Download IZZE Sparkling Juice Case Study

IZZE Sparkling Juice Case Study A refreshing new beverage is born . . . In February 2002, Todd Woloson and Greg Stroh, two friends who love good food and drink, were having lunch in Boulder, Colorado. They spoke of life and work, and what it would be like to start a company that not only made a great product, but also gave back to the community. Both agreed on a singular goal: To make a delicious, new beverage created by a company with a conscience, and have a little fun in the process. Both entrepreneurs were impressed with the sodas they had tried in Europe, and agreed that no other American brand had captured the sophisticated fruit flavors they experienced in Italy, France and Switzerland. As they reminisced while they drank “ordinary” soft drinks, they recognized an opportunity to create a European style sparkling drink for the American palate. They agreed that their beverage would have to be made from pure and simple ingredients, and they‘d have to be proud to produce it, share it, and drink it. And, they decided their new drink should be branded “IZZE,” named after Isabelle, the eldest daughter of co‐founder Todd Woloson. The goodness of this brand had to go beyond what was inside the bottle. In 1998, Todd and his wife, Eliza, had founded a non‐profit, Global Education Fund, on the belief that educating kids secures a better future for the world. IZZE and Global Education – they would combine for a perfect blend of pure, simple, and good. Now they had the makings of a product and company they could feel good about, the IZZE Beverage Company was born. During a taste test of all of their flavors, a trade columnist wrote, “It’s an honest departure from the syrupy, sweet sodas of the past. Cheers to their entrepreneurial spirit!” What differentiates IZZE from the dozens of brands in the crowded soft drink category? Real fruit contains fructose, an organically natural sugar. The founders decided that IZZE would be made with real fruit juice, and that only natural fruit sugars would sweeten their drinks. There are 87‐107 calories in eight ounces of IZZE (depending on the flavor), and 120‐130 calories in the twelve ounce bottle. Ounce‐
per‐ounce, the caloric content is equal to or lower than other juice drinks, sodas, or new age beverages on the market. But most importantly, the sugars/carbohydrates in IZZE are naturally occurring, and come from wholesome, natural sources. IZZE with vitamins is a line extension with the same great sparkling juice ingredients as IZZE beverages but enhanced with 30% of the U.S. recommended daily allowance of Vitamin C, and 10% of the allowance for B6 and Niacin. Like IZZE, IZZE with vitamins has no refined sugars. It has no caffeine, and no preservatives. Although IZZE with vitamins is gaining in popularity, Todd and Greg are in total agreement on their current mission: “Our marketing strategy for the foreseeable future will be to build IZZE brand itself, not on the vitamin line or any one flavor.” No matter which choice consumers make, IZZE or IZZE with vitamins, the taste is the same. The only difference is that IZZE with vitamins comes with extra vitamins. By adding vitamins, there is no difference in taste, calories, juice content or cost. Marketing/Media Planning Challenge . . . Pepsico Acquires IZZE Both Todd and Greg are experienced businessmen, and when they launched IZZE, they knew they faced extraordinary challenges in determining the marketing mix, a mix they had to get right to compete with the soft drink goliaths. They not only got the marketing mix right, they got it so right that Pepsico acquired IZZE. Pepsico, known worldwide for visionary brand development, was also smart enough to keep founders Woloson and Stroh on the brand team. Rather than the classic four Ps, their marketing ideas fit better with Robert Lauterborn’s four Cs published in 1990. Lauterborn’s Cs are a more consumer‐oriented version of the four Ps that recognizes how smaller startup brands must focus on niche marketing versus the older model of mass marketing: “C” Corresponding “P” Description Consumer wants and needs Product Cost Price Communication Promotion Convenience Place Consumer wants and needs A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase. Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids". It reflects the total cost of ownership. Many factors affect Cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service. While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer with the aim to create a dialogue with the potential customers based on their needs and lifestyles. It represents a broader focus. Communications can include social media, advertising, public relations, personal selling, and viral marketing. In the era of Internet, catalogs, credit cards and phones, people no longer need to go anyplace to satisfy a want or a need and are not limited to a few places to satisfy them. Marketers should learn how the target market prefers to buy, how to be there when they are ready to buy, and make the brand ubiquitous to guarantee convenience in buying. With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors. (Source:Wikipedia, “Marketing Mix”, Italics added)
As with any marketing model, the key to success is discovering the proper balance for all components in the mix. After a decade of experience with their brand, Wolosen and Stroh are confident they have nailed the Consumer Wants and Needs part of the equation. Lauterborn would attribute much of their success to fulfilling a want/need by selling a sparkling fruit juice that a specific consumer wants to buy. Going National Other components in the marketing mix are equally important to this brand’s future. Now that IZZE has a foothold in multiple channels, the challenge now is to make the brand ubiquitous to guarantee convenience in buying. Thus far IZZE’s sales have been achieved primarily through a push strategy. They have successfully pushed the IZZE brand into households by achieving distribution in retailers such as Whole Foods and Trader Joes, periodic case sales through big box stores like Costco, selling on Amazon, communicating through social media, and getting some local and regional retailers to give their product valuable shelf space. Woloson and Stroh now face their biggest challenge since launching their brand and the Pepsico acquisition – achieving solid national distribution. According to the Nielsen research firm, there are over 35,000 supermarkets in the USA, and 149,000 convenience stores. To date, IZZE’s penetration into these stores is below 12%. Pepsico is exploring the possibility of marketing IZZE on a national scale with the goal of 70% distribution in USA supermarkets and C stores within 2 years. They’ve proposed a plan to inject $23 million into the company to accomplish this goal. Currently, IZZE contracts the mixing, bottling and packaging of their drinks with an independent producer in Monrovia, California. All product must be shipped from this west coast facility. Of the $23 million, $5 million would be used to increase bottling capacity at plants in strategic geographic locations across the lower 48 states. The balance ($18 million) would be earmarked exclusively for communication and marketing expenses. Pitching the Business Your advertising agency has been retained by Woloson and Stroh to write a marketing/media plan that will serve as a proposal to Pepsico. Your $18 million media plan will be the primary factor in determining whether or not Pepsico moves forward with this capital injection. Your job is to generate national awareness by creating dialogue with the potential customers based on their needs and lifestyles. Your focus must be much broader than just “advertising.” Communications can include radio, TV, print media, social media, business to business, public relations, sales promotion, and viral marketing. You will discover that $18 million is not a lot of money when buying national media. Your inspiration should be the legendary Bill Bernbach who was fond of saying, “Rules are what the artist breaks; the memorable never emerged from a formula.” Although he was talking to the creative department, the principle applies to all individuals who fancy themselves marketers. Media is creative if you have the genius to make it creative. Magnitude of the Challenge Even after the acquisition by Pepsico in 2006, IZZE has continued primarily with low‐to‐no‐budget word‐of‐mouth/kitschy event campaign strategies. Todd and Greg expect that this sort of advertising will continue—it’s been highly successful so far, and they want to maintain their unique position in the marketplace moving forward. However, they recognize that even with an $18 million marketing cash infusion the task ahead of them, and you, is large. IZZE is the minnow in an ocean of beverage sharks—IZZE’s current marketing spend doesn’t even register compared to the massive spend of the soft drink, bottled water, and fruit drink categories they compete against. The $18 million will require a near genius media plan to compete against the annual $1.5 billion spent by IZZE’s competitors in these categories: IZZE Competitive Category Spend 2013 $(000)
$1.5 Billion Total
Carbonated Soft Drinks
$727.6
Fruit Juices & Fruit Flavored Drinks
$389.7
Non‐Carbonated Soft Drinks
$358.9
Bottled Water
Vegetable Juices
$114.6
$27.6
Branding Challenges IZZE needs to “own a space”. Woloson and Stroh are looking for a campaign theme that can be built upon for the foreseeable future. This theme/position should be an ‘anthem’ which can be refreshed periodically with new creative that keeps the idea alive and growing in the mind of the consumer as communication continues. 1) A primary goal for your agency is to increase brand awareness, currently estimated at 12% nationally. By end of the first year, brand recognition must grow by 10 percentage points to over 22% aided awareness. Woloson and Stroh are opposed to the dated notion of “sender →receiver” advertising. They agree with Lauterborn that promotion is "manipulative" and from the seller. Successful communication must be "cooperative" and from the buyer with the aim of creating a dialogue with customers based on their needs and lifestyles. 2) IZZE’s brand personality is not clearly defined in the mind of customers. As media planner, an important goal will be to create new media that will generate a dialogue between IZZE and its customers. 3) Along with an imaginative media mix, Woloson and Stroh want to see some examples of your strategy. If you employ traditional media, provide an example of the concept/message to demonstrate how it will foster dialogue with the IZZE brand. If you create a viral message or a twitter concept, be specific with examples. IZZE finds itself in an unusual situation compared to the other products in the Pepsico line—there is no syndicated data for either the brand or its competitors as market penetration is small. To further assist you in planning, Pepsico commissioned MRI to do a custom study on the category (base sizes for individual brands are too small to report separately) and to index the results to the regular MRI report for the period. The results of that study are part of your arsenal of information, and can be found online with other case materials. Campaign Parameters Write a media plan applying the principles outlined in MFP chapters 1‐7. Review all chapters well. See IZZE CASE on MFP website for targeting, competitive, and marketing data. 1. Target audience & media mix: A well justified target audience is vital to the success of this brand, and your job is to accurately define the segment of the market that will buy IZZE. Study your brand and competitive brands carefully and critically. Write a profile for the target audience using all relevant online sources provided for you. Justify both the target profile and your media mix decisions using quantitative and qualitative data from the case and from other resources you may be able to find. 2. Timing/Scheduling: Plan a 12‐month campaign. Each of the 12 months may or may not include advertising or promotions depending on your timing strategy. You decide which month to launch, and which months to accelerate spending. The timing/scheduling strategy is vital to your success. Your client expects you to justify peak spending periods with strong support. Woloson and Stroh are long range marketing planners. Assuming you get the business, what marketing/media strategy will follow year one? They want you to propose (in one short paragraph – 50 words or less) a “Second Year Marketing/Media Strategy.” How will year 2 build on year one? 3. Media Mix: You need to justify the media mix for IZZE. Analyze the information in the case combined with all available online data to convince your client that your media mix has strategic genius. Your media plan should include traditional media as well as any new media, social media, or sales promotional spending. If you cannot find published costs for social media, sales promotion or event marketing that you wish to use, estimate a percentage of the total budget (a percentage of $18 million) you plan to spend, and identify it in your write‐up. 4. Scope: Geographic strategy is make‐or‐break for the IZZE brand. Make a very clear commitment to one of the three scopes in the MFP online simulation: National, Spot, or Both. Justify your decision by citing relevant data from all available sources. This should include data from the case itself or other resources, but keep in mind that IZZE’s brand team is especially interested in your quantitative analysis of relevant data. 5. Spreadsheet: If you choose to support local or spot markets, use the method outlined in the MFP Exercise, Learning to “Weight” Spreadsheets. Calculate Estimated Value Percents (EV%) for all markets selected, and rank them from strongest to weakest. If you choose a spot market strategy, data for spot market planning is online (mediaflightplan.com). Evaluate all selected markets using Excel, and employ a weighting strategy. 6. SWOT (Strengths, Weaknesses, Opportunities, and Threats) or Situation Analysis: competitive data, spreadsheet market data, etc., are all available online [www.mediaflightplan.com]. The quality of your analysis, and the effort you invest is the key to unlocking some of the most important issues in this case study. As you prepare your SWOT, follow the seven points outlined in Chapter 2. IZZE’s marketing director suggests special attention be given to the following in your analysis: • Recommend a marketing mix for IZZE; use Robert Lauterborn’s “C’s” to guide your analysis. • Include a careful analysis of IZZE’s primary competitors. •
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Competitive Spending Analysis with SOV (Share of Voice). Review MFP Exercise 8 if you need help with the SOV. Note that IZZE’s current spend would result in an SOV of zero, so use the competitive data to analyze the competitive marketplace and guide media decisions. Ask yourself which category might IZZE be most directly competing in? When can IZZE own a medium or break through the background clutter? Etc. Make your analysis and decisions tie into your media mix strategy. Make a complete analysis part of your presentation/write‐up. Geography strategy: Should spending be focused or broadened? How can IZZE maximize its advertising voice in national and/or spot markets? 7. Creative strategy: Write a creative brief for an integrated campaign that positions IZZE, and write a tag line for the upcoming campaign. Yes, media planners are expected to be part of the creative team. And yes, both authors of this text have witnessed big campaign concepts that came from the minds of media folks. Why a creative brief? It’s all about intelligent positioning. When integrated thoughtfully, creative becomes a major driving force in your media strategies. 8. Media Flight Plan Simulation: Execute a media buy using Media Flight Plan. Include a flowchart in the body of your work, and other printouts as required by your professor. Make sure all decisions stated on these printouts are supported with logical and intelligent objectives/strategies. CAUTION: Be sure the buys on your flowchart are consistent with your media objectives/strategies! Your marketing/media plan will be judged less on the buys you make than on the objectives/strategies that drive the buys. 9. Strategy is everything – write media objectives/strategies for the following: • A clear definition of IZZE’S target audience with an intelligent media mix • Strategy. Media mix should include a list of vehicles, e.g. – radio formats, social media concepts, mobile media concepts, magazine titles, TV programs, etc. • Monthly reach/frequency goals and accompanying strategies. • Geography: Should IZZE be advertised nationally, in spot markets, or a combination of both? • Monthly media allocations and budgeting strategy demand logical marketing support. • Timing/scheduling decisions are vital to IZZE’s marketing success ‐ justify your timing. 10. MFP Tip: You may wish to show social media detail on your flowchart. There are two ways to do this currently: ‐Export your flowchart to excel, and manually input the data ‐You can add ‘vehicles’ to individual media. To add Facebook (for example) to your internet campaign, double click on “Internet‐Trgtd Sites” (our recommendation for this, although you could use one of the other provided media as a ‘host’). In the window, you can add items by typing them in the “Vehicle Name” box and clicking Accept as we did for the ‘Social Media‐Facebook’ entry. Delete items you don’t want by clicking the ‘X’ next to the item. Vehicles you add this way can’t be bought individually (you ‘buy’ the host by entering GRPs in the main screen as you do for other media) but they will show up as line items on your flowchart. More detail is available in the MFP tutorial (Exercise 13).