Not Your Father’s Root BeerMarketing Plan Report 2016

Melissa FrancoKenny Horne

Lee RoseMehmet S Gurtekin

Collin Horne

Table of Contents

1. Executive Summary pg 2-4

2. Product Statement 5-6

3. Environmental Analysis

3.1 External Environmental Analysis

3.1.1 Industry/Market Trends 7-10

3.1.2 Competitive Trends 11-19

3.1.3 Technological Trends 19-20

3.1.4 Economic Trends 20-25

3.1.5 Political, Legal, and Regulatory Trends 25-27

3.1.6 Societal Trends 27-38

3.2 Customer Environmental Analysis 39-41

3.3 Internal Environmental Analysis 42-44

4. SWOT Analysis 45-49

5. Issues Analysis 50-51

6. Marketing Goals and Objectives 52

7. Marketing Strategies 53

7.1 Target Market Definition 53-54

7.2 Strategy Statement 55

8. Marketing Implementation and Action Plan Outlines 56-74

9. Budget 75

10.References 77-80

1 Executive Summary

Main Issues the Brand is Facing

Small Town Brewery's Not Your Father’s Root Beer is a new product in a market

that has an extreme potential to grow and introduce new experiences to its

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consumers. There are issues that are causing Not Your Father’s Root Beer to grow

and become dominate in the craft beer market. These issues consist of not

enough marketing strategies are being conducted. The product is also in danger

of being mixed in with all of the other craft brews that are on the market and not

standing out in front to become the obvious choice for the consumer.

Since there are a few issues that need to be handled, we decided on a couple of

strategies that will fix the issues that face the product. We put in place a

marketing strategies that ensures the Not Your Father’s Root Beer to be able to

flourish in its primary market which consist of young adventurous adults who

are seeking that classic root beer taste with a twist of alcohol. The secondary

target market are also young adults 21-36 that either don’t try new beers too

often or they are oblivious that a product such as hard root beer even exist. There

is also the issue of a completely new sales region for the product because

currently the product is very popular in Illinois region.

Overall Strategies

After evaluating our target markets, we have created ten action plans that will

guarantee a solution to help fix the issues that face Small Town Brewery and its

product Not Your Father’s Root Beer. Our number one action plan is to offer a $2

mail in rebate for the Southeastern part of the United States, this in terms will

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create new customers and broaden the current sales region for the product. The

second most important action plan will consist of an national television ad

campaign, this will make Not Your Father’s Root Beer stand out amongst the

completion and become the superior craft hard root beer by giving a visual

reference to the target market it seeks to obtain. The third most important action

plan will be to implement internet based advertising, which this allows new

customers who are not usually exposed the traditional ways of advertising

media. These are just the top three action plans, we have created seven more

ways to better the company’s product, which entitles a better and more profitable

future for Small Town Brewery.

Budget Request and Expect Results

Our projected budget for the ten action plans will be $1,050,000. Even though this

sounds like a large sum of money to spend, if the company follows through with

the funding for these action plans, it is a guarantee that Small Town Brewery will

see a major increases in sales ten times the cost of all the action plans. New

consumers of the product will start to show up once they are exposed to it by our

advertising through television, the internet and even a $2 dollar mail in rebate.

We expect consumers to fall head over heels for this product once they

experience the taste and sensation that comes from the product. The only way

that any of this can happen is by implementing the ten action plans.

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2. Product Statement Overview

Founded by Tim Kovac in 2013, Small Town Brewery is a brewing company

located in Wauconda, IL. The company brews a handful of varying styles of beer

each year. However, this report will focus on what they are most well known for,

The 5.9% version of “Not Your Father's Root Beer”.

Product

Not Your Father's Root Beer, is a Hard Root Beer style Beer with an ABV of 5.9%.

The Beer is dark brown in color with a light brown soda style head when poured

or served on draft. It is a very aromatic beer, which consists of a Carmely vanilla

smell with some added spices. The aroma overall is not much different than that

of a sarsaparilla root beer

with a wiff of alcohol. The

flavor of the beer is very

sweet, and very similar in

taste to a sarsaparilla style

root beer with just a hint of

alcohol, which becomes

slightly stronger as one sips on it.

Packaging

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The packaging of not your father's root beer is mostly consistent with other

products in its category. The beer comes bottled in Dark brown 12 oz . glass

bottles or in 12 oz aluminum cans. Both bottling styles have the same base logo,

which consists a well designed logo next to a man with a cane dressed in a late

19th century suit standing next to an old style wooden cask. below this is the

contents and the ABV of the beer. The background of the logo is made to look like

an old wooden cask. The glass bottle version has one more label on the neck that

consists of the small town brewery logo. Both bottling styles of the beer come in

six packs, however the glass bottles are packed in a tall cardboard carrier and the

cans with plastic poppers. The cardboard carrier for the glass bottles has the

same logo design as the bottle. Unlike most other beer carriers the one for not

your father's root beer comes up to the neck of the bottle.

Price

Not your father's root beer varies little in price and can be found between $9.99

and $12.99 per a six pack. There is no price difference between the aluminium or

glass packaging.

Place

Small town brewery itself distributes not your father's root beer in Illinois and its

bordering states. They have contracted production and distribution to several

other breweries throughout the United States in order to meet demand. Not your

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father's root beer can usually be found in most supermarkets, liquor stores, and

in some gas stations.

3.1 Environmental Analysis

3.1.1 Industry/Market Trends – Not Your Father’s Root Beer

The “hard soda” malt beverage or alcopop category has been marketed as an

alternative to traditional beer since 1993, with the introduction of Zima by Coors.

Coors originally had some success as nearly half of American households

sampled their offering, but it came at a significant cost as they spent nearly $50

million marketing their offering. Shortly after, Miller introduced Qube, Stroh’s

offered Clash, and Smirnoff launched Smirnoff Ice which by 1995 became the

market leader. However, the product market share did not continue to grow – in

fact it contracted as this segment became perceived as “girly drinks” and Zima

was discontinued in 2008. (Koener, Brendan – November 26, 2008. “The Long,

Slow, Torturous Death of Zima”

http://www.slate.com/articles/life/drink/2008/11/the_long_slow_torturous_death_o

f_zima.html).

In 2013, Small Town Brewery launched Not Your Father’s Root Beer

(http://smalltownbrewery.com/our-beers/) in the Chicago area. It has been

important for Small Town to market themselves as a “craft” beer. According to a

Nielson study (Nielson 7-14-2015 - “Trapped In: Craft and Local are Powerful

Trends in the Beer Aisle” http://www.nielsen.com/us/en/insights/news/2015/tapped-

in-craft-and-local-are-powerful-trends-in-the-beer-aisle.html), the word “craft”

motivates beer purchases, especially amongst young men. The study concluded:

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“35% of adults 21 and older say they’re more interested in trying an adult

beverage labeled craft. Among men 21-24, that figure jumps to 46%.” Since Small

Town Brewery’s customers are mainly Millennials, this strategy seems to be

paying off as they have experienced enough success to attract much larger

partners – Phusion and Pabst Brewing Company.

With the power of Pabst’s distribution arm behind them, what was once a local

tavern favorite has become available in thirty-eight states and per Pabst’s

website, soon to be available in all fifty states. Through the first half of 2015,

NYFRB has racked up $7.2 million in sales ranking it among the top 30 craft beers

(IRI data cited by Beer Marketers Insights in June 2015). In terms of sales, you’d be

hard-pressed to find a bigger stand-out in the beer category than craft. For

starters, higher-end priced products such as craft are driving most of the growth

across the overall beer market, but the total beer category growth has been

paltry. In fact, volume for the whole category grew just 0.6% for the 52-week

period ending June 20, 2015. Comparatively, however, volume growth of craft

beer for the same period was 10.2%.

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BEER CATEGORY TRENDS (Source: Nielsen Scantrack, 52 weeks ending June

20, 2015)

Sales Share Change Volume Sub-Category Value %

Change

Volume

% Change

Avg. Price

Indexed to

Total Cat

100% 100% TTL

Beer/FMB/Ciders

+3.3 +0.6 100

40.1 44.3 Premium -0.1 -1.0 91

16.0 22.9 Below Premium -2.0 -3.5 70

16.6 12.8 Imports +8.2 +6.3 129

9.9 7.8 Mexican Beer* +12.7 +10.2 127

11.9 7.6 Craft (including

domestic specialty

beer)

+13.8 +10.2 156

6.5 4.5 FMB +5.6 +5.9 145

5.8 4.9 DM Super Premium +1.2 -0.1 117

1.5 0.9 Ciders +43.9 +43.2 158

At the end of June 2015, craft beer accounted for 11.9% of the total dollar volume

of the beer category in the U.S. It’s worth noting, however, that craft’s market

share varies significantly by channel. For example, it has a much larger share in

the grocery channel (20.1%) than the convenience (4.6%) and drug (8.7%) store

channels, largely because grocery stores have significantly more floor space

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available, which allows for greater assortment and options for consumers. That

said, however, the convenience channel holds the title for being the leader for

overall beer sales, and craft is making a strong run there, growing at a faster pace

in the convenience channel (+21.4%) than in grocery stores (+13.7%) for the 52

weeks ending June 20, 2015.

Per The Brewers Association (www.brewersassociation.org), the 2014 numbers

indicate a stable growing trend for craft beers (see chart below).

NYFRB is a very successful example of a beverage trend we can expect to

continue in the future.

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3.1.2 Competitive Trends

While the overall beer market is relatively flat with minimal growth, the hard

soda and craft beer industry is positioned in an extremely competitive and

steadily growing market. There are four major categories that the competition

can be broken into:

i. Brand Competitors – Brand competitors are companies that deliver very

similar products that target the same customers. On a small scale, two

competitors have already emerged, but on a larger platform, MillerCoors has

announced that they will be launching their own brand of hard sodas in early

2016. The line will debut with two flavors, Henry’s Hard Ginger Ale and Henry’s

Hard Orange Soda as a way for MillerCoors to target Gen Xers who grew up

drinking soda (and the overall nearly $20 billionw dollar market).

Coney Island Hard Root Beer

(www.coneyislandbeer.com/hard-root-beer) was started

in 2007 in Coney Island, NY by Jeremy Cowen of Shmaltz

Brewing Company. Mr. Cowen is known for brewing

several award winning lagers under the Coney Island

Lager label. In August 2013, the company began

expanding their offerings and entered the market with

Coney Island Hard Root Beer. Coney Island Brewery is a

subsidiary of Boston Brewing Company. Coney Island’s products are sold in 12

packs of 12oz cans and 6 packs 12oz bottles. Average price is approximately

$0.13 per ounce.

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Strengths: Part of the Boston Brewing family and potentially leveraging the

momentum from other brands in that portfolio (Sam Adams, Angry Orchard, and

Twisted Tea).

Weaknesses: Is viewed as a “me too” brand that is following the bandwagon

rather than leading it and has almost zero momentum (The Battle for Hard Root

Beer Dominance Has Begun by Arthur Palac August 2015). Very little marketing

efforts.

Sprecher Brewing Company (www.sprecherbrewery.com)

was founded in 1985 in Milwaukee, WI by Randall

Sprecher, formerly a brewing supervisor at Pabst Brewing

Company. In 2013, they began brewing Fire Brewed Hard

Root Beer – “Not your Granddaddy’s root beer, or is it?”

Sprecher is sold in 4 and 24 packs of 12oz bottles. Average

price is approximately $0.12 per ounce.

Strengths: It is part of a diverse offering of craft and

seasonal products.

Weaknesses: The Company treats it as an ancillary “malternative” brand with

little market penetration and it can only be found in very few locations spread

across only seven states. Very limited marketing efforts.

ii. Product Competitors – Product competitors are companies that compete in

the same product class, but deliver different features, benefits and prices. Closely

associated types of non-beer alternatives are hard ciders, flavored malt

beverages, and wine coolers.

Hard Cider

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Hard ciders have been around for thousands of years – the pilgrims brought it to

America and hard cider was the market leader until it was passed by the beer

industry early in the 20th century. In 1991, Vermont based Woodchuck sprung up

and was largely unchallenged for the next twenty years. Within the next two

years Boston Beer Co, Anheuser Busch, MillerCoors and Heineken all entered the

market. By the end of 2014, cider sales have grown by over 75% when compared

to the previous year (see IRI data table below).

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While there are many players demonstrating significant

growth over the previous year, Angry Orchard was

introduced to the market in April 2012 by Boston Brewing

Company (http://angryorchard.com/#!) and quickly

dominated this market. Their commercial (Something a

Little Different) is at the following link: https://www.youtube.com/watch?

v=l5jR5PYdn44. Angry Orchard products are sold in 4 packs of 16oz cans and 6

packs of 12oz bottles. Average price is approximately $0.11 per ounce.

Strengths: BBC was able to leverage their success and relationships as a craft

beer maker and expand their offering. They are able to take advantage of a well-

established network of distribution channels and cider has a strong appeal to

women. AO marketing is also starting to venture into the rapidly growing

“Gluten-Free” market (their product label has “Gluten-Free” verbiage).

Weakness: Seen as a niche market and only represents less than 2% of the $19.6

billion craft market overall market and experienced a recent (August 2015)

product recall due to refermentation.

Flavored Malt Beverages

Malt beverages are hybrid brews, which are made like beer, but flavored to taste

like a cocktail. The categories share of the US beer market has doubled over the

past five years to nearly 4%, according to industry tracker Beer Marketer’s

insights. The drinks contain more alcohol than beer (8% vs. 5%) and are

designed to appeal to millennial drinkers, many of whom prefer sweeter

alternatives to beer. MillerCoors Marketing Director of Innovations Anup Shah

said the drinks give brewers a chance to steal share from wine and spirits. The

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market leaders are Anheuser Busch Light FlavoRitas, Mike’s Hard drinks, and the

Smirnoff product family.

Anheuser Busch Light FlavoRitas (www.budlight.com/our-

beers/lime-rita-margarita-twist.html) entered this market in April

2012 and quickly became the market leader in this segment by a

considerable margin. A sample of the commercial (All Night Long)

can be found at https://www.youtube.com/watch?

v=YdKs0DK98Lg. Flavo-A-Rita products are sold in 4 and 12 packs

of 8, 16, and 25oz cans and 6, 12 and single half-liter bottles.

Average price is approximately $0.25 per ounce.

Strengths: A steadfast commitment from a very deep pocketed owner to fully

support this brand (per Kantar Media, the advertising budget rose from $2.7

million in 2012 to over $12 million in 2014 and Tyler Simpson, Director of

Marketing for Bud Light Extensions was quoted “we are stepping up our

investment in the Ritas”.), an incredibly powerful distribution network, a

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dedicated pipeline introducing a steady stream of new flavors, a growing

consumer base for AB (women), and a sales and marketing department that is

creatively building the brand through a variety of media including recipe books.

Weaknesses: A fairly high price point per ounce compared to other competitors

(sold in 8oz cans) and in November 2014, a class-action lawsuit was filed against

Anheuser-Busch for allegedly falsely advertising several flavors of Bud Light Rita

malt beverages as “light” and low calorie beverages when they actually contain

significantly more calories and carbohydrates than any other AB alcoholic

beverages (Cruz et al v. Anheuser-Busch LLC, Case No BC563150, Superior Court

of California in the County of Los Angeles).

Mike’s Hard Lemonade Company

(http://www.mikeshard.com/en/home) entered the US

market in April 1999 (Canada in 1996) and quickly

became the market leader. However, they have seen

considerable share erosion to their “Hard” line both

externally to Anheuser Busch ‘Ritas and internally to their “Harder” line. Their

most recent commercial (Bikini Bear in Vegas) can be viewed at

https://www.youtube.com/watch?v=4_r_XnF232M. Mike’s Hard products are sold

in 4 packs of 16oz cans and 6, 12 and 24 packs of 12oz bottles. Average price is

approximately $0.14 per ounce.

Strengths: A robust product mix not only in flavor, but also in alcohol and caloric

content. Mike’s employs a driven digital marketing campaign with considerable

social media buzz particularly their active “Gluten-free” campaign. Mike’s also

has a strong foothold in the female demographic segment

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Weaknesses: Despite advertising attempts to make their product more

appealable to men, it is still largely perceived as a female’s choice of beverage.

Smirnoff Ice

(http://www.smirnoff.com/en-us/vodka/smirnoff-ice-

original-flavored-malt-beverage/) entered the US

market in May 2007. Despite the strong Smirnoff

vodka brand boosting their initial offering, Ice sales

have flattened and is slightly tailing off. Their latest

commercial (Less Sweet More Refreshing) can be

viewed at https://www.youtube.com/watch?v=OK24kSF_NzQ. Smirnoff Ice is sold

in 6, 12 and 24 packs of 12oz bottles. Average price is approximately $0.10 per

ounce.

Strengths: Smirnoff Ice has a strong foothold in the female demographic segment

and a strong international following based on the strength of their Vodka

products.

Weaknesses: It is still largely perceived as a female’s choice of beverage – in fact

the game “Icing” was created in which male drinkers are publically shamed if

caught consuming this product.

Wine Coolers - Traditionally an alcoholic beverage

of wine or fruit juice mixed with a carbonated

beverage, wine coolers were popular in the 1980’s

and 1990’s. However, in 1991 the US government

quintupled the tax on these products; popularity

declined over 95% with the corresponding severe price increases (Dr. Vino,

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September 2007). Despite drastically reducing their prices in response, the

manufacturers have not been able to regain their market share. There are still a

few manufacturers left i.e. Seagrams (www.seagramsescapes.com/) and Bartles &

Jaymes (http://www.bartlesandjaymes.com/home.htm). Seagrams Color Your

Girls Night commercial is at this link: https://www.youtube.com/watch?

v=b2rKm72iVsU. B&J has not released a commercial in over seven years. Coolers

are typically sold in 4 packs of 12oz bottles. Average price is approximately $0.10

per ounce.

Strengths: Still has a dedicated core market of consumers and a long standing

favorable reputation.

Weaknesses: Does not have a significant market share in the United States (less

than 21 million consumers per ISI).

iii. Generic Competitors – Generic competitors are those that provide very

different products that solve the same purpose for satisfying the same basic

20customer needs. In theory this is represented by the chart in 3.1.1 BEER

CATEGORY TRENDS (Source: Nielsen Scantrack, 52 weeks ending June 20, 2015).

iv. Total Budget Competitors – Total budget competitors are the ones that

compete for the limited financial resources of a customer. Since NYFRB is sold in

grocery stores including large chain distributors like Wal-Mart, it has a wide

range of total budget competitors ranging from apples to car tires.

3.1.3 Technological Trends

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Technology is evolving at an unprecedented rate and companies have to make

concerted efforts to stay abreast or risk falling behind and rapidly becoming

obsolete. In January 2015, Google published their annual “Top 3 Tech Trends

Marketers Should Watch in 2015”. This year the list is:

1. Connected Life Platforms are Emerging - As devices proliferate and start

to work together, connected objects will become platforms for your life.

They’ll help you with the things you do every day—from entertainment to

driving to taking care of your home. Connected objects will create more

data—marketers need to use it to create better experiences. Make

recommendations based on preferences. Tap into programmatic

technology to deliver relevant ads in real time. Use data-driven insights to

up your customer service game.

2. Mobile “shapes” the Internet of Me - Your smartphone is getting smarter.

As the hub for all these connected platforms, it can use lots of data to create

better, personalized experiences. The “Internet of Things” is becoming an

“Internet of Me”—all to simplify your life. The mobile device is the remote

control for our lives. Make sure consumers have a great experience with

your brand on their smartphone. Use context to make it even better—

content about their location, ads with local inventory, one-click ordering,

etc.

3. The Speed of Life Gets Even Faster - Online or off, we can now get

information, entertainment, and services in the exact moment we want

them. These quick moments of decision making happen constantly—and

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the more connected we are, the more they’ll happen. Consumers expect to

get what they want in the moment they want it. Companies need to think

about what this means for their business—24/7 customer support? On-

demand delivery? A more comprehensive keyword strategy? Make

interactions as fast, simple, and easy as possible and make sure they are

useful in all the moments that matter.

3.1.4 Economic Trends

Economic trends are a critical part of any marketing plan as the state of the

economy affects consumers’ willingness and ability to spend. This section will be

focused on several key indicators.

1. Employment Levels – The unemployment rate is one of the most closely

followed indicators, used by businesses, investors and private citizens to

gauge the health of the U.S. economy. Investor sentiment and consumer

confidence have strong inverse relationships with the percentage of

unemployed Americans. When the unemployment rate rises, investors

guard their money more closely and consumers become reticent, fearing

economic calamity. When the rate is low, people are more confident about

the economy, and it shows in their investing and spending patterns

(www.Investopedia.com). Despite what many people believe, the

unemployment rate is not measured by calculating the number of people

collecting unemployment insurance. In fact, the government comes up

with this number each month by following a process that more closely

resembles the U.S. Census. The unemployment rate is measured by a

division of the Department of Labor known as the Bureau of Labor

Statistics, or BLS. This government agency conducts a monthly survey

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called the Current Population Survey that involves 60,000 households.

These households are selected using random sampling methods designed

to generate as close an approximation as possible to the larger population.

Below are the latest statistics from the BLS:

Labor Force Statistics from the Current Population SurveyAge: 16 years and overYears: 2010 to 2015Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2010 9.8 9.8 9.9 9.9 9.6 9.4 9.4 9.5 9.5 9.4 9.8 9.32011 9.2 9.0 9.0 9.1 9.0 9.1 9.0 9.0 9.0 8.8 8.6 8.52012 8.3 8.3 8.2 8.2 8.2 8.2 8.2 8.0 7.8 7.8 7.7 7.92013 8.0 7.7 7.5 7.6 7.5 7.5 7.3 7.2 7.2 7.2 7.0 6.72014 6.6 6.7 6.6 6.2 6.3 6.1 6.2 6.1 5.9 5.7 5.8 5.62015 5.7 5.5 5.5 5.4 5.5 5.3 5.3 5.1 5.1

Based on these statistics, it appears that the population of the United States

is slowly re-entering the workforce and that this number will continue to

grow.

2. Income Levels and Consumer Confidence – Measures how optimistic or

pessimistic consumers are with respect to the economy in the near future.

The idea is that if the consumers are optimistic, they will tend to purchase

more goods and services. This increase in spending will inevitably

stimulate the whole economy. The University of Michigan's final reading

on the overall index of consumer sentiment came in at 87.2 in September,

down from a final 91.9 in September. It is the lowest figure in eleven

months. Consumer Confidence in the United States averaged 85.81 from

1952 until 2015, reaching an all-time high of 111.40 in January of 2000 and

a record low of 51.70 in May of 1980.

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While the short term period is trending downwards, consumer confidence

over the last five years is solidly up. Nevertheless, this bears monitoring

closely.

3. Gross Domestic Product (GDP) – Gross domestic product (GDP) is the

monetary value of all the finished goods and services produced within a

country's borders in a specific time period. GDP includes all private and

public consumption, government outlays, investments and exports minus

imports that occur within a defined territory. Put simply, GDP is a broad

measurement of a nation’s overall economic activity

(www.Investopedia.com). See US Department of Commerce

(www.bea.gov) statistics below:

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Per the US Department of Commerce, spending on services rose, notably on

health care and food services and accommodations. Spending on nondurable

goods also rose, as did spending on durable goods, notably on motor vehicles

and parts. Exports of goods also increased, notably industrial supplies and

materials. Business investment, state and local government spending, and

residential investment also rose. Over the last four years, 15 of the 16

quarters have demonstrated growth.

4. Inflation/Consumer Price Index (CPI) – CPI is the measure of the average

change over time in the prices paid by the consumer for the basic basket of

consumer goods and services. Below is the monthly index from Jan 2010

through August 2015 (www.bls.gov).

Consumer Price Index - All Urban Consumers1-Month Percent ChangeYears: 2010 to 2015Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual

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2010 0.1 -0.1 0.0 0.0 -0.1 0.0 0.2 0.1 0.2 0.3 0.3 0.4 0.12011 0.3 0.3 0.5 0.5 0.4 0.0 0.3 0.3 0.3 0.1 0.2 0.0 0.32012 0.3 0.2 0.3 0.1 -0.2 -0.1 0.0 0.6 0.5 0.3 -0.2 0.0 0.22013 0.1 0.6 -0.2 -0.2 0.1 0.3 0.2 0.2 0.2 0.1 0.1 0.3 0.22014 0.2 0.1 0.2 0.2 0.3 0.2 0.1 -0.1 0.1 0.1 -0.3 -0.3 0.12015 -0.7 0.2 0.2 0.1 0.4 0.3 0.1 -0.1 0.1

Despite a dip at the end of 2014/Jan 2015, unfortunately, overall the

index has consistently experienced a slight annual increase.

5. National Average Wage Index- An index calculated annually by the Social

Security Administration (SSA) based on wages subject to federal income

taxes and contributions to deferred compensation plans. The National

Average Wage Index (NAWI) is used by the SSA in the indexation of

retirement and insurance benefits in the United States. This statistics

provides insight into the direction of wage trends, which can have an effect

on wage inflation, which could cause the fed to raise rates to curtail it.

Raising interest rates will have a negative effect on bond and equity

markets. Alternatively, if wage inflation seems to be decreasing, the Fed

may lower rates, which would have positive effects in the markets

(www.Investopedia.com).

Historical Real Median Household Income for the United States

Date US

2013 $52,250

2012 $52,117

2011 $52,306

2010 $53,469

2009 $54,541

2008 $56,290

2007 $57,006

2006 $55,978

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2005 $55,178

The current median household income for the United States is $52,250. Real

median household income peaked in 2007 at $57,006 and is now $4,756 (8.34%)

lower. This is not a good trend and will affect consumer’s disposable income if it

does not reverse its course.

Based on the data gathered from these different economic indicators, it appears

that the US economy is slowly clawing their way out of a recession as over the last

five years employment rates, the GDP, and customer confidence are up while

inflation and median household incomes have had little change.

3.1.5 Political, Legal, and Regulatory Trends

Health and other public concerns have generated detailed Federal and state

regulation of the sale and possession of alcoholic beverages, tobacco products,

and a wide range of other "controlled substances." The distinctive history of

Prohibition, repealed by the Twenty-First Amendment to the US Constitution,

gives particular complexity to the mix of Federal and state law governing alcohol.

Absent any specific regulation, these substances are treated like all other forms of

personal property. However, the general rights of property are subject to so-

called "police power" regulations of the state, local, and federal governments.

The regulation of alcohol is generally focused on "intoxicating beverages" with

the exact definition of "intoxicating" varying from statute to statute. In many

jurisdictions, it has been held that the list of liquors subject to regulatory or

prohibitive enactments, particularly when such a list is followed by an

expression akin to "or other intoxicating liquors" must be intoxicating in fact.

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Many statutes either refer to "intoxicating liquors" generally, or prescribe an

alcoholic percentage cut off. In Mississippi, it has been held that the prohibition

of the sale of alcoholic liquor does not apply to a beverage containing less than

two tenths of one percent (0.2%) of alcohol.

The police powers of the Federal government are limited to regulating matters

which are connected with one of the powers expressly granted to the government

by the U.S. Constitution, and which do not infringe on the police powers of the

states. This means that the Federal government lacks the power to regulate liquor

sales by one citizen to another within the territorial limits of a given state, or to

prescribe liquor-related business within any state. Because of the commerce

clause, however, the Federal government can and does regulate the importation

and interstate transportation of intoxicating liquors; see the Federal Alcohol

Administration Act of 1935, 27 U.S.C. §§ 201 et seq. The federal government also

has the power to regulate liquor sales in D.C., and where it has exclusive

authority such as on government owned military reservations, and with Indian

tribes. In all other situations, the state's' police power controls alcoholic beverage

law. The federal government has, however, used financial incentives built into its

funding of highways to establish a national minimum drinking age. See 23 U.S.C.

§ 158 (https://www.law.cornell.edu/wex/Alcohol).

Industries such as alcoholic beverages, tobacco, and gambling are burdened with

heavy taxes by the government. Often called sin taxes, these taxes are imposed

on products or activities that are considered socially undesirable. The alcoholic

26

beverage industry is subject to high excise taxes at both state and federal levels.

The state excise tax varies considerably from state to state. For instance,

Washington imposes the highest excise tax on spirits at $35.22 per gallon,

compared to $12.80 in Alaska.

3.1.6 Societal Trends

1. Demographic Trends - As of September 12, 2015, the United States has a total

resident population of 322,000,000 (http://www.census.gov/popclock/). The

American population almost quadrupled during the 20th century—at a growth

rate of about 1.3% a year—from about 76 million in 1900 to 281 million in 2000.

In 2014, the US population growth increased at a rate of 0.75%

(http://www.census.gov/). Though high by industrialized country standards, this

is below the world average annual rate of 1.1%

(www.cia.gov/library/publications/the-world-factbook/fields/2002.html).

27

Age - The US is getting older – the median age of the population has increased

from 29.5 in 1960 to 37.7 in 2014. Per the US Census Bureau, this trend indicates

that it will continue. Life expectancy for newborns has increased substantially

over the past 80 years, from 57.1 years for infants born in 1929, to 78.8 years for

babies born in 2012.

Gender Composition - Per the Census Bureau, in 2010 there were over 156.9

million women and over 151.8 million men (50.8/49.2 ratio); this was slightly

different than 2000 (50.9/49.1) ratio.

Ethnic Diversity – As of 2013, Whites constitute the majority of the U.S.

population, with a total of about 77.7% of the population. Hispanic and Latino

Americans accounted for 60% of the national population growth of 89.2 million

between 1980 and 2013. However, according to the Pew Group, by 2065, there

will be 441 million people in the United States and that almost 90 percent of that

28

growth will be from immigrants and their kids with the biggest pool of those

immigrants – 38% will be not Hispanic, but Asian

(http://www.pewhispanic.org/2015/09/28/modern-immigration-wave-brings-59-

million-to-u-s-driving-population-growth-and-change-through-2065/).

Education – From preschool through graduate school, it appears no one is

satisfied with the state of American education. Parents have pushed back against

new standards for English and math. Teachers have protested what they see as

an overemphasis on testing and an unfair link between scores and performance

evaluations. Over the last thirty years, the recognition of the importance of

education is readily evident (see chart below) as the overall college enrollment

has increased nearly 16%. However, college tuition continues to inch upward

29

and completion rates have sagged. All the while, historically left-leaning teachers

unions and GOP lawmakers criticized the federal government for its increased

oversight of K-12 and college education

(http://www.usnews.com/news/blogs/data-mine/2014/12/01/report-too-much-

freedom-hurts-college-graduation-rates).

30

Family Structure – Less than half of children in the US live in a traditional model

in which they live in a home with two married heterosexual parents in their first

marriage. Americans are delaying marriage, and more may be foregoing the

institution altogether. At the same time, the share of children born outside of

marriage now stands at 41%, up from just 5% in 1960. While debate continues as

to whether divorce rates have been rising or falling in recent decades, it’s clear

that in the longer term, the share of people who have been previously married is

rising, as is remarriage (http://www.pewresearch.org/fact-tank/2014/12/22/less-

than-half-of-u-s-kids-today-live-in-a-traditional-family/).

31

32

2. Lifestyle Trends – There are several areas in which people’s lifestyles are

evolving – both good and bad. One is the increase in sedentary lifestyles due to

the advancement of technology and the ease of doing it all from a desk and the

prevalence of quick fast meals based on convenience rather than nutritional

value. More than one-third (34.9% or 78.6 million) of U.S. adults are obese and

the estimated annual medical cost of obesity in the U.S. was $147 billion in 2008

(http://jama.jamanetwork.com/article.aspx?articleid=1832542).

A second and conflicting (or relating depending on the individual) trend is an

increased interest in exercise and healthy eating. In a January 2015 Nielson

33

study, Nearly half (49%) of global respondents in Nielsen’s Global Health &

Wellness Survey consider themselves overweight, and a similar percentage (50%)

is actively trying to lose weight. And they’re doing so by making more healthful

food choices— with help from food and beverage companies. Manufacturers are

reformulating products to eliminate or reduce the sugar, cholesterol, Trans and

saturated fat and sodium content of food. They’re moving away from artificial

ingredients and introducing products high in desirable attributes like fiber and

protein. Three quarters of global respondents who are trying to lose weight plan

to change their diet, and nearly as many (72%) plan to exercise.

One third major area is the concept of sustainability. People are looking for ways

in which they can be more environmental responsible – whether it’s the vehicles

they drive, the house they live in or even the products they consume. In fact,

according to a Nielson studies, growing number of consumers are even willing to

a pay a premium to help achieve this (http://www.nielsen.com/us/en/press-

room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-

is.html).

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3. Cultural Values Trends – Americans cultural values are shifting – largely

towards being more tolerant of behaviors that were considered taboo in the

recent past and curtaining behaviors that may be harmful to others (smoking in

public places). One area is the legalization of marijuana – not just for medicinal

purposes, but recreational use in several states and inclusion on the voting ballot

on several more.

35

A second area of tolerance is acceptance of same sex marriage. On June 26th, the

Supreme Court made a ruling that states cannot ban same sex marriage and that

married same-sex couples will now enjoy the same legal rights and benefits as

married heterosexual couples and will be recognized on official documents such

as birth and death certificates.

A third is the ease and prevalence of viral media. Everyone with a smart phone

now has the capability of not only capturing news (and bad celebrity behavior) as

it occurs, but also they can create it and spread it globally in an instant. While

this country was founded and has always been critical of government abuse, in

today’s environment information enters the public forum much easier than any

other time in history and as a result there is a rising tide of outrage regarding the

lack of accountability with both the Federal and State governments. Hillary

Clinton’s role in Benghazi and her cavalier attitude towards e-mail security, Eric

Holder and the Fast and Furious gun deals with Mexican drug cartels, Edward

36

Snowden’s exposure of the NSA’s flagrant overstepping of their legal charter and

violation of US citizens personal privacy as well as spying on “trusted” allies, the

IRS’s targeted audits of Democrat opponents, John Kerry’s nuclear deal with Iran,

the Department of Veteran Affairs mismanagement and the fact that more than

238,000 of the 847,000 veterans with pending applications for health care through

have already died. President Obama has failed to curtail the expansion of ISIS,

negotiated with terrorists in the exchange of a deserter for known enemy

combatants, not supported laws regarding immigration or the second

amendment, increased racial tensions by jumping to conclusions before

considering the facts with Trayvon Martin and the Ferguson shooting, failed to

regulate big banks, issued numerous “shady” executive orders, openly

disregarded the constitution and not only excused or pardoned these behaviors,

but some would say by his actions – encourages them.

3.2 Customer Environmental Analysis

37

Who Are Our Customers?

Not Your Father’s Root Beer is sold in 30 states and is one of the fastest-selling

new craft beers, according to Nielsen data.“Clearly there is a consumer right now

that is clamoring for this,” said Bob Sullivan, who is the president of craft beer

sales for Andrews Distributing. Customers who purchase unique craft beer range

from those who do not typically enjoy the taste of beer to those who are craft

beer enthusiasts. Not Your Father’s Root beer is requested by thousands of people

around the country. The beverage appeals to young drinkers under age 35, who

prefer a lighter more sweet beer. This beer is obviously not meant for those that

do not like root beer soda or people who don’t enjoy sweet beverages. The age

group can vary from newly 21 year olds who cannot tolerate the taste of real

alcohol quite yet, to older people who drink it for the nostalgia of their youth.

Through a random sample of 34 people who have tried this beverage, 91.18%

were 21-35 years of age and 67.65% were females. These results reveal that the

average age of our customers are between 21 and 35.

Why Do Customers Buy Our Product?

38

According to Nielsen data Not Your Father’s Root beer was a top-selling beverage

in craft beer, outselling all traditional beers in Buffalo-Rochester market.

Customers buy our product because they are interested in trying something new

with a taste that is familiar. Customers appreciate a craft beer that is inspired by

traditional brewing and recipes that were passed over two decades. People who

purchase this product regularly are seeking that classic root beer taste with a

twist of alcohol. Some people try this beverage to mix it with ice cream and create

a twisted root beer float. For example, Jdub’s Brewing Company held an official

Not Your Father’s Root Beer float event. Many customers really enjoy the thrill of

trying something new and can appreciate Tim Kovac’s innovative twist on craft

beer and soda.

How Do Customers Buy Our Product?

Customers purchase this craft beer from a

range of channels such as local bars or

restaurants, liquor stores, grocery store

chains, and gas stations if carried. From a

recent survey given to a random sample of 34 people who sampled this beverage

the results were as follows; 58.82% of people purchased at a supermarket, 20.59%

39

purchased at a liquor store, 11.76% purchased at a bar/restaurant, and only

8.82% were not purchased at all. The majority of people bought this craft beer at

a grocery store.

Why Non-customers?

Non-customers may exist because they do not drink alcohol or they do not enjoy

the taste of root beer soda. These are just preferences that different people may

have and occur with any gender or age group. The switching cost are not high for

customers to try new craft beers. However, some customers do need to become

familiar with the product and decide if they like or dislike the taste. This product

is fairly new to the craft beer market and it may discourage some customers from

trying or switching to this product.

3.3 Internal Environmental Analysis

Management/ Leadership

40

The management of Small Town Brewery is growing and changing at an

extraordinary rate due to the quick growth of the company. At the moment they

are hiring Regional Managers that are very motivated and willing to take the

company into a whole new level of success and growth. The managers currently

working for Small Town Brewery hold the same values near and dear to them

because they want the best for the company.

Firm Culture

The atmosphere of Small Town Brewing Company is all about staying true to

their traditions and keeping a passion for brewing that runs through their blood.

Since this company is making specialty beer that utilize unique ingredients with

an unmistakable taste of nostalgia, it is almost certain that this company is all for

the experience and taste that comes from their beer.

Financial Performance

Although Small Town Brewing is a relatively new entity to the market, financially

the company did start off very weak, but it continued to grow as word-of-mouth

about the product spread amongst the beer conosors. Today it is a rather

profitable company due the fact that it is the number one selling hard root beer

in America. From when the beer hit the shelves to this past July, Not Your

Father’s Root Beer sales totaled $8.1 million, according to IRI data cited by The

Wall Street Journal. This new company is growing exponentially, in doing so it is

creating a lot of commotion in the beer industry by exceeding the sales of larger

41

rivals such as New Belgium, Sam Adams, and Sierra Nevada. In terms Small Town

Brewing is taking a large chunk of the market share for specialty craft “soda

flavored” beers.

Production Capacity

When Small Town Brewing Company started, they had a limited amount of

product that they could make due to multiple variables, such as not enough

bottling equipment, not enough workers, and not nationally known. In the first

quarter of 2015 Small Town Brewery got a major boost in production from a

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distribution agreement with Pabst Brewing, which they would be taking the

beverage national. It began selling the beer in March 2015 and the beverage is

now in 38 states, some retailers are reportedly having trouble keeping it in stock,

even Pabst said none of the retailers or distributors can keep it in stock. This in

terms has caused a major boost in the production of the beer by creating a larger

and more efficient capacity to produce the much desired beer.

43

4. SWOT Analysis

STRENGTHS: WEAKNESSES:

- Strategic partnership with

Pabst Brewing Company

- Production Capacity

- Market leader in Hard Root

Beer category

- Rapid growth has led to many

new people in key leadership

positions

- Culture founded on

“traditional” values

- Overall industry/product

awareness

OPPORTUNITIES: THREATS:

- Market expansion including

international opportunities

- Entry of major companies into

this specific category (Anheuser

Busch, MillerCoors and Sam

Adams)

- Craft beer market is the driving

most of the growth in the alcohol

market

- Overall total beer market

performance is flat

- Introduction of other flavors

and/or alcohol concentrations

- Category history has history of

short term-success and long-term

failure (Zima)

44

A. Strengths

The strategic partnership with Pabst Breweries has enabled what was once

only a local tavern favorite to quickly become available in thirty-eight states and

per Pabst’s website, soon to be available in all fifty states. This will allow Small

Time Brewery to compete beyond the local environment.

Through the first half of 2015, NYFRB has racked up $7.2 million in sales

ranking it among the top 30 craft beers (IRI data cited by Beer Marketers Insights

in June 2015) and number one for hard root beers. This position has been well

earned and indicates fairly rapid growth and that the company is building its

brand accordingly.

Founded by Tim Kovac in 2011, Small Town Brewery is a brewing company

located in Wauconda, IL and the atmosphere of Small Town Brewing Company is

about staying true to their traditions and keeping a passion for brewing that runs

through their blood. Since this company is making specialty beer that utilizes

unique ingredients with an unmistakable taste of nostalgia, it is almost certain

that this company is all for the experience and taste that comes from their beer

and will not compromise their standards in order to save a few dollars.

B. Weaknesses

As with many small start-ups, Small Town initially only offered their

product locally. As the company has grown, distribution has increased to a level

where it now available in 38 states. However, several retailers and Pabst

distribution have reported difficulties keeping it in stock.

The management of Small Town Brewery is growing and changing at an

extraordinary rate due to the quick growth of the company. At the moment they

advertise that several Regional Managers positions are open to motivated

45

individuals willing to take the company to a whole new level of success and

growth. while Small Town Brewery is looking for candidates that hold the same

values, this will bear watching to ensure the brand does not get compromised.

At the end of June 2015, craft beer accounted for 11.9% of the total dollar

volume of the beer category in the U.S. The hard root beer portion of this market

represents less than 2% of the total annual US sales and needs to grow

substantially in order to secure its position as a beverage of choice.

C. Opportunities

In a relatively small time period, Small Town Brewery has experienced

enough success to attract much larger partners – Phusion and Pabst Brewing

Company. This opportunity provides Small Town the ability to leverage their

relationships in a variety of ways including acquiring capital, gaining industry

expertise and access to distribution channels that will facilitate growth and

expansion, widespread domestic and possibly international distribution and

potentially production improvements leading to greater efficiencies.

In terms of sales, you’d be hard-pressed to find a bigger stand-out in the

beer category than “craft”. While the total beer category growth has been paltry,

higher-end priced products such as craft are driving most of the growth across

the overall beer market,. In fact, volume for the whole category grew just 0.6%

for the 52-week period ending June 20, 2015. Comparatively, however, volume

growth of craft beer for the same period was 10.2%. Small Town can expect to

gain significant market share by fulfilling a substantially growing consumer

demand for an unique quality beverage.

While Small Town only offers a root beer derivative, companies such as

Sam Adams, Anheuser Busch, and Mike’s Hard products have demonstrated

growing consumer demand for variety is a significant force in the market. Small

46

Town could easily expand their offering to include other flavors i.e. Ginger,

Creme, Birch, Sassafras, etc. Another consideration is for Small Town to

permanently offer NYFRB in stronger alcohol concentrations as they have

enjoyed considerable success with a limited offering 10% alcohol volume or

possibly a “Light” low calorie version.

D. Threats

On a small scale, two competitors have already emerged, but on a larger

platform, MillerCoors has announced that they will be launching their own brand

of hard sodas in early 2016. The line will debut with two flavors, Henry’s Hard

Ginger Ale and Henry’s Hard Orange Soda as a way for MillerCoors to target Gen

Xers who grew up drinking soda (and the overall nearly $20 billion dollar

market). Companies in the hard cider and/or flavored malt beverage market

(Sam Adams and Anheuser Busch) could also expand into this market as the

rewards of growing this market become substantial enough to warrant their

attention. While the overall hard soda market will benefit from the additional

attention and advertising that a major corporation like MillerCoors brings, it

could very easily steal customers from Small Town.

The overall total beer market grew only 0.6% in 2014. while some

companies have seen significant growth in their lines, it has largely been a

reallocation of consumer dollars from one product to another rather than

industry growth. As the US economy strengthens, it is reasonable to expect the

industry to correspond accordingly and grow with it - particularly in premium

products.

The “hard soda” malt beverage or alcopop category has been marketed as

an alternative to traditional beer since 1993, with the introduction of Zima by

Coors. Coors originally had some success as nearly half of American households

47

sampled their offering, but it came at a significant cost as they spent nearly $50

million marketing their offering. Shortly after, Miller introduced Qube, Stroh’s

offered Clash, and Smirnoff launched Smirnoff Ice which by 1995 became the

market leader. However, the product market share did not continue to grow – in

fact it contracted as this segment became perceived as “girly drinks” and Zima

was discontinued in 2008. Small Town will need to remain focused on its

primary focus of providing an unique alternative to Millennials and not allow

itself to be “pigeon holed” as gender specific.

48

5. Issues Analysis

Expanding Availability

Despite Not Your Father’s Root Beer flying off the shelves, it is not readily

available to all of the United States. Although it has been very difficult to

purchase in local markets, there are no signs of the sales slowing. The beer has

also appealed to non-beer drinkers. They are moving off the shelves so fast, that

they are unable to meet the consumer supply and demand. This has forced Not

Your Father’s Root Beer to partner up with Pabst Distribution who also

distributes 30 other kinds of beers. This partnership promises to better distribute

Not Your Father’s Root Beer nationwide; therefore, becoming more obtainable to

the demanding market. The distribution should go beyond just Pabst- Not Your

Father’s Root Beer should engage other suppliers.

Advertising

Not Your Father’s Root Beer is known mostly by beer enthusiasts. Most of

their advertising is through blogs and websites. To further reach other audiences,

they should start advertising products in commercial form on televisions to help

target diverse backgrounds.

Currently, the packaging of the beer only comes in a 6 pack. These should

be made into 12 packs to appease to larger crowds or heavier beer drinkers. In

addition to the size, the packing is not eye-catching and doesn’t stand out. It looks

cheap-looking compared of the other beers. Not Your Father’s Root Beer’s

49

marketing team should better present the product in a way to grab even the non-

beer drinker’s attention. Some ideas can be a better logo, colorful label or slogan.

Different Beer Drinkers

Not Your Father’s Root Beer should also target health conscious drinkers

who are more aware of their caloric/carb intake. By developing a light version of

the beer, they can expand their audience beyond that of regular drinkers. This

will also give them market differentiation from the other root beer producers.

6.0 Goals and Objectives

Goals

➢ To significantly increase brand awareness for NYFRB

50

➢ To become a leader in the Craft Beer Category

➢ To increase NYFRB’s product availability in multiple markets

Objectives

➢ Exhibit at the National Craft Brewers Conference/Brew Expo America

(Philadelphia May 2016) as well as several regional exhibitions (SAVOR,

Great American Beer Festival) and increase overall promotional activity by

at least 20% in 2016

➢ Increase gross sales of NYFRB by 20% annually

➢ Expand NYFRB Bomber (10.7% alcohol vs. 5.9%) product offering beyond

“Limited Availability” to “Year Around” in 2016

➢ Leverage relationship with Pabst distribution to make NYFRB available in

all 50 states and select foreign markets by year end 2016

51

7 Marketing Strategies

The target market that Not Your Father’s Root Beer will focus on will be men and

women age 21 through 36. We can make these men and women loyal customers

by offering a unique and familiar taste that is unlike any other craft beer on the

market.

7.1 Target Market Definition

After further investigation of what Not Your Father’s Beer target market, it is

found to be a beer for adults, male and female, from the age of 21 through 36 who

have love for craft brew beer.The market segment of men and women for the age

of 21 to 36 who love beer is thought to be between 30 million and 35 million

people within the United States. This brew caters to the true beer connoisseurs

that typically are in the early stages of the family life cycle, with a family size of

one to three people. The income for this target market will average around

$45,000, with a good portion of that money being used for recreational use to

purchase alcohol and try new beers such as Not Your Father’s Root Beer.

The lifestyle of the primary target market group would be an actively social

group who are ready to try new things and have an interpersonal outgoing

personality. Even though this target market drinks new type of beer, that doesn’t

keep them from being active or athletic as well. When purchasing this beer for an

occasion, we found that our target market will be buying Not Your Father’s Root

52

Beer for a friend’s or coworker’s birthday party. The usage rate of this product

from our target market would be medium use due to the fact they are drinking

our product on the weekends or when they are being social with friends. We also

find the primary group to have an attitude of loyalty to the product because of

the fact that it fits perfectly into their active social lifestyle

The secondary target market are also young adults 21-36 that either don’t try new

beers too often or they are oblivious that a product such as hard root beer even

exist. They have the about the same attributes as the primary target market,

except that they are less socially active and are not as eager to try a craft beer.

53

7.2 Strategy Statement

Not Your Father’s Root Beer brings a new take on traditional root beer by adding

a little kick to it. This creates a new experience for the consumer and opens their

mind to try new and amazing brews such as Not Your Father’s Root Beer.

Product Not Your Father's Root Beer

Target Market Men and Women ages 21-36

Benefits Brings a unique take on traditional Root Beer

Price The prices ranges from $9.99-$12.99

Value Proposition Not Your Father’s Root Beer offers a alcohol take on the traditional root beer and turns it into a craft brew. This creates an adult and fun way to enjoy a favorite pastime drink from the consumers childhood. The hard root beer is brewed with passion and the desire to be the best craft hard root beer on the market.

8. Marketing Implementation - Action Plan Outlines

The action plans that are going to take place will be explained in the upcoming

pages. To become the best craft hard Root Beer, it is crucial that Small Town

Brewing should consider the order of the action plans and execute them

properly.

54

Action Plan One: $2 Mail in Rebate in Southeastern U.S.

Objective: Attract new customers in the southeast who have not yet tried the

product as well as increase sales with current customers. It will also provide

marketing research data for future marketing campaigns.

Target Market: Men and women age of 21 to 36

Description of the Program: This plan will require attaching the promotional

rebate coupons to the products packaging. The coupons will be on 6-packs of not

your father's root beer that are sold at the following stores: Publix Supermarkets,

Kroger Supermarkets, Total Wine, ABC Liquor. It will also require aisle endcap

placing in Publix and Kroger stores.

Who: The Small Town Brewery marketing department will be responsible for the

design of the rebate coupon. The Small Town Brewery sales rep for the southeast

will be responsible for coordinating the displays with each of the retailers.

360incentives rebate processing service will be responsible for fulfilling the

rebate coupons:

360incentives30 Galesi Dr.#104Wayne, NJ 07470United States1.888.665.4927

Timing: The rebate program will start on June 1st 2016 and last until July 31st

2016. The rebate coupon will be good through October 1st 2016.

Budget: $43,500

Coupon printing: 10,000 Coupons x ¢25= $2,500

Promotional product placing: $3,000

Max Rebate payout: $20,000

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360incentives Fee: $18,000

Measurement: The effectiveness of program will be measured by the number of

sales during the promotion and the number of rebate forms filled. The program

can be considered successful if an increase in sale is seen during the programs

run and at least 25% of the rebate forms filled out for marketing research data

collection.

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Action Plan Two: National Television Advertising Campaign.

Objective: Inform new male customers about our product. It should also help

increase Small Town Breweries market share and increase consumer awareness

of the product.

Target Market: Men age 21-36

Description of the Program: A television commercial with a runtime of 30

seconds will be produced with the assistance of Revolution Media Inc. Revolution

Media will handle not only the production, but also get the commercial

broadcasted. Revolution Media has recommended airing the ad for 4 months on

Spike Tv, Comedy Central, and TNT. The stations share a demographic that is

similar to our target market.

Who: Revolution Media Inc. will handle the bulk of the ad campaign with the aid

of the Small Town Brewery marketing department for direction.

Revolution Media21051 Warner Center Lane, Suite 250Woodland Hills, CA 91367Phone: (818) 348.1800Fax: (818) 348.1956email: info@revolutionmediainc.com

Timing: 4 months starting December 1st 2015 and lasting until March 31st 2016

Budget: $425,000

T.V. commercial production: $75,000

Revolution Media inc. fees: $125,000

T.V. Runtime for 4 months: $225,000

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Measurement: Tracking hits on the company's website, searches for “Not your

father's root beer”on social media, and tracking sales during the adds runtime.

The action plan will be considered successful if there is an increase in hits on the

company's website as well as an increase in sales nationwide.

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Action Plan Three: Internet Click based Advertising.

Objective: Attract new customers that are interest in craft beers or are not usual

exposed to traditional advertising media.

Target Market: Primary and secondary market made up of men and women

from the age of 21 to 36.

Description of the Program: The plan will rely heavily on click based

advertising through Google AdWords. Google AdWords will advertise the Small

Town Brewery website on the google search engine as a top recommended search

result. The ad will show up up based on on certain keywords such as craft, beer,

etc. The budget is very flexible through Google AdWords and will be based on the

number and popularity of keywords as well as the number of visits to the website

for the ad. Google has recommended a budget of $120,000 per year in order to

obtain the keywords that would coincide with our business and target market.

Who: Google AdWords will manage all the of the advertising on their search

engine, and will only require input from the Small Town Brewery marketing

department for keywords and budget limits.

Google AdWords DivisionMillennium at Midtown10 10th Street NE, Suite 600Atlanta, GA 303091-855-607-0435.

Timing: 2 year trial run starting January 1st 2016 and potentially ending on

January 1st 2018 depending on results.

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Budget: $120,000

Google AdWords 2016: $120,000

Measurement: The effectiveness of program will be measured by using Google

AdWords. With this Small Town Brewery will be able to track the number of

visits to their website as well as which keywords are used most often to find the

website. The program can be considered successful if there is a 25% increase in

the number of visits per year to the Small Town Brewery website.

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Action Plan Four: Taste Testing at 12 Total Wines in Florida

Objective: The goal of this plan is to Introduce the product in an environment

where it can give potential customers who are either curious about the product

or do not know about it, a chance to try it. The plan should generate new

customers and potentially persuade current customers to re-buy.

Target Market: Men and women age of 21 to 36.

Description of the Program: The plan will require having the 12 selected Total

Wines add the ad to their monthly postal and email based ads notifying their

customers of the event. The Small Town Brewery sales reps will be required to

set up and manage the events. During the taste testing an optional survey will be

available to customers and will ask for basic feedback such as age, gender, and

what they think of the beer. The first tasting will be held at 6 of the Total Wine

locations on the west coast of Florida and the next one the following week at the

other 6 locations on the east coast.

Who: Total Wine will be responsible for notifying customers of the event. The

Small Town Brewery marketing department will handle the scheduling the event

and the sales reps will run the events interacting with customers.

Timing: Two weekends in 2016 during the month of February. The first tasting

on the west coast will be held on February 13th -14th with the second tasting on

the east coast on the 27th-28th

Budget: $26,500

Total Wine floor space 4 days: $15,000

Tasting displays: $7,500

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Tasting supplies and surveys: $2,200

Sample Beers: 10 Cases ($15 per) per store (12) $1,800

Measurement: The effectiveness of program will be measured by the number of

sales during the promotion and the number of surveys filled out. The program

can be considered successful if a small increase in sale is seen during the Taste

testing and at least 500 surveys are filled out.

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Action Plan Five: Advertising on Social Media: Facebook & Twitter

Objective: Create awareness of the product in the online community, increase

sales of the product nationwide, and provide a more personal feedback to

customers and fans of the product.

Target Market: Men and women from the age of 21 to 36 how are active on

social media sites and are interested in craft beers.

Description of the Program: Small Town Brewery will set up a business page on

Facebook.com and Twitter.com. From both social media sites they will announce

news and updates about the company as well as promote Not Your Father’s Root

Beer. This will also allow them to interact with customers and receive instant

feedback from them on the product. Both sites will advertise the Not Your

Father’s Root Beer based on keywords, members likes, and posts to their pages.

On the Facebook page, a survey of the product will be available to customers to

fill out and provide info that is useful to the marketing department.

Who: A new division located under the Small Town Brewery public relations

team will be created and higher one new employee to manage the social media

aspects. The main section of the public relations department will be in charge of

setting of the advertisements and scheduling with Facebook & Twitter.

Timing: The plan will start on January 1st 2016 and have a 1year trail run. If

successful, it will run indefinitely or until it becomes ineffective.

Budget: For first year: $46,000

Facebook Ad service (initial budget): $10,500

Twitter Ad service (initial budget): $7,500

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New Employee: $28,000 per year

Measurement: The effectiveness of program will be measured by number of new

followers on the pages and the number of surveys that are filled out. The

program can be considered successful if the number of followers on both

websites by the end of the first year is at least 35,000 and a minimum of 1,500

surveys are filled out.

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Action Plan Six: 2016 National Craft Brewers Conference

Objective: Increase national awareness of for Not Your Father’s Root Beer in

order to generate more sales and broaden the market share.

Target Market: The market for which Not Your Father’s Root Beer is targeting

are men and women aged 21-36 beer advocates who enjoy the thrill of trying

something new as well as new business members in the industry to help increase

Small Town Brewery position in the market.

Description of the Program: Small Town Brewery will set up an Exhibit at the

National Craft Brewers Conference. While at the conference the Small Town

Brewery management staff will attend an industry conference while the Small

Town Brewery public relations team will setup and manage a booth at the

conference.

Who: The Small Town Brewery RP team will be responsible for scheduling and

managing the exhibit for the three day conference. The marketing team will be in

charge of design the exhibit. The management staff will be tasked with learning

more about the industry at present and making new business connections.

Timing: The action plan will take place in 2016 from May 4th to the 6th.

Budget: $22,425

Registration for conference: $1200

Lounge area exhibit Booth: $17,500

Setup: $1500

Samples: 15 Cases of beer at & $15 per case: $225

Travel & Transportation expenses for PR team: $2,000

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Measurement: The effectiveness of program will be measured by the number of

sales after the conference and by what the management staff learns. The

program will be considered a success if a small increase in sale is seen following

the conference and if the management can make at least one new business

connection.

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Action Plan Seven: 2016 Great American Beer Festival

Objective: Promote Not Your Father’s Root Beer in a competition style setting and

increase sales. Another objective is to increase the reputation of Small Town

Brewery as an award winning brewery.

Target Market: The market for this action plan will be men and women aged 21-

36 who are into craft beer and brewing.

Description of the Program: Small Town Brewery will be one of the main

sponsors of the Great American Beer Festival (GABF). A back cover ad on the

GABF festival guide book. The book will be handed out to the 60,000 people at the

festival, in which 42% of them will be up of our target market. Small Town

Brewery will also enter “Not Your Father’s Root Beer” in the Specialty Beer

Category of the GABF Beer Competition.

Who: The Small Town Brewery marketing team will be responsible for creating

the ad for the guide book. The management staff will be in charge of coordinating

with the Great American Beer Festival event staff on entering the competition

and becoming a sponsor the event.

Timing: The action plan will take place in 2016 from October 6th to the 8th.

Budget: $14,750

Sponsorship: $5,000

Back cover ad (8.625”w x 11.125”h): $2,750

Specialty Beer Category Registration: $320

Travel & Transportation expenses: $6,000

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Measurement: The effectiveness of program will be measured by the number of

sales during and after the event and by how well “Not Your Father’s Root Beer”

does in the competition. It will be considered a success if a 5% increase in sale is

seen following the event and if “Not Your Father’s Root Beer” receives an award

at the event.

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Action Plan Eight: Small Town Brewery YouTube Channel ads

Objective: Attract new customers nationwide who have not yet tried the product

and increase sales with current customers. It will also inform customers of the

product and show other uses.

Target Market: The market for this action plan Men and women aged 21-36 who

enjoy beer and use YouTube.

Description of the Program: A series of low budget commercials will air on

YouTube.com with a runtime of 60 seconds each that wil be shown in In-stream

and In-search ads. The ads will take place at Small Town Brewery and star the

founder Tim Kovac. In the commercial Tim Kovac will promote “Not Your

Father’s Root Beer” in a personal manner. This will include quick tours of the

factory and different uses for the beer, such as making an alcoholic root beer

float. The series of ads will take place over 12 months with each new commercial

airing every two months.

Who: The Small Town Brewery marketing staff will handle the production of the

commercials and what Tim Kovac will do in each ad. The Small Town Brewery

public relations team will be in charge of responding to the responses to the ad

on YouTube.com.

Timing: The 1st commercial will air for the month January 2016 with a new ad

airing each month. The finale ad will air during the month of December 2016

Budget: $165,000

Comercial creation budget: $15,000

YouTube In-stream ad fee: $0.30 per view x 500,000est views: $150,000

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YouTube In-search ad fee: $0.10 per click x 250,000est clicks: $25,000

Measurement: The effectiveness of commercials will be measured by the

number of clicks on the ad, the number of views, and hits on the Small Town

Brewery website.The commercials can be considered a success if there is an

increase on the number of hits on the Small Town Brewery website and the

number of views as well as clicks meet their estimated markets.

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Action Plan Nine: Motor Trend Magazine advertisements

Objective: Promote Not Your Father’s Root Beer to Motor Trend’s 1,122,000

readers nation wide to generate more sales. It will also increase consumer

awareness of the beer on a large scale.

Target Market: The market for this action plan will be Motor Trend subscribers

and readers, which is composed of a large majority of the Small Town Brewery

target market. The market will be mainly men aged 21-36 who are willing to try

craft beers.

Description of the Program: The action plan will require the purchase of two

different full inside advertising pages in the Motor Trend magazine. Both ads will

vary in layout and content but will both advertise the “Not Your Father’s Root

Beer” beer. The ads will also appear in the magazine Six months apart in

different issues.

Who: The Small Town Brewery marketing team will be tasked with designing two

unique ads that will be placed in the magazine. They will also be in charge of

where in the magazine the ads will be located. The Small Town Brewery

management staff will be in charge of scheduling the ad spots and making the

transaction for the ad space.

Timing: Ad #1 will be in the January 2016 issue of Motor Trend magazine and ad

#2 will be in the June 2016 issue.

Budget: $179,470Ad Full-page #1: $89,735

Ad Full-page #2: $89,735

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Measurement: The effectiveness of program will be measured by the number of

sales after each new release of the magazine in which the ad is located. The

action plan will be considered a success if sales revenue increases by $100,000

after each release.

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Action Plan Ten: “Keep the Glass” bar promotion

Objective: Promote Not Your Father’s Root Beer to generate more sales and

broaden the audience purchasing as well as provide customers with a “take

away” that reminds them of the brand and provides conversation initiators with

potential future customers.

Target Market: The market for which Not Your Father’s Root Beer is targeting

are men and women aged 21-36 who enjoy the thrill of trying something new and

can appreciate Tim Kovac’s innovative twist on craft beer and soda.

Description of the Program: Bar patrons who purchase two servings of NYFRB

will be awarded a special NYFRB commemorative glass with the company’s

distinct label and logo. The company will be shipping two cases of glasses to each

of its top 50 commercial customers (based on 2015 total sales) and they will be

distributed appropriately.

Who: The marketing department will be responsible for coordinating this with

purchasing, shipping, Regional Sales Managers as well as managers/owners at

key customers.

Timing: This program will kick off on Memorial Day weekend (May 27, 2016) and

run through the July 4th holiday weekend.

Budget: $3,692

Beer Glasses: $17.46 per case x 100 cases: $3,492

Shipping fees: $200

Measurement: The effectiveness of program will be measured by the sales

revenue during this time period compared to previous year.

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9.Marketing Budget

Plan # Action Plan Title Cost

1 2$ Mail in Rebate in Southeastern U.S. $43,500

2 National Television Advertising Campaign. $425,000

3 Internet Click based Advertising. $120,000

4 Taste testing at 12 Total Wines in Florida. $26,500

5 Advertising on Social Media: Facebook & Twitter. $46,000

6 2016 National Craft Brewers Conference. $22,425

7 2016 Great American Beer Festival. $14,750

8 Small Town Brewery YouTube Channel ads. $165,000

9 Motor Trend Magazine ad. $179,470

10 “Keep the glass” bar promotion. $3,692

Total Cost for implementing action plans. $1,046,337

The total cost for the implementing the action plans remains within the budget of

small town brewery. Overall, the budget is very large compared to small town

brewery's total sales for the previous year. However, the implementation of these

action plans will insure total marketing coverage and have the best chance of

contacting the target market. If all ten of the action plans are followed through

with, Small Town Brewery will see a substantial increase in sales of 20% or more

for 2016.

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What we learned

Throughout the semester, we have discovered all weakness both internally and

externally that Not Your Father’s Root Beer is facing. By analyzing the mentioned

weaknesses, we came to the understanding that having a better marketing

strategy is the backbone of having a successful business. We learned that Not

Your Father’s Root Beer has potential to better grow throughout many audiences

by better distributing and advertising the product.

As we worked through the SWOT analysis, we learned that the integrity, quality

and taste of the beer have served as the greatest strength for this product.

During the Issues Analysis, we discovered that Not Your Father’s Root Beer needs

to better expand their product and target diverse audiences. By creating a lighter

version of the beverage, this promises a unique competitive advantage. This

would enable Not Your Father’s Root Beer to be the leading and innovate product

in both the craft beer and root beer market.

In conclusion, we all agreed that this company has huge potential as long as Not

Your Father’s Root Beer further develops and expands by taking our suggestions

into consideration. After all, this truly is not your father’s root beer.

75

10. References

US NewsAllie Bidwellhttp://www.usnews.com/news/blogs/data-mine/2014/12/01/report-too-much-freedom-hurts-college-graduation-rates

Refreshing Hard Cider With AttitudeAngry Orchard http://angryorchard.com/

Mike's Hard Lemonade Commercial BHP Musichttps://www.youtube.com/watch?v=4_r_XnF232M Mike's Hard Lemonade Commercial BHP Musichttps://www.youtube.com/watch?v=4_r_XnF232

Pabst Taking ‘Not Your Father’s Root Beer’ NationalBrewboundhttp://www.brewbound.com/news/pabst-taking-not-your-fathers-root-beer-national

Promoting Independent Craft BrewersBrewers Associationhttp://www.brewersassociation.org

Angry Orchard TV Commercial Bruce Jacobsonhttps://www.youtube.com/watch?v=l5jR5PYdn44

U.S. Bureau of Labor Statistics U.S. Bureau of Labor Statisticshttp://www.bls.gov

Budlight RitasBudlightwww.budlight.com/our-beers/lime-rita-margarita-twist.html

76

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CIA Site RedirectCentral Intelligence Agencyhttp://www.cia.gov/library/publications/the-world-factbook/fields/2002.htm

Hard Root Beer Coney Island Brewing Companyhttp://www.coneyislandbeer.com/hard-root-beer

Prevalence of Obesity in the United States, 2011-2012 (JAMA Network)Cynthia Ogdenhttp://jama.jamanetwork.com/article.aspx?articleid=1832542

Fewer than half of U.S. kids today live in a 'traditional' family Gretchen Livingstonhttp://www.pewresearch.org/fact-tank/2014/12/22/less-than-half-of-u-s-kids-today-live-in-a-traditional-family/

FIESTA STREET PARTY! LIME A RITAS BUD LIGHT COMMERCIAL Juan Jprotvhttps://www.youtube.com/watch?v=YdKs0DK98Lg

The long, slow, torturous death of Zima.Koerner, Brendan.http://www.slate.com/articles/life/drink/2008/11/the_long_slow_torturous_death_of_zima.html

AlcoholLegal Information Institutehttps://www.law.cornell.edu/wex/Alcohol

Press Room (Global Consumers are Willing to Put Their Money Where Their Heart is When it Comes to Goods and Services from Companies Committed to Social Responsibility)Nielsenhttp://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html

Tapped In: Craft and Local Are Powerful Trends in the Beer AisleNielsen

77

http://www.nielsen.com/us/en/insights/news/2015/tapped-in-craft-and-local-are-powerful-trends-in-the-beer-aisle.html

Modern Immigration Wave Brings 59 Million to U.S., Driving Population Growth and Change Through 2065 (Pew Research Center's Hispanic Trends Project RSS)Pew Research Centerhttp://www.pewhispanic.org/2015/09/28/modern-immigration-wave-brings-59-million-to-u-s-driving-population-growth-and-change-through-2065/

The Buffalo News Samantha Christmannhttp://www.buffalonews.com/business/not-your-fathers-root-beer-is-a-hard-to-find-phenomenon-20150916

Home - Seagram’s Escapes (Seagram’s Escapes Home Comments)Seagramhttp://www.seagramsescapes.com/

SMIRNOFF ICE® Original flavored malt beverage Smirnoffhttp://www.smirnoff.com/en-us/vodka/smirnoff-ice-original-flavored-malt-beverage/

Smirnoff Ice - Patio - TV Commercial - ENGSmirnofficecanadahttps://www.youtube.com/watch?v=OK24kSF_NzQ

Sprecher BrewerySprecher Brewerywww.sprecherbrewery.com

Not So Soft Drink: Brewers Add Booze to Root Beer (WSJ)Tripp Micklehttp://www.wsj.com/articles/not-so-soft-drink-brewers-add-booze-to-root-beer-1439546400

Seagram's Escapes TV Commercial, 'Color Your Girls Night' Truel Genuinehttps://www.youtube.com/watch?v=b2rKm72iVsU

U.S. and World Population Clock (Population Clock)U.S Census Bureauhttp://www.census.gov/popclock/

78

Census.gov (Census.gov)U.S. Department of Commercehttp://www.census.gov/

79