incremental growth – the market demand grows annually. However,
many industries (arguably the majority of industries) are now experi-
encing static or declining demand. Such markets are hostile in nature and
feature factors such as: volatility, over capacity, price discounting, reduced
profit margins and ‘downsizing’.
Given these conditions Aaker (1995) advocates a number of strategic
options for declining and/or hostile markets these include:
● Generate growth: Can we revitalise the industry by finding growth?
This could be possible through: (i) encouraging existing users to increase
usage, (ii) developing new markets for our products and (iii) finding
new applications for existing products or technologies/skills. The
‘Ansoff’ matrix (see Figure 8.10) provides a useful analytical frame-
work for this purpose.
Strategy formulation 173Illustrative Example 8.5
Kronenberg 1664: The premium lager marketing decline
The UK drinks market contains many segments. Currently, the premium lager market dis-
plays many characteristics associated with difficult market conditions. Sales are generally
falling as consumers move to other drinks. Additionally the market is dominated by well-
resourced providers willing to fight for market share.
France’s favourite beer – Kronenberg 1664, was first introduced into the UK in the 1950s. The
premium lager segment of the drinks market has proved challenging in recent years, with
Kronenberg coming second to market leader ‘Stella Artois’. Stella has cultivated an image of
quality through a carefully orchestrated ‘reassuringly expensive’ brand position established over
many years. Kronenberg has launched a number of brand variations (see below) including a white
beer, ‘Kronenberg Blanc’, designed to compete with the speciality beer ‘Hoegaarden’. Kornenberg
aims to position the brand, through an advertising strategy, as a drink to sit and saviour. TV
advertising portrays the message that 1664 was a great year for beer – ‘Sit, Savour, 1664’.Premier Cru
A slow brewed beer (6 per cent ABV), which has a sophisticated taste characterised by a robust
flavour and dark golden colour and provides a perfect accompaniment to food.Blanc
White beers use wheat in the brewing process. This can give the beer a cloudy appearance. It
is pale in colour and 5 per cent ABV.
(ABV denotes strength of the product)
Note, a ‘problem-based learning’ version of this case is available to Tutors through the companion website.● Survival: Organisation can survive by effectively managing cost and
clearly signalling their commitment to the industry and its customers.
Clearly, there is a need to manage cost structures, with experience effects
and economy-of-scale becoming vital. Organisation may rationalise