write a journal report after reading the case study.

 

Executive Summary

 

The UK has experienced an explosion of interest in craft beers over the past five years and this has led to the formation of a significant number of new small and micro independent breweries. The catalyst for growth has been younger drinkers, who are more experimental in their tastes and avoid mainstream products. They are driving cultural change and disrupting the brewing industry around the world.

There is no definition for craft beer, however, it usually involves smaller breweries producing beer by hand using traditional methods. Often producers add new flavours to create more flavoursome, characterful products than mass-market breweries provide. The craft beer industry has similarities in styles and consumption patterns across the world. However, the preference of craft consumers is for locally brewed products. Therefore, it really is an excellent example of what marketing academics call ‘Glocalisation’. In the UK alone over 500 million pints of craft-brewed beers were consumed in 2017 (SIBA 2018). Since then craft beer has continued to increase in popularity with new craft beer bars and micro-pubs constantly appearing. Although some analysts feel that the market has reached saturation, growth shows no sign of abating. Most supermarkets now devote significant shelf space to local craft beers in favour of mainstream beers, which indicates a shift in the long-term consumer behaviour towards beer. The number of breweries launched leapt by over 50 per cent in the UK last year. The success stems from experimental, innovative products, produced by small scale breweries. The craft beer explosion has been fuelled by homebrewers turning professional and producing beers with unique styles. A similar revolution is happening in the homebrew market, where consumers are investing more money in advanced equipment and are demanding more specialist ingredients, despite the higher cost. There are many similarities between the behaviour exhibited by consumers in the commercial craft beer market and (advanced) home craft brewing.

The home brewing industry has developed significantly in recent years. Whilst the traditional “homebrewer” (who brew beer to save money) still exists, a new space is emerging, which sits between home brewing, and commercial set-ups, where a target group of (typically younger) affluent enthusiasts exists. They are willing to pay considerable amounts for small scale, high end “commercial style” brewing equipment. This is a market sector that is attracting increasing attention but is yet to be fully exploited by retailers in the homebrew industry.  Since the Covid19 Lockdown, the market for home brewing supplies has exploded and continues to grow. Many consumers have built their own garden bars during lockdown and have designed them to be an alternative to the pub.

The main objective for Tribal Marketing is to exploit this market space and to offer a fantastic online/ offline customer experience. The target audience will be younger groups of customers, who have been referred to as “the brewing tribe”. They exist in many countries around the world and are enthusiastic and passionate about their hobby and their brewing setups. This group demands high-quality materials and equipment to brew beer. They are driven by variety, quality, and are value driven. This means that the market is less price elastic than it has been in past years. To engage with this tribe requires a solid understanding of their purchasing/consumption behaviour, and an ability to reach out to them in an innovative and engaging way.

 

Introduction

 

Tribal Brewing was set up in 2020 with investor support, and aims to be a value-driven brand which supplies high-quality equipment and craft brewing supplies, to a younger audience (sometimes associated with a “hipster” persona) in selected international markets. It aims to take advantage of a growing niche market, where customers are willing to spend greater amounts on higher quality equipment, a trend which is closely aligned with that of the growth of the international craft beer movement (Heward, 2018). Tribal Brewing is situated in a market space where some of its customers may aspire to develop their own commercial venture. Therefore, higher quality products will be required to attract and develop relationships with customers. Customer engagement will be key to success.

The success of Tribal Brewing is heavily reliant on an understanding and engagement with the younger craft beer ‘tribe’ in specific countries and offering them a unique customer experience. The SOSTAC formula has been adopted to develop Tribal’s initial marketing plan in order to ensure a strategic context. SOSTAC describes the principals and process of marketing planning (Dibb and Simkin, 2008), consisting of six stages: Situation, Objectives, Strategy, Tactics, Actions and Control (Reed, 2014).

An understanding of key consumer behaviour theories that relate to the success of the international craft beer market will be of paramount importance. Consumer behaviour is described as “processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires” (Solomon, 2015). Consumer behaviour will determine how customers perceive the brand and their likelihood of buying into it. Home Brew consumers are increasingly digitally savvy and use technology to engage with and influence the products/services that interest them. The home craft beer industry provides a great insight into the behaviour of consumers since unlike mass-produced beer consumers, craft brewers have a unique and close-knit consumer base (Foster et al., 2017). This base will to some extent drive brand values, shape popular brands, and disrupt the brewing industry across international markets.

Current Situation

 

The mainstream UK beer industry has reached the maturity stage of its product life cycle and a few multinational firms dominate the market. Through their constant effort to reduce costs, beer has increasingly been commoditised, and price has been the dominant marketing element. Quality has been compromised and there is a significant similarity between brands. This commodification has led to a revolt amongst some consumers and a niche craft market being formed, which emphasises quality and variety. Carroll (1985) described a theory of resource-partitioning, which assumes that if a few large organisations dominate the market, smaller specialist companies will develop and thrive on the side-lines. The resource-partitioning model states that niche segments can form within an established industry particularly when large organisations compete and merge to achieve the biggest consumer base in the market (Carroll and Swaminathan, 2000). This theory can be adopted to explain the development of the craft brewing industry in a mature competitive market. The theory focuses on the interrelationship between two trends. The first is increasing market absorption. This was highlighted recently with the takeover of Fullers Brewery by the Japanese Asahi conglomerate. Some of these giant corporations are buying smaller breweries to penetrate the craft sector. The second trend is the appearance of several smaller specialist groups forming in developed markets (Carroll and Swaminathan, 2000). This trend can be demonstrated through increased entrepreneurship and collaboration between craft breweries. For example, five regional Welsh craft brewers recently bought the Albion Pub in Conwy, and have established a thriving collaborative venture, which is highly successful amongst younger drinkers. Many of their customers engage in home brewing as a hobby, which is supported by the group.

It is important to define the younger craft beer consumer. The main demographic of craft drinkers are millennials and early generation Z’s. Millennials (otherwise known as generation Y) are people born between the years 1980 and 1994 and are currently between the ages of 25-39 years old (Kasasa, 2018). There are around 17million in Britain, and this group will soon become the largest demographic group in the UK (UK domain, 2019). Generation Z are the group that follow after generation Y. People in this group were born between 1995-2015 and are currently between the ages of 4-24 years old (Kasasa, 2018). Although only a small percentage of generation Z are currently able to drink alcohol, these consumers will be the natural follow-on for future market penetration. There are currently around 6 million generation Y consumers that are between 18-24-years old in the UK (Office for National Statistics, 2019). These millennial consumers will represent the future of craft beer consumption as they are the latest group to be able to legally drink alcohol. They are also likely to engage with home brewing as their family circumstances change. Therefore, it is critical that their behaviour and lifestyles are understood for the long-term strategic planning of Tribal Brewing.

Millennial consumers are a segment that want different things to their formative Generation X’s. Ordun (2015) researched the differences between generation Y (Millennials) and generation X. The differences in consumption and decision making are interesting. The Millennial consumer tends to focus on the social aspect of consuming. They are influenced highly by society: the main driver when purchasing brands is what others in their social group will think of them. The key role of a brand for generation Y’s is image, social profiling and quality, Millennials are attracted to products that align with innovation and they are key market disrupters. The Adoption of Innovation model is often used to track how and when consumers engage with products. ‘Early adopters’ are important to establish brands as they are prepared to take risks and try new technologies early. They influence ‘the majority’ of potential consumers, who if they can see success, will follow and buy into the brand.

Older generation X consumers display different tendencies. Consumption and purchase decisions are usually made on a more rational basis.  Factors such as price, influence from friends and family and functionality are key purchase influencers. Generation X consumers are more likely to buy mature products, and less likely to adopt newly launched brands (Babin, Harris 2015). They form the ‘early and late majority’ of purchasers.

Millennials consumption behaviour is considerably different to past generations. They act in a similar way to each other but very different to past consumer generations. Increasingly market research and theory are focusing on this group and the tag “Tribe” is becoming a popular description. Consumer tribes have been described as “a group of people emotionally connected by similar consumption values and usage, using the social ‘linking value’ of products to create a community and express its identity” (Cova, 1997). Soloman et al. (2010) states, “the notion of a consumer tribe is similar to a brand community; it is a group of people who share a lifestyle and who can identify with each other through a shared allegiance to an activity”. Members share emotions, moral beliefs and have common lifestyles. Millennials themselves are a very broad consumer tribe and the craft beer drinking tribe display tendencies which align well to the theory. Robin (2011), states that tribes contain four key characteristics: multiplicity, playfulness, transience and entrepreneurship. Multiplicity refers to how persons can be part of many tribes, showcasing different aspects of their personality. Tribes do not dominate the everyday life of the consumer, rather they punctuate the working week (Goulding, Shankar, Elliot and Canniford, 2009). This is where tribes differ to subcultures. For example, a member of the craft beer consumer tribe can also belong to another consumer tribe, such as craft baking, or veganism. Secondly, Robin’s article defines consumer tribes as playful. Tribes are not built on rational motivations, such as price, functionality etc, but on aspects such as aesthetics, emotions, culture, brands, fashion, music. These are all elements of consumerism that are enjoyable. The craft beer market symbolises these tendencies.

There is evidence that these younger drinkers prefer to drink at home or in non-traditional environments. On average, 18 mainstream pubs are closing each week in the United Kingdom, as 75% of consumers believe they offer a lack of perceived value (BBC News, 2018).  Drinkers that stay at home can be encouraged to brew their own beer. Statistics show that sales of home-brewing kits have doubled in recent years, as Brits choose to stay at home and produce their own beverages (Lee, 2014). Millennials are likely to socialise at home with friends. Barbeques and garden parties are common forms of entertainment, and for many, their gardens are a natural extension of their homes. They form a good platform for showing off to friends and a home bar is an effective way of doing this. This demonstrates the playfulness feature of Robin’s work.

In 2014, it was estimated there were around 14,000 regular home brewers in the UK, and it can be assumed that this figure has drastically increased over the past 5 years (Lee, 2014). Research by Wells (2015) suggested that over half of Britain’s now prefer to entertain friends at home, as opposed to going out for a drink. There are several reasons for this cultural shift, including price, comfort and enjoyment of a more personal environment. The unaffordable consensus regarding UK pubs is pushing consumers towards home brewing, as people can produce a pint of beer for around 50p (Lee, 2014). Following the family life cycle theory, increasingly Millennials will become ‘full nesters’ and the demands of small children will increase their propensity to engage with home drinking and hobbies. These statistics are replicated across the World, and the USA and certain Eastern European Countries are driving the craft home brewing market.

Objectives

 

Tribal Brewing’s aim is to reach out to this new group (tribe) of customers across selected international markets. The year 1 objective is to secure 2000 account holders on the website and to achieve a £200,000 turnover. Tribal will compete alongside three major UK competitors; The Malt Miller, Brew UK and Get ‘Er Brewed in N. Ireland. These companies provide high-value product portfolios and focus on quality to target customers with greater disposable incomes. United States businesses currently dominate the market space in terms of innovative products. Tribal Brewing enters this market aiming to expand its product portfolio to include high-end equipment. Expansion into premium products provides an opportunity for Tribal to quickly become established in the international arena, through being one of the limited number of suppliers. There are other key competitors which need to be tracked and the U.S. market provides opportunities to assess best practice (online stores such as Brooklyn Brewshop and Northern Brewers tend to follow innovative strategies).

Strategy

 

The businesses strategy will be to purchase higher value/innovative home brewing equipment from suitable overseas sources and to resell the equipment in the UK and selected overseas markets. This will mean that Tribal will need to identify suppliers of brewing equipment and re-brand that equipment in order to secure a good profit margin Therefore, quality, exchange rate issues, distribution costs and processes, etc, will be important. It will also be important to identify attractive markets to target the Tribal Branded products towards.

Tactics

 

Tribal’s product portfolio will be higher-end brewing and winemaking equipment. The products will be priced at a mid-range point, and the value proposition will be driven through quality. Innovative engagement strategies and creativity are critical to the success of craft brands such as Tribal Brewing. Social media as a marketing tool provides them with the opportunity to communicate directly with its consumers in the UK, allowing for opinions on brewing styles or new products to be captured (Briggs et al., 2004). Craft consumers use social media to interact with their favourite breweries and to learn about the history of the organisation behind the product. (Carneiro, 2018). This is something Tribal may be able to take advantage of, but they are unsure if this will add value to an overseas campaign.

Tribal marketing is currently a hot topic in academic circles as niche consumers play a vital role in the development of brands. They create a sense of community and are influencer groups, communicate with each other to mould brand values. Craft beer enthusiasts share their experiences, provide feedback and influence individual’s behaviour towards the brand. These enthusiasts are engaged and commonly involved in creating unique processes which allow them to resist market forces (Cova and Dalli, 2009). James Watt, owner of Brew Dog, suggested that businesses never own brands, their customers do. All they can do is try to develop positive brand values which influence key consumer groups. Tribal Brewing aims to create a community around the brand, by creating social media groups and a forum built into the website, where customers can join, discuss their hobby, and ask questions.

Action

 

Tribal Brewing plans to attend a range of beer festivals and events where the equipment and kits can be showcased, and samples can be given out to customers to encourage them to buy. However, the Covid 19 Pandemic has prevented this action from taking place. It seems likely that the business will not be able to attend any overseas events in the foreseeable future, and perhaps not at all in 2021. Therefore, an alternative marketing approach will be necessary.

Craft breweries have achieved operational success by creating a community feeling around their brand. This allows consumers to engage with the producers. It also allows craft brewers to connect with their local communities (Reid and Gatrell, 2017). These customers typically attend events to come together and share their passion for brewing. However, since the covid lockdown strong social media communities have developed to fill the gap. These niche communities allow producers and consumers to develop strong relationships. Granese (2019) stated that most craft consumers enjoy engaging with the producer. Research indicates that craft drinkers are motivated by the experience of local products that provide a sense of community (Taylor, S. and DiPietro, R. 2017). This sense of community has been losing ground in the UK through increased commoditisation and the rate public houses are closing across the country. Over 10,000 pubs have closed since 2000 according to the British Beer & Pub Association (Jones, 2018). However, this decline has been combatted by craft breweries with taprooms and brewpubs, creating a social space for craft beer enthusiasts to taste new creations and socialise. This indicates a potential engagement opportunity for Tribal and the importance of creating a community around the brand. The pandemic has reduced the opportunity for people to visit bars and pubs, and many feel uncomfortable in taking the risk. Therefore, the home bar concept is gathering momentum as consumers create their own pub atmosphere at home. This phenomenon is also evident in the USA and perhaps other countries around the world.

Control

 

Monitoring customer feedback will be vital to Tribal Brewing as word of mouth is one of the most persuasive methods to improve marketing. Tribal plans to offer customers Facebook support to help those who have any queries. This will enable them to get closer to customers by understanding their needs and challenges. They will also provide a feedback form on the website. This will be used for customers to report on service quality and purchase satisfaction. They hoe this approach will be appropriate in overseas markets too but are not sure how effective internet-based marketing is in some countries.

Creating an online community will be important for Tribal in order to maximise customer engagement. This will be achieved by creating social media groups and a forum built into the website, where customers can create their own discussion topics. Regular control and monitoring of customer feedback will be vital for them. It will provide information on current performance and areas for improvement. Negative and positive feedback will be equally important for the business to improve products and processes.

Google Analytics will be used to track online activity and improve SEO. This will be an important ongoing activity, with a member of the team having specific responsibility for website monitoring.

 

 

References

 

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Task:

 

You should conduct suitable research to underpin a 4500-word consultancy style report

 

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