Matthew Campbell, Brianna Coyne, Tyne Curran, Alana Davis

MKTG 4550 - 001

Professor Laura Smarandescu

May 4, 2017

Table of Contents

1 1. Introduction………………………………………………………………………………..3

2. Situation Analysis…………………………………………………………………………3

3. Target Market

Specification……………………………………………………………….6

4. Brand Concept Formulation……………………………………………………………….7

5. Product Design and Pricing Fundamentals………………………………………………..7

6. Integrated Marketing Communications Program………………………………………….9

7. References………………………………………………………………………………..14

8. Appendices……………………………………………………………………………….16

2 Introduction

MachoVino is being proposed as Hogue Wine Cellars’ newest line extension of masculine wines. The process that concluded with MachoVino being selected as the new product category for Hogue’s existing brand began with the unmet need of men wanting a more comfortable way of drinking wine in public. Once the concept of a wine product to be developed similar to a beer bottle was chosen, our group researched wine brands that had the pre-existing characteristics that would fit our needs. Hogue’s inexpensive and unique screw cap design for their bottles gave us the confidence that Hogue was the perfect brand to adopt the MachoVino series. Using the screw cap design as our basis, MachoVino was ultimately developed as a wine bottle identical to a standard sized beer bottle that used this screw cap technology and complimented by an uber-masculine branding strategy. We believe that entering the market via communicating to our target audience of young males ages 21-30 via liquor store sampling, greek life sponsorships, student ambassador programs and intensive social media marketing

MachoVino will take off into the hands of our consumers.

Situation Analysis

Before addressing our own product, we took a broad look at the wine industry as a whole and discovered that 40% of adults drink wine regularly with 43% of those being men (Thatch,

2015). We also found that over the past 10 years, wine sales increased by $13 billion which gives us confidence that there is an opportunity for our product to grow in this industry. Another important statistic is yearly wine sales which are $55.8 billion in the U.S (Wine Consumption,

2017). With the U.S. being the global leader in wine consumption, we believe our product will bring us immense success.

3 Creating a new line of wine that does not exist in the market yet allows for enormous potential both internally and externally. Our first strength is that a more masculine line of wine is unique and differentiated and appeals to a different target consumer than normal lines of wine do. Our brand is the first to enter this segment with this specific type of product. By extending this brand from the existing Hogue Cellars brand we will already be entering the market with established resources and distribution channels. However, entering into this new market we will have some weaknesses. Just like any other new brand, we will have a lack of established reputation. Also our new line of wine includes the same flavors of wine that already exist, which may not appeal as much to new customers. Our company needs to make sure that we create a new brand while not diminishing the image associated with the product.

There are also many opportunities with our new line extension and after conducting research, we have determined that this new line of wines will satisfy new customer’s unmet needs. This new line of wine that has a more masculine appeal does not exist yet in the market and by tapping into a new market there will be a large opportunity to bring in new customers.

However, there are some threats that exist in the market that we cannot avoid but can learn to deal with. In the market there are already thousands of substitute products for alcohol such as other lines of wines, beer, hard liquor, and many others. There are also existing social stigmas in the market of who and when it is appropriate to drink wine, and it may be difficult for us to change these existing habits of individuals. Not only do these stigmas exist, but there are also many wineries that are reputable that may cause an issue with customers switching over from their loyal brands.

As mentioned before there are already many existing lines of alcohol, however our biggest competitors are Budweiser and Bandit Wines. Our team believes that Budweiser will

4 ultimately be our largest competitor as we are trying to get men to switch from drinking beer to wine in social settings. Budweiser is a very established brand that not only has strong advertising efforts, but is also third most popular beer brand by men in the United States with sales of about

$2,110,352,000 (Bratskeir, 2015). This beer brand has dominant Super Bowl advertisements every year and also has strong social media bases on Facebook, Twitter, and Instagram.

Budweiser’s advertisements are also extremely successful through several promotional activities and campaigns such as, #GiveADamn for people to stop drunk driving, “Whassup” which started a viral catchphrase, “King of Beers,” and many others (Youtube, “Budwesier”). Budweiser also has strong associations with sports team and Olympic sponsorships. For example, for the past

Olympic games in Rio de Janeiro, Budwesier supported six athlete’s journey’s as they believed they had the values of courage and belief, which aligns with the Budweiser brand (Busch, 2016).

Last, Budweiser also has a firm marketing mix. The prices for their beer are competitive yet fair which is how we are pricing our MachoVino product and they have strong product and brand loyalty while being positioned in the media world.

Another major competitor to our brand extension is the fairly new line of wine, Bandit

Wines. Brandit Wines is not a public company so our team was unable to find information on their market share. Not only could we not find this information, but this company actually does not have any strong forms of advertising and differentiates themselves in a unique way. Bandit

Wines differentiates their brand through particular packaging and sustainability. Instead of a wine bottle, their wine is offered in an eco-smart carton that is recyclable and fuel efficient. Not only does their packaging reduce their CO2 footprint, but without spending money on the glass bottle and cork, Bandit Wines is able to invest more money into the quality of their wine (Bandit

Wines, 2017). Our team views Bandit Wines to be one of our largest competitors as our new line

5 extension, MachoVino, is also differentiated through it’s unique packaging. However, we feel as if our strengths can outway the competition with Bandit Wines as our brand perception and target market are unparalleled.

Target Market Specification

We are promoting a new product category/line extension for an existing brand of wine,

Hogue Cellars. Our team is coming up with a line extension of wine that is intended for young men between the ages of 21 and 30. This target market includes college students and new graduates who are more likely to try new things and have a lower disposable income. Similar to the stigma of Axe, we want to create a line extension of wine targeted towards any race of males who can show off their masculinity when drinking from this product line. Between its monetary and alcoholic value, we believe this product would fit best young male bar goers who are beer drinkers but are open to this new idea of being able to drink wine in public without any worry.

From a psychographic standpoint, we are targeting men who enjoy and value drinking wine but may not necessarily feel secure with openly drinking wine in large social settings. Not only does this target market value social time with their peers, but they are concerned with their appearance and other’s perceptions of themselves. This line extension of wines will not only target men in general, but we want to target men with a range of personalities and interests. For example, we will have a diverse set of wines that are targeted towards different activities and interests to men such as the “outdoorsy,” “preppy, “athletic,” “hipster, and “scholarly,” types of males, not just the singled out “macho man.”

Brand Concept Formulation

The new product category that we are creating based off the wine brand Hogue Cellars will be targeted to younger-aged men as explained above. Hogue Cellars is a modest wine brand

6 most notably known for their use of “screw cap” tops that are resealable. We feel that the image of convenient use that Hogue has become associated with will be conducive for our product concept. Their brand image is also rooted in high quality and they pride themselves on their ability to incorporate many different viewpoints and aspects during the development of new products which will be essential as we move forward with our new concept.

We created a essence wheel in order to provide ourselves with a better understanding of where MachoVino stands in the eye’s of the customer (Appendix, Figure 6). We made an effort to hone in on brand vision and personality so that we could align ourselves more closely with

Hogue.

Although Hogue faces some competitors, there is currently no “manly” line of wine that exists in the market which is why this new concept will be extremely successful compared to existing wine brands. Hogue is the second largest wine producer in the United States which leads us to believe there is great brand awareness and driving sales for our new product should not be a difficult feat (Hogue Cellars, 2014).

Product Design and Pricing Fundamentals

Our brand is a product line extension of the existing brand of wine, Hogue Cellars.

However, our team decided to change the name of our new brand to MachoVino. The name

MachoVino is more representative of our target audience and the impressions and perceptions we want this new brand to have. MachoVino is very a suitable name for our target market as our name explains exactly what our product is as it is “macho” meaning it is masculine and then

“vino” which is another name for wine. The design of MachoVino bottles differs from existing wine bottles that are currently in the market. The bottle will be the size of a beer bottle (12 oz),

7 rather than the size of a regular wine bottle but still have the shape of a wine bottle. This packaging makes it optimal for a customer to purchase a 6-pack of wine. Each bottle holds about

2.4 glasses of wine per serving rather than one standard size wine glass (5 oz). The bottle will also have a unique sealing system, which involves a “screw on and off” aluminum cap that allows the bottle to be resealed if consumer does not want to consume the entire bottle in one sitting since it is larger than the average glass of wine. In order to get rid of the social stigma of it not being acceptable for men to drink wine in public, we have decided to make the bottles of

MachoVino to have a matte black finish with a white logo that way others cannot see what is inside of the bottle (Appendix, Figure 1). We believe that this matte black finish with the white logo will look sleek yet unique, making our brand perceived as higher quality. One of the bottle designs we considered previously had a white logo that include dour product name

“MachoVino” and a man holding grapes. The grapes on the bottle would either be a maroon color if the wine inside was a red (ex: Cabernet or Merlot) or a cream color if the wine inside was a white (ex: Pinot Grigio or Sauvignon Blanc). However, we believed that this design may look too complicated and take away from our desired sophisticated bottle.

After conducting research we determined that the price per bottle to produce is about

$1.36. This price includes, $0.46 for grapes, $0.10 for the bottle, $0.60 for the label/logo and outer matte black finish, and $0.20 for the screw on and off aluminum cap. Our team determined these numbers based off research of how much it costs to produce a $100 bottle of wine (Chen,

2015). We took into account that we will not be selling our bottles for nearly as high of a price and allocated the appropriate numbers to each component by looking at each aspect and estimated how our product correlated to others that are in the current marketplace.

8 In our survey we asked our respondents how much they would pay for a 6-pack of

MachoVino (Appendix, Survey Link & Results). Our team took the average of these results and took out the major outliers and determined that the average price that a consumer would pay for our product is about $16.29 per 6-pack. However, there was a high willingness to pay as some respondents said that they would pay as much as $50 for one 6-pack. Both of our major competitors, Budweiser and Bandit Wines have relatively low competitive prices in the marketplace. Therefore, our team decided to price one 6-pack at $20 in order to maintain a profit and also maintain a higher perception of quality in the consumer’s minds compared to the average $9 bottle of Bandit Wines and $7.99 6-pack of Budweiser.

Integrated Marketing Communications Program

As far as our IMC program is concerned, we have developed a number of different advertising programs to utilize. The overarching campaign we decided to use was “I’m a Macho

Man”. This theme allows our messaging to be consistent across all platforms as well as be memorable for the consumer. The “I’m a Macho Man” campaign does not have the connotation of the stereotypical large muscled, gym-going, manly man, but is rather a way to connect all types of men who enjoy MachoVino - hence they are a macho man. One way we plan to penetrate the CU Boulder market is to use Greek Life Sponsorships. These sponsors will allow for us to create brand awareness within the fraternities on campus. Our goal is to reach as much of our target market as possible, which is why we also plan to implement student ambassadors to expand to other groups on campus. In order to appeal to our segment of 21 to 30 year olds, we have decided to be present at various events in Boulder. These events include the Boulder Arts

Festival as well as Oktoberfest. This allows for visibility as well as hopefully peak the interest of potential consumers. We will use print advertising to our advantage and host events where we

9 partner with bars to promote MachoVino (Appendix, Figure 2). The last advertising program we will employ for our initial launch are a variety of guerilla marketing program where we surprise people on the Bike Mobile Ride or Thursday Night Cruisers with a fun way to taste our wine.

For our digital and social marketing program, we felt this was an essential part to our initial success, therefore, we set aside a relatively large budget for this. Our objectives behind these efforts are to generate measurable interactions. These interactions include impressions, likes, follows, and page views which can, in turn, predict awareness as well as future sales. To continue with the theme we mentioned earlier of “I’m a Macho Man”, we will use the hashtag

#imamachoman to promote buzz about our product as well as monitor what consumers are saying about our product. The promotional channels we will utilize are: Facebook, Instagram,

Twitter, Snapchat, as well as a website. For Facebook, we will use 35% of or budget for boost posts and sponsored ads. Instagram will occupy about 10% of the budget for sponsored posts

(Appendix, Figure 3). 30% of our budget has been allocated for Twitter because we feel this is a good medium for us to do contests and sweepstakes, therefore, requiring a larger budget

(Appendix, Figure 4). For Snapchat, we will use 25% of the budget to create original content for stories on our own account as well as ads. We feel our website is going to be an essential part of our business especially in its early stages. In turn, we have allocated 10% of our budget to this project because we feel it will be an essential part of our awareness (Appendix, Figure 5). This will serve as a place where future consumers can visit to gain more knowledge on the product as well as even buy MachoVino.

As previously mentioned, MachoVino will have several channels and vehicles used in order to promote our product. Through print ads, guerilla marketing, social media efforts, and magazine advertisements, we will be able to reach a large consumer base. Our team determined

10 that will be reach about 8,200 male students at the University of Colorado Boulder who are over

21 years old and also 34,627 men over the age of 21 in the city of Boulder. Through views on social media, purchases of our product, and other accessible interactions with our product, we assume that frequency will be about 50% and repurchase likelihood will be about 40% of the people that we reach. Due to this frequency percentage and the multiple diverse media vehicles and channels, we believe that each person will have about 3 exposures, thus giving us a GRP of

150 (50% * 3). CPM is another metric that we considered at first, however, our team decided that at our initial launch CPM is not applicable as we do not have enough funds initially to pay for ads that are online. Therefore, once our line extension is more established we will have pop-up and banner ads that will be measured on a CPM basis.

Our sales promotion program will be one of the most essential parts of our efforts as we work to implement this product with Hogue. We will mainly focus on establishing relationships with distributors, enhancing awareness with new customers, and building brand loyalty to ensure continuous streams of revenue. As far as establishing relationships with distributors, we will offer discounts to retailers to encourage them to hold our product. We have also considered co- op funding which means we will share the cost of advertising with retailers such as Hazels in order for them to promote our product in their store. After reaching out to Hazels regarding some cost estimates, we now have a better understanding of what it takes to get a product from production to the store. Slotting and co-op funding fees are actually very pricey at about $25,000 per store. Knowing this information, we will have to be very selective about which stores we want to sell our product in, in order to optimize sales.

The consumer promotions are where we will spend the most amount of money to ensure that people hear about our product and are intrigued enough to get to a store and purchase it. Our

11 target market is comprised of people who already drink alcoholic beverages and likely have preferred brands; which directs our focus to brand conversion and finding a way to pull them away from their typical beer purchases. Mail-offers, monthly subscriptions, and BOGO coupons will be our main means for outreach. The mail-offers will feature an image of our product as well as information regarding its background, a list of local stores offering our product, and 50% discount on first purchases to create trialability. MachoVino will also be featured in magazines such as Food & Wine and Men’s Health. By putting our products in these trusted sources in the context of topics already important to our target market, we believe our product will draw quite a bit of attention.

Our point-of-purchase program will be critical for our success with people who have not yet been reached by our other promotional efforts. After several considerations, we chose to allocate about 10% of our budget to the point-of-purchase program. Although this may seem like a very high percentage, especially for a small company with a very new product, in order for successful market entry we need to put forth great efforts to be noticed. Some examples of our program include end-cap displays on the aisles, free samples at liquor stores, and small informational tags to be placed in the bag after checking out. In the earliest stages, end-caps and samples will be key for our success. The reason we are implementing end cap displays is heavily based off the fact that the people we are targeting are mainly beer drinkers. Due to our efforts to capture a new market, we will not be able to grab their attention in the wine aisle. In addition, we are not offering a beer product so it will not belong in that aisle either. We will have to capture their attention at the end of an aisle they would typically pass while seeking out beer. Our vision for this is a large visual display, such as a poster, which has an image of our logo and product and relatively bright colors to grab people’s attention. We have also considered placing a

12 sampling table in front which will feature both a white and red version of our wine in order to grasp the attention of a larger audience.

We previously mentioned percentage of budget allocated to each aspect of the IMC program, and will now discuss how we came to our overall budget. In order to determine our budget, our team determined and projected a net income statement for our first year of launch

(Appendix, Figure 7). After taking into account our revenues and costs, we looked at average industry standards in order to come up with an appropriate amount for our budget of advertising costs.

Prior to creating our budget, our team sent out a survey to the public via Qualtrics and asked several questions regarding our new product line extension idea. We were able to reach a sample size of 93 respondents, 52% being female and 48% being male. We asked a range of questions including the customer’s purchase intent, how much they would pay for this product, and their initial reaction to the product. Many respondents actually loved the idea of our product line extension and even said that they “frequently turn to beer in order to satiate my expression as a ‘man’” (Appendix, Survey Link & Results). However, we did come across one major flaw in one of the questions that we asked. For the purchase intent question, we asked respondents how likely they would be to purchase this product. Our team noticed that we accidentally gave four options that are more on the positive side and only one option that is more on the negative side (Appendix, Survey Link & Results). We feel that since we asked this question in this fashion, our interpretation of the data is somewhat misleading as respondents could have been confused when taking our survey. Ideally, we would have asked this question with two positive outcomes, one neutral outcome, and two negative outcomes.

13 After going through the process of producing a new product to be implemented through the Hogue brand, we envision great success for our product line extension. We look forward to launching our new wine and cannot wait to see how the comfort level of men in social settings changes as they drink MachoVino.

References

Anheuser-Busch. "Budweiser Joins Forces with Six Elite Athletes to Support their Journeys to

Rio de Janeiro." PR Newswire: news distribution, targeting and monitoring. Anheuser-Busch, 27

Apr. 2016. Web. 02 May 2017.

"Bandit Wines." Home : Bandit Wines. Rebel Wine Co., n.d. Web. 02 May 2017.

.

Bratskeir, Kate. "The 20 Most Popular Beers Indicate That, Deep Down, Americans Are Frat

Boys." HuffPost. TheHuffintongPost, 04 Mar. 2015. Web. 2 May 2017.

.

Chen, Jerry. "How much does it cost to produce a bottle of fine wine?" Quora, 27 Aug. 2015.

Web. 2 May 2017. .

Thach, Liz. "Survey of American Wine Consumer Preferences." 2015 Survey of American Wine Consumer

Preferences. N.p., 11 Nov. 2015. Web. 03 May 2017.

14

"The Wine Institute." Statistics - The Wine Institute. N.p., n.d. Web. 03 May 2017.

YouTube. YouTube, 28 Oct. 2016. Web. 02 May 2017.

.

"2014 Genesis Meritage." Hogue Cellars. N.p., n.d. Web. 01 May 2017.

Appendices

Figure 1 Figure 2

Figure 3

Figure 4

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Figure 5

Figure 6

Figure 7

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Survey Link & Results https://qtrial2017q2az1.az1.qualtrics.com/jfe/form/SV_1HBrQEK3HdY9mkZ

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