For our project, we recommended Cidre Rhuys' strengthen its pull marketing. Through our analysis, we saw how competitors leveraged different digital platforms to reach their consumers. There are three areas as to why Cidre Rhuys should focus more on a pull strategy, but still continue to use the current push strategies they have implemented:
The first decision was based on a low brand awareness amongst American consumers about the cider industry. As we go into our paper, we will provide The second reason is that there is a growing younger demographic of cider consumers in the US that should be targeted through pull strategies. Cidre Rhuys has an area of opportunity to leverage social media to capture this target market.
Finally, pull strategies are very cost effective and we will go into detail on what strategies we will be using and why they are cheaper than strategies bigger companies might use. In our objectives portion, we will give some concrete numbers for our pull strategies that we think are measurable and obtainable for Cidre Rhuys.
Therefore, the most important action we identified for them is a social media campaign. By sharing consistent content on platforms such as Facebook and YouTube, Cidre Rhuys can connect with potential consumers, create a story, and leverage the newly created brand identity to gain followers and likes and thereby increase brand awareness and sales. By further redesigning the homepage and package design, Cidre Rhuys can cost effectively make use of an appealing appearance to increase their sales and customer base. We believe that both social media and packaging should be able to communicate the story of the product.
Cidre Rhuys offers genuine French hard cider made with twenty kinds of apples picked locally in Brittany. The cider is fermented for several months and contains no additives and no pasteurization. Currently, Cidre Rhuys has won 12 awards dating back to 2011, two of which were won in the United States. Cidre Rhuys is different from the top selling cider brands in the United States because Cidre Rhuys focuses on being very transparent with the ingredients in the cider and providing a traditional drinking experience. This is a unique selling point for the product.
Over the past five years, the cider production industry has become the fastest growing alcoholic beverage industry in the United States. Over a decade ago, the industry consisted almost entirely of small-scale regional cider mills and cider houses. Today however, this is not the case. The retail sales of the leading cider companies are dominated by big brand names such as Angry Orchard, Strongbow, Woodchuck, Smith & Forge, and Stella Artois. Together, these top five brands accounted for over $315 million dollars in 2016, whereas the next five grossing cider companies reported a combined $33 million in retail sales (Appendix 1.0).
According to the IBISWorld Industry Report, over the next five years to 2021, the number of local and national cider producers is expected to grow far more slowly than it had in the previous five years and small-scale producers will likely represent the industry's enterprise growth over the next five years.
Cider is a relatively common alcoholic beverage in Europe, and international trade of cider is expected to increase sharply from the relatively low levels of just five years ago. As US consumers become more interested in styles of cider, total imports are projected to increase by an annualized 5.7%, faster than the five year projected growth of the US cider industry.
Based on our Porter's Five Forces analysis (Appendix 1.1), Cidre Rhuys has a great chance of succeeding in the US. Even though the bargaining power of distributors and retail buyers in the United States is high, the barriers to entry in this industry are relatively low as is the bargaining power of suppliers. The industry competition is high, as are substitute products because there is a general lack of knowledge amongst United States consumers about what a cider actually is. We see this as an opportunity to educate consumers while promoting Cidre Rhuys.
Consumers aged 35 to 54 have traditionally represented the major consumer base for cider in the United States. However, during the past five years the largest growth segment for cider has been the youngest portion of the population of US drinking age, namely those aged 21 to 34. This younger demographic is also driving the creation of the “craft drinker” target market. This target market seeks high quality alcoholic products—either imported or domestic. Cidre Rhuys—a niche, imported cider—has an opportunity to capture the “craft drinker” demographic. The gender breakdown for the cider market is nearly 50-50. Thus, we have established our target market as:
People aged 21 to 34
Part of the “craft drinkers” demographic
Our established target market will be able to capture the fastest growing segments of the cider industry. According to the United States Association of Cider Makers, “the regular cider consumer is younger, earns a higher income, and is more likely to be hispanic”, compared to beer drinkers. Because data is much harder to come by for the cider industry than the beer industry, we thought it was important to note this statistic from the 2017 Cider Conference.
In order to come up with challenging, yet realistic objectives for our pull approach, we conducted benchmarking on the pull marketing strategies of some of our closest competitors. These include other successful premium cider brands, either imported or produced in the US. To better quantify our objectives, especially for the Cidre Rhuys social media channels, we analyzed our competitors' social media sites.
The use of social media channels is an urgent priority for Cidre Rhuys. They represent a form of advertising that allows an effective application of pull marketing. Through social media channels such as YouTube or Facebook, Cidre Rhuys is able to educate consumers, as well as create brand awareness and build loyalty. Social media is an effective digital platform to advertise products, while simultaneously optimizing marketing costs. So far, Cidre Rhuys has not actively leveraged social media and digital marketing. In comparison, other cider brands that are imported from Europe, such as Domaine Dupont, have a stronger social presence. It should be noted that domestic-made premium cider brands such as Smith & Forge Hard Cider and Blake's Hard Cider are already successfully using social media pull tactics.
One of our first objectives is to redesign the social media platforms of Cidre Rhuys and its official website to better compete in the market. As of November 27th, 2017 this is a comparison between similar brands and their social media presence:
Estimated Number of Likes on Facebook:
Smith & Forge Hard Cider
Blake's Hard Cider
Expanding its social media presence is an area of opportunity for Cidre Rhuys. A reasonable goal would be to obtain 1000 Facebook likes by the end of 2018. One way we believe they can achieve this is by interacting with consumers at events and enticing them to follow the brand on social media. Examples include:
Taking photos of consumers interacting with Cidre Rhuys products at events and tagging them on the official Facebook page.
Doing a product giveaway:
Everyone (of legal drinking age) who likes the Cidre Rhuys Facebook page and shares the contest post with their followers is then entered to win a free bottle of cider.
Word of mouth advertising
One thing to note, Facebook allows for extremely capable and customized online marketing at a very low price. The cost-per-click for Facebook advertising is about $0.19 and for $3.99 you can reach up to the 1000 consumers with an advertisement. Using Facebook marketing, our objective would be to increase the sale of bottles by 1000 bottles in 2018, which is consistent with our aforementioned goal of obtaining 1000 Facebook likes.
After Cidre Rhuys has introduced an effective online marketing strategy, it should leverage analytics to optimize its online marketing. There are numerous analytics programs such as Google and Facebook Analytics. Several of those analytics programs are free while with paid services starting at $19.00 per month. Please refer to the Appendix 1.2 for an overview of the quantifiable goals.
Secondly, Cidre Rhuys should introduce a YouTube Channel to share advertisement videos for their brand. They could upload documentary footage that shows how Cidre Rhuys is produced in France. There have been many companies such as Dollar Shave Club that have advertised extremely successfully on YouTube with low budget videos. The key to this is to go viral and capture the attention of a wide audience. Competitors such as Blake's Hard Cider have already successfully used a YouTube channel to advertise videos to more than 25,000 viewers. With a small marketing budget and the right amount of creativity, Cidre Rhuys could use YouTube to gain more brand awareness and educate consumers on the production process of Cidre Rhuys. In this case, our objective would be to create a YouTube ad and have it viewed more than 10,000 times by the end of 2018.
Lastly, Cider Rhuys should redesign its official website to give it a more appealing look, and include more content that can be used to educate consumers and convince them of the superior quality of they have to offer. It is important for all social platforms to be synergistic in their content sharing and create a user friendly experience. For example, if a new video is uploaded on the YouTube channel it should also be shared on the Cidre Rhuys Facebook site and official website.
We would like to redesign the packaging of the Cidre Rhuys bottles. Currently, the label is very simple and does not necessarily capture the attention of a younger consumer base. Furthermore, the packaging is not tailored to US consumers. Ideally, consumers should realize after one look, that Cidre Rhuys is a high quality product that was imported from France. See an example of an eye-catching bottle that alludes to the brand's French origins in Appendix 1.3.
For the pre-purchase portion we would like to improve online presence, as previously discussed in the objectives. When consumers go to look for information on the product they will be limited in their search, with Cidre Ruys' current state. The social media objectives that we will implement, will eliminate this issue. For the purchase portion, a unique selling point for Cidre Ruys is that it originates in France. Interestingly, if you looked at the bottle now, you would never know it was a French cider without reading the fine print. Incorporating France onto the bottle, as we proposed, would give it a more foreign and exotic feel that would help catch the eye of American consumers. For post purchase, to get free information on what consumers want out of cider, we would like to insert a QR code on the back of the bottle. This is a good way for customers to be directed to the company's social media pages, if they enjoy the product since every newer phone since comes with a code reader.
In order to decide which channel member can most effectively perform what service, they need to follow the principle of maximum efficiency. This means, that Armorica needs to allocate those specific services that they can perform at a lower cost than the consumer is willing to pay. This will be of increased importance, since Armorica has very limited resources. To determine the services for each channel member, the vertically linked channel members need to be identified in order to break down all above-mentioned activities into the smallest separable components and assign them to the specific channel member, which can perform that service at lowest cost. While doing so the tradeoff between control and complexity needs to be taken into account as Armorica is not operated as the primary occupation of its founders and therefore their time needs to be used effectively. Multitasking will lead to time, which is not efficiently used and shall therefore be prevented. Furthermore, the risk of potential conflicts between channel members shall also be minimized as dealing with such will take valuable resources away from the Armorica team. However, especially synergies and economies of scales play an important role, when we will later talk about the distributors of Cidre Rhuys.
We believe that Armorica will have to be responsible for the main part of the sales. It's initial task will it be to ensure a secure supply chain. This includes importing the Cidre from France, customs, storage of the product and distribution to the resellers and distributors. They are the main point of contact for all other channel members and are hence responsible for establishing, maintaining, and improving contact to distributors, wholesalers and retail locations and customers. Furthermore, they are most efficient in marketing the product, which will be discussed in detail in section four. Additionally, tasks like gathering business analytics data and evaluating them, as well as strategy formulation and execution fall under their tasks.
Cidre Rhuys will stay responsible for the production of the Cidre in France. They will also bottle the cider and are the business partner Armorica buys the good from.
The End-point-of-sale, however, are the resellers, distributors and bars. Their network, reach, network and supply makes them the most efficient to perform this task.
Armorica operates as an exclusive re-seller of Cidre Rhuys in North America. This type of governance structure eliminates intra-brand competition for Armorica, in addition to granting it near-monopoly power over Cidre Rhuys' North American market. Cidre Rhuys is a niche product, with a small market share; the exclusive agreement is advantageous because it provides the channel with a high degree of control, in the competitive cider industry. A successful governance structure will require two key factors:
Higher Degree of Interaction:
Because this governance structure is slightly vertically integrated, Armorica and Cidre Rhuys are likely to have a higher degree of interaction. With a higher number of anticipated interactions, contracts and agreements will need to be collaborated between channel members.
Collaboration: Agreements between channel members must lay out a roadmap, with measurable objectives and an allocation of responsibilities that optimize costs for all channel members. Collaboration will drive channel success.
Timeliness: Regularly scheduled meetings between key stakeholders among the channel members, in order to discuss and evaluate the performance of objectives
Agility: Because of the competitiveness of the cider market, channel members must be agile, by updating and refining objectives
Although the exclusive agreement is more vertically integrated, on the overall spectrum it is more in the middle. Thus, compensation should be structured as a mix of profit sharing between channel members. As mentioned previously, it is important that channel members collaborate together to develop a compensation scheme that focuses on measurable objectives. Any modifications to the compensation structure must be agreed upon all channel members, otherwise channel conflict may occur.
Implementation, Timeline and Follow-up
Before Armorica will be able to implement the proposed changes, it is important to ensure clear short, medium and long-term goals. They will track immediate improvements while evaluating progress towards eventual goals and targets. Especially when it comes to assigning concrete actions, it will help Armorica to follow the developments.
Timeline- Short Term Goals ~3 months:
The allocated short term goals will determine the company's most pressing issues and will help to develop strategies and actions to improve them. One issue right now for Armorica is the weak social media presence. Short-term actions that can be redesigning the website and the Facebook page as well as other social media accounts such as YouTube. All platforms should show a consistent and appealing brand image, which especially attracts the identified target group. Furthermore, certain KPI's should be installed to measure the success of the changes. Hence, important KPI's to trace would be Followers/Likes, number of mentions or website traffic. This will increase customer awareness. Another action will be to create an advertisement video on YouTube to educate potential customers about Cidre Rhuys and emphasize the unique selling points of Cidre Rhuys. We believe that this can be achieved with the help of a freelancer and a low-budget within three months.
Timeline- Medium Term Goals ~9-12 months:
The medium term goals will help to find permanent solutions to the short-term problems we identified. As mentioned above, Armorica lacks an effective social media presence. By going one step further after redesigning the appearance, Armorica should start effective online marketing. Instead of just gaining awareness, they would also start increasing the engagement with the community (KPI: number of comments/shares/mentions). Actions will be: starting to use Google Adwords and Facebook Marketing. Also, establishing collaborations with blogs, influencers and other mediums can help to reach the targeted KPI's.
Another medium-term goal will be to leverage analytics to optimize the marketing. Particular actions will be actually starting to track the views on clicks on the social media accounts and further to invest in data analytics to track the short term marketing efforts and become more effective in marketing. This tracing will also give Armorica a change to reallocate efforts to keep them as low as possible.
Furthermore, Armorica will have to rethink its packaging and labeling design. After successfully creating a coherent online appearance it is time to match this with an equally appealing product design. This will further benefit the creating of the brand Cidre Rhuys. It seems possible to discuss a strategy within the next year and start to implement the short term goal falling under this strategy during 2018, whereas the Social Media Analytics shall follow towards the end of 2018, when hopefully first results of the Social Media Restructuring will be visible.
Timeline Long Term Goals >12 months:
Finally, Armorica will have to identify its long term goals and visions for the future. As its mission is “to bring the best cider from France to America” it will be of uttermost importance to grow bigger, to not only benefit from economies of scales but also to successfully making profits out of the import of the cider. Long term goals should also be to increase the amount of products offered right now, radically increase the sales and expand the distribution network. The most successful strategies will be developed over time by following the evaluation the recent sales and identifying the potential for the next year. The strategy should be viable within the foreseeable future but will take more than a year to accomplish.
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