not your father’s root beer
TRANSCRIPT
Not Your Father’s Root BeerMarketing Plan Report 2016
Melissa FrancoKenny Horne
Lee RoseMehmet S Gurtekin
Collin Horne
Table of Contents
1. Executive Summary pg 2-4
2. Product Statement 5-6
3. Environmental Analysis
3.1 External Environmental Analysis
3.1.1 Industry/Market Trends 7-10
3.1.2 Competitive Trends 11-19
3.1.3 Technological Trends 19-20
3.1.4 Economic Trends 20-25
3.1.5 Political, Legal, and Regulatory Trends 25-27
3.1.6 Societal Trends 27-38
3.2 Customer Environmental Analysis 39-41
3.3 Internal Environmental Analysis 42-44
4. SWOT Analysis 45-49
5. Issues Analysis 50-51
6. Marketing Goals and Objectives 52
7. Marketing Strategies 53
7.1 Target Market Definition 53-54
7.2 Strategy Statement 55
8. Marketing Implementation and Action Plan Outlines 56-74
9. Budget 75
10.References 77-80
1 Executive Summary
Main Issues the Brand is Facing
Small Town Brewery's Not Your Father’s Root Beer is a new product in a market
that has an extreme potential to grow and introduce new experiences to its
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consumers. There are issues that are causing Not Your Father’s Root Beer to grow
and become dominate in the craft beer market. These issues consist of not
enough marketing strategies are being conducted. The product is also in danger
of being mixed in with all of the other craft brews that are on the market and not
standing out in front to become the obvious choice for the consumer.
Since there are a few issues that need to be handled, we decided on a couple of
strategies that will fix the issues that face the product. We put in place a
marketing strategies that ensures the Not Your Father’s Root Beer to be able to
flourish in its primary market which consist of young adventurous adults who
are seeking that classic root beer taste with a twist of alcohol. The secondary
target market are also young adults 21-36 that either don’t try new beers too
often or they are oblivious that a product such as hard root beer even exist. There
is also the issue of a completely new sales region for the product because
currently the product is very popular in Illinois region.
Overall Strategies
After evaluating our target markets, we have created ten action plans that will
guarantee a solution to help fix the issues that face Small Town Brewery and its
product Not Your Father’s Root Beer. Our number one action plan is to offer a $2
mail in rebate for the Southeastern part of the United States, this in terms will
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create new customers and broaden the current sales region for the product. The
second most important action plan will consist of an national television ad
campaign, this will make Not Your Father’s Root Beer stand out amongst the
completion and become the superior craft hard root beer by giving a visual
reference to the target market it seeks to obtain. The third most important action
plan will be to implement internet based advertising, which this allows new
customers who are not usually exposed the traditional ways of advertising
media. These are just the top three action plans, we have created seven more
ways to better the company’s product, which entitles a better and more profitable
future for Small Town Brewery.
Budget Request and Expect Results
Our projected budget for the ten action plans will be $1,050,000. Even though this
sounds like a large sum of money to spend, if the company follows through with
the funding for these action plans, it is a guarantee that Small Town Brewery will
see a major increases in sales ten times the cost of all the action plans. New
consumers of the product will start to show up once they are exposed to it by our
advertising through television, the internet and even a $2 dollar mail in rebate.
We expect consumers to fall head over heels for this product once they
experience the taste and sensation that comes from the product. The only way
that any of this can happen is by implementing the ten action plans.
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2. Product Statement Overview
Founded by Tim Kovac in 2013, Small Town Brewery is a brewing company
located in Wauconda, IL. The company brews a handful of varying styles of beer
each year. However, this report will focus on what they are most well known for,
The 5.9% version of “Not Your Father's Root Beer”.
Product
Not Your Father's Root Beer, is a Hard Root Beer style Beer with an ABV of 5.9%.
The Beer is dark brown in color with a light brown soda style head when poured
or served on draft. It is a very aromatic beer, which consists of a Carmely vanilla
smell with some added spices. The aroma overall is not much different than that
of a sarsaparilla root beer
with a wiff of alcohol. The
flavor of the beer is very
sweet, and very similar in
taste to a sarsaparilla style
root beer with just a hint of
alcohol, which becomes
slightly stronger as one sips on it.
Packaging
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The packaging of not your father's root beer is mostly consistent with other
products in its category. The beer comes bottled in Dark brown 12 oz . glass
bottles or in 12 oz aluminum cans. Both bottling styles have the same base logo,
which consists a well designed logo next to a man with a cane dressed in a late
19th century suit standing next to an old style wooden cask. below this is the
contents and the ABV of the beer. The background of the logo is made to look like
an old wooden cask. The glass bottle version has one more label on the neck that
consists of the small town brewery logo. Both bottling styles of the beer come in
six packs, however the glass bottles are packed in a tall cardboard carrier and the
cans with plastic poppers. The cardboard carrier for the glass bottles has the
same logo design as the bottle. Unlike most other beer carriers the one for not
your father's root beer comes up to the neck of the bottle.
Price
Not your father's root beer varies little in price and can be found between $9.99
and $12.99 per a six pack. There is no price difference between the aluminium or
glass packaging.
Place
Small town brewery itself distributes not your father's root beer in Illinois and its
bordering states. They have contracted production and distribution to several
other breweries throughout the United States in order to meet demand. Not your
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father's root beer can usually be found in most supermarkets, liquor stores, and
in some gas stations.
3.1 Environmental Analysis
3.1.1 Industry/Market Trends – Not Your Father’s Root Beer
The “hard soda” malt beverage or alcopop category has been marketed as an
alternative to traditional beer since 1993, with the introduction of Zima by Coors.
Coors originally had some success as nearly half of American households
sampled their offering, but it came at a significant cost as they spent nearly $50
million marketing their offering. Shortly after, Miller introduced Qube, Stroh’s
offered Clash, and Smirnoff launched Smirnoff Ice which by 1995 became the
market leader. However, the product market share did not continue to grow – in
fact it contracted as this segment became perceived as “girly drinks” and Zima
was discontinued in 2008. (Koener, Brendan – November 26, 2008. “The Long,
Slow, Torturous Death of Zima”
http://www.slate.com/articles/life/drink/2008/11/the_long_slow_torturous_death_o
f_zima.html).
In 2013, Small Town Brewery launched Not Your Father’s Root Beer
(http://smalltownbrewery.com/our-beers/) in the Chicago area. It has been
important for Small Town to market themselves as a “craft” beer. According to a
Nielson study (Nielson 7-14-2015 - “Trapped In: Craft and Local are Powerful
Trends in the Beer Aisle” http://www.nielsen.com/us/en/insights/news/2015/tapped-
in-craft-and-local-are-powerful-trends-in-the-beer-aisle.html), the word “craft”
motivates beer purchases, especially amongst young men. The study concluded:
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“35% of adults 21 and older say they’re more interested in trying an adult
beverage labeled craft. Among men 21-24, that figure jumps to 46%.” Since Small
Town Brewery’s customers are mainly Millennials, this strategy seems to be
paying off as they have experienced enough success to attract much larger
partners – Phusion and Pabst Brewing Company.
With the power of Pabst’s distribution arm behind them, what was once a local
tavern favorite has become available in thirty-eight states and per Pabst’s
website, soon to be available in all fifty states. Through the first half of 2015,
NYFRB has racked up $7.2 million in sales ranking it among the top 30 craft beers
(IRI data cited by Beer Marketers Insights in June 2015). In terms of sales, you’d be
hard-pressed to find a bigger stand-out in the beer category than craft. For
starters, higher-end priced products such as craft are driving most of the growth
across the overall beer market, but the total beer category growth has been
paltry. In fact, volume for the whole category grew just 0.6% for the 52-week
period ending June 20, 2015. Comparatively, however, volume growth of craft
beer for the same period was 10.2%.
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BEER CATEGORY TRENDS (Source: Nielsen Scantrack, 52 weeks ending June
20, 2015)
Sales Share Change Volume Sub-Category Value %
Change
Volume
% Change
Avg. Price
Indexed to
Total Cat
100% 100% TTL
Beer/FMB/Ciders
+3.3 +0.6 100
40.1 44.3 Premium -0.1 -1.0 91
16.0 22.9 Below Premium -2.0 -3.5 70
16.6 12.8 Imports +8.2 +6.3 129
9.9 7.8 Mexican Beer* +12.7 +10.2 127
11.9 7.6 Craft (including
domestic specialty
beer)
+13.8 +10.2 156
6.5 4.5 FMB +5.6 +5.9 145
5.8 4.9 DM Super Premium +1.2 -0.1 117
1.5 0.9 Ciders +43.9 +43.2 158
At the end of June 2015, craft beer accounted for 11.9% of the total dollar volume
of the beer category in the U.S. It’s worth noting, however, that craft’s market
share varies significantly by channel. For example, it has a much larger share in
the grocery channel (20.1%) than the convenience (4.6%) and drug (8.7%) store
channels, largely because grocery stores have significantly more floor space
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available, which allows for greater assortment and options for consumers. That
said, however, the convenience channel holds the title for being the leader for
overall beer sales, and craft is making a strong run there, growing at a faster pace
in the convenience channel (+21.4%) than in grocery stores (+13.7%) for the 52
weeks ending June 20, 2015.
Per The Brewers Association (www.brewersassociation.org), the 2014 numbers
indicate a stable growing trend for craft beers (see chart below).
NYFRB is a very successful example of a beverage trend we can expect to
continue in the future.
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3.1.2 Competitive Trends
While the overall beer market is relatively flat with minimal growth, the hard
soda and craft beer industry is positioned in an extremely competitive and
steadily growing market. There are four major categories that the competition
can be broken into:
i. Brand Competitors – Brand competitors are companies that deliver very
similar products that target the same customers. On a small scale, two
competitors have already emerged, but on a larger platform, MillerCoors has
announced that they will be launching their own brand of hard sodas in early
2016. The line will debut with two flavors, Henry’s Hard Ginger Ale and Henry’s
Hard Orange Soda as a way for MillerCoors to target Gen Xers who grew up
drinking soda (and the overall nearly $20 billionw dollar market).
Coney Island Hard Root Beer
(www.coneyislandbeer.com/hard-root-beer) was started
in 2007 in Coney Island, NY by Jeremy Cowen of Shmaltz
Brewing Company. Mr. Cowen is known for brewing
several award winning lagers under the Coney Island
Lager label. In August 2013, the company began
expanding their offerings and entered the market with
Coney Island Hard Root Beer. Coney Island Brewery is a
subsidiary of Boston Brewing Company. Coney Island’s products are sold in 12
packs of 12oz cans and 6 packs 12oz bottles. Average price is approximately
$0.13 per ounce.
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Strengths: Part of the Boston Brewing family and potentially leveraging the
momentum from other brands in that portfolio (Sam Adams, Angry Orchard, and
Twisted Tea).
Weaknesses: Is viewed as a “me too” brand that is following the bandwagon
rather than leading it and has almost zero momentum (The Battle for Hard Root
Beer Dominance Has Begun by Arthur Palac August 2015). Very little marketing
efforts.
Sprecher Brewing Company (www.sprecherbrewery.com)
was founded in 1985 in Milwaukee, WI by Randall
Sprecher, formerly a brewing supervisor at Pabst Brewing
Company. In 2013, they began brewing Fire Brewed Hard
Root Beer – “Not your Granddaddy’s root beer, or is it?”
Sprecher is sold in 4 and 24 packs of 12oz bottles. Average
price is approximately $0.12 per ounce.
Strengths: It is part of a diverse offering of craft and
seasonal products.
Weaknesses: The Company treats it as an ancillary “malternative” brand with
little market penetration and it can only be found in very few locations spread
across only seven states. Very limited marketing efforts.
ii. Product Competitors – Product competitors are companies that compete in
the same product class, but deliver different features, benefits and prices. Closely
associated types of non-beer alternatives are hard ciders, flavored malt
beverages, and wine coolers.
Hard Cider
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Hard ciders have been around for thousands of years – the pilgrims brought it to
America and hard cider was the market leader until it was passed by the beer
industry early in the 20th century. In 1991, Vermont based Woodchuck sprung up
and was largely unchallenged for the next twenty years. Within the next two
years Boston Beer Co, Anheuser Busch, MillerCoors and Heineken all entered the
market. By the end of 2014, cider sales have grown by over 75% when compared
to the previous year (see IRI data table below).
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While there are many players demonstrating significant
growth over the previous year, Angry Orchard was
introduced to the market in April 2012 by Boston Brewing
Company (http://angryorchard.com/#!) and quickly
dominated this market. Their commercial (Something a
Little Different) is at the following link: https://www.youtube.com/watch?
v=l5jR5PYdn44. Angry Orchard products are sold in 4 packs of 16oz cans and 6
packs of 12oz bottles. Average price is approximately $0.11 per ounce.
Strengths: BBC was able to leverage their success and relationships as a craft
beer maker and expand their offering. They are able to take advantage of a well-
established network of distribution channels and cider has a strong appeal to
women. AO marketing is also starting to venture into the rapidly growing
“Gluten-Free” market (their product label has “Gluten-Free” verbiage).
Weakness: Seen as a niche market and only represents less than 2% of the $19.6
billion craft market overall market and experienced a recent (August 2015)
product recall due to refermentation.
Flavored Malt Beverages
Malt beverages are hybrid brews, which are made like beer, but flavored to taste
like a cocktail. The categories share of the US beer market has doubled over the
past five years to nearly 4%, according to industry tracker Beer Marketer’s
insights. The drinks contain more alcohol than beer (8% vs. 5%) and are
designed to appeal to millennial drinkers, many of whom prefer sweeter
alternatives to beer. MillerCoors Marketing Director of Innovations Anup Shah
said the drinks give brewers a chance to steal share from wine and spirits. The
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market leaders are Anheuser Busch Light FlavoRitas, Mike’s Hard drinks, and the
Smirnoff product family.
Anheuser Busch Light FlavoRitas (www.budlight.com/our-
beers/lime-rita-margarita-twist.html) entered this market in April
2012 and quickly became the market leader in this segment by a
considerable margin. A sample of the commercial (All Night Long)
can be found at https://www.youtube.com/watch?
v=YdKs0DK98Lg. Flavo-A-Rita products are sold in 4 and 12 packs
of 8, 16, and 25oz cans and 6, 12 and single half-liter bottles.
Average price is approximately $0.25 per ounce.
Strengths: A steadfast commitment from a very deep pocketed owner to fully
support this brand (per Kantar Media, the advertising budget rose from $2.7
million in 2012 to over $12 million in 2014 and Tyler Simpson, Director of
Marketing for Bud Light Extensions was quoted “we are stepping up our
investment in the Ritas”.), an incredibly powerful distribution network, a
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dedicated pipeline introducing a steady stream of new flavors, a growing
consumer base for AB (women), and a sales and marketing department that is
creatively building the brand through a variety of media including recipe books.
Weaknesses: A fairly high price point per ounce compared to other competitors
(sold in 8oz cans) and in November 2014, a class-action lawsuit was filed against
Anheuser-Busch for allegedly falsely advertising several flavors of Bud Light Rita
malt beverages as “light” and low calorie beverages when they actually contain
significantly more calories and carbohydrates than any other AB alcoholic
beverages (Cruz et al v. Anheuser-Busch LLC, Case No BC563150, Superior Court
of California in the County of Los Angeles).
Mike’s Hard Lemonade Company
(http://www.mikeshard.com/en/home) entered the US
market in April 1999 (Canada in 1996) and quickly
became the market leader. However, they have seen
considerable share erosion to their “Hard” line both
externally to Anheuser Busch ‘Ritas and internally to their “Harder” line. Their
most recent commercial (Bikini Bear in Vegas) can be viewed at
https://www.youtube.com/watch?v=4_r_XnF232M. Mike’s Hard products are sold
in 4 packs of 16oz cans and 6, 12 and 24 packs of 12oz bottles. Average price is
approximately $0.14 per ounce.
Strengths: A robust product mix not only in flavor, but also in alcohol and caloric
content. Mike’s employs a driven digital marketing campaign with considerable
social media buzz particularly their active “Gluten-free” campaign. Mike’s also
has a strong foothold in the female demographic segment
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Weaknesses: Despite advertising attempts to make their product more
appealable to men, it is still largely perceived as a female’s choice of beverage.
Smirnoff Ice
(http://www.smirnoff.com/en-us/vodka/smirnoff-ice-
original-flavored-malt-beverage/) entered the US
market in May 2007. Despite the strong Smirnoff
vodka brand boosting their initial offering, Ice sales
have flattened and is slightly tailing off. Their latest
commercial (Less Sweet More Refreshing) can be
viewed at https://www.youtube.com/watch?v=OK24kSF_NzQ. Smirnoff Ice is sold
in 6, 12 and 24 packs of 12oz bottles. Average price is approximately $0.10 per
ounce.
Strengths: Smirnoff Ice has a strong foothold in the female demographic segment
and a strong international following based on the strength of their Vodka
products.
Weaknesses: It is still largely perceived as a female’s choice of beverage – in fact
the game “Icing” was created in which male drinkers are publically shamed if
caught consuming this product.
Wine Coolers - Traditionally an alcoholic beverage
of wine or fruit juice mixed with a carbonated
beverage, wine coolers were popular in the 1980’s
and 1990’s. However, in 1991 the US government
quintupled the tax on these products; popularity
declined over 95% with the corresponding severe price increases (Dr. Vino,
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September 2007). Despite drastically reducing their prices in response, the
manufacturers have not been able to regain their market share. There are still a
few manufacturers left i.e. Seagrams (www.seagramsescapes.com/) and Bartles &
Jaymes (http://www.bartlesandjaymes.com/home.htm). Seagrams Color Your
Girls Night commercial is at this link: https://www.youtube.com/watch?
v=b2rKm72iVsU. B&J has not released a commercial in over seven years. Coolers
are typically sold in 4 packs of 12oz bottles. Average price is approximately $0.10
per ounce.
Strengths: Still has a dedicated core market of consumers and a long standing
favorable reputation.
Weaknesses: Does not have a significant market share in the United States (less
than 21 million consumers per ISI).
iii. Generic Competitors – Generic competitors are those that provide very
different products that solve the same purpose for satisfying the same basic
20customer needs. In theory this is represented by the chart in 3.1.1 BEER
CATEGORY TRENDS (Source: Nielsen Scantrack, 52 weeks ending June 20, 2015).
iv. Total Budget Competitors – Total budget competitors are the ones that
compete for the limited financial resources of a customer. Since NYFRB is sold in
grocery stores including large chain distributors like Wal-Mart, it has a wide
range of total budget competitors ranging from apples to car tires.
3.1.3 Technological Trends
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Technology is evolving at an unprecedented rate and companies have to make
concerted efforts to stay abreast or risk falling behind and rapidly becoming
obsolete. In January 2015, Google published their annual “Top 3 Tech Trends
Marketers Should Watch in 2015”. This year the list is:
1. Connected Life Platforms are Emerging - As devices proliferate and start
to work together, connected objects will become platforms for your life.
They’ll help you with the things you do every day—from entertainment to
driving to taking care of your home. Connected objects will create more
data—marketers need to use it to create better experiences. Make
recommendations based on preferences. Tap into programmatic
technology to deliver relevant ads in real time. Use data-driven insights to
up your customer service game.
2. Mobile “shapes” the Internet of Me - Your smartphone is getting smarter.
As the hub for all these connected platforms, it can use lots of data to create
better, personalized experiences. The “Internet of Things” is becoming an
“Internet of Me”—all to simplify your life. The mobile device is the remote
control for our lives. Make sure consumers have a great experience with
your brand on their smartphone. Use context to make it even better—
content about their location, ads with local inventory, one-click ordering,
etc.
3. The Speed of Life Gets Even Faster - Online or off, we can now get
information, entertainment, and services in the exact moment we want
them. These quick moments of decision making happen constantly—and
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the more connected we are, the more they’ll happen. Consumers expect to
get what they want in the moment they want it. Companies need to think
about what this means for their business—24/7 customer support? On-
demand delivery? A more comprehensive keyword strategy? Make
interactions as fast, simple, and easy as possible and make sure they are
useful in all the moments that matter.
3.1.4 Economic Trends
Economic trends are a critical part of any marketing plan as the state of the
economy affects consumers’ willingness and ability to spend. This section will be
focused on several key indicators.
1. Employment Levels – The unemployment rate is one of the most closely
followed indicators, used by businesses, investors and private citizens to
gauge the health of the U.S. economy. Investor sentiment and consumer
confidence have strong inverse relationships with the percentage of
unemployed Americans. When the unemployment rate rises, investors
guard their money more closely and consumers become reticent, fearing
economic calamity. When the rate is low, people are more confident about
the economy, and it shows in their investing and spending patterns
(www.Investopedia.com). Despite what many people believe, the
unemployment rate is not measured by calculating the number of people
collecting unemployment insurance. In fact, the government comes up
with this number each month by following a process that more closely
resembles the U.S. Census. The unemployment rate is measured by a
division of the Department of Labor known as the Bureau of Labor
Statistics, or BLS. This government agency conducts a monthly survey
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called the Current Population Survey that involves 60,000 households.
These households are selected using random sampling methods designed
to generate as close an approximation as possible to the larger population.
Below are the latest statistics from the BLS:
Labor Force Statistics from the Current Population SurveyAge: 16 years and overYears: 2010 to 2015Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2010 9.8 9.8 9.9 9.9 9.6 9.4 9.4 9.5 9.5 9.4 9.8 9.32011 9.2 9.0 9.0 9.1 9.0 9.1 9.0 9.0 9.0 8.8 8.6 8.52012 8.3 8.3 8.2 8.2 8.2 8.2 8.2 8.0 7.8 7.8 7.7 7.92013 8.0 7.7 7.5 7.6 7.5 7.5 7.3 7.2 7.2 7.2 7.0 6.72014 6.6 6.7 6.6 6.2 6.3 6.1 6.2 6.1 5.9 5.7 5.8 5.62015 5.7 5.5 5.5 5.4 5.5 5.3 5.3 5.1 5.1
Based on these statistics, it appears that the population of the United States
is slowly re-entering the workforce and that this number will continue to
grow.
2. Income Levels and Consumer Confidence – Measures how optimistic or
pessimistic consumers are with respect to the economy in the near future.
The idea is that if the consumers are optimistic, they will tend to purchase
more goods and services. This increase in spending will inevitably
stimulate the whole economy. The University of Michigan's final reading
on the overall index of consumer sentiment came in at 87.2 in September,
down from a final 91.9 in September. It is the lowest figure in eleven
months. Consumer Confidence in the United States averaged 85.81 from
1952 until 2015, reaching an all-time high of 111.40 in January of 2000 and
a record low of 51.70 in May of 1980.
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While the short term period is trending downwards, consumer confidence
over the last five years is solidly up. Nevertheless, this bears monitoring
closely.
3. Gross Domestic Product (GDP) – Gross domestic product (GDP) is the
monetary value of all the finished goods and services produced within a
country's borders in a specific time period. GDP includes all private and
public consumption, government outlays, investments and exports minus
imports that occur within a defined territory. Put simply, GDP is a broad
measurement of a nation’s overall economic activity
(www.Investopedia.com). See US Department of Commerce
(www.bea.gov) statistics below:
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Per the US Department of Commerce, spending on services rose, notably on
health care and food services and accommodations. Spending on nondurable
goods also rose, as did spending on durable goods, notably on motor vehicles
and parts. Exports of goods also increased, notably industrial supplies and
materials. Business investment, state and local government spending, and
residential investment also rose. Over the last four years, 15 of the 16
quarters have demonstrated growth.
4. Inflation/Consumer Price Index (CPI) – CPI is the measure of the average
change over time in the prices paid by the consumer for the basic basket of
consumer goods and services. Below is the monthly index from Jan 2010
through August 2015 (www.bls.gov).
Consumer Price Index - All Urban Consumers1-Month Percent ChangeYears: 2010 to 2015Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
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2010 0.1 -0.1 0.0 0.0 -0.1 0.0 0.2 0.1 0.2 0.3 0.3 0.4 0.12011 0.3 0.3 0.5 0.5 0.4 0.0 0.3 0.3 0.3 0.1 0.2 0.0 0.32012 0.3 0.2 0.3 0.1 -0.2 -0.1 0.0 0.6 0.5 0.3 -0.2 0.0 0.22013 0.1 0.6 -0.2 -0.2 0.1 0.3 0.2 0.2 0.2 0.1 0.1 0.3 0.22014 0.2 0.1 0.2 0.2 0.3 0.2 0.1 -0.1 0.1 0.1 -0.3 -0.3 0.12015 -0.7 0.2 0.2 0.1 0.4 0.3 0.1 -0.1 0.1
Despite a dip at the end of 2014/Jan 2015, unfortunately, overall the
index has consistently experienced a slight annual increase.
5. National Average Wage Index- An index calculated annually by the Social
Security Administration (SSA) based on wages subject to federal income
taxes and contributions to deferred compensation plans. The National
Average Wage Index (NAWI) is used by the SSA in the indexation of
retirement and insurance benefits in the United States. This statistics
provides insight into the direction of wage trends, which can have an effect
on wage inflation, which could cause the fed to raise rates to curtail it.
Raising interest rates will have a negative effect on bond and equity
markets. Alternatively, if wage inflation seems to be decreasing, the Fed
may lower rates, which would have positive effects in the markets
(www.Investopedia.com).
Historical Real Median Household Income for the United States
Date US
2013 $52,250
2012 $52,117
2011 $52,306
2010 $53,469
2009 $54,541
2008 $56,290
2007 $57,006
2006 $55,978
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2005 $55,178
The current median household income for the United States is $52,250. Real
median household income peaked in 2007 at $57,006 and is now $4,756 (8.34%)
lower. This is not a good trend and will affect consumer’s disposable income if it
does not reverse its course.
Based on the data gathered from these different economic indicators, it appears
that the US economy is slowly clawing their way out of a recession as over the last
five years employment rates, the GDP, and customer confidence are up while
inflation and median household incomes have had little change.
3.1.5 Political, Legal, and Regulatory Trends
Health and other public concerns have generated detailed Federal and state
regulation of the sale and possession of alcoholic beverages, tobacco products,
and a wide range of other "controlled substances." The distinctive history of
Prohibition, repealed by the Twenty-First Amendment to the US Constitution,
gives particular complexity to the mix of Federal and state law governing alcohol.
Absent any specific regulation, these substances are treated like all other forms of
personal property. However, the general rights of property are subject to so-
called "police power" regulations of the state, local, and federal governments.
The regulation of alcohol is generally focused on "intoxicating beverages" with
the exact definition of "intoxicating" varying from statute to statute. In many
jurisdictions, it has been held that the list of liquors subject to regulatory or
prohibitive enactments, particularly when such a list is followed by an
expression akin to "or other intoxicating liquors" must be intoxicating in fact.
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Many statutes either refer to "intoxicating liquors" generally, or prescribe an
alcoholic percentage cut off. In Mississippi, it has been held that the prohibition
of the sale of alcoholic liquor does not apply to a beverage containing less than
two tenths of one percent (0.2%) of alcohol.
The police powers of the Federal government are limited to regulating matters
which are connected with one of the powers expressly granted to the government
by the U.S. Constitution, and which do not infringe on the police powers of the
states. This means that the Federal government lacks the power to regulate liquor
sales by one citizen to another within the territorial limits of a given state, or to
prescribe liquor-related business within any state. Because of the commerce
clause, however, the Federal government can and does regulate the importation
and interstate transportation of intoxicating liquors; see the Federal Alcohol
Administration Act of 1935, 27 U.S.C. §§ 201 et seq. The federal government also
has the power to regulate liquor sales in D.C., and where it has exclusive
authority such as on government owned military reservations, and with Indian
tribes. In all other situations, the state's' police power controls alcoholic beverage
law. The federal government has, however, used financial incentives built into its
funding of highways to establish a national minimum drinking age. See 23 U.S.C.
§ 158 (https://www.law.cornell.edu/wex/Alcohol).
Industries such as alcoholic beverages, tobacco, and gambling are burdened with
heavy taxes by the government. Often called sin taxes, these taxes are imposed
on products or activities that are considered socially undesirable. The alcoholic
26
beverage industry is subject to high excise taxes at both state and federal levels.
The state excise tax varies considerably from state to state. For instance,
Washington imposes the highest excise tax on spirits at $35.22 per gallon,
compared to $12.80 in Alaska.
3.1.6 Societal Trends
1. Demographic Trends - As of September 12, 2015, the United States has a total
resident population of 322,000,000 (http://www.census.gov/popclock/). The
American population almost quadrupled during the 20th century—at a growth
rate of about 1.3% a year—from about 76 million in 1900 to 281 million in 2000.
In 2014, the US population growth increased at a rate of 0.75%
(http://www.census.gov/). Though high by industrialized country standards, this
is below the world average annual rate of 1.1%
(www.cia.gov/library/publications/the-world-factbook/fields/2002.html).
27
Age - The US is getting older – the median age of the population has increased
from 29.5 in 1960 to 37.7 in 2014. Per the US Census Bureau, this trend indicates
that it will continue. Life expectancy for newborns has increased substantially
over the past 80 years, from 57.1 years for infants born in 1929, to 78.8 years for
babies born in 2012.
Gender Composition - Per the Census Bureau, in 2010 there were over 156.9
million women and over 151.8 million men (50.8/49.2 ratio); this was slightly
different than 2000 (50.9/49.1) ratio.
Ethnic Diversity – As of 2013, Whites constitute the majority of the U.S.
population, with a total of about 77.7% of the population. Hispanic and Latino
Americans accounted for 60% of the national population growth of 89.2 million
between 1980 and 2013. However, according to the Pew Group, by 2065, there
will be 441 million people in the United States and that almost 90 percent of that
28
growth will be from immigrants and their kids with the biggest pool of those
immigrants – 38% will be not Hispanic, but Asian
(http://www.pewhispanic.org/2015/09/28/modern-immigration-wave-brings-59-
million-to-u-s-driving-population-growth-and-change-through-2065/).
Education – From preschool through graduate school, it appears no one is
satisfied with the state of American education. Parents have pushed back against
new standards for English and math. Teachers have protested what they see as
an overemphasis on testing and an unfair link between scores and performance
evaluations. Over the last thirty years, the recognition of the importance of
education is readily evident (see chart below) as the overall college enrollment
has increased nearly 16%. However, college tuition continues to inch upward
29
and completion rates have sagged. All the while, historically left-leaning teachers
unions and GOP lawmakers criticized the federal government for its increased
oversight of K-12 and college education
(http://www.usnews.com/news/blogs/data-mine/2014/12/01/report-too-much-
freedom-hurts-college-graduation-rates).
30
Family Structure – Less than half of children in the US live in a traditional model
in which they live in a home with two married heterosexual parents in their first
marriage. Americans are delaying marriage, and more may be foregoing the
institution altogether. At the same time, the share of children born outside of
marriage now stands at 41%, up from just 5% in 1960. While debate continues as
to whether divorce rates have been rising or falling in recent decades, it’s clear
that in the longer term, the share of people who have been previously married is
rising, as is remarriage (http://www.pewresearch.org/fact-tank/2014/12/22/less-
than-half-of-u-s-kids-today-live-in-a-traditional-family/).
31
32
2. Lifestyle Trends – There are several areas in which people’s lifestyles are
evolving – both good and bad. One is the increase in sedentary lifestyles due to
the advancement of technology and the ease of doing it all from a desk and the
prevalence of quick fast meals based on convenience rather than nutritional
value. More than one-third (34.9% or 78.6 million) of U.S. adults are obese and
the estimated annual medical cost of obesity in the U.S. was $147 billion in 2008
(http://jama.jamanetwork.com/article.aspx?articleid=1832542).
A second and conflicting (or relating depending on the individual) trend is an
increased interest in exercise and healthy eating. In a January 2015 Nielson
33
study, Nearly half (49%) of global respondents in Nielsen’s Global Health &
Wellness Survey consider themselves overweight, and a similar percentage (50%)
is actively trying to lose weight. And they’re doing so by making more healthful
food choices— with help from food and beverage companies. Manufacturers are
reformulating products to eliminate or reduce the sugar, cholesterol, Trans and
saturated fat and sodium content of food. They’re moving away from artificial
ingredients and introducing products high in desirable attributes like fiber and
protein. Three quarters of global respondents who are trying to lose weight plan
to change their diet, and nearly as many (72%) plan to exercise.
One third major area is the concept of sustainability. People are looking for ways
in which they can be more environmental responsible – whether it’s the vehicles
they drive, the house they live in or even the products they consume. In fact,
according to a Nielson studies, growing number of consumers are even willing to
a pay a premium to help achieve this (http://www.nielsen.com/us/en/press-
room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-
is.html).
34
3. Cultural Values Trends – Americans cultural values are shifting – largely
towards being more tolerant of behaviors that were considered taboo in the
recent past and curtaining behaviors that may be harmful to others (smoking in
public places). One area is the legalization of marijuana – not just for medicinal
purposes, but recreational use in several states and inclusion on the voting ballot
on several more.
35
A second area of tolerance is acceptance of same sex marriage. On June 26th, the
Supreme Court made a ruling that states cannot ban same sex marriage and that
married same-sex couples will now enjoy the same legal rights and benefits as
married heterosexual couples and will be recognized on official documents such
as birth and death certificates.
A third is the ease and prevalence of viral media. Everyone with a smart phone
now has the capability of not only capturing news (and bad celebrity behavior) as
it occurs, but also they can create it and spread it globally in an instant. While
this country was founded and has always been critical of government abuse, in
today’s environment information enters the public forum much easier than any
other time in history and as a result there is a rising tide of outrage regarding the
lack of accountability with both the Federal and State governments. Hillary
Clinton’s role in Benghazi and her cavalier attitude towards e-mail security, Eric
Holder and the Fast and Furious gun deals with Mexican drug cartels, Edward
36
Snowden’s exposure of the NSA’s flagrant overstepping of their legal charter and
violation of US citizens personal privacy as well as spying on “trusted” allies, the
IRS’s targeted audits of Democrat opponents, John Kerry’s nuclear deal with Iran,
the Department of Veteran Affairs mismanagement and the fact that more than
238,000 of the 847,000 veterans with pending applications for health care through
have already died. President Obama has failed to curtail the expansion of ISIS,
negotiated with terrorists in the exchange of a deserter for known enemy
combatants, not supported laws regarding immigration or the second
amendment, increased racial tensions by jumping to conclusions before
considering the facts with Trayvon Martin and the Ferguson shooting, failed to
regulate big banks, issued numerous “shady” executive orders, openly
disregarded the constitution and not only excused or pardoned these behaviors,
but some would say by his actions – encourages them.
3.2 Customer Environmental Analysis
37
Who Are Our Customers?
Not Your Father’s Root Beer is sold in 30 states and is one of the fastest-selling
new craft beers, according to Nielsen data.“Clearly there is a consumer right now
that is clamoring for this,” said Bob Sullivan, who is the president of craft beer
sales for Andrews Distributing. Customers who purchase unique craft beer range
from those who do not typically enjoy the taste of beer to those who are craft
beer enthusiasts. Not Your Father’s Root beer is requested by thousands of people
around the country. The beverage appeals to young drinkers under age 35, who
prefer a lighter more sweet beer. This beer is obviously not meant for those that
do not like root beer soda or people who don’t enjoy sweet beverages. The age
group can vary from newly 21 year olds who cannot tolerate the taste of real
alcohol quite yet, to older people who drink it for the nostalgia of their youth.
Through a random sample of 34 people who have tried this beverage, 91.18%
were 21-35 years of age and 67.65% were females. These results reveal that the
average age of our customers are between 21 and 35.
Why Do Customers Buy Our Product?
38
According to Nielsen data Not Your Father’s Root beer was a top-selling beverage
in craft beer, outselling all traditional beers in Buffalo-Rochester market.
Customers buy our product because they are interested in trying something new
with a taste that is familiar. Customers appreciate a craft beer that is inspired by
traditional brewing and recipes that were passed over two decades. People who
purchase this product regularly are seeking that classic root beer taste with a
twist of alcohol. Some people try this beverage to mix it with ice cream and create
a twisted root beer float. For example, Jdub’s Brewing Company held an official
Not Your Father’s Root Beer float event. Many customers really enjoy the thrill of
trying something new and can appreciate Tim Kovac’s innovative twist on craft
beer and soda.
How Do Customers Buy Our Product?
Customers purchase this craft beer from a
range of channels such as local bars or
restaurants, liquor stores, grocery store
chains, and gas stations if carried. From a
recent survey given to a random sample of 34 people who sampled this beverage
the results were as follows; 58.82% of people purchased at a supermarket, 20.59%
39
purchased at a liquor store, 11.76% purchased at a bar/restaurant, and only
8.82% were not purchased at all. The majority of people bought this craft beer at
a grocery store.
Why Non-customers?
Non-customers may exist because they do not drink alcohol or they do not enjoy
the taste of root beer soda. These are just preferences that different people may
have and occur with any gender or age group. The switching cost are not high for
customers to try new craft beers. However, some customers do need to become
familiar with the product and decide if they like or dislike the taste. This product
is fairly new to the craft beer market and it may discourage some customers from
trying or switching to this product.
3.3 Internal Environmental Analysis
Management/ Leadership
40
The management of Small Town Brewery is growing and changing at an
extraordinary rate due to the quick growth of the company. At the moment they
are hiring Regional Managers that are very motivated and willing to take the
company into a whole new level of success and growth. The managers currently
working for Small Town Brewery hold the same values near and dear to them
because they want the best for the company.
Firm Culture
The atmosphere of Small Town Brewing Company is all about staying true to
their traditions and keeping a passion for brewing that runs through their blood.
Since this company is making specialty beer that utilize unique ingredients with
an unmistakable taste of nostalgia, it is almost certain that this company is all for
the experience and taste that comes from their beer.
Financial Performance
Although Small Town Brewing is a relatively new entity to the market, financially
the company did start off very weak, but it continued to grow as word-of-mouth
about the product spread amongst the beer conosors. Today it is a rather
profitable company due the fact that it is the number one selling hard root beer
in America. From when the beer hit the shelves to this past July, Not Your
Father’s Root Beer sales totaled $8.1 million, according to IRI data cited by The
Wall Street Journal. This new company is growing exponentially, in doing so it is
creating a lot of commotion in the beer industry by exceeding the sales of larger
41
rivals such as New Belgium, Sam Adams, and Sierra Nevada. In terms Small Town
Brewing is taking a large chunk of the market share for specialty craft “soda
flavored” beers.
Production Capacity
When Small Town Brewing Company started, they had a limited amount of
product that they could make due to multiple variables, such as not enough
bottling equipment, not enough workers, and not nationally known. In the first
quarter of 2015 Small Town Brewery got a major boost in production from a
42
distribution agreement with Pabst Brewing, which they would be taking the
beverage national. It began selling the beer in March 2015 and the beverage is
now in 38 states, some retailers are reportedly having trouble keeping it in stock,
even Pabst said none of the retailers or distributors can keep it in stock. This in
terms has caused a major boost in the production of the beer by creating a larger
and more efficient capacity to produce the much desired beer.
43
4. SWOT Analysis
STRENGTHS: WEAKNESSES:
- Strategic partnership with
Pabst Brewing Company
- Production Capacity
- Market leader in Hard Root
Beer category
- Rapid growth has led to many
new people in key leadership
positions
- Culture founded on
“traditional” values
- Overall industry/product
awareness
OPPORTUNITIES: THREATS:
- Market expansion including
international opportunities
- Entry of major companies into
this specific category (Anheuser
Busch, MillerCoors and Sam
Adams)
- Craft beer market is the driving
most of the growth in the alcohol
market
- Overall total beer market
performance is flat
- Introduction of other flavors
and/or alcohol concentrations
- Category history has history of
short term-success and long-term
failure (Zima)
44
A. Strengths
The strategic partnership with Pabst Breweries has enabled what was once
only a local tavern favorite to quickly become available in thirty-eight states and
per Pabst’s website, soon to be available in all fifty states. This will allow Small
Time Brewery to compete beyond the local environment.
Through the first half of 2015, NYFRB has racked up $7.2 million in sales
ranking it among the top 30 craft beers (IRI data cited by Beer Marketers Insights
in June 2015) and number one for hard root beers. This position has been well
earned and indicates fairly rapid growth and that the company is building its
brand accordingly.
Founded by Tim Kovac in 2011, Small Town Brewery is a brewing company
located in Wauconda, IL and the atmosphere of Small Town Brewing Company is
about staying true to their traditions and keeping a passion for brewing that runs
through their blood. Since this company is making specialty beer that utilizes
unique ingredients with an unmistakable taste of nostalgia, it is almost certain
that this company is all for the experience and taste that comes from their beer
and will not compromise their standards in order to save a few dollars.
B. Weaknesses
As with many small start-ups, Small Town initially only offered their
product locally. As the company has grown, distribution has increased to a level
where it now available in 38 states. However, several retailers and Pabst
distribution have reported difficulties keeping it in stock.
The management of Small Town Brewery is growing and changing at an
extraordinary rate due to the quick growth of the company. At the moment they
advertise that several Regional Managers positions are open to motivated
45
individuals willing to take the company to a whole new level of success and
growth. while Small Town Brewery is looking for candidates that hold the same
values, this will bear watching to ensure the brand does not get compromised.
At the end of June 2015, craft beer accounted for 11.9% of the total dollar
volume of the beer category in the U.S. The hard root beer portion of this market
represents less than 2% of the total annual US sales and needs to grow
substantially in order to secure its position as a beverage of choice.
C. Opportunities
In a relatively small time period, Small Town Brewery has experienced
enough success to attract much larger partners – Phusion and Pabst Brewing
Company. This opportunity provides Small Town the ability to leverage their
relationships in a variety of ways including acquiring capital, gaining industry
expertise and access to distribution channels that will facilitate growth and
expansion, widespread domestic and possibly international distribution and
potentially production improvements leading to greater efficiencies.
In terms of sales, you’d be hard-pressed to find a bigger stand-out in the
beer category than “craft”. While the total beer category growth has been paltry,
higher-end priced products such as craft are driving most of the growth across
the overall beer market,. In fact, volume for the whole category grew just 0.6%
for the 52-week period ending June 20, 2015. Comparatively, however, volume
growth of craft beer for the same period was 10.2%. Small Town can expect to
gain significant market share by fulfilling a substantially growing consumer
demand for an unique quality beverage.
While Small Town only offers a root beer derivative, companies such as
Sam Adams, Anheuser Busch, and Mike’s Hard products have demonstrated
growing consumer demand for variety is a significant force in the market. Small
46
Town could easily expand their offering to include other flavors i.e. Ginger,
Creme, Birch, Sassafras, etc. Another consideration is for Small Town to
permanently offer NYFRB in stronger alcohol concentrations as they have
enjoyed considerable success with a limited offering 10% alcohol volume or
possibly a “Light” low calorie version.
D. Threats
On a small scale, two competitors have already emerged, but on a larger
platform, MillerCoors has announced that they will be launching their own brand
of hard sodas in early 2016. The line will debut with two flavors, Henry’s Hard
Ginger Ale and Henry’s Hard Orange Soda as a way for MillerCoors to target Gen
Xers who grew up drinking soda (and the overall nearly $20 billion dollar
market). Companies in the hard cider and/or flavored malt beverage market
(Sam Adams and Anheuser Busch) could also expand into this market as the
rewards of growing this market become substantial enough to warrant their
attention. While the overall hard soda market will benefit from the additional
attention and advertising that a major corporation like MillerCoors brings, it
could very easily steal customers from Small Town.
The overall total beer market grew only 0.6% in 2014. while some
companies have seen significant growth in their lines, it has largely been a
reallocation of consumer dollars from one product to another rather than
industry growth. As the US economy strengthens, it is reasonable to expect the
industry to correspond accordingly and grow with it - particularly in premium
products.
The “hard soda” malt beverage or alcopop category has been marketed as
an alternative to traditional beer since 1993, with the introduction of Zima by
Coors. Coors originally had some success as nearly half of American households
47
sampled their offering, but it came at a significant cost as they spent nearly $50
million marketing their offering. Shortly after, Miller introduced Qube, Stroh’s
offered Clash, and Smirnoff launched Smirnoff Ice which by 1995 became the
market leader. However, the product market share did not continue to grow – in
fact it contracted as this segment became perceived as “girly drinks” and Zima
was discontinued in 2008. Small Town will need to remain focused on its
primary focus of providing an unique alternative to Millennials and not allow
itself to be “pigeon holed” as gender specific.
48
5. Issues Analysis
Expanding Availability
Despite Not Your Father’s Root Beer flying off the shelves, it is not readily
available to all of the United States. Although it has been very difficult to
purchase in local markets, there are no signs of the sales slowing. The beer has
also appealed to non-beer drinkers. They are moving off the shelves so fast, that
they are unable to meet the consumer supply and demand. This has forced Not
Your Father’s Root Beer to partner up with Pabst Distribution who also
distributes 30 other kinds of beers. This partnership promises to better distribute
Not Your Father’s Root Beer nationwide; therefore, becoming more obtainable to
the demanding market. The distribution should go beyond just Pabst- Not Your
Father’s Root Beer should engage other suppliers.
Advertising
Not Your Father’s Root Beer is known mostly by beer enthusiasts. Most of
their advertising is through blogs and websites. To further reach other audiences,
they should start advertising products in commercial form on televisions to help
target diverse backgrounds.
Currently, the packaging of the beer only comes in a 6 pack. These should
be made into 12 packs to appease to larger crowds or heavier beer drinkers. In
addition to the size, the packing is not eye-catching and doesn’t stand out. It looks
cheap-looking compared of the other beers. Not Your Father’s Root Beer’s
49
marketing team should better present the product in a way to grab even the non-
beer drinker’s attention. Some ideas can be a better logo, colorful label or slogan.
Different Beer Drinkers
Not Your Father’s Root Beer should also target health conscious drinkers
who are more aware of their caloric/carb intake. By developing a light version of
the beer, they can expand their audience beyond that of regular drinkers. This
will also give them market differentiation from the other root beer producers.
6.0 Goals and Objectives
Goals
➢ To significantly increase brand awareness for NYFRB
50
➢ To become a leader in the Craft Beer Category
➢ To increase NYFRB’s product availability in multiple markets
Objectives
➢ Exhibit at the National Craft Brewers Conference/Brew Expo America
(Philadelphia May 2016) as well as several regional exhibitions (SAVOR,
Great American Beer Festival) and increase overall promotional activity by
at least 20% in 2016
➢ Increase gross sales of NYFRB by 20% annually
➢ Expand NYFRB Bomber (10.7% alcohol vs. 5.9%) product offering beyond
“Limited Availability” to “Year Around” in 2016
➢ Leverage relationship with Pabst distribution to make NYFRB available in
all 50 states and select foreign markets by year end 2016
51
7 Marketing Strategies
The target market that Not Your Father’s Root Beer will focus on will be men and
women age 21 through 36. We can make these men and women loyal customers
by offering a unique and familiar taste that is unlike any other craft beer on the
market.
7.1 Target Market Definition
After further investigation of what Not Your Father’s Beer target market, it is
found to be a beer for adults, male and female, from the age of 21 through 36 who
have love for craft brew beer.The market segment of men and women for the age
of 21 to 36 who love beer is thought to be between 30 million and 35 million
people within the United States. This brew caters to the true beer connoisseurs
that typically are in the early stages of the family life cycle, with a family size of
one to three people. The income for this target market will average around
$45,000, with a good portion of that money being used for recreational use to
purchase alcohol and try new beers such as Not Your Father’s Root Beer.
The lifestyle of the primary target market group would be an actively social
group who are ready to try new things and have an interpersonal outgoing
personality. Even though this target market drinks new type of beer, that doesn’t
keep them from being active or athletic as well. When purchasing this beer for an
occasion, we found that our target market will be buying Not Your Father’s Root
52
Beer for a friend’s or coworker’s birthday party. The usage rate of this product
from our target market would be medium use due to the fact they are drinking
our product on the weekends or when they are being social with friends. We also
find the primary group to have an attitude of loyalty to the product because of
the fact that it fits perfectly into their active social lifestyle
The secondary target market are also young adults 21-36 that either don’t try new
beers too often or they are oblivious that a product such as hard root beer even
exist. They have the about the same attributes as the primary target market,
except that they are less socially active and are not as eager to try a craft beer.
53
7.2 Strategy Statement
Not Your Father’s Root Beer brings a new take on traditional root beer by adding
a little kick to it. This creates a new experience for the consumer and opens their
mind to try new and amazing brews such as Not Your Father’s Root Beer.
Product Not Your Father's Root Beer
Target Market Men and Women ages 21-36
Benefits Brings a unique take on traditional Root Beer
Price The prices ranges from $9.99-$12.99
Value Proposition Not Your Father’s Root Beer offers a alcohol take on the traditional root beer and turns it into a craft brew. This creates an adult and fun way to enjoy a favorite pastime drink from the consumers childhood. The hard root beer is brewed with passion and the desire to be the best craft hard root beer on the market.
8. Marketing Implementation - Action Plan Outlines
The action plans that are going to take place will be explained in the upcoming
pages. To become the best craft hard Root Beer, it is crucial that Small Town
Brewing should consider the order of the action plans and execute them
properly.
54
Action Plan One: $2 Mail in Rebate in Southeastern U.S.
Objective: Attract new customers in the southeast who have not yet tried the
product as well as increase sales with current customers. It will also provide
marketing research data for future marketing campaigns.
Target Market: Men and women age of 21 to 36
Description of the Program: This plan will require attaching the promotional
rebate coupons to the products packaging. The coupons will be on 6-packs of not
your father's root beer that are sold at the following stores: Publix Supermarkets,
Kroger Supermarkets, Total Wine, ABC Liquor. It will also require aisle endcap
placing in Publix and Kroger stores.
Who: The Small Town Brewery marketing department will be responsible for the
design of the rebate coupon. The Small Town Brewery sales rep for the southeast
will be responsible for coordinating the displays with each of the retailers.
360incentives rebate processing service will be responsible for fulfilling the
rebate coupons:
360incentives30 Galesi Dr.#104Wayne, NJ 07470United States1.888.665.4927
Timing: The rebate program will start on June 1st 2016 and last until July 31st
2016. The rebate coupon will be good through October 1st 2016.
Budget: $43,500
Coupon printing: 10,000 Coupons x ¢25= $2,500
Promotional product placing: $3,000
Max Rebate payout: $20,000
55
360incentives Fee: $18,000
Measurement: The effectiveness of program will be measured by the number of
sales during the promotion and the number of rebate forms filled. The program
can be considered successful if an increase in sale is seen during the programs
run and at least 25% of the rebate forms filled out for marketing research data
collection.
56
Action Plan Two: National Television Advertising Campaign.
Objective: Inform new male customers about our product. It should also help
increase Small Town Breweries market share and increase consumer awareness
of the product.
Target Market: Men age 21-36
Description of the Program: A television commercial with a runtime of 30
seconds will be produced with the assistance of Revolution Media Inc. Revolution
Media will handle not only the production, but also get the commercial
broadcasted. Revolution Media has recommended airing the ad for 4 months on
Spike Tv, Comedy Central, and TNT. The stations share a demographic that is
similar to our target market.
Who: Revolution Media Inc. will handle the bulk of the ad campaign with the aid
of the Small Town Brewery marketing department for direction.
Revolution Media21051 Warner Center Lane, Suite 250Woodland Hills, CA 91367Phone: (818) 348.1800Fax: (818) 348.1956email: [email protected]
Timing: 4 months starting December 1st 2015 and lasting until March 31st 2016
Budget: $425,000
T.V. commercial production: $75,000
Revolution Media inc. fees: $125,000
T.V. Runtime for 4 months: $225,000
57
Measurement: Tracking hits on the company's website, searches for “Not your
father's root beer”on social media, and tracking sales during the adds runtime.
The action plan will be considered successful if there is an increase in hits on the
company's website as well as an increase in sales nationwide.
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Action Plan Three: Internet Click based Advertising.
Objective: Attract new customers that are interest in craft beers or are not usual
exposed to traditional advertising media.
Target Market: Primary and secondary market made up of men and women
from the age of 21 to 36.
Description of the Program: The plan will rely heavily on click based
advertising through Google AdWords. Google AdWords will advertise the Small
Town Brewery website on the google search engine as a top recommended search
result. The ad will show up up based on on certain keywords such as craft, beer,
etc. The budget is very flexible through Google AdWords and will be based on the
number and popularity of keywords as well as the number of visits to the website
for the ad. Google has recommended a budget of $120,000 per year in order to
obtain the keywords that would coincide with our business and target market.
Who: Google AdWords will manage all the of the advertising on their search
engine, and will only require input from the Small Town Brewery marketing
department for keywords and budget limits.
Google AdWords DivisionMillennium at Midtown10 10th Street NE, Suite 600Atlanta, GA 303091-855-607-0435.
Timing: 2 year trial run starting January 1st 2016 and potentially ending on
January 1st 2018 depending on results.
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Budget: $120,000
Google AdWords 2016: $120,000
Measurement: The effectiveness of program will be measured by using Google
AdWords. With this Small Town Brewery will be able to track the number of
visits to their website as well as which keywords are used most often to find the
website. The program can be considered successful if there is a 25% increase in
the number of visits per year to the Small Town Brewery website.
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Action Plan Four: Taste Testing at 12 Total Wines in Florida
Objective: The goal of this plan is to Introduce the product in an environment
where it can give potential customers who are either curious about the product
or do not know about it, a chance to try it. The plan should generate new
customers and potentially persuade current customers to re-buy.
Target Market: Men and women age of 21 to 36.
Description of the Program: The plan will require having the 12 selected Total
Wines add the ad to their monthly postal and email based ads notifying their
customers of the event. The Small Town Brewery sales reps will be required to
set up and manage the events. During the taste testing an optional survey will be
available to customers and will ask for basic feedback such as age, gender, and
what they think of the beer. The first tasting will be held at 6 of the Total Wine
locations on the west coast of Florida and the next one the following week at the
other 6 locations on the east coast.
Who: Total Wine will be responsible for notifying customers of the event. The
Small Town Brewery marketing department will handle the scheduling the event
and the sales reps will run the events interacting with customers.
Timing: Two weekends in 2016 during the month of February. The first tasting
on the west coast will be held on February 13th -14th with the second tasting on
the east coast on the 27th-28th
Budget: $26,500
Total Wine floor space 4 days: $15,000
Tasting displays: $7,500
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Tasting supplies and surveys: $2,200
Sample Beers: 10 Cases ($15 per) per store (12) $1,800
Measurement: The effectiveness of program will be measured by the number of
sales during the promotion and the number of surveys filled out. The program
can be considered successful if a small increase in sale is seen during the Taste
testing and at least 500 surveys are filled out.
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Action Plan Five: Advertising on Social Media: Facebook & Twitter
Objective: Create awareness of the product in the online community, increase
sales of the product nationwide, and provide a more personal feedback to
customers and fans of the product.
Target Market: Men and women from the age of 21 to 36 how are active on
social media sites and are interested in craft beers.
Description of the Program: Small Town Brewery will set up a business page on
Facebook.com and Twitter.com. From both social media sites they will announce
news and updates about the company as well as promote Not Your Father’s Root
Beer. This will also allow them to interact with customers and receive instant
feedback from them on the product. Both sites will advertise the Not Your
Father’s Root Beer based on keywords, members likes, and posts to their pages.
On the Facebook page, a survey of the product will be available to customers to
fill out and provide info that is useful to the marketing department.
Who: A new division located under the Small Town Brewery public relations
team will be created and higher one new employee to manage the social media
aspects. The main section of the public relations department will be in charge of
setting of the advertisements and scheduling with Facebook & Twitter.
Timing: The plan will start on January 1st 2016 and have a 1year trail run. If
successful, it will run indefinitely or until it becomes ineffective.
Budget: For first year: $46,000
Facebook Ad service (initial budget): $10,500
Twitter Ad service (initial budget): $7,500
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New Employee: $28,000 per year
Measurement: The effectiveness of program will be measured by number of new
followers on the pages and the number of surveys that are filled out. The
program can be considered successful if the number of followers on both
websites by the end of the first year is at least 35,000 and a minimum of 1,500
surveys are filled out.
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Action Plan Six: 2016 National Craft Brewers Conference
Objective: Increase national awareness of for Not Your Father’s Root Beer in
order to generate more sales and broaden the market share.
Target Market: The market for which Not Your Father’s Root Beer is targeting
are men and women aged 21-36 beer advocates who enjoy the thrill of trying
something new as well as new business members in the industry to help increase
Small Town Brewery position in the market.
Description of the Program: Small Town Brewery will set up an Exhibit at the
National Craft Brewers Conference. While at the conference the Small Town
Brewery management staff will attend an industry conference while the Small
Town Brewery public relations team will setup and manage a booth at the
conference.
Who: The Small Town Brewery RP team will be responsible for scheduling and
managing the exhibit for the three day conference. The marketing team will be in
charge of design the exhibit. The management staff will be tasked with learning
more about the industry at present and making new business connections.
Timing: The action plan will take place in 2016 from May 4th to the 6th.
Budget: $22,425
Registration for conference: $1200
Lounge area exhibit Booth: $17,500
Setup: $1500
Samples: 15 Cases of beer at & $15 per case: $225
Travel & Transportation expenses for PR team: $2,000
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Measurement: The effectiveness of program will be measured by the number of
sales after the conference and by what the management staff learns. The
program will be considered a success if a small increase in sale is seen following
the conference and if the management can make at least one new business
connection.
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Action Plan Seven: 2016 Great American Beer Festival
Objective: Promote Not Your Father’s Root Beer in a competition style setting and
increase sales. Another objective is to increase the reputation of Small Town
Brewery as an award winning brewery.
Target Market: The market for this action plan will be men and women aged 21-
36 who are into craft beer and brewing.
Description of the Program: Small Town Brewery will be one of the main
sponsors of the Great American Beer Festival (GABF). A back cover ad on the
GABF festival guide book. The book will be handed out to the 60,000 people at the
festival, in which 42% of them will be up of our target market. Small Town
Brewery will also enter “Not Your Father’s Root Beer” in the Specialty Beer
Category of the GABF Beer Competition.
Who: The Small Town Brewery marketing team will be responsible for creating
the ad for the guide book. The management staff will be in charge of coordinating
with the Great American Beer Festival event staff on entering the competition
and becoming a sponsor the event.
Timing: The action plan will take place in 2016 from October 6th to the 8th.
Budget: $14,750
Sponsorship: $5,000
Back cover ad (8.625”w x 11.125”h): $2,750
Specialty Beer Category Registration: $320
Travel & Transportation expenses: $6,000
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Measurement: The effectiveness of program will be measured by the number of
sales during and after the event and by how well “Not Your Father’s Root Beer”
does in the competition. It will be considered a success if a 5% increase in sale is
seen following the event and if “Not Your Father’s Root Beer” receives an award
at the event.
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Action Plan Eight: Small Town Brewery YouTube Channel ads
Objective: Attract new customers nationwide who have not yet tried the product
and increase sales with current customers. It will also inform customers of the
product and show other uses.
Target Market: The market for this action plan Men and women aged 21-36 who
enjoy beer and use YouTube.
Description of the Program: A series of low budget commercials will air on
YouTube.com with a runtime of 60 seconds each that wil be shown in In-stream
and In-search ads. The ads will take place at Small Town Brewery and star the
founder Tim Kovac. In the commercial Tim Kovac will promote “Not Your
Father’s Root Beer” in a personal manner. This will include quick tours of the
factory and different uses for the beer, such as making an alcoholic root beer
float. The series of ads will take place over 12 months with each new commercial
airing every two months.
Who: The Small Town Brewery marketing staff will handle the production of the
commercials and what Tim Kovac will do in each ad. The Small Town Brewery
public relations team will be in charge of responding to the responses to the ad
on YouTube.com.
Timing: The 1st commercial will air for the month January 2016 with a new ad
airing each month. The finale ad will air during the month of December 2016
Budget: $165,000
Comercial creation budget: $15,000
YouTube In-stream ad fee: $0.30 per view x 500,000est views: $150,000
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YouTube In-search ad fee: $0.10 per click x 250,000est clicks: $25,000
Measurement: The effectiveness of commercials will be measured by the
number of clicks on the ad, the number of views, and hits on the Small Town
Brewery website.The commercials can be considered a success if there is an
increase on the number of hits on the Small Town Brewery website and the
number of views as well as clicks meet their estimated markets.
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Action Plan Nine: Motor Trend Magazine advertisements
Objective: Promote Not Your Father’s Root Beer to Motor Trend’s 1,122,000
readers nation wide to generate more sales. It will also increase consumer
awareness of the beer on a large scale.
Target Market: The market for this action plan will be Motor Trend subscribers
and readers, which is composed of a large majority of the Small Town Brewery
target market. The market will be mainly men aged 21-36 who are willing to try
craft beers.
Description of the Program: The action plan will require the purchase of two
different full inside advertising pages in the Motor Trend magazine. Both ads will
vary in layout and content but will both advertise the “Not Your Father’s Root
Beer” beer. The ads will also appear in the magazine Six months apart in
different issues.
Who: The Small Town Brewery marketing team will be tasked with designing two
unique ads that will be placed in the magazine. They will also be in charge of
where in the magazine the ads will be located. The Small Town Brewery
management staff will be in charge of scheduling the ad spots and making the
transaction for the ad space.
Timing: Ad #1 will be in the January 2016 issue of Motor Trend magazine and ad
#2 will be in the June 2016 issue.
Budget: $179,470Ad Full-page #1: $89,735
Ad Full-page #2: $89,735
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Measurement: The effectiveness of program will be measured by the number of
sales after each new release of the magazine in which the ad is located. The
action plan will be considered a success if sales revenue increases by $100,000
after each release.
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Action Plan Ten: “Keep the Glass” bar promotion
Objective: Promote Not Your Father’s Root Beer to generate more sales and
broaden the audience purchasing as well as provide customers with a “take
away” that reminds them of the brand and provides conversation initiators with
potential future customers.
Target Market: The market for which Not Your Father’s Root Beer is targeting
are men and women aged 21-36 who enjoy the thrill of trying something new and
can appreciate Tim Kovac’s innovative twist on craft beer and soda.
Description of the Program: Bar patrons who purchase two servings of NYFRB
will be awarded a special NYFRB commemorative glass with the company’s
distinct label and logo. The company will be shipping two cases of glasses to each
of its top 50 commercial customers (based on 2015 total sales) and they will be
distributed appropriately.
Who: The marketing department will be responsible for coordinating this with
purchasing, shipping, Regional Sales Managers as well as managers/owners at
key customers.
Timing: This program will kick off on Memorial Day weekend (May 27, 2016) and
run through the July 4th holiday weekend.
Budget: $3,692
Beer Glasses: $17.46 per case x 100 cases: $3,492
Shipping fees: $200
Measurement: The effectiveness of program will be measured by the sales
revenue during this time period compared to previous year.
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9.Marketing Budget
Plan # Action Plan Title Cost
1 2$ Mail in Rebate in Southeastern U.S. $43,500
2 National Television Advertising Campaign. $425,000
3 Internet Click based Advertising. $120,000
4 Taste testing at 12 Total Wines in Florida. $26,500
5 Advertising on Social Media: Facebook & Twitter. $46,000
6 2016 National Craft Brewers Conference. $22,425
7 2016 Great American Beer Festival. $14,750
8 Small Town Brewery YouTube Channel ads. $165,000
9 Motor Trend Magazine ad. $179,470
10 “Keep the glass” bar promotion. $3,692
Total Cost for implementing action plans. $1,046,337
The total cost for the implementing the action plans remains within the budget of
small town brewery. Overall, the budget is very large compared to small town
brewery's total sales for the previous year. However, the implementation of these
action plans will insure total marketing coverage and have the best chance of
contacting the target market. If all ten of the action plans are followed through
with, Small Town Brewery will see a substantial increase in sales of 20% or more
for 2016.
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What we learned
Throughout the semester, we have discovered all weakness both internally and
externally that Not Your Father’s Root Beer is facing. By analyzing the mentioned
weaknesses, we came to the understanding that having a better marketing
strategy is the backbone of having a successful business. We learned that Not
Your Father’s Root Beer has potential to better grow throughout many audiences
by better distributing and advertising the product.
As we worked through the SWOT analysis, we learned that the integrity, quality
and taste of the beer have served as the greatest strength for this product.
During the Issues Analysis, we discovered that Not Your Father’s Root Beer needs
to better expand their product and target diverse audiences. By creating a lighter
version of the beverage, this promises a unique competitive advantage. This
would enable Not Your Father’s Root Beer to be the leading and innovate product
in both the craft beer and root beer market.
In conclusion, we all agreed that this company has huge potential as long as Not
Your Father’s Root Beer further develops and expands by taking our suggestions
into consideration. After all, this truly is not your father’s root beer.
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10. References
US NewsAllie Bidwellhttp://www.usnews.com/news/blogs/data-mine/2014/12/01/report-too-much-freedom-hurts-college-graduation-rates
Refreshing Hard Cider With AttitudeAngry Orchard http://angryorchard.com/
Mike's Hard Lemonade Commercial BHP Musichttps://www.youtube.com/watch?v=4_r_XnF232M Mike's Hard Lemonade Commercial BHP Musichttps://www.youtube.com/watch?v=4_r_XnF232
Pabst Taking ‘Not Your Father’s Root Beer’ NationalBrewboundhttp://www.brewbound.com/news/pabst-taking-not-your-fathers-root-beer-national
Promoting Independent Craft BrewersBrewers Associationhttp://www.brewersassociation.org
Angry Orchard TV Commercial Bruce Jacobsonhttps://www.youtube.com/watch?v=l5jR5PYdn44
U.S. Bureau of Labor Statistics U.S. Bureau of Labor Statisticshttp://www.bls.gov
Budlight RitasBudlightwww.budlight.com/our-beers/lime-rita-margarita-twist.html
76
Bartles & Jaymes (Bartles & Jaymes)B&Jhttp://www.bartlesandjaymes.com/home.htm
CIA Site RedirectCentral Intelligence Agencyhttp://www.cia.gov/library/publications/the-world-factbook/fields/2002.htm
Hard Root Beer Coney Island Brewing Companyhttp://www.coneyislandbeer.com/hard-root-beer
Prevalence of Obesity in the United States, 2011-2012 (JAMA Network)Cynthia Ogdenhttp://jama.jamanetwork.com/article.aspx?articleid=1832542
Fewer than half of U.S. kids today live in a 'traditional' family Gretchen Livingstonhttp://www.pewresearch.org/fact-tank/2014/12/22/less-than-half-of-u-s-kids-today-live-in-a-traditional-family/
FIESTA STREET PARTY! LIME A RITAS BUD LIGHT COMMERCIAL Juan Jprotvhttps://www.youtube.com/watch?v=YdKs0DK98Lg
The long, slow, torturous death of Zima.Koerner, Brendan.http://www.slate.com/articles/life/drink/2008/11/the_long_slow_torturous_death_of_zima.html
AlcoholLegal Information Institutehttps://www.law.cornell.edu/wex/Alcohol
Press Room (Global Consumers are Willing to Put Their Money Where Their Heart is When it Comes to Goods and Services from Companies Committed to Social Responsibility)Nielsenhttp://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html
Tapped In: Craft and Local Are Powerful Trends in the Beer AisleNielsen
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http://www.nielsen.com/us/en/insights/news/2015/tapped-in-craft-and-local-are-powerful-trends-in-the-beer-aisle.html
Modern Immigration Wave Brings 59 Million to U.S., Driving Population Growth and Change Through 2065 (Pew Research Center's Hispanic Trends Project RSS)Pew Research Centerhttp://www.pewhispanic.org/2015/09/28/modern-immigration-wave-brings-59-million-to-u-s-driving-population-growth-and-change-through-2065/
The Buffalo News Samantha Christmannhttp://www.buffalonews.com/business/not-your-fathers-root-beer-is-a-hard-to-find-phenomenon-20150916
Home - Seagram’s Escapes (Seagram’s Escapes Home Comments)Seagramhttp://www.seagramsescapes.com/
SMIRNOFF ICE® Original flavored malt beverage Smirnoffhttp://www.smirnoff.com/en-us/vodka/smirnoff-ice-original-flavored-malt-beverage/
Smirnoff Ice - Patio - TV Commercial - ENGSmirnofficecanadahttps://www.youtube.com/watch?v=OK24kSF_NzQ
Sprecher BrewerySprecher Brewerywww.sprecherbrewery.com
Not So Soft Drink: Brewers Add Booze to Root Beer (WSJ)Tripp Micklehttp://www.wsj.com/articles/not-so-soft-drink-brewers-add-booze-to-root-beer-1439546400
Seagram's Escapes TV Commercial, 'Color Your Girls Night' Truel Genuinehttps://www.youtube.com/watch?v=b2rKm72iVsU
U.S. and World Population Clock (Population Clock)U.S Census Bureauhttp://www.census.gov/popclock/
78
Census.gov (Census.gov)U.S. Department of Commercehttp://www.census.gov/
79