Savanna Bolin-Hayley Renneker-Chelsea Ritter-Jessica Seitz SITUATION ANALYSIS SUMMARY industry. There are also human rights issues with possibly different policies and regulations when a company has operations in a foreign Fairlife is a company that has positioned themselves as a premium country. Along with regulations form the FDA, the increased aware- milk provider. With the added benefits that Fairlife is able to provide ness of the environmental problems have influenced legislation as with their milk, comes a higher price point than their competitors well. This includes waste management like the quantity of packaging which they must overcome. Fairlife is in competition with products going through the system and the increase of recyclable materials. The that have been on the market for a while and are well known by con- ability to enter emerging and developing markets is also a factor to sumers. Due to the changes in the milk industry and the soft drink consider. industry alike, Fairlife has an opportunity to be the providers of a healthy alternative to the sugary drinks on the market. Their sustain- Economic Factors able and responsible farming practices that they use will allow Fairlife to be a company that flourishes based on the environmentally friendly The tough economic times have led to some challenges in most indus- trend. The decreased amount that consumers drink milk and spend tries, including the soft drink and milk industry. With the recession on milk will be challenges that Fairlife must overcome. The target back in 2008, customers were less likely to spend money on unneces- market for Fairlife will be those who are in search for a product with sary products such as soft drinks. The price of imports, exports, and the additional nutrition benefits that Fairlife offers and a product that the exchange rates are also something that the soft drink industry has is produced using environmentally friendly practices. to consider. The larger companies operating in a global environment can watch this and make adjustments during the times of economic A. INDUSTRY ANALYSIS: PESTLE struggle. Commodity prices also introduce a risk into the soft drink industry. The cost of raw materials can fluctuate, which can be chal- Political Factors lenging. The soft drink companies are in a very competitive field, meaning that they can’t afford to change their prices drastically. They The government regulates non-alcoholic beverages with the Food will have to be prepared for the raising costs of raw goods and adjust and Drug Administration (FDA). The FDA regulates the manufactur- accordingly. In addition, the milk industry has been declining for the ing of these products, and if companies fail to meet these standards past 4 years, while the prices have been rising. established by the FDA, they could be subject to fines. Some of these factors can influence the operations of soft drink companies. Changes Social Factors in laws and regulations such as taxation requirements, FDA changes, and environmental laws can affect the industry. Political conditions A huge social factor influencing the soft drink industry is that there is in foreign countries such as conflicts, governmental changes and an increased interest in a healthy lifestyle in the United States. This in border restrictions also have the possibility of altering the soft drink strongly influencing sales, and causing people to search for alternative drinks such as bottled water and diet soft drinks and teas. Along with Legal Factors the increased desire for a healthy lifestyle, people are concerned with nutrition. The largest section of the US population is baby boomers, The legal factors surrounding the soft drink industry overlap with and as they age they are more aware of their health. The demand for both the political and environmental factors. With the politics, some healthier drink options is at large. Consumers are also trying out new new laws are enforced depending on the current situations. The same diets like things with higher protein and less sugar. Another social is true for environmental factors. The increased awareness of envi- factor affecting the industry is the lack of brand loyalty people are ex- ronmental problems has caused new legislature to pass in some areas, hibiting. It is much easier now for people to switch between products which can pose the threat of fines and other legal problems if the laws then it has been in the past. Consumers do not necessarily care about are not followed. what brand they are trying, but rather what benefits they can get from that brand. This is a challenge that faces the soft drink industry as they Environmental Factors try out new ways and benefits to attract people to their products. As mentioned previously, the concern for environmental issues is Technological Factors increasing. There is a push to recycle and be conscious of the environ- ment. For example, companies are encouraged to decrease the quan- Technological factors can range from things such as advertising tity of packaging that goes through the waste management system, and marketing to package design and new equipment. The different lessen the consumption of natural resources, and increase the recy- mediums through which a company can advertise are changing now cling packaging materials. As this continues to become a bigger issue, more than ever. Between social media and the web, many options there may be more laws put into effect regarding controlling packag- have opened up. The ability to effectively use these various mediums ing and other elements that affect the environment. This is something to advertise their products can greatly impact sales. The packaging de- to pay attention to when companies go to package their products. sign has become important not only for the company, but for people While they like to keep these products portable, they also have to ac- as well. There was in an increase in sales once cans and plastic bottles count for the packaging that they use and try to make it as recyclable were first introduced due to the portability of the product. Now how- and environmentally friendly as possible. ever, people are becoming aware of the impact of these items on the planet and want easily recyclable packaging. Both new equipment and B. COMPANY ANALYSIS new factories has led to an increase in production, making it easier to get these items out on the shelf faster. The new technology also helps The Coca-Cola Company states that their mission is “to refresh the to introduce new product lines, like new flavors, healthier options, world, to inspire moments of optimism and happiness, and to create and caffeine free goods. value and make a difference.” This mission statement is reinforced through a focused company vision that is split into seven distinct ties seek to drive sales growth of Coca-Cola in emerging markets, in- parts: crease brand value in developing markets, and grow profit in already 1. People developed markets. Furthermore, they utilize marketing to achieve 2. Portfolio long-term growth in per capita Coca-Cola consumption and to ul- 3. Partners timately hold a larger share of the worldwide nonalcoholic beverage 4. Planet market. Coca-Cola claims to develop their marketing plans via prod- 5. Profit and uct and packaging research, brand positioning attempts, precise cus- 6. Productivity. tomer communications, and solicitation of customer feedback. Once developed, their marketing plans tend to include 3 basic elements: People is representative of their effort to create a workplace where advertising, point-of-sales merchandising, and sales promotions. employees are inspired to become the best that they can be. Portfolio As a result of declining sales both within the company and the entire addresses their work to present the world with a host of quality bever- soft drink industry, Coca Cola is putting an increased focus on mar- age that satisfies consumer wants and needs. Partners refers to the keting its new, reduced-calorie, naturally sweetened Coke Life, tea mutually beneficial relationship that Coca-Cola has created with their products, and – of course – Fairlife Milk. customers and suppliers. Planet represents Coca-Cola’s goal of build- ing and supporting sustainable communities. Profit is the company’s C. PRODUCT ANALYSIS obvious, overall goal of maximizing its return to shareholders. Lastly, productivity addresses the company’s work to be highly effective and Fairlife Milk is a premium milk product. They are “committed to fast moving. They also boast many company values that align with improving the health and vitality of the planet and its people” through their mission to create both a successful product and a brand that providing a “purely nutritious milk.” Their mission is “to improve the inspires creativity, passion, and fun. These values include leadership, health and vitality of the world.” The ultra-filtration process creates a collaboration, integrity, accountability, diversity, and quality. nutrient enhanced product. Fairlife Milk has 30% more calcium 50% Coca-Cola boasts highly impressive sales and profits. During the fiscal more protein and half the sugar in other milks; that includes lactose year of 2014, the company made $45.93 billion in sales revenue and free milk and organic milk. Fairlife is lactose free. In order to come $7.1 billion in net income. Those high numbers are, however, consis- up with a product with such properties, the milk is ultra-filtered. This tent with a downward trend in growth. From 2012 to 2013, sales rev- means that it is put through five different filters designed to divide up enue growth was down 2.85%. From 2013 to 2014, revenue dropped the water, minerals, lactose, protein and fat in the milk. The different another 1.64%. The same is true for overall profit growth. From 2012 properties are then put back together in an alternative amount. to 2013, net income growth was down 4.82%. From 2013 to 2014, Fairlife is also processed in such a way that leaves it with a longer shelf growth was down a staggering 17.31%. life prior to being opened for the first time. Once it has been opened The company markets on a huge, global scale. Their marketing activi- it has the same life as regular milk. Fairlife is not an organic product, but the 92 different family owned farms that the milk comes from Regular milk is not a highly competitive market due to the fact that are focused on sustainability and responsible farming practices. The there are not a lot of brands of milk. Dean’s milk, Borden milk, Nestle cofounder, Mike McCloskey, was a veterinarian prior to starting the and store brand milk are the most commonly found. These milk Fairlife, and he specialized in dairy cows. His respect for the cows brands are relatively close in price. Fairlife is not only a milk product; and understanding of what is best for them has transpired over to it is a health, protein and nutritional supplement drink product. This the dairy cows used on the farms where the milk comes from for the leads them into the competitive market of nutrition drinks which Fairlife product. Fairlife practices a closed system of production. “We includes protein drinks and powders, and drinks like PowerAde and grow our own crops; We make our cows feed; We fill our own trucks; Gatorade. We ultra-filter our own milk; We put it in our own bottles.” They pride The competitive strengths Fairlife has are that it has partnered with themselves are keeping their product within their company from Coca Cola in order to be able to distribute their product across the “grass to glass.” nation. Fairlife is also a brand that cares for their consumers, their Fairlife Milk comes in four options: Reduced fat, Chocolate, Fat Free employees (both human and cow) and their product. Fairlife will have and Whole milk. It is available in half gallon and single serve sizes and to overcome the strong, well asserted companies and persuade con- is substantially more expensive than regular milk. Fairlife is avail- sumers that the extra cost is worth the extra benefits. able in many retail store including Target, Kroger, Walmart and other smaller retail stores. E. TARGET CONSUMER ANALYSIS They are present on Facebook, Pinterest, Instagram, and Twitter. They use the hashtags “believeinbetter and #fairlife. According to Mediamark Research and Intelligence’s report on milk Fairlife partnered with the Coca Cola Company in 2012 for distribu- in general, women use milk more often than men. This aligns with tion. the social trend of women being the shoppers for the household. The age group statistics are relatively evenly divided. Likewise, the aver- D. COMPETITION age household income of the users are evenly distributed. Overall, the Fairlife will be in direct competition with regular milk product as well results provide insight to the fact that milk users are very diverse and as almond, soy and organic milk. Besides the other milk options, the encompass a wide variety of characteristics. competition includes alternative drink options to milk; this includes, Another source stated that the Fairlife target market was women ages but is not limited to juices, sodas, teas, lemonades, alcohol, energy 25-39 who “aspire to wholesome mindful living.” drinks, and coffee. With the health benefits of Fairlife, the nutritional The anticipated target consumer would be someone who is health supplement drinks are also competition. Products such as Carna- conscious due to the enhanced nutrient benefits of the Fairlife Milk tion Instant Breakfast, Odwalla, Nestle, Yoo-Hoo and Ensure are also product. These people would also be aware of the impact that the competition. With the association with Coca Cola, Pepsi becomes a products they use have on the environment from start to end or from competitor too. “grass to glass.” These consumers are those individuals who like to know where there product comes from and how the processes affect Threats the environment as a whole. They also care about their wellbeing and Possible negative effects from association with Coke brand what they put inside their bodies. They would be moderate to heavy Consumers misunderstanding how the product is made users of milk in general. The target consumer would also be someone If the product takes off then the demand will exceed supply who has the financial ability to spend more on a milk product then Milk sales have declined in the past 4 years they currently do. Competition
F. SWOT ANALYSIS II. RESEARCH OBJECTIVES Strengths Coke’s distribution channels Based on the research that was completed the following questions More Protein have become evident: More Calcium Who is going to buy this product? Less Sugar Are consumers willing to buy a more expensive milk product? No Lactose Do consumers care about the said benefits of the Fairlife Milk prod- Shelf Life of 90 days prior to opening uct? If so which ones? Environmentally friendly and responsible farming practices Are consumers drinking milk regularly? Weaknesses Does the fact that the Coca Cola Company is associated with the Fair- New to the milk market life Milk product bother consumers? More expensive than competition Not organic III. RESEARCH PROCEDURES People do not associate milk with Coca Cola Confusion about Coca Cola’s role The objectives for the primary research that was conducted were: Opportunities Determine who the target consumers should be Brand loyalty from Coke drinkers Determine the important aspects of Fairlife Milk Product to Decrease in soda drinkers the Consumers Lactose intolerant market Learn about the Consumers behavior in correspondence to Current healthy actions trend Milk. Increase in Nutrition supplement use The research strategy in which the objectives were sought after was Premium Milk product through an online survey. The survey consisted of strategic ques- Regular milk is already increasing in price tions whose answers aid in resolving the research objectives. The Environmental awareness survey was distributed to the Facebook accounts that we each have. This method reached a diverse audience based on the fact that we $175,000-$199,999 are friends with different people on Facebook and are from different $200,000 and up areas. The survey was as follows: Where do you live? What is your gender? Urban Male Rural Female What do you drink on a weekly basis? (Please check all that apply.) What is your age? Water 18-24 Milk 25-34 Soda 35-44 Juice 45-54 Alcohol 55-64 Coffee 65 and up Energy Drinks What is your family profile? Other
Single How often do you drink Milk? Single with Kids Married Never Married with Kids Less than Once a Month Once a Month What is your approximate average household income? 2-3 Times a Month Once a Week $0-$24,999 2-3 Times a Week $25,000-$49,999 Daily $50,000-$74,999 $75,000-$99,999 How satisfied are you with your milk product? $100,000-$124,999 $125,000-$149,999
$150,000-$174,999 1 2 3 4 5 6 7 Have you heard about Fairlife Milk product? What are your opinions on a milk product being associated with the Coca Cola Company? Yes No How do you spend your time? (hobbies, work, interests) If you have heard about Fairlife, what do you know about it? IV. FINDINGS If you have heard about Fairlife, how did you hear about it? From our primary research, we learned what a sample of 79 people If you have heard about Fairlife, have you tried it? What are your think about milk in general, as well as their awareness and attitudes opinions on the product? toward Fairlife Milk as a product of the Coca-Cola Company. Would you be willing to pay more for milk if it has these qualities: less The respondents to our survey were predominantly female (78%), sugar, more protein and calcium, no lactose, and farming practices most fell into the age range of 18-24 (46%), and an overwhelming that are sustainable and responsible. amount were single without kids (54%). Yes Maybe No
Please rank the benefits in order of importance to you. Less Sugar More Protein More Calcium Sustainable and Responsible Farming Practices No Lactose
Would Coca Cola Company name on a Milk product deter you from buying it? Yes Maybe No We gathered further information about our survey respondents by one (extremely unsatisfied) to seven (extremely satisfied), the average asking them how they spend their time. The most common responses number was 5.25. While this informed us that most people are mod- to this question were work, school, church, reading, and various out- erately satisfied with their current milk product, it did not provide us door activities including fishing and hiking. with any insight into what respondents are or are not satisfied with.
One goal of the survey was the find the attitudes that respondents How satisfied are you with your milk product? held toward milk in general. We sought to find how often they drink Min. Value Max. Value Avg. Value Standard Deviation Reponses milk, if they are satisfied with their milk product, and what bever- 1.00 7.00 5.25 1.87 61 ages they commonly chose to drink instead of milk. We found that most respondents were heavy users of milk, and a significant amount To discover what respondents were choosing to drink instead of milk, of respondents were extremely light users, but there weren’t many we provided them a list of beverages and asked them to choose which moderate drinkers. To break it down into numbers: 29% of respon- ones they drink over the course of a normal week. While 51% of re- dents said they drink milk “never” or “less than once a month”, while spondents listed milk as one of their choices, the other most popular 43% of respondents said they drink milk “two to three times a week” choices were water (95%), coffee (53%), and soda (52%). Those who or “daily”. listed an ‘other’ option listed tea.
Another goal of our survey was the measure the awareness and at- Only 61 of the 79 respondents chose to share their satisfaction with titudes that respondents had toward Fairlife Milk. When asked if they their current milk product. Of those who did respond on a scale of had ever heard of the Fairlife Milk product, 95% answered “no”. calcium, and less sugar. The least important benefit to respondents ap- peared to be no lactose; 47 people ranked this option with a five.
When respondents were asked if they would pay more for premium milk with the aforementioned benefits, the results weren’t heavily swayed in one direction or the other: 25 respondents answered “yes”, 16 answered “no”, and 37 answered “maybe”. Without having tried the product or having heard much about it prior to this survey, it seemed to be difficult for respondents to decide if they would purchase or not.
Of the 5% who answered “yes”, they attributed their awareness of the product to a commercial on TV, a coupon in the mail, and a setup in Earth Fare grocery store. When these particular respondents were asked what they knew about Fairlife, their answers were:
“High quality milk from sustainable farming” “A healthy milk option” “That it’s made by Coca-Cola” “Not a lot”
From this data, it was apparent that the overall awareness of Fairlife is very low. Even those who had heard of Fairlife Milk did not have much knowledge about the product. Of the 79 survey respondents, only one individual had actually tried Fairlife. The last general goal of our survey was to determine whether or not To gauge which Fairlife benefits would be most appealing to consum- having the Coca-Cola Company associated with Fairlife milk would ers, we asked respondents to rank a list of five benefits (less sugar, have any effect on a respondent’s likelihood to purchase. more protein, more calcium, sustainable and responsible farming The respondents were asked if seeing the Coca-Cola Company name practices, and no lactose) in order of importance, one being most on a milk product would deter them from buying it. The results were important and five being least important. The most popular benefits relatively close: 41% of respondents said it would not deter them, 28% among respondents were sustainable and responsible farming, more said it would deter them, and 32% answered “maybe”.
produce something that would be Farm Fresh” “Doesn’t convince me that anything about it could be healthy since Coke dissolves nails...” “Coca-Cola is bad for your teeth and all around health. Milk is supposed to be good for the body” “I’ve heard some rumors about what coke can do. I don’t know if I trust then to make nutritious enough milk.” “It associates it more with capitalism which makes it less ap pealing”
Overall, it was apparent that seeing Fairlife Milk associated with Coca-Cola would lead a consumer to believe that the milk isn’t as nutritious as it claims to me. The survey also asked respondents to elaborate on their opinions about a milk product being associated with the Coca-Cola Company. V. RECOMMENDATIONS While a few respondents answered that they were indifferent, or that an association wouldn’t matter one way or another, the majority of Based on the secondary research and the primary research that that respondents felt strongly. Some respondents had positive opinions: was conducted the following personas were developed. Sydney Miller is a hard working professional who cares about herself “I would want to buy it more. I love coke!!!” and others. The products she uses are those that will benefit her and “It is nice to see a company try something new” not hurt her. She is successful in what she does and has the expend- “Wouldn’t bother me. FDA approval isn’t a short term process, able income to spend on a premium milk product that provides the nor do I think Coca-Cola would jeopardize their name in any benefits that Fairlife has. The environmental friendliness of the Fairlife way. They must believe in the product” company ensures Sydney that the product she is getting is good for her. The association with the Coca Cola Company does not bother But the majority of comments were from those with highly negative Sydney because she believes that the FDA would find anything that opinions: would potentially cause a negative side to the Fairlife product. Keith Brown is a college student who is an avid Coca Cola fan. He is “With a company that is so associated with something that is interested in Fairlife Milk due to the fact that the Coca Cola Company not good for you I would hesitate to believe that they would is involved in its brand. He is single and enjoys being able to spend his money on himself. Keith Brown is studious and enjoys study breaks that are productive. Fairlife Milk provides an alternative to Coke and provides him the nutrition he needs. He has an expensive taste and the premium spin on the Fairlife Milk product comes with the status he enjoys. His spare time is comprised of cooking, jogging and listen- ing to music. Charlotte Woods is a married mother who teaches elementary school. She is devoted to her family and her job alike. Her schedule is kept busy with the activities of her three children and husband. Charlotte is a strong believer in healthy diets and exercise along with a good edu- cation which she works hard to communicate in the classroom and at home. Hiking and biking are a few of the activities she enjoys with her family. The great ideas for her classroom and home originate from her time spent on Pinterest.
V. RECOMMENDATIONS The information that we suggest Fairlife should publish would be about the farms where the milk comes from. The stories about the Keeping the three personas in mind, the advertising campaign for farmers themselves and their families in addition to the occurrences Fairlife should be molded around the idea of the small farm origin be- on the farm with day to day activities would provide the consum- ing at the forefront. With this being said, the current advertisements ers / followers a story to become interested in. Consumers tend to being used by Fairlife do this in a roundabout way. The T.V. advertise- be drawn toward stories in general but also stories they can relate to. ment discusses the ultra-filtration that the milk undergoes and how Those farmers who have children could bring forth their children’s that leads to more calcium and protein. The visual aspect is the farm- view point on the farm from which the Fairlife Milk comes from. A ers and families with the product. child’s point of view will be taken with more sincerity than an adult who could be saying anything. Our proposition is to build on the “Believe in Better” tagline that they currently have in use. We want to employ multiple advertising tactics In addition to just publishing these stories to the social media ac- to communicate the brand and what it is to our consumers. First we counts, we believe a blog where the farmers can provide more expan- want to increase awareness of the product. In order to do so we will sive stories would be beneficial since social media restricts the length create in store promotional pieces. These will provide an image of a of the posts. A blog would be a medium that the pictures from Insta- farmer on location holding the product with the key benefits of the gram, recipes from Pinterest, teasers from Twitter and much more can product listed. The hashtag #believeinbetter will also be visible. The be woven together to create the story of Fairlife Milk. current website is strong therefore the store promotional piece will also feature the website address in addition to a QR codes that con- An app would also be made available to reach the stories of the farm- sumers can scan on site to drive the consumers there so they can learn ers. In addition, a feature that would tell someone where Fairlife more about Fairlife. products are available would be included in the app design. Links to the various social media accounts would be accessible through the Social media is a prime outlet to use to promote such a product as this app, too. one. Coca Cola has a substantial following across all social media plat- forms. Coca Cola could release content to their social media accounts The television advertisements that we would want to create would regarding the Fairlife product and pushing their large group of fol- mirror the same themes that the social media accounts and the blog lowers to connect with Fairlife’s social media accounts. Alongside this would present. The stories of the farmers and their families on the action by Coca Cola, Fairlife would need to increase their presence on farms where the Fairlife product comes from would be the selling their accounts. They would need to ensure that they are interacting point. The benefits of the Fairlife Milk product would be equally, if not with their followers and providing materials that they want to see on more important than the stories, but the stories would bring consum- their feeds. ers into where they can learn about the benefits. Multiple versions of the television ads would be ran, each version SOURCES focusing on a different aspect of the Fairlife product and the benefits. The versions would be based around the following: Bobby, Shann. “MBA Posts.” PEST Analysis of Beverage Indus- try. 31 May 2012. Web. 1 May 2015.