Five Year Marketing Plan:

Smirnoff Jell-O Shooters

Tyler Steinke, Lauren Belz, Christian Schneider,

Corey Kuchers, and Jonathan Schwegman

Marketing 291

Professor Eric Stenstrom

December 3, 2013

Table of Contents

1. Executive Summary 3

2. Company Description 3

3. Strategic Focus and Plan 4

4. Situation Analysis 6

5. Market-Product Focus 9

6. Marketing Program 11

7. Financial Data and Projections 13

8. Organization 15

9. Implementation 16

10. References 17

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1. Executive Summary

Diageo, the leading alcohol distributor in the world, is working with Jell-O to bring to market a revolutionary and new product that is yet to be created. The and families will welcome

Smirnoff Jell-O Shooters to their line of convenient and pre-packaged drinks. Smirnoff Jell-O Shooters, a pre- made alcoholic gelatin substance, is a beverage geared to meet the needs of consumers ages 21-35. Currently in the United States, there is nothing similar on the market. Smirnoff Jell-O Shooters will be launched in the

United States and then be further evaluated.

Due to experience in the ready to drink alcoholic beverage industry, we are assured that we will see great success with the release of Smirnoff Jell-O Shooters. First and foremost, there is no competing product in the market. Smirnoff is strong in that they are able to recognize the demands of consumers and predict the potential of a product. After our past struggles with our ready to drink products including Smirnoff Ice and

Smirnoff Frozen Pouches, we have experience in this part of our consumer market. We are planning to use this experience and apply it to Smirnoff Jell-O Shooters. As a result, we will have a more successful product launch and a more profitable product. With a total projected revenue of $20,000,000.00 and projected total expenses of

$6,979,000.00, we expect to see $13,021,000.00 in profit in its first year on the market.

We have decided that, pending our success in the United States, we will expand Smirnoff Jell-O

Shooters internationally. Smirnoff‘s staggered release of Smirnoff Jell-O Shooters will happen over a five year period. At the end of the five years, Smirnoff will review net sales and look to expand world-wide. Smirnoff is looking to then release Smirnoff Jell-O Shooters in Australia and Europe. This decision is attributed to cultural similarities and similar drink preferences.

2. Company Description

Diageo is a young company that has been in existence since 1997, however many of the brands have a rich heritage dating back to 1749. Diageo trades in approximately 180 countries, employs 25,000 people around the world and is the world's leading premium alcoholic beverage business. We have an outstanding collection of

3 brands across the spirits, beer and wine markets which include: , , J&B, Windsor,

Buchanan's, Bushmills, Smirnoff, Ciroc, , Baileys, , , and .

Between 2000 and 2002, we sold shares in food companies including Burger King and Pillsbury. In 2001, we acquired the line of spirits and wine in order to expand our brand offerings and only focus on premium alcoholic beverages.

Although our products have a rich history and 250 years of experience, we want our products to be enjoyed by future generations as well. In recent years, we have developed additional products to meet new consumer tastes and experiences. The Smirnoff product line has been experimenting with new ready to drink products including: Smirnoff Ice, Smirnoff Frozen Pouches, and canned mixed drinks. With this in mind we are excited to be adding a new item to our already outstanding Smirnoff line: Smirnoff Jell-O Shooters. The

Smirnoff Jell-O Shooter is a convenient, pre-packaged alcoholic gelatin shot made with Smirnoff vodka and

Jell-O gelatin.

3. Strategic Focus and Plan

This section covers three aspects of corporate strategy that influence the marketing plan: (1) the mission,

(2) goals, and (3) core competency/sustainable competitive advantage of Diageo. On a corporate level, Diageo has several missions and goals that we seek to meet in order to maintain a competitive edge over competitors.

Mission At Diageo, we are:

1. Passionate about customers and consumers: We desire to be courageous in pursuing our full potential,

constantly searching for new ideas that drive growth across business. Curiosity and consumer insights drive

growth.

2. Free to succeed: This fosters an entrepreneurial spirit, where we trust each other, and are open to new

market challenges. We always behave as a team, whether together or apart.

3. Proud of what is done: We enjoy and benefit from diversity, and act sensitively with the highest

standards of integrity and social responsibility. 4

4. Striving to be the best: While proud of our past, we are always improving, learning, and restless for new

innovations. We are constantly setting high standards and working to exceed them. In the end, we deliver

competitive results, and celebrate success.

5. Placing value on each other: We seek and benefit from diverse people and perspectives. We strive to

create mutually fulfilling relationships and partnerships (Diageo, 2013).

Goals Diageo has the following 6 core goals:

1. Lead industry marketing in order to engage consumers in multiple modes of media by joining our strengths

with creative partnerships.

2. Create and deliver superior marketing campaigns that target different consumers at price points ranging from

luxury pricing to more affordable.

3. Focus on marketing innovation and reaching new consumers, which include the growing middle class,

multiethnic, and woman consumers

4. Foster lasting value for all of Diageo’s diverse brands

5. Collaborate with customers to increase profitability by building connections with both retailers and customers

6. Deliver education to associates and develop commercial and strategic worth for all parties in hope of having

an unsurpassed sales force (Diageo, 2013).

Competitive Advantages Our strengths include combining heritage and innovation, utilizing supply chains, developing emerging markets, and obtaining outstanding, diverse, and talented people. We have acquired these strengths through our various spirits brands, which have become household names across the world. Although these products individually are strong amongst themselves, they continue to expand and meet customer demands.

Our industry leading capabilities include marketing, sales, supplies, and management. Our flexible operating model is agile and well established, while remaining financially disciplined. We have brands at almost every price level of every category. The breadth of our business provides resilience. Given the range of 5 our price points, we are able to capture consumption shifts across the price spectrum. This breadth and depth allow us to sustain our performance over time.

In order to make our capabilities into a sustainable advantage, we must continue to take advantage of our established supply chains, while quickly acquiring the machinery to create the product. Also, we hope to spread the Smirnoff Jell-O Shooters throughout new markets in the US within the first five years.

4. Situation Analysis

The table below shows the company’s internal and external factors affecting the success of our product.

SWOT Analysis

Internal Factors Strengths Weaknesses

Marketing Under Smirnoff, a well-respected name Additional costs because of multiple modes of marketing.

Offerings Unique product, convenient Lower-quality, lower-priced competitors

Management Integrated as one of the various Smirnoff products Additional costs due to an additional management team.

Finance Backed by Smirnoff- fully funded by the company Potential for market failure

Manufacturing Pre-existing facilities Additional machinery required

R&D Popular and established flavors and experience in Research required to establish proper packaging and pre-packaged products distribution

External Factors Opportunities Threats

Competitive Strong and established brand name Growing interests in the product idea of a “Jell-O shot”

Distribution Established distribution, stores, and supply chains Temperature variations could harm product

Technological Incorporation of the Mixhibit application Development of new machinery capable of creating Jell-O shots

Economic Sales growth in the spirits industry Smirnoff is a luxury brand

Legal/Regulatory Knowledge of current laws and regulations Changing laws pertaining to alcohol and working with Jell-O’s brand representative.

Consumer/Social Stable market. Potential market growth. Brand misrepresentation specific to Jell-O

Table 1 SWOT Analysis

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Internally, our greatest strengths are our brand name and our convenient product offering. The uniqueness of the Smirnoff Jell-O Shooters is a great asset - we are offering a simple and convenient way to entertain a social gathering, with no prep time necessary. Externally, our greatest strengths include our experience in distribution, understanding the legal environment surrounding alcohol sales, and our knowledge of consumers. As for distribution, there is no other product on the market that is sold nationally, creating ample opportunity for growth. Because of our past business as Smirnoff, we know the appropriate actions and regulations pertaining to the sale of alcoholic beverages. We also understand our consumers and the opportunity for market growth.

The main threats are brand misrepresentation and partnering with another company. Because we are marketing Jell-O in association with Smirnoff, the family-friendly brand image of Jell-O’s parent company

Kraft could be diminished. To alleviate potential profit loss due to brand image, the partnership between Jell-O and Smirnoff provides Jell-O with a 5% royalty on a per product basis.

Industry Analysis: Trends in Pre-Packaged Mixed Drinks According to International Wine and Spirit Research, between 2010 and 2011, the flavored vodka category increased 25% in sales. According to Diageo’s press release in June 2013, “Ready to drink [products] net sales declined 10% as Smirnoff Ice faced increased competition from established beer brands”. While the ready to drink category including Smirnoff Ice recently has brought Smirnoff some trouble, Smirnoff Jell-O

Shooters will change the brand image associated with these products and increase sales in this market. The failure of Smirnoff Ice was largely due to poor marketing and packaging focused towards women. Smirnoff

Jell-O Shooters has learned from this failure and has created a gender neutral marketing strategy that presents the product in a youthful light.

Competitor Analysis: The Ready to Drink Market There are very few large-scale competitors that offer a product that is anything similar to ours. Pre-made

Jell-O shots are a revolutionary new product in the alcohol industry. Currently, no pre-made Jell-O shots are being sold within the United States in liquor stores. We have identified our top competing companies as Gel

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Shots and MoonJoos. We have been able to identify several weaknesses in each of our competitors that we feel differentiate our product and make it the best product on the market.

As far as Gel Shots, the mix is a pre-made alcoholic substance but still requires consumers to pour the mix into small shot cups and chill. This diminishes the concept of “grab and go” as it requires consumers to take additional steps in order to enjoy the product. Additionally, Gel Shots are not available in stores and must be purchased at their online website. This means the consumers must wait several days to have the product shipped in order to enjoy the product.

MoonJoos are pre-made gelatin shots with alcohol that are exclusive to New Zealand. MoonJoos are made very similarly to Smirnoff Jell-O Shooters, except without the quality that Smirnoff vodka delivers. While they do sell their product in stores, they do not offer their product online and do not ship their items overseas. Therefore, their product cannot be found in any other countries. This leaves a large opportunity for Smirnoff Jell-O Shooters to dominate the remaining markets with an equal, if not better, product.

Company Analysis The Smirnoff brand has become a household name that is recognizable all over the world. Smirnoff Jell-

O Shooters is at an advantage in that the already established Smirnoff customers will want to try the product simply because of brand recognition and loyalty. Additionally, consumers are already familiar with the various

Smirnoff flavors, and know what they can expect from Smirnoff Jell-O Shooters.

Previously, Smirnoff has used several marketing campaigns to gain more marketing share. Through a series of billboards, magazine ads, and unique product placement, Smirnoff has made their brand known. With the release of Smirnoff Jell-O Shooters, we will continue on this marketing trend. Most recently, Smirnoff has created an online application for all electronic devices called Mixhibit. This allows consumers to share their experiences while enjoying Smirnoff products. Incorporating Smirnoff Jell-O Shooters into the pre-existing

Mixhibit application will help contribute to brand and product recognition, increasing market share and profitability.

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Customer Analysis Based on data collected from Smirnoff Ice, Smirnoff Jell-O Shooters appeal to youthful, fulfilled adults from the legal drinking age of 21 to 35 years old who enjoy a night out. Smirnoff Jell-O Shooters seek to be a stable alternative to traditional liquid alcoholic drinks and beverages. The product is designed to appeal to both men and women equally. Additionally, many of the consumers are familiar with and enjoy the various types of

Smirnoff Vodka flavors. Demographically, Smirnoff has recognized that the largest concentration of consumers are located within large cities. This is attributed to the fact that these cities have the highest percent of 21-35 year olds. Additionally, the typical Smirnoff consumer makes above $50,000 annually. Smirnoff is considered to be a luxury brand, and therefore is affordable to a specific income bracket.

Smirnoff Jell-O Shooters are not recommended for pregnant women, people with severe medical conditions, and people that suffer from erratic behavior. Smirnoff Jell-O Shooters are a part are of a healthy lifestyle, however only in moderation. At an alcohol percentage of 15%, consumers are responsible for appropriate consumption and all risks associated with consumption of Smirnoff Jell-O Shooters.

5. Market-Product Focus

Within this section the details of Smirnoff Jell-O Shooters are discussed relating to each of the following categories: the marketing and product objectives, target markets, points of difference, and positioning of

Marketing and Product Objectives Smirnoff plans to build its already established current markets by expanding in store sales and by introducing new products in the future through the use of Smirnoff Jell-O shooters as a transitional product. The details for each category are as follows:

● Current markets. Current spirit markets will be grown through increased consumer consumption.

Because Smirnoff Jell-O Shooters are a non-traditional liquid alcoholic beverage, Smirnoff Jell-O

Shooters will be bought in addition to normal purchases. In the future the intent of Smirnoff is to expand

its Smirnoff Jell-O Shooter flavors in order to increase consumer interest and consumption.

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● New products. Smirnoff Jell-O Shooters can be used as a transition into further ready-made alcoholic

products. These can include adult gummies and pudding shots.

Target Markets The primary target market for Smirnoff Jell-O Shooters is young individuals between the ages of 21-35 who are looking for a convenient, quality, and adventurous option for an alcoholic product. This age range is still in the younger years of life and is more adventurous and fun-loving than predecessors. The target market has variable income but is willing to spend money on a quality and quantity.

Points of Difference The “points of difference” -- characteristics that make Smirnoff Jell-O Shooters unique compared to competitors -- fall into three important areas:

 Convenience. No other nationally recognized competitor offers a high-quality, ready-made Jell-O

shooter. Other smaller competitors offer alcoholic gelatin shots or gelatin shot mixes, but the Smirnoff

Jell-O Shooter is ready to drink and only requires the lid to be removed before consumption.

 Premium packaging. Our innovative packaging allows the Jell-O Shooter to look like a normal liquid

shooter and be squeezed out of the packaging. Aesthetically, our transparent packaging allows for the

consumer to see the colors of the Jell-O and conveniently recognize individual flavors.

 Distribution and Availability. Because Smirnoff is already a globally recognized name, the distribution

channels and vendor relations are already established. Unlike competitors, Smirnoff has the resources to

swiftly expand into large demographic regions.

Positioning In the past, the Smirnoff brand has been known for quality. In recent years, Smirnoff has been expanding product offerings into different products with a more youthful and adventurous brand image. These innovations include the Smirnoff Ice line, which includes frozen pouches and canned drinks, and the Smirnoff

Ready to Serve product lines. Smirnoff Jell-O Shooters will be a quality, youthful addition to the Ready to

Serve product line.

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6. Marketing Program

Smirnoff Jell-O Shooters’ four marketing mix elements are detailed in the marketing program below.

Product Strategy: After first summarizing the product line, the approach to product quality and the details of our unique packaging are covered.

Product Line. Smirnoff Jell-O Shooters, available in mix-packs ranging from prices of $9.99 to $24.99, are available in different sized mix-packs that contain five different flavors. These flavors include Passion Fruit

(orange), Lemon Lime (yellow), Green Apple (green), Raspberry (pink), and Blueberry (blue).

Unique Product Quality. Smirnoff premium vodkas have been on the forefront of the spirits market for over 140 years. Our distilleries in India, Italy, Ireland, and the United Kingdom use only the most advanced techniques in distilling and manufacturing our vodkas, flavored vodkas, and malt beverages. This process involves distilling our spirits three times which accounts for their non-comparable smoothness. Combining this smooth, yet premium spirit with Jell-O brand gelatin (yet another household name) makes Smirnoff Jell-O

Shooters an easily marketable product.

Packaging. Unlike other spirits in the market, Smirnoff has stuck to its roots throughout the ages while still keeping a youthful image of our products. The individual packaging of the shooter will be cylindrical and crushable. This will allow the consumer to easily consume the shooter. The Jell-O colors will be recognizable to

Smirnoff customers, seeing as the plastic packaging will be transparent. The individual shooter flavors will be available for purchase in an assortment, called a “Mix-pack”.

Pricing Strategy: We will be offering 12, 24, and 36 packs of Smirnoff Jell-O Shooters priced at $9.99, $18.99, and

$24.99 respectively. This pricing strategy is designed to persuade buyers to purchase larger amounts of shooters because it will ultimately drive down the overall price. The chosen prices are similar to other Smirnoff ready to drink products.

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Promotion Strategy: Key Promotion programs feature in-store advertising, commercials, magazine ads, and a large amount of social media.

Commercials. The television commercials will be playing off the recent Mixhibit campaign and will feature the same theme, only a different product. The setting will be in an urban area and show a number of individuals going from one social setting to the next, while Smirnoff Shooters are present at all the areas. The group will then flashback through the night and show the products in action throughout the night.

Magazine ads. There will be two types of magazine ads. The first ad will be a very straight forward ad reading “Mix up your night.” We believe that this is a good penetration ad in order to actually show what the product is.

This ad is displayed in Figure 2.

The second magazine ad will feature the product but in an Figure 2 Mix-pack Advertisement unconventional way. The magazine ad will show 4 adults holding different alcoholic beverages that one may find when they go out (for example: a glass of wine, a beer, or a martini). The third person, however, will be inside one of the Smirnoff

Shooters. The slogan will be half above and half below the images and will say, “Mix it up (top)... mix it in

(bottom).”

Social Media. The social media portion of the promotion will be tied into the Mixhibit campaign. While there won’t be a separate application pertaining strictly to Smirnoff Jell-O Shooters, there will be a function added to the application that will show what liquor and spirit stores sell Smirnoff Shooters. The Mixhibit campaign will focus primarily on the overall Smirnoff brands and will also be applicable to the Smirnoff Jell-O 12

Shooters. We plan on incorporating the "personality" of the application by incorporating multiple flavors into a

Smirnoff Jell-O Shooters mix-pack suitable for different social situations. Through this, we believe the social

Mixibit lifestyle will present itself through the ability to mix and match different flavors of the Smirnoff Jell-O

Shooters. Along with Mixhibit, we will create both a Facebook and Twitter account specifically for Smirnoff

Jell-O Shooters, in order to further promote our product via social media.

Place (Distribution) Strategy: The primary location where this product will be sold is in cities where there are a large amount of young adults and college towns across the United States. We believe these consumers will be more interested in the product than older consumers who are typically already set into a standard drink order.

7. Financial Data and Projections

Past Sales Revenue North America delivers around a third of Diageo’s net sales, which is why we believe the best place to initially launch our product is in the United States.

This is seen in Figure 3. North America is also our largest region by operating profit, while Europe is close behind with 28% of net sales followed by Asia Pacific at 14% Due to the net sales in Europe and the Asia Pacific region, specifically

Australia, we will expand to these regions after our initial North American launch.

Figure 4 shows the

performance of Diageo’s different Figure 3 Net Sales by Region

product lines, including Spirits, Beer, Wine, and Ready to Drink

products. As you can see from this chart, Diageo in the past has

had a very difficult time selling its ready to drink products.

However, the simplicity and utility seen in Smirnoff Jell-O Figure 4 Net sales per Category

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Shooters has never before been seen. This is why we expect to see much more success in this product category than ready to drink products in the past.

Five Year Projections Five-year financial projections for Smirnoff appear in Figure 5. These projections reflect the continuing growth in number of Smirnoff Jell-O Shooters sold. We have based these projections off of our experience in the ready to drink product market as well as our confidence in Smirnoff Jell-O Shooters being a unique product that recognizes an unsatisfied customer need in the alcohol market. While comparable products have not been as profitable as we predict our Smirnoff Jell- O Shooters to be, none of our previous products have been as unique or in as high of demand. Beyond the 5 year projections seen below we have the intention of expanding Smirnoff Jell-O Shooters internationally. We will be following the same lapsed time release Figure 5 Projected Sales Revenue expansion plan we used in the United States. Due to the cultural and historical drinking similarities, the first places we will expand internationally will be Australia and Europe. Table 2 shown below details our financial model for the first 5 years of the product launch. This mot only includes the basic manufacturing, labor and advertising costs, but also the royalty fee that will be paid to Jell-O as part of the partnership. These projections are based upon previous Smirnoff sales and costs for similar ready to drink products.

Table 2 Financial Model

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8. Organization

At present, Diageo operates as a large global company that does business on several continents. Below each vice president or director there are numerous employees that contribute to the success and growth of Diageo world- wide. The present Board of Directors consist of nine members chaired by Dr. Franz Humer. Six of these members are non- executives. The Board of Directors is responsible for both the stewardship and governance of the company. As part of this, the Board of Directors sets the company’s strategic aims and values and oversees the executive management who carry out the day-to-day operations of the business. The board has established several committees, each with clearly defined terms of reference, procedures and responsibilities. These committees consists of the nomination, audit, and Figure 6 Organization Structure remuneration committee.

The executive committee for the Diageo Corporation consists of fifteen members that include the CEO,

CFO, Strategy Director, Corporate Relations Director, CMO, and New Business Director. These positions oversee the Diageo brands in all the different regions. Beyond that, Diageo is unique as far as organizations in that instead of dividing the company by brand, they are divided by region. Diageo has brands and products in

Western Europe, North America, Asia Pacific, Latin America and the Caribbean, and Africa, Eastern Europe, and Turkey. Within the executive committee sits a President for each of these five regions. They are responsible for overseeing all of the operations within the region and reporting to corporate on a regular basis.

The executive committee works closely with various other committees that work to support each region.

These include a finance committee, filings assurance committee, audit and risk committee, and a working groups committee. These four committees, along with the Executive Committee, work to meet the objectives appointed by the CEO. 15

9. Implementation

The first step is to redevelop facilities for the molds and machinery required to craft the desired shooters.

These additional pieces of machinery have been included in the overall financial model. As a result of new machinery we have allocated additional training costs for our current workforce. We do not expect to hire a large number of additional employees, because of the new technology being purchased.

Providing the Smirnoff Shooters to our target markets will be a complex but manageable task as

Smirnoff has already set up a large market across the United States for their premium vodkas. In addition to setting up these markets, we will also have to provide an avenue for consumers to receive promotional awareness. Our first three target regions to implement the products are in the West, Midwest, and East of the United States. From there, we are planning on creating three different sectors to test the Table 3 New Locations Model products in. These sectors will be Los Angeles (West), Chicago (Midwest), and New York (East). We plan on introducing our product to a new location in the region every fiscal quarter of the calendar year so that there will be 12 markets implemented by the end of the first year. Following the success in these regions, we will expand to all US regions in a similar manner as the first year. This is shown in Table 3. After 5 year of success in the

United States, we will consider introducing the product to other countries around the world starting with Europe and Australia, then using the sales results to justify any further expansion.

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10. References

Diageo. "Corporate Governance." Corporate Governance. N.p., 2013. Web. 01 Dec. 2013.

.

Diageo. "Our People." Our People. Diageo, 2013. Web. 01 Dec. 2013.

row/ourbusiness/ourpeople/Pages/default.aspx>.

Diageo. "Our Strategy." Our Strategy. Diageo, 2013. Web. 01 Dec. 2013.

row/ourbusiness/aboutus/Pages/our-strategy.aspx>.

Gel Shots. "Gel Shots." Gel Shots. N.p., 2013. Web. 01 Dec. 2013. .

MOONJOOS USA. "Better Than Your Homemade Jell-O Shots! MoonJoos USA - Ready To Drink Jel Shots."

Better Than Your Homemade Jell-O Shots! MoonJoos USA - Ready To Drink Jel Shots. MOONJOOS

USA., 2013. Web. 01 Dec. 2013. .

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