Importance of Surrogate Advertising in Creating Brand Identity for Liquor Industry(Final)

EXECUTIVE SUMMARY The present research has been conducted in a bid to comprehensive and comparative study of the advertising strategy used in liquor industry which makes the need of surrogate advertising exemplary, as the only way of advertising for liquor industry and also to know the effectiveness of surrogate advertising in influencing customer perception towards the products offered by the company In the present research, in order to collect primary data sample were selected conveniently. 60 Delhi based liquor consumers were selected for collecting primary data.

Alcohol advertising has the potential of promoting changes in attitudes and social values, including publicizing the desirability of social drinking to its viewers, which all encourage a higher consumption of alcohol. It is known that advertising can influence consumer choices, have a positive short-term impact on knowledge and awareness about alcohol, but it has proved difficult to measure the exact effects of advertising on the demand for alcoholic beverages, in part because the effects are likely to be cumulative and long-term.

However, the recent literature suggests that advertising and increases the overall demand, and influence of consumers towards higher consumption and harmful drinking. The findings of the present research also greatly substantiate this fact as approached consumers in greater majority agree to great extent that advertising increases their overall demand and consumption of harmful drinking. It is generally recognised that surrogate advertising is even more influencing than normal advertising, but the liquor industry has no choice.

Of course, this strategy assumes that the brand and, in some cases, the advertisements, are already well known. Otherwise, such advertising may not serve any purpose. It is difficult to evaluate the effectiveness of surrogate advertising. So far as the present research is concerned , it reveals that for many liquor consumers surrogate advertising is even more influencing than normal advertising, whereas for many others surrogate advertising is less or non influencing than normal advertising. INDEX INTRODUCTION1-4 Aims of the study3 Objective of the study4 iterature review5-40 research methodology41-49 FINDINGS AND ANALYSIS50-60 Conclusion and RECOMMENDATIONS61-66 BIBLIOGRAPHY67 Appendix 68-69 QUESTIONNAIRE 68 INTRODUCTION Background Information For some “advertising” is a surrogate for being on stage—in the limelight. When people work on a brand, they identify with the brand, and its “advertising” becomes part of them. Therefore when ads and other promotional brand messages appear on TV, radio, in magazine and billboards, a part of them is there too—on stage.

Another reason is the challenge. The majority of “advertising” messages are not very good and some are down right insulting, as I’m sure you have noticed. Thus, the opportunity to do something that works and that you can be proud off, is always sitting out there. Finally, for me, “advertising” is a way of being in sales without all the constant face-to-face rejection. When we are part of any kind of halfway decent promotional effort, we will sell something. It may not always pay out, but at least we changed some people’s behavior.

What this means when it comes to studying “advertising” is that the learning experience can be interesting, informative, and really fun. When most people think about advertising, they think about the creative side–the clever slogans and attention getting pictures and illustrations. For these clever slogans and graphics to be effective, however, requires a lot of research, strategic thinking, and a good understanding of customer behavior. It also requires knowing and being able to apply basic industry practices.

Surrogate advertising is the most insidious form of advertising, where the biggest hypocrites are the media who gleefully accept these lucrative advertisements, while at the same time harping on moral standards that their readers/viewers should inculcate. In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. The liquor industry has intentionally blurred the line between products, advertising `old wine’ in a `new bottle,’ only this time with a soft-drink label.

The advertisement comes with the same music and punch line as the one for the popular liquor brand telecast before the ban on liquor advertisements. This phenomenon, known as “surrogate advertising” (duplicating the brand image of one product extensively to promote another product of the same brand), has become commonplace. In fact, so brazen is the attempt to lure customers and advertise the liquor brands that nothing is left to chance. In most cases, licencees have actually been taking hefty amounts from the liquor companies to allow them to advertise their brands.

In India, where even surrogate advertisement, showing mineral water or sports gear of the same name as popular liquor brands, is banned, it is surprising the licencees of these kiosks are getting away with so much advertising. The companies are actually luring youngsters to start drinking by advertising their brands. Somebody must put an end to this. Aim of the Study • This study is aimed towards accomplishing the objective of a comprehensive and comparative study of the advertising strategy adopted in liquor industry i. e. Surrogate advertising. • To study the Importance of Surrogate Advertising in Creating Brand Identity for Liquor Industry In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. The liquor industry has intentionally blurred the line between products, advertising `old wine’ in a `new bottle,’ only this time with a soft-drink label. One nothing without customers understanding that organization exists for no other reasons than to meet customer needs and expectations, for this liquor industry has no option but rather advertise in the name of juices, sodas etc to send there message to the customer. Objectives of the study

The objective of this research work is comprehensive and comparative study of the advertising strategy used in liquor industry which makes the need of surrogate advertising exemplary, as the only way of advertising for liquor industry and also to know the effectiveness of surrogate advertising in influencing customer perception towards the products offered by the company. • To study the reasons which made surrogate advertising as the only way of advertising in liquor industry • To study the importance of surrogate advertising in influencing customer behavior towards products of liquor industry.

LITERATURE REVIEW SURROGATE ADVERTISING: GENESIS AND DEFINITIONS As a reaction to the directive of Government, the liquor & tobacco majors sought other ways of endorsing their products. They have found an alternative path of advertising through which they can keep on reminding their liquor brands to their customers. They have introduced various other products with the same brand name. Launching new products with common brand name is known as brand extension, which can be carried out for related products or unrelated products. Prima facie, there is nothing wrong with brand extension.

The problem occurs when brand extension is carried out in response to the ban on advertisement of one product category. In this case, the companies launch other products with the same brand name for the purpose of reminding their old customers. Heavy advertising is done so that the customers do not forget their liquor & tobacco brands, for which advertisements are banned. The advertisements for such new products are placed under the category of “Surrogate Advertisements”. Their only objective is to compensate the losses arising out of the ban on advertisements of one particular product (i. e. liquor).

According to dictionary – surrogate means substitute. Many of us have come across this word in connection with surrogate motherhood. This time it has come in a new avataar – “Surrogate Advertisement”. Surrogate advertising is “an advertisement of a brand extension in such a way that brings clear recall of the core product in the mind of the consumer”. The literal meaning of ? Surrogate Advertising? is duplicating the brand image of one product extensively to promote another product of the same brand. Surrogate advertising involves advertising for products using a company’s brand to promote other products sold using that same brand.

For example, it is technically acceptable to promote Smirnoff cassettes in television ads in India, but not Smirnoff vodka. In the advertising world ‘surrogate advertising’ is a politically correct term used to define fraudulent pieces of communication. For example, all those playing cards, soda water bottles, apple juices, mineral water and other product ads we see, are actually clever promotions for liquor and cigarette brands by the same name. Surrogate Advertising is quite rightly frowned upon as it is but a cynical attempt at promoting products that public policy decrees is not in society’s interest.

But the Government should guard against any over-zealous interpretation of what constitutes surrogate advertising so as not to hurt legitimate efforts at brand extension. Given the integrated nature of markets, brand promotion has become an elaborate exercise, often extending across national boundaries. Surrogate advertising has been around ever since someone decided that certain things were probably not good in the interest of the community at large. The government has out rightly banned the advertising and publicity of alcohol nd tobacco in any form; so, tobacco and alcohol companies have found a way to circumvent the ban on advertising by resorting to surrogate advertising in order to keep their brand alive in the minds of consumers. Surrogate advertising is usually born out of regulation. This regulation may either be government imposed or self-imposed by a regulatory body of the industry. By its very definition, surrogate advertising is something that the advertiser resorts to in an attempt to get his brand across to the consumers mind without violating any regulatory guidelines.

Certainly it is not ideal but in a number of cases this is the only way you can reach your consumers in a cost-effective and meaningful way. The concept of surrogate advertising in India emerged due to certain regulations enforced on the promotion of certain products mainly liquor and tobacco (products). Surrogate advertising has long made use of soft drink, apple juice and sports apparel to sell tobacco and alcohol through the media. But the Indian government has promised litigation to tackle surrogate advertising as well.

Here the companies producing these products, in order to avoid legal complications, and also in order to remain in the minds of consumers, use reminder advertising by way of resorting to surrogate advertising. These companies advertise their brand extensions for the promotion of the core brand. Surrogate advertising is used in two contexts: the first is when a company “farms out” the entire marketing function and the group providing the service is called a “surrogate marketing department. The second is what is happening in India with respect to the ban on tobacco and alcohol advertising.

Companies in banned industries are introducing brand extensions with products that are legal to advertise with the same brand name as the banned product. One liquor company introduced apple juice with the same brand name as the liquor. The idea is the companies can advertise freely the extension – thus keeping their banned-from-the-media products in the minds of the customers. So the apple juice, for instance, is the surrogate for the liquor in the ads. The companies also don’t care much about the sales of the surrogate products – for instance, I read that the apple juice isn’t even readily available to buy throughout the company.

This loophole that the tobacco and liquor companies are exploiting is upsetting the legislature because every apple juice ad that reminds the consumers of the liquor is a slap in the lawmakers’ faces. But, they also don’t quite know what to do about it! In general, surrogate marketing is when you promote one product or service in the hopes of selling another. Why we would want to do that varies. The best reason is that we aren’t able to legally. But other reasons might be because the two products sell better together – for instance, we may make a product and it requires service – which we don’t provide.

We can market a service provider – the surrogate – who will only use our product. SURROGATE ADVERTISING AND CONSUMERS It is generally recognised that surrogate advertising is even more wasteful than normal advertising, but the liquor industry has no choice. Of course, this strategy assumes that the brand and, in some cases, the advertisements, are already well known. Otherwise, such advertising may not serve any purpose. It is difficult to evaluate the effectiveness of surrogate advertising. In Malaysia where cigarette advertising is banned (as in India), surrogate advertising for cigarette brands is common.

A leading brand of cigarette advertised itself as a business marketing holidays on beaches. The tour business, which was advertised as a surrogate for the cigarette brand, became a market leader. There is, of course, the question about business and advertising ethics. There has been criticism of surrogate advertising because they are advertising products which are not suppose to be advertised according to the law of the land. While its opponents argue that strictly speaking surrogate advertising may not be illegal, is it ethical? Or so people ask. Alcoholic drinks, which are branded and bottled, are being made and sold legally.

If so, there should be no restraint on that advertising except guidelines on what the advertising can show and, possibly, the time during which such advertisement can be exposed on television. In any case, if it is felt that certain degree of control is required, then it is in order to have such guidelines so as to ensure that alcoholic beverages are not sold in a manner, which is irresponsible in any way. Surrogate advertisements for alcohol or tobacco products can appear within advertisements for something more innocent like bottled water or perfume.

The more innocent product is somehow merely the carrier for the disguised, ‘surrogate’ advertisement. For example, the innocent product may be labeled with the familiar logo of the Tobacco Company or brewery. The surrogate advertising need not be imbedded with another advertisement at all, however. The tobacco company (or any other company whose products may not be advertised directly in a given society) may give out free playing cards, for example, its familiar company symbol used as the pattern on the back of the cards. Any advertising technique of this kind would be considered surrogate advertising.

Earlier only liquor and tobacco companies stepped in as sponsors for surrogate advertising. You could count golfing events on your finger tips like the Wills Golf, Charminar Challenge, Royal Challenge and a few others. Today, more and more companies are coming forward as sponsors to get associated with the elite lifestyle image for their brand building. The global alcohol beverage industry is characterized by maturity and low growth, where the liquor companies have struggled against a global health kick and heavy price competition. In recent years, the liquor industry has undergone a dramatic shift.

Many global brewers and distillers have merged to reduce costs and gain market share. For example, Diageo, the world’s biggest wines and spirits company came into being through a merger of Guinness and Grand Metropolitan. It then increased its core strengths by acquiring Seagram’s business and other brands. The latest additions to this merger wave are Belgium Interbrew and Brazil’s Ambev, which is now the biggest brewer in the world. Adding to this global wave of strategic realignments, beer is fast becoming the alcoholic beverage of choice over spirits. With 35% market share in 1997, beer rose to almost equal to spirits in 2002.

Euromonitor forecasts that by 2007, it will take a lead with 42% market share. Another challenge that liquor industry is facing is that the consumer groups, which were earlier targeted as one large demographic island, have been fragmented into distinct psychological groups. Unlike a decade ago, the consumers today have a number of options in terms of brands and segments. A fast emerging change is in terms of flavor substitution depending on consumption conditions. The generation Y consumers include a very young and skeptical group of people, who are defining their own world of drinking.

They have a multitude of taste preferences that they like to be made available at bars and pubs. This makes it difficult for the alcohol companies to keep pace with their changing preferences. So how are the liquor companies managing these challenges along with government laws and restrictions? Considering the global change in the drinking patterns, the alcohol beverage companies are working at keeping their current consumers and at the same time trying to lure new consumers by using different marketing and product gimmicks.

From tropical fruit based drinks to Pepper Vodka, Organic beers and malternatives, the segment that defines new age beverage continues to grow. Alcohol marketers have found that by blending the best of different categories, they can appeal to consumers who seek various benefits such as flavor as well as added health benefits. And by mixing it up, liquor marketers get a colorful palette of flavors never seen before. Furthermore, beverage marketers are increasingly trying to communicate with consumers on a personal level.

For example, the Johnnie Walker Relationship Marketing Program called “Journey of Taste” has been implemented successfully in most of its markets. This “mentor program” (as it is usually called) features a guided Scotch whisky education to the consumers led by a qualified Johnnie Walker Ambassador. It not only allows the consumers to appreciate the Scotch whisky or the brand but also allows them to develop a long-term association with the brand. Guinness, a beer brand, is also entering the second year of its Believer mentor program designed to convert Guinness drinkers into effective brand ambassadors.

Adding to that, liquor marketers are taking a move away from “in-your-face” or hard sell advertising to a more subtle marketing approach. Another wave of “one-to-one” marketing that liquor marketers have introduced is called guerilla and grass root marketing. It is a viral marketing technique that attempts to make each encounter with a customer appear as a unique, spontaneous personal exchange of information instead of a calculated marketing pitch choreographed by a professional advertiser. Liquor marketers have pioneered this technique after developing a keen understanding of target consumers and the way to communicate with them.

For instance, Heineken USA began strategically placing people they referred to as “opinion leaders” into bars to consume Heineken products while hanging out with other bar patrons. A vodka company also uses a similar kind of strategy where an attractive woman at a bar will order cocktails featuring the brand and talk about the product to people who approach her. Moreover, with the rise in global obesity, consumers are becoming more health conscious. However, liquor makers are keeping pace with the needs of their consumers by unveiling new marketing campaigns, and promoting low carbohydrate or diet-friendly products.

Diageo for instance, is urging bartenders to push drinks like Johnnie Walker Red Label and Ginger. The mixer of scotch and diet ginger ale contains 96 calories, which is a low intake. Bacardi, on the other hand, is going retro. The company is bringing back its campaign, which illustrates that 5 ounces of white wine has more calories (121) than five ounces of Bacardi and diet coke, which has 66 calories. Nonetheless, there are conventional marketing techniques that the marketers use to revive their brands and capture younger markets.

Cognacs or scotches suffer from a stodgy image that they are mostly consumed by older men. Hence, cognac makers Hennessy and Courvoisier have been trying to reach out to the younger market by building their brands in the entertainment industry and urban markets. Liquor marketers have also recognized that strong brand names, which deliver high sales and profits, have the potential to wave the magic wand on new products. The launch of the initial Courvoisier “Autumn Collection” marked the Liquor Company’s attempt to transform it from being “the world’s first cognac” to an icon of fashion.

The launch was part of a wider trend where makers of luxury brands try to capitalize on their labels by extending them into new areas of business. The marketing of liquor becomes more complicated when the marketers are faced with the dilemma “To push or not to push? ” Even though the liquor companies try to sell their brands, they have to recognize that alcohol beverages may be consumed irresponsibly and can therefore create problems for individuals and the society as a whole. It becomes more difficult when government and voluntary organizations in most of the ountries are keeping a close eye on them and pressurizing them with government taxation and marketing restrictions. The liquor companies’ associations presently try to minimize the extent to which under-age consumers are exposed and attracted to alcohol advertising by employing self-regulation codes. With or without government restrictions, big liquor companies take into account the importance of having to advertise and market their brands responsibly. For example, Diageo’s on/off trade promotions encourage responsible consumption by adults who choose to drink . It also does not support activities that encourage excessive consumption.

Its promotional activities exercise caution when products that areconsumed are in shots. Nevertheless, sometimes it becomes difficult for the marketers to move against the normal consumption patterns in order to act responsibly. However, there are also liquor marketers that are finding creative ways to play around government restrictions. In many countries, the government does not allow the advertisement of liquor on TV and other mass media. To counter this, the liquor industry has intentionally blurred the line between products by advertising cocktail mixers, soft drinks or soda water using the brand name of popular liquors.

This phenomenon, known as “surrogate advertising” (duplicating the brand image of one product extensively to promote another product of the same brand) has become widespread in many countries and continues to gain momentum. For example, in India, the Bagpiper club soda advertisement featuring movie celebrities is similar to an earlier advertisement of Bagpiper whisky. In a nutshell, the marketing for liquor will continue to have its highs and lows as it tries to keep up with a very unpredictable market.

Nevertheless, as it goes through the challenges to capture the right consumers, wines and spirits and the market’s consumption behavior may be worth watching out for. Does framed advertising influence consumer purchase decisions? If so, with which consumer segments is it more influential? How does it influence the purchase process? In this paper the impact of positively and negatively framed advertising is diagnosed on five purchase-decision constructs for a transformational consumer product category. The moderating impact of consumers’ education on this process is also studied.

Educated consumers are more influenced by positively framed advertising; less educated consumers are more influenced by negatively framed advertising. In general, positively framed advertising has a more favorable impact than negatively framed advertising on purchase-decision judgments for transformational products. The implications of these findings for mainstream consumer products advertisers are discussed. For more than a decade, researchers have argued and have found empirically that framing message content either positively or negatively influences decision processing.

Most of this research has been done in cause-related or health-related areas such as breast cancer (Meyerowitz and Chaiken, 1987), testicle cancer (Steffen et al. , 1994), skin cancer, sexually transmitted disease (Block and Keller, 1995), heart disease (Maheswaran and Meyers-Levy, 1990), and others. Most of these studies consistently find that negatively framed appeals are more effective than positively framed appeals; decision makers appear to be motivated by loss aversion. But what about framing effects when advertising more mainstream products, such as consumer durables? Many of these products (e. g. cameras, audio or video equipment, appliances) are associated with reasonable financial, functional, or performance risk, and hence potential loss; yet, they also are purchased to obtain very positive, enjoyable, transformational benefits. How should advertisers frame these types of purchase decisions? Should they emphasize potential gains from making a correct brand decision or potential losses for failing to make the correct brand decision? It also is important to know which consumers are more sensitive to framed advertising. Advertisers frequently use descriptive variables to segment markets, such as age, income, or education.

These variables (or related indicators) often are observable and inexpensive to obtain. In this research I focus specifically on consumers’ education as a surrogate for cognitive processing ability. Are there differences in the effectiveness of framed advertising for consumer segments of differing educational levels? There is a rich consumer literature that suggests that buyers of differing product knowledge and cognitive ability respond very differently to advertising appeals. For example, buyers with low knowledge and cognitive ability tend to process information heuristically; they are influenced by simple cue ffects, such as sensitivity to familiar brand names, or aversion to loss appeals. Teenagers today are increasingly the prime targets of malt beverage advertisements. Recent statistics show that 77 percent of teenagers watch television after 9 p. m. on weekdays, when advertisements for these malt beverages routinely are aired. Those same advertisements appear during commercial breaks in popular teen shows such as NBC’s Friends and ESPN’s NBA games. Popularly known as “alcopops,” these advertisements are used by liquor companies to encompass a new generation of drinkers and have raised sharp criticism from Mothers against Drunk Driving.

Selling malt beverages under the same brand name of hard liquors is a deliberate ploy liquor companies use to propagate their brand name in front of young audiences. More than 60 percent of teenagers have reported seeing advertisements for malt beverages such as Smirnoff Ice, Bacardi Silver and Mike’s Hard Lemonade. Meanwhile MADD has launched its own campaign, asking legislators to consider congressional hearings that focus on how to prevent underage drinking, including a national media campaign and a review of alcohol advertising standards and guidelines. “MADD is not against alcohol advertising,” MADD National President Wendy J.

Hamilton said in a statement. “We simply want standards in place that will protect our children from constant exposure and messages that directly appeal to them. Beer and wine companies have long advertised on TV with lax responsibility standards and irresponsible advertising, and now liquor companies have found another way to bend advertising guidelines by promoting their malt-based alternatives while teens are watching television. ” Hamilton’s statement added “it is a fact that beer, a malt-based product, is the alcohol of choice for underage drinkers and drunk drivers. For instance, Smirnoff uses the theme of a creative nightlife to market its drink Smirnoff Ice. Their advertisements portray young adults at a party, enjoying Smirnoff Ice. “Liquor companies in their advertising for malt beverages create associations within a teenager’s mind where these colorful fruity malt beverages are linked to having a good time,” Commerce Prof. Chris Pullig said. Such advertisements define loud music, dancing, pretty women and trendy clothing as their unique selling point. Thus, critics claim eenagers develop a positive outlook to such drinks as they feel that consuming such beverages will not have an adverse effect on their health, according to reports issued by the Center for Science in the Public Interest. Additionally, the audience to which liquor companies market may not necessarily be equipped to understand these advertisements, Pullig said. “It may be hard to explain to my 10-year-old son who may be enticed by the new flavors and colorful appearance of Jack Daniels Cola, what exactly the product is,” he said.

Indeed, CSPI researchers suggest these advertisements largely ignore voluntary alcohol advertising standards — the intentions of the liquor brands appear to capture a market that is not necessarily buying the product today. While Jack Daniels is promoted as a drink for mature, professional drinkers, Jack Daniel’s Cola is seen as a drink for someone not as mature. Liquor companies use a form of “brand extension,” attaching their brand name with these malt beverages to portray high quality and assurance.

Because attaching the brand name to the malt beverage does not take away from the existing market share of hard liquor, these companies have no concerns while advertising for such beverages, Pullig added. Statistics reveal that around $77 million was spent on “alcopop” advertising in 2001 and the amount is expected to rise to $450 million in 2002. “Alcopop” advertising may border on unethical marketing and companies need to be careful not to cross the line, Pullig said. MADD’s proposal to prevent such gross violation of liquor industry advertising standards suggests banning branding of any youth products identical to a liquor brand.

According to Hamilton, until such bans are implemented, the liquor companies will continue to use loopholes in the guidelines and influence highly impressionable young minds through this form of surrogate advertising. SURROGATE ADVERTISING AND LIQUOR INDUSTRY Worldwide, 1. 8 million deaths in 2000 were attributable to alcohol use causing 3. 2% of all global deaths and contributing to 4% of the disease burden. Alcohol is the leading risk factor related to the major burden of disease in low mortality developing countries and the third most prevalent risk factor for leading diseases and injuries in developed countries. While lcohol consumption is decreasing in some developed countries, it is on the rise in developing nations Significant proportion of the student population drink at hazardous level. The burden from alcohol exceeds that from tobacco because alcohol problems tend to take their toll earlier in life. The physiological and social consequences of alcohol use also negatively affect school performance, attendance and productivity at work and relations within the family. Alcohol consumption is declining in most of the developed countries, and rising in many of the developing countries and the countries of Central and Eastern Europe.

Males do most of the drinking in these countries, and evidence available regarding patterns of drinking suggests that large amounts of heavy drinking are occurring. Patterns, context and overall levels of alcohol consumption influence the health of the population as a whole. Alcohol transnationals are shifting their focus to Asia and other developing countries (young population and a growing economy) as the American and European markets are saturated. With an increase in per capita incomes, trade barriers falling, and alcoholic beverages advancing into new markets in developing countries, alcohol consumption is likely to increase.

Both beer and spirits consumption in India have been rising, possibly due to economic liberalisation of the Indian market. Privatisation and opening up the market to foreign companies dramatically changes the advertising and marketing of alcohol and most countries (such as in Asia) lack alcohol control national policies and strategies. Alcohol advertising has the potential of promoting changes in attitudes and social values, including publicizing the desirability of social drinking to its viewers, which all encourage a higher consumption of alcohol and weakens the social climate towards effective alcohol control policies.

In countries where advertising in the media is not totally banned, there is frequent portrayal of alcohol in the media, particularly in magazines, newspapers and television, especially of internationally branded beverages. The mainstream of these portrayals suggests alcohol use as a harmless pursuit, showing solidarity, friendship and masculinity, while neglecting any negative consequences. It is known that advertising can influence consumer choices, have a positive hort-term impact on knowledge and awareness about alcohol, but it has proved difficult to measure the exact effects of advertising on the demand for alcoholic beverages, in part because the effects are likely to be cumulative and long-term. Recent literature suggests that advertising and other marketing activities increase the overall demand, and influence teenagers and young adults towards higher consumption and harmful drinking (Saffer, 2006). Self-regulation by the mass media has been attempted by developing codes of advertising for and by the industry.

However, the effectiveness of voluntary codes is likely to be limited in developing countries because of lack of enforcement. Even in places where alcohol advertising is banned, messages on alcohol use could be conveyed to existing or potential consumers in a variety of ways. One method frequently used is surrogate advertising – brand sharing of products including name and logos, advertising at the point of sales, and sponsorship of events particularly in teenager friendly events such as sports, music and cultural events.

Thus an effective monitoring system is needed. In contemporary India, tendency of alcohol consumption has percolated down to youth. Media has played a leading role in encouraging the use of alcohol among the youth through portrayalof alcohol in congenial social settings, association of alcohol use with glamour and celebrity status and by using direct and indirect advertising. Age of initiation for alcohol use has progressively reduced in Kerala (India). In 1986, the age was 19. This was reduced to 17 in 1990 and further to 14 in 1994.

Alcohol Industry is following exactly the same marketing and promotion tactics and strategies as were employed by the Tobacco Industry globally and especially in developing countries. Billboard advertising of international and domestic brands of alcohol through surrogate means is widely being employed by alcohol industry worldwide. Sponsorship of sports and cultural events is widely being undertaken by alcohol companies in India. “Royal stag” sponsors Indian cricket matches and cricket players. “Shaw Wallace” sponsored the Indian open golfing event as he Royal Challenge Indian open and the Kenya cricket team. “Seagram” sponsors events such as “Chivas Regal Polo championships” and “Chivas Regal Invitational golf challenge” for corporates. Teacher’s whiskey has launched the Teacher’s Achievement Awards. Other sponsored awards and events include: “Smirnoff international fashion award”. “Lakme India Fashion Week” was sponsored by Seagram’s Blenders pride. How do liquor companies do surrogate advertising What they sell is different from what they offer Brand Extension |Core Brand |Company | |CD’s and Accessories |Magic Moments, Masterstroke, 8 PM |Radico Khaitan | |Water |Gilbey’s |Guiness UDV | | |Kingfisher |UB Group | |Soda |Mc Dowell’s |UB Group | |Men’s Accessories |Director’s Special |UB Group | |Sporting Equipment |Royal Challenge |UB Group | |Awards |Teacher’s |Allied Domecq | |Web Sites |Imperial Blue |Seagram’s | |Cassettes |Bacardi |Bacardi | |Fashion Weeks, |Kingfisher |UB Group | |Swimsuit Calendar |Blender’s Pride |Seagram’s | Surrogate Advertising- “Aristocrat” a popular whisky brand is being advertised as Aristocrat Apple Juice. “Mc. Dowell’s” is advertised as sodas, “Kingfisher” has packaged water bottles. Some alcohol brands have introduced rand promotional items such as: “Haywards 5000” has darting kits, “Bacardi” advertises through its Bacardi blast album and also advertises through parties tied up with rediff. com . Regulatory strategies for alcohol control thus will have to be formulated on same lines as Tobacco Control. This will require initiating efforts for alcohol control at national, regional and international levels. The liquor industry in India comprises the organised and unorganised sectors. The organised sectors include IMFL and the beer industry while the unorganised sector comprises of the market for country liquor. The size of the country liquor is approximately 40 times that of the IMFL market. The size of the ABs industry is estimated at Rs. 5 bn. , while fermented drinks account for 35% of the ABs market, the rest is derived from Indian Made Foreign Liquor (IMFL) segment. The UB group, consisting of McDowells Limited, UB Limited and Herbertsons Limited, dominate the liquor market and have a combined market share (in terms of sales value) aggregating 28%. The other major players in the segment include Radico Khaitan Ltd. , Jagatjit Industries Limited and Mohan Meakin Limited having market shares of 13%, 9% and 8% respectively. However, in terms of sales volumes, Balaji Distillers Ltd. , an associate of UB Limited, has a market share of 21. 4% followed by Radico Khaitan Limited at 20. % and Mohan Meakins Limited at 16. 3%. Jagajit Industries. Limited and Herbertsons Limited have 14. 0% and 13. 1% of market shares respectively. The state of Maharashtra accounts for approximately 26% of the total market for liquor followed by the states of Tamil Nadu, Delhi, Calcutta and Rajasthan, which respectively accounted for 18%, 10%, 8% and 7% of the total market. The Government of Gujarat has always prohibited the sale of ABs in the state while in Andhra Pradesh (AP) and Haryana, prohibition has been frequently imposed and lifted. The prohibition imposed earlier was lifted in the states of AP and Haryana in March 1997 and in April 1998 respectively.

The frequent imposition and lifting of prohibition in certain states has destabilised the industry’s growth and performance. The domestic IMFL industry faces competition from the unorganised sector and the Multi National Companies (MNCs), who were allowed entry in 1992. The government, however, protected the domestic players by restricting the MNCs from manufacturing liquor from molasses. However, one such MNC, International Distillers & Vinteners, was allowed to manufacture molasses based liquor. Competition from MNCs including United Distilleries, Seagram, White & Mackay and Hiram Walker exists primarily in the premium and the super premium segments where margins are high but volumes are low.

Although the Indian players have brands in the premium segment, a significant portion of the volumes is derived from the regular segments. As the profitability in the regular segment is dependent primarily on volume sales, players with a countrywide distribution network and well-established brands have a competitive edge over other players in the industry. The lower end of this segment faces stiff competition from the unorganised sector, as the latter is exempt from various governmental levies and therefore enjoys a price advantage to the extent of approximately 50% over the organised sector. Although competition in the industry is linked to pricing, the demand for ABs is inelastic to prices.

As the demand in the ABs industry is primarily brand driven, manufacturers focus on brand promotion to increase their sales. The manufacturers also create various brands under a single product category in order to counter competition. However, there is a strict regulation on advertising and some states have even banned advertisements. Consequently, the companies have resorted to surrogate advertising through sponsorship of fashion shows and sport events. The surrogates used by Magic Moments Vodka, Hayward’s 5000, Masterstroke Whiskey and Kingfisher beer advertisements ranged from audiocassettes, CDs and perfumes to golf accessories and mineral water. By August 2002, the I&B Ministry had banned 12 advertisements.

Leading satellite TV channels, including Zee, Sony, STAR and Aaj Tak were issued show-cause notices asking them to explain their reason for carrying surrogate liquor advertisements. The channels were asked to adhere strictly to the Cable Television Regulation Act 1995. As a result, Zee and STAR stopped telecasting the advertisements; Aaj Tak and Sony soon followed suit. In addition, the I&B Ministry hired a private monitoring agency to keep a watch on all advertisements for violations of the Act. These developments led to heated debates over the issue of surrogate advertising by liquor companies. Though the liquor companies involved protested strongly against the I&B Ministry’s decision, they had no choice, but to comply with the regulations.

Analysts remarked that the government’s policy was hypocritical. One said, “On the one hand they allow these ‘socially bad’ products to be manufactured and sold (in order to garner revenues) and then they deny the manufacturers the right to propagate knowledge of their products in order to drive sales. If something is bad and cannot be advertised, why allow it to be sold at all? ” Meanwhile, the government also seemed to be in dilemma. On the one hand, it had to encourage the sales of liquor and tobacco because they were the highest taxed sectors of the Indian economy. On the other hand, there was also the need to take the high moral ground and reduce the consumption of such products.

The Indian liquor industry can be divided into two broad segments: Indian Made Foreign Liquor (IMFL) and country-made liquor. IMFL comprises alcoholic beverages that were developed abroad but are being made in India (whisky, rum, vodka, beer, gin and wine), while country-made liquor comprises alcoholic beverages made by local breweries. While many players were present in the IMFL segment, breweries in the unorganized sector accounted for almost 100% of the country-made liquor segment. During 1999-00, the Rs 60 billion Indian liquor industry grew at the rate of 10-12%. While IMFL was consumed by the middle and upper classes of society, the economically backward classes consumed country-made liquor.

In India, 40-50% of all males and 1% of all females consumed alcohol. Almost 62% of the drinkers could be classified as light drinkers (i. e. social drinkers), 29% percent as moderate drinkers, and about 9% as hard drinkers. The organized industry was dominated by United Breweries and Radico Khaitan, which together accounted for around 53% of the total market. The government heavily regulated the liquor industry. Companies were not allowed to expand capacity without prior approval from the concerned state government. The distribution of liquor was also controlled in many states through auction system, the open-market system and the government-controlled system.

In India, you cannot advertise for cigarettes or alcohol on television, but many liquor companies have been pushing their brands on Indian television in a practice known as “surrogate advertising. ” Surrogate advertising involves advertising for products using a company’s brand to promote other products sold using that same brand. For example, it is technically acceptable to promote Magic Moments cassettes and cd’s in television ads in India, but not Magic Moments Vodka. Now India’s ministry of information & broadcasting is planning to amend the applicable law to stop this practice. Currently, Section 7 (2) of the Cable Act states that “no broadcaster is permitted to show an advertisement which romotes directly or indirectly, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants, infant milk substitution, feeding bottle or infant food. ” But the new law will also include a clause that says that “any advertisement for a product that uses a brand name which is also used for cigarette, tobacco product, wine, alcohol, liquor or any other intoxicant will not be permitted. Liquor companies accused of indulging in surrogate advertising seem to be playing musical chairs as they move from one channel to another to evade the information and broadcasting (I&B) ministry. Sources in the government say as soon as the I&B ministry sends notices to broadcasters to withdraw their surrogate ads, they reappear on other channels. “Sometimes the products are also changed.

As for instance, if the surrogate product was apple juice which was objected to, it is later changed to soda. ” The government, for now, seems to have no option but to keep sending out show cause notices to the television channels. The apex body for broadcasting companies, the Indian Broadcasting Foundation (IBF), is taking a serious view of the matter. In a recent meeting with members of the Confederation of Indian Alcoholic Beverages Companies (CIABC) and other liquor companies such as Seagram and Jagatjit Industries, IBF informed them that they must withdraw all surrogate ads and should adhere to the rules prescribed in the Advertising Code.

To some liquor company’s claims that the products advertised are genuine, IBF has asked the companies to produce certificates stating that the brand extensions are genuine. Real products or services (non-alcoholic and non-tobacco), which are widely distributed in the market through established networks “should not be denied speech, even if the product or service shares a brand name with a liquor product or a tobacco product or a company,” state the regulations. But, “indirect advertising for liquor or tobacco will not be permissible. ” This phenomenon, known as “surrogate advertising” (duplicating the brand image of one product extensively to promote another product of the same brand), has become commonplace.

Surrogate advertisements took off not long ago in the UK, where British housewives protested strongly against liquor advertisements “luring” away their husbands. The liquor industry found a way around the ban: Surrogate advertisements for cocktail mixers, fruit juices and soda water using the brand names of the popular liquors. In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. The liquor industry has intentionally blurred the line between products, advertising `old wine’ in a `new bottle,’ only this time with a soft-drink label.

A market survey in 2001 revealed that advertising has a direct influence on the consumption habits of 431 million people in India and an indirect impact on 275 million `aspirants’ from the lower income group. Considering this and realising that nearly 50 per cent of the television owners have access to cable channels, there is no doubt that the hidden call for alcohol consumption behind the surrogate advertisements is not escaping the eyes of viewers in the world’s fourth highest liquor-consuming country. Surrogate advertising defeats the very purpose of banning liquor advertisements. Sociological studies have shown that, in India, a significant share of income of a large section of the population is spent on liquor, potentially leading to financial distress and health hazards.

According to the International Wine and Spirit Board, a liquor industry publication, there will be a jump in the number of people reaching the legal drinking age of 25 within the next few years. The implication is that the problem is going to grow. The motivations of firms look even more suspect when they advertise products that cannot be bought. In 2002, for example, Jagatjit Industries, the maker of Aristrocrat Whisky, advertised a product called `Aristrocrat Apple Juice. ‘ The company reportedly confirmed availability of the fruit juice in Delhi, Haryana, Punjab and Rajasthan, yet, no reputed shop in Delhi had ever seen it, let alone sells it. Understanding the gravity of the situation, the Indian Broadcasting Foundation (IBF) has started to take on the surrogate liquor advertisements.

In a recent board meeting, the IBF decided that Jagatjit Industries and other liquor manufacturing units must get production of the advertisement approved both at the `storyboard stage’ and after the production of the commercial. It also ruled that that if liquor companies promote any juice, mineral water or soda, these should be shown in a proper manner and not as trimmings to liquor advertisement. These are welcome steps, but the key point lies in enforcement. If, in a free society, producers have a legitimate right to let consumers know about their products through advertisements, consumers have the right to information in adverts that are clear and honest. Surrogate advertisements are not only misleading, but also false and dishonest in many cases. With surrogate advertising so widespread, this is the moment to tackle the problem head-on.

There should be stringent regulatory measures to curb the practice, such as: i) Making transparent laws banning surrogate advertisements for different products under a single brand names, by amending the Trade Marks Act, for instance; ii) Providing teeth to the Advertising Standards Council of India to enable it to take action against false and misleading advertisements, and keep a close vigil over clever evasion of the law; iii) Asking the electronic and print media to adhere to the advertisement codes and not encourage surrogate advertisements; iv) Calling on the ASCI address complaints received from consumers against surrogate advertisements and take appropriate actions immediately; v) Creating a consumer awareness programme to help people understand the negative impact of surrogate advertisements; vi) Adopting strict laws to penalise those companies featuring surrogate advertisements without any real existence of the product; and vii) Requiring advertising agencies to have full knowledge of the products under the same brand for which they are promoting advertisements, and taking legal actions against those agencies which design surrogate advertisements. If one believes that honesty is the best policy and truth ultimately gains, the best policy would be to stand up strongly to the dishonest practices of surrogate advertising. With the Government trying to clamp down on surrogate advertising, liquor companies seem keen to bat out the ban. Even as liquor brands have traditionally been associated with up market sporting activities like golf, polo, derby and yachting, companies are now turning towards the game of the masses – cricket.

In fact, the latter half of the current year will see liquor brands as the title sponsors of two major cricketing events featuring India. Immediately after the triangular series at Zimbabwe (of which Royal Stag was the associate sponsor), the India and Zimbabwe Test series will be called the Royal Stag Cup. Till date Royal Stag has used several international cricketers as brand endorsers. This is the first time the company has forayed into tournament sponsorship. Similarly, the ICC World XI Vs Australia series to be held Down Under will be called the Johnnie Walker Super Series. According to media planners, as both the series are being held outside India it would be difficult for the Government to blip out the liquor brands. Since the matches will be beamed into Indian drawing rooms live, the brands will enjoy good visibility,” they added. Internationally beer brands such as Fosters and Lion have supported cricket in Australia and Sri Lanka respectively. Meanwhile, Royal Stag has roped in Zimbabwean Vice-Captain, Heath Streak as their new Royal Stag brand ambassador. Other celebrity Royal Stag cricket endorsers include Australian Cricket captain Ricky Ponting, and India’s ace offie Harbhajan Singh. The Information and Broadcasting (I&B) Ministry’s efforts to ban surrogate advertising of liquor brands has reached a naught. A few months ago, it had sent out notices to various television channels to withdraw advertisements by liquor companies.

But within a few weeks of the notices being issued, surrogate advertising made a comeback on television. In fact, a few liquor companies have been advertising during the ongoing cricket series as well. Earlier, in an interaction with Government officials, channels were categorically told that there is a complete ban on advertising by liquor companies. “However, exemptions could be granted on a case-by-case basis, like the one granted to Kingfisher Airlines,” they had said. The Government is also handicapped by procedure wherein it can take action against channels only after receipt of complaints. “The Government cannot suo motu issue show-cause notices. It has to first receive complaints,” said official sources.

Liquor companies on their part state that their advertising is self-regulated and comply with the Indian Broadcasting Foundation and the Advertising Standards Council of India code. The Rs 60,000-crore Indian beverage alcohol industry has always been operating in a restricted and controlled environment. It is a real shame that an industry that is a legitimate business in the country and which contributes a whopping Rs 22,000 crore just in revenues to the government, is not allowed to market its products freely and communicate to its consumers directly. This restrictive environment is also applicable to the beer and wine industry. Product advertising for liquor and cigarette companies is banned in the country since 1995 by Cable Television Network (Regulation) Act.

According to Rule 7 (2) of the Act, no broadcaster is permitted to show advertisement which promotes directly or indirectly promotion, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants, infant milk substitution, feeding bottle or infant food. This ban is now likely to be extended to advertising of extended brands. In fact, recently the government of India has in a unilateral move sought an amendment in the Trade and Merchandise Marks Act of 1958 to explore possibilities of denying extension of registration of trademarks used for brand names of cigarettes, tobacco products, wine, alcohol, liquor and other intoxicants to other products.

This has ostensibly been done to check surrogate advertisements of “other products” of liquor companies. The sales volumes of these products advertised do not justify advertisement expenditure incurred by the companies, it is argued. The alcohol beverage industry is justifiably upset with the proposed axe on advertising and promotions of legitimate economic activity through trademark extensions. These should not be confused with surrogate advertising wherein no products may exist. Freedom of commerce should be preserved and brand extensions of cigarette tobacco and liquor products should not be banned notwithstanding similar graphics, if they do not propagate smoking or drinking merely on the ground of the brand names being similar.

The ban on advertising of alcohol beverage products has severely handicapped communication with consumers. The industry is naturally compelled to make the best use of the channels and media of communications still open to it. Companies with liquor brands are not advertising liquor products; instead they have extended the equity of their brands into other fields. Over a period of time these products have become independent businesses for companies. Some of the product extensions like water, soda, and music cassettes have sales which run into millions in value and volume. McDowell’s sold 1. 5 million cases of water and soda, through its 20 franchise plants. Water and soda are added to our core liquor product, they are legitimate businesses.

Umbrella branding is a known phenomenon in marketing and today, we have omnibus brands like Nestle, Amul, Samsung etc which sell many products under one brand umbrella. Surely, the reverse logic would also apply that if any of the above-exemplified companies were to come out with a beverage alcohol, their original products cannot be banned. As far as co-relation between value of goods being sold and quantum of advertisement is concerned, this is a commercial decision why companies spend more than their turnover on a set of products. However, for brand building exercises, huge investments are undertaken and they at times can exceed the value of the sales turnover.

The Advertising Standards Council of India (ASCI) has clarified that as per its code, the mere use of a brand name or company name that may also be applied to a product whose advertising is restricted or prohibited is not reason to find the advertisement objectionable provided the advertisement is not objectionable and the product is produced and distributed in reasonable quantities and the objectionable advertisement does not contain direct or indirect cues for the product that which is not allowed to be advertised. Liquor companies do not need any approvals to advertise products other than liquor. Therefore, denying any trade Mark Registration for products other than liquor, will not affect our business unless the Trade Mark Act is amended to categorically deny products having liquor brand names for brand extensions. As of today, this does not lie under the purview of the Trade Mark Act. According to legal experts, any amendments that seek to prevent trademark registration of industry specific brand names in other classes of products or services would be ultra virus of the Trade Mark Act.

According to them, the Trade Mark Act Common Law permits brand owners to use and protect even their unregistered trademarks. Therefore, a brand owner could still use their trademark for other goods and services even though they may not have obtained trademark registration. The industry is fully sensitive to the need for shielding the young and the impressionable from getting carried away. Rather than an outright ban on advertising, the government should endorse the “Code of Conduct” which specifies the timings when the ad should be aired, non-targeting of children, disallowing teenagers in ads etc. Instead of an outright ban, the industry has been underlining the need for dialogue and subsequent guidelines outlining dos and don’ts of advertising.

It could specify timings when the ads should be aired, not target children, disallow teenagers in ads, not allow ads that are glamorous or suggest increased attractiveness to the opposite sex after alcohol consumption. The industry on its own has shown restraint. Society for Alcohol Related Social Policy Initiative (SASPI) is a self-evident initiative in this direction. McDowell’s and Seag-ram’s have undertaken campaigns for responsible drinking. For the government to make progress in an affirmative manner, the Government should consider the alcohol beverage industry’s self-imposed Confederation of Indian Alcoholic Beverages Companies (CIABC) code on advertising, benchmarked against guidelines in the US and UK.

THE CIABC code clearly lays down that while advertisements for promotional items, accessories or services using brand names of alcoholic beverages should not feature bottles, copy matter directly suggesting alcoholic beverages (or drinking vessels filled with alcoholic beverages or what appears to be an alcohol beverage) nor should they show people drinking such products. The alcohol beverage industries have a genuine intent to not just market their products in a socially responsible manner but to also comply with the appropriate Federal or state laws concerning the marketing of alcohol beverages. It is regrettable that an industry which is allowed to sell its products, is not allowed to advertise the same products even after making a mandatory statement advising customers to use in moderation; (or with a health warning). Brands need to be advertised, and the consumer makes his brand choice partly by the process of commercial communication.

RESEARCH METHODOLOGY Introduction The present chapter details the research methodology applied for conducting this research. Research may be classified according to its purpose. It may be concerned with solving theoretical issues, something capable of wide generalisation but difficult to achieve. On the other hand, it may be concerned with solving a very specific practical problem in one company, this may be achieve more readily but have little application outside the particular case (Yin, 1994). The present research was related to comprehensive and comparative study of the advertising strategy adopted in liquor industry i. e. Surrogate advertising.

To study the need and effectiveness of surrogate advertising in influencing customer behavior in liquor industry (with reference to Indian liquor industry) Research Design Research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project — the samples or groups, measures, treatments or programs, and methods of assignment — work together to try to address the central research questions. Qualitative methods are useful in those situations where it is necessary to use data that are basically an interpretation of the phenomena in the social world and then to present the interpretation of that phenomena as faithfully an accurately as possible.

Quantitative research arises from a positivist paradigm, which is centered, on objective truth, scientific methods and systematic relationships, which allow generalizations or point specific linkages between elements of a problem. For studying the views of respondents it becomes necessary for a researcher to use both of these qualitative and quantitative method for first collecting the information which gives an end result which can be measured and an analysis can be done by seeing that, and for a much desirable and meaningful analysis we need an information which is qualitatively correct as we are not taking whole of the society for their views regarding the topic, So it becomes necessary to use both Qualitative Method as well as Quantitative methods for Research.

So far as the present study is concerned the researcher opted close -ended questions based survey thinking that it would allow the respondents to have flexibility in their responses. As has been identified above survey was conducted in this research through questionnaire method; in which interviewees were provided a questionnaire having a set of close-ended questions. The questionnaire consisted of 11 close-ended questions. Selecting the right sample is the key to a study; therefore lot of importance was given for selecting the right sample. The research ensured that the characteristics of the sample were the same and that it belonged to the liquor industry.

It was also found imperative to select a sample from which data could be analysed and research questions could be investigated. In the present research, the sample size was 60. Primary data can be collected from various sources and methods that are case studies, observation, questionnaire survey and interview. In this research interview of Marketing Executives of liquor companies’ survey method was applied in order to collect primary data. The secondary data in the present research were collected from books, journals, periodicals, newspapers and magazines. Further, the reports of Indian liquor industry relating to advertising and advertising ban reports of government were used. Limitations of the research

Quite characteristically, academic research is full of limitations, particularly in the contexts of time and resources provided. The present researcher also confronted this problem. Thus due to the limitation of resources, the researcher had to reduce the sample size due to limited provided time the researcher had to analyse the data on simple method avoiding the complications and lengthiness of scientific and technical methods. DATA FINDINGS Sab Miller • CHALLENGES FACED IN LIQUOR INDUSTRY There are restrictions on advertising, and they do reduce the efficiency of communicating the brand positioning. Every market has its own facilitators and its own barriers, and the role of marketing is to maximise efficiency and effectiveness within the defined framework.

They try to ensure that each brand is distinctly positioned with low reliance on fine nuances. They try to engage the consumers at various points of influence – touch points – through a 360-degree programme. • PROMOTIONAL ACTIVITIES OF THE COMPANY Castle Loud is a property we are actively building. It’s a music property they are taking across the country again this year. They are bringing in DJs from all over the world and Loud by itself is a property that is present in several countries across the world. They have, of course, Indianised it to suit the market. Castle Loud is an initiative of Castle Lager to bring a perfect balance of music and beer. • CELEBRITY ENDORSERS

They help cut through the clutter. If the endorser has a perfect brand fit, it also has a constructive rub-off effect. However, with a limited number of celebrities with mass appeal, and a large number of mass brands trying to use them, we have reached a situation where the same celebrities are endorsing many brands, and often brands with divergent image and personality. The effectiveness and efficiency of such endorsement is a matter of debate. They have used some of them in the past. They had Manoj Bajpai for Knock Out and Darshan now endorses our brand in the Karnataka market. It really depends on the fit between the brand and the endorsers.

Also, these were not people who were into endorsing a whole bunch of products, so the ability to break through the clutter was high. UB Group • PROMOTIONAL ACTIVITIES ASSOCIATED WITH KINGFISHER Fashion. It has an intangible edge that appeals to the youth. Not everybody can wear fashionable clothes and not everybody can be a fashion model but everyone aspires to have that kind of image. Kingfisher is firmly entrenched in that kind of environment. They have instituted the fashion awards, the first of its kind in the country. In terms of brand building, they have associated ourselves with a property that appeals to the youth. Apart from this, we have time to time advertised • THE PROHIBITION ON ADVERTISING ALCOHOL AFFECTED UB

It has affected not just UB but the entire industry. It is important to realize that the law of the land and we need to follow it. Apart from that, they have realized that they can’t sit back and stop the brand building process. Hence, advertising and brand building continues. While they cannot advertise alcohol, they have successfully built brand through associations. A lot of companies, they don’t want to name them, do this by using things like branded glasses, which is not truly credible. But they, on the other hand, they do fashion, do sports. In fact, water is a very successful brand in its segment. They actually sell a lot of water in this country.

They are, in fact, the fourth or fifth largest water brand in India. In the recently held marathon in Mumbai, Kingfisher was the official water sponsor. They make large quantities of water. They have an organization that does water, and obviously we use that to build our brand. If direct advertising were allowed, it would definitely help! Then you could talk to your consumers directly saying that Kingfisher beer stands for all the values we are talking about, that it is fashionable, trendy and exciting. We may still continue all our sponsorships. A lot of big brands, take Budweiser for example, do a lot of advertising and undertake sponsorships.

They would have added this dimension to our advertising to support our brand building. ADVERTISING BEARING ON SALES Advertising has a direct impact on any business. The only difference between the conventional advertising of a soft drink, garment or soap and us is that while they can communicate directly about their brand and talk about its virtue, brand and benefits, but they can’t. They have to do it through associations and events. When they advertise that Kingfisher West Bengal is India’s best football club, and a winner of many tournaments, also Kingfisher is the best beer in the country. CHANGES AT THE FRONT-END It is changing, but the change is slow.

There are a number of large department stores like Food World that retail beer. The shopping experience in say a Food World is far superior to going to a regular liquor store. So, they would think that going forward there will a number of such shops coming up. Also, there are a number of very classy, up-market and stylish bars and lounges opening up, particularly in the larger cities and that will also accelerate as we go forward. The whole experience of purchasing and consumption of beer is going to improve. IMPORTANCE OF POINT OF PURCHASE ADVERTISING FOR BEER It is very important. Since direct advertising is limited, the point of sale can make a difference.

When a consumer walks into a store, he comes with a basket of brands in his mind. Not everyone walks in thinking I want brand XYZ. In such a situation, good quality as also visibility of the item could make him change his mind. Radico Khaitan • CHALLENGES OF LIQUOR ADVERTISING As a leading alcoholic beverage company in the country. They are always on a lookout for new and innovative ways to engage our consumers through right communication. In doing so, they are always guided by the code developed by the Confederation of Indian Alcoholic Beverages Companies (CIABC), the apex association of alco-bev companies of which Radico Khaitan is a member.

So long as our communication meets the standards and conditions of the CIABC code, we are keen on evolving new avenues for brand expression. Radico Khaitan is becoming much more of a marketing driven company and is increasingly taking the route of imaginative promotions, events and associations for building brands. While above the line spend is slated to go up from the existing 30 per cent to 60 per cent, below the line spend will be gradually reduced from the current 70 per cent to 40 per cent by the end of current fiscal. This represents a marked shift in the marketing spend of the company and a conscious move from a brand push policy to a brand pull policy.

Brand image, highlighted through association with relevant events and sponsorships, has been identified as the most important factor in fuelling consumers’ demand. Accordingly, as a part of the overall marketing mix, Radico Khaitan is positioning its brands by associating with world-class events. The activities that are woven around brands need to embody respective brands’ attributes. IMPORTANCE OF ADVERTISING TO THE LIQUOR INDUSTRY Communication is very important to project the brand attributes. More than any thing else, consumers buy a product for what it stands for. This is all the more true in case of lifestyle products like liquor where positioning of one brand puts it apart from other similar brands. Advertising is right communication help in imparting that distinctive edge.

That is why Radico Khaitan has pulled in celebrity Brand Ambassadors like Shahrukh Khan for Masterstroke Whisky, Hritik Roshan for Magic Moments Vodka and Mallika Shehrawat for 8 PM Whisky. • FUTURE PROSPECT The line spending is increasing given the requirements of the market place. The BTL spend will be about 40% of our overall marketing spend this year. They are constantly working to ensure that all the brands remain relevant and contemporary and any new commercials or campaigns made will be pursuant to that objective. FINDINGS AND ANALYSIS On Consumer Level 1. To what extent do you agree that advertising increases your overall demand and consumption of harmful drinking? [pic]

As according to the figure above, 15 (25%) out of the total 60 approached liquor consumers agree only to some extent that advertising increases their overall demand and consumption of harmful drinking; whereas some 45 (75%) of them agree to great extent that advertising increases their overall demand and consumption of harmful drinking. 2. To what extent do you agree that surrogate advertising is less influencing for your consumption decision than normal advertising? [pic] According to the figure above 30 (50%) out of the total 60 approached liquor consumers agree to great extent that surrogate advertising is less influencing for their consumption decision than normal advertising ; whereas the remaining 30 (50%) of them agree only to some extent that surrogate advertising is less influencing for their consumption decision than normal advertising. 3. Do you know that Surrogate advertising is advertising that is not according to the law of the land? [pic]

According to the figure above, 48 (80%) out of the total approached liquor consumers come to the conclusion that they are aware of the fact that surrogate advertising is advertising that is not according to the law of the land; whereas at the same time some 12(20%) of them come to the conclusion that they are not aware of the fact that surrogate advertising is advertising that is not according to the law of the land. 4. Are you impressed of companies coming forward as sponsors for liquor companies (as surrogate advertising) to get associated with the elite lifestyle image for their brand building? [pic] As the figure above demonstrates 20 (33. 3%) out of the total 60 approached liquor consumers come to the conclusion that they are impressed of companies coming forward as sponsors for liquor companies (as surrogate advertising) to get associated with the elite lifestyle image for their brand building; whereas the remaining some 40 (66. 66%) of them come to the conclusion that they are not impressed of companies coming forward as sponsors for liquor companies (as surrogate advertising) to get associated with the elite lifestyle image for their brand building. 5. The role of surrogate advertising in changing your drinking patterns is…? [pic] The figure above demonstrates that for 18 (30%) out of the total 60 approached liquor consumers in this research find that the role of surrogate advertising in changing their drinking patterns is positive; whereas some 42 (70%) of them find that the role of surrogate advertising in changing their drinking patterns is negative. 6. Leading satellite TV channels, including Zee, Sony, STAR and Aaj Tak were issued show-cause notices asking them to explain their reason for carrying surrogate liquor advertisements’, how do you see this step? [pic] According to the above figure, 48 (80%) out of the total approached liquor consumers come to the conclusion that issuing show-cause notices asking TV channels to explain their reason for carrying surrogate liquor advertisements is right step; whereas at the same time some 12(20%) of them come to the conclusion that issuing show-cause notices asking TV channels to explain their reason for carrying surrogate liquor advertisements is not right step. 7. Do you find that liquor products advertised through surrogate advertising are genuine…? [pic]

As the above figure demonstrates for 24 (40%) out of the total 60 total approached liquor consumers come to the conclusion that liquor products advertised through surrogate advertising are genuine; whereas for remaining some 36 (60%) of them liquor products advertised through surrogate advertising are not genuine. 8. Do you agree that surrogate advertising defeats the very purpose of banning liquor advertisements? [pic] According to the figure (8) 43 (71. 66%), out of the total 60 approached liquor consumers in this research find that surrogate advertising defeats the very purpose of banning liquor advertisements; whereas the remaining 17 (28. 33%) of them find that surrogate advertising does not defeat the very purpose of banning liquor advertisements. . Is the decision of banning direct ads on liquor is correct or they could have done better by also banning indirect ads too [pic] According to the survey 36 % respondents feels that to curb on the spread of message given by the liquor companies both kind of advertisements that include direct as well as indirect ads (surrogate advertisements) should be completely banned while majority rests with people who thinks that surrogate advertisement will not give the message which is inappropriate for the society. 10. To what extent do you agree that surrogate advertisements are not only misleading, but also false and dishonest in many cases..? [pic]

As according to the figure (10), 45 (75%) out of the total 60 approached liquor consumers in this research find to great extent that surrogate advertisements are not only misleading, but also false and dishonest in many cases; whereas the remaining 15 (25%) of them find only to some extent that surrogate advertisements are not only misleading, but also false and dishonest in many cases. 11. To what extent do you agree that the alcohol beverage industries have a genuine intent to not just market their products in a socially responsible manner but to also comply with the appropriate state laws concerning the marketing of alcohol beverages? [pic]

According to the figure (11), 48 (80%) out of the total approached liquor consumers agree to great extent that the alcohol beverage industries have a genuine intent to not just market their products in a socially responsible manner but to also comply with the appropriate state laws concerning the marketing of alcohol beverages; whereas at the same time some 12(20%) of them agree only to some extent that the alcohol beverage industries have a genuine intent to not just market their products in a socially responsible manner but to also comply with the appropriate state laws concerning the marketing of alcohol beverages. CONCLUSION AND RECOMMENDATIONS Alcohol advertising has the potential of promoting changes in attitudes and social values, including publicizing the desirability of social drinking to its viewers, which all encourage a higher consumption of alcohol.

It is known that advertising can influence consumer choices, have a positive short-term impact on knowledge and awareness about alcohol, but it has proved difficult to measure the exact effects of advertising on the demand for alcoholic beverages, in part because the effects are likely to be cumulative and long-term. However, the recent literature suggests that advertising increases the overall demand, and influence of consumers towards higher consumption and harmful drinking. The findings of the present research also greatly substantiate this fact as approached consumers in greater majority agree to great extent that advertising increases their overall demand and consumption of harmful drinking.

It is generally recognized that surrogate advertising is even more influencing than normal advertising, but the liquor industry has no choice. Of course, this strategy assumes that the brand and, in some cases, the advertisements, are already well known. Otherwise, such advertising may not serve any purpose. It is difficult to evaluate the effectiveness of surrogate advertising. So far as the present research is concerned , it reveals that for many liquor consumers surrogate advertising is even more influencing than normal advertising, whereas for many others surrogate advertising is less or non influencing than normal advertising. The question arises about advertising ethics when it comes to surrogate advertising.

That is why there has been criticism of surrogate advertising because they are advertising products which are not suppose to be advertised according to the law of the land. While its opponents argue that strictly speaking surrogate advertising may not be illegal, is it ethical. In any case, if it is felt that certain degree of control is required, then it is in order to have such guidelines so as to ensure that alcoholic beverages are not sold in a manner which is irresponsible in any way. Interestingly, in this research it has been revealed that liquor consumers are on greater found aware of the fact that surrogate advertising is advertising that is not according to the law of the land. Earlier very few liquor companies stepped in as sponsors for surrogate advertising.

However, today, more and more companies are coming forward as sponsors to get associated with the elite lifestyle image for their brand building. In this context findings of the present research reveal that generally liquor consumers are not impressed of companies coming forward as sponsors for liquor companies (as surrogate advertising) to get associated with the elite lifestyle image for their brand building. Considering the global change in the drinking patterns, the alcohol beverage companies are working at keeping their current consumers and at the same time trying to lure new consumers by using different marketing and product gimmicks. From tropical fruit based drinks to Pepper Vodka, Organic beers and alternatives, the segment that defines new age beverage continues to grow.

Alcohol marketers have found that by blending the best of different categories, they can appeal to consumers who seek various benefits such as flavor as well as added health benefits. And by mixing it up, liquor marketers get a colorful palette of flavors never seen before. However, as the findings of the present research reveal the role of surrogate advertising in changing liquor consumers drinking patterns is negative and not effective. The surrogates used by Magic Moments Vodka, Hayward’s 5000, Masterstroke Whiskey and Kingfisher beer advertisements ranged from audiocassettes, CDs and perfumes to golf accessories and mineral water. Thus, the I&B Ministry in India had banned 12 advertisements.

Leading satellite TV channels, including Zee, Sony, STAR and AajTak were issued show-cause notices asking them to explain their reason for carrying surrogate liquor advertisements. The channels were asked to adhere strictly to the Cable Television Regulation Act 1995. Interestingly, as according to the findings of the research, issuing show-cause notices liquor consumers find asking TV channels to explain their reason for carrying surrogate liquor advertisements in greater majority. The question also arises about the equinity of products advertised through surrogate advertising. To some liquor company’s claims that the products advertised are genuine, and that is why companies are asked the companies to produce certificates stating that the brand extensions are genuine.

So far as consumer perception is concerned, majority of them believe that liquor products advertised through surrogate advertising are not genuine. According to a market survey (2001) advertising has a direct influence on the consumption habits of 431 million people in India and an indirect impact on 275 million `aspirants’ from the lower income group. Considering this and realizing that nearly 50 per cent of the television owners have access to cable channels, there is no doubt that the hidden call for alcohol consumption behind the surrogate advertisements is not escaping the eyes of viewers in the world’s fourth highest liquor-consuming country.

However, it is found that surrogate advertising defeats the very purpose of banning liquor advertisements. The findings of the present research also substantiates this fact as majority of approached consumers concluded that surrogate advertising defeats the very purpose of banning liquor advertisements. Liquor companies promote any juice, mineral water or soda, and therefore it is suggested that these should be shown in a proper manner and not as trimmings to liquor advertisement. These are welcome steps, but the key point lies in enforcement. If, in a free society, producers have a legitimate right to let consumers know about their products through advertisements, consumers have the right to information in adverts that are clear and honest.

Surrogate advertisements are not only misleading, but also false and dishonest in many cases. With surrogate advertising so widespread, this is the moment to tackle the problem head-on. This fact is also substantiated by the findings of the present research as most commonly approached liquor consumers in this research find that surrogate advertisements are not only misleading, but also false and dishonest in many cases. Suggestively, advertisements for promotional items, accessories or services using brand names of alcoholic beverages should not feature bottles, copy matter directly suggesting alcoholic beverages nor should they show people drinking such products.

The alcohol beverage industries have a genuine intent to not just market their products in a socially responsible manner but to also comply with the appropriate state laws concerning the marketing of alcohol beverages. Therefore, liquor companies need to follow the following rules of business ethics. Instead of an outright ban of surrogate advertising, liquor companies need to underline the need for dialogue and subsequent guidelines outlining dos and don’ts of advertising. It could specify timings when the ads should be aired, not target children, disallow teenagers in ads, not allow ads that are glamorous or suggest increased attractiveness to the opposite sex after alcohol consumption. With surrogate advertising so widespread, this is the moment to tackle the problem head-on.

There should be stringent regulatory measures to curb the practice, through following measure: • Making transparent laws banning surrogate advertisements for different products under a single brand names, by amending the Trade Marks Act, for instance; • Providing teeth to the Advertising Standards Council of India (ASCI) to enable it take action against false and misleading advertisements, and keep a close vigil over clever evasion of the law; • Asking the electronic and print media to adhere to the advertisement codes and not encourages surrogate advertisements; • Calling on the ASCI address complaints received from consumers against surrogate advertisements and take appropriate actions mmediately; • Creating a consumer awareness programme to help people understand the negative impact of surrogate advertisements; • Adopting strict laws to penalize those companies featuring surrogate advertisements without any real existence of the product; and • Requiring advertising agencies to have full knowledge of the products under the same brand for which they are promoting advertisements, and taking legal actions against those agencies which design surrogate advertisements. BIBLIOGRAPHY • Abrol, P. (2006), Surrogate Advertising in India, • Bhatnagar, M. (2003), Liquor companies play musical chairs with surrogate ads on TV • Mehta, P. 2003), Surrogate advertising — Needed, a spirited attack • Sharma, J. (2006), Surrogate Advertisements: A Case of Proxy War • Subramanian, N. and Kaushik, N. (2005), This is not cricket! — Liquor cos to use overseas series to circumvent ad ban, • Suchanti, P. (2006), Soft regulations for hard liquor sales Websites • www. advertisinglaw. wordpress. com • www. mba. iiita. ac. in • www. nt. walletwatch. com • www. deccanherald. com • www. icmr. icfai. org • www. iosworld. org • www. magindia. com Questionnaire On Consumer Level 1. To what extent do you agree that advertising increases your overall demand and consumption of harmful drinking? 2.

To what extent do you agree that surrogate advertising is less influencing for your consumption decision than normal advertising? 3. Do you know that Surrogate advertising is advertising that is not according to the law of the land? 4. Are you impressed of companies coming forward as sponsors for liquor companies (as surrogate advertising) to get associated with the elite lifestyle image for their brand building? 5. The role of surrogate advertising in changing your drinking patterns is…? 6. ‘Leading satellite TV channels, including Zee, Sony, STAR and Aaj Tak were issued show-cause notices asking them to explain their reason for carrying surrogate liquor advertisements’, how do you see this step…..? 7.

Do you find that liquor products advertised through surrogate advertising are genuine…? 8. Do you agree that surrogate advertising defeats the very purpose of banning liquor advertisements? 9. Is the decision of banning direct ads on liquor is correct or they could have done better by also banning indirect ads too? 10. To what extent do you agree that surrogate advertisements are not only misleading, but also false and dishonest in many cases..? 11. To what extent do you agree that the alcohol beverage industry has a genuine intention to not just market their products in a socially responsible manner but to also comply with the appropriate state laws concerning the marketing of alcohol beverages? THANK YOU