[SOLVED] I. Synopsis The UK-based company Diageo

I. Synopsis The UK-based company Diageo was formed through the merger of Guinness and Grand Met in 1997. Since July 2000, the company has increasingly concentrated its focus on its premium drinks business, spinning off food operations such as Pillsbury Co., which was sold to General Mills in 2001, and Burger King, which was sold in 2002.
Diageo bolstered its position in the alcoholic drinks market when it acquired some Diageo is a global company, trading in over 180 markets, and owns a broad range of alcoholic beverage brands across spirits, wine and beer, including Smirnoff vodka and Smirnoff FABs, Johnnie Walker, Guinness, Baileys, J&B, Captain Morgan, Cuervo Tequila, Tanqueray and Gordon’s gins and Beaulieu Vineyard and Sterling Vineyards wines.
The company has one major beer brand: Guinness, which is the world’s leading stout brand. As a result of this status, Diageo Plc’s beer performance is heavily reliant on the fortunes of the Guinness brand.
The main question in the Guinness case is: should Diageo continue the ‘milking strategy’ by withdrawing marketing resources (lowering costs) and increasing revenues (by increasing the end-consumer prices)?
II. Situational analysis (SWOT analysis)
Strengths:
High market shares in the special stout market. The Guinness brand is recognized throughout the world, even by non-consumers. It is one of only a few truly global beer brands, possessing a geographic coverage that spans all international regions…………………………………………………………..
1. How would you explain the Guinness pricing strategy and the underlying assumptions about consumer behaviour when Diageo reports for 2005 that in the UK and Ireland the Guinness sales volume fell by 3 per cent, but a value growth of 4 per cent was achieved in both markets, mainly due to price increases?
2. Motivated by the success of this pricing strategy should Diageo continue to increase the price of Guinness?
3. In Choueke (2006) an anonymous beer retail buyer comments on Guinness’ decreasing sales volume:
Guinness has an older profile of drinker and with an ever-increasing availability of continental lagers and a fast-growing range of alcopops, the younger generation of drinkers simply haven’t bought into it. Innovation – widgets and gadgets – will keep the brand alive for a while but where else can Diageo go? Flavoured Guinness? No thanks. It is in decline and Diageo’s best minds can’t do much about it. The brand may have only a couple of decades worth of life in it and I would milk it for everything before getting rid of it and concentrating on spirits.
Do you agree with this statement? Explain your reasons.
4. What elements of the Guinness international marketing strategy would you focus on in order to increase both global sales volume, value and profits?
5. What do you think about the ‘1759’ marketing idea? Should Guinness introduce more special edition beer brands with a limited lifetime for special occasions or as a gift product?

Question: I. Synopsis The UK-based company Diageo