Alex Nogle BrainBrew Green Tea

MKTG 370 December 4, 2012

I. Product Description BrainBrew is a green tea beverage that applies the findings of recent herbal supplement brain performance studies to green tea, an established drink with a wide appeal. Green tea is a popular choice for health-conscious individuals, most notably because it contains antioxidants and thiamine, which provides the calming effect of tea. Green tea also aids in hunger suppression, making it a popular choice among people who are on the go or watching their weight. All of these benefits exist naturally in green tea, but where BrainBrew is unique is its addition of Nootropics during the brewing process. Nootropics are a classification of herbs and natural compounds that have been shown to increase mental focus and cognition. The nootropics used in BrainBrew are all safe and have been approved by the FDA. The beverage is mildly sweetened with honey instead of adding the massive amounts of processed sugar or high-fructose corn syrup of other drinks. The appearance of the beverage is an attractive clear, very pale yellow-green, still liquid. The flavor is a refreshing, pleasant green tea with a hint of honey. The benefits of BrainBrew by ingredient include:

• Caffeine: Promotes alertness. BrainBrew is steeped for a shorter period of time than other green teas on the market, which means the caffeine content will be lower. No crash and burn.

• Theanine: Calming effect. Naturally found in tea leaves. • Rhodiola Root: rhodiola has shown to improve the capacity to perform mentally demanding tasks

under conditions of extreme stress and fatigue. It is recommended as an energy booster and treatment for depression, chronic fatigue, and anxiety.

• Choline: Choline is an organic compound classified as an essential nutrient and usually grouped with the B Vitamin complex. Choline is considered one of the true 'smart drugs' or nootropics, because it is a chemical precursor needed to produce the main memory neurotransmitter of our brains, called acetylcholine

• vitamin B6: Building block for the production of amino acids and neurotransmitters, which aid in mental function.

• Organic honey for natural sweetness • Alpha GPC helps promote energy and alertness • Natural citrus extracts for flavor

II. STP Analysis

BrainBrew’s target audience is college students. College students are trendsetters and are part of the highly sought 18- to 30-year-old demographic. These are the formative years in which purchasing decisions are cemented. The functionality of the product is perfectly aligned with the demanding schedule and mental requirements of the average college student. In addition, college students are becoming more health conscious, and BrainBrew is a healthy alternative to energy drinks. This target market was also selected because BrainBrew’s founder is a college student, giving BrainBrew a competitive advantage. I have first-hand experience with the need for the product and insight into how a college student will react to the product and its marketing. For example, in the afternoon I hit a wall before my third consecutive class and need a healthy mental boost, not a jittery jolt from a caffeinated drink. The only drinks to be found at SDSU convenience stores are coffees, highly caffeinated energy drinks, average teas, and coconut water. BrainBrew will fill a specific niche, because it actually improves brain function, and its green tea base is mild and has medicinal benefits. BrainBrew will be positioned in the mind of the consumer using their positive associations with green tea, herbal remedies and supplements, and health consciousness and their negative associations with unhealthy, highly caffeinated, highly sweetened energy drinks.

III. Branding

Brand Name

Our goals for the product name were to communicate the product’s unique selling proposition, which is mental sharpness and focus, to be catchy and memorable, and to be relatable to our target market. We first came up with the name of NuMood but decided this name wasn’t clear on the brain benefits of the product. Our next idea was BrainTea, which clearly communicated what the product is, but wasn’t terribly catchy. Finally we thought of BrainBrew, which uses alliteration for memorability. Also, the word “brew” is something college students relate to.

Logo and Packaging

The logo, slogan, and product imaging were developed with college students in mind. We gave the logo an edgy look with the “Headliner” font and used the likeable Einstein to immediately communicate that BrainBrew is focused on mental performance. Two styles of logo were developed, one in the color purple and one in black and white, to accommodate different printing situations. Both logos incorporate the slogan T = iQ2, which is a play on E = mc2 , to further communicate the benefit of the beverage. The Einstein image is tinted in yellow-green to suggest green tea, as well as a green, organic product. Purple was chosen because it complements the green color of the Einstein image and the pale yellow of the tea. The packaging for BrainBrew is a 500 ml/16.9 fluid-ounce plastic bottle with a black twist cap. The packaging label is made of plastic film and is glued to the bottle. The label summarizes the benefits of the ingredients and lists other important information like fair trade and organic certification.

IV. Distribution

Our distribution strategy will begin as one of exclusivity, in which BrainBrew will only be available on the SDSU campus, specifically the Aztec Convenience Store, vending machines, and dining halls. We will establish distribution channels with SDSU Food Services and deliver the product directly from our manufacturing facility to the retailer. This strategy will allow us to have more control over the brand, which is crucial as a new company with limited finances. We want to make sure we have a solid grasp of what it takes to be successful in this market before extending into other locations. Assuming the product is successful at SDSU, we plan to partner with other universities and community colleges in the future. We chose to model our distribution strategy after ShakeSmart, a smoothie and protein shake company started by two SDSU business students in 2010. They were able to get a grassroots following on campus, and SDSU accommodated them with a space to do business right outside the campus gym. This

is an opportunity that wouldn’t have been available if the owners didn’t have a connection to SDSU. It is in SDSU’s interest to support student-run businesses because it reflects well on the SDSU entrepreneur program. After ShakeSmart’s initial success on the SDSU campus, they have been able to expand to locations in Pacific Beach and Rolando. We hope to follow a similar trajectory.

V. Pricing

Because BrainBrew fits into a niche category and provides a unique benefit to the consumer, it warrants a price point that is differentiated from its competitors. Also, we are limited in how low we can price the product. Variable costs will be higher than most competitors because we are adding high-quality ingredients and are not diluting the beverage with cheap ingredients like high fructose corn syrup. We have determined the product’s main competitors in Aztec Convenience Stores will be Lipton Pure Leaf Tea ($1.79), Lipton Natural Green Tea ($2.09), Redbull Energy Drinks ($2.69), and Starbucks bottled coffee ($2.99). Because college students are very price sensitive, we initially debated penetration pricing to increase our market share. However, we are confident that once students try the product and are happy with its benefits, they will be willing to spend $2.49. This is the midpoint of the competitors’ pricing spectrum. We will hold the price to this point, rather than increasing the price once we gain ground.

VI. Promotion

The beverage industry is an extremely difficult industry to break into. Competitors such as Redbull, Starbucks, and Lipton have seemingly infinite marketing budgets. While this will be an obstacle, we truly believe that if students try our product, they will see its functionality is superior to anything currently available on campus. Our first three months of promotion will be focused on getting free samples into the hands of SDSU students. We will place beverages under desks in classrooms across campus. We will also provide A+ Review sessions with free product. This first phase will focus on grassroots and word of mouth. Social media will play an important role in gathering feedback, particularly since our targeted demographic are tech-savvy college students. If the product is well liked, students will essentially do the advertising for us, sharing their opinions on Facebook, Twitter, and Instagram. These avenues are inexpensive, which will be important in the beginning when revenue streams are just getting going. We will also have a website in place to answer questions or concerns students may have. During the next six months, after buzz and excitement has been generated for the product, we will switch from a strategy focused on free samples to one of more traditional advertising. We will contact journalists for the SDSU newspaper, asking them if they would be willing to try our product for free and write unbiased reviews of it. We will also place small ads in the school newspaper, the basketball program, and other publications around campus. Free samples will be distributed occasionally at campus events. The final three months of our year-one promotional strategy will be spent getting our brand out to a wider audience. Prior to this we will have solely focused on and distributed to SDSU students. However, by month nine we will be looking to expand our operations to other locations. Our promotional strategy at this time will be to sponsor SDSU T-shirts with the BrainBrew logo at SDSU home basketball games. The national media features the student fans (the “show”) prominently and often on TV. This will kill two birds with one stone. It will continue SDSU promotions while expanding to national television at a a relatively low cost.

VII. Forecasting

The following figures are based on similar products with similar start-up costs: Fixed Costs (equipment, rent, advertising/marketing) = $35,000 Variable Costs (materials/supplies, shipping, packaging) = $1.48 per unit Selling Price= $2.49 Contribution Margin= $2.49 - $1.48 = $1.01

Break-even Point = 35,000 / 1.01 = 34,653 units or $86,287 The current population of SDSU is 30,000 students. During the first three months of operation we expect a 2% rate of adoption amongst the student population, which equals 600 students. Assuming the average student will purchase our product once every two weeks, our monthly unit sales will equal 1,200 units. Over this three-month period we will sell roughly 3,600 units. For the next three months we expect our rate of adoption to double to 4%, which means we will sell 7,200 units. The next three months our rate of adoption will increase to 6%, giving us 10,800 units sold. In our final three months of the business year, our rate of adoption will increase slightly to 7%, as we start to seek opportunities for growth outside SDSU. During this period we will sell 12,600 units.

BrainBrew Green Tea

2013 Sales Forecast

Sales (units) x Selling Price = Revenue

Q1 3,600 $2.49 $8,964

Q2 7,200 $2.49 $17,928

Q3 10,800 $2.49 $26,892

Q4 12,600 $2.49 $31,374

Total 34,200 $2.49 $85,158*

*Based on these estimates, we will break even at the end of 2013.

References

Song J, Xu H, Liu F, Feng L: Tea and cognitive health in late life: current evidence and future directions. Journal of Nutrition, 16:31-34.

List of Nootropics. (2010). Retrieved November 26, 2012, from http://www.erowid.org/smarts. Perks and Pricing. (2007). Retrieved December 1, 2012, from http://www.inc.com/magazine/20070701/ask-inc.html.