DOI: https://doi.org/10.62204/2336-498X-2023-3-3

MANAGEMENT OF MARKETING ACTIVITIES

OF BREWING ENTERPRISES

Iryna Potapiuk,

Ph.D. in Economics, Associate Professor,

 Poltava State Agrarian University, Ukraine,

iryna.potapyuk@pdau.edu.ua; ORСID: 0000-0002-1051-0114

Karyna Huzychko,

Poltava State Agrarian University,Ukraine,

karyna.huzychko@pdau.edu.ua; ORСID: 0009-0009-3357-483X

Andriy Peremitets,

Poltava State Agrarian University, Ukraine,

andrii.peremitets@st.pdau.edu.ua; ORСID: 0009-0008-2957-2826

Annotation. The article highlights the theoretical and practical aspects of marketing management of modern enterprises in the brewing industry. The article provides well-argued research results, which prove that the beer market in Ukraine is highly competitive and quite diversified in terms of the potential of sellers, purchasing power, and consumer tastes, which determines the possibilities and benefits for product manufacturers gained from the implementation of a wide range of marketing tools.

Keywords: management, enterprise, marketing, marketing activity, marketing-mix, brewing industry.

The goal of marketing management of any enterprise is to create its competitive advantages, which is a determining factor in increasing competitiveness of the whole enterprise’s business. Domestic enterprises need the implementation of effective instruments of marketing management, both in the domestic and foreign markets, which can be used in forming a scientifically-grounded strategy for achieving competitive advantages. The development of a strategy that would take into account the specifics of the activity and the factors of ensuring competitive advantages of the enterprise requires a systematic justification of the choice and determination of the mechanism of its formation [2].

Marketing management can function effectively only on the condition that the management activity of the enterprise corresponds to the basic marketing principles, one of which is that the consumer should be at the center of the organization and the marketing and management system focuses all efforts on satisfying the needs of consumers in their entirety.

At the current stage of development, the modern market is overflowing with goods/ services, which means that competition is increasing even at the micro level. Enterprises should focus on organizing marketing management in the management system for their effective functioning. Marketing management implies the introduction of such a system of enterprise functioning, which includes the process of forming or developing marketing plans that are aligned with the strategic goals of enterprise’s management.

The leading experts in the field of marketing argue that in current competition conditions, marketing management is of great importance and a determining factor in the intensive development of the company, as it affects the company’s activities in general. Management is present in all spheres of society’s life. All enterprises are interested in the effective management of marketing activities and search for a qualitatively new approach to the coordination of production and sales of their goods/services. Marketing management forms the skills of planning, organization, motivation, and control of the marketing activities of the enterprise, taking into account the principles of sustainable development. This will provide an opportunity to strengthen economic activity, increase entrepreneurial spirit, and expand business. The analysis of the recent studies on the issues of increasing the companies’ competitiveness in the world market and the findings of this study allow us to conclude that there is an urgent need to apply an innovative approach to management in production and sales, based on the principles of marketing [6].

 It is clear that the marketing mix is a standard in the theory and practice of marketing activity, but due to rapid changes in the market environment and consumer preferences of buyers, the concept of “4P” has been somewhat expanded and supplemented with new items. The search for a more accurate mixture of marketing tools that would ensure the company’s advantage in the market stimulated the supplements to the concept. Foreign and Ukrainian marketing theorists, taking the “4P” concept as a basis, supplement it with new elements that are combined into such models as “6P”, “7P”, “8P”, “10P”, “12P”, etc. Table 1 demonstrates the evolutionary development of the “4P” concept [7; 12].

Table 1

Evolution of the concept of the marketing mix [7; 12]

Complex	Elements	Content of elements
4Р	Product	Goods and services offered on the market
	Price	The amount of money that must be paid to the consumer to receive the goods or services
	Place	Sales activity
	Promotion	Dissemination of information and convincing buyers of the advantages of the company’s goods and services
5Р		4Р+
	Personnel	Qualification level and professionalism of employees
6Р		5Р+
	Publicity	Promotion of the positive features of the enterprise through the mass media
7Р		5Р+
	Process	Process of choosing a product or providing quality services
	Physical evidence	The material embodiment of the provided service
8Р		7Р+
	Perceptual psychology	The buyer’s psychological associations about the company and its goods and services
10Р	5Р+
	People	Participants in the buying and selling process
	Package	A means of product storage and an element of visual representation of the brand
	Purchase	Prerequisites and consequences of making a purchase decision
	Probe Public	Verification in practice
	Relations	Creating a positive image of the company, products, and services
12Р	5P+People, Public Relations, Process, Package, Purchase
	Physical premises	The conditions created for effective sales of own products
	Profit	Income after deduction of expenses
4С	Customer needs and wants = Product	Consumer needs that are satisfied by purchasing the company’s goods
	Cost to consumer = Price	The cost of purchasing the product

The data in Table 1 demonstrate that each of the units, added to content, inherently includes those elements that were previously part of the “4P” marketing mix and reflects the relationships between its components.

Thus, the elements of Personnel, People, Process, Physical Evidence, Perceptual Psychology, Probe Public, and Package characterize the Product. Profit is included to Price, Physical Premises – to Place, Publicity, Purchase, Package, Public Relations, and Physical Evidence – to Promotion. The “4C” concept reflects the consumer’s perception of the manufacturer’s marketing mix, allows analysts to shift their focus of perception, and contributes to the formation of the integrity and systemic vision of the object under study.

The study results argue that the development of the marketing mix should ensure the release of goods satisfying the needs of a specific group of consumers. The set of marketing tools comprises research of the current features of the market, product policy, pricing policy, distribution policy, communication policy, and marketing strategy.

Today, the brewing industry is one of the most investment-attractive sectors of the economy. Despite the difficult economic situation in Ukraine, the brewery market is developing dynamically. Investing in the brewing industry is promising, as beer is in high demand among consumers and its production is profitable [3].

The modern beer market is also developing dynamically. Foreign big companies invest a lot of money in the brewing industry of Ukraine because brewery in Ukraine is a profitable business. There is always fierce competition with powerful manufacturers, especially at the level of defending the company’s interests at the legislative level and in the information segment. For decades, the range of beer products has been expanding by creating new recipes of malt, kvass, and exclusive branded beer brands for retail chains [9].

Compared to the European countries, the Ukrainian beer market is quite young and open to experiments. Beer consumption in Ukraine today reaches only 65 liters per capita. It is significantly lower than beer consumption in European countries (in the Czech Republic, this indicator reaches 125 liters, and in Germany – 180 liters). According to the KOLORO agency data, Ukraine currently produces 20 licensed brands of beer, about 400 native brands of beer, and exports the hoppy drink to more than 40 countries [5].

In the structure of sales of food industry products, the share of beer and soft drinks is over 20%. In recent years, there has been a decline in beer production by 1.5-3% annually. It is important to note that recently, a sufficient amount of foreign funds has been invested into the industry, the equipment has been modernized, and the marketing policy has improved significantly. However, the volume of beer sales in Ukraine is gradually decreasing.

To improve the current situation in the industry, enterprises need to expand the range of beer products by differentiating them, namely, increasing the production of malt, kvass, and exclusive branded beer for sales. If effectively applied, such measures will allow brewers to increase their share in the domestic market by 1-2%.

In the pre-coronavirus pandemic period, craft beer producers were quite serious competitors to big breweries. The main consumers of their beer were tourists and the local population of the regions where production facilities were located. Such craft beer producers were not represented in big supermarkets and only to a limited extent in other retail outlets. The products were mainly sold in the local entertainment clubs and other establishments. In the conditions of quarantine, these already small sales significantly decreased. As a result, most craft beer producers stopped their activities due to the lack of demand on the market.

According to the report of the General Director of PrJSC “Ukrpyvo” G.M. Korenkova (in terms of the expert assessments), the beer production volume in Ukraine (except nonalcoholic beer with an alcohol content of up to 0.5 vol. %) in 8 month period of 2023 amounted 92.3 million dals and was 108.8% as compared to the same period in 2022. At the same time, the specified indicator of beer production is only 75.4% of the volumes as compared to the similar eight-month period of 2021 [4].

Bringing alcoholic products to the market and promoting them is rather complicated task from the point of view of establishing the communication process. The advertising of alcoholic products is the sphere of the Black market (the “gray market” is a conventional designation for the advertising market sector whose participants are under strict legal restrictions). In the Dark Market conditions, when deciding to use online tools for advertising a product on the Internet, it is important to take into account the factors that can contribute to increasing the effectiveness of communication. Among them is the power of the idea and the brand, emotionality and expressiveness of communication, and positive attitude to the trademark. Considering these aspects allows us to conduct a dialogue with the consumer on conditions that can not be provided by ordinary offline communication due to the existing limitations [11].

The beer market of Ukraine, like the majority of domestic business entities,  is in a difficult economic situation. The biggest problem is the decrease in production and consumption of goods on the market. The current hostilities in our country, a difficult agrarian and raw materials situation, and the country’s difficult economic and political state are the factors that led to the decline of the Ukrainian economy and most of its industries. The main reason for it is the deterioration of the socio-economic situation in the country, the decrease in the purchasing power of citizens, as well as the Covid-19 pandemic.

The next important factor in the deterioration of the situation in the industry was the ban on the sale of alcoholic beverages, including beer, by the Decree of the President of Ukraine “On the introduction of martial law in Ukraine” No 64/2022, dated 24.02.2022. In many regions of the country, and from February 24 until the beginning of April, the sale of alcohol was prohibited throughout Ukraine. This was an economic blow to the enterprises of the industry. As a result of military operations, the activities of industry enterprises in 2022 had to switch from expensive to cheaper types of beer, activating consumer demand, and preserving assets and relationships with suppliers. In the current war conditions in the country, many producers of alcoholic products have stopped their activities altogether. Given this, the economic strategy of Ukrainians has also changed significantly. Ukrainians’ preferences are now more about basic necessities than alcoholic beverages. It should be noted that this has brought changes to every category of alcohol production and sale. Among all alcoholic beverages, sales of beer were the least affected. This is because weaker restrictions were imposed on beer sales and not in all regions of Ukraine. Beer has always been a seasonal drink. That is why in March and April, its sales were moderate. Sociological and statistical studies data testify that in times of crisis, the consumption of hard beverages/hard liquor increases. Consumers drink spirits as a product substitute for beer.

The legislative innovations also greatly influenced the development and functioning of the brewing industry in Ukraine, particularly, by equating beer with an alcoholic beverage, increasing the excise rate, and changing licensing and advertising conditions. As a result, this led to an increased regulatory and tax burden on brewers and made the brewing business unprofitable (since 2020). From 2018 to 2020, the domestic brewing business was one of the most developed sector markets with high export potential.

Note that beer sales in Ukraine have certain peculiarities related to seasonality. Usually, at the beginning of the season (around the middle of April), the local leading producer provides up to 70% of beer sales in the region. In May, beer from out-of-region producers begins to enter the regional market more actively. In the peak of the season (July-August), the share of a large local producer of beer is no more than 30-40% of total beer sales. Such dynamics can be explained by completely objective phenomena. In winter, beer sales fall four to five times compared to the warm time of the year, and it is unprofitable for wholesalers to import foreign beer in small quantities – the high cost of transportation will make it uncompetitive [10].

The consumer market is the main sales target. The products are delivered to a wide network of stores and supermarkets where consumers purchase them. According to the statistical data, the largest group of beer consumers are men aged 18 and over. Beer allows them to relax, take their mind off their problems, and cheer them up. Another sales market is the intermediary market. Enterprises sell large volumes of their products to intermediaries and wholesalers, who then sell them at their outlets. To attract new intermediaries, the company conducts special product presentations. The beer market has never been simple. It is constantly subject to compaction and price increases, like other alcoholic drinks. Thus, in recent years, there has been an increase in the excise tax, the levy on hop farming, a ban on the sale of beer in the evening and at night, and a ban on drinking beer in public places. The prospects of the Ukrainian beer market depend on the level of purchasing power of the population, the introduction of the latest energysaving technologies in production, which would ensure a decrease in the cost of the finished product, as well as the expansion of the assortment series due to the creation and production of new original brands of beer. Under such difficult conditions, manufacturers of low-alcohol drinks need to implement a competent marketing policy.

 In the market of alcoholic beverages, beer is in the greatest demand, mainly due to the effective marketing strategies of its producers, and primarily it concerns the marketing mix. The basis of these strategies is an offer of new interesting products with unusual tastes on the market, the financial stability of enterprises and their active policy in the field of branding, an offer of beer in different packaging and different capacities, creative methods of manufacturers in the field of traditional and Internet communications, and their adaptation to the specifics of various market areas.

Marketing management decisions are based on knowledge of principal marketing functions and a clear understanding of supervisory and management techniques and their application. Marketing managers and product managers conduct marketing management processes together. Customers can see the results of their  policies in the form of products quality, prices, advertisements, promotions, and the like. Marketing managers have to balance the importance of the benefits and solutions to the problems offered to customers and the profitability of certain customer groups. Every company has its own unique culture and traditions that can help or hinder the performance of the marketing function [13].

Conclusions. This study’s findings allow us to highlight the current trends in the development of the Ukrainian beer market. They are the following:

1. Decrease in consumption volumes and purchasing power of consumers.
2. Polarization of consumer preferences (growth of the economical type of consumption); decrease in the average price segment and relatively stable in the premium segment. Demand in the econom-segment is met mainly by small producers. Big breweries are gradually reorienting themselves to the production of premium products. Craft breweries form competition for them.
3. There is fierce competition between domestic factories and powerful companies, mainly foreign ones. The main tools of competitive struggle include direct lobbying of the companies’ interests at the legislative level, active utilization of innovations, marketing, and information and communication policy.
4. Non-alcoholic beer production is a stable segment of brewing. In the last decade, the volume of its production has even slowly grown, which is connected with the increase in demand due to popularizing a healthy lifestyle.

The study of the issue of marketing significance in brewing enterprises activities has revealed that the beer market in Ukraine is highly competitive and quite diversified in terms of the sellers’ potential, purchasing power, and tastes of consumers, which determines the possibilities and practical importance of implementing a wide range of marketing strategies by product manufacturers.

The marketing mix is being developed by taking into account the characteristics of every company’s product assortment. Therefore, the development of an efficient marketing strategy is extremely important for modern businesses when manufacturers have to produce goods that satisfy the needs of various consumers and, thereby, contribute to the company’s business success. It is hardly possible that even a high-quality product can find a large audience without a marketing strategy. That is why an active marketing policy and product quality are the two principal conditions for the efficient functioning and development of both craft breweries and giant brewing companies.

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