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Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Table of contents
TABLE OF CONTENTS .......................................................................................................................................2
EXECUTIVE SUMMARY .....................................................................................................................................3
1. PRELIMINARY ANALYSIS........................................................................................................................3
A. COUNTRY AND INDUSTRY PROFILE.....................................................................................................................3 B. FISCHER (HEINEKEN) COMPANY PROFILE..........................................................................................................7 C. SWOT ANALYSIS .................................................................................................................................................8
2. STRATEGIC GOALS AND OBJECTIVES..........................................................................................10
3. STRATEGIC OPTIONS .............................................................................................................................10
A. MODE OF ENTRY AND MARKETING STRATEGY ...............................................................................................10 B. SEGMENTATION AND TARGET GROUP..............................................................................................................11 C. POSITIONING AND COMPETITIVE STRATEGY...................................................................................................11
4. OPERATIVE MARKET ENTRY STRATEGY FOR 2007 ..............................................................12
A. GLOBAL PRODUCT .............................................................................................................................................12 B. PREMIUM PRICING .............................................................................................................................................12 C. ESTABLISHED DISTRIBUTION CHANNELS.........................................................................................................13 D. EXTENSIVE ADVERTISING AND PROMOTION CAMPAIGNS ..............................................................................14
5. CONCLUSION...............................................................................................................................................15
SOURCES ...............................................................................................................................................................16
EXHIBITS................................................................................................................................................................18
REFERENCES .......................................................................................................................................................48
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Executive Summary
Despite severe regulations and high competition due to frequent new product launches and a large
number of substitutes, the American (and more precisely Bostonian) alcoholic drinks presents a great
potential for selling Desperados. The large portion of the population falling in the target group, who
showed high interest (46%, survey) in buying Tequila flavored beer, as well as Heineken’s strong
presence in the area, which provide tacit market knowledge and established distribution channels, are
essential factors for success. Fischer’s global marketing strategy will be applicable to a large extent to
this new market entry, yet adapted to legal constraints and market conditions. The product range will
not have to be altered (ideal for exports) and the global premium price strategy will be followed,
though the prices will be adapted to the highest of market. Fischer will receive full support from
Heineken concerning distribution but also the financing and design of extensive advertising and
promotion. Should Fischer achieve the market sales objectives of $182,000 without exceeding its
budget of $465,000 by too far, it will beginning its expansion to other major U.S. cities. Yet, it is highly
recommended to analyze carefully the laws and other environmental factors specific to the different
states.
1. Preliminary Analysis
a. Country and Industry Profile
i. Macroenvironmental Analysis
Politics Economy
The United States is a constitution-based federal republic with a strong democratic
tradition. The U.S. government has quite a liberal position towards alcohol
consumption, accepting it as a part of the American culture as long as the legal
framework is respected. Yet, it advises moderate consumption as it widely
broadcasted the results of a study by the National Institute on Alcohol Abuse and
Alcoholism (NIAAA) stating both the negative effects of alcohol abuse and the
positive effects of moderate drinking on heart health1.
The USA has the largest economy in the world with a per capita GDP of $42,000 in
20052 ($44,861 in Massachusetts (MA)3). Recently soaring oil prices threatened
inflation and unemployment. Yet, rise in prices is forecast at 2.0%4 p.a. over 2006-
07 and unemployment at 5.1%5. The real GDP growth was 3.7% p.a. over 2004-06
and is expected to slow down to 2.4% in 20076. The current median family income
is $59,600 in the U.S. (vs. $82,600 in Boston city), and has risen at 1.8% p.a. since
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Social Technology Environment Laws and regulations
20037. The current currency rate of 0.8 €/$8 is not favorable to European exports.
The total population is 298.5 million people (almost 0.6 m in Boston city) with a
growth rate of 0.91% p.a. The U.S. median age of 36.5 years is significantly higher
than the Boston median age of 31. One third of all Bostonians are between 20-34.
In both the U.S. and Boston the gender ratio approximates a 1:1 repartition. Over
14% of Americans (and Bostonians) are Hispanic. 76% of all Americans are
Christians and only 3% of the population (Muslims and Mormons) are prohibited to
drink alcohol by religion. English is the dominant language (82% of natives), but
Spanish becomes increasingly important (11%)9 (Exhibit 1). Alcohol, and
especially beer, is a part of the American culture10. More than one third of
Americans between 12-20 years report alcohol consumption. Binge drinking is a
major issue threatening America’s youth (25%)11.
New technologies mainly affect the brewing process and result in both quality and
efficiency improvements. For instance, recent production chains reduce the
bottling time and the setup-time from one bottle format to another12. Some
innovations also concern packaging, as e.g. the pressure-sensitive labels
developed by Spear Systems® for Anheuser-Busch that deliver a frost effect on
the clear glass of the Bacardi Silver bottles13.
The container deposit legislation is different from state to state. Massachusetts
passed its bottle bill, the Beverage Container Recovery Law, in 1981. The law
requires a 5-cent deposit on deposit beverage containers, which is refunded when
empty containers are brought back to the selling point. Unclaimed deposits all go
directly to the state’s Clean Environment Fund (CEF)14.
Alcohol related laws15 are passed on the State level (e.g. Massachusetts General
Laws, Exhibit 2) and not by the American government. The legal drinking and
alcohol purchasing age is 21 in MA. The distribution of alcohol requires a selling
license delivered by the State and strict ID controls of each buyer. License holders
must pay a tax on their alcohol gross sales. The license for beers and other soft
alcohols is easier to obtain and tax is lower than for hard alcohols. Alcohol
consumption in public places is forbidden. Bars and pubs have to close at 2am. It
is strictly against law to drive under the influence of alcohol (limit of 0.08% of
alcohol in blood) or any intoxicating substance. Additionally to State laws, the
alcohol industry agreed on voluntary advertising regulations. At least 70% of the
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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viewership of any advertisement must be over 21 years old.16
ii. Alcoholic drinks Market Analysis
U.S. alcoholic drinks market volume and value Market segmentation Massachusetts alcohol drinks market volume and value Main demand drivers
The United States alcoholic drinks market is a mature market with a modest
growth of 1.9% p.a. over 2000-2004. The market value was $138.7 billion in 2004
and is forecast to reach about $151.9 billion in 2009 (+9.5% since 2004). The
market volume grew even slower over this period (1.1% p.a.) to reach 28.6 billion
liters in 2004, pointing out a shift toward premium products17.
The market is divided into five product categories: beer, spirits, wine, FABs
(flavored alcoholic beverages) and cider. Beer, FAB’s and cider (BFC) are
generally considered as one segment, due to the similar alcohol level. The BFC
segment still holds 55.7% of the market value in 2004 (59.0% in 1995), but it has
continuously been losing share to the spirits segment which now stands for 29.1%
of market value (26.4% in 1995). Yet, the BFC market value, which only grew by
0.8% over 2000-2004, is expected to accelerate its pace to a 1.1% growth over
2005-2009. Half of all beers are light, and about 60% are premium lager (Exhibit 3). The BFC market volume reached 24.2 billion liters in 2004, thus accounting for
84.6% of the alcoholic drinks market volume18.
The state of Massachusetts stood for 2.08% (502.5 million liter) of the U.S. beer
consumption in 2004. It is one of the states with the highest part of import beers
(nearly one fifth). However, it is, after New Jersey, the state where beer
consumption represents the smallest part of total alcohol consumption (79.4% in
volume and 51.6% in value)19 (Exhibit 4).
The growth of the alcoholic drinks market is closely positively correlated to the
economical performance of the USA20. The four key demand drivers are
trendsetters, personal taste, brand recognition and income. Trendy bars or clubs
as well as stars are the main trendsetters which initiated over the past years a shift
toward premium products and especially FABs and distilled spirits at the expense
of beer. Personal taste further influences both the type of alcohol (i.e. beer, spirit or
wine) and the brand choice. Also, product differentiation and advertising play a
major role as alcohol and in particular beer is no longer considered as a
commodity. This fact is illustrated by the tremendous advertising budget of all
major alcohol selling companies. Finally, income must be taken into consideration
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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as the price gap between premium and low-end products grows (Exhibit 5).
iii. Microenvironmental Analysis
Analyzing the micro-environmental influences as researched by Michael E. Porter shall support the
assessment of the US alcohol industry’s attractiveness. The crucial forces are bargaining power of
buyers, competition from substitutes, and rivalry between established players (Exhibit 6).
Industry rivalry and competition (high)
Supplier power (low) Buyer power (middle)
The significant buyer power combined with the high number of substitutes lead to
an aggressive internal rivalry among established players. As the beer industry
offers a relatively homogenous high volume product, the competitive focus lies first
and foremost on marketing, though R&D is very important. The U.S. alcoholic
drinks (and especially beer) industry is an oligopoly with three major players. In
2004, Anheuser-Busch (A-B), SAB Miller and Coors shared 68% of the market
(79% of beer only). However, A-B is the one dominating firm (43% total, 52% beer)
(Exhibit 7). These strong market positions are the result of many mergers and
acquisitions, through which traditional breweries acquired a significant stake in the
growing distilled spirits market. Another tendency is the joint product development.
For instance, A-B entered a partnership with Bacardi in 2002 to launch Bacardi
Silver, a “malternative” to beer combining malt, rum and diverse flavors (e.g. apple,
strawberry etc). In most cases, foreign alcoholic drinks producers who wish to
enter the US market have done so through licensing agreements or joint ventures
with a domestic manufacturer who is already established in the market21.
The supplier power in this industry is very low because of the large number of
suppliers. Thus, changing a supplier is relatively easy and triggers relatively low
costs. Quality consistency is quite easy to manage as purchased goods are raw
materials that most suppliers extract from the same sources. No stronger
backward integration, which would raise supplier power, is to be expected.
Most commonly alcohol distribution is organized as a three-tier system22. The
immediate buyers of an alcoholic drinks producing firm are usually wholesaler or
distribution chains. These are in charge of selling the products to retailers (e.g.
liquor shops, groceries) and to pubs, bars, and clubs. These finally sell them to the
final consumer. Some distribution chains like supermarkets sell directly to the end-
consumer (two-tier system) but represent a small part of sales in the USA. Due to
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Threat of entry (low) Threat of substitutes (high)
the alcohol market structure (three major players), the wholesaler and distributor
power is limited. Of course, the market is driven by consumer demand. The
consumer does not have any transition costs when switching the product/brand,
and there is a huge variety of substitute products. However, “brand switching” is
limited by the very high brand loyalty in the U.S. alcoholic drinks market. In
addition, switching brands does not mean switching the company, as the three
major players hold about 60% of all existing brands, hence a reduced buyer power.
High capital requirements (infrastructure, advertising expense) lead to the
necessity of economies of scale, which can only be achieved by mass production
and consolidated sales on a global scale. High brand recognition, customer loyalty,
and the existing alliances between the major market players are also significant
barriers to entry. Small successful firms are often subject to acquisition. Thus, the
entry of new competitors is highly improbable.
In contrast, existing players regularly launch new products on the market. Alone A-
B is launching up to three new beer products a year. This results in a highly
competitive market and also strong product cannibalization (e.g. between
Budweiser and BudLight). As many alcoholic drinks actually address the same
target groups and basically accomplish the same role (e.g. party drinks), they are
all, to some extent, substitutes for one another. This has been shown in the last
few years by the increasing wine and spirit consumption resulting in relatively
lower beer consumption. Also, FABs are more and more appreciated substitutes
for beer, especially among young people (21-30).
b. Fischer (Heineken) company profile23 The Fischer Brewery in brief
Fischer was founded in Strasbourg (France) in 1821 and has ever since been
one of the most innovative and creative European beer breweries. Fischer also
stands for the quality of its beer: it is the only French brewery that integrates the
full production process in-house, for which it was given all the main ISO quality
labels since 1997. To ensure irreproachable quality worldwide, Fischer produces
all its beers in one site and then exports about 21% of its production. Indeed, the
brewing process requires high expertise and newest technologies, which the
company does not want to diffuse outside its Alsatian stronghold. In 2005, the
company counted 335 employees and had revenues of 210 million euros.
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Desperados Marketing Strategy From Fischer to Heineken
Desperados was developed in 1994 and launched in 2005 in three French test-
cities, where it was initially only sold as an aperitif in restaurants. It then was
progressively rolled-out nationally in restaurants, bars and clubs as well as
supermarkets. It is today available in more than 20 countries, i.e. most
European countries as well as Russia. Fischer designed Desperados as a
global product and followed a global marketing strategy which was only adapted
to local conditions when required by law or advertising practices. The target
group consists of young (under 30) urban party-goers with middle to high
income. Desperados has always been positioned as a tequila flavored premium
beer.
Heineken took over Fischer in 1996, but left a large managing and decision-
taking autonomy to its subsidiary. Yet, cross-selling opportunities and synergies
arose as Fischer could use Heineken’s existing distribution channels in every
new country where Desperados was launched. Also, tacit market knowledge
was transferred between the two breweries resulting in effective market
strategies even in those markets that Fischer had not been in so far (e.g.
Russia). These synergies could also be used for entering the American market.
c. SWOT Analysis
Opportunities
Threats
- U.S. market is 2nd biggest market worldwide - Economic growth, price stability, high income - Political acceptance of alcohol consumption - Alcohol is part of American culture - Low supplier power, no backward integration - High brand loyalty rewards advertising efforts - Low threat of entry, no new competitors - Moderate distributor power, large coverage possible with few distributors - High percentage (25%) of Boston population between 21 and 30 years old
- Currency rate unfavorable to exports from Europe- Restrictive legal framework, especially alcohol consumption prohibition for people under 21 - MA is 2nd lowest beer consumption U.S. State - Market dominated by three major players (oligopoly) - High competition especially due frequent new product launches - High brand loyalty hinders market penetration - High number of substitutes
Strengths
Weaknesses
- Creativity and Innovativeness - High Product Quality - Experience in launching Desperados in markets presenting similarities to the U.S. (e.g. Ireland) - Synergies with Heineken:
- Inflexibility when sticking to the global marketing strategy - High Transportation Costs due to export policy (no production outside Strasbourg) - Limited Production Capacities in view of the
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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+ Existent Distribution Network + Good Market Knowledge
American market size
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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2. Strategic Goals and Objectives Long-term vision
Objectives for 2007
Fischer’s Desperados operation in the USA is expected to reach the break even
in 2010. By 2015, Desperados will be available for purchase in all U.S. cities
counting more than 500,000 inhabitants. Sales market value (end consumer
price x volume) is forecast at $11.4 million (Exhibit 8), which would bring
Desperados in the top 15 of best selling beer brands and make it the best selling
specialty beer in the U.S. market. Fischer’s U.S. revenues from Desperados are
expected to attain $3.6 million in 2015 with a profit before tax of about $434,000.
Fischer’s central objective regarding its Desperados launch in Boston is to reach
its market sales goal of $182.000 in 2007 (which should bring Fischer revenues
of about $58.000) without extending the market entry budget too far over
forecast ($465,000) (Exhibit 9). On average (over the year), half of the target
group is forecast to know the brand. One third of those is further expected to
buy the product and 40% of the first trial buyers to buy Desperados repeatedly.
Desperados will have the image of a wild party beer in peoples’ minds.
3. Strategic Options
a. Mode of Entry and Marketing Strategy Mode of entry and Expansion Global Marketing Strategy
In accordance with Fischer’s production and quality control strategy,
Desperados will be produced in Strasbourg and exported to the U.S. To reduce
transportation costs, joint shipments with Heineken export beers are to be
organized. In 2007, Desperados will be launched only in Boston city which has
been identified as a meaningful test market given the high part of the population
corresponding to the defined target group (see section 3.b.). Depending on the
encountered success, the product will be rolled-out progressively to other big
U.S. cities presenting a high demand potential (Exhibit 8).
Desperados will, to a large extent, be marketed in the U.S. following Fischer’s
global marketing strategy which already proved to be successful in markets
where consumers have similar alcohol preferences and consumption behaviours
(Ireland and the United-Kingdom). Yet, adaptations will be made that take into
account the specific U.S. alcohol market structure, competition and legislation.
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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b. Segmentation and Target Group Strategic Product Segmentation
Target Group
The U.S. alcohol market consists of three main product segments: spirits, wine
and BFC (Section 1.a.ii.). The BFC segment is split into beer, FABs, and cider.
The beer segment can again be broken down into premium lager, specialty
beers, standard lager, and stouts and ales (Exhibit 3). Desperados being a
tequila flavored beer, it potentially competes both against flavored beers on the
specialty beer segment and malternatives on the FAB segment. As a result of
the competitive strategy (Section 3.c.), Desperados will be positioned as a
specialty beer (segment value of $18.2 billion in 2004). Yet, it will also closely
compete with malternatives and indirectly against other beers (mostly lager).
Given the mixture (beer + tequila), the alcohol content (5.9%) and the openness
of partygoers to try innovative alcoholic creations, Desperados will be targeted
at partygoers in the U.S. The focus will lie on people between 21 (minimum legal
age) and 30, as the interest of over 30 year old Americans for beer mixtures has
shown to be limited (Exhibit 12) and a strong brand loyalty is already
established. Thus, targets are primarily students and young professionals
concentrating in major U.S. cities, which will allow economies of scale in
distribution. In accordance with the global premium strategy, Desperados is
designed for upper-middle class citizens. To avoid the loss of potential
customers, no restriction will be made concerning the gender or ethnic group.
To sum up, the target group are 21-30 years old upper-middle class urban
partygoers.
c. Positioning and Competitive Strategy Product Identification & Differentiation
Positioning and Competitive Strategy
Desperados is first and foremost a lager beer which differentiates by an
additional wild tequila flavor, a high alcohol content (5.9% compared 4.5% or
less for a standard beer) and a unique “cool” bottle design. Unlike malternatives,
the authentic taste of beer remains a key characteristic of Desperados, which
makes it a high quality specialty beer rather than a flavored alcoholic beverage.
The differentiation criteria lead to the definition of the strategic positioning
relative to Desperados’ closest premium competitors (brands). Desperados will
be positioned as a premium flavored beer for wild and trendy partygoers. The
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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positioning is visualized on more details in Exhibit 10.
4. Operative Market Entry Strategy for 2007
a. Global Product Global Strategy
Branding
Product Range
Packaging, Use and
Place
Desperados is a global product which is not being altered to suit local market
tastes. In turn, markets are selected for their potential tequila flavored beer
advocates. According to our survey (Exhibit 13), 37% of 21-30 years old
Bostonians were highly or very highly interested in buying tequila flavored beer.
Desperados is an international brand name which makes people think of
“Mexico” and “wildness” in every country, and also in the USA (Exhibit 13). This
name is a good brand recognition facilitator as it reflects both the product
identification and differentiation (“Mexican tequila” flavored beer) and the target
group (it appeals to “wild” partygoers).
Desperados will be available for purchase in the main package sizes that
already exist in the European market, i.e. in classic small 12oz (0.33l) bottles, in
large 22oz (0,65l) bottles and as well 169oz (5l) kegs. Because of the
differences of products and positioning, there will be no internal cannibalization
between Desperados products and other Heineken beers in the U.S. market.
The classic 12oz longneck bottle of Desperados has the perfect size for both
private parties and bars and clubs. Experience in the home markets France and
Germany has shown that this mythic Desperados bottle is the ultimate
trendsetter product. For house parties, Desperados will be also available in
supermarkets and liquor stores in six-packs or 24-boxes of 12oz bottles, which
are easy to carry and store. The unique XL keg provides freshness and an air of
exclusivity. They are ideal for private parties only, i.e. Desperados will not be for
sale from the keg in bars and pubs to preserve the premium image (Exhibit 14).
b. Premium Pricing Premium Strategy
In accordance with the high quality/high price (premium) positioning (Exhibit 10), retail prices will be aligned with the premium competitors both on the
specialty beer and the FAB segment (i.e. Tequiza, Smirnoff Ice and Bacardi
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
13
Strict Control over Retail Prices Average Retail Price
Fischer Selling Price Policy
Tax, Deposit and Currency issues
Silver). Desperados will thus compete on the value added of the product rather
than directly on price, which is a key characteristic of the global pricing strategy.
In order to have an effective control over consumer prices, Fischer will negotiate
with each retailer a contract that will install a yearly fix retail price equal to the
competing products’ price at the retail place. This price should not be out of a
10% range around the average target price (Exhibit Z). In the case of three tier
distribution (Section 4.c.), the intermediary wholesaler will hold the
responsibility of negotiating a contract with the end-retailer following the same
conditions.
Considering the average prices of the basket of brands identified as
Desperados’ closest competitors (see above), the average retail price for the
standard 12oz bottle will be $3.75 ($11.25 a liter) in pubs, bars and clubs (PBC)
and $1.30 ($3.90 a liter) in supermarkets, convenience and liquor stores
(Exhibit Z).
Fischer will have to negotiate appropriate selling prices to intermediate
distributors in accordance with the above defined pricing strategy, taking into
account the margins of each link of the chain. Though the selling prices change
in function of the chosen distribution channel (Section 4.c.), no incentive will be
given to retailers (in particular PBC) to short-circuit the distribution system. The
results of this calculation are summarized in Exhibit 12.
In addition to the standard sales tax of 5%, the state of MA raises a beer tax
worth $0.11 per gallon (i.e. $0.01 per 12oz bottle). Also, a 5 cent deposit is
required on each glass bottle sold. These represent additional costs for the
consumer, but as they are also applicable to competing products, the pricing
alignment strategy is not affected. In 2007 there will be no issue of currency
because revenues will be reinvested in the company (expenses higher than
revenue).
c. Established Distribution Channels Using established channels
Three tier channel
For the launch of Desperados in the USA, Fischer will use Heineken's
established distribution channels. Three channels must be distinguished
(Exhibit 16).
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
14
Two tier channels
Strict Control over Distributors
The most common distribution channel for any alcohol exporter to the U.S.
market is the three tier system involving a wholesaler which resells the product
to different types of retailers24. These retailers will be pubs, bars and clubs
(PBC-retailers) as well as liquor stores and convenience stores. Unlike
traditional Heineken beer, the party drink Desperados will not be for sale in
restaurants.
American alcoholic drinks wholesalers present the advantage of achieving a
large coverage (presence in many cities) which can be useful for the expansion
after 2007. In 2007, Heineken will add Fischer’s Desperados to the list of brands
it already distributes via Burke Distributing, one of the biggest beer wholesalers
for the Boston area25. This channel will account for approximately 60% of the
total sales volume in 2007, as it is an effective means of reaching a large
number of, especially small, retailers.
The other type of distribution channels, which in contrast is more efficient in
terms of price control (Section 4.b.) and margins, is the two tier system
consisting in direct sales to both (a) large supermarket chains (10% of sales
volume) and (b) PBC-retailers (30%). In 2007, Desperados will be included in
the contract Heineken negotiates yearly with Shaws. Also, Heineken disposes of
a competent sales team responsible for canvassing PBC customers throughout
the USA. Desperados will thus be added to the list of distributed brands.
Salespeople in charge of the Boston area will be trained on marketing the new
brand.
The key of a successful market positioning and implementation of the product
and price strategies is a good control over all links of the distribution chain. This
controls is guaranteed here by the long experience and excellent contacts that
Heineken has with its distributors.
d. Extensive Advertising and Promotion Campaigns Legal Constraints Target Audience and Promise
This advertising and promotion strategy will comply with applicable regulations.
Indeed, Desperados needs not to be associated with a brand inviting people to
break laws (e.g. incite underage teenies to drink, Exhibit 17).
According to the target group, the targeted audience is all Bostonian partygoers
between 21 and 30 with middle-high income. The advertising promise is that
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
15
Advertising Channels 12-months Plan Highlights Budget Planning
Desperados is a premium Tequila flavored that consumers will enjoy when
going on wild parties with their friends.
Desperados will use several media channels for its advertising: the radio,
specialized local magazines, outdoor and indoor billboards and the Internet.
Sponsorships with local sports events (baseball and football) are also
forecasted, as well as exclusive Desperados’ events in night clubs. These two
latter places will benefit from special billboards (Exhibit 18). In shop advertising
and promotions (including free trial and discounts) will also be designed for
liquor stores.
Advertising is planned from January to December 2007 (Exhibit 19). An
emphasis will be put on the first month of the launching and on the summer
months as beer consumption is higher during that period. Obviously one of the
capital aspects is to keep the coherence between all messages spread through
the different medias by always focusing on the promise.
A detailed advertising plan is given in Exhibits 18 and 19. In accordance with
the results of our survey (Exhibit 13), the main focus will lie on bill boarding and
promotion in PBCs. Happy hours (where Desperados will be sold for $2/bottle)
will also be organized to encourage first trial. As most of the target group spends
a lot of time on the Internet, a Desperados dedicated website providing both
information and animation is a must. Also, product related goodies and clothes
will be for sale online. The website will be advertised through an intensive
emailing campaign. In summer months, sports events will be the place where to
enhance brand awareness e.g. through free trials from the keg.
Heineken and Fischer will invest $425,000 for advertising/promotion in 2007.
58% (246.500 $) of the advertising budget will be allocated to media advertising
(including creation agencies fee and rent of consumer data bases) and 37%
(157.250 $) in “non-media” advertising including sponsorships and Desperados
own events in clubs or pubs. The remaining will be hold as a security provision
(5%) to enable the company to face non-forecasted additional expenses.
5. Conclusion
With a strong 46% interest for Tequila flavored beer within its target group, Desperados has the best
chances to be successfully launched in the US market, after its huge success in the Europe. Should
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
16
Fischer achieve the market sales objectives of $182,000 in the end of 2007 without exceeding its budget
of $465,000, it will begin its expansion to other major U.S. cities. Otherwise Fischer should exit the US
market in 2008 and stop selling Desperados in the USA.
With the support of its mother company Heineken, Fischer’s objective of reaching the break even point in
2010 is realistic. Heineken’s financial helping hand and established distribution power will be precious
assets to Desperados’ expansion throughout the USA. Desperados operates in a highly profitable niche
on the specialty beer market, where it can become one the top 15 best selling beer brands within a ten
year horizon.
Sources Adams Beverages Group (2005), Beer Handbook Australian Government (http://www.austrade.gov.au/australia/layout/0,,0_s2-1_CLNTXID0019-2_-3_PWB110752488-4_marketing-5_-6_-7_,00.html, 10/16/2006) Brasseries Fischer (http://www.brasseriefischer.com/brasserie-fischer.htm, 10/08/2006) Business Insights (2003), Alcoholic Drinks in the United States (Market Report) CIA World Factbook (https://www.cia.gov/cia/publications/factbook/geos/us.html#Econ, 10/14/2006) CIA World Factbook (https://www.cia.gov/cia/publications/factbook/geos/us.html#People, 10/16/2006) Datamonitor (October 2005), Alcoholic Drinks in the United States (Market Report) Datamonitor (October 2005), Beer market in the United States (Market Report) DataPlace (http://www.dataplace.org/charttable/index.html?groupBy=per, 10/14/2006) Dimensional Insights (http://www.dimins.com/News/PressReleases/2005/burke/, 10/21/2006) FreedomWorks (http://www.freedomworks.org/massachusetts/index.php, 10/15/2006) Global Insight (Q1 2006), The World Outlook (Report) Massachusetts Institute of Technology (MIT) (http://web.mit.edu/alcohol/www/laws.html, 10/12/2006) OnVista (http://waehrungen.onvista.de/, 10/14/2006) State Environmental Resource Center (http://www.serconline.org/bottlebill/stateactivity.html, 10/15/2006) State University of New York (Sociology Department), U.S. Government: Moderate drinking benefits health (http://www2.potsdam.edu/hansondj/InTheNews/MedicalReports/Longevity/1088617919.html, 10/15/2006)
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Stuff @Night magazine (http://stuffatnight.com/, 10/21/2006) USA Today (11/06/2005), Alcohol makers on tricky path in marketing to college crowd (Article) U.S. Department for Health and Human Services (http://ncadi.samhsa.gov/govpubs/rpo995/, 10/16/2006)
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibits Exhibit 1: Population Key Facts Exhibit 2: Legal Framework in the alcoholic drinks industry in Massachusetts Exhibit 3: Segmentation of the American alcoholic drinks market (2004) Exhibit 4: Massachusetts beer consumption statistics Exhibit 5: Key demand drivers on the American alcohol market Exhibit 6: Porter’s Five Forces in the American alcoholic drinks market Exhibit 7: Competitors on the U.S. alcoholic drinks (and beer) market (2004) Exhibit 8: Demand Forecast for 2007, 2010 and 2015 Exhibit 9: Income Statements for 2007, 2010 and 2015 Exhibit 10: Positioning and Competitive Strategy Exhibit 11: Prices per category of alcoholic drink and brand Exhibit 12: Survey Questionnaire Exhibit 13: Survey – Main Results Exhibit 14: Desperados Product Range and Characteristics Exhibit 15: Premium Pricing Strategy Exhibit 16: Overview of Distribution Channels Exhibit 17: Compliance Strategy with Advertising and Promotion Regulations Exhibit 18: Detailed Advertising Strategy Exhibit 19: Overview – Media Planning 2007
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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U.S. Population by Religion (2004)
0 10 20 30 40 50 60
Protestant
Catholic
Mormon
Muslim
Jew ish
Other
None
U.S. Population by Ethnic Origin (2004)
0 10 20 30 40 50 60 70 80
White
Hispanic
Black
Asian
Others
(%)
Boston Population by Age Class (2000)
0
20
40
60
80
100
120
140
Und
er 5
5 - 8
9 - 1
4
15 -
19
20 -
24
25 -
34
35 -
44
45 -
54
55 -
59
60 -
64
65 -
74
75 -
84
Ove
r 85
Exhibit 1: Population Key Facts
Source: U.S. Census Bu-reau (2000)
Source: CIA Worldfactbook Source: CIA Worldfactbook
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Exhibit 2: Legal Framework in the alcoholic drinks industry in Massachusetts This is an overview of the main laws related to alcohol consumption in the State of Massachusetts.
AAAGGGEEE • The legal drinking age in Massachusetts is 21 years of age. PPPUUURRRCCCHHHAAASSSIIINNNGGG AAALLLCCCOOOHHHOOOLLL • For persons under 21 years of age • A person over 21 years of age may not buy alcohol for a person under 21 years of age. Violation of this section may result in a fine of $2,000 or/and imprisonment up to 6 months. • By persons under 21 years of age: • Persons who present false identification, or make arrangements with someone older to buy alcohol are illegal. Violation of this section may result in a fine of $300. SSSEEERRRVVVIIINNNGGG AAALLLCCCOOOHHHOOOLLL • Any person without a license to serve alcohol may not serve someone under 21 years of age. • Any person licensed to serve alcohol may not serve intoxicated persons. • It is unlawful for unlicensed persons to serve alcohol to persons underage. AAALLLCCCOOOHHHOOOLLL AAANNNDDD DDDRRRIIIVVVIIINNNGGG • It is unlawful for a person under 21 years of age knowingly to drive a car with alcohol. • Persons may not drive while drinking from an open container of an alcoholic beverage. • Persons may not drive while under the influence of alcohol (0.08% legal blood alcohol limits) or any intoxicating substance. Violators are subject to a fine of up to $1,000 or imprisonment of up to two years, or both. LLLIIIQQQUUUOOORRR LLLIIICCCEEENNNSSSEEE • One-day license holders must pay state sales tax on the gross sales of alcohol at their events. Please note that licensees must be at least 21 years of age and have a valid Massachusetts identification (driver’s license). • Actually the license for beer and soft alcohols (e.g. >Desperados) is easier to obtain and less expensive than a wine & spirits license • No licensee shall: - Offer or deliver any free drinks to any person or groups of persons - Deliver more than two drinks to one person at a time - Sell, offer to sell, or deliver malt beverages or mixed drinks by pitcher except to two or more persons at one time - Advertise or promote in any way, whether within or without the licensee’s premises, any of the practices prohibited above. • Alcoholic beverages dispensed via a central source container, such as kegs, are prohibited in all MIT residential facilities.
Source: Massachusetts General laws, http://web.mit.edu/alcohol/www/laws.html, 2006
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 3: Segmentation of the American alcoholic drinks market (2004) The U.S. alcoholic drinks market value was $138.7 billion in 2004, distributed as follows between the three market segments (Beer & FABs & Cider (BFC), Distilled Spirits and Wine):
US alcoholic drinks market value segmentation (2004)
Beer, FAB's & Cider
55,73%
Distilled Spirits29,13%
Wine15,14%
Source: Datamonitor (U.S. Alcoholic drinks market industry profile 2005) The U.S. BFC market value was $77.3 billion in 2004, distributed as follows between the different market segments (beer represents over 97% of the BFC market):
American beer, FABs and cider segment (2004)
Low/No Alcohol0,68%
Ales, Stouts/Bitters
2,14%
Specialty Beer23,57%
Premium Lager59,13%
Standard Lager11,88%
FAB's2,07%
Cider0,52%
Source: Adams Beverages Group (Beer Handbook 2005), Datamonitor (Beer industry profile 2005)
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 4: Massachusetts beer consumption statistics The beer consumption in Massachusetts shows a positive trend between 1997 and 2004, though it did not steadily augment every year.
Beer consumption in Massachusetts, USA
502.512
470.000
475.000
480.000
485.000
490.000
495.000
500.000
505.000
510.000
1997 1998 1999 2000 2001 2002 2003 2004
in '0
00 li
ters
Source: Adams Beverages Group (Beer Handbook 2005) BFC represent 79% of the market volume in Massachusetts, which is far less than the country average of 85%. It is worth remembering as well that given the low price to volume ratio of the BFC segment (1.00 point in volume share brings on average 0.65 in value share), BFC only accounts for approximately 52% of the market value.
Massachusetts alcohol drinks market volume segmentation (2004)
Wine14%
Spirits6%
BFC imported15%
BFC79%
BFC domestic65%
Source: Adams Beverages Group (Beer Handbook 2005)
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Exhibit 5: Key demand drivers on the American alcohol market This chart shows the four main factors that influence the choice of an alcoholic drink in the USA. They affect three main decisions the consumer has to make:
What category (spirit, wine, beer) and what type (spirits > rum, tequila, vodka) of alcohol? What product/brand (lager > Heineken, Budweiser or Coors)? What price positioning (premium, medium, low-price)?
Of course, these choices are interrelated, i.e. choosing beer as alcohol category and lager as product type excludes Smirnoff to be chosen as a brand. Also, choosing Heineken as one’s lager beer brand implies choosing a premium product, as this is the brand’s positioning. Conversely, opting for the low-price positioning impedes choosing Heineken as a brand. significant influence influence Source: Own analysis based on secondary market research
Spirit
Wine
Beer
Premium
Medium
Low-price
TRENDSETTER - stars/models - trendy bars/lounges
abc
BRANDS - product differentiation - advertising/brand recognition
INCOME - personal income - macroeconomic situation (growth vs. recession)
TASTE - type - quality
Specialty
Lager
Ale
Red
Withe
Rose
FAB
Cider
Rum
Tequila
Vodka
uio
qwe
rty
pas
lzx
dfg
hjk
cvb
nmq
jkl
stu
mno
pqr
vwx
yza
abc
def
ghi
mnb
jhg
iuy
vcx
zlk
fds
tre
apo
wqm
Light
nbv
hgf
cxz
dsa
lkj
poi
uyt
rew
qmn
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 6: Porter’s Five Forces in the American alcoholic drinks market This chart summarizes the key points of the microenvironmental analysis of the American alcoholic drinks market according to Porter’s Five Forces. Source: Own analysis based on secondary market research
THREAT OF ENTRY (low)
• Economies of scale
are necessary • Mass production
required • High capital required • High brand
recognition and loyalty
• International Distribution
• Strong alliances
THREAT OF SUBSTITUTES
(high)
• FABs (Smirnoff Ice), Beer, Wine and spirits (Tequila)
• Frequent new product launches
SUPPLIER POWER (low)
• Large number of
suppliers • Low cost of change • No backward
integration
BUYER POWER (middle)
• Increased buyer power • Substitute products • High brand recognition • Customer loyalty
INDUSTRY RIVALRY (high)
• Different industries
(Beer & FABs) • 3 big market players • Increased buyer
power • Huge variety of
substitute products • High brand
recognition and customer loyalty
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 7: Competitors on the U.S. alcoholic drinks (and beer) market (2004) This chart shows that the U.S. alcoholic drinks (and especially the beer) market is an oligopoly in which three players share 67% (respectively 79%) of the market (figures from 2004).
The U.S. Alcoholic Drinks Market - an Oligopoly
15189
1133
19
43 52
0%
20%
40%
60%
80%
100%
Total Alcohol Beer
Anheuser-Busch SAB Miller Adolph Coors Others
Source: Datamonitor (U.S. Alcoholic drinks market industry profile 2005 and U.S. beer market profile 2005)
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 8: Demand Forecast for 2007, 2010 and 2015 If Desperados meets the revenue targets in Boston in 2007, the tequila flavored beer will be introduced progressively in other major U.S. cities. As of today, the expansion plan forecasts launch as follows: Boston (2007), New York (2008), Philadelphia (2008), Chicago (2009), Detroit (2009), Los Angeles (2010), San Francisco (2010), San Diego (2010), Washington (2011), San Jose (2011), Phoenix (2011), Houston (2012), Dallas (2012), San Antonio (2012), Austin (2013), Indianapolis (2013), Columbus (2013), Milwaukee (2013) and Baltimore (2013). According to this plan, Desperados will be available in all U.S. cities with more than 500,000 inhabitants by 2013. After this year, Fischer will focus its resources on intensive market penetration rather than expansion. The following demand schedules for 2007 (market entry), 2010 (break even) and 2015 (outlook) are based on this expansion plan as well as on objectives regarding brand awareness, first trial and repeated purchase. They also rely on the assumption of constant nominal average prices and proportion between different distribution channels. Indicated values are nominal (not discounted). 1) Demand forecast 2007 Target group in 2007 Total population in Boston** 589.141 from which: between 21-30 years** 25% from which: regular partygoers*** 70% from which: middle to high income**** 49% Total target population 50.519 Sales volume in liter in 2007 Sales Volume Brand awareness 60% from which: First trial (0.33 liter bottle) 33% 3.301 from which: Repeated Purchase (+ 4 liter p.a.) 40% 16.004 Total sales volume 19.305 Market Sales Value in 2007 Volume per distribution channel Sales Volume Sales ValueLiquor store/Supermarket 25% 4.826 Pubs/Bars/Clubs 75% 14.479 Average retail price per liter ($) Liquor store/Supermarket $ 3,90 $ 18.823 Pubs/Bars/Clubs $ 11,25 $ 162.888 Total sales value $ 181.711 Company Sales Value in 2007 Volume per distribution channel Sales Volume Sales ValueWholesaler 60% 11.583 Supermarkets chains 10% 1.931 Pubs/Bars/Clubs 30% 5.792 Average selling price per liter ($) Wholesaler $ 2,60 $ 30.116 Supermarkets/Liquor Store chains $ 3,10 $ 5.985 Pubs/Bars/Clubs $ 3,80 $ 22.008 Total sales value $ 58.109
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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2) Demand forecast 2010 Target group in 2010 Total population in eight major cities* 22.142.905 from which: between 21-30 years 22% from which: regular partygoers 70% from which: middle to high income 49% Total target population 1.670.904 Sales volume in liter in 2010 Sales Volume Brand awareness 66% from which: First trial (0.33 liter bottle) 33% 120.095 from which: Repeated Purchase (+ 4 liter p.a.) 40% 582.276 Total sales volume 702.371 Market Sales Value in 2010 Volume per distribution channel Sales Volume Sales ValueLiquor store/Supermarket 25% 175.593 Pubs/Bars/Clubs 75% 526.778 Average retail price per liter ($) Liquor store/Supermarket $ 3,90 $ 684.812 Pubs/Bars/Clubs $ 11,25 $ 5.926.255 Total sales value $ 6.611.067 Company Sales Value in 2010 Volume per distribution channel Sales Volume Sales ValueWholesaler 60% 421.423 Supermarkets/Liquor Store chains 10% 70.237 Pubs/Bars/Clubs 30% 210.711 Average selling price per liter ($) Wholesaler $ 2,60 $ 1.095.699 Supermarkets/Liquor Store chains $ 3,10 $ 217.735 Pubs/Bars/Clubs $ 3,80 $ 800.703 Total sales value $ 2.114.137
3) Demand forecast 2015 Target group in 2015 Total population in cities over 500,000****** 35.869.015 from which: between 21-30 years***** 22% from which: regular partygoers*** 70% from which: middle to high income 49% Total target population 2.706.676 Sales volume in liter in 2015 Sales Volume Brand awareness 70% from which: First trial (0.33 liter bottle) 33% 206.330 from which: Repeated Purchase (+ 4 liter p.a.) 40% 1.000.387 Total sales volume 1.206.717
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Market Sales Value in 2015 Volume per distribution channel Sales Volume Sales ValueLiquor store/Supermarket 25% 301.679 Pubs/Bars/Clubs 75% 905.038 Average retail price per liter ($) Liquor store/Supermarket $ 3,90 $ 1.176.549 Pubs/Bars/Clubs $ 11,25 $ 10.181.677 Total sales value $ 11.358.227 Company Sales Value in 2015 Volume per distribution channel Sales Volume Sales ValueWholesaler 60% 724.030 Supermarkets/Liquor Store chains 10% 120.672 Pubs/Bars/Clubs 30% 362.015 Average selling price per liter ($) Wholesaler $ 2,60 $ 1.882.479 Supermarkets/Liquor Store chains $ 3,10 $ 374.082 Pubs/Bars/Clubs $ 3,80 $ 1.375.658 Total sales value $ 3.632.219
* Boston (2007), New York (2008), Philadelphia (2008), Chicago (2009), Detroit (2009), Los Angeles (2010), San Francisco (2010), San Diego (2010) **Total Population (Boston Census, 2000) 589.141 20-24 years (-1 year = 1.9%) 11,90% 70.084 25-34 years (-4 years = -6.2%) 21,20% 124.762 Approximation: Age 21-30 25,00% 147.285 *** Survey (Exhibit 11 & 12) ****Total Households (in 1) and 2) only singles) 239.603 1) $ 20,000 - $29,999 5,90% 14.137 2) $ 30,000 - $39,999 5,40% 12.939 3) $ 40,000 - $49,999 5,31% 12.721 4) $ 50,000 - $59,999 7,84% 18.776 5) $ 60,000 - $64,999 9,48% 22.720 6) $ 75,000 - $99,999 9,93% 23.784 7) $ 100,000 - $124,999 5,16% 12.369 Target Group >= $ 20,000/person p.a. 49,02% 117.445 ***** Business Insights (2003) ****** City Data (http://www.city-data.com/top1.html)
Sources: Business Insights (2003), City Data, Boston City Census (2000), own analysis and estimation
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 9: Income Statements for 2007, 2010 and 2015 The following income statements of Fischer’s Desperados operations in the USA are based on the demand schedules shown in Exhibit 8. As a result of high market entry investments especially in advertising and promotion, the break even point is expected to be reached only in the fourth year of operations (2010). Sales will grow rapidly during the expansion wave (1179% p.a. until 2010 and 14% p.a. up to 2015). As a result of targeted market penetration efforts, the return on sales is estimated at about 15% for the years following 2015 with an average sales growth of 5-10% p.a. in '000 of dollars Entry 2007 (%) Breakeven 2010 (%) Outlook 2015 (%)Gross Revenues $ 58 $ 2.114 $ 3.632 Trade Discounts $ 4 7% $ 106 5% $ 109 3%Net Revenues $ 54 93% $ 2.008 95% $ 3.523 97% Costs of goods sold $ 19 33% $ 702 33% $ 1.207 33%Distribution costs $ 6 10% $ 169 8% $ 291 8%Selling costs $ 5 8% $ 127 6% $ 218 6%Gross Margin $ 24 42% $ 1.010 48% $ 1.808 50% Advertising $ 300 516% $ 540 26% $ 784 22%Promotions/Merchandising $ 125 215% $ 230 11% $ 336 9%Administrative costs $ 6 10% $ 190 9% $ 254 7%Profit before tax $ -407 -700% $ 50 2% $ 434 12%
In 2007, Fischer will benefit from the financial support of the Heineken group to which it belongs. Heineken, which spent $50 million on advertising and promotion in 2005, will provide Fischer with a budget of $400,000 for launching the promising product in the U.S. alcohol drinks market. In the long run (after the end of the expansion wave), the advertising and promotion budget is expected to represent about 20% of operation revenues. Sources: In accordance with the Demand Forecast (Exhibit 8), own budgeting
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 10: Positioning and Competitive Strategy The positioning of Desperados is defined taking into account both the product’s characteristics and target groups and the current positioning of competing brands on the market. These brands are briefly presented in Exhibit 11.
1 Desperados 8 Local specialties (average) 15 Budweiser 2 Smirnoff Ice 9 Ales (average) 16 Busch 3 Mike’s Hard Lemonade 10 Stouts (average) 17 Coors 4 Bacardi Silver 11 Bud Light 18 Miller High Life 5 Zima XXX 12 Miller Lite 19 Corona Extra 6 Bud Extra 13 Coors Light 7 Tequiza 14 Natural Light
Desperados will stay in close competition with both flavored beers (specialty beer segment) and malternatives (FAB segment). The major competing brands have been shaded in grey. Differentiation and positioning play a major role for creating brand recognition and foster sustainable brand loyalty. This is especially true in view of the high number of substitutes and constant innovations in the market. Mapping 1 shows the positioning of Desperados on the beer market segment compared to two closely competing products that are positioned on the FAB segment. This reveals the difference in composition which is one main criteria of differentiation (beer vs. malt-based lemonade). Also, both the premium positioning and the little extra (which places Desperados closer to FABs) differentiate the tequila flavored beer from the main field of standard lager beers. Mapping 1 – Identification (FAB vs. /Beer) and Price/Quality (Premium vs. Standard) * Implies high price and high quality ** Implies lower price and lower quality
Premium*
Standard**
Beer FAB
1
15
3
2 4
5 6
7
19 18
16
14
13 11
12 17
8
9 10
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Mapping 2 – Image (Traditional/Common vs. Trendy/Party) and Taste (Strong & Wild vs. Mild & Lemo) Mapping 2 shows how Desperados differentiates from Lemo-like brands like Smirnoff Ice and Bacardi Silver by its strong wild taste. It also differentiates from Tequiza (and the main field traditional beers) by its extreme positioning as a trendy party beer. * Strong (usually bitter) taste ** Mild (watery or sweet) taste Sources: Own analysis and research, also based on collected data shown in Exhibit 11
Strong, Wild*
Mild, Lemo-like**
Trendy, Party drink
Traditional, common
1
15
3
2 4
5
6 7
19 18
16
14 13 11
12
17
8
9 10
Product Category or Brand
Company Description Packaging (in stores) Unit price Liter Price Unit price Liter price
Supermarket/ Liquor or Convenience Store Pubs/Bars/Clubs
Flavored alcoholic beverages Smirnoff (Ice/ Black Ice/ Twisted)
Smirnoff malt-based beverage with vodka available in different flavors (citrus, grape, apple…)
12oz bottle (6-pack)
$ 1.30 $3.90 $3.75 $11.25
Mike’s Hard Lemonade
Mike’s malt-based lemonade available in five different berry flavors
12oz bottle (6-pack)
$ 1.25 $3.75 Not for Sale* Not for Sale*
Bacardi Silver
Anheuser-Busch malt-based beverage with rum available in different flavors (apple, peach, orange…)
12oz bottle (6-pack)
$1.30 $3.90 $3.75 $11.25
Zima XXX Coors malt-based beverage available in different flavors (orange, lemon, cherry…)
12oz bottle (6-pack)
$1.20 $3.60 Not for Sale* Not for Sale*
Specialty beers Flavored beers Bud Extra Anheuser-Busch beer with caffeine,
ginseng and guarana, three aromas (blackberry, raspberry and cherry)
12oz bottle (6-pack)
$1.30 $3.90 Not for Sale* Not for Sale*
Tequiza Anheuser-Busch lager beer with real blue agave nectar and a natural flavor of lime and real Mexican tequila
12oz bottle (6-pack)
$1.40 $4.20 $3.75 $11.25
Regional beers Local Specialties (average)
Diverse Usually beers with a little ‘extra’ (e.g. British dark beer), generally imported
12oz bottle (6-pack) or 24oz bottle
$1.10-$1.60
$1.80-$2.60
$3.30-$4.80 $3.50-$5.00 $10.50-$15.00
Exhibit 11: Prices per category of alcoholic drink and brand
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
33
Source: Own research (Average prices collected in 3 conveniences stores, 2 liquor stores, 1 supermarket, 1 pub, 2 bars and 1 night club)
Ales and stouts Ales (average)
Diverse 12oz bottle (6-pack) or 24oz bottle
$1.30-$1.60
$2.25
$3.90 $3.75-$4.50 $11.25-$13.50
Stouts (average)
Diverse 12oz bottle (6-pack) or 24oz bottle
$1.50-$2.00
$2.50
$4.50 $4.00-$5.50 $12.00-$16.50
Other beers Light beers Bud Light Anheuser-Busch Low calorie beer, world
leading light beer, most sold beer in the U.S.
12oz can (12-pack)
$0.92 $2.76 $3.25 $9.75
Miller Lite Miller Brewing Very low calorie traditional beer (“spelled lite, because ‘gh’ is too heavy”)
12oz bottle (6-pack)
$0.83 $2.49 $3.25 $9.75
Coors Light Coors Pale low calorie lager with light blonde to transparent color
12oz bottle (6-pack)
$0.83 $2.49 $3.25 $9.75
Natural Light
Anheuser-Busch Less filling, low calorie very refreshing light beer
12oz can (12-pack)
$0.54 $1.62 $3.00 $9.00
Other lager Budweiser Anheuser-Busch Leading premium lager in
the U.S. market 12oz can (12-pack)
$1.00 $3.00 $3.25 $9.75
Busch Anheuser-Busch Smooth and light taste, subpremium
12oz can (12-pack)
$0.63 $1.89 $3.00 $9.00
Coors Coors Crisp and clean premium lager
12oz bottle (6-pack)
$1.20 $3.60 $3.25 $9.75
Miller High Life
Miller Brewing “American Style” traditional premium lager
12oz bottle (6-pack)
$1.25 $3.75 $3.25 $9.75
Corona Extra
Grupo Modelo (Corona)
Most sold Mexican lager in the world, refreshing and generally served with lime
12oz bottle (6-pack) or 24 oz bottle
$1.25
$2.00
$3.75 $3.75 $11.25
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
Exhibit 12: Survey Questionnaire Source: Own creation
8
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
36
Exhibit 13: Survey – Main Results
Source: Analysis of answers given to the Questionnaire in Exhibit 12 (Survey has been given in Boston city and was accessible for online filling) Total size: 256 respondents
Gender: Male = 52% Female = 48%
Origin: American = 79% Hispanic = 12% European = 6% Others = 3%
Age structure: below 21 = 10% 21-30 = 85% above 30 = 5%
Occupation: Student = 67% Employed = 22% Others = 11%
1) General interest in Desperados?
Would you be interested in buying tequila flavored beer? (only 21-30 years old)
Very highly18%
Highly28%
Rather not17%Not at all
7%
Somewhat30%
Conclusions: - 46% of the target group would be interested in Desperados + 30% potential buyers Additional results: - Demand for Desperados for people above 30 is declining
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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2) What does the brand name “Desperados” make people think of?
Which impression have people with the brand name "Desperados"? (only 21-30 years old)
Wild18%
Movie7%
Desperate21%
Mexican30%
I don't know3%
Others5%
Party16%
Conclusions: - 69% of the respondent’s impressions are a combination of wild/desperate feelings with a
Mexican culture. - 16% think that Desperados stands for party, which is one of the target group factors! 3) How much would the Bostonian customer pay for “Desperados”?
How much would you spend for Desperados?(only 21-30 years old)
8%
2%
27%
51%
12%
5%17%
28%
50%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
less than $2 $2-3 $3-4 $4-5 more than $5
Price
Perc
ent
Pups/bars/clubs Supermarkets/liquid stores
Conclusions: - Average price in pubs/bars/clubs should be between $3-4 - Average price in supermarkets/liquor stores should be less than $2.
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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4) Which media should use Fischer/Heineken to introduce “Desperados” into the Boston market?
8% 16%
26%
12%
30%
8%
0%
5%
10%
15%
20%
25%
30%Billboard outdoor
Bars/bubs/clubs
Supermarket/Liquor store
Magazine
Radio
Internet
Where did you see the last ad for
alcoholic drinks?(only 21-30 years old)
Conclusions: - The main focus should be concentrated on “Billboard” advertisement (72%) - Radio, Internet and Magazines should be considered secondarily 5) For which occasion should be Desperados available?
To what occasions do you drink alcohol?(only 21-30 years old)
37,0%
33,0%
15,0%
8,0%
7,0%
0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0%
Pubs/bars/clubs
Parties
Sport events
During watching TV
Eating
Conclusions: - 70% of the target group are consuming alcohol in pubs/bars/clubs and on parties - This results approved that Desperados is the perfect drink for partygoers
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
39
Exhibit 14: Desperados Product Range and Characteristics Desperados is tequila flavored beer with 5.9% vol. alcohol. The stylish relief bottle has a touchable
writing “Desperados”. The customer can enjoy Desperados straight from the pure bottle, ideally served
by seven degrees Celsius with a slice of lemon.
0,33l Longneck bottle (12oz) This format is the perfect size for private parties and bars and clubs. Its
trendy design is an eye-catcher. It will be for sale as a six-pack and a 24
bottle box in supermarkets, liquor stores and convenience stores. While the
six-pack is perfect for storage in the fridge, the 24 bottle box of Desperados is
the perfect party solution for big events. The 12oz bottle will be the only
available bottle size in PBC establishments.
0,65l Longneck XL bottle (22oz) The first and very unique XL bottle presents Desperados in one of its most
exclusive way for its particularly thirsty advocates. It is very similar to the
small bottle of Desperados but with 100 per cent more volume, which is ideal
for home drinkers and just perfect for party starters. This bottle will not be
available for sale in PBC establishments where small sizes, that are more
likely to trigger repeated purchase, are the more efficient solution.
5l Big keg (169 oz) This very innovative product of Desperados is the ideal present for any occasions
and parties. It gives the consumer a feeling of even more freshness and taste
than bottles. It can also be bought for sport or other outdoor events. Yet, there will
be no Desperados sold out of kegs in PBC establishments, which would break
with the premium image transferred by the classic bottle.
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 15: Premium Pricing Strategy These are average target prices which were defined per retailer type for consumer prices (Table 1) and per customer type for intermediate selling prices (Table 2). In accordance with the price alignment strategy, retail prices may vary from one retailer to another (even within the same category) depending on the price of the closest premium competing products (i.e. Tequiza, Smirnoff Ice and Bacardi Silver). The variance should not exceed +/-10% of the target prices in stores and +/-20% in PBC-retailing. Intermediate selling prices will be negotiated with a 5% tolerance (rebates excluded) to ensure proper gross margins. The prices for PBC-retailers have been defined to give owners no incentive to buy Desperados in uncontrolled manner from liquor stores or wholesalers. In other words, summing up costs and benefits, PBC owners will have no advantage of not buying from Fischer (Exhibit 16). This will avoid short-circuiting the direct distribution channel which enables higher control over the implementation of the operating strategy. Table 1: Retailing Prices
Packaging size Supermarket/Liquor Store/Convenience Store (+/-10%)
Pub/Bar/Club (PBC) (+/-20%)
Bottle, 12 oz Not for sale $3.75
Bottle, 12oz 6 pack
$7.80 ($1.30 per bottle) Not for sale
Bottle, 12oz 24 pack
$28.00 ($1.17 per bottle) Not for sale
Bottle, 22 oz $2.20 Not for sale
5 liter container $15.90 Not for sale
Table 2: Fischer Selling Prices
Packaging Size Wholesaler (+/-5%)
Supermarket (+/-5%)
Pub/Bar/Club (+/-5%)
Bottle, 12oz (6 pack)
$5.20 ($0.87 per bottle)
$6.25 ($1.04 per bottle)
$7.62 ($1.27 per bottle)
Bottle, 12oz (24 pack)
$19.00 ($0.79 per bottle)
$24.00 ($1.00 per bottle)
$30.00 ($1.25 per bottle)
Bottle, 22oz $1.50 $1.80 Not for sale
5 liter Container $12.00 $14.00 Not for sale
Source: Own analysis based on alignment strategy (see also Exhibit 11)
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 16: Overview of Distribution Channels The following tables show the three types of distribution patterns that can occur and the corresponding margins of every link in the channel. 1) Three-tier system Index
1 Manufacturer (Fischer) selling price index 100
2 Wholesaler selling price 150 Wholesaler
selling price 120
3 PBC-retailer selling price 430
Liquor (or convenience) store selling price
150
2) Two-tier system Index
1 Manufacturer (Fischer) selling price
150 Manufacturer (Fischer) selling price
120
2 PBC-retailer selling price 430 Supermarket
chain selling price 150
The price indices clearly show that PBC-retailers can not buy Desperados from any place for less than 150 which is the selling price Fischer wants to achieve. To ensure this, a contract must be signed with the wholesaler forcing him to charge at least 50% over Fischer’s price when selling to PBCs. The same is, a supermarket could not get Desperados for less than 120 if it was to go to the wholesaler. Source: Own analysis based on Heineken’s distribution system (internal source)
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 17: Compliance Strategy with Advertising and Promotion Regulations
GGGEEENNNEEERRRAAALLL MMMIIISSSSSSIIIOOONNN • In its advertising, Desperados will not encourage illegal and irresponsible consumption of
alcohol such as portrayal of dinking and driving, underage drinking, or alcoholism.
OOOPPPEEERRRAAATTTIIIVVVEEE CCCOOONNNSSSTTTRRRAAAIIINNNTTTSSS • To minimize appeal to people under the legal age of alcohol consumption, Desperados will
take into account these elements:
o Symbols
o Language
o Music
o Gestures
o Entertainers or celebrities
o Cartoon characters
o Groups or organizations
• Desperados billboard advertisements will be located at least 500 linear feet from primary
schools, places of worship or public playgrounds.
• Desperados will only use advertising channels where a minimum of 70% of the viewership has
the minimum legal drinking age.
• All the on-site testing and distribution of Desperados products (goodies: clothing, key rings,
hats, posters) will be done where establishments are licensed and where people are in the
legal age.
• Sponsored events will also be done in licensed establishments and will be in accord with state
law. Desperados take the responsibility not to encourage the irresponsible, excessive,
underage or otherwise illegal consumption of its product.
Source: Own analysis based on Beer Institute Advertising Code (Jan 2006), http://www.beerinstitute.org/tier.asp?bid=249
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Exhibit 18: Detailed Advertising Strategy Source: Own analysis and strategy Radio
Specialized Bostonian Magazines
Billboards
Time scale: during the first two months (January and February), to introduce the
product, then during the summer (June, July and August) when people are in
holidays and when their take more time for going out, and finally during the end
of December, anticipating the New Year’s Eve.
Budget Allocation: 5 %: 21 250$
Commercials are planned to be broadcasted 4 times per day from Thursday to
Saturday early in the evening and during night time, when young people are
supposed to prepare their selves for going out or when they are in their cars,
coming back from work to their home. The commercial will be very dynamic,
broadcasting club music and presenting Desperados as “the new flavored
tequila beer”. Sequences will be spread through Magic Radio 106.7 (Soft Rock
radio: young professional) and Jamming: 94.5 (hip hop radio – urban rap: young
students).
Time Scale: The whole advertising will cover the first month, then, March to
september (spring break and summer holidays), and finally December (holidays
and New Year’s Eve).
Budget Allocation: 8%: 34 000$
The magazines selected are the metro Edition; the improper Bostonian
(accurately bills itself as "Metro Boston's Decorative Guide to Entertainment,
Culture, and the Perfect Palate"). One page in “Stuff @Night magazine”26 will be
mandatory. This is a “party and fashion” magazine which perfectly covers the
target group. The advertising could be leverage with regular Skyscrapers on the
magazine’s website.
Time scale: Outdoor billboards: the first month, during the summer (holidays:
July, august and September) and 2 weeks in December, before New Year’s Eve
concerning Outdoor billboards. Indoor billboards will be exposed trough all the
year, in Bars and clubs and liquor stores.
Budget Allocation: 30%:127 500 $
Billboard advertising is one of the most important elements, because it exposes
the new brand to the largest audience. The positioning have to be well felt
otherwise, people will be confused and won’t be attracted by tasting it.
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
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Outdoor billboards will be located around universities and “famous” bars or clubs
and will be focused on brand image: representing young men and women,
around 25 years, drinking desperados, having fun, in nice different
environments. As a consequence, there will be different designs: the same
persons will be represented in different contexts: in night clubs, bars but also
during house parties. The atmosphere has to be the same in all outdoor
billboards. The audience has to feel that they really share a good moment,
having their desperados in their hands.
Indoor billboards will be focused on encouraging people to consume the
product. As a consequence it will show men and women trying to drink the
product.
In both of the billboards, the Desperados bottle will be well showed up as well as
the “Tequila flavored” message. These are the two central elements people
have first to be attracted by; because it is the thing they have to remember.
Example of Night club billboard The created billboard here shows a man that tries to appropriate desperados.
He is already drinking a Desperados, so he likes it and want more. He is in a
club, had a lot of fun (he danced a lot since he don’t have his shirt any more)
and is about to go back home with more desperados. The city drawing in the
bottom side reflects the urban notion as targeted group lives in Cities.
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
45
Internet
Sponsorship (Sport events & DJs) Pubs & Night Clubs Promotion, Special Events
Time Scale: All year long
Budget allocation: 15%: 63 500$
Internet is a media regularly used by the targeted demographic group. Create a
flash web site with games could be a very powerful and entertaining way for
getting prospects accustomed with the brand. The web-site promotion will be
leveraged on an aggressive e-mailing campaign addressed to prospect
accurately defined with the rented databases.
A simple game example is bottles of desperados falling and the gamer have to
catch them in a crate at the bottom of the screen, the more he collects the better
the reward. This system was used by Pilsner Urquell and there were ladies
onscreen who got undressed the more bottles the gamer collected.
Time scale: 2 presences in sports matches per month during all the year, expect
during October, November. The partnerships with clubs will be done during one
week end on January (for the launching), March (spring break), August (summer
holidays) and December (New Year’s Eve)
Budget Allocation: 12 %: 51 000 $ for sports Events
10%: 42 500 $ for night clubs parties with famous DJ
Good looking girls will present Desperados in nice stands in stadiums. Cheap
offers will be organized in order to encourage people (older than 21 years old) to
taste it. In a long term vision, Desperados advertisements will be spread through
national sports events such as Superbowl or US open (where Heineken yet
developed partnership this year). Fischer must also look for partnerships with
local famous clubs and associate its image with famous DJs. During these
events, desperados branded products like clothing, posters, hats will be offered.
Time scale: January, April (Spring break events), July to September (summer
holidays) and December (winter holidays)
Budget Allocation: 15 %: 63 750 $
The Desperados Events will clearly be organized in Night clubs and Bars.
Special Desperados “happy hours” will take place in the most popular Bostonian
Bars (lounge bars but also bars near universities) where people will benefit from
discounts (e.g. $2/ 12oz bottle). Dedicated Desperados night will be promoted
on the website. In both bars and clubs, good looking women (hired by
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
46
communication agencies) will be paid for promoting the new product. They will
represent the brand and will praise it, encouraging people to try it.
In liquor stores some stands will be implemented, presenting a big desperados
Bottle with different brochures about the product characteristics, the address of
the web sites with its referred games and schedules of all events organized.
Finally a buzz marketing event could hugely enhance massive brand
awareness. We thought about implementing a huge trap in the center of Boston
(near Prudential for example: see the picture below) in which a Desperados
bottle will be locked up. People would have to find out how to liberate the bottle,
by going on the internet website, and playing the game relative to this trap. This
really could enhance Bostonian curiosity and also word of mouth. Moreover, it
would have a considerable impact on the other advertisements and promotions
proposed in this advertising plan.
Desperados ‘ Trap
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
Exhibit 19: Overview – Media Planning 2007
Desperados - Media Planning 2007 Budget Months % Jan Feb Mar April May June July Aug Sept Oct Nov Dec Medias 58% Radio 5% Magazines 8% Metro edition The Improper Bostonian Stuff@Night Billboards 30% Outdoor 2 weeks Indoor Internet 15% Non-Media 37% Sponsorship 22% Sports Events 12% Baseball games Football games Clubs with famous DJ 10% N.Y Eve Desperados Events 15% Clubs and Pubs promotion Reserve (not yet allocated) 5% Intensive Summer Holiday Promotion Promotion period No Promotion Source: In accordance with own advertising strategy
Desperados in Boston - Marketing Plan 2007 October 23rd 2006
References 1 State University of New York (Sociology Department), U.S. Government: Moderate drinking benefits health (http://www2.potsdam.edu/hansondj/InTheNews/MedicalReports/Longevity/1088617919.html, 10/15/2006) 2 CIA World Factbook (https://www.cia.gov/cia/publications/factbook/geos/us.html#Econ, 10/14/2006) 3 FreedomWorks (http://www.freedomworks.org/massachusetts/index.php, 10/15/2006) 4 Global Insight (Q1 2006), The World Outlook (Report) 5 CIA World Factbook (https://www.cia.gov/cia/publications/factbook/geos/us.html#Econ, 10/14/2006) 6 Global Insight (Q1 2006), The World Outlook (Report) 7 DataPlace (http://www.dataplace.org/charttable/index.html?groupBy=per, 10/14/2006) 8 OnVista (http://waehrungen.onvista.de/, 10/14/2006) 9 CIA World Factbook (https://www.cia.gov/cia/publications/factbook/geos/us.html#People, 10/16/2006) 10 Business Insights (2003), Alcoholic Drinks in the United States (Market Report) 11 U.S. Department for Health and Human Services (http://ncadi.samhsa.gov/govpubs/rpo995/, 10/16/2006) 12 Brasseries Fischer (http://www.brasseriefischer.com/brasserie-fischer.htm, 10/08/2006) 13 Business Insights (2003), Alcoholic Drinks in the United States (Market Report) 14 State Environmental Resource Center (http://www.serconline.org/bottlebill/stateactivity.html, 10/15/2006) 15 Massachusetts Institute of Technology (MIT) (http://web.mit.edu/alcohol/www/laws.html, 10/12/2006) 16 USA Today (11/06/2005), Alcohol makers on tricky path in marketing to college crowd (Article) 17 Datamonitor (October 2005), Alcoholic Drinks in the United States (Market Report) 18 Datamonitor (October 2005), Alcoholic Drinks in the United States (Market Report) 19 Adams Beverages Group (2005), Beer Handbook 20 Business Insights (2003), Alcoholic Drinks in the United States (Market Report) 21 Australian Government (http://www.austrade.gov.au/australia/layout/0,,0_s2-1_CLNTXID0019-2_-3_PWB110752488-4_marketing-5_-6_-7_,00.html, 10/16/2006) 22 Australian Government (http://www.austrade.gov.au/australia/layout/0,,0_s2-1_CLNTXID0019-2_-3_PWB110752488-4_marketing-5_-6_-7_,00.html, 10/16/2006) 23 Brasseries Fischer (http://www.brasseriefischer.com/brasserie-fischer.htm, 10/10/2006) and based on an interview with Mr. Fritz Riedl, Production Manager at Brasseries Fischer from 1992 to 2003 (10/12/2006) 24 Australian Government (http://www.austrade.gov.au/australia/layout/0,,0_s2-1_CLNTXID0019-2_-3_PWB110752488-4_marketing-5_-6_-7_,00.html, 10/21/2006) 25 Dimensional Insights (http://www.dimins.com/News/PressReleases/2005/burke/, 10/21/2006) 26 Stuff @Night magazine (http://stuffatnight.com/, 10/21/2006)
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