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Craft Beer Female Segment
- 1. Craft Beer: Targeting the Female Segment Gennaro Aliperti, Bryan Blick, Joseph Brad Boggess, Benjamin Bolasny, Miriam Brownstone, Dustin Bryant Research Project Marketing 9716 Professor Dr. Chugani
- 2. 1 Table of Contents I. Executive Summary 2 II. Introduction 3 III. Research Question 4 IV. Methodology 5 Part 1: In-‐Depth Interviews 6 Part 2: Conjoint Analysis 7 V. Major Findings 11 Promotion 11 Product 12 VI. Conclusions and Recommendations 13 VII. Appendix 15 VIII. Bibliography 21 IX. Contributions 22
- 3. 2 I. Executive Summary For this consumer behavior final project, the objective was to find a company and answer a specific marketing question. We decided to take a closer look at craft beer, and selected the brewery of our team member Joseph Boggess. The brewery is called Underhill Brewery, and is hoping to launch in the Fall of 2016 in New York’s Long Island City. Like for any establishment, Underhill Brewery is looking for ways to increase its competitive advantage and maximize its profits. We began the project by conducting literary research, which showed women are consuming craft beer disproportionately to regular beer. To explicate, women make up only 25% of the consumers of regular beer, but 37% of craft beer. This gave us our basis and reason to delve further into the subject of the female segment within craft beer. We hoped to find out why this cleft exists, and how we could capitalize on it. We defined our target market as upper middle class, well educated, young, working professional women in the New York City metro area, aged 21-‐45. Using literary, qualitative, and quantitative research, we have been able to identify which attributes appeal most to female beer drinkers, and how Underhill Brewery could and should use this information to capitalize on this target segment. We have combined knowledge about both product and promotion to create the perfect craft beer and how to bring it to the market and target segment.
- 4. 3 II. Introduction In late 2016, Underhill Brewery is expecting to open its doors to the public. Underhill Farm Brewery will be a Long Island City brewpub serving high-‐quality beer and food through locally-‐ sourced ingredients. The brewery aspires to be a unique venue where customers can experience fresh and full-‐flavored ales, participate in the beer brewing process, and taste what New York State farms have to offer. The venture will be a brewery and a restaurant all in one space. The “brewery side” will exist in the kitchen (stripped out of traditional cooking equipment) with the beer produced within. The “restaurant side” will focus on selling the food and drink, with the food prep area in the basement. The model is based on high foot traffic, retail sales as opposed to wholesale, fresh artisanal beer, and farm-‐to-‐table ideals. To best take on the problem and analysis to come, it’s important to understand three concepts: 1. Craft beer, also known as microbrew beer, refers to the segment of fully flavored, artisan-‐ style beers made by U.S. brewers. Craft beers are available with a variety of ingredients, styles, and packaging that reflect their often hand-‐crafted origins. Varieties are typically associated with small independent local or regional brewers. The styles and positioning characterized by craft beer are in opposition to the larger brewing corporations including Anheuser-‐Busch InBev and MillerCoors, who are often defined as macrobreweries. 2. The beer/brewing industry is still dominated by these macrobreweries, which account for almost 90% of the market. But even as breweries such as InBev and SABMiller sales steadily decrease, Craft Beer sales rise every year. According to the Brewer’s Association, Craft Beer
- 5. 4 growth exceeded 13% by volume and 15% by dollars from 2008 to 2013. Year after year, the growth rate increases (2013 grew by 18% over 2012). The 2012 Mintel report on Craft Beer suggests that sales will have tripled from 2007 to 2017.1 Microbrewing is eating away at the macrobrewery market share as more and more customers switch to Craft Beers. 3. The average Craft Beer enthusiast is Caucasian, male, and with household incomes of at least $50,000. Most are between the ages of 25 to 45, but the younger customers (21 to 30) are rapidly gaining market share. Women and Hispanics have lately gained recognition in Craft Beer as high-‐growth consumers as well. Underhill will provide food, drink, and a full brewery experience. However, the company’s core competency is Craft Beer, producing full-‐flavored beer in-‐house. As such, the success of the venture lies in capturing a segment of the NY Craft Beer market. While Underhill has a strong strategy for capturing these traditional Craft Beer customers, the company acknowledges that it does not have a strong plan for reaching women. III. Research Question There is little data or research on marketing beer toward women specifically. This demographic, until recently, has been dismissed: women do not really drink beer. They prefer wine or mixed drinks. But according to a 2013 Gallop poll on the alcohol industry, women in fact represent 25% of all beer sales, and 37% of all Craft Beer sales.2 What this means is that women as a group consume much less beer than men, yet within Craft Beer, they consume almost as much as men. This data indicates that something about Craft Beer attracts women more to Craft Beer 1 Kraushaar, Amy, Beer -‐ US -‐ January 2015, Mintel, January 2015 2 Mosbaugh, Erin, How Craft Beer Fails its Female Fan Base, First We Feast, November 20, 2014
- 6. 5 than the average man. (We are not stating that women drink more Craft Beer than mass-‐ produced beer, as Craft Beer is still in its infancy at under 10% of total beer market). For Underhill, this data is quite important. As the venture focuses on Craft Beer at a retail level, understanding the behavior of women with regards to Craft Beer will be crucial in creating a targeted marketing strategy and capturing more market share. “Marketers may have opportunities to invest more in targeting women for their true-‐/mass-‐craft beer brands, since their usage likelihood isn’t considerably different than men.”3 Research into craft beer’s success in the female market could provide valuable insights into why women are drinking craft beer at a rate similar to men. This research project aims to answer the two following questions: What are the attributes of Craft Beer that are attractive to women? What can Underhill Brewery do to better market its products towards women? IV. Methodology The research project was broken up into two steps. The goal for Part 1 of the research project was to determine certain attitudes and behaviors of women between the ages of 22 and 45 surrounding craft beer. More specifically, the team wanted to discover which attributes of craft beer are important to women and why. Analyzing women’s understanding of Craft Beer and their attitudes and behaviors towards the product was the key to finding a way to capitalize on this market segment. The information would help us prepare for the second part of the project 3 Kraushaar, Amy, Beer -‐ US -‐ January 2015, Mintel, January 2015
- 7. 6 in finding out the essential question: How should Underhill Brewery, which makes Craft Beer, better direct its marketing efforts toward this target market? Part 1: In-‐Depth Interviews The team conducted 20 in-‐depth interviews with women between the ages of 23 and 36. Questions revolved around basic demographic information such as age and income, non-‐ drinking related habits such as profession hobbies, and of course their alcohol consumption such as drink preference and reasoning behind it. We also dove into some marketing-‐related questions, in order to see if this was even a conscious issue for our demographic. A full list of the questions used as well as a complete look at the major findings gathered during the interviews are provided in the appendix. The three attributes below were the most important ones to focus on for the conjoint analysis in Part 2: a. Flavor Do women want a sweet or bitter beer? Should it be colorful and have a high level of flavor complexity as the tongue’s palette absorbs each individually? Or should it be straightforward and easily readable in terms of taste? Should it be fruity, citrusy, and aromatic or should it be more malty, bready, or grainy?
- 8. 7 b. Fullness Do women prefer a lighter beer, one that is often referred to as a summer beer, leaving a feeling of freshness? Or do women prefer a rounder beer, one that is usually heavy and more filling? c. Alcohol by volume (ABV) Is the level of alcohol a beer has import to female beer drinkers? Do they prefer beers that have a higher or lower alcohol percentage? We believe that most craft beer drinkers do not drink for the purpose of getting drunk (it’s more efficient to drink several shots of hard liquor). What is the preferred ABV of female craft beer drinkers? Part 2: Conjoint Analysis: Testing the Attributes of Craft Beer The research showed that female beer drinkers (both craft and non-‐craft) and non-‐beer drinkers alike did have a similar palette when it came to picking a drink of their preference. The goal for Underhill Brewery would be to create beers that are made up of the various flavors, types, and attributes women would be most interested in. If the team were able to find the perfect formulas for a small line of beers (maybe three of four kinds), the brewery could win over an entire market segment. The interviews in part 1 provided much insight into what women are looking for in Craft Beer, and part 2 consisted of testing these findings.
- 9. 8 To answer the second question about what attributes our beer itself should have, the team used the conjoint analysis method. As it is evident that the team could not actually produce a myriad of different kinds of beers, we relied on potential consumers’ selections of what beer they would choose, were they all on a menu. 1. We presented respondents with several product options, each version with a different combination of attributes (X’s). 2. Respondents provided overall rating (S’s) for each of these product options. 3. We entered attribute values (X’s) and ratings of product options (S’s) into conjoint analysis to determine attribute preferences and how much respondents care about each attribute relative to the other attributes (W’s). 4. We used the output to calculate tradeoffs between attributes if desired. In order to quantify our findings, we decided to add a fourth attribute, namely price, into the mix, to create a total of 16 different kinds of beers: Beer Flavor Fullness ABV Price A Citrusy/Fruity Light Low (4%) Low ($6) B Citrusy/Fruity Light Low (4%) High ($8) C Citrusy/Fruity Full Low (4%) Low ($6) D Citrusy/Fruity Full Low (4%) High ($8) E Malty/Bready Light Low (4%) Low ($6) F Malty/Bready Light Low (4%) High ($8) G Malty/Bready Full Low (4%) Low ($6) H Malty/Bready Full Low (4%) High ($8)
- 10. 9 I Citrusy/Fruity Light High (7%) Low ($6) J Citrusy/Fruity Light High (7%) High ($8) K Citrusy/Fruity Full High (7%) Low ($6) L Citrusy/Fruity Full High (7%) High ($8) M Malty/Bready Light High (7%) Low ($6) N Malty/Bready Light High (7%) High ($8) O Malty/Bready Full High (7%) Low ($6) P Malty/Bready Full High (7%) High ($8) We realized and understood that 16 such similar choices and questions would be too many for participants to answer all, assuming they would get tired by the end of it and not be as concentrated, rendering less useful responses. Using Qualitrics, we were therefore able to allow each participant to only see eight of the sixteen combinations. For each participant, both which eight beers are shown as well as the order in which they are shown will be random and equal. For clarification purposes, the terms ABV, citrusy/fruity taste, malty/bready taste, light-‐ bodied, and full-‐bodied will all come with a short description in order to help participants visualize the beers as much as possible. Participants will be asked to rate the likelihood of them ordering the specific beer on a scale of 1 -‐ 9. A total of 116 women within our target market responded to this survey for the conjoint analysis.
- 11. 10 The below is an example of one of the beer variations provided in the survey: Imagine you're at a bar, and you decide to try a new beer. The beer has 4% ABV, and is described as having a citrusy/fruity taste with a light body. The beer costs $6. Definitions: ABV -‐ Alcohol by Volume Citrusy/Fruity -‐ sweet and tart with orange / grapefruit tones Light Body -‐ highly carbonated, light taste How likely are you to order this beer? Note The founder of Underhill will be eventually creating beers that will test some of these scenarios. While they are beyond the scope of this project, Underhill intends to create 8 distinct beers to test the same attributes “in reality.” This will have the twofold effect of creating a more precise test, as well confirming the reliability of the method. If the results are the same for both the conjoint analysis and the real beers, Underhill will feel more secure in using such a method in the future. Defining flavor characteristics with words is a limitation, but the survey itself can provide valuable information for marketing purposes. For example, malty/bready may not be clear to some women, and alternative descriptions may be presented or uncovered during the test. if that is the case, when Underhill provides descriptions of the various beers, the brewery will be able to provide more relevant descriptors.
- 12. 11 V. Major Findings of Interviews and Conjoint Analysis Promotion: Information and Education About Craft Beer Like with any product, it’s important to have an audience that finds you interesting. If there is no information out there, though, there is nothing to be interested in. Our findings showed that information about craft beer was not only lacking, but of interest to our target demographic. All but two of the women interviewed expressed that they would be much more likely to purchase a craft beer if they knew more about them. This educational aspect was the single most consistent response, with 18 out of 20 women showing interest in knowing more. By coming up with what specific information would be useful to these women, we hope to be able to win them over and give craft beer a chance. The current marketing landscape is evidence that, currently, craft beer breweries are not trying to educate their drinkers. The team recommends that Underhill take advantage of this opportunity, and aim to fill the gap. The below suggestions were made during the interviews, and the team recommends Underhill fold them into its marketing strategy: d. The story behind the founder and brewery, and each beer (origin, what it means to the brewery, why Underhill values these beers, what makes them different...) e. Relating the brand to the marketing endeavor. How does the specific marketing endeavor fit into the Underhill brand? For example, if Underhill decides to to a beer and cheese pairing night, how does this event fit into Underhill’s farm-‐to-‐
- 13. 12 table identity? A direct link between the mission and the marketing may need to be established. f. How a flavor relates to what customers already know and can relate to. For example, relating the flavors of Underhill’s IPA to oranges, grapefruit, and freshly baked bread. g. Specific classes, parties, and tastings for women only. This was suggested as fun events for “girls night out” as well as good events for women whose significant others drinks Craft Beer and want to join in the hobby. Product: Citrusy and high ABV most important Using conjoint analysis, our regression testing discovered that three of our four attributes are statistically significant in determining female consumer's subjective utility: flavor, alcohol by volume, and price. Our survey showed that flavor is the most important factor tested. A change in flavor from malty/bready to citrusy/fruity is worth $5.38 to our average female consumer in our target demographic. For alcohol by volume (ABV), we tested 4% and 7%. Our results showed that an increase in ABV by 3% is worth $2.45 to our average female consumer. Next, price was relatively important, too. We tested $6 vs. $8 for a pint of beer, and our results showed that a lower price is worth .205 subjective utility points per dollar to our average female consumer. With this information in mind, we can see that the beer that will result in the most satisfied female consumers is one that has a citrusy/fruity flavor, a high ABV, and a low price. It is worth
- 14. 13 noting that while the results about the body/weight of the beer was not statistically significant, customers tended to favor a lighter beer over a heavier beer. VI. Conclusion and Recommendations Underhill Brewery’s research and findings throughout this research project have resulted in a concise and clear conclusion, allowing us to make substantial recommendations that will surely lead to the brewery’s lasting success. The famous Four P’s of Marketing are Price, Product, Promotion, and Place. We have come up with a formula that addresses all four of these matters. Firstly, we had already decided on place. Underhill Brewery will be located in Queens’ Long Island City, and hopes to open its doors in late 2016. An up-‐and-‐coming, newly gentrified and hipsterized area, this part of New York City is open to and welcoming of new breweries and craft beer aficionados. Secondly, let us turn to the product itself. Prior to this research project, Underhill Brewery already had a relatively clear idea of what kind of craft beer it was going to brew, and what flavor elements were going to be used. Thanks to the extensive research done on the female segment alone, though, product ideation came into the mix of our findings. By surveying 116 women in our target demographic and asking them to rank a total of 16 different beers from 1-‐ 9, we were able to identify which beers would be most and least favored. With an average of 6.46, Beer I (citrusy/fruity, light-‐bodied, 7% ABV, $6) received the highest rating. In contrast, Beer F (malty/bready, light-‐bodied, 4% ABV, $8) received the lowest rating with an average of
- 15. 14 4.23. As our detailed regression analysis in the previous section explained, we learned to stay clear of malty/bready flavored-‐beers, and aim to have a higher rather than lower ABV. Women tended to prefer light-‐bodied beers, but this was the weakest indicator of likelihood to order. Next, we were able to determine a reasonable price point, and understand price elasticity and sensitivity of the consumer. We have concluded that $6.5 will be our average price, with some beers above and below. Using Dan Ariely’s pricing studies about adding seemingly “useless” options,4,5 we can list some beers likely no one will choose at prices that will serve purely as anchors for our consumers. This will decrease price sensitivity, and we will be able to win a larger profit margin. Last but not least, we have come to understand our target demographic in terms of what they are looking for in promotion and marketing geared towards them. Avoiding macrobrewery type advertisements on television or subways, Underhill Brewery will use direct targeting and micro-‐ marketing tools to reach its target. Examples of this are tastings and smaller events designed for our target specifically, writing the story of the origin of Underhill Brewery and its beers in the menu, and including educational facts such as the brewing process and ingredients about beers in general and the specific beers on the menu. We believe that we have been able to identify whom we should try and target in order to capitalize on a currently untapped market segment, with what product definitions we should do it, and how we will be able to do it successfully. We are convinced that this research has given Underhill Brewery what it needs for a successful launch and many profitable years to come. 4 Ariely, Dan, Predictably Irrational, Harper Perennial, 2010 5 Ariely, Dan, Pricing the Economist, YouTube, www.youtube.com/watch?v=xOhb4LwAaJk, uploaded Dec 17, 2009
- 16. 15 VII. Appendix In-‐depth interview findings Out of the 20 women we interviewed, 12 of them regularly choose beer, and 8 of them choose other drinks. All of the data was used for the findings. 9 women reported having 3 to 4 drinks when at a bar. 8 women reported having 1 to 2 drinks when at a bar. 2 women reported having over 4 drinks when at a bar. 1 woman did not typically drink alcohol when at a bar. 1. When shopping for groceries, quality was important to all respondents. Freshness and price were also quite important, and most preferred organic products. 2. Surprisingly, “local” was not an important aspect of the choice of drink, unless the beer was actually brewed on premise. 3. The choices of drinks that were not beer were mostly cocktails and wine. The reasons behind these choices were taste/flavor and health. Wine and cocktails were seen as more healthy than beer. 4. For those that did not choose beer, their perceptions of beer drinkers were overwhelmingly of unsophisticated men drinking in order to get drunk. The recurring attributes were “frat boy,” “sports loving,” and “loud.” 5. 3 of the women that did not choose beer also added that there also exists a group that drinks beer for flavor, similar to wine drinkers. Women were included in this group, as opposed to the notion of guys drinking to get drunk. 6. Within the group that did not choose beer, they knew very little about craft beer, only that there was a difference between craft beer and mass-‐produced beer. None could identify the concrete differences, though. 7. For the women who did not choose beer to consider trying a craft beer, the attributes that were most important were full flavor, low alcohol, low bitterness, light and refreshing, and sweetness as opposed to tartness or bitterness. 8. Most of the women who did not choose either beer or craft beer said they would be much more inclined to try them if they knew more about them. Information about the flavors and health impacts was of most interest. 9. For women who did choose craft beer, the choices of beer were quite varied. Belgian-‐style, light beers, citrusy, and non-‐bitter IPAs were most common.
- 17. 16 10. The reasons for choosing beer were flavor, uniqueness, low bitterness, citrus flavors, low alcohol (can drink more without getting drunk), knowledge of the beer in question, and price. 11. Craft beer drinkers are seen as more social drinkers (as opposed to drink-‐to-‐get-‐drunk), more informed, used to higher-‐quality products, and younger. 12. The craft beer industry was understood as an opposition to mass-‐production. There was much more variety in the types of beers offered, smaller scale production, fancier, and with more personality. 13. All of the beer drinkers said that they would be much more inclined to consume craft beer if they knew more about the beers. The most valuable information was flavor descriptions, style, alcohol level, ingredients, technique, and the story behind the beer. 14. Attractiveness of tap handles or bottle packaging was only mildly important, respondents thought it could influence choice if there were no other cues, but other attributes such as knowledge of the beer or flavor of the beer were much more important. 15. All respondents reported no marketing efforts from Craft Breweries. 16. All respondents reported mass-‐produced beer marketing was directed towards men. Sports and beautiful women were the focus for all the examples. 17. When asked what craft beer marketers should do differently, most respondents suggested marketing with no emphasis on sexualized women, sports, and drunkenness, and more emphasis on the story behind the brand, the taste of the beer (as opposed to “coldness”), health benefits, quality ingredients, and better information. Many suggested showing professional women having beer over lunch rather than men at sporting events.
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- 22. 21 VIII. Bibliography Ariely, Dan, Predictably Irrational, Harper Perennial, 2010 Ariely, Dan, Pricing the Economist, YouTube, www.youtube.com/watch?v=xOhb4LwAaJk, uploaded December 17, 2009 Kraushaar, Amy, Beer -‐ US -‐ January 2015, Mintel, January 2015 Mosbaugh, Erin, How Craft Beer Fails its Female Fan Base, First We Feast, November 20, 2014
- 23. 22 IX. Contributions Gennaro Aliperti: Created the Qualtrics survey and worked on the regressions. Bryan Blick: Created the regression analysis and the accompanying charts. Joseph Brad Boggess: Provided the basis for the project. Formulated research question(s), introduction, interview questions, as well as drew conclusions from findings. Benjamin Bolasny: More closely defined the research question, and also contributed to formulating interview questions Miriam Brownstone: Explained the methodologies and formulated final conclusions, as well as also formulating interview questions Dustin Bryant: Analyzed the interview responses and findings All team members conducted 3 in-‐depth interviews.