Thats why we make

1
Thats why we make
Leslie Karr David Blake Donna Sperry Nevrus
Nazarko Helen Tu Lei Gao Greg Borich
2
History

• 1907 Ben and Perry Feigenson began Bottling
  Works - soda flavors based on cake frosting
• Original flavors Fruit Punch, Strawberry, and
  Grape
• 1910 Hired first employees
• 1910s - Added Lithiated Lemon and Sassafras
• - The term Pop was coined because
  of the sound the bottle made when opened

3
History

• 1921 The name was changed to Faygo because
  Feigenson Brothers Bottling Works was too long
  to put on the bottle
• 1920s - Added Rock Rye, Vanilla and Seltzer
• 1935 Faygo moved to current location on Gratiot
  Avenue, Detroit
• 1940s Faygo hired WB Doner advertising
  agency to promote its product
• - Added Root Beer and UpTown

4
History

• 1950s WB Doner develops animated Faygo Kid
  television commercial
• Which Way Did He Go? Which Way Did He Go?
• He went for Faaaaaygooooooo!
• 1960s - Introduction of a full line of diet,
  sugar-free pops
• 1970s - Pioneered one-way bottles, twist-off
  caps and warehouse distribution
• - Faygo Boat Song released which rose
  to 3 in the popular music charts

5
History

• 1980s Faygo extends its product line to
  include flavored sparkling waters
• 1986 - Faygo was purchased by National Beverage
  Corporation
• 1997 - Celebrates 90th Anniversary
• 1998 Faygo launches its first website and
  online Faygo POPShop

6
Current Market Trends

• Highly competitive, stable, non-cyclical, steady
  sales growth in past ten years
• Consumer demand for healthy or less traditional
  beverages
• Colas vs. Non Colas, recent increased growth in
  non cola consumption including flavored waters,
  seltzers, etc.

7
Strengths

• Innovative yet profitable manufacturing processes
  state of the art equipment, process
  engineering, quality control, low overhead
• Hybrid customer driven distribution channels
  internet, large and small chains, local markets,
  service stations and pharmacies

8
Strengths

• Unique Flavor Spectrum
• Creative Marketing Strategies retro marketing,
  alternative uses
• Consumer Loyalty Though Community Involvement
  charitable causes
• More Pop Less Money

9
Weaknesses

• Limited national name brand recognition
• Limited marketing research capabilities compared
  to competitors limited marketing resources
• Perceived product quality relative to competitors

10
Opportunities

• U.S. consumer demand for more functional drinks,
  single serving packages, vitamin- enriched and
  herbal drinks
• Consumer demand for a wide assortment of pop,
  juices, bottled and flavored waters triple
  digit growth in consumption
• Increased vending machine distribution
• Distribution of syrup flavors

11
Threats

• Maturity of a large number of competitors
  relative market share over time, future shake out
• Changing customer tastes to healthier drinks,
  flavored waters or juice drinks
• As competitors product lines expand, shelf space
  for Faygo could contract

12
Marketing Strategy

• Faygo strives to provide quality beverages that
  have"time-tested"consumer loyalty in geographic
  regions and offer the best flavor.

13
Marketing Strategy

• Faygo taste process
• There is the up-front taste you get when the
  beverage first touches your tongue
• It's followed by flavors you experience in the
  middle before you swallow
• Then the endnotes of the flavor, or what lingers
  in your mouth after you swallowed, complete the
  experience

14
Marketing Strategy

• Fresh and Unique Flavors
• Food and Beverage Trends
• Frozen Foods
• Baked Goods
• Nutritional Foods
• Grocery Categories

15
Marketing Strategy

• Core Flavors
• Rock Rye
• Black Raspberry
• Develop New Flavors
• Adapt to market trends, discontinue after trend

16
Marketing Strategy

• Target Markets
• Urban
• Alternative Youth
• Un-Cola Crowd
• Value Minded Customers
• Baby Boomers

17
Sources of Synergy

• National Beverage Company
• Purchasing Power
• Research and Development
• Distribution
• IT Resources

18
Competitive Advantage

• Unique Flavors

19
Faygos Product Decisions

• Product Features
• Unique flavor variety is Faygos core competency
• Maintain core flavors of Rock Rye and Redpop
• Introduce new flavors to stimulate renewed
  interest
• Packaging
• Use packaging to identify and differentiate
  product
• Various sizes and containers (e.g. 3-liter
  bottles)
• Glass bottles with retro label design

20
Faygos Product Decisions

• Branding
• Family branding strategy using Faygo name
• Line Filling (e.g. Moon Mist Red Moon Mist Blue)
• Line Extension (e.g. sparkling water Ohana
  Punch)
• New Product Development
• 2-3 new flavors every year
• Create specialized products for regional markets
  (e.g. Cherry Festival)
• Community involvement in flavor creation

21
Faygos Promotion Decisions

• Advertising
• Radio
• Faygo fanatic character
• Positions Faygo as an unparalleled beverage that
  cannot be replaced by substitutes
• Out-of-Home (Urban Market Billboards)
• Positions Faygo as a cool drink for a hot day
• Links social status with drinking Faygo
• Associates Faygo with nostalgia

22
Faygos Promotion Decisions

• Personal Selling
• Long-term contractual alliances with regional
  retailers for promotional support
• Push strategy (convince channels to stock
  product)
• Promotion
• Designed to keep Faygo brand in customers minds
• Website contests and sweepstakes
• New flavor creator Dreamstakes
• Faygo recipe book

23
Faygos Promotion Decisions

• Public Relations
• Print and television media coverage
• faygo.com web site to inform, entertain customers
• Faygo brand merchandise
• Insane Clown Posse elevates Faygo to cult status
• Promotion Mix Overview
• Reach regional customer base
  without heavy advertising spending

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Strategic Pricing Objective

• Differentiation
• Early entrant in mature market
• Basis of differentiation is flavor
• Enable pricing above comparable substitutes
• Wide variety, not cola based
• Perceived value in Creme Soda versus X cola

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Pricing Factors

• Other strategic elements
• Compatibility with other elements is essential
• Perception
• Product differentiation flavors, caffeine free,
  serving size
• The competition
• Avoid the Goliaths, we are not David!
• The substitutes
• Widely available, similarly priced

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Pricing Faygo

• Pricing
• Dictated by the market
• Power of retailers
• Mature industry, Coke and Pepsi dominant
• Mid level pricing below premium brands but above
  store generics
• Policies
• Price structure based upon competition,
  distribution channel (e.g. Internet versus Farmer
  Jack)
• Low margin/high-turnover

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Distribution

• Where are the target customers?
• Bulk, impulse, inquisitive
• Distribution channels
• Primarily retail outlets
• Grocery stores, gas stations, discount chains
• eg. Kroger, Farmer Jack, Target, K Mart
• Pure Detroit
• Faygo POPshop
• In-store positioning
• Where Coke and Pepsi are available
• Soft drinks aisle, checkout, special displays

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Service Requirements

• Important for differentiation
• Availability of substitutes demands close control
  on inventory
• Out of stock is unacceptable
• Order cycle time
• Bottling facility on Gratiot Avenue
• Market information
• Partnership with retailers, EPOS

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Distribution Channel

• Strategy of retail coverage
• Cooperation with enough retail outlets
• Intensive distribution strategy
• Maximum number of retailers to enhance product
  recognition and impulse purchases
• Faygo POPshop
• Geographic limitations overcome
• Pricing power and profits
• Eliminate the middleman
• The home of Faygo
• Popularity of lower cost, locally produced thirst
  quencher!

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Competitive Advantage

• Unique Flavors

31
Marketing Recommendations

• Sponsor Local Activities
• Minor League Teams
• Toledo Mudhens
• Lansing Lugnuts
• Plymouth Whalers
• University Teams
• Wayne State
• Mary Grove
• University of Detroit

• Sponsor Special Events
• Hart Plaza Events
• Community Fun Fairs
• Red Wings with Red Pop
• Develop Community Fundraiser Program
• School
• Little League
• Church

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Marketing Recommendations

• Create partnerships with regional businesses
• Fast Food
• White Castle
• Tubbys
• Family Run Restaurants
• In Store Free Samples
• Co-Marketing
• Better Made Potato Chips
• Jiffy Foods
• Vending Machine Placement