1. OPEN QUESTION; In which stage of the Product-Life Cycle would you position the Jgermeister brand in Germany in 1985? What are sensible marketing strategies for escaping this stage of the PLC. Please relate these strategies to the Jgermeister case.

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Case Text

Jgermeister: Teaching an old brand new tricks

In the summer of 1985, Walter Sandvoss, member of the board of the German herbal liqueur producer 'Jgermeister', was sitting in the 'Commander's Palace', an exclusive restaurant in New Orleans. The waiter had just approached holding a green Jgermeister bottle to serve him his second drink of the night. Sandvoss and his American contractors were celebrating: In the last year, the US market accounted for 25% of Jgermeister's total sales representing an increase of 20% compared to the previous year. But Sandvoss did not just want to celebrate. He also came to learn. While Jgermeister had gained a cult status in the US, especially among students, in Jgermeister's home market Germany, the liqueur had an old-fashioned, dull and dusty image - in short: Germans saw Jgermeister as a drink for the elderly. But without attracting young customers, Jgermeister would eventually fall by the wayside one day. Sandvoss needed to find what went right in the US and whether Jgermeister's US marketing mix could be implemented at home and elsewhere to address a new and younger customer segment.

Fortunately, things worked out for Jgermeister. In 2011, Jgermeister sold more than 87 million bottles of liqueur was rated one of the ten most important liqueur brands of the world - and in addition had also gained a cult status in Germany (Matthes/Schuster 2012). Sandvoss recounted the strategic initiatives taken to reposition Jgermeister since his time with the company.

From Vinegar to Liqueur: The Jgermeister story

In the 1870s, Wolfenbttel was a very quiet little town in North Germany. The economy was highly reliant on agriculture and mining. Because of the mining industry, there was demand for vinegar to cool down the rocks before they were extracted. So, in 1878, Wilhelm Mast opened a vinegar production plant in Wolfenbttel, the cradle for the later Mast-Jgermeister SE. After his death in 1918, his 2l-year-old son Curt took over the business and had to face decreasing vinegar sales, because most mining companies had started to use cheaper, industrially produced vinegar. Consequently, Curt Mast decided to stop the vinegar production and to focus on selling wine. But selling wine was not enough of a challenge for him. He experimented with spirits - and after many years of trying to find the right formula, he finally settled on a winning recipe in 1934: Jgermeister was born (Jgermeister 2012).

Jgermeister liqueur was officially launched in 1935. At the same time, Curt Mast expanded the company's product portfolio, adding, for example, the wild fruit liqueur 'Schlehenfeuer', the coffee liqueur 'Mocca Double', 'the caraway schnapps 'Korn und Kimme' and a bitter spirit called 'Boonekamp'. In the 1960s, the company continued to manage a wide product range, sometimes stocking more than 20 different spirits and fine wines. This broad product portfolio was gradually reduced until only Schlehenfeuer and Jgermeister remained. Today, these two braided spirits still constitute the complete Mast-Jgermeister SE product range

(Jgermeister 2012). However, Jgermeister is the dominant brand - there is no marketing campaign for Schlehenfeuer and the company is planning to sell the brand in the near future (Vossen 2011).

Gnter Mast, Curt Mast's nephew, joined the company in 1952 and paved the way for Jgermeister's international expansion. In the 1960s, he decided to internationalize - which proved to be a very wise decision. By 2012, 80% of Jgermeister's sales were generated outside Germany and Jgermeister was sold in approximately 90 countries (Kessler 2012, Jgermeister 2012). During the process of strategically developing its brand abroad, Jgermeister took cultural and country-specific conditions of each market into account and worked with local distribution partners. The distribution partners worked hand in hand with the company to develop marketing concepts tailored to the needs of the different country markets. As a result, no unified global marketing strategy emerged and the way in which

the Jgermeister brand was presented and perceived differed from country to country. In Spain and Great-Britain, for example, Jgermeister has had a rock & roll image, while in Italy and Hungary it was considered chic and fashionable (Jgermeister 2012). Gnter Mast also was a real marketing genius who, for instance, invented advertising on soccer shirts

or started to engage in racing sponsorship. He was also responsible for the first large-scale marketing campaign. He served as a CEO until l997. After Gnter Mast, Hasso Kaempfe, who formerly worked for the coffee producer Tchibo, took over the helm of the company in 1998. Jgermeister, even though registered as a stock corporation, continued to be a family business, owned by members of the Mast family. In 2011, the Mast-Jgermeister AG (AG: German stock corporation) changed its legal form and was converted to the Mast-Jgermeister SE (societas europae, European stock corporation). "This is a logical step. It is a sign-post on our route to becoming a branded goods business with an even stronger international orientation and broader product portfolio", explains Dell'Antonio (Jgermeister 2011).

'ls it cough syrup?' - The Product

The secret formula of 1934 is still used today and makes for the special taste of Jgermeister. Jgermeister is made of 56 herbs, roots and fruits. The liqueur has to age for one full year in oak barrels (Bergmann 2010). This mixture is solely produced in the German-based main factory and the exported all over the world. Contractors just add water, sugar and 35% vol. alcohol and then fill the liqueur in bottles.

Jgermeister is delivered in a distinct green bottle. Curt Mast, a passionate hunter, had chosen

green because it reminded him of firs (Bergmann 2010). He also conducted tests to find out the ideal form of a bottle that does not break too easily. The Jgermeister logo shows a magnificent stag with a gleaming cross between its antlers. This goes back to an ancient legend of 'hunter Hubertus' (Jgermeister 2012). Both designs remained basically unchanged since 1935.

Challenges

When Hasso Kaempfe became the CEO in 1998, his biggest problem was Jgermeister's image: Jgermeister was seen as a product for people aged 50 and older (Heide 2008) - and this target group was getting older and older contributing to the overall image of the brand. This image was enforced by the 'l drink Jgermeister' campaign which showed nerdy looking people consuming Jgermeister. Also, drinking habits had changed: consuming alcohol was seen rather as a social event compared to the previous habit of just enjoying a drink alone at home. In addition to that, the use of modern IT - CRM systems, laptops, the Internet and market research were sparsely used in the company.

However, Kaempfe could not change the brand image completely: 'We couldn't just put on a young face - that would not have been authentic.' Also, targeting a younger customer segment (aged 25 to 35) carries the danger of losing the traditional customers. Therefore, Kaempfe summarized the challenge as follows: 'The art of brand management is to serve different target groups in such a way that the different approaches don't cannibalize each other' (Irler 2006).

Strategic Actions

Kaempfe's first official act was to take down the deer antlers hanging in his office and to stop the 'I drink Jgermeister' campaign (Langer 2003). However, Kaempfe had to make changes not only with regard to promotion activities, but in all aspects of the marketing mix:

Product Policy

Jgermeister - besides the small brand Schlehenfeuer - was the only brand of Mast-Jgermeister SE. Kaempfe had not seen any necessity to enlarge the product range: 'We mainly concentrate on this single product and don't have to take care of 20 different brands. This focusing makes things easier.' Launching an alcopop was also no alternative for him, because placing a main focus on teenagers would be against Jgermeister's Marketing Code that states: 'Jgermeister is intended for adults of legal purchase age who choose to drink. Minors must be given special protection.' (Jgermeister 2012). Of course, Jgermeister is also used for several cocktails, but Jgermeister only cooperates with other companies 'in the glass' but not officially.

It was clear for Kaempfe not to change the taste and ingredients, because they made up the identity of Jgermeister. Kaempfe even emphasized the positioning of Jgermeister as a high-quality product. When a bottle leaves the production plant today, it has passed 383 different quality checks (Jgermeister 2012). Another important aspect of the product which is also related to the consistent high quality is branding. Jgermeister's branding is intended as rather experienced-based. 'Rather than raising awareness predominantly through traditional mass media such TV advertising or wide coverage poster advertising (billboards), Mast-Jgermeister SE prefers a far more direct, more personal way of talking to consumers: Jgermeister appears where people can experience the brand (Jgermeister 2012). In addition to this emotionalization of the brand, Kaempfe and Dell'Antonio also tried to establish a brand myth. This means that not only the product is advertised and sold, but the story behind the product. A good example can be found on the Jgermeister website where the whole production process is shown with a movie emphasizing the natural ingredients as well as the traditional art of producing Jgermeister. Today, the Jgermeister brand is well-known and

associated with attributes like friendliness, straightforwardness, honesty as well as quality and tradition (Busch 2012).

Price Policy

As a high-quality product, Jgermeister follows a premium pricing strategy. In 2012, the retail selling price of on1 0.7 l-bottle of Jgermeister was approximately 12. What makes the pricing strategy interesting is that all retailers have to pay the same price - whether they are a small kiosk or a large retail chain like Tesco. The only price differentiation is based on quantities and five different prices are available depending on the quantities that are bought. Also, retailers are not allowed to grant rebates to end consumers. With this consistent price policy Jgermeister is able to strengthen its high-quality image.

Distribution Policy

Jgermeister is available in different bottle sizes ranging from 0.2 l to 1.75 l. While the traditional customers mainly consumed Jgermeister at home, targeting a younger generation also meant establishing Jgermeister as a party drink that was consumed away from home.

In the early nineties, Sidney Frank - an American importer of Jgermeister - started a revolution for the distribution of Jgermeister: he invented a tap machine for spirits. With this machine Jgermeister could not only be served ice-cold but it had the added advantage of making both the brand and the bottle visible during consumption. The tap machines were subsequently introduced in other markets around the globe including Germany and proved to be a catalyst for a change in the marketing of the brand. To date, more than 130,000 tap machines have been installed globally (Jgermeister 2012). Another great American invention Kaempfe had transferred to Germany was the 'Jgerettes', Jgermeister's on-site sales team. Dressed in the corporate colors, they offered one free drink, banners and T-shirts to raise awareness of Jgermeister brand to encourage people to try the liqueur (Wassener 2003). Today, Jgerettes are used in many other countries, as well, and are an integral part of Jgermeister's distribution strategy, especially in new markets. This seems to be a critical element in Jgermeister's hub-and-spoke strategy. First awareness is established in the gastronomy sector before the distribution is additionally managed via retailers (Irler 2006).

Promotion Policy

Kaempfe soon replaced the 'I drink Jgermeister'-campaign. The new claim was "Achtung Wild!" ('Attention Wild!'). This ad campaign mainly showed young people at a party, which appealed to the new customer segment that Jgermeister was targeting. This in turn projected the new brand image Jgermeister was trying to create. But this campaign was intended not only to address the new segment of younger customers, but also the 50+ Jgermeister customers, because many of them could also relate positively to the lifestyles depicted in the campaigns. 'Most of them have positive memories of this phase of life' (Irler 2006) and, thus, a favorable association could equally be created for this established segment. However, this ad campaign was only one part of Kaempfe's overall brand communication strategy which also included channel marketing, Internet initiatives, the Jgerettes, and event marketing. The Internet especially was important to reach the younger generation of customers. For example,

Jgermeister's first infotainment website, jaegermeister.de, was launched in 2000. A channel

marketing campaign for the retail sector was, for example, a prize draw for 25 Harley Davidsons in Jgermeister livery; and the traditional Jgermeister bottles were designed and sold as limited editions. Events also became a constant part in the overall promotion mix.

In the end, Kaempfe's strategy worked out: many young Germans between 20 and 29 years have become Jgermeister fans. Most importantly, the traditional segments did not seem alienated by the new developments. In 2011, the average Jgermeister customer was 48 years old - and this age kept constant over the years, because enough new and young customers became attracted to the brand. Kaempfe was very successful to change the Jgermeister image from dull to cool. Since 2007, Paolo Dell'Antonio took over as the chairman of the board. He and CMO Michael Volke continued Kaempfe's strategy. Their long term strategy focused especially on internationalization (Jgermeister 2011) and they joined forces to progress further on keeping Jgermeister's fresh image. In 2009, Volke launched a new '360 degrees communication campaign' under the slogan 'Real Jgermeister.' It focused on building up a brand myth based on the authentic character of the brand, real experiences and the high quality of the product. This campaign not only targeted the young party generation, but also gourmets who drink Jgermeister at home (Jgermeister 2009). Still, event marketing plays a big role: There is a music promotion program 'Band Support' promoting new rock sounds and, for example, the Sky Bar 'Hochsitz' presented at many music festivals (Jgermeister 2012). This strategic shift paid off for the company. n 2009, despite the economic crisis, Jgermeister's sales remained constant and, in the following years, sales even increased. In 2011, Jgermeister sold 87.1 million 0.7 l-bottles, about half of which was sold in Europe and half outside of Europe making Jgermeister one of the most successful liqueur brands of the world.

Sandvoss leaned back in his chair. It was true that the brand Jgermeister had seen some drastic changes over its recent history and he was sure that things would have turned out quite differently without these changes. However, he was also sure that Curt Mast would have been quite pleased with this turn-around because - in the end - the brand remained pretty much true to itself.