One: Changes and challenges in the market
Taiwan has adopted an open market competition policy for alcohol and tobacco products for over 3 decades. Although product innovation and organizational change occurred within the company amid fierce market competition and the marketing strategy also adapted accordingly, TTL’s market share continued to decline. Therefore, we must engage in more proactive transformation and innovation in 2017 in order to recover vigor in the tobacco, alcohol and biotechnology market, thereby laying a firm foundation for TTL’s next century of success as a longstanding business.
Two decades ago, TV commercials were the primary medium for communicating with consumers, and tobacco and alcohol commercials often shaped changes in consumer behavior. For instance, singer Wu Bai’s celebrity endorsement of “Freshest Taiwan Beer” was a campaign that made Taiwan Beer a household brand, achieving an extraordinary market share of 80%. Japan’s Kirin Ichiban beer was also successfully introduced into the Taiwanese market with the appeal “100% malt, first press beer”, while another creative commercial featuring a hopping bird also attracted curiosity from the Taiwanese audience, making The Famous Grouse the whisky of choice among discerning connoisseurs at the time.
These serve as a testament to the ability of commercials in imprinting brand image in consumers’ mind, which in turn fosters willingness to purchase and actual consumption. The marketing thinking behind commercials is to evoke consumers’ attention via advertising and reinforce their impression about the product, so that when they need to purchase something they will automatically think of the advertised product. At the time, TTL’s marketing strategy involved expanding the product’s distribution in conjunction with adequate TV commercial to increase or maintain market share.
Roughly 20 years ago, the advent of Internet and online search function meant that it was becoming easier for consumers to find useful information on the Internet, including product characteristics, price and review and opinions provided by other consumers or users. As a result, consumers can effectively evaluate the value differences between products and use them as reference for making their purchase. Consumers are susceptible to the influence of other people’s recommendations - or the lack thereof. At the same time, the opinions they publish online also play an instrumental role in other people’s decision-making process.
In recent years, in addition to online searching function, emergence of social medial and mobile access, the advent of the IT era has further accelerated the propagation of consumers’ experiences and word-of-mouth. In other words, brand management model has shifted from TV commercial-oriented mass consumption to market segmentation driven mainly by social media.
With the declining function of monopolistic TV commercials, if companies are to succeed in product sales and brand image creation. They can no longer shell out on TV commercials. Although the Internet is an easy medium for disseminating product information and brand awareness, successful firms still need to focus on quality and cordial service as their key appeal in order to garner trust and recognition from consumers. In doing so, consumers will be willing to purchase the brand’s products repeatedly and maintain brand value through customer loyalty. In the digital age, brand management should emphasize experiential marketing and online word-of-mouth to create dialogues on digital media and induce discussions and responses from consumers.
Two: Organizational restructuring and innovation
Faced with the marketing model in the digital age, as well as the increasing number of market competitors and level of innovation, TTL’s new Chairman officially formed the new Marketing Division on January 1, 2017 by integrating the function of Marketing Research Division with the Brand Marketing Division of 3 production departments. The mission of Marketing Division is marketing communication and brand management of tobacco, alcohol and beer products as well as other functions including: new product planning, execution, procurement, channel management, market information gathering, analysis and market research plans etc. The restructured corporate management team consists of three major functions: production, channel and marketing. It is hoped that the new team’s management strategy will adopt a more proactive marketing approach in order to overcome new challenges in the tobacco and alcohol market. The three major functions are described below:
The Production Department is in charge of quality management and product innovation by applying rigorous quality control measures from the outset – raw material procurement through to the production and quality assurance process. This ensures product safety and reliable quality, in turn garnering consumers’ trust. Furthermore, the department will continue investing in R&D resources, focusing on the research and development of core functional materials and advanced technology. The ultimate objective is to develop unique, innovative products tailored to the needs of the market so that consumers can enjoy great value for money products.
In terms of sales efforts, besides continued development in brick and mortar channels, the Logistics Department has also created the E-Commerce Division, aiming to offer fully online/offline integrated, omni-channel services, thereby allowing consumers to quickly purchase TTL’s vast array of products. For instance, when the Division of Beer launched exquisitely designed Christmas edition Gold Medal Taiwan Beer, the Special Sales Division of Logistics Department immediately set up product displays in major hypermarkets, and word-of-mouth promotion were carried out on TTL’s official website and Facebook page, thereby maximizing the commercialization of the outstanding product.
In terms of branding, the company’s newly formed Marketing Division has centralized and professionalized the management of TTL’s marketing resources, where rationality, functionality and perceptual appeals are applied concurrently to conduct effective consumer communication. In addition to fostering consumers’ willingness to purchase various products and their actual purchasing behavior, the objective is also to elevate the company’s overall image. For instance, promotion of Chinese New Year’s dish this year focused on using liquor as an ingredient during the culinary process as well as complementing meals with liquor. Thanks to the market differentiation marketing approach of the brand, this year’s Chinese New Year’s dish preorder volume grew by 80% compared to last year. Through coordinated functioning of tree production and marketing departments, it is hoped that the passive marketing culture of state-run businesses in the past will be transformed into consumer-oriented, proactive marketing culture.
In regards to individual products, Nantou Brewery’s international award-winning whisky label OMAR is ready to embrace challenges from other similar domestic and imported products. Next, we will create a Whisky Experience Pavilion in Nantou Brewery, so that consumers can embark on a knowledgeable whisky tasting journey. While sipping and appreciating the aroma of OMAR whisky, they will also be able to create wonderful memories in life.
White liquor in Taiwan and China offer distinctive flavors, and TTL’s Chiayi Distillery has in its reserve premium fragrant white liquor that has been cellared for numerous years. The liquor not only offers full-bodied, lingering flavor, more importantly, its outstanding quality ensures that drinkers will not suffer from headaches and hangovers. The product is currently in the packaging design stage, and it is set to take the market by storm and cement its stature in Taiwan’s med to high end white liquor market. In turn, the extraordinary liquor bearing the image of Taiwan’s Yushan Mountain will be exported to Chinese consumer market worldwide.
As the beer market shifts towards diversification and segmentation, TTL’s 18 Days Draft Beer has demonstrated increasing sales over the last 5 years. The most significant characteristic of the beer is its locally brewed freshness and flavor. This is something that other imported beers – having to be shipped over long distances – are unable to match. This year, we will expand and improve our refrigerated delivery service so that more consumers can experience the silky-smooth, ultra-fresh flavor of 18 Days Draft Beer. To use milk as an analogy, this is akin to offering consumers fresh milk as opposed to forcing them to drink UHT milk.
Three: Future outlook
In relation to the company’s overall brand marketing, we aspire to make TTL the consumers’ most trustworthy partner on the tobacco and alcohol market. Besides constantly improving quality and offering innovative products, this year TTL will continue to expand the domestic convenience store channel and develop the membership card incentive program in order to maintain good customer relationships, as well as to improve the channel’s standard of service. In doing so, TTL’s products will be able to reach every corner of the society and become a key element in creating happy, wonderful and healthy lifestyles. With persistent innovation and diversification, we will strive to reshape the century-old brand of TTL and spark a new trend of fine wining and dining among Taiwanese consumers
(Director of Marketing Division – Hung-kui Chiang.)