A consulting report from my Analytical Tools for Marketers class at DePaul. In this paper, I use conjoint analysis to increase market share and customer value for a beer product from one of my favorite breweries, Revolution Brewing.

1.
Revolution
Brewing’s
Natural
Double
IPA:
Increasing
Market
Share
&
Consumer
Value
Teri
Grossheim
October
9,
2014
MKT
534
–
Analytical
Tools
for
Marketers
Fall
2014

2.
Executive
Summary
This
report
provides
information
regarding
conjoint
analysis
techniques
and
their
application
in
the
craft
beer
industry,
with
a
focus
on
beer
features
for
Revolution
Brewing.
Revolution
Brewing
marketing
personnel
requested
these
services
from
TG
Consulting
when
one
of
their
products,
Natural
Double
IPA,
experienced
a
decrease
in
craft
beer
market
share.
TG
Consulting
uses
qualitative
data,
surveying,
and
proven
analytical
methodologies
to
make
assumptions
and
suggestions
throughout
this
report.
Conjoint
analysis
was
chosen
for
this
study
since
it
is
a
data-­‐driven
consumer
insight
tool
that
shows
the
relative
value
that
consumers
assign
to
various
features
and
levels
of
a
product.
The
analysis
has
demonstrated
that
certain
features,
as
well
as
levels,
are
more
important
than
others
to
craft
beer
consumers.
Regarding
Revolution’s
Natural
Double
IPA,
the
analysis
has
identified
certain
changes
that
can
be
made
to
improve
market
share.
Findings
of
this
study
show
that
with
changes
in
International
Bitterness
Units
(IBU)
and
organic
content,
Revolution
can
increase
market
share
and
consumer
value
of
the
Natural
Double
IPA.
Conjoint
Analysis
Methodology
TG
Consulting
leveraged
conjoint
analysis
for
the
study,
since
it
is
a
proven
analytical
tool
for
figuring
out
appropriate
responses
to
competitors’
products
and
correct
pricing
for
a
line
extension.
This
study
acknowledges
that
every
beer
possesses
a
set
of
features
and
as
a
result,
discerning
consumers
are
sensitive
to
a
singular
change
in
level
and/or
features.
TG
Consulting’s
familiarity
of
the
craft
beer
industry
allowed
for
identification
of
core
product
features.
Focus
groups,
managers’
input,
and
competitive
analysis
were
used
to
determine
relevant
features
and
levels.
Profiles
were
created
after
a
survey
of
the
competitive
market,
including
craft
beers
from
competitors’
breweries
with
similar
features.
Large-­‐sample
surveys
were
issued
to
gain
feedback
on
profiles
for
the
analysis.
This
report
serves
as
an
analysis
of
the
survey
results
and
their
application
to
craft
beer
products,
namely
Revolution’s
Natural
Double
IPA.
Current
State
TG
Consulting
began
by
reviewing
the
craft
beer
competitive
market
to
identify
core
product
features,
which
are
a
set
of
non-­‐differentiating
features
that
do
not
vary
across
competitors,
to
be
included
in
the
study.
A
few
non-­‐differentiating
features
for
craft
beer
include
distribution
channel,
brewery
location,
and
popularity.
Package
size,
alcohol
by
volume
(ABV)
rating,
and
color
(European
Brewery
Convention
or
EBC),
calories,
organic
content,
international
bitterness
unit
(IBU),
and
price
were
identified
as
relevant
features,
which
resulted
from
input
by
focus
groups,
managers,
and
competitive
analysis.
Three
levels
within
each
feature
were
also
identified
and
used
in
the
study.
The
study
used
these
seven
features
and
three
levels
to
determine
the
relative
value
that
craft
beer
consumers
assign
to

3.
them1.
Features
that
are
valuable
to
craft
beer
consumers
should
be
evaluated
and
considered
when
making
product
changes.
Various
craft
beer
profiles
were
created
using
seven
features
and
three
levels.
18
profiles
were
created
and
used
for
the
survey2.
Since
there
are
more
than
10
profiles,
survey
participants
were
asked
to
rate
the
profiles,
based
on
conjoint
analysis
best
practices.
The
set
of
levels
and
features
used
in
the
study
are
adequate
for
profile
creation3.
A
certain
analysis
technique
(OED)4
was
used
to
create
the
profiles,
which
determines
not
only
how
many
profiles
to
show
to
consumers,
but
also
which
ones.
In
order
to
associate
quantitative
value
to
something
qualitative
such
as
consumer
response
to
a
given
product,
code
values
were
assigned
to
the
each
level
so
each
could
be
treated
as
a
variable.
These
code
values
allowed
for
correlation
of
the
study
results,
which
enabled
the
statistical
analysis
that
serves
as
the
foundation
of
this
study.
The
analysis
also
showed
that
the
correlation
was
meaningful,
demonstrating
statistical
validity5.
Once
the
profiles
were
created
and
validated
with
statistical
information,
the
profiles
were
sent
to
1500
craft
beer
consumers
in
the
Midwestern
US
over
a
two-­‐month
period6.
The
survey
responses
were
then
analyzed
and
interpreted
using
statistical
correlation7.
The
resulting
data
provided
information
regarding
consumer
response
to
the
profiles.
For
instance,
the
data
shows
the
most
important
craft
beer
feature
is
price,
and
the
least
important
feature
is
calories8.
While
alcohol
by
volume
(ABV),
price
per
serving,
and
package
size
were
important
features
to
the
surveyed
consumers,
color
(EBC),
bitterness
(IBU),
and
organic
content
percentage
were
less
important
features9.
The
profile
with
the
best
value
was
a
$4,
22
oz.
Bomber
beer
with
200
calories,
80
EBU,
50%
organic
content,
100
IBU,
and
2%
ABV.
The
profile
with
the
worst
value
was
a
$12,
12oz.
can
beer
with
100
calories,
33
EBC,
0%
organic
content,
5
IBU,
and
12%
ABV10.
Revolution’s
Natural
Double
IPA
shares
the
same
color
(EBC)
and
package
size
as
the
best
value
beer
profile
and
does
not
share
any
features
with
the
worst
beer
profile.
The
Natural
Double
IPA
also
has
the
smallest
relative
market
share,
which
included
three
competitors’
craft
beers
identified
in
a
competitive
analysis11.
TG
Consulting
has
a
few
recommendations
for
Revolution
Brewing
that
leverages
Natural
Double
IPA’s
strengths
to
gain
market
share
and
increase
value
amongst
consumers.
1
Appendix:
Conjoint
Analysis
Bar
Graph
2
Appendix:
Profile
Sample
3
Adjusted
R
Square
=
0.43607
4
Appendix:
Code
Sheet
&
Orthogonal
Array
5
Significance
F<0.005
(0.000359638584113993)
6
Appendix:
Profile
Sample
7
Appendix:
Orthogonal
Array
&
Regression
Analysis
8
Feature
Importance:
Average
Serving
Price
(29.98%),
Calories
(5.77%)
9
Appendix:
Feature
Importance
Graph
10
Optimal
TPU
(3.667),
Worst
TPU
(0.857)
11
Appendix:
Market
Share
–
Product
1,
21.40%,

4.
Recommendations
Based
on
the
analysis,
TG
Consulting
believes
Revolution
Brewing
could
make
a
few
changes
to
improve
market
share
and
consumer
value
for
the
Natural
Double
IPA.
First,
the
analysis
shows
there
are
relationships
in
certain
categories
such
as
calories,
color
(EBC),
organic
content,
bitterness
(IBU),
and
package
size,
that
translate
to
consumers
being
somewhat
insensitive
to
these
features12.
On
the
other
hand,
the
analysis
demonstrates
consumers
are
sensitive
to
price
and
alcohol
by
volume
(ABV)13.
As
a
result,
TG
Consulting
recommends
changes
to
insensitive
features
such
as
organic
content
and
bitterness
(IBU).
The
suggestions
in
this
report
have
the
potential
to
increase
the
Natural
Double
IPA’s
market
share
by
3.5%14.
The
analysis
also
found
more
compelling
changes
could
be
made
to
increase
market
share,
but
would
have
cost
and
operational
implications.
Natural
Double
IPA
shares
the
most
valuable
color
and
package
size
levels
in
the
analysis,
which
is
positive
because
consumers
place
high
value
on
color
(EBC)
and
package
size,
15.
Regarding
calories,
Natural
Double
IPA
300-­‐calorie
level
was
valued
somewhat
highly
compared
to
other
feature
levels,
TG
Consulting
recommends
leaving
this
alone,
since
more
prominent
gains
can
occur
in
other
areas16.
Natural
Double
IPA’s
100%
organic
content,
while
it
does
have
value,
the
analysis
demonstrated
that
50%
organic
content
had
the
most
value
out
of
the
three
organic
content
levels17.
Since
the
analysis
shows
that
consumers
are
somewhat
insensitive
to
the
organic
content,
TG
Consulting
recommends
a
change
from
100%
to
50%
organic
content18.
Since
Revolution
has
built
brand
recognition
with
Natural
Double
IPA
being
100%
organic,
a
reduction
of
this
feature
would
still
support
the
brand
name
and
familiarity.
Certain
changes
in
the
brewing
process
might
need
to
occur
to
accommodate,
which
might
reduce
cost
due
to
lesser
organic
content,
since
organic
materials
tend
to
be
more
expensive
than
non-­‐organic.
Another
change
TG
Consulting
would
suggest
is
altering
bitterness
from
100
IBU
to
50
IBU,
since
the
analysis
shows
consumers
place
more
value
on
50
IBU
than
100
IBU
and
0
IBU19.
There
are
trade
offs
at
all
levels
between
IBU
and
organic
content,
which
are
also
considered
to
be
insensitive
features,
so
both
these
areas
are
great
places
to
make
changes
without
much
hesitation
from
consumers20.
Regarding
package
size,
it’s
suggested
that
Revolution
keep
the
12
oz.
bottle
for
the
Natural
Double
IPA,
since
this
level
possessed
the
most
value
among
both
the
12
oz.
can
and
22
oz.
“Bomber”
bottle.
12
Appendix:
Non-­‐Linear
Relationships
13
Appendix:
Linear
Relationships
14
24.85%-­‐21.4%=
3.45%
15
80
EBC,
12
oz.
bottle
16
300
Calories
(0.190),
200
Calories
(0.238)
=
Difference
(0.048)
17
100%
(0.190),
50%
(0.357),
0%
(0.095)
18
100%
Organic
(0.190),
50%
Organic
(0.357)
=
Difference
(0.167),
Appendix:
Market
Share
19
100
IBU
(0.190),
50
IBU
(0.450),
0
IBU
(0.119)
|
Difference
between
100
IBU
&
50
IBU
=
0.260
20
IBU
&
Organic
Content
non-­‐linear
relationship,
all
levels
within
0.1
of
each
other.
Appendix:
Trade
offs
and
Linearities

5.
Alcohol
by
volume
and
price
are
important
features
and
as
a
result,
the
analysis
found
changes
in
these
areas
should
be
done
with
care.
As
previously
mentioned,
the
analysis
found
consumers
are
sensitive
to
these
features21.
While
certain
large
gains
could
be
accounted
for
with
a
drop
in
price,
this
is
typically
not
best
practice
when
gaining
market
share
with
a
certain
product22.
Both
the
alcohol
by
volume
(ABV)
and
price
per
serving
values
possessed
by
Natural
Double
IPA
reflect
moderate
value,
which
is
a
trade
off
that
provides
a
balance
within
the
product
for
consumers23.
In
all,
TG
Consulting
suggest
making
changes
to
features
such
as
organic
content
and
IBU,
but
do
not
alter
price
and
alcohol
by
volume
(ABV).
The
suggested
changes
would
not
only
increase
market
share,
they
would
also
meet
the
barrier
to
entry
requirements
for
the
market24.
While
the
suggested
changes
do
not
equate
to
the
optimal
product
feature
mix
uncovered
in
the
analysis,
the
changes
should
increase
market
share
and
still
be
competitive
in
the
market.
In
addition,
the
changes
should
bring
Revolution’s
Natural
Double
IPA
from
a
4th
place
ranking
in
a
competitive
analysis
to
3rd
place25.
In
order
to
overtake
competitors,
Revolution
would
have
to
consider
dropping
the
price
to
$4
per
serving
or
bringing
the
ABV
down
from
8%
to
2%26.
Since
consumers
are
sensitive
to
these
changes,
and
they
have
implication
to
cost
and
operations,
TG
Consulting
would
suggest
further
marketing
research
to
determine
if
altering
these
areas
is
best
for
Revolution’s
business.
TG
Consulting
believes
with
a
few
minor
changes,
Revolution’s
Natural
Double
IPA
could
marginally
gain
market
share
and
increase
consumer
value.
In
order
to
make
significant
gains,
Revolution
would
have
to
evaluate
considerable
changes
that
may
result
in
certain
impacts
to
the
business.
TG
Consulting
suggests
Revolution
Brewing
should
take
the
findings
in
this
report
and
review
internally
to
decide
if
this
is
the
right
direction.
21
Appendix:
Trade
Offs
&
Linearity
22
$4
per
serving
(0.976)
-­‐
$8
per
serving
(0.476)
=
0.5
23
$8
per
serving
(0.476)
-­‐
8%
ABV
(0.452)
=
0.024
(within
0.1)
24
New
product
TPU
(2.524)
>
Intercept
(1.000)
25
New
Product
Market
Share
(24.85%),
4th
place
competitor
(23.79%)
26
$4
per
serving
(0.967)
+
2%
ABV
(1.000)
=
increase
TPU
by
1.967

6.
Appendix

7. !
!
Conjoint Analysis Bar Graph

8.
} = Trade Off
!
Non-linearity!Linearity
}
}
}{
Trade Offs & Linearities - Customer Value Structure
}
}

9. !
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10. !
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Revolution Natural Double IPA (Product 1)
Market Share & Simulation

11. !
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Calculations

12. 1. Would definitely never consider purchasing
2. Would most likely never consider purchasing
3. Would probably never consider purchasing
Begin Rating Here 4. Indifferent towards purchasing
5. Would probably consider purchasing
6. Would most likely consider purchasing
7. Would definitely consider purchasing
Beer 1 ### Beer 2 ### Beer 3 ###
Price Per One Unit Price Per One Unit $12 Price Per One Unit $4 Price Per One Unit $8
ABV % ABV % 2% ABV % 12% ABV % 5%
EBC (Color) EBC (Color) 4 (Pale Lager) EBC (Color) 33 (Amber Ale) EBC (Color) 80 (Imperial Stout)
IBU (Bitterness) IBU (Bitterness) 5 (American Lager) IBU (Bitterness) 50 (IPA) IBU (Bitterness) 100 (BarleyWine)
Size/packaging Size/packaging 12 oz Can Size/packaging 22 oz. Bomber Size/packaging 12 oz Bottle
Organic Content Organic Content 100% Organic Content 0% Organic Content 50%
Calories/serving Calories/serving 300 Calories/serving 300 Calories/serving 300
6 1 7 5
Beer 4 ### Beer 5 ### Beer 6 ### Beer 7 ###
Price Per One Unit $12 Price Per One Unit $4 Price Per One Unit $8 Price Per One Unit $12
ABV % 2% ABV % 12% ABV % 5% ABV % 12%
EBC (Color) 33 (Amber Ale) EBC (Color) 80 (Imperial Stout) EBC (Color) 4 (Pale Lager) EBC (Color) 4 (Pale Lager)
IBU (Bitterness) 100 (BarleyWine) IBU (Bitterness) 5 (American Lager) IBU (Bitterness) 50 (IPA) IBU (Bitterness) 100 (BarleyWine)
Size/packaging 22 oz. Bomber Size/packaging 12 oz Bottle Size/packaging 12 oz Can Size/packaging 12 oz Bottle
Organic Content 50% Organic Content 100% Organic Content 0% Organic Content 0%
Calories/serving 300 Calories/serving 300 Calories/serving 300 Calories/serving 100
3 5 3 5
Beer 8 ### Beer 9 ### Beer 10 12 Beer 11 13
Price Per One Unit $4 Price Per One Unit $8 Price Per One Unit $12 Price Per One Unit $4
ABV % 5% ABV % 2% ABV % 5% ABV % 2%
EBC (Color) 33 (Amber Ale) EBC (Color) 80 (Imperial Stout) EBC (Color) 80 (Imperial Stout) EBC (Color) 4 (Pale Lager)
IBU (Bitterness) 5 (American Lager) IBU (Bitterness) 50 (IPA) IBU (Bitterness) 5 (American Lager) IBU (Bitterness) 50 (IPA)
Size/packaging 12 oz Can Size/packaging 22 oz. Bomber Size/packaging 22 oz. Bomber Size/packaging 12 oz Bottle
Organic Content 50% Organic Content 100% Organic Content 0% Organic Content 50%
Calories/serving 100 Calories/serving 100 Calories/serving 100 Calories/serving 100
2 3 2 4
Beer 12 14 Beer 13 15 Beer 14 16 Beer 15 17
Price Per One Unit $8 Price Per One Unit $12 Price Per One Unit $4 Price Per One Unit $8
ABV % 12% ABV % 12% ABV % 5% ABV % 2%
EBC (Color) 33 (Amber Ale) EBC (Color) 80 (Imperial Stout) EBC (Color) 4 (Pale Lager) EBC (Color) 33 (Amber Ale)
IBU (Bitterness) 100 (BarleyWine) IBU (Bitterness) 50 (IPA) IBU (Bitterness) 100 (BarleyWine) IBU (Bitterness) 5 (American Lager)
Size/packaging 12 oz Can Size/packaging 12 oz Can Size/packaging 22 oz. Bomber Size/packaging 12 oz Bottle
Organic Content 100% Organic Content 50% Organic Content 100% Organic Content 0%
Calories/serving 100 Calories/serving 200 Calories/serving 200 Calories/serving 200
7 6 5 3
Beer 16 18 Beer 17 19 Beer 18 20
Price Per One Unit $12 Price Per One Unit $4 Price Per One Unit $8
ABV % 5% ABV % 2% ABV % 12%
EBC (Color) 33 (Amber Ale) EBC (Color) 80 (Imperial Stout) EBC (Color) 4 (Pale Lager)
IBU (Bitterness) 50 (IPA) IBU (Bitterness) 100 (BarleyWine) IBU (Bitterness) 5 (American Lager) Please continue to the next page
Size/packaging 12 oz Bottle Size/packaging 12 oz Can Size/packaging 22 oz. Bomber to complete the survey.
Organic Content 100% Organic Content 0% Organic Content 50%
Calories/serving 200 Calories/serving 200 Calories/serving 200
4 3 5
SAMPLE
Profile Sample
Code Sheet

13. !
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Orthogonal Array

14. !
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Regression Analysis

15. !
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Intercept
Optimal
Product
Intercept - Market Barrier to Entry