Branding Strategies of Latvian Balsam

Lecturer: Hilde Eeckhout

BRAND REVIEWLatvijas Balzams (Latvian Balsam)

Laura KrasovskaMoCoMa

June 14, 2007Belgium, Gent

Brand Review Latvijas Balzams

Table of Contents

1. General Information on the Company1.1. History 3

2. Mission ` 43. Positioning 5

3.1. Strategic Positioning 53.2. Psychological Positioning 53.3. Communicative Positioning 6

4. Objectives 74.1. Company Objectives 74.2. Marketing Objectives 7

5. Market Situation and Competitors 86. Marketing Mix 10

6.1. Product 106.2. Price 106.3. Place / Distribution 12

7. SWOT Analysis 137.1. Strengths 137.2. Weaknesses 147.3. Opportunities 147.4. Threats 15

8. Analysis of Different Communication Strategies and Applied Tools 15 8.1. Case 1; Brandy Bonaparte 158.2. Case 2; Riga Black Balsam 178.3. Case 3; New Packaging of LB Vodka 18

9. Media Strategy: which media are used? 1910. Conclusion 2011. References 2112. Bibliography

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1. General Information on the Company1.1. History

The origins of Latvijas balzams mastery can be found back in 1900, when the first Riga State Spirits Warehouse No.1 started its operations. World War I stopped the trade of spirits for some time, however, already at the very beginning of Latvia as an independent state, the operations of spirits distillery were resumed. The production output at that time amounted 25 000 – 26 000 bottles a day. According to the information provided by Riga City Bureau of Statistics, in 1924 Riga Spirits Warehouse employed 24 employees.

In 1940 the distillery was nationalized and named as Rīgas spirta un degvīna rūpnīca (Riga spirits and vodka distillery). In 1949 the distillery started producing liqueurs and was renamed accordingly, i.e., Rīgas liķieru un degvīna rūpnīca (Riga liqueur and vodka distillery).In 1960 the company started export production.In 1970 the company acquired its present name. But a few years following the resumption of national independence of Latvia, Latvijas balzams became a state-owned joint stock company.In 1997, the company was privatized and in 1998 A/S Latvijas balzams shares were listed in Riga Stock Exchange.In 2000, as the result of acquisition, Latvijas balzams joined with A/S Rīgas vīni, which enabled LB (Latvijas Balzams) to acquire a substantial market share in the growing wine segment and develop the production of light alcoholic drinks.Since 2001, one of the top priorities set by the company has been the development of new products. New brands have been created both in the segment of strong and light alcoholic beverages, enabling the company to strengthen its competitiveness.

In 2002, the company celebrated the 250th anniversary of Riga Black Balsam. Riga Black Balsam is an ancient drink, created in the middle of the 18th century, as the first written evidences of the unique mixture date back to 1752. This brand carries a very special meaning to the company, which actually bears its name. Riga Black Balsam is made by JSC Latvijas Balzams and the traditional recipe invented by Abraham Kunze, a pharmacist living in Riga, is based on a composition of 24 different ingredients like plants, flowers, buds, juices, roots, oils and

berries prepared in oak barrels. It is sold in ceramic hand-made jugs. According to legend, Empress Catherine the Great of Russia, became ill during a visit to Latvia, but was cured after drinking Riga Black Balsam. Over time experts from many countries have highly regarded the outstanding quality of Riga Black Balsam. It is the visiting card of the company in Latvia and abroad where Riga Black Balsam has received more than 30 awards at various international fairs.1

In 2002, the company celebrated the 50th anniversary of the sparkling wine brand Rīgas šampanietis (Riga Champagne).In late October 1952 in the wine production facility (which is still located in the same place - the industrial part of Riga city centre at Aristīda Briāna Street), LB produced the first 300 bottles of a new product. It was created on the basis of an ancient and well-known French method – double fermentation of bottled wine. Today A/S Latvijas balzams is the largest manufacturer of alcoholic beverages in Latvia and in the Baltic states. According to the information of the SRS Excise Goods

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Administration, in 2003 the market share of the company reached 43% in Latvia. By today the market share of the company is not less than 48% in Latvia. Latvijas balzams is a wide-ranging producer of alcoholic beverages, manufacturing more that ten product groups, including Riga Black Balsam, different brands of vodka, liquor, sparkling wine, gin, brandy, whiskey, cocktails, in total more that 115 brands.

Today the majority shareholder of Latvijas Balzams is S.P.I. Distilleries.B.V. Since S.P.I. Group has become the majority shareholder extensive investments have been made to the company. Over the last two years more than 8 million lats have been invested towards increasing of production capacity and development of operations. Due to substantial export, the company has doubled its production capacities.2

2. Mission

Company has developed number of points, which emphasize its mission, but no particularly one mission statement is highlighted in one concise formulation. According to accessible information in company’s web-site, their mission is:

To be the leading producer of alcoholic beverages in the Baltic region, consolidating the traditions preserved over the centuries and modern manufacturing practice.

To supply consumers with high quality alcoholic beverages employing the traditions and experience preserved over the centuries.

To ensure unchangingly high quality of products and compliance with the international quality standards through regular modernisation and upgrading of technologies.

To understand and satisfy the needs of consumers in line with the market development.

To form the cooperation with the shareholders, personnel, customers, consumers, so that the operations of the company meets the interests of all stakeholders and the general public.

To develop the alcohol consumption culture that would be in line with public health interests. To stress the importance of personal responsibility for moderate usage of alcohol. We would never support the situation where people addicted to alcohol are seen as a model for others.

As the history of a/s Latvijas balzams dates back to more than hundred years, while the origins of its historic brand Rīgas melnais balzams (Riga Black Balsam) is more than 250 years old, we must preserve the values that are important to the history of Latvia.3

3. Positioning

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Further, couple of positionings is going to be analyzed. As Latvijas Balzams is the brand (and also the name of the company), which is so called “mother-brand” and uses multi branding and line extension brand strategies, these positionings are mostly concentrating on overall company profile itself. There are some small positioning modifications for some particular products, in order to differentiate them according to target group needs and preferences, but generally this divided positioning affects all the Latvijas Balzams products and profile actions.

3.1. Strategic Positioning

Latvijas Balzams has acquired big market share in Latvia, and is expanding to Baltic States and other EU states continuously. Their position relative to other competitors and their production is that Latvijas Balzams is the largest producer of alcoholic drinks in Baltic countries as well as the most contemporaneous alcoholic production in Latvia. A share of enterprise at Latvian market of alcoholic products amounts to almost 50% and, therefore, has great availability and also respect among other competitors. Latvijas Balzams is an open stock company and since 1998 its shares are quoted on a stock exchange, which is highlighted by company’s transparency policy.The company is a member of Association of Latvian Spirits Producers and Distributors, whereas the Association, in turn, has joined the European Confederation of Spirits Producers, which gives the reliability and assurance of quality standards of their production:

“The quality plays the leading role in our operations. High and consistent quality standards have been implemented in our day-to-day production business and apply as well to the purchase of raw materials, packaging and the culture of work.”

“For Latvia and Riga we are significant tax - payers. Here, in the country we are working in, we strive for growth and development in order to be able to create jobs for more and more people.”

The company’s extended statement, which also presents their positioning – they state themselves as “valuable” force in the society.

3.2. Psychological Positioning

Psychological positioning of the organization is about the position the organization wants to occupy in the “mind” of the target groups and also overall publics. According to the information accessible about Latvijas Balzams, their statements show what they want the society to know about them and think about them. Company is also concerned about internal matters, so their publics are also their employees;

“Our work is aimed at satisfaction of every single customer and every single employee of the company.”

“Thinking of today, we are looking towards tomorrow with the sense of responsibility. We support projects aimed at improving the alcohol consumption culture in Latvia. Being the alcohol producer, we would like to see our customers as responsible alcohol consumers able to take the responsibility for their actions.”4

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This shows their position, what they want the publics to know about the company. Because the alcohol issue is very “slippery” in a sense, that although society likes company’s production, constantly there are arising discussions about alcohol usage among people below the legal age (18 or 21 years) and also health issues as well as problems arising, when people are driving drunk. In these cases society often “attacks” the alcohol producers.

“LB (Latvijas Balzams) takes care of the improvement of professional skills of its personnel through performance evaluation and training processes that has contributed to the competitiveness of our personnel in the labor market. The company benefits from these processes in terms of efficiency and quality.” This is the positioning the company wants its employees to have in mind. This is also about the stating the company for overall publics as attractive place to work for.

“Being aware of the historical role of the public joint stock company Latvijas balzams in Latvia, we have made our contribution also to preserving of Latvian heritage values. Riga came into being more than 800 years ago. The first evidences on Riga Black Balsam date back to year 1752. This is one of the oldest Latvian brands with an international fame, created by the multicultural city of Riga and its craftsmen whose skills have been praised by the powerful of this world.”

This is how the company presents the “mother-brand” (also the name of the company) and wants to be perceived in mind of publics. The high value historical heritage appraisal is emphasized. According to different public opinion polls, Latvijas Balzams has succeeded of fulfilling its positioning aspects.

3.3. Communicative Positioning

Communicative positioning is about the way position is being realized through communication. This can include a mix of different characteristics, such as concept, view point, message etc.As already mentioned above, due to the fact that Latvijas Balzams is alcohol producer, some problems related to alcohol abuse and health consequences from time to time are being addressed to the company. Therefore, in order to underline the above mentioned psychological positioning that the company supports the responsible consumption of alcohol, there is developed the communicative positioning statement, such as

“The company believes that moderate and responsible alcohol consumption does not interfere with harmonious and healthy lifestyle. What causes the problem and undermines the quality of life is alcohol abuse.”

So, the key message Latvijas balzams is carrying – respect and take pride in your country, your city, your people and their achievements.

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4. Objectives4.1. Company Objectives

To increase the profit by an average of 15% annually To invest in spirit factory development and “move it out” from the city centre To maintain the production of high quality beverages To increase the volume of the production To increase the number of employees – provide more working places To increase the aggregate amount of exported products by an average of 30%

annually To expand the export directions - fuller uptake of Baltic States, as well as of EU

markets To gain recognition in world fairs To keep on following the strategic positioning

4.2. Marketing Objectives

Increase product awareness and attitude among the target audiences by an average of 15% in one year.

Improve sales by maintaining quality and heritage image for existing products and company.

Increase sales of most demanded light-alcoholic drinks. (According to market characteristics).

Improve sales by building images and awareness for new products. To keep on differentiating the positioning of different products, due to the fact

that company is using multi branding and line extension brand strategies.

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5. Market Situation and Competitors

As Latvijas Balzams is Latvian company and mainly operating in Latvian market, the market situation is described more from Latvian market perspective. Nevertheless, some foreign markets’ related characteristics are going to be mentioned.

More alcohol is consumed in Latvia than in other Baltic and CIS countries, Latvians head the ranks in Europe, claims the WHO (World Health Organization). And yet «residents of Latvia have started to drink less, especially the strong drinks», approves the national excise tax goods administration, adding that beer is consumed in growing amounts, as are other light beverages like cocktails. Although the Latvian parliament has excluded it from the law on alcoholic beverages, and listed its stouts and lagers as foodstuff, nevertheless beer producers are strong competitors.The total amount of alcohol sales have increased in Latvia during last years. Latvian made drinks are covering approximately 65% of the market.

Producers. Local alcohol produce has seen a tendency to increase in volume during the past years and there is a rise with growth in exports. Nevertheless, the popularity of light-alcoholic cocktails is increasing. At the same time, people have started to drink more imported beverages. The output of locally produced brandies and liqueurs has diminished as they are not very popular any more; while the amount of natural wines consumed has tripled. The output of Latvian champagne production has fallen a bit, partly because of more imports of foreign sparkling wines. It should be noted that the renowned herbal Riga Black Balsam, also enjoyed in places abroad, gave a 26% rise to strong beverage production. Vodka still makes up almost half of the total alcoholic drinks produced, of course, not counting all the liters of beer drunk to cool the hot summer months and not only. Moskovskaya Osobaya Vodka or the Moscow Special was the most popular drink in the country for several years, but has now given up its first place to LB vodka.Both of these favorites are made by the same producer, also the biggest drinks maker in Latvia (and the Baltic states), Latvijas Balzams, taking up to 48% of the whole Latvian market after increasing its share considerably by merging with another large producer, Rīgas Vīni (Riga Wines), in early 2001. Raw spirits is officially produced by five companies in Latvia. If some time ago the main producer of spirits was the Latvijas Balzams distillery (made from rectified spirits coming from the Jaunpagasts Plus distillery), today more than 55% of the rectified spirits is distilled by the Riga’s Bestsprit distillery in Kalsnava.

Importers. 57 firms in Latvia hold license to import alcohol. According to accessible public information, five importers – Mobil plus ADV, Lion&Co as well as Mono M, L.D.V. and S.D.V, all constitute two thirds of the total import turnover. The three latter companies are all part of the Mono holding company and specialize in premium alcohol beverages. Approximately 13 million liters of imported alcoholic beverages are consumed in Latvia annually, quite a bit for a total population of 2.6 million. Imported drinks are consumed in growing amounts in rural areas. The past couple of years have seen vodka imports double – basically on the expense of cheaper brands produced mainly in neighboring countries, but bearing labels in Latvian. Typically a fifth of the alcohol market is filled with so–called Soviet brandy, like Manastirska Izba, a cheap Georgian wine produced in Bulgaria and others like it. The prices of these drinks are way down and falling, as many companies

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are in on importing the sought after and affordable booze of choice, and also because of the generally poorer quality. All market players, according to Armands Sterns, marketing director at Mobil plus ADV, were worried over the new strategy of Latvijas Balzams after a change in shareholders, as the clients of the importers – the shops – depend on the main distillery due to its almost monopoly status. Around that time, the press published reports on Latvijas Balzams handing over exclusive rights for the wholesale of its production to AV&D, which is said to be supposedly related to the Mono holding.5

Export zone for Latvijas Balzams The aggregate amount of exported products has reached 14.9 million lats in the first half of year 2006, which is by 41% more than in the first half of 2005. The main export directions in the first half of year 2006, included Baltic States, Poland and Scandinavia, at the same time, with active development of new export markets. In the beginning of the year, sales of JSC Latvijas balzams products were started on ferry lines – Eckero line, Viking line and Silja line, as well as cooperation with Tallink ferries has been continued successfully. Since June 2006, Riga Black Balsam bar is opened on Tallink ferry Regina Baltika which runs between Riga and Stockholm, where guests and tourists can taste not only the Riga Black balsam, but also to become acquainted with information about its history and traditions. By now, the production of Latvijas Balzams is being exported to Great Britain, Germany, Italy, USA, Ukraine, Nordic countries, Lithuania, Russia, Denmark, Belarus, Estonia, Slovenia, Norway, as well as to far-away exotic countries, like Mexico and Japan.

Competitors In the territory of Latvia as well in foreign countries, the main competitors of Latvijas Balzams are foreign alcohol producers. The main ones are Allied Domecq, Constellation Brands, Fortune Brands, Diageo, Pernod Ricard and others. Latvijas Balzams’ pricing policy, therefore, mostly in foreign countries is middle prices for consumers with middle income. But they are also differentiating their prices according to their more expensive or “luxury” production.

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6. Marketing Mix6.1. Product

Latvijas Balzams is a drinks manufacturer with a broad spectrum, which at the moment produces ten different sorts of products including Latvijas Melnais Balzams (Latvian Black Balsam), vodkas, bitters, liqueurs, aperitifs, gins and brandies — altogether 50 different titles. 55% of the total amount of products sold are vodkas, 12% liqueurs and 18% brandy based drinks.Due to the large amount of products, only main and most popular sorts of products are going to be described here from perspective of “benefits”, options, quality, design and packaging.

Riga Black Balsam 24 ingredients. Subtle hints of linden blossom, birch bud, valerian root, raspberry, bilberry, and ginger as well as touches of nutmeg and black peppercorn tease the palate and come alive in the glass.

Riga Black Balsam, a most valued drink and the best gift of friendship, was first made in Riga in the middle of the 18th century. The legend has it that Empress Catherine the Great of Russia, having fallen ill during a visit to Latvia, was cured after drinking Riga Black Balsam.

Riga Black Balsam is carefully prepared in oak barrels, which allow its characteristic strength and the slightly bitter-sweet taste to develop. You

will feel elixir’s fruity aroma and its special taste with every sip. Enjoy it straight up, on the rocks, or mixed in a variety of cocktails. Riga Black Balsam is available in different souvenir packaging – boxes and tubes.Alcohol content: 45%Volumes available: 0.04l, 0.2l, 0.35l, 0.5l, 0.7l, 1.0l, 3.0l

LB Vodka LB Vodka excels in an outstanding purity and is produced from the top quality spirit by a fourfold distillation method. LB Vodka is based on the best traditions acquired by Latvijas balzams distillers over more than 100 years of the company’s history

According to the data provided by the Excise Goods Administration, in 2005, LB Vodka is the third most popular vodka brand in Latvia. Different others tastes are available, such as apple – rhubarb, cranberry, Riga Black Balsam Vodka and grapefruit taste. Volumes available: 0.2 l; 0.35l; 0.5 l; 0.7 l and 1.0 lAlcohol content: 40%

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Kaznacheyskaya Vodka Kaznacheyskaya vodka brand has originated from the legend that tells about Russian vodka monopoly at the end of the 19th century. It tells that in 1861 a new procedure for vodka procurement was introduced in Russia – landed gentry and landlords supplied vodka to the State Treasure as an equivalent of tax payments, whereas the quality of vodka and terms of delivery were under a strict control of the State.Kaznacheyskaya vodka is original Russian vodka, the recipe and production technology of which has been developed in Russia. Kaznacheyskaya vodka serves as a model for vodka quality and purity standards. Tastes and sorts, such as “gold”, “bereza”, currant, lemon, cranberry, pepper and honey available.

According to the data provided by the Excise Goods Administration, in 200 Kaznacheyskaya vodka ranged the first among the top vodka brands.Volumes available: 0.2, 0.35, 0.5, 0.7. 1.0 lAlcohol content: 38%.

Riga D`OR A new, exclusive V.S.O.P. class brandy created specially on the occasion of Riga’s 800th anniversary. Material for this special product have been purchased in France, the country famous for its historical experience in cognac and brandy production, supplying the raw material to many distilleries all around the world. Chivalrous and noble Riga d’Or symbolizes the golden age of Riga and carries the message of its return.

Volume available: 0.7 lAlcohol content: 40%

Beaufond Cognac XO Beaufond XO is a 20 years aged cognac boasting an exceptional mahogany coloring. At first, its scent seems elusive, but after a moment you will feel the adorable nuances of sandalwood, tobacco, leather and raisins.The cognac leaves a balanced aftertaste, which lasts for several minutes after enjoying the drink.Alcohol content: 40%Volume: 0.7

Latvijas Balzams’ production also includes sparkling wines – red, Muscat, sweet, medium sweet, medium dry and brut, classical red and white champagne, “Desire Cherry”, “Desire Strawberry” and “Gold Medal” sparkling wines. Ordinary wines also available.

Long drinks are very popular product as well: Black Balsam Cola, Cherry, Currant, Cranberry, Gin Tonic, Rum with Coke, Vodka and Tequila cocktails and also energy drink cocktails.

Within category of ciders, Latvijas Balzams is offering “Lucky Dog” with tastes of apple, apple-vanilla, pear, kiwi, caramel, strawberry and pineapple tastes.



Sarlote Riga Black Balsam A popular cream liqueur with Riga black balsam. The unique taste composition owes to the famous Riga black balsam, the recipe of which has been created in the 18th century as a blend of 24 ingredients: herbal, berries, flowers and other components. Also available liqueurs, such as Sarlote Coffee, Mia Bella Irish Cream and Vanilla, Mocca, Cranberry, Cherry, Strawberry and Mint liqueurs.Serve Sarlote pure, on ice, as a cocktail ingredient, with coffee or with dessert.

Alcohol content: 17%Volume: 0.35l, 0.5l

6.2. Price

Due to the fact, that Latvijas Balzams is one of the largest alcohol producers, their product prices vary. Mostly they are using “middle range” prices for most of the products. Latvijas Balzams has many brands of vodka, liqueurs, brandies and cocktails, so for different brands they are adopting different price policy. This is according to the “status” and quality of each product. Nevertheless, they have developed special, more “luxury” product brands, which, accordingly have higher price.It is possible to purchase the production in the shops on the basis of clearance. If the client is buying the production in gross/ wholesale, the discount is given. For example, if the value of the production is more than 30 Ls, then client gets 5% discount. If the purchase exceeds 100 Ls, then discount of 10% is given.

6.3. Place / Distribution

Production release Since year 2000, the main distributor of Latvijas Balzams production is SIA AV&D – the wholesaler of alcoholic drinks, which constantly provides all the supermarkets and other shops with the alcohol production. Within the distribution chain, the company can guarantee free delivery of the entire assortment available within 24 hours to every place in Latvia and in any amount. More over it is possible to buy import alcoholic drinks in SIA AV&D warehouses. SIA AV&D warehouses are located in Riga, Madona, Kuldīga and Daugavpils – the cities in Latvia.The production of Latvijas Balzams is available in every supermarket, food and drink shop as well as kiosks in Latvia.



Specialized Store Chain

At the moment, Latvijas Balzams owns 45 company stores. They all are set according to one unitary concept as specialized alcohol production stores. This means, that all these stores have the same identical look as well as unitary standards for serving the clients. Also the uniforms of the employees of these stores have unitary design. The outlook of the store is characterized with the signboard with

company’s name and logo – brown letters on the yellow background. Latvijas Balzams store specialization is trading alcohol production. Over 70% of there sold alcoholic drinks are the production of Latvijas balzams. Nevertheless, in these kinds of stores it is also possible to buy tobacco products, different sweets, and small gifts or souvenirs. In some specialized stores, greater amount of other food items is available. The assortment of specialized stores of Latvijas balzams is set so that people can buy nice presents – good beverage and some box of tasty confection before going to a birthday party or some other celebrations.

7. SWOT Analysis7.1. STRENGTHS

Good financial situation - turnover of JSC “Latvijas balzams” has reached 38.3 million lats in the first six months of the year 2006, which is by 6 million or 18 % more compared to the first half of the previous year. The profit gained by the enterprise was 739 thousand lats in the first half of 2006, which is by almost 12 % more than in the same period of 2005.6

Stable market share – Latvijas Balzams is the largest alcohol producer in Latvia and its production sales has reached more than 48% of the market.

Brand knowledge among consumers – Latvijas Balzams brand is one of the oldest and best known brands in Latvia and is gaining more and more recognition in other Baltic Countries as well as EU trade fairs.

Multi-branding and line extension strategy – Latvijas Balzams is using its brand name only on particular product categories, which strengthens its awareness, because of the high quality and historical value which is often related to the brand. In most cases, other brands, if not successful, don’t damage the overall perception of company brand name.

Variety of products – consumers have great choice of different products (see 6.1.) as well as various available tastes, which each and every consumer can pick according his/her wishes. For example, if a consumer wants not just ordinary vodka – it is possible to get different tastes of it, and more over, the prices comparing to competitors are more attractive.

Patented technologies – this is what makes the brand unique. Latvijas Balzams is handing over exclusive rights for the wholesale of its

production to AV&D, which is said to be supposedly related to the Mono holding.



Communication managed according to set company mission – all the communication activities have so far been managed within the company’s mission background. This strengthens publics’ attitude towards the brand – they respect and believe in high values set by the brand.

Clear strategic direction – the brand has been operating according its strategic objectives and has clear understanding of their objectives as well. This has helped to maintain the course of development and gaining profit.

7.2. WEAKNESSES

Internal problems - there might arise some internally related problems, which might interfere with the transparency of the company; the audit discrepancies, work force conditions and not so strong internal communication as the external one.

Clients with low income – due to the fact of high inflation and increasing taxes in the country, the company also will have to raise the prices, so they might loose some part of the client sector.

Increasing competition in the market - more imported alcohol is gaining recognition within consumers. The brand weakness can be that although it is well recognized among consumers, it still doesn’t have the same perception as consumers have towards, for example, Hennessey, Absolut and others.

7.3. OPPORTUNITIES

Increasing consumer paying capacity – there will also be a sector of consumers, whose paying capacity will surely increase, and therefore, possibly to gain more profit from more expensive alcoholic drinks. This is also the opportunity to acquire new market segment by starting producing more qualitative, more expensive drinks that would harmonize with the lifestyle of more wealthy people.

Increase export – due to the access of EU, the previously tied boundaries are open for a while. More over, if loosing some percentage of the market share in Latvia, there is an opportunity to gain the percentage sales back within other foreign countries.

To improve the quality of production – competitors are still not so powerful, so by improving the quality and introducing new product ideas/lines, it is the opportunity to “fight them back”, because most of them are in the Product Life Cycle Stage of introduction and growth.

To improve the technical equipment – due to the investor support, Latvijas Balzams can invest in factory development, by improving also the environmental protection etc. This is also the opportunity to gain bigger market shares in overall EU market, because of the increased quality standards.



7.4. THREATS

Healthy lifestyle - although Latvijas Balzams states that “the company believes that moderate and responsible alcohol consumption does not interfere with harmonious and healthy lifestyle. What causes the problem and undermines the quality of life is alcohol abuse”, nevertheless, there is a threat that more and more people might stop consuming alcohol at all, thinking about healthy lifestyle. If some strong and impressive campaigns are run against alcohol consumption, this might have effect to the company’s profit as well as brand name itself.

Unfavorable upgrades in legislation – due to the high inflation, the Parliament is adopting different taxes’ strategies to excise products. There might be some changes in limiting the productions or selling time of strong alcohol, due to problems with people under legal age.

Demographic situation in Latvia - it is acquired that there might be a decrease of consumers, because of higher death rates than birth rates. It is assumed that younger people are consuming more alcohol than older people.

8. Analysis of Different Communication Strategies and Applied Tools

Due to the fact that Latvijas Balzams is well known “mother brand” and as well, holds the name of the company, has different branding strategies (multi branding and line extension), it is evitable, that company itself has adapted different communication strategies for different aspects of its operation. So, further in this paper, some different communication strategies and tools are going to be analyzed.

8.1. Case 1; Brandy Bonaparte

Communication ObjectivesTo maintain brand knowledge (Brandy Bonaparte) and support brand loyalty.

Target GroupsAll consumers of legal age that are aware of the brand and are following the Eurovision Song contest.

PositioningAssuring mental commitment between consumer and the brand, using catchy slogan.

MessageThe underlying key message Latvijas balzams is carrying – respect and take pride in your country, your city, your people and their achievements.

Instruments



Advertising in magazines.Background information about the ad: The displayed people were the representatives of Latvia in Eurovision Song Contest 2007. This group’s name is Bonaparti.lv.1st line of says: “We sound together” – a way of playing with words. (The sound – when something sounds, relating to Eurovision, and the sound – meaning the name, which, in this case is basically the same, and the meaning of “we” –the relation of the product and the contestants)The last line warns: “Using alcohol has negative influence”.

Advertising ObjectivesA mix of cognitive and affective objectives;Cognitive – to maintain brand knowledge;Affective – to evoke patriotism feelings by the ad and combine them with likeability and the sense of belonging to country, which is representing itself in Eurovision and to evoke relation between “national feelings” and “national” brand Bonaparte.

Message“We sound together!”

Creative strategyFormal execution strategy – emotional appeal, trying to evoke and link positive emotions of supporting the Eurovision contestants and therefore, their relation, positive and nationalism feelings to the product in the minds of consumers, using non-verbal elements.

Creative idea - as it was the time period before Eurovision Song Contest and the contestants from Latvia were chosen – Bonaparti.lv, the relation of names was found. The idea was to use the joint promotion for both sides to gain benefit. As the names are related, the ad is easy made – group Bonaparti.lv are seen there at the music instrument to highlight their contestant status, and Napoleon Bonaparte is sitting next to them, tasting his brandy and listening, showing that he likes the sound. Therefore, all the participating characters are related and “support” each other.



8.2. Case 2; Riga Black Balsam

Communication ObjectivesTo create brand awareness and purchase intention.

Target GroupsForeign people of legal age that are coming to visit Riga, Latvia

PositioningUse of product for creating “typical national characteristic” associations.

MessageThe underlying message is that Riga Black Balsam is one of the most valued historical heritages and is a visit card for Riga, Latvia.

InstrumentsOutdoor advertising posters in Riga airport territory and billboards inside the airport premises.

Advertising ObjectivesA mix of cognitive and conative objectives;Cognitive – to create brand awarenessConative - to create purchase intension

Advertising Message“Have you really been to Latvia?” Riga Black Balsam – a European legend since 1752

Advertising typeThis advertisement includes awareness and symbolism characteristics.Awareness – it is creating advertising recall, more over, for foreigners coming to Latvia this is “a new product”, therefore here is the same situation as if the product would be in the introductory stage of the brand life cycle. Symbolism – this advertisement also communicates symbolic brand meaning, such as being legend, some Latvian “national thing”

Message strategyESP- Emotional Selling proposition, influencing the potential consumer that this is the product he/she has to buy to find out what is really “typical” or legend for Riga, Latvia.

Creative strategyDue to the fact that usually people, who are visiting foreign country, want to bring some souvenir back home, the advertisement is “just there” to let them know WHAT should they taste, bring home and tell everyone about. Nice, respectful picture of the product is displayed, mentioning its legendary dawn. Non-verbal communication.



8.3. Case 3; New packaging of LB Vodka

Communication ObjectivesTo reinforce brand knowledge due to the changes of packaging.To maintain the brand loyalty.

Target GroupsAll the existing costumers of legal age, that were familiar with old packaging, all alcohol consumers of legal age that are familiar in a way of the brand, and might try the “renewed version” due to the interest.

PositioningHighlighting the product with reassurance (promise, message) that quality and values have remained.

MessageThe underlying message is that the packaging has changed, but the quality and values of the way of lifestyle of the product have remained.

InstrumentsAdvertising in magazinesThe background information: LB Vodka had changed the packaging. In this advertisement in each picture the text means: “test nr. 3, 7, 12” The text next to the product means: “Life proven; unfailing since 1900”The last line means: “Using alcohol has negative influence”.

Advertising ObjectivesA mix of cognitive and affective objectives.Cognitive – creating the awareness of new packagingAffective - evoking positive feelings related to the lifestyle the consumers might like.

Advertising Message“Life proven; unfailing since 1900”“Tested”

Advertising typeThis advertising stresses relationship – a link between loyal costumer and the brand and reinforces the emotional, lifestyle involvement.

Message strategyEmotional selling proposition

Creative strategy



Creative idea - to show in the advertisement different people lifestyles, moments of life, when people might drink vodka. The advertisement shows 3 moments of life, in order to broaden the audiences – at least some of these moments, such as being with friends, skiing in mountains or fishing might be “close to heart”.

9. Media Strategy: which media are used?

As observed, Latvijas Balzams is using a mix of above-the-line and below-the-line media.Mostly used above-the-line media are:Broadcast;

Television-advertising Cinema-advertising

Print; Newspapers Magazines

Out-of-home-media; Billboards

Internet; Own web-site

Below-the-line media are:Out-of-home-media;

Corporate – and product-brochures Trade fairs

PR; Press releases Press conferences and events Sponsoring

POS; Posters Packaging

Promotions; Premiums Discounts Contests

10. Conclusion



Latvijas Balzams is one of the oldest and therefore best known brands in Latvia. Nevertheless it is using different branding strategies, which help to experiment in developing new product and evaluate how well it can compete in the market. Latvijas Balzams shares its mission with overall society and has high social responsibility. It has good overall external communication, which welds the positive attitude towards the company. This makes the brand strong in the market. Although being alcohol producer nowadays is a very risky business from people’s possible negative attitude perspective, Latvijas Balzams stands for beliefs that moderate and responsible alcohol consumption does not interfere with harmonious and healthy lifestyle. What causes the problem and undermines the quality of life is alcohol abuse. More over, thinking of today, the company is looking towards tomorrow with the sense of responsibility as mentioned before. Latvijas Balzams support projects aimed at improving the alcohol consumption culture in Latvia. Being the alcohol producer, they state that they would like to see their customers as responsible alcohol consumers able to take the responsibility for their actions. They have also supported the campaigns such as: “Drink, Drive, Die”, which might bee seen unusual to the alcohol producer. But inevitably this is a part of its mission. As a consequence, one will never see the advertising of Latvijas Balzams promoting drinking, or consuming alcohol as such. It is all about the values, quality, responsibility, know-how to enjoy.To add, recently Latvijas Balzams has acquired new markets and keep on looking forward in releasing the production and promoting the quality and the value of historical heritage of Latvia.This all makes the brand Latvijas Balzams – the Latvian brand of which Latvians can be proud of.

2 http://www.balzams.lv/html/

3 http://www.balzams.lv/html/eng/28837.php


5 http://www.spi.ru/en/lbalzams_e.html


12. Bibliography

Eeckhout, Hilde; Marketing Communications; notes

Patrick De Pelsmacker, Maggie Guens and Joeri Van den Bergh; Marketing Communications. A European Perspective. 3rd edition, FT Prentice Hall/Financial Times 2007


http://www.balzams.lv/html/eng/28840.php

http://www.spi.ru/en/lbalzams_e.html



http://www.balzams.lv/html/


11. References

1 http://en.wikipedia.org/wiki/Riga_Black_Balsam


http://en.wikipedia.org/wiki/Riga_Black_Balsam

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Branding Strategies of Latvian Balsam

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