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MBA 635 – 515 Brewing Company Marketing Plan, Angove1

Marketing Plan

Jamie Angove

Bellevue University

MBA 635: Marketing & New Media Strategy

Professor Brown

November 12, 2015


Table of Contents

Company Overview…………………………………………………………………………..3

History of the Craft Beer Industry……………………………………………………………3

Situation Analysis…………………………………………………………………………….4

The Internal Environment…………………………………………………………….4

The Customer Environment…………………………………………………………..8

The External Environment…………………………………………………………...11

SWOT Analysis……………………………………………………………………………...14

Strengths, Weaknesses, Opportunities and Threats………………………………….14

SWOT Matrix………………………………………………………………………..17

Developing Strategic Focus………………………………………………………….19

Marketing Goals and Objectives…………………………………………………………….20

Marketing Strategy………………………………………………………………………......23

Marketing Implementation…………………………………………………………………..24

Evaluation and Controls……………………………………………………………………..26

References…………………………………………………………………………………...28

Appendix…………………………………………………………………………………….31


Company Overview

515 Brewing Company prides itself on providing exceptional beer. The company was

founded in 2013 by four friends with a passion for brewing craft beer and a desire to share their

passion with fellow craft beer lovers in the Des Moines, Iowa area. The owners enjoy

experimenting with varying recipes, and its customers are receptive to the accompanying “beer

adventure” that the company takes them on. 515 has a new combination of beers on tap each

time its loyal customers visit, seemingly serving a beer suited for any craft beer aficionado’s

flavor preferences.

515 opened its doors in March of 2013 with a small, three-barrel brewing system. The

owners quickly found that they could not brew fast enough to keep up with customer demand.

Just two years later, 515 expanded by adding a new seven-barrel system, additional fermenters

and new brite tanks, an investment that more than doubled its brewing capacity. What started as

a dream founded by four craft beer lovers and experimenters became a successful business with

an ongoing influx of new customers.

History of the Craft Beer Industry

After hundreds of years of brewing in America, prohibition banned most beer production

(Wieren, n.d.). Brewing was legalized once again in 1933, and macro-brewing (brewing in large

batches) grew over the next 50 years primarily due to taxing and continued regulation on small-

batch brewing (Wieren, n.d.). The industry began to shift when homebrewing was legalized in 1978,

jump-starting the craft beer movement by allowing beer lovers to experiment in their own homes

(Wieren, n.d.). Microbreweries started to spread in the early 1980s, and the first craft brewery in

Iowa, Millstream Brewing Company, opened in Iowa in 1985.


The craft beer industry is essentially a high-end business (Goldschmidt, 2015). People

have no real need for beer, but consumers look to the experience of sampling new beer and

finding their new favorites. Craft beer brewing is different than macro-brewing mostly based on

the fact that it is produced in small batches, often meticulously tasted and experimented on

before the brewer finalizes their recipe. Due to small-batch brewing, many craft breweries

struggle with overall consistency, but drinkers are forgiving and often enjoy the adventure

(Wooverton & Parcell, 2008). Craft brewers are in-tune with their customers’ needs and are okay

with not being everything to everyone; in fact, this individuality is precisely what their biggest

market segment, millennials, want to experience (Wooverton & Parcell, 2008).

Situation Analysis

The Internal Environment

One of the most unique factors of the craft beer industry is the camaraderie that brewers

share. They are open to sharing secrets with one another, and they want to help others in the

business succeed (Lutke, 2014). The industry is collaborative by nature, and 515 Brewing

Company is no exception. Its taproom features other local breweries’ beers, brew night events

introducing local homebrewers’ recipes, waived wine corking fees for customers bringing their

own Iowa-made wine, and collaboration with eight brewers to create a beer with shared

ownership. Craft beer is often a shopping purchase when customers are seeking a new brand;

finding a new company or brew requires thought and planning before customers typically go to a

new brewery (Iacobucci, 2015).

Marketing goals and objectives. 515 Brewing has seen such an unexpected boom in

business that the owners have not yet started to focus their efforts on a comprehensive marketing


plan. The owners are all part-time brewers and taproom managers, currently unwilling to leave

their full-time jobs to devote their careers to running the company. In order to more effectively

keep up with production demands, the company hired a full-time brewer in June when it also

increased its brewing equipment and doubled capacity.

Though the company has not been aggressive with marketing campaigns, the owners

have created partnerships with the Iowa Brewer’s Guild and other breweries to bring more

awareness to its brand. 515 often attends local and regional events where it has a chance to

provide samples of its products to a captive audience of craft beer lovers and potential new

customers. The company also has partnerships with women’s beer education groups and is able

to increase customer loyalty by offering operant-style conditioning when its affiliates receive a

discount for being both a member of the group and a 515 patron. The company offers various

merchandise for purchase, including t-shirts and branded glassware.

515 Brewing Company’s mission statement is to provide exceptional, flavorful and fresh

beer, a positioning statement reflected by the company’s motto, “Exceptional folks drink

exceptional beer.” Despite the lack of a consistent marketing plan, the owners continue to

experiment with recipes and offer beer that their customers love to drink. Small-batch brewing is

consistent with this mission, providing customers new recipes on a quarterly basis, but it does

not allow as much beer to be brewed and kept available. Customers will often find at least one of

the seven or eight beers on tap has been sold out. It takes a longer time to replenish the depleted

product as the company can only brew one or two beers at a time, and the beer must be held in

fermentation prior to being ready for consumption. The company is able to keep up with trends

in the industry, including increasing technology and focusing on brewing the primary beers that

its customers like best.


Marketing strategy and performance. 515 Brewing Company’s primary product is its

beer, but brewery taprooms and brewpubs offer customers social utility in addition to a chance to

partake in drinking their favorite adult beverage (Wooverton & Parcell, 2008). The company

serves a variety of great-quality beer, sometimes with unexpected flavor notes. The taproom is

often found packed with customers enjoying a craft beer while meeting friends or coworkers for

a social gathering. 515 offers a welcoming environment that makes customers want to stay for

just one more beer; the atmosphere is ironically similar to the television show, Cheers, where

loyal patrons can expect that, “Everybody knows your name.”

The location of a taproom is key to success. Majority of brewpubs and taprooms are

located in population centers or visitor areas (Wooverton & Parcell, 2008). 515 meets this

criteria: it is centrally located in the Des Moines area and attracts primarily customers within a

15 minute drive, but loyal customers will often drive further. The company benefits from word-

of-mouth promotion from these loyal customers, and does not do much additional promoting

since it has been faced with the challenge of keeping up production to meet current customer

demands.

Prices at 515 have remained reasonable and stable since opening two-and-a-half years

ago, between $4.50 and $6 for beers ranging in size from ten to sixteen ounces. The company

was able to offset the cost of newly installed equipment based on past sales, anticipated future

sales and the new offering of growlers for customers to purchase supplementary beer to take

home. Additionally, the taproom and brew area are relatively small so the company has low

overhead. The company does not have any distribution needs as its products are all offered

exclusively in the taproom. 515 does not currently sell its beer at supermarkets, liquor stores,

restaurants, or any other establishment.


515 has seen an influx of new customers, likely leading to increased profits since opening

its doors. Installing new equipment and hiring a full-time brewer indicates that the company has

had significant profits and feels confident about the future of the market. The company is one of

approximately nine breweries in a 25-mile radius, with two new companies opening in the next

six months. Despite the growing number of competitors, 515 has high brand awareness among

craft beer drinkers in the market. The company increases awareness through events sponsored in

its taproom such as a monthly fun run followed by a free beer, Stitch and Bitch women’s knitting

social gatherings, and Man Craft men’s luxury craft sales.

Most loyal customers prefer 515 beer to any other craft beer on the market; they are still

adventurous and enjoy sampling new beers, but always go back to 515. Customers typically have

either a favorite beer or a favorite style of beer offered by the company, but they also like to

experiment with different styles brewed by the company. They are willing to try things outside

their comfort zone because the beer is made by people they trust.

515 began with the primary employees being owners and their wives. Recently, wives have

been eliminated and the company hired a brewer to do full-time brewing. It also has a wait staff to

serve beer and keep tap room tidy. The wait staff is knowledgeable and also willing to share

samples to get customers to try new brews. The physical site has challenges with size: the brewing

facticity is very small and completely maxed out with new equipment. If the company continues

growing, they will need to increase the production location size, staff, and customer seating areas.

Suppliers to 515 include malt and hops distributors, and the relationship with these suppliers is

good. Fortunately, these commodities are also easy to come by for brewers in the Des Moines area.


515 Brewing Company is very customer-oriented, but seemingly interested in short term

planning. It is installing a patio at the demand of customers, although the current location will not

support any more production growth. 515’s lack of marketing strategy will is big risk based on the

continued growth in the industry, and specifically, in the Des Moines market.

The Customer Environment

Current and potential customers. The craft beer industry typically does not have a

common demographic. The common factors among 515 customers is that they enjoy good beer,

they like to experiment with new flavors, and they live within a fifteen mile radius of the taproom.

These customers enjoy craft beer based on the pleasure of participating in a niche market, and they

like being unique and independent. Craft beer drinkers today view sampling beer as a hobby much

like their parents did with wine drinking 30 years ago (Goldschmidt, 2015). Prime customers are

often millennials, but not exclusively. They are primarily white and approximately half male and

half female. Customers have varying lifestyles, and there are a lot of fitness gurus seen in the

taproom. Runners and bikers are very common, especially since the taproom is located right off a

bike path. There are a small handful of customers that patron the taproom more than once a week,

some that frequent it once a week (estimated at about 20 percent), and the largest population that

goes once or twice a month.

Purchasers of 515 beer are primarily the direct users. Until several months ago, all beer had

to be purchased and consumed in the taproom. Influencers include significant others of the

consumers, especially since spending time in the taproom is a social event. For example, a wife may

not want her husband spending so much time in the taproom and away from the family. Both the

purchasers and influencers share the responsibility of purchase price. While craft beer is a luxury


item in the field of alcoholic beverages, most middle class households can afford the splurge of

approximately $6 on the product.

To understand recognition of the 515 brand in the Des Moines area, a survey was conducted

through the use of Facebook and Survey Monkey. Study participants primarily resided in the heart

of Des Moines or in near-by suburbs, and three participants living within fifteen to 20 miles of Des

Moines. This research found that participants had a high level of awareness of the brand. See Figure

1. There was only one competitor in Des Moines that received more recognition. It should be noted

that the survey could be skewed due to the participant’s relationship with the survey conductor and

writer of this paper, a frequent 515 customer. The study also found that customers aware of the 515

brand were fairly loyal; most customers frequented 515 at least a couple of times a month, and four

even stated they went to 515 once a week or more. See Figure 2. Most competitors in the area

appeared to have much less loyal customers, only frequenting other breweries an average of a few

times a year.

Figure 1

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How familiar are you with the following Des Moines area breweries and brewpubs?

Never heard of it Familiar, but I’m not totally sure… Oh yeah, I know them!


Figure 2

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How often do you frequent the following Des Moines area breweries or brewpubs?

Once a week or more

A couple of times a month

Every other month or so

A few times a year

Never, or I've been there once or twice

Customer usage of products. Craft beer is used for enjoyment, a sense of status, and to

make the consumer feel like they are part of the community (“Craft Beer Industry Association,”

2015). The overall purchase market for many products has shifted to a “buy local” theme, boosting

the demand for beer that is made with products sourced locally and brewed by members of the

community. Beer is often purchased with food. 515 does not serve food, but offers snack pretzels

and has partnerships with several vendors that serve food in the taproom on a set day each week.

Additionally, customers are encouraged to bring their own food, as the company knows that this

will entice them to stay longer and drink more beer.


Beer is often enjoyed as a celebration and frequently drank in social settings. Many 515

customers have post-work outings, meet up with friends, or saddle up to the bar to chat with their

favorite taproom staff member. Customers are encouraged to be more loyal to the company,

knowing that 515 is an avid recycler, donating the spent grain from the brewing process to local

farmers to feed their livestock.

While 515 does not have many promotional events, its quarterly pairings (cupcakes,

chocolates, beer floats) provide regular customers an extra reward and draw a small new crowd of

curious customers. Breakfast pairings bring in customers during a time of day they are typically not

planning to purchase beer. The taproom has hours limited to Wednesday through Sunday, which

leads to a lot of lost sales opportunities. Groups meeting in the taproom during off hours witness

customers attempting to stop in when 515 is not open. The taproom is busier during the summer

months as customers are more likely to have a quick beverage while they are out enjoying summer

activities. Promotional events and playing college games helps draw in customers in cooler months.

515 primarily misses opportunities for new customers based on five key factors: the limited

hours of operation, the location, the availability of beer outside the taproom, the availability of its

competition’s beer, and a lack of advertising and sampling beer to prospective customers. Pricing is

on par with competitors, but distribution is lacking as its products cannot be purchased anywhere

else.

The External Environment

Competition. 515 Brewing Company’s primary competitors are Confluence and

Firetrucker. All three companies offer locally made craft beer, are newer establishments, are located

on a bike trail, and do not serve food in their taprooms. Confluence sells “honest beer,” in a manner


that is friendly and unpretentious. It is less adventurous than 515, providing more consistent recipes

and the same seasonal beers each year. The company has much more product placement:

Confluence is available in restaurants, grocery stored, and kegs for customer consumption. It

typically has more beers on tap than 515.

Firetrucker says that “beer is art.” It often uses smoky elements in its brews and provides

experimental seasonal beers. The taproom is further away from the general Des Moines market, but

this offers a new market in a suburb that 515 may not be as attractive to. Firetrucker also does not

bottle its beer or sell product outside the taproom.

Future competitors include Fox Brewing, a new brewery opening about 5 miles away from

515, and Wing Nutt Brewing, a brewery about 15 miles away. In addition, 515 has eight other

competitors in the market.

Economic growth and stability. The craft beer industry has continued increasing profits

significantly over the last 20 years: in 2014, profits were up .5 percent and craft beer sales

represented 11 percent of beer market share and is expected to reach 20 percent by 2020

(Goldschmidt, 2015). There are not many craft breweries that claim much of the market share

single-handedly since customers have unique taste preferences and show brand loyalty at the

local market level (Wooverton & Parcell, 2008).

Legal and regulatory issues. 515 has struggled over the last two years with various

government-imposed regulations that are seemingly unrelated to the type of business that it runs.

Breweries and taprooms are significantly different than the environment of a true bar, but

government officials often argue that the two are similar enough. 515 has struggled with

maintaining its license due to a supposed limitation of parking and its allowance of children in


the taproom. It also had to request a building permit several times before being allowed to build a

patio.

Traditional governance of the alcohol industry limits selling and advertising beer. The

distribution process requires manufacturers, wholesalers and retailers, and producers often

cannot sell directly to the public outside the taproom. Many states limit Sunday sales, but Iowa

and 515 are not impacted by this law.

Technological advances. Two trends in the brewing industry primarily impact 515: the

invention of alternative hops packaging and automation of brewing technology. Whereas hops

traditionally were sold in their raw form, they have since been modified into pellets and plugs,

increasing the usability of the product. The pellets increase flavor and offer new aromas, which

suits customer wants. Technology is advancing at a rapid pace in the brewing industry.

Companies find that the ability to computerize bottling, monitor each step in the brewing

process, use an iPad to program and run equipment, a centrifuge to clarify beer, and glycol-lined

cooling tanks are able to help temperature control, provide more precise measurements, and

allow for more consistency in beer (Dunphy, 2014).

Sociocultural trends. The growth of young adults in millennial market reaching the legal

drinking age increases the size of 515’s target market (Bennett, 2014). This market has more

disposable income and free time as they are not as likely to be homeowners or to have children. This

segment demands more individuality and customization, valuing local businesses and avoiding the

huge conglomerates. The “locavore movement” has helped craft brewers establish a stronger

position place in the beer market and has increased the availability of craft beer in new locations

(Bennett, 2014).


The availability of more brewing ingredient staples and equipment in the Des Moines

market will drive more competition and the need for each beer to really stand out from its

competitors. 515 will need to establish who it is and what it does best.

SWOT Analysis

Strengths

The company is growing its production while keeping prices low, encouraging current

customers to grow more loyal to the company and also attracting new business through word-of-

mouth. Current customers have pride in the brand and often purchase merchandise to promote the

company personally. 515 partners with other businesses and organizations to promote itself further

in the brewing community. The company is located centrally in Des Moines, easily accessible, and

available right off of a bike trail for avid bikers.

515 differentiates itself primarily in its experimental brewing techniques, expanding its

repertoire of new recipes and further attracting new customers with different flavor palettes. The

company also comes up with quirky names for its beer such as DART Dodger (Des Moines public

transportation once known for its reputation of hitting pedestrians), Belgian Mistress (an easy-

drinking beer with a surprisingly high alcohol content), and Weiner Bever (an intentionally

misspelled beer named after graffiti left on the fence behind the building). Customers love talking

about 515’s beers, and often bring in friends and new customers so they can participate in the fun.

Weaknesses

One of the biggest weaknesses in 515’s current business plan is its lack of a clear marketing

plan. The company dabbles in PR offered through events and relies on word-of-mouth and

customer-worn merchandise, but does not actively market or advertise its products externally. In

turn, the business has not yet shown a profit since revenues were reinvested into new brewing


equipment. Although the new equipment has helped, 515 still experiences an inability to keep up

with demand as customers are often met by a “sold out” sign when attempting to order their favorite

beer. The company offers limited hours of operation and only sells its products through the

taproom, limiting the potential to maximize sales and bring more beer to customers that want more

beer. The lack of marketing, inability to purchase products outside of the taproom and limited hours

all impede on 515’s ability to keep up with competition.

Opportunities

Customers benefit from the camaraderie in the brewing industry since all craft breweries,

515 in particular, are able to partner with one another and improve their recipes. The growth of the

industry continues to make new craft beer available to customers; as they continue spending money

in this market, more companies are opening and current companies offer new recipes for customers.

Craft beer drinkers take pride in purchasing local products and they enjoy being part of a niche

market, which makes it easy for craft breweries such as 515 to serve them products they enjoy.

These target customers (millennials) often have more disposable income also, and as they are

willing to spend it on newer and better beer, breweries are happy to continue expanding their

options. Technological advances in the brewing industry make production faster and less expensive,

further benefitting the customer by receiving the product quicker and keeping prices down.

Longer term opportunities include technology enhancements, as these purchases often

require a large initial deposit for long-term returns. The growth of the industry continues to promise

long-term benefits also, as the craft beer industry is expected to represent 20 percent market share

by 2020 (Goldschmidt, 2015). Shorter term opportunities include capitalizing on the millennial

market with more income, advertising to this market specifically in order to entice them to try 515


beer. The pride of local purchasing is another early opportunity that 515 can take advantage of

through immediate marketing campaigns.

Threats

As competition continues to grow in the market, current 515 customers have their needs

met, but the company will lose opportunities to attract new loyal customers. Customers typically

drink more craft beer in the summertime, making the winter a poor sales month for craft

breweries. The hype behind craft beer may eventually go away, the bubble bursting, which

would eliminate many customers from 515’s patronage and make it more difficult to afford to

continue serving the customers still in existence. Likewise with the risk of customers walking

away from craft beer in the event that they needed to adhere to a tighter budget.

Continued competition is a very immediate threat, and 515 needs to begin to prepare itself

for the possibility of losing customers. Many current customers were attracted on luck: they

happened to be in the area, on the bike trail, or read a news article on the company, but the company

will have to do targeted marketing to maintain its growth. The propensity for customers to drink

more beer in warmer months is an immediate threat now, and one that continues to re-present itself

every fall. Longer term threats include the possibility of the craft beer hysteria disappearing, leaving

brewers with fewer and fewer customers.

SWOT Matrix

While 515 Brewing Company has more strengths and weaknesses than opportunities and

strengths in the craft beer market overall, each category of internal and external elements are fairly

balanced; there are seven strengths, eight weaknesses, five opportunities, and four threats identified.

See Figure 3.


Figure 3Strengths: •Growth of the company; doubling brewing capacity•Events that draw large crowds: Stitch n Bitch, homebrew nights, Man Craft, running club•Partnerships with other businesses and organizations, including Iowa Brewer’s Guild, Barley’s Angels•Pride in the brand reflected in loyal customers and their merchandise purchases•Experimental brewing and sampling of new recipes•Prices have remained low•Location: right on a bike path, centrally located in Des Moines

Opportunities: •Camaraderie in brewing industry; opportunities to partner with competitors and learn from them•Growth of craft beer industry•Craft beer drinkers’ pride in a local product and pleasure of being part of a niche market•Technological advances in the brewing industry, making production faster and less expensive•Target customer, millennials, have more disposable income

Weaknesses: •Lack of a clear marketing plan•Business has not yet turned a profit, but rather reinvested money back into the business•Lack of consistency in common recipes•Inability to keep up with demand; oftentimes one or more beers are sold out•Limited hours of operation•Beer only available for purchase in the taproom•Limited space for growth in current facility•Primarily short term planning; not preparing for several years down the road

Threats: •Craft beer market and competition continues growing•Craft beer is purchased entirely for enjoyment; there is a risk that if times are tough for a customer, this could be cut to save money•Customers’ propensity to drink more craft beer in warmer months; less business during the winter•The current hype behind craft beer could disappear as the product reaches the peak of its lifecycle

Developing Competitive Advantages

The growth of the craft beer industry overall can be matched to the growth of 515

Brewing Company and the opportunity for it to continue to expand and reach new customers.

The company focuses on experimental brewing, fueled by camaraderie in the brewing industry

and the support it receives from competitors and distributors. Lastly, the pride in the brand

recognized by current loyal customers can be maximized my meeting the needs of the expanding

millennial target market with more disposable income. The millennial generation includes people

born from 1980 to 2000 (Stout, 2015), which means an additional 13,357,664 potential

customers are turning 21 between 2014 and 2021 (Census Bureau, 2014).


Basic principles of operational excellence, product leadership, and customer

intimacy. 515’s primary competitive advantages of experimental brewing and extreme customer

loyalty prove the company’s commitment to excellence in the product, leading the brewing

industry through innovative taste profiles, and intimacy developed with its customers to create

loyalty. However, the weaknesses that 515 faces can also be attributed to operational excellence

failures in product consistency and strategic planning, as well as product leadership as it is not

differentiating itself from competitors offering similar products available in more distribution

channels.

Converting weaknesses into strengths and threats into opportunities. 515 has only

demonstrated an ability to plan short term; the absence of a marketing plan and shortness of brewing

space prove that the company is trying to keep up in the current market rather than focus on where it

expects to be several years down the road. Lack of consistency in the standard beer recipes it brews

often poses a dilemma as customers are not as confident in the product and may be reluctant to

return to a prior favorite after having a sample of a bad batch. Beginning to look towards solutions,

515 could convert its issues with keeping beer on tap and not offering it outside of the taproom

by positioning these techniques as intentional exclusivity in beer availability.

While 515 may find it difficult to predict the peak of the craft beer product market or

necessarily change the fact that customers prefer more beer in the summer, the company could focus

on more promotions in the winter and draw customers back in through events that would inspire

them to drink more beer. A focused marketing and advertising strategy would also help the

company prepare for competition and ensure that there is a plan in place to continue to boost sales.

Liabilities and limitations. 515 has several liabilities, including the lack of a marketing

plan partnered with the growth of competitors in the market, and the fact that the company has not


produced a profit and the industry overall risks hitting the peak of the product lifecycle; all of the

work and investment currently made into the company could be lost if customers begin losing

interest in the craft beer market. Limitations for 515 include the lack of consistency in common

recipes, paired with the growth of technology in the brewing industry. Customers are aware of these

inconsistencies, though often forgiving, but the leniency allowed to a brewery still within three

years of opening may soon begin wearing off. There is a large opportunity for 515 to improve

consistency in product preparation through the use of technology. The continued current growth of

the industry make it apparent that 515 needs more focus on a marketing plan and additional long-

term planning, including space, distribution and brewing capacity. Again, customers are well-aware

of the lack of planning, often apparent through product unavailability in the taproom and inability to

purchase 515’s beer in bottles or through any other distribution channel.

Developing Strategic Focus

515 Brewing Company’s marketing plan will be focused on aggressiveness and

defensiveness. Since the company has had a lack of strategic marketing for the entirety of the

product currently, the plan will need to be exuberant in capturing both of these elements in order

to ensure the business will have continued growth and a stable future. An aggressive approach

will entice people in the current target segment that are not current customers, focusing on the

opportunity in the millennial market. Soft but defensive tactics will be used in positioning the

company against competition: leveraging the company slogan, “Exceptional folks drink

exceptional beer.”

The marketing plan will further position the company as the key local provider of

exceptional beer, proving the brand to customers and driving their preferences toward 515 above

competitors. While the craft beer market overall is a niche market, 515’s market plan will not


leverage this as part of its focus. The market is niche applies to the industry overall, so 515

should not try to further differentiate itself as even more niche. The target market is already

segmented enough, so the company should not limit market potential by segmenting the

customer population further.

515’s strategy canvas was created based on 515’s two top competitors, Confluence and

Firetrucker. As shown on the canvas in Figure 4, 515 has a competitive advantage over both

competitors in the events that it hosts, and it also outperforms one competitor or the other in

terms of location and pricing. 515 has the ability to maximize its position in the market and

diverge from competitors by taking advantage of these prime aspects of the marketing mix.

Figure 4

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515 Strategy Canvas

515 Confluence Firetrucker

Marketing Goals and Objectives

515 Brewing’s goals and objectives will be based on the principles of increasing

awareness with a new target market, improving availability of the product, and growing the


space available for brewing and enticing customers to visit. The overall strategy is focused on

delighting customers and growing market share. Many of the objectives also make up integrated

marketing communications planned for the company.

Goal 1: Increase Awareness of the Brand

Objective 1: Increase awareness through advertising to millennials. 515’s current

advertising budget is zero; it is recommended to set a minimal budget typical of the industry, and

begin setting aside five percent of annual sales to go towards advertising. Revenue is estimated

to be $62,500 per year, based on the average revenue per barrel of $200, 312 brewing days per

year with seven days allowed to ferment, and a seven barrel system (((312/7) x 7) x

$200=$62,500). Based on this figure, the advertising budget will be $3,115 ($62,500 x

5%=$3115).

Advertisements should leverage radio and internet mediums since they are targeted at

millennials and can be created with relatively low cost. Ads would be expected to reach 25

percent of the target audience of 102,549 in the Des Moines area, or 25,637 potential customers

(Census Bureau, 2014). It could be estimated that five percent of these customers will try 515

based on average attitude towards the product of 80%: 1,282 customers. 515 has high loyalty and

repeat customers, so it is estimated that 90% will be repeat customers: 1,153. If each of these

customers visits 515 just once a month and purchase one beer at approximately $6, revenue

could increase by $6,918 monthly.

The ad campaign should be introduced in January 2016 since the winter is a slower time

for beer consumption and customers may be looking for a new place to visit to get out of the

house. One of the four owners of the company will be responsible for implementing this

campaign, the one who is the most creative.


Objective 2: Create an app. Millennials love technology and education, so 515 should

leverage these preferences and create an app that they will use. The app should offer beer

education, a social media component, and send alerts for events and new beer tappings. This

objective will have the same measurable targets as the ad campaign; it is expected to be

leveraged by 1,153 repeat customers that will contribute an additional $6,918 monthly revenue.

The app should be spear-headed by the owner of the company that is the most

technologically savvy. Development should start early in 2016.

Goal 2: Increase Availability of the Product

Objective 1: Increase distribution channels by expanding product into grocery

stores. 515 will have more success reaching additional customers and selling more craft beer if it

is available through more channels. The company has high awareness in the market currently

(estimated at 75 percent), good attitude (80 percent), high repeat buys (90 percent), but low trial

due to unavailability (25 percent). Estimated market share in the Des Moines market is 13.5

percent. Implementing the product into grocery stores could increase trial to 40 percent,

improving market share seven percent (21.5 percent).

515 beer should be introduced in grocery stores beginning in January 2017 due to the

logistics and additional brewing capacity required to prepare for this venture. January is an

optimal time to purchase beer to drink at home, and the company should offer cold weather

favorites such as stouts, porters, and spiced ales. Additionally, 515 is known for its IPAs and

should ensure these are available in grocery stores year-round. One of the owners of the

company will be responsible for this objective, preferably the one with the best organization and

planning skills.


Objective 2: Increase available brewing and taproom space. One 515’s weaknesses is

its limited space for brewing and serving customers. Expanding brewing capacity and space for

customers in the taproom would improve their experience as well as make it possible to offer

more beer to the market. This would likely improve returns of customers, increasing repeat buys

from 90 to 95 percent, which would also improve market share by .75 percent (14.25 percent).

Construction should begin in the fall of 2016 to allow the company to focus on

advertising and app objectives before launching this initiative. The owner that is most familiar

with construction and building permits should be responsible for this objective.

Marketing Strategy

Primary Target Market

The primary target market consists of millennials, both male and female, ages 21 to 34 in

the Des Moines area (102,549 potential customers). Most of these customers do not have

children, may or may not be married, and have a medium income. They live in Des Moines or

within 30 miles and value locally made products and a friendly brand. Millennials want to be

recognized for their uniqueness and experimental tastes, often preferring a niche market.

Millennials want to develop a relationship with their favorite brewer, they are tech-savvy,

and appreciate education (Schoenwalder, 2015). They will respond to a brewery that forms

bonds with its customers, offers technological ways to find out more about its products and share

those findings with friends, and offer beer education. Millennials are currently delaying big

ticket purchases to later in life, and often have more disposable income as a result (Otani, 2013).

Product, Pricing and Distribution Strategy

The 515 logo is basic and elegant, embodying the mission of the company to offer great

beer. As it expands into retail sales, the 515 logo should be leveraged on packaging with the


same design. 515 features local beer in great flavors and experimental brews. It positions itself

on the basis that “exceptional people drink exceptional beer.” The beer is positioned for

customers that have distinguishing tastes. Customer service is optimal in the taproom: customers

are always welcome and are typically not rushed out even after closing, samples are offered

frequently, and returning patrons are recognized and called by name.

Since 515 positions itself on exceptional beer, its pricing strategy is slightly skewed. The

company should consider raising prices above competitor Confluence, but not more than

Firetrucker (which prides itself on its slogan “Beer is Art”). Current pricing would lead

customers to believe the product is more affordable and potentially not as exceptional as the

company claims. Increased pricing would also allow for improved advertising and construction

on the property without impacting customers that are generally not overly price sensitive in the

craft beer market. As part of this pricing and positioning, it is not recommended to run

promotions on discounted products, other than the occasional incentive to purchase new beer

recipes or attend exclusive events with discounted beer.

Distribution channels should improve for 515 in order to make the product more

available to both the existing market and the new targeted market. 515 beer should be located in

grocery stores on the top shelf to uphold the exceptional beer persona. The company should

partner with distributors to ensure its beer will be stocked and maintained at the chosen grocery

stores.

Marketing Implementation

Implementing the four marketing objectives will require several new employees be hired,

and will integrate several training and communication techniques. None of these objectives are

expected to cause resistance for existing employees, but will likely be embraced as exciting new


ways to promote the brand. See Table 1 in the appendix for tactical marketing activities and an

implementation schedule outlining additional responsibilities, costs, and implementation

timelines.

To begin advertising to millennials, a part time staff member should be hired to be

responsible for advertising efforts. Radio ads are the first priority, but this person should also

assume responsibility for existing social media advertising to ensure consistency in voice for the

company. This person will report to the owner of the company responsible for managing this

objective. The new employee will need to be integrated into the team, be responsible for

internally communicating the advertising plan, and should encourage staff to support the plan

and further promote via word of mouth to millennials.

To create an app, DWNLD can be used as a free alternative to an expensive programmer.

For $15 per month, 515 will receive four campaigns per month, usage guaranteed on customers’

phones and tablets, the ability to advertise and collect revenues for other companies, engagement

metrics to measure success, and help center support (DWNLD, n.d.). The new marketing

employee should create and manage the app, train employees to understand how to navigate the

app so they can share their knowledge with customers, and this person should schedule social

media posts to promote availability of the app.

Expanding the product into grocery stores requires 515 to begin bottling. The company

will need to hire one full time person for bottling activities. The owner responsible for this

objective will be the distribution management liaison, overseeing distribution and bottling

processes. This owner will also communicate the strategy to employees and coach them to

dispense flyers to customers in the taproom promoting the availability of 515 beer in local

grocery stores.


Last, increasing brewing and taproom space will mandate a fairly large construction

effort. The owner responsible for the expansion objective will hire a contractor after receiving

bids for the work, and will oversee construction as it is underway.

Evaluation and Controls

Each of the objectives will require formal controls to evaluate both the new marketing

employee and the bottling employee; measuring their integration to the company, effectiveness

and work load. Audits should be conducted by the owner responsible for each objective, and

bottling quality measures should be evaluated daily at first then monthly as production

normalizes. The owner should test for product quality and consistency. Analytics supported by

DWNLD will provide app usage, reach, customer satisfaction and overall effectiveness, and

these should be monitored monthly.

Overall performance standards should be gauged two months following the radio

campaign and the launch of the app, assessing whether the goal of an additional $7,000 in sales

has been met. Effectiveness can also be measured by interviewing employees and loyal

customers following the campaign to gauge brand image, and 515 can leverage social media to

search for commentary related to the brand image or customer dissatisfaction. Brand awareness

and recognition should continue to be tracked following implementation of the ad campaign, app

and distribution of product to stores, using surveys conducted by the marketing employee.

Distribution to stores will require close monitoring of expenses and revenue related to

distributing, including inventory evaluation designed to evaluate which beers are preferred in

stores. Determining if customers value the product can be initially read weekly through inventory

evaluation and marketing tracking social media chatter about the release. Management

commitment to distribution, product performance and quality of bottling, consideration of the


price point and whether customers are buying, and the effectiveness of distribution and

relationship management should also be monitored on a monthly basis.

App implementation also carries informal controls: 515 will need to ensure employees

are only using the app for positive promotion and are not venting or posting proprietary

information. Audits should be conducted on a monthly basis. Since the app is rather inexpensive

to maintain, it is recommended to continue its use as long as there is a moderate level of traffic (a

minimum of 200 users), providing it is not leading to a negative reputation for the company.

Although there is limited ability to undo or change the results after implementing an

expansion of the brewery or taproom, owns should still expect to see an increase in market share

and improved customer satisfaction. These should be evaluated on a quarterly basis, reviewing

progress and looking for future improvement opportunities.


References

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52-54.

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on October 28, 2015 from http://www.buildingsguide.com/faq/what-average-commercial-

building-cost-square-foot

Clemons, E., Gao, G., & Hitt, L. (2006). When online reviews meet hyperdifferentiation: A

study of the craft beer industry. Journal of Management Information Systems, 23(2), 149-

171.

Dunphy, J. (2014, September 8). Crown discusses three major can technologies changing the craft

industry. Craft Brewing Business. Retrieved from

http://www.craftbrewingbusiness.com/packaging-distribution/craft-beer-can-technology/

DWNLD. (n.d.). How it works. Retrieved on October 28, 2015 from https://dwnld.me/info#plans

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https://smartasset.com/insights/the-economics-of-craft-beer

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http://smallbusiness.chron.com/beer-industry-legal-political-factors-75952.html

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Retrieved from http://www.craftbeer.com/brewers_banter/is-craft-brewing-camaraderie-on-

its-way-out

Otani, A. (2013, October 29). Big spenders? Retail sales report mirrors Millennial buying habits.

Christian Science Monitor.

Satran, J. (2014, September 12). Here’s how a six-pack of craft beer ends up costing $12.

Huffington Post. Retrieved from http://www.huffingtonpost.com/2014/09/12/craft-beer-

expensive-cost_n_5670015.html

Schoenwalder, C. (2015, May 18). Getting to know the millennial generation. Grand Rapids

Business Journal, 33(20), 13.

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millennial-generation.html

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Table 1# Objective Tactical Activity Person

ResponsibleBudget Required

Completion Date

Product

No changes to product

Pricing

No changes to pricing

Distribution/Supply Chain1 Expand into

grocery stores

Meet with large local grocery stores, Hy-Vee and Price Chopper, to negotiate product integration and placement in stores

Owner Responsible for Distribution Mgmt

n/a January 2017

Payment to distributor for first shipment of 200 bottles1 $500 December 2016

Purchase and install bottling equipment: half-growler bottles $9,000 August 2016

Purchase half-growler bottles and packaging materials: first delivery to include 200 bottles1 $350

September 2016

Learn to use bottling equipment and begin process Full Time Bottler n/a November 2016

Ensure a good product mix is available, featuring at least one IPA , a seasonal, and one other staple

Owner Responsible for Distribution Mgmt

n/a January 2017

Schedule pickup and delivery of bottles to stores n/a November 2016

Schedule first shipment to arrive in stores - cost of shipping and taxes1 $200 December 2016

Payment to retailer for first shipment1 $750 December 2016

Create flyers to provide customers in the taproom to make them aware of new availability

New Marketing Staff Member $200 November 2016

Promote availability in grocery stores through social media n/a

November 2016-February 2017

Total cost for expanding into grocery stores $11,000 2 Increase

brewery space

Obtain bids from local contractors

Owner Responsible for Building Expansion

n/a March 2016

Increase space an additional 2000 square feet2 $70,000 March 2017

Begin construction n/a August 2016

Send "please pardon our mess" coupons to customers via social media to encourage business throughout construction process - cost of estimated dollars lost when coupons used

New Marketing Staff Member $200

August 2016-January 2017

Schedule grand re-launch with updated taproom

Owner Responsible for Building Expansion n/a April 2017

Total cost for increasing brewery space $70,200

IMC/Promotion3 Advertising to

millennials Reiterate "exceptional people drink exceptional beer slogan" through radio advertising

New Marketing Staff Member

$3,115 January 2016

Target millennials - leverage stations that play hits, rap/hip hop and new country

Estimated reach: 25,637 people in the demographic


Advertising to millennials Estimated new customers: 1,153

Target placed, "flight" strategy to maximize reach to intended audience, estimated 20 commercials aired

4 Creating an app

Use DWNLD3 to create a new app for the company

New Marketing Staff Member

Free to build, $15/month to maintain

February 2016

Estimated 1,153 customers will use app initially

WOM to spread availability of app

Promote app with social media1 Satran, 20142 BuildingsGuide, n.d.3 DWNLD, n.d.

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