Cooper’s Hawk

Marketing to Wine Club Members

2  pm  IMCisters  – Briana  Borsellino,  Yilun  Gu,  Jiaxuan  Han,  Shuyi  Shang

Outline

The  Company AnalyzingWine  Club  Members

Methodology Comparison  &  Profiling

Overview&

Objective

Targets

Objectives  &

Marketing  Communication  

Plan

Financial  Impact

Company Overview “We would create a signature menu with a selection of dishes designed to pair perfectly with our own Cooper’s Hawk wines, made in our own private winery.”

Upscale casual dining restaurant

Full-service bar

Banquet

Napa-style tasting room

Retail gift store

Monthly Wine Club

Two-Year Overview ofWine Club MembersData time range: 09/24/2012 - 09/23/2014

Wine Club Members

4,265

Total Revenue from Members$6,794,948

Wine Club Revenue $2,482,813

Restaurant Revenue $4,312,135*

* From Transaction-level data

Marketing Objective

Increase total spending of wine club members by 5% in the next four quarters.*

PlanUse fixed-base segmentation to segment the wine club members based on their club membership level and their

contribution to restaurant revenue.

Identify two valuable segments.

Gain deeper understanding of target segments’ behavior in wine purchase and restaurant dining.

Recommend appropriate marketing message and tactics.

Evaluate financial impact of suggested marketing communication plans.* $3,318,063 to $3,490,463

Objective & Plan

Break  Points  for  large  and  small  spenders:Club  Level:  1 & 2Average  Spending:    Small  Spenders   <  $1,118 ≤  Large  Spenders   <  $4,136 ≤  Very  Large  Spenders

Fixed-Basis Segmentation

The  Bon  VivantClub   level  =  1  &  2

Restaurant  Revenue  ≥  $4,136

The  EpicureClub   level  =  2

$1,118  ≤  Revenue  <  $4,136

The  FoodieClub   level  =  1

$1,118  ≤  Revenue  <  $4,136

The  Wine  LoverClub   level  =  2

Revenue  <  $1,118

The  Casual  DinerClub   level  =  1

Revenue  <  $1,118

Casual  DinerWine  Lover

FoodieEpicure

Bon  Vivant

The Five Segments of Wine Club MembersThe Bon Vivant

85 Level 1 & 2 members. VIP diners of Cooper’s Hawk. They enjoy large, lively parties with good food.Why Target? They have extremely high average spending at the restaurant.

The Epicure562 Level 2 members. They are fans of the wine, and enjoy dining there with small groups.Why Target? They contribute highly to Wine Club and Restaurant revenue due to higher average spending.

The Foodie631 Level 1 members. They spend a lot more money at the restaurant than for their wine membership.

The Wine Lover755 Level 2 members. They are fans of the wine, but otherwise don’t spend a lot of money at the restaurant.

The Casual Diner2,232 Level 1 members. About half of the Wine Club members. Lowest spending at Wine Club and the restaurant.

Cross-Segment Comparison

● Largest Segment: Casual Diners make up half of the Wine Club but their spending power is not strong.

● Power Segments: Bon Vivants are only 2% of customers but contribute to 8% of total revenue. Epicures are only 13% of customers but contribute to 24% of total revenue.

Number of Customers Revenue(WC & Restaurant)

Cross-Segment ComparisonRevenue Breakdown

Power Segments: Bon Vivants and Epicures are customers with the strongest spending power.

Revenue Generator: Restaurant

Overall Revenue(both WC and Restaurant)

WC vs. Restaurant

Overall  Avg:  $1,581

Cross-Segment ComparisonRestaurant Frequency & Recency

Power Segments: Bon Vivants and Epicures visit much more often than the average diner. They also have the lowest recency—as low as 0.5 week—which suggests that they would be more responsive to marketing incentives.

Average:  14

Average:  2.7

Frequency of Transaction Recency of Transaction(in weeks)

Year-to-Year AnalysisTarget Segments

Transactions Revenue

Year  1 Year  2 Year  1 Year  2

Bon  Vivant 2,380 2,235 $243,387 $254,594

Epicure 8,780 8,409 $568,976 $537,939

Total  Revenue  (all  segments): $2,235,896 $2,076,239

Bon Vivant: Fewer visits, larger bills. Revenue increased in year 2 even though their number of transactions decreased, which means they are going into the restaurant less, but their spending more when they do go in.

Epicure: Management should pay more attention because both transactions and revenue decreased in year 2.

The Bon Vivant

Wine Club Member Level Source of Revenue

As much as 90% of the revenue from Bon Vivants come from the Restaurant.

About 55% of them are Level 2 Wine Club members. Since their restaurant spending is so significant, our marketing plan should focus on the restaurant instead of Wine Club.

The Bon Vivant Revenue Breakdown: Monthly & Weekly

The holiday season and the late spring are the most popular times.

They visit the restaurant more on the weekend, but on average spend the most on Thursday and Friday, possibly due to bigger gatherings.

Revenue

Average Revenue per Customer

Transaction Frequency

By WeekBy Month

The Bon Vivant Revenue Breakdown: Venues

Bon Vivants host very large parties. Although Server generates more revenue than Banquet, when we look at the spending per transaction, we can clearly see that Bon Vivants spend a lot of money for each banquet event—over $2,000.

Revenue  by  Venue Average Revenue per Transaction

The Bon Vivant: ObjectivesInsight

➔ They are the only segment that host large events at the Banquet venue that generate much more revenue than any other transaction. Increasing their transactions at the banquet is a quick way to increase revenue.

Behavioral Objective

➔ Increase Bon Vivants’ banquet gatherings from 65 to 85 in the next year to achieve an overall revenue increase of 1.34%.*

Communication Objective

➔ Bon Vivants perceive Cooper Hawk’s banquet halls as a favorite go-to place for both corporate events and special occasions with family and friends.

*  Adding  20  more  banquet  transactions   increases  revenue  by  $44,320,   which  is  a  1.34%  overall   revenue  increase.

The Bon Vivant: MarketingMessage: At Cooper’s Hawk, you don’t just get good food and wine. You’ll be able to impress clients, reward your employees, or show appreciation for your loved ones.

Incentive: “Make your guests even happier with a little extra something.” Each time you host event at banquet hall during promotional months, all attending guests will each receive:

Effect: Not only would the Bon Vivants have one more reason to host their event at Cooper’s Hawk, their guests would also have the incentive to check out all the other venues and potentially become a regular.

Campaign Detail

Offer $15 off coupon to banquet guests during:

March-June

November-December

Promote to Bon Vivants during these high-transaction months so that they choose us over competitors when hosting events.

Incorporate “a little extra something” to marketing messages directed at Bon Vivants.

The Epicure Revenue Breakdown

Similar to Bon Vivant, Restaurant is the main revenue generator.

December is the most popular month due to holiday outings with friends/family.

They visit the restaurant more on the weekend, but on average spend the most on Sunday and Monday. Since they’re Level 2 Wine Club members, perhaps they are active attenders of Wine Club events on Mondays.

RevenueTransaction Frequency

By WeekBy MonthBy Location

Average Revenue per Customer

The Epicure Revenue Breakdown: Venues

Epicures like to taste various wine at Cooper’s Hawk and dine at the restaurant and bar. Server, Tasting Room and Bar are the main revenue drivers, making up 84% of revenue from Epicures. It makes sense that Banquet shows the the highest spending per transaction, but the amount is much lower than that of Bon Vivants.

Revenue  by  Venue Average Revenue per Transaction

The Epicure: ObjectivesInsight

➔ They are wine lovers who love to try different new flavors at the Tasting Room. They eat, drink and socialize in small, intimate groups at Cooper’s Hawk.

Behavioral Objective

➔ Increase spending per server transaction (dining at the restaurant) from $78.5 to $98.5 to achieve an overall revenue increase of 3.86%.*

Communication Objective

➔ Epicures perceive Cooper’s Hawk as the best place to try dishes that pair well with different wine.

*  Spending  $20  more  per  visit   leads  to  revenue  increase  of  $128,080,   which  is  a  3.86%  overall  revenue  increase.

The Epicure: Marketing

Message: Your wine would taste even better with our food. Find out what goes with your new favorite wine!

Incentive: Special Seasonal Prix Fixe Menu with wine pairing

Effect: This encourages more visits to the restaurant, where the server can recommend dishes to pair with the customer’s favorite wine or a new bottle that was purchased at the Tasting Room. Since they are wine lovers, this will not only increase visits to the restaurant but also possibly the Bar and Tasting Room.

Campaign Detail

Promote the Prix Fixe Menus by:

- Email invitation

- Promotional materials at the Tasting Room.

- Invitation cards in monthly wine delivery

- In each monthly wine delivery box, add a card suggesting dishes at the restaurant that goes with the wine delivered.

The Epicure: Marketing

$20 Prix Fixe Lunch Menu

Wine Pairings

Pay for Wine

The Epicure: Marketing

$30 Prix Fixe Menu

Wine Pairings

Pay for Wine

Financial Impact of Marketing ObjectiveMarketing Objective: Increase total spending of wine club members by 5% in the next four

quarters.

If we achieve the behavioral objectives of two target segments, the total revenue will increase by $172,400. Comparing with year 2 total revenue $3,318,063.33, The Cooper’s Hawk revenue will increase by 5.2%, which outperforms our objective by 0.2%.

Financial Impact by Segment: Bon Vivant= 1.34% Epicure= 3.86%

Assumption One: Since the year 2 revenue of wine club is lacking in current data, we computed it by multiplying the sum of monthly fee by 12. (Please refer to Appendix slide 35 for detailed information.)

Assumption Two: We used the parameters of Year 2 to compare to our projected Year 3 revenue increase.

Assumption Three: Each member will stay in the same wine club level and the number of customers in each segment remains the same from Year 2 to Year 3.

Cross-Segment Financial Comparison

If  we  can  accomplish   the  marketing  objectives   set  for  each  segment,  the  revenue  generated  by  each  of  them  will  look  like  this:

● The  Bon  Vivant: from  $254,594.86 to  $298,914.86

● The  Epicure: from  $537,939.31 to  $666,019.31

SummaryWith insights on the key Wine Club members (the Bon Vivant and the Epicures), Cooper’s Hawk management can focus on ways to convert them to long-term patrons of the restaurant. Their high spending power will help drive Cooper’s Hawk revenue to a new high.

Appendix

About discrepancies in data sheetsWe found that the two-year restaurant total revenue data is not consilient from two datasets:

To maintain consistency, we used the number got from transaction level dataset ($4,12,135.21) throughout our analysis.

From member level data: From transaction level data:

Method Rationale & Variable Selection Why did we choose to use fixed basis segmentation?

This method enables us to determine the break point according our particular goal while k-mean cluster never tells you the specific parameter it uses.

What are the variables & Why?

WC level: This is the key differentiator in how much customers spent in wine club.

Restaurant revenue: This variable shows how much our customers spent in restaurant.

Why didn’t we choose other variables?

Recency: Generally speaking, most of our members are active (70% have visited Cooper’s Hawk in the past 3 months). Therefore, this variable is not a key differentiator.

Restaurant Frequency: This variable is highly correlated to restaurant revenue.

WC monthly fee, WC 2-year revenue: These two variables are highly correlated to WC level.

Segmenting the Customer BaseHow many people are there in each segment?

Wine club revenue and restaurant revenue generated by each segment:

Cross-Segment Comparison: Recency & Frequency

Benchmark The Bon Vivant

The Epicure

The Bon Vivant Profile

Club level data

The Bon Vivant ProfileSeasonality data

The Bon Vivant Profile

Most visited venue and revenue generated by each venue:

Wine Club Type:

The Bon Vivant ProfileEach venue was visited most frequently on ____ day, in ____ month:

The Epicure ProfileSeasonality data

The Epicure Profile

Most visited venue and revenue generated by each venue:

Wine Club Type:

The Epicure Profile Each venue was visited most frequently on ____ day, in ____ month:

Financial ImpactAssumption:

We  don’t  have  year-­‐by-­‐year  data  for  Wine  Club  spending   so  we  can’t  calculate  %  increase  in  Wine  Club  spending  in  year  3  compared  to  year  2.  Thus,   in  our  projection  we  assume   that  members’  Wine  Club   spending   is  unchanged  in  year  3.  Then  we  computed  it  by  multiplying   the  sum  of  monthly   fee  by  12.  

Wine  Club   Year  2  revenue  =  $103,485   *  12  =  $1,241,824.32

Year  2  total  revenue  =  Wine  club  revenue   year2  +  restaurant  revenue  year2  =  $1,241,824.32  +  $2,076,239.01  

=  $3,318,063.33