Academic Version

Yellowhead Brewery

MARK465 - Marketing Management

For Irene Kirby-Frith

December 7, 2012

By Alina Eckert, Greg Furlong, Alastair Lilico & Olivia McGhan

Academic Version

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in this

marketing plan is confidential; therefore, reader agrees not to disclose it without the express written

permission of _______________.

It is acknowledged by reader that information to be furnished in this marketing plan is in all respects

confidential in nature, other than information which is in the public domain through other means and that

any disclosure or use of same by reader, may cause serious harm or damage to _______________.

Upon request, this document is to be immediately returned to _______________.

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Signature

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Date

This is a marketing plan. It does not imply an offering of securities.

Academic Version

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22.2 The Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

2.2.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2.3 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.2.4 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.3 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112.3.2 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112.3.3 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.3.4 SWOT Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

2.3.4.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.3.4.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.3.4.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142.3.4.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

2.3.5 Historical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142.4 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.4.1 Direct Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.4.2 Indirect Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183.1 Value Proposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183.2 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193.4 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

3.4.1 Societal Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203.5 Target Market Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213.6 Messaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

3.6.1 Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223.7 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

4.0 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244.1 Product Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254.2 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254.3 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

4.3.1 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264.3.2 Public Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.3.3 Direct Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

4.4 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

5.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .315.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335.4 Linking Expenses to Strategy and Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .345.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

6.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .376.2 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386.3 Market Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386.4 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

7.0 Works Cited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Table of Contents

Academic Version

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Table of Contents

Academic Version

1.0 Executive Summary

Yellowhead Brewery is one of two current microbreweries in the Edmonton area. They have one

product offering, a craft lager, sold in two main package forms: keg and growler. As assessed in

the market evealution, the target market is males between the ages of 18-30 who are highly-

educated and want to satisfy their esteem and belonging needs. Yellowhead lager allows the

target market to fufill their need to socialize and their desire to support local, organic products.

Sales and expenses are both expected to grow; however, the sales will grow enough to generate

higher profit.

Yellowhead's strict brewing standard, derived from the German brewing techniques, separate its

lager from the competition. Also, its historic and local relevance make it a differentiable.

Because of its local nature, Yellowhead will become a staple in the Edmonton community. This

is true not only for their product and experience offered in their craft beer, but also for their

community involvement. They strive to support local acts and arts. This shows their character

and further separates them from the other breweries.

Yellowhead will be positioned as a quality craftbeer that creates a memorable and unique

expereince. This capitalizes on the aformentioned esteem and beloning needs of the target

market.

Yellowhead aims to become the preimer craftbeer in the Edmonton area. Eventually, expansion

to the rest of the province will occur. However, currently, there are financial and logistical

barriers. Once the company's growth and revenues stabilize, they will be able to expand.

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2.0 Situation Analysis

The situation analysis examines the internal and external business environment. It is important to

be cognoscente of the micro and macro environment in order to capitalize on trends and

opportunities and minimize threats and weaknesses. Yellowhead Brewery's market, the company

offering, a SWOT analysis and the competition will be explored in this section.

2.1 Market Needs

Beer can be found anywhere. A company that wants to succeed with a product that is prevalent

like this must differentiate themselves in the industry. This is especially true for a small brewery,

like Yellowhead. Yellowhead's lager is distinct in Alberta because of the German purity laws and

simple ingredients that enhance it's taste. It is not expensive; it saves the customer money and

minimizes their perceived financial risk. Because it is a craftbeer, the customer's experience is

heightened because they are proud to support local, high-class beer. This boosts their self-esteem

and leverages their social need to belong.

Needs of consumers will often vary due to personal taste. However, this creates an opportunity

for new products. Customers want to try something new and trendy so they feel special. They are

trying to broaden their taste and palate to impress their peers. This has been why Yellowhead has

experienced gradual growth among consumers. As Yellowhead gains notoriety, it will move from

a trendy beer into a beer staple. Many breweries and other alcohol companies have experienced

this. For example, Alley Kat, Yellowhead's main competitor, has slowly moved away from a beer

one only has once and a while, to one that is sought out by their target market.Yellowhead

currently only offers one type of beer: a lager. This contrasts the industry because most

microbreweries carry three options. They do this in order to satisfy customers' wants and

capitalize on customization. Yellowhead needs to keep this in mind because they will only

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capture customers who are looking for a lager.

Beer is becoming more of a cultured product. This is especially true for craftbeer. This differs

from the traditional image as it has become more prestigious. Consumers are learning tasting

methods and developing their palates as the beer culture shifts. There are even establishments

that only serve high-quality beer and no other alcohol. Formerly, wine was the only alcoholic

beverage to have distinct bars that sold no other beverages.

Some breweries have also been able to incorporate their own event centers where consumers can

be immersed in the culture of their brewery. This allows for a unique experience to learn about

the beer. This was popularized by wineries during the summers for weddings and other events.

Breweries may also have these tasting rooms, so that they can develop their palates while getting

to know the brewers.

2.2 The Market

Yellowhead's current market consists of the Edmonton area. Immediately, any person below the

age of 18 can be eliminated from the potential market as they are not of legal drinking age. The

following market analysis shows that there is nearly a 50/50 split between men and women,with

slightly more men, over 18 in the metropolitan area. Both are expected to grow at about 1.5%

over the next several years. This is huge potential for Yellowhead. If Yellowhead were to expand

throughout the province of Alberta, their potential market would grow by nearly five times. Any

market share that Yellowhead Brewery can gain will help increase revenues and build a loyal

base.

Alberta has the highest disposable income across Canada which increases the amount one could

spend on beer. Overall, Canadian spend approximately $1,149 on alcohol and tobacco products

over one year (Statistics Canada, 2012). If Yellowhead can capture even a small fraction of this

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expenditure, they can expect to grow substantially.

Table: Market Analysis

Market Analysis2013 2014 2015 2016 2017

Potential Customers Growth CAGRMale 18+ 2% 332,000 336,980 342,035 347,166 352,373 1.50%Female 18+ 1% 322,000 326,669 331,406 336,211 341,086 1.45%Other 0% 0 0 0 0 0 0.00%Total 1.48% 654,000 663,649 673,441 683,377 693,459 1.48%

2.2.1 Market Demographics

The demographic for microbreweries in Canada consists of anyone who is of the legal age to

consume alcoholic beverages. In Alberta, people over the age of 18 are potential consumers. In

Canada, more men drink than women. Men also consume higher volumes of alcohol compared to

women (Helath Canada, 2008). Those with a post-secondary education consume more alcohol

than those with a lower education, like those without a high school diploma. Those with a higher

income also drink more than those with a lower income (Health Canada, 2008). Household

composition is not a huge factor as males drink relatively the same amount of alcohol regardless

of their marital or family status. Those who drink craftbeer are looking for a social experience

that demonstrates their masculinity, like at sporting events. They also enjoy supporting local

products. Craftbeer drinker are more open minded than other beer drinkers; they are looking for

a social experience and they are curious. Craftbeer drinkers enjoy organic beers more so than

their regular beer counterparts because of their eco-consciousness (Kegworks, 2009).

The craftbeer drinker is looking for the social experience. They are environmentally conscious.

They are not loyal to any one beer but seek an experience. They do support locally, but they want

to try something new. Because of Edmonton's size, the craftbeer drinker is more likely to seek

trendy establishments that carry both the craftbeer and the experience (Kegworks, 2009).

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Table: Market Demographics

Market Demographics

Market Segments

Educated Social Class Edmonton Area BehaviouralHealth

ConcsiousMale 18+ Appeal to their

statusAppeal to the middle-

upper classLocal

aspect/HistoryExperience

oriented/customizedEco-

friendly/organicFemale 18+ Appeal to their

statusAppeal to the middle-

upper classLocal

aspect/HistoryNew flavours

LowCalorie/organic

Other - - - - -

2.2.2 Market Trends

Social trends have a big influence on the industry. Low calorie drinks have started to become

popular as consumers are more aware of their health. Consumers also prefer “greener” products;

this means minimizing the impact on the environment which can occur with the help of a well

organized sustainable supply chain.

During the fiscal year ending March 31, 2010, liquor stores and agencies sold $19.9 billion worth

of alcoholic beverages which is shows 2% incremental growth from the previous year. Beer

remained the alcoholic drink of choice for Canadians (Statistics Canada, 2010). In terms of

volume, beer stores and agencies sold 2.4 billion liters of beer in 2010, up 1.4% from the

previous year.

On a per capita basis, beer sales amounted to 83.6 liters per person in 2010, down from 85.6

liters in 2000 (Statistics Canada, 2010). In contrast, during the same period, beer sales in terms of

value increased by almost $53 to $326.4 per person. The growth in volume of sales of imported

beer continued to outpace that of domestic products (Statistics Canada, 2010). The volume of

imported beer sold increased by 7.8% in 2010, while volume sales of domestic products were up

by less than half of one percent. In 2010, imported beer captured 14% of the beer market in

Canada, which doubled its market share of 7% in 2000. Of all the imported beer sold in Canada,

24% came from the United States, 20% from Mexico and 17% from the Netherlands (Statistics

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Canada, 2010). The only statistically significant change in past year in alcohol use was in Alberta, where

the percentage increased to 80.0% from 73.8% in 2010.

The current trends suggest that microbreweries will be around for the foreseeable future. This is

because of the growing demand for customized and local product offerings. This is especially

true for craftbeer as it offers the customer a beverage and an experience. Capitalizing on this

customization is essential for both the macrobreweries and microbreweries. It is also important

for breweries to figure out how they are perceived by the target market. This determines their

positioning and how they should reach their customer base. Many breweries offer a selection of

flavors and drafts, but do not address the unique culture that their beer offers to the consumer.

Building an atmosphere around a beer is extremely important as beer satisfies esteem and

belonging needs. This means that while the product offering is important, it is how the consumer

feels about the beer that will push them to buy. Without positioning and a beer culture, there is

no way to make a differentiation between two beer offerings. An example of this is Old-Style

Pilsner, a beer associated with Saskatchewan, who's image of tradition and rowdiness produce a

perceived 'redneck' kind of beer. In contrast, Steamwhistle, another pilsner, represents innovation

and a community style beer. They are similar types of beer, taste-wise, but because of their

completely different cultures and positionings, they are completely distinguishable. This has made

them successful breweries.

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0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2013 2014 2015 2016 2017

Male 18+

Female 18+

Other

Market Analysis (Trends)

2.2.3 Market Growth

The industry has become stagnant in terms of growth overall as an industry. It is, however,

growing for microbreweries throughout the country. This is most evident in the recent success

and openings across the country. This newfound growth can be attributed to changing consumer

preferences(Holloway, 2004). Breweries are now inheriting a completely new and wiser beer

drinker who has an opinion about what kind of products they consume. This has led to the

demand for customized beers that many breweries currently provide. Most recently, hoppier

beers and flavored beer, such as vanilla or blueberry, have been created in order to appeal

towards beer drinkers who want to try something new. This microbrew movement has created

interest among bar owners which has lead them to open up brew-pubs or bars that focus soley on

microbrew beers.

This newfound trend towards customization in beers has not been overlooked by the

macrobreweries. They have started to create more specialized options of some of their current

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products. However, this has not been as successful as microbrews (Mcdonald, 2009). This has

led majer brewers to purchase microbreweries instead of creating new ones.

Among the consumers who have purchased craftbeer, young men who are looking for newer

options that differ from their fathers have proven very to be lucrative for the microbreweries

(Holloway, 2004). However there is also a rising trend among women which has lead many

breweries to create options that are more appealling to their taste. These include fruity and

distinct flavors. However, most women still favor other alcoholic beverges, like wine or mixed

drinks (Health Canada, 2008).

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

Male 18+ Female 18+ Other

Market Analysis (C.A.G.R)

2.2.4 Macroenvironment

The macro environment is composed of several main factors. They are important to monitor in

order to respond and react to the ever changing business environment. The factors are political,

economical, social and technological. The political portion relates to the government and legal

aspects. The economical factors reflect the consumer and business financial situations. The social

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factor shows the market and consumer trends in the industry. The technological aspect pertains

to new developments within the industry.

Political:

Alberta's beer movement is completely privatized. Microbreweries must follow rules and

regulations set by Alberta Gaming and Liquor Commission. Microbreweries can sell directly from

their location or can distribute their beer through retailers or restaurants (Hughey, 2011).

Breweries, and brew pubs must have a Class E or liquor manufacturing license before they can

manufacture their own beer (AGLC, 2012). Yellowhead must also have a Class A license so that

they can sell alcohol in their event room.

Economical:

Alberta's average wage is $23.80 an hour,which is equivalent to $3808 a month or $45,696 a

year before taxes (Government of Alberta, 2011). Of this, the average person spends $1,149 a

year on liquor and tobacco products (Statistics Canada, 2012). Yellowhead Brewery sells their

beer for about $5.25 a pint and $9.00 for a growler. Alley Kat, the other microbrewery in

Edmonton, sells a pint of a comprable lager for about $5.50-$7.00. This makes both Yellowhead

Brewery and its competitor relatively affordable in Alberta’s economy.

Social:

The product beer can be viewed through several social stand points. First as an enhancer of social

engagements that helps having a memorable experience. Secondly it can be viewed as a weapon

that ruins lives whether it be drinking and driving or the alcohol causing someone to become

violent .These two stand points are very different and can create tension in the public eye. A

brewery or supplier of beer may try to create a positive image of their brand to avoid these social

stigmas. They may even try to create a Corporate Social Responsibilty (CSR) program to bring

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positive public attention to their brewery and brand over the product. They must be careful

though to support something that is not hypocritical to their product.

Technological:

Technology has allowed business to create a closer relationship with their customers. Companies

can learn what their target market interests are through their likes and preferences from social

media websites. New themes could be created from what a company learns about their market

by customizing the message to increase interest in their company.

2.3 The Company

Yellowhead Breweries was established two years ago on Edmonton's north side. It's name comes

from Alberta's history and a former brewery that operated in the 1800s (Yellowhead, 2012). It

offers one lager in keg and growler form.

This plan aims to set the marketing strategy for Yellowhead Brewery from January 1, 2013 to

January 1, 2014 inclusive. It will provide guidance for the communication plan moving forward.

This is the strategy document. Further creative development will be needed in order to create

advertisements and other specific tactics. Yellowhead's current situation and business

environment have been analyzed, which has lead to the marketing strategy creation. This led to

the definition of specific marketing mix factors and the necessary financials. Finally, the controls

and implementation complete the document.

This marketing strategy is based on increasing the brand awareness and sales of Yellowhead. It

is essential that Yellowhead's core competencies and differentiating factors are communicated to

the target market. They need to understand the product and experience offering that the

Yellowhead lager enables.

The document will affect the communications team and sales team. They are responsible for

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several tasks and it is vital that they carry out these for the plan to be successful.

2.3.1 Mission

Yellowhead Brewery aims to provide quality taste at an affordable price for the craftbeer drinker

in Alberta. They strive to improve the Canadian brewing standard by utilizing the German

brewing technique. Their historical and local qualities are important for the consumer and

demonstrate Yellowhead's core values. Their heritage is important to keep Alberta's history

alive. Quality, experience, history and local culture embody Yellowhead which translates into

their beer.

2.3.2 Product Offering

Yellowhead Brewery offers a premium lager in the Edmonton area. It is one of the only

breweries in Canada that follows the strict German purity laws that ensures the fresh, natural

taste of Yellowhead is enjoyable. Yellowhead's name is steeped in history, adopting the name

from the 1894 beer situated in what is now the Royal Glenora Club. The term Yellowhead is

significant in Alberta history, referring to a blonde explorer during the foundation of the province.

The beer is offered in two formats: kegs and growlers. Kegs are sold to restaurants, pubs and

bars around the Edmonton area. Having the beer on tap allows the freshness to be preserved.

Growlers are refillable bottles that carry approximately six cans worth of beer. They are

ecofriendly which matches Yellowhead's commitment to the Edmonton community. Although

Yellowhead only offers one product in different packaging, its superior quality sets it apart from

the competition.

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2.3.3 Positioning

Yellowhead needs to position itself as a historical brewery: not onlyone with a rich history, but

one that has also adapted. This involves highlighting the history of the brewery throughout the

past 100 years. A few other breweries have done this , which has allowed them to reinvent their

brand while staying true to its history. Examples of this include Sleeman, Pilsner, Alexander

Keith’s and Guinness.

Yellowhead has adapted from its history, suggesting that they are a cultural icon rather than just

a brewery. This is a very distinct advantage that other breweries do not have.

By adapting over time it also illustrates that the brewery wants to grow with the consumer and

adapt to different tastes. By positioning themselves in this way, Yellowhead can leverage the

local and historic aspect of the brewery.

2.3.4 SWOT Summary

Considering the company’s strengths and opportunities, coupled with current market trends in

the province, Yellowhead Brewery has the resources available to become a strong player in the

industry. Its strengths and opportunities surpass the weaknesses and threats. With a viable

marketing plan, the company could easily face threats and overcome weaknesses, becoming a key

player in the marketplace.

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2.3.4.1 Strengths

• Low competition

• High barriers to entry

• Business concept

• Local business

• Competitive pricing - no transportation costs

• Freshness

• Social trends

• Product quality

• Enforcement of German standards

• Historic location

2.3.4.2 Weaknesses

• Only known in the downtown core

• Not a strong brand presence due to the fact that the company is new in the market

• Supply chain not fully developed

• Product line not fully developed – only one beer

• Company and product positioning

• Low market share

• Target market vaguely defined

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2.3.4.3 Opportunities

• Regional expansion

• Provincial in the short term and inter-provincial in the long term

• Improve packaging system

• Expand product line

• Supply chain expansion - sustainable supply chain management

• Increase positive image by working with local festivals

• Expand marketing strategy to compliment company growth

2.3.4.4 Threats

• Drinking and driving laws

• New brewery opening up next year in Saint Albert

• Expansion of Calgary breweries within the province

2.3.5 Historical Results

Because Yellowhead is a relatively new company, there is little historical data to analyze.

However, from year 1 (2010) to year 2 (2011), their revenue increased by nearly 150%. This

shows huge growth and that they have been successful. The growth can be partially attributed to

their increased advertising and expanded distribution. From year 1 to year 2, their was an

emphasis on sales channels and relationships with local bars, pubs and restaurants. This boosted

the amount of establishments where potential customers can experience the lager. It important

for Yellowhead to continue to build relationships with these key distributors because in order to

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increase sales and decrease their current deficit.

Table: Historical Data

Historical Data

Variable 2010 2011 2012Industry Revenue $715,000,000 $725,000,000 $735,000,000Company Market Share 0% 0% 0%Company Revenue $110,825 $329,875 $396,900Industry Variable Costs $425,000,000 $435,000,000 $445,000,000Company Variable Costs $219,554 $185,640 $185,640Industry Gross Contribution Margin

$290,000,000 $290,000,000 $290,000,000

Company Gross Contribution Margin

($108,729) $144,235 $211,260

Marketing Expenses $7,247 $5,874 $8,000Company Net Contribution Margin ($115,976) $138,361 $203,260

2.4 Competition

The beer industry is exteremly saturated. This is because of the high start up costs and

competition from huge, identifiable breweries. In the local craftbeer market, their is only one

other brewer besides Yellowhead: Alley Kat Brewery. It is essential for Yellowhead to monitor

Alley Kat as they have been established in the area longer and already hold most of the market

share. Yellowhead must also be aware of the major international breweries, as they are a

substitution for Yellowhead Premium Lager. The major breweries are identifiable and pose little

financial or status risk to a beer drinker. If Yellowhead can understand it's competition, they will

be able to leverage their core competencies and differentiate themselves in the highly competitive

market.

2.4.1 Direct Competition

Although the beer brewing industry is extremely competitive, the mircobrewing/craftbeer industry

in Edmonton is small,composed of two main players: Yellowhead and Alley Kat.

Alley Kat Brewery is a craft brewery located on Edmonton's south side. It is the longest running

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microbrewery in the metropolitan area and because of this, it is well established and recognizable

(Alley Kay, 2011). Like Yellowhead, its is sold in a variety of serving establishments, like pubs

and restaurants, but it can also be found in liquor stores. Alley Kat is also similar to Yellowhead

as both have an entertainment space for functions and tastings.

Alley Kat offers many flavors of both lager and ale and is responsive to seasonal change. For

example, in the fall, it offers a pumpkin pie beer. Alley Kat's website is interactive and informs

people what kind of food to pair a particular beer. 50 Litre kegs cost $195: $20 more than

Yellowhead (Alley Kat, 2011). However, because there is high understanding in the Edmonton

area about Alley Kat, there is little price sensitivity displayed.

A potential direct competitor is Hogshead Brewery which will be located in St. Albert over the

next year. They are not established yet. In the short term, they are not competition as they do not

have a product, customer base or any brand awareness. However, in the long term, they must be

monitored as they may take away some of Yellowhead's target market.

The Competitive Analysis table shows a numeric difference between Yellowhead, its direct and

indirect competition. It is rated on a scale from 1 to 5: 5 being the most desirable and 1 being the

least desirable. For example, a 5 for price indicates the lowest price while a 5 for loyalty indicates

fierce support for the beer.

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Table: Competitive Analysis

Competitive Analysis

#1 #2 #3 #4 #5 #6Competitor Alley Kat Yellowhead Guiness Alexander Keith's Molson Budweiser

Product and/or Service Alley Kat Yellowhead Guiness Alexander Keith's Molson BudweiserQuality 4 4 5 3 2 2Selection 5 1 2 4 3 3Price 3 5 2 3 5 5Distribution 4 3 5 4 5 5

Location and Physical Appearance

Alley Kat Yellowhead Guiness Alexander Keith's Molson Budweiser

Traffic 3 2 3 3 4 4Appearance 2 3 5 4 4 3Visibility 2 3 5 4 5 5Convenience Factors 2 2 5 3 5 5

0 0 0 0 0 0

Added Value Factors Alley Kat Yellowhead Guiness Alexander Keith's Molson BudweiserPre and Post Sales Service 3 4 2 2 3 3Experience 3 4 4 4 2 3Expertise 3 3 5 4 2 2Reputation 4 3 5 4 4 4Image 4 2 5 4 4 4Stability 3 2 4 4 4 4Strategic Alliances 0 0 0 0 0 0Other 0 0 0 0 0 0

Other Marketing Activities Alley Kat Yellowhead Guiness Alexander Keith's Molson BudweiserEstablished Sales Channels 3 2 5 4 5 5Advertising 3 2 5 4 5 5Post-purchase Support 3 4 3 3 3 3Incentives 0 0 4 3 5 3Loyalty Components 4 2 4 3 3 3Other 0 0 0 0 0 0Total 58 51 78 67 73 71

2.4.2 Indirect Competition

There are many beers available for consumption that are available at serving stablishments and at

liquor stores. However, these fall outside of the local microbrewery/craftbeer category. It is

important to understand these, however, because they are a substitute for Yellowhead Brewery.

There are two distinct types of substitutes: Highend/Imports and Major Breweries.

Highend/Imports - These beers display recognizable brands and tastes. There is a specific

perception about what kind of experience one can expect from a highend or import beer. This

category is understood by both casual beer drinkers and beers experts. It is perceived as higher

quality, so naturally, it is a higher price. Examples of this indirect competition include: Guinness,

Stell Artois, Heineken and Alexander Keiths.

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Major Breweries - These brands are also recognizable, but are not held in the same esteem as

the imports. They offer consistent taste and are a cheaper option. It is understood by alcohol

drinkers. Examples of this category are Molson Canadian, Budweiser and Coors Light.

3.0 Marketing Strategy

The strategy of Yellowhead will be to target consumers with there history, culture, and style of

beer. The key demographics that we will be targeting will be of consumers whom are developing

there taste for beer and want to experience the culture that is associated with it. Things that will

be done to attract this target market include accomplishing our marketing, and societal objectives

while highlighting our positioning strategy. This will help to solve critical issues and differentiate

the brewery from Yellowhead’s competitors.

3.1 Value Proposition

The most valuable thing that Yellowhead Brewery offers is it’s local beer and the way that it is

created. The beer is fresh in comparison with many of Yellowhead’s competitors, because the

brewery is located directly in the middle of Edmonton. This has allowed their product to be

transported to local establishments at a far faster rate than competitors. This creates optimal

freshness.

The name creates a cultural preference for Yellowhead among other craftbeers in the Edmonton

market.

Yellowhead is known for the their location. Since the brewery has an event center that is located

downtown, it is an optimal place for many organizations to host functions, as well as private

events like weddings.

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3.2 Critical Issues

An issue that is currently affecting Yellowhead Brewery is brand awareness. There is knowledge

among some consumers, especially in the downtown core, but not city-wide. This is especially

detremental among Yellowhead’s key demographic. Without an established brand, it is difficult to

become successful within the first five years of the business opening.

Other pressing issues that are affecting Yellowhead include competition that is starting to come

into the Edmonton area. Although beer-pubs encourage average beer drinkers to consume more

craftbeer options, they also introduce customers to beers that are not offered locally. This

iscreases competions and may eliminate some potential customers. Exmaples of these new pubs

include Craft, Underground Tap and Grill, MKT and Mercer's Taverns.

3.3 Financial Objectives

1. Increase sales by 5%.

This will be achieved by building relationships within the distribution channels, particularly within

the pub and restaurant channels. This increases the rebuy by the establishment and the

knowledge of the beer. In turn, this will increase sales and customer retention.

2. Decrease deficit by 20%.

This will be achieved by increasing sales. Any profit made over the next several years will be

used to decrease the deficit incurred as a result of start-up. With a 5% increase of sales, the

deficit will be decreased by 20%.

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3.4 Marketing Objectives

1. Be in 30% of the bars and restaurants in the Edmonton area by 2014.

This we be achieved by managing and building the relationships in the bars and restaurants in

Edmonton. The sales team will be responsible for this. It will be measured according to the

number of licensed establishments available in the metropolitan area.

2. Capture 7% market share in the Edmonton area by 2014.

This will be achieved by building brand awareness, product loyalty and relationships with the

distributors. The sales team will be responsible to build up the distribution channels and ensure

that the servers at these places are knowledgeable of Yellowhead.

3. Develop the bottling line to be finished by the spring of 2013.

This will increase the opportunity for the end customer to try Yellowhead. Manufacturing is

responsible for the creation of the bottling line.

4. Increase brand awareness every year by at least 7.5%, starting in 2013.

This will be achieved through communications strategy. This will be implemented personally,

through sales and servers, and general, through advertising. Customer surveys will be used to

measure this.

3.4.1 Societal Objectives

1. Increase awareness of Yellowhead’s music and arts involvement in the community. This

will involve hosting events and bigger artists.

This will be achieved through festival involvement, like the Fringe. The communications team

will be responsible for this.

2. Develop community conscious projects that help to restore or revitalize Edmonton.

Specifically targeted towards historical locations if possible

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This could be achieved through community involvment with a press release to inform the area of

Yellowhead's involvement.

3.5 Target Market Strategy

The target market for Yellowhead Breweries is a male between 18-30 in the Edmonton area

which will everntually expand across the province*. He is environmentally conscious and a local

product supporter. He seeks an experience from his alcohol consumption. He looks for the trendy

establishments with his friends. He goes out several times a week to socialize a try the newest

brew. He is pursuing higher education or already has a diploma or degree from a post-secondary.

He is looking for the next best thing and wants to impress his social circle with his beer

knowledge.

The strategy that Yellowhead will be focusing upon will be on the growing segment of

consumers who are adapting their tastes to microbrews rather than focusing on a mass market of

beer drinkers. This option allows Yellowhead to grow at very gradual, steady rate.

Introducing a platform for culture among key demographics, Yellowhead will help to increase

brand awareness of the brewery. Yellowhead already has a number of resources that competitors

do not currently have, which will help to set them apart. These include there location, history,

and style of beer.

*Please Note: Yellowhead will expand across the province eventaully. Currently, they do not

have the financial means or distribuion network necessary to expand. However, Yellowhead

does plan to expand, starting around the Edmonton area.

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3.6 Messaging

The message will focus on the target market. It will bring together the product qualities as well

as the craftbeer experience. The slogan "A Beer That's Made For Your Taste" will be the focus

of the message. This leverages the belonging, status and quality of Yellowhead. It conveys the

message that will position Yellowhead effectively in the craftbeer market.

3.6.1 Branding

The overall logo, symbol, and packaging does not need to change. It potray the history and

freshness of Yellowhead. It is also identifiable with the current drinkers of Yellowhead lager.

Also, there is no money for a rebreand. Rebands are also risky because they are difficult to

predict and may backfire.

Themes

The themes that Yellowhead will use to target their consumers include the usage of culture, style,

of beer, history.

1.Historically, they will be seen as Edmonton’s true and natural beer. A beer that was originally

made from the North Saskatchewan River when the brewery was originally down in the river

valley, and has now been moved up into Edmonton’s downtown social hub. In other parts of the

world there are towns that create and serve their own particular beer. The beer is a representation

of the place where it was created, and brings much pride to the community to serve their beer to

visitors. Yellowhead’s lager will become Edmonton's beer.

2.The beer that has been created by Yellowhead stays true to the German purity laws. This is

because the brewery and its founders wish to have beer remain true to tradition rather than

commercialization. The beer is to be seen as a fresh alternative to many of the other lagers that

are avliable at bars. This is possible through local and quick service.

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3. Culturally the brewery is one that embodies a culture of Edmonton. Through its history and

trueness to tradition, Yellowhead's brand displays the community. Many breweries try to reach

consumers, but not all of them can do so on a personal basis like microbreweries. There needs to

be a focus on what the Edmonton community needs. Whether it is building up the knowledge that

is exhibited with beer, or if it’s a place for beer lovers to hang out Edmonton's needs should be

reflected in Yellowhead's brewery.

Table: Target Market Messaging

Target Market Messaging

Market Segments MessagingMale 18+ A beer that's made for your tasteFemale 18+ A beer that's made for your tasteOther -

3.7 Strategy Pyramids

The main strategy for Yellowhead is to establish it as a quality beer and increase revenues. They

are already operating in Edmonton and have developed their product. It is essential for them to

increase their brand awareness through horizontal marketing and retailer education. The product

placement is also key for Yellowhead. Relationships with distributors and bottling the beer will

aide the expansion of the brewery. By decreasing the deficit, Yellowhead can realize their

revenue potential.

Strategy Pyramid

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Strategy

Establish Yellowhead as a quality beer in Alberta and increase revenues

Tactic 2

Product Placement

Distribution Channels

Expand network to reach across Alberta, starting around Edmonton

Bottling

Allowing new distribution channels - liquor stores

Tactic 3

Decrease Deficit

Increase Sales

Through distribution channels and server training

Lower Debt Financing

Decreasing debt will eliminate the deficit

Tactic 1

Brand Awareness

Horizontal Marketing

Retailer receives bulk discount in order to feature beer weekly

Server Education

Increases understanding of beer and therefore customer experience

4.0 Marketing Mix

The marketing mix strategies mentioned are being used to grab brand attention and create a

stronger brand image. This is because the industry is already saturated with competition locally

and from international companies. By focusing on their brand image, they can help their target

market realize the benefits and value that is perceived through Yellowhead Premium Lager

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4.1 Product Marketing

Currently, Yellowhead Brewery only sells one beer: Yellowhead Premium Lager. This beverage

is a fresh beer that only contains four essential ingredients and is crafted following German purity

laws (Yellowhead, 2012). The fact that it is made this way is a great benefit to its target market

because most drinkers of craftbeers do not want modified beer recipes and prefer traditional

methods (Kegworks, 2009). Yellowhead Brewery is still in the growth stage of the life cycle and

should continue to focus on this product for the following year.

It is reccomended that Yellowhead Brewery considers producing another flavor or type of beer

to stay competitive with other microbreweries in Edmonton when they have the funds to do so. It

is also recommended that this new product still follows the strict German purity laws to help

create consistency between the product lines.

4.2 Pricing

Yellowhead Brewery uses a penetrating price strategy for its product. This is because the

alcoholic beverage market is saturated with alternatives and substitutions. They are able to keep

their costs low because of the minimal transportation costs. This strategy has allowed

Yellowhead to drive straight into the market with a lower price than most and attract customers

to switch to their to Yellowhead lager. Unfortunately, this may make customers see less value in

Yellowhead lager’s German purity due to the low price. At this point, raising the price to show

that the larger is a premium beer may drive away loyal customers from Yellowhead lager. A

solution to this may be to standardize Yellowhead lager prices to match the competition.

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Table: Price List

Price List

Item Description Per Unit PriceKeg Holds 50 litres of beer. Sold to major establishments $175Growler Holds 1.89 litres of beer which is equivalent to a six

pack. Refillable. Sold to consumers.$9

Bear Beer Promotional beer for a radio station. Sold in liquor stores.

$24

Other Type a description here $0

4.3 Promotion

Yellowhead Brewery could promote their product by utilizing their strong distribution channels.

Using horizontal marketing, Yellowhead brewery can offer some of its retailers Yellowhead

Lager for a discounted price. In return, the retailer would make Yellowhead Premium Lager a

weekly drink special. This could be measured to see how much consumption has gone up in a

year on said featured night and then compare it to see how much the consumption has gone up

on non-featured nights. If consumption has increased for both overall Yellowhead Brewery can

assume that they have create a stronger brand image and implement at other retailers.

4.3.1 Advertising

Yellowhead brewery should focus it marketing budget, like in the past, on posters at events and

around town as well on radio ads on the Bear. The posters are reaching the market segment

already and will help promote bottle released when Yellowhead reaches that point. The radio

advertising should continue to go with the Bear because of the current collabortaion with this

broadcaster.

Yellowhead's new slogan, "A Beer That's Made For Your Taste," will start at the beginning of

the year and be used on any promotional items. Radio advertising will occur in the summer when

beer experiences its highest sales, thus reminding the target market. Posters will be used

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throughout the year in various strategic locations. The sales and communications teams will be

responsible for implementing, developing and monitoring advertising.

Table: Advertising Milestones

Milestones

Advertising Start Date End Date Budget Manager Yellowhead BreweryA beer that's made for your taste 1/1/2013 1/1/2014 $0 Sales Manager SalesRadio 1/5/2013 31/10/2013 $2,000 Sales Manager SalesPosters 1/1/2013 1/1/2014 $1,500 Sales Manager SalesOther 1/1/2013 15/1/2014 $500 Sales Manager SalesTotal Advertising Budget $4,000

4.3.2 Public Relations

Public relations will be used to increase the brand image and product knowledge of the event

center as a place to hold one of Edmonton’s festivals. Yellowhead could acheive this by offering

the event center to an event such as the Fringe, a yearly theater festival that books venues around

the Edmonton Area. Yellowhead Brewery has a chance to gain free publicity from the local

papers writing reviews about the show.

Yellowhead will participate in the Fringe and promote its local, organic lager. A press release

regarding the Fringe involvement will be timed to be released before, during and after the festival.

The bottling of the beer will be done in March, and a release will be timed to inform the

community about the new way to buy/drink Yellowhead. Any other releases will be sent out

when relevant. The communications and sales team will be responsible for the public relations of

the business.

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Table: PR Milestones

Milestones

PR Start Date End Date Budget Manager DepartmentFringe Festival 15/8/2013 30/8/2013 $1,000 Sales Manager SalesPress release - festival

14/8/2013 30/8/2013 $0Communication

TeamCommunications

Press release - new beer30/4/2013 30/4/2013 $0

CommunicationTeam

Communications

Other1/1/2013 1/1/2014 $500

CommunicationsTeam

Communications

Total PR Budget $1,500

4.3.3 Direct Marketing

Yellowhead Brewery should focus their direct marketing on social media. They currently have a

blog but it has not been kept up to date. This should be revamped and maybe mimic Alley Kat’s

food blog which explains what foods go good with their beer. They should continue to keep their

Facebook page up to date as well posting events and festivals that their target market may be

interested in. These two forms of marketing will make consumers feel less like just a customer

and more like a friend with Yellowhead’s brand. In order to push Yellowhead throughout the

retailers, training will be offered to servers so that they are knowledgeable about Yellowhead.

An incentive program could be created in order to make the server's prerogative to mention

Yellowhead to as many individuals as possible.

Social media and the website will be used throughout the year, starting January 1, 2013, to

market and promote Yellowhead. Server's training will begin in January and be carried out

throughout the entire year. The sales and communications teams will be responsible for

implementation, results and analysis.

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Table: Direct Marketing Milestones

Milestones

Direct Marketing Start Date End Date Budget Manager DepartmentTwitter

1/1/2013 1/1/2014 $0Communications

teamCommunications

Facebook1/1/2013 1/1/2014 $0

Communicationsteam

Communications

Server training 1/1/2013 1/1/2014 $1,000 Sales team SalesOther 1/1/2013 1/1/2014 $0 Sales team SalesTotal Direct Marketing Budget $1,000

4.4 Service

Customers require high service from the establishments Yellowhead is situated in, the

Yellowhead entertainment space and eventually the liquor stores that carry their bottled beer (as

of May 2013). In order to ensure proper service in the pubs and bars, the serves will be educated

and trained about Yellowhead beer. As mentioned in the Direct Marketing segment, an incentive

program will provide a reason for servers to promote and talk about the beer. The service in the

entertainment space is simple to control because it is located within the brewery. Yellowhead is

responsible for who is hired and they can make sure that the servers are knowledgeable and

friendly. As for the liquor stores, Yellowhead can work with them much the same way as with

the servers. By increasing their understanding of the product, they can better serve the

customers' needs.

5.0 Financials

From the new marketing strategy, sales are expected to grow by 5% each year for the next three

years. This is a conservative estimate and achievable given Yellowhead's quality and distribution

channels. Expenses are also expected to rise about 5%. This was estimated based on inflation.

It is necessary to spend money on the marketing plan in order to realize the brand awareness and

sales increase that have been identified as main objectives. Each dollar spent can be linked to a

specific objective. The contribution and sales forecast have identified the cycle for Yellowhead:

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high sales in the summer and low sales in the winter. It is important for Yellowhead to manage

this.

5.1 Break-even Analysis

For this section, it is assumed that the economy would remain stable. Another assumption was

that the market trends of today would continue to increasse at similar levels. Social trends

pertaining to the consumption of beer would also remain constant.

Table: Fixed Costs

Fixed Costs

CostRent $1,667Professional Services $58Payroll $9,808Insurance $572Utilities $1,691Telephone $258Other $1,525Total Fixed Costs $15,579

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 161Monthly Revenue Break-even $27,037

Assumptions:Average Per-Unit Revenue $167.61Average Per-Unit Variable Cost $71.03Estimated Monthly Fixed Cost $15,579

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($20,000)

($15,000)

($10,000)

($5,000)

$0

$5,000

$10,000

$15,000

$20,000

0 60 120 180 240 300

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis

5.2 Sales Forecast

With the current economic factors and the growing brand of Yellowhead, it is possible to achieve

a 5% sales increase in kegs and a 10% increase in growlers over the next year. This is a

conservative estimate that shows relatively stable peaks and valleys over the next three years.

Sales are expected to increase in the summer, as is the industry norm, and to drop over the winter

with a slight increase at new years. Sales performance is directly linked to the relationships with

the licensed Edmonton and area establishments. This is because most of Yellowhead's sales are

from bars, pubs and restaurants. It is important to build these relationships so that the

establishments rebuy and potential customers have the opportunity to taste the beer.

Keg prices are approximately $175. The cost to produce kegs were estimated at $75 each.

Growlers are priced at $9 with an estimated $6 cost to Yellowhead. Bear beer costs $12 and is

priced at approximately $24 per case.

Bear beer is a one year project. Partnered with an area rock radio station, 100.3 The Bear,

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Yellowhead has produced and sold the product under both the Bear and Yellowhead name. It

coincides with the 20th anniversary of the radio station. The Bear beer will be phased out by

May 2013.

Table: Sales Forecast

Sales Forecast2013 2014 2015

Unit SalesKeg 2,225 2,336 2,453Growler 36 40 44Bear Beer (Per Case) 110 0 0Total Unit Sales 2,371 2,376 2,497

Unit Prices 2013 2014 2015Keg $177.28 $177.28 $177.28Growler $9.00 $9.00 $9.00Bear Beer (Per Case) $24.00 $0.00 $0.00

SalesKeg $394,438 $414,159 $434,867Growler $324 $356 $392Bear Beer (Per Case) $2,640 $0 $0Total Sales $397,402 $414,516 $435,259

Direct Unit Costs 2013 2014 2015Keg $75 $79 $83Growler $6 $7 $7Bear Beer (Per Case) $12 $0 $0

Direct Cost of SalesKeg $166,875 $183,980 $202,838Growler $216 $261 $316Bear Beer (Per Case) $1,320 $0 $0Subtotal Direct Cost of Sales $168,411 $184,241 $203,154

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Keg

Growler

Bear Beer (Per Case)

Sales Monthly

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5.3 Expense Forecast

The entire marketing budget, including advertising, public relations, direct marketing, web and

other, is $9,000. These expenses are not expected to dramatically increase over the next few

years*. An increase of about 5% is expected to reflect inflation. This is a reasonable prediction

but it could change dramatically. Therefore, it is only an estimate and should be expected to

change,even if only a small portion.

Sale expenditures will increase because of the importance of building relationships with the

distributors, like the pubs and bars. A higher quality and longer lasting relationship with a

distributer can be expected to incur higher costs.

Advertising and public relations will also have higher spending. This is because of Yellowhead's

objectives. In order to increase brand awareness and market share, Yellowhead has to

communicate to the target market. The target market can be reached through advertising and

public relations.

There is no direct cost incurred from using social media. However, this is important to create

two-way communication for the customer to build a relationship.

*Please Note: There was no financial information or estimates available for the bottling system

which has been mentioned in various places throughout the report. It is being pursued by the

company, so it has been included in some aspects, like public relations. However, it was not

included in the expense, revenue or sales forecasting although it can be expected to impact these

areas dramatically.

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Table: Marketing Expense Budget

Marketing Expense Budget 2013 2014 2015Advertising $3,498 $3,673 $3,857Public Relations $1,000 $1,050 $1,103Other $2,004 $2,104 $2,209

------------ ------------ ------------Total Sales and Marketing Expenses $6,502 $6,827 $7,168Percent of Sales 1.64% 1.65% 1.65%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Advertising

Public Relations

Other

Monthly Expense Budget

5.4 Linking Expenses to Strategy and Tactics

Awareness is at the forefront of Yellowhead's strategy. Through communications from ads, press

releases and server knowledge, Yellowhead can establish themselves as a quality craftbeer that

delivers an exceptional social experience. In order to achieve this, $5,500 of the marketing

budget be used. This sum is managed on a monthly basis, seeing higher spending in the summer

months when beer is the choice alcoholic beverage.

Sales increase through relationships with distributors. This will also help with increase market

share and the amount of bars that Yellowhead is situated in. Approximately $1,000 is allotted

from the marketing plan to achieve this.

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$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales

Expenses

Sales vs. Expenses Monthly

5.5 Contribution Margin

The contribution and gross margins are directly linked to the seasonal demands experienced in

the alcohol industry. Both are larger when Yellowhead is able to sell more and minimize the cost

per product. This is demonstrated in the summer, when the gross margin grows to a staggering

40% in July. This is reflected in a higher contribution margin of 39%. This cycle is important for

Yellowhead to be aware of as they can work to capitalize on their strength within the summer

and mitigate their risks in the winter.

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Table: Contribution Margin

Contribution Margin2013 2014 2015

Sales $397,402 $414,516 $435,259Direct Costs of Goods $168,411 $184,241 $203,154Costs of Goods $94,100 $95,512 $96,944

------------ ------------ ------------Cost of Goods Sold $262,511 $279,753 $300,098

Gross Margin $134,891 $134,763 $135,161Gross Margin % 33.94% 32.51% 31.05%

Marketing Expense Budget 2013 2014 2015Advertising $3,498 $3,673 $3,857Public Relations $1,000 $1,050 $1,103Other $2,004 $2,104 $2,209

------------ ------------ ------------Total Sales and Marketing Expenses $6,502 $6,827 $7,168Percent of Sales 1.64% 1.65% 1.65%

Contribution Margin $128,389 $127,936 $127,993Contribution Margin / Sales 32.31% 30.86% 29.41%

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Contribution Margin Monthly

6.0 Controls

Controls are necessary to ensure the success of the marketing strategy. While an idea may seem

valid, until it is put into practise, no one knows how the target market will react. It is important

to monitor their reaction and the implementation plan to make sure that the objectives are

satisfied. The plan will encompass the year 2013 and attempt to increase brand awareness and

sales. However, if this plan does not meet its expectations, a contingency plan has been created.

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6.1 Implementation

In order to reach the financial, marketing and societal objectives outlined in this paper,

Yellowhead Brewery would need to take a number of strategic steps. The objectives are strongly

related and because of this, satisfying one generates a positive outcome for the other. In order for

sales to increase by 5% within the next year, the company needs to increase brand awareness. If

this goal is successfully attained, the deficit will be reduced by 20%.

The implementation plan starts with the company improving their communication with their

partners. The Edmontonian pubs and restaurants should be knowledgeable about the properties

of the beer and the brewing techniques. This will allow them to better seve the customer. A

Yellowhead representative should visit the pubs and restaurants that sell their beer and ensure the

supervisors are aware of the qualities of the beer and will make sure their staff gain that

knowledge as well. Every now and again, the Yellowhead representative could ensure serving

staff is knowledgeable. The same representative should visit other pubs and restaurants to

establish new contracts and expand the supply chain.

In order to help attain some of the societal objectives and increase awareness, the second step

would be for the microbrewery to be present at festivals throughout Edmonton. This would

ensure more people would become aware of their product. Based on this, and assuming revenues

would reach the forecasted amount, the next step would be for the company to host their own

events and also to develop community conscious projects to give back to the community.

Another step would be for the company to add their partners on their website, and every festival

they attend, or events they host as well.

This implementation steps would be made from January 2013 until January 2014.

After each step of the implementation plan, an assessment would be done, to ensure the efficiency

of the marketing strategy. Consumer surveys, along with financial analysis should determine

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whether or not the company should keep enforcing the marketing strategy.

6.2 Keys to Success

One of the most important success factors for this strategy is the representative that would

educate the various restaurants and pubs about the product, and would also try to gain more

partnerships with more establishments. The person should be knowledgeable about the company

and its product, but also very passionate about it. Same attributes should be present in the

individuals that would represent the company at the Fringe Festival.

Price should stay the same, as the revenue increase would be done through brand awareness.

6.3 Market Research

After each step of the implementation plan, a research should be conducted to ensure the

efficiency of the plan. For the communication steps, Yellowhead’s representative should quiz

staff about the different factors of the beer, but also survey customers to see if they were properly

informed about these factors.

As soon as advertising increases, a market research should be implemented to conduct a cost and

benefit analysis. This would help the company realize the importance of advertising, and also it

would help establish if more money should be allocated towards advertising.

After each festival attended, or event hosted, the same cost and benefit analysis should be

conducted in order to establish which one is more efficient and which one is not.

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6.4 Contingency Planning

Some bars or pubs might have contract clauses with other companies that would not allow them

to try and sell Yellowhead’s product. In this case, the company should try and establish new

partnerships with restaurants and pubs that could help the company build brand awareness.

The marketing plan could be efficient, but awareness might take longer than a year to build.

Market research should help analyze which steps are more efficient than others and should help

the company allocate resources better.

7.0 Works Cited

AGLC. (2012). Balancing choice and responsibility. Retreived November 20, 2012, from

http://aglc.ca/

Alley Kat. (2011). Great brews. From scratch. Retreived November 1, 2012, from

http://www.alleykatbeer.com/

Government of Alberta. (2011). 2011 Alberta wage and salary survey overview. Retreived

November 14, 2012, fro http://eae.alberta.ca/documents/wage-and-salary-survey-overview.pdf

Health Canada. (2008). Focus on gender: Canadian's use of alcohol . Retreived November 28,

2012, from http://www.hc-sc.gc.ca/hc-ps/pubs/adapd/cas_gender-etc_sexe/chap3-eng.php

Holloway, A. (2004). Heady times. Canadian Business, 77, 23-23. Retrieved November 15, 2012, from http://libezproxy.nait.ca/loginurl=http://search.proquest.com/docview/221351939?accountid=12654

Hughey, R. (2011). Beer distribution in Canada. Retreieved November 14, 2012, from (

http://www.realbeer.com/library/authors/hughe-r/distribution.php).

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Kegworks. (2009). Craft beer drinkers and abstainers. Retrieved November 10, 2012, from

http://www.kegworks.com/blog/2009/11/09/what-your-beer-says-about-you-part-3/

Mcdonald, N. (2009). Small ales, big sales: Craft beer-makers are thriving even as big brewers struggle. Macleans, 122(48/4), 36.

Statistics Canada. (2010). Control and sale of alcoholic beverages. Retreived November 20,

2012, from http://www.statcan.gc.ca/dailyquotidien/110420/dq110420a-eng.htm

Statistics Canada. (2012). Survey of household spending. Retreived October 25, 2012, from

http://www5.statcan.gc.ca/cansim/a26?

lang=eng&retrLang=eng&id=2030023&tabMode=dataTable&srchLan=-1&p1=-1&p2=9

Yellowhead. (2012). Edmonton's finest brewery. Retreived October 25, 2012 from

http://www.yellowheadbrewery.com/

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Appendix Table: Sales Forecast

Sales ForecastJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Unit SalesKeg 5% 130 140 165 185 205 225 265 240 210 180 130 150Growler 10% 0 0 2 3 4 5 6 10 6 0 0 0Bear Beer (Per Case) 0% 40 30 20 10 10 0 0 0 0 0 0 0Total Unit Sales 170 170 187 198 219 230 271 250 216 180 130 150

Unit Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecKeg $175.00 $176.25 $177.50 $177.50 $177.50 $177.50 $177.50 $177.50 $177.50 $177.50 $177.50 $177.50Growler $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00Bear Beer (Per Case) $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00

SalesKeg $22,750 $24,675 $29,288 $32,838 $36,388 $39,938 $47,038 $42,600 $37,275 $31,950 $23,075 $26,625Growler $0 $0 $18 $27 $36 $45 $54 $90 $54 $0 $0 $0Bear Beer (Per Case) $960 $720 $480 $240 $240 $0 $0 $0 $0 $0 $0 $0Total Sales $23,710 $25,395 $29,786 $33,105 $36,664 $39,983 $47,092 $42,690 $37,329 $31,950 $23,075 $26,625

Direct Unit Costs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecKeg $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75Growler $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6Bear Beer (Per Case) $12 $12 $12 $12 $12 $12 $12 $12 $12 $12 $12 $12 $12

Direct Cost of SalesKeg $9,750 $10,500 $12,375 $13,875 $15,375 $16,875 $19,875 $18,000 $15,750 $13,500 $9,750 $11,250Growler $0 $0 $12 $18 $24 $30 $36 $60 $36 $0 $0 $0Bear Beer (Per Case) $480 $360 $240 $120 $120 $0 $0 $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $10,230 $10,860 $12,627 $14,013 $15,519 $16,905 $19,911 $18,060 $15,786 $13,500 $9,750 $11,250

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Appendix Table: Marketing Expense Budget

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAdvertising $125 $125 $125 $125 $458 $458 $458 $458 $458 $458 $125 $125Public Relations $0 $0 $0 $0 $0 $0 $0 $1,000 $0 $0 $0 $0Other $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses

$292 $292 $292 $292 $625 $625 $625 $1,625 $625 $625 $292 $292

Percent of Sales 1.23% 1.15% 0.98% 0.88% 1.70% 1.56% 1.33% 3.81% 1.67% 1.96% 1.27% 1.10%

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Appendix Table: Contribution Margin

Contribution MarginJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales $23,710 $25,395 $29,786 $33,105 $36,664 $39,983 $47,092 $42,690 $37,329 $31,950 $23,075 $26,625Direct Costs of Goods $10,230 $10,860 $12,627 $14,013 $15,519 $16,905 $19,911 $18,060 $15,786 $13,500 $9,750 $11,250Costs of Goods $7,800 $7,600 $7,700 $7,800 $8,000 $8,200 $8,200 $8,000 $7,800 $7,700 $7,700 $7,600

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Cost of Goods Sold $18,030 $18,460 $20,327 $21,813 $23,519 $25,105 $28,111 $26,060 $23,586 $21,200 $17,450 $18,850

Gross Margin $5,680 $6,935 $9,459 $11,292 $13,145 $14,878 $18,981 $16,630 $13,743 $10,750 $5,625 $7,775Gross Margin % 23.96% 27.31% 31.76% 34.11% 35.85% 37.21% 40.31% 38.96% 36.82% 33.65% 24.38% 29.20%

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAdvertising $125 $125 $125 $125 $458 $458 $458 $458 $458 $458 $125 $125Public Relations $0 $0 $0 $0 $0 $0 $0 $1,000 $0 $0 $0 $0Other $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $292 $292 $292 $292 $625 $625 $625 $1,625 $625 $625 $292 $292Percent of Sales 1.23% 1.15% 0.98% 0.88% 1.70% 1.56% 1.33% 3.81% 1.67% 1.96% 1.27% 1.10%

Contribution Margin $5,388 $6,643 $9,167 $11,000 $12,520 $14,253 $18,356 $15,005 $13,118 $10,125 $5,333 $7,483Contribution Margin / Sales 22.72% 26.16% 30.78% 33.23% 34.15% 35.65% 38.98% 35.15% 35.14% 31.69% 23.11% 28.11%

Appendix

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