Caleb's Kola Marketing Plan

Arlina Cai, Gabriel Kates, Han Ren Lim, Steven Lukens, Robert Petts, Stephanie Zheng

AGENDA

• Context• Caleb’s• Competitive Landscape• Addressing the Challenge• Strategy• The Marketing Mix: 4Ps

• Per capita soft drink consumption is decreasing

• The soft drink industry is declining at a more rapid rate

CONTEXT

• Consumer awareness of the negative effects of soda consumption• Obesity and diabetes epidemic

• Increase in soda prices due to increased prices of corn and sugar

The soda industry as a whole is in decline

Additional Facts

Key drivers of decline

Retail sales of U.S. carbonated soft drinks

Sources: IBISWorld Business Environment Profile: Per capita soft drink consumption, Mintel Carbonated Soft Drinks - US - 2014

Craft soda is 1% of the soda market in terms of units

CONTEXT

= 90 million cases

Craft soda

Sources: CNBC 2014

But the craft soda market is emerging

CONTEXT

Sources: Mintel Carbonated Soft Drinks - US - 2014

The craft movement is being driven by new social trends and changes in consumer taste

CONTEXTPeople buy craft soda

because

Reasons People buy Carbonated Soft

DrinksLike the flavor

For refreshmentTo have as a treat

A favorite beverageFor energy

For Convenience

Reasons People Buy Craft Soda

Better taste

Authenticity

Quality

Smaller batches

Sources: Mintel’s Carbonated Soft Drinks - US - June 2014, Five Star Soda, PMQ

What is Pepsi doing to leverage this trend?

CALEB’S

Pepsi is moving into the craft soda industry with Caleb’s Kola

Ingredients

1. Kola nuts from Africa2. Sustainable fair trade cane

sugar3. “A special blend of spices from

around the world”4. Citrus5. Sparkling water

Nutrition Facts10 ounce glass bottle

110 calories29 grams of sugar

0 grams of fat50 milligrams of

sodium50 milligrams phosphorus

Current Distribution Channels

(Collaborators)

Current Customers

NYC Area (Brooklyn focus)Pizza eaters

Costco shoppersDeli patrons

Restaurant goers

Sources: Caleb’s Website

~100 retail stores (sold by bottle)9 Costcos (sold by case)

32 restaurants (sold by bottle)

CALEB’S

Weaknesses

Strengths


• Lack of Awareness in target market

• Lack of Understanding

• Lack of Availability

• Lack of Attractiveness

• Overall ineffective at attracting new customers

• Access to large distribution networks via Pepsi

• Economies of scale

CALEB’S

Caleb’s currently has more weaknesses than strengths

BUT Caleb’s value proposition offers consumers a premium craft soda

• High quality ingredients - kola nuts, cane sugar

• Sustainable sourcing of ingredients

• Taste• Thirst quenching• Product design• #honorincraft - coolness• Caffeine• Champagne like fizz

• Price• Limited availability• Calories• Sugar• Caffeine


CALEB’S

CostsBenefits


The core competencies and strategic assets How Caleb’s can leverage it

Cash Sustainable sourcing of premium ingredients

Existing distribution channelsCaleb’s can piggy back on current

distribution channels to get Caleb’s into more restaurants and stores

Economies of Scale Can provide a better product for cheaper

Relationships and experienceCaleb’s can use Pepsi’s professional

network and use Pepsi’s experience to optimize operations

CALEB’S

Caleb’s optimal value proposition leverages its core competences and strategic assets

We need to differentiate Caleb’sin a way that is conducive to achieving our

goals.

COMPETITIVE LANDSCAPE


CALEB’S

Value Refreshment Seeker

Energy Seeker

Mixer Seeker Foodie Treat

SeekerHealth Seeker

Flavor M/H L H H H M

Fizziness L/M L H H M L

Thirst Quenching H L L M L M

Caffeine L H L L L L

Convenience H H M L L L

Authenticity L L L/M HH H H

Healthy L L L M/H M H

All natural ingredients L L L H H H

Pairs well with food L L M HH M L/M

Good for mixing L L H M L L

Heritage L L L H M M

Price H M M L L L

Soda customers value these attributes

Additional Brands: Dr. Browns, San Pellegrino, Hansen Beverage Company, SABMiller Holdings inc., Thomas Kemper Soda Co.

Products: Soda is basically all these companies offer. But many companies do offer different flavored sodas and diet versions of those flavors.

JONES

REED’S SODA

BOYLAN

Sources: Google Images, Reed’s Soda 2014 10-K, Boylan’s Website, Jones Soda Websites, Reed’s Soda Website, Izze’s Website


*Please refer to our competitors’ tab for more information

GROWN UP SODA

Caleb’s has strong competitors

High

Medium

Low

Flavor FizzThirst

Quenching

Caff. Conv. Authen. HealthyAll

Natural Ingredie

nts

Pairs well with food

Good for

MixingHeritage Price



Caleb

’s

Jones

Reed’s/Virgil’s

Boylan

GuS

Caleb’s competitors have many different value propositions

Values Caleb’s Jones Reed’s/Virgil’s Boylan GuS

Flavor M/H M H H HFizziness H M/L M/L M/L M/L

Thirst Quenching M L H H H

Caffeine M H H H LConvenience L L L H M/HAuthenticity H L M/H M (decr). M

Healthy H L M M HAll natural ingredients H L H H M

Pairs well with food H L L M M/H

Good for mixing L/M L M H HHeritage M/H L L H L

Price H L M L M

Sources: Caleb’s Website, Boylan’s Website, Jones Soda Websites, Reed’s Soda Website, Izze’s Website


Caleb’s competitors have many different value propositions

ADDRESSING THE CHALLENGE

Values Caleb’s

Flavor M/H

Fizziness H

Thirst Quenching M

Caffeine MConvenience LAuthenticity H

Healthy HAll natural ingredients H

Pairs well with food H

Good for mixing L/M

Heritage M/H

Price H

Value Foodie

Flavor HFizziness H

Thirst Quenching MCaffeine L

Convenience L

Authenticity HHHealthy M/H

All natural ingredients H

Pairs well with food HH

Good for mixing M

Heritage H

Price L


The Foodies’ values align best with Caleb’s value proposition


Value Foodie

Flavor HFizziness H


Convenience L




Good for mixing M

Heritage H

Price L


How did you hear about new flavors and ingredients?

• Value experiences with food• Adventurous flavors• Artistic and/or creative

• “Creative Class Millennials”• Love sharing photographs of their food• Spread food ideas through word-of-

mouth• Social media and food bloggers

Who are foodies? What do they value?

Sources: Mintel


• Millennials care about quality• Are adventurous and want to try new

things• Grew up with social media

The profile of Foodies fit the description of the Millennials

Value Foodie

Flavor HFizziness H


Convenience L




Good for mixing M

Heritage H

Price L


Retail Sales $10,000 Net Revenues 5,000COGS

(3,250)Distribution Costs

Gross Profits 1,750Marketing Budget (1,000)

Marketing Contribution $750

Given a marketing budget of $1 million$10MM in retail sales / $1.75 per bottle = 5,714,286 units of Caleb’s

Caleb’s P&L (in thousands)

Caleb’s financial goal is to reach $10 MM in retail sales by Dec. 31, 2015

How will Caleb’s achieve its financial goal?

STRATEGY

STRATEGY

Cities % Millennials in Population

# Millennials in Population

Austin 16% 141,664Salt Lake City 15% 28,677

Portland 15% 91,418

Los Angeles 14% 543,802

Denver 14% 90,930

D.C. 14% 92,245

Houston 14% 307,440Las Vegas 14% 84,489

San Francisco 14% 117,242Dallas 14% 176,120

Manhattan1 30% 484,800

• There are high concentrations of Millennials in the West

• Focus on college towns

Key Facts about Millennials

Sources: U.S. Census Bureau, Nielsen’s Millennials – Breaking the Myths

The percentages of Millennial concentration are very similar, so we are looking mostly at the nominal # of millennials in the population.

1 Manhattan is not technically a city, but a borough of NYC

The following cities have high concentrations of milennials and are potential markets for Caleb’s

STRATEGY

Sources: U.S. Census Bureau, Nielsen’s Millennials – Breaking the Myths

The five markets combined creates a potential market size of 1.378 million

Heavy Consumers

Moderate Consumers

Light Consumers Total

Penetration Rate 10% 30% 60% 100%

# of Buyers 13,789 41,368 82,736 137,893

Purchase Frequency 208 36 18 -

Purchase Quantity 2,868,166 1,489,250 1,489,240 5,846,646

To reach our financial goal

we are assuming 10% yield

STRATEGY

Sources: Elaborations on craft soda market

2 This number comes from the P&L

We need to reach approximately 1.37 million people in order to achieve sales of approximately 5.7 million2

Sources: Caleb’s Website, Competitors’ websites

STRATEGY

So how should Caleb’s position itself to attract this target?

We don’t want to compare ourselves to any other craft sodas in the market because we don’t have a main competitor. We don’t want to dominate the market, but rather want a healthy portion of it.

Rationale

STRATEGY

Non-Comparative Positioning Statement

Caleb’s is the craft soda for foodies because it has a smaller and more champagne like fizz which pairs better with food because the fizz does not dominate the meal.

We think that the non-comparative positioning statement is best


Create Awareness

Create Trial

Create Understanding

Create Attractiveness

Create Availability

Caleb’s is a new brand, so brand awareness is extremely low.

Because Caleb’s is a new brand, customers do not know their value proposition.

Caleb’s needs to convince consumers that it is an attractive product

Caleb’s has very limited availability, so customers who want Caleb’s will be very discouraged when they can’t find it available in stores.

We need to work on all of the above to get customers to try the product.

Repeat!

STRATEGY

Caleb’s should focus its marketing goals on creating awareness and understanding

Implementation: The Marketing Mix

THE MARKETING MIX

THE MARKETING MIX: Product

Why?

Because we want Caleb’s drinkers to think of an indulgent experience whenever they see or drink Caleb’s

The essence of the Caleb’s brand is indulgence


Caleb’s core product benefit is high quality indulgence


To convey our positioning, Caleb’s association with food must be strengthened

Add a tag to the back of the bottle explaining the bubbles

Sources: Google Images


#CalebsCompletes encourages consumers to share their food pairings on social media

This description of the bubbles increases consumer understanding of Caleb’s and increases the value that consumers see in Caleb’s.

Add a tag to the back of the bottle explaining why its bubbles are better with food

Sources: Primary market research, Caleb’s website

THE MARKETING MIX: Place

To maintain the authenticity of the brand, we should be looking to restaurants/cafes that are more intimate/small.

Choosing the right restaurants will enhance our reputation with foodies

Ideal restaurant profile should be in line with our brand identity of indulgence/authenticity

58% Would drink soft drinks with pizza

42% Would drink soda with burgers

We would like to move into pizza and burger restaurants

because according to our market research

We want to continue expansion into more restaurants

Sources: Numbers based on 100-300 average restaurant goers per day in a restaurant

THE MARKETING MIX: Promotion

Bottle purchases per day 20Bottle purchases per month 600Case sales required to reach goal (12 bottles/case) 50Order Frequency 12Total Orders per year 600

Number of restaurants required to achieve goal 800Number of cities expanding into 5Number of restaurants required per city ~160

3 Please refer to index for a detailed breakdown

In order to reach our financial goal, we need to target about 160 restaurants in each city3

Trade Promotion (push tactics)

Consumer Promotion (pull tactics)

• “Buy one get one” deals

• Display Caleb’s on the counter with sample food

• Give out free stickers with the cases for restaurants and cafes to give to their customers

• Sampling

• Increase social media presence through bloggers

• and through #CalebsCompletes campaign

• Recommendations on what food to pair with Caleb’s (with possible alteration to packaging to include something about this on the bottle)


Goal: Increase awareness and induce trial

Goal: Obtain initial distribution

We recommend the following tactics

To increase awareness of Caleb’s, we recommend spending on stickers, blogger collaborations, and sampling4

Sources: Google Images, Mintel’s Innovation on the Menu: Flavor Trends - US - June 2014


$513K Stickers$40K Bloggers$447K Sampling$1 M Total

Marketing Budget Allocation

4 Please refer to index for a detailed breakdown

To increase awareness of Caleb’s, we recommend spending on stickers, bloggers, collaborations, and sampling4

Moving into the future

STRATEGY



“influential foodies to connect and share ideas and recipes. Unfortunately, for the restaurant industry, this has created a league of confident, at-home cooks that have been inspired by beautiful pictures, blog posts, boards, and pins found on the internet, and have been replicating or creating their own one-of-a-kind dishes at home versus going out to eat.”

We need a way to enter into foodies’ at home eating occasions

Foodies are eating out, but they are also eating at home more

Niche supermarkets like Whole Foods is the next step for Caleb’s distribution.



The number of niche format super markets like Whole foods are growing by 69%

Niche supermarkets like Whole Foods is the next step for Caleb’s distribution



Foodies go to supermarkets like Whole Foods because they buy the most organic goods out of all consumers and Whole Foods caters to this type of food consumer 6

Whole Foods’ brand image would give credibility to Caleb’s authenticity and high quality core and essence

Niche supermarkets like Whole Foods is the next step for Caleb’s distribution

Thanks

GUS

GROWN UP SODA


• Founded in 2003• Emphasis on 100% Natural• “Not too sweet,” 90-98

Calories

• Social Media Platforms: Facebook, Instagram, Twitter

• Wide distribution, available for purchase in most states

• “Dry” sodas: blackberry, cola, pomegranate, Valencia orange, Meyer lemon, cranberry lime, root beer

• “Extra Dry” ginger ale• Star ruby grapefruit

Key Facts

Product Line

Promotion and Communication

Sources: Numbers based on our calculations for bottles from P&L


Retail Sales $10,000,000

Net Revenues 5,000,000COGSDistribution Costs

(3,250,000)

Gross Profits 1,750,000Marketing Allocation

Stickers (513,000)Sampling (447,000)Bloggers (40,000)

Marketing Budget (1,000,000)

Marketing Contribution

$750,000

Retail Sales $10,000,000

Bottles Required to Achieve Target

5,714,286

Potential Market Size 1,378,893Yield 137,893

Heavy User

Moderate User Light User

Penetration Rate 10% 30% 60%# of Buyers 13,789 41,368 82,736Purchase Frequency

208 36 18

Purchase Quantity 2,868,166 1,489,240 1,489,240Assumptions:

Bottles required to achieve target sales is based on $1.75/ bottle10% yield of potential marketHeavy users consume 16 times a monthModerate users consumer 3 times a monthLight users consume 1.5 times a month

2

3 In order to reach our financial goal, we would need to target about 160 restaurants in each city



Target goal (Units) = 5.8 million = 480,000 cases (assuming 12 bottles per case)

Estimated number of bottle purchased per restaurant/cafe per day: 20Estimated number of bottles required per restaurant/cafe per month:600 (20 x 30)Estimated number of cases: 50 (600 / 12)Estimated order frequency: MonthlyTotal order size: 600 per year

Number of restaurants to meet the target goal: 800 ( 480,000 / 600)Number of cities to expand into: 5Number of restaurants/cafe per city:~160 (800 / 5)

4 Elaborations on the budget allocation



Stickers 3 stickers per bottle 12 bottles per case

Selling 475K cases this year

17.1 million total stickers needed for distribution

Assuming

each sticker costs 3 cents to make (a conservative

estimate because online purchase price is 3 cents for

average consumers)

17.1 million x .03

$513K total spending on

stickers

Bloggers

$8K to collaborate with each blogger because

commissions even for small bloggers can average in the

thousands

5 bloggers$40K spending

on blogger collaboration

Sampling We are distributing the rest of our budget for sampling

5 Caleb’s is in the Introduction phase, moving into the growth phase of the product life cycle

Sources: Google Images, Product Handout


Characteristics of Caleb’s in the Market:- Small, but growing, market size- Market growth is increasing from low to higher- Competition is increasing from low to higher- Product is still limited- Distribution is still limited- Price is still penetration/skimming- Promotion is still on awareness and is beginning to stress positioning

Primary Research

We used a survey to find out how college consumers viewed pairing soda with their food. These results may be a bit skewed because we only surveyed NYU students, but we also believe that these results are most consistent with those that we would find in our recommended cities.

Survey Results


Superior fizz

Inferior fizz

Good Taste

Caleb’s

Bad Taste

Reeds Boyla

nJones

STRATEGY

GuS

Caleb’s should position itself on its high quality fizz and …


Pairs well with food

Caleb’s

Doesn’t pair well with food

Reeds Boyla

n

Jones

STRATEGY

Superior fizz

Inferior fizz

GuS

Caleb’s should position itself on its high quality fizz and “pairs well with food”

Caleb's Kola Marketing Plan

Marketing

Transcript of Caleb's Kola Marketing Plan