. It would be very hard to exit this market unless, they accepted a buyout. Diversity of competitors, all of Fullers competitors are very similar, with their business being in very similar markets, all offer very similar
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products and services and the differentiation between them are only noticeable from their brand equity values.
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21.0 Internal Analysis Fuller’s Organisational Structure
Appendix B*
Fuller’s organisational structure is a reflection on the company itself and does suit the business model they have chosen. Being traditional and family orientated, with a premium price point, the company suits the hierarchal approach.
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22.0 Fuller’s Capabilities in the Brewery Environment Brewing Industry: Although the brewing industry has dominated developments in the public houses market for most of its history, it also qualifies as an outside supplier. This is increasingly the case as a growing number of pubs loosen the direct ties with local brewers. In addition, the most profitable outlets owned by the major brewers are being distanced from the traditional tie by balancing their income from meals, wines, soft drinks and entertainment, and not just pints of beer. Nevertheless, draught beer in a range of styles and in good condition is the top priority for any pub and this makes a close relationship with any brewer or beer wholesaler essential. The business relationship is very close, even in cases where a totally independent outlet (a free house) is sourcing its beer and other supplies from a brewer. * (Keynote) Breweries & The Beer Market, July 2005, Market Report The supply of beer is more concentrated than ever, despite the efforts of successive governments to produce level playing fields for smaller companies. The 1995 merger that produced Scottish Courage (the brewing division of S&N) is still the market leader in 2005. * (Keynote) Breweries & The Beer Market, July 2005, Market Report
Assets: 362 public houses 20 brands of ale 1845, Chiswick Bitter, Discovery, ESB (Extra Special Bitter), Gales Butser, Gales Festival Mild, Gales HSB, Gales Prize Old Ale, Golden Pride, Hock, IPA, London Porter, London Pride, Mr Harry, Old Winter Ale, Organic Honey Dew, Pale Ale, Red Fox, Summer Ale, Vintage Ale Chiswick brewery open for 161 years 6 Hotels
Competencies:
As previously talked about in the PEST analysis, there are some things to be considered inside the organisation, which have been approached by the company already, that is the increase in binge drinking and underage drinking. Fullers have made a stance of making sure age verification is practiced throughout all of its Public Houses, to keep its Corporate Social Responsibility intact. Takeovers and buyout offers are not to be overlooked too, in this very competitive market.
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23.0 Porter’s Value Chain Analysis
Appendix C*
Explanation of Primary Activities Inbound logistics
Refer’s to the raw materials being obtained from Fuller’s suppliers to be turned into products.
Operations
Are the raw materials and goods obtained are created into the end product, value is added at this point.
Outbound logistics
Is when the products have been created they are ready to be distributed to the public houses, wholesalers, retailers and directly to the customers.
Marketing and Sales:
Must make sure that the product is targeted towards the end of the market that Fuller’s wants its products consumed by. The marketing mix is used to establish an effective strategy; any competitive advantage is clearly communicated to the target group by the use of the promotional mix. After Fuller’s products have been sold, what after sales services does the organisation have to offer? In Fuller’s case, the after sales, is friendly staff to come back too, other Fullers products to try and staying at the likes of Fuller’s Hotels in the future and get the same service.
Services:
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24.0 Porter’s Value Chain Analysis
Explanation of Support Activities “Achieving the Competitive Advantage” Procurement:
Technology development:
Human resource management:
Firm infrastructure:
This department of Fuller’s must source the raw materials and obtain the best price for doing so. For the price they must obtain the best possible quality materials, to maintain Fuller’s high standard of traditional ales. The use of technology to obtain a competitive advantage within the organisation. This is very important in today’s technological driven environment. The brewery market continually invests into new technologies that will reduce wastage and increase efficiency, technology can also be used in production to reduce cost and thus, adding value, or in research and development to develop new products. Fuller’s has to recruit, train and develop the correct people for the organisation if they are to succeed in their objectives. Fuller’s staff in their Public Houses, add value to the product, from being friendly and helpful, giving a good image to the Brewery Group. Every organisation needs to ensure that their finances, legal structure and management structure works efficiently and helps drive the organisation forward. Fuller’s organisation infrastructure is tested and works and is very strong.
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25.0 SWOT Analysis Strengths: Long-term focus Being in business for over 160 years, means that looking towards the future is a high priority and with such a long heritage and traditional image, it is important that, that is not lost. Investors also find Fuller’s a decent investment as it is a company that is not going to just vanish overnight and can give a good return over time.
Culture of style not fashion Traditional ales that have been around for decades, even centuries mainly dominate Fuller’s brands! Some brewer’s try creating products every year that are a bit new and are in line with what younger people are looking for, whereas Fuller’s stick to their premium brand image and corporate social responsibility and try not getting involved in that end of the market.
Passion for quality From the raw ingredients in their cask ales and other beverages, made with natural ingredients created in traditional ways, to their service in all of their inns.
Continuing steady growth across the estate Fullers Brewery Group has no flagging areas in its business sectors. All of the individual areas that Fullers operate within are making very good profit leaps, year on year. For example, Profits this year were up 6%, the wine division had a 15% increase in profits, managed pubs have had a staggering 30% increase in profits.
Fuller’s product sales are on the increase Food sales up 13% Cask Ale sales up 8% Wine sales up 8%
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26.0 SWOT Analysis Weaknesses Hotels Fuller’s own 6 hotels all doted around London, with expansion in mind. Although their competitors have a head start on them, with Greene King owning Old English Inns who own 70 inns and hotels, along with Hungry Horse and Belhaven Pubs. The market for brewery groups to get into hotels and inns may be shrinking, along with a lot more affordable room rates at a Premier Travel Inn or Best Western. A comparison table is detailed below.
Hotel Name Best Western
Price per night based on Double Bed/w B&B £60.00
Premier Travel Inn
£47.00
Fuller’s Hotel
£70.00
Old English Inn’s (Greene King)
£70.00
Younger Market’s Whilst Fuller’s Maintains a tight grip on holding onto its older aged audience, the younger audience could perceive Fuller’s as being somewhat dated and maybe an older mans type brewery. Fuller’s have attempted to stop this from happening; with introducing a younger mans ale that is lighter and more suited to someone who is used to lager.
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27.0 SWOT Analysis Opportunities Gales Acquisition Acquiring George Gale & Company Ltd for £91.8m has created brand new opportunities for Fullers.
Expanded Free Trade area with considerable potential Excellent geographic fit Good demographic area Large proportion of sites with outside trading areas High food mix at 40% Opportunities for growing cask ale and wine sales * (Fuller’s Preliminary Results, April 2006, p. 21)
Major brand launched in 2005 Fullers launched a new brand of ale in the last year, called Discovery Blonde Beer, trying to attract lager drinkers in pubs to the ales market. It is aimed at being a stepping-stone to the traditional ales such as Fuller’s London Pride, whilst keeping the attraction of lagers in the product. This is a niche area with a lot of potential to change peoples taste pallets to more traditional ales instead of lagers; it could bring new customers to Fullers.
Significant shareholder returns Their shareholders have received fullers very well in recent years, from the great returns on their investments in the brewery group.
Eight new acquisitions The market Fuller’s operate in is extremely susceptible to takeovers, mergers and acquisitions. Fuller’s recently acquired 8 other companies in their market excluding Gales. This brings Fullers to new markets and allows them to get their products to more customers.
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28.0 SWOT Analysis Threats Susceptibility to an acquisition As already discussed, the market is rife with acquisitions and there are many larger brewers in the industry that buyout companies as large as Fullers. This is a threat that definitely needs to be considered, as it is constantly happening in an increasingly competitive brewery market.
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29.0 Conclusion Where is Fullers now exactly? Fuller’s is a company and brand that has been established for centuries and has a long time tradition of not changing very much, but still being able to deal and adapt with the market when changes came about. At the current time, the market is changing an awful lot, with many buyouts and takeovers happening every year and with increasing needs for Corporate Social Responsibility because of the way that consumers are now. Traditional and premium product with a higher price point are still needed on the market just as always, although they may becoming more of a niche area. In the competitors world, Fuller’s is a medium sized brewery company with large aspirations, even after the long time of trading that it has already accomplished. Profits and turnover are still making great increases year on year at a steady and manageable rate, which please investors and as stated earlier in the report, this is what they are looking for with their investment into Fullers. There is still a lot of room for expansion for Fullers in the future, which I think will be welcome from people, from the fact that they are a family run business even to this day and pride themselves of excellent service, quality and price.
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