2 Company Overview: Sprinkles In 2002, Candace Nelson and her husband Charles Nelson, both investment bankers, visited Candace's sister in New York City and tried the cupcakes at Magnolia bakery. Candace believed it was “time for cupcakes to stop being the backup dancer to cakes.”So on April 13th, 2005, she started Sprinkles Cupcakes in Beverly Hills – the world’s first cupcake bakery.
3 Brand Audit: POP/POD Points of Parity Baked Sweets Sugar Desserts RewardCupcakes GiftIndulgencePoints of DifferenceATM cupcake Fun (47% of respondents strongly agree Sprinkles is fun)Landscape of Beverly HillTrendy (53% of respondents agree Sprinkles is trendy )High-end dessert (50% of respondents think Sprinkles is rich if it was a person)First cupcake bakeryLuxury(48% of respondents agree Sprinkles is luxury)
4 Brand Audit: Positioning Nature of Competition:Class: Desserts, Confectionery goodsCategory: Baked dessertsType: CupcakeTarget Audience:FemaleAge: 17-27Trendy, social media savvyMid/high overall income (60k+)
5 Positioning Statement Sprinkles is the only premium dessert brand that focuses on providing the highest quality desserts with great customer service to young, trendy, social media savvy females from years old.
6 Brand Audit: Brand Mantra Rewarding(High-end) QualityMomentsRewarding: The benefits of Sprinkles products are delivered to consumers in a very rewarding manner.Consumers generally associate the purchasing of a Sprinkles product as an indulging reward, whether intentionally or on a whim.Quality: Sprinkles focuses on providing quality moments for its consumers through its top-notch products and quality customer service. Sprinkles consumers are encouraged to lead quality livesHigh-end: When Sprinkles opened its store in Beverly Hill and introduced the ATM cupcake at the same time, its fashionable and well designed window became a landscape of the beverly hill. People go and consume in Sprinkles not only for cupcake itself but also the high-end and relaxed lifestyle the Sprinkles stands for.Moments: Sprinkles focuses on creating moments for its customers to escape everyday life to enjoy the benefits and indulgence that its brand has to offer.
7 Sprinkles Cupcake Pops Consumer Insight“I would like to eat a Sprinkles cupcake because I enjoy the taste, but the portions are too big and not portable.”“I would like to buy a sweet baked dessert for someone because it is a good gift, but I cannot find something that is cute, small, and unique.”
8 Sprinkles Cupcake Pops Sprinkles Cupcake Pops are the ultimate treats for on-the-go Sprinkles fans. Made in a variety of Sprinkles’ signature flavors, these cupcake pops are a unique twist on traditional cake popsVariety of Sprinkles flavorsPortableCute PackagingCan be giftSmall Portions
9 Sprinkles Cupcake Pops Concept #1: Secondary Research • According to Hoover’s database, “specialty eateries can generate additional consumer interest and customer traffic by promoting new products.” Confection shop chains are beginning to add innovative new products to attract customers. Sprinkles Cupcake Pops would be a twist to the popular and unique cake pop products that are emerging in the market, which would attract trendy customers who are looking for a Sprinkles taste.• According to IBISWorld database, “the Specialty Food Stores industry cannot compete with supermarkets on price, but can capture market share through quality, expertise and uniqueness.” By introducing Cupcake Pops, Sprinkles is keeping an edge by continuing to provide quality and expertise, but adding uniqueness by bringing signature Sprinkles flavors into the new product.• In addition, “a quick, easy and nostalgic snack, have been resilient in the past five years. Despite consumers having less disposable income for these discretionary goods during the recession and recovery period, they became an affordable luxury reminiscent of better times” according to IBISWorld. This is relevant because Sprinkles Cupcake Pops are in this segment of quick, easy snacks that perform well. Since they are smaller, they are also cheaper than Sprinkles cupcakes.
10 Sprinkles Cupcake Pops From Survey:80% of respondents felt positive about this product63% of respondents would pay $2-3 for each Cupcake Pop & 6% would pay over $4 for each84% of respondents rank Sprinkles Cupcake Pops as the best extension out of the three proposedFrom Focus Group:All participants believe that this is a realistic product for SprinklesMost participants believe that this product aligns with Sprinkles as a brandImpressions and associations from participants were mostly positiveParticipants would buy the Sprinkles Cupcake Pops as gifts or snacks for themselves
13 Sprinkles Cupcake Pops Compelling (Moderate)Imagery47% of survey respondents never buy cake pops & 35% buy them less than once a month; however, 50% of respondents would buy Sprinkles Cupcake Pops65% of respondents would buy Sprinkles Cupcake Pops both as gifts and for themselves36% of respondents would buy this product more than once per monthPerformanceOn average, respondents believe that price value of this extension is moderately strongRelevant (Strong)Judgment69% of respondents feel that Sprinkles Cupcake Pops would do better than other cake pops on the market; 0% think that it would do worse94% of respondents trust Sprinkles to make these Cupcake Pops59% of respondents believe that Sprinkles Cupcake Pops offer benefits that other cake pops cannot offerOn average, respondents believe that the quality of this product extension will be strongOn average, respondents think that the uniqueness of this extension is moderately strongFeelingThe Sprinkles Cupcake Pops gives mainly positive feelings, according to our focus groups. No participant had anything obvious or prominently negative to mention about this concept.
14 Sprinkles Cupcake Pops Consistent (Strong)85% of respondents believe that the introduction of this product will not change the way they think about the Sprinkles brand; this implies good alignment between the extension and the parent brand88% of respondents believe that this is a realistic product extension for Sprinkles82% of respondents believes that this extension fits Sprinkles’ brand imageSprinkles Mantra: Unique Quality (High-end) MomentsThe Sprinkles Cupcake Pops aligns with this mantra well because the new extension is a unique and high quality product, in the sense that it is a new twist to other cake pops since it is made with signature Sprinkles ingredients and other brand elements.4. StrongModerate & PositiveThe extension does not change the perceptions of the parent brand, but it moderately positively impacts the parent brand. Sprinkles Cupcake Pops will add a new product category to Sprinkles, and it definitely caters to more purchase and usage situations. Consumers expressed positive sentiment about this product line. Some consumers stated that they would buy this product as snacks for themselves or as gifts because of the additional benefits that it provides: smaller portions, portable, cute packaging. In addition, many consumers believe that Sprinkles could do a great job in producing this new product line, which increases its credibility. People also believe that this product is unique, so it will increase differentiation points for Sprinkles from other baked dessert brands.
15 Sprinkles Cupcake Pops – Purchase Intent & ATAR % awareness of extension: 20%% availability of extension: 95%Total Trial Rate: (80%*26%)+(33%*24%)= 28.72%Total Repeat Rate: [(26%x80%)+(24%x33%)]x[(64%x1)+(22%x2)+(14%x4)] = 28.72% x 1.64 = 47.10%ATAR*: 20%*95%*28.72%*47.10%= 2.57%*This calculation includes our repeat rate; however it may not be completely accurate, and therefore we are providing a calculation without it for comparison.ATAR: 20%*95%*28.72%=5.46%
16 Sprinkles Cupcake Pops - Recommendation AdvantagesRisksREALISTIC: This product extension definitely aligns with the Sprinkles brand. It is a realistic product that many consumers are willing to purchase.RECOMMENDATION: Because it is realistic, Sprinkles should definitely make sure to have these Cupcake Pops in all of their distribution channels and promote it well; it would definitely increase profits.NOT UNIQUE ENOUGH: Consumers may not purchase these cake pops because they don’t believe it is worth the price or that it is unique enough.RECOMMENDATION: Sprinkles should focus on marketing its Cupcake Pops well, in order to increase awareness of the product and to communicate its uniqueness (Sprinkles flavors) compared to other types of cake pops.GIFT GIVING: This product could be a very attractive option as a gift purchase. It also reinforces Sprinkles’ ability to produce high quality baked desserts with great signature flavors.RECOMMENDATION: Create an attractive packaging to promote the gift-focused idea.SMALLER PORTION: This product is an attractive option for those who would like to purchase smaller, more portable portions of Sprinkles baked desserts as a snack or gift. The size also makes it inherently cute-looking, which may increase purchases.RECOMMENDATION: Sprinkles should focus on marketing the awareness of the product and its many potential purchase occasions.We should definitely move forward with launching this product. Its advantages definitely outweigh the risks. It positively reinforces Sprinkles’ brand equity. 84% of survey respondents ranked this concept as #1 out of all options. It has a great ATAR % as well, which means good market share.
17 Sprinkles Cupcake Pops - Strategy ParentExtensionBrand Extension type:Identity(Brand Elements + Image)PODs (from category)Extension Type:LineCategoryHow POPs change or notBrand Extension StrategiesLevel of RiskSprinklesSprinkles Cupcake PopsModifiedSprinkles Cupcake Pops keep the same image of the parent brand, but includes slight changes in brand elements (product form, packaging).Flavors & packaging that are unique to Sprinkles productsCategory: Cake PopsThe POPs totally changed for this extension compared to the parent brand because it is a new category of product; cupcake pops/cake pops are different from cupcakes.Same product different form. Products that contain brand’s distinctive taste. Products that capitalize on firm’s perceived expertise. Products that capitalize on the distinctive image or prestige of brand.Low
18 Sprinkles Baking Helpers – Consumer Insight “I would like to give a baking set as a gift, but I can’t find anything in stores.”“I would like to buy a unique baking set to make baking more fun but the products sold are so plain and are sold individually.”
19 Sprinkles Baking Helpers A basic set of premium baking tools and supplies. This set includes cupcake pan, cupcake wrappers, apron, mixing spatula, mitten.“Sprinkles Certified”- Premium quality
20 Sprinkles Baking Helpers Concept #2: Secondary Research Developing New Products: Specialty eateries can generate additional consumer interest by promoting new products. Unique products can also provide a competitive advantage. As many menu items are seasonal, certain products may available for a limited time to attract additional traffic.from Hoover’s databaseAccording to Proquest: “Retailers are finding that today's customer wants baking supplies that are easy to use, fun to work with and combine style with function.”
21 Sprinkles Baking Helpers – Research Findings 44% of respondents felt positive about this product.48% of respondents believe that the Sprinkles baking set could offer something other products do not.68% of respondents can see Sprinkles making this product.63% of respondents would buy this product as a gift. 35% of respondents would buy this for themselves and 27% would never buy this product.The majority of the respondents (44%) would pay 20-50$ for if they were to buy this product.90% of respondents trust Sprinkles to make this product.Most of respondents (60%) think that this product fits with Sprinkles existing brand.
24 Sprinkles Baking Helpers Salience (Strong): Sprinkles Baking Set inherits many associations from the parent brand Sprinkles, both positive and negative.Favorability (Strong): Sprinkles Baking Set creates new positive associations and inherits others from the parent. Furthermore, it doesn’t inherit most negative associations from the parent such as too sweet or guilty pleasure.Uniqueness (Strong): Sprinkles Baking Set brings in a series of new positive associations separate from the parent brand.CompellingBrand Performance-44% feel positive about the brand, 10% negative, and the remainder are moderately indifferent.-Many in the focus group could see this being purchased as a gift.Imagery-Respondents in the focus group expressed that they see this more a gift rather than a product they would purchase for themselves.-Survey respondents felt strongly that this product would carry the parents associations of high quality, high class, luxury, etc.RelevantJudgement-72% of people don’t think this changes the way they think about the Sprinkles brand.-The survey revealed that 62% would buy this as a gift, 36% for themselves, and 27% would never buy this product.Feelings-However, respondents overall felt positive about the new product. They felt that the product gave them feelings of high status, happiness, and exclusiveness.-88% felt that they trust sprinkles to make this product.
25 Sprinkles Baking Helpers – Purchase Intent & ATAR % awareness of extension: 20%% availability of extension: 80%Total Trial Rate: (80%*5%)+(33%*18%)= 9.94%*Regarding repeat rate, we measured whether or not the respondent would recommend the product to a friend, but we do not have numbers for the actual number of recommendations.ATAR: 20%*80%*9.94%= 1.59%*This calculation does not include repeat rate.
26 Sprinkles Baking Helpers - Recommendation AdvantagesRisksGift Ability: Cupcake has to be an same day gift. The baking set can be pre-purchased for holidays.Could be a financial loss: 52% of our respondents thought that this product doesn’t offer any added benefitGrows brand: This brand extends the consumers idea of what Sprinkles in know for. Allows Sprinkles to engage in new markets.This new brand could dilute the existing brand by causing confusion in the mind of the consumer.New sources of revenue: New markets are viable sources of new revenue for the company.If a failure it could hinder peoples image of the parent brand.Sprinkles should launch the banking set as a limited time holiday product. We recommend this due to its overwhelming desire to be given as a gift. It allows Sprinkles to temporarily expand its portfolio and to generate revenue without bringing negativity to the parent. Our concern for a permanent launch is that our many of our respondents did not see an added benefit. With a short term launch it’s giftablity is its benefit.
27 Sprinkles Baking Helpers - Strategy ParentExtensionBrandtype:Identity Brand Elements + ImagePOD’sExtension Type: Line categoryHow POP’s change or notBrand extension StrategyLevel of RiskSprinklesSprinkles Baking SetIt is a sub-brand. It borrows equity for the parent assiociations but also developes it’s own.Same colors, feelings, logo, etc. Simply a different product.Higher Quality,giftablityCategory extension: it simply borrows equity from Sprinkles Brand elements. It has completely different usage benefits.New POPs: Kitchen products.Products that reflect the brand’s distinctive benefit, attribute, or feature. It borrow the association of quality and baking in general.Moderate
28 Sprinkles • O.P.I Nail Polish – Consumer Insight “I would like to find a colorful gift because it provides happiness and enjoyment, but I can never find something stylish and different.”
29 Sprinkles • O.P.I Nail Polish This product is a partnership with OPI, the world leader in the professional nail care industry, to celebrate 10th year anniversary of Sprinkles. This line of nail polish focuses on two tone manicures, with colors inspired by signature Sprinkles flavors. It also includes French nail stickers that represent Sprinkles’ dots.
30 Sprinkles • O.P.I Nail Polish Concept #3: Secondary Research • According to Forbes, Cupcakes’ industry has low cost of entry so existing brand has to develop a strong differentiator. If Sprinkles sell Nail Polish, it would be the first cupcake bakery selling beauty products and that would differentiate the brand from others.• According to GCI, nail polish industry has been one of the strongest performing categories the past few years. Moreover, those companies that have partnerships with movies, celebrities or well-known brands have perform better as consumers feel attracted to the variety of colours. OPI would benefit from partnering with Sprinkles and so would Sprinkles because it would spread its brand awareness.
31 Sprinkles • O.P.I Nail Polish Research Findings68% of respondents think that Sprinkles Nail Polish can’t offer something different than other Nail polish.64% of respondents said Sprinkles Nail Polish would do equally compared to other Nail polish76% of respondents claim that this product changes the way they think of SprinklesMost of respondents think this product would be high quality82% of respondents doesn’t see Sprinkles making this productRespondents would buy it equally as a gift or on a whim for themselvesMost of respondents would pay $9 at most for this product.
34 Sprinkles • O.P.I Nail Polish SALIENCE:Positive brand associations from the parent brand:Colorful High StatusUnique LuxuryHappinessNegative Brand associations:OverpricedFAVORABILITY:50% of respondents said that they would buy this product as a gift which reinforces the “gift-giving” association of the brand.It will reinforce one of the main brand element of the brand, its colors.UNIQUENESS42.9% of respondents think this product is unique35% of respondents think that Sprinkles Nail Polish has something different to offer than other nail polishREWARDING(HIGH-END) QUALITYMOMENTSGood fit. 69% of respondents said this product is rewarding.Good fit. OPI is known for its quality. 75% of respondents claimed that this product has associations with luxury and 80% said that it has associations with high-status.No fit. This product is more related with beauty than moments.
35 Sprinkles • O.P.I Nail Polish – Purchase Intent & ATAR Awareness: 20%Availability: 80%Trial rate: Average % of those who would definitely buy this concept x 80% industry benchmark + % of those who would probably buy this concept x 33% industry benchmark = (2%x80%) + (18%x33%) = 1.6% % = 7.54%Definetly buy: 2%Probably buy: 18%Repeat intent: Average % repeat from only those who would definitely buy x average frequency in 1 year + % repeat from only those who would probably buy x average frequency in 1 year = [(2%x80%) + (18%x33%)] x [(0.69x1) + (0.21x2) + (0.1x4)] = 7.54% x 1.51 = 11.39%ATAR=Awareness x availability x trial rate = 20% x 80% x 7.54% = 1.21%ATAR*=Awareness x availability x trial rate x repeat intent* = 20% x 80% x 7.54% x 11.39% = 0.137%We asked everybody for the repeat rate so it could be overinflated.
36 Sprinkles • O.P.I Nail Polish - Recommendation ADVANTAGESRISKSOPI is known for its product quality and its multiple partnership with different industries. - RECOMMENDATION: Use OPI name on the product so people can associate it with quality.Sprinkles has no associations with beauty. Instead, it is related with high calories and guilty pleasure. - RECOMMENDATION - Create a new brand which has beauty associations.Sprinkles is related with gift giving and so it is this concept. - RECOMMENDATION: Create an attractive packaging and gift focused.People might be confused. Existing Secondary sources such as Cupcake Wars or Candace Nelson would not give equity to the new product as they are not related with Nail Polish. - RECOMMENDATION: Find celebrities related to the beauty industry to endorse the brand.Increase market coverage. People who does not want to buy Sprinkles cupcakes, ice-cream or other existing products because they are associated with high calories could buy Sprinkles Nail polish. - RECOMMENDATION: Create an advertising campaign targeting these sector.It can dilute brand meaning. Sprinkles has always been consistent with its product portfolio. - RECOMMENDATION: Expand the “Beauty products” portfolio on a new brand.Sprinkles shouldn’t launch this product because the advantages it provides are not important enough to cover the existing risks. Also, 71% of respondents ranked this concept as the worst when comparing to the other product proposals and ATAR rate is only 0.137%.
37 Sprinkles • O.P.I Nail Polish ParentExtensionBrand Extension type:Identity(Brand Elements + Image)PODsExtension Type:LineCategoryHow POPs change or notBrand Extension StrategyLevel of RiskSprinklesSprinkles Nail PolishSub-brand - Sprinkles Nail polish combines new and parent brand associations. It has a different usage but has the same colors and logo than the parent brand.Same logo, Same colours, Dots, Different usageFrench manicure, two tone, stylishCategory. Sprinkles Nail Polish has completely different PODs & POPs. Even the logo and colour are the same, its identity change because of its usagePersonal care, nails, paint, girlsProducts that reflect the brand’s distinctive benefit, attribute, or feature (dots and colours)Products that capitalize on the distinctive image or prestige of the brand (OPI quality and Sprinkles high status)High
38 Winning Concept: Sprinkles Cupcake Pop ProductSprinkles Cupcake Pops are the ultimate treat for on-the-go Sprinkles fans.Made in a variety of Sprinkles’ signature flavors, these Cupcake Pops are a unique twist on traditional cake pops.
39 Sprinkles Cupcake Pop Place Cupcake Pops will be sold inside Sprinkles Ice Cream stores*Cupcake stores only sell cupcakes & Sprinkles Ice Cream store sells a variety of Sprinkles products
40 Sprinkles Cupcake Pop Price $2.75 each Cupcake Pop Priced between full size cupcakes ($3.75) and mini-cupcakes ($2) to avoid direct cannibalization
41 Sprinkles Cupcake Pop Positioning Positioning Statement: Target Market:Female ages 17 to 27Nature of Competition: Bite-Sized dessertsCute edible giftsPoints of Parity: SmallLower calories than a full slice of cakeSweetSatisfy cravingsPoints of Difference: Sprinkles flavorPremium qualitySprinkles “Dot”Positioning Statement:Sprinkles Cupcake Pops are the only bite-sized desserts that provide signature Sprinkles flavors in a cute, portable way to the defined Sprinkles target market.
42 Sprinkles Cupcake Pop April 13, 2015 (Sprinkles 10th Anniversary) Complimentary Cupcake Pops to Celebrities• Oprah Winfrey • Blake Lively• Emma Watson • Kadashians • Jimmy Kimmel
43 Sprinkles Cupcake Pop Maximize Media Coverage - TV + Engagement: • #SprinklesBirthday• ilovesprinkles.com/Birthday
44 Conclusion Sprinkles Cupcake Pops YES Sprinkles Baking Helper YES – SeasonalSprinkles • O.P.I Nail Polish NO
45 Appendix Focus Group Consent Forms Survey Total Survey Response Bibliography