What is Budweiser’s competitive advantage? Format example attached. CLINIQUE MAK

Question

What is Budweiser’s competitive advantage?
Format example attached. CLINIQUE MAKE UP COMPANY Competitive Advantage Over the years, Estée Lauder has built a family of brands with a unique balance, owning numerous brands that appeal to different consumer groups. The company's products are sold in over 120 countries and its portfolio of brand names include Estée Lauder, Aramis, Clinique, Prescriptives, Origins Natural Resources, M-A-C, La Mer, Bobbi Brown essentials, Tommy Hilfiger Toiletries, jane, Donna Karen Cosmetics, Aveda, Stila, Jo Malone, and Bumble and bumble. Currently, Estée Lauder employs approximately 17,000 full-time employees worldwide. In order to have a sustainable business, it is important to have a couple of competitive advantage over the peers (Perreault, Cannon, & McCarthy, 2010) The company has two important competitive advantages. The first one is the use of selective distribution network. With the help of this, the company is able to successfully target specific stores as per the target audience. It targets the retail chains where high end people come regularly in order to increase the sales of the company. Tying up with each and every store will result in unnecessary increase in the cost of distribution and would result in the decrease in the profitability of the company. The other advantage that the company has due to the use of selective distribution network is the elimination of the intermediaries involved in the distribution network. It is known that a smaller number of intermediaries result in better profitability due to less commission costs. The second competitive advantage of the company is the tying up with the Kennesaw State University bookstore. They have reserved a shelf in the bookstore to showcase their products. This has resulted in increasing the visibility of the products of Clinique. Many youths visit the bookstores on a regular basis. They may try the products and as a result the sales would get boosted. The company has plans to expand into tie-ups with more number of bookstores.

Explanation / Answer

Distribution Strategy

Budweiser is one of the leading brewers for many decades now. As far as their distribution strategy is considered, it is important to understand that similar to any other brewer in the country, Budweiser has to follow a rule that states adherence to a three tier system. Under this three tier system, the producers that are the brewers cannot directly deal with the retailers that are they cannot sell directly to them but have to have a distributer in between who will directly coordinate with producers and retailers.

But this system was feared to ultimately increase the cost to Budweiser due to the additional payments to the distributors. Thus the company made the distributers to sign an “exclusive incentive plan” under which it made its distributors to drop the distribution of all other competitor brands and to be exclusively deal with Budweiser. In return they were offered huge benefits like equity plans but with strict sales targets. This step of the company has increased its profits due to decreased competition. It is similar to owning its personal exclusive distribution channel with breaking any rule. Now, Budweiser has further streamlined the process by dealing with only the big distributors who possess a big geographical area and will work exclusively for the company. Through this, the company has further eliminated the number of middle men further cutting the costs, targeting bigger geographical areas via big distributors.

Competitive strategy

Budweiser has the parent company as Anheuser- Busch which is into existence since 1876. Thus, the biggest competitive advantage is the trust that the customer have developed in the brand. Secondly, the strong marketing campaign used by the company like the “Stand By You campaign” that presents the brand as a friend in the good and the bad times to its consumers and use of tag lines like the “King of Beers” has really popularized it. Further, its use of unique ingredients like unified hop varieties, use of premium two-row and six-row barley malt, milled, polished rice has lead to the distinct flavor of Budweiser which is one of the biggest competitive advantage. Its use of different types of barley from more than 2000 barley fields and its signature 7- step brewing process adds on to it advantage over its competitors.   

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