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Coors Rocky Mountain Sparkling Water
Lindsay Klasing, William Louey, Ben Mills, Caitlyn Mitryk MKT Dr Matulich
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Learning Objectives Identifying market trends
Understand the demand and growth of product Evaluating proper target market Marketing research of launching and positioning a new product Growing product portfolio (diversification) Pros and cons of branding and brand equity Understanding differential advantages Properly describing marketing mix Lindsay LK
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Case Review - Background
The Adolph Coors Company was founded by Adolph Coors and Jacob Schueler in Golden, Colorado in 1873 Brewery survived prohibition by selling non-alcoholic malted milk and from the Coors porcelain business Coors beer: American icon with cult status Distribution primarily in the U.S. western states until late 1980s Largest brewing facility in the U.S located in Golden, CO Owns water rights and utilizes water from natural springs located in Golden, Colorado for its beer Lindsay LK
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Case Review - The Market
Projected Bottled Water Market Growth: : 35.1% (still); 15.3% for (carbonated) Trends: Public fears concerning water safety; increasing competition in market Alcohol Market: Consumer shift to lower alcohol content and overall consumption Carbonated Soft Drinks: Public health concerns with consumption Fitness craze and fad diets Coors Key Finances: The bad: -72.0% (decreased net income) - 50% (decreased market valuation of $1B) The good: 76.2% (increased cash flow) Lindsay LK
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Case Review - Action and Results
January 15th, 1990: “Coors Rocky Mountain Sparkling Water” Released bottled water as diversified growth strategy in 1990 First non-alcoholic beverage since the prohibition Legendary water source Using similar name and label of Coors beer confused customers Coors went through a number of packaging re-designs with its bottled water Coors cancelled its bottled water trademark in 1997 Lindsay LK
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Dazed and Confused Lindsay LK
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Discussion Question 1-4 Did the Coors name provide positive brand equity to their bottled water product? Did the marketing data indicate that bottled water would be a trend or a fad? Did a market opportunity exist for Coors within the field of bottled water? What marketing missteps did Coors make when they introduced Rocky Mountain Sparkling Water? Lindsay LK
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Problem definition Primary: Despite a burgeoning bottled water market, consumers show limited interest in a sparkling bottled water product from Coors. This is due in part to confusion as to whether product is alcoholic or not. Ineffective marketing efforts resulted in poor positioning of Rocky Mountain Sparkling Water. Secondary: Coors needs to decide whether to invest or divest in their bottled water product. Coors still needs to increase net income. Ben BM
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Key Players William Coors- President of Adolph Coors Company
Peter Coors- Chief Executive Officer of Coors Brewing Company Leo Kiely III- President and Chief Operating Officer of Coors Brewing Company Alvin Babb- Executive Vice President, Operations and Technology of Coors Brewing Company William Weintraub- Vice President of Marketing Robert Klugman- Vice President of Corporate Development John Recca- Brand Strategist of Coors Brewing Company Competition in the water industry U.S market of beverage consumers Ben BM
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Coors SWOT Strengths? Cait CM
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Coors Strengths Brand recognition
12 redistribution centers - strong distribution Coors success in advertising and promotions for existing product portfolio Coors bottling capabilities and logistics Coors largest beer market is also the largest bottled water market (California and Texas) Coors brand associated with "pure rocky mountain spring water" Consumers recognize Coors brand having pure water supply Cait CM
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Coors SWOT Weaknesses? Cait CM
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Coors Weaknesses Lack of strong experience in non-alcoholic beverages
Single point production of bottled water Alcoholic association with brand name Traditional water source associated with brewing beer Cait CM
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Coors SWOT Opportunities? Cait CM
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Coors Opportunities Large growth in the bottled water market
Large growth in carbonated water segment New PET packaging available for bottled products Public fear of tap water safety Public health trends Trends towards lower alcohol consumption Cait CM
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Coors SWOT Threats? Cait CM
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Coors Threats Alcoholic beverage industry bias
Bottled water could be a fad Reliance on trains for shipping: train strikes -70% of products via railroad Major competitors already active in marketplace Cait CM
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Can Coors reposition Rocky Mountain Sparkling Water?
Discussion Question 5 Can Coors reposition Rocky Mountain Sparkling Water? Cait CM
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Alternative 1: Reposition Rocky Mountain Sparkling Water
Remove Coors branding to lower consumer confusion New bottle (less beer-like) Keep glass bottle for differentiation (Like Perrier) Establish alternative positioning (Cannot compete with Perrier) Retain existing liquid formulations Cait CM
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Alternative 1: Reposition Rocky Mountain Sparkling Water
Advantages Disadvantages Ability to change marketing mix to appeal to customers wants/needs New branding to lower consumer confusion New bottle will have wider appeal Coors remains in the bottled water industry Ability to keep resources already invested in the water May confuse customers even more Time it would take to reposition and make changes Money and effort in changing label and packaging Opportunity cost of spending time and effort if it does not work out Cait CM
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Alternative 2: Increase promotional effort of existing product
Build marketing effort around non-alcoholic beverage message On-premise sampling (consumers don't need to buy to try) Coupons and wholesaler discounting Distance Coors' brand association with strictly malt beverages Ben BM
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Alternative 2: Increase promotional effort of existing product
Advantages Disadvantages Continuing presence in bottled water market Utilizing existing Pricing, Product and Place Keep existing stock at distributors, retailers. Most cost-effective alternative Need to shift Coors brand perception, no easy task Existing consumer anti- alcohol bias Product may have still need adjustment to sell Ben BM
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Discussion Question 6 What differential advantages did Coors possess in the bottled water industry? Will WL
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Alternative 3: Introduce a new water product- Switch from bottled carbonated water to bottled still water Remove Coors branding to lower consumer confusion Discontinue "Rocky Mountain Sparkling Water" Introduce "Rocky Mountain Spring Water" Use plastic bottling to resemble competitor's products Change packaging from glass to plastic to appeal to on-the-go consumers Will WL
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Alternative 3: New water product- Switch from bottled carbonated water to bottled still water
Disadvantages Advantages Still water has higher projected growth than carbonated water More demand for still water Ability to capitalize on the American health trend Have "legendary" water source with high perceptions Natural water is not carbonated-cheaper to produce Insignificant development costs Great way to increase net income- low expenses Consumers may still prefer competitors-market penetration difficult Consumers may not recognize that the product has changed Consumers may not want to support a "sin" product company even though Coors branding has been removed Lost sales from Rocky Mountain Sparkling Water Will WL
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Alternative 4: Discontinue Coors Rocky Mountain Sparkling Water
Discontinue distribution Remove Rocky Mountain Sparkling Water from product portfolio Focus on alcohol and beer product line Lindsay LK
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Alternative 4: Discontinue Coors Rocky Mountain Sparkling Water – focus on core competencies
Advantages Disadvantages Discontinue an unprofitable product Can focus on profitable products and legendary beer Coors would no longer be as differentiated Leaving bottled water market Unable to capitalize on American health trends Lindsay LK
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Discussion Question 7 How could Coors have entered the market using an alternative differentiation growth strategy? Lindsay
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Selected Alternative:
New water product- Switch from bottled carbonated water to bottled still water Will WL
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Implementation Cait WL
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Case Update ( ) After a number of re-packaging designs Coors canceled its bottled water trademark in 1997 In 1992 Coors introduced Zima, a clear lightly carbonated beverage as an alterative to the traditional alcohol beverage. Zima was discontinued in 2008 In 2005, Adolph Coors Company merged with Molson Inc. to create the Molson Coors Brewing Company (Creating worlds 5th largest brewer) In 2008, Molson Coors and SABMiller form a joint venture of MillerCoors In 2010, Molson Coors announces joint venture with Hebei Si'hai Beer Company of China Current signature brands: Blue Moon, Carling, Cobra, Coors Light, Keystone Light, MGD 64, Miller High Life, Miller Lite, Molson Canadian, Molson Dry, Molson Export, Molson M, Rickard's Red, Staropramen, Doom Bar Partner Brands: Aguila, Amstel Light, Cristal, Cusquena, Heineken, Peroni Nastro Azzurro, Pilsner Urquell, Ty Skie, Grolsch, Singha Cait CM
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Lessons Learned Importance of STP (Segmentation, Targeting and Positioning) of a new product- MKT 609 Performing market research is essential when looking to release a new product to accurately forecast products potential success-MKT 612 A company must build products based on consumers wants and needs as well as the company’s mission rather than decision makers opinions- MKT 609 When utilizing growth strategies, it is risky to utilize the diversification option to grow a company's product portfolio-MKT610 A product's logo is critical to the consumer's perception of the product -MKT 612 Proper test marketing in the new product development process- Unit 4 MKT 610 Continuous innovation is essential to compete in the market place- MKT 652 Cait CM
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