Marketing and Business Acumen
Posted on Sun, Dec 25, 2011
In the spirit of the holiday season, I continue with part two of my story on vodka. How does one differentiate a commodity product? We can start with the traditional marketing mix or what the textbooks call the “Four Ps of Markeing:” Price, Product, Place (distribution as well as location), and Promotion.
Vodka is a drink that is neutral in taste , color and odor. One can start to differentiate by adding flavors and coloring. Of course like perfume, packaging is critical. And then there are the celebrities and the beautiful people who appear in media advertising and event marketing. But how about vodka’s ingredients and where it is distilled?
One of the legends of the spirits business is a man named Sidney Frank (above photo). In 1997, he came up with a name (Grey Goose) and then told his staff to look for a vodka made in France. As Frank said: “ People are always looking for something new. It’s all about brand differentiation. If you’re going to charge twice as much for a vodka, you need to give people a reason. “ The Grey Goose “story” was indeed compelling. It is made in France, the country famous for its production of luxury goods. It was shipped in crates like fine wine, not in cardboard boxes like the ordinary 80 proof stuff from Eastern Europe. Even the characters on the popular TV series “Sex and the City” began asking for “Grey Goose Cosmos.” After 7 years of ramped up sales, Frank sold his company to Bacardi for a cool $2billion. Shortly after the sale, he gave a gift to his alma mater, Brown University (Class of ’42) of $100 million for scholarships to students in financial need. When, Frank passed away in 2006 at the age of 86, he was ranked #186 on the Forbes 400 Richest Americans. 
We all know how popular microbrews have become in the American beer industry. Now we see a trend towards “microdistillers.” One of the most successful ones is “Tito’s Handmade Vodka.” I haven’t tried this product yet, but I do admire the company’s use of social media in its marketing.
Diageo is a good example of the power of celebrity to market a product such as vodka. The ccompany that calls itself the “leading premium drink business,” engaged hip-hop star/entrepreneur Sean Combs (aka “Diddy”) in a multi-year contract to promote one of its vodka brands, Ciroc, for a percentage of the profit, rather than a fixed fee. I have been told by an influential person in the industry that the product is doing extremely well, thanks in large part to Diddy’s endorsement.
In Business Acumen: Your Key to Sucess, , we talk about companies that “make money by spending money.” The premium drink business is a great example of this. Our Marketing Mastery: Your Key to Success explains the marketing concepts that we see are used so effectively in the selling of vodka. Happy Holidays everyone!