KNagy GB530 Unit 5 Assignement

GB530 Brand Extension Marketing Plan Coca-Cola Brand Line Extension Unit 5 Assignment Kyle Nagy School of Master of Business, Purdue Global GB530: Marketing Management Dr. Beatrice Bourne 11/07/2023 Page 1 of 17

GB530 Brand Extension Marketing Plan Coca-Cola Brand Line Extension Over the last two years, ready-to-drink (RTD) alcoholic beverage consumption has grown by 104%. It is projected that by the year 2032, the RTD market will hold a market share size of 16.83 billion dollars with an annual growth of 10.1%. Due to this rapid growth, companies have been presented with opportunities to capitalize on and expand their market share. One such company to take advantage of this opportunity is Pepsi. In February 2022 PepsiCo expanded its Mountain Dew line and began offering Hard Mountain Dew in a limited number of states. By June 2022 Hard Mountain Dew was able to capture 18% of the market proving a need for RTD hard sodas. Due to PepsiCo seeing success from the introduction of Hard Mountain Dew, it would only make sense for its top competitor Coca-Cola to do the same. The Company The Coca-Cola Company was founded in 1892 and engages in the sale and manufacturing of soft drinks and citrus beverages. The Coca-Cola Company line currently consists of 2,800 products and is available in more the 200 countries. In the Coca-Cola quarter 3 2023 annual report they showed net revenue growth of 8% and operating income growth of 6 . Over the years The Coca-Cola Company has built a rivalry against PepsiCo and attained a cult- like following. Until the introduction of Hard Mountain Dew, The Coca-Cola Company has always been able to produce a product to continue the rivalry.  The Product To continue this rivalry and capitalize on the expanding RTD alcoholic beverage industry The Coca-Cola Company needs to introduce a beverage of their own. In 1997 Coca-Cola was faced with the same scenario when PepsiCo introduced the original Mountain Dew. In response to the introduction of Mountain Dew Coca-Cola released a citrus beverage called Surge. Surge quickly grew in popularity due to expansive marketing and commercials targeted toward an “Extreme Lifestyle”. Surge was discontinued in 2003 sending a shockwave through its loyal fanbase, but in 2011 with the launch of “The Surge Movement” Surge’s fan base was able to persuade Coca-Cola to bring back the fan-favorite. To capitalize on the cult following of Surge Coca-Cola’s new RTD alcoholic beverage can be called Surge Unleashed. Brand Line Extension The introduction of Surge Unleashed would be a Brand Line Extension because Coca- Cola would be using one of its fan-favorite soda lines. This is also a great way for Coca-Cola to utilize the existing brand name to help venture into a new segment of RTD alcoholic beverages. Target Market The target market consists of primarily males, but an increasingly appeals to Gen Z females. These consumers range in age from 21-35 years old and live in urban and suburban areas. The target market lives an active, social, and adventurous lifestyle and is interested in music, gaming, sports, outdoor activities, and pop culture. Social media and streaming services Page 2 of 17

GB530 Brand Extension Marketing Plan  Regular financial monitoring: Utilize specialized accounting software to evaluate expenses and revenue.  Key performance indicators (KPIs): Track website traffic, conversion rates, customer acquisition, and ROI to assess marketing effectiveness.  Market research: Monitor industry trends, consumer behavior, and competitor activity.  Collaboration with Coca-Cola teams: Leverage expertise in brand management, market research, and digital marketing. Overall, Surge Unleashed presents a compelling opportunity for Coca-Cola to enter the rapidly growing malt beverage market with a strong brand, innovative product, and targeted marketing strategy. By focusing on its key success factors and implementing strong controls and governance, Surge Unleashed has the potential to become a major player in the market. 2.0 SITUATION ANALYSIS By the year 2032, the malt beverage market is anticipated to surpass 16.83 billion US dollars and is projected to have a compound annual growth rate of 10.1%. This is due to Alcohol consumers looking for alcoholic drink alternatives that are healthy, ready to drink, and backed by well-known brands. Over the years many brands have entered this market, but few have had an impact on the market until PepsiCo introduced Hard Mountain Dew in 2021. Hard Mountain Dew quickly grew in success but has only been available in a select few states. Due to the growing demand not being met in all 50 States, it is allowing another company to produce a product to fill the gap. With PepsiCo and Coca-Cola's ongoing rivalry Coca-Cola can utilize the existing product name of Surge, which was introduced to compete with Mountain Dew in the 90s. This product will be marketed towards the adults who grew to love Surge in the 90s and towards consumers looking for easily available ready-to-drink alcoholic beverages. To elevate Surge Unleashed above Hard Mountain Dew it will be offered in a variety of sugar-free flavors with a 6.5% ABV being packed and sold in 12 packs of 16 oz aluminum bottles. 2.1 Market Summary Within the United States, 62% of Americans admit to drinking alcoholic beverages. Putting in perspective that out of ten Americans more than six consume alcohol. The alcohol market consists of three individual segments beer (i.e. malt beverage, cider, lagers), wine, and spirits. Beer holds the largest market share in America with Coors Light being the most popular. The malt beverage industry is forecasted to cross 16.83 billion US dollars by the year 2032 and holds a compound annual growth rate of 10.1% . The key target customer group of Malt beverage drinkers consists of health-conscious individuals looking for easily available ready-to-drink beverages. Due to Surge Soda gaining a cultlike following in the 90s, these individuals will also play a key role in the target customer group. Page 4 of 17

GB530 Brand Extension Marketing Plan 2.1.1 Market Demographics   Geographic Area:  77% of all global malt beverage consumption occurs in North America, with the US leading the way.  Western Europe: Countries like Germany, Belgium, and the UK have a strong cultural connection to beer and other malt beverages. Behavioral Influencers:  Social occasions: Malt beverages are often consumed in social settings, such as parties, sporting events, and gatherings with friends.  Relaxation and stress relief: Many consumers enjoy malt beverages as a way to unwind after a long day or week.  Taste and flavor: The increasing variety of flavored malt beverages, particularly hard seltzers, is attracting new consumers who enjoy the taste and lower calorie content compared to traditional beer. Psychographic Profile:  Young adults: Millennials and Generation Z make up a significant portion of the malt beverage market. They are drawn to convenient, portable options with unique flavors and experiences.  Active lifestyle: Many consumers who enjoy outdoor activities and socializing choose malt beverages as a refreshing beverage option.  Openness to trying new things: The adventurous spirit and willingness to try new flavors prevalent in younger generations is driving the popularity of innovative malt beverages.  Value-conscious: Consumers are increasingly looking for affordable options that offer good value for their money. Additional Considerations:  Gender: While males traditionally consumed more malt beverages than females, with Males consuming 31% more than Femals.  Education: 43% of malt beverage consumers have not graduated from college suggesting a potential target market for affordable and accessible malt beverages.  Income:  45% of consumers earn less than $40,000 annually indicating price sensitivity and a need for value-oriented options. Understanding the upcoming Gen Z's willingness to spend on flavored malt beverages highlights the market's potential for continued growth and innovation. By catering to evolving demographics, geographic preferences, and behavioral influences, malt beverage companies can position themselves for success in the future. 2.1.2 Market Needs Page 5 of 17

GB530 Brand Extension Marketing Plan  Targeted marketing campaigns: Coca-Cola can utilize its extensive marketing resources to reach target consumers effectively. To fully capitalize on the growing malt beverage market, Coca-Cola should:  Continuously innovate: Develop new and exciting flavors to keep consumers engaged.  Expand distribution: Make Surge Unleashed readily available in key retail outlets.  Monitor market trends: Continuously analyze market trends and adapt their strategies accordingly.  Build strong relationships with retailers and distributors: Ensure product availability and promote sales through strategic partnerships.  Engage with consumers: Build a strong online and social media presence to connect with consumers and build brand loyalty. By proactively addressing market growth conditions and implementing strategic initiatives, Coca-Cola can position Surge Unleashed for long-term success in the growing malt beverage market. 2.2 SWOT Analysis Strengths :  o Existing Partnership with Large Brewery  Coca-Cola has already spent time and money on locating a suitable brewery aligned with its values to produce its line of Simply Hard Lemonade.  o Coca-Cola Brand Image  Surge Unleashed will be able to utilize the brand image of Coca-Cola to help build confidence in the product with consumers. o Cult Following  In the 90s Surge acquired a strong cult following. Weaknesses :  o Advertisement  Surge is currently available for sale but has not had strong marketing since the 90s. o Aggressive Competition   PepsiCo is one of Coca-Cola's strongest competitors and has already been in the market for multiple years. o Molson Coors Brewing  In recent years Molson Coors Brewing has had limited success outside its core business of beer sales. Opportunities :  o New Generation of Alcohol Consumption  By 2032 the majority of Generation Z will be within the age of drinking in the United States. o Ready-to-drink Page 7 of 17

GB530 Brand Extension Marketing Plan  In recent years there has been a steady increase in the need for ready-to- drink alcoholic beverages. o Hard Mountain Dew Limited Availability  Due to Hard Mountain Dew sales being limited to specific States, Surge Unleashed would be introduced into States that do not offer Hard Mountain Dew. Threats : o Costs  Increasing costs of importing grain necessary for the malting process. o Health Concerns  Consumers have an increase in health consciousness regarding alcohol consumption. o Cheaper Alternatives  Consumers may decide to purchase a cheaper alternative. 2.3 Competition The current competition consists of Monster Unleashed, Henry’s Hard Soda, Not Your Father’s Root Beer, and Hard Mountain Dew. Due to the extent of rivalry between PepsiCo and Coca-Cola Hard Mountain Dew will be the key target competition Surge Unleashed will go up against. To set Surge Unleashed apart it will be offered with a slightly higher alcohol by volume (ABV) of 6.5%, produced with natural food coloring, and will be sold in 16 oz aluminum bottles. To better market Surge Unleashed Coca-Cola will invest in the latest marketing channels such as short-form videos and influencer marketing. Marketing Mix (Hard Mountain Dew) Product:  Malt Beverage  7 Unique Flavors: Original, Watermelon, Livewire, Baja Blast, Baja Blast Pineapple, Baja Blast Punch, and Baja Blast Mango  Zero Caffeine  No added sugar  2.2g of Total Carbs per 12oz Serving  100 Calories per 12oz Serving  5% ABV  Available in 12oz & 24oz Cans Price:  24oz Aluminum Can $3.49  12 Pack of 12oz Aluminum $17.99 Place:  Available for purchase in Iowa, Tennessee, Florida, Oklahoma, Arkansas, Missouri, Minnesota, Virginia, Ohio, Illinois, Arizona, Kentucky, Connecticut, Wyoming, Oregon, Vermont, Idaho, and Colorado Page 8 of 17

GB530 Brand Extension Marketing Plan surge of citrus flavor and a guilt-free indulgence, leaving no mountain unconquered. Surge Unleashed will be crafted with the finest ingredients, ensuring a guilt-free indulgence that allows one to savor the explosion of citrus flavor without any regrets. Surge Unleased will pride its self on a product that can satisfy the customers demands by offering a flavorful ready-to-drink, low calorie, and zero sugar alcoholic beverage. 3.2 Marketing Objectives The current marketing objectives are to expand revenue streams for Coca-Cola by introducing a product that is not only able to capitalize on the growing malt beverage market but also capitalize on the nostalgic segment of consumers who grew up loving the drink in the 90s. This will be done through rapid market share acquisition, strategic market penetration, increased brand awareness, and acquisition of the current malt beverage customers. Due to the overall malt beverage market projecting a yearly increase of 10.1% Surge Unleashed is confident that it will be able to acquire 5% of the new market within the first year and then a steady 1-2% increase quarter after quarter.  To increase brand awareness Surge Unleashed will utilize the latest marketing trends including targeted social media ads, partnerships with influencers, and creating interactive experiences. From the utilization of these marketing trends, Surge Unleashed should see an engagement rate of 4.25%. To continue increasing the success of brand awareness quarterly evaluations will be completed and if subpar results are exhibited adjustments will be made. When it comes to customer acquisition this will be done through establishing a consistent brand voice and designing an eye-catching brand logo. To determine if the brand voice and brand logo are adequate working random surveys will be completed to evaluate how many interactions it takes for a consumer to recognize the product. Ideally, the results should show that it takes 5 to 7 interactions but if more are discovered then Surge Unleashed will reevaluate its current offerings.  When examining the malt beverage market it is projected to have an overall increase of 10.1%. With the introduction of Surge Unleashed a goal of 5% market share within the first 5 years will be set. 3.3 Target Markets The optimal target market for Surge Unleased are Millennials & Gen Z, Social Drinkers, Urban and suburban dwellers, and health-conscious consumers. Within these optimal target markets, Surge Unleashed will be able to tap into the following niches consumers who enjoy citrus-flavored beverages, consumers who love nostalgic beverages, consumers who are health conscious, and consumers who prefer convenience. The reasoning behind these optimal target markets is due to Surge Unleashed is offered as a ready-to-drink low-calorie sugar free alcoholic beverage. These target markets have disposable income and are willing to try new products. 3.4 Positioning Page 10 of 17

GB530 Brand Extension Marketing Plan Surge Unleashed will position itself as a premium product by marketing towards the specific needs of its target audience, including overall taste, health consciousness, and quality of ingredients. To evoke nostalgia for the original Surge from the 90s, Surge Unleashed will be packaged in aluminum cans with a retro design. This design will highlight the beverage’s elevated features, including its higher alcohol by volume (ABV), lower calorie content, and zero- sugar formula. To further differentiate Surge Unleashed from its primary competitor, Hard Mountain Dew, it will be offered with a slightly higher ABV and emphasize its superior citrus- taste.  3.5 Marketing Mix Product Surge Unleashed will be a variation of the beloved soda drink that gained popularity in the early 90s. To accommodate the adventurous spirit of its target market, Surge Unleashed will be available in resealable 16-ounce aluminum bottles, providing convenient access while on the go. Each bottle will feature a nostalgic design while prominently displaying the product’s zero- sugar, low-carb, and no-artificial-coloring attributes. Surge Unleashed will boast an ABV that is half percent higher than the leading competitor positioning it as a premium beverage. These unique features of Surge Unleashed will enable it to charge a higher price point compared to its competitors.  Price To determine the optimal price point for Surge Unleashed, a combination of cost-based and market-based pricing strategies will be used. Surge Unleashed will be offered in 6-packs of aluminum bottles within a price range of $10-$15 and 12-packs of aluminum bottles within a price range of $18-$24. The final pricing decision will be determined by production and packaging costs, the specific state where the product is sold, and the type of retail outlet offering Surge Unleashed. The perceived value of Surge Unleashed will stem from its premium ingredients, exceptional citrus flavor, and higher ABV, catering to its target market of affluent demographics. Given the dynamic nature of the malt beverage market, Surge Unleashed's pricing strategy will not focus on undercutting competitors but rather on aligning with industry standards. Maintaining a flexible pricing approach will allow for adjustments to optimize the price point as market conditions evolve.  Place Leveraging the existing partnership between Coca-Cola and Molson Coors Beverage Company, Surge Unleashed will be distributed through the same channels utilized for Simply Hard Lemonade. Molson Coors Beverage Company has demonstrated success in placing Simply Hard Lemonade within grocery stores and liquor retailers. Utilizing their established distribution network will minimize the costs associated with developing and implementing a new distribution channel. Promotion Page 11 of 17

GB530 Brand Extension Marketing Plan  Revenue: $40 million  Variable cost: $12 million  Fixed cost: $28 million  Total cost: $40 million  Profit/loss: $0 (break-even) Year 3 and beyond:  With continued sales growth, Hard Surge is projected to generate increasing profits. Conclusion: Surge Unleashed’s potential for profitability and long-term success is evident in its projected sales growth and break-even point. However, ongoing monitoring, adaptation to market changes, and continuous improvement will be crucial for sustained growth and achieving its full potential. 4.2 Sales Forecast Year 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Units Sold 250K 350K 500K 650K 750K 1.25 Mil 1.5 Mil 1.5 Mil 1.5 Mil 750K 500K 500K Revenue ($) 500K 700K 1 Mil 1.3 Mil 1.5 Mil 2.5 Mil 3 Mil 3 Mil 3 Mil 1.5 Mil 1 Mil 1 Mil Year 2 Q1 Q2 Q3 Q4 Total Units Sold 2,200,000 5,300,000 9,000,000 3,500,000 20,000,000 Revenue $ 4,400,000 $ 10,600,000 $ 18,000,000 $ 7,000,000 $ 40,000,000 Year 3 Q1 Q2 Q3 Q4 Total Units Sold 3,300,000 7,950,000 13,500,000 5,250,000 30,000,000 Revenue $ 6,600,000 $ 15,900,000 $ 27,000,000 $ 10,500,000 $ 60,000,000 Rationale:  Launch month: Moderate sales due to limited availability and awareness.  February-March: Increased sales due to marketing campaigns and word-of-mouth.  April-May: Continued growth as distribution expands and product visibility increases.  June-August: Peak sales driven by summer season and outdoor activities.  September-October: Slight decline as summer ends but still strong sales.  November-December: Seasonal decrease but remaining a popular holiday beverage. Risks and Challenges:  Intense competition: Established brands in the hard seltzer market.  Regulatory restrictions: Potential limits on alcohol advertising. Page 13 of 17

GB530 Brand Extension Marketing Plan  Consumer preference for established brands: Overcoming brand loyalty.  Economic downturn: Reduced consumer spending.  Negative media coverage or product recalls: Damaging brand reputation. 4.3 Expense Forecast The next three years will require substantial investments in marketing and advertising to drivebrand awareness and sales for Surge Unleashed. The target market's rapid evolution necessitates exploring new flavors and variations to maintain relevance. Furthermore, the growing malt beverage industry will usher in new competitors. To ensure Surge Unleashed remains competitively priced, we must dedicate resources to studying and identifying key players in the market. 5.0 CONTROLS Maintaining proper control over the Surge Unleashed brand requires implementing various tactics and monitoring dashboards. Utilizing specialized accounting software will enable regular evaluations of overall expenses and revenue. Establishing key performance indicators (KPIs) such as website traffic, conversion rates, customer acquisition, and return on investment (ROI) will allow for accurate assessment of marketing effectiveness. Regularly assessing the rapidly evolving malt beverage industry is crucial for success. This includes monitoring economic indicators like GDP growth, inflation rates, and consumer confidence to enable timely adjustments. 5.2 Marketing Organization Coca-Cola's marketing organization is a well-oiled machine composed of a diverse team of professionals with innovative strategies and a deep understanding of consumer behavior. Leveraging Coca-Cola's existing team will be key to the success of Surge Unleashed's marketing strategy.One of the first areas to address is brand management. By collaborating with Coca- Cola's experienced brand management team, Surge Unleashed can be developed to maintain its brand identity and ensure consistency across all channels.Market research will also be essential. By utilizing Coca-Cola's market research team, Surge Unleashed can analyze market trends, consumer behaviors, and competitor activities, gaining valuable insights to inform its marketing strategy.Finally, due to the target market's preferred information channel being social media, collaboration with Coca-Cola's digital and social media team will be crucial for success. 5.3 Contingency Planning Surge Unleashed faces the potential risk of misalignment with the Coca-Cola brand due to the dynamic nature of the malt beverage industry. This misalignment could manifest as a disconnect between Surge Unleashed's image and the values associated with Coca-Cola. To Page 14 of 17

GB530 Brand Extension Marketing Plan References Alcohol.org. (2023, January 17). The alcohol industry in Data . https://alcohol.org/guides/the- alcohol-industry-in-data/ Borkakoty, K. (2023, August 30). Social media demographics every marketers must know in 2023 . Sprinklr. https://www.sprinklr.com/blog/social-media-demographics/ Brenan, M. (2023, August 14). More than six in 10 Americans drink alcohol . Gallup.com. https://news.gallup.com/poll/509501/six-americans-drink-alcohol.aspx Chi, C. (2022, December 6). The top marketing channels, and how they’ll change in 2023 [+data] . HubSpot Blog. https://blog.hubspot.com/marketing/marketing- channels#:~:text=Short%2Dform%20videos%20and%20influencer,and%20resources %20into%20in%202023.&text=Social%20media%20is%20likely%20a,interacting %20with%20business%2Dminded%20people. Cucu, E. (2023, June 17). 2023 social media industry benchmarks: Socialinsider . Socialinsider Blog: Social media marketing insights and industry tips. https://www.socialinsider.io/blog/social-media-industry-benchmarks/ Davey, L. (2023, January 10). 10 marketing trends to boost your business in 2023 . Shopify. https://www.shopify.com/blog/marketing-trends FMI. (2022, June). Malt beverages market . Future Market Insights. https://www.futuremarketinsights.com/reports/malt-beverages-market#:~:text=Malt %20Beverage%20Market%20Outlook%20(2022%2D2032)&text=Sales%20of%20malt %20beverage%20have,grow%20at%20a%20healthy%20CAGR. Howarth, J. (2023, September 5). 6 important alcohol industry trends (2023-2026) . Exploding Topics. https://explodingtopics.com/blog/alcohol-industry-trends Kelly, J. (2023, February 27). How to measure the success of marketing campaigns . RSS. https://www.invoca.com/blog/measure-success-marketing-campaigns Kelly, K. (2022, April 16). Alcoholic beverage consumption statistics and trends 2022 . Penn State Extension. https://extension.psu.edu/alcoholic-beverage-consumption-statistics-and- trends-2022 Kotler, P. & Keller, K. L. (2016). Marketing management (15th ed.). Pearson Prentice Hall. Muninder. (2020, August 27). Logo statistics, facts, Tips, and 2022 trends . DailyBlogging. https://dailyblogging.org/internet/internet-marketing/logo-statistics/#:~:text=The%20Most %20Important%20Logo%20Stats,to%20recognize%20a%20brand%20logo. Page 16 of 17

GB530 Brand Extension Marketing Plan NielsenIQ. (2023a, May 26). Summer 2023 Trend Outlook for Beverage Alcohol . NIQ. https://nielseniq.com/global/en/insights/infographic/2023/summer-2023-trend-outlook-for- beverage-alcohol/ NielsenIQ. (2023b, August 2). Ready to drink and ready to serve are heating up . NIQ. https://nielseniq.com/global/en/insights/report/2023/ready-to-drink-and-ready-to-serve- are-heating-up-the-summer/ SurveyMonkey. (2023). What is Brand Voice and why is it important? https://www.surveymonkey.com/market-research/resources/what-is-brand-voice-why- brand-tone-matters/#:~:text=A%20balanced%20voice%20and%20tone,the%20authenticity %20of%20a%20brand. Page 17 of 17