New Belgium Case Analysis

Introduction The unseasoned Belgium Brewing confederation is angiotensin converting enzyme of the top three maneuver beer breweries in the nation. It has experienced solid harvest from its received entry as a niche merchandise placeer to a nock that is now distributed across the country. Much of sweet Belgiums attender is a response of a hearty-developed positioning strategy that bear ons the partys culture as much as its yield. Not coincidentally, New Belgiums home run market chooses brands like fatten out toil because of both the fraternitys culture and its product.Our evaluation of the two New Belgium facial expressions proves that the line of reasoning deal beer pains remains an attractive investment for the company, particularly because of its specific capabilities and resources. The cases withal allude that a conservative growth outlook has the greatest probability of maintaining an pleasurable level of profitability without sacrificing the company s mission and core values.Finally, New Belgiums positioning, particularly as its exemplified by the flesh out deteriorate c international ampereereaign, is a sustainable one for both current and future brands, though deliberate adaptations testament be necessary as New Belgium expands into brisk markets SWOT Analysis Strengths (New Belgium) Weaknesses (New Belgium) High- fictitious character beer, award-winning beers Association with a single office of beer- blue Tire 7th Largest brewery in the nation, 3rd enormousst chicanery brewery cast up pressure on maintaining company culture as a result of company growth Strong growth with est. ales of anywhere $100B and sales of all over 700K barrels of beer Continued reliance on natural gas and fossil fuels- non-renewable resources $10M advertising compute for Fat Tire campaign No go across of successful Fat-Tire ad campaign Collaboration with Elysian Brewing Company Increasing distribution distances Customer Loyalty Compet ition from craft brewers and craft beers from traditional brewers Effective word-of-mouth advertising Smaller advertising budget ($10M) than competition (surface-to-air missile Adams $35M) Strong product association (Fat Tire Brewery) One of the founders no longer with NBB favorable media presence Facebook (300K $50. M monetization), Twitter (100K), Pandora, Instagram, Beer Stream, YouTube Customer foil back if environmental and accessible responsibleness not as denote TV advertising variediated from traditional breweries Incompatibility between affable responsibility and promotion of alcohol consumption Clear market sectionalization Increased expense associated with sustainability efforts Strong brand positioning Distribution in 29 states and DC Performance advantage of ethically and socially answerable companies Triple Bottom Line economic, social, and environmental focus drives strategy grade manifesto co-developed by Dr. Holt Clear mission, core values, and belief s Long-standing commitment to sustainability sustainable buying Guidelines Awards for environmental turn overment Admission of flaws in sustainability claims Dedication to socially trusty initiatives, corporate charity and philanthropy Event sponsorship to promote environmental responsibility Generous employee benefits that reflect company culture Awards for business ethics and work-place environment Grant- put forwarded new plant in NC Opportunities (Craft Beer assiduity) Threats (Craft Beer Industry) 16. 4 share growth in craft beer attention 2 pct decrease in add up beer consumption Fastest ontogeny segment of US alcoholic swallow market w/>100 percent growth from 1999-2011 Accounts for only 5. percent of US beer market Differentiation from traditional breweries Competition from traditional and former(a) craft breweries Low cost per viewer TV advertising Social stigma of alcohol consumption Growth of social media as low-budget source of advertising Beer can become a commodity in a poor economy, decreasing demand for craft beers Customer commitment Increased differentiation efforts required to stand apart from traditional breweries much(prenominal) immune to an economic downturn than traditional beers New Belgium and the Craft Beer Industry New Belgium Brewing Company is relatively small compared to the traditional breweries such(prenominal) as Anheuser Busch and Coors, though they are still the seventh-largest brewery in the nation. New Belgium is, however, the third-largest craft brewery in the nation, with estimated sales of over $100 million, equaling approximately 700,000 barrels of beer per year. An analytic thinking of the craft beer industry as a whole kick ups that there is proceed growth potential for New Belgium.Exhibit 5. 1 of the New Belgium Brewing (B) case shows that craft beer is the fastest growing segment of the U. S. alcoholic beverage market, with an increase in market share of over 100 percent from 1999-2011. It is excessively an industry whose guests tend to be extremely loyal, making them less in all probability to view craft beer as a commodity. Consequently, craft beer has a high probability of being immune to competition from inferior goods and substitutes.This is particularly relevant to New Belgiums target market of beer connoisseurs that appreciate the high quality and taste of craft beer and who include executives, lawyers, and accountants with the occurd ability to pay higher(prenominal) prices for craft beer, enabling the craft beer industry to achieve gross margins of up to 30 percent (Clark & Rogler, 2013). Four separate strengths of New Belgium indicate continued growth in the craft beer industry. First, studies have shown that companies who sincerely promote ethical, social, and environmental responsibility outperform those on the S&P 500.New Belgium has been such a company from the very start. Second, they have exploited social media as an inexpensive adverti sing platform, with their Facebook presence alone accounting for over $50 million in annual sales. Third, New Belgium has shown that they can succeed in traditional television advertising as well with their Fat Tire campaign that produced an extremely successful positioning strategy resulting in significant sales increases. Fourth, New Belgium continues to look for ways to innovate, like their coalition with Elysian Brewing Company that could lead to greater efficiency and support new product development.New Belgium is a company that has received awards for their beer, for their ethics, for their employee care, and for their stewardship of the environment, all the epoch maintaining unattackable financial growth and market share. There is nothing to counsel that New Belgium cannot continue to succeed in the craft beer industry. New Belgiums Growth Outlook New Belgiums success to date in the industry has been a result of a conservative approach to growing their business- a go slow to go fast strategy. We look at it should continue to be conservative in its outlook on growth.New Belgium Brewing is a growing company, best exemplified by plans to open a second brewery in Asheville, North Carolina, in order to reach new markets on the tocopherolboundmost coast. This expansion, however, is creating pressure on the companys commitment to sustainability. Even though the new plant go out reduce the fuel necessary for east coast distribution, it still will result in an increase in the overall use of fossil fuels and non-renewable resources from current levels, not just with transit but with production as well. In addition, the increased production will necessarily mean an increase in environmental waste by-products.An vulturine outlook on growth with a mindset of grow, grow, grow would unless jeopardize the companys ability to maintain sustainability efforts, which would not be consistent with New Belgiums way of operating. New Belgium Brewing embraces a trip le bottom line approach to business that factors economic, social, and environmental considerations into its business strategy rather than simply looking at the bottom line. We believe that this has been critical in developing a strong brand preference through customer trust.New Belgiums own study indicates the 39 percent of beer consumers will pay back extra efforts to buy from and support sustainable companies, spell outside studies suggest that a significant number of consumers support businesses that question sustainable practices. Going fast with an aggressive growth outlook would believably alienate New Belgiums customer base and would violate every one of New Belgiums Sustainable Branding Strategy principles, from laissez passer before talk (living up to sustainability claims) to make ripples (convincing the customer that advertisements promote the brand and the culture behind it).In addition, an aggressive growth outlook would be perverse to some of New Belgiums core values and beliefs, particularly those that overcompensate environmental stewardship and commitment to trust through fulfilling promises. No one should dubiety that New Belgium is in the business to operate a profitable brewery as its mission statement makes clear, but not at the expense of the other two bottom lines. For New Belgium Brewing Company, slow and steady leads the way. Fat Tire Positioning As noted above, New Belgiums positioning of its Fat Tire brand was a success.Clancy (2001) defines positioning as the put across a company wants to imprint on the minds of customer and prospects or so its productand how it differs from and offers something better than competitors (p. 1). In the case of Fat Tire, its positioning mirrored the companys culture where a highly creative activityis engage for the intrinsic value of doing it, as well as perfromed in a balanced manner with nature. The message was to the highest degree pursuing ones interests (folly) but not in a way that reflects self-interest alone.Its a message about recycling (restoring the bike), about caring for the environment ( riding instead of driving), about relationships (the road biker and the twiddler riding uphill together), and about the simple joy of simple things. Its about good beer made by a literally good company. compare this approach with the positioning of the largest craft brewer, Sam Adams, whose ads have morphed into television vagrant that look more and more like the position of Americas large-scale Three brewers. The Fat Tire ad, on the other hand, cleary demonstrates that New Belgium is different than its competitors in the culture behind the beer, and thats what New Belgium is after- the market who not only wants high quality, excellent craft beer but who also wants to be associated with a high quality company behind it. The Fat Tire campaign produced increased sales of 37 percent in test markets, and New Belgiums sales force was able to supplement this success by c onvincing transactional customers to promote New Belgiums subaltern brands, increasing these sales by over 50 percent (Holt & Cameron, 2010).Given the results of the Fat Tire campaign, we recommend a continuation of the current positioning. through and through Fat Tire, New Belgium has been able to differentiate itself in the craft beer industry by producing strong products that are well received by their target customers who are, or who see themselves as, smart, creative, athletic, environmentally conscious, and socially engaged. Target Markets The target consumer customer marketing strategy for the Fat Tire campaign focuses on the market concentration approach of selecting a single market segment and so identifying shared segmentation factors.For example, the campaign targets high-end (psychographic, behavioral) male beer drinkers ages 25-44 (demographic) who are mostly clerical professionals (demographic) who vacation in Colorado (geographic) for a taste of the mountain li fe-style (psychographic). This market longs for the life of the tinkerer (psychographic) but believe that they are uneffective to sacrifice their current circumstances in order to obtain it (psychographic). They can, however, make a connection to that life and to others in sympathetic situations (psychographic, association/affinity) by drinking Fat Tire (behavioral).The transactional customer, on the other hand, is likely to be the local anesthetic liquor store or grocer rather than supermarket or large retail discount center. For one, such distributors are more apt to assume craft beers because of their higher price and lower sales volume. More importantly, it is more probable that they are susceptible to local demands to carry New Belgium beers, the tolerant that result from the example noted by the case where a local Minnesota liquor store sold 400 cases of Fat Tire with the first hour of opening.Recommendations for the Future Looking toward the future, the cases note that Ne w Belgium has no plans to undertake another major television ad campaign similar to Fat Tire. We recommend that they reconsider this position, particularly as they move into the east coast market and open their Asheville brewery. Taking a pure accretion approach by replicating current strategy there will in all likelihood not produce the success to which New Belgium has become accustomed.Having recently analyse the early failures of Disney in Europe due to a lack of adaptation, we suggest a television ad campaign modeled after a listening tour, perhaps where the tinkerer and his single-speed bike tours the Carolinas, finding compatriots along the way. The tagline could be, Beer is our folly. Whats yours? The television ads would promote contact with New Belgium via social media, and local events would be sponsored to share New Belgium beer and culture with the east coast market, as well as to learn more about their new target market.Based upon what New Belgium learns, we also re commend developing a new craft beer specifically for the east coast market, fulfilling the transformational innovation activities of the Innovation Ambition Matrix (Limacher, 2012). We consider this campaign then developing television spots that show the tinkerer traveling through locations from the Maine coast to the Key West, with quick images of him restoring old junked treasures that lay out the follies he previously learned about- a wooden canoe, an Appalachian fiddle, or an antique Penn ocean reel- all the while promoting New Belgiums new brand.In addition to television ads, New Belgium would continue its established strategy of consent marketing using social media, which they have clearly established as having a strong correlation with annual sales. We project that if New Belgium follows this Sustainable Branding Strategy with an emphasis on adaptations to the new market, it will achieve success similar to the results from the Fat Tire campaign. Conclusion New Belgium is self-collected for significant growth because of the way that it has differentiated the company from other craft brewers.Despite a smaller advertising budget that larger competitors like Sam Adams, New Belgium has leveraged its advertising resources into developing a position that is distinctly different, which has created strong brand appeal among its target market. If New Belgium can maintain its original principles as it grows, we see a high likelihood that profits will follow. New Belgiums single speed is absolutely the right fomite to transport the company into the future. References Clancy, K. 2001). Whatever happened to positioning Recent Copernicus study confirms the dissappearance of positioning. Copernicus. Clark, C. , & Rogler, J. (2013, March 8). Personal Interview. (M. Holcomb, Interviewer) Holt, D. , & Cameron, D. (2010). Cultural Strategy Using forward-looking Ideologies to Build Breakthrough Brands. New York Oxford University Press. Limacher, R. (2012, May 25) . Framework of the week 81 -innovation ambition matrix. Retrieved March 20, 2013, from strategyhub. net