Thums Up Jack - Ashley Elizabeth Martinez



177800393700center137160000Thums Up JackTeam 9Ian Johnson, Ali King, Ashley Martinez, Rob Papetti, Kate Rolli, Aly RumelTable of Contents TOC \o "1-3" \h \z \u Thums Up Jack PAGEREF _Toc404090257 \h 2Team 9 PAGEREF _Toc404090258 \h 2Executive Summary PAGEREF _Toc404090259 \h 4Part I: Background and Problem PAGEREF _Toc404090260 \h 5Company PAGEREF _Toc404090261 \h 5Marketing Problem PAGEREF _Toc404090262 \h 5Market Situation PAGEREF _Toc404090263 \h 6Product Situation PAGEREF _Toc404090264 \h 6Competitive Situation PAGEREF _Toc404090265 \h 7Distribution Situation PAGEREF _Toc404090266 \h 8Macro-environment Situation PAGEREF _Toc404090267 \h 8SWOT Analysis PAGEREF _Toc404090268 \h 9Part II: Marketing Research PAGEREF _Toc404090269 \h 10Data Collection Method PAGEREF _Toc404090270 \h 10Contact Method PAGEREF _Toc404090271 \h 10Sampling Plan PAGEREF _Toc404090272 \h 10Representativeness, Reliability, and Validity PAGEREF _Toc404090273 \h 10Statistical Tests PAGEREF _Toc404090274 \h 11Perceptual Map PAGEREF _Toc404090275 \h 11Findings PAGEREF _Toc404090276 \h 12Part III: Marketing Strategy Development PAGEREF _Toc404090277 \h 15Target Market PAGEREF _Toc404090278 \h 15Geographic Target Market PAGEREF _Toc404090279 \h 15Marketing Mix PAGEREF _Toc404090280 \h 16Additional Research PAGEREF _Toc404090281 \h 21Action Plan PAGEREF _Toc404090282 \h 22Budgets PAGEREF _Toc404090283 \h 24Controls PAGEREF _Toc404090284 \h 25Appendices PAGEREF _Toc404090285 \h 27Works Cited PAGEREF _Toc404090286 \h 38Executive SummaryA Brief IntroductionWhile Jack Daniel’s sold more whiskey than any company in 2013, increased competition in the US whiskey market threatens Jack Daniel’s long-term domestic growth potential. However, a growing global demand for whiskey presents a unique opportunity to continue product expansion abroad. Jack Daniel’s will increase profitability by increasing market share in India. India offers a rapidly developing consumer market that relishes American tradition and culture. India consumes as much whiskey as North America, Asia, Latin America, the Middle East, and Western and Eastern Europe combined — over 1.2 Billion liters in 2012 (Appendix A). India’s whiskey consumers seek superior quality and elite status offered by western brands. In particular, they desire the American tradition and culture perfected by Jack Daniel’s whiskey (Fortune Magazine).Our product, Thums Up Jack, will introduce the young and upwardly mobile Indian consumer to a traditional western cocktail: whiskey and cola. Thums Up Jack combines a familiar Indian brand, Thums Up, with the American classic, Jack Daniel’s, to create a premium ready-to-drink (RTD) beverage that appeals to the rising middle class consumer’s desire for quality, status, and convenience. After performing extensive market research and analysis, we developed a marketing campaign and implementation plan to launch Thums Up Jack.Market ResearchIndia’s expanding middle class offers a large customer base with increasing disposable income to spend on luxuries such as alcohol. Market research shows the Indian middle class is expected to reach 200 million by 2020 (EY). As a new generation of middle class consumers drives sales, spending is projected to increase by 14 percent (Goyal).Marketing Strategy DevelopmentIndia’s fashion mega star, Sonam Kapoor, said it best, “There are only two religions in India: cricket and Bollywood.” Thums Up Jack will leverage India’s passion for cricket through a sponsorship with the Mumbai Indians and product placements in Bollywood films will highlight the quality and exclusivity of the brand. Through surrogate advertising, these partnerships will create brand recognition without direct reference to alcohol. The current RTD beverage market in India offers alcoholic beverages at an affordable price. Thums Up Jack will be priced slightly above competitors to reflect its high quality and premium brand status. The product will be distributed in retail locations throughout Maharashtra, home of Mumbai and Bollywood, and offer convenience and value for the young, middle class consumer.Final ThoughtsThums Up Jack, a unique product that integrates western tradition into a foreign market, presents a profitable opportunity for Jack Daniel’s. Thums Up Jack offers a one-of-a-kind experience in a market that seeks quality and status. As an introductory product for transitional consumers, Thums Up Jack will increase recruitment to the whiskey category, promoting long-term success for Jack Daniel’s in India.Part I: Background and ProblemCompanyJack Daniel’s Tennessee Whiskey is an American tradition. The distillery, founded in Lynchburg, Tennessee by Jack Daniel himself, is the oldest registered producer of whiskey in the United States. Today it produces enough barrels to supply the entire global demand for the legendary whiskey, and is made according to Jack’s original mission: “Everyday day we make it, we make it the best we can” ().Brown-Forman, located in Louisville Kentucky, owns Jack Daniel’s, the corporation’s flagship product sold around the world. International sales growth is part of Jack Daniel’s strategic plan to cater the firm’s premium products to growing international markets. In a press release from Brown-Forman, the firm achieved double-digit growth during 2014 in emerging economies like Brazil and Russia (“Brown-Forman Releases Q2”). To support their growth plan the firm plans to invest over $34 million into the Lynchburg distillery in the coming years. Additionally, the firm says in their 2014 Annual Report that they “understand that innovation is essential to [their] successful growth and long-term penetration of exciting new markets and categories around the world” (Annual Report 2014).Jack Daniel’s long-term growth is supported by the firm’s ten-year strategy, called Brown-Forman 150, which focuses on driving sustainable growth toward the corporation’s 150th anniversary (Annual Report 2014). As the firm’s most valuable brand, Jack Daniel’s Tennessee Whiskey will work to appeal to consumers worldwide by exploring opportunities for the whiskey’s family of brands within a wide range of price points, channels, consumer groups, and international markets (Annual Report 2014).Marketing ProblemIn the mid-nineties, as part of Brown-Forman’s strategic plan to expand into emerging international markets, the firm entered a joint venture with the Indian firm Jagatgit. The partnership was a key piece of the firm’s overall strategy to expand into “advancing” markets within Latin America, Central Europe, Africa, West Asia, and Asia (“Hindu”). The Indian pact, according to the Wall Street Journal, was a 50-50 venture with the New Delhi based firm Jagatgit: the third largest Indian marketer and producer of spirits (“Brown-Forman Signs”). Through the venture Brown-Forman locally blended two of its lesser brands, Forester 1870 and Early Times, both of which failed to appeal in the Indian market. Eventually in 2002 Brown-Forman announced plans to end its partnership with Jagatgit in favor of directly importing the firm’s flagship international brand: Jack Daniel’s, made exclusively in Tennessee (“Brown-Forman Signs”).Today, Jack Daniel’s Tennessee Whiskey lacks substantial market share in India. Potential reasons for the brand’s slow growth since its initial entry may be due to lack of brand awareness, overt exclusivity, and high price point. Additionally, the brand struggles with extreme tariffs and laws against directly advertising alcohol.Market SituationBrown-Forman’s sales are led by the American whiskey category, mainly Jack Daniels, with a company compounded annual growth rate of 4 percent (Annual Report 2014). Brown Forman’s investors believe the company can keep growing because of its new product lines and fast growing sales in international markets. The United States, Australia, and the United Kingdom comprise 84 percent of Brown-Forman’s sales, growing at a rate of 2.7 percent per year, as shown in Appendix B (Meredith). The rest of the world makes up 16 percent of Brown-Forman’s sales, with annual growth of 15 percent. This shows tremendous potential for future sales growth.Brown-Forman recently entered the Indian market, which consumes 46.7 percent of all global whiskey (Sen). The rising middle class and its increasing disposable income makes the Indian whiskey market extremely lucrative. As incomes rise, the middle class will eventually make up 58 percent of total Indian income (Farrell). In addition to the rising middle class, the young adult population presents a large market within India: people 35 years or under make up 65 percent of the total population (Virmani). Each year, millions of young Indians reach drinking age (Durns). Young adults are the future customer base of the Indian market and offer a huge, profitable market for the alcohol industry.Whiskey is the most popular form of alcohol imported in India and it is currently grows 7 percent per year (The Future). The Indian whiskey industry is worth $10 billion and major alcohol companies from around the world see India as an attractive market (Durns). Despite strong domestic production, foreign whiskey is heavily imported in India because it is viewed as a status symbol. To buy into this status symbol, domestic whiskey brands itself as western and is consumed by the middle class. Foreign imported whiskey costs significantly more than domestically produced brands and has become a product for the elite.Brown-Forman entered India by targeting young people in cities through promotions at rock concerts and partnerships with aspirational brands, such as Harley Davidson (Dalal). Such partnerships helped consumers associate Brown-Forman brands with luxury and fun. Brown-Forman entered with Jack Daniel’s and saw a 20-25 percent growth rate over the first five years (Dalal). Jack Daniel’s initial success helped promote Brown-Forman’s champagne and tequila products in India. Brown-Forman plans to continue to increase its presence in India by launching new products. Product SituationJack Daniel’s leads Brown-Forman’s global sales. According to the Wall Street Journal, sales of the Jack Daniel's trademark grew 4 percent in the last fiscal year, while sales of Jack Daniel's Tennessee Honey grew 35 percent. With over 14 premium brands, the Jack Daniel’s Family accounted for 55 percent of the firm’s 2014 net sales of $3.9 billion and profits of $659 million (Annual Report 2014). For Brown-Forman overall, sales grew 3 percent in the most recent statement and were mainly driven by the Jack Daniel’s brands in developing and emerging economies, specifically Turkey, Russia, Brazil and Indonesia. These and other global economies helped push Jack Daniel’s sales up 10% internationally (Annual Report 2014). Competitive SituationThe demand for whiskey in India attracts leading world spirits companies and boosts many domestic whiskey brands (Appendix C). The Indian government has tried to reduce the demand for alcohol with heavy import taxes, state-specific consumption bans, and prohibition of alcohol advertisements. The industry leaders in India have combat these problems in different ways.United Spirits McDowell’sUnited Spirits, an Indian whiskey company, launched its most popular brand, McDowell’s, in 1968. United Spirits has a total market share in India of 52 percent, which they gained by being a first mover. McDowell’s was the first to launch a single malt whiskey as well as premixed drinks. In 2012, McDowell’s sold 19.5 million cases, resulting in company growth of 21 percent (Top).United Spirits has 75 production locations and a huge distribution network, making their products available throughout India. Its products are sold in retail stores and among the nightlife scene. McDowell’s No. 1 Reserve Whisky sells for $14.99 for a 750 mL bottle (McDowell’s).McDowell’s markets itself by sponsoring multiple events, such as music concerts, football, grand prix, tennis, and derby. McDowell’s also associated itself with foreign brands of beer, perfumes, cigars, spirits, wines, and other lifestyle products. A first mover in the Indian whiskey market and the first company to promote through sponsored events, United Spirits markets its products to consumers who share their passion for ambition and being “No. 1”. ?Allied Blenders & Distillers Pvt. Ltd’s Officer’s ChoiceAllied Blenders, another Indian whiskey company, brands their products with a European style. The company’s branding promotes an image of high status while also tracing their roots back to colonization by Great Britain. Officer’s Choice, a popular brand in India, delivers foreign status with a low price due to domestic production.Officer’s Choice is the largest selling whiskey brand in the world, and sold 18.1 million cases with a growth rate of 10 percent in India in 2012. Officer’s Choice is the market leader in 15 states in India with a national market share of 32 percent (Top). It sells at $4.70 for a 750 mL bottle.Allied positioned Officer’s on a “righteousness” platform. Advertisements ask consumers “to make the right choice in life and awaken the hidden Officer within them” (Officer’s). To market this, Allied produced two short commercials that showed a man standing up for a woman and tying it to the brand. They also advertise by promoting CDs.Jim Beam Teacher’s & BourbonJim Beam is an American company that entered into the Indian market with its launch of Teacher’s scotch. Jim Beam built awareness through Teacher’s and now is launching its flagship brand of Bourbon. Jim Beam plans to launch more of its products in India and to expand its premixed offering (Dhamija).Teacher’s sold 440,000 cases in 2012 and grows at a compounded annual growth rate of 24 percent (Knight). Beam’s revenue from India is $47 million and has a 0.1 percent share of the spirits market (Knight). When Beam initially brought in Jim Beam Bourbon, it sold at a significantly higher price of $20.50 for 750 mL bottle. To reduce the cost by 25% percent, the corporation began bottling the bourbon in India (Dhamija). The Bourbon is sold in Gurgaon and Kolkata.Jim Beam recently partnered with Delhi Duty Free to offer an exclusive “Bachelor Pad” to Beam consumers. The promotion gives Jim Beam customers the chance to win gifts with every purchase (Morgan).Distribution SituationIndian regulation is extensively complicated and varies from state to state. Alcoholic beverages have additional distribution regulations above other products because of the conservative government. According to India Consumer, 70 percent of the liquor consumption in India takes place in states that control its distribution networks. Some of these states sell products through their own stores or allow free reign of retail. If the state doesn’t control the distribution network, it is either free or the sale of alcohol is banned within that territory. In Appendix D you can see that India has one of the most difficult regulatory environments in the world.In other international markets, Brown-Forman employs one of three strategies. In some countries, Brown-Forman owns and operates distribution networks and sells products directly to retailers. In other markets, the corporation sells a brand to a wholesaler that then sells to retail customers and consumers. Finally, Brown-Forman also partners directly with a supplier in the host country (Annual Report 2014). See Appendix E for an Indian city distribution network.Macro-environment SituationThe Indian government has placed a 150 percent import tax on liquor, which provides a large entry barrier for foreign companies. The 150 percent tax is only on entering the country and there are additional taxes when the product moves through the different states. The end price of a product from a company outside of India is significantly higher than a domestically produced beverage.In addition to maintaining a high import tax on alcohol, the Indian government has banned alcohol consumption in certain areas and requires special licenses to sell alcohol. As a result, India records a lower consumption rate than most western countries with 60 percent of Indian men and 90 percent of women abstaining from alcohol throughout their lives. In recent years, drinking habits have evolved and consumption is rising (Sinha). Men consume significantly more alcohol than women: an average male drinker consumes 33 liters of alcohol a year while the female consumes 11 liters. Both men and women, however, show a preference for hard liquor. Over 93 percent of alcohol consumers in India prefer hard liquor to beer and wine (Sinha). Women have a much lower consumption rate than men because traditional Indian society frowns on women drinking alcohol. Recently, there has been a notable shift in the society of India with the increased acceptance of women drinking alcohol. Women are becoming more independent in the urban cities and liquor manufacturers are starting to target alcoholic drinks towards women. An Indian government research body determined that less than 5 percent of women drink, but this figure is predicted to rise by 25 percent in the next five years (Gupta).Another trend happening in India is the shift from rural to urban concentration. Currently, 68 percent of Indians live in rural populations, but urban populations show the largest growth over the next four decades (Rural). Between 2010 and 2050, India will add 497 million to its urban population (India). Alcohol consumption is much more widely accepted in urban areas, which indicates ideal conditions for Brown-Forman to further penetrate the market.SWOT AnalysisStrengthsJack Daniel’s has become an international “megabrand” by serving as an iconic American whiskey (Fortune Magazine). The company maintains its status as a premium whiskey brand by promoting its classic, Southern heritage and small-town authenticity. A distinct “smooth and smoky” flavor and easy-to-recognize labeling and packaging further emphasize Jack Daniel’s point of difference. The company has now expanded into over 160 countries worldwide, demonstrating a growing global presence as a leading whiskey producer.WeaknessesWhile Jack Daniel’s price premium reflects high product quality and brand exclusivity, it may deter a significant share of whiskey consumers, leading to smaller market share in the global whiskey market. The product is also seen as an upper-class American whiskey, potentially lacking local appeal of foreign consumers uninterested in western whiskey brands.OpportunitiesAn increased global demand for whiskey creates new opportunities for product innovation at Jack Daniel’s. Jack Daniel’s is an ideal whiskey for mixed drink beverages, offering strong co-branding potential with other beverage companies. Similar to co-branding partnerships, Jack Daniel’s has the ability to form international sponsorships through sporting events and music festivals. There is also an inherent ability to increase customer lifetime value in foreign countries through international expansion. ThreatsWhile new product development opportunities and potential for international expansion present promising opportunities for Jack Daniel’s, they also may lead to potential risks. New partnerships and co-branding campaigns with other beverage companies could harm Jack Daniel’s current status as an exclusive American whiskey brand. There is also an inherent risk of increased competition in both the U.S. and international whiskey markets from new entrants. Intense competition for market share from well-established domestic players is also a notable risk when looking to expand into a new foreign landscape.For a visual representation of the SWOT analysis, please see Appendix F. Part II: Marketing ResearchOptimization of the four P’s is crucial to driving sales of Jack Daniel’s in India. Since little data is readily available regarding India’s alcohol trends, additional analysis is required. The demographics, psychographics, purchase habits, lifestyles, and geographic density of India’s population are necessary to determine a target market. This data is useful in creating a marketing strategy that neither offends consumers nor discourages purchasing. Additional details regarding Jack Daniels’ current product offerings in India, benefits and disadvantages of Jack Coke mixed drink, brand recognition, product reputation, market position, pricing, and current product use determine Jack Daniel’s current market status.Detailed knowledge of alcohol regulations across India is of utmost importance for legal implementation of future marketing campaigns. Understanding competitors’ positioning strategies, customer bases, business practices, and marketing channels generates credibility for proposed marketing efforts in India. Finally, tracking trends and perceptions of nonalcoholic players provides an innovative opportunity to penetrate the market through potential partnerships.Data Collection MethodSince our resources are limited, conducting a survey is an inadequate means of gathering information about India’s alcohol consumption. The sample size of India-born persons within our reach is too small to be significant. According to Bloomberg BusinessWeek, the Kelley School of Business at Indiana University in Bloomington has an international student population of 4 percent; approximately 200 students. Any answers gathered from this miniscule population would represent a reporting bias. This is because the Indian population present in America has been more heavily exposed to Jack Daniel’s and other American whiskey brands. Consequently, their perception of Jack Daniel’s varies greatly from when they were in India due to increased exposure. Rather, historical data and statistical databases are the best way to gather information on the target market. This will prove effective since the United Nations’ databases and India’s consensus data are detailed and thorough. In addition, there are many successful cases of alcoholic beverage companies improving their market standing in India.Contact MethodSince no survey is to be conducted, research will be gathered from the United Nation’s online database, Government of India’s 2011 Census, and the Internet.Sampling PlanThe sampling units include alcohol consumers, primary household shoppers, and venues currently selling alcohol. Data collected from sources listed above will represent a random sampling.Representativeness, Reliability, and ValidityData gathered by the 2011 Government of India Census is representative of the target population we seek to access. The Indian government has one of the highest participation rates in the world. Survey results are collected by enumerators who travel across India to people’s personal abodes and manually input all survey results (History of Census in India). Enumerators translate survey questions and guarantee participation from illiterate members of the population. Since the sample size of data gathered by the Indian government in 2011 was 1.2 billion, it is sufficiently large enough to form reliable conclusions.Specific information regarding India provided by the United Nations is from 2012 and takes into account the entire population of India as required by the Indian government. This validates its representativeness, reliability, and validity. However, any additional research gathered from the Internet will need to be selected with extreme caution since sampling could be unrepresentative or biased.Statistical TestsWe predict a majority of alcohol consumers to be literate, middle class singles aged 25 to 40 and assume an overwhelming preference for domestic whiskey. We presume a positive correlation between the rise of middle class consumers and increased hard liquor consumption. Data collected from the United Nations’ 2013 database was used to conduct a linear regression analysis and correlation testing. Notably, the United Nations’ dataset is missing values for certain variables resulting in foreseen error.Variables taken into consideration were population (in billions); population growth (percentage); population density (per square kilometer); mobile-cellular telephone subscriptions per 100 inhabitants; percentage of individuals using the internet; Coke consumption (thousand metric tons); and ethyl alcohol and other spirits denatured imports and exports in USD, weight (kg), and quantity (Appendix G). The regression analysis generated an R square value of 1, which is likely incorrect due to the absence of certain variables, but insinuates a good model since R square is greater than 0.5 (Appendix H). Correlation analysis determined a strongly positive correlation between imports of hard liquor and population growth (0.68); a medium strength correlation between hard liquor and Internet use (0.40); and a weak positive correlation between hard liquor and mobile-cellular telephone subscriptions (0.24). See Appendix I for a detailed overview of statistical analysis.Although data on the specific annual population size of India’s middle class could not be found, EY expects India’s middle class population to increase steadily through 2020. Currently, the middle class population is approximately 50 million people or 5 percent of India’s population. EY expects this value to increase 400 percent to 200 million in 2020 (EY). Since the middle class population in India is consistently growing and the overall Indian population growth compared to hard liquor imports has a strong positive correlation, our hypothesis is affirmed. The rising middle class is positively correlated with an increase in whiskey sales.Perceptual MapJack Daniel’s is known as a Tennessee tradition. Its whiskey is marketed as liquor made by the independent spirit for the independent spirit. Drop-by-drop, the distillery charcoal mellows its whiskey before letting it age in handcrafted barrels. The whiskey is only ready when the tasters declare it so. Calendars are never used because Mr. Jack Daniels himself judged his whiskey using his senses. Unlike its competitors, Jack bottles never list ages, but instead follow a maturity system.Jack Daniel’s is positioned as a “high priced” alcohol in India due to its premium quality and a 150 percent import tax imposed on alcohol (Immihelp). It is sold at $33USD (duty-free) in Delhi (Delhi Duty Free). Jack Daniel’s is recognized as a famous American whiskey and an iconic brand, and its No. 7 Brand is often marketed as a great complement to Coca-Cola (Whiskey Market Place India). However, Jack Daniel’s market share in India is relatively small compared to other whiskey products. Its competitors dominate the market due to their affordability and western branding. McDowell’s, Allied Blenders, Officer’s Choice, and Teacher’s are seen by as more affordable western brand alternatives to Jack Daniel’s. See Appendix J and K for details.FindingsCharacteristics of the Rising Middle ClassMcKinsey & Company predicts economic growth of 7.3 percent in India between 2005 and 2025. This means 41 percent of the population (583 million people) will belong to India’s middle class in 2025 (Appendix L). The middle class has been deemed the predominant force behind increased consumer spending in India, as their household disposable income has more than doubled since 1985. With increased disposable income, the middle class will account for 59 percent of India’s total consumption by 2025. An increased demand for discretionary and luxury items is marked by a desire for higher product quality and innovation (Mukherjee and Satija).According to the National Council for Applied Economic Research, the Indian middle class possesses annual household incomes of $4,000 to $21,000 USD. By this definition, the middle class will be the largest segment of India’s population within ten to fifteen years (Mukherjee and Satija). The Indian middle class is dominated by an educated group of white-collar workers from urban societies (Maitra). With their newfound wealth, the legal-aged middle class consumer is seeking higher quality whiskey over cheaper, western imitators (Business Today).Alcohol RegulationsThe legal drinking age and other alcohol regulations vary greatly from state to state in India. The average legal drinking age is 25, but is as low as 21 in some states. Alcohol is most frequently sold in liquor stores, restaurants, hotels, clubs, and bars. Some states also allow alcohol to be sold in grocery stores and department stores (Constitution Society). The legal drinking age in Maharashtra is 25, and there are approximately 15 ‘dry days’ in the city where alcohol sales are banned (Maharashtra State Excise). Although it is not illegal for women to purchase alcohol, it is negatively viewed by society in some states. Nonetheless, the consumption of alcohol by women is not discouraged (Pidd).Advertising alcoholic beverages on Cable Television Networks is banned throughout India according to the Amendment Bill of September 8, 2000. However, private channels will sometimes permit surrogate advertising (Alcohol Web India).Current Indian Whiskey MarketIndia consumes over 1.6 billion liters of whiskey each year and ranks in the top ten for whiskey consumption on a per capita basis. Although India consumes the most whiskey on a global scale, their consumption of US whiskey is extremely low at a per capita basis of 0.0001 liters per year, per person (Ferdman). Whiskey CompetitorsThe top ten whiskey brands in India are Blender’s Pride, 8pm, Hayward’s Fine, Original Choice, Imperial Blue, Old Tavern, Bagpiper, Royal Stag, McDowell’s No. 1 Reserve, and Officer’s Choice (Hopkins 2014). However, the best selling Whiskey brands in order of highest to lowest sales volume are McDowell’s No. 1, Officer’s Choice, Bagpiper, Royal Stag, Old Tavern, Original Choice, Imperial Blue, Haywards, 8PM, Director’s Special, Blender’s Pride, Gold Riband, McDowell’s Green Label, Director’s Special Black, and Signature (rediff Business). Based on the above information, Jack Daniel’s biggest domestic competitors are McDowell’s No. 1, Royal Stag, Bagpiper, Royal Stag, and Old Tavern.Potential Co-Branding PartnerCoca-Cola plans to invest five billion dollars in India by 2020. The company is looking to increase its presence due to the fast growing environment. Indian consumers fall behind other international consumers by drinking (on average) 12 Cokes per year versus 230 in Brazil and 92 globally. The money will be used to expand capacity at bottling facilities and distribution centers. Coca-Cola’s market share in India grew 20 percent in 2012, and steady growth is expected to continue (Gulati and Ahmed).Coca-Cola partnered with Brown-Forman in the early 2000’s on a co-branding initiative between Coca-Cola and Jack Daniel’s. The mixed drink, better known as Jack & Coke, enhanced the branding image of both beverages. Before the new drink was introduced to the US, Jack Daniel’s was seen as a redneck favorite and Coca-Cola was deemed a beverage for the youth. Jack & Coke catered to the middle class consumer: a young adult who had just reached legal drinking age. While the beverage was targeted toward the 21-35 year old age group, it grew to be a favorite for all generations (WordPress).Coca-Cola purchased the Thums Up brand in 1993, and it is now the most popular Coca-Cola product in India (Hughes). Its market share in August 2013 was 15.3 percent, second to Sprite at 15.6 percent (Bhushan). Thums Up continues to dominate in India, capturing 42 percent of the Cola market in 2013 (Hughes). Marketing efforts surrounding the product are aimed toward appealing to the 25-35 year old crowd with statements such as, “Thums Up is known for its strong, fizzy taste and its confident, mature and uniquely masculine attitude. This brand clearly seeks to separate the men from the boys” (Hughes). After a very successful co-branding relationship with Jack Daniel’s in the past, it is likely that Coca-Cola will agree to an additional co-branding relationship.Jack & CokeJack Daniel’s Old No. 7 is mixed with Coca-Cola to create the mixed beverage, Jack & Coke. Packaged in an aluminum can and sold for $10USD in the US, this drink contains 5 percent alcohol — about half as much as the average Jack Coke mixed at home (Gordon). Although the drink is not readily available in India, many Indian consumers know Jack Daniel’s as the ideal whiskey for mixing with Coke (Whiskey Market Place India).Mixed Drink PlayersBacardi BreezerBacardi Breezer is Bacardi rum and fruit juice in 270-mL bottles with 4.8 percent alcohol. Bacardi launched the product in Goa for Rs 35 and Mumbai for Rs 40. It has a 97 percent market share, selling over two million cases annually and experiencing a 25 percent compounded-annual growth rate (Dhamija). Bacardi created the ready-to-drink (RTD) category to attract younger consumers and transition them from drinking soda to hard alcohol. As a rum product, Bacardi aims to attract consumers away from whiskey and hopes to do this by customizing the drink to Indian consumer preferences. Current flavors offered in India are the aam panna (green mango) and nimbu paani (lemonade). Bacardi plans to roll out new Indian flavors over the next year (Dhamija).Smirnoff IceSmirnoff Ice moved into the Indian market after Bacardi Breezer with its Smirnoff Ice Black and Smirnoff Ice Original in 275 mL bottles. Smirnoff launched the product in Goa for Rs 75 and Kanataka for Rs 110. Since Smirnoff entered the market in October of this year, market share information is not yet available. Smirnoff Ice is targeting the male consumer, raising its alcohol content to 7 percent to reflect a “manly presence”. Smirnoff Ice is used as a way to introduce vodka to a younger crowd that usually drinks beer, eventually transitioning them towards hard alcohol.Smirnoff Ice also markets its product as the “before the party drink” with the slogan, “Start the night, break some ICE”. Consequently, this campaign promotes a brand essence based on spontaneity and fun (Bisaria). Smirnoff is utilizing marketing channels such as store events, point-of-purchase displays, and digital media.Teacher’s & ColaTeacher’s & Cola is a scotch and cola RTD beverage produced by Jim Beam and is the only brown-spirits based RTD in India. It was launched in Mumbai, Goa, and Daman, priced at Rs 100 for the 330 mL drink. Teacher’s is the highest selling scotch brand in India with 30 percent market share (Nielsen). Beam’s strategy was to launch the RTD after its Scotch Whiskey and Single Malt to cover to multiple consumer demographics. Teacher’s is positioned as a day drink for young people with its low alcohol content (Mazumdar). See Appendix M for a perceptual map of the mixed drink industry. Part III: Marketing Strategy DevelopmentTarget MarketThums Up Jack targets the upwardly mobile, young Indian consumer. With a swelling middle class expected to reach 200 million people by 2020, India offers an enormous market with increasing disposable income (“Middle Class Growth in Emerging Markets”). Historically, the alcohol industry experiences the greatest increases in demand from the emerging middle class because consumers have greater disposable income (Drinks). Middle class incomes are projected to comprise 58 percent of total Indian income by 2025, which leaves middle class consumers with extra money for indulgences like alcohol (Farrell). In addition to the increase in size, middle class consumer expenditures are set to grow at 14 percent in India with a new generation of spenders as the main driver (Appendix N) (Goyal). India’s Gen I is going through the equivalent of the United State’s Baby Boomers. India’s Gen I grew up during India’s economic liberalization, fostering a belief of “living in the present and personal indulgence” (Amotabh). The RTD beverage category fits the lifestyles and decisions of the rising middle class. The RTD category has already witnessed a 30 percent growth increase due to “the growing young adult population, high disposable incomes, and higher aspirations” (Outlook Business). Harish Moolchandani, MD of Beam India, notes the match between RTD beverages and the middle class consumer: “RTDs are a ready-made fit for their lifestyles. They are easy to carry and consume” (Kulshrestha). The demand in the RTD segment is led by consumers aged 25-35, particularly urban professionals (Kapoor). Thums Up Jack, a premium RTD beverage, appeals to the tastes of the expanding middle class.Geographic Target MarketMaharashtra, with a population of 112,372,972, is our primary target region for implementation in India. Mumbai, the capital of Maharashtra, contributes to the wealth of the state as it houses the headquarters of most corporate and financial institutions. Maharashtra is the most industrialized state in India, but also offers the glamour of Bollywood — bolstering a diverse consumer base that will be best exploited through segmented marketing.??? Maharashtra’s perception of America is positive, as seen in their welcoming of foreign brands such as Starbucks and Wal-Mart. Young, upwardly mobile professionals with extra cash enjoy the status of American products, specifically whiskey. Maharashtra’s legal drinking age is 25 and they are the second largest consumers of alcohol on a per capita basis by state. The official language of the state is Marathi, but English is somewhat common in urban areas of the state. The state had a per capita income of $1,600 in 2011. Starbucks targeted Maharashtra in their implementation plan because of its development, wealth, and positive perception of American products. No other state comes close to Maharashtra in these regards (The Times of India).?????? ??? Moreover, Bollywood exemplifies Maharashtra’s positive attitude toward American culture and products. Adoring fans throughout Maharashtra clamor over their favorite movie stars in fan clubs and at social gatherings. Effective marketing through Bollywood — utilizing product placements in films or by way of a celebrity endorsement — will have significant impact on the potential consumer (Mid-Day).PositioningThums Up Jack will compete in the RTD market, which is positioned towards the young adult population with disposable income. The young adult population makes up the largest segment of the Indian population, providing an enormous target market for Jack Daniel’s (Appendix O). Ready-to-drink beverages are seen as an entry drink that will eventually lead to the consumption of higher alcoholic drinks, such as whiskey. There is an increasing demand for RTDs in India because of the convenience they provide and due to a shift in consumer preferences for more readily available mixed beverages.Currently, Bacardi Breezer dominates the Indian RTD market with over 97 percent share in the domestic market (Dhamija). Other direct competitors such as Smirnoff Ice or Sniffers Vodka all target the same market segment: the decisional young adult just entering the spirits market. Bacardi Breezer is for those who want to “sip a little something that makes you feel just a little bit ‘breezy’…” (Preethven). Other reviews agree that the product appeals to women and other consumers looking for a mild drink and who are attracted to the flashy colors and flavors (Preethven). Teachers & Cola, the only RTD whiskey beverage in the Indian market, takes a different approach with a simple can design and only two flavor offerings. Thums Up Jack creates a unique space for itself in the Indian RTD market with its premium beverage status.Thums Up Jack appeals to the Indian desire for western brands by introducing the consumer to an American tradition: Jack & Coke. The modern Indian views alcohol as a status symbol. Purchasing whiskey is a sign of affluence and success, and people in India are willing to spend a higher portion of their income on luxury spirits (Business Today). The Indian population regards domestically-produced whiskey as “primitive and reserved for the poorest of the rural population.” Indian consumers instead prefer spirits with distinct western branding, which they associate with status and quality (Business Today). By leveraging the distinct Jack Daniel’s brand, Thums Up Jack will remind Indian consumers of a timeless western classic. Appendix P details Thums Up Jack positioning in the whiskey category.Marketing MixPrice Pairing Jack Daniel’s with Thums Up Cola presents inherent risk when considering how the customer’s perception of Jack Daniel’s will be affected by pairing with a lower status cola. Indian consumers perceive Jack Daniel’s whiskey as a high quality brand and are willing to pay a price premium. However, creating a product in the RTD category means Thums Up Jack must remain relatively price competitive. Thums Up Jack will be sold for 150 Rupees (Rs), which converts to $2.40 at a conversion rate of $0.016 per Rs. The price is set at a small premium compared to the other pre-mixed drinks because Thums Up Jack is one of only two premixed whiskey beverage options. As shown in Appendix Q, 150 Rs provides the highest profit because it is at the last point where it continues to increase purchases with the increase of price. If the price were to go any higher, a significant drop in purchases would happen. This table is built off the assumption that as prices increase, purchases will decrease due to the price sensitivity of consumers.ProductThums Up Jack is a new product extension for Jack Daniel’s: a premixed RTD beverage comprised of whiskey and Thums Up Cola. Thums Up Jack is the perfect combination of a familiar Indian brand, Thums Up Cola and an American classic, Jack Daniel’s No. 7. Similar to most beverages in the RTD category, the product will contain approximately 4.8 percent alcohol by volume. Sold in cardboard packages containing six glass bottles, Thums Up Jack is a convenient and tasteful selection for the young middle class socialite. The initial product launch will be limited to one flavor, which will be traditional Jack and cola. However, Thums Up Jack presents infinite opportunity for evolution with endless flavor developments. ack Daniel’s sells thousands of premixed “Country Cocktails” in fan-favorite flavors such as “Downhome Punch”, “Lynchburg Lemonade”, “Watermelon Punch”, and “Berry Punch” in the US (Pfrang). The design team at Brown Forman remarks on the upbeat, friendly branding of the product: "[We wanted to] unite the brand's signature black with color, flavor iconography, and refreshment cues to introduce a new consumer to the Jack Daniel's trademark” (Pfrang). Similarly, Thums Up Jack will benefit from branding that merges the Thums Up and Jack Daniel’s logos for a distinct, iconic package that familiarizes customers with the Jack Daniel’s trademark.Thums Up Jack also offers decisional Indian consumers a lower-price entry point to taste a first-class liquor brand. The premium and easy-access product offers long-time growth potential for Jack Daniel’s by introducing consumers to the brand early on. By partnering with Thums Up, a brand familiar to millennials, Thums Up Jack will attract decisional young adults who are transitioning into the alcohol market. Over time, the consumer will graduate from the RTD category, but their brand loyalty to Thums Up Jack will make Jack Daniel’s whiskey a logical choice as they trade up in the alcohol market.PromotionSales PromotionsOur IMC campaign for Thums Up Jack will utilize very a selective sales promotion strategy. We intend to leverage Jack Daniel’s brand reputation as a premium American whiskey by executing sales promotions in exclusive settings, such as an upscale Jack Daniel’s viewer box at professional cricket matches.Since the target market may not be familiar with the idea of a whiskey-cola mixed beverage, sales promotions will include free product samples to introduce Thums Up Jack to new consumers. Product samples will be distributed in smaller, four ounce cans. While regular Thums Up Jack beverages will be packaged in glass bottles, we recommend using cans for safe transportation and easy distribution of product samples. We will also run contests advertising free prize giveaways to increase consumer familiarity with the Thums Up Jack brand. Prizes will include Jack Daniel’s apparel and merchandise to increase brand recognition and product familiarity in India.Despite the unique strengths of Thums Up Jack, a partnership with Thums Up could potentially harm Jack Daniel’s status as a premium whiskey product. We intend to partially mitigate this risk by relying on exclusive sales promotion events, such as cricket viewing events in the Jack Daniel’s premium viewing lounge, that promote Thums Up Jack as a casual yet exclusive mixed beverage, ideal for the rising middle class consumer. Where we promote our product is just as important as which promotional strategies we use, since the setting can create a memorable frame of reference for consumers.Our sales promotion strategy will avoid tactics such as coupons and product rebates. We intend to avoid marketing Thums Up Jack as a cheaper, price competitive drink that is easily accessible through coupons and rebates. Instead, product exclusivity is extremely important. Jack Daniel’s brand strategy is centered on maintaining exclusivity. At one point in time, the company actually spent money on ads to tell people they could not get Jack Daniel’s. This message was intended to demonstrate that the company would not compromise the quality of their product simply to meet demand, so customers could be assured that when they bought the product, it would be the “one and only” Jack Daniel’s (Fortune Magazine). We will similarly stress high product quality for Thums Up Jack by ensuring Indian consumers that once they try Thums Up Jack through one of our product samplings, they will choose it as their go-to mixed beverage. Advertising SpendingJack Daniel’s has historically followed a low-budget advertising campaign, which stressed authenticity and simplicity (Fortune Magazine). However, the company’s advertising budget and global marketing team has grown at a steady rate and have now expanded sales into 160 countries (Telegraph).In order to capture significant market share in India’s growing whiskey market, we recommend a ten million dollar advertising budget for Thums Up Jack. Major anticipated budget expenses include: a sponsorship with a professional cricket team, product placement contracts with Bollywood film companies, and point-of-purchase advertising materials.Optimal Marketing BudgetA solver optimization model determined how much of the ten million dollar advertising budget would be used for each strategy (Appendix R). The marketing strategies evaluated include: free samples, social media contests, a sponsorship of the Mumbai Indians, product placement in a Bollywood film, and point-of-purchase advertising.A sample of Thums Up Jack would be sold in a can and smaller quantity. This reduces the cost to produce from $1.40 to $0.65. For every person who would sample Thums Up Jack, 75 percent would make a purchase at a price of $2.40. The determination for the cost of social media campaign is the average of past events. Past social media contests were able to reach 4,000 people per week and 12% of viewers are likely to make a purchase after participating (Leveraging). These strategies will not be implemented because they do not possess the desired return for the cost it creates.The Mumbai Indians sponsorship will cost $4,176,610.68 for the season determined by a recent cricket sponsorship that lasted for three years (Gollapudi). The Mumbai Indians have ten million fans and compete with seven other teams (Ambuj). Taking the assumption that all teams have the same number of fans, 80 million people will view Brown-Forman’s sponsorship for the season. A viewer has 1.5 percent rate of purchasing Thums Up Jack. A constraint of 1 is used because Brown Forman can only support one team. Product placement in Bollywood costs, on average, $1,250,000 and an average of 13,750,000 people will view one film. The likelihood we estimated of a customer seeing Thums Up Jack in the film and buying it is 0.1 percent (Product). The point-of-purchase advertising in retail stores is estimated to be $75 per store. There are 121,139 stores that Thums Up Jack could be sold in, making this number our constraint (Mumbai). The number of people who view Thums Up Jack is derived from average store traffic. We estimated the likelihood of purchasing to be 1.9 percent. The likelihood of purchasing is higher because people are already in the store shopping and the advertising can trigger impulsive buying.The solver optimization model illustrates that 11,949,263 purchases will happen from a cost of $10 million.Our budget proposal also accounts for the fact that we will be sharing advertising costs with through our co-branding partnership with Thums Up. Thums Up is owned by the Coca-Cola Company and has gained 42 percent market share in India’s cola market since 2012 (SeriousEats). Jack Daniel’s has worked closely on co-branding campaigns with Coca-Cola in the past — creating a similar mixed beverage that is popular both in the United States and overseas in countries such as Britain and Australia (SeriousEats).Message to CustomerJack Daniel’s has historically communicated a very simple message: product quality and heritage are most important. The brand has increased exclusivity by advertising their product as a hard-to-get, limited supply item. Such an approach has led to a surge in the demand for Jack Daniel’s and has proven to be an incredibly successful communication message. It is essential that Thums Up Jack does not jeopardize Jack Daniel’s brand status as a premium distilled whiskey.The communication message for Thums Up Jack will be simple and easy to understand: we offer the highest-quality American whiskey with an added benefit — we are sharing the American tradition of drinking Jack and Cola with Indian whiskey consumers. This particular message behind the Thums Up Jack campaign is essential to the success of our product. Indian consumers should feel as if they are taking part in a western tradition that has been shared for hundreds of years. As India’s economy has experienced rapid growth, demand for western spirits has surged (Economic Times). Indian consumers are demanding western alcohol brands, presenting a unique opportunity for Jack Daniel’s to gain consumer loyalty through a sentimental advertising campaign.Advertising MediaWhile it is currently illegal to publicly advertise alcohol in India, many alcohol brands have seen major success through surrogate advertising. For example, Shaw Wallace Breweries began indirectly marketing its Hayward’s 5000 beers in 2005 by creating a Hayward’s 5000 soda, which looked identical to the beer label. Sales of Hayward’s 5000 beer more than tripled one year after Shaw launched its soda brand (Wall Street Journal).During the initial launch of the Thums Up Jack, our IMC campaign will leverage the Thums Up brand in a very similar way, creating brand recognition for our beverage without directly stating its alcohol content. However, the campaign will not rely on television advertisements. It will instead utilize three unique advertising mediums: sponsorships through professional cricket games, product placements in films, and point-of-purchase displays. We plan to strategically increase consumer reach and maximize the overall effectiveness of our advertising campaign through the following:1. Professional Cricket SponsorshipsAs humorously suggested by India’s fashion mega star, Sonam Kapoor, there are only two religions in India: cricket and Bollywood. Cricket is not only India’s most popular sport, but is also the most viewed. More than 176 million Indians watched cricket in 2010 — and that number is continuing to grow (Times of India). Thums Up will use a surrogate advertising strategy by sponsoring the Mumbai Indians, a popular professional cricket team in the Indian Premier League. We will hold an exclusive Thums Up Jack viewing box at their matches: The Thums Up Jack Viewers Lounge. Fans will pay a premium ticket price to gain access to this exclusive box, where they will receive a comfortable, upscale viewing environment for the match. Fans will also have the opportunity to try free product samples and learn more about the Thums Up Jack brand and the authentic southern tradition behind Jack Daniel’s. The Thums Up Jack Viewers Lounge closely parallels Jack Daniel’s reputation as an exclusive, high-quality brand.2. Product Placement in FilmsProduct placement of alcohol brands in Bollywood movies has become increasingly popular. Such a strategy serves as a highly effective marketing communication tool. Alcohol brands have been actively presented in films, helping to ensure that viewers recall and recognize the brand at the time of purchase (Hindu Business Line). When selecting a suitable film for Thums Up Jack, we will base our selection on whether the film successfully captures our target market. Since we are marketing Thums Up Jack toward a young rising middle class, our film selection must cater to their specific preferences.3. Point-of-Purchase DisplaysAs the alcohol industry has become highly competitive, point of sales marketing is an effective marketing tool that has become increasingly popular (University of Wollongong). Furthermore, the majority of point-of-sales ad campaigns for alcohol products compete directly on reduced prices and free product giveaways (USA Trade Press).Our point-of-purchase advertising campaign will use in-store displays to create a unique point of difference for the Thums Up Jack brand. Instead of competing on lower prices, we will creatively tell the Jack Daniel’s story to the customer at their point-of-purchase. By creating a narrow, easy-to-construct cardboard shelf for in-store display purposes, we will tell the story of Jack Daniel’s through images and text on the cardboard shelf. Historically important dates, individuals, and milestones of Jack Daniel’s will be artistically written and drawn across this cardboard canvas, sharing with Indian consumers the history behind a western tradition and American classic: Jack & Cola.?PlaceRetail outlets such as grocery stores and supermarkets offer an ideal distribution channel for the evolving Indian alcohol consumer. Bacardi Breezer, the leader in the Indian RTD category, has witnessed huge volumes of sales since they launched the product in retail outlets. Their sales data shows that consumers tend to purchase in large quantities from the retail outlets, instead of just one or two cases (Kapoor). From Bacardi’s success, we can predict that Jack Daniel’s will see similar returns from launching Thums Up Jack in the retail category.What’s more, many retail outlets have started selling alcohol (Progressive Grocer India). Vikram Achanta, co-founder and CEO of the online bar guide Tulleeho, attributes the changes in the retail environment to the increased availability of alcoholic beverage brands and the evolution of the Indian consumer (Bhagat). Furthermore, Thums Up Jack’s target market prefers to shop at modern stores, making retail outlets a convenient place to distribute the product (Bhagat). With the rise in alcohol departments and the evolution of the Indian alcohol consumer, retail outlets present an opportunity for strong growth.Distribution through retail outlets requires careful adherence to state sourcing laws. Alcoholic beverages may only be sourced via registered distributors, and transportation to stores is only allowed through TPs, or transport permits issued by the state’s Excise Office (Bhagat). Regulations vary state by state, so Jack Daniel’s will need to conduct research on the evolution of state laws in order to determine ideal locations for future product launches. Currently, Delhi, Chandigarth, Goa, Maharashtra, West Bengal, and Karnataka allow liquor sales in supermarkets and grocery stores (Bhagat). Distribution through retail outlets presents a promising opportunity for increased sales and is worth the extra cost and effort to continually monitor and abide by the changes in state regulations.Additional ResearchBefore introducing Thums Up Jack to the Indian market, Jack Daniel’s should conduct additional research to track consumer preferences and competitors. Researchers should consider the current Teacher’s & Cola consumer: What does the customer like and dislike about the current whiskey and cola offering in the market, and how can Jack Daniel’s capitalize on these weaknesses to differentiate its brand? Personal interviews, surveys, and product review sessions will provide necessary consumer insight. Additional research should include further observations on how young Indian members of the middle class shop for alcohol. Preliminary online research answers questions such as: Do these consumers prefer retail grocery markets or liquor stores? Do they shop alone or with friends? Do they buy in bulk, or just for the evening? Primary data collection on-site in India will expand knowledge about the consumer’s shopping habits and decision processes to help Jack Daniel’s meet consumer needs.If the following proposal is approved, we recommend contracting Accel Knowledge and Market Resonance to conduct an in-depth market analysis for Jack Daniels in India. Accel Knowledge specializes in market entry, branding, product development, concept testing, and pricing analysis. The market research company operates in 36 countries and has worked for Coca-Cola, Johnson & Johnson, and McKinsey & Co. Accel Knowledge’s experience with market entry for consumer product goods in India makes it a valuable source of knowledge for Jack Daniels’ growth in India. Given that Maharashtra provides the greatest probability of success, acquiring the assistance of a Mumbai-based firm is justifiable. Market Resonance is a local firm in Mumbai. They are known for working with limited budgets and providing quick turnaround. A phone-based survey would be most effective since 63 percent of India’s population owns a phone while only 9.5 percent own a computer (Saraf). Gathering data about literate, middle to upper class individuals in India is cost effective due to consistent use of technology by this demographic. Research costs are 40-60 percent cheaper without a loss of quality when conducted by Indian firms (SIS International Research). On average, a phone survey in the United States costs approximately $40 per interview. This means a phone survey costs approximately $16 to $24 per interview in India (Yun Lee). With a confidence level of 99 percent and confidence interval of four, a sample size of 1040 is required to draw accurate conclusions about Maharashtra’s literate population (Creative Research Systems 2014). This suggests a budget of $16,640 to $24,960 is required to conduct a beneficial phone survey in Maharashtra, India.Yet research doesn’t stop at product launch. After rolling out Thums Up Jack in the test market, researchers will need to gather additional data about the product’s success in order to continue product development. Jack Daniel’s will need to monitor purchasing patterns to evaluate where consumers buy the product, how often they purchase, and which consumers are spending the most. Answers to these questions will help determine the evolution of the product, including the next location to launch the product and possible flavor developments. Continual market analysis will be essential to the longevity and success of the Jack Daniel’s brand in India.Action PlanThe detailed action plan below specifies crucial next steps before and after launching Thums Up Jack in Maharashtra, India. Our campaign is a seven-step process beginning on February 1, 2015 and ending January 1, 2016. This plan also includes tentative start-finish dates and expected costs of completing each task. 1. Form Co-Branding Partnership with Coca-Cola (Jan. 1 – Mar. 1)Before beginning IMC strategy implementation, Jack Daniel’s must first solidify a partnership and contract with Coca-Cola through an iterative meeting and negotiation process. This preliminary agreement must be thoroughly executed to ensure successful product and brand development objectives for Thums Up Jack. After an agreement is reached, anticipated costs will include lawyer fees to form a written contract with Coca-Cola, which are already included in the retained fee Brown Forman pays and will not affect this project’s costs.2. Conduct Additional Market Research and Analysis (Mar. 7 – Jun. 7)While we have already selected our pilot location to be the city of Maharashtra, we will utilize our partnership with Thums Up to gain firsthand information and market knowledge of India’s current consumer landscape, including geography, demographics, and consumer purchasing patterns. As previously mentioned, we will also hire two outside research companies, Accel Knowledge and Market Residence. Our average estimated cost for hiring both companies is $20,800.3. Define Product Positioning and Target Market (Jun. 1 – Jul. 1)After completing additional market analysis, we plan to finalize the Thums Up Jack product position in India’s whiskey market. This step includes selecting a frame of reference and point of difference that we will be advertising to Indian consumers. During this process, Jack Daniel’s will work closely with the Thums Up marketing team to develop a brand message and product image that are consistent with Jack Daniel’s premium brand status, but also capture young, upper-middle class Indian consumers. We do not anticipate additional costs during the creative marketing process.4. Develop a Sponsorship with the Mumbai Indians (Jul. 1 – Jul. 21)Once we have finalized our desired brand position and target market, we will begin developing an exclusive sponsorship with the Mumbai Indians. We have selected the Mumbai Indians because they are one of the most popular teams in the Indian Premier League, providing large-scale viewership to maximize brand awareness for Thums Up Jack in India. The sponsorship agreement will provide prime viewing space at the Indian’s Wankhede Stadium for our Thums Up Jack Viewers Lounge. The formation of this sponsorship is expected to cost $4,176,610.68 and will last for the remainder of the season (April through October).5. Select Product Placement Campaign in Bollywood Film Industry (Jul. 21 – Aug. 21)After establishing our partnership with the Mumbai Indians, we will turn our attention toward our second advertising medium: product placement in film. This step will include meeting with Bollywood film companies and directors to determine optimal film selection for Thums Up Jack. We will consider factors such as potential viewer reach, viewer correlation to our target market, and ability to communicate our brand message when deciding which film to choose. We expect negotiations to run no longer than one month. We will selectively choose the film based on its tentative opening date. We will look for films coming out in the next four months to decrease lag time after our initial product launch in grocery stores and supermarkets. The cost of product placement is estimated to be $1,250,000.6. Create Point-of-Purchase Displays & Establish Vendor Relationships (Jul. 21 – Aug. 21)While establishing sponsorships and product placement contracts, our creative marketing team will be jointly working to craft custom-designed, point-of-purchase displays for Thums Up Jack. We will work with graphic designers from both Jack Daniel’s and Thums Up to form easy-to-construct cardboard shelves that vendors can place in the liquor aisles of their stores. These display shelves will tell the story of Jack Daniel’s and the American classic (Jack & Cola) through words and images across our display shelves. While our creative marketing team finalizes design plans, we will also be reaching out to local grocery and supermarket stores in Maharashtra to maximize potential selling destinations for Thums Up Jack. Total estimated costs for designing and producing these point-of-purchase displays are expected to run $4,573,350 for placement in 9,266 stores.7. Launch Product Through Point-of-Purchase Displays (Oct. 1 –Dec. 25)After vendor relationships have been secured, we will begin selling our product in stores at the beginning of October. Our marketing team will closely monitor product sales throughout this test market period, which will last three months. We will also collect data on specific consumer buying trends for further analysis. We do not anticipate additional costs during this period.8. Conduct a Three-Month Analysis of Product Sales & Performance (Dec. 25 – TBD)After we have collected sufficient information on product sales and consumer purchasing trends from our test market data, we will determine product performance and future sales potential for Thums Up Jack. Depending on our test market results, we will decide next steps for future expansion in India.BudgetsCLV AnalysisOur 5-year CLV estimate for the Thums Up Jack campaign is $51,994,482 with a total marketing cost of $10,000,000. We based this marketing cost off Brown Forman’s total 2013 marketing expense of $436,000,000, and assumed allocation to their products by a percent of sales. Thus, we calculated a $91,560,000 budget to Jack Daniel’s and then allocated roughly 10% to Thums Up Jack. We assumed a similar customer retention rate to Jack Daniel’s retention rate of US consumers from 2012 to 2013. Jack Daniel’s customers increased from 18,640,000 in 2012 to 19,640,000 in 2013, and we further considered the amount of new entrants to be the number of births in 1993 (now age 21). We multiplied this figure by the amount that consume alcohol (71%), and then multiplied by the amount that prefer whiskey (13%). Because Thums Up Jack is a RTD beverage and not a traditional whiskey beverage, we multiplied this retention rate by 60 percent to obtain a more realistic 53.99 percent customer retention rate.To calculate our project gross margin, we estimated a target population of 11,949,263 customers in Maharashtra, representing close to 10 percent of the total population of 115,000,000 (India). To calculate the yearly revenue generated from this consumer base, we multiplied the estimated number of customers by the average number of purchases for the year per customer, which we estimate to be five. Thus, at a price of 150 Rs (~$2.4), we expect a yearly revenue of $18,678,231.To calculate our Project Gross Margin per person, we divided the yearly revenue by the total targeted customers, resulting in a Project Gross Margin of $1.56. We assumed our customer base would grow most in the first 2 years and for that growth to taper off in years 4 and 5 to roughly 21,500,000 total customers. After averaging our values throughout the 5 years, we calculated a 5 year CLV Per Person of $2.92, and a total 5 year CLV of $51,994,482 (Appendix S). Breakeven Analysis - First 8 QuartersTo calculate a quarterly profit estimate for the Thums Up Jack campaign, we used our customer count estimate from our CLV analysis (11,949,263) and assumed growth throughout each quarter similar to our yearly growth in our CLV analysis. Growth is most strong from Q1 to Q2 and weakest from Q7 to Q8 as the market becomes more saturated with Thums Up Jack. Our revenue estimates for each quarter reflect the amount of bottles sold and our selling price of 150 Rs.We assumed the variable costs incurred by this campaign would be similar to the variable costs of Brown Forman, Inc. and the Coca-Cola company on a relative basis. We found the average cost of goods sold for Brown Forman and the Coca-Cola company over the previous 3 years and calculated a 50.5 and 39.4 cost of goods sold percent of sales respectively. We weighted these averages to favor the Coca-Cola company’s gross margin because the bottling will be an operation of the Coca-Cola company, as well as the contents of Thums Up Jack will be mostly Coca-Cola’s.Our fixed costs are calculated in line with Coca-Cola’s operating margin over the last 4 years. We averaged these margins to calculate average fixed costs to be 23% of sales, but increased this estimate to 27% given the added costs of expanding the business into a foreign market. Year 1 and Year 2 fixed costs are calculated at a baseline of 27% of sales. In addition to the fixed costs as a percentage of revenue, we added the marketing costs into our Year 1 fixed costs estimates. We factored 60% of the $10,000,000 marketing expense into the Q1 fixed costs estimate, figuring most of the payments would be made up front. After Q1, we allocated 25, 10 and 5 percent of the $10,000,000 marketing expense to Q2, Q3 and Q4 respectively to pay the expense.According to our estimates, Thums Up Jack will be first profitable in Q3 with a net profit of $1,313,496. We estimate the project to break even in Q5.Appendix T and Appendix U detail the breakeven analysis. ControlsCustomer Feedback GoalsTo monitor the success of the Thums Up Jack product launch in India, programs will be put in place to gather customer feedback about the product. Surveys conducted with marketing groups and individual interviews will provide consumer insight on the new campaign. After evaluating consumer feedback, product developers, and marketers we will be able to adjust the launch of Thums Up Jack based on consumer preferences.Target Market Sales GoalsControls will be put in place to determine the ultimate effect of the Thums Up Jack product launch on the target market. Thums Up Jack targets the upwardly mobile, young adult. With the assistance of retail buyers, quarterly data analyses will compare actual target market sales with projected target market sales in order to monitor the progression of the product. If the target market sales revenue and units sold figures differ from the projected figures by more than 10 percent after one year, further research will be conducted to find and correct the source of discrepancy. By monitoring and maintaining sales no less than 90 percent of projected sales, Jack Daniel’s can minimize loss and adapt their strategy as needed. Budgeting GoalsIn addition to monitoring the sales of the product, it is crucial to evaluate the costs of the process. Throughout the first five years, Jack Daniel’s must closely track costs in order to minimize spending and maximize profit. The Thums Up Jack product launch also poses large advertising costs. In particular, Jack Daniel’s will need to monitor the cost of Bollywood product placements, cricket endorsements, and point-of-purchase print and video demonstration advertisements. For the Thums Up Jack project to be successful, these costs must remain below 10 percent of Jack Daniel’s current marketing budget.Market Share GoalsDue to the success of Thums Up Jack, Jack Daniel’s will have 2 percent market share in the Indian alcohol market in the next three years and 4 percent market share in five years. Based on the monopoly of Bacardi Breezer, even these modest projections will mark a strong win for Jack Daniel’s. By securing a portion of the market share in the first five years of the product launch, Jack Daniel’s will set itself up for future growth, as their brand-loyal customers trade up from the RTD category to pure whiskey and other alcohol products.AppendicesWhiskey Consumption in IndiaBrown Forman Sales by RegionSource: Brown-Forman Annual Report 2014Indian Spirits IndustryDifficult Regulatory EnvironmentSource: The World Bank: “Doing Business 2012”Maharashtra Importer Distribution NetworkSWOT Analysis Statistical TestsSource: United Nations DatasetCorrelation TestingRegression AnalysisSample Size Required for Phone InterviewPerceptual Map of Whiskey CompetitorsWhiskey Competitors in India India Middle ClassSource: McKinsey Global InsightPerlberg, Steven. "Here's A Breakdown Of The World's Biggest Whiskey Drinkers." Business Insider. Business Insider, Inc, 13 Jan. 2014. Web. 17 Nov. 2014. 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