A Beer for Every Occasion

The marketing team at Labatt USA (LUSA) faces a strong challenge in creating P-O-P materials for its diverse portfolio of beers. Not only must the marketing programs appeal to a wide-ranging consumer base, but they must also meet the needs of wholesalers and retailers through a spectrum of channels.To achieve these ends, the company works closely with its marketing agency and has improved its methods for producing P-O-P and allocating budgets. Those changes are becoming even more important as parent company Interbrew continues to post sales increases in America and add new products to its portfolio.Based in Norwalk, Conn., Labatt USA operates four marketing divisions: Domestic, Canadian, Mexican and European. The company includes the number-one imports from Canada, Germany, Belgium and the UK, and the number-two import from Mexico. Last July, Bass Ale was added to the European division, and a new domestic brand, Loyalhanna, also was unveiled. Initially available in Pennsylvania and New Jersey, Loyalhanna is an amber lager named for the Latrobe, Pa., creek that feeds the Rolling Rock brewery. According to Interbrew's 2002 annual report, such expansion is coming with "strong performance in the core Labatt USA business." The report goes on to state that "Our volumes rose by 6.3%, in line with the growth in the import segment, and all three pillars of our business did well. Our Canadian brands were up 3.6%, the Mexican brands were up 8.1%, and our European brands were up 48.6%." Last year, Tecate experienced double-digit growth, Stella Artois doubled its volume and Blue Light "managed a further 19.7% growth of a considerable base." Furthermore, the domestic Rolling Rock brand, which had declined 9.7% in 2001, saw 5.3% growth in 2002."We've had great success over the past 10 years with integrating new brands into our beer portfolio," says Bryan J. Semkuley, vice president of marketing for Labatt USA. "As new brands came in, they gave us more scale, which allowed us to have better leverage in the marketplace. That in turn allows us to bring a more complete story to our wholesalers, retailers and consumers. In that respect, it's become easier to market our brands, because we're a more complete player today. But it's always going to be a competitive marketplace."Labatt's marketers strive to create distinctive brand positioning, because they're well aware that such brand diversity means competition may come from inside the company as well as from outside. "Most of our brands have unique positions in either their regional or demographic targets," explains Larry Sternbach, executive vice president, account director for DVC Worldwide, Labatt's marketing agency. "But there are similarities, in that they're all in the beer business and all reaching customers through the same channels and media."Covering Its Consumer BaseConsumers are a more difficult target to hit precisely these days, notes Devin Kelly, Labatt USA's director of marketing, Canadian brands and innovation. "In the past, consumers had a smaller repertoire in their choices of brands," he says. "Now, that range has grown larger due to occasion and pricing segmentation and other needs through their day, week and life. Our broader portfolio now is better able to address that larger range of needs."The product lineup also must properly address every channel where beer is sold, including c-stores, sports bars, restaurants, supermarkets and mass-merchants. "It can be overwhelming," Sternbach says. To target all of these channels effectively, Labatt utilizes P-O-P as a key marketing component, along with advertising media, promotions and sponsorships. "P-O-P plays a very, very prominent role throughout the entire organization," Semkuley says. Kelly concurs. "P-O-P offers the perfect vehicle for us to deliver the brand story at the retail level," he says. "When the consumers are making that critical decision in the aisle, they're interacting primarily with the package and the P-O-P, so it's a huge priority for us to be sure we're telling our story effectively at retail."Labatt's goal, Kelly adds, "is to design materials so they appeal to the wants and needs of consumers, retailers and wholesalers, not just one of those groups." To help ensure this, the company uses various informal and qualitative feedback channels so that retailers and wholesalers can provide input on campaigns. It also conducts occasional test programs by reviewing Nielsen data in particular markets to determine sales lift during promotions.Satisfying everyone every time is critical, notes Semkuley. "It may be the most brilliant program ever for consumers, but if retailers won't embrace it, it's not going to be used by the stores," he says. "Or, it may be flexible, easy to assemble and turnkey, but if consumers aren't pulling the product off the shelves, it's not going to stay up. Or, it may be an inexpensive, beautiful display, but if it takes three hours to set up, our wholesalers won't deal with it."Feedback from wholesalers, Sternbach adds, is sometimes critical to a campaign's success. "Retailers are pretty much out of merchandising in the beer department," he says. "Virtually 100% of our merchandising is done by our wholesalers."Juggling Many PiecesBecause it handles a portfolio with many strong brands, Sternbach says Labatt must ensure its materials are tightly focused on each product's strengths and messages. "It can be a challenge to create unique pieces of P-O-P that don't overlap while keeping the salesforce excited and providing innovation."DVC develops between 800 and 1,000 display programs each year for Labatt's brands. Those materials break down into two basic categories: themed pieces, targeted to a specific promotion; and generic pieces, which feature branded items suitable for year-round use. Within each category, the materials are broken down further into "paper and perm.""Certain items are required as a cost of entry into the beer category," explains Sternbach. For instance, in the on-premise category, perennial paper items include banners, table tents and pennants, while perm items include tap handles and neon signs. "Those are all critical pieces," he says, "so we're always producing them. But we also are creating a broad range of additional items to cover the needs of the entire portfolio of brands.""The beer business is phenomenal -- we end up working in so many media," Sternbach adds. "We deal in paper, electronics, metal, plastics, fabric, wood, glass, every material on the face of the earth. From an agency and supplier standpoint, it's a true gem."10-Step Development ProcessCreating new P-O-P materials begins 60 weeks prior to shipping the finished pieces to stores, explains Geoffrey M. Blanck, senior brand manager, Labatt Blue. That schedule is maintained on a routine basis, so marketers and agency staff know when it's time to begin new programs based on their 14-month calendar. That wasn't always the case, however. "We weren't meeting our customers' expectations for timeliness, and we were incurring incremental costs to meet our deadlines," says Semkuley. To remedy this, Labatt and DVC created the 10-Step Merchandising Development Process (see chart at right). "DVC was very helpful in working with our internal groups to refine the process to ensure we now get to market on time," Semkuley says. "Today, I think we are one of the better suppliers out there in terms of getting material to market on time in advance of our customers' need without extra costs."Labatt initiates the 10-Step process by putting together a marketing brief for DVC. "Before we establish any goals or write the marketing brief, we talk with the sales force to recap what was done the previous year and set new goals, strategies and objectives," says Blanck. That feedback and other input are developed into a document that includes program objectives, timing, any mandatory components, brainstorming on creative and budget requirements.This brief is then reviewed with DVC's team, which uses it to generate several concepts that address the stated goals. "We're not typically thinking in terms of P-O-P concepts at this point, but we may be thinking about ideas or pieces that would work," Sternbach says. For each of these concepts, DVC produces a strategy that flows through all channels and markets. The plan considers on- and off-premise, online, public relations and sponsorship opportunities, for example. "Every program has to hit on all cylinders, and that gets pretty detailed," Sternbach says. DVC presents and discusses each concept with the brand team, which selects a final approach. DVC then refines that program and begins sourcing ideas and materials for P-O-P pieces."Once the strategic theme is signed off, it truly becomes a team effort, with a lot of input from LUSA, its brand teams and our internal people," says Sternbach. For Labatt, DVC uses a dedicated staff that develops ideas and produces the final pieces. "We research all types of ideas, go to trade shows and are constantly sourcing materials that could be applicable for a promotion," Sternbach says. "We also rely on our vender partners to suggest pieces."Protecting Its VendorsThe creative briefs are sent to many vendors, notes Barrie Brachfeld, senior vice president, production supervisor for DVC. "We ask them for ideas that they know they can produce," he says, "so who we send the briefs to will dictate the styles and specific ideas we receive." The agency is protective of its vendors, he adds. "We never take an idea from a vendor and have it knocked off somewhere else. We develop trust with people who we work with. They know if they're innovative, it'll be their project to produce." Brachfeld also fields calls from new vendors looking to gain business. "We encourage those contacts, especially those with new or different approaches to technologies." Often, he notes, the technologies being used aren't new. However, they're being reapplied in new ways that offer new benefits. "Sometimes they bring us an idea and ask if there's something we can do with it," he says. "Our staff feels comfortable with that and has the expertise to work in whatever media are necessary. It's a real partnership with Labatt -- [we have] open lines of communication where everyone interacts."The goal is to find P-O-P ideas that can become proprietary for each brand, says Blanck. "We always need to stay a step ahead, and partnered with DVC, we've been able to create innovative pieces. We hope that the pieces we create become so well associated with us that when other brands poach them the next year, they are so familiar to retailers that they don't get much execution."Selecting P-O-PAfter vendors respond to Labatt's briefs, the company produces a preliminary list of about 50 to 100 potential items. These will cover all price points possible, both to provide merchandising flexibility and to meet various state requirements for cost maximums on promotional items for alcoholic beverages. "We have to provide a tiered approach to the P-O-P to give our customers enough to choose from while still meeting our budgetary needs," says Blanck. Each market's individual needs also must be satisfied, he adds. For instance, Labatt Blue's number-one status in the Buffalo, N.Y., market requires a wider and deeper range of materials than is required for that brand in Florida, where it is less popular.From this preliminary merchandising list, LUSA marketers select the items they think best meet the program's needs. DVC creates renderings and prototypes complete with pricing on a final list of 25 items for review. About 10 are ultimately produced by various vendors.DVC then creates sell sheets and order forms in conjunction with the marketing assistance division of LUSA -- the other half of the overall marketing department. That group provides support to the field salesforce, as well as to the customer service, marketing services and graphics departments. "They assist with all services needed for the entire portfolio of brands being managed by the four brand directors," Semkuley explains.After the marketing assistance division coordinates with the field salesforce to organize wholesaler meetings and produce merchandising orders, DVC arranges production and fulfillment of the P-O-P and plans any feedback and analysis from the various customer groups after the promotion runs.Market Allocations DefinedEach in-store campaign is driven by its allocated budget, and determining those numbers has become more quantified in recent years, Semkuley says. The company uses what it calls the Mathematical Portfolio Allocation Model to slice up the pie, regardless of the size to which it's grown. The model is an internal calculation that allocates marketing resources across the company's entire product spectrum, Semkuley explains. It takes into account such variables as current sales trends, sales volume, margins, costs for doing business in various major markets for each brand, relative growth, sub-category competition, channel size and number of accounts. These factors are input for every brand, and the model calculates how much of the total budget allocation each receives."The budgets for various P-O-P programs are based on the brand's needs resulting from its maturity and the market itself," he explains. "As brands move up the hierarchy scale and can afford or demand additional investment, they receive more attention." Stella Artois, for example, received a disproportionately large P-O-P allocation in 2003 because its volumes doubled last year, he notes. "We provided it with more resources this year to help continue that growth."In any allocation, Kelly stressed, P-O-P plays a key role. In fact, in smaller allocations, it usually becomes a big fish in a small pond. "Even as the brands grow, the P-O-P investment doesn't get scaled back," he says.Furthermore, as sales increase for the brands, the pie from which each takes its slice grows. "We've experienced great growth trends across the entire portfolio, so we've been able to add resources that have allowed us to put more dollars against P-O-P, media, etc.," says Kelly. "It's the nature of a success story." "In the past, more emotional attachment came into play when determining the budget for respective brands, and more time was spent rationalizing why budgets were what they were," Semkuley explains. "This mathematical approach helps ensure we don't remain too steeped in the past and locked into what used to be effective. The market is very fluid, and our resource allocation has to reflect that fluidity. That may mean a brand receives substantially more budget because it's performed better this year or the sub-category it competes in is growing fast."However, there's more to it than calculators, Semkuley notes. "We try to keep all of the variables active and bring the best objective thinking to our resource allocation, but there's also an art that has to be included," he says. "For certain strategic reasons, we may allow a subjective need to play a role in the allocation."New TrendsStaying on top of key market trends and the fluidity of markets and customers means keeping P-O-P as effective as possible. For that reason, LUSA marketers are putting more of their P-O-P budgets into themed pieces rather than generic, year-round options. "Retailers are looking for their suppliers to enhance the consumer experience," Kelly says. "That's much more difficult to do with generic awareness-building mechanisms than it is with more specific and more timely P-O-P pieces."Timely pieces go beyond holiday themes, he adds. "We are expanding the breadth and depth of programs to cover more occasions. Dos Equis, for instance, delivers a mindset that carries beyond Cinco de Mayo." That was evidenced by this summer's program, which used a "Liquid Sports" theme in sponsoring the Pro Surfing Tour of America and the International Jet Sport Boat Association's Motosurf National.The company also is looking to leverage its expanding marketing potential by creating more consistency in all of its media messages, says Semkuley. "We're creating more themed environments that are more occasion-driven and include more integration among media. We may pick up elements of our TV program for use in P-O-P, and we're now even seeing some of the P-O-P elements driving some TV and radio images or outdoor pieces."Creating successful P-O-P means keeping flexibility as a top priority, he says. "It means achieving better execution by making the materials easier to assemble, move and take down, which is critical today. It means finding more effective ways to bring the display to market and make it easier to comprehend the message, and it means creating national programs that can be easily adapted to local markets and applied to various retail environments with different legal requirements by our salesforce."Labatt also is paying close attention to packaging trends. This year, the company has introduced six new formats for its Canadian brands alone, including new sizes, shapes and extensions, such as an 18-pack. In June, it introduced a 20-pack mountain-shaped Mountain Pack for its Labatt Blue and Labatt Blue Light brands. The new packaging "raises the bar within the category while driving new displays and features for off-premise business," says Kelly. Similarly, bottles continue to evolve. The spring re-launch of Rock Light, Rolling Rock's light beer, featured new graphics on the painted bottle label and a major updating of the outer wrap, which features an enlarged and icy close-up view of the bottle.This kind of innovation, Semkuley says, must remain a goal throughout all of the allocations and program developments. "We are always challenging ourselves to find something unusual and unique, and we challenge our vendors to do the same. We tell them we need things we haven't seen before and something that will excite our sales force, our wholesalers, our retailers and our consumers."

A Beer for Every Occasion

P2PI MEMBERS

JOIN P2PI

Related Topics

Related Images

Business Topic

Market Segment