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Table of Contents

Problem Statement 2

Situation Analysis... 2

Market and Segmentation Analysis.. .. 3

Key Factors .. 3

Alternative Analysis... 3

Recommendations ... 7 Action Plan....... 8

Problem Statement: Vincor must choose the best product characteristics, positioning, branding, packaging and distribution strategy to introduce their new alcoholic beverage product in the refreshment market. Situation Analysis

Objectives: Vincors objective is to have at least a 3-year lifespan in the market, since this would be considered successful in the refreshment industry. Unsuccessful products were pulled from the shelves within their first year. 1

Background: In 2004, Vincor was the worlds eighth largest producer and distributor of wine and wine-related products. In Canada, Vincor was the market leader with 21% market share. The refreshment category was an important part of Vincors business in Canada, and was driven primarily by its Vex and Growers Cider brands, each of which sold nearly one million cases in 2005.1 In 2004, refreshments were a $230 million dollar industry in Canada. However, the refreshment category within the alcoholic beverage industry shrank by 6% year over year. Each province has one buyer and one primary source for distribution. The monopsonistic nature of the distribution channel added pressure to the launch of a new brand. The industry is extremely dynamic and trendy market, so new brands and brand extensions were launched every year. Being in a highly competitive industry and with customers willing to try out new brands, the company needs to be innovative to remain financially healthy in the long run.

. SWOT Strengths: 8th largest producer of wine products Second largest supplier in Canada with sales over $ 400million per year. Large production and distribution capabilities. Extensive brand management experience of Kelly Kretz. Sales organization able to convince store managers to list their products. Weaknesses: Poor performance of Yuha.

Kelly has only 7 months remaining while it is necessary to have 10-12 months of lead time. R&Ds failure to produce gummy worm.

Opportunities: Awareness can be stimulated with bar and restaurant promotions. In Canada refreshments are a business generating $230 million per year. Wide opportunity, 30% of new products is launched each year. Threats: Highly competitive market. The refreshment category is losing market.

Market Analysis:

Other brands standing in the refreshment product category and their respective market share are Diageo Smirnoff Ice 26%, Bacardi Breezer 17%, Mikes Hard Lemonade 9%. New products as of 2005 are Yuha, Mikes Berry, and Vodka Mudshakes.

Case Keys: Customers response to new fruit cooler are the major concern for Vincor and also an unsorted doubt will be whether they will associate the product with previous years product Yuha. Key Success Factors:

Getting the right marketing mix, such as getting right product pricing and packaging. Tremendous innovation required. Good flavour combination. Decide on the right distribution strategy.

Key Uncertainties:

Change in consumer behaviour. Competitors strategies.

Alternative Analysis 3

1. PRODUCT Alternative #1: Real Fruit Juice Coolers Pros: Winner of quantitative research. Cons No in-house fermentation capabilities. Similar product Yuha failed. Low price. Appeal as a healthier option.

Alternative #2: Gin or Tequila Coolers Pros: No product currently on market Cons: Vodka outnumbers gin and tequila 10 to 1 Alternative #3: Spring Water Coolers Pros: Tested well among females. Cons: Weak flavour profile. Alternative #4: Energy Coolers Pros: Red Bull and Vodka is popular. Cons: side effects (too much caffeine can keep drinker wired for longer than they want to be), health risks (hard on liver) 2. PACKAGING 2.1 Carrier Alternative #1: 4-pack Pros: Priced within psychological threshold $10. Differentiated from Vex. Cons: Limited yield of 200 bottles produced/minute. Alternative #2: 6-pack Pros: No premium 6-pack on the market.

Faster and cheaper to produce (250-270 bottles/minute).

2.2 Box Design Alternative #1: Closed Box Pros: Larger surface for creative design and copy. Cons: Consumer cannot see product. Alternative #2: Open Carrier Pros: Allows consumers to see bottle/product inside. Cons: Less surface area for creative design and copy. 2.3 Label Alternative #1: Paper Label Pros: Easiest, most straightforward. Cheapest to implement. Vincor already has production capability. Cons: Not perceived as upscale. May not be able to achieve eye-catching differentiated packaging. Alternative #2: Ceramic Labelling Pros: Bottle would be differentiated. No coolers use this. Cons: More expensive than paper. Vincor must outsource the labelling Bottle could not be reused through recycling program (increased expense). Small colour selection. Alternative #3: Pressure-sensitive label Pros: Allows maximum flexibility to execute creative designs. Considered premium. Cons: Most expensive option. Bottles could not be reused, increased expense. Alternative #4: No Label Pros: Edgy, different.

Cheap to implement. Cons: May not be enticing to new consumers. 3. BOTTLE 3.1 Type Alternative #1: Glass Pros: Conventional choice. Longer shelf-life for carbonation (one year). Cons: More expensive. Breakable. Alternative #2: Plastic Pros: Less expensive. More durable. Cons: Usually reserved for bottled water, soft drinks, sports drinks. Shorter shelf-life for carbonation (4 months). 3.2 Shape/Size Alternative #1: Square Pros: Differentiation. Cons: Requires purchasing new mould, additional financial risk. Alternative #2: One Litre Bottle Pros: Successfully used with Vex. Innovation in industry. Cons: Already used. Would be too similar to Vex. Alternative #3: Standard bottle size 341mL Pros: Easiest to use. Cons: Less product than competitor Smirnoff Ice (355mL). 4. PRICING Alternative #1: Grey-Goose Approach higher than market leader Pros:

Cons:

High price would connote premium. Higher margins would yield rich returns. Would exceed $10 threshold. No brand-named spirit base associated with it.

Alternative #2: Line Pricing at or slightly below current leader Pros: Gives perception of similar to market leader in quality. Cons: Does not want to be me too. Alternative #3: Price Below $9 Level Pros: Potential higher sales volume due to lower prices. Cons: Price would confuse consumer as to products positioning: Premium vs. Value. 5. PROMOTION Alternative #1: Deep Discount $1.50-$2.00 Pros: Drive sales volume. Get promotion off to a strong start. Cons: Smaller margins. Alternative #2: Smaller Discount $0.50-$1.00 Pros: Protect margins and premium launch positioning. Still get good placement with provincial liquor stores. Cons: Is it enough? Recommendation: Real fruit juice coolers should be produced because of the positive quantitative research, low price, and appeal as a healthier option. A 4-pack carrier should be produced to keep price point In line with other coolers, since value is a major criterion. The box will consist of an open-carrier design, which will offer visibility of the product and the bottle. Paper labelling is recommended because it is the easiest and cheapest option. A glass bottle should be used because glass is associated with fruit juice and it also has a longer shelf life. A standard 341mL bottle is recommended because it is the easiest to use. It is advisable to use the round bottle design without adding anymore steps to launch to accelerate the launch process.

The Line Pricing approach would generate the best results because it gives the perception of similar quality to the market leaders. A price of $9.95 would be a good offer keep in line with competitor products. Limited Time Offers (LTOs) of $1.00 discounts should be used to help ensure premium product placement (and shelf space in general) in LCBOs (66% of consumers are value conscious).

Action Plan Short Term:


1. 2. 3. 4.

Plan a budget and forecast. Get the sales teams consent and support. Establish better controls to ensure timely marketing mix outcomes. Get approval from executive council for the brief.

Long Term: Over the long term Vincor should reevaluate its strategy and also must ensure that the refreshment category is part of Vincors overall marketing strategy. Contingency Plan In order to sell off the stock by the end of the summer, the price must be reduced and also a thorough inspection must be carried out to know what mistakes were made so that better corrective measures can be introduced.

References

Richard Ivey School of Business, University of Western Ontario. Vincor: Project Twist, 9B08A002.
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