MKTG1102 - Marketing Report Walter Caesar Mix PDF

Preview

Summary

Final marketing report for beverage product...

Description

[Document title] [DOCUMENT SUBTITLE]

[COMPANY NAME] | [COMPANY ADDRESS]

Table of Contents Current Marketing Situation......................................................2 Market Description................................................................................................................................2 Product Review......................................................................................................................................2 Competitive Analysis.............................................................................................................................3

SWOT Analysis..........................................................................4 Strengths............................................................................................................................................... 4 Weaknesses...........................................................................................................................................5 Opportunities........................................................................................................................................5 Threats.................................................................................................................................................. 5

Objectives................................................................................5 Marketing Strategy...................................................................6 Positioning.............................................................................................................................................6 Product Strategy....................................................................................................................................6 Pricing Strategy......................................................................................................................................6 Distribution Strategy..............................................................................................................................7 Integrated Marketing Communication (IMC) Strategy...........................................................................7 Sales promotion................................................................................................................................ 7 Public relations.................................................................................................................................8 Advertising........................................................................................................................................ 8 Direct and digital marketing.............................................................................................................8 Action Program......................................................................................................................................8 Budget................................................................................................................................................... 9 Marketing Controls................................................................................................................................9

Current Marketing Situation Walter Craft Caesar Mix is the first Canadian-based Caesar Mix. In Canada, 350 million bottles of Caesar are consumed every year. As one of the minor Caesar producers in the market, Walter Craft Caesar Mix generated $690,000 in 2015 and expects $2.5 million in 2016. Walter Craft Caesar Mix has responded to a growing number of people who value national pride, healthier lifestyle and more environment-friendly way of living. According to Statistics Canada, there is an alcohol drinking population of 23 million. Twentyseven percent of the twenty-three million people consume cocktails on a regular basis, which is 6.2 million consumers. In the past decade, there has been 1 percent growth per year in Canada’s drinking population. Current competitors such as Mott’s Clamato and Campbell’s V8 use artificial ingredients and produced in the United States. The competitors position their products as convenience goods which provide low quality, no frills. Being the only Canadian-based Caesar mix producer, Walter Craft Caesar Mix aims to differentiate themselves by using all natural ingredients, local and environmental-friendly production process.

Market Description Walter Craft Caesar Mix is a high-quality cocktail mix that appeals two market segments: (1) people who drink cocktails at home, (2) people who eat out at restaurants and bars. The primary target market is made up of people aged from 25 to 40 with an annual income of $50,000 or higher who drink at home and seek healthier options. This segment is comprised of people with established careers. With busy lifestyles, these people tend to enjoy drinking alcoholic beverages after a long and tiring day at work. With higher income, they are more concerned about what they consume. Therefore, they prefer healthier options. The secondary target market consists of people aged from 40 to 60 people with an annual income of $75,000 or higher who enjoy going to luxurious restaurants and hotels. This segment consists of people who enjoy a social lifestyle, so they typically visit restaurants to chat with friends or family, or to look for new experience.

Product Review Walter Craft Caesar Mix currently has two products that fall under the shopping goods category: Classic Spice and Mild Spice. The products provide healthy and environmentalfriendly alternatives to home cocktail drinkers.

Figure 1 Current Products

Walter Craft Caesar Mix’s value proposition is “All in Pursuit of a Better Caesar” based on the following customer benefits named “The ‘Walter Difference’: all-natural ingredients, no high fructose corn syrup, craft small batch production, no artificial color or flavor, no artificial MSG added, glass bottle, gluten-free, made in Canada, and ocean friendly.”

Competitive Analysis Caesar mix market is a good example of oligopoly. Two major competitors, Mott’s Clamato and V8, occupy 79.6 percent of market share. North American Industry Classification System (NAICS) defines the market as a part of ‘Fruit and Vegetable Canning’ industry under 311421. While Walter’s Craft Caesar Mix position themselves as Canada’s healthiest, most environmental-friendly Caesar mix, the competitors offer different benefits to cocktail drinkers. Mott’s Clamato offers the lowest price in the market and easy access to the products by making them available in as many locations as possible. Campbell’s V8 is well known to provide healthy lifestyle and satisfy its customers with different tastes with the extended line of the products. However, the competitors share weaknesses: artificial ingredients, not locally produced, and low quality. In contrary, Walter’s Craft Caesar Mix is the only product made in Canada using all natural ingredients. The company has been building a good reputation in high-end grocery stores, luxurious hotels, and bars. The product’s high quality has been proven to the world by winning 17 medals at international spirit competitions. The table below shows Walter’s Craft Caesar Mix’s five forces overview. Porter’s five forces analysis explains entry barriers, threat of substitute, supplier’s bargaining power, buyer’s bargaining power, and direct competitor. Table 1 Walter Craft Caesar Mix's Five Forces Overview

Porter’s Five-Force Category Direct Competitor

Primary Example

Description

Mott’s Clamato, V8, KEG

Direct competitors offer the same kind of product (Caesar mix) and target the same market: Caesar drinkers. Two major competitors dominate the market and they are owned by large corporate entities (Mott’s Clamato – Dr. Pepper/Seven Up,

Substitutes

Other cocktail bases: orange juice, coke, lemonade

Entry barriers

N/A

Supplier’s power

Ingredient producers: Tomato, clam

Buyer’s power

End consumers

Inc., V8 – Campbell) In a broader perspective, cocktail drinkers can choose substitute of Caesar mix to make different types of cocktail. Using similar distribution network, these substitutes can indirectly affect customers’ choice. Entry barriers are relatively low. However, dominant competitors could be a reason newcomers struggle to become profitable. Supplier’s power is also low because the number of tomato and clam farmers is large enough. Approximately one million metric tons of tomatoes are produced in Canada per year. End consumers have many choices, and large number of substitutes are available. The buyer’s power in cocktail mix market is high.

SWOT Analysis Strengths      

High quality products Canadian-based production Award-winning company Strong presence in luxurious hotels and restaurants Environment-friendly Owners’ knowledge and consumer insights

Opportunities     

Consumers tend to want quality over quantity Consumers are concerned more about their health Canada’s national pride is rising More environment-friendly consumers Caesar is a popular cocktail in Canada

Weakness      

High price Low brand awareness Less distribution channels in retail market Relatively low budget for marketing Lack of diversification in product line Too many stakeholders (investors)

Threats    

Consumers tend to spend less Caesar mix market is dominated by giant competitors As premium Caesar market grows, more competition will occur Consumers want more choices

Strengths Walter Craft Caesar Mix is a trusted brand which is well known for Canadian-based production and environmental-friendly products. Walter Craft Caesar Mix offers the only Caesar mix made of all-natural ingredients.

High quality of the product is proven by winning 17 medals at international spirits competitions, and it is one of the most significant strengths. It led the company to have the strong presence in luxurious restaurants, hotels, and bars.

Weaknesses Maintaining high quality of the products requires high costs, which drives up the price. A majority of the competitors aims to reach as many consumers as possible by offering an easy access to their products and lower prices. Even though the company expects more investment in the future, limited amount of marketing budget can also be a weakness for Walter Craft Caesar Mix. Lack of diversification is also a weakness of the company because the entire product line has only two products: Classic Spice, Mild Spice.

Opportunities A growing number of Canadian consumers pay more attention to what they consume. Business Development Bank of Canada (BDC) found out that 45 percent of the consumers try to buy Canadian products to support the economy, 33 percent prefer to pay premium for a healthier product, and 87 percent think it is better to buy an environmental-friendly product. Caesar’s popularity in Canada gives the company more potential. While the competitors’ products are made of artificial ingredients, Walter Craft Caesar Mix’s high-quality products can create a premium Caesar mix market and become a leader in the market.

Threats The biggest threat is the consumers’ frugality. 66.7 percent of Canadian consumers think that price is the most important factor of their decision-making process. As Walter Craft Caesar Mix’s products are positioned as a premium shopping product, they are priced at relatively higher price ($8.95). Frugality of the target consumers can negatively affect the sales. Low entry barriers of the industry could be another threat. If the premium Caesar mix market grows, more competitors will enter the market. The existing competitors can also add a high-end product to their lines.

Objectives Walter Craft Caesar Mix has already shown a stable growth during the last three years. Since the company started its operations in 2013, sales have increased from $690,000 to expected $2,500,000 in 2016. The company’s distribution network has enlarged. As a result, the company is present in 1,200 grocery stores and 400 restaurants across Canada. This success is highly connected to the value proposition built around Walter Craft Caesar Mix being Canada's first all-natural Caesar mix. The company creates value for its customers by following modern market trends: rising Canadian pride and increase of concerns for health and environment.

With the positions of the current products and plans to introduce a new product (pre-mixed cocktail) next year, Walter Craft Caesar Mix sets the objective to achieve five million dollars in sales by the end of 2017. Therefore, with the launch of pre-mixed alcoholic cocktail (Walter Caesar), the company will continue to use its core competencies, but in more convenient manner for the customers.

Marketing Strategy Positioning Walter Caesar pre-mixed cocktail is Canada’s favorite cocktail appealing to home cocktail drinkers by offering convenient, the healthiest, and most environmental-friendly option in the market.

Product Strategy In order to achieve five million dollars in sales by the end of 2017, the following analysis has been made to determine the best product strategy:     

Core customer value: national pride, healthier lifestyle, more environment-friendly way of living Actual product or service: Cocktail mix Augmented product or service: guarantee that your cocktail mix is made of all natural & Canadian ingredients Type of product: Shopping product. Cocktail mix is not a frequently purchased product, and customers need to go to certain places to buy a certain brand of Caesar mix. Lifecycle stage: Growth Stage. The company’s sales and profit are rising, so it is trying to expand its distribution network to reach more customers.

For Walter Craft Caesar Mix, product development is the best product strategy to implement. With a pre-mixed cocktail product, Walter Craft Caesar Mix can launch the product in liquor stores for those who look for ready-to-go products to drink at home. Using the product development strategy, the company can add liquor stores to the existing distribution channels. With this addition, the company will gain more brand awareness. Walter Craft Caesar Mix can also gain a competitive advantage since all Caesar mix competitors don’t have a presence in liquor stores. The new product can also add convenience to existing customers’ core value.

Pricing Strategy The prices of our four biggest competitors are: Table 2 Competitors' Market Prices

Price per pack (CAD) # of products in one pack Quantity per bottle (ml)

Mott’s Clamato

Smirnof

Mike's Lemonade

Baileys

10.49

9.29

11.99

26.49

4

4

6

1

355

330

355

750

Price per 1ml

0.01

0.01

Price per 100ml

0.74

0.70

0.01

0.04

0.56

3.53

Source: BC Liquor Store (http://www.bcliquorstores.com/)

Given this information, Walter Craft Caesar Mix’s current pricing strategy is a value based approach. The price should signal the target market that Walter’s Caesar is a premium product. Therefore, Walter’s Caesar should be priced at $7.50 per 500ml bottle. Walter Caesar pre-mixed cocktail is in the introductory phase, so the company should minimize the chasm before the growth stage. The company needs to enter the market with a penetration pricing strategy that would price Walter’s Caesar at $6.00 for the first half of 2017 and raise the price to $7.50. Using the penetration pricing strategy, brand awareness can grow faster since more customers are likely to try the new product. Sales volume will also increase, and it is easier to compete with the low-priced competitors in the market: Mott’s Clamato and Smirnoff. In addition, the company can also use by-product pricing, which is to start selling clam shells to accessory producers as raw material. This will help the company to achieve the objective because it increases the profit, and it is more environmental-friendly, which correlates with the positioning statement. Therefore, to reach company’s objective to achieve five million dollars in sales by the end of 2017 for Walter Craft Caesar Mix, Walter’s Caesar should be positioned as a premium product. This means that Walter’s Caesar will be priced at $7.50. However, to move the company out of the introductory phase to the growth phase, a market penetration strategy will be implemented and price of Walter’s Caesar will be set up at $6.00 for 6 months. Byproduct pricing will be used as an additional pricing tactic.

Distribution Strategy Based on alcoholic beverage regulations in Canada, such as Liquor Distribution Act in British Columbia, the company must use an indirect distribution strategy. With the indirect distribution, Walter Craft Caesar Mix will be able to create more brand awareness by having a presence in liquor stores that target different markets. There will be little risk as the ownership of the products will be transferred. (+Figure)

Integrated Marketing Communication (IMC) Strategy To appeal to home cocktail drinkers by offering convenient, the healthiest, and most environmental-friendly option, Walter Craft Caesar Mix company consider multi-tiered program that work as follow: Sales promotion Walter Craft Caesar Mix should have a food contest where participants will submit a recipe for the best matching dishes with the company’s new product: pre-mixed cocktail. The company will accept recipes from September to November, and well-known chefs will select

the best recipes. At the end of the time span, the top 5 winners will win $50,000 worth of prizes. The recipes will be published and shared via online website and mobile application. Public relations Walter Craft Caesar Mix will hold an art fair with the related publics: environmental nonprofit organizations, artists, media, and people who care about the environment. At this fair, artists will be invited to create art pieces with clam shells from the company’s production process. Media will publish the company’s commitment to the environment through recycling the wastes (clam shells). Advertising Online Online advertising involves using Google to show Walter Craft Caesar Mix’s pre-mixed cocktail on the top of the search list when someone looks up “cocktail” or “Caesar”. This will be implemented for the entire year of the promotion to make more customers aware of the product. Social Media “Tasty” is a Facebook page with 75 million likes. The page releases one minute videos of people making delicious food, and each video gets more than 10,000 likes. Walter Craft Caesar Mix will use the page to post the winning recipes with the company’s pre-mixed cocktail. As the contest targets the holiday season, the advertisement will be posted online from November to December. Direct and digital marketing Walter Craft Caesar Mix should use Instagram to promote the pre-mixed cocktail. Instagram users will have the chance to post a picture of their experience with “Walter Caesar” using “#thewalterdifference”. At the end of the 6 months, three randomly selected people who have posted a picture and follow Walter Caesar on Instagram will win one week vacation to Hawaii. Each winner will be announced via Instagram. This strategy will take place from January to June, and the trips will be scheduled during the summer.

Action Program Table 3 Action Plan

Year of 2017 Advertising Online Social Media Public Relations Media NPO Sales Promotion Contest Direct & Digital

1

2

3

4

5

6

7

8
<...