Strategies for Growing the Deschutes Brand in the New Mexico Market
1.
STRATEGIES FOR GROWING THE DESCHUTES
BRAND IN THE NEW MEXICO MARKET
Developed and Presented by:
MGMT 522 – Spring 2015
Anderson Graduate School of Management
University of New Mexico
APRIL 30, 2015
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5 Strategies for Growing the Deschutes Brand in the NM Market
EXECUTIVE SUMMARY
Marketing as a whole is about values. Strictly trying to sell a product based on superior
quality alone is unlikely to motivate buyer behavior. Deschutes Brewery must make clear to
the New Mexico consumer what they value as it relates specifically to creating a quality
experience and emphasizing a shared community. Strategic emphasis on effectively
communicating values and beliefs in a way that highlights existing core competencies will
enable Deschutes to properly deliver the full extent of the Deschutes Brewery experience.
Working with the Anderson School of Management in an attempt to strategically
approach the market shows that Deschutes Brewery is willing to take the next step towards
investing in the community of the beautiful Land of Enchantment. Deschutes Brewery needs
to further pursue proactive regional investment and a desire to help the growing and dynamic
local craft beer community if it wants to grow its market share in New Mexico.
The goal of this marketing plan is to emphasize current problems as they relate to
brand presence and convert those problems into opportunities to increase brand awareness
of Deschutes Brewery. The changing competitive landscape of craft breweries in the
southwest region of the United States, particularly in New Mexico, has evolved into a scene
Deschutes must approach carefully. New Mexico craft beers have been showing up
increasingly among the winners at the Great American Beer Festival and World Beer Cup.
Many of the craft breweries in the state have earned shelf space in grocery and liquor stores.
Quality of local craft breweries, evolution of local craft culture, and the native New Mexican’s
desire for a community driven outdoor experience present both opportunities and threats to
Deschutes Brewery.
Through extensive market research and analysis the team has developed a step by
step push strategy as it relates to distribution and a pull strategy as it relates to the consumer
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and retailer markets. The basis for the plan is to help Deschutes Brewery develop a synergy
between the prospective New Mexican consumer and Bend, Oregon utilizing existing core
competencies in a way that highlights a sustainable competitive advantage. It is key that
Deschutes Brewery embraces community partnerships that are based on cooperative-
competitive strategies and focus on raising the tide for all ships.
New Mexico culture welcomes everyone, at the same time however, New Mexicans
are loyal to their community. Similar to Bend, Oregon, there is no shortage of outdoor
activities such as skiing, snowboarding, golfing and hiking among others. Sponsoring or
hosting experience driven events and actively fostering positive relationships with
distributors will help consumers as well as distributors understand that Deschutes is taking a
more proactive approach towards becoming part of the New Mexico craft beer community
instead of as an adversarial threat siphoning market percentage. This experience oriented,
community building strategy will place Deschutes products into the hands of consumers and
show consumers and distributors that Deschutes Brewery is willing to invest in the quickly
growing New Mexico craft beer community.
The challenge Deschutes faces is getting New Mexicans to try Deschutes products and
continue drinking them. Deschutes needs to become a part of and associated directly with
helping to build the local New Mexican craft beer community. Deschutes as a brand has the
opportunity to deliver a superior experience to New Mexico’s currently under saturated
market. The overall objective of the team’s strategic implementation plan is to provide a
comprehensive blueprint of how Deschutes Brewery can build a loyal consumer base in the
New Mexico market by linking the region specific marketing research effort to higher level
strategies and goals.
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1 THE CHALLENGE & SOLUTION
Deschutes is underperforming in the New Mexico market as compared to other
markets where Deschutes products are also available. Deschutes brand beers have been
available in New Mexico for approximately three years, however, volume trends continue to
be negative. In 2014, Deschutes’ New Mexico footprint was -6.7% as compared an overall
footprint of 17.3% for all of the markets during the same time period. (Billingsley, 2014)
The Managerial Marketing class at UNM’s Anderson Graduate School of Management
was asked to define the root problem causing Deschutes underperformance in New Mexico
and offer implementation strategies for growing the Deschutes brand in the New Mexico
market. Moreover, the team was asked specifically to develop strategies for growth that
would also allow Deschutes to stay relevant in the craft beer community and true to their
mission and values.
After conducting thorough market research and analysis, the team identified the root
problem facing Deschutes in the New Mexico market. The team then developed a
comprehensive set of strategies that target and will solve the identified root problem. The
implementation plan employs simultaneous push strategies for distribution problems and pull
strategies for retail and consumer problems. This dual approach will best target all relevant
market segments in New Mexico.
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2 SITUATION ANALYSIS
2.1 COMPANY ANALYSIS
2.1.1 History, Products, Customers
In 1988, Gary Fish founded a craft brewery in Bend, Oregon and named it after the
Deschutes River that flows through central Oregon. Deschutes Brewery has been family
owned and operated since it began and in 2013 the company implemented an Employee
Stock Ownership Program which allows employees to own a percentage of the company.
Deschutes operates a 435,000 barrel/year production facility as well as two public houses in
Oregon. (Frequently Asked Questions, 2014)
Deschutes has grown exponentially since its humble beginnings and is now the 6th
largest craft brewery in the United States and the 12th largest brewery overall. Deschutes
products are currently shipped to 28 states and parts of Canada. The product mix includes
year-round, seasonal and specialty brews. Deschutes uses an in-house, proprietary method
for yeast strain in the brewing process. (Billingsley, 2014)
2.1.2 Mission/Culture/Values
Deschutes’ mission is “to profitably deliver the finest beers in the world and cultivate
extraordinary experiences.”(Billingsley, 2014) Core values include, honoring customers,
delivering quality, working as a team, building a healthier society, celebrating the culture of
beer, and doing their best, and next time doing it better.
The brewery was founded with an emphasis on community. Deschutes continues that
commitment to community in two ways. First, Deschutes does not simply want to offer beer,
they want to offer an experience and specifically one that is “worth sharing.” It is Deschutes’
goal to bring people together and create communities with their beers. Second, Deschutes is
committed to preserving and improving the communities they belong to. Deschutes donates
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one dollar per barrel sold to local and national charities and participates in various
fundraisers. Deschutes is also proactive in sustainability efforts. The brewery has been able
to reduce the amount of water used and the amount of waste released into the sewer system
during the brewing process by installing a water reuse system and a carbon dioxide capture
system in their production facility. (Wikipedia, 2015)
2.2 MARKET ANALYSIS
With the company’s values, mission, and goals for New Mexico in mind, the team set
the following objectives for the market research phase of the project:
Characterize New Mexico craft beer consumer.
Define characteristics of New Mexico craft beer retailers.
Identify relevant market segments.
Determine core problems facing Deschutes in New Mexico.
To best meet these objectives, five distinct groups were targeted during the market research
phase. The team determined that these five groups adequately represent the full range of the
beer market in general and would therefore provide the most complete information when
applied to New Mexico. The five groups are: 1. Off-Premise Consumer 2. On-Premise
Consumer 3. Off-Premise Retailer 4. On-Premise Retailer 5. Distributor. The research
problem, research methods and results of each group will be presented individually followed
by conclusions drawn from analysis of all of the research.
2.2.1 Consumer Market Analysis
2.2.1.1 Off premise Consumer Market Analysis
Problem Statement
To evaluate those aspects of research specific to off-premise consumer research, the
team focused on an assessment within three major spheres of focus. These include the
persona of the average craft beer consumer in New Mexico, a depiction of the circumstances
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under which existing customers purchase off-premise beer and an analysis of differences
between existing and potential Deschutes consumers. Within these three spheres series of
research questions were developed as follows:
1. Persona
a. What does the existing craft beer drinker look like in New Mexico?
b. What does the existing Deschutes beer drinker look like in New Mexico?
2. Circumstance
a. Under what physical circumstances do customers in New Mexico purchase off-
premise beer?
b. Under what psychological circumstances do customers in New Mexico
purchase off-premise beer?
c. Under what physical circumstances do customers in New Mexico consume beer
purchased off -premise?
d. Under what physical circumstances do customers in New Mexico consume beer
purchased off -premise?
3. Analysis
a. What does the potential craft beer/Deschutes drinker look like in New Mexico?
b. How can Deschutes reach them better?
Research Methods
The team decided that descriptive research would be most effective in answering the
research question “what factors will contribute to increased sales of Deschutes beer to off-
premise customers?” by identifying the characteristics of pre-existing off-premise customers,
assessing how these and other beer drinkers in the greater Albuquerque area view and
consume Deschutes beer, and evaluating differences between these customers.
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While both primary and secondary data was collected for off-premise consumer
research, a greater emphasis was placed on the collection of primary data as it more
accurately describes the nature of the current established and available customers. This data
was collected through the use of a thirty-five question survey that was both published
electronically and physically distributed to research participants. The questions were both
open-ended and close-ended and included questions such as “When buying beer, do you
buy in volume?” (close-ended) and “What do you enjoy eating when drinking beer?” (open-
ended). This research was conducted with a sample, a subgroup of the population that
volunteered to participate in the study.
The survey included a section that evaluated the participant’s demographics, a section
that addressed their beer drinking habits, and a section that inquired into their values and
lifestyles. By observing demographics in combination with participants’ drinking habits, the
team was able to collect statistical evidence that indicated demographic trends among both
Deschutes and non-Deschutes drinkers. Further, by asking about the participants’ lifestyle
and values, the team was able to gauge how well Deschutes’ values are aligned with existing
and potential customers.
Research Findings
The research conducted on off-premise consumers indicates several trends within
already existing consumers of Deschutes. These trends exemplify both demographic and
lifestyle significance in the off-premise purchase of Deschutes beer. For example, the
findings indicate that the majority of those sampled who regularly purchased craft beer and
recognized Deschutes were between the ages of 21 and 25, and were of lower wage brackets,
with over 50% of respondents making less than $50,000 per year. Interestingly, of these same
respondents, 100% had at least a high school diploma. The age and education demographics
may indicate that craft beer consumers are youthful customers who are approaching higher
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salaries and more prestigious careers in the future. Further, many of the participants that
were surveyed said they lived active lifestyles and enjoyed playing soccer and videogames.
One of the greatest trends noted in the results of the survey was that 63% of respondents
stated they often buy their beer in bulk. In contrast to this, the majority of respondents also
claimed that they buy variety packs of beer. Further, the majority of participants were willing
to pay higher prices for higher quality beer and an overwhelming majority (76%) said that
they were more inclined to buy beer from sustainably oriented companies. With respect to
the portion of the survey that focused on participants’ beer drinking habits, the team found
that almost all of those surveyed enjoyed drinking craft beer and thought that they knew the
difference between craft and other types of beer. However, 66% of respondents did not
recognize Deschutes as a craft beer brand.
2.2.1.2 On-premise Consumer Market Analysis
Problem Statement
The objective of the on-premise consumer research was to understand both the
behavioral habits and consumer trends of beer drinkers throughout New Mexico. A primary
goal was to determine how Deschutes can improve sales in New Mexico by using data that
analyzes the New Mexican consumer trends. Another priority was to determine how
Deschutes can utilize trends to establish a better presence in the market.
The first step was to identify the typical consumer profile of beer drinkers, craft beer
drinkers, and Deschutes consumers. To better understand the consumer, it is crucial to learn
what goes through the typical consumer mind when choosing a beer in an on-premise setting.
To develop a more comprehensive understanding of consumer beer choices, it is important
to determine exactly how and why people chose a specific beer over all their other choices.
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Research Methods
Two data collections methods were used: an on-premise method of observations and
interviews and an online survey. First, the team visited six bars throughout the Albuquerque
area where Deschutes products were served on tap or in bottles. When these locations were
visited, both observational and person-to-person data was collected. Through observations,
information on the persona of a typical craft beer drinker was gathered. Consumers were then
approached based on differing demographics that included age and gender. Many open-
ended questions were asked to gather more qualitative data and to further improve the
understanding of the typical craft beer drinker. The input from these on location data
collections was used to develop a more in-depth online survey that provided an increased
amount of data.
The online survey was created using the program Qualtrics and contained both open
and close-ended questions. The survey had approximately 300 respondents who were asked
a variety of personal characteristic and psychological attribute questions. Many of the
questions focused on demographic information such as age and occupation while other
questions related to a respondent’s lifestyle, motivational and attitude characteristics. The
participants covered a wide range of age, gender, ethnicity, income, and educational
demographics. Once the data was collected it was presented and interpreted via Microsoft
Excel. Tables and graphs were formed to create a visual understanding of the results of the
survey.
Research Findings
The first step in conducting the on-premise research was to investigate the different
locations where consumers can purchase Deschutes products in Albuquerque. The locations
included a variety of bars and restaurants in Albuquerque’s most popular drinking areas,
Downtown and Nob Hill. The research focused on bars that had a variety of different beers on
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tap, specifically Deschutes, to get the most information per interaction. A number of informal
and personal surveys with a multitude of different consumers as well as servers, bartenders
and managers were conducted. These interviews were revealing about consumer trends,
buying habits, etc., which provided a more enhanced understanding of beer consumers.
Some of the most relevant initial findings as they relate to on-premise consumer trends and
behavior include:
Men tend to be more open to drinking and tend to be more open to trying new things.
Overall, men tend to select a few different beers/styles per visit.
Most female beer drinkers have higher brand loyalty than men and tend to select
beers that are lighter. Women that avoid craft beers appear to dislike the high calories
associated with these beverages. Many also mentioned it makes them feel “full”.
Consumers are more likely to choose Deschutes in bars that lack the presence of local
beers or when it is on “special.”
Bar managers and bartenders indicated that customers buy and consume more
beverages when they book performing acts such as live music events.
Consumers that regularly drink craft beer are more open to try Deschutes than non-
craft drinkers.
Customers are attracted to Deschutes taps in well-lit bars but cannot read them in
darker bars.
In addition to bars, data was collected in restaurants throughout the Albuquerque area
as well. One restaurant that stood out was Vinaigrette, a salad eatery that typically pairs wines
with their salad entrees. However, this restaurant also has four beers on tap, all of which are
craft brews: Oskar Blues Mama’s Little Yello Pils (CO), Anderson Valley Blood Orange Goose
Ale (CA), Deschutes Fresh Squeezed IPA (OR), and Durango Brewing Dark Lager (CO). The
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manager stated that the staff has a heavy input into the restaurant’s beer selection and that
Vinaigrette only chooses beer from the same distributor to avoid complexity. The restaurant
also tries to rotate and feature local beers most of the time. The manager stated that they tend
to favor lighter beers that pair with the menu items. Overall, Vinaigrette is an example of new
restaurants that are beginning to put an emphasis on pairing menu items with beer, a
phenomenon that Deschutes could potentially take greater advantage of in the future.
Using the information gathered at these locations, a survey was constructed to address
any potential points of interest and to substantiate consumer trends. The survey was
distributed by members of the Anderson School of Management to other students, co-
workers, family, friends, and on social media, targeting only those who are of legal drinking
age and live in New Mexico. Results from the survey coincided with the information gathered
from the observations and interviews with customers and bartenders. The survey results
support the idea that men tend to be willing to try new things and generally have an open
mind towards new beers, while a higher percentage of women, compared to men, are content
with their current selections. The results indicate that men can be swayed as evidenced by
the 20% of respondents who indicated they are open to a new beer depending on specific
factors such as beers on draft, intriguing options, absence of their preferred beer, etc.
Figure 1
Do you tend to order a new or the same beer at a bar?
MEN WOMEN
New 60.94% 52.63%
Same 19.53% 41.05%
Varies 19.53% 6.32%
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Another survey question measured the openness of trying new beers. Women were
split on knowing what they are going to order before they walk into the bar. Men, on the other
hand, are more likely make their beverage selection after entering the bar. Menu options,
drink specials, draft selection, and recommendations likely have a heavy influence on the
decision-making process.
Figure 2
A factor that weighs heavily on taste differences between men and women is the
favorite beer style of each gender. According to survey results, women most clearly prefer
wheat style beers while men show a slight preference for IPAs. Deschutes most popular beers,
the Mirror Pond Ale and the Black Butte Porter, ranked outside the top three favorite beer
styles for both men and women. This data suggests that Deschutes is lacking in the current
New Mexican market; however, it poses as an opportunity for these two beers to become
more popular in their respective categories. Additionally, the New Mexico market may be
more receptive to Deschutes IPAs, Chainbreaker, River Ale and other beers that fit in the IPA,
Wheat, or Stout category.
Do you know what you want when walking into a bar?
MEN WOMEN
No 59% 48%
Yes 41% 52%
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Figure 3
An overwhelming consensus of survey respondents enjoy outdoor activities including
sports such as skiing and golfing, hiking, fishing, camping, etc. In New Mexico, there is no
shortage of outdoor activities such as skiing, snowboarding, and rock climbing, among
others. The survey results also indicate that music events tend to spur on-site alcohol sales, as
79% of respondents will purchase beer during live music events. While New Mexico does not
have any major music festivals, there are many different venues across the state that serve
alcohol. In addition, there are many bars in New Mexico that host bands and different musical
acts. Also of note, most of the survey respondents were members of one or more social media
platforms. An overwhelming majority stated they had a Facebook account, followed by
YouTube, Instagram, and Twitter in decreasing numbers.
The survey also shed some light on the craft vs.non-craft debate, as 8 out of 10 people
stated that they know what a craft beer was and 64% actually prefer craft beer to non-crafts.
Of the craft beer enthusiasts, 40% have never heard of or tasted a Deschutes beer, whereas,
Favorite Beer Styles
MEN WOMEN
IPA 19.48% 14.85%
Wheat 13.08% 34.50%
Stout 13.66% 14.85%
Ales (Hefeweizen,
Saison, Fruit, Brown,
Blonde, Black, Honey,
Belgian)
12.79% 11.35%
Pilsner 11.92% 9.61%
Lager 5.81% 6.55%
Amber 5.52% 4.80%
Pale Ale 4.07% 3.93%
Light Beer 1.16% 3.06%
Red 4.94% 3.06%
Porter 3.49% 2.62%
Sours 1.74%
Cider 3.49%
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of those respondents who were unsure of whether they prefer a craft beer or not, 51% have
never heard of or tasted a Deschutes beer before.
Figure 4
According to the data presented in the graph above, Deschutes appears to fail in
reaching a large percentage of the consumers surveyed. Brand presence of Deschutes in New
Mexico appears to be low. To illustrate this point, the survey had a chart of some popular
national and local beer brands alongside Deschutes’ flagship beers: Mirror Pond Ale, Black
Butte Porter, and Fresh Squeezed IPA. The Deschutes beers all ranked last on a scale of
familiarity by a significant margin. Local beers such as Marble Red, La Cumbre Elevated IPA,
and the Santa Fe Black IPA ranked ahead of Deschutes.
The team also conducted outside demographic research and discovered that in New
Mexico, there is a very large percentage of Hispanics compared to other states in the country.
According to the US Census Bureau (2015), approximately 47% of New Mexicans were of
Hispanic decent in 2010. In New Mexico, success in many ventures hinges upon the Hispanic
community. The survey results indicated that 43% of Hispanics have heard about Deschutes,
while less than 35% have tried a Deschutes beer before. In speaking to those that identified
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as Hispanic during on-premise visits, a portion of older Hispanics seem to be brand loyal to
beer that they have grown up drinking or were able to afford when they first started drinking.
In addition, price may be a large factor for Hispanics to consider, since 65% of Hispanics have
a household income of under $60,000 a year, compared to just 47% for Caucasians (US Census
Bureau, 2015). The Hispanic segment of the market tends to enjoy imported beers such as a
Corona, Dos Equis, or Modelo. However, IPA’s are in the top two beer styles of choice for
Hispanic respondents. While, the beer styles offered by Deschutes may not have a lighter or
cheaper option for Hispanic drinkers, the collaboration beer, Zarabanda, may generate more
appeal for the Hispanic consumer market in the future. This beer could appeal to rural New
Mexicans and Hispanics as a saison style beer that has roots as a farmhouse ale, made to keep
farmers and ranchers in Europe refreshed in warmer climates.
2.2.2 Retailer Market Analysis
2.2.2.1 Off Premise Retail Market Analysis
Problem Statement
The objective of the off-premise retailer research was to find out why Deschutes does
not have many products in New Mexico retail stores compared with retail stores in other
states. The ratio of on-premise sales versus off-premise sales in New Mexico depicts that New
Mexico has a lower percentage of off-premise sales than other states. (Billingsley, 2014)
Deschutes would like to bring this ratio to a healthier balance. The team surveyed retailers
across Albuquerque to determine what beers are selling the best in New Mexico. In addition,
the team focused on discovering if New Mexico store employees are familiar with the
Deschutes brand, what the top beer sellers are in New Mexican stores, and which brews of
Deschutes are carried in New Mexican retail stores.
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Research Methods
A ten-question survey was developed and used in the research of retail stores and one
additional question in the survey was used for Total Wine or other stores that offer beer
samples prior to purchase. A total of 25 retail stores were approached with the survey.
Questions focused on identifying where the stores place certain beers and understanding
what beers sell well in the stores. Answers to these questions will give Deschutes information
about how to position their beer in retail stores and their local competitors in the New Mexican
market.
Below is the complete list of questions that the team asked the various stores:
1. How does your store choose which beers to sell? Are there specific things you look for?
2. How do you decide where different beer brands get placed on the shelves?
3. Do you order the same beers each time or is it based on customer demand?
4. What are the top 3-5 brands or types of beer that you see being sold?
5. Do you sell more 6-packs, 12-packs, variety-packs, or singles?
6. Do you advertise certain beers? If so why?
7. How well do craft beers sell at your store?
8. How would you describe the typical purchaser of craft beers?
9. Have you heard of Deschutes or their top product Mirror Pond Ale?
10. Do people buy Deschutes in your store? If so how much?
11. Total Wine - do you taste test Deschutes?
The team also sought secondary research about general beer sales in New Mexico.
The research showed that in the US, off-premise beer channel off-premise sales are spread fairly
evenly across convenience stores, liquor stores, and supermarkets, as illustrated in Figure 1
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below. With this information in mind, the team determined it would be best to research all types
of off-premise retail stores.
Figure 5
Research Findings
Brand awareness is inconsistent for many retail managers and store employees. For
example, at one Smith’s location, a manager claimed the store did not carry Deschutes beer.
However, upon visiting the store in person, the team found that Deschutes is in fact located on
the shelves. At a different location, a beverage specialist had a thorough knowledge on
alcoholic beverages including Deschutes. He recommended a technique called cross-
branding which involves placing Deschutes beers at other locations in the store creating
greater customer awareness. One example could be placing the beers close in high traffic
areas of the grocery store and/or near foods that pair well with Deschutes.
Retailer placement of beer varies from retailer to retailer. At Albertsons, Deschutes
beers are placed at eye level to make it easier for customers to see and because Albertsons
believes that Deschutes is going to be a top seller. Deschutes is not currently a top seller at
Albertsons but corporate representatives from Albertsons have confidence in the brand. In
contrast, Sprouts places the better selling beers on the lowest shelf. In Sprouts, Deschutes
sells well and is placed on a lower shelf. Jubilation, a local liquor store, places local beers on
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top of the shelves which encourages local brewery sales and will be a disadvantage that
Deschutes will have to overcome. Total Wine places beer in alphabetical order according to
the different categories, such as craft beer, brand, and region. At Smith’s, each store receives
a schematic diagram for the shelves arrangement from their corporate office. An interesting
possibility with Smiths is that brands can buy shelf space. Bud Light has already purchased
some of their shelf space.
Another important observation with respect to selling beers is the price. In retail stores
like Smith’s and Sprouts, price was reported to be an important factor that could boost the
sale. The stores that carry Deschutes said that the Mirror Pond Pale Ale and Black Butte Porter
are their top sellers of Deschutes brews. Sales and strategic placement are important to this
demographic and can be used to gain new customers.
The team encountered several difficulties when gathering research data. Many stores
are not allowed to respond to survey requests without corporate approval. Information was
considered proprietary at many retailers. Additionally, some stores would not respond to
emails and did not want to answer questions in person or over the phone. They would answer
the phone and ask for the survey to be emailed to them; however, in many of these cases, the
survey was never completed and returned. Finally, a challenge with national chain retailers
is that corporate level decisions are made as to what beers are carried in store. Some stores
also referred the team to corporate managers, rather than speaking with us directly. Due to
the scope of the project being focused on New Mexico, the team decided not to pursue
communication with corporate managers. Unfortunately these difficulties created a smaller
sample size than preferred.
Figure 6 compiles the top brands of beer sold in each store. Almost every store
surveyed included Marble in their list of top brands. The Chevron gas station was the only
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store that does not sell Marble as a top brand. None of the stores surveyed included Deschutes
in their list of top sellers. Figure 6 includes the results from nine different retailers and
includes data from stores with multiple locations.
Figure 6. Number of stores that have these beers in their top three to five bestsellers
The research data indicates that consumers are more likely to purchase new beers if
they are able to try it first. Mintel, Beer the Consumer Report, states that, “Education drives
craft beer sales, with 53% of consumers saying they would try (or try more) craft beers if they
had more information about them. This is particularly true of younger adults, with people
younger than 34 being the biggest craft beer fans. Where permitted, both on and off-premise
operators can benefit from tasting events.” (Mintel) A sales representative from World Market
gave a similar response in the team’s survey, “We do have regular wine and beer tastings. In
my memory, we have had a tasting of Deschutes products a few years ago. I remember that it
went well. Whenever we have a tasting, the featured product usually sees an increase of sales
for that item.” This shows people will purchase a new beer if they are able to sample it first.
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This is critical for success in the off-premise retail stores, where people usually cannot taste
the beer before they purchase it. Unfortunately, Total Wine and World Market are the only
stores surveyed that have regular beer tastings but they have not recently done a sampling
of Deschutes beer.
2.2.2.2 On-premise Retailer Research Findings
Problem Statement
The on-premise retailer market research focused on local bars, restaurants, casinos,
etc. in order to determine Deschutes’ overall presence and standing in the state of New
Mexico. The main goal was to create a profile for a typical Deschutes drinker in the retail
setting and to see where Deschutes stood in comparison to other craft beer companies around
the state. In turn, the team evaluated what factors contribute to the standing and success of
beer companies in New Mexico.
Research Methods
Primary data was collected from a number of on-premise retailers through interviews
and observation. For each interview, there was a general list of questions for each retailer
along with supporting questions based on the answers that were given. Questions included
information about the consumers, whether or not the bars/restaurants carried Deschutes,
whether or not they carried craft beer in general, what specials they had (if any), whether
they served more hard alcohol or beer, how they made their decision on what beers to offer,
and what beers they commonly recommended to customers. The one-on-one interviews were
conducted with a variety of Albuquerque on-premise retailers. (For a full list of surveyed
retailers, see Appendix 1). Observational data was also collected regarding drinking habits
of customers. We then categorized the retailers based on their consumers. During the
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26 Strategies for Growing the Deschutes Brand in the NM Market
interviews, bartenders, servers, and managers were asked to describe how they would
portray a typical Deschutes drinker.
The characteristics compiled below are representative of a typical Deschutes drinker:
Male
25-35 years old
College level education
Caucasian
Focused on beer quality
Casual drinker, not drinking to “get drunk”
Research Findings
The research indicates that there are major differences in the behaviors and beverage
preferences at nightclubs versus bars and restaurants. For the most part, nightclubs do not
carry Deschutes and have often never heard of it. Bartenders at nightclubs claim their
customers, who are typically between 21-28 years of age, are looking for cheap drinks and
are drinking to get intoxicated. Restaurants and bars, on the other hand, are more likely to
carry Deschutes. Their customers vary widely in age and are generally looking for quality
products. The staff at restaurants/bars claim that beers with attractive handles and/or large
font or logos are bigger sellers than bland handles and also increase brand awareness. The
research found most of the bars and restaurants that do carry Deschutes are happy with the
product.
The surveys and interviews indicated several reasons that account for why
establishments do not carry Deschutes or do not sell high quantities of Deschutes:
Price Perception - Deschutes sells really well when it is on special. When customers
find the price of Deschutes is the same as domestic brews, the customers will opt for
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Deschutes. The perception of price plays a role in purchases; customers assume
Deschutes will be expensive because it is a quality beer.
Inconsistent quality - Some of the bars and restaurants choose not to carry Deschutes
claiming that the quality of the brews is inconsistent from year to year.
Night clubs typically do not carry and have not heard of Deschutes. These locations
attract a target market different from Deschutes target market.
Overall, the team found that there is very little promotion or advertising of Deschutes
products in or by on-premise retailers. However, there were a couple of exceptions. One of
which was Kelly’s Brew Pub on Central. They offer a special for Deschutes beers on Thursday
nights, which seems to garner a lot of fans. This could present a great opportunity for
consumers that are unaware of or do not have a taste for Deschutes as it is a low financial risk
opportunity chance to try Deschutes beer and experience some of the culture attached to it.
Another exception was Vintage 423 who co-branded with Deschutes to make their own
specialized craft beer, Vintage Pale Ale by Deschutes. The handle even includes both brands,
which could promote sales.
2.2.3 Distribution Analysis
2.2.3.1 On-premise Distribution Analysis
National Distributing Company (NDC) provides on-premise distribution services for
an average of 35 beer suppliers throughout New Mexico. Each of these suppliers offer a
variety of brands increasing the total beer product portfolio for NDC to 100+ products during
any given month. According to the IBS world beer wholesaler report, demand for craft brews
that are produced by smaller breweries is on the rise. (National Beer Sales & Production Data,
2015) This demand increases the number of suppliers in NDC’s portfolio making it difficult
for Deschutes to attain brand awareness and product promotion.
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Local survey of the restaurants and bars in Albuquerque reveals that bar managers
typically select the beers that their establishments will carry; however, consumer preference
(and input from distributors and suppliers) is also considered. In informal interviews, bar
managers mentioned that suppliers frequently stop by to introduce their products.
Distributors focus on products that do well; therefore, in order for Deschutes to receive
satisfactory attention by NDC sales staff, its products need to be in demand.
Communication between NDC and Deschutes needs attention, particularly in terms of
sharing local market knowledge to help strengthen Deschutes’ portfolio strength and
increase brand awareness in New Mexico. The Independent Council on 3-Tier Dynamics
identifies this area as a responsibility of the distributor. (Billingsley, 2014) NDC has not yet
provided specific market strategies for New Mexico to Deschutes. This is important in order
to target the appropriate market for Deschutes products. A comprehensive and collaborative
marketing plan is essential to the overall success for Deschutes sales in New Mexico. Upon
reviewing the on-premise sales data provided by NDC, 2014 sales of Deschutes fluctuated
throughout the year in comparison with more steady performance the prior year. NDC and
Deschutes should collaborate to investigate and address the cause of said
inconsistencies. The sales data further reveals that most New Mexico restaurants and bars
prefer the local Marble Brewery. In view of this finding, Deschutes must work to market its
products in order to remain competitive with the local breweries.
2.2.3.2 Off Premise Distribution Analysis
Deschutes is facing lost opportunities for sales in off-premise distribution because New
Mexico consumers lack awareness of its products. In retail Deschutes products are not often
stocked in refrigerated areas and a limited number of products are offered. Primary research
found that Deschutes products are often found warm, out of reach, or at floor level. Secondary
research indicates that customers typically prefer beverages served at drinking
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temperature. Retail staff generally determine which products will be refrigerated in concert
with distributors.
A potential reason for poor shelf placement can be attributed to the upstream
consolidation of the largest beer producers Anheuser-Busch with InBev, and
MillerCoors. These two companies dominate the market and therefore have major price-
setting power. With no craft brewery owning a large market share, these large companies
can negotiate better contracts. Anheuser-Busch (over 200 brands) and MillerCoors (170
brands) own the majority of shelf space in most places where alcohol is sold.
Generally, distributors have their own in-house sales teams. It may be the case that
NDC’s sales team is not adequately educated on Deschutes products and/or incentivized to
push Deschutes products, or that they simply find better incentives for competitor
products. These misaligned goals could be a contributing factors to the stagnating Deschutes
sales figures in New Mexico.
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2.3 SWOT ANALYSIS
A SWOT analysis was conducted based on the research findings. Understanding the
current proficiencies, deficiencies, and potential for Deschutes can yield major dividends
when constructing a strategy to more effectively spread brand awareness and penetration
within the market.
Strengths
Cultural similarities between New
Mexico and Bend
Positive performance during
promotional sales
On-premise popularity at Kelly's
Off-premise support at Albertsons
Black Butte Porter is the highest selling
craft beer porter in the country
Weaknesses
Lack of knowledge of local
Albuquerque beer market
Lack of strategic market segmentation
strategy
Ineffective distribution methods and
communication.
Lack of dedicated resources in the NM
Market
Opportunities
Growing market for craft beer in NM
Openness of typical craft enthusiasts to
try new beers
Threats
Lack of brand awareness
Consumer loyalty to local brews,
Increasing competition between local
breweries
Increasing quality of local beers
Positive competitor sales
Highly regulated product category
Figure 7
2.4 CONCLUSIONS FROM MARKET ANALYSIS/IDENTIFYING ROOT PROBLEM
2.4.1 Consumer/Retailer Conclusions
The market research process revealed interesting and useful trends about both
consumer and retailer behavior. The overarching conclusion that can be drawn from the
research is that at both the consumer and retail level, the root marketing problem is a lack of
brand presence. Every issue identified thus far with Deschutes in New Mexico can be traced
back to the company not having a physical or virtual presence in New Mexico. Lack of brand
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presence has led to further complications such as lack of brand awareness, questionable
value proposition and mixed or confused positioning.
Brand awareness in particular has suffered greatly from Deschutes not explicitly
making their brand presence felt in New Mexico. Both on a consumer and retailer scale,
limited promotional tactics, lack of strategic consumer targeting and local consumer loyalty
to New Mexican produced beer have made brand awareness difficult to improve. To this
point, sales, successful product distribution, and establishing a connection with the local
populace in Albuquerque have also suffered largely because of a lack of knowledge about
Deschutes. Both consumers and retailers simply don’t know enough about Deschutes to
become interested in the beer from Oregon. If Deschutes had more of a defined presence in
the state, many of these issues could be remedied. In contrast, the craft beer industry in New
Mexico has shown significant growth within the past decade. As of April, 2015, a map
published by the New Mexico Brewer’s Guild shows at least 23 major breweries or tap houses
in the Albuquerque area alone. (The Official New Mexico Beer Map, 2013-15) A significant
cluster is in the Nob Hill area adjacent to the University of New Mexico, where Bosque Brewing
has joined Kelly’s and Tractor Brewing, alongside restaurants such as Il Vicino and B2B, which
are now brewing their own beer. (See Appendix 1 for a map of Albuquerque’s most popular
neighborhoods for drinking and socializing). The craft beer community is vibrant and
growing in New Mexico and the research indicates that the typical craft beer drinker in New
Mexico is nearly identical to the typical craft beer drinker nationwide. Thus, there is a lot of
potential for Deschutes to grow in New Mexico if improved brand presence can be
successfully augmented with sustained market penetration.
Another hurdle Deschutes must overcome, according to the research, is New
Mexican’s tendency to buy and consume local craft beer. The research also reveals that not
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only are their similarities between craft beer drinkers in New Mexico and craft beer drinkers
in Oregon but there are also many similarities between New Mexico’s culture and values and
Deschutes’ culture and values (i.e. strong ties to community, outdoor/active lifestyle,
concerned about the environment and sustainability, etc.) Deschutes must clearly
communicate these similarities to consumers in New Mexico and also mitigate the perceived
threat to local breweries by taking a collaborative competitive approach with local breweries.
A sustained effort to educate consumers and retailers about Deschutes products is
needed to overcome the many obstacles facing Deschutes in New Mexico.
2.4.2 Distribution Conclusions
The overarching distribution problem is the weak relationship between Deschutes
Brewery and NDC. This also can be attributed to the root problem of brand presence. Missed
opportunities for education, support, incentives and communication has had a negative
impact on the relationship between Deschutes and NDC.
The lack of a strong relationship has affected Deschutes’ ability to effectively
communicate what it believes its responsibilities are as a supplier, as well as its expectations
for NDC. This lack of effective communication has contributed to an overall 7.3% decrease in
sales in New Mexico and low brand awareness. Furthermore, this poor relationship has
minimized the sense of community among Deschutes’ customer base in New
Mexico. Community and brand awareness cannot be improved without Deschutes and NDC
working together to reach out to local consumers and firms.
When products sell well, NDC is more likely to suggest that those products be carried
by retailers, driving revenues for both retailers and NDC in a cyclical nature. The lack of
brand presence has resulted in a product brand that is challenging to sell. Deschutes and
NDC both stand to benefit from increasing brand presence in New Mexico.
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3 MARKET SEGMENTATION & MARKETING PERSONAS
3.1 MARKET SEGMENTATION
Before determining how to increase Deschutes’ brand presence in New Mexico
through various strategies, the team had to determine who those strategies should target. The
market research and analysis revealed five logical and distinct market segments, three of
which Deschutes should target.
Market Segments to Target
1: Craft beer drinkers who do not drink Deschutes (Primary Target Market)
This segment is the one Deschutes is most likely to capture and should be their primary focus
to begin with. Market research identified this segment as being mostly made up of sociable
and active Caucasian males (21-35 years old) who enjoy the fine quality taste of a craft
beer. They are adventurous and willing to try beers that are outside of the Budweiser/Coors
mold. They are innovative and want to be ahead of the curve; the first person to talk, post, or
tweet about a great beer.
2: Non-craft beer drinkers (Secondary Target Market)
The secondary segment in terms of both ease and potential benefit in acquiring consists of the
traditional beer drinker. This person varies in age, taste preference, and motivations for
drinking, but in general is more interested in traditional beer options. For example, on-
premise interviews indicated that a large portion of Hispanics within New Mexico prefer more
traditional beer that they grew up drinking. These consumers do however have a level of
impressionability that could be utilized. The market research shows that 53% of consumers
would try craft beer if they had more information. This segment is at a tipping point. These
consumers have a taste for beer and long to be educated about what good beer tastes like.
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3: Alcohol drinkers who do not drink beer (Tertiary Target Market)
This segment would be classified as tertiary as it is the most difficult group to target. This
person is attracted by factors that may be out of the control of a craft brewery. For example,
gender might have a direct influence. According to a recent study conducted by Nielsen
Spectra/Simmons, 68% of men drink beer while only 32% of women do. (Craft Beer
Consumers, 2014) This would imply that it is likely that women are the dominant demographic
of this group. As market research has shown that women generally favor lighter beers, if any,
it may be difficult to sway them towards trying the IPAs, porters, and stouts characteristic of
craft beer offerings. Non beer drinkers may simply have not been given the opportunity to
find a beer that they enjoy. Other consumers in this group may feel as though they do not fit
the stereotypical beer drinker and prefer to drink something that is more trendy or classy.
Still, others in this group simply prefer other alcoholic beverages to beer.
Target Markets to Ignore
4: Loyal Deschutes drinkers
This is the small segment of people in New Mexico who are already brand loyalists. Deschutes
should definitely not “ignore” their loyal customers, however, for the objectives of this plan
(growing the Deschutes brand in the New Mexico market), it does not make financial sense
for Deschutes to invest in directly targeting this particular segment.
Segment 5: People who cannot or choose not to drink alcohol
This segment consists of people under 21 who cannot legally drink alcohol and also those
people over 21 who choose not to drink for religious or other reasons.
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3.2 MARKETING PERSONAS
The team employed the use of marketing personas in an effort to more easily and
effectively describe the typical consumer in each of the three market segments chosen to
target. Marketing personas are semi-fictional representations of a company’s consumer base
and are created using a combination of market research and real data about the customers.
The use of marketing personas has many benefits including a better understanding of
customer needs, consistency across the company, better product development and in this
case, better marketing strategies. The following personas were developed for each of the
targeted market segments:
1. Pat – craft beer drinker who does not drink Deschutes
Pat is male, Caucasian, educated, and between the ages of 25-35. He enjoys a variety of
outdoor activities such as hiking, fishing, camping, skiing, etc. He also likes to go to music
events and is frequently logged into several different social media accounts. As a result of
his consistent social media exposure, Pat is both more frequently exposed to and more
influenced by online advertisements than by commercials on television. Pat primarily
views craft beer as a casual experience than as an instrument. He values, to a greater
extent, the experience of trying new, high quality beers over having low quality beers for
intoxication purposes. Pat often finds more pleasure in trying out new beers and
experimenting rather than sticking with consistency. To this end, he is far less brand loyal
than older generations. Pat could most aptly be labeled as a contemporary “hipster”.
2. Stevie – non craft beer drinker
Stevie is Hispanic and may be male or female. Preferences vary as to the type of beer s/he
drinks but they definitely do not drink craft beer on a regular basis. Stevie is older (35+
years), loyal to the brands of beer they have been drinking for years and is more likely to
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pick a beer based on brand name, price, or familiarity as opposed to taste, quality,
recommendations, etc. Stevie is somewhat impressionable, however, and may be
persuaded to try craft beers if given adequate information.
3. Tricia – alcohol drinker who does not drink beer
Tricia is female, middle to upper class, and could be any age or ethnicity. Tricia drinks
wine, cocktails, mixed drinks, etc. and rarely if ever drinks beer. Her reasons for not liking
beer include the caloric content and bitter taste of beer. Her drinking habits are either
drinking to get intoxicated (price motivated) or drinking socially (status motivated). She
is more likely to frequent nightclubs than the neighborhood bar or local craft brewpub.
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4 INTEGRATED MARKETING COMMUNICATION
Identifying the target markets and creating brand personas allowed the team to
successfully create targeted strategies specific to New Mexico and based on the research
findings. Before discussing those strategies, there is an important element that will act as an
overarching theme in the implantation of any or all of these strategies.
As Deschutes implements market strategies in New Mexico, it is important that they
communicate a consistent message each time they engage with a consumer, retailer, or
distributor. The message should also be consistent across all platforms, i.e. social media,
print, in-person, etc. The marketing term for this practice is Integrated Marketing
Communication (IMC). This should not be confused with a company slogan or motto and the
IMC is not meant to replace those. The IMC will be particularly useful as Deschutes grows in
a market like New Mexico where brand presence is extremely low and there is little to no (or
in some cases confused) knowledge of Deschutes and what they offer in terms of product and
value. Communicating a consistent message will not only create awareness but also
confidence in the brand.
None of the marketing strategies discussed below will be successful if Deschutes
cannot overcome the New Mexico consumer preference to buy local and do this in a way that
is not threatening. This can best be accomplished by highlighting the similarities that exist
between New Mexico and Bend, Oregon. The craft beer drinker in New Mexico is strikingly
similar to the craft beer drinker in Bend. The two locales are also similar in their commitment
to community, enjoyment of an outdoor/active lifestyle, concern for the environment and
sustainability, support of a thriving craft beer culture, etc. For Deschutes to be successful in
New Mexico, the consumer must acknowledge these similarities and also understand that
Deschutes is not trying to take over the craft beer community in New Mexico, but rather seeks
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5 STRATEGIES
The strategies discussed below are divided into the same five groups the Market
Research was divided into: Off-Premise Consumer, On-Premise Consumer, Off-Premise
Retailer, On-Premise Retailer and Distribution. Within each of these five groups, there is a
discussion of recommended strategies, implementation, costs, metrics, and contingencies.
5.1.1 Consumer Marketing Strategies
5.1.1.1 Off premise Consumer Marketing Strategies
In the preliminary analysis, an approach including the traditional mix of product
branding, service and pricing was considered. This led to marketing options like running
promotions with rebates, coupons for in-store complimentary products, seasonal sales, mix-
n-match themes, displays, product inserts, beer clubs and other similarly aligned
approaches. These strategies, however, were found to be somewhat redundant when
reviewed by other strategy groups. In addition, consideration was given to Deschutes’
ongoing initiatives in marketing that address specific strategic goals with regard to product
branding. In the final analysis, we decided to pursue a comprehensive media campaign that
would be progressive in nature and allow for the tracking of key metrics selected to quantify
results. The objective of this proposed campaign is to address what has been determined to
be the root problem: Increasing both brand awareness and product differentiation.
Recommended Strategy – Media Campaign
1) News Outlet Initiative
The first stage of the media campaign would involve a press release and/or story that
would appear in both the Albuquerque Journal and The Daily Lobo. The Albuquerque Journal
has a daily circulation of 96,825 and on Sundays, 116,826. It is the largest newspaper in New
Mexico and dates back to 1880. (Wikipedia, 2015) The Daily Lobo is the University of New
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Mexico’s official newspaper, and also has beginnings dating back to the latter 1800s with its
first publication in 1895. The current circulation is 9,000 copies daily. (H. Dowdy-Sue, personal
communication, April 30, 2015)
The goal is to highlight the collaboration between Deschutes and UNM, specifically the
development of a strategic marketing plan. This will create an opportunity to spotlight the
products offered by Deschutes. The news coverage will also help to create more awareness
within the community and at the same time develop a sort of synergy between the prospective
consumer and Deschutes. This platform will also be a great platform for first introducing the
IMC “Connecting likeminded communities” to the New Mexico Market. This strategy would
reach Pat, Stevie and Tricia by being printed in a generalized newsprint.
2) Sponsored Beer Festival
In addition to participating in beer festivals such as Hop Fest, Albuquerque Beer
Festival and Blues & Brews, Deschutes should also consider sponsoring one. These beer
festivals are fairly new to New Mexico, but are intended to be run annually and bring in many
craft and general beer drinkers alike. Deschutes was a brewer at both Blues & Brews and Hop
Fest last year, but gathered data suggests that this did not have a large enough effect on
creating brand awareness. Inspiration came from the fact that the Alaskan Brewing Co.,
another non-local craft brewery, actually sponsors the Blues & Brews festival. Although many
breweries are in attendance and can offer samples, attendees can only purchase beer from
Alaskan Brewing Co. Deschutes could host a festival similar to Blues & Brews. Deschutes can
also sponsor an event in New Mexico similar to the Arizona Beer Week, where the focus is not
on a variety of breweries but rather on a variety of Deschutes beers accompanied by music
and food. According to the Deschutes’ southwest regional sales manager, this event has been
successful in Arizona, so it seems logical to experiment with something designed similarly
and targeted to engage with New Mexico consumers.
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3) Contest featured and promoted in social media
Another idea to pull in more brand awareness in New Mexico is to create a contest that
is targeted at beer drinkers who use social media. Ideas for such a contest include:
Gift card giveaways
A trip to the Deschutes brewery in Oregon
A Deschutes “care package”
Name the New Regional/Seasonal Beer contest
All of these contests can be held in other states as well as in New Mexico. Consumers
could fill out entries at festivals that they participate in, and/or using social media like
Facebook and the Deschutes website, to enter the contests. The most interesting of the above
contest ideas is “Name the Regional/Seasonal Beer Contest”. It would allow Deschutes to
bring something special to their whole southwestern region by stating how the beer’s
“inspiration” was taken from various aspects of each regional state (New Mexico, California,
Arizona, etc.).
The Deschutes care package can contain a variety of their beers or other Deschutes
products similar to what other beer and spirits companies give away in bars, liquor stores and
at events. These products include beer mugs, coasters, towels, sunglasses, and keychains. It
can be a simple package such as four beer mugs, a bottle opener, a pamphlet about
Deschutes beers and some coasters. It can be named a “Deschutes Beer Drinker Starter Kit”.
This in itself can be a prize, or a secondary prize in the beer naming contest or trip giveaway.
Developing a partnership with a local brewer to brew the beer featured in the Name
the New Beer Contest would help to create that sense of community and further generate
interest in the contest. The campaign should be advertised in local entertainment media as
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well as online to generate buzz about the project. It holds true to the message of Deschutes
building a community with New Mexico and the surrounding states.
4) Local Lifestyle Show
The final leg of the campaign would involve an appearance on a local lifestyle show.
“Good Day New Mexico” is a popular daytime show sponsored by the local NBC station,
KOB4. The station maintains a state-wide leadership role with “Good Day New Mexico”
providing businesses and organizations exposure within communities that they would not
otherwise have. The segments are “long-form” meaning they are extended and allow for
customizable and in-depth coverage. The viewing appeals to a diverse demographic and
KOB4 allows access via television, online and mobile. “Good Day New Mexico” also engages
in social media with their Facebook page, which currently has 2,500 “likes.”
This final strategy comes with the anticipation that a successful market communication
initiative has increased the brand awareness and promoted the overall product differentiation
that Deschutes has to offer. At this stage, the goal is that the local beer community has
embraced the idea of a non-local brewer and could voluntarily identify with the culture and
mission surrounding Deschutes’ brewing and craft offerings. An appearance on a local
lifestyle show would be the climactic rollout whereby Deschutes could shine. The on-camera
interview could open up with a discussion of the UNM collaboration, then transition into a brief
talk about “beer culture,” and finally highlight what Deschutes Brewery has to offer in the way
of quality, variety and community. A cross-sectional market audience, reaching a wider range
of consumer groups, would see this TV segment, thus impacting the market segments of both
Pat and Stevie.
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Implementation
The goal of this proposed strategy is to build Deschutes’ brand awareness in New
Mexico both quickly and cost-effectively. With that in mind, the following implementation
plan is proposed:
The first stage is the news outlet initiative: Press coverage in the Albuquerque Journal
and Daily Lobo of Deschutes and its recent collaboration with the Anderson UNM class. These
articles can symbolize a sort of re-invention or re-invigoration of Deschutes’ presence in New
Mexico and will exemplify Deschutes’ efforts to engage and rebuild with the New Mexico
community. Partnering with the state’s premiere university in order to understand who New
Mexicans are and what they want from Deschutes Brewery deepens their commitment.
Capitalizing on this media coverage as a launching point for a wider campaign, the
next stage for Deschutes should be to focus on targeting Stevie by increasing Deschutes’
appearance at beer festivals and soon afterwards sponsoring its own. Beginning with a focus
towards engaging the “beer but not craft” drinker segment will allow Deschutes to start with
what the company is already well-positioned to do – market the benefits of craft beer and the
craft beer culture as a whole. This heightened festival presence will incidentally bring
significant awareness to the Pat as well. However, it is recommended to wait on specifically
targeting current craft drinkers until Deschutes’ new rebranding efforts fully take hold and
also until Deschutes has more experience with representing and promoting its new
“substance matters,” and “worth sharing,” message. Once Deschutes is able to compellingly
use its new brand to clearly differentiate itself from other craft breweries, especially local
competitors, it can shift to focus directly on engaging “craft but not Deschutes” drinkers as
well.
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In the third and final stage, Deschutes can expand by specifically targeting Pat through
the contest featured in the Alibi and the local lifestyle show appearance. At this point, the
focus is to grab the interest of passionate craft drinkers and turn them on to what Deschutes is
about and the unique and valuable contribution it makes to the New Mexico craft atmosphere.
This multi-staged approach will allow Deschutes to manage risk by ramping up slowly
and measuring success of initial efforts before making significant supplemental investments
of time and money in the market.
Phase 1: News outlet initiative (Timeline: Immediately)
Immediately after this marketing plan is received, Deschutes should work with the
Anderson School of Management to build media interest in running stories about this
project.
Deschutes should develop a set of ideas for press releases and interviews that
emphasize the collaborative, community-building, and pro-NM nature of their
decision to work with UNM students in understanding and engaging the New Mexico
consumer. For example, Deschutes can explain that they needed to understand what
New Mexico consumers want, and so they partnered with New Mexico consumers
themselves – UNM students – to find out. They can also explain how the partnership
linked well with their “worth sharing” and “substance matters” brand image, as a
community-focused and integrative way of responding to a business problem (rather
than the more distant and corporate-focused methods some other companies might
choose).
Phase 2: Increased beer festival attendance by Deschutes, leading to a Deschutes-sponsored
beer festival (Timeline: Starting within the next 6 months)
Continue attendance at various New Mexico beer festivals such as Blues & Brews and
Hop Fest. Also consider expanding attendance to other festivals such as Albuquerque
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Beer Festival or Bike and Brew. Focus on selling the craft beer culture and engaging
non-craft beer drinkers, as well as showcasing Deschutes’ commitment to building
community with the New Mexico consumer and beer industry.
Begin the process of Deschutes eventually hosting its own festival, just as Alaskan
Brewing Co., also a non-local brewery, does with Blues & Brews. Leverage Deschutes’
experience with similar endeavors such as Street Pub and the festivals Deschutes
facilitates in Arizona. Aim to hold the first Deschutes-hosted festival within two years,
and even sooner if feasible would generate greater results.
Phase 3: Develop campaign aspects specifically focused towards getting craft but non-
Deschutes drinkers interested, specifically contest featured in the Alibi and local lifestyle
show appearance (Timeline: Starting in 6 months to 1 year)
Review effectiveness of campaign so far and use metrics to determine whether to
continue, expand, or cut back (further details under “Metrics” and “Contingency
Plans” below).
If decision is to continue, develop contest ideas. Once contest is ready, build buzz by
advertising contests through media outlets most likely to reach passionate craft
consumers, such as social media and local lifestyle media like the Alibi magazine.
Contact local lifestyle shows, such as “Good Day New Mexico,” and seek to gain a
television appearance by pointing to the interesting nature of the Deschutes’ story –
both the general events of Deschutes’ history, beginning in Oregon, and its product
quality and the story of Deschutes, to the New Mexico collaboration starting with UNM.
Then leverage these appearances as a powerful platform to further develop
Deschutes’ “Worth Sharing” brand and community-building orientation as a good fit
with the New Mexico culture and lifestyle.
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Costs
Below are (very rough, considering the nature of this project) cost estimates for each
piece of the proposed media campaign. The employee salary rate of $40.87/hour is based off
an $85,000 annual rate, which was taken from online estimates of the annual salary of an inside
salesperson:
Strategy
Cost
Estimate
Explanation
Press Release - Abq
Journal
$409 10 hours of work at $40.87/hour
Press Release - Daily
Lobo
$368 9 hours of work at $40.87/hour
Sponsoring a beer
festival
$4,385
40 hours of work at $40.87/hour
$1,250 estimated festival fees/logistics (based off a
festival manager’s experience)
$1,500 giveaways and product
Ad and Contest - The
Alibi
$2,935
40 hours of work at $40.87/hour
$300 ad (1 per week at $75, for 4 weeks - see
http://www.nationwideadvertising.com/adinalnewme
a.html)
$1000 contest prize value
TV Appearance - Good
Day New Mexico
$1,226 30 hours of work at $40.87/hour
TOTAL: $9,323
Figure 8
Metrics
Throughout implementation, Deschutes will need to evaluate and measure the success
of each piece of the strategy. In order to do this, it will need to rely upon metrics. These
metrics will be used to measure performance after each particular implementation strategy is
put into practice. Although the example metrics that follow use data from 11/30/2014, it is
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47 Strategies for Growing the Deschutes Brand in the NM Market
advised that Deschutes use more recent quarterly data and growth data in order to better
exemplify more recent trends. Being as there are many types of potential metrics to use,
below are a few suggestions as to which to focus on.
Concerning the news outlet initiative, sponsored beer festival, and local lifestyle show
strategy aspects, two metrics are suggested. First is market share percentage. This involves
dividing Deschutes’ sales revenue in the market by the estimated total market revenue,
yielding market share percentage by revenue. According to the IRI data provided by
Deschutes, in November 2014, Deschutes’ New Mexico market share percentage was 2.2%
with $233,387 in sales out of a total of $10,595,089. Success would be measured by a growth
in the market share percentage after implementation of each strategy stage. Considering that
Shock Top and Marble Brewery, two of the top ten brewers of the most-purchased craft beers
in New Mexico, are at 4.2 and 4.3% market share respectively, success could be measured
by matching or exceeding 4.0%, or approximately $200,000 more in sales, over a four quarter
time frame.
Another method by which success could be gauged is volume and velocity numbers,
which Deschutes has previously measured after running similar campaigns. With this metric,
success would be measured by a percentage growth followed by a hold at the higher volume
outputs. Success will be more difficult to measure using this metric since volume outputs vary
from state to state. It is recommended that Deschutes see total volume sold increase and
remain at an increased level in order to deem the strategy a success.
As for measuring effectiveness of the contest featured in the Alibi, both market share
and volume and velocity numbers are recommended still, but a third metric is also suggested:
Click-through rates. Click-through rates will allow Deschutes to better understand the change
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48 Strategies for Growing the Deschutes Brand in the NM Market
in social media usage before and after the campaign is run, such as whether or not social
media involvement increases after implementing a plan that targets social media users.
Contingencies
Contingency 1: Strategy Exceeds Expectations
The marketing strategy has been very successful in increasing awareness and interest
in trying Deschutes beers, leading to an unexpectedly high increase in demand from both on-
premise and off-premise consumers. In order to satisfy demand and keep increasing
awareness, Deschutes needs to hire a local person that will be able to manage operations in
New Mexico, thus establishing a permanent presence in the market. The benefit of having
someone local includes that they can react quickly to new opportunities in the market and also
be obtainable when necessary. A local contact may also be better suited to navigate the
unique complexities of the New Mexico culture and business environment. Furthermore, a
local Deschutes’ person can work closely with the supply chain and make sure the product is
available in many outlets and is convenient for customers to purchase.
As a longer-term plan, Deschutes could consider investing in opening a brew house in
New Mexico. There are many potentially lucrative locations for a Deschutes brew house,
including near some of New Mexico’s many ski resorts and/or golf courses. These places
attract a variety of people from both in and out of state. Deschutes could use a local brew
house to market their beers, experiment with new beer flavors and even combine their beers
with New Mexican food.
Contingency 2: Strategy Does Not Meet Expectations
If the original plan does not give the expected results, Deschutes should further narrow
the target market and pursue a niche strategy. For example, Deschutes could focus on Pat and
not Stevie. Craft beer consumers are already familiar with the craft culture and are more
willing to experiment. By pursuing a niche strategy, Deschutes will be able to expand
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awareness among that group and also invest more in the consumer that drinks craft instead of
just beer.
After narrowing the target market, such as to only consumers who drink craft but not
Deschutes, the next step would be to focus on the channel that will deliver the most value.
Deschutes should focus on selective distribution and distribute to grocery stores that appeal
more to craft beer drinkers such as Trader Joe’s and Whole Foods. Deschutes would then also
need to focus on a pull strategy that would incentivize retailers to sell and promote Deschutes
beer. Another suggestion would be to develop and compare marketing plans for different
states in the region. Deschutes should focus on the long-term plans of other states where it has
been successful and then try to understand how to translate that success to the New Mexico
market.
5.1.1.2 On-premise Consumer Marketing Strategies
When evaluating on-premise consumer strategy, Deschutes’ most significant issue is
brand awareness. The market research correlates with this assertion. Of people who are
unsure whether or not they enjoy craft beer, 51% have never heard of the Deschutes Brewery.
Additionally, of the craft beer enthusiasts who were polled, 40% have never heard of the
Deschutes Brewery. These figures demonstrate a stark reality and help define a path forward.
The Deschutes Brewery slogans include “Worth Sharing”,“Bravely Done”, and
“Building Community.” These sentiments feed directly into the makeup of a typical craft beer
drinker (Pat). Someone who enjoys variety, adventure, and new experiences will be
inherently drawn to the Deschutes Brewery culture. The question becomes: how does
Deschutes convince New Mexicans to try its product, and therefore buy-in to its value
proposition? The following strategies were formed to address this issue directly.
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50 Strategies for Growing the Deschutes Brand in the NM Market
Alternative Strategies
In pursuit of the goal, several initial ideas were rejected. These ideas included: (1)
coasters, (2) light up taps, (3) bottles only, (4) bumper stickers, and (5) stealth marketing.
These ideas are generic and cliché. Coasters get ignored, light up taps are tacky, and
bumper stickers are practically extinct - at least for this target market. As for implementing a
bottles only strategy, the market research showed that the target market is more inclined to
order a beer on tap than from a bottle. The potential gain in brand awareness does not
outweigh the loss in sales. With stealth marketing, the execution of the strategy is too
deceptive for the Deschutes brand. Deschutes is a proud company that believes in their
product; therefore, any implemented strategy must live up to that proud culture. Deschutes
needs to position themselves as a brewery that is already above these basic levels of
marketing tactics. The subsequent strategies do just that.
Recommended Strategies
1) Regional Focus
When establishing the brand, the best return on investment is to focus on where the
most craft drinkers are located so they can increase brand awareness, tell their friends about
Deschutes, and become regular Deschutes drinkers. The ideal places to find these craft
drinkers are at ski resorts and towns that thrive on outdoor activities. These New Mexico
towns include Albuquerque, Santa Fe, Taos, Angel Fire, Sipapu, Red River, Los Alamos, and
Ruidoso. With this in mind, Deschutes should focus their marketing toward these areas since
they are similar to many of the locations in Oregon for which their beers are named. Those
who visit these areas are likely to have the income to use on a craft beer experience and will
appreciate beers that are named after landmarks. This will help Deschutes distinguish their
beer from their competitors and will appeal to many craft drinkers or vacationers who are
looking for something new and different to enjoy.
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Since many of these towns are seasonal, it will also be important for Deschutes to have
a place to focus their marketing plan during the summer months. This can include golf courses
that cater to both local New Mexicans and to tourists. The golf courses that Deschutes should
focus on include: The Club at Las Campanas, Paa-ko Ridge, Rainmakers, Black Mesa, Twin-
Warriors, Pinon Hills, Pueblo de Cochiti, Sierra Del Rio, and Red Hawk, as well as major golf
courses in ski towns. Deschutes should focus its attention on getting tap space in the
clubhouse of these golf courses. The Deschutes brand is more for people who want to wind
down and talk about the round, rather than for golfers who are on the course and who are less
concerned about taste.
2) Neighborhood Tap Exchange
Neighborhood taps, in which Deschutes partners with a local brewery to feature their
beers in a local brewery, are a perfect way for Deschutes to demonstrate how it is investing
in the local New Mexican community. There is a huge opportunity for Deschutes to engage in
an unofficial partnership with brewers such as Marble, La Cumbre, Red Door, etc. (a brief
overview of selected local breweries can be found in Appendix 3). The idea of exchanging
taps with other breweries shows the community that Deschutes is truly not about competition,
but about sharing the good quality that goes into craft beer. This appears to be a profitable
compromise for both parties involved because it increases each other’s market exposure.
Deschutes is not just coming in and asking for something without reciprocating the favor;
meaning, they will station a tap of a New Mexican brewer at their hometown pub house(s) as
well. It is a mutual agreement between two competing organizations for the greater good and
variety of the beer drinker.
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3) Beer Enthusiasts
Market research shows that consumers are much more likely to listen to their peers
when making a beverage choice. Seventy-five percent of consumers seek advice from their
friends or strangers when making a decision about drink purchases. This is split almost
equally in half with 90 of the 236 respondents turning to a friend and 89 turning to a stranger
for drink suggestions. The remaining 25% ask their server or bartender. There are two
possible implementations for this strategy, a high cost option and a low cost option. The first
strategy is the higher cost strategy which consists of Deschutes creating a team of beer
enthusiasts. This team would be made up of people who excel at influencing the typical craft
beer persona, Pat. Based on the market research, the best type of influencer for this retail
target market would be a casual, cool, smooth talking, attractive, and educated individual
(typically male). In addition, this person is independent, self-motivated, and driven by
success. He is sociable, emotionally intelligent, and self-aware. He typically wears a casual,
cotton oxford button-up, untucked, sleeves rolled up, cotton slacks, and suede oxfords. His
face is well trimmed with a five o’clock shadow coupled with trendy eyewear. The ideal
person for this job would be an aspiring actor. Rather than posting this job opening on their
website, Deschutes should think out of the box by posting a casting call to organizations such
as the Albuquerque Theatre Guild, as well as several Santa Fe casting agents. New Mexico is
an ideal location for this type of hiring strategy, due to the booming film industry. These beer
enthusiasts would be trained about Deschutes and its products, have a passion for craft beer,
and would be seen by their peers as attractive and cool. These employees would be
responsible for going into bars and restaurants and telling consumers about the product and
its benefits. Implementing this technique, however, might prove costly because it requires
the hiring and training of a new staff.
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53 Strategies for Growing the Deschutes Brand in the NM Market
The second beer enthusiast implementation option is less costly. Deschutes would
identify community leaders in New Mexico, attract them to Deschutes, and make them brand
evangelists. By identifying and building a relationship with leaders in the New Mexico craft
beer community, Deschutes can create brand loyalists. These brand loyalists will work hard
to promote their products. This can be done by contacting and forming partnerships with
organizations such as New Mexico Brewers Guild, ABQ Beer Geeks, and Dark Side Brew
Crew. Members of these organizations are well respected and are considered to have a great
deal of knowledge about craft beer. They also have a substantial following around the
Albuquerque and greater New Mexico area. These enthusiasts spend a great deal of time in
bars and pubs and already fit the criteria of a perfect beer enthusiast. These individuals can
use both the time they spend in actual on-premise locations as well as other mediums to
connect with consumers. For example, these enthusiasts can use social media to start
conversations with their followers about the beer. Social media sites such as Untapped,
SnapChat, Facebook, and Twitter can be leveraged to create a discussion that will help
eliminate the lack of brand awareness that Deschutes has in the New Mexican community.
4) Glass Differentiation
As a way of improving brand awareness, Deschutes must attempt to distinguish its
product on bar taps and tables at all current and future retailers. The most effective way of
doing this is by offering a unique glass to serve Deschutes beer. Market research shows that
19.5% of New Mexicans polled prefer IPA style craft beers, a near 6% percent difference from
the second closest beer type. Additionally, Deschutes market research has shown Fresh
Squeezed IPA to be the fastest growing beer in the United States. These two facts should be
leveraged to distinguish Deschutes in a bar setting.
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If Deschutes offered a legacy glass, like a specialty snifter, it would offer an experience
to the drinker that boldens and enhances the taste of the beer. It is evident that New Mexicans
like IPA and with Fresh Squeezed IPA growing in popularity, it would be beneficial to
differentiate the product to consumers by offering it in a specialty glass. This would fit into
Deschutes’ goal of building communities. If Deschutes were to be served only in the specialty
glasses, people would immediately have a connection with the person across the bar who is
also enjoying a Deschutes beer. This could be a potential conversation starter and the
beginning of a new friendship or acquaintance. Another way in which Deschutes could appeal
to the distinct New Mexican culture would be to inscribe a cultural symbol that has meaning
for the people of New Mexico. These symbols could include the Zia symbol, a chili pepper, a
hot air balloon, or a natural landmark such as the Sandia or Manzano Mountians. This would
further prove their dedication to the New Mexican culture and community. This is a strategy
that could be taken to each region. This strategy has the potential to make Deschutes glasses
a collector’s item as tourists collect the Deschutes glasses from each state that they visit. By
employing this strategy, Deschutes will use subtle visual stimulation to put its beer in the
minds of on-premise consumers. The overall cost for this strategy is dependent on the
manufacturing and design of the snifter glass and the shipping expenses to bars. Purchasing
imprinted snifter glasses in bulk has relatively low costs and is a good investment that can
lead to an overall increased brand awareness for Deschutes. There is no doubt that a glass of
that caliber will stand out. Yet, Deschutes must be able to overcome two major obstacles:
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making the glass cheaper to produce and convincing retailers to use it exclusively on
Deschutes’ beer. If those things happen, this strategy will be a success.
5) Event Presence
Event presence is another opportunity that Deschutes has to increase brand
awareness. Choosing specific events in the New Mexican community that highlight the
Deschutes mission and values would be a perfect way to show craft drinkers that the company
wants to become a part of the local community. It gets the product into the hands of consumers
on-premise and shows consumers that Deschutes is willing to invest in New Mexico. The
people of New Mexico are loyal to their community and to their events, so sponsoring or
hosting events will help consumers see Deschutes as a part of the New Mexico craft beer
community instead of as a competitor from out of state. The implementation for this strategy
is for Deschutes to choose events that are located in one of the key locations described earlier
and find events that are taking place in that community that benefit or support causes that fit
within Deschutes’ values and mission. Potential events include: Balloon Fiesta, Hop Fest,
Summer Fest (Nob Hill), The Great New Mexico Food Truck, ABQ Beer Week, ABQ Blues and
Brews, Bike and Brew Festival, River and Blues Brew Festival, Las Cruces Tour de Beer, and
New Mexico Brewfest.
6) Food and Beer Pairings
The best way for Deschutes to market their beer to those who drink alcohol but not
craft beer is through food pairing at restaurants. This strategy will help encourage these
consumers to see craft beer as the new sophisticated way to drink alcohol. Deschutes can
implement this strategy by going into restaurants that already carry their products and telling
them they want to promote craft beer. Deschutes will work with the restaurant to find craft
beers that can be paired with each menu item. These beers do not have to be only Deschutes
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56 Strategies for Growing the Deschutes Brand in the NM Market
but other craft breweries should be represented as well. However, Deschutes will research
what the restaurant’s most ordered dishes are and pair those dishes with their
beer. Deschutes will incentivize the restaurants to do this by offering to pay for the cost of
reprinting their menus. This strategy will benefit Deschutes through more sales, will promote
other craft breweries, and will help the restaurants increase their sales of beer.
Implementation
The aforementioned strategies can be effective, but only if they are executed properly.
The following is a rough outline of what implementation should look like over the next two
years:
Phase 1 - Deschutes enters select regional locations and introduces snifter glasses
Deschutes first must ensure that its products are served in the locations that were
outlined in the Regional Focus section. Taos, Santa Fe, and Albuquerque should be the
primary focus. For example, Deschutes already has a presence at the ski lodge and The
Gorge Bar and Grill in Taos but should now expand in the community by having Mirror Pond,
Black Butte Porter, and Fresh Squeezed IPA carried at Aceq. Ideally, at least one select
location will serve Deschutes in each identified community within six months.
Simultaneously, Deschutes will distribute its new snifter glasses to all establishments.
The establishments will be instructed to always serve Deschutes beer in these glasses. The
snifters will create subtle but effective brand awareness through visual stimulation. The
combination of these two factors will be very powerful. Residents of New Mexico will see
Deschutes popping up in all the great outdoor towns of the state. Over time, consumers will
also recognize the snifters as Deschutes glasses and it will spark interest and much needed
brand awareness.
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57 Strategies for Growing the Deschutes Brand in the NM Market
Phase 2 - Beer enthusiasts are released into the market
This phase will run the course of the entire two years, but will not be known to the
public until six months into the implementation. In the first six months, Deschutes will
participate in casting and hire their beer enthusiasts. Deschutes will need to reach out to A&M
Talent House, The O’Agency, and Applause, which are the three best talent agencies in New
Mexico, and they have access to the most qualified talent. Deschutes will then hire and train
twenty beer enthusiasts within six months. Next, the new employees will be sent out across
the New Mexico establishments that carry Deschutes beer to promote the product. This
includes acting as beer advocates for the brand and helping to bolster the newly gained
brand awareness.
Phase 3 - Increased event presence and second wave of beer enthusiasts
After the first six months, Deschutes will begin investing more into the New Mexican
community by sponsoring local events throughout the state. The first event that matches
perfectly with Deschutes’ likeness is the third annual Bike & Brew festival in Santa Fe (2016).
The event is attended by people who pursue an active lifestyle, and Deschutes will have no
problem building community and embracing boldness at such events. The events have to be
the right fit and this would be the perfect place to start.
Once the event schedule has been finalized, Deschutes should then reach out to
several beer groups all around New Mexico. An example of this interaction would be
Deschutes contacting the Dark Side Brew Crew and offering them five VIP passes to Bike &
Brew in exchange for being the topic of their next blog post. The Dark Side Brew Crew would
accept the invitation and be granted access behind the velvet rope. The Deschutes product
and community speak for itself and the Crew would become advocates of the Deschutes
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58 Strategies for Growing the Deschutes Brand in the NM Market
brand. Deschutes would then track their social media activity and retweets, likes, and piggy
backs off all the free press.
Courting these groups will be a slow process, but the potential benefits are worth the
time invested. With the right amount of effort, these groups are having meetings at bars while
drinking Deschutes and posting their activity on Untapped. The effect would be similar to that
of a popular food truck. Consumers will follow these influencers and Deschutes will see an
uptick in on-premise consumer sales.
Phase 4 - Introduce neighborhood taps promotion
In the fourth month of the second year, Deschutes will implement the tap exchange
strategy. Deschutes will take the considerable momentum that has been building over the
previous fifteen months and approach a local brewery with the idea. The exchange should
start simple; one Deschutes tap in their establishment(s) for one of their taps in all Deschutes
pub houses. This can be done with multiple breweries consecutively or simultaneously. The
logistics would work because of Deschutes’ established supply chain. The benefit to sales
would be massive for Deschutes. It would have discovered a way to penetrate breweries and
convince New Mexicans that it can be trusted because it has gained the trust of local brewers.
Not only that, consumers will be impressed that Deschutes is helping local breweries expand
to new markets. Over time, this respect will help Deschutes feel like it is just like the local
brews; the neighbors from the north.
Costs
Although it is not feasible to provide a detailed budget, considering the nature of the
project, below is the proposed cost of each strategy.
