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Sofia Gomez, Sarah Vlasic, Grace Mueller, Jay
Williams
Marketing 489
J u l y 2 9 , 2 0 1 5
Elysian Brewing Company
2
Table Of Contents
Industry Analysis – pages 4-15
• Market Review– pages 4-7
• Competitive Review – pages 7-11
• Customer Review – pages 11-13
• Macro Environmental Review– pages 13-15
Firm Analysis– pages 15-21
• Key Company Information – pages 15-17
• Current Goals and Objectives– page 17
• Current and Past Strategy– pages 18
• Market Performance – pages 18-19
• SWOT Analysis – pages 19-20
• Current Lifecycle– pages 20-21
• Current Branding– page 21
Core Competencies and Competitive Advantages– pages 21-24
• Core Competencies– pages 21-22
• Cost and Differentiation Advantages– pages 22-24
Three-Circles Targeting– pages 25-32
• Customer Targeting– pages 25-27
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• Customer Evaluations– page 28
• Key Features– page 29
• 3 Circles graphic– page 30
• Key Takeaways– pages 31-32
Marketing Plan – pages 32-39
• Goals & Objectives– page 32
• Segmentation– pages 32-34
• Targeting– pages 34-35
• Marketing Implementation– pages 36-38
• Evaluation & Control – pages 38-39
Works Cited – pages 40-44
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Market Review
Threat of New Entrants
Because the craft brewing industry has expanded rapidly over the past decade
across the United States, it is an industry that operates under the constant threat of
new entrants. Craft breweries have gained popularity in recent years due to their low
costs, high volume production process, and limited product variability. Therefore, the
threat of new entrants is moderately high for craft breweries in general and especially
for Elysian Brewing Company based in Seattle, WA. Due to the low barriers to entry
that the craft brewing industry faces, it increases competition on a local scale as more
and more breweries continue to appear throughout the country. Currently, there are
275 craft breweries in Washington State alone and 77 in Seattle city limits and King
County alone (Radovich, 2015). Therefore, due to the threat of local competition and
the low barriers to entry within the craft brewing industry, Elysian faces the threat of
new entrants on a moderately high level on a daily basis.
Buyer Power
Buyer power is low for Elysian Brewing Company. This is a result due to the
similarity of products among the craft brewing industry. According to our lecture
notes, buyer power is low when the "buyer cannot negotiate the price or the terms" of
the product. Within the craft brewing industry, price points are determined by fixed
costs, operating costs, and individual tax margins. Therefore, the consumer does not
have a say in the price they pay for their craft beer. Also, craft beer is a specialized
product and lacks relevant substitutes within its target market of consumers making
its buyer power relatively low.
Supplier Power
Because most craft beer is produced in house at brewery locations, the supplier
power is relatively low within the industry. The buying of ingredients vary greatly
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between competitors, yet all breweries must rely on suppliers of hops and grains,
wheat and barley produces, flour millers, wholesalers of corn, wheat, and soybeans, as
well as sugar processors (Quinn, 2013). While supplier power may increase to the due
power of the suppliers of these ingredients, most prices fluctuate nationally and would
be uniform across the industry.
Threat of Substitutes
Because the craft brew industry caters to a specific target market of consumers,
there is a low level of threat of substitutes for Elysian Brewing Company. Some may
argue that craft beer is competitive with other alcoholic beverage options, such as
spirits and wine, yet because craft beer offers a specialized product, they do not
compete within the same market as their alternatives. Customers of craft beer are
specific to choosing craft beer over wine and alternative alcoholic beverages. Based on
our evaluation of the target market for craft beer, consumers within this industry may
switch between local industry competitors, but they are specifically seeking craft beer
as their product of choice. Therefore, the market for wine and alternative alcoholic
beverages competes outside of the market for craft beer.
Competitive Intensity
Related to the force of Threat of New Entrants, Elysian Brewing Company also
faces extreme Competitive Intensity. Since the operations involved in craft brewing
are consistent across competition within the industry, the craft brewing industry faces
a fairly balanced competition field.
With 77 craft breweries competing within the Seattle market, Elysian Brewing
Company faces the highest level of competitive advantage (Radovich, 2015). In
contrast to specialized industries, Elysian Brewing Company must compete in an
extremely competitive market, where product offerings do not allow for large levels of
varying innovation. Since there are certain expectations of how a craft beer should
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taste, Elysian is forced to compete with 76 other breweries that are essentially making
the same product. Lack of differentiation among products produced within the craft
brewing industry is another factor that leads to high competitive intensity for Elysian
Brewing Company. Common craft beer offerings consist of Pilsner, Brown Ale, Wheat
Beer, Pale Ale, India Pale Ale, Double IPA, Porter, Stout and Bock (Brewers
Association, 2014). While different breweries may specialize in specific brews, the lack
of differentiation among products offered by craft breweries across the United States
leads to Elysian facing high levels of competitive intensity. Pricing across the industry
of craft beer is similar as well. Prices vary from state to state based on individual state
taxes but the average costs and prices for craft beers remain competitively similar and
are determined largely by the consumer willingness to pay. This also remains true for
the similarity between fixed costs faced by all major craft breweries. While equipment
costs vary between sizes of breweries, competitive intensity increases when all players
in the industry face the same variability in fixed cost numbers. This allows for
common pricing strategies across the industry, creating more choices and
opportunities for the craft beer target market.
For these reasons, competitive intensity within the craft brewing industry is the
most important factor in which Elysian competes. This is also the reason that the
industry is attractive to new entrants. With low barriers to entry and high profit
margins, the craft brewing industry will continue to grow. Elysian Brewing Company
competes among hundreds of other craft beer brands around the country. This market
of competition is an example of perfect competition. Perfect competition occurs where
there are many competitors within the market a well as many buyers, leading to the
impossibility "for any one participant to alter the prevailing price in the market”
(Richards, 2014). Within the craft beer market system, there are many competitors
making very similar products, competing within a common price belt. This shows that
while there may be market leaders, the amount of buyers and sellers is great and these
market leaders are unable to increase pricing because the consumer will have many
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other choices of alternatives within the market. Therefore, Elysian Brewing Company
competes within a perfect competition market system.
Competitive Review
The market for craft beer provides endless options for the avid beer drinker,
thus making the competitive intensity very high. This situation gives Elysian Brewing
Company many different levels of competition, both on a local and a national scale.
The three main competitors for Elysian Brewing Company are Deschutes Brewery,
Pike Brewing Company, and New Belgium. Although looking at the overall sizes of
these three breweries there is a large amount of variation, to the customer in the
North West these options are interchangeable. This is why these three breweries are
not only the biggest competition overall, but also pose as the biggest competition
when comparing the brands. As previously mentioned, although these companies vary
in size, but each of the three have high brand loyalty and established customer base in
the North West.
Brand Competitors
Deschutes Brewery
Deschutes Brewery has built a highly successful brand based on the active
North West consumer and has capitalized on the highly involved craft beer drinker to
build their brand from the ground up. Straying away from traditional forms of
marketing, Deschutes has made their name through events, social media, and the very
active Oregon craft beer community.
Due to the fact that Deschutes is a privately owned company, exact sales figures
are not available for the public. Although the exact numbers are not available, we can
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infer the scale of Deschutes production based on the Brewers Association ranking. In
2014, Deschutes was ranked as the 7th
largest craft brewer in America (Brewers
Association, 2015). Although Deschutes is a much larger brewery when compared to
Elysian, the high levels of brand involvement in the North West makes them a big
competitor and is serves as one of the company’s biggest strengths. In addition to
brand loyalty, Deschutes takes a leading role in the market as a very sustainable and
charitable business. One of the primary weaknesses of Deschutes is that their brand is
built centrally on North West culture, and is hard for potential customers from other
areas to identify with.
Pike Brewing Company
The second brand competitor for Elysian is the Pike Brewing Company located
in Seattle, Washington. Pike has made a name for themselves mostly through their
iconic location, The Pike Place Market. Pike has let the location do most of the
marketing for them and has capitalized on the high level of customers to that area and
immersed themselves into Seattle culture. Pike made it a large part of their business
to educate and share beer and food pairing to go along with the food they offered, as
well as the large variety of food at the market.
Pike Brewing Company is also a privately held corporation and does not share
sales figures with the public. The best indicator of the level of market share that Pike
holds is through the amount of distribution. Pike currently distributes all over
Washington, Oregon, Alaska, and Montana, and in 16 other states exclusively at Total
Wine & More (Pike Brewing Company, 2015). Pike is a much smaller scale business
than Elysian, but the high level of involvement in the North West culture makes them
a strong competitor. The primary weakness of Pike is that they are very limited in
distribution and are not well known outside of the North West.
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New Belgium Brewing Company
Elysian’s third brand competitor is the New Belgium Brewing Company. Much
like the previous two breweries, New Belgium has made their name through
integration into local culture and a high level of involvement in the craft beer
community. New Belgium executes its marketing primarily through social media and
events across the country. New Belgium gets customers involved through its New
Belgium Brand Cru Rewards, which invites fans to interact with the brand on social
media to earn points, digital badges, and giveaways. In addition to their online
presence, New Belgium participates in many spring and summer events, most notably
the ‘Tour De Fat’. This event highlights the bike culture in Colorado, sustainability,
and celebrates their most famous brew, Fat Tire. The event visits a handful of cities
during the spring and summer each year.
New Belgium holds a large piece of the craft beer market and is ranked as the
4th
largest craft brewery in the US (Brewers Association, 2015). New Belgium has seen
high levels of growth in the past years, 19.3% from 2013-2014, selling 945,367 barrels
of beer last year (Sexton, 2015). As the company continues to grow in size, they are
becoming more and more popular in the North West. Along with the large size
advantage of New Belgium, many of their strengths come from the core of the
business. This includes things like being employee owned, extensive amounts of
philanthropy, and high levels of corporate responsibility. Although the size of New
Belgium severs as a large advantage, it can also be a weakness. Due to its rapid growth
as a company, many consumers feel as if the culture of the company is fading away.
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Product Competitors
Rogue Ales
Although Rouge Ales competes with Elysian in the class of craft beer, there are
many notable differences taken into account by consumers. The most evident
difference between Elysian and Rogue is price of 6-packs. Rogue’s famous Dead Guy
brew is currently priced at $10.99, whereas Elysian’s the popular Immortal IPA is
currently priced at $7.49 (Total Wine, 2015). In addition, Rogue Ales offers craft beer
drinkers different benefits due to their wide selection of specialty 22oz beers. Rogue
crafts many specialty beers only to be distributed in 22oz bottles, like the Sriracha Hot
Stout Beer, and the Voodoo Doughnut Bacon Maple Ale, which range in price from
$6.75 - $13.00 (Total Wine, 2015).
Redhook Ale Brewery
An additional product competitor to Elysian is Redhook. The main factor that
these two breweries compete in is price. The famous Redhook ESB is currently being
sold for $6.99, which in comparison to Elysian’s Immortal IPA at $7.49 is a cheaper
choice for the consumer.
Fremont Brewing Company
Fremont Brewing Company directly competes with Elysian on the benefits it
provides to the North West customer. Given the backlash Elysian has experienced
from becoming a publicly held company, Fremont is the most notable threat to
business. Although Fremont is a much younger brewery, founded in 2009, it
represents everything the local craft beer drinker wants. Fremont is family owned,
uses local ingredients, and is focused on small artesian beer, which is what the avid
craft beer drinker knows and respects.
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Generic Competitors
When analyzing the alcohol industry as a whole, the generic competitors for
craft beer are hard ciders and wine. These two substitutes offer similar benefits and
promote a culture for highly involved users in a social atmosphere. Hard cider and
wine offer users an experience to show refined taste, to be highly involved, and learn
about the production and processes involved in producing the goods.
Total-Budget Competitors
The mental budget involved with the purchase of craft beer is a balance of
discretionary income and money spent on fun activities. When a consumer is deciding
on a craft beer purchase, it is often evaluated against things like going out to eat,
buying wine, hard cider, or going out to a movie.
Customer Review
The existing buyers in the Greater Seattle Area craft beer market are, for the
most part, over 21 years old, mostly white, and both men and women. The greater
Seattle Area has a mostly white population at around 70% white (Estimates, 2013).
Men and women both consume craft beer, with men consuming a little bit more than
women. In 2012, for the age range on 21 to 34, 32 percent of men drank craft beer and
44 percent of women drank craft beer. For the age range of 35 to 54, 37% of women
drank craft beer and 44 percent of men drank craft beer (Statista, 2012). The
geographic concentration of craft beer consumers is within the Greater Seattle Area,
which includes Seattle, Tacoma, Bellevue, Everett, Redmond, Kirkland, Woodinville,
and more. Over the last five years the socioeconomic characteristics of craft beer
drinkers has shifted from the vast majority of craft drinkers being more affluent to a
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heavier concentration in the middle and lower socioeconomic levels. In 2014, the
bottom 60% of the socioeconomic ladder consumed 40% of craft beer (Vorel, 2014).
There are three psychographic segments for craft beer drinkers. The first
segment is “The Explorer.” The Explorer is not very educated about the brewing
process and not particularly interested. The Explorer tries new and different beers out
of curiosity and appreciation for different tastes and flavors. The Explorer is not brand
loyal. The second segment is called “The Loyalist.” The Loyalist does not go out of
their way to try new beers or brands. The Loyalist sticks to one or two brands or one
or two beers from one brand. The Loyalist knows what they like and has no desire to
stray from that preference. The third segment is “The Enthusiast.” The Enthusiast has
a deep appreciation for different types of craft beer s well as the history and process of
craft brewing. The Enthusiast will try all new types, flavors, and brands of craft beer
and is not restricted by their preferences. The Enthusiast is not brand loyal
(Carpenter, 2013).
There is a wide range of behavioral characteristics for the craft beer consumer
depending largely on age. From the age range of 21 to 24, the majority of craft
drinkers are likely in college and do not have a full time job. These consumers will
drink craft beer later in the day, after class or work. These consumers drink craft beer
to relax, as a drink with dinner, or in a social setting on weekends. For the age range
of 24 to 34, the majorities of these consumers are likely graduated from college and
have a full time job. These consumers will drink a craft beer when the get home from
work to relax, have a drink with dinner, or socially after work or on weekends. These
consumers still have an active social life the often is centered on bars. For the age
range of 35 to 54, majorities of consumers are set in their careers and have families.
These consumers consume less than the previous two age groups and consume craft
beer for relaxation. Each age group has no issue with solitary or social drinking.
The adult (21+) population in the Greater Seattle Area is about 2.95 million
adults. About 35 percent of the adult population consumes craft beer. The size of the
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existing market is about 1.03 million consumers. The size of the potential market is
the remaining 1.92 million adults in the Greater Seattle Area (Estimates, 2013).
The purchase decision process for craft beer is a two-step process. The
consumer goes into the store with an idea in mind of what kind of beer they want;
IPA, Red, Stout, etc. Once they have gotten into the beer section they will choose a
brand within the type category. Craft beer consumers consume craft beer for
relaxation, appreciation of the taste, and to partake in social activities. The consumer
expects that whichever beer they purchase, it will be consistent with what they are
used to of that craft beer type with a little bit of difference to demonstrate uniqueness
between breweries.
Macro environment Review
Legal and regulatory
The alcohol industry is subject to legal and regulatory policies that affect the
market for the product and its distribution and sale (Peters & Woolley). In 1984, The
National Minimum Drinking Age Act rose the federal drinking age to 21 and
influenced states to comply through budgetary incentives. The minimum drinking age
requirement affects the market for beer by enforcing a minimum drinking age of 21
years. The process of distributing alcoholic beverages is regulated at the state and
federal level. Something that stays consistent across the United States is the three-tier
alcohol control system that divides the industry into categories of manufacturers,
wholesalers, and retailers, in which manufacturers are not allowed to sell directly to
the public (Lowrie, 2015).
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Economic
The sale of beer has proved to be resilient in times of economic hardship.
During 2008, the first full year of the most recent recession, the sale of beer expanded
more than 9% (Smith, 2011). Another example of resilience in the alcohol industry is
the rise of stocks in the industry by 46.02% from June 1998 to 2001, while the S&P 500
fell by 14.05% (Ahrens, 2004). This is positive for Elysian Brewing Company, because
their product is one that will not follow a volatile pattern of sales with fluctuations of
the economy.
Social and cultural
Craft beer is becoming more and more popular, and as of March 2015, craft
breweries produce 1 out of every 10 beers sold. There is a trend among consumers of
beer moving towards beer produced by smaller breweries, and the beer industry saw a
19% increase in breweries from 2013 to 2014, bringing the total amount of breweries
in the United States to 3,464 with only 46 of those which are non-craft breweries.
Washington State has the second highest amount of craft breweries in the country
and ranks seventh for breweries per capita, reflecting the cultural interest in beer. As
a brewery located in Washington State, the general attitude towards beer is favorable
for Elysian Brewing Company.
Environmental
Craft breweries have gravitated towards a focus on reducing the amount of
water it takes to produce a pint of beer (McWilliams, 2014). Depending on where
production takes place, a pint of beer can take anywhere from 8 to 24 gallons of water
to produce when considering all aspects of the process (Siegel, 2010). The large
amount of water required to produce a pint of beer can be seen as a threat to
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companies in the industry of producing beer, including Elysian, because it creates a
potential for criticism from consumers who are sensitive to the environmental impacts
of the products they consume. Another way to view the large amount of water that is
used to produce a pint of beer is as an opportunity for breweries like Elysian. In order
to differentiate themselves from other craft breweries, Elysian could focus on
becoming an environmentally conscious company as an opportunity for
differentiation.
Technological
A current trend in the beer industry is the development of applications for
smart phones and tablets that aim to make the industry more appealing for both
producers of beer and beer drinkers. One application, Monks Toolbox, has recently
been developed “…with the brewer in mind and keeps track of all of the logistics
involved with managing a brew house…” (Strauss, 2013). Another application
designed for smart phones and tablets is Ontap.Me, which provides restaurant patrons
with information about beers on tap at different restaurants in their vicinity, along
with an opportunity to rate beers and save favorites. Ontap.Me provides subscribing
restaurants with this information along with tools to track inventory (Strauss, 2013).
Key Company Information
History
In the year 1995, Elysian Brewing Company was founded in Seattle,
Washington by Dick Cantwell, Joe Bisacca, and Dave Buhler (Corporate Affiliations,
2015). Over the past 19 years Elysian has expanded to four different locations all over
Seattle – Capitol Hill, Elysian Tangletown, Elysian Fields, Elysian BAR, and its full
production brewery Elysian Airport Way (Elysian Brewing Company, 2015). The
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flagship brewery in Capitol Hill opened in 1996, which seats approximately 220 people
and has served as the main attraction for Elysian fans and has been the location of all
major Elysian events (Elysian Brewing Company, 2015). In 1997, Elysian Tangletown
opened. This location is much smaller, seating only 80 people, but served a very
important role in Elysian’s history. Tangletown was a full service bar and restaurant
and provided Elysian’s chefs and brewers with creative opportunity to try new things
on a small scale (Elysian Brewing Company, 2015). The most recent addition to the
Elysian lineup is Elysian Fields, which opened on 2006 and is located in the heart of
Seattle’s professional sports fields (Elysian Brewing Company, 2015).
Since its inception, Elysian has been a critical member of the Seattle craft
brewing scene and Seattle culture in general, until recently. In February of 2015,
Anheuser-Busch, Inc. acquired Elysian Brewing Company for an undisclosed amount
of money (Corporate Affiliations, 2015). This came as a devastating shock to many of
Elysian’s dedicated patrons, as this corporate buyout disqualified Elysian from being
considered a craft brewer. Following the media coverage and disapproving comments
from the craft beer community, co-founder Dick Cantwell resigned with the statement
“I am a craft brewer, past, present, and future…” (Corporate Affiliations, 2015).
Cantwell served on the Brewers Association Board and aided in the creation of the
Craft brewer definition, which recently eliminated Elysian from operating as craft
brewery.
Elysian Management and Size
• Co-Founders: Dick Cantwell, Joe Bisacca, and Dave Buhler
• CEO: Joe Bisacca
• Number of Employees: 263
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Products and Services
From the day the doors of the Capitol Hill location opened in 1996, Elysian has
brewed over 350 craft beers (Elysian Brewing Company). Elysian is known for their
creativity and variety in the selection of quality beer that they offer. Elysian offers
classic year round beers like the Immortal IPA, Men’s Room Red, Loser Pale Ale, and
the Avatar Jasmine IPA. In addition to these popular staples, Elysian crafts many
seasonal brews, collaborations, and beers that are special to specific pubs.
Current Goals and Objectives
Elysian Brewing Company was bought by Anheuser-Busch in February 2015.
Since the sale, Elysian Brewing Company has received out lash from some of their
consumer base here in Seattle. Out lash comes from those opposed to the corporate
structure and the inevitable change that corporate ownership often entails. But, even
with the sale to Anheuser-Busch, Elysian’s owners are looking forward to the future of
the company and maintain that Elysian Brewing Company will remain the same loved
Seattle brewery that they have been since their beginning in 1996. With this promise,
Elysian Brewing Company will maintain their goal of providing quality craft beer to
the Seattle area for years to come. As the 4th
highest producing brewery in
Washington state, Elysian plans to stay on top and continue to serve their customers
for years to come (Washington Beer, 2015).
Like craft breweries across the nation, Elysian is part of the craft beer industry
that is known for their avid and enthusiastic customer base. With the acquisition of
Elysian Brewing Company by Anheuser-Busch, Elysian now has to maintain their
current market share and customer base within the Seattle market. According to Dick
Cantwell and David Buhler, co-owners of Elysian Brewing Company, they are aware of
the consumer backlash, yet are hopeful that their customers will continue to support
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Elysian as long as they continue to create new brews and maintain their values.
Further emphasizing this, Andy Goeler, CEO of Anheuser-Busch stated, “The simple
answer is that we bought Elysian to continue to be who they are. So they will continue
to operate in Seattle, same people to continue to run the brewery, make great beers so
you don’t see a lot of change occurring. We want them to keep the core of who they
are intact. (Paul, 2015)”
Current and Past Strategy
Elysian Brewing Company also has plans to continue their distribution width as
they consider expanding into Southern California by the end of the year. Currently,
Elysian distributes to 11 states: Alaska, Washington, Oregon, Colorado, Idaho,
Montana, Pennsylvania, New Jersey, Maryland, Delaware, and New York.
Internationally, Elysian is in Vancouver BC, Alberta, Taiwan, Australia, and Japan
(Paul, 2015).
Like other Seattle-based breweries, Elysian Brewing Company hosts many
events throughout the calendar year in order to stay connected with their customer
base. These events serve to increase brand loyalty, awareness, and equity as they allow
Elysian to showcase their newest brews and connect with those customers in
attendance. These events take place all year long and bring in thousands of craft brew
lovers from around the Pacific Northwest. Like their competitors within the industry,
advertising for craft breweries is limited to social media and word of mouth.
Therefore, as in the past, Elysian’s current strategy includes the continuation of
hosted events and interaction with consumers online. Distribution may be expanded
in the future but there are no definitive plans in action.
Market Performance
As of 2014, Elysian was the second largest producer of “craft-like” beer in the
Seattle area, in terms of volume, producing 58 thousand barrels of beer. Redhook was
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the largest with 258 thousand barrels, and Georgetown Brewing and Mac & Jack’s are
a close third and fourth at 56 thousand and 46 thousand barrels a year, respectively.
Elysian’s approximate market share in 2014 was 10 percent of the Seattle area craft
beer industry. From 2011 to 2014 Elysian’s market share has grown seven percent,
from three percent to 10 percent. The peak of Elysian’s market share was at 12
percent in 2013 until Redhook’s production grew from 149 thousand barrels in 2013
to 258 thousand barrels in 2014.
The following estimates are based on Boston Brewing Company revenues,
profits, and relationships between the two. In 2012 Elysian produced 30 thousand
barrels of beer, which were sold for approximately $213.90 dollars per barrel. The
total revenues were $6,417,000 in 2012. Approximately 10 percent of revenues end up
as profit. The 2012 profit was $641,700 dollars. To scale this to 2014 production
volumes, the total revenue for 2014 was $12,406,200 dollars and profits were
$1,240,620 dollars.
SWOT Analysis
Strengths
• Very aesthetically appealing
labels
• Third top rated brewery in WA
• Second in production volume
• Better distribution
Opportunities
• Growing market/demand for craft
beer
• Can enter markets that other Seattle
area breweries do not have
penetration in due to new
distribution
Weaknesses
• No longer a “craft” brewery
• Much of original staff quit after
buy out (including co-founder)
Threats
• In a highly competitive environment
• Seattle area breweries are
considered some of the best in the
nation
• Redhook is largest local brewery
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Elysian’s strengths include very creative and pleasing artwork on the labels and
for the brand as a whole, large production volume, popular beer ratings, and
consistent growth over the last three years. The most important weakness is that they
are no longer, technically, a craft brewery. With Elysian recently being bought out,
they are no longer an independent brewery, removing them from the category of
“craft beer”. This may have a negative impact on consumers who value the idea and
integrity of independent breweries. The opportunities include new distribution
channels and a growing market for craft beer in the U.S. The largest threat to Elysian
is the competitive craft beer market in the Northwest – particularly now that Elysian is
no longer a “craft brewery.”
Current Lifecycle stage
Elysian Brewing Company’s stage in its product lifecycle could be looked at
from two different perspectives. The first is looking at the product as craft beer in the
craft beer industry. From this perspective, Elysian Brewing Company is in the growth
stage. Since 2010, the number of barrels brewed of craft beer has almost doubled.
Demand for this product is increasing, and breweries are responding to this increase
with increased production. Elysian, along with other craft breweries, can expect to
continue to experience an increase in the popularity and demand of craft beer as well
as an interest in increased selection (Rojo, 2014). In Washington State, the number of
craft breweries grew from 136 in 2011 to 256 in 2014 (Brewers Association, 2014).
Anheuser-Busch acquired Elysian Brewing Company in February of 2015. If Elysian
Brewing Company is looked at as a part of the brewing industry in general, not
specifically craft brewing, their product can be considered to be in the introduction
lifecycle stage. Because of how established Elysian Brewing Company is, having
brewed over 350 different craft beers, it is more beneficial to view Elysian Brewing
Company as a part of the craft brewery industry (Elysian Brewing, 2015).
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Current Branding
Elysian Brewing Company faces an interesting situation as a macro beer
industry leader, Anheuser-Busch, has recently purchased their craft brewery. As a
craft brewery, Elysian has a history of animosity towards “corporate beer,” naming one
of their year-round beers “Loser,” with the tagline “Corporate Beer Still Sucks” (Loser
Pale Ale). This exemplifies their identity as a craft brewery, one that will have an
interesting place in a corporate setting under Anheuser-Busch. As Elysian was only
purchased 5 months ago by Anheuser-Busch, it is too early to know how the company
will handle the brand’s advertising and marketing communications. The direction that
Anheuser-Busch takes Elysian Brewing Company should be towards preserving the
craft brewery’s identity within the craft brewing industry, as will be further discussed
in the recommendations made for Elysian Brewing Company.
Core Competencies
Elysian is set apart from the competition due to their ability to create numerous
unique, creative, and popular specialty and seasonal beers. Elysian’s ever-changing
lineup of brews keeps customers actively seeking out what is new and trying all their
innovative, and sometimes wild beers. This is largely due to the opportunity that the 3
pub locations present. Elysian is able to constantly innovate new beers at these
locations in test batches and always has a willing test market ready to share their
opinion. It is because of these 3 separate locations that Elysian has been able to brew
over 350 different beers, and over 2000 batches of beer (Elysian Brewing, 2015). This
unique opportunity to be so closely connected to their customers and constantly hear
their opinions and desires allows Elysian to offer the best products for their
customers. Additionally, being in such close contact with all the their customers
22
allows Elysian to build strong relationships and trust between them, making their
customers more adventurous and willing to try such different beers.
The second core competency that Elysian has is The Great Pumpkin Beer Fest.
This festival has served as a major opportunity for new customers to find out about
Elysian and try their specialty beers with a lower risk compared to buying 6-packs at
the store. Seeing as new customers may be apprehensive to try such specialized beers,
this festival can draw them in through the spirit of fall and introduce their product in
a social and festive setting. The Great Pumpkin Beer Fest has also played an integral
role in establishing Elysian’s name in the market for specialty and seasonal beers.
Competitive Advantages
Cost Advantages
Despite all of the recent criticism Elysian has been faced with for ‘selling out’
to Anheuser-Bush, the opportunity may serve as a potential cost advantage against
other craft brewers. Not only will Elysian have a tremendous amount of funding
compared to all of the privately owned companies, but will have access to
numerous new resources. Following the acquisition of the company, the founders
of Elysian were interviewed by Market Watch and noted the importance of the
access to these new resources, like A-B’s Elk Mountain Hops. “Raw materials are
harder to get. The game is getting tough and kind of dire. If you don’t have access,
you can’t grow. If you don’t have the hops you need, you’re out of the market”
(Notte, 2015).
Although it has not been noted that Elysian has experienced any direct cost
advantages thus far, it can be expected in the future through learning effects.
Elysian has successfully run a profitable brewery for nearly 20 years, but can learn
how to be more efficient when production is drastically increased.
23
Differentiation Advantages
Elysian initially made a name for themselves through their integration in to the
Seattle culture, but has continued to stand out from the numerous other breweries in
town through their specialized beer offering. Elysian has established this
differentiation advantage by continuously creating unique and creative brews that are
unlike the offering from any of their other competitors. The seasonal, limited release,
and specialty beers outnumber the year round offerings of Elysian’s traditional beers
at all times. Elysian’s current bottled beer offering features 6 year round brews, which
are more traditional in nature, like the Immortal IPA, Loser Pale Ale, and the Men’s
Room Red.
Although these beers are a staple to the Elysian brand, the 12 specialty beers
currently being offered greatly out number these traditional brews. This is much
different than that of their competition. When comparing Elysian’s specialty beer
offering to their three largest competitors it is clear that they have a strong advantage
in this category. The following table compares the current bottled beers available from
Pike, Deschutes, and New Belgium.
Pike Brewing
Company
Deschutes
Brewery
New Belgium
Elysian
Brewing
Year-round
Beers
7 9 9 6
Specialty &
Seasonal
Beers
1 4 4 12
By constantly providing new beers and changing the offerings with the season,
Elysian keeps consumers interested and involved with the brand and their products.
The specialized offerings don’t stop at the 12 bottled beers mentioned previously; in
fact it is just the tip of the iceberg. At the 3 Elysian pubs in Seattle there is constant
innovation where new unique beers are created everyday. Between the 3 locations,
24
there are currently and additional 45 different specialty beers exclusively served at the
pubs.
Capitalizing on the market for specialty and seasonal brews is an advantage that
will continue to set Elysian apart from its competitors. This source of differentiation is
very sustainable and will most likely play a key role in keeping customers loyal to the
brand, even after the much-hated acquisition by Anheuser-Bush. Given the situation,
many customers will have the desire to switch to other brands when buying a IPA or
red ale, but what if they want a blood orange pale ale or an espresso stout? These
creative concoctions are only available from Elysian and there are far and few
comparable alternatives.
Additionally, this acquisition will allow Elysian to greatly increase the volume
of production and will enable more of their creative brews to hit the shelves. In the
past it has often been the case that Elysian creates a new creative beer but simply did
not have the resources to produce it at a large scale. Co-founder Dick Cantwell shared
that this was the case for a long time with one of the most popular Elysian beers,
Space Dust IPA. The IPA was created in a test batch 2 years prior to being bottled
and was enjoyed and sought after by Elysian fans at the various pubs (Notte, 2015).
Because this IPA was a unique creation with many special ingredients, funding the
mass-production was not a viable option. Given the increased access to resources
Elysian can now produced more of its loved specialty pub beers, like the Space Dust
IPA, to share with its customers. This competitive advantage will sustain so long as
Elysian keeps their creativity and quality along the same path.
25
Three-Circles Targeting
Customer Targeting
Elysian Brewing Company’s target market is adults ages 24-32 looking for a
great tasting, craft beer that lives up to the taste and quality associated with our brand.
Key identifiers for this target market are young adults living in on a coastline who
have graduated from college. We have chosen Deschutes Brewery as the main
competitor for Elysian Brewing Company. Since Deschutes Brewery shares the same
target market segment as Elysian and other competitors, it is important for Elysian
Brewing Company to continue to focus on their local customer segments. Our goal is
to determine how Elysian Brewing Company can increase their market share by
continually offering their 24-32 year-old craft beer drinkers many varieties of high
quality, great tasting craft beers over that of Deschutes Brewing Company.
The top factors for Elysian Brewing Company customer’s when determining
which craft beer brand to choose include variety of specialty brews, overall taste
experience, price, packaging options, aesthetic appeal, and alcohol content. Below,
you will find the ranking of importance of each factor according to our target market
of craft beer drinkers ages 24-32 on a rating scale of 1-10 for both Elysian Brewing
Company and Deschutes Brewing Company.
26
Customer Rating of Deschutes
Factor Rating
Variety 5
Taste
Experience
9.8
Price 8
Packaging
Options
10
Aesthetic
Appeal
8
Alcohol
Content
7
Customer Rating of Elysian
Factor Rating
Variety 9
Taste
Experience
9.2
Price 6
Packaging
Options
10
Aesthetic
Appeal
10
Alcohol
Content
8
Importance to Customers
Factor Importance Rating
Variety of Specialty Brews 10
Taste Experience 10
Price 4
Packaging Options 5
Aesthetic Appeal 7.5
Alcohol Content 8
27
Customers in the craft brewery segment consider an array of features and
conveniences when making a purchase. Variety of specialty brews refers to how many
limited batch beer options customers have at any given time. This is extremely
important to customers in our target market. Taste experience also plays an extremely
important part in our customers’ decision process and evaluation of Elysian Brewing
Company’s beer. It includes the taste, smell, mouth-feel, the color and weight of the
beer, as well as other indescribable factors that contribute to a customer’s enjoyment
of the beer. Our target market is not highly sensitive to price as they are looking for
the highest quality beer among craft breweries. Packaging options are moderately
important to our target market so that they can purchase a quantity that fits their
needs - 22 ounce, six, twelve, and twenty-four packs, growlers, and kegs are all options
available to customers. The aesthetic appeal of the packaging and the brand image is
also an important factor to customers as it is the first thing to give them an impression
of the product. Alcohol content is an important aspect in the decision making process
for customers as it signals the brewery’s ability to produce high quality and full-
bodied beer. Based on these factors and their relative importance ratings, customer
evaluation tables can be created to examine how Elysian and Deschutes are thought of
by customers.
28
Customer Evaluation of Elysian
Factor Ratings X Importance Factor =
Customer
Evaluation
Variety 9 x 1 = 9
Taste
Experience
9.2
x
1 = 9.2
Price 6 x .4 = 2.4
Packaging
Options
10 x .5 = 5
Aesthetic
Appeal
10 x .75 = 7.5
Alcohol
Content
8 x .8 = 6.4
TOTAL = 39.5
Customer Evaluation of Deschutes
Factor Rating x Importance Factor =
Customer
Evaluation
Variety 5 x 1 = 5
Taste Experience 9.8 x 1 = 9.8
Price 8 x .4 = 3.2
Packaging
Options
10 x .5 = 5
Aesthetic Appeal 8 x .75 = 6
Alcohol Content 7 x .8 = 5.6
TOTAL = 34.6
29
Key Features of Elysian Brewing Company
• Seasonal Beer Releases
• Specialty Batch Beers
• Creative Label Art
• Integrated into Seattle Culture
• Award Winning Brewery
• Flavorful Beers
Key Features of Deschutes Brewing Company
• Oregon Identity
• Extensive Distribution
• Award Winning Beers
• Strong/Consistent Year-Round Beers
• Affordable Price Point
30
Deschutes
-Oregon Identity
-Extensive Distribution
-Award Winning Beers
-Strong/Consistent Year-
Round Beers
-Affordable Price Point
Customer Attributes
Sought
- Expanded Distribution
- More variety in 6-packs
- More Year-round beers
Elysian
-Seasonal Beer Releases
-Specialty Batch Beers
-Creative Label Art
-Integrated into Seattle
Culture
-Award Winning Brewery
-Flavorful Beers
Award Winning
Quality Flavor
Reasonable
Pricing
Deschutes & Elysian
• Award-Winning
• Culturally Integrated
• Similar Product Offerings
Customer & Elysian
• Product Options
• Local Seattle Values
• Quality-based Pricing
• Aesthetic Appeal
Customer & Deschutes
• Trusted Quality
• Availability
• Affordable Pricing
• PNW Focus
31
Key Opportunities for Growth
The most prominent opportunity on Elysian’s horizon is currently their lack of
6-packs offered. Almost all of Elysian’s most cherished seasonal and special release
beers are only sold in individual 22oz bottles. This presents a large opportunity to
capture more of the market for craft beer drinkers, especially for those craft
consumers who are looking for a reward after a
Features that can be eliminated
At this point in time, the Elysian brand has already undergone much change
due to the A-B acquisition, and further eliminating aspects of the brand or products
may be too much for the consumer. It is in the best interest of the company to
continue what they are doing, and only make improvements, and additions to their
offerings at this point in time.
Features that should be better promoted
Given the recent backlash that Elysian has seen from the acquisition from A-B,
Elysian should remind customers of their involvement with the Seattle culture and
the history they have with the city. Elysian needs to remind customers that they are
still heavily invested in their place of origin and that many beers are inspired by local
customers. This could be done by involving the Seattle community in activities like
the evaluation in many of their test batch beers at their 3 pub locations.
Points of difference that can be taken away from Deschutes
One of the main differences between Deschutes and Elysian has always been
price point. Elysian has consistently been more expensive than Deschutes because of
the specialty beers they offer, but customers are often looking for an affordable option
for a personal reward. If Elysian were to greater expand into the area of 6-packs, it
32
may present an opportunity for lower unit cost beers and would give customers an
alternative to the more expensive 22oz bottles.
Goals & Objectives
Marketing Plan Goals
When evaluating the current strengths and weaknesses of Elysian, the greatest
opportunity for the company lies within growth. This is why the overall goal for the
marketing plan is to increase market share. When evaluating two of Elysian’s main
competitors, Deschutes and New Belgium, they have a much larger share of the
market than that of Elysian. To more evenly compete with these two companies,
Elysian must capture more of the craft beer market through the creation of variety 6-
packs. Through the introduction of variety 6-packs the marketing plan wishes to
address three main things: increasing trial, awareness, and preference.
Given the current situation Elysian is in due to the acquisition, it will be most
efficient and profitable thing to do is attract new customers. The explorers are not
fully invested in craft beer culture and do not feel effected by the corporate buy-out
like other Elysian may. Once Elysian has attracted these customers, we aim to retain
them by the constantly evolving lineup of seasonal and special release 6-packs.
Segmentation
In order to most efficiently meet the needs of current and potential Elysian
customers, we have broken up craft beer consumers into the following three
segments: The Enthusiast, The Explorer, and The Average Joe. Each of these
segments will be explained in further detail in the following paragraphs.
33
The Enthusiast
The enthusiast is the embodiment of all things craft beer. This person is heavily
invested in the craft beer culture and enjoys being involved in all aspects of the
process (Carpenter, 2013). The Enthusiast’s needs in regard to craft beer are a reward
at the end of a long day, as well as a means for social gatherings. The Enthusiast
knows all things about the brewing process, as well as the technical definition of what
it means to be a ‘craft brewer’. These customers will be well aware of the current
acquisition of Elysian and most likely not very fond of it. The Enthusiast is typically
within the age range of 21-34 years old with a active social life. Our value proposition
for this segment is as follows:
“For The Enthusiast, Elysian provides a variety of high-quality, great tasting craft
style brews that serve as the perfect beer for any social gathering or personal reward.”
The Explorer
The Explorer is a beer drinker that is driven by experience and excitement. The
Explorer views craft beer as more of a wholesome experience and is not interested in
all the technicalities like The Enthusiast is. The needs that The Explorer wants to fill
are finding new breweries to visit, new beers to try, and to satisfy their need for
adventure (Carpenter, 2013). Given that these consumers are not heavily involved in
the culture of craft beer, they will likely feel unaffected by Elysian’s acquisition and
will view the business no differently. The Explorer is often not brand committed or
loyal to a single brand of beer, and is only likely to be loyal if the brand constantly
releases new beers and can keep their attention. The age range of an Explorer is often
from 21-34 years old (Carpenter, 2013). The positioning statement for the Explorer is
shown below:
“For The Explorer, Elysian offers a variety of innovative seasonal and specialty beers to
quench your adventurous pallet.”
34
The Average Joe
The final segment for beer drinkers we have identified is The Average Joe. The
Average Joe is a person that is not heavily invested in the world of craft beer, and
often does not consume it. The Average Joe views beer as a means of relaxation, habit,
or a treat for a special occasion. These are consumers who have full-time jobs, less
chaotic social lives, and just like to have a beer or two at the end of a day. The Average
Joe is typically between 35-54 years old and has a lower willingness to pay for beer in
comparison to the other two segments, even though they often have a higher income.
The value proposition for The Average Joe is stated below:
“For the Average Joe, Elysian offers a variety high quality traditional and specialty
beers that are perfect for special occasions and events in your life.”
Targeting
Primary Target: Explorer
Elysian Brewing Company’s competitive advantage stems from their large
selection of specialty beers, and Explorer Consumers are the segment of target
customers who are adventurous to try all of Elysian’s beers. These consumers are not
exclusively brand loyal to other breweries, but instead are loyal to brands that
continue to offer a variety of changing products. This is a perfect match for Elysian
Brewing Company, as it is a brewery that offers a changing beer selection to
consumers. Explorer Beer Consumers are not educated in the technical processes or
the definition of craft beer brewing, which is an important consideration for Elysian
Brewing Company after their recent purchase by Anheuser Busch. This acquisition
could cause some backlash from craft beer enthusiasts who are knowledgeable and
35
care about the craft beer identity and process, but the Explorer Beer Consumers are
less likely to become upset by the acquisition.
Positioning Strategy
Currently, Explorer Beer Consumers have limited options for trying new
specialty beers from Elysian Brewing Company. 22 oz. bottles are the most common
form that seasonal and limited edition brews are sold in, which creates a problem for
Elysian’s recommended target consumers. Trying a new beer as a 22 oz. bottle carries
the risk of wasting a majority of the beer if the Explorer does not enjoy the brew. A
six-pack of variety choices reduces this risk of non-enjoyment for the Explorer Beer
Consumer, as he or she is able to purchase a number of smaller brews at once. This
encourages Explorers to choose Elysian beers as opposed to other craft options
because of the more attractive size offering. Previous situations would include an
Explorer choosing between 22 oz. options, but with Elysian’s offering of variety six
and twelve packs, an Explorer will be more likely to choose Elysian beers because of
the new packaging options.
Positioning Statement for The Explorer
“For the beer drinker that wants a new experience and non-traditional brews,
Elysian aims to continually offer creative and innovative beers to keep you coming
back for more. Elysian will satisfy your need to try new things with our constantly
evolving lineup of high quality seasonal and special release beers.”
36
Marketing Implementation
Marketing Plan
The timeline for the marketing plan surrounding the release of the variety 6
and 12-packs will begin in August and finish at the end of the year. Beginning in the
month of September, Elysian will be offering four new products in the same places
that Elysian is currently distributed. During the Fall season, Elysian will release a
Pumpkin Specialty six pack which will include two of each of the following: Great
Pumpkin, Dark O’, and Punkuccino. Also during the fall season Elysian will release a
Pumpkin Specialty 12-pack which will include three of each of the following: Great
Pumpkin, Dark O’, Punkuccino, and Night Owl. During the Spring and Summer
seasons Elysian will release a Manic IPA Series six pack which will include three each
of the Dayglow IPA and the Savant IPA. Elysian will also begin offering a year round
variety 12-pack called, “The Greats,” which will include three each of the Immortal
IPA, the Men’s Room Red, the Loser Pale Ale, and the seasonal release at the time.
During the excitement leading up to The Great Pumpkin Beer Fest, in August
Elysian will start the promotion of the new product offering. The campaign will kick
off on the company’s social media outlets. Posts on Facebook, Instagram, and Twitter
will help spread awareness of the exciting news. Pictured below are two mock-ups of a
potential social media post announcing the variety packs.
37
38
Additionally, Elysian will promote these products at the Great Pumpkin Beer
Festival that they host in October. Seeing as this is the biggest event of the year that
celebrates Elysian’s most popular seasonal collection, this is the perfect time to
surprise customers with a new offering. In order to do this, Elysian will make use of
posters and displays of the new variety packs so that beer lovers from all around will
be exposed to the new offerings. This will spark interest and start conversations in the
beer communities, providing a great initial boost in awareness and buzz. Elysian will
also use in-store displays when permitted by stores. Seeing as variety 6-packs are a
new thing for beer lovers to experience, many beer drinkers will be inclined to
purchase them simply on novelty.
Evaluation & Control
The metrics that Elysian will use to evaluate the marketing plan for the desired goal of
increasing market share will include:
• Relative Market: compare Elysian share to the most important competitor,
Deschutes
• Measuring Trial: by comparing the sales growth through the first quarter that
they are offered for the new six pack offerings to the sales growth through the
first quarter that it was offered of the Space Dust IPA six packs (Space Dust
IPA was only offered as a specialty release in 22oz bottles until popular demand
led Elysian to produce and release it as a six pack as well).
• Measuring Preference: through social media engagement – shares, likes,
retweets, comments, posts, hash tag usage.
• Measuring Awareness: through social media – new followers, friends, and hash
tag usage
39
Tentative Costs
Seeing as it is not possible to access the information on production and
distribution of beer that will be sold in stores, below we have provided estimates of
the costs related to promotion.
Graphic Design Costs: Social media posts and posters (Hische, 2014)
• Usage for artwork in all print and online media for the period of one year:
$10,000
• Total: $10,000
Print Materials: Posters to be placed in Brewpubs
• Pumpkin Specialty 6-pack: $100
• Pumpkin Specialty 12-pack: $100
• Manic IPA Series 6-pack: $100
• “The Greats” Variety 12-pack: $100
Estimated Promotion Costs: $10,400
40
Works Cited
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Elysian Brewing. (2015). Loser Pale Ale. . Retrieved from
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Godard, T. (2015, January 23). The Economics of Craft Beer. Retrieved
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Hische, J. (2014). How Much Should You Charge for Design Work? Fast Company.
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charge-for-design-work-a-guide
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brewing/
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round.aspx
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anheuser-busch-2015-02-02?page=
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Elysian MKTG Plan (Summer '15)

  • 1. Sofia Gomez, Sarah Vlasic, Grace Mueller, Jay Williams Marketing 489 J u l y 2 9 , 2 0 1 5 Elysian Brewing Company
  • 2. 2 Table Of Contents Industry Analysis – pages 4-15 • Market Review– pages 4-7 • Competitive Review – pages 7-11 • Customer Review – pages 11-13 • Macro Environmental Review– pages 13-15 Firm Analysis– pages 15-21 • Key Company Information – pages 15-17 • Current Goals and Objectives– page 17 • Current and Past Strategy– pages 18 • Market Performance – pages 18-19 • SWOT Analysis – pages 19-20 • Current Lifecycle– pages 20-21 • Current Branding– page 21 Core Competencies and Competitive Advantages– pages 21-24 • Core Competencies– pages 21-22 • Cost and Differentiation Advantages– pages 22-24 Three-Circles Targeting– pages 25-32 • Customer Targeting– pages 25-27
  • 3. 3 • Customer Evaluations– page 28 • Key Features– page 29 • 3 Circles graphic– page 30 • Key Takeaways– pages 31-32 Marketing Plan – pages 32-39 • Goals & Objectives– page 32 • Segmentation– pages 32-34 • Targeting– pages 34-35 • Marketing Implementation– pages 36-38 • Evaluation & Control – pages 38-39 Works Cited – pages 40-44
  • 4. 4 Market Review Threat of New Entrants Because the craft brewing industry has expanded rapidly over the past decade across the United States, it is an industry that operates under the constant threat of new entrants. Craft breweries have gained popularity in recent years due to their low costs, high volume production process, and limited product variability. Therefore, the threat of new entrants is moderately high for craft breweries in general and especially for Elysian Brewing Company based in Seattle, WA. Due to the low barriers to entry that the craft brewing industry faces, it increases competition on a local scale as more and more breweries continue to appear throughout the country. Currently, there are 275 craft breweries in Washington State alone and 77 in Seattle city limits and King County alone (Radovich, 2015). Therefore, due to the threat of local competition and the low barriers to entry within the craft brewing industry, Elysian faces the threat of new entrants on a moderately high level on a daily basis. Buyer Power Buyer power is low for Elysian Brewing Company. This is a result due to the similarity of products among the craft brewing industry. According to our lecture notes, buyer power is low when the "buyer cannot negotiate the price or the terms" of the product. Within the craft brewing industry, price points are determined by fixed costs, operating costs, and individual tax margins. Therefore, the consumer does not have a say in the price they pay for their craft beer. Also, craft beer is a specialized product and lacks relevant substitutes within its target market of consumers making its buyer power relatively low. Supplier Power Because most craft beer is produced in house at brewery locations, the supplier power is relatively low within the industry. The buying of ingredients vary greatly
  • 5. 5 between competitors, yet all breweries must rely on suppliers of hops and grains, wheat and barley produces, flour millers, wholesalers of corn, wheat, and soybeans, as well as sugar processors (Quinn, 2013). While supplier power may increase to the due power of the suppliers of these ingredients, most prices fluctuate nationally and would be uniform across the industry. Threat of Substitutes Because the craft brew industry caters to a specific target market of consumers, there is a low level of threat of substitutes for Elysian Brewing Company. Some may argue that craft beer is competitive with other alcoholic beverage options, such as spirits and wine, yet because craft beer offers a specialized product, they do not compete within the same market as their alternatives. Customers of craft beer are specific to choosing craft beer over wine and alternative alcoholic beverages. Based on our evaluation of the target market for craft beer, consumers within this industry may switch between local industry competitors, but they are specifically seeking craft beer as their product of choice. Therefore, the market for wine and alternative alcoholic beverages competes outside of the market for craft beer. Competitive Intensity Related to the force of Threat of New Entrants, Elysian Brewing Company also faces extreme Competitive Intensity. Since the operations involved in craft brewing are consistent across competition within the industry, the craft brewing industry faces a fairly balanced competition field. With 77 craft breweries competing within the Seattle market, Elysian Brewing Company faces the highest level of competitive advantage (Radovich, 2015). In contrast to specialized industries, Elysian Brewing Company must compete in an extremely competitive market, where product offerings do not allow for large levels of varying innovation. Since there are certain expectations of how a craft beer should
  • 6. 6 taste, Elysian is forced to compete with 76 other breweries that are essentially making the same product. Lack of differentiation among products produced within the craft brewing industry is another factor that leads to high competitive intensity for Elysian Brewing Company. Common craft beer offerings consist of Pilsner, Brown Ale, Wheat Beer, Pale Ale, India Pale Ale, Double IPA, Porter, Stout and Bock (Brewers Association, 2014). While different breweries may specialize in specific brews, the lack of differentiation among products offered by craft breweries across the United States leads to Elysian facing high levels of competitive intensity. Pricing across the industry of craft beer is similar as well. Prices vary from state to state based on individual state taxes but the average costs and prices for craft beers remain competitively similar and are determined largely by the consumer willingness to pay. This also remains true for the similarity between fixed costs faced by all major craft breweries. While equipment costs vary between sizes of breweries, competitive intensity increases when all players in the industry face the same variability in fixed cost numbers. This allows for common pricing strategies across the industry, creating more choices and opportunities for the craft beer target market. For these reasons, competitive intensity within the craft brewing industry is the most important factor in which Elysian competes. This is also the reason that the industry is attractive to new entrants. With low barriers to entry and high profit margins, the craft brewing industry will continue to grow. Elysian Brewing Company competes among hundreds of other craft beer brands around the country. This market of competition is an example of perfect competition. Perfect competition occurs where there are many competitors within the market a well as many buyers, leading to the impossibility "for any one participant to alter the prevailing price in the market” (Richards, 2014). Within the craft beer market system, there are many competitors making very similar products, competing within a common price belt. This shows that while there may be market leaders, the amount of buyers and sellers is great and these market leaders are unable to increase pricing because the consumer will have many
  • 7. 7 other choices of alternatives within the market. Therefore, Elysian Brewing Company competes within a perfect competition market system. Competitive Review The market for craft beer provides endless options for the avid beer drinker, thus making the competitive intensity very high. This situation gives Elysian Brewing Company many different levels of competition, both on a local and a national scale. The three main competitors for Elysian Brewing Company are Deschutes Brewery, Pike Brewing Company, and New Belgium. Although looking at the overall sizes of these three breweries there is a large amount of variation, to the customer in the North West these options are interchangeable. This is why these three breweries are not only the biggest competition overall, but also pose as the biggest competition when comparing the brands. As previously mentioned, although these companies vary in size, but each of the three have high brand loyalty and established customer base in the North West. Brand Competitors Deschutes Brewery Deschutes Brewery has built a highly successful brand based on the active North West consumer and has capitalized on the highly involved craft beer drinker to build their brand from the ground up. Straying away from traditional forms of marketing, Deschutes has made their name through events, social media, and the very active Oregon craft beer community. Due to the fact that Deschutes is a privately owned company, exact sales figures are not available for the public. Although the exact numbers are not available, we can
  • 8. 8 infer the scale of Deschutes production based on the Brewers Association ranking. In 2014, Deschutes was ranked as the 7th largest craft brewer in America (Brewers Association, 2015). Although Deschutes is a much larger brewery when compared to Elysian, the high levels of brand involvement in the North West makes them a big competitor and is serves as one of the company’s biggest strengths. In addition to brand loyalty, Deschutes takes a leading role in the market as a very sustainable and charitable business. One of the primary weaknesses of Deschutes is that their brand is built centrally on North West culture, and is hard for potential customers from other areas to identify with. Pike Brewing Company The second brand competitor for Elysian is the Pike Brewing Company located in Seattle, Washington. Pike has made a name for themselves mostly through their iconic location, The Pike Place Market. Pike has let the location do most of the marketing for them and has capitalized on the high level of customers to that area and immersed themselves into Seattle culture. Pike made it a large part of their business to educate and share beer and food pairing to go along with the food they offered, as well as the large variety of food at the market. Pike Brewing Company is also a privately held corporation and does not share sales figures with the public. The best indicator of the level of market share that Pike holds is through the amount of distribution. Pike currently distributes all over Washington, Oregon, Alaska, and Montana, and in 16 other states exclusively at Total Wine & More (Pike Brewing Company, 2015). Pike is a much smaller scale business than Elysian, but the high level of involvement in the North West culture makes them a strong competitor. The primary weakness of Pike is that they are very limited in distribution and are not well known outside of the North West.
  • 9. 9 New Belgium Brewing Company Elysian’s third brand competitor is the New Belgium Brewing Company. Much like the previous two breweries, New Belgium has made their name through integration into local culture and a high level of involvement in the craft beer community. New Belgium executes its marketing primarily through social media and events across the country. New Belgium gets customers involved through its New Belgium Brand Cru Rewards, which invites fans to interact with the brand on social media to earn points, digital badges, and giveaways. In addition to their online presence, New Belgium participates in many spring and summer events, most notably the ‘Tour De Fat’. This event highlights the bike culture in Colorado, sustainability, and celebrates their most famous brew, Fat Tire. The event visits a handful of cities during the spring and summer each year. New Belgium holds a large piece of the craft beer market and is ranked as the 4th largest craft brewery in the US (Brewers Association, 2015). New Belgium has seen high levels of growth in the past years, 19.3% from 2013-2014, selling 945,367 barrels of beer last year (Sexton, 2015). As the company continues to grow in size, they are becoming more and more popular in the North West. Along with the large size advantage of New Belgium, many of their strengths come from the core of the business. This includes things like being employee owned, extensive amounts of philanthropy, and high levels of corporate responsibility. Although the size of New Belgium severs as a large advantage, it can also be a weakness. Due to its rapid growth as a company, many consumers feel as if the culture of the company is fading away.
  • 10. 10 Product Competitors Rogue Ales Although Rouge Ales competes with Elysian in the class of craft beer, there are many notable differences taken into account by consumers. The most evident difference between Elysian and Rogue is price of 6-packs. Rogue’s famous Dead Guy brew is currently priced at $10.99, whereas Elysian’s the popular Immortal IPA is currently priced at $7.49 (Total Wine, 2015). In addition, Rogue Ales offers craft beer drinkers different benefits due to their wide selection of specialty 22oz beers. Rogue crafts many specialty beers only to be distributed in 22oz bottles, like the Sriracha Hot Stout Beer, and the Voodoo Doughnut Bacon Maple Ale, which range in price from $6.75 - $13.00 (Total Wine, 2015). Redhook Ale Brewery An additional product competitor to Elysian is Redhook. The main factor that these two breweries compete in is price. The famous Redhook ESB is currently being sold for $6.99, which in comparison to Elysian’s Immortal IPA at $7.49 is a cheaper choice for the consumer. Fremont Brewing Company Fremont Brewing Company directly competes with Elysian on the benefits it provides to the North West customer. Given the backlash Elysian has experienced from becoming a publicly held company, Fremont is the most notable threat to business. Although Fremont is a much younger brewery, founded in 2009, it represents everything the local craft beer drinker wants. Fremont is family owned, uses local ingredients, and is focused on small artesian beer, which is what the avid craft beer drinker knows and respects.
  • 11. 11 Generic Competitors When analyzing the alcohol industry as a whole, the generic competitors for craft beer are hard ciders and wine. These two substitutes offer similar benefits and promote a culture for highly involved users in a social atmosphere. Hard cider and wine offer users an experience to show refined taste, to be highly involved, and learn about the production and processes involved in producing the goods. Total-Budget Competitors The mental budget involved with the purchase of craft beer is a balance of discretionary income and money spent on fun activities. When a consumer is deciding on a craft beer purchase, it is often evaluated against things like going out to eat, buying wine, hard cider, or going out to a movie. Customer Review The existing buyers in the Greater Seattle Area craft beer market are, for the most part, over 21 years old, mostly white, and both men and women. The greater Seattle Area has a mostly white population at around 70% white (Estimates, 2013). Men and women both consume craft beer, with men consuming a little bit more than women. In 2012, for the age range on 21 to 34, 32 percent of men drank craft beer and 44 percent of women drank craft beer. For the age range of 35 to 54, 37% of women drank craft beer and 44 percent of men drank craft beer (Statista, 2012). The geographic concentration of craft beer consumers is within the Greater Seattle Area, which includes Seattle, Tacoma, Bellevue, Everett, Redmond, Kirkland, Woodinville, and more. Over the last five years the socioeconomic characteristics of craft beer drinkers has shifted from the vast majority of craft drinkers being more affluent to a
  • 12. 12 heavier concentration in the middle and lower socioeconomic levels. In 2014, the bottom 60% of the socioeconomic ladder consumed 40% of craft beer (Vorel, 2014). There are three psychographic segments for craft beer drinkers. The first segment is “The Explorer.” The Explorer is not very educated about the brewing process and not particularly interested. The Explorer tries new and different beers out of curiosity and appreciation for different tastes and flavors. The Explorer is not brand loyal. The second segment is called “The Loyalist.” The Loyalist does not go out of their way to try new beers or brands. The Loyalist sticks to one or two brands or one or two beers from one brand. The Loyalist knows what they like and has no desire to stray from that preference. The third segment is “The Enthusiast.” The Enthusiast has a deep appreciation for different types of craft beer s well as the history and process of craft brewing. The Enthusiast will try all new types, flavors, and brands of craft beer and is not restricted by their preferences. The Enthusiast is not brand loyal (Carpenter, 2013). There is a wide range of behavioral characteristics for the craft beer consumer depending largely on age. From the age range of 21 to 24, the majority of craft drinkers are likely in college and do not have a full time job. These consumers will drink craft beer later in the day, after class or work. These consumers drink craft beer to relax, as a drink with dinner, or in a social setting on weekends. For the age range of 24 to 34, the majorities of these consumers are likely graduated from college and have a full time job. These consumers will drink a craft beer when the get home from work to relax, have a drink with dinner, or socially after work or on weekends. These consumers still have an active social life the often is centered on bars. For the age range of 35 to 54, majorities of consumers are set in their careers and have families. These consumers consume less than the previous two age groups and consume craft beer for relaxation. Each age group has no issue with solitary or social drinking. The adult (21+) population in the Greater Seattle Area is about 2.95 million adults. About 35 percent of the adult population consumes craft beer. The size of the
  • 13. 13 existing market is about 1.03 million consumers. The size of the potential market is the remaining 1.92 million adults in the Greater Seattle Area (Estimates, 2013). The purchase decision process for craft beer is a two-step process. The consumer goes into the store with an idea in mind of what kind of beer they want; IPA, Red, Stout, etc. Once they have gotten into the beer section they will choose a brand within the type category. Craft beer consumers consume craft beer for relaxation, appreciation of the taste, and to partake in social activities. The consumer expects that whichever beer they purchase, it will be consistent with what they are used to of that craft beer type with a little bit of difference to demonstrate uniqueness between breweries. Macro environment Review Legal and regulatory The alcohol industry is subject to legal and regulatory policies that affect the market for the product and its distribution and sale (Peters & Woolley). In 1984, The National Minimum Drinking Age Act rose the federal drinking age to 21 and influenced states to comply through budgetary incentives. The minimum drinking age requirement affects the market for beer by enforcing a minimum drinking age of 21 years. The process of distributing alcoholic beverages is regulated at the state and federal level. Something that stays consistent across the United States is the three-tier alcohol control system that divides the industry into categories of manufacturers, wholesalers, and retailers, in which manufacturers are not allowed to sell directly to the public (Lowrie, 2015).
  • 14. 14 Economic The sale of beer has proved to be resilient in times of economic hardship. During 2008, the first full year of the most recent recession, the sale of beer expanded more than 9% (Smith, 2011). Another example of resilience in the alcohol industry is the rise of stocks in the industry by 46.02% from June 1998 to 2001, while the S&P 500 fell by 14.05% (Ahrens, 2004). This is positive for Elysian Brewing Company, because their product is one that will not follow a volatile pattern of sales with fluctuations of the economy. Social and cultural Craft beer is becoming more and more popular, and as of March 2015, craft breweries produce 1 out of every 10 beers sold. There is a trend among consumers of beer moving towards beer produced by smaller breweries, and the beer industry saw a 19% increase in breweries from 2013 to 2014, bringing the total amount of breweries in the United States to 3,464 with only 46 of those which are non-craft breweries. Washington State has the second highest amount of craft breweries in the country and ranks seventh for breweries per capita, reflecting the cultural interest in beer. As a brewery located in Washington State, the general attitude towards beer is favorable for Elysian Brewing Company. Environmental Craft breweries have gravitated towards a focus on reducing the amount of water it takes to produce a pint of beer (McWilliams, 2014). Depending on where production takes place, a pint of beer can take anywhere from 8 to 24 gallons of water to produce when considering all aspects of the process (Siegel, 2010). The large amount of water required to produce a pint of beer can be seen as a threat to
  • 15. 15 companies in the industry of producing beer, including Elysian, because it creates a potential for criticism from consumers who are sensitive to the environmental impacts of the products they consume. Another way to view the large amount of water that is used to produce a pint of beer is as an opportunity for breweries like Elysian. In order to differentiate themselves from other craft breweries, Elysian could focus on becoming an environmentally conscious company as an opportunity for differentiation. Technological A current trend in the beer industry is the development of applications for smart phones and tablets that aim to make the industry more appealing for both producers of beer and beer drinkers. One application, Monks Toolbox, has recently been developed “…with the brewer in mind and keeps track of all of the logistics involved with managing a brew house…” (Strauss, 2013). Another application designed for smart phones and tablets is Ontap.Me, which provides restaurant patrons with information about beers on tap at different restaurants in their vicinity, along with an opportunity to rate beers and save favorites. Ontap.Me provides subscribing restaurants with this information along with tools to track inventory (Strauss, 2013). Key Company Information History In the year 1995, Elysian Brewing Company was founded in Seattle, Washington by Dick Cantwell, Joe Bisacca, and Dave Buhler (Corporate Affiliations, 2015). Over the past 19 years Elysian has expanded to four different locations all over Seattle – Capitol Hill, Elysian Tangletown, Elysian Fields, Elysian BAR, and its full production brewery Elysian Airport Way (Elysian Brewing Company, 2015). The
  • 16. 16 flagship brewery in Capitol Hill opened in 1996, which seats approximately 220 people and has served as the main attraction for Elysian fans and has been the location of all major Elysian events (Elysian Brewing Company, 2015). In 1997, Elysian Tangletown opened. This location is much smaller, seating only 80 people, but served a very important role in Elysian’s history. Tangletown was a full service bar and restaurant and provided Elysian’s chefs and brewers with creative opportunity to try new things on a small scale (Elysian Brewing Company, 2015). The most recent addition to the Elysian lineup is Elysian Fields, which opened on 2006 and is located in the heart of Seattle’s professional sports fields (Elysian Brewing Company, 2015). Since its inception, Elysian has been a critical member of the Seattle craft brewing scene and Seattle culture in general, until recently. In February of 2015, Anheuser-Busch, Inc. acquired Elysian Brewing Company for an undisclosed amount of money (Corporate Affiliations, 2015). This came as a devastating shock to many of Elysian’s dedicated patrons, as this corporate buyout disqualified Elysian from being considered a craft brewer. Following the media coverage and disapproving comments from the craft beer community, co-founder Dick Cantwell resigned with the statement “I am a craft brewer, past, present, and future…” (Corporate Affiliations, 2015). Cantwell served on the Brewers Association Board and aided in the creation of the Craft brewer definition, which recently eliminated Elysian from operating as craft brewery. Elysian Management and Size • Co-Founders: Dick Cantwell, Joe Bisacca, and Dave Buhler • CEO: Joe Bisacca • Number of Employees: 263
  • 17. 17 Products and Services From the day the doors of the Capitol Hill location opened in 1996, Elysian has brewed over 350 craft beers (Elysian Brewing Company). Elysian is known for their creativity and variety in the selection of quality beer that they offer. Elysian offers classic year round beers like the Immortal IPA, Men’s Room Red, Loser Pale Ale, and the Avatar Jasmine IPA. In addition to these popular staples, Elysian crafts many seasonal brews, collaborations, and beers that are special to specific pubs. Current Goals and Objectives Elysian Brewing Company was bought by Anheuser-Busch in February 2015. Since the sale, Elysian Brewing Company has received out lash from some of their consumer base here in Seattle. Out lash comes from those opposed to the corporate structure and the inevitable change that corporate ownership often entails. But, even with the sale to Anheuser-Busch, Elysian’s owners are looking forward to the future of the company and maintain that Elysian Brewing Company will remain the same loved Seattle brewery that they have been since their beginning in 1996. With this promise, Elysian Brewing Company will maintain their goal of providing quality craft beer to the Seattle area for years to come. As the 4th highest producing brewery in Washington state, Elysian plans to stay on top and continue to serve their customers for years to come (Washington Beer, 2015). Like craft breweries across the nation, Elysian is part of the craft beer industry that is known for their avid and enthusiastic customer base. With the acquisition of Elysian Brewing Company by Anheuser-Busch, Elysian now has to maintain their current market share and customer base within the Seattle market. According to Dick Cantwell and David Buhler, co-owners of Elysian Brewing Company, they are aware of the consumer backlash, yet are hopeful that their customers will continue to support
  • 18. 18 Elysian as long as they continue to create new brews and maintain their values. Further emphasizing this, Andy Goeler, CEO of Anheuser-Busch stated, “The simple answer is that we bought Elysian to continue to be who they are. So they will continue to operate in Seattle, same people to continue to run the brewery, make great beers so you don’t see a lot of change occurring. We want them to keep the core of who they are intact. (Paul, 2015)” Current and Past Strategy Elysian Brewing Company also has plans to continue their distribution width as they consider expanding into Southern California by the end of the year. Currently, Elysian distributes to 11 states: Alaska, Washington, Oregon, Colorado, Idaho, Montana, Pennsylvania, New Jersey, Maryland, Delaware, and New York. Internationally, Elysian is in Vancouver BC, Alberta, Taiwan, Australia, and Japan (Paul, 2015). Like other Seattle-based breweries, Elysian Brewing Company hosts many events throughout the calendar year in order to stay connected with their customer base. These events serve to increase brand loyalty, awareness, and equity as they allow Elysian to showcase their newest brews and connect with those customers in attendance. These events take place all year long and bring in thousands of craft brew lovers from around the Pacific Northwest. Like their competitors within the industry, advertising for craft breweries is limited to social media and word of mouth. Therefore, as in the past, Elysian’s current strategy includes the continuation of hosted events and interaction with consumers online. Distribution may be expanded in the future but there are no definitive plans in action. Market Performance As of 2014, Elysian was the second largest producer of “craft-like” beer in the Seattle area, in terms of volume, producing 58 thousand barrels of beer. Redhook was
  • 19. 19 the largest with 258 thousand barrels, and Georgetown Brewing and Mac & Jack’s are a close third and fourth at 56 thousand and 46 thousand barrels a year, respectively. Elysian’s approximate market share in 2014 was 10 percent of the Seattle area craft beer industry. From 2011 to 2014 Elysian’s market share has grown seven percent, from three percent to 10 percent. The peak of Elysian’s market share was at 12 percent in 2013 until Redhook’s production grew from 149 thousand barrels in 2013 to 258 thousand barrels in 2014. The following estimates are based on Boston Brewing Company revenues, profits, and relationships between the two. In 2012 Elysian produced 30 thousand barrels of beer, which were sold for approximately $213.90 dollars per barrel. The total revenues were $6,417,000 in 2012. Approximately 10 percent of revenues end up as profit. The 2012 profit was $641,700 dollars. To scale this to 2014 production volumes, the total revenue for 2014 was $12,406,200 dollars and profits were $1,240,620 dollars. SWOT Analysis Strengths • Very aesthetically appealing labels • Third top rated brewery in WA • Second in production volume • Better distribution Opportunities • Growing market/demand for craft beer • Can enter markets that other Seattle area breweries do not have penetration in due to new distribution Weaknesses • No longer a “craft” brewery • Much of original staff quit after buy out (including co-founder) Threats • In a highly competitive environment • Seattle area breweries are considered some of the best in the nation • Redhook is largest local brewery
  • 20. 20 Elysian’s strengths include very creative and pleasing artwork on the labels and for the brand as a whole, large production volume, popular beer ratings, and consistent growth over the last three years. The most important weakness is that they are no longer, technically, a craft brewery. With Elysian recently being bought out, they are no longer an independent brewery, removing them from the category of “craft beer”. This may have a negative impact on consumers who value the idea and integrity of independent breweries. The opportunities include new distribution channels and a growing market for craft beer in the U.S. The largest threat to Elysian is the competitive craft beer market in the Northwest – particularly now that Elysian is no longer a “craft brewery.” Current Lifecycle stage Elysian Brewing Company’s stage in its product lifecycle could be looked at from two different perspectives. The first is looking at the product as craft beer in the craft beer industry. From this perspective, Elysian Brewing Company is in the growth stage. Since 2010, the number of barrels brewed of craft beer has almost doubled. Demand for this product is increasing, and breweries are responding to this increase with increased production. Elysian, along with other craft breweries, can expect to continue to experience an increase in the popularity and demand of craft beer as well as an interest in increased selection (Rojo, 2014). In Washington State, the number of craft breweries grew from 136 in 2011 to 256 in 2014 (Brewers Association, 2014). Anheuser-Busch acquired Elysian Brewing Company in February of 2015. If Elysian Brewing Company is looked at as a part of the brewing industry in general, not specifically craft brewing, their product can be considered to be in the introduction lifecycle stage. Because of how established Elysian Brewing Company is, having brewed over 350 different craft beers, it is more beneficial to view Elysian Brewing Company as a part of the craft brewery industry (Elysian Brewing, 2015).
  • 21. 21 Current Branding Elysian Brewing Company faces an interesting situation as a macro beer industry leader, Anheuser-Busch, has recently purchased their craft brewery. As a craft brewery, Elysian has a history of animosity towards “corporate beer,” naming one of their year-round beers “Loser,” with the tagline “Corporate Beer Still Sucks” (Loser Pale Ale). This exemplifies their identity as a craft brewery, one that will have an interesting place in a corporate setting under Anheuser-Busch. As Elysian was only purchased 5 months ago by Anheuser-Busch, it is too early to know how the company will handle the brand’s advertising and marketing communications. The direction that Anheuser-Busch takes Elysian Brewing Company should be towards preserving the craft brewery’s identity within the craft brewing industry, as will be further discussed in the recommendations made for Elysian Brewing Company. Core Competencies Elysian is set apart from the competition due to their ability to create numerous unique, creative, and popular specialty and seasonal beers. Elysian’s ever-changing lineup of brews keeps customers actively seeking out what is new and trying all their innovative, and sometimes wild beers. This is largely due to the opportunity that the 3 pub locations present. Elysian is able to constantly innovate new beers at these locations in test batches and always has a willing test market ready to share their opinion. It is because of these 3 separate locations that Elysian has been able to brew over 350 different beers, and over 2000 batches of beer (Elysian Brewing, 2015). This unique opportunity to be so closely connected to their customers and constantly hear their opinions and desires allows Elysian to offer the best products for their customers. Additionally, being in such close contact with all the their customers
  • 22. 22 allows Elysian to build strong relationships and trust between them, making their customers more adventurous and willing to try such different beers. The second core competency that Elysian has is The Great Pumpkin Beer Fest. This festival has served as a major opportunity for new customers to find out about Elysian and try their specialty beers with a lower risk compared to buying 6-packs at the store. Seeing as new customers may be apprehensive to try such specialized beers, this festival can draw them in through the spirit of fall and introduce their product in a social and festive setting. The Great Pumpkin Beer Fest has also played an integral role in establishing Elysian’s name in the market for specialty and seasonal beers. Competitive Advantages Cost Advantages Despite all of the recent criticism Elysian has been faced with for ‘selling out’ to Anheuser-Bush, the opportunity may serve as a potential cost advantage against other craft brewers. Not only will Elysian have a tremendous amount of funding compared to all of the privately owned companies, but will have access to numerous new resources. Following the acquisition of the company, the founders of Elysian were interviewed by Market Watch and noted the importance of the access to these new resources, like A-B’s Elk Mountain Hops. “Raw materials are harder to get. The game is getting tough and kind of dire. If you don’t have access, you can’t grow. If you don’t have the hops you need, you’re out of the market” (Notte, 2015). Although it has not been noted that Elysian has experienced any direct cost advantages thus far, it can be expected in the future through learning effects. Elysian has successfully run a profitable brewery for nearly 20 years, but can learn how to be more efficient when production is drastically increased.
  • 23. 23 Differentiation Advantages Elysian initially made a name for themselves through their integration in to the Seattle culture, but has continued to stand out from the numerous other breweries in town through their specialized beer offering. Elysian has established this differentiation advantage by continuously creating unique and creative brews that are unlike the offering from any of their other competitors. The seasonal, limited release, and specialty beers outnumber the year round offerings of Elysian’s traditional beers at all times. Elysian’s current bottled beer offering features 6 year round brews, which are more traditional in nature, like the Immortal IPA, Loser Pale Ale, and the Men’s Room Red. Although these beers are a staple to the Elysian brand, the 12 specialty beers currently being offered greatly out number these traditional brews. This is much different than that of their competition. When comparing Elysian’s specialty beer offering to their three largest competitors it is clear that they have a strong advantage in this category. The following table compares the current bottled beers available from Pike, Deschutes, and New Belgium. Pike Brewing Company Deschutes Brewery New Belgium Elysian Brewing Year-round Beers 7 9 9 6 Specialty & Seasonal Beers 1 4 4 12 By constantly providing new beers and changing the offerings with the season, Elysian keeps consumers interested and involved with the brand and their products. The specialized offerings don’t stop at the 12 bottled beers mentioned previously; in fact it is just the tip of the iceberg. At the 3 Elysian pubs in Seattle there is constant innovation where new unique beers are created everyday. Between the 3 locations,
  • 24. 24 there are currently and additional 45 different specialty beers exclusively served at the pubs. Capitalizing on the market for specialty and seasonal brews is an advantage that will continue to set Elysian apart from its competitors. This source of differentiation is very sustainable and will most likely play a key role in keeping customers loyal to the brand, even after the much-hated acquisition by Anheuser-Bush. Given the situation, many customers will have the desire to switch to other brands when buying a IPA or red ale, but what if they want a blood orange pale ale or an espresso stout? These creative concoctions are only available from Elysian and there are far and few comparable alternatives. Additionally, this acquisition will allow Elysian to greatly increase the volume of production and will enable more of their creative brews to hit the shelves. In the past it has often been the case that Elysian creates a new creative beer but simply did not have the resources to produce it at a large scale. Co-founder Dick Cantwell shared that this was the case for a long time with one of the most popular Elysian beers, Space Dust IPA. The IPA was created in a test batch 2 years prior to being bottled and was enjoyed and sought after by Elysian fans at the various pubs (Notte, 2015). Because this IPA was a unique creation with many special ingredients, funding the mass-production was not a viable option. Given the increased access to resources Elysian can now produced more of its loved specialty pub beers, like the Space Dust IPA, to share with its customers. This competitive advantage will sustain so long as Elysian keeps their creativity and quality along the same path.
  • 25. 25 Three-Circles Targeting Customer Targeting Elysian Brewing Company’s target market is adults ages 24-32 looking for a great tasting, craft beer that lives up to the taste and quality associated with our brand. Key identifiers for this target market are young adults living in on a coastline who have graduated from college. We have chosen Deschutes Brewery as the main competitor for Elysian Brewing Company. Since Deschutes Brewery shares the same target market segment as Elysian and other competitors, it is important for Elysian Brewing Company to continue to focus on their local customer segments. Our goal is to determine how Elysian Brewing Company can increase their market share by continually offering their 24-32 year-old craft beer drinkers many varieties of high quality, great tasting craft beers over that of Deschutes Brewing Company. The top factors for Elysian Brewing Company customer’s when determining which craft beer brand to choose include variety of specialty brews, overall taste experience, price, packaging options, aesthetic appeal, and alcohol content. Below, you will find the ranking of importance of each factor according to our target market of craft beer drinkers ages 24-32 on a rating scale of 1-10 for both Elysian Brewing Company and Deschutes Brewing Company.
  • 26. 26 Customer Rating of Deschutes Factor Rating Variety 5 Taste Experience 9.8 Price 8 Packaging Options 10 Aesthetic Appeal 8 Alcohol Content 7 Customer Rating of Elysian Factor Rating Variety 9 Taste Experience 9.2 Price 6 Packaging Options 10 Aesthetic Appeal 10 Alcohol Content 8 Importance to Customers Factor Importance Rating Variety of Specialty Brews 10 Taste Experience 10 Price 4 Packaging Options 5 Aesthetic Appeal 7.5 Alcohol Content 8
  • 27. 27 Customers in the craft brewery segment consider an array of features and conveniences when making a purchase. Variety of specialty brews refers to how many limited batch beer options customers have at any given time. This is extremely important to customers in our target market. Taste experience also plays an extremely important part in our customers’ decision process and evaluation of Elysian Brewing Company’s beer. It includes the taste, smell, mouth-feel, the color and weight of the beer, as well as other indescribable factors that contribute to a customer’s enjoyment of the beer. Our target market is not highly sensitive to price as they are looking for the highest quality beer among craft breweries. Packaging options are moderately important to our target market so that they can purchase a quantity that fits their needs - 22 ounce, six, twelve, and twenty-four packs, growlers, and kegs are all options available to customers. The aesthetic appeal of the packaging and the brand image is also an important factor to customers as it is the first thing to give them an impression of the product. Alcohol content is an important aspect in the decision making process for customers as it signals the brewery’s ability to produce high quality and full- bodied beer. Based on these factors and their relative importance ratings, customer evaluation tables can be created to examine how Elysian and Deschutes are thought of by customers.
  • 28. 28 Customer Evaluation of Elysian Factor Ratings X Importance Factor = Customer Evaluation Variety 9 x 1 = 9 Taste Experience 9.2 x 1 = 9.2 Price 6 x .4 = 2.4 Packaging Options 10 x .5 = 5 Aesthetic Appeal 10 x .75 = 7.5 Alcohol Content 8 x .8 = 6.4 TOTAL = 39.5 Customer Evaluation of Deschutes Factor Rating x Importance Factor = Customer Evaluation Variety 5 x 1 = 5 Taste Experience 9.8 x 1 = 9.8 Price 8 x .4 = 3.2 Packaging Options 10 x .5 = 5 Aesthetic Appeal 8 x .75 = 6 Alcohol Content 7 x .8 = 5.6 TOTAL = 34.6
  • 29. 29 Key Features of Elysian Brewing Company • Seasonal Beer Releases • Specialty Batch Beers • Creative Label Art • Integrated into Seattle Culture • Award Winning Brewery • Flavorful Beers Key Features of Deschutes Brewing Company • Oregon Identity • Extensive Distribution • Award Winning Beers • Strong/Consistent Year-Round Beers • Affordable Price Point
  • 30. 30 Deschutes -Oregon Identity -Extensive Distribution -Award Winning Beers -Strong/Consistent Year- Round Beers -Affordable Price Point Customer Attributes Sought - Expanded Distribution - More variety in 6-packs - More Year-round beers Elysian -Seasonal Beer Releases -Specialty Batch Beers -Creative Label Art -Integrated into Seattle Culture -Award Winning Brewery -Flavorful Beers Award Winning Quality Flavor Reasonable Pricing Deschutes & Elysian • Award-Winning • Culturally Integrated • Similar Product Offerings Customer & Elysian • Product Options • Local Seattle Values • Quality-based Pricing • Aesthetic Appeal Customer & Deschutes • Trusted Quality • Availability • Affordable Pricing • PNW Focus
  • 31. 31 Key Opportunities for Growth The most prominent opportunity on Elysian’s horizon is currently their lack of 6-packs offered. Almost all of Elysian’s most cherished seasonal and special release beers are only sold in individual 22oz bottles. This presents a large opportunity to capture more of the market for craft beer drinkers, especially for those craft consumers who are looking for a reward after a Features that can be eliminated At this point in time, the Elysian brand has already undergone much change due to the A-B acquisition, and further eliminating aspects of the brand or products may be too much for the consumer. It is in the best interest of the company to continue what they are doing, and only make improvements, and additions to their offerings at this point in time. Features that should be better promoted Given the recent backlash that Elysian has seen from the acquisition from A-B, Elysian should remind customers of their involvement with the Seattle culture and the history they have with the city. Elysian needs to remind customers that they are still heavily invested in their place of origin and that many beers are inspired by local customers. This could be done by involving the Seattle community in activities like the evaluation in many of their test batch beers at their 3 pub locations. Points of difference that can be taken away from Deschutes One of the main differences between Deschutes and Elysian has always been price point. Elysian has consistently been more expensive than Deschutes because of the specialty beers they offer, but customers are often looking for an affordable option for a personal reward. If Elysian were to greater expand into the area of 6-packs, it
  • 32. 32 may present an opportunity for lower unit cost beers and would give customers an alternative to the more expensive 22oz bottles. Goals & Objectives Marketing Plan Goals When evaluating the current strengths and weaknesses of Elysian, the greatest opportunity for the company lies within growth. This is why the overall goal for the marketing plan is to increase market share. When evaluating two of Elysian’s main competitors, Deschutes and New Belgium, they have a much larger share of the market than that of Elysian. To more evenly compete with these two companies, Elysian must capture more of the craft beer market through the creation of variety 6- packs. Through the introduction of variety 6-packs the marketing plan wishes to address three main things: increasing trial, awareness, and preference. Given the current situation Elysian is in due to the acquisition, it will be most efficient and profitable thing to do is attract new customers. The explorers are not fully invested in craft beer culture and do not feel effected by the corporate buy-out like other Elysian may. Once Elysian has attracted these customers, we aim to retain them by the constantly evolving lineup of seasonal and special release 6-packs. Segmentation In order to most efficiently meet the needs of current and potential Elysian customers, we have broken up craft beer consumers into the following three segments: The Enthusiast, The Explorer, and The Average Joe. Each of these segments will be explained in further detail in the following paragraphs.
  • 33. 33 The Enthusiast The enthusiast is the embodiment of all things craft beer. This person is heavily invested in the craft beer culture and enjoys being involved in all aspects of the process (Carpenter, 2013). The Enthusiast’s needs in regard to craft beer are a reward at the end of a long day, as well as a means for social gatherings. The Enthusiast knows all things about the brewing process, as well as the technical definition of what it means to be a ‘craft brewer’. These customers will be well aware of the current acquisition of Elysian and most likely not very fond of it. The Enthusiast is typically within the age range of 21-34 years old with a active social life. Our value proposition for this segment is as follows: “For The Enthusiast, Elysian provides a variety of high-quality, great tasting craft style brews that serve as the perfect beer for any social gathering or personal reward.” The Explorer The Explorer is a beer drinker that is driven by experience and excitement. The Explorer views craft beer as more of a wholesome experience and is not interested in all the technicalities like The Enthusiast is. The needs that The Explorer wants to fill are finding new breweries to visit, new beers to try, and to satisfy their need for adventure (Carpenter, 2013). Given that these consumers are not heavily involved in the culture of craft beer, they will likely feel unaffected by Elysian’s acquisition and will view the business no differently. The Explorer is often not brand committed or loyal to a single brand of beer, and is only likely to be loyal if the brand constantly releases new beers and can keep their attention. The age range of an Explorer is often from 21-34 years old (Carpenter, 2013). The positioning statement for the Explorer is shown below: “For The Explorer, Elysian offers a variety of innovative seasonal and specialty beers to quench your adventurous pallet.”
  • 34. 34 The Average Joe The final segment for beer drinkers we have identified is The Average Joe. The Average Joe is a person that is not heavily invested in the world of craft beer, and often does not consume it. The Average Joe views beer as a means of relaxation, habit, or a treat for a special occasion. These are consumers who have full-time jobs, less chaotic social lives, and just like to have a beer or two at the end of a day. The Average Joe is typically between 35-54 years old and has a lower willingness to pay for beer in comparison to the other two segments, even though they often have a higher income. The value proposition for The Average Joe is stated below: “For the Average Joe, Elysian offers a variety high quality traditional and specialty beers that are perfect for special occasions and events in your life.” Targeting Primary Target: Explorer Elysian Brewing Company’s competitive advantage stems from their large selection of specialty beers, and Explorer Consumers are the segment of target customers who are adventurous to try all of Elysian’s beers. These consumers are not exclusively brand loyal to other breweries, but instead are loyal to brands that continue to offer a variety of changing products. This is a perfect match for Elysian Brewing Company, as it is a brewery that offers a changing beer selection to consumers. Explorer Beer Consumers are not educated in the technical processes or the definition of craft beer brewing, which is an important consideration for Elysian Brewing Company after their recent purchase by Anheuser Busch. This acquisition could cause some backlash from craft beer enthusiasts who are knowledgeable and
  • 35. 35 care about the craft beer identity and process, but the Explorer Beer Consumers are less likely to become upset by the acquisition. Positioning Strategy Currently, Explorer Beer Consumers have limited options for trying new specialty beers from Elysian Brewing Company. 22 oz. bottles are the most common form that seasonal and limited edition brews are sold in, which creates a problem for Elysian’s recommended target consumers. Trying a new beer as a 22 oz. bottle carries the risk of wasting a majority of the beer if the Explorer does not enjoy the brew. A six-pack of variety choices reduces this risk of non-enjoyment for the Explorer Beer Consumer, as he or she is able to purchase a number of smaller brews at once. This encourages Explorers to choose Elysian beers as opposed to other craft options because of the more attractive size offering. Previous situations would include an Explorer choosing between 22 oz. options, but with Elysian’s offering of variety six and twelve packs, an Explorer will be more likely to choose Elysian beers because of the new packaging options. Positioning Statement for The Explorer “For the beer drinker that wants a new experience and non-traditional brews, Elysian aims to continually offer creative and innovative beers to keep you coming back for more. Elysian will satisfy your need to try new things with our constantly evolving lineup of high quality seasonal and special release beers.”
  • 36. 36 Marketing Implementation Marketing Plan The timeline for the marketing plan surrounding the release of the variety 6 and 12-packs will begin in August and finish at the end of the year. Beginning in the month of September, Elysian will be offering four new products in the same places that Elysian is currently distributed. During the Fall season, Elysian will release a Pumpkin Specialty six pack which will include two of each of the following: Great Pumpkin, Dark O’, and Punkuccino. Also during the fall season Elysian will release a Pumpkin Specialty 12-pack which will include three of each of the following: Great Pumpkin, Dark O’, Punkuccino, and Night Owl. During the Spring and Summer seasons Elysian will release a Manic IPA Series six pack which will include three each of the Dayglow IPA and the Savant IPA. Elysian will also begin offering a year round variety 12-pack called, “The Greats,” which will include three each of the Immortal IPA, the Men’s Room Red, the Loser Pale Ale, and the seasonal release at the time. During the excitement leading up to The Great Pumpkin Beer Fest, in August Elysian will start the promotion of the new product offering. The campaign will kick off on the company’s social media outlets. Posts on Facebook, Instagram, and Twitter will help spread awareness of the exciting news. Pictured below are two mock-ups of a potential social media post announcing the variety packs.
  • 37. 37
  • 38. 38 Additionally, Elysian will promote these products at the Great Pumpkin Beer Festival that they host in October. Seeing as this is the biggest event of the year that celebrates Elysian’s most popular seasonal collection, this is the perfect time to surprise customers with a new offering. In order to do this, Elysian will make use of posters and displays of the new variety packs so that beer lovers from all around will be exposed to the new offerings. This will spark interest and start conversations in the beer communities, providing a great initial boost in awareness and buzz. Elysian will also use in-store displays when permitted by stores. Seeing as variety 6-packs are a new thing for beer lovers to experience, many beer drinkers will be inclined to purchase them simply on novelty. Evaluation & Control The metrics that Elysian will use to evaluate the marketing plan for the desired goal of increasing market share will include: • Relative Market: compare Elysian share to the most important competitor, Deschutes • Measuring Trial: by comparing the sales growth through the first quarter that they are offered for the new six pack offerings to the sales growth through the first quarter that it was offered of the Space Dust IPA six packs (Space Dust IPA was only offered as a specialty release in 22oz bottles until popular demand led Elysian to produce and release it as a six pack as well). • Measuring Preference: through social media engagement – shares, likes, retweets, comments, posts, hash tag usage. • Measuring Awareness: through social media – new followers, friends, and hash tag usage
  • 39. 39 Tentative Costs Seeing as it is not possible to access the information on production and distribution of beer that will be sold in stores, below we have provided estimates of the costs related to promotion. Graphic Design Costs: Social media posts and posters (Hische, 2014) • Usage for artwork in all print and online media for the period of one year: $10,000 • Total: $10,000 Print Materials: Posters to be placed in Brewpubs • Pumpkin Specialty 6-pack: $100 • Pumpkin Specialty 12-pack: $100 • Manic IPA Series 6-pack: $100 • “The Greats” Variety 12-pack: $100 Estimated Promotion Costs: $10,400
  • 40. 40 Works Cited Ahrens, D (2004). Investing in Vice: The Recession-Proof Portfolio of Booze, Bets, Bombs, and Beer Styles. Retrieved from http://www.craftbeer.com/beer-styles Brewers Association. (2015, July, 1). Brewers Association Lists Top 50 Breweries of 2014.[Press Release]. Retrieved from http://www.brewersassociation.org/press- releases/brewers-association-lists-top-50-breweries-of-2014/ Brewers Association. (2014, June 3). Washington Craft Beer Statistics. Retrieved from http://www.washingtonbeerblog.com/washingtons-22-breweries/ CorporateAffiliations.com. (2006). Elysian Brewing Company. Retrieved July 8, 2015, from LexisNexis Corporate Affiliations database. Carpenter, A.J. (2013). Craft Beer and Consumer Behavior. Retrieved July 1, 2015, from https://anthonygarver.files.wordpress.com/2013/06/buyer-behavior-craft- beer- project.pdf Deschutes Brewery (2015). Brews. Retrieved from http://www.deschutesbrewery.com/brews/list Elysian Brewing Company (2015). About Elysian. Retrieved from http://www.elysianbrewing.com/about/ Elysian Brewing (2015). Elysian Beers. Retrieved from http://www.elysianbrewing.com/elysian-beers/
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