Marketing Strategy Development: Foster Group Analysis Report, 2024

This report provides a comprehensive marketing strategy analysis of the Foster Group, a global beverage manufacturer. It begins with an executive summary and a company description, including its background, guiding principles, vision, and values. The analysis then delves into the 5Cs of the organization (Company, Customers, Collaborators, Competitors, and Context), incorporating a detailed SWOT analysis. The report further explores how the firm collects information and develops its marketing strategy, including potential market segments, value propositions, and positioning statements. Finally, it examines marketing tactics and concludes with a summary of the key findings and recommendations. The report highlights the company's strengths, weaknesses, opportunities, and threats, and offers insights into its competitive landscape and strategic considerations.

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Marketing Strategy Development
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Executive Summary
In 2007, the American Marketing Association (AMA) accepted the definition of marketing as
“Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society
at large (Marketing News, 2008)”. Marketing strategy focuses on market segmentation, customer
target identification and positioning while choosing how to compete in the markets identified.
The marketing tactics focus on the 4-7Ps of the marketing mix and support the marketing
strategy (Varadarajan, 2009). According to Kotler (1997), marketing is one very dynamic area of
management and new challenges keep cropping up every time and businesses need t respond to
them. New marketing ideas are thus needed to meet the new emerging marketing challenges. An
example is the influence the internet has had on marketing in education, research and practice
(Varadarajan, 2009). All firms must therefore constantly analyze review their marketing
activities, decisions and behaviors if they are to remain relevant and competitive.

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Table of Contents
Executive Summary …………………………………………………………………………….. 2
Issue 1: Company Description ………………………………………………………………….. 4
1.1 Background of Fosters Group ………………………………………………………. 4
1.2 Foster Group Guiding Principles ……………………………………………………. 4
2 Issue 2: Analysis of the 5Cs of the Organization ……………………………………………. 6
2.1 Company SWOT Analysis ...………………………………………………………… 6
2.2 Customers …………………………………………………………………………… 7
2.3 Collaborators ………………………………………………………………………… 8
2.4 Competitors …………………………………………………………………………. 8
2.5 Context ……………………………………………………………………………… 9
3. Issue 3: How the firm collects information ………………………………………………….. 11
4. Issue 4: Developing Marketing Strategy …………………………………………………….. 11
4.1 Potential market segments …………………………………………………………. 11
4.2 Value Proposition ………………………………………………………………….. 12
4.3 Positioning Statement ……………………………………………………………… 12
5. Issue 5: Developing Marketing Tactics ……………………………………………………... 13
6. Conclusion …………………………………………………………………………………... 14
7. References …………………………………………………………………………………… 15

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Issue 1: Company Description
1.1 Background of Fosters Group
Fosters group is a wine and other beverages manufacturer from Australia that sells in
over 150 countries in the world making one of the biggest Australia’s selling beer brand in the
whole world. It was started by William and Ralph Foster in 1887. The company manufactures
markets and also distributes a large international portfolio of alcoholic and non alcoholic
beverages. Their products include beers, cider, spirits and wines and some non alcoholic
beverages with some famous brands such as Crown Lager and Victoria Bitter for beers and Wolf
Blass and Chateau St Jean for wines (Fostersbeer.com). Some of the brewing operations operate
in Australia, USA, France, Germany, Fiji, China, India, Vietnam, among other places. The
company has grown to become a global beverage manufacturer through a series of acquisitions
(Fostergrp.com, 2017).
1.2 Foster Group Guiding Principles
The company is committed to serving its customers and ensuring that they flourish as
seen in the vision and mission statements. Through these guiding principles, the company
celebrates the customers and the relationships that have been formed and retained over the years,
as the company boasts of 97% annual customer retention rate. The vision and mission statements
thus captures this commitment as per below (fostergrp.com, 2017).
Figure 1: Foster group Vision and Mission Statements. Source: https://www.fostergrp.com/who-
we-are/our-guiding-principles/

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The company also has a set of corporate values which is a set of principles that are not
compromised. These are the traits expected of the company and they set out the customer as
priority and taken seriously for trusted and lasting relationships. These set of values include
integrity, humility, accountability, humility, respect, wisdom and excellence. The company also
has a culture of service and strives to live that culture every day. They therefore hire the best
professionals in positions that best fit their skills and abilities. Another culture is cooperation and
team work thus benefiting from the insights and knowledge of every team member. Finally,
there is the aspect of evidence-based investing in the culture. This is represented by intersection
between cost, competence and expertise as shown in the figure below.
Figure 2: Foster Group evidence based investing. Source: https://www.fostergrp.com/who-we-
are/our-guiding-principles/

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The foster brand portfolio is large enabling it to have presence in almost all segments and
brand category. The company’s brands are classified according to their brand power. It thus
offers to the market many beverage solutions to choose from, from hotels, restaurants, pubs to
the small beer shops. The company has specific managers to cater for each brand category
(Fostergrp.com, 2017).
Issue 2: Analysis of the 5Cs of the Organization
2.1 Company SWOT Analysis
Strengths
The company has a large diversified brand portfolio and strong brand equity, from
premium brands and specialty beverages to other world renowned brands. It also has a large
portfolio of agricultural assets. The company also strategic breweries that are located for better
reach of the global market. The company is credited for having expertise in packaging and
pricing globally. They are also credited with the great and authentic Australian taste from
imported hops. The strong brand presence in over 150 countries in the world where the products
are sold.
Weaknesses

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The geographical spread of the company is not large thus vulnerable to the risks of
particular regions it operates in. However, the company still sells through other retail mediums in
some other regions like Africa. The company also suffers from lack of global presence compared
the main competitors and market leaders.
Opportunities
The company has been innovative on new product lines and improving on the product
portfolio thus giving it an edge over competitors. Some of the innovations include zero sugar and
Carlton Dry Fusion. The premium global brands are preferred by customers due to the quality,
taste and legacy, as opposed to cheaper local beers which may be of lower quality
Fostergrp.com. (2017).
Threats
The company’s brands suffer from intense competition from other brands like Carlsberg,
Kingfisher, and Budweiser among other premium brands. It also suffers from strict regulations
that restrict commercial advertising of alcohol products in parts of the world. This is a threat to
the value of the company products and may reduce the revenues and profits. Another threat is the
high taxes imposed in the beer industry in many countries. Another threat relates to rising costs
in raw materials which may reduce company earnings. Foster’s overseas market is also subject to
fluctuate due to political and economic conditions like currency fluctuations which affect their
business in those markets.
2.2 Customers

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The company sells to wholesalers and retailers in Australia, Europe, America, Asia
Pacific and other regions in the world. The company targets young and middle aged
professionals both men and women who have average disposable income. In addition, the
company has a large portfolio of brands that target different segments from the premium brands
that are priced above the ordinary brands. Other cheaper brands target other pubs and shops
which are not in the premium class.
2.3 Collaborators
The company has a number of subsidiaries which help in marketing, sales and
distribution of the products in various countries. The principal subsidiaries include the Australian
Leisure and Hospitality that deals with liquor shops and hotels, Wine Clubs include Blass Wine
Estates, Heinrich Maximillian Pallhuber and Cellamaster Wines ltd in different countries.
Foster’s USA handles US beer distribution. Windsor Vineyards handles direct marketing in US
and Lensworth Group ltd handles investments.
2.4 Competitors
The Australian beer market main players have been the Lion and Foster’s Group. In
2016, Foster’s Group led in Australia beer market share with a 34% total of the volumes.
Although Fosters maintains the leading position, the company suffered a drop over this period,
due to lack of a craft beer like James Squire and Little Creatures. There was also decline of some
of their beer brands like Carlton Draught and other mid-priced lagers faced stiff competition
from the competitor craft alternatives. The market share for the alcoholic beverages in Australia
is represented by the figure below.
Figure 3: Market Share of Beer Manufacturers in Australia. Source: IBISWorld (2011), Beer &
Malt Manufacturing, Australia.

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2.5 Context
Strategic analysis requires an analysis of the operating environment in order to formulate
appropriate strategies for competitive advantage. The external factors are those beyond the
company’s control but that affect the company and its business operations (Yüksel, 2012). These
can be analyzed using different models which include the PESTEL model which stands for the
“political, economic, social, technological, environmental and legal factors” (Lynch, 2009).
Political factors are those that may involve government’s laws, regulations and
restrictions both in domestic and international markets (Rodrigo, 2012). Some trade agreements
have been in favor of the beer and wine industry which may make it easier for Foster group to
sell more of their products to other markets like China and take advantage of the big population
and market there. These include the ChAFTA agreement that was signed in 2015 and has led to
the growth of the market with 57% volume increase in Australian wine import growth (Wu,
2016). The signing of WTO by China saw reduction of import tariffs from 65% to 14% thus
becoming favorable for the import of foreign wines (Wu, 2016).
Economic factors include exchange rates, currency fluctuations and other economic
factors that may affect the industry (Rodrigo, 2012). The company is subject to these changes in

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their international markets for example the effects of Brexit and related currency fluctuations
which may lead to loss of business. The company therefore needs to have strategies to hedge
against losses related to these changes.
Social-cultural factors affecting the company may relate to the population demographics
and people buying power and may relate to the cultural values of the people (Rodrigo, 2012).
The company may be affected by cultures and religions that may not advocate for drinking
alcohol. The company needs to continue monitoring such factors like purchasing power as it
influences their target market to focus on the segment with some disposable income.
Technological factors relate to the technological changes and innovations that affect the
market (Rodrigo, 2012). These may include new production methods that are more efficient as
well distribution. For example online distribution has become favorable in many markets and the
company should not be left behind in embracing new ways of doing business that connect with
the customers.
With increased focus on environmental sustainability, the company must be seen to be
operating in ways that do not harm the environment or risk losing environmental conscious
customers (Rodrigo, 2012). The company also needs to consider the geographical and weather
conditions that may hinder the manufacturing of their products. Law suits related to
environmental degradation from company activities may lead to huge losses and must be
avoided.
Legal factors are those related to laws of copyright, consumer protection, health and
safety and others that affect the way the company operates (Yüksel, 2012). These may change
from one country to the others. They may affect the way alcoholic products are packaged and

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advertised, with some countries not allowing advertisement of these products and restrict the age
of persons who can buy these products. Another example was the launch of anti dumping and
anti subsidy investigations led to decline of imports in 2013 (Inotai, 2013). The company must
therefore comply with the laws of the countries in which they operate.
Issue 3: How the firm collects information
There are a number of research companies that carry out market research on the beverage
industry and publish reports that give trends and insight in to the industry and give business
recommendations. This gives the company some leads of what is happening in the market, the
competition and where their products stand compared to competition.
Other ways the company collect customer information includes use of the partners and
distributors and retailers who give information from customers and what they expect about the
company products. The regional managers then collate the information that helps the company in
formulation of marketing communication messages and improvement or even innovation of new
products.
Issue 4: Developing Marketing Strategy
4.1 Potential market segments
The main target market will be the young and middle aged, male and female individuals
who have average to high income and can afford the middle to premium products. Currently the
company has multiple brands that appeal to people of almost all segments, from the premium
products, the middle and the low segment of customers. The company should continue with
innovation of other products that appeal to every potential customer whether they are male or

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female, young or old, from the high, middle and the low class. This will ensure that the company
brands appeal to majority of the population while also gaining over competitors.
4.2 Value Proposition
While there may be no agreed definition of a value proposition, many authors agree that
the customer value should be defined from a customer perspective and that it should help the
organization achieve competitive advantage (Anderson, Narus & Van Rossum, 2006). When a
company formulates and implements a value proposition, it forces the company to choose how to
compete in the chosen market (Ballantyne, Frow, Varey and Payne, 2011). According to Glaser
(2006), all those involved in the value creating process need to realize their complementary
objectives and thus negotiate for the value to be enhanced for all parties. In this case then value
is not just a strategy or benefits to the customer, but a negotiation of all participants to create
value (Ballantyne & Varey, 2006).
Foster group will then consult all the stakeholders to negotiate on the value for the brands
and develop the value proposition which appeals to every participant. The value proposition will
focus on relationships as highlighted by the vision and mission and quality as shown in all the
products. The suggested value proposition is: Create Lasting Relationships.
4.3 Positioning statement
According to Anderson et al., (2006), a positioning statement should define what the
company is selling, the target customer and why the customer is buying the company products. A
good positioning statement will define the target market as well as how they will perceive the
brand. It has four main components namely target market, differentiation, frame of reference and