MHA Strategy to enter the Quebec Market Case Study #3Mosaic Marketing Corporation Manpreet Berar, Briana Cowan, Sarah Henderson, Susan Keely, Parker McMullin and Raminique Sahota. Instructor: Anne Marie Webb-Hughes, Marketing 1102SET 1F NOVEMBER 19th 2009Table Of Contents TOC o "
Table Of Contents PAGEREF _Toc120169670 h 2Introduction and Problem Statement3Key Findings and Assumptions for Research4Target Market Analysis6Competitive Analysis7ALTERNATIVE 1 – INTENSIVE DISTRIBUTION PAGEREF _Toc120169675 h 8ADVANTAGES PAGEREF _Toc120169676 h 8DISADVANTAGES PAGEREF _Toc120169677 h 8ALTERNATIVE 2 – EXCLUSIVE DISTRIBUTION PAGEREF _Toc120169678 h 9ADVANTAGES PAGEREF _Toc120169679 h 9DISADVANTAGES PAGEREF _Toc120169680 h 9ALTERNATIVE 3 – SELECTIVE DISTRIBUTION PAGEREF _Toc120169681 h 10ADVANTAGES: PAGEREF _Toc120169682 h 10DISADVANTAGES: PAGEREF _Toc120169683 h 11SOLUTION PAGEREF _Toc120169684 h 11IMPLEMENTATION PLAN PAGEREF _Toc120169685 h 12COURSE CONCEPTS PAGEREF _Toc120169686 h 13APPENDIX PAGEREF _Toc120169687 h 14“L’elan dans la ville” Advertising Campaign PAGEREF _Toc120169688 h 14Bottle and Logo Change PAGEREF _Toc120169689 h 14"
L’elan dans la ville…avec toi” Promotional Activity PAGEREF _Toc120169690 h 15REFERENCES PAGEREF _Toc120169691 h 16 INTRODUCTION AND PROBLEM STATEMENT Widely respected as one of Canada’s best, Moosehead beer has been incredibly successful throughout Canada, distributing to the majority of the provinces in the country. However, the one province where Moosehead has struggled to effectively penetrate the beer market is in Quebec. This east central Canadian province is the second most populous province after Ontario, and is the only Canadian province whose population is mainly francophone. We feel that the cause of this marketing challenge is due to fact that the Moosehead Company has not productively advertised their product, together with the French-Canadian culture, values and beliefs, to their francophone target market. Having a population with over seven million residents, and consuming approximately 5.3 million hectolitres of beer each year, Quebec is the second largest beer consumption market in Canada. Being recognized as a “distinct society” by Prime Minister Jean Chrétien, the French Canadians of Quebec take great pride in their French language, culture and sophistication. The residents of Quebec are known to be imaginative, fashionable and conscious about their health. In this particular province, cultural identity is strong, and many French Canadians voice their outlook of Quebec culture being more distinguished than that of English-Canada. A marketing strategy that will enable Moosehead to successfully penetrate the Quebec beer market is to incorporate the specific French Canadian cultural vales and characteristics while advertising to this particular province. Also, taking into account that they have become accepted as a distinct society in Canada will also build interest with the francophone residents of Quebec. Given that the company already has the product, deciding the accurate pricing for the product, where to place it for it to be sold, how to promote it and what distribution channel to use are crucial evaluations that need to be made. What is the most effective distribution strategy that Moosehead Beer Company can do to penetrate and obtain market share in the province of Quebec? And how can Moosehead reposition their company to relate to the culture and community of Quebec citizens? KEY FINDINGS AND ASSUMPTIONS FROM RESEARCH
The preferred beer in Quebec based on statistics is Labatt and Molson, which dominate the beer sales with 90% market share.
Quebec, densely populated with over 7 million residents, has the second largest beer consumption market in Canada with an estimated 5.3 million hectolitres of beer consumption a year.
¾ purchased from independent retailers and chains (grocery stores, convenience store, some at Société des alcools du Québec).
¼ purchased in bars, restaurant, special events, licensed establishments.
As Quebec and New Brunswick are neighbouring provinces, distribution costs would be significantly lower than shipping to other provinces. However, higher interprovincial trade barriers contrast this.
The beer market is the second biggest market in Montreal.
Moosehead entered the market in the year 2003 with difficulties in the success.
Most beer products are purchased at convenience stores called “depaneurs” and not at stores SAQ (Societe d’Alcool a Quebec).
Based on statisitcs, bottled beer is the highest ranking over draught and canned.
There are over 2000 convenience stores by the name of Couche Tard and thousands of bars/lounges. There are over 600 nightclubs in Quebec alone.
Moosehead brews it’s beer at their brewery in Saint Johns, New Brunswick, and has a small share of the McAuslan brewery located in Montreal, Quebec.
Moosehead’s total revenue in 2009 was approximately $190 million dollars, greatly increasing since 2003, which brought in an estimated $130 million.
Moosehead carries a line of various different beers ranging from light and lime flavoured.
SWOT Analysis GraphENVIRONMENTPOSITIVENEGATIVEINTERNALSTRENGTHS:Offered in 50 states, all throughout Canada, and in 14 other countriesOffer’s a large product depth. Such as Moosehead: light, pale ale, premium dry, dry ice, alpine lager, alpine light, Clancy’s amber ale, and cold filtered lightOne of the oldest breweries in Canada – 127 yearsCompany has high brand awarenessBottles are highly recyclable – 17 timesWEAKNESSES:Website is not directed to the demographics of Quebec (their culture and image).Product is marketed and perceived as “too Canadian.”The brand image is sought out to be known as generic (green bottle, labeling, name)Moosehead has already penetrated into the Quebec beer market. However as marketers we must promote it to create brand awareness. The Quebec consumers at this point are unsure of the quality of MooseheadLack of experience in the Quebec market since Moosehead has penetrated the Quebec market in 2003 has led to low sales EXTERNALOPPORTUNITIES: Quebec’s population is 24% of the Canadian population. Quebec has the higher consumer spending rates per capita. This means that Quebec represents an important marketThe current market of Quebec is booming and room for Moosehead product to capture market share is availableProduct mix can be expanded one initial success is create and brand loyalty becomes apparentQuebec’s beer industry is the second largest market in CanadaIntroduce Moosehead light a low carb beer, which targets the health conscientious beer drinkers.75% approx of purchased beer is at home drinking, we must consider this in our distribution strategyTHREATS:Competitors such as Labatt Blue already have an established clientele in QuebecMoosehead does not carry a large capital for huge advertising campaignsCompetitors are more experiences in the Quebec beer industryThere are many Government regulations in the Quebec that are associated with the alcohol industry. Such as font and languageCulture barrier between the Anglophone Canadians and the francophone Canadians.
TARGET MARKET ANALYSIS The Moosehead brand already has some brand awareness in Quebec, however, they not attaining high volume sales. We feel this is occurring due to the fact that the company is not targeting specific demographics based on the particular geographic area of Quebec. This therefore causes Moosehead to lose sales revenue to companies such as Labatt and Molson, which are dominating the beer market. French Canadians are known to be creative, trendy, health conscious and sophisticated and we feel that Moosehead should keep these precise cultural characteristics in mind when marketing to the French residents of Quebec. With the new target market segmentation, we feel that Moosehead needs to target their beer product to adult men and women, “à la mode” students and career-oriented individuals, ages eighteen to thirty-five. This product will satisfy each consumer’s psychographic needs, by raising the level of sophisticated brand image and allowing them to be associated with a product that is unique and distinguished, just as the French Canadians see themselves as a culture. Since the distribution of alcohol in Quebec is through many independent retail chains and retailers, we choose to use selective distribution through select depanneurs such as Couche Tard, night clubs, bars and lounges to attract our target market. With a newly sophisticated Moosehead beer bottle, we believe that the younger generations will do their best to feel more mature buy purchasing this product, and that the older generations will be willing to pay a little more for a high quality product to relive their formative years. The French are always looking for something different in taste, unique and sophisticated, and we feel that once they experience Moosehead beer, they will gain a familiarity of what differentiates a quality product from a standard one. COMPETITIVE ANALYSIS The alcohol beverage industry is a highly competitive market. With revenues for the Canadian beer market generating 10.9 billion dollars in 2008 representing a compound annual growth rate of 1.7% for the period spanning 2004-2008. This has indicated to Mosaic Marketing Corp. that the beer market is extremely profitable; however within this market there are already competitors that have already dominated the Quebec market. Labatt Blue and Molson Canadian both share 90% of the market share in Quebec. With these two major Canadian breweries monopolizing the beer market in Quebec, there are also the smaller breweries that are in competition with Moosehead as well. These small beer brands include Brasseur Du Nord and Brasserie McAuslan Brewery. An advantage that Moosehead has over these smaller breweries is, Moosehead has the largest market share for the smaller breweries in the rest of the Canadian sector. Through our research Moosehead beer has already penetrated the Quebec market in 2003, however sales in Quebec for Moosehead beer are low. Molson and Labatt Blue have marketed their company to meet the needs and demographics of the Quebec market by promoting and advertising their beer’s quality, image, and uniqueness; however Moosehead has not been successful with this. Another advantage that Moosehead has over it competitors is Moosehead will have an image of a premium lager. We believe this quality is directed specifically towards the Quebec individuals and gives a huge advantage over the two dominating competitors, which we will utilize to our advantage. Three alternatives have thus been devised in the distribution of the Moosehead product. ALTERNATIVES ALTERNATIVE 1 – INTENSIVE DISTRIBUTION Another way for Moosehead to enter the Quebec market is to distribute to as many independent retailers as possible in order to saturate the market. This includes all bars, restaurants and nightclubs as well as all types of retailers such as depanneurs and grocery stores. In order to distribute intensively, Moosehead would need to convince retailers to carry its products. Thus, a pull strategy would be employed to generate consumer attention. Moosehead will advertise heavily through radio and billboards to promote awareness and encourage consumers to go to their local convenience store or neighborhood bar and ask for the product. ADVANTAGES
Because the Moosehead brand already exists in Quebec, retailers and consumers will naturally show interest in carrying and consuming Moosehead beer.
Due to the fact that there will be more exposure of the product, Moosehead will have a greater opportunity for brand awareness, being available in numerous depanneurs.
By having Moosehead be more available to the public, we could charge a lower price (for example, a price of $12. 99/ 12 pack), allowing the product to become for affordable for its consumers.
·Moosehead would have to negotiate many contracts and agreements when trying to get their product out to as many retailers as possible. This could be costly and time consuming.
Overexposure of the brand could cause consumers to perceive Moosehead as a generic brand which is less valuable and less interesting than more illusive brands.
There is a greater possibility for brand dilution if the Quebec public perceives Moosehead’s market saturation as overwhelming.
ALTERNATIVE 2 – EXCLUSIVE DISTRIBUTION For our second alternative, we contemplated using the Exclusive distribution strategy. Quebec is infamous for it’s party scene, including nightclubs, bars and lounges which make up numbers of over 40 + in Quebec’s most popular city, Montreal, alone. There is a huge market made up of individuals who enjoy drinking, spending money on alcohol, and have strong psychographic values regarding their overall image. A large percentage of the population between 18-30 years of age who inhabit most nightclubs find happiness in looking good and feeling good. This not only includes the clothes they wear and their body image, it includes the drink they are holding and drinking which affects how others view you. Therefore, distributing Moosehead beer exclusively in nightclubs and bars in Montreal alone creates a value perception. Montreal being the most “hip” city of Quebec would give the impression of extreme value through the use of exclusive geographic territories. Moosehead would therefore be the “Lacoste of beer”, where drinking it then is based half on how it tastes/makes you feel and half of the image you get when you drink it. There is huge potential based on what we have researched about Montreal psychographics…but there are also some disadvantages, which resulted in our overall decision to dismiss this alternative. ADVANTAGES
Creates a value and evokes a perception of “rarity” and “classiness”.
Limits the cost of licensing vendors and retailers to sell the product.
Allows the company to more carefully regulate their inventory by limiting production.
This is a potential risk when considering a new/currently under popular product which may not take off.
Diminishes the possibilities of sales by not expanding to other demographics (aka at-home drinkers).
May be too much of a change from previous “low class” image of the brand.
Our main disadvantage, which is too much of a threat to ignore, is the statistic that three quarters of beer produced is for at home drinking (as mentioned in the SWOT Analysis). By choosing an exclusive distribution approach, we ignore three quarters while focusing on the one quarter that purchase beer solely when they are out. For this reason we have come up with an alternative that encompasses both “at home” drinkers and “social” drinkers. ALTERNATIVE 3 – SELECTIVE DISTRIBUTION When considering distribution intensity, selective distribution lies between intensive and exclusive. This system would have Moosehead enter an agreement with select distributors in Quebec who would have authorization to sell the product. It would help Moosehead maintain a classy image by focusing distribution on higher end establishments such as nightclubs and restaurants, while also allowing them to utilize certain distribution agencies such as depanneurs which will attract the large demographic of beer drinkers at home. The implementation of selective distribution would require Moosehead to form need recognition in the minds of consumers through push strategies. The focus here is on creating value for the Moosehead brand through a series of promotional campaigns to heighten consumer awareness. Once that brand awareness has been established, we believe that Quebec consumers will be more likely to seek the Moosehead brand at select retailers. While there are many advantages to choosing selective distribution methods, Moosehead must also be aware of any disadvantages to using this implementation plan. ADVANTAGES:
Retailers will be more inclined to sell the brand if there is an associated value and possibility for higher profits.
Moosehead can select the channels for which they believe will benefit the image and sales of their product.
They have more control over the consumers perception of higher value or image of their brand.
Once the customer perceives value in the Moosehead brand, there will be more likelihood for repeat customers or brand loyalty.
They will have to market themselves in a way that makes consumers “seek them out”. For example, creating a psychological need in consumer behavior may be a challenge from a marketing perspective.
This could be costly both from an advertisement perspective and a distribution perspective
There are many competitors in the Quebec market who are also on the selective level of distribution.
They are limiting the amount of distributors resulting in the possibility of a smaller target market.
SOLUTION Why did we make the decision to choose the selective distribution strategy? First of all, Moosehead needs to implement a new image, which is more appealing to Quebec culture. At the moment they are not representing the lifestyle characteristics and the values for which Quebec encompasses. In order to really connect with Quebecois culture, Moosehead needs to reposition their brand with a classy, elegant, artistic feel that would be appreciated and valued. Through the use of selective distribution, Moosehead will become the desired brand label of Quebec. Although we may be sacrificing our potential volume of sales by limiting distribution channels, we feel that this is a necessary change in order to create the perception of exclusivity. In order for selective distribution to work, Moosehead will engage in a push strategy involving a series of advertisements and promotions, which will support their new brand image and product line. Our company will evolve into the title ‘MH’ (pronounced em-ash) so that Quebec consumers can relate to a classier name. Furthermore, this method gives us the opportunity to distribute through select depanneurs as well as nightclubs, bars and restaurants. The use of indirect distribution will allow Moosehead to develop relationships with select retailers who will ultimately benefit from carrying the desired product. As these relationships grow, there will be an opportunity for a vertical marketing channel to develop, where Moosehead will work alongside retailers to promote their brand. By limiting our distribution agencies to only these select retailers, Moosehead will also have more control over who can sell their product and ultimately, how the Quebec consumer perceives their brand. IMPLEMENTATION PLAN
Work with creative team to develop elements of a new Moosehead Beer image. This includes changing the brand logo, the product’s bottle design and adjusting the brand name of the product to appeal to the Quebec citizens. We will develop an advertising campaign to launch the new and improved Quebecois design. (see Appendix for details on the changes)
Arrange with Moosehead to allot 3% of their total revenue, which is valued at approximately $5.7 million for future endeavors regarding brand buildup.
Arrange contracts with the retailers that will eventually carry the brand and cease distribution to retailers not apart of the new selective strategy. This means signing with most nightclubs, bars, lounges and select depaneurs namely ‘Couche Tard’ and other higher end convenience stores.
Instill a relationship between the wholesaler’s at Moosehead and the retailers in the Quebec region in the attempt to form a vertical marketing channel. Moosehead will ensure that the retailers see a value in their product in order to keep their competitive edge.
After developing a relationship with such retailers, we sign a contract ensuring that our product will not be sold under a certain price. Our launch price will stay at the competitive based price of $14.99. This allows the product to receive the perception of increased value by the $2.00 increase, but also keeps us $1.00 below our main competitors, Labatt and Molson.
Once our “behind the scenes” work is complete and MH is part of our retailer’s inventory, we will launch our advertising campaign entitled “L’elan dans la ville”. (see Appendix for details on the campaign)
After creating attention, interest and desire for MH based on the campaign, we will introduce the new MH promotion that will be featured at Couche Tard independently. The promotion ties into the current campaign and is called “L’elan dans la ville…avec vous” (translated: The moose is in the city…with you.) which will only take place for 2 months. (see Appendix for details on the promotion).
Continuing with this plan for a few months, we will then review our sales increase or decrease in the Quebec region to measure the effectiveness of our strategies.
If the actual results match what was hoped for, we will continue with our advertising campaign and continue to distribute selectively. In time, we may choose to raise the price after value has been created to match directly with our competitors.
Integrated Marketing Communications (Appendix)
Demographic and Psychographics (page. 5)
Product Line Depth (page. 4)
Intensive Distribution (page. 7)
Exclusive Distribution (page. 8)
Selective Distribution (page. 9)
Brand Image (page. 5)
Brand Repositioning (page. 4)
Vertical Marketing Channel (page. 12)
Competitors (page. 7)
Indirect Distribution (page. 11)
Market Share (page. 4)
Pull Strategy (page. 7)
Brand Awareness (page. 8)
Brand Dilution (page. 8)
Market Saturation (page. 8)
Need Recognition (page. 10)
Push Strategy (page. 11)
Retailers (page. 11)
Wholesalers (page. 11)
APPENDIX “L’elan dans la ville” Advertising Campaign To attract Quebec consumers, Moosehead has come up with a campaign specifically for the geographic region of Quebec. They will be featured mainly in Men’s magazines such as GQ, Esquire and Maxim as well as classier women’s magazine’s to reach the demographic. The campaign that we have entitled “L’elan dans la ville”, which translates to “The moose in the city” has been created to attract our classy, artistic and trendy target market as mentioned prior. It features a line of models depicting our market (trendy men, classy women, young club goers etc.) with the head of a moose in a social situation, somewhere in the city (a club, lounge, bar, event, on the town etc.). These advertisements will create a hype based on the strange nature and abnormality of the image portrayed. After what we have learned about Quebec individuals, they will be attracted to the artistic and classy mix of the advertisements as oppose to the “all Canadian, rowdy and rustic” image of the current Moosehead line. A sample advertisement from the “L’elan dans la ville” campaign is featured on the next page. Bottle and Logo Change The name “Moosehead” depicts an “all Canadian” feel and brand image to the beer brewed in New Brunswick. For the majority of Canadian drinkers, this works but for the psychographics in Quebec it does not, leading to the lackluster sales they have experienced in the province. Therefore, to avoid an entire name change, Moosehead will be known as “MH” in Quebec, which translates to the pronunciation ‘em – ‘ash’ in French. This name is classier and more appealing to the consumers we are targeting. As for the bottle logo, the current bottle does not play into the image of “MH” thus we have come up with a innovative new design which features the following
the new “MH” Logo, simple and in classic font.
an image of the city, with the city lights creatively shaping a Moosehead.
Moosehead’s current color scheme as to not deviate too much from the original (gold, green and red).
“L’elan dans la ville…avec toi” Promotional Activity 211455152400 As apart of the launch of ‘MH’ a promotional activity will be released in the form of a contest. This is meant to create hype and excitement and thus drawn in consumers who will participate. It involves an “under the cap” contest, provoking consumers to purchase ‘MH’ and find the winning cap. The prize would be a night in the city of Montreal with three friends, all expenses paid and a night’s supply of free ‘MH’. Hotel, nightclub cover, limousine and dinner would all be apart of the contests package. This would satisfy the target market that we are after as well as solidify our attempts to make the “L’elan dans la ville” campaign the next big campaign such as “Got Milk”. REFERENCES Brewers Association of Canada. (2009, October 19th). Domestic Sales Bulletin. Retrieved November 14th, 2009, from The Brewer’s Association of Canada website: http://www.brewers.ca/UserFiles/Documents/Sales%20Bulletins/2009 Beer Pal (2009, September 20th). Evaluation of Moosehead Beer Lager. Retrieved November 13th, 2009, from Beer Pal wesbite: http://www.beerpal.com/Moosehead-(Lager)-Beer/3568/ Mel & Rose (November 18th, 2009). Prices of Moosehead Beer in Quebec. Retrieved November 18th, 2009, from Mel & Rose Website: http://www.melandrose.com/istar.asp Chowhound (May 15th, 2006). Beer Prices in Quebec. Retrieved November 15th, 2009, From Chowhound Website: http://chowhound.chow.com/topics/109381 Hugh Topham (July 10th, 2008). Montrealers, Beer Prices – Quebec vs. Ontario Retrieved November 12th, 2009, from Secure website: https://secure.neap.net/pipermail/montrealers/2008-July/014064.html Blork du Montreal. (2004, November 26th). Buying beer in Quebec. Retrieved November 12th, 2009, from Blork Du Montreal’s website: http://beerblog.genx40.com/archive/2004/november/buyingbeerin Sara Minogue. (2003, May 5th). When to Spend in Quebec. Retrieved November 12th, 2009, from Sara Minogue, Strategy website: http://www.strategyonline.ca/articles/magazine/20030505/quebec.html Brian O’Neal. (1995 December) Distinct Society: Origins, Interpretations, Implications, Retrieved November 12th, 2009: http://www.parl.gc.ca/information/library/prbpubs/bp408-e.htm